TAT Technologies Reports Year 2010 First Quarter Results
GEDERA, Israel, May 17, 2010 /PRNewswire-FirstCall/ -- TAT Technologies Ltd. (NASDAQ: TATT), 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, 2010.
Financial Highlights:
TAT announced revenues of $18.4 million and a net income of $0.7 million for the three months ended March 31, 2010 compared to revenues of $24.5 million with net income of $1.1 million for the three months ended March 31, 2009.
During the first quarter of 2010 revenues were impacted by (i) The contribution of the Parts services operations to First Aviation Services, Inc. ("FAvS", see 'Other Highlights' below); (ii) higher levels of revenues compared to the first quarter of 2009, in the OEM of Heat Transfer Products operations in Israel; (iii) a decline in revenues in the OEM of Electric Motion Systems operations in Israel following the completion of a one-time project from year 2008 through the first quarter of 2009; and (iv) similar level of revenues in the MRO operations, excluding the Propellers MRO operations contributed to FAvS (see 'Other Highlights' below) despite the weakness in the U.S aviation industry. Total decrease in revenues was 25%.
Revenue breakdown by the three (four during year 2009) principal operational segments for the three-month period ended March 31, 2010 and 2009, respectively, was as follows:
Three Months Ended March 31.
2010 2009
Revenues % of Revenues % of
in Total in Total
Thousands Revenues Thousands Revenues
unaudited Unaudited
Revenues
MRO services * $ 8,954 48.7 % $ 11,484 46.8 %
OEM of Heat
Transfer
products 8,900 48.5 % 7,680 31.3 %
Parts services
** -- - % 2,637 10.7 %
OEM of
Electric
Motion Systems 1,945 10.6 % 3,736 15.2 %
Eliminations (1,432) (7.8) % (994) (4.0) %
Total revenues $ 18,367 100.00 % $ 24,543 100.00 %
* Includes MRO services for Propellers only for the first quarter of year 2009 in the amount of $2,391. On December 4, 2009 this product line was contributed to FAvS.
** Includes results only for the first quarter of year 2009 in the amount of $2,637. On December 4, 2009 this operational segment was contributed to FAvS.
The 30% decrease in net income for the three month period ended March 31, 2010 compared with the three month period ended March 31, 2009, is primarily attributable to the decrease in operating income of our US based subsidiary, Limco-Piedmont, due to the weakness in the U.S aviation industry, partially offset by decrease in finance expenses and in income taxes, as well as by net income of our 37% held related company FAvS for the three month period ended March 31, 2010.
Other Highlights :
On December 4, 2009 the transaction between TAT's subsidiary, Piedmont Aviation Component Services LLC ("Piedmont"), and 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. TAT recorded a capital gain of $4.4 for the transaction.
Dr. Shmuel Fledel, TAT's CEO commented:
"The first quarter of year 2010 was a challenging period for TAT and the whole Aviation industry. We used this period to complete reorganization steps in our U.S. operations already initiated during year 2009. We continued our lean manufacturing initiatives, improved our yields and effected additional management changes, including strengthening our marketing team. We are focusing on our core capabilities while continue to invest in expanding our business offerings worldwide. We also benefited from a very satisfying quarter of FAvS, our 37% held related company, and are very encouraged by the on-going cooperation as well as by the potential of leveraging FAvS's global presence and distribution channels. Our goal is 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 the remaining part of 2010 as well as expand its global outreach".
TAT TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share data)
March 31, March 31,
2010 2009
ASSETS
Current Assets:
Cash and cash equivalents $ 25,874 $21,091
Marketable securities 2,934 22,309
Restricted deposit 5,065 1,510
Trade accounts receivable (net of
allowance for doubtful accounts of
$2,411 and $176 at March 31, 2010 and
March 31, 2009, respectively) 16,171 19,569
Inventories 34,478 34,579
Other accounts receivable and prepaid
expenses 8,229 5,617
Total current assets 92,751 104,675
Investment in a company 9,105 -
Funds in respect of employee right
upon retirement 2,681 3,764
Long-term deferred tax 158 --
Property, plant and equipment, net 14,202 14,905
Intangible assets, net 2,801 1,946
Goodwill 5,296 5,764
Total assets $126,994 $131,054
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term loans 1,828 138
Trade accounts payables 7,935 8,437
Dividends payable -- 4,463
Other accounts payable and accrued
expenses 5,260 5,941
Total current liabilities 15,023 18,979
LONG-TERM LIABILITIES:
Fair value of Call options to
minority ---- --
Long-term loans, net of current
maturities 7,300 6,385
Liability in respect of employee
rights upon retirement 3,227 4,359
Long-term deferred tax liability 2,905 1,024
13,432 11,768
EQUITY:
Share capital
Ordinary shares of NIS 0.9 par value
- Authorized: 10,000,000 Shares at
March, 2010 and 2009; issued and
outstanding 8,815,003 Shares at March
31, 2010 and 6,548,021 shares at
March 31, 2009, 2,790 2,204
Additional paid-in capital 55,882 39,667
Accumulated other comprehensive
income (loss) 7,717 (1,918)
Treasury stock, at cost, 258,040
shares at March 31, 2010 (2,018) (26)
Retained earnings 31,385 32,614
Total shareholders equity 95,756 72,541
Noncontrolling interest 2,783 27,766
Total equity 98,539 100,307
Total liabilities and equity $126,994 $131,054
TAT TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except share and per share data)
Three months ended
March 31,
2010 2009
Revenues:
MRO services $ 8,954 $11,484
OEM - Heat Transfer products 8,900 7,680
OEM - Electric Motion Systems 1,945 3,736
Parts services - 2,637
Eliminations (1,432) (994)
18,367 24,543
Cost and operating expenses:
MRO services 8,042 9,493
OEM - Heat Transfer products 5,961 4,992
OEM - Electric Motion Systems 1,528 2,340
Parts services - 2,040
Eliminations (1,202) (759)
14,329 18,106
Gross Profit 4,038 6,437
Research and development costs 141 165
Selling and marketing expenses 706 879
General and administrative
expenses 2,591 2,943
3,438 3,987
Operating income 600 2,450
Financial expense (388) (1,144)
Financial income 341 640
Income before income taxes 553 1,946
Income taxes 26 741
Net income 527 1,205
Share in results of related
company 206 -
less: Net loss (income)
attributable to noncontrolling
interest 5 (147)
Net income attributable to
controlling interest $ 738 $1,058
Basic net income per share
attributable to controlling
interest $0.08 $0.16
Diluted net income per share
attributable to controlling
interest $0.08 $0.16
Weighted average number of
shares - basic 8,815,003 6,552,671
Weighted average number of
shares - diluted 8,818,616 6,552,671
Subsequent Event
In April 2010, the Company was notified by FAvS that one of the customers of the propeller MRO business which had been contributed to FAvS by Piedmont (see "Other Highlights") was requesting reimbursement for damages purportedly caused to certain propellers. FAvS in turn advised the Company that it wanted the Company to reimburse it for any liability FAvS might incur to such customer. The controversy is in its early stage and it is unclear at this point what liability, if any, the Company might eventually incur. As of the date hereof, the Company has provided a reserve of $350,000 with respect to this potential expense.
* * * * *
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-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, 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 Yaron Shalem - CFO
MS-IR LLC TAT Technologies Ltd.
Tel: +1-917-607-8654 Tel: +972-8-862-8500
[email protected] [email protected]
SOURCE TAT Technologies Ltd
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