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TAT Technologies Reports Fourth Quarter and Full Year 2012 Results

      TAT Technologies Reports Fourth Quarter and Full Year 2012 Results

PR Newswire

GEDERA, Israel, March 22, 2013

GEDERA, Israel, March 22, 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 twelve
month periods ended December 31, 2012.

Financial Highlights:

TAT announced revenues of $23.0 million and a net income of $0.4 million for
the three months ended December 31, 2012 compared to revenues of $23.4 million
with a net income of $0.1 million for the three months ended December 31, 2011
- an increase ofapproximately$0.3million in net income.

During the fourth quarter of 2012, revenues were impacted by (i) the decrease
in revenues in the Heat Transfer Services and Products segment; (ii) similar
revenues in the OEM of Heat Management Solutions segment; (iii) similar
revenues in the OEM of Electric Motion Systems segment; partially offset by
(iv) the increase in revenues in the MRO Services for Aviation Components
segment. 

Revenue breakdown by the operating segments for the three month and twelve
month periods ended December 31, 2012 and 2011 was as follows:

                            Three Months Ended December 31,
                                                                     % of
                                                                    Change
                                                                    Between
                            2012                    2011            Periods
                    Revenues       % of     Revenues       % of
                       in         Total        in         Total
                    Thousands    Revenues   Thousands    Revenues

                                           Unaudited
    Revenues
    OEM of Heat
    Management
    Solutions         $ 8,311       36.1%     $ 8,424       36.0%    (1.3)%
    Heat Transfer
    Services and
    Products            7,167       31.1%       7,638       32.7%    (6.2)%
    MRO services
    for Aviation
    Components          5,776       25.1%       5,343       22.8%      8.1%
    OEM of
    Electric
    Motion Systems      3,092       13.4%       3,103       13.3%    (0.4)%
    Eliminations       (1,307)      (5.7)%     (1,118)      (4.8)%    16.9%
    Total revenues   $ 23,039      100.0%    $ 23,390      100.0%    (1.5)%

                           Twelve Months Ended December 31,
                                                                     % of
                                                                    Change
                                                                    Between
                            2012                    2011            Periods
                    Revenues       % of     Revenues       % of
                       in         Total        in         Total
                    Thousands    Revenues   Thousands    Revenues

                                           Unaudited
    Revenues
    OEM of Heat
    Management
    Solutions        $ 31,032       35.3%    $ 30,020       35.2%      3.4%
    Heat Transfer
    Services and
    Products           27,709       31.5%      27,603       32.3%      0.4%
    MRO services
    for Aviation
    Components         22,442       25.5%      20,146       23.6%     11.4%
    OEM of
    Electric
    Motion Systems     10,007       11.4%      11,658       13.6%   (14.2)%
    Eliminations       (3,268)     (3.7)%      (4,030)     (4.7)%   (18.9)%
    Total revenues   $ 87,922      100.0%    $ 85,397      100.0%      3.0%

For the twelve months ended December 31, 2012, TAT announced revenues of $87.9
million with a net loss of $1.5 million compared to revenues of $85.4 million
with net loss of $1.0 million for the same period ended December 31, 2011 - an
increase of3.0% in revenues along with
a$0.05millionincreaseinreportednet loss. The net loss reported for the
twelve month period ended December 31, 2012 is the result of a $1.0 million
impairment charge of goodwill, recorded in the second quarter of 2012, in
TAT's OEM for Electric Motion Systems operating segment and a $3.3 million
impairment charge, also recorded in the second quarter of 2012, with respect
to TAT's investment in FAvS. The net loss reported for the twelve month period
ended December 31, 2011 was the result of a $5.76 million (before taxes) write
down of inventories and impairment charges of long lived assets ($3.61
million, net of taxes). Excluding these impairment charges netincomefor the
twelve month period ended December 31, 2012, was $2.8millioncompared to
netincomeof $2.6 millionfortwelve month period ended December 31, 2011-
an increase of10%.

During the twelve months of 2012, revenues were impacted by the increase in
revenues in all our significant operating segments - the OEM of Heat
Management Solutions segment, the Heat Transfer Services and Products segment
and the MRO Services for Aviation Components segment; while revenues in the
OEM of Electric Motion Systems operating segment significantly decreased due
to growing weakness in the relevant defense markets. This decrease is a
continuation of the decrease in revenues this segment had experienced during
2011.

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

"The results of 2012 reflect the trend ofcontinuingimprovement Year over
Year as weagainincreasedrevenues and gross margins compared to 2011 and
2010. These improvements are attributed to the increase in our marketing and
sales efforts during 2011and2012 as well as to our rigorous and continuing
activity in improving our production efficiency.

Increasingfuel costs continue to impact thecommercial airlinebusiness
environment by reducingairlineprofitability and offsetting the positive
impact of growing air traffic. As a result, airlinesare likely todefer MRO
activities andutilizeexisting stock rather than maintaining inventory
levels. On the other hand, we continue to witness positive indications from
commercial OEMs in the aerospace industry that increase backlog of new
airplanes and/or airborne platforms/systems. The defense market however
continues to show weakness and is impacted by budget constraints in various
countries, primarily in the USA.

We are encouraged by our ability to maintain a steady growth in our key
businessesin spiteof theadverseimpactsof the trends described above. The
weakness in the defense market which is also relevant to the OEM of Electric
Motion Systems operating segment resulted in a decrease of our revenues and
gross margins in this segment compared to 2011.

We continue to focus on our core capabilities and believe that our efforts
will sustain the trend of improved performance for in 2013.

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)

                                                                     December
                                                      December 31,     31,
             2012                  2011
                         ASSETS
    Current Assets:
    Cash and cash equivalents                             $ 16,581    $ 26,232
    Short-term bank deposits                                10,048           -
    Marketable securities at fair value                          -       1,900
    Short-term restricted deposits                           2,307         954
    Trade accounts receivable (net of allowance for
    doubtful accounts of $376 and $190 at December
    31, 2012 and 2011, respectively)                        20,930      20,621
    Other accounts receivable and prepaid expenses           4,468       6,479
    Inventories, net                                  33,031            31,303

    Total current assets                                    87,365      87,489

    Long-term assets:
          Long-term restricted deposits                          -       2,300
          Investment in affiliated company                   1,264       5,020
          Funds in respect of employee right upon
          retirement                                         3,318       2,859
          Long-term deferred tax                             2,535       3,669
          Property, plant and equipment, net                12,910      12,939
          Goodwill, net                                          -       1,042

    Total Long-term assets                                  20,027      27,829

    Total assets                                         $ 107,392   $ 115,318

                 LIABILITIES AND EQUITY

    Current Liabilities:
    Current maturities of long-term loans                    3,274       4,916
    Trade accounts payables                                  5,373       5,073
    Other accounts payable and accrued expenses              7,057       6,835

    Total current liabilities                               15,704      16,824

    Long-term liabilities:
    Long-term loans, net of current maturities               1,116       4,420
    Other long-term liabilities                                  -          86
    Liability in respect of employee rights upon
    retirement                                               3,815       3,414
    Long-term deferred tax liability                         1,490       1,413

                      Total long-term liabilities            6,421       9,333

    EQUITY:
    Share capital
    Ordinary shares of NIS 0.9 par value -
    Authorized: 10,000,000 shares at December 31,
    2012 and 2011; Issued: 9,073,043 shares at
    December 31, 2012 and 2011; Outstanding:
    8,798,570 and 8,815,003 shares at December 31,
    2012 and 2011, respectively                              2,790       2,790
    Additional paid-in capital                              64,410      64,402
    Treasury stock, at cost, 274,473 and 258,040
    shares at December 31, 2012 and 2011,
    respectively                                            (2,088)     (2,018)
    Accumulated other comprehensive loss                      (897)     (1,036)
    Retained earnings                                       18,249      22,232
    Total TAT Technologies Ltd. shareholders'
    equity                                                  82,464      86,370
    Noncontrolling interest                                  2,803       2,791

    Total equity:                                           85,267      89,161

    Total liabilities and equity                         $ 107,392   $ 115,318


TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

                                 Three months ended       Twelve months ended
                                    December 31,             December 31,
                                 2012          2011       2012          2011

    Revenues:
    OEM of Heat Management
    Solutions                  $ 8,311       $ 8,424   $ 31,032      $ 30,020
    Heat Transfer Services
    and Products                 7,167         7,638     27,709        27,603
    MRO services for
    Aviation Components          5,776         5,343     22,442        20,146
    OEM of Electric Motion
    Systems                      3,092         3,103     10,007        11,658
    Eliminations                (1,307)       (1,118)    (3,268)       (4,030)
                                23,039        23,390     87,922        85,397

    Cost and operating
    expenses:
    OEM of Heat Management
    Solutions                    6,256         6,270     23,105        22,660
    Heat Transfer Services
    and Products                 4,925         5,801     19,671        20,173
    MRO services for
    Aviation Components          4,996         4,973     18,694        17,882
    OEM of Electric Motion
    Systems                      2,464         2,524      8,043         9,388
    Write down of inventory
    and impairment charges
    of long lived assets             -             -          -         5,763
    Eliminations                (1,212)       (1,127)    (3,281)       (3,884)
                                17,429        18,441     66,232        71,982
    Gross Profit                 5,610         4,949     21,690        13,415

    Research and development
    costs, net                     313           143      1,152           786
    Selling and marketing
    expenses                       830           958      3,426         3,439
    General and
    administrative expenses      3,233         2,939     11,487        10,949
    Other expenses (income)         (1)          (44)         9          (169)
    Impairment of goodwill           -             -      1,015             -
                                 4,375         3,996     17,089        15,005
    Operating income (loss)      1,235           953      4,601        (1,590)

    Financial expenses            (577)         (630)    (2,229)       (2,203)
    Financial income               560           296      2,048         1,823
    Gain from dilution of
    interests in affiliated
    company                          -             -          -           240

    Income (loss) before
    income taxes                 1,218           619      4,420        (1,730)

    Taxes on income
    (benefit)                      309           363      2,205          (316)
    Net income (loss) after
    income taxes                   909           256      2,215        (1,414)

    Share in results of
    affiliated company and
    impairment of share in
    affiliated company            (540)         (119)    (3,756)           331
    Net income (loss)              369           137     (1,541)        (1,083)
    Net loss (income)
    attributable to
    Noncontrolling interest        (8)          (20)         58            53
    Net income (loss)
    attributable to TAT
    Technologies Ltd.
    shareholders                 $ 361         $ 117  $  (1,483)     $  (1,030)
    Earning per share
    Basic and diluted net
    income (loss) per share
    attributable to
    controlling interest        $ 0.04        $ 0.01   $  (0.17)      $  (0.12)

    Weighted average number
    of shares - basic and
    diluted                  8,798,570     8,815,003  8,808,075      8,815,003

Liquidity and Capital Resources

As of December 31, 2012, TAT had cash and cash equivalents and short-term bank
deposits of $26.6 million and restricted cash of $2.3 million (such restricted
cash was released on March 18, 2013, see further below under "Disposal of API
by FAvS") , which equals $28.9 million of financial assets, compared with cash
and cash equivalents $26.2 million, marketable securities of $1.9 million and
restricted cash of $3.3 million, which equals $31.4 million of financial
assets as of December 31, 2011. Financial assets, net of debt were $24.5
million in December 31, 2012 compared to $22.0 million in December 31, 2011

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 was for a
period of 6 months (subject to extension) and provided for the purchase of
shares in an aggregate amount of up to $0.5 million U.S. dollars. Such plan
replaced and superseded a prior repurchase plan approved by TAT's Board of
Directors on February 21, 2012. On November 21, 2012, the term of such stock
repurchase plan ended. As of such date, the Company had purchased 16,433
shares for approximately $70 thousands (average of $4.29 per share)
constituting less than 0.1% of TAT's issued shares.

On November 6, 2012, the Company made a prepayment of $775 thousands, on
account of loans in the total original amount of $6.25 million received by the
Company from an Israeli bank. The loans' balance prior to the prepayment was
$3.3 million, following which its remaining balance was $2.5 million.

Grant of options

Following the approval of TAT's Audit committee and Board of Directors, on
June 28, 2012, the Company's shareholders approved a plan (the "Plan") to
grant up to 380,000 options ("Options") to purchase Ordinary shares, 0.9 NIS
par value, of the Company to senior executives and certain members of the
Board of Directors, at an exercise price of $6.5 per share. The Options vest
over a three-year period (one-third each year), but the vesting of 50% of the
Options is subject, in addition, to certain minimum shareholders' equity
during a period of 4 years from the grant date. On August 21, 2012, pursuant
to the Plan, TAT's Board of Directors approved the grant of 330,000 Options,
which were granted on October 4, 2012 (out of which 45,000 options were
forfeited on October 30, 2012 and additional 40,000 were forfeited on January
16, 2013).

Election of a new Chairman of the Board of Directors

At a meeting of the Board of Directors of the Company held on March 19, 2013,
Mr. Zeev Birnboim was elected as the new Chairman of the Board of Directors,
to serve in such capacity until the 2013 Annual General Meeting of the
Company, expected to be held by the end of June.

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. Persuant
to the tender all proposals to aquire such shares must be submitted no later
than April 18, 2013. Finalization of such sale would result in a change of
control of TAT.

Disposal of API by FAVS

On March 18, 2013 FAvS sold 97% of the stock of API, one of its subsidiaries,
for a total purchase price of $16.5 million, out of which $15.9 million were
used to repay debt. The sale resulted in FAvS retaining a 3% equity interest
in the API business.

The transaction resulted in a loss from discontinued operations and write-down
of the API business of $11.5 million which is included in the FAvS loss for
the year ended December 31, 2012. On June 30, 2012, as a result of certain
indications of impairment, TAT performed an impairment test on its investment
in FAvS and as a result recorded an impairment charge of $3.3 million on its
investment in FAvS (which relates to API as well and approximates its share in
the abovementioned write-down). TAT also recorded its share in the losses of
FAvS for the year ended on December 31, 2012 in the amount of $0.5 million.

Simultaneously with the transaction FAvS paid-off its Term Loan in the amount
of $4 million thereby releasing the Letter of Credit provided by TAT to secure
such loan. Accordingly the restricted deposit associated with the above Letter
of Credit, was released as well.

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
world-wide distributor of products and services to the aerospace industry and
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.

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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