TAT Technologies Grows Revenue by 36%, Increases Net Income by 78% and increased adjusted EBITDA by 69%, for the Second Quarter of 2024

Rhea-AI Summary

TAT Technologies (NASDAQ: TATT) reported strong financial results for Q2 2024, with revenue growing 36.2% to $36.5 million and net income increasing 78% to $2.6 million. The company's performance marks its 7th consecutive quarter of expanding revenues and profits. Key highlights include:

- Gross profit up 47.1% to $8.0 million (21.9% of revenues)
- Operating income rose 78.5% to $2.7 million (7.5% of revenues)
- Adjusted EBITDA increased 69.4% to $4.3 million (11.9% of revenues)

TAT secured orders of over $40 million in Q2, resulting in a record backlog and LTA Value exceeding $414 million. The company also began servicing APUs for newly certified 131 and 331-500 engines, tapping into a market with nearly 20,000 aircraft and an annual potential of about $2 billion.

Positive

• Revenue increased by 36.2% to $36.5 million in Q2 2024
• Net income grew by 78% to $2.6 million in Q2 2024
• Gross profit margin improved to 21.9% in Q2 2024 from 20.2% in Q2 2023
• Operating income increased by 78.5% to $2.7 million in Q2 2024
• Adjusted EBITDA rose by 69.4% to $4.3 million in Q2 2024
• Secured orders of over $40 million in Q2 2024
• Record backlog and LTA Value of over $414 million
• Started servicing APUs for newly certified 131 and 331-500 engines, accessing a market of nearly 20,000 aircraft

Negative

• Cash flow from operating activities was negative $(4.1) million in Q2 2024, compared to positive $2.5 million in Q2 2023
• Cash flow from operating activities for H1 2024 was negative $(7.7) million, compared to positive $4.2 million in H1 2023

Insights

Financial Analyst

TAT Technologies' Q2 2024 results demonstrate robust financial performance, with significant growth across key metrics. Revenue increased by 36.2% to $36.5 million, while net income surged by 78% to $2.6 million. The company's adjusted EBITDA grew by 69.4% to $4.3 million, representing 11.9% of revenues.

Notably, this marks TAT's seventh consecutive quarter of revenue and EBITDA growth, indicating a strong, sustained upward trajectory. The company's backlog and LTA value have reached a record $414 million, providing solid revenue visibility for upcoming quarters. However, the negative operating cash flow of $(4.1) million in Q2 2024 contrasts with the positive $2.5 million in Q2 2023, warranting closer examination of working capital management.

The expansion into servicing APUs for newly certified 131 and 331-500 engines opens up a potential $2 billion annual market, which could significantly boost future revenues and profitability as TAT scales up these operations.

Aerospace Industry Expert

TAT's Q2 results reflect the ongoing recovery and growth in the aerospace sector. The company's focus on MRO services for a wide range of aircraft, including the newly certified 131 and 331-500 engines, positions it well to capitalize on the increasing demand for air travel and the subsequent need for aircraft maintenance.

The expansion into servicing APUs for these new engines is particularly noteworthy, as it addresses a fleet of nearly 20,000 aircraft. This move diversifies TAT's service offerings and could lead to significant market share gains in the $2 billion annual market for these specific APU services.

The record backlog of over $414 million suggests strong industry confidence in TAT's capabilities and services. As airlines continue to ramp up operations post-pandemic, companies like TAT that can provide efficient MRO services are likely to see sustained growth. The challenge now lies in scaling operations to meet this increased demand while maintaining quality and efficiency.

Company Delivers 7th Consecutive Quarter of Expanding Revenues and Profits

Management Reviews Financial Results and Provides Business Update on Quarterly Webcast

CHARLOTTE, N.C., Aug. 28, 2024 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT) (TASE: 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 period ended June 30, 2024.

Financial Highlights for the Second Quarter and First Six Months of 2024:

• Revenues increased by 36.2% to $36.5 million compared to $26.8 million for the second quarter of 2024. For the first half of 2024 revenues increased by 36% to 70.6$ million compared to $52 million in the first half of 2023.
• Gross profit increased by 47.1% to $8.0 million compared to $5.4 million for the second quarter of 2023 (21.9% of revenues in Q2\24 compared to 20.2% of revenues in Q2\23). For the first half of 2024 gross profit increase by 55.4% to $15.1 million compared to $9.7 million in the first half of 2023 (20.9% of revenues in H1\24 compared to 18.6% of revenues in H1\23)
• Operating Income increased by 78.5% to $2.7 million compared to $1.5 million in Q2\23, (7.5% of revenues in Q2\24 compared to 6.5% of revenues in Q2\23). For the first half of 2024 operating income increased by 99% to $4.9 million compared to $2.5 million in the first half of 2023 (7% of revenues in H1\24 compared to 4.8% of revenues in H1\23).
• Net Income increased by 78% to $2.6 million compared to $1.5 million in the second quarter of 2023. For the first half of 2024 net income increased by 122% to $4.7 million compared to $2.1 million in the first half of 2023.
• Adjusted EBITDA increased by 69.4% to $4.3 million (11.9% of revenues) compared to $2.6 million (9.6% of revenues) in the second quarter of 2023. Adjusted EBITDA for the first half of 2024 increased by 73% to $8 million compared $4.6 in the first half of 2023 (11.4% of revenues in H1\24 compared to 9% in H1\23).
• Cash flow from operating activities was negative $(4.1) million compared to positive cash flow of $2.5 million in the second half of 2023. Cash flow from operating activities for the first half of 2024 was negative $(7.7) million compared to positive cash flow of $4.2 million in the first half of 2023.

Mr. Igal Zamir, TAT's CEO and President commented: "We are very proud to report another record quarter marked by revenue growth, margin expansion, and profitability improvement. Our results demonstrate increasing demand for our products and services, which are aligned with our growth strategy. This was the seventh consecutive quarter of growth in revenue and EBITDA, and given our growing momentum and backlog, we expect this trend to continue."

"During the second quarter, we secured orders of more than $40 million, resulting in a record backlog and LTA Value of over $414 million," continued Mr. Zamir. "These new orders give us significant visibility into revenue potential over the coming quarters and bolster our confidence in continued success. On top of the continued revenue growth, we invest efforts in improving our operational efficiency and cost structure. This resulted in an improved Gross margin and EBITDA margin."

"During the first six months of 2024 we started serving APU of the newly certified 131 and 331-500 which serves a fleet of close to 20,000 aircraft (with a total addressable annual market of about $2 billion)," added Mr. Zamir. "The revenue obtained during the first half of 2024 is mainly driven from TAT's historical products and services. The revenue from these new engines' capabilities is insignificant. We are very excited about our future revenue growth and profits, as we start leveraging the potential of this new market. We will continue to expand our customer base for those engines MRO services according to our growth strategy"

Shareholder Webcast

Igal Zamir and Ehud Ben-Yeir, TAT's CEO and CFO, have posted a webcast reviewing the financial results and to provide a business update.  Investors interested in accessing the webcast can visit the investor relations section of the Company's website at https://tat-technologies.com/investors/. The webcast will remain accessible on the website for at least 90 days.

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, financial (expenses) income, net, and 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 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. Eran Yunger
Director of IR
erany@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, [LTAs] and backlog, the price and continuity of supply of component parts used in our operations, 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. Shareholders 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)
	Jun 30,		December 31,
	2024		2023
	(unaudited)		(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$        8,058		$      15,979
Accounts receivable, net of allowance for credit losses of $305    and $345 thousand as of Jun 30, 2024 and December 31, 2023 respectively	26,197		20,009
Restricted deposit	-		661
Other current assets and prepaid expenses	6,722		6,397
Inventory	56,763		51,280
Total current assets	97,740		94,326
NON-CURRENT ASSETS:
Restricted deposit	294		302
Investment in affiliates	2,763		2,168
Funds in respect of employee rights upon retirement	644		664
Deferred income taxes	1,097		994
Property, plant and equipment, net	40,934		42,554
Operating lease right of use assets	2,656		2,746
Intangible assets, net	1,687		1,823
Total non-current assets	50,075		51,251
Total assets	$                  147,815		$                  145,577
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans	$                    1,937		$                      2,200
Short term loans	12,547		12,138
Accounts payable	9,079		9,988
Accrued expenses	12,907		13,952
Operating lease liabilities	1,155		1,033
Total current liabilities	37,625		39,311
NON CURRENT LIABILITIES:
Long-term loans	11,970		12,886
Liability in respect of employee rights upon retirement	998		1,000
Operating lease liabilities	1,486		1,697
Total non-current liabilities	14,454		15,583
Total liabilities	$                     52,079		$                  54,894
EQUITY:
Share capital	3,152		3,140
Translation reserves	164		-
Additional paid-in capital	76,512		76,335
Treasury shares at cost	(2,088)		(2,088)
Accumulated other comprehensive income			27
Retained earnings	17,996		13,269
Total shareholders' equity	95,736		90,683
Total liabilities and shareholders' equity	147,815		$             145,577

 

 

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,
	2024		2023		2024		2023		2023
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Audited)
Revenues:
Products	$    11,732		$   8,167		$     23,667		$   15,458		$     35,241
Services	24,793		18,637		46,946		36,564		78,553
	36,525		26,804		70,613		52,022		113,794
Cost of goods:
Products	7,673		5,548		16,659		11,822		30,517
Services	20,868		15,830		38,904		30,515		60,809
	28,541		21,378		55,563		42,337		91,326
Gross Profit	7,984		5,426		15,050		9,685		22,468
Operating expenses:
Research and development, net	343		157		620		256		715
Selling and marketing	1,993		1,298		3,653		2,457		5,523
General and administrative	2,916		2,474		6,225		4,933		10,588
Other income	(2)		(35)		(390)		(441)		(433)
	5,250		3,894		10,108		7,205		16,393
Operating income (Loss)	2,734		1,532		4,942		2,480		6,075
Interest expenses	(413)		(440)		(763)		(806)		(1,683)
Other financial income (expenses), Net	106		167		7		148		353
Income before taxes on income (tax benefit)	2,427		1,259		4,186		1,822		4,745
Taxes on income (tax benefit)	44		(63)		(109)		(90)		576
Income before share of equity investment	2,383		1,322		4,295		1,912		4,169
Profit of equity investment of affiliated       companies	234		153		432		221		503
Net Income	$    2,617		$   1,475		$   4,727		$   2,133		$     4,672

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Basic and diluted income per share
Net income per share	$    0.26		$      0.16		$    0.46		$    0.24		$    0.52
Net income per diluted shares	$   0.25		$    0.15		$   0.44		$   0.23		$      0.51
Weighted average number of shares      outstanding
Basic	10,394,654		8,942,423		10,386,859		8,942,423		8,961,689
Diluted	10,561,420		9,052,163		10,722,153		9,052,163		9,084,022

 

	Three months ended				Six months ended							Year ended
	June 30,											December 31,
	2024		2023		2024				2023			2023
	(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)			(Audited)
Net income	$    2,617		$     1,475			$    4,727				$     2,133				$    4,672
Other comprehensive income , net
Change in foreign currency translation adjustments	164		-			164				-				-
Net unrealized income from derivatives	-		26			(27)				26				53
Total comprehensive income	2,781		$    1,501			$ 4,864				$    2,159				$    4,725

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share data)
		Share capital								Accumulated
		Number of shares issued			Amount		Additional paid-in capital		Translation reserves	other comprehensive income (loss)		Treasury shares		Retained earnings		Total equity
BALANCE AT DECEMBER 31, 2022		9,186,019			$            2,842		$       66,245		-	$            (26)		$            (2,088)		$            8,597			$            75,570
CHANGES DURING THE YEAR ENDED      DECEMBER 31, 2023:
Comprehensive loss		-			-		-			53		-		4,672			4,725
Exercise of option		32,466			8		157			-		-		-			165
Issuance of common shares net of issuance costs of $141      thousands		1,158,600			290		9,774			-		-		-			10,064
Share based compensation		-			-		159			-		-		-			159
BALANCE AT DECEMBER 31, 2023		10,377,085			$            3,140		$     76,335		-	$              27		$            (2,088)		$            13,269			$            90,683
CHANGES DURING THE PERIOD ENDED JUN      31, 2024 (unaudited):
Comprehensive profit									164	(27)		-		4,727			4,864
Exercise of option		49,109			12		(12)					-					-
Change in foreign currency translation adjustments												-
Share based compensation							189										189
BALANCE AT JUN 30, 2024 (unaudited)		10,426,194			3,152		76,512		164	-		(2,088)		17,996			95,736

 

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,
		2024		2023		2024	2023		2023
		(Unaudited)		(Unaudited)		(Unaudited)	(Unaudited)		(Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$  2,617		$  1,475		$ 4,727	$  2,133		$     4,672
Adjustments to reconcile net income (loss) to net cash      provided by (used by) operating activities:
Depreciation and amortization		1,431		901		2,805	1,942		4,710
Loss (gain) from change in fair value of derivatives		-		-		22	-		(9)
Change in funds in respect of employee rights upon retirement		15		(27)		20	(97)		116
Change in operating right of use asset and operating leasing      liability		(3)		-		1	(6)		22
Non-cash financial expenses		(274)		(134)		(488)	(248)		(172)
Decrease in restructuring plan provision		(43)		(32)		(63)	(90)		(126)
Change in allowance for credit losses		40		(2)		40	(5)		(182)
Share in results of affiliated companies		(233)		(153)		(431)	(221)		(503)
Share based compensation		148		30		189	120		159
Liability in respect of employee rights upon retirement		(5)		(47)		(2)	(127)		(148)
Capital gain from sale of property, plant and equipment		(1)		(29)		(355)	(485)		(530)
Deferred income taxes, net		306		(98)		(103)	(76)		235
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts receivable		(5,430)		3,137		(6,250)	1,123		(4,205)
Decrease (increase) in other current assets and prepaid     expenses		(144)		359		(325)	1,634		(341)
Increase in inventory		(2,906)		(3,248)		(5,543)	(285)		(5,400)
Decrease in trade accounts payable		(209)		(1,034)		(909)	(2,155)		(245)
Increase (decrease) in accrued expenses and other		591		1,352		(982)	1,062		4,202
Net cash provided by (used in) operating activities from    continued operation		$ (4,100)		$     2,450		(7,647)	$       4,219		$     2,255
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment		-		375		1,306	1,935		2,002
Purchase of property and equipment		(978)		(1,021)		(1,967)	(2,454)		(5,102)
Purchase of intangible assets		-		-		-	-		(479)
Cash flows used in investing activities		$(978)		$ (646)		$  (661)	$(519)		$(3,579)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term loans		(510)		(425)		(950)	(847)		(1,701)
Short-term credit received from banks		4,668				668			1,000
Proceeds from long-term loans received				-			-		712
Issuance of common shares		12		-		12	-		-
Proceeds from issuance of common shares, net		-		-		-	-		10,064
Exercise of options		(13)		165		(12)	165		165
Cash flows provided by (used in) financing activities		$  4,157		$ (260)		$  (282)	$(682)		$10,240
Net increase (decrease) in cash and cash equivalents and restricted cash		(921)		1,546		(8,590)	3,018		8,916
Cash and cash equivalents and restricted cash at      beginning of period		9,273		9,498		16,942	8,026		8,026
Cash and cash equivalents and restricted cash at the end      of period		8,352		11,044		8,352	11,044		16,942
SUPPLEMENTARY INFORMATION ON INVESTING      ACTIVITIES NOT INVOLVING CASH FLOW:
Additions of operating lease right-of-use assets and      operating lease liabilities		245		-		590	-		1,345
Reclassification of inventory to property, plant and      equipment		-		-		60	-		68
Supplemental disclosure of cash flow information:
Interest paid		(410)		(267)		(852)	(512)		(1,438)

 

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,
	2024		2023		2024		2023		2023
Net income (Loss)	$ 2,617		$  1,475		$4,727		$ 2,133		$4,672
Adjustments:
Share in results and sale of equity      investment of affiliated companies	(234)		(153)		(432)		(221)		(503)
Taxes on income (tax benefit)	44		(63)		(109)		(90)		576
Financial expenses (income), net	306		272		755		658		1,330
Depreciation and amortization	1,468		1,006		2,898		2,140		4,902
Share based compensation	148		30		189		120		159
Adjusted EBITDA	$ 4,349		$ 2,567		$    8,028		$       4,740		$              11,136

 

SIGNATURE

            Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

TAT TECHNOLOGIES LTD.

            (Registrant)

 

By: /s/ Ehud Ben-Yair
Ehud Ben-Yair
Chief Financial Officer

 

Date: August 28, 2024

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SOURCE TAT Technologies Ltd.

FAQ

What was TAT Technologies' (TATT) revenue growth in Q2 2024?

TAT Technologies reported a 36.2% increase in revenue, reaching $36.5 million in Q2 2024 compared to $26.8 million in Q2 2023.

How much did TAT Technologies' (TATT) net income grow in Q2 2024?

TAT Technologies' net income increased by 78% to $2.6 million in Q2 2024 compared to $1.5 million in Q2 2023.

What was TAT Technologies' (TATT) Adjusted EBITDA for Q2 2024?

TAT Technologies' Adjusted EBITDA increased by 69.4% to $4.3 million (11.9% of revenues) in Q2 2024 compared to $2.6 million (9.6% of revenues) in Q2 2023.

What is the value of TAT Technologies' (TATT) backlog and LTA as of Q2 2024?

TAT Technologies reported a record backlog and LTA Value of over $414 million as of Q2 2024.

What new market did TAT Technologies (TATT) enter in the first half of 2024?

In the first half of 2024, TAT Technologies began servicing APUs for newly certified 131 and 331-500 engines, accessing a market of nearly 20,000 aircraft with an annual potential of about $2 billion.