GEDERA, Israel, August 18 /PRNewswire-FirstCall/ -- TAT
Technologies Ltd. (NASDAQ:TATTF), reported today its results for
the three - month and six - month periods ended June 30, 2009. TAT
Technologies Ltd. (TAT), directly and through its subsidiaries,
provides a variety of services and products to the military and
commercial aerospace and ground defense systems industries. Such
products and services primarily include the design, development,
manufacture, maintenance and repair 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 broad range of electrical motion
applications for airborne and ground systems. Management's
Discussion and Analysis of Financial Condition and Results of
Operations Background TAT operates under four operational segments:
(i) Original Equipment Manufacturing or "OEM" of Heat Transfer
products (ii) OEM of Electric Motion Systems (iii) Maintenance,
Repair and Overhaul or 'MRO" services; and (iv) parts services,
each with the following characteristics. TAT's activities in the
area of OEM of Heat Transfer products primarily relate to the (i)
design, development, manufacture and sale of 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; and
(ii) manufacture and sale of environmental control and cooling
systems 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 relate to the design,
development, manufacture and sale of a broad range of electrical
motor applications for airborne and ground systems. TAT activities
in this segment commenced with the acquisition of Bental in August
2008 and accordingly, the results in this segment for fiscal year
2008 are not compared with the previous years. TAT's MRO services
include the remanufacture, overhaul and repair of heat transfer
equipment and other aircraft components, APUs, propellers and
landing gear. TAT's Limco subsidiary operates FAA certified repair
stations, which provide aircraft component MRO services for
airlines, air cargo carriers, maintenance service centers and the
military. TAT's parts segment focuses on inventory management and
sale of APU parts, propellers and landing gear. TAT offers parts
services for commercial, regional and charter airlines and business
aircraft owners. Three Months ended June 30, 2009 compared with
three months ended June 30, 2008 The following table reflects the
geographic breakdown of TAT's revenues for each of the three month
and six month periods ended June 30, 2009 and 2008: Three Months
Ended June 30. ____________________________________________________
2009 2008 ________________________ ________________________
Revenues % of Revenues % of in Total in Total Thousands Revenues
Thousands Revenues ________________________
________________________ unaudited unaudited Sources of Revenues
North America $ 11,465 53.5 % $ 14,794 63.8 % Europe 3,854 18.0 %
4,822 20.8 % Israel 3,674 17.1 % 2,375 10.2 % Asia 913 4.3 % 478
2.1 % Other 1,526 7.1 % 731 3.1 % ___________ _________ ___________
_________ Total $ 21,432 100.00 % $ 23,200 100.00 % ===========
========= =========== ========= Six Months Ended June 30.
____________________________________________________ 2009 2008
________________________ ________________________ Revenues % of
Revenues % of in Total in Total Thousands Revenues Thousands
Revenues ________________________ ________________________
unaudited unaudited Sources of Revenues North America $ 23,237 50.5
% $ 28,268 62.2 % Europe 8,632 18.8 % 9,270 20.4 % Israel 9,177
20.0 % 4,257 9.4 % Asia 2,125 4.6 % 1,412 3.1 % Other 2,804 6.1 %
2,236 4.9 % ___________ _________ ___________ _________ Total $
45,975 100.00 % $ 45,443 100.00 % =========== ========= ===========
========= TAT's revenues from its four principal lines of business
for each of the three month and six month periods ended June 30,
2009 and 2008 were as follows: Three Months Ended June 30.
____________________________________________________ 2009 2008
________________________ ________________________ Revenues % of
Revenues % of in Total in Total Thousands Revenues Thousands
Revenues ________________________ ________________________
unaudited unaudited Revenues MRO services $ 11,736 54.8 % $ 13,225
57.0 % OEM of Heat Transfer products 7,018 32.7 % 6,918 29.8 %
Parts services 2,186 10.2 % 4,452 19.2 % OEM of Electric Motion
Systems 2,278 10.6 % -- -- % Eliminations (1,786) (8.3)% (1,395)
(6.0)% ___________ _________ ___________ _________ Total revenues $
21,432 100.00 % $ 23,200 100.00 % =========== ========= ===========
========= Six Months Ended June 30.
____________________________________________________ 2009 2008
________________________ ________________________ Revenues % of
Revenues % of in Total in Total Thousands Revenues Thousands
Revenues ________________________ ________________________
unaudited unaudited Revenues MRO services $ 23,220 50.5 % $ 26,210
57.7 % OEM of Heat Transfer products 14,698 32.0 % 13,397 29.5 %
Parts services 4,823 10.5 % 8,587 18.9 % OEM of Electric Motion
Systems 6,014 13.1 % -- -- % Eliminations (2,780) (6.1)% (2,751)
(6.1)% ___________ _________ ___________ _________ Total revenues $
45,975 100.00 % $ 45,443 100.00 % =========== ========= ===========
========= Revenues. Total revenues decreased to $21.4 million for
the three months ended June 30, 2009 from $23.2 million for the
three months ended June 30, 2008, a decrease of 7.6%. This decrease
reflects increased revenues in the OEM operations due to organic
growth in the OEM of Heat Transfer products segment, as well as
revenues in the OEM of Electric Motion Systems segment derived from
the Company's 70% controlled subsidiary, Bental, which did not
exist during the second quarter of fiscal 2008; offset by decreased
revenues in the MRO services segment and in the Parts services
segment. Cost of revenues. Cost of revenues decreased to $17.6
million for the three months ended June 30, 2009 from $18.3 million
for the three months ended June 30, 2008, an decrease of 3.77%. The
decrease in cost of revenues was primarily attributable to the
decreased revenues in the MRO and Part services operations, off-set
by additional cost related to Repair Center and Storefront
agreements. Cost of revenues as a percentage of revenues after
eliminating intercompany transactions was 82% in the three months
ended June 30, 2009, compared to 79% for the three months ended
June 30, 2008. Research and development. Research and Development
expenses were $0.2 million for the three months ended June 30,
2009, and are related to new products and technologies within the
OEM operations in Israel. Research and Development expenses as a
percentage of revenues was 1.0% in the three months ended June 30,
2009. TAT did not incur any material research and development
expenses in the years ended December 31, 2008 and 2007. TAT does
expect to continue to incur and record research and development
expenses in coming years. Selling and marketing expenses. Selling
and marketing expenses were $1.1 million for the three months ended
June 30, 2009, a slight increase compared to $1.0 million for the
three months ended June 30, 2008. These expenses were attributable
to increased expenses in the OEM operations off-set by decreased
expenses in the MRO services and in lesser extent in the parts
service segment. Selling and marketing expenses as a percentage of
revenues were 5.2% for the three months ended June 30, 2009,
compared to 4.4% for the three months ended June 30, 2008. General
and administrative expenses. General and administrative expenses
were $2.8 million for the three months ended June 30, 2009, a
slight decrease compared to $2.9 million for the three months ended
June 30, 2008. This is primarily attributable to a one time
expenses in 2008 associated with the retirement of certain
management members off set by increased expenses in the OEM
operations as a result of the consolidation of Bental operations
commencing August 18, 2008. General and administrative expenses as
a percentage of revenues slightly increased to 12.9% for the three
months ended June 30, 2009 from 12.4% for the three months ended
June 30, 2008. Relocation Expenses. Relocation expenses were $0.1
million for the three months ended June 30, 2009, compared to none
during the three months ended June 30, 2008, and are related to the
relocation of the operations of TAT's Tulsa, Oklahoma based
subsidiary Limco Airepair, Inc. ("Limco") to the location of its
Piedmont Aviation Component Services, Inc. subsidiary in
Kernersville, North Carolina. On July 28, 2009 the Company had
determined not to go forward with the planned relocation Operating
income. For the three months ended June 30, 2009 there was an
operating loss of $0.4 million from compared to an operating income
of $1.0 million for the three months ended June 30, 2008. That
reflects an increased gross and operational margins in the OEM
operations due to improved margins in the OEM of Heat Transfer
products segment, as well as operational income in the OEM of
Electric Motion Systems segment derived from the company's 70%
controlled subsidiary, Bental Industries Ltd. which did not exist
during the second quarter of fiscal 2008; offset by decreased gross
and operational margins in the MRO and in the Parts services
segments in 2009 compared to 2008. Financial income. Financial
income for the three months ended June 30, 2009 was $0.6 million,
compared to $0.5 million for the three months ended June 30, 2008
and was primarily attributable to hedging activities related to
exchange rate between the U.S. dollar and the Israeli Shekel and
interest received for short-term investments. Financial expenses.
Financial expense for the three months ended June 30, 2009 was $0.4
million, compared to $0.1 million for the three months ended June
30, 2008. In the three months ended June 30, 2009 financial expense
was primarily resulted from changes in the exchange rate between
the U.S. dollar and the Israeli Shekel, as well as interest
payments on long-term loans. In the second quarter of 2008
financial expense was primarily resulted from changes in the
exchange rate between the U.S. dollar and the Israeli Shekel. Other
Income (expenses). TAT had other expense of $0.4 million for the
three months ended June 30, 2009 compared to insignificant other
income for the three months ended June 30, 2008. Other expenses for
the three months ended June 30, 2009 primarily resulted from a
change in the fair value of unrealized forward transactions gains
as of June 30, 2009. Net income attributable to noncontrolling
interest. TAT recognized a net loss attributable to noncontrolling
interest of $ 0.3 million for the three months ended June 30, 2009
compared with a net income attributable to noncontrolling interest
of $0.24 million for the three months ended June 30, 2008. Taxes.
Total tax income for the three months ended June 30, 2009 amounted
to $0.1 million, compared to tax expense of $0.2 million for the
three months ended June 30, 2008. The decrease in tax expense for
the three months ended June 30, 2009 is primarily attributable to
tax income in the operation in the U.S. due to decreased pretax
income, off-set increased tax expenses in the operation in Israel.
Net income. For the three months ended June 30, 2009, net income
was $0.6 million, compared with net income of $1.4 million for the
three months ended June 30, 2008. Six Months ended June 30, 2009
compared with Six months ended June 30, 2008 Revenues. Total
revenues increased to $46.0 million for the six months ended June
30, 2009 from $45.4 million for the six months ended June 30, 2008,
an increase of 1.2%. This increase reflects increased revenues in
the OEM operations due to organic growth in the OEM of Heat
Transfer products segment, as well as revenues in the OEM of
Electric Motion Systems segment derived from the Company's 70%
controlled subsidiary, Bental, which did not exist during the
second quarter of fiscal 2008; offset by decreased revenues in the
MRO services segment and in the Parts services segment. Cost of
revenues. Cost of revenues decreased to $35.4 million for the six
months ended June 30, 2009 from $34.7 million for the six months
ended June 30, 2008, an increase of 2%. The increase in cost of
revenues was primarily attributable to the increased revenues in
the OEM operations and by additional cost related to Repair Center
and Storefront agreements affected retroactively in the MRO
segment, off-set by the decreased revenues in the MRO and Part
services. Cost of revenues as a percentage of revenues after
eliminating intercompany transactions was 77% in the six months
ended June 30, 2009, compared to 76% in the six months ended June
30, 2008, primarily as a result of the additional cost related to
Repair Center and Storefront agreements, mentioned above. Research
and development. Research and Development expenses were $0.4
million for the six months ended June 30, 2009, and are related to
new products and technologies within the OEM operations in Israel.
Research and Development expenses as a percentage of revenues in
this segment were 1% in the six months ended June 30, 2009. TAT did
not incur any material research and development expenses in the
years ended December 31, 2008 and 2007. TAT does expect to continue
to incur and record research and development expenses in coming
years. Selling and marketing expenses. Selling and marketing
expenses were $2.0 million for the six months ended June 30, 2009,
a slight decrease compared to $2.1 million for the six months ended
June 30, 2008. These expenses were attributable to increased
expenses in the OEM operations off-set by decreased expenses in the
MRO services and to a lesser extent in the parts service segment.
Selling and marketing expenses as a percentage of revenues were
4.3% for the six months ended June 30, 2009, compared to 4.5% for
the six months ended June 30, 2008. General and administrative
expenses. General and administrative expenses were $5.7 million for
the six months ended June 30, 2009, similar to these expenses for
the six months ended June 30, 2008. This is primarily attributable
to a one time expenses in 2008 associated with the retirement of
certain management members off set by increased expenses in the OEM
operations as a result of the consolidation of Bental operations
commencing August 18, 2008. General and administrative expenses as
a percentage of revenues slightly decreased to 12% for the six
months ended June 30, 2009 from 13% for the six months ended June
30, 2008. Relocation Expenses. Relocation expenses were $0.4
million for the six months ended June 30, 2009, compared to none
during the six months ended June 30, 2008, and are related to the
relocation of the operations of TAT's Tulsa, Oklahoma based
subsidiary Limco Airepair, Inc. ("Limco") to the location of its
Piedmont Aviation Component Services, Inc. subsidiary in
Kernersville, North Carolina. On July 28, 2009 the Company had
determined not to go forward with the planned relocation Operating
income. Operating income decreased to $2.1 million for the six
months ended June 30, 2009 from $3.0 million for the six months
ended June 30, 2008, a decrease of 31%. The decrease in operating
income reflects decreased gross and operational margins in the MRO
and in the Parts services segments in 2009 compared to 2008; offset
by increased gross and operational margins in the OEM operations
due to improved margins in the OEM of Heat Transfer products
segment, as well as operational income in the OEM of Electric
Motion Systems segment derived from the company's 70% controlled
subsidiary, Bental Industries Ltd. which did not exist during the
second quarter of fiscal 2008. Financial income. Financial income
for the six months ended June 30, 2009 was $1.1 million, compared
to $1.0 million for the six months ended June 30, 2008 and was
primarily attributable to hedging activities related to exchange
rate between the U.S. dollar and the Israeli Shekel and to interest
received for short-term investments. Financial expenses. Financial
expense for the six months ended June 30, 2009 was $1.3 million,
compared to $0.3 million for the six months ended June 30, 2008. In
the first six months of 2009 financial expense primarily resulted
from changes in the exchange rate between the U.S. dollar and the
Israeli Shekel, as well as interest payments on long-term loans. In
the first six months of 2008 financial expense primarily resulted
from changes in the exchange rate between the U.S. dollar and the
Israeli Shekel. Other Income (expenses). TAT had other expense of
$0.1 million for the six months ended June 30, 2009 compared to
insignificant other income for the six months ended June 30, 2008.
Other expenses for the six months ended June 30, 2009 primarily
resulted from a change in the fair value of unrealized forward
transactions gains as of June 30, 2009. Net income attributable to
noncontrolling interest. TAT recognized a net loss attributable to
noncontrolling interest of $0.1 million for the six months ended
June 30, 2009 compared with a net income attributable to
noncontrolling interest of $0.6 million for the six months ended
June 30, 2008. Taxes. Total tax expense for the six months ended
June 30, 2009 amounted to $0.6 million, compared to $0.6 million
for the six months ended June 30, 2008. The increase in tax expense
for the six months ended June 30, 2009 is primarily attributable to
increased tax expenses in the operation in Israel, off-set by
decreased tax expenses in the operation in the U.S. due to
decreased pretax income. Net income. For the six months ended June
30, 2009, net income was $1.6 million, compared with net income of
$2.9 million for the six months ended June 30, 2008. Subsequent
Event On July 3, 2009 the Company resolved its commercial dispute
with one of its key suppliers relating to its MRO business, whereby
the Company will continue to act as a Storefront and Authorized
Repair Center for an extended period through May 31, 2014. The
Company performed preliminary allocation of the amount paid on July
3, 2009 to different components based on their estimated fair
value. The residual amount of $1,550, net of tax benefit of $590,
is being recognized as an expense in the second quarter and is
assigned to the settlement of the dispute with the supplier for the
period June 2006 until June 2009. 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. TAT
TECHNOLOGIES AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) June 30, June 30, 2009 2008
_______ _______ ASSETS Current Assets: Cash and cash equivalents $
19,108 $17,273 Marketable securities 21,773 21,632 Trade accounts
receivable (net of allowance for doubtful accounts of $198 and $220
at June 30, 2009 and June 30, 2008, respectively) 18,317 16,576
Inventories 34,660 33,997 Other accounts receivable and prepaid
expenses 5,424 4,778 _______ _______ Total current assets 99,282
94,256 Funds in respect of employee right upon retirement 3,550
4,685 Property, plant and equipment, net 14,877 12,737 Investment
in affiliated company -- 5,590 Intangible assets, net 1,897 1,491
Goodwill 5,829 4,814 _______ _______ Total assets $125,435 $123,573
======= ======= LIABILITIES AND EQUITY Current Liabilities: Current
maturities of long-term loans 154 -- Trade accounts payables 5,783
8,519 Other accounts payable and accrued expenses 6,413 3,912
_______ _______ Total current liabilities 12,350 12,431 _______
_______ LONG-TERM LIABILITIES: Long-term loans, net of current
maturities 6,353 5,000 Liability in respect of employee rights upon
retirement 4,226 4,853 Long-term deferred tax liability 1,016 564
_______ _______ 11,595 10,417 _______ _______ EQUITY: Share capital
Ordinary shares of NIS 0.9 par value - Authorized: 10,000,000
shares at June 30, 2009 and 2008; 6,552,671 issued shares and
6,548,021 outstanding shares at June 30, 2009 and 6,542,671 issued
and outstanding shares at June 30, 2008, 2,204 2,202 Additional
paid-in capital 39,730 39,397 Accumulated other comprehensive loss
(1,307) (36) Treasury stock, at cost, 4,650 shares at June 30, 2009
(26) - Retained earnings 33,150 34,187 _______ _______ Total
shareholders equity 73,751 75,750 _______ _______ Noncontrolling
interest 27,739 24,975 _______ _______ Total equity: 101,490
100,725 _______ _______ Total liabilities and equity $125,435
$123,573 ======= ======= TAT TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except
share and per share data) Three months ended Six months ended June
30, June 30, ____________________ ____________________ 2009 2008
2009 2008 _______ _______ _______ _______ Revenues: MRO services $
11,736 $ 13,225 $ 23,220 $ 26,210 OEM - Heat Transfer products
7,018 6,918 14,698 13,397 OEM - Electric Motion Systems 2,278 --
6,014 -- Parts services 2,186 4,452 4,823 8,587 Eliminations
(1,786) (1,395) (2,780) (2,751) _______ _______ _______ _______
21,432 23,200 45,975 45,443 _______ _______ _______ _______ Cost
and operating expenses: MRO services 11,228 11,154 20,721 20,778
OEM - Heat Transfer products 4,803 4,898 9,795 9,679 OEM - Electric
Motion Systems 1,509 -- 3,823 -- Parts services 1,867 3,588 3,907
6,894 Eliminations (1,800) (1,343) (2,817) (2,632) _______ _______
_______ _______ 17,607 18,297 35,429 34,719 _______ _______ _______
_______ Gross Profit 3,825 4,903 10,546 10,724 _______ _______
_______ _______ Research and development costs 207 -- 372 --
Selling and marketing expenses 1,110 1,128 1,988 2,060 General and
administrative expenses 2,762 2,755 5,705 5,662 Relocation Expenses
122 -- 406 -- _______ _______ _______ _______ Operating income
(376) 1,020 2,075 3,002 _______ _______ _______ _______ Financial
expense (473) (105) (1,279) (341) Financial income 634 464 1,144
990 Other (expenses) income, net 353 -- 144 -- _______ _______
_______ _______ Income before income taxes 138 1,379 2,084 3,651
Income taxes (125) 168 616 557 _______ _______ _______ _______ Net
income 263 1,211 1,468 3,094 Share in results of affiliated company
-- 434 -- 434 less: Net loss (income) attributable to
noncontrolling interest 287 (241) 140 (625) _______ _______ _______
_______ Net income attributable to controlling interest $ 550 $
1,404 $ 1,608 $ 2,903 ======= ======= ======= ======= Basic net
income per share attributable to controlling interest $ 0.08 $ 0.21
$ 0.24 $ 0.44 Diluted net income per share attributable to
controlling interest $ 0.08 $ 0.21 $ 0.24 $ 0.44 Weighted average
number of shares - basic 6,548,021 6,542,671 6,550,346 6,542,671
Weighted average number of shares - diluted 6,549,273 6,556,606
6,551,598 6,556,847 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. DATASOURCE:
TAT Technologies Ltd CONTACT: 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.
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