TAT Technologies Reports Third Quarter 2015 Results

Nov 27, 2015, 07:15 ET from TAT Technologies Ltd

GEDERA, Israel, Nov.  27, 2015 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT) (the "Company"), a leading provider of services and products to the commercial and military aerospace and ground defense industries, reported today its results for the three month and nine month periods ended September 30, 2015.

Financial Highlights for the Third quarter of 2015:

  • Total Revenue: $22 million compared to $20.3 million in the third quarter of 2014, increase of 8%.
  • Operating income: $0.5 million compared to $0.6 million in the third quarter of 2014.
  • Net income: $0.2 million compared to $(0.4) million in the third quarter of 2014.
  • Earnings per share basic and diluted: $0.02 per share compared to $(0.05) per share in the third quarter of 2014.
  • EBITDA: $1.1 million compared to $1.2 million in the third quarter of 2014.
  • Cash and cash equivalents and short-term bank deposits: During the third quarter of 2015, the cash balance decreased in $ 0.8 million, from $29.7 million as of June 30, 2015 to $28.9 million as of September 30, 2015.
  • Closing of Chromalloy Israel Acquisition: On October 19, 2015 the Company completed the acquisition of Chromalloy Israel for approximately US $3.5 million. In addition, TAT will pay an earn-out, capped at $2 million, in the event that Chromalloy Israel meets certain annual revenue targets in 2015 and 2016.
    Following the completion of the transaction, Chromalloy Israel changed its name to Turbochrome Ltd.

Financial Highlights for the nine months of 2015:

  • Total Revenue: $63.9 million compared to $59.3 million in the nine months of 2014.
  • Operating income: $2.7 million compared to $1.7 million in the nine months of 2014.
  • Net income: $2.8 million compared to $0.3 million in the nine months of 2014.
  • EBITDA: $4.6 million compared to $3.2 million in the nine months of 2014.
  • Earnings per share basic and diluted: $0.32 per share compared to $0.03 per share in the nine months of 2014.
  • Cash and cash equivalents and short-term bank deposits: During the first nine months of 2015, the cash balance increased in $ 0.9 million, from $28 million as of December 31, 2014 to $28.9 million as of September 30, 2015.

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 three segments:  (i) Original Equipment Manufacturing or "OEM" of Heat Management Solutions (ii) Heat Transfer Services and Products (iii) Maintenance, Repair and Overhaul or "MRO" services of Aviation Components and (iv) overhaul and coating of certain jet engine components.

TAT's activities in the area of OEM of Heat Management Solutions primarily include the design, development, manufacture and sale of (i) a broad range of heat transfer components (such as heat exchangers, pre-coolers and oil/fuel hydraulic coolers) used in mechanical and electronic systems on-board commercial, military and business aircraft; (ii) environmental control and cooling systems on board aircraft and for ground applications; and (iii) a variety of other electronic and mechanical aircraft accessories and systems such as pumps, valves, power systems and turbines.

TAT's activities in the area of Heat Transfer Services and Products include the maintenance, repair and overhaul of heat transfer equipment and in a lesser extent, the manufacturing of certain heat transfer products. TAT's Limco subsidiary operates FAA certified repair station, which provides heat transfer MRO services and products 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 maintenance, repair and overhaul of APUs, Landing Gear 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 jet engine overhaul includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes, afterburner flaps and other components.

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

(Unaudited, in thousands)



September 30,


December 31,

2015


2014




(Revised)

ASSETS




Current Assets:




Cash and cash equivalents

$                  23,821


$                   22,894

Short-term bank deposits

5,109


5,089

Accounts receivable-trade (net of allowance for doubtful accounts of  $269 as of September 30, 2015 and $125 as of December 31, 2014)

19,416


15,657

Other accounts receivable and prepaid expenses

4,668


4,298

Inventories, net

35,895


35,477





Total current assets

88,909


83,415





Long-term assets:




Investment in an affiliated company

-


2,556

Investment in investee company

423


-

Funds in respect of employee rights upon retirement

2,505


2,496

Long-term deferred tax

1,156


1,550

Property, plant and equipment, net

12,025


11,524





Total Long-term assets

16,109


18,126





Total assets

$                 105,018


$                 101,541





LIABILITIES AND EQUITY








Current Liabilities:




Accounts payables trade

5,041


5,886

Other accounts payable and accrued expenses

6,984


5,651

Total current liabilities

12,025


11,537





Long-term liabilities:




      Other accounts payable

59


34

Liability in respect of employee rights upon retirement

2,708


2,655

Long-term deferred tax liability

1,812


1,774





Total long-term liabilities

4,579


4,463





Total liabilities

16,604


16,000













 

EQUITY:




Share capital

2,793


2,793

Additional paid-in capital

64,517


64,491

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive loss

1


-

Retained earnings

23,191


20,345

Total equity

88,414


85,541





Total liabilities and equity

$                105,018


$                 101,541





 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except share data)



Three months ended


Nine months ended


Year ended 


September 30,


December 31,


2015


2014


2015


2014


2014




(Revised)




(Revised)


(Revised)

Revenues:










Products

$     8,254


$     7,483


$   22,980


$   23,015


$          31,363

Services

13,694


12,841


40,924


36,326


49,363


21,948


20,324


63,904


59,341


80,726











Cost  of goods:










Products

7,003


5,976


18,591


17,725


23,616

Services

11,547


10,621


33,946


30,577


40,906


18,550


16,597


52,537


48,302


64,522

Gross Profit

3,398


3,727


11,367


11,039


16,204











Operating expenses:










Research and development, net

247


324


570


885


1,070

Selling and marketing

647


776


2,130


2,415


3,203

General and administrative

2,033


1,999


5,981


6,099


8,123

Other income

(1)


(4)


-


(11)


(11)


2,926


3,095


8,681


9,388


12,385

Operating income

472


632


2,686


1,651


3,819











Financial income (expenses), net

17


(812)


(232)


(783)


(1,294)

Loss from dilution of interests in affiliated company

-


-


-


(45)


-











Income (loss) before taxes on income

489


(180)


2,454


823


2,525











Taxes on income

317


315


1,099


810


1,360











Net income (loss) after taxes on income

172


(495)


1,355


13


1,165

Share in results and sale of equity investment of affiliated company

-


48


1,491


267


267











Net income (loss)

$       172


$     (447)


$      2,846


$       280


$            1,432











Basic and diluted income (loss) per share




















Net income (loss) per share

$    0.02


$    (0.05)


$       0.32


$       0.03


$              0.16











Weighted average number of shares outstanding










Basic

8,808,344


8,805,236


8,808,344


8,805,236


8,805,495

Diluted

8,810,824


8,805,236


8,809,844


8,830,610


8,826,542











 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)



Three months ended


Nine months ended


Year ended



September 30,


December 31,



2015


2014


2015

2014


2014





(Revised)



(Revised)


(Revised)

CASH FLOWS FROM OPERATING
ACTIVITIES:










Net income (loss)


$      172


$    (447)


$  2,846

$     280


$      1,432











Adjustments to reconcile net income to net cash provided by operating activities:




















Depreciation


675


527


1,890

1,543


2,069

Exchange differentials of loans


-


-


-

(1)


(1)

Gain (loss) on sale of property and equipment


-


-


-

(7)


10

Interest from short-term bank deposits and restricted deposits


(5)


-


(20)

(69)


(128)

Provision for doubtful accounts


144


-


144

-


-

Share in results and sale of equity investment of affiliated company 


-


(48)


(1,491)

(222)


(267)

Share based compensation expenses


11


17


26

28


38

Liability in respect of employee rights upon retirement


(68)


(115)


53

(112)


(485)

Deferred income taxes, net


30


(19)


672

(267)


1,229

Changes in operating assets and liabilities:










    Amounts due to (from) related parties, net


-


-


-

5


5

    Decrease (increase) in trade accounts receivable


(1,261)


643


(3,903)

4,082


2,730

Decrease (increase) in other accounts receivable, prepaid expenses and other


35


(1,568)


(276)

(2,338)


(833)

    Decrease (increase) in inventories, net


779


(770)


(418)

(1,404)


(6,009)

    Increase (decrease) in trade accounts payable


(396)


(940)


(801)

(2,115)


(509)

    Increase (decrease) in other accounts payable and accrued expenses


(236)


1,121


1,052

1,257


(715)

    Increase (decrease) in other long-term liabilities


39


(7)


25

(18)


(24)











Net cash provided by (used in) operating activities


$      (81)


$   (1,606)


$   (201)

$      642


$    (1,458)











CASH FLOWS FROM INVESTING ACTIVITIES:










Proceeds from sale of subsidiary (A)


-


-


-

2,176


2,176

Proceeds from sale of equity investment of affiliated company


-


-


3,624

-


-

Funds in respect of employee rights upon retirement


76


97


(61)

80


352

Proceeds from sale of property and equipment


3


-


9

7


19

Purchase of property and equipment


(745)


(350)


(2,444)

(2,234)


(3,021)

Maturities of short-term deposits


-


-


-

-


5,098

Cash flows provided by (used in) investing activities


$   (666)


$   (253)


$   1,128

$         29


$      4,624











Cash flows used in financing activities


-


-


-

$  (2,909)


$   (2,909)











Net increase (decrease) in cash and cash equivalents


(747)


(1,859)


927

(2,238)


257











Cash and cash equivalents at beginning of period


24,568


22,258


22,894

22,637


22,637











Cash and cash equivalents at end of period


$    23,821


$    20,399


$ 23,821

$   20,399


$     22,894






















(A)  Proceeds from sale of subsidiary


-


-


-

7,136


7,136

Assets held for sale (excluding cash in the amount of $2,823)


-


-


-

(3,428)


(3,428)

Liabilities held for sale


-


-


-

(1,532)


(1,532)

Non-controlling interest


-


-


-

$      2,176


$      2,176























 

Revision of financial statements

During Q3 2015, the Company identified an error related to the classification of US employees' social benefits expenses. Previously, the Company classified these expenses in 'general and administrative expenses' instead of classifying a part of them in 'Cost of goods' (product and services) for employees allocated to this line item. This change in classification also impacted the capitalization of inventory balances. There was no material impact on the statement of cash flows.
The error only impacts one segment of the Company, Heat Transfer Services and Products. The Company will revise previously reported segment information in its Annual Report on Form 20-F for the year ended December 31, 2015.

The Company assessed the materiality of this error in accordance with the SEC's Staff Accounting Bulletin 99 and Accounting Standards Codification Topic 250, Accounting Changes and Error Corrections, and concluded that the previously issued financial statements were not materially misstated.  In accordance with the SEC's Staff Accounting Bulletin, the Company will correct these errors by revising the affected financial statements in the Company's 2015 Annual Report on Form 20-F.

Following is the effect of the revision on the Company's previously reported results:

 

Statements of income per share:


For the three and six months periods ended June 30, 2015:



Three months ended

Six months ended


June 30, 2015

June 30, 2015


As
reported
previously

Adjustment

As
revised

As
reported
previously

Adjustment

As
revised

Cost  of goods:







   Products

5,964

70

6,034

11,444

144

11,588

   Services

11,153

168

11,321

22,046

353

22,399

Gross profit

4,353

(238)

4,115

8,466

(497)

7,969

General and administrative

2,261

(237)

2,024

4,428

(480)

3,948

Operating income

1,149

(1)

1,148

2,231

(17)

2,214

Net income

734

(1)

733

2,691

(17)

2,674

Net income per share

0.08

*

0.08

0.31

(0.01)

0.30

*Represents an amount less than $1.

 

 

For the three periods ended March 31, 2015:



Three months ended


March 31, 2015


As
reported
previously

Adjustment

As
revised

Cost  of goods:




   Products

5,480

74

5,554

   Services

10,893

185

11,078

Gross profit

4,113

(259)

3,854

General and administrative

2,167

(243)

1,924

Operating income

1,082

(16)

1,066

Net income

1,957

(16)

1,941

Net income per share

0.22

*

0.22

*Represents an amount less than $1.

 

 

For the three and nine months periods ended September 30, 2014:



Three months ended

Nine months ended


September 30, 2014

September 30, 2014


As
reported
previously

Adjustment

As
revised

As
reported
previously

Adjustment

As
revised

Cost  of goods:







   Products

5,911

65

5,976

17,511

214

17,725

   Services

10,458

163

10,621

30,114

463

30,577

Gross profit

3,955

(228)

3,727

11,716

(677)

11,039

General and administrative

2,216

(217)

1,999

6,771

(672)

6,099

Operating income

643

(11)

632

1,656

(5)

1,651

Net (loss) income

(436)

(11)

(447)

285

(5)

280

Net income per share

(0.05)

*

(0.05)

0.03

*

0.03

*Represents an amount less than $1.

 

 

For the year ended December 31, 2014:


As
reported
previously

Adjustment

As
revised

Cost  of goods:




   Products

23,340

276

23,616

   Services

40,286

620

40,906

Gross profit

17,100

(896)

16,204

General and administrative

9,019

(896)

8,123

Operating income

3,819

*

3,819

Net income

1,432

*

1,432

Net income per share

0.16

*

0.16

*Represents an amount less than $1.

 

 

Balance sheets and shareholders' capital

As of December 31, 2014:



As
reported
Previously

Adjustment

As
revised

Inventories, net

35,404

73

35,477

Total current assets

83,342

73

83,415

Total assets

101,468

73

101,541

Retained earnings

20,272

73

20,345

Total equity

85,468

73

85,541

 

Contact:
Guy Nathanzon – CFO
TAT Technologies Ltd.
Tel: 972-8-862-8500
guyn@tat-technologies.com 

 

SOURCE TAT Technologies Ltd



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