TAT Technologies Reports Year 2013 First Quarter Results
GEDERA, Israel, May 29, 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 period ended March 31, 2013.
Financial Highlights:
TAT announced revenues of $21.5 million and net income of $1.7 million for the three months ended March 31, 2013, compared to revenues of $20.7 million with net income of $0.6 million for the three months ended March 31, 2012, an increase of 4.1% in revenues along with an increase of $1.1 million in net income.
During the first 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) the increase in revenues in the OEM of Electric Motion Systems operating segment; partially offset by (iv) the decrease in revenues in the OEM of Heat Management Solutions operating segment.
Revenue breakdown by the operating segments for the three month period ended March 31, 2013 was as follows:
Three Months Ended March 31, |
||||||||||
2013 |
2012 |
% of |
||||||||
Revenues |
% of |
Revenues |
% of |
|||||||
Unaudited |
||||||||||
Revenues |
||||||||||
OEM of Heat Management Solutions |
$ 6,716 |
31.2% |
$ 7,684 |
37.2% |
(12.6)% |
|||||
Heat Transfer Services and Products |
7,141 |
33.2% |
6,783 |
32.8% |
5.3% |
|||||
MRO services for Aviation Components |
5,803 |
26.9% |
5,003 |
24.2% |
16.0% |
|||||
OEM of Electric Motion Systems |
1,950 |
9.1% |
1,802 |
8.7% |
8.2% |
|||||
Eliminations |
(81) |
(0.4)% |
(595) |
(2.9)% |
(86.4)% |
|||||
Total revenues |
$ 21,529 |
100.0% |
$ 20,677 |
100.0% |
4.1% |
Mr. Itsik Maaravi, TAT's President & CEO commented:
"2013 first quarter was a challenging period for the Aerospace and Defense markets following a very successful year in 2012 in terms of revenues, profits and backlog. Several trends impacted the business environment, with the primarily being the followings: The commercial aerospace shows increase in passengers and cargo air traffic while airlines profitability remain 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 following their all-time 2012 record year. On the other hand, with modest revenue decline reported for 2012, defense companies continue to show weakness and are waiting to understand uncertainties following budget constraints and sequestration went into effect on March 1, 2013.
For TAT, the results of 2013 first quarter reflect the continuation of the trend of improvement as we increased revenues, gross margins and operating margins compared to the first quarter of 2011. We continue to focus on our core capabilities, establishing relations with key players in the relevant markets and investing in the development of new products for new customers. Notwithstanding the above, the weakness in the defense markets which is also relevant to the OEM of Electric Motion Systems operating segment resulted in a decrease of our gross margins in this segment compared to 2012.
We plan to continue and increase our marketing and sales efforts, as well as to increase our activity in improving our production efficiency, the quality of our products and the responsiveness and support to our customers. We believe that our efforts will sustain the trend of improved performance throughout next quarters of 2013.
In addition, we are continuing to preserve a strong balance sheet with limited liabilities, strong working capital and sufficient financial assets to support the growth of our operations."
TAT TECHNOLOGIES AND ITS SUBSIDIARIES |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(Unaudited, in thousands, except share data) |
|||||
March 31, |
|||||
2013 |
2012 |
||||
ASSETS |
|||||
Current Assets: |
|||||
Cash and cash equivalents |
$19,568 |
$19,593 |
|||
Short-term bank deposits |
10,061 |
10,000 |
|||
Marketable securities at fair value |
- |
1,900 |
|||
Short-term restricted deposits |
- |
1,255 |
|||
Trade accounts receivable (net of allowance for doubtful |
21,086 |
19,516 |
|||
Other accounts receivable and prepaid expenses |
4,671 |
5,818 |
|||
Inventories, net |
33,296 |
31,754 |
|||
Total current assets |
88,682 |
89,836 |
|||
Long-term assets: |
|||||
Long-term restricted deposits |
- |
2,000 |
|||
Investment in affiliated company |
2,175 |
4,980 |
|||
Funds in respect of employee right upon retirement |
3,375 |
3,082 |
|||
Long-term deferred tax |
1,768 |
3,474 |
|||
Property, plant and equipment, net |
12,992 |
12,659 |
|||
Goodwill, net |
- |
1,072 |
|||
Total Long-term assets |
20,310 |
27,267 |
|||
Total assets |
$108,992 |
$117,103 |
|||
LIABILITIES AND EQUITY |
|||||
Current Liabilities: |
|||||
Current maturities of long-term loans |
3,595 |
5,550 |
|||
Trade accounts payables |
5,991 |
5,817 |
|||
Other accounts payable and accrued expenses |
6,865 |
6,367 |
|||
Total current liabilities |
16,451 |
17,734 |
|||
Long-term liabilities: |
|||||
Long-term loans, net of current maturities |
1,044 |
4,381 |
|||
Other accounts payable |
- |
86 |
|||
Liability in respect of employee rights upon retirement |
3,887 |
3,628 |
|||
Long-term deferred tax liability |
838 |
1,368 |
|||
Total long-term liabilities |
5,769 |
9,463 |
|||
EQUITY: |
|||||
Share capital |
|||||
Ordinary shares of NIS 0.9 par value – Authorized: |
2,790 |
2,790 |
|||
Additional paid-in capital |
64,410 |
64,402 |
|||
Treasury shares at cost - 274,473 and 258,040 shares, at |
(2,088) |
(2,018) |
|||
Accumulated other comprehensive loss |
(752) |
(823) |
|||
Retained earnings |
19,726 |
22,816 |
|||
Total TAT Technologies Ltd. shareholders' equity |
84,086 |
87,167 |
|||
Non controlling interest |
2,686 |
2,739 |
|||
Total equity: |
86,772 |
89,906 |
|||
Total liabilities and equity |
$108,992 |
$117,103 |
TAT TECHNOLOGIES AND ITS SUBSIDIARIES |
|||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||
(Unaudited, in thousands, except share data) |
|||
Three months ended |
|||
March 31, |
|||
2013 |
2012 |
||
Revenues: |
|||
OEM of Heat Management Solutions |
$6,716 |
$7,684 |
|
Heat Transfer Services and Product |
7,141 |
6,783 |
|
MRO services for Aviation Components |
5,803 |
5,003 |
|
OEM of Electric Motion Systems |
1,950 |
1,802 |
|
Eliminations |
(81) |
(595) |
|
21,529 |
20,677 |
||
Cost and operating expenses: |
|||
OEM of Heat Management Solutions |
5,085 |
5,586 |
|
Heat Transfer Services and Products |
5,111 |
5,029 |
|
MRO services for Aviation Components |
4,716 |
4,374 |
|
OEM of Electric Motion Systems |
1,961 |
1,711 |
|
Eliminations |
(309) |
(597) |
|
16,564 |
16,103 |
||
Gross Profit |
4,965 |
4,574 |
|
Research and development, net |
288 |
174 |
|
Selling and marketing expenses |
886 |
889 |
|
General and administrative expenses |
2,664 |
2,995 |
|
Other expenses (income) |
(7) |
14 |
|
3,831 |
4,072 |
||
Operating income |
1,134 |
502 |
|
Financial expenses |
(361) |
(556) |
|
Financial income |
329 |
816 |
|
Income before income taxes |
1,102 |
762 |
|
Taxes on income |
483 |
268 |
|
Net income after income taxes |
619 |
494 |
|
Share in results of affiliated company |
911 |
(40) |
|
Net income |
1,530 |
454 |
|
Net loss attributable to Non controlling interest |
178 |
130 |
|
Net income attributable to TAT Technologies shareholders |
$1,708 |
$584 |
|
Earnings per share |
|||
Basic and diluted net income per share attributable to |
$0.19 |
$0.07 |
|
Weighted average number of shares – basic and diluted |
8,798,570 |
8,815,003 |
Liquidity and Capital Resources
Financial assets, net of debt were $25.0 million in March 31, 2013 compared to $24.8 million in March 31, 2012.
As of March 31, 2013, TAT had cash and cash equivalents and short-term bank deposits of $29.6 million with total debt of $4.6 million. As of March 31, 2012 TAT had cash and cash equivalents and short-term deposits of $29.6 million, short term investments and marketable securities of $1.9 million and restricted cash of $3.3 million, which equals $34.7 million of financial assets, with total debt of $9.9 million.
On May 1, 2013, the Company made a payment of $1.6 million, in accordance with its payment schedule of loans in the total original amount of $6.25 million received by the Company from an Israeli bank. The loans' remaining balance following the payment was $0.9 million.
As of March 31, 2013 TAT met all financial covenants related to its loans and credit facilities.
Change of Control – Update
On March 15, 2013 the receiver of the Company's shares held by its previously controlling shareholders announced a tender to purchase such shares. Pursuant to the tender all proposals to acquire such shares were required to be submitted no later than April 25, 2013. As of the date hereof, the receiver advised the Company that a few proposals have been received and are under evaluation.
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
[email protected]
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.
SOURCE TAT Technologies Ltd.
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