PR Newswire | Nov 4, 2021 04:42PM EDT

11/04 15:41 CDT

TAT Technologies Reports Third Quarter 2021 Results GEDERA, Israel, Nov. 4, 2021

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 by 40% 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 $2.5M in Q3 and see a sequential improvement in volumes of the MRO activity as the commercial airline industry starts to recover from the meaningful slow-down of the pandemic."

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-YairChief Financial OfficerTel: 972-8-862-8503ehudb@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,

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 Restricted deposit

Investment in affiliates 697 771

Funds in respect of employee rights upon 1,019 1,186retirement

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

$ 111,838 $ 116,121Total assets

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 7,568 6,691expenses

Operating lease liabilities 1,615 1,614

Provision for restructuring plan 470 -

Liabilities belong to discontinued - 179operation

Total current liabilities 23,148 25,183

NON CURRENT LIABILITIES:

Long-term loans 5,221 3,489

Liability in respect of employee rights 1,361 1,410upon retirement

Operating lease liabilities 4,691 5,758

Total non-current liabilities 11,273 10,657

$ 34,421 $ 35,840Total liabilities

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' $ 111,838 $ 116,121equity

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,

2021 2020 2021 2020 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)

Revenues:

Products $ $ $ 18,221 $ 18,157 $ 22,739 5,268 4,822

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 $ $ $ (0.38) $ (0.17) $ (0.39) (0.11) (0.16)

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In thousands)

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) $ $ (2,862) $ $ (5,329) (1,576) (3,376)

Other comprehensive income

Net unrealized income (loss) from derivatives 21 (33) (107) (7) 232

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

Total other comprehensive income (loss) $ (946) $ $ (2,969) $ $ (5,227) (1,609) (3,378)

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 Additional other shares issued Amount paid-in capital comprehensive Treasury shares Retained earnings Total equity 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 - - - 232 - 806 1,038

Share based compensation - - 38 - - - 38expenses

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 loss - - - 102 - (5,329) (5,227)

Share based compensation - - 138 - - - 138expenses

BALANCE AT DECEMBER 31, 2020 9,149,169 $ 2,809 $ 65,711 $ $ (2,088) $ 13,721 $ 80,281 128

CHANGES DURING THE YEAR ENDEDSEPTEMBER 30, 2021(unaudited):

Comprehensive (loss) - - - (107) - (2,862) (2,969)

Share based compensation - - 105 - - - 105expenses

BALANCE AT SEPTEMBER 30, 2021 9,149,169 $ 2,809 $ 65,816 $ $ (2,088) $ 10,859 $ 77,417(unaudited) 21

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,

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 cashprovided 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 1,161 (729) (1,177) (605) 310expenses

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) $ (13,830) $ (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 $ - $ - $ 6,042 $ 4,841 $ 7,652



$ 40 $ (120) $ 503 $ (1,806) $ (1,845)Cash flows from discontinued operations:

Net profit (loss) from discontinued operation

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

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,

2021 2020 2021 2020 2020

Net income (loss) $ (967) $ (1,576) $ (2,862) $ (3,376) $ (5,329)

Adjustments:

Share in results of equity investment ofaffiliated companies 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.