TAT Technologies Reports Third Quarter 2021 Results
TAT Technologies Ltd. (NASDAQ: TATT) reported its Q3 and nine-month financial results for 2021. Revenues in Q3 totaled $17.6 million, up from $16.8 million in Q3 2020, while nine-month revenues decreased to $57.6 million from $58.8 million in the previous year. Gross profit for Q3 more than doubled to $3 million, representing 16.8% of revenues. Adjusted EBITDA improved significantly to $1.03 million, compared to a loss of $0.3 million in Q3 2020. The net loss for Q3 narrowed to $0.97 million. TAT continues to implement a strategic rationalization plan to consolidate production facilities, aimed at improving operational efficiency.
- Q3 2021 revenues increased to $17.6 million, up 4.8% year-over-year.
- Gross profit for Q3 2021 more than doubled to $3 million, a 116% increase from Q3 2020.
- Adjusted EBITDA improved significantly to $1.03 million from a negative $0.3 million in Q3 2020.
- The net loss decreased to $0.97 million in Q3 2021 from $1.6 million in Q3 2020.
- The strategic rationalization plan is on track, focusing on consolidating to three main production sites.
- Nine-month revenues declined to $57.6 million from $58.8 million year-over-year.
- Net loss for the nine-month period was $2.86 million, including $2.54 million in restructuring costs.
GEDERA, Israel, Nov. 4, 2021 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT - News) ("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, 2021.
Key Financial Highlights:
- Revenues for Q3 2021 were
$17.6 million compared to$16.8 million in Q3 2020. Revenues for the nine-month period that ended on September 30, 2021 were$57.6 million compared with$58.8 million in the nine-month period that ended on September 30, 2020. - Gross profit for Q3 2021 more than doubled to
$3 million (16.8% as a percentage of revenues) compared with$1.4 million (8.3% as a percentage of revenues) in Q3 2020. Gross profit for the nine-month period that ended on September 30, 2021, was$9.5 million (16.5% as a percentage of revenues) compared with$7.5 million (12.7% as a percentage of revenues) in the nine-month period that ended on September 30, 2020. - Adjusted EBITDA for Q3 2021 significantly improved to
$1.03 million compared with negative$0.3 million in Q3 2020. Adjusted EBITDA for the nine-month period that ended on September30, 2021 improved by40% to$3 million compared with$2.2 million in the nine-month period that ended on September 30, 2019. - Net loss continues to decrease and was (
$0.97) million , or loss of ($0.11) per diluted share in Q3 2021 compared with a net loss of ($1.6) million , or ($0.16) per diluted share in Q3 2020. Net loss was ($2.86) million (out of which$2.54 million in restructuring costs) , or loss of ($0.32) per diluted share in the nine-month period that ended on September 30, 2021, compared with a net loss of ($3.38) million , or ($0.37) per diluted share in the nine-month period that ended on September 30, 2020. - The implementation of the strategic footprint rationalization scheme is on-track. The main objective of the new footprint calls for concentration in three main production facilities (instead of four) and the creation of a "center of excellence" in the heat transfer activities. In connection with such plan, the Company incurred restructuring expenses of
$2.5 million and capital expenditures of$3.1 million in the nine months of 2021.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "During the last quarter we continued the strategic rationalization scheme to reduce the main production sites from four to three. We expect to benefit from the internal synergies of combining the heat transfer activity in one center of excellence and improve our cost structure. The process is progressing on track and is expected to be completed by Q2\22. We continued strengthening our position as Honeywell's premier partner to serve Honeywell's main line of APUs that are used in the majority of the active platform (including the Boeing 737 family and the Airbus 320 family). In this regard we continue to build our capabilities to serve new platform and increase revenues from this segment starting from 2022". Mr. Zamir continues: "We continue to enjoy US grants in support of the pandemic impact of
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.
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | |||
September 30, | December 31, | ||
2021 | 2020 | ||
(unaudited) | (audited) | ||
ASSETS | |||
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 13,689 | $ 24,128 | |
Accounts receivable, net | 13,155 | 11,355 | |
Inventory, net | 40,527 | 41,223 | |
Other current assets and prepaid expenses | 5,428 | 2,737 | |
Total current assets | 72,799 | 79,443 | |
NON-CURRENT ASSETS: | 330 | 176 | |
Investment in affiliates | 697 | 771 | |
Funds in respect of employee rights upon retirement | 1,019 | 1,186 | |
Deferred income taxes | 742 | 566 | |
Intangible assets, net | 1,881 | 1,475 | |
Property, plant and equipment, net | 29,482 | 25,737 | |
Operating lease right of use assets | 4,888 | 6,767 | |
Total non-current assets | 39,039 | 36,678 | |
Total assets | $ 111,838 | $ 116,121 | |
LIABILITIES AND EQUITY | |||
CURRENT LIABILITIES: | |||
Current maturities of long-term loans | 1,269 | 1,477 | |
Credit line from bank | 6,010 | 3,000 | |
Accounts payable | 6,216 | 12,222 | |
Accrued expenses | 7,568 | 6,691 | |
Operating lease liabilities | 1,615 | 1,614 | |
Provision for restructuring plan | 470 | - | |
Liabilities belong to discontinued operation | - | 179 | |
Total current liabilities | 23,148 | 25,183 | |
NON CURRENT LIABILITIES: | |||
Long-term loans | 5,221 | 3,489 | |
Liability in respect of employee rights upon retirement | 1,361 | 1,410 | |
Operating lease liabilities | 4,691 | 5,758 | |
Total non-current liabilities | 11,273 | 10,657 | |
Total liabilities | $ 34,421 | $ 35,840 | |
EQUITY:
| |||
Share capital | 2,809 | 2,809 | |
Additional paid-in capital | 65,813 | 65,711 | |
Treasury stock at cost | (2,088) | (2,088) | |
Accumulated other comprehensive income | 21 | 128 | |
Retained earnings | 10,859 | 13,721 | |
Total shareholders' equity | 77,417 | 80,281 | |
Total liabilities and shareholders' equity | $ 111,838 | $ 116,121 | |
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | |||||||||
Three months ended | Nine months ended | Year ended | |||||||
September 30, | December 31, | ||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||
Revenues: | |||||||||
Products | $ 5,268 | $ 4,822 | $ 18,221 | $ 18,157 | $ 22,739 | ||||
Services | 12,351 | 11,995 | 39,343 | 40,667 | 52,620 | ||||
17,619 | 16,817 | 57,564 | 58,824 | 75,359 | |||||
Cost of goods: | |||||||||
Products | 5,226 | 4,383 | 16,362 | 16,156 | 20,751 | ||||
Services | 9,443 | 11,036 | 31,700 | 35,179 | 46,173 | ||||
14,668 | 15,419 | 48,062 | 51,335 | 66,924 | |||||
Gross Profit | 2,951 | 1,398 | 9,502 | 7,489 | 8,435 | ||||
Operating expenses: | |||||||||
Research and development, net | 97 | 62 | 368 | 131 | 185 | ||||
Selling and marketing | 1,330 | 920 | 3,993 | 2,986 | 4,369 | ||||
General and administrative | 2,043 | 1,813 | 5,974 | 5,542 | 7,612 | ||||
Restructuring and other expenses | 122 | - | 2,538 | 21 | 315 | ||||
3,592 | 2,795 | 12,873 | 8,680 | 12,481 | |||||
Operating loss | (641) | (1,397) | (3,371) | (1,191) | (4,046) | ||||
Financial expenses, net | (257) | (177) | (117) | (248) | (770) | ||||
Income (loss) before taxes on income (tax benefit) | (898) | (1,574) | (3,488) | (1,439) | (4,816) | ||||
Taxes on income (tax benefit) | 73 | (180) | (198) | (48) | (1,517) | ||||
Income (loss) before equity investment | (971) | (1,394) | (3,290) | (1,391) | (3,299) | ||||
Share in results of affiliated companies | (36) | (62) | (75) | (179) | (185) | ||||
Net income (loss) from continued operation | $ (1,007) | $ (1,456) | $ (3,365) | $ (1,570) | $ (3,484) | ||||
Net profit (loss) from discontinued operation | $ 40 | $ (120) | $ 503 | $ (1,806) | $ (1,845) | ||||
Net income (loss) | $ (967) | $ (1,576) | $ (2,862) | $ (3,376) | $ (5,329) | ||||
Basic and diluted income (loss) per share | |||||||||
Net income (loss) per share from continued operation | $ (0.11) | $ (0.16) | $ (0.38) | $ (0.17) | $ (0.39) | ||||
Net loss per share from discontinued operation | $ 0 | $ 0 | $ 0.06 | $ (0.2) | $ (0.21) | ||||
Net income (loss) per share | $ (0.11) | $ (0.16) | $ (0.32) | $ (0.37) | $ (0.6) | ||||
Weighted average number of shares outstanding | |||||||||
Basic | 8,874,696 | 8,874,696 | 8,874,696 | 8,874,696 | 8,874,696 | ||||
Diluted | 8,874,696 | 8,874,696 | 8,874,696 | 8,874,696 | 8,874,696 | ||||
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | |||||||||||||||
Three months ended | Nine months ended | Year ended | |||||||||||||
September 30, | December 31, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||
Net income (loss) | $ (967) | $ (1,576) | $ (2,862) | $ (3,376) | $ (5,329) | ||||||||||
Other comprehensive income | |||||||||||||||
Net unrealized income (loss) from derivatives | 21 | (33) | (107) | (7) | 232 | ||||||||||
Reclassification adjustments for gains (losses) | - | - | - | 5 | (130) | ||||||||||
Total other comprehensive income (loss) | $ (946) | $ (1,609) | $ (2,969) | $ (3,378) | $ (5,227) | ||||||||||
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | ||||||||||||||||||
TAT Technologies Ltd. Shareholders | ||||||||||||||||||
Share capital | Accumulated | |||||||||||||||||
Number of | Amount | Additional paid-in capital | other comprehensive income (loss) | Treasury shares | Retained earnings | Total equity | ||||||||||||
BALANCE AT DECEMBER 31, 2018 | 9,122,501 | $ 2,802 | $ 65,535 | $ (206) | $ (2,088) | $ 18,244 | $ 84,294 | |||||||||||
CHANGES DURING THE YEAR ENDED DECEMBER 31, 2019: | ||||||||||||||||||
Comprehensive income | - | - | - | 232 | - | 806 | 1,038 | |||||||||||
Share based compensation expenses | - | - | 38 | - | - | - | 38 | |||||||||||
BALANCE AT DECEMBER 31, 2019 | 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 expenses | - | - | 138 | - | - | - | 138 | |||||||||||
BALANCE AT DECEMBER 31, 2020 | 9,149,169 | $ 2,809 | $ 65,711 | $ 128 | $ (2,088) | $ 13,721 | $ 80,281 | |||||||||||
CHANGES DURING THE YEAR ENDED SEPTEMBER 30, 2021 (unaudited): | ||||||||||||||||||
Comprehensive (loss) | - | - | - | (107) | - | (2,862) | (2,969) | |||||||||||
Share based compensation expenses | - | - | 105 | - | - | - | 105 | |||||||||||
BALANCE AT SEPTEMBER 30, 2021 | 9,149,169 | $ 2,809 | $ 65,816 | $ 21 | $ (2,088) | $ 10,859 | $ 77,417 | |||||||||||
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | |||||||||
Three months ended | Nine months ended | Year ended | |||||||
September 30, | December 31, | ||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
Net income (loss) | $ (967) | $ (1,576) | $ (2,862) | $ (3,376) | $ (5,329) | ||||
Net income (loss) from continued operations | (1,007) | (1,456) | (3,365) | (1,570) | (3,484) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 1,440 | 1,079 | 3,577 | 3,107 | 4,065 | ||||
Loss (gain) from change in fair value of derivatives | (21) | (14) | (46) | 7 | (34) | ||||
Provision for doubtful accounts | 7 | (73) | 49 | 133 | (8) | ||||
Share in results of equity investment of affiliated Company | 36 | 62 | 75 | 179 | 185 | ||||
Share based compensation | 47 | 33 | 105 | 110 | 138 | ||||
Non cash finance expense | (13) | 57 | (407) | (48) | 566 | ||||
Provision for restructuring expenses | - | - | 470 | - | - | ||||
Liability in respect of employee rights upon retirement | (59) | (159) | (49) | (300) | (341) | ||||
Impairment of intangible assets | - | - | - | - | 298 | ||||
Impairment of fixed assets | - | 1,800 | - | ||||||
Deferred income taxes, net | 104 | 441 | (176) | 384 | (1,438) | ||||
Government loan forgiveness | - | (794) | (1,442) | 265 | - | ||||
Changes in operating assets and liabilities: | |||||||||
Decrease (increase) in trade accounts receivable | 1,733 | 787 | (1,693) | 7,027 | 9,472 | ||||
Decrease (increase) in other current assets and prepaid expenses | 1,161 | (729) | (1,177) | (605) | 310 | ||||
Decrease (increase) in inventory | (1,634) | 1,674 | (185) | 3,039 | 1,868 | ||||
Increase (decrease) in trade accounts payable | (1,303) | 307 | 191 | (2,913) | (5,336) | ||||
Increase (decrease) in accrued expenses | (836) | (995) | (532) | (1,080) | (252) | ||||
Decrease in other long-term liabilities | (73) | - | (39) | (62) | (62) | ||||
Net cash provided by operating activities | $ (418) | $ 220 | $ (2,773) | $ 7,673 | $ 5,947 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Proceeds from sale of property and equipment | - | - | - | (22) | - | ||||
Increase in long-term deposits | - | (2) | - | (165) | - | ||||
Purchase of property and equipment | (4,652) | (1,253) | (13,275) | (3,012) | (3,894) | ||||
Purchase of intangible assets | (11) | (950) | (555) | (950) | (1,513) | ||||
Cash flows used in investing activities | $ (4,663) | $ (2,205) | $ (4,149) | $ (5,407) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
Short-term credit received from banks | - | - | 3,000 | - | 3,960 | ||||
Proceeds from long-term loans received | - | - | 3,042 | 4,841 | 3,692 | ||||
Cash flows provided by financing activities | $ - | $ - | $ 7,652 | ||||||
Cash flows from discontinued operations: Net profit (loss) from discontinued operation | $ (1,845) | ||||||||
Net cash provided by operating activities | 88 | 175 | (156) | 1,588 | 1,998 | ||||
Net cash provided by (used in) discontinued activities | $ 128 | $ 55 | $ 347 | $ (218) | $ 153 | ||||
Net increase (decrease) in cash and cash equivalents | (4,953) | (1,930) | (10,285) | 8,147 | 8,345 | ||||
Cash and cash equivalents at beginning of period | 18,872 | 26,036 | 24,304 | 15,959 | 15,959 | ||||
Cash and cash equivalents at end of period | $ 14,019 | $ 24,106 | $ 14,019 | $ 24,106 | $ 24,304 | ||||
TAT TECHNOLOGIES AND ITS SUBSIDIARIES | ||||||
Three months ended | Nine months ended | Year ended | ||||
September 30, | September 30, | December 31, | ||||
2021 | 2020 | 2021 | 2020 | 2020 | ||
Net income (loss) | $ (967) | $ (1,576) | $ (2,862) | $ (3,376) | $ (5,329) | |
Adjustments: | ||||||
Share in results of equity investment of | 36 | 62 |
75 |
179 |
185 | |
Taxes on income (tax benefit) | 73 | (180) | (198) | (48) | (1,517) | |
Financial expenses, net | 257 | 177 | 117 | 250 | 770 | |
Depreciation and amortization | 1,495 | 1,060 | 3,758 | 3,250 | 4,219 | |
Restructuring expenses | 130 | - | 2,559 | - | - | |
Exit and disposal activities | - | - | - | 21 | 805 | |
Discontinued operation (income) loss | (40) | 120 | (503) | 1,806 | 1,845 | |
Share based compensation | 47 | 33 | 105 | 110 | 138 | |
Adjusted EBITDA | $ 1,031 | $ (304) | $ 3,051 | $ 2,192 | $ 1,116 | |
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SOURCE TAT Technologies Ltd.
FAQ
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