TAT Technologies Reports Year 2012 First Quarter Results

GEDERA, Israel, May 22, 2012 /PRNewswire/ --

TAT Technologies Ltd. (NASDAQ: TATT - News), 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 period ended March 31, 2012.

Financial Highlights:

TAT announced revenues of $20.7 million and a net income of $0.6 million for the three months ended March 31, 2012, compared to revenues of $21.4 million with net income of $1.5 million for the three months ended March 31, 2011.

During the first quarter of 2012, revenues were impacted by (i) the increase in revenues in the Heat Transfer Services and Products operating segment and the MRO Services for Aviation Components operating segment; and (ii) the significant decrease in revenues in the OEM of Electric Motion Systems due to growing weakness in the relevant markets. This decrease is a continuation of the decrease in revenues this segment had experienced during 2011.

Revenue breakdown by the operating segments for the three months period ended March 31, 2012 and 2011, respectively, was as follows:

                                      Three Months Ended March 31,
                                                                     % of
                                                                    Change
                                                                    Between
                           2012                     2011            Periods
                  Revenues        % of     Revenues        % of
                     in          Total        in          Total
                  Thousands     Revenues   Thousands     Revenues
                        Unaudited                Unaudited
    Revenues
    OEM of Heat
    Management
    Solutions       $ 7,684        37.2%     $ 7,640        35.7%      0.6%
    Heat
    Transfer
    Services and
    Products          6,783        32.8%       6,467        30.2%      4.9%
    MRO services
    for Aviation
    Components        5,003        24.2%       4,799        22.4%      4.3%
    OEM of
    Electric
    Motion
    Systems           1,802         8.7%       3,570        16.7%   (49.5)%
    Eliminations      (595)       (2.9)%     (1,074)       (5.0)%   (44.6)%
    Total
    revenues       $ 20,677       100.0%    $ 21,402       100.0%    (3.4)%


Mr. Itsik Maaravi, TAT's CEO commented:  

"The results of 2012 first quarter reflect the continuation of the improving trend in our dominant operating segments - the OEM of Heat Management Solutions and Heat Transfer Services and Products, as well as in our MRO for Aviation Components operating segment.  In each of these segments we continued to increase revenues compared to the first quarter of 2011. These improvements are attributed to the increase in our marketing and sales activities during 2010 and 2011 as well as to our rigorous and continuing activity to improve our production flow and yields.

During the first quarter we experienced a notable decrease in revenues and margins in the OEM of Electric Motion Systems compared to the same period in 2011, resulting from growing weakness in the defense markets relevant to this segment. This decrease is a continuation of the decrease in revenues this segment had experienced during 2011.

We are continuing to preserve a strong balance sheet with limited liabilities, impressive working capital and sufficient financial assets to support the growth of our operations.

We are encouraged by global trends of increased traffic reported by airlines around the world. We are witnessing a steady demand for MRO services, as well as positive indications from OEMs in the aerospace and defense industries, which impact our businesses

We continue to focus on our core capabilities while expanding our business offerings worldwide.

We believe that our efforts along with continued improvement in the global aviation industry, will sustain the improved trend line of our performance further in 2012".


TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share data)

                                              March 31,  March 31,
                                                2012       2011
                     ASSETS
    Current Assets:
    Cash and cash equivalents                  $ 19,593   $ 28,820
    Short-term bank deposits                     10,000          -
    Marketable securities at fair value           1,900      2,547
    Short-term restricted deposits                1,255      5,081
    Trade accounts receivable (net of
    allowance for doubtful accounts of $456
    and $ 2,527 as of March 31, 2012 and
    2011, respectively)                          19,516     20,072
    Other accounts receivable and prepaid
    expenses                                      5,818      7,583
    Inventories, net                             31,754     33,152
 
    Total current assets                         89,836     97,255
 
    Long-term assets:
    Long-term restricted deposits                 2,000          -
    Investment in affiliated company              4,980      4,535
    Funds in respect of employee right upon
    retirement                                    3,082      2,959
    Long-term deferred tax                        3,474      1,128
    Property, plant and equipment, net           12,659     14,356
    Intangible assets, net                            -      1,736
    Goodwill, net                                 1,072      1,144
 
    Total Long-term assets                       27,267     25,858
 
    Total assets                              $ 117,103  $ 123,113
 
             LIABILITIES AND EQUITY
 
    Current Liabilities:
    Current maturities of long-term loans         5,550      9,556
    Trade accounts payables                       5,817      7,796
    Other accounts payable and accrued
    expenses                                      6,367      7,371
 
    Total current liabilities                    17,734     24,723
 
    Long-term liabilities:
    Long-term loans, net of current
    maturities                                    4,381        798
    Other accounts payable                           86        129
    Liability in respect of employee rights
    upon retirement                               3,628      3,531
    Long-term deferred tax liability              1,368        775
 
    Total long-term liabilities                   9,463      5,233
 
    EQUITY:
    Share capital
    Ordinary shares of NIS 0.9 par value -
    Authorized: 10,000,000 shares at March
    31, 2012 and 2011; Issued and
    outstanding: 9,073,043 and 8,815,003
    shares, respectively at March 31, 2012
    and 2011                                      2,790      2,790
    Additional paid-in capital                   64,402     64,449
    Treasury stock, at cost, 258,040 shares
    at March 31, 2012 and 2011, respectively     (2,018)    (2,018)
    Accumulated other comprehensive loss           (823)      (249)
    Retained earnings                            22,816     24,964
    Total TAT Technologies shareholders'
    equity                                       87,167     89,936
    Non controlling interest                      2,739      3,221
 
    Total equity:                                89,906     93,157
 
    Total liabilities and equity              $ 117,103  $ 123,113
 


TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except share and per share data)

                                                   Three months ended
                                                       March 31,
                                                   2012         2011
 
    Revenues:
    OEM of Heat Management Solutions               $ 7,684      $ 7,640
    Heat Transfer Services and Product               6,783        6,467
    MRO services for Aviation Components             5,003        4,799
    OEM of Electric Motion Systems                   1,802        3,570
    Eliminations                                      (595)      (1,074)
                                                    20,677       21,402
 
    Cost and operating expenses:
    OEM of Heat Management Solutions                 5,586        5,392
    Heat Transfer Services and Products              5,029        4,698
    MRO services for Aviation Components             4,374        4,067
    OEM of Electric Motion Systems                   1,711        2,487
    Eliminations                                      (597)        (952)
                                                    16,103       15,692
    Gross Profit                                     4,574        5,710
 
    Research and development, net                      174          265
    Selling and marketing expenses                     889          882
    General and administrative expenses              2,995        2,469
    Other expenses                                      14            -
                                                     4,072        3,616
    Operating income                                   502        2,094
 
    Financial expense                                 (556)        (308)
    Financial income                                   816          517
 
    Income before income taxes                         762        2,303
 
    Taxes on income                                    268          780
 
    Net income after income taxes                      494        1,523
    Share in results of affiliated company             (40)          86
 
    Net income                                         454        1,609
    Net loss (income) attributable to Non
    controlling interest                               130         (107)
 
    Net income attributable to TAT Technologies
    shareholders                                     $ 584      $ 1,502
 
    Earning per share
    Basic and diluted net income per share
    attributable to controlling interest            $ 0.06       $ 0.17
 
    Weighted average number of shares - basic
    and diluted                                  8,815,003    8,815,003


TAT operates under four operating 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 for Aviation Components; and (iv) OEM of Electric Motion Systems.

OEM of Heat Management Solutions primarily includes 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.

Heat Transfer Services and Products primarily includes 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 an FAA certified repair station, which provides heat transfer MRO services and products for airlines, air cargo carriers, maintenance service centers and the military.

MRO services for Aviation Components primarily includes 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.

OEM of Electric Motion Systems primarily includes the design, development, manufacture and sale of a broad range of electrical motor applications for airborne and ground systems.

Liquidity and Capital Resources

As of March 31, 2012, TAT had cash and cash equivalents and short-term bank deposits of $29.6 million, marketable securities of $1.9 million and restricted cash of $3.3 million, which equals $34.8 million of financial assets, compared with cash and cash equivalents and short-term deposits of $28.8 million, short term investments and marketable securities of $2.5 million and restricted cash of $5.1 million, which equals $36.4 million of financial assets as of March 31, 2011.

As of March 31, 2012 the Company met all financial covenants related to its loans and credit facilities.

Seasonality

In the OEM industry in general and in TAT's OEM businesses in particular, the majority of customers operate based on annual budgets and tend to utilize during the fiscal fourth quarter the remaining balance of any un-used budgets. This trend is more typical with customers from the defense industry. Accordingly, TAT is more likely to generate increased revenues in the OEM businesses (such as TAT's OEM of Heat Management Solutions and OEM of Electric Motion Systems) during the fiscal fourth quarter. The aviation industry is known for its highest traffic in the third quarter, primarily attributable to summer vacations. As a result, during the fiscal third quarter, airlines tend to postpone, to the extent possible, maintenance and repair of their aircraft to minimize aircraft grounding. Accordingly, TAT is more likely to notice decreased revenues in the MRO businesses (such as TAT's MRO for Aviation Components and Heat Transfer Services and Products) during the fiscal third quarter with recovery during subsequent quarters.  

Subsequent Event

On April 22, 2012, subsequent to the balance sheet date, TAT's Board declared a cash dividend in the total amount of $2.5 million (approximately NIS9.4 million), or $0.283 per share (approximately NIS1.065 per share), for all of the shareholders of TAT. The dividend was paid on May 17, 2012 to shareholders of record on May 3, 2012.

On May 21, 2012, TAT's Board of Directors approved a stock repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934. The plan will be in effect for a period of 6 months (subject to extension) and will provide for the purchase of shares in an aggregate amount of up to $0.5 million U.S. dollars. Such plan replaces and supersedes any other repurchase plan approved by TAT's Board of Directors' on February 21, 2012

*  *  *  *  *

TAT's executive offices are located in the Re'em Industrial Park, Neta Boulevard, Bnei Ayish, Gedera 70750, Israel, and TAT's telephone number is 972-8-862-8500.

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, 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, please visit our web-site:  http://www.tat-technologies.com

 

Yaron Shalem - CFO
TAT Technologies Ltd.
Tel: +972-8-862-8500
yarons@tat-technologies.com

SOURCE TAT Technologies Ltd




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