TAT Technologies Reports Year 2013 Second Quarter Results

Aug 27, 2013, 04:29 ET from TAT Technologies Ltd.

GEDERA, Israel, Aug. 27, 2013 /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 six month periods ended June 30, 2013.

Financial Highlights:

TAT announced revenues of $21.9 million with a net income of $1.0 million for the three months ended June 30, 2013, compared to revenues of $22.1 million with a net loss of $4.2 million for the three months ended June 30, 2012. The net loss reported for 2012 second quarter was the result of a $1.0 million impairment charge of goodwill in TAT's OEM for Electric Motion Systems operating segment and a $3.3 million impairment charge with respect to TAT's investment in First Aviation Services Inc. ("FAvS"). Excluding the impairment charges recorded in the second quarter of 2012, net income for the three months ended June 30, 2013 increased by $0.9 million compared to the same period in 2012.

During the Second quarter of 2013, revenues were impacted by (i) the increase in revenues in the MRO Services for Aviation Components operating segment; (ii) the increase in revenues in the Heat Transfer Services and Products operating segment; (iii) similar revenues in the OEM of Heat Management Solutions operating segment; offset by (iv) the decrease in revenues in the OEM of Electric Motion Systems operating segment. This decrease is a continuation of the decrease in revenues this segment had experienced during 2012 and 2011.

Revenue breakdown by operating segments for the three month and six month periods ended June 30, 2013 and 2012, respectively, was as follows:

 

Three Months Ended June 30,

2013

2012

% of Change Between Periods

Revenues in Thousands

% of Total Revenues

Revenues in Thousands

% of Total Revenues

Unaudited

Revenues

OEM of Heat Management Solutions

$          7,006

32.0%

$         7,036

31.8%

(0.4)%

Heat Transfer Services and Products

7,466

34.2%

7,104

32.1%

5.1%

MRO services for Aviation Components

6,168

28.2%

5,636

25.5%

9.4%

OEM of Electric Motion Systems

2,042

9.4%

2,677

12.1%

(23.7)%

Eliminations

(821)

(3.8)%

(326)

(1.5)%

151.8%

Total revenues

$         21,861

100.0%

$       22,127

100.0%

(1.2)%

 

Six Months Ended June 30,

2013

2012

% of Change Between Periods

Revenues in Thousands

% of Total Revenues

Revenues in Thousands

% of Total Revenues

Unaudited

Unaudited

Revenues

OEM of Heat Management Solutions

$        13,722

31.6%

$       14,720

34.4%

(6.8)%

Heat Transfer Services and Products

14,607

33.7%

13,887

32.4%

5.2%

MRO services for Aviation Components

11,971

27.6%

10,639

24.9%

12.5%

OEM of Electric Motion Systems

3,992

9.2%

4,479

10.5%

(10.9)%

Eliminations

(902)

(2.1)%

(921)

(2.2)%

(2.1)%

Total revenues

$         43,390

100.0%

$       42,804

100.0%

1.4%

 

For the six months ended June 30, 2013, TAT announced revenues of $43.4 million with a net income of $2.7 million compared to revenues of $42.8 million with a net loss of $3.6 million for the six months ended June 30, 2012. The net loss reported for the six month period ended June 30, 2012 was the result of a $1.0 million impairment charge of goodwill in TAT's OEM for Electric Motion Systems operating segment and a $3.3 million impairment charge with respect to TAT's investment in FAvS. Excluding the impairment charges recorded in the second quarter of 2012, net income for the six months ended June 30, 2013 increased by $2.0 million compared to the same period in 2012.

During the six months ended June 30, 2013, revenues were impacted by (i) the increase in revenues in the MRO Services for Aviation Components operating segment; (ii) the increase in revenues in the Heat Transfer Services and Products operating segment; partially offset by (iii) the decrease in revenues in the OEM of Heat Management Solutions operating segment; and (iv) the decrease in revenues in the OEM of Electric Motion Systems operating segment - As mentioned above, this decrease is a continuation of the decrease in revenues this segment had experienced during 2012 and 2011.

Mr. Itsik Maaravi, TAT's President & CEO commented: 

"2013 Second quarter's trends in the Aerospace and Defense markets were similar to the trends shown in the beginning of the year. The commercial airlines markets continue to show an increase in passengers and to a lesser extent, in cargo air traffic while airlines profitability remains a challenge due to competitive environment and relatively high fuel prices. In addition, the MRO business shows steady flow with modest growth and commercial aerospace OEMs continue to report increasing revenues and backlog. On the other hand defense companies continue to show weakness and are waiting to understand uncertainties following budget constraints and sequestration which went into effect on March 1, 2013.

For TAT, the results of 2013 second quarter reflect the continuation of the trend of improvement as we increased revenues, gross margins and operating margins compared to the first quarter of 2013. On a year-to-date basis, the first half of 2013 reflects higher revenues compared to the first half of 2012 while gross and operating margins were similar. We continue to increase our marketing and sales efforts and put an emphasis on strengthening our relations with leading players in the relevant markets, successfully develop new products for new customers and improving our production efficiency, the quality of our products and the responsiveness and support to our customers."

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share data)

June 30,

June 30,

December 31,

2013

2012

ASSETS

Current Assets:

Cash and cash equivalents

$              21,945

$              14,158

$            16,581

Short-term bank deposits

10,013

10,000

10,048

Marketable securities at fair value

-

1,900

-

Short-term restricted deposits

-

3,206

2,307

Trade accounts receivable (net of      allowance for doubtful accounts      of  $368 and $ 436 as of June      30, 2013 and 2012, respectively)

17,969

20,111

20,930

Other accounts receivable and      prepaid expenses

3,771

5,207

4,587

Inventories, net

33,494

31,711

33,031

Total current assets

87,192

86,293

87,484

Long-term assets:

Investment in affiliated company

2,362

1,668

1,264

Funds in respect of employee right upon      retirement

3,514

2,965

3,318

Long-term deferred tax

1,435

2,787

2,535

Property, plant and equipment, net

13,160

12,141

12,910

Total Long-term assets

20,471

19,561

20,027

Total assets

$            107,663

$         105,854

$          107,511

 

LIABILITIES AND EQUITY

Current Liabilities:

Short term bank loan and current maturities of long-term loans

1,883

3,731

3,274

Trade accounts payables

6,156

6,649

5,373

Other accounts payable and accrued expenses

6,725

6,021

7,407

Total current liabilities

14,764

16,401

16,054

Long-term liabilities:

Long-term loans, net of current      maturities

82

1,883

1,116

Other accounts payable

73

85

-

Liability in respect of employee rights      upon retirement

4,069

3,540

3,815

Long-term deferred tax liability

863

1,344

1,490

Total long-term liabilities

5,087

6,852

6,421

 

EQUITY:

Share capital

Ordinary shares of NIS 0.9 par value –      Authorized: 10,000,000 shares at       June 30, 2013 and 2012; Issued:      9,073,043 shares at June 30, 2013      and 2012; Outstanding: 8,798,570 and      8,810,366 shares at June 30, 2013      and 2012, respectively

2,790

2,790

2,790

Additional paid-in capital

64,412

64,402

64,410

Treasury stock, at cost, 274,473 and      262,677 shares at June 30, 2013 and      2012, respectively

(2,088)

(2,038)

(2,088)

Accumulated other comprehensive loss

(702)

(1,218)

(897)

Retained earnings

20,745

16,116

18,018

Total TAT Technologies shareholders' equity

85,157

80,052

82,233

Non controlling interest

2,655

2,549

2,803

Total equity:

87,812

82,601

85,036

Total liabilities and equity

$            107,663

$            105,854

$          107,511

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

Three months ended

Six months ended

Year ended

June 30,

June 30,

December 31,

2013

2012

2013

2012

2012

Revenues:

OEM of Heat Management Solutions

$       7,006

$       7,036

$     13,722

$    14,720

$         31,032

Heat Transfer Services and Product

7,466

7,104

14,607

13,887

27,709

MRO services for Aviation Components

6,168

5,636

11,971

10,639

22,442

OEM of Electric Motion Systems

2,042

2,677

3,992

4,479

10,007

Eliminations

(821)

(326)

(902)

(921)

(3,268)

21,861

22,127

43,390

42,804

87,922

Cost and operating expenses:

OEM of Heat Management Solutions

5,498

5,404

10,583

10,990

23,105

Heat Transfer Services and Products

5,293

5,020

10,404

10,049

19,671

MRO services for Aviation Components

5,053

4,163

9,769

8,537

19,044

OEM of Electric Motion Systems

1,712

2,288

3,673

3,999

8,043

Eliminations

(862)

(454)

(1,171)

(1,051)

(3,281)

16,694

16,421

33,258

32,524

66,582

Gross Profit

5,167

5,706

10,132

10,280

21,340

Research and development, net

215

501

503

675

1,152

Selling and marketing expenses

928

924

1,814

1,813

3,426

General and administrative expenses

2,794

2,755

5,458

5,750

11,487

Other expenses (income)

-

(4)

(7)

10

9

Impairment of  goodwill

-

1,015

-

1,015

1,015

3,937

5,191

7,768

9,263

17,089

Operating income

1,230

515

2,364

1,017

4,251

Financial expenses

(262)

(811)

(623)

(1,094)

(2,229)

Financial income

262

428

591

970

2,048

Income before income taxes

1,230

132

2,332

893

4,070

Taxes on income

452

1,063

935

1,331

2,086

Net income (loss) after income taxes

778

(931)

1,397

(438)

1,984

Share in results of affiliated company and impairment of share in affiliated company

187

(3,312)

1,098

(3,352)

(3,756)

Net income (loss)

965

(4,243)

2,495

(3,790)

(1,772)

Net loss attributable to Non controlling interest

54

44

232

174

58

Net income (loss) attributable to TAT Technologies shareholders

$       1,019

$     (4,199)

$       2,727

$   (3,616)

$        (1,714)

Earning per share

Basic and diluted net income (loss) per share attributable to controlling interest

$       0.12

$       (0.48)

$       0.31

$     (0.41)

$     (0.19)

Weighted average number of shares – basic and diluted

8,798,570

8,815,003

8,798,570

8,815,003

8,808,075

Resignation and Election of Chairman of the Board of Directors

At the meeting of the Board of Directors of the Company, held on August 26, 2013, Mr. Zeev Birnboim has resigned as Chairman of the Board of Directors of the Company effective immediately. Mr. Birnboim advised the Board that his resignation was not as a result of any disagreement with the Company. At that meeting, the Board of Directors of the Company has elected Mr. Samual Vlodinger as the new Chairman of the Board of Directors, effective immediately. Mr. Vlodinger is a senior partner with FIMI Opportunity Funds, the new controlling shareholder of TAT.

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. 

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 or "OEM" of Heat Management Solutions (ii) OEM of Electric Motion Systems (iii) Heat Transfer Services and Products and (iv) Maintenance, Repair and Overhaul or "MRO" services of Aviation 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 OEM of Electric Motion Systems primarily include the design, development, manufacture and sale of a broad range of electrical motor applications for airborne and ground systems.

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 also holds approximately 30% of the equity of First Aviation Services, a one-stop-shop for MRO services (wheels, breaks, propellers and landing gear) for the General Aviation Industry.

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.

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

Yaron Shalem – CFO TAT Technologies Ltd. Tel: 972-8-862-8500 yarons@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, 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.

SOURCE TAT Technologies Ltd.



RELATED LINKS

http://www.tat-technologies.com