TAT Technologies Reports First Quarter 2018 Results

TAT Technologies Reports First Quarter 2018 Results

PR Newswire

GEDERA, Israel, May 31, 2018 /PRNewswire/ -- TAT Technologies Ltd. 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 period ended March 31, 2018.

Financial highlights for the first quarter of 2018 (unaudited):

  • Revenues for the three-month period that ended on March 31, 2018 were $24.4 million compared with $27.1 million in the three-month period that ended on March 31, 2017.
  • Adjusted EBITDA for the three-month period that ended on March 31, 2018 decreased to $0.4 million compared with $2.9 million in the three-month period that ended on March 31, 2017.
  • GAAP net loss of $0.7 million, or $0.08 per diluted share in the three-month period that ended on March 31, 2018 compared with a net income of $1.2 million, or $0.14 per diluted share in the three-month period that ended on March 31, 2017.
  • Non-GAAP net loss of $0.7 million, or $0.08 per diluted share in the three-month period that ended on March 31, 2018, compared with non-GAAP net income of $1.3 million, or $0.14 per diluted share in the three-month period that ended on March 31, 2017.

Mr. Igal Zamir, TAT's CEO and President commented on the results: "The first quarter results were affected by several measures that the company took in preparation for potential new business opportunities which are aligned with the company's long term strategy. In order to support the long term strategy, the company has been investing in building strong leadership, production capabilities and sales and marketing infrastructure. In addition, several purchase orders that the company expected to receive in the first quarter were delayed and we now expect them to materialize throughout the remainder of 2018. We expect revenues in 2018 to be similar to those of 2017."

Mr. Zamir added: "We continue to foster TAT as a global leader in OEM and MRO heat transfer solutions and power and actuation solutions for the aerospace industry. In recent years, TAT has been investing in operation, sales and marketing and management to support and execute its long-term strategy."

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, the Company also presents a Non-GAAP presentation of Net Income and 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.  Non-GAAP Net Income excludes changes, income or losses, as applicable, related to one or more of the following: (1) share-based compensation expenses and/or (2) certain tax impact and/or (3) share in results of equity investment of affiliated companies. 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, financial (expenses) income, net, and depreciation and amortization.  Non-GAAP Net Income and Adjusted EBITDA, however, should not be considered as alternatives to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor they are meant to be predictive of potential future results.  Non-GAAP Net Income and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of GAAP Net Income to Non-GAAP Net Income and Adjusted EBITDA in pages 9 and 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: www.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)





March 31,



December 31,

2018



2017



(unaudited)



(audited)

ASSETS







CURRENT ASSETS:







Cash and cash equivalents

$                   16,381



$                   17,514

Short-term bank deposits

470



470

Accounts receivable, net

26,055



25,744

Other current assets and prepaid expenses

2,203



2,363

Inventory, net

40,767



38,630









Total current assets

85,876



84,721









NON-CURRENT ASSETS:







 Investment in affiliates

1,202



1,192

Funds in respect of employee rights upon retirement

2,566



2,779

 Deferred income taxes

769



937

Intangible assets, net

1,012



1,045

Property, plant and equipment, net

21,419



21,321









Total non-current assets

26,968



27,274









Total assets

$                 112,844



$                 111,995









LIABILITIES AND EQUITY















CURRENT LIABILITIES:







Accounts payable

11,063



9,348

Accrued expenses

8,497



8,331









Total current liabilities

19,560



17,679









NON CURRENT LIABILITIES:







   Other long-term liabilities

124



146

Liability in respect of employee rights upon retirement

3,052



3,235

Deferred income taxes

2,369



2,361









 Total non-current liabilities

5,545



5,742









Total liabilities

25,105



23,421









EQUITY:







Share capital

2,802



2,802

Additional paid-in capital

65,128



65,073

Treasury stock at cost

(2,088)



(2,088)

Accumulated other comprehensive income (loss)

(11)



135

Retained earnings

21,908



22,652

Total shareholders' equity

87,739



88,574









Total liabilities and shareholders' equity

$                 112,844



$                 111,995









 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)





Three months ended



Year ended



March 31,



December 31,



2018



2017



2017



(Unaudited)



(Unaudited)



(Audited)













Revenues:











Products

$          6,836



$     9,550



$    36,053

Services

17,521



17,531



70,474



24,357



27,081



106,527













Cost of goods:











Products

6,530



6,911



28,096

Services

14,655



14,613



57,987



21,185



21,524



86,083

Gross Profit

3,172



5,557



20,444













Operating expenses:











   Research and development, net

319



229



731

   Selling and marketing

1,370



1,142



4,974

   General and administrative

2,170



2,267



9,409

Other loss

-



28



53



3,859



3,666



15,167

Operating income (loss)

(687)



1,891



5,277













  Financial expenses, net

(2)



(172)



(338)













Income (loss) before taxes on 

    income

(689)



1,719



4,939













Taxes on income

65



498



2,333













Income (loss) before equity 

     investment

(754)



1,221



2,606













Share in results of affiliated 

     companies

10



(20)



(210)













Net income (loss)

$           (744)



$          1,201



$      2,396













Basic and diluted income (loss) per 

     share























Net income (loss) per share

$          (0.08)



$            0.14



$    0.27













Weighted average number of shares 

    outstanding











Basic

8,848,028



8,828,444



8,848,028

Diluted

8,899,131



8,865,808



8,909,072













 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)





Three months ended



Year ended



March 31,



December 31,



2018



2017



2017



(Unaudited)



(Unaudited)



(Audited)













Net income (loss)

$          (744)



$          1,201



$      2,396

Other comprehensive income











Net unrealized losses from derivatives

(60)



(97)



(686)

        Reclassification adjustments for gains included in net     

          income and inventory

(86)



537



894

Total other comprehensive income (loss)

$          (890)



$              1,641



$      2,604













 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES







RECONCILIATION OF GAAP TO NON-GAAP RESULTS (UNAUDITED)



(In thousands, except share and per share data)









Three months ended



Year ended





March 31,



December 31,





2018



2017



2017































Reported net income (loss) on GAAP basis

$           (744)



$          1,201



$          2,396



Adjustments:













Share in results of equity investment of

affiliated company

(10)



20



210



  Share based compensation

55



57



174



Non-GAAP net income (loss)

$          (699)



$          1,278



$      2,780

















Non-GAAP net income (loss) per share

$           (0.08)



$             0.14



$        0.31

















Weighted average number of shares 

     outstanding













 Basic

8,848,028



8,828,444



8,848,028



 Diluted

8,899,131



8,865,808



8,909,072

















 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES







CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



(In thousands, except share data)











TAT Technologies Ltd. Shareholders











Share capital







Accumulated



















Number of

shares issued



Amount



Additional paid-in capital



other comprehensive income (loss)



Treasury shares



Retained earnings



Total equity



BALANCE AT DECEMBER 31, 2015 (audited)



9,082,817



$            2,793



$       64,529



$             (4)



$             (2,088)



$            26,194



$            91,424



CHANGES DURING THE YEAR ENDED DECEMBER 31, 2016 (audited):































Comprehensive income (loss)



-



-



-



(69)



-



62



(7)



Share based compensation expenses



-



-



105



-



-



-



105



 Exercise of option



20,100



4



126



-



-



-



130



 Dividend distributed



-



-



-



-



-



(3,000)



(3,000)



BALANCE AT DECEMBER 31, 2016 (audited)



9,102,917



$             2,797



$       64,760



$             (73)



$             (2,088)



$            23,256



$            88,652



CHANGES DURING THE YEAR ENDED DECEMBER 31, 2017 (audited):































Comprehensive income



-



-



-



208



-



2,396



2,604



 Share based compensation expenses



-



-



174



-



-



-



174



 Exercise of options



19,584



5



139



-



-



-



144



 Dividend distributed



-



-



-



-



-



(3,000)



(3,000)



BALANCE AT DECEMBER 31, 2017 (audited)



9,122,501



$            2,802



$       65,073



$            135



$            (2,088)



$            22,652



$            88,574



CHANGES DURING THE THREE MONTHS ENDED MARCH 31, 2018 (unaudited):































Comprehensive loss



-



-



-



(146)



-



(744)



(890)



 Share based compensation expenses



-



-



55



-



-



-



55



BALANCE AT MARCH 31, 2018 (unaudited)



9,122,501



$            2,802



$       65,128



$             (11)



$            (2,088)



$            21,908



$            87,739





































 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)







Three months ended



Year ended





March 31,



December 31,





2018



2017



2017





(Unaudited)



(Unaudited)



(audited)















CASH FLOWS FROM OPERATING 

     ACTIVITIES:













Net income (loss)



$          (744)



$          1,201



$      2,396















Adjustments to reconcile net income to net cash 

     provided by operating activities:



























Depreciation and amortization



1,008



969



3,941

Loss on sale of property, plant and equipment







28



54

Interest from short-term bank deposits and 

     restricted deposits











(6)

Loss (gain) from change in fair value of derivatives



212



(16)



(490)

Provision for doubtful accounts







18



321

Share in results of affiliated Company 



(10)



20



210

Share based compensation



55



57



174

Liability in respect of employee rights upon 

     retirement



(183)



102



241

Deferred income taxes, net



176



58



382

Changes in operating assets and liabilities:













     Decrease (increase) in trade accounts 

   receivable



(312)



535



(4,493)

   Decrease (increase) in other current assets and 

   prepaid expenses



100



(942)



488

Decrease (increase) in inventory



(2,264)



1,265



210

     Increase (decrease) in trade accounts payable



2,085



(1,438)



578

     Increase (decrease) in accrued expenses



166



1,230



(1,505)

     Increase (decrease) in other long-term liabilities



(22)



36



(5)

Net cash provided by operating activities



$      267



$      3,123



$      2,496





























CASH FLOWS FROM INVESTING

ACTIVITIES:













Investment in affiliated company



-



(87)



(383)

Funds in respect of employee rights upon 

     retirement



43



(36)



(156)

Proceeds from sale of property and equipment



7



-



-

Purchase of property and equipment



(1,450)



(620)



(3,520)

 Maturities of short-term deposits



-



-



500

Cash flows used in investing activities



$   (1,400)



$        (743)



$   (3,559)















CASH FLOWS FROM FINANCING ACTIVITIES:













Payment of cash dividend



-



-



(3,000)

 Exercise of options



-



-



144

Cash flows used in financing activities  



$               -



$               -



$   (2,856)















Net increase (decrease) in cash and cash 

     equivalents



(1,133)



2,380



(3,919)















Cash and cash equivalents at beginning of 

     period



17,514



21,433



21,433















Cash and cash equivalents at end of period



$     16,381



$     23,813



$    17,514















 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES







RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP)  (UNAUDITED)



(In thousands)









Three months ended



Year ended





March 31,



December 31,





2018



2017



2017































Net income (loss)

$           (744)



$           1,201



$         2,396



Adjustments:













Share in results and sale of equity 

    investment of affiliated companies

(10)



20



210



Taxes on income

65



498



2,333



Financial expenses, net

2



172



338



Depreciation and amortization

1,008



969



3,941



  Share based compensation

55



57



174



Adjusted EBITDA

$             376



$           2,917



$       9,392

















Note to the financial statements

As of January 1, 2018, the company has adopted the new standard for recognizing Revenue from Contracts with Customers.

In May 2014, FASB issued Accounting Standards Update "Revenue from Contracts with Customers." ASU 2014-09 supersedes most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue upon the transfer of goods or services to customers in an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances.

The guidance is effective for the interim and annual periods beginning on or after December 15, 2017 (early adoption is permitted in annual periods beginning after December 15, 2016). The guidance permits the use of either a retrospective or cumulative effect transition method. The Company applied the new standard on its effective date (January 1, 2018) to uncompleted contracts as of that date.

The company has adopted the following exemptions and accounting policies:

  1. The Company has chosen to account for shipping as a fulfillment costs, in cases in which the shipping occurs after the customer has obtained control of a good.
  2. The Company has chosen not to adjust the promised amount of consideration for the effects of a significant financing component, in cases in which the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to the customer and when the customer pays for that good or service will be one year or less.
  3. The Company has chosen to present all sales taxes collected from customers on a net basis.

The new standard has no material impact on the Company's consolidated financial statements.

Contact:

Ms. Inna Shpringer

MARCOM Manager

Tel: 972-8-862-8594

innas@tat-technologies.com

 

Cision View original content:http://www.prnewswire.com/news-releases/tat-technologies-reports-first-quarter-2018-results-300657741.html

SOURCE TAT Technologies Ltd

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