TAT Technologies Reports Continued Improvement in Q3 2017

 

The Company is reporting revenue growth of 13% in the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 and 12% growth in Q3/17 compared to Q3/16.

Company achieved adjusted EBITDA of $7.8 million for the nine-month period ended September 30, 2017 compared with $4.8 million in the nine-month period ended September 30, 2016, an increase of 64%

GEDERA, Israel, Nov. 15, 2017 /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 nine-month periods ended September 30, 2017.

Key Financial Highlights:

  • Revenues for the nine-month period that ended on September 30, 2017 were $80.2 million compared with $70.8 million in the nine-month period that ended on September 30, 2016, a 13% growth. Revenues for Q3/17 were $26.6 million compared with $23.6 million in Q3/16, a 12% growth.
  • Adjusted EBITDA for the nine-month period that ended on September 30, 2017 increased to $7.8 million compared with $4.8 million in the nine-month period that ended on September 30, 2016, an increase of 64%. Adjusted EBITDA for Q3/17 was $2.5 million compared with $2.5 million in Q3/16.
  • The Company achieved GAAP net income of $2.7 million, or $0.30 per diluted share in the nine-month period that ended on September 30, 2017 compared with a net loss of $1.6 million, or a loss of $0.18 per diluted share in the nine-month period that ended on September 30, 2016.  GAAP net income for Q3/17 was $0.8 million, or $0.10 per diluted share compared with GAAP net income of $0.9 million, or $0.10 per diluted share in Q3/16.
  • Non-GAAP net income reached $3.0 million, or $0.33 per diluted share in the nine-month period that ended on September 30, 2017, compared with non-GAAP net income of $0.9 million, or $0.10 per diluted share in the nine-month period that ended on September 30, 2016, and non-GAAP net income of $0.9 million, or $0.10 per diluted share in Q3/17 and in Q3/16.

  Mr. Igal Zamir, CEO and President of TAT Technologies stated, "We continue to see consistent improvement in the company's financial performance. Revenues continue to grow organically due to the company's sales and marketing efforts, its strong position in its markets and the continued strength in the Aerospace industry. The company is expected to start deliveries related to the recently awarded APU MRO contract during Q4/17. Operational improvements that have been implemented resulted in solid and stable profitability. The company continues to pursue growth initiatives, both organic and strategic and further improve its profitability."

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 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)



September 30,


December 31,

2017


2016


(unaudited)


(audited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$                   18,315


$                   21,433

Short-term bank deposits

464


964

Accounts receivable, net

26,004


21,572

Other current assets and prepaid expenses

3,336


1,687

Inventory, net

37,623


39,269





Total current assets

85,742


84,925





NON-CURRENT ASSETS:




 Investment in affiliates

1,247


1,019

Funds in respect of employee rights upon retirement

2,889


2,660

 Deferred income taxes

916


896

Intangible assets, net

1,079


1,179

Property, plant and equipment, net

21,108


21,298





Total non-current assets

27,239


27,052





Total assets

$                 112,981


$                 111,977





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Accounts payable

9,882


8,406

Accrued expenses

8,752


9,836





Total current liabilities

18,634


18,242





NON CURRENT LIABILITIES:




   Other long-term liabilities

163


151

Liability in respect of employee rights upon retirement

3,354


2,994

Deferred income taxes

2,015


1,938





 Total non-current liabilities

5,532


5,083





Total liabilities

24,166


23,325





EQUITY:




Share capital

2,802


2,797

Additional paid-in capital

65,050


64,760

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive loss

142


(73)

Retained earnings

22,909


23,256

Total shareholders' equity

88,815


88,652





Total liabilities and shareholders' equity

$                 112,981


$                 111,977





 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)



Three months ended


Nine months ended


Year ended


September 30,


December 31,


2017


2016


2017


2016


2016


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)











Revenues:










Products

$          8,985


$     6,940


$   27,904


$   22,950


$      30,431

Services

17,596


16,705


52,326


47,859


65,363


26,581


23,645


80,230


70,809


95,794











Cost  of goods:










Products

7,557


5,147


22,000


18,179


23,788

Services

13,930


13,605


42,536


39,407


52,969


21,487


18,752


64,536


57,586


76,757

Gross Profit

5,094


4,893


15,694


13,223


19,037











Operating expenses:










Research and development, net

215


213


620


951


1,140

Selling and marketing

1,205


911


3,643


2,868


3,876

General and administrative

2,182


2,300


6,688


7,392


10,023

Other loss (income)

(1)


(18)


27


(21)


(138)


3,601


3,406


10,978


11,190


14,901

Operating income

1,493


1,487


4,716


2,033


4,136











Financial income (expenses), net

21


(60)


(251)


(92)


(154)











Income before taxes on income

1,514


1,427


4,465


1,941


3,982











Taxes on income

623


537


1,656


3,445


3,865











Income (loss) before equity investment

891


890


2,809


(1,504)


117











Share in results of affiliated companies

(50)


(37)


(156)


(51)


(55)











Net income (loss)

$       841


$       853


$    2,653


$    (1,555)


$      62











Basic and diluted income (loss) per share




















Net income (loss) per  share (basic and diluted)

$    0.10


$    0.10


$    0.30


$      (0.18)


$    0.01











Weighted average number of shares outstanding










Basic

8,848,028


8,828,444


8,848,028


8,828,444


8,828,444

Diluted

8,924,358


8,837,714


8,920,054


8,829,894


8,830,764











 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)



Three months ended


Nine months ended


Year ended 


September 30,


December 31,


2017


2016


2017


2016


2016


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)





















Net income (loss)

$       841


$       853


$    2,653


$    (1,555)


$                   62

Other comprehensive income










Net unrealized gains (losses) from derivatives

(221)


181


(545)


373


174

Reclassification adjustments for gains     included in net income and inventory

(113)


(93)


760


(214)


(243)

       Total other comprehensive income (loss)

$       507


$       941


$    2,868


$    (1,396)


$                  (7)











 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP RESULTS (UNAUDITED)

(In thousands, except share and per share data)



Three months ended


Nine months ended


September 30,


2017

2016

2017


2016













Reported net income (loss) on GAAP basis

 

$            841

 

$            853

$            2,653


$              (1,555)

Adjustments:






Tax adjustments re non-GAAP adjustments (1)

-

-

-


2,360

Share in results of equity investment of affiliated company

 

50

 

37

156


51

Share based compensation

36

37

151


64

       Non-GAAP net income

$           927

$           927

$           2,960


$                   920







       Non-GAAP net income per share (basic and diluted)

 

$            0.10

 

$            0.10

$            0.33


$               0.10







Weighted average number of shares outstanding






 Basic

8,848,028

8,828,444

8,848,028


8,828,444

 Diluted

8,924,358

8,837,714

8,920,054


8,829,894















 

(1)   During the second quarter of 2016 the Company distributed dividend from its foreign subsidiaries earnings. As a result, the company accrued deferred tax liability due to actual distribution of earnings from foreign subsidiaries of the Company and due to the possibility of future distribution of earnings from such foreign subsidiaries.


 

 

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, 2014 (audited)


9,082,817


$            2,793


$      64,491


$                      -


$        (2,088)


$         20,345


$        85,541


CHANGES DURING THE YEAR ENDED
DECEMBER 31, 2015 (audited):
















Comprehensive income (loss)


-


-


-


(4)


-


5,849


5,845


Share based compensation expenses


-


-


38


-


-


-


38


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 NINE MONTHS ENDED
SEPTEMBER 30, 2017 (unaudited):
















Comprehensive income


-


-


-


215


-


2,653


2,868


 Exercise of options


19,584


5


139


-


-


-


144


 Dividend distributed


-


-


-


-


-


(3,000)


(3,000)


 Share based compensation expenses


-


-


151


-


-


-


151


BALANCE AT SEPTEMBER 30, 2017 (unaudited):


9,122,501


$            2,802


$        65,050


$                    142


$        (2,088)


$         22,909


$        88,815



















 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)




Three months ended


Nine months ended


Year ended



September 30,


December 31,



2017


2016


2017

2016


2016



(Unaudited)


(Unaudited)


(Unaudited)

(Unaudited)


(Audited)











CASH FLOWS FROM OPERATING ACTIVITIES:










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


$       841


$       853


$       2,653

$    (1,555)


$      62











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




















Depreciation and amortization


987


929


2,936

2,660


3,636

Loss (gain) on sale of  property, plant and equipment


-


(19)


28

(18)


12

Interest from short-term bank deposits and restricted deposits


-


-


-

(11)


(24)

 Gain from change in fair value of derivatives


(40)


(122)


(100)

(170)


(152)

Provision for doubtful accounts


-


10


38

53


(29)

Share in results of equity investment of affiliated Company 


50


37


156

51


55

Share based compensation


36


37


151

64


105

Liability in respect of employee rights upon retirement


190


47


360

60


123

Deferred income taxes, net


341


(287)


57

1,813


1,670

Changes in operating assets and liabilities:










    Increase in trade accounts receivable


(3,185)


(44)


(4,470)

(3,541)


(2,392)

   Decrease (increase) in other current assets and prepaid expenses


(521)


(913)


(1,138)

31


1,487

Decrease (increase) in inventory


(1,353)


(862)


1,319

(1,367)


(2,707)

    Increase in trade accounts payable


2,805


1,503


1,433

1,379


1,192

    Increase (decrease) in  accrued expenses


(701)


1,013


(1,084)

1,358


2,521

    Increase (decrease) in other long-term liabilities


(13)


(1)


12

(123)


(38)

Net cash provided by (used in) operating activities


$   (563)


$   2,181


$   2,351

$   684


$      5,521











CASH FLOWS FROM INVESTING ACTIVITIES:










Investment in affiliated company


(133)


(376)


(384)

(389)


(905)

Funds in respect of employee rights upon retirement


(26)


98


(97)

75


2

Proceeds from sale of property and equipment


-


17


-

18


17

Purchase of property and equipment


(1,203)


(1,078)


(2,632)

(4,661)


(5,702)

Maturities of short-term deposits


-


5,182


500

7,182


7,182

Cash flows provided by (used in) investing activities


$   (1,362)


$   3,843


$   (2,613)

$   2,225


$         594











CASH FLOWS FROM FINANCING ACTIVITIES:










Realization of contingency


-


(500)


-

(500)


(500)

Payment of cash dividend


-


(3,000)


(3,000)

(3,000)


(3,000)

 Exercise of options


144




144

130


130

Cash flows  provided by (used in) financing activities


$   144


$   (3,500)


$   (2,856)

$   (3,370)


$   (3,370)











Net increase (decrease) in cash and cash equivalents


(1,781)


2,524


(3,118)

(461)


2,745











Cash and cash equivalents at beginning of period


20,096


15,703


21,433

18,688


18,688











Cash and cash equivalents at end of period


$    18,315


$    18,227


$    18,315

$    18,227


$    21,433











 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

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

(In thousands)



Three months ended

Nine months ended


September 30,

September 30,


2017


2016

2017

2016













Net income (loss)

$         841


$         853

$         2,653

$      (1,555)

Adjustments:






Share in results of equity investment of affiliated companies

50


37

156

51

Taxes on income

623


537

1,656

3,445

Financial expenses (income), net

(21)


60

251

92

Depreciation and amortization

987


929

2,936

2,660

Share based compensation

36


37

151

64

Adjusted EBITDA

$         2,516


$         2,453

$         7,803

$         4,757







 

Guy Nathanzon, CFO
TAT Technologies Ltd.  
Tel: 972-8-862-8500
guyn@tat-technologies.com

View original content:http://www.prnewswire.com/news-releases/tat-technologies-reports-continued-improvement-in-q3-2017-300557146.html

SOURCE TAT Technologies Ltd



RELATED LINKS
http://www.tat-technologies.com

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