PR Newswire | Mar 30, 2021 05:51PM EDT

03/30 16:50 CDT

TAT Technologies Reports 2020 Results GEDERA, Israel, March 30, 2021

GEDERA, Israel, March 30, 2021 /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 audited results for the twelve months ended December 31, 2020.

Key Financial Highlights (*):

* Total revenues for the twelve months ended December 31, 2020 were $75.3 million compared to $97.4 million for the twelve months ended December 31, 2019, a decrease of 22.7% The decrease in revenues was the result of the COVID-19 pandemic outbreak which has significant effect on the commercial aviation industry.

* Gross profit for the twelve months ended December 31, 2020 were $8.4 million (11.2% of revenues) compared to $15.3 million (15.7% of revenues) for the twelve months ended December 31, 2019, a decrease of 44.8%. The decline in gross profit was mainly due to decrease in revenues and fixed charges on the COGS.

* Adjusted EBITDA for the twelve months ended December 31, 2020 was $1.1 million compared to $7.1 million for the twelve months ended December 31, 2019.

* GAAP net loss from continued operations for the twelve months ended December 31, 2020 was $3.5 million compared to GAAP net income of $1.5 million for the twelve months ended December 31, 2019. GAAP net income from continued operations for the twelve months ended December 31, 2020 included one-time expenses of approximately $0.8 million.

* Cash net of debt for December 31, 2020 was $16.2 million compared to $16.0 million for December 31, 2019. During 2020, the Company made significant capital investments related to the two large agreements with Honeywell. Nevertheless, the improvement in cash was mainly due to improved working capital management.* Financial results for fiscal year 2019 reclassified due to discontinued operation.

Mr. Igal Zamir, CEO and President of TAT Technologies stated, "2020 was a unique and challenging year for the aerospace industry and for TAT. TAT has reacted quickly in early 2020 to the changing environment and adjusted its cost structure to the new environment. We managed to conclude 2020 with positive EBITDA and slight increase in our net cash balance after making some meaningful investments related to the two new strategic agreements with Honeywell. These investments are reflected in the inventory and property, plant and equipment line items in our balance sheet. During 2020, we signed two strategic agreements with Honeywell that are related to MRO services to APU 331-200 and APU 331-500. We believe that such agreements position TAT (through its Piedmont subsidiary) as a global premier MRO services provider. We also believe that the Company would generate significant business and revenues from these two agreements. In addition, TAT has been working on other operational rationalization activities that are expected to yield significant cost savings starting from late 2021. We expect to enjoy the full impact of our above mentioned activities when the industry starts recovering from the COVID 19 crisis.

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 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 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 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.

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands)

December 31,

2020 2019 (*)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 24,128 $ 15,959

Accounts receivable, net of allowance for credit losses of $306 11,355 20,311 thousands as of December 31, 2020

Inventory, net 41,223 43,327

Other current assets and prepaid expenses 2,737 2,605

Assets belong to discontinued operation - 1,401

Total current assets 79,443 83,603

NON-CURRENT ASSETS:

Restricted deposit 176 -

Investment in affiliates 771 956

Funds in respect of employee rights upon retirement 1,186 1,404

Deferred income taxes 566 228

Property, plant and equipment, net 25,737 20,605

Operating lease right of use assets 6,767 6,664

Intangible assets, net 1,475 389

Assets belong to discontinued operation - 826

Total non-current assets 31,072 36,678

Total assets $ 116,121 $ 114,675

December 31,

2020 2019(*)

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Current maturities of long-term loans $ 1,477 $ -

Credit line from bank 3,000 -

Accounts payable 12,222 11,823

Accrued expenses 6,691 7,393

Operating lease liabilities 1,614 1,330

Liabilities belong to discontinued operation 179 158

Total current liabilities 25,183 20,704

NON-CURRENT LIABILITIES:

Long-term loans 3,489 -

Other long-term liabilities - 62

Liability in respect of employee rights upon retirement 1,410 1,751

Deferred income taxes - 1,100

Operating lease liabilities 5,758 5,688

Total non-current liabilities 10,657 8,601

COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 13)

Total liabilities 35,840 29,305

EQUITY:

Ordinary shares of NIS 0.9 par value:

Authorized: 13,000,000 shares at December 31, 2020 and at 2,809 2,809 December 31, 2019; Issued: 9,854,696 shares at December 31, 2020 and at December 31, 2019; Outstanding: 8,874,696 shares at December 31, 2020 and at December 31, 2019

Additional paid-in capital 65,711 65,573

Treasury shares, at cost, 274,473 shares at December 31, 2020 and 2019 (2,088) (2,088)

Accumulated other comprehensive income (loss) 128 26

Retained earnings 13,721 19,050

Total shareholders' equity 80,281 85,370

Total liabilities and shareholders' equity $ 116,121 $ 114,675

*Reclassified due to discontinued operation

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)

Year ended December 31,

2020 2019(*) 2018(*)

Revenue:

Products $ 22,739 $ 25,019 $ 23,151

Services 52,620 72,460 64,570

75,359 97,479 87,721

Cost of revenue:

Products 20,751 21,557 23,807

Services 46,173 60,622 55,969

66,924 82,179 79,776

Gross profit 8,435 15,300 7,945

Operating expenses:

Research and development, net 185 113 458

Selling and marketing 4,369 4,929 4,754

General and administrative 7,612 7,654 7,901

Other expense (income) 315 - (4)

12,481 12,696 13,109

Operating income (loss) (4,046) 2,604 (5,164)

Financial expenses (999) (1,270) (1,555)

Financial income 229 848 1,467

Income (loss) before taxes on income (tax benefit) (4,816) 2,182 (5,252)

Taxes on income (tax benefit) (1,517) 589 (1,464)

Income (loss) before share of equity investment (3,299) 1,593 (3,788)

Share in results of equity investment of affiliated companies (185) (132) (140)

Net income (loss) from continued operation $ $ 1,461 $ (3,484) (3,928)

*Reclassified due to discontinued operation.

Year ended December 31,

2020 2019(*) 2018(*)

Net loss from discontinued operation $ $ (655) $ (480) (1,845)

Net income (loss) $ $ 806 $ (4,408) (5,329)

Net income (loss) per share basic and $ $ 0.17 $ (0.45)diluted from continued operation (0.39)

Net loss per share basic and diluted $ $ (0.07) $ (0.05)from discontinued operation (0.21)

Net income (loss) per share basic and $ $ 0.1 $ (0.5)diluted (0.6)

Weighted average number of sharesoutstanding:

Basic 8,874,696 8,874,696 8,864,885

Diluted 8,874,696 8,874,696 8,864,885



*Reclassified due to discontinued operation.



TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Year ended December 31,



2020 2019(*) 2018(*)



Net income (loss) $ (5,329) $ 806 $ (4,408)

Other comprehensive income (loss), net

Net unrealized gains (losses) from 232 372 (672)derivatives

Reclassification adjustments for gains from (130) (140) 331 derivatives included in net income

Total other comprehensive income (loss) $ 102 $ 232 $ (341)

$ (5,227) $ 1,038 $ (4,749)Total comprehensive income (loss)

*Reclassified due to discontinued operation.

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Share capital

Accumulated Number of Amount Additional other Treasury shares Retained earnings Total equity shares issued paid-in capital comprehensive income (loss)

BALANCE AT DECEMBER 31, 2017 9,102,917 $ 2,802 $ 65,073 $ $ (2,088) $ 22,652 $ 88,574 135

CHANGES DURING THE YEARENDED DECEMBER 31, 2017:

Comprehensive income (loss) - - - (341) - (4,408) (4,749)

Share based compensation - - 272 - - - 272

Exercise of options 19,584 7 190 - - - 197

BALANCE AT DECEMBER 31, 2018 9,122,501 $ 2,809 $ 65,535 $ $ (2,088) $ 18,244 $ 84,294 (206)

CHANGES DURING THE YEARENDED DECEMBER 31, 2018:

Comprehensive income - - - 232 - 806 1,038

Share based compensation - - 38 - - - 38

BALANCE AT DECEMBER 31, 2019 9,149,169 $ 2,809 $ 65,573 $ $ (2,088) $ 19,050 $ 85,370 26

CHANGES DURING THE YEARENDED DECEMBER 31, 2019:

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 $ $ (2,088) 13,721 $ 80,281 128

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year ended December 31,

2020 2019(*) 2018(*)

CASH FLOWS FROM OPERATINGACTIVITIES:

Net income (loss) $ (5,329) $ 806 $ (4,408)

Net income (loss) from continued (3,484) 1,461 (3,928)operations

Adjustments to reconcile netincome to net cash provided by(used in) operating activities:

Depreciation and amortization 4,065 4,292 4,065

Loss on sale of property, plant - - -and equipment

Loss (gain) from change in fair (34) (311) 382value of derivatives

Non cash finance expense 566 354 -

Change in provision for doubtful (8) 38 (347)accounts

Share in results of affiliated 185 132 140companies

Share based compensation 138 38 272

Liability in respect of employee (341) (897) (587)rights upon retirement

Impairment of intangible assets 298 - -

Deferred income taxes, net (1,438) (450) (102)

Changes in operating assets andliabilities:

Decrease (increase) in trade 9,472 (2,037) 6,477accounts receivable

Decrease (increase) in othercurrent assets and prepaid 310 2,500 (1,575)expenses

Decrease (increase) in 1,868 (5,740) 381inventory

Increase (decrease) in trade (5,336) 3,349 (1,137)accounts payable

Increase (decrease) in (252) 982 (1,920)accrued expenses

Increase (decrease) in other (62) (118) 34long-term liabilities

Net cash provided by operatingactivities from continued $ 5,947 $ 3,593 $ 2,155operation

CASH FLOWS FROM INVESTINGACTIVITIES:

Investment in affiliated company - (10) (26)

Funds in respect of employee - - (22)rights upon retirement

Proceeds from sale of property - - 7and equipment

Purchase of property and (3,894) (3,269) (4,270)equipment

Purchase of intangible assets (1,513) - -

Maturities of deposits - - 470

Net cash used in continued $ (5,407) $ (3,279) $ (3,841)investing activities

Year ended December 31,

2020 2019(*) 2018(*)

CASH FLOWS FROM FINANCINGACTIVITIES:

Short-term credit received from 3,960 - -banks

Proceeds from long-term loans 3,692received

Exercise of options - - 197

Net cash provided by continued 7,652 - 197financing activities

CASH FLOWS FROM DISCONTINUEDACTIVITIES:

Net loss from discontinued (1,845) $ (655) $ (480)operation

Net cash provided by operating 1,998 484 405activities

Net cash used in investing - (134) -activities

Net cash provided by (used in) 153 $ (305) (75)discontinued activities



NET INCREASE (DECREASE) IN CASH 8,345 9 (1,564)AND CASH EQUIVALENTS ANDRESTRICTED CASH

CASH AND CASH EQUIVALENTS ANDRESTRICTED CASH AT BEGINNING OF 15,959 15,950 17,514YEAR

CASH AND CASH EQUIVALENTS AND 24,304 15,959 15,950RESTRICTED CASH AT END OF YEAR



SUPPLEMENTARY INFORMATION ONINVESTING ACTIVITIES NOTINVOLVING CASH FLOW:

Purchase of property, plant and $ 6,575 $ 942 $ 523equipment on credit

Additions of operating leaseright-of-use assets and operating $ 1,756 $ 648 -lease liabilities

Supplemental disclosure of cashflow information:

Interest paid $ (3) $ (28) $ (10)

Income taxes received (paid), net $ (3) $ 673 $ (1,087)

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

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

(In thousands)

December 31, December 31,

2020 2019 (*)

(audited) (audited)

Net income (loss) $ $ 806 (5,329)

Adjustments:

Share in results of equityinvestment of affiliated 185 132companies

Taxes on income (tax benefit) (1,517) 589

Financial expenses, net 770 422

Other expenses 315 -

Depreciation and amortization 4,259 4,394

Net loss from discontinued 1,845 655operation

Share base compensation 138 38

Exit and disposal activity 450 -

Adjusted EBITDA 1,116 7,036

*Reclassified due to discontinued operation

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.

For more information of TAT Technologies Ltd., please visit our web-site: www.tat-technologies.com.

Contact:Mr. Ehud Ben-YairChief Financial OfficerTel: +972-8-862-8503 ehudb@tat-technologies.com

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SOURCE TAT Technologies Ltd