TAT Technologies Reports Third Quarter 2022 Results

Rhea-AI Summary

TAT Technologies Ltd. (NASDAQ: TATT) reported strong financial results for Q3 and nine months ending September 30, 2022. Q3 revenues rose 19% to $20.9 million, while year-to-date revenues increased 7% to $61.7 million. Gross profit also improved, reaching $3.4 million in Q3, although adjusted EBITDA decreased to $0.6 million. The net loss narrowed to $0.35 million in Q3 compared to $0.97 million in Q3 2021. The company signed a long-term agreement with RTX for Boeing 777 component repairs, expected to boost future revenues.

Positive

• Q3 2022 revenues increased by 19% to $20.9 million compared to Q3 2021.
• Gross profit for Q3 2022 rose to $3.4 million, reflecting profitability improvements.
• Long-term agreement with RTX for Boeing 777 components expected to drive future revenue growth.

Negative

• Adjusted EBITDA decreased to $0.6 million in Q3 2022 from $1 million in Q3 2021.
• Net loss for Q3 2022 was $0.35 million, although an improvement from the previous year, it still indicates ongoing financial challenges.

GEDERA, Israel, Nov. 30, 2022 /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 months and nine months periods ended September 30, 2022.

Key Financial Highlights:

• Revenues for Q3 2022 were $20.9 million compared with $17.6 million in Q3 2021, an increase of 19%. Revenues for the nine-month period that ended on September 30, 2022 were $61.7 million compared with $57.6 million in the nine-month period that ended on September 30, 2021, an increase of 7%.
• Gross profit for Q3 2022 was $3.4 million (16.4% as a percentage of revenues) an increase of 16.4% compared with $3 million (16.8% as a percentage of revenues) in Q3 2021. Gross profit for the nine-month period that ended on September 30, 2022, was $10.5 million (17% as a percentage of revenues) an increase of 10.6% compared with $9.5 million (16.5% as a percentage of revenues) in the nine-month period that ended on September 30, 2021.
• Adjusted EBITDA for Q3 2022 decreased to $0.6 million compared with $1 million in Q3 2021. Adjusted EBITDA for the nine-month period that ended on September 30, 2022, was $2 million compared with $3.1 million in the nine-month period that ended on September 30, 2021.
• During the nine months of 2021 the Company received grants (which were recorded as a decrease of expenses) in an aggregate amount of $4.5 million. Adjusted EBITDA excluding grants increased from a loss of $1.4 million in the nine-month period that ended on September 30, 2021 to a profit of $2 million in the nine month period that ended on September 30, 2022. During Q3/21 the company received grants in an aggregate amount of $2.6 million. Adjusted EBITDA excluding grants increased from a loss of $1.6 million in Q3/21 compared with a profit of $0.6 million in Q3/22 (for more details see the proforma comparison below).
• Net loss continues to decrease and was $0.35 million, or a loss of $0.04 per diluted share in Q3 2022 compared with a net loss of $0.97 million, or $0.11 per diluted share in Q3 2021. Net loss was $2 million (out of which $1.6 million in restructuring costs), or a loss of $0.23 per diluted share in the nine-month period that ended on September 30, 2022, compared with a net loss of $2.86 million, or a loss of $0.32 per diluted share in the nine-month period that ended on September 30, 2021.
• Proforma results comparison, representing 2021 without grants:

Thousands USD	Q3\22	Q3\21	YTD 22	YTD 21
Revenues	20,977	17,619	61,707	57,564
COGS	17,543	16,747	51,195	51,738
Gross Profit	3,434	872	10,512	5,826
GM	16.4 %	4.9 %	17 %	10.1 %
R&D & SG&M	3,942	4,099	13,437	13,735
EBITDA	559	(1,557)	1,952	(1,488)

 

Mr. Igal Zamir, TAT's CEO and President commented on the results: "The financial results of the third quarter of 2022 represent a continuous improvement in our results compared to the same period in 2021 and reflects the positive trend in our industry going out of the COVID19 pandemic. We continue to make enormous efforts to meet our customers' needs at a time when demand post the COVID-19 pandemic is picking up, but materials and components availability is still problematic". Mr. Zamir continued: "During this quarter we signed a long-term agreement with RTX for the repair of heat components on the Boeing 777 platform. This agreement already generates revenues and will be a contributor to our growth in the coming years.  We continue to work on other opportunities that may result from the strategic agreements that we signed with Honeywell last year and we expect positive results in the coming few months".

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 website:
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
CONDENSED CONSOLIDATED BALANCE SHEET  (In thousands)
	September 30,		December 31,
	2022		2021
	(unaudited)		(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$                  7,311		$      12,872
Accounts receivable, net	13,368		13,887
Inventory, net	47,601		41,003
Other current assets and prepaid expenses	5,232		4,219
Total current assets	73,512		71,981
NON-CURRENT ASSETS:    Restricted deposit	323		343
Investment in affiliates	1,606		695
Funds in respect of employee rights upon retirement	809		1,157
Deferred income taxes	1,380		1,252
Intangible assets, net	1,675		1,829
Property, plant and equipment, net	39,760		30,462
Operating lease right of use assets	2,833		3,114
Total non-current assets	48,386		38,852
Total assets	$                121,898		$            110,833
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans	1,788		$        691
Credit line from bank	6,061		6,008
Accounts payable	8,579		9,093
Accrued expenses	7,489		6,959
Operating lease liabilities	878		1,169
Provision for restructuring plan	200		657
Total current liabilities	24,995		24,577
NON CURRENT LIABILITIES:
Long-term loans	18,828		5,979
Liability in respect of employee rights upon retirement	1,187		1,504
Operating lease liabilities	1,908		1,989
Total non-current liabilities	21,923		9,472
Total liabilities	$               46,918		$        34,049
EQUITY:
Share capital	2,843		2,809
Additional paid-in capital	66,194		65,871
Treasury stock at cost	(2,088)		(2,088)
Accumulated other comprehensive income	(81)		33
Retained earnings	8,112		10,159
Total shareholders' equity	74,980		76,784
Total liabilities and shareholders' equity	$                121,898		$                110,833

 

 

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,
	2022		2021		2022		2021		2021
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Audited)
Revenues:
Products	$      5,694		$     5,268		$   19,157		$   18,221		$   25,870
Services	15,283		12,351		42,550		39,343		52,103
	20,977		17,619		61,707		57,564		77,973
Cost of goods:
Products	4,710		5,226		16,280		16,362		23,761
Services	12,833		9,443		34,915		31,700		42,942
	17,543		14,668		51,195		48,062		66,703
Gross Profit	3,434		2,951		10,512		9,502		11,270
Operating expenses:
Research and development, net	197		97		349		368		517
Selling and marketing	1,312		1,330		4,164		3,993		5,147
General and administrative	2,463		2,043		7,341		5,974		8,354
Other Income	-		-		(90)		-		(468)
Restructuring expenses (income)	(30)		122		1,673		2,538		1,755
	3,942		3,592		13,437		12,873		15,305
Operating loss	(508)		(641)		(2,925)		(3,371)		(4,035)
Financial income (expenses), net	73		(257)		647		(117)		(540)
Income (loss) before taxes on income (tax      benefit)	(435)		(898)		(2,278)		(3,488)		(4,575)
Taxes on income (tax benefit)	(44)		73		(107)		(198)		(662)
Income (loss) before equity investment	(391)		(971)		(2,171)		(3,290)		(3,913)
Share in results of affiliated companies (loss)	36		(36)		124		(75)		(76)
Net income (loss) from continued operation	$     (355)		$     (1,007)		$      (2,047)		$     (3,365)		$      (3,989)
Net profit (loss) from discontinued operation	$   -		$   40		$   -		$   503		$   427
Net income (loss)	$  (355)		$  (967)		$   (2,047)		$   (2,862)		$       (3,562)
Basic and diluted income (loss) per share
Net income (loss) per share from continued operation	$      (0.04)		$      (0.11)		$    (0.23)		$    (0.38)		$    (0.45)
Net loss per share from discontinued operation	$   0		$   0		$    -		$    0.06		$  0.05
Net income (loss) per share	$    (0.04)		$    (0.11)		$   (0.23)		$   (0.32)		$      (0.4)
Weighted average number of shares outstanding
Basic	8,909,046		8,874,696		8,909,046		8,874,696		8,874,696
Diluted	8,909,046		8,874,696		8,909,046		8,874,696		8,874,696

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
	Three months ended					Nine months ended								Year ended
	September 30,													December 31,
	2022		2021			2022				2021				2021
	(Unaudited)		(Unaudited)			(Unaudited)				(Unaudited)				(Audited)
Net income (loss)	$    (355)		$     (967)			$     (2,047)				$     (2,862)				$     (3,562)
Other comprehensive income
Net unrealized income (loss) from derivatives	34		21			(114)				(107)				(76)
Reclassification adjustments for gains (losses)          included in net income and inventory	-		-			-				-				(19)
Total other comprehensive income (loss)	$     (321)		$    (946)			$     (2,161)				$    (2,969)				$     (3,657)

 

 

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, 2019		9,149,169			$      2,809				$       65,573		$            26		$         (2,088)		$             19,050		$       85,370
CHANGES DURING THE YEAR ENDED     DECEMBER 31, 2020:
Comprehensive income (loss)		-			-				-		102		-		(5,329)		(5,227)
Share based compensation		-			-				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     DECEMBER 31, 2021:
Comprehensive loss		-			-				-		(95)		-		(3,562)		(3,657)
Share based compensation		-			-				160		-		-		-		160
BALANCE AT DECEMBER 31, 2021		9,149,169			$      2,809				$       65,871		$            33		$          (2,088)		$            10,159		$       76,784
CHANGES DURING THE PERIOD ENDED     SEPTEMBER 30, 2022 (unaudited):
Comprehensive loss		-			-				-		(114)		-		(2,047)		(2,161)
Exercise of option		34,450			34				156		-		-		-		190
Share based compensation		-			-				167		-		-		-		167
BALANCE AT SEPTEMBER 30, 2022     (unaudited)		9,183,619			$      2,843				$       66,194		$            (81)		$         (2,088)		8,112		$       74,980

 

 

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,
		2022		2021		2022	2021		2021
		(Unaudited)		(Unaudited)		(Unaudited)	(Unaudited)		(Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$  (355)		$  (967)		$  (2,047)	$  (2,862)		$     (3,989)
Adjustments to reconcile net income (loss) to net cash  provided by operating activities:
Depreciation and amortization		931		1,440		2,830	3,577		4,881
Loss (gain) from change in fair value of derivatives		(7)		(21)		1	(46)		(19)
Provision for doubtful accounts		-		7		(45)	49		248
Share in results of equity investment of affiliated Company		(36)		36		(124)	75		76
Share based compensation		56		47		167	105		160
Non cash finance expense		(4)		(13)		(91)	(407)		(65)
Lease modification									(1,315)
Increase (decrease) in provision for restructuring expenses		(914)		-		(457)	470		657
Liability in respect of employee rights upon retirement		9		(59)		(317)	(49)		94
Impairment of fixed assets		-		-		-	1,800		1,820
Capital gain from sale of fixed assets		-		-		(90)	-		(468)
Deferred income taxes, net		(47)		104		(128)	(176)		(686)
Government loan forgiveness		-		-		-	(1,442)		(1,442)
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts receivable		1,127		1,733		(219)	(1,693)		(2,934)
Decrease (increase) in other current assets and prepaid        expenses		(557)		1,161		(672)	(1,177)		(959)
Decrease (increase) in inventory		(3,485)		(1,634)		(6,711)	(185)		(681)
Increase (decrease) in trade accounts payable		(182)		(1,303)		(1,073)	191		2,571
Increase (decrease) in accrued expenses		499		(836)		531	(532)		(218)
Decrease in other long-term liabilities		(160)		(73)		(1,045)	(39)		8
Net cash used in operating activities		$ (3,125)		$ (418)		$ (9,490)	$ (2,773)		$     (2,269)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment		-		-		93	-		1,163
Purchase of property and equipment		(3,833)		(4,652)		(11,418)	(13,275)		(16,247)
Purchase of intangible assets		-		(11)		-	(555)		(555)
Cash flows used in investing activities		$ (3,833)		$ (4,663)		$(11,325)	$(13,830)		$   (15,639)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term credit received (repayment) from banks		3,000		-		-	3,000		3,000
Proceeds from long-term loans received		3,200		-		15,680	3,042		3,042
Loans and credit line repayment to banks		(375)		-		(636)	-		-
Exercise of options		123		-		190	-		-
Cash flows provided by financing activities		$ 5,948		$ -		$15,234	$6,042		$       6,042
Cash flows from discontinued operations: Net profit (loss) from discontinued operation		$-		$40		$-	$503		$   (1,845)
Net cash provided by operating activities		-		88		-	(156)		1,998
Net cash provided by (used in) discontinued activities		$   -		$   128		$   -	$   347		$    153
Net increase (decrease) in cash and cash equivalents		(1,010)		(4,853)		(5,581)	(10,285)		(11,089)
Cash and cash equivalents at beginning of period		8,644		18,872		13,215	24,304		24,304
Cash and cash equivalents at end of period		$  7,634		$  14,019		$  7,634	$  14,019		$    13,215

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP) (UNAUDITED) (In thousands)
	Three months ended			Nine months ended		Year ended
	September 30,			September 30,		December 31,
	2022		2021	2022	2021	2021
Net income (loss)	$  (355)		$   (967)	$   (2,047)	$   (2,862)	$    (3,562)
Adjustments:
Share in results of equity investment of     affiliated companies	(36)		36	(124)	75	76
Taxes on income (tax benefit)	(44)		73	(107)	(198)	(662)
Financial expenses (income), net	(73)		257	(647)	117	540
Depreciation and amortization	1,041		1,495	3,037	3,758	5,420
Restructuring (income) expenses	(30)		130	1,673	2,559	1,755
Discontinued operation (income) loss	-		(40)	-	(503)	(427)
Share based compensation	56		47	167	105	160
Adjusted EBITDA	$ 559		$ 1,031	$     1,952	$    3,051	$    3,300

 

 

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SOURCE TAT Technologies Ltd

FAQ

What were TAT Technologies' Q3 2022 revenues and how do they compare to Q3 2021?

TAT Technologies reported Q3 2022 revenues of $20.9 million, a 19% increase from $17.6 million in Q3 2021.

What is the adjusted EBITDA for TAT Technologies in Q3 2022?

TAT Technologies reported an adjusted EBITDA of $0.6 million in Q3 2022, down from $1 million in Q3 2021.

How did TAT Technologies' net loss change in Q3 2022?

TAT Technologies reported a net loss of $0.35 million in Q3 2022, improving from a net loss of $0.97 million in Q3 2021.

What strategic agreements did TAT Technologies enter recently?

TAT Technologies signed a long-term agreement with RTX for the repair of heat components on the Boeing 777, which is expected to contribute to revenue growth.