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TAT Technologies Reports Second Quarter 2018 Results

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TAT Technologies Reports Second Quarter 2018 Results

PR Newswire

GEDERA, Israel, Aug. 30, 2018 /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, 2018.

Key Financial Highlights:

  • Revenues for Q2 2018 were $24.8 million compared with $26.6 million in Q2 2017.  Revenues for the six-month period that ended on June 30, 2018 were $49.2 million compared with $53.6 million in the six-month period that ended on June 30, 2017.
  • Adjusted EBITDA for Q2 2018 was $(0.3) million compared with $2.4 million in Q2 2017. Adjusted EBITDA for the six-month period that ended on June 30, 2018 was $0.05 million compared with $5.3 million in the six-month period that ended on June 30, 2017.
  • GAAP net loss was $1.4 million, or $0.16 per diluted share in Q2 2018 compared with a net income of $0.6 million, or $0.07 per diluted share in Q2 2017.
  • Non-GAAP net loss of $1.2 million, or $0.14 per diluted share in Q2 2018, compared with non-GAAP net income of $0.8 million, or $0.09 per diluted share in Q2 2017.

Mr. Igal Zamir, CEO and President of TAT Technologies stated, "The first six months of 2018 were challenging. We suffered from delay in order intake. Also, as a preparation for 2018 we invested in employees and machinery which caused an increased level of expenses. Starting Q2 we initiated a plan to increase sales and streamline operations which I expect will improve the results in the second half of 2018. Our increased back-log keeps me optimistic about the future of the company. During the first six months of 2018 we won several long-term strategic contracts with expected revenue over the next few years of approximately USD60M. These contracts position us in the front line of MRO companies both to aircraft manufactures and leading airlines around the world. "

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) acquisition related expenses and/or (4) share in results of equity investment of affiliated companies. Adjusted EBITDA is calculated as net income before the Company's share in results and sale of equity investment 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 website:

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)


June 30,

2018


December 31,

2017


(unaudited)


(audited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$                   15,186


$                   17,514

Short-term bank deposits

470


470

Accounts receivable, net

22,596


25,744

Other current assets and prepaid expenses

2,797


2,363

Inventory, net

38,560


38,630

Total current assets

79,609


84,721





NON-CURRENT ASSETS:




 Investment in affiliates

1,132


1,192

Funds in respect of employee rights upon retirement

2,499


2,779

 Deferred income taxes

623


937

Intangible assets, net

978


1,045

Property, plant and equipment, net

21,636


21,321

Total non-current assets

26,868


27,274

Total assets

$                 106,477


$                 111,995





LIABILITIES AND EQUITY




CURRENT LIABILITIES:




Accounts payable

8,423


9,348

Accrued expenses

6,439


8,331

Total current liabilities

14,862


17,679





NON CURRENT LIABILITIES:




   Other long-term liabilities

225


146

Liability in respect of employee rights upon retirement

2,932


3,235

Deferred income taxes

1,992


2,361

 Total non-current liabilities

5,149


5,742

Total liabilities

20,011


23,421





EQUITY:




Share capital

2,809


2,802

Additional paid-in capital

65,382


65,073

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive income (loss)

(171)


135

Retained earnings

20,534


22,652

Total shareholders' equity

86,466


88,574





Total liabilities and shareholders' equity

$                 106,477


$                 111,995





 

 

 


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,


2018


2017


2018


2017


2017


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)











Revenues:










Products

$        6,160


$       9,369


$      12,996


$       18,919


$          36,053

Services

18,672


17,199


36,193


34,730


70,474


24,832


26,568


49,189


53,649


106,527











Cost of goods:










Products

6,451


7,532


12,981


14,443


28,096

Services

15,784


13,993


30,439


28,606


57,987


22,235


21,525


43,420


43,049


86,083

Gross Profit

2,597


5,043


5,769


10,600


20,444











Operating expenses:










Research and development, net

176


176


495


405


731

Selling and marketing

1,265


1,296


2,635


2,438


4,974

General and administrative

2,576


2,239


4,746


4,506


9,409

Other loss

-


-


-


28


53


4,017


3,711


7,876


7,377


15,167

Operating income (loss)

(1,420)


1,332


(2,107)


3,223


5,277











Financial income (expenses), net

21


(100)


19


(272)


(338)











Income (loss) before taxes on income

(1,399)


1,232


(2,088)


2,951


4,939











Taxes on income

(95)


535


(30)


1,033


2,333











Income (loss) before equity investment

(1,304)


697


(2,058)


1,918


2,606











Share in results of affiliated company

(70)


(86)


(60)


(106)


(210)











Net income (loss)

$      (1,374)


$         611


$      (2,118)


$       1,812


$          2,396











Basic and diluted income (loss) per share




















Net income (loss) per share

$        (0.16)


$        0.07


$        (0.24)


$         0.21


$            0.27











Weighted average number of shares
outstanding










Basic

8,862,473


8,828,444


8,855,251


8,828,444


8,848,028

Diluted

8,876,232


8,832,080


8,887,641


8,892,756


8,909,072











 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)


Three months ended


Six months ended


Year ended 


June 30,


December 31,


2018


2017


2018


2017


2017


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)





















Net income (loss)

$       (1,374)


$         611


$     (2,118)


$      1,812


$           2,396

Other comprehensive income










Net unrealized losses from derivatives

(288)


(227)


(348)


(324)


(686)

Reclassification adjustments for gains
included in net income and inventory

128


336


42


873


894

       Total other comprehensive income (loss)

$       (1,534)


$         720


$     (2,424)


$      2,361


$           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


June 30,


2018


2017









Reported net income (loss) on GAAP basis

$     (1,374)


$          611

Adjustments:




Share in results of affiliated company 

70


86

Share based compensation

64


58

       Non-GAAP net income (loss)

$     (1,240)


$          755

       Non-GAAP net income per share (loss)

$       (0.14)


$         0.09





Weighted average number of shares outstanding




 Basic

8,862,473


8,828,444

 Diluted

8,876,232


8,832,080





 

 

 


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 options


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 SIX MONTHS ENDED JUNE 30, 2018 (unaudited):
















Comprehensive loss


-


-


-


(306)


-


(2,118)


(2,424)


Share based compensation expenses


-


-


119


-


-


-


119


 Exercise of options


26,668


7


190


-


-


-


197


BALANCE AT JUNE 30, 2018 (unaudited)


9,149,169


$            2,809


$       65,382


$            (171)


$           (2,088)


$            20,534


$            86,466



















 

 

 

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,



2018


2017


2018

2017


2017



(Unaudited)


(Unaudited)


(Unaudited)

(Unaudited)


(Audited)











CASH FLOWS FROM OPERATING ACTIVITIES:










Net income (loss) attributable to TAT Technologies Ltd. shareholders


$   (1,374)


$  611


$   (2,118)

$   1,812


$      2,396











Adjustments to reconcile net income to net cash provided by operating activities:




















Depreciation and amortization


1,029


980


2,037

1,949


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


174


(43)


386

(60)


(490)

Provision for doubtful accounts


127


19


127

38


321

Share in results of affiliated company 


70


86


60

106


210

Share based compensation


64


58


119

115


174

Liability in respect of employee rights upon retirement


(120)


68


(303)

170


241

Deferred income taxes, net


(231)


(342)


(55)

(284)


382

Changes in operating assets and liabilities:










   Decrease (increase) in trade accounts receivable


3,334


(1,820)


3,022

(1,285)


(4,493)

   Decrease (increase) in other current assets and prepaid expenses


(848)


324


(748)

(618)


488

Decrease in inventory


2,352


1,407


88

2,672


210

    Increase (decrease) in trade accounts payable


(3,117)


67


(1,032)

(1,371)


578

    Decrease in accrued expenses


(2,058)


(1,613)


(1,892)

(383)


(1,505)

    Increase (decrease) in other long-term liabilities


101


(11)


79

25


(5)

Net cash provided by (used in) operating activities


$  (497)


$  (209)


$  (230)

$  2,914


$      2,496











CASH FLOWS FROM INVESTING ACTIVITIES:










Investment in affiliated company


-


(164)


-

(251)


(383)

Funds in respect of employee rights upon retirement


(65)


(35)


(22)

(71)


(156)

Proceeds from sale of property and equipment


-


-


7

-


-

Purchase of property and equipment


(735)


(809)


(2,185)

(1,429)


(3,520)

Maturities of short-term deposits


-


500


-

500


500

Cash flows used in investing activities


$  (800)


$  (508)


$  (2,200)

$  (1,251)


$   (3,559)












TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(In thousands)



Three months ended


Six months ended


Year ended



June 30,


December 31,



2018


2017


2018

2017


2017



(Unaudited)


(Unaudited)


(Unaudited)

(Unaudited)


(Audited)

CASH FLOWS FROM FINANCING ACTIVITIES:










Payment of cash dividend


-


(3,000)


-

(3,000)


(3,000)

 Exercise of options


102


-


102

-


144

Cash flows  provided by (used in) financing activities


$        102


$    (3,000)


$        102

$      (3,000)


$        (2,856)











Net decrease in cash and cash equivalents


(1,195)


(3,717)


(2,328)

(1,337)


(3,919)











Cash and cash equivalents at beginning of period


16,381


23,813


17,514

21,433


21,433











Cash and cash equivalents at end of period


$   15,186


$    20,096


$   15,186

$      20,096


$       17,514











 





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,



2018


2017


2018


2017


2017























Net income (loss)


$     (1,374)


$            611


$   (2,118)


$        1,812


$          2,396

Adjustments:











Share in results of affiliated company


70


86


 

 

60


 

 

106


 

 

210

Taxes on income


(95)


535


(30)


1,033


2,333

Financial expenses (income), net


(21)


100


(19)


272


338

Depreciation and amortization


1,029


980


2,037


1,949


3,941

Share based compensation


64


58


119


115


174

Adjusted EBITDA


$         (327)


$         2,370


$         49


$         5,287


$          9,392












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-second-quarter-2018-results-300705173.html

SOURCE TAT Technologies Ltd

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