PR Newswire | May 13, 2021 04:45PM EDT

05/13 15:44 CDT

TAT Technologies Reports First Quarter 2021 Results GEDERA, Israel, May 13, 2021

GEDERA, Israel, May 13, 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 unaudited results for the three-month period ended March 31, 2021.

Financial highlights for the first quarter of 2021 (unaudited):

* Revenues for Q1 2021 increased by 11% to $18.3 million compared to revenues of $16.5 million in Q4 2020 and decreased by 25% compared to $24.6 million in Q1 2020. * Gross profit for Q1 2021 increased by 259% to $3.4 million compared to $0.9 million in Q4 2020 and decreased by 26% compared to $4.6 million in Q1 2020. * Gross margin for Q1 2021 improved to 18.6% compared to 5.7% in Q4 2020 and compared to 18.5% in Q1 2020. * Adjusted EBITDA for Q1 2021 increased by $2.7 million to $1.6 million compared to a loss of $1.1 million in Q4 2020 and decreased by 36% compared to $2.5 million in Q1 2020. * Net income for Q1 2021 increased to $0.6 million compared to a loss of $1.9 million in Q4 2020 and compared to net income of $0.4 million in Q1 2020.

The Company is proceeding with its recently announced plan to improve its cost structure, and in that respect has recently begun executing on its plan to consolidate the Company's operations in Kiryat Gat, Israel and Tulsa, Oklahoma. Among other things, such actions will enable the Company to concentrate its heat exchanges cores activity in the United States allowing for better operational flow, getting closer to the Company's customer base and cutting fixed costs. To support this process, the Company successfully continued to obtain loans from banks in Israel and the US and has continued in improving its working capital. In connection with such plan, the Company incurred expenses of $0.5 million and capital expenditures of $0.5 million in Q1 2021.

As part of the consolidation of certain of the Company's operations in the US, the Company secured grants and incentives from the State of Oklahoma in an amount of approximately $11 million (subject to the terms of such grants) which will be utilized to finance investments and employee-related expenses of the Company's operations in Oklahoma.

Mr. Igal Zamir, TAT's CEO and President commented on the results: "In Q1 we increased our revenues and gross margin, improved our working capital and stabled the Company's operational cash flow. In Q1 of 2021 we already started enjoying the fruits of our strategic lease deal with Honeywell that was signed at the end of 2020 as well as a PPP loan forgiveness of $1.44 million. We continue with the plan to streamline our operations and expect our cost structure to improve by 2022."

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 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-YairChief 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 TECHNOLOGIESAND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET(In thousands)

March 31, December 31,

2021 2020

(unaudited) (audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 21,709 $ 24,128

Accounts receivable, net 12,862 11,355

Inventory, net 40,406 41,223

Other current assets and prepaid expenses 2,856 2,737

Total current assets 77,833 79,443

NON-CURRENT ASSETS:

Restricted deposit 320 176

Investment in affiliates 759 771

Funds in respect of employee rights upon retirement 1,133 1,186

Deferred income taxes 702 566

Intangible assets, net 1,716 1,475

Property, plant and equipment, net 25,959 25,737

Operating lease right of use assets 6,461 6,767

Total non-current assets 37,050 36,678

Total assets $ 114,883 $ 116,121







LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Current maturities of long-term loans $ 773 $ 1,477

Credit line from bank 6,012 3,000

Accounts payable 5,998 12,222

Accrued expenses 7,247 6,691

Operating lease liabilities 1,589 1,614

Provision for restructuring plan 470 -

Liabilities belong to discontinued operation 43 179

Total current liabilities 22,132 25,183

NON CURRENT LIABILITIES:

Long-term loans 5,625 3,489

Liability in respect of employee rights upon retirement 1,283 1,410

Operating lease liabilities 5,092 5,758

Total non-current liabilities 12,000 10,657

Total liabilities 34,132 $ 35,840

EQUITY:

Share capital 2,809 2,809

Additional paid-in capital 65,737 65,711

Treasury stock at cost (2,088) (2,088)

Accumulated other comprehensive income (loss) (15) 128

Retained earnings 14,308 13,721

Total shareholders' equity 80,751 80,281

Total liabilities and shareholders' equity $ 114,883 $ 116,121





*Reclassified due to discontinued operation.

TAT TECHNOLOGIES AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except share and per share data)

Three months ended Year ended

March 31, December 31,

2021 2020(*) 2020

(Unaudited) (Unaudited) (Audited)

Revenues:

Products $ $ $ 22,739 4,154 7,257

Services 14,206 17,393 52,620

18,360 24,650 75,359

Cost of goods:

Products 3,610 5,794 20,751

Services 11,352 14,273 46,173

14,962 20,067 66,924

Gross Profit 3,398 4,583 8,435

Operating expenses:

Research and development, net 136 37 185

Selling and marketing 1,205 1,157 4,369

General and administrative 1,622 2,048 7,612

Restructuring and other expenses 520 - 315

3,483 3,242 12,481

Operating income (loss) (85) 1,341 (4,046)

Financial income (expenses), net 397 160 (770)

Income (loss) before taxes on 312 1,501 (4,816)income (tax benefit)

Taxes on income (tax benefit) (131) 642 (1,517)

Income (loss) before equity 443 859 (3,299)investment

Share in results of affiliated (12) (98) (185)companies

Net income (loss) from continued $ 431 $ 761 $ operation (3,484)

$ Net profit (loss) from 156 (315) (1,845)discontinuedoperation

$ $ 587 446 $ (5,329)Net income (loss)







Basic and diluted income pershare

Net income (loss) per share basicand diluted from continued $ 0.05 $ 0.09 $ (0.39)operation

Net income (loss) per share basicand diluted from discontinued $ 0.02 $ (0.04) $ (0.21)operation

Net income (loss) per share basic $ 0.07 $ 0.05 $ (0.6)and diluted

Weighted average number of sharesoutstanding

Basic 8,874,696 8,874,696 8,874,696

Diluted 8,874,696 8,874,696 8,874,696

*Reclassified due to discontinued operation.

TAT TECHNOLOGIES AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In thousands)

Three months ended Year ended

March 31, December 31,

2021 2020 2020

(Unaudited) (Unaudited) (Audited)

Net income $ 587 $ 446 $ (5,329)

Other comprehensive income (loss)

Net unrealized incomes (losses) from derivatives (143) (108) 232

Reclassification adjustments for gains included in net - 5 (130) income and inventory

Total other comprehensive income $ 444 $ 343 $ (5,227)

TAT TECHNOLOGIES AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(In thousands, except share data)

Share capital Accumulated

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

BALANCE AT DECEMBER 31, 2018 9,122,501 $ 2,802 $ 65,535 $ $ (2,088) $ 18,244 $ 84,294 (206)

CHANGES DURING THE YEAR ENDEDDECEMBER 31, 2019:

Comprehensive income (loss) - - - 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 YEAR ENDEDDECEMBER 31, 2020:

Comprehensive income - - - 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

CHANGES DURING THE YEAR ENDED MARCH31, 2021 (unaudited):

Comprehensive income (loss) - - - (143) - 587 444

Share based compensation - - 26 - - - 26

BALANCE AT MARCH 31, 2021 9,149,169 $ 2,809 $ 65,737 $ $ (2,088) 14,308 $ 80,751(unaudited) (15)

TAT TECHNOLOGIES AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)

Three months ended Year ended

March 31, December 31,

2021 2020 2020

(Unaudited) (Unaudited) (audited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ $ $ 587 446 (5,329)

Net income (loss) from continued operations 431 761 (3,484)

Adjustments to reconcile net income to net cashprovided byoperating activities:

Depreciation and amortization 1,056 1,035 4,065

Loss (gain) from change in fair value of derivatives (9) 109 (34)

Provision for doubtful accounts - 205 (8)

Share in results of affiliated Company 12 98 185

Share based compensation 26 40 138

Non cash finance expense (397) (229) 566

Provision for restructuring expenses 533 - -

Liability in respect of employee rights upon (127) (128) (341)retirement

Impairment of intangible assets - - 298

Deferred income taxes, net (136) 312 (1,438)

Government loan forgiveness (1,443) - -

Changes in operating assets and liabilities:

Decrease (increase) in trade accounts receivable (1,573) 267 9,472

Decrease (increase) in other current assets andprepaid (181) 710 310 expenses

Decrease (increase) in inventory 798 (470) 1,868

Decrease in trade accounts payable (106) (3,212) (5,336)

Increase (decrease) in accrued expenses 560 1,778 (252)

Decrease in other long-term liabilities (27) (13) (62)

Net cash provided by (used in) operating activities $ $ $ 5,947 (583) 1,263

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in affiliated company - - -

Purchase of property and equipment (7,605) - (3,894)

Purchase of intangible assets (285) (898) (1,513)

Cash flows used in investing activities $ (7,890) $ (898) $ (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 - 3,692

Cash flows provided by financing activities $6,042 $ $ - 7,652

CASH FLOWS FROM DISCONTINUED ACTIVITIES:

Net profit (loss) from discontinued operation 156 (315) (1,845)

Net cash provided by operating activities - 366 1,998

Net cash provided by (used in) discontinued 156 51 153activities

Net increase (decrease) in cash and cash equivalents (2,275) 416 8,345

Cash and cash equivalents at beginning of period 24,304 15,959 15,959

Cash and cash equivalents at end of period $ $ $ 24,304 22,029 16,375

TAT TECHNOLOGIES AND ITS SUBSIDIARIESRECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP)(UNAUDITED)(In thousands)

Three months ended Year ended

March 31, December 31,

2021 2020 2020

Net income $ $ $ 587 446 (5,329)

Adjustments:

Share in results and sale of equity investment of affiliated companies 12 98 185

Taxes on income (tax benefit) (131) 642 (1,517)

Financial (income) expenses, net (397) (160) 770

Depreciation and amortization 1,105 1,103 4,219

Provision for restructuring 533 - -expenses

Exit and disposal activities - - 805

Discontinued operation (income) (156) 315 1,845loss

Share based compensation 26 40 138

Adjusted EBITDA $ $ $ 1,579 2,484 1,116

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SOURCE TAT Technologies Ltd