TAT Technologies Reports Second Quarter 2020 Results
GEDERA, Israel, Sept. 15, 2020 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT) ("TAT" or the "Company"), a leading provider of products and services to the commercial and military aerospace and ground defense industries, reported today its unaudited results for the three month and six month periods ended June 30, 2020.
Key Financial Highlights:
-- Revenues for Q2 2020 were $17.3 million compared with $25 million in Q2
2019. Revenues for the six-month period that ended on June 30, 2020 were
$42 million compared with $46.9 million in the six-month period that
ended on June 30, 2019.
-- Gross profit for Q2 2020 was $1.5 million (8.6% as a percentage of
revenues) compared with $3.6 million (14.4% as a percentage of revenues)
in Q2 2019. Gross profit for the six-month period that ended on June 30,
2020 was $6.1 million (14.5% as a percentage of revenues) compared with
$6.8 million (14.5% as a percentage of revenues) in the six-month period
that ended on June 30, 2019.
-- Adjusted EBITDA for Q2 2020 was 0.03 million compared with $1.7 million
in Q2 2019. Adjusted EBITDA for the six-month period that ended on June
30, 2020 was $2.5 million compared with $3.1 million in the six-month
period that ended on June 30, 2019.
-- Net loss was ($2.2) million, or loss of ($0.3) per diluted share in Q2
2020 compared with a net income of $0.13 million, or $0.02 per diluted
share in Q2 2019. Net loss was ($1.8) million, or loss of ($0.2) per
diluted share in H1 2020 compared with a net income of $0.2 million, or
$0.03 per diluted share in H1 2019.
-- During Q2 of 2020 and H1 of 2020 TAT reported losses from discontinued
operation of the JT8D engine blades coating in the amount of $1.4M and
$1.7M respectively.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "The commercial aviation industry suffered greatly from the impact of the COVID-19 pandemic. During Q2 of 2020 we suffered from a decline in our revenues compared to Q2 2019, mainly due to decline in demand in our commercial MRO business. Other operations of the Company, such as military, OEM and cargo, remain stable.
The COVID-19 pandemic has significantly increased global economic and demand uncertainty, and has impacted TAT's businesses, operations and the aerospace sector as a whole. In response, the company has taken immediate actions to conserve cash and reduce costs. The financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time. TAT will continue to consider and proactively implement cost and working capital efficiencies so that TAT can respond to these uncertain market conditions."
On a positive note, during Q2 2020, TAT managed to improve its cash flow from operations (cash flow from operations were $6.3M in Q2 2020 and $7.5M in H1 2020), and also secured new credit lines from banks that may be used by the Company in the near future to finance new investments opportunities.
Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with GAAP, the Company also presents Adjusted EBITDA. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results, trends and performance. Adjusted EBITDA is calculated as net income excluding the impact of: the Company's share in results of affiliated companies, share-based compensation, taxes on income, discontinued operation, financial (expenses) income, net, depreciation and amortization. Adjusted EBITDA, however, should not be considered as alternative to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor it is meant to be predictive of potential future results. Adjusted EBITDA is not measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of Adjusted EBITDA in pages 13 below.
About TAT Technologies LTD
TAT Technologies Ltd. is a leading provider of services and products to the commercial and military aerospace and ground defense industries. TAT operates under four segments: (i) Original equipment manufacturing ("OEM") of heat transfer solutions and aviation accessories through its Gedera facility; (ii) MRO services for heat transfer components and OEM of heat transfer solutions through its Limco subsidiary; (iii) MRO services for aviation components through its Piedmont subsidiary; and (iv) Overhaul and coating of jet engine components through its Turbochrome subsidiary. TAT controlling shareholders is the FIMI Private Equity Fund.
TAT's activities in the area of OEM of heat transfer solutions and aviation accessories primarily include the design, development and manufacture of (i) broad range of heat transfer solutions, such as pre-coolers heat exchangers and oil/fuel hydraulic heat exchangers, used in mechanical and electronic systems on board commercial, military and business aircraft; (ii) environmental control and power electronics cooling systems installed on board aircraft in and ground applications; and (iii) a variety of other mechanical aircraft accessories and systems such as pumps, valves, and turbine power units.
TAT's activities in the area of MRO Services for heat transfer components and OEM of heat transfer solutions primarily include the MRO of heat transfer components and to a lesser extent, the manufacturing of certain heat transfer solutions. TAT's Limco subsidiary operates an FAA-certified repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers and the military.
TAT's activities in the area of MRO services for aviation components include the MRO of APUs, landing gears and other aircraft components. TAT's Piedmont subsidiary operates an FAA-certified repair station, which provides aircraft component MRO services for airlines, air cargo carriers, maintenance service centers and the military.
TAT's activities in the area of overhaul and coating of jet engine components includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps.
For more information of TAT Technologies Ltd., please visit our web-site:
Contact:
Mr. Ehud Ben-Yair
Chief Financial Officer
Tel: 972-8-862-8503
ehudb@tat-technologies.com
Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements which include, without limitation, statements regarding possible or assumed future operation results. These statements are hereby identified as "forward-looking statements" for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause our results to differ materially from management's current expectations. Actual results and performance can also be influenced by other risks that we face in running our operations including, but are not limited to, general business conditions in the airline industry, changes in demand for our services and products, the timing and amount or cancellation of orders, the price and continuity of supply of component parts used in our operations, the change of control that will occur on the sale by the receiver of the Company's shares held by our previously controlling stockholders, and other risks detailed from time to time in the Company's filings with the Securities Exchange Commission, including, its annual report on form 20-F and its periodic reports on form 6-K. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.
TAT TECHNOLOGIES
AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
---
(In thousands)
June 30, December 31,
2020 201
9
(*)
---
(unaudited)
(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $26,036 $15,959
Accounts receivable, net 14,486 20,311
Other current assets and prepaid expenses 2,715 2,605
Inventory, net 41,885 43,327
Assets belong to discontinued operation 176 1,839
Total current assets 85,298 84,041
NON-CURRENT ASSETS: 163 -
Restricted deposit
Investment in affiliates 841 956
Funds in respect of employee rights upon retirement 1,259 1,404
Deferred income taxes 271 228
Intangible assets, net 355 777
Property, plant and equipment, net 21,021 20,605
Operating lease right of use assets 7,734 6,664
Total non-current assets 31,644 30,634
Total assets $116,942 $114,675
===
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable 8,999 11,823
Accrued expenses 7,308 7,393
Deferred income (government grant) 1,059 -
Operating lease liabilities 1,646 1,330
Liabilities belong to discontinued operation 327 158
Total current liabilities 19,339 20,704
NON CURRENT LIABILITIES:
Long-term loans 4,834 -
Other long-term liabilities - 62
Liability in respect of employee rights upon
retirement 1,610 1,751
Deferred income taxes 1,086 1,100
Operating lease liabilities 6,401 5,688
Total non-current liabilities 13,931 8,601
Total liabilities $33,270 $29,305
---
EQUITY:
Share capital 2,809 2,809
Additional paid-in capital 65,650 65,573
Treasury stock at cost (2,088) (2,088)
Accumulated other comprehensive income 52 26
Retained earnings 17,249 19,050
Total shareholders' equity 83,672 85,370
Total liabilities and shareholders' equity $116,942 $114,675
===
*Reclassified due to discontinued operation
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
---
(In thousands, except share and per share data)
Three months ended Six months ended
Year ended
---
June 30,
December 31,
2020 2019(*) 2020 2019(*)
2019(*)
---
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenues:
Products $6,078 $6,299 $13,335 $12,199 $25,019
Services 11,280 18,695 28,672 34,711 72,460
---
17,358 24,994 42,007 46,910 97,479
---
Cost of goods:
Products 5,980 5,088 11,773 10,183 21,557
Services 9,871 16,247 24,143 29,913 60,622
---
15,851 21,335 35,916 40,096 82,179
---
Gross Profit 1,507 3,659 6,091 6,814 15,300
---
Operating expenses:
Research and development, net 33 22 70 56 113
Selling and marketing 980 1,323 2,057 2,324 4,929
General and administrative 1,586 1,624 3,713 3,502 7,654
2,599 2,969 5,840 5,882 12,696
---
Operating income (loss) (1,092) 690 251 932 2,604
---
Financial expenses, net (234) (150) (74) (372) (422)
---
Other expenses (21) (21)
---
Income (loss) before taxes on income (tax (1,347) 540 156 560 2,182
benefit)
Taxes on income (tax benefit) (510) 168 156 (5) 631
---
Income (loss) before equity investment (837) 372 565 1,551
Share in results of affiliated companies (17) (55) (115) (74) (132)
Net income (loss) from continued operation $(854) $317 $(115) $491 $1,419
Loss from discontinued operation before (13) (205) (331) (334) (655)
income taxes
Loss on disposal of discontinued operation (1,375) (1,335)
before income taxes
Benefit from income taxes 14 29 42
Net loss from discontinued operation $(1,388) $(191) $(1,686) (305) $(613)
Net income (loss) $(2,242) $126 $(1,801) $186 $806
Basic and diluted income (loss) per share
Net income (loss) per share from continued $(0.1) $0.04 $(0.01) $0.06 $0.18
operation
Net loss per share from discontinued operation $(0.16) $(0.02) $(0.19) $(0.03) $(0.07)
Net income (loss) per share $(0.26) $0.02 $(0.2) $0.03 $0.11
Weighted average number of shares
outstanding
Basic 8,874,696 8,862,473 8,874,696 8,855,251 8,864,885
Diluted 8,874,696 8,862,473 8,874,696 8,855,251 8,864,885
===
*Reclassified due to discontinued operation
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
---
(In thousands)
Three months ended Six months ended Year ended
June 30, December 31,
2020 2019 2020 2019 2019
(Unaudited)
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net income (loss) $(2,242) $126 $(1,801) $186 $806
Other comprehensive income
Net unrealized income from derivatives 129 56 21 286 372
Reclassification adjustments for gains (losses) (30) 5 (14) (140)
included in net income and inventory
Total other comprehensive income (loss) $(2,113) $152 $(1,775) $458 $1,038
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
---
(In thousands, except share data)
TAT Technologies Ltd. Shareholders
Share capital
Accumulated
other
Number of
Additional paid-
comprehensive
Treasury
Retained
shares issued Amount
in capital
income (loss)
shares
earnings
Total equity
BALANCE AT DECEMBER 31, 2017 (audited) 9,122,501 $2,802 $65,073 $135 $(2,088) $22,652 $88,574
CHANGES DURING THE YEAR ENDED
DECEMBER 31, 2018 (audited):
Comprehensive income (341) (4,408) (4,749)
Share based compensation expenses 272 272
Exercise of option 26,668 7 190 197
BALANCE AT DECEMBER 31, 2018 (audited) 9,149,169 $2,809 $65,535 $(206) $(2,088) $18,244 $84,294
CHANGES DURING THE YEAR ENDED
DECEMBER 31, 2019 (audited):
Comprehensive loss 232 806 1038
Share based compensation expenses 38 38
BALANCE AT DECEMBER 31, 2019 (audited) 9,149,169 $2,809 $65,573 $26 $(2,088) $19,050 $85,370
CHANGES DURING THE SIX MONTHS ENDED
JUNE 30, 2020 (unaudited):
Comprehensive income (loss) 26 (1,801) (1,775)
Share based compensation income 77 77
BALANCE AT JUNE 30, 2019 (unaudited) 9,149,169 $2,809 $65,650 $52 $(2,088) $17,249 $83,672
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
---
(In thousands)
Three months ended Six months ended
Year ended
June 30,
December 31,
2020
2019(*) 2020
2019(*)
2019(*)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(2,242) $126 $(1,801) $186 $806
Net income (loss) from continued operations (854) 317 (115) 491 1,419
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,030 1,058 2,028 2,043 4,292
Loss (gain) from change in fair value of derivatives (88) (20) 21 (254) (311)
Provision for doubtful accounts 1 206 38
Share in results of equity investment of affiliated Company 17 55 115 74 132
Share based compensation 37 (117) 77 (45) 38
Non cash finance expense 188 63 (49) 217 354
Liability in respect of employee rights upon retirement (13) (587) (141) (778) (897)
Deferred income taxes, net (369) 452 (57) (178) (450)
Deferred revenues (government grant) 1,059 1,059
Changes in operating assets and liabilities:
---
Decrease (increase) in trade accounts receivable 6,332 (1,622) 6,242 (3,226) (2,037)
Decrease (increase) in other current assets and prepaid (641) 310 69 1,257 2,500
expenses
Decrease (increase) in inventory 1,653 407 1,372 (2,133) (5,740)
Increase (decrease) in trade accounts payable (178) 1,192 (3,220) 2,639 3,349
Increase (decrease) in accrued expenses (1,862) (661) (85) 342 982
Decrease in other long-term liabilities (49) (20) (62) (78) (118)
Net cash provided by operating activities $6,263 $827 $7,460 $371 $3,551
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in affiliated company (10) (10) (10)
Funds in respect of employee rights upon retirement (22)
Proceeds from sale of property and equipment (22) (22)
Increase in long-term deposits (163) (163)
Purchase of property and equipment (861) (746) (1,759) (1,693) (3,269)
Cash flows used in investing activities $(1,046) $(756) $(1,944) $(1,725) $(3,279)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term loans received 4,834 4,834
Cash flows provided by financing activities $4,834
$ - $4,834
$ -
$ -
Cash flows from discontinued operations:
Net loss from discontinued operation $(1,388) $(191) $(1,686) (305) $(613)
Net cash provided by operating activities 998 190 1,413 33 484
Net cash used in investing activities (34) (34) (134)
Net cash used in discontinued operations $(390) $(35) $(273) (306) $(263)
Net increase (decrease) in cash and cash equivalents 9,661 36 10,077 (1,660) 9
Cash and cash equivalents at beginning of period 16,375 14,254 15,959 15,950 15,950
Cash and cash equivalents at end of period $26,036 $14,290 $26,036 $14,290 $15,959
*Reclassified due to discontinued operation
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP)
---
(UNAUDITED)
---
(In thousands)
Three months ended Six months ended
Year ended
---
June 30, June 30,
December 31,
---
2020
2019(*) 2020
2019(*)
2019(*)
---
Net income (loss) $(2,242) $126 $(1,801) $186 $806
Adjustments:
Share in results of equity investment of 17 55 115 74 132
affiliated companies
Taxes on income (tax benefit) (510) 168 156 (5) 631
Financial expenses, net 234 150 74 372 422
Other expenses 21 21
Depreciation and amortization 1,089 1,120 2,124 2,139 4,394
Net loss from discontinued operations 1,388 191 1,686 305 613
Share based compensation 37 (117) 77 (45) 38
---
Adjusted EBITDA $34 $1,693 $2,452 $3,026 $7,036
*Reclassified due to discontinued operation
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SOURCE TAT Technologies Ltd
