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TAT Technologies Reports Year 2012 First Quarter Results

Israel May 22, 2012

March 31, 2012

Financial Highlights

$20.7 million $0.6 million March 31, 2012 $21.4 million $1.5 million March 31, 2011

During the first quarter of 2012, revenues were impacted by (i) the increase in revenues in the Heat Transfer Services and Products operating segment and the MRO Services for Aviation Components operating segment; and (ii) the significant decrease in revenues in the OEM of Electric Motion Systems due to growing weakness in the relevant markets. This decrease is a continuation of the decrease in revenues this segment had experienced during 2011.

March 31, 2012

                                       Three Months Ended March 31,                                                                      % of                                                                     Change                                                                     Between                            2012                     2011            Periods                   Revenues        % of     Revenues        % of                      in          Total        in          Total                   Thousands     Revenues   Thousands     Revenues                         Unaudited                Unaudited     Revenues     OEM of Heat     Management     Solutions       $ 7,684        37.2%     $ 7,640        35.7%      0.6%     Heat     Transfer     Services and     Products          6,783        32.8%       6,467        30.2%      4.9%     MRO services     for Aviation     Components        5,003        24.2%       4,799        22.4%      4.3%     OEM of     Electric     Motion     Systems           1,802         8.7%       3,570        16.7%   (49.5)%     Eliminations      (595)       (2.9)%     (1,074)       (5.0)%   (44.6)%     Total     revenues       $ 20,677       100.0%    $ 21,402       100.0%    (3.4)% 

Itsik Maaravi

"The results of 2012 first quarter reflect the continuation of the improving trend in our dominant operating segments – the OEM of Heat Management Solutions and Heat Transfer Services and Products, as well as in our MRO for Aviation Components operating segment.  In each of these segments we continued to increase revenues compared to the first quarter of 2011. These improvements are attributed to the increase in our marketing and sales activities during 2010 and 2011 as well as to our rigorous and continuing activity to improve our production flow and yields.

During the first quarter we experienced a notable decrease in revenues and margins in the OEM of Electric Motion Systems compared to the same period in 2011, resulting from growing weakness in the defense markets relevant to this segment. This decrease is a continuation of the decrease in revenues this segment had experienced during 2011.

We are continuing to preserve a strong balance sheet with limited liabilities, impressive working capital and sufficient financial assets to support the growth of our operations.

We are encouraged by global trends of increased traffic reported by airlines around the world. We are witnessing a steady demand for MRO services, as well as positive indications from OEMs in the aerospace and defense industries, which impact our businesses

We continue to focus on our core capabilities while expanding our business offerings worldwide.

We believe that our efforts along with continued improvement in the global aviation industry, will sustain the improved trend line of our performance further in 2012".

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share data)

                                               March 31,  March 31,                                                 2012       2011                      ASSETS     Current Assets:     Cash and cash equivalents                  $ 19,593   $ 28,820     Short-term bank deposits                     10,000          -     Marketable securities at fair value           1,900      2,547     Short-term restricted deposits                1,255      5,081     Trade accounts receivable (net of     allowance for doubtful accounts of $456     and $ 2,527 as of March 31, 2012 and     2011, respectively)                          19,516     20,072     Other accounts receivable and prepaid     expenses                                      5,818      7,583     Inventories, net                             31,754     33,152       Total current assets                         89,836     97,255       Long-term assets:     Long-term restricted deposits                 2,000          -     Investment in affiliated company              4,980      4,535     Funds in respect of employee right upon     retirement                                    3,082      2,959     Long-term deferred tax                        3,474      1,128     Property, plant and equipment, net           12,659     14,356     Intangible assets, net                            -      1,736     Goodwill, net                                 1,072      1,144       Total Long-term assets                       27,267     25,858       Total assets                              $ 117,103  $ 123,113                LIABILITIES AND EQUITY       Current Liabilities:     Current maturities of long-term loans         5,550      9,556     Trade accounts payables                       5,817      7,796     Other accounts payable and accrued     expenses                                      6,367      7,371       Total current liabilities                    17,734     24,723       Long-term liabilities:     Long-term loans, net of current     maturities                                    4,381        798     Other accounts payable                           86        129     Liability in respect of employee rights     upon retirement                               3,628      3,531     Long-term deferred tax liability              1,368        775       Total long-term liabilities                   9,463      5,233       EQUITY:     Share capital     Ordinary shares of NIS 0.9 par value -     Authorized: 10,000,000 shares at March     31, 2012 and 2011; Issued and     outstanding: 9,073,043 and 8,815,003     shares, respectively at March 31, 2012     and 2011                                      2,790      2,790     Additional paid-in capital                   64,402     64,449     Treasury stock, at cost, 258,040 shares     at March 31, 2012 and 2011, respectively     (2,018)    (2,018)     Accumulated other comprehensive loss           (823)      (249)     Retained earnings                            22,816     24,964     Total TAT Technologies shareholders'     equity                                       87,167     89,936     Non controlling interest                      2,739      3,221       Total equity:                                89,906     93,157       Total liabilities and equity              $ 117,103  $ 123,113   

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

                                                    Three months ended                                                        March 31,                                                    2012         2011       Revenues:     OEM of Heat Management Solutions               $ 7,684      $ 7,640     Heat Transfer Services and Product               6,783        6,467     MRO services for Aviation Components             5,003        4,799     OEM of Electric Motion Systems                   1,802        3,570     Eliminations                                      (595)      (1,074)                                                     20,677       21,402       Cost and operating expenses:     OEM of Heat Management Solutions                 5,586        5,392     Heat Transfer Services and Products              5,029        4,698     MRO services for Aviation Components             4,374        4,067     OEM of Electric Motion Systems                   1,711        2,487     Eliminations                                      (597)        (952)                                                     16,103       15,692     Gross Profit                                     4,574        5,710       Research and development, net                      174          265     Selling and marketing expenses                     889          882     General and administrative expenses              2,995        2,469     Other expenses                                      14            -                                                      4,072        3,616     Operating income                                   502        2,094       Financial expense                                 (556)        (308)     Financial income                                   816          517       Income before income taxes                         762        2,303       Taxes on income                                    268          780       Net income after income taxes                      494        1,523     Share in results of affiliated company             (40)          86       Net income                                         454        1,609     Net loss (income) attributable to Non     controlling interest                               130         (107)       Net income attributable to TAT Technologies     shareholders                                     $ 584      $ 1,502       Earning per share     Basic and diluted net income per share     attributable to controlling interest            $ 0.06       $ 0.17       Weighted average number of shares - basic     and diluted                                  8,815,003    8,815,003 

TAT operates under four operating segments: (i) Original Equipment Manufacturing or "OEM" of Heat Management Solutions; (ii) Heat Transfer Services and Products; (iii) Maintenance, Repair and Overhaul or "MRO" services for Aviation Components; and (iv) OEM of Electric Motion Systems.

OEM of Heat Management Solutions

Heat Transfer Services and Products

MRO services for Aviation Components

OEM of Electric Motion Systems

Liquidity and Capital Resources

March 31, 2012 $29.6 million $1.9 million $3.3 million $34.8 million $28.8 million $2.5 million $5.1 million $36.4 million March 31, 2011

March 31, 2012

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.  

Subsequent Event

April 22, 2012 $2.5 million NIS9.4 million $0.283 NIS1.065 May 17, 2012 May 3, 2012

May 21, 2012 $0.5 million February 21, 2012

*  *  *  *  *

Bnei Ayish Israel

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.

http://www.tat-technologies.com

 

Yaron Shalem

[email protected]

SOURCE TAT Technologies Ltd

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