TAT Technologies Reports Fourth Quarter and Full Year 2009 Results; Dan Topaz Joins TAT's Board
GEDERA, Israel, March 15, 2010 /PRNewswire-FirstCall/ -- 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 and twelve month periods ended December 31, 2009.
2009 was a year of weakness in the global aviation industry in general and to a greater extent in the U.S. TAT used this period as an opportunity for reorganization as well as for establishing the infrastructure for future growth. During this period TAT effected certain key management changes, appointing a new CEO to head our U.S. operations as well as appointing a new CMO as part of the group effort to expand its marketing team.
In 2009 TAT successfully completed 2 strategic M&A milestones. The first milestone was the completion of the merger with Limco-Piedmont, TAT's U.S. based subsidiary. This strategic merger resulted in increased synergy between the operations in the U.S. and Israel and we believe it should enable us to reduce expenses. The second milestone was the completion of the FAvS transaction (described below under "Other Highlights") which should position TAT as a leading MRO "One- Stop -Shop" for general aviation. Furthermore this transaction should enable TAT to leverage FAvS's global presence and distribution channels as well as permit TAT to focus on its core aviation businesses: Landing Gear, APU, Heat Exchange and regional aviation markets.
TAT has also begun implementing comprehensive lean manufacturing processes which should improve yields of its U.S. operations.
Financial Highlights:
TAT announced revenues of $18.4 million and a net loss of $1 million for the three months ended December 31, 2009 compared to revenues of $31.1 million with net income of $0.7 million for the three months ended December 31, 2008.
During the 2009 period revenues were impacted by (i) lower revenues in the MRO and Parts operations due to the weakness in the U.S aviation industry; (ii) a return to normal volumes of revenues in OEM of Electric Motion Systems operations in Israel upon the completion of an extraordinary project during year 2008 through first quarter of 2009; and (iii) similar levels of revenues compared to the fourth quarter of 2008, in the OEM of Heat Transfer Products operations in Israel. Total decrease in revenues was 41%.
In the fourth quarter of 2009 TAT recorded a capital gain of $4.4 million from the FAvS transaction described below under "Other Highlights".
Revenue breakdown by the four principal operational segments for the three-month and twelve-month periods ended December 31, 2009 and 2008, respectively, was as follows:
Three Months Ended December 31.
2009 2008
Revenues % of Revenues % of
in Total in Total
Thousands Revenues Thousands Revenues
unaudited Unaudited
Revenues
MRO services * $ 8,155 44.4 % $ 14,012 45.0 %
OEM of Heat
Transfer
products 7,881 42.9 % 8,393 26.9 %
Parts services ** 446 2.4 % 3,929 12.6 %
OEM of Electric
Motion Systems 2,510 13.7 % 6,692 21.5 %
Eliminations (631) (3.4) % (1,882) (6.0) %
Total revenues $ 18,361 100.00 % $ 31,144 100.00 %
Twelve Months Ended December 31.
2009 2008
Revenues % of Revenues % of
in Total in Total
Thousands Revenues Thousands Revenues
unaudited Unaudited
Revenues
MRO services $ 42,283 50.9 % $ 54,276 52.5 %
OEM of Heat
Transfer
products 28,618 34.4 % 27,857 27.0 %
Parts
services ** 6,057 7.3 % 17,289 16.7 %
OEM of
Electric
Motion
Systems 11,321 13.6 % 9,758 9.4 %
Eliminations (5,188) (6.2) % (5,891) (5.7) %
Total
revenues $ 83,091 100.00 % $ 103,289 100.00 %
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* Includes MRO services for Propellers for the period: January 1st 2009 until November 30, 2009, following which this product line was sold to First Aviation Services Inc., as further described under "Other Highlights"
** Includes results for the period: January 1st 2009 until November 30, 2009, following which this operational segment was sold to First Aviation Services Inc., as further described under "Other Highlights"
For the twelve months ended December 31, 2009 TAT announced revenues of $83.1 million with net income of $1.8 million compared to revenues of $103.3 million with net income of $4.3 million for the same period ended December 31, 2008.
During the 2009 period, revenues were impacted by (i) lower revenues in the MRO and Parts operations due to the weakness in the U.S aviation industry; (ii) a return to normal volumes of revenues in OEM of Electric Motion Systems operations in Israel upon the completion of an extraordinary project during year 2008 through first quarter of 2009; and (iii) higher levels of revenues compared to 2008, in the OEM of Heat Transfer Products operations in Israel. Total decrease in revenues was 20%.
Other Highlights :
On December 4, 2009 the transaction between TAT's subsidiary, Piedmont Aviation Component Services LLC ("Piedmont"), and First Aviation Services, Inc. ("FAvS") was consummated. In connection with the transaction, among other things, Piedmont acquired 37% of FAvS common stock and $750,000 of its preferred stock, in exchange for the contribution of Piedmont's parts and propeller businesses. FAvS is a leading supplier of products and services to the aerospace industry worldwide, including the provisioning of aircraft parts and components, and supply chain management services. FAvS also performs overhaul and repair services for wheels, brakes and starter/generators, and builds custom hose assemblies. Simultaneously, FAvS acquired all of the assets of Kelly Aerospace Turbine Rotables ("KATR"), a provider of overhaul and repair services for landing gear, safety equipment, hydraulic and electrical components, brakes and hose assemblies for corporate, regional and military aircraft. Piedmont agreed to provide an up to 2 year guaranty of $7 million of the debt incurred by FAvS in connection with the KATR acquisition. We believe this transaction will position TAT as a leading MRO "One- Stop -Shop" for general aviation while enabling TAT to enjoy FAvS's global presence and distribution channels. As mentioned above, TAT recorded a capital gain of $4.4 for the transaction.
On November 19, TAT completed the repurchase of all shares authorized under its previously announced Rule 10b5-1 Stock Repurchase Plan (announced on August 13, 2009). Under the plan TAT repurchased 253,390 ordinary shares at an average price of $7.89 per share. These shares represented 2.79% of the shares outstanding prior to the commencement of the repurchases.
On November 12, 2009, TAT's Board declared a cash dividend in the total amount of NIS 10 million (approximately $2.66 million), or NIS 1.123 per share (approximately $0.30 per share), for all of the shareholders of TAT. The dividend was paid on December 7, 2009.
Dr. Shmuel Fledel, TAT's CEO commented:
"2009 was a challenging year for TAT and the whole industry. However, we used the softness in the market as an opportunity to reorganize the company, focus on our core capabilities and expand our business through strategic acquisitions. Our goal is to continue to expand our business offerings worldwide and to be a leader in MRO and OEM products for the commercial and military aerospace and ground defense industries. We believe that with the latest strategic steps that we took, TAT will grow its business during 2010 as well as expand its global outreach".
TAT TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share data)
December 31, December 31,
2009 2008
ASSETS
Current Assets:
Cash and cash equivalents $ 25,568 $33,899
Marketable securities 2,919 11,300
Trade accounts receivable (net of
allowance for doubtful accounts of $2,360
and $145 at December 31, 2009 and December
31, 2008, respectively) 15,494 22,086
Inventories 33,620 35,014
Other accounts receivable and prepaid
expenses 12,394 6,545
Total current assets 89,995 108,844
Investment in a company 8,901 -
Funds in respect of employee right upon
retirement 2,597 3,705
Long-term deferred tax 220 --
Property, plant and equipment, net 14,463 15,187
Intangible assets, net 2,924 2,195
Goodwill 5,311 5,999
Total assets $124,411 $135,930
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term loans 1,434 150
Trade accounts payables 6,110 10,718
Other accounts payable and accrued
expenses 5,785 7,360
Total current liabilities 13,329 18,228
LONG-TERM LIABILITIES:
Fair value of Call options to minority -- 2,183
Long-term loans, net of current maturities 7,363 5,188
Liability in respect of employee rights
upon retirement 3,157 4,468
Long-term deferred tax liability 2,956 1,086
13,476 12,925
EQUITY:
Share capital
Ordinary shares of NIS 0.9 par value -
Authorized: 10,000,000 shares at December
31, 2009 and 2008; issued and outstanding
8,815,003 shares at December 31, 2009 and
6,552,671 shares at December 31, 2008, 2,790 2,204
Additional paid-in capital 55,865 39,476
Accumulated other comprehensive loss 7,581 (763)
Treasury stock, at cost, 258,040 shares at
December 31, 2009 (2,018) -
Retained earnings 30,648 35,160
Total shareholders equity 94,866 76,077
Noncontrolling interest 2,740 28,700
Total equity: 97,606 104,777
Total liabilities and equity $124,411 $135,930
TAT TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except share and per share data)
Three months
ended Year ended
December 31, December 31,
2009 2008 2009 2008
Revenues:
MRO services $ 8,155 $14,012 $ 42,283 $ 54,276
OEM - Heat Transfer
products 7,881 8,393 28,618 27,857
OEM - Electric
Motion Systems 2,510 6,692 11,321 9,758
Parts services 446 3,929 6,057 17,289
Eliminations (631) (1,882) (5,188) (5,891)
18,361 31,144 83,091 103,289
Cost and operating
expenses:
MRO services 7,959 11,787 37,901 43,664
OEM - Heat Transfer
products 6,183 5,913 19,809 21,058
OEM - Electric
Motion Systems 2,277 5,905 7,849 7,845
Parts services 528 3,352 5,879 13,922
Eliminations (1) (1,748) (4,543) (5,926)
16,946 25,209 66,895 80,563
Gross Profit 1,415 5,935 16,196 22,726
Research and
development costs 183 -- 680 --
Selling and
marketing expenses 927 901 3,719 4,369
General and
administrative
expenses 5,348 3,689 14,401 12,407
Less: Capital gain
from selling
activity (4,400) -- (4,400) --
Relocation Expenses 178 -- 604 --
2,236 4,590 15,004 16,776
Operating income (821) 1,345 1,192 5,950
Financial expense 645 866 2,042 1,503
Financial income 768 1,196 2,117 2,677
Other (expenses)
income, net (170) (236) 101 (236)
Income (loss)
before income taxes (868) 1,439 1,368 6,888
Income taxes 201 420 (765) 1,795
Net income (loss) (1,069) 1,019 2,133 5,093
Share in results of
affiliated company (32) (12) (32) 674
less: Net loss
(income)
attributable to
noncontrolling
interest 84 (321) (347) (1,499)
Net income (loss)
attributable to
controlling
interest $(1,017) $686 $1,754 $4,268
Basic net income
(loss) per share
attributable to
controlling
interest $(0.12) $0.12 $0.22 $0.652
Diluted net income
(loss) per share
attributable to
controlling
interest $(0.12) $0.12 $0.22 $0.650
Weighted average
number of shares -
basic 8,699,664 6,554,504 7,920,678 6,546,055
Weighted average
number of shares -
diluted 8,717,163 6,559,587 7,948,345 6,566,249
Election of New Director
At a meeting of TAT's Board of Directors held on March 14, 2010, Mr. Dan Topaz was unanimously elected a member of our Board of Directors. He replaces Mr. Eran Saar who resigned from his position as KMN Holdings' CFO and, therefore resigned from the Board effective February 1, 2010. Mr. Topaz currently serves as the Chief Executive Officer of Isal Amlat, TAT's controlling shareholder. Prior to joining TAT's board, between the years 1995 and 2009, Dan Topaz served as Co-Chief Executive Officer of Ham-Let Ltd., an Israeli company which supplies industrial & High Tech compression Fittings and Valves.
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: http://www.tat.co.il
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, synergies, customer benefits, growth opportunities, financial improvements, expected expense savings and other benefits anticipated from the merger. 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 registration statement on form F-4, 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.
Contact:
Miri Segal-Scharia
MS-IR LLC
Tel: +1-917-607-8654
[email protected]
Yaron Shalem - CFO
TAT Technologies Ltd.
Tel: +972-8-862-8500
[email protected]
SOURCE TAT Technologies Ltd
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