TAT Technologies Reports Second Quarter 2021 Results

GEDERA, Israel, Aug. 5, 2021 /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 and six month periods ended June 30, 2021.

Key Financial Highlights:

• Revenues for Q2 2021 were $21.6 million, an increase of 24% compared with $17.4 million in Q2 2020. Revenues for the six-month period that ended on June 30, 2021 were $39.9 million compared with $42 million in the six-month period that ended on June 30, 2020.
• Gross profit for Q2 2021 was $3.2 million (14.6% as a percentage of revenues) an increase of 214% compared with $1.5 million (8.7% as a percentage of revenues) in Q2 2020.  Gross profit for the six-month period that ended on June 30, 2021 was $6.6 million (16.4% as a percentage of revenues) an increase of 8% compared with $6.1 million (14.5% as a percentage of revenues) in the six-month period that ended on June 30, 2020.
• Adjusted EBITDA for Q2 2021 was 0.4 million compared with $0.0 million in Q2 2020. Adjusted EBITDA for the six-month period that ended on June 30, 2021 was $2.0 million compared with $2.5 million in the six-month period that ended on June 30, 2020.
• Net loss was ($2.5) million, or loss of ($0.3) per diluted share in Q2 2021 compared with a net loss of ($2.2) million, or loss of ($0.3) per diluted share in Q2 2020. For the period of H1 2021, net loss was ($1.9) million, or loss of ($0.2) per diluted share compared with a net loss of ($1.8) million, or $0.2 per diluted share in H1 2020. Net loss for Q2 2021 and for the six-month period that ended on June 30, 2021 include restructuring expenses of $1.9 million and $2.4 million, respectively.

Mr. Igal Zamir, TAT's CEO and President commented on the results: "As the commercial aviation industry continues to emerge from the deep crisis and the major slow-down during 2020, we see sequential recovery in the volumes of our MRO activities and related revenues. This trend started  in Q1 2021 resulting in improvement in our gross margin and operational cash flow.

"During Q2 2021, we signed a third strategic agreement (following the two agreements that were announced in January 2021 and September 2020) with Honeywell for the repair and lease of the APU 131 engines, the most common of Honeywell's APU series. This deal opens a much larger market that we were not exposed to in the past. We believe that due to the execution of the new strategic agreement with Honeywell (together with the two agreements with Honeywell previously announced), the Company's addressable market size in the MRO segment is expected to grow in a substantial manner, and therefore opens the door to the Company for potentially significant revenue growth in the MRO segment. In first half of 2021 we already started enjoying the fruits of our strategic lease deal with Honeywell for the rental of APU 331-500 which was announced in January 2021. We continue with the plan to streamline our operations and expect our cost structure to improve by 2022.

"We strongly believe that the three strategic agreements with Honeywell coupled with the operations rationalization scheme will position TAT as a strong player in its lines of business with the expected recovery of the commercial aviation industry." 

The Company is proceeding with its recently announced plan to improve its cost structure and operational efficiency, and in that respect has begun executing on its plan to consolidate the Company's operations from four to three production sites by consolidating its production sites in Israel and transferring additional production operations to the Company's production site in Tulsa, Oklahoma. Among other things, such actions will enable the Company to concentrate its heat exchanges cores activity in the United States allowing for better operational flow, getting closer to the Company's customer base and cutting fixed costs. In connection with such plan, the Company incurred restructuring expenses of $2.4 million and capital expenditures of $1.5 million in H1 2021.

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: www.tat-technologies.com

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.

SOURCE TAT Technologies Ltd.