TAT Technologies Reports Full Year 2022 Results
TAT Technologies Ltd. (TATT) reported its audited results for the year ending December 31, 2022, showcasing a revenue increase of 8.4% to $84.6 million compared to $78 million in 2021. Gross profit surged by 41% to $15.9 million, representing 18.8% of revenues. Adjusted EBITDA rose 21% to $4 million. The company's GAAP net loss from continued operations improved by 60%, down to $1.6 million. However, net debt rose significantly to $19.4 million from $0.5 million in 2021 due to capital investments and restructuring expenses. TAT secured strategic contracts, increasing long-term agreements' value by $130 million, resulting in a backlog of $400 million entering 2023.
- Revenue increased by 8.4% to $84.6 million.
- Gross profit rose 41% to $15.9 million, improving margins.
- Adjusted EBITDA increased by 21% to $4 million.
- GAAP net loss improved by 60% to $1.6 million.
- Long-term agreements increased in expected value by $130 million.
- Net debt rose to $19.4 million from $0.5 million.
- Supply chain issues impacted operations due to COVID and the war in Ukraine.
Key Financial Highlights:
- Total revenues for the twelve months ended
December 31, 2022 , were$84.6 million $78 million December 31, 2021 , an increase of8.4% . - Gross profit for the twelve months ended
December 31, 2022 , were$15.9 million 18.8% of revenues) compared to$11.3 million 14.5% of revenues) for the twelve months endedDecember 31, 2021 , an increase of41% . - Adjusted EBITDA for the twelve months ended
December 31, 2022 , was$4 million $3.3 million December 31, 2021 , an increase of21% . - GAAP net loss from continued operations for the twelve months ended
December 31, 2022 , was$1.6 million $0.1 million $4 $2.2 million December 31, 2021 . A decrease of60% in net loss. - Net debt for
December 31, 2022 , was$19.4 million $0.5 million December 31, 2021 . During the years 2021 and 2022, the Company made significant capital investments related to large strategic agreements and the restructuring plan. - During 2021 and 2022 the company recorded a reduction of expenses due to ERC grants in the amount of
$3.6Millions $1.2Millions - During the years 2021 and 2022 the company recorded restructuring expenses in the amount of
$1.7M
- Proforma results comparison, representing 2021 and 2022 without grants and restructuring cost:
Thousands USD | YTD 22 | YTD 21 | YTD 20 |
Revenues | 84,556 | 77,973 | 75,359 |
COGS | 69,582 | 69,550 | 68,274 |
Gross Profit | 14,974 | 8,423 | 7,085 |
17.7 % | 10.8 % | 9.4 % | |
R&D & SG&M | 16,236 | 14,524 | 12,831 |
EBITDA | 2,832 | (461) | (2,816) |
Mr.
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, depreciation and amortization, inventory impairment from exit and dismissal activity and customers relationship write off. 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 page 11.
About
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 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
TAT's activities in MRO services for aviation components include the MRO of APUs, landing gears and other aircraft components. TAT's Piedmont subsidiary operates an
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.
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | |||||
CONDENSED CONSOLIDATED BALANCE SHEET | |||||
(In thousands) | |||||
2022 | 2021 | ||||
ASSETS | |||||
CURRENT ASSETS: | |||||
Cash and cash equivalents | $ 7,722 | $ 12,872 | |||
Accounts receivable, net of allowance for credit losses of | 15,622 | 13,887 | |||
Other current assets and prepaid expenses | 6,047 | 4,219 | |||
Inventory, net | 45,759 | 41,003 | |||
Total current assets | 75,150 | 71,981 | |||
NON-CURRENT ASSETS: | |||||
Restricted deposit | 304 | 343 | |||
Investment in affiliates | 1,665 | 695 | |||
Funds in respect of employee rights upon retirement | 780 | 1,157 | |||
Deferred income taxes | 1,229 | 1,252 | |||
Property, plant and equipment, net | 43,423 | 30,462 | |||
Operating lease right of use assets | 2,477 | 3,114 | |||
Intangible assets, net | 1,623 | 1,829 | |||
Total non-current assets |
51,501 |
38,852 | |||
Total assets | $ 126,651 | $ 110,833 | |||
The accompanying notes are an integral part of the consolidated financial statements.
2022 | 2021 | |||||
LIABILITIES AND EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Current maturities of long-term loans | $ 1,876 | $ 691 | ||||
Credit line from bank | 6,101 | 6,008 | ||||
Accounts payable | 10,233 | 9,093 | ||||
Accrued expenses and other | 9,686 | 6,959 | ||||
Operating lease liabilities | 904 | 1,169 | ||||
Provision for restructuring plan | 190 | 657 | ||||
Total current liabilities | 28,990 | 24,577 | ||||
NON-CURRENT LIABILITIES: | ||||||
Long-term loans | 19,408 | 5,979 | ||||
Liability in respect of employee rights upon retirement | 1,148 | 1,504 | ||||
Operating lease liabilities | 1,535 | 1,989 | ||||
Total non-current liabilities | 22,091 | 9,472 | ||||
COMMITMENTS AND CONTINGENCIES (NOTE 15) | ||||||
Total liabilities | 51,081 | 34,049 | ||||
EQUITY: | ||||||
Ordinary shares of Authorized: 13,000,000 shares at | 2,842 | 2,809 | ||||
Additional paid-in capital | 66,245 | 65,871 | ||||
(2,088) | (2,088) | |||||
Accumulated other comprehensive income (loss) | (26) | 33 | ||||
Retained earnings | 8,597 | 10,159 | ||||
Total shareholders' equity | 75,570 | 76,784 | ||||
Total liabilities and shareholders' equity | $ 126,651 | $ 110,833 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
Year ended | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Revenue: | ||||||||||||
Products | $ 25,460 | $ 25,870 | $ 22,739 | |||||||||
Services | 59,096 | 52,103 | 52,620 | |||||||||
84,556 | 77,973 | 75,359 | ||||||||||
Cost of revenue, net: | ||||||||||||
Products | 21,631 | 23,761 | 20,751 | |||||||||
Services | 46,997 | 42,942 | 46,173 | |||||||||
68,628 | 66,703 | 66,924 | ||||||||||
Gross profit | 15,928 | 11,270 | 8,435 | |||||||||
Operating expenses: | ||||||||||||
Research and development, net | 479 | 517 | 185 | |||||||||
Selling and marketing, net | 5,629 | 5,147 | 4,369 | |||||||||
General and administrative, net | 9,970 | 8,354 | 7,612 | |||||||||
Other (income) expenses | (90) | (468) | 315 | |||||||||
Restructuring expenses, net | 1,715 | 1,755 | - | |||||||||
17,703 | 15,305 | 12,481 | ||||||||||
Operating (loss) | (1,775) | (4,035) | (4,046) | |||||||||
Interest expenses | (902) | (250) | (96) | |||||||||
Other financial income (expenses), net | 1,029 | (290) | (674) | |||||||||
Income (loss) before taxes on income (tax benefit) | (1,648) | (4,575) | (4,816) | |||||||||
Taxes on income (tax benefit) | 98 | (662) | (1,517) | |||||||||
Loss before share of equity investment | (1,746) | (3,913) | (3,299) | |||||||||
Share in profit (losses) of equity investment of affiliated | 184 | (76) | (185) | |||||||||
Net loss from continued operation | $ (1,562) | $ (3,989) | $ (3,484) | |||||||||
The accompanying notes are an integral part of the consolidated financial statements.
Year ended | |||||||
2022 | 2021 | 2020 | |||||
Net income (loss) from discontinued operation | - | $ 427 | $ (1,845) | ||||
Net loss | $ (1,562) | $ (3,562) | $ (5,329) | ||||
Net loss per share basic and diluted from continued | $ (0.175) | $ (0.45) | $ (0.39) | ||||
Net income (loss) per share basic and diluted from | - | $ 0.05 | $ (0.21) | ||||
Net loss per share basic and diluted | $ (0.175) | $ (0.4) | $ (0.6) | ||||
Weighted average number of shares outstanding: | |||||||
Basic and diluted | 8,911,546 | 8,874,696 | 8,874,696 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
Year ended | |||||||||
2022 | 2021 | 2020 | |||||||
Net loss) | $ (1,562) | $ (3,562) | $ (5,329) | ||||||
Other comprehensive income (loss), net | |||||||||
Net unrealized gains (losses) from derivatives | (89) | (76) | 232 | ||||||
Reclassification adjustments for (gains) from | 30 | (19) | (130) | ||||||
Total other comprehensive income (loss) | $ (59) | $ (95) | $ 102 | ||||||
Total comprehensive loss | $ (1,621) | $ (3,657) | $ (5,227) | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
Ordinary shares | |||||||||||||||||||||||
Number of | Amount | Additional paid-in | Accumulated | Retained earnings | Total equity | ||||||||||||||||||
BALANCE AT | 9,149,169 | $ 2,809 | $ 65,573 | $ 26 | $ (2,088) | $ 19,050 | $ 85,370 | ||||||||||||||||
CHANGES DURING THE YEAR ENDED | |||||||||||||||||||||||
Comprehensive loss | - | - | - | 102 | - | (5,329) | (5,227) | ||||||||||||||||
Share based compensation | - | - | 138 | - | - | - | 138 | ||||||||||||||||
BALANCE AT | 9,149,169 | $ 2,809 | $ 65,711 | $ 128 | $ (2,088) | 13,721 | $ 80,281 | ||||||||||||||||
CHANGES DURING THE YEAR ENDED | |||||||||||||||||||||||
Comprehensive loss | - | - | - | (95) | - | (3,562) | (3,657) | ||||||||||||||||
Share based compensation | - | - | 160 | - | - | - | 160 | ||||||||||||||||
BALANCE AT | 9,149,169 | $ 2,809 | $ 65,871 | $ 33 | $ (2,088) | 10,159 | $ 76,784 | ||||||||||||||||
CHANGES DURING THE YEAR ENDED | |||||||||||||||||||||||
Comprehensive loss | - | - | - | (59) | - | (1,562) | (1,621) | ||||||||||||||||
Exercise of Options | 36,850 | 33 | 156 | - | - | - | 189 | ||||||||||||||||
Share based compensation | - | - | 218 | - | - | - | 218 | ||||||||||||||||
BALANCE AT | 9,186,019 | $ 2,842 | $ 66,245 | $ (26) | $ (2,088) | $ 8,597 | $ 75,570 | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
Year ended | ||||||
2022 | 2021 | 2020 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net income (loss) from continued operations | $ (1,562) | $ (3,989) | $ (3,484) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) | ||||||
Depreciation and amortization | 3,706 | 4,881 | 4,065 | |||
Loss (gain) from change in fair value of derivatives | 8 | (19) | (34) | |||
Change in operating right of use asset and operating leasing liability | (82) | (73) | 566 | |||
Lease modification | - | (1,315) | - | |||
Increase (decrease) in restructuring plan provision | (467) | 657 | - | |||
Change in provision for doubtful accounts | 138 | 248 | (8) | |||
Share in results of affiliated companies | (184) | 76 | 185 | |||
Share based compensation | 218 | 160 | 138 | |||
Liability in respect of employee rights upon retirement | (356) | 94 | (341) | |||
Impairment of intangible assets | - | - | 298 | |||
Impairment of fixed assets | - | 1,820 | - | |||
Capital gain from sale of property, plant and equipment | (90) | (468) | - | |||
Deferred income taxes, net | 23 | (686) | (1,438) | |||
Government loan forgiveness | - | (1,442) | - | |||
Changes in operating assets and liabilities: | ||||||
Decrease (increase) in trade accounts receivable | (2,659) | (2,934) | 9,472 | |||
Decrease (increase) in other current assets and prepaid expenses | (1,459) | (959) | 310 | |||
Decrease (increase) in inventory | (5,069) | (681) | 1,868 | |||
Increase (decrease) in trade accounts payable | 1,143 | 2,571 | (5,336) | |||
Increase (decrease) in accrued expenses | 2,727 | (218) | (252) | |||
Increase (decrease) in other long-term liabilities | (902) | 8 | (62) | |||
Net cash provided by (used in) operating activities from continued operation | $ (4,867) | $ (2,269) | $ 5,947 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Proceeds from sale of property and equipment | 93 | 1,163 | - | |||
Purchase of property and equipment | (16,213) | (16,247) | (3,894) | |||
Purchase of intangible assets | - | (555) | (1,513) | |||
Net cash used in continued investing activities | $ (16,120) | $ (15,639) | $ (5,407) | |||
The accompanying notes are an integral part of the consolidated financial statements.
Year ended | |||||||||||
2022 | 2021 | 2020 | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Repayments of long-term loans | (1,071) | - | - | ||||||||
Short-term credit received from banks | - | 3,000 | 3,960 | ||||||||
Proceeds from long-term loans received | 16,680 | 3,042 | 3,692 | ||||||||
Exercise of options | 189 | - | - | ||||||||
Net cash provided by continued financing activities | $ 15,798 | $ 6,042 | $ 7,652 | ||||||||
CASH FLOWS FROM DISCONTINUED ACTIVITIES: | |||||||||||
Net cash provided by operating activities | - | 777 | 153 | ||||||||
Net cash provided by (used in) discontinued activities | - | $ 777 | $ 153 | ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND | (5,189) | (11,089) | 8,345 | ||||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT | 13,215 | 24,304 | 15,959 | ||||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF | 8,026 | 13,215 | 24,304 | ||||||||
SUPPLEMENTARY INFORMATION ON INVESTING ACTIVITIES | |||||||||||
Purchase of property, plant and equipment on credit | $ 196 | $ 199 | $ 6,575 | ||||||||
Additions of operating lease right-of-use assets and operating lease liabilities | $ 318 | $ 399 | $ 1,756 | ||||||||
Classification inventory to property, plant and equipment | 284 | $ 829 | - | ||||||||
Classification inventory to property, plant and equipment | $ 787 | - | - | ||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Interest paid | (796) | $ (251) | $ (3) | ||||||||
Income taxes received (paid), net | - | $ - | $ (3) | ||||||||
The accompanying notes are an integral part of the consolidated financial statements
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | |||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP) (UNAUDITED) | |||
(In thousands) | |||
2022 | 2021 | ||
(audited) | (audited) | ||
Net income (loss) | $ (1,562) | $ (3,562) | |
Adjustments: | |||
Share in results of equity investment of affiliated companies | (184) | 76 | |
Taxes on income (tax benefit) | 98 | (662) | |
Financial expenses, net | (127) | 540 | |
Depreciation and amortization | 3,878 | 5,420 | |
Net loss (income) from discontinued operation | - | (427) | |
Share base compensation | 218 | 160 | |
Restructuring expenses | 1,715 | 1,755 | |
Adjusted EBITDA | 4,036 | 3,300 | |
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
For more information of
www.tat-technologies.com
Contact:
Mr.
Chief Financial Officer
Tel: 972-8-862-8503
ehudb@tat-technologies.com
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