TATT - TAT Technologies Reports Full Year 2021 Results

March, 09 2022 10:30 AM TAT Technologies Ltd.

PR Newswire

GEDERA, Israel , March 9, 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 audited results for the twelve months ended December 31, 2021 .

Key Financial Highlights:

Total revenues for the twelve months ended December 31, 2021 , were $78 million compared to $75.3 million for the twelve months ended December 31, 2020 , an increase of 3.6%.

Gross profit for the twelve months ended December 31, 2021 , were $11.3 million (14.5% of revenues) compared to $8.4 million (11.2% of revenues) for the twelve months ended December 31, 2020 , an increase of 35%. The Gross margin for 2021 without a onetime impact of the restructuring plan was $12.5 million (16% out of revenues). The improvement in gross margin is mainly attribute to government grants that the company received during the year and to cost cutting measures that were taken during the year.

Adjusted EBITDA for the twelve months ended December 31, 2021 , was $3.3 million compared to $1.1 million for the twelve months ended December 31, 2020 . An improvement of 296%.

GAAP net loss from continued operations for the twelve months ended December 31, 2021 , was $4 million ( $2.2 million without a onetime impact of our restructuring plan) compared to GAAP net loss from continued operations of $3.5 million for the twelve months ended December 31, 2020 . A decrease of 62% in net loss from continued operations without a onetime impact of our restructuring plan.

Cash net of debt for December 31, 2021 , was $0.5 million compared to $16.2 million for December 31, 2020 . During the years 2020 and 2021, the Company made significant capital investments related to the three large strategic agreements with Honeywell and the restructuring plan.

Mr. Igal Zamir , CEO and President of TAT Technologies stated, "2021 was a unique and challenging year for the aerospace industry and for TAT. While volumes and prospects improved during 2021, volatility and uncertainty continued to be part of our business environment". Mr. Zamir continues: " during 2021 we closed additional two strategic deals with Honeywell for the MRO and lease activity of APU331-500 (which are mainly used in the Boeing 777 fleet) and APU131 (which are mainly used in the Boeing 737 and the Airbus 320 fleets). We are already benefiting from the fruit of the lease activity, and we are building the production infrastructure to be able to provide MRO services for these APUs during 2022. We believe that these deals will consist of a major growth factor for TAT as the aerospace industry will shape up. In parallel we are in the final phase of closing a production facility in Israel reducing our operational foot print to three major facilities with significant cost savings. We continue to ramp up our Heat Exchange capabilities in our Limco facility in Tulsa Oklahoma . We are expecting to see the impact of these strategic transaction in our financial results starting from the second half of 2022".

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,



2021

2020






ASSETS











CURRENT ASSETS:





Cash and cash equivalents


$ 12,872

$ 24,128
Accounts receivable, net of allowance for credit losses of $389 and $306 thousands as of December 31, 2021 and December 31, 2020 respectively


13,887

11,355
Inventory, net


41,003

41,223
Other current assets and prepaid expenses


4,219

2,737






Total current assets


71,981

79,443






NON-CURRENT ASSETS:





Restricted deposit


343

176
Investment in affiliates


695

771
Funds in respect of employee rights upon retirement


1,157

1,186
Deferred income taxes


1,252

566
Property, plant and equipment, net


30,462

25,737
Operating lease right of use assets


3,114

6,767
Intangible assets, net


1,829

1,475
Total non-current assets


38,852

36,678






Total assets


$ 110,833

$ 116,121




December 31,



2021

2020







LIABILITIES AND EQUITY













CURRENT LIABILITIES:






Current maturities of long-term loans


$ 691

$ 1,477

Credit line from bank


6,008

3,000

Accounts payable


9,093

12,222

Accrued expenses


6,959

6,691

Operating lease liabilities


1,169

1,614

Provision for restructuring plan


657

-

Liabilities belong to discontinued operation


-

179

Total current liabilities


24,577

25,183








NON-CURRENT LIABILITIES:






Long-term loans


5,979

3,489

Liability in respect of employee rights upon retirement


1,504

1,410

Operating lease liabilities


1,989

5,758








Total non-current liabilities


9,472

10,657














COMMITMENTS AND CONTINGENCIES LIABILITIES (NOTE 15)













Total liabilities


34,049

35,840








EQUITY:






Ordinary shares of NIS 0.9 par value: Authorized: 13,000,000 shares at December 31, 2021 and at December 31, 2020; Issued: 9,149,169 shares at December 31, 2021 and at December 31, 2020; Outstanding: 8,874,696 shares at December 31, 2021 and at December 31, 2020


2,809

2,809

Additional paid-in capital


65,871

65,711

Treasury shares, at cost, 274,473 shares at December 31, 2021 and 2020


(2,088)

(2,088)

Accumulated other comprehensive income


33

128

Retained earnings


10,159

13,721

Total shareholders' equity


76,784

80,281








Total liabilities and shareholders' equity


$ 110,833

$ 116,121

TAT TECHNOLOGIES AND ITS SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)













Year ended December 31,




2021

2020

2019

Revenue:








Products


$ 25,870

$ 22,739

$ 25,019

Services


52,103

52,620

72,460




77,973

75,359

97,479










Cost of revenue:








Products


23,761

20,751

21,557

Services


42,942

46,173

60,622




66,703

66,924

82,179










Gross profit


11,270

8,435

15,300










Operating expenses:








Research and development, net


517

185

113

Selling and marketing


5,147

4,369

4,929

General and administrative


8,354

7,612

7,654

Other (income) expenses


(468)

315

-

Restructuring expenses, net


1,755

-

-













15,305

12,481

12,696










Operating income (loss)


(4,035)

(4,046)

2,604










Financial expenses


(683)

(999)

(1,270)

Financial income


143

229

848










Income (loss) before taxes on income (tax benefit)


(4,575)

(4,816)

2,182










Taxes on income (tax benefit)


(662)

(1,517)

589










Income (loss) before share of equity investment


(3,913)

(3,299)

1,593










Share in results of equity investment of affiliated companies


(76)

(185)

(132)










Net income (loss) from continued operation


$ (3,989)

$ (3,484)

$ 1,461




Year ended December 31,



2021

2020

2019








Net income (loss) from discontinued operation


$ 427

$ (1,845)

$ (655)
Net income (loss)


$ (3,562)

$ (5,329)

$ 806








Net income (loss) per sharebasic and diluted from continued operation


$ (0.45)

$ (0.39)

$ 0.17
Net income (loss) per sharebasic and diluted from discontinued operation


$ 0.05

$ (0.21)

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


$ (0.4)

$ (0.6)

$ 0.1








Weighted average number of shares outstanding:







Basic and diluted


8,874,696

8,874,696

8,874,696

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In thousands)











Year ended December 31,





2021

2020

2019










Net income (loss)


$ (3,562)

$ (5,329)

$ 806

Other comprehensive income (loss), net








Net unrealized gains (losses) from derivatives


(76)

232

372

Reclassification adjustments for gains from derivatives included in net income


(19)

(130)

(140)

Total other comprehensive income (loss)


$ (95)

$ 102

$ 232

Total comprehensive income (loss)


$ (3,657)

$ (5,227)

$ 1,038

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

















Ordinary shares



Accumulated









Number of shares issued

Amount

Additional paid-in capital

other comprehensive income (loss)

Treasury shares

Retained earnings

Total equity

















BALANCE AT DECEMBER 31, 20 18

9,122,501

$ 2,809

$ 65,535

$ (206)

$ (2,088)

$ 18,244

$ 84,294

CHANGES DURING THE YEAR ENDED DECEMBER 31, 20 19 :















Comprehensive income

-

-

-

232

-

806

1,038

Share based compensation

-

-

38

-

-

-

38

BALANCE AT DECEMBER 31, 20 19

9,149,169

$ 2,809

$ 65,573

$ 26

$ (2,088)

$ 19,050

$ 85,370

CHANGES DURING THE YEAR ENDED DECEMBER 31, 20 20 :















Comprehensive income (loss)

-

-

-

102

-

(5,329)

(5,227)

Share based compensation

-

-

138

-

-

-

138

BALANCE AT DECEMBER 31, 20 20

9,149,169

$ 2,809

$ 65,711

$ 128

$ (2,088)

13,721

$ 80,281

CHANGES DURING THE YEAR ENDED DECEMBER 31, 20 21 :















Comprehensive loss

-

-

-

(95)

-

(3,562)

(3,657)

Share based compensation

-

-

160

-

-

-

160

BALANCE AT DECEMBER 31, 202 1

9,149,169

$ 2,809

$ 65,871

$ 33

$ (2,088)

10,159

$ 76,784

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)



Year ended December 31,


2021

2020

2019







CASH FLOWS FROM OPERATING ACTIVITIES:






Net income (loss) from continued operations

$ (3,989)

$ (3,484)

$ 1,461







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






Depreciation and amortization

4,881

4,065

4,292
Gain from change in fair value of derivatives

(19)

(34)

(311)
Non cash finance expense

(73)

566

354
Lease modification

(1,315)

-

-
Provision for restructuring expenses

657

-

-
Change in provision for doubtful accounts

248

(8)

38
Share in results of affiliated companies

76

185

132
Share based compensation

160

138

38
Liability in respect of employee rights upon retirement

94

(341)

(897)
Impairment of intangible assets

-

298

-
Impairment of fixed assets

1,820

-

-
Capital gain from sale of fixed assets

(468)

-

-
Deferred income taxes, net

(686)

(1,438)

(450)
Government loan forgiveness

(1,442)

-

-
Changes in operating assets and liabilities:






Decrease (increase) in trade accounts receivable

(2,934)

9,472

(2,037)
Decrease (increase) in other current assets and prepaid expenses

(959)

310

2,500
Decrease (increase) in inventory

(681)

1,868

(5,740)
Increase (decrease) in trade accounts payable

2,571

(5,336)

3,349
Increase (decrease) in accrued expenses

(218)

(252)

982
Increase (decrease) in other long-term liabilities

8

(62)

(118)
Net cash provided by (used in) operating activities from continued operation

$ (2,269)

$ 5,947

$ 3,593







CASH FLOWS FROM INVESTING ACTIVITIES:






Investment in affiliated company

-

-

(10)
Proceeds from sale of property and equipment

1,163

-

-
Purchase of property and equipment

(16,247)

(3,894)

(3,269)
Purchase of intangible assets

(555)

(1,513)

-
Net cash used in continued investing activities

$ (15,639)

$ (5,407)

$ (3,279)








*Reclassified due to discontinued operation

The accompanying notes are an integral part of the consolidated financial statements.









Year ended December 31,




2021

2020

2019

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



Net cash provided by continued financing activities


$ 6,042

$ 7,652

-










CASH FLOWS FROM DISCONTINUED ACTIVITIES:








Net income (loss) from discontinued operation


427

(1,845)

(655)

Net cash provided by operating activities


350

1,998

484

Net cash used in investing activities


-

-

(134)

Net cash provided by (used in) discontinued activities


$ 777

$ 153

$ (305)










NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH


(11,089)

8,345

9

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR


24,304

15,959

15,950

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR


13,215

24,304

15,959










SUPPLEMENTARY INFORMATION ON INVESTING ACTIVITIES NOT INVOLVING CASH FLOW:








Purchase of property, plant and equipment on credit


$ 199

$ 6,575

$ 942

Additions of operating lease right-of-use assets and operating lease liabilities


$ 399

$ 1,756

$ 648

Classification inventory to fixed assets


$ 829

-

-










Supplemental disclosure of cash flow information:








Interest paid


$ (251)

$ (3)

$ (28)

Income taxes received (paid), net


$ -

$ (3)

$ 673




















*Reclassified due to discontinued operation.

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

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


December 31,

December 31,
2021

2020

(audited)

(audited)
Net income (loss)
$ (3,562)

$ (5,329)
Adjustments:



Share in results of equity investment of affiliated companies
76

185
Taxes on income (tax benefit)
(662)

(1,517)
Financial expenses, net
540

770
Exit and disposal activity
-

765
Depreciation and amortization
5,420

4,259
Net loss (income) from discontinued operation
(427)

1,845
Share base compensation
160

138
Restructuring expenses
1,755

-




Adjusted EBITDA
3,300

1,116

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-Yair
Chief Financial Officer
Tel: 972-8-862-8503
ehudb@tat-technologies.com

SOURCE TAT Technologies Ltd.

Company Name:	TAT Technologies Ltd.
Stock Symbol:	TATT
Market:	NASDAQ
Website:	tat-technologies.com

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