TATT

Image source: The Motley Fool. Monday, Aug. 10, 2026 at 8:30 a.m. ET President and Chief Executive Officer - Igal Zamir Chief Financial Officer - Ehud Ben-Yair Matthew Chesler: Good morning, and thank you for joining the TAT Technologies Second Quarter 2026 Earnings Conference Call. This call is being recorded. My name is Matt Chesler with FNK IR, a U.S.-based Investor Relations firm supporting Eran Yunger, TAT's Head of Investor Relations. Joining me today are Igal Zamir, TAT's President and CEO; and Ehud Ben-Yair, TAT's CFO. Before we begin, I'd like to remind you that certain statements made on this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These statements are based on current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially. Additional information regarding these risks and uncertainties can be found in our filings with the SEC, including our most recent Form 20-F. TAT assumes no obligation to update forward-looking statements, except as required by law. Investors are cautioned not to place undue reliance on these forward-looking statements. During this call, we may disclose certain non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings release issued earlier today and in our Form 6-K filed with the SEC. And with that, I'll turn the call over to Igal. Igal Zamir: Thank you, Matt. Good morning, everybody, and thank you for joining us. We appreciate your continued interest in TAT. The strong second quarter marked an important inflection point for TAT. We delivered another record quarter, converting strong demand into the highest backlog in our history and grew revenue by nearly 23%. Improving supply chain conditions allowed us to convert previously constrained customer demand into revenue, further bolstering our strong performance while continuing to expand profitability and grow our record backlog. TAT's competitive position continues to strengthen. We are becoming an increasingly important aftermarket partner to airlines, OEM and MRO providers, leveraging the breadth of our capabilities, the quality of our execution and long-standing relationship across aviation ecosystem. An important milestone this quarter was the expansion of our strategic relationship with Honeywell Aerospace. We are now Honeywell's sole global authorized distributor for spare parts for the 331-200, 250 APU platform. We also extended our MRO license for that platform to 2036 and acquired 3 Honeywell Aerospace 131-9A APUs to expand our trading and leasing business. The expanded Honeywell agreement adds a distribution capability we didn't have on this platform before. Historically, we supported the 331-200, 250 platform to MRO and serviced alone. And now we are also a part supplier, giving operators lessors and MRO partners one source across the full life cycle from parts to repair and return. Also, extending the agreement to 2036 further strengthened the long-term visibility and secure the profitability of this important business while reinforcing one of our most valuable OEM relationships. When it comes to the industry, commercial aviation fundamentals remain exceptionally healthy. Aircraft are staying in service longer than historically norms. Utilization rates are high and operators continue to prioritize reliable aftermarket support. These trends continue to support healthy demand across our repairs overall and components business. While supply chain conditions have improved significantly, they have not fully normalized. We will continue to prioritize customer support even when that requires targeted inventory investment or higher procurement costs. Although these actions have somewhat dampened our profitability gains in the short term, they help keep the aircraft in service and reinforce our reputation as a trusted aftermarket partner. We expect inventory requirement to become more efficient as supply chain continues to improve. We believe that investments we are making today will strengthen customer relationship, expand future business opportunities and create long-term value for [Audio Gap]. On the strategic priorities and M&A front, M&A remains an important component of our long-term growth strategy. We see acquisition as a way to expand our MRO capability, strengthen our thermal system business and broaden our platform portfolio and, finally, establish a greater presence in geographies that brings us closer to customers. These opportunities have the potential to enhance our competitive position while expanding our relevance across the global aviation aftermarket. We believe that we are well positioned to execute this strategy. Our strong balance sheet provides the financial flexibility to pursue acquisitions, while our operating platforms and integration capabilities enable us to successfully incorporate complementary businesses. As always, we remain disciplined on valuations and strategic fit, and we will not pursue acquisitions simply for the sake of growth. Our M&A efforts continue to move front and center. We have built a robust pipeline of potential acquisition targets, completed initial due diligence on a number of opportunities and are actively evaluating them. M&A is becoming an important focus of our team, reflecting both the quality and the opportunities we are seeing and our commitment to execute this important element of our long-term growth strategy. In terms of the outlook for the rest of the year, our performance in the second quarter and the first 6 months of 2026 demonstrates the progress we have made and the strong position TAT occupies in the industry. Customer demand remains exceptionally strong with our record backlog of $650 million, providing excellent visibility into the future revenue. Simultaneously, supply chain conditions continue to improve, giving us increasing confidence in our ability to convert our record backlog into revenue while maintaining service levels to our customers. Building on the existing relationship, we continue to strengthen our competitive position through expanding OEM relationship and broader platform coverage, highlighted by the recent Honeywell agreement, which enhanced our service offering while extending an important long-term partnership through 2036. Finally, our strong balance sheet provides the financial flexibility for strategic acquisitions that can further expand our capabilities and addressable market. Taken together, these factors reinforce our confidence in TAT's ability to continue delivering profitable growth while creating long-term value for our shareholders. With that, I will turn the call over to Ehud for a more detailed review of the financial results. Ehud Ben-Yair: Thank you, Igal, and good morning, everyone. Good afternoon for the guys in Israel. As noted, the second quarter benefited from strong demand and the record backlog. Also, the improvement in supply chain environment enabled us to convert a significant portion of work into revenue as supply constraints eased. We have won several new contracts. We are now starting to see the benefit of these wins following through our financials. All in all, it was a great quarter. That said, while profit margin improved, our operating leverage would have been higher if not for some ongoing supply chain issues and weaker exchange rate of the U.S. dollar against the Israeli shekel. Second quarter revenue was $52.9 million compared to $43.1 million in the second quarter of 2025, an increase of nearly 23%. All product segments contributed to the growth in this quarter. Demand remains exceptionally strong as reflected in a record backlog and a long-term agreement, which increased to a record of $615 million at the end of June 30, 2026. Gross profit increased by 23% year-over-year to $13.3 million with gross margin remaining above 25%. This reflected healthy pricing and operating execution despite continued supply chain inefficiencies that increased procurement costs in certain product lines. We are closely monitoring the supply chain issues, which are impacting revenue growth while we continue to maintain full expense level for this segment. We still have a low visibility of when supply chain issues within this segment will be resolved. Operating income was $5.6 million or 10.6% of revenue compared to $4.4 million or 10.3% of revenue in the second quarter of 2025. With parts availability in certain areas of our business remaining challenging, we have continued to prioritize customer delivery schedule by securing certain components at higher cost when necessary. Absent the ongoing supply chain challenges, our margin expansion would have been even stronger. We continue to invest in the company's growth, infrastructure and M&A capabilities. This led to an increase of SG&A expenses. We also continue to invest in development of future thermal system, resulting in a modestly higher R&D expenses. Net income were $8.1 million compared to $3.4 million in the second quarter of 2025. Diluted earnings per share were $0.61 compared to $0.30 in the second quarter of 2025. The second quarter of 2026 included a nonrecurring one-time gross gain of approximately $4.3 million from the sale of a minority interest in an unconsolidated entity and a nonrecurring charge of $900,000 related to tax expenses. The net impact was $3.4 million on the net profit. Excluding the nonrecurring gain from the minority interest sale, net income was $4.6 million or $0.35 per diluted share. The foreign exchange of USD against the Israeli shekel was a headwind in the second quarter of 2026. The strength of the shekel to the U.S. dollar during Q2 led to foreign exchange losses of over $600,000. We are working with our customers and suppliers on finding solution to these issues without harming the flow of operation in Israel. Adjusted EBITDA, excluding the one-time gain was $7.4 million or 14% of revenue compared to $6.1 million or 14% of revenue in the second quarter of 2025. For the cash, cash used in operating activity was $0.6 million compared to $7 million and a positive cash flow in the second quarter of 2025. A portion of the revenue that we recognized had not yet converted to cash collection by quarter end, and we expect that to convert during the third quarter. Working capital requirements are expected to remain elevated in the near term as we support the expanded distribution agreement through strategic inventory investments. We view these investments as an attractive use of capital to support future revenue growth. Briefly summing the results for the first 6 months of 2026. Revenue increased by 10.4% compared to the same period in 2025 and reached to $94.1 million. Gross profit increased by 12.4% to $23.4 million. This represents 24.8% gross margin, up approximately 40 basis points year-over-year. Operating income was flat at $8.6 million. Net income, which includes a $3.4 million one-time benefit, increased by 58.1% to $11.5 million. And excluding the nonrecurring benefit, net income would have increased approximately by 11% to $8.1 million. Diluted earnings per share, inclusive of the one-time gain, were $0.87 versus $0.64. The one-time gain represented approximately $0.26 in diluted earnings per share in the current period. Adjusted EBITDA, excluding the one-time gain, increased by 4.1% to $12.3 million or 13.1% EBITDA margin. For the balance sheet, our balance sheet remains a competitive advantage. We ended the quarter with net cash of $43 million with a 0.2 debt-to-cash ratio and 0.43 debt to last 4 quarter EBITDA ratio. We also recently secured a new $100 million 5-year revolving line of credit with several U.S.-based banks, giving us significant flexibility to support our M&A strategy and future growth of the company. Diving into the product line, heat exchanger's revenue increased by 7.8% in the second quarter of 2026 and 4.2% in the first half compared to the same period last year. Heat exchanger business is both OEM and MRO and the growth is single digit and steady according with our expectation. In APU, this quarter results are affected by the supply chain recovery as communicated on the previous earnings call as well as by new long-term contract wins. We expect to continue the positive trend. Overall, this product line grew by 22.2% in the first half of 2026 despite the supply chain impact. Trading & Leasing increased by 17% this quarter with several good trades and steady revenue from leasing activities, which will now benefit from 3 additional 131-9A and engines that were purchased, ending year at 5% of our total revenue, is still affected by supply chain constraints. To summarize, the backlog is at record level. We announced 2 new and important contracts with customers that include both the legacy platform and the new platform. Gross margins continue to be stable above 25%, and the balance sheet is positioned to support our growth strategy. The supply chain is improving and has an incremental growth, and we are very optimistic about TAT's future in general and especially for 2026 results in particular. And with that, I will turn the call back to Igal. Igal Zamir: Thank you, Ehud. Before we move to questions, I would like to thank our employees around the world. Their professionalism, especially the close coordination with our customers and the suppliers this quarter, is what makes the results like this possible. As we close, there are 3 quick takeaways. First, our fundamentals have never been stronger. Customer demand keeps growing and backlog and long-term agreements reached a new record. Second, we are deepening our competitive position. Our expanded relationship with Honeywell adds new distribution rights and extends our MRO authorization through 2036. And third, our balance sheet gives us flexibility to be growing organically, but more importantly to support our strategic inorganic growth to create long-term value for our shareholders. We are entering the second half of 2026 with more momentum, more visibility and a stronger competitive position than at any point in our history. I would like to thank you for your continued support, and we look forward to updating you in our progress. With that, I will turn over to Matt for questions. Matthew Chesler: Thank you, Igal. We're now going to open up to the Q&A session. [Operator Instructions] First question is from Jeff Van Sinderen at B. Riley Securities. Let's move on, and Jeff, you can jump back into the queue. The next question is from Josh Sullivan at Jones Trading. Let's move on to the next question. The next question is from Ben Klieve at Benchmark. Benjamin Klieve: All right. Is that working? Can you guys hear me? Igal Zamir: Yes. Benjamin Klieve: All right. Well, first of all, congratulations on a very good quarter here. First, I have a question about the APU business and the parts availability dynamic. And I'm curious if you can give us a bit of context around the number of APU units that have been sitting, awaiting that parts availability to unlock. So I'm just curious if you can kind of level set us on kind of where the number of units waiting to be worked on ended your 2025, kind of where that peaked at the height of the parts challenge earlier this year and kind of where that sits right now. Igal Zamir: I think that if you come to the Greensboro facility, give or take at any time, you will see a couple of dozens of APUs in the shop in different stages. Those of you who visited us when we had the Analyst Day in Greensboro, so back then, we had about 50, 60 in the shop on a certain day, [indiscernible] day. We peaked at the end of Q1 because we had a couple of -- we have several engines that were ready to ship but missing the last part that we couldn't farm. Obviously, all these engines were shipped during Q2. the overall amount of engines kind of normalized a little bit back. But at any point, even at the end of second quarter, if you show up at the facility, you will see 40, 50 engines easy in any certain day. I would say that now it's back to normal. You need to remember that the other factor is that we won several new businesses, which we published. So obviously, with new customers sending more engines, you should expect to see a gradual increase in the amount of engines a week in the process. Benjamin Klieve: Got it. Very good. That's very helpful. And then for my follow-up, and then I'll get back in queue is also around the parts availability dynamic. I mean I'm curious, one, the degree to which the second quarter results were kind of a positive surprise for you relative to where you thought this may end up during your fourth quarter call, if the parts availability kind of came in faster than you were expecting? And then also, can you give us any kind of context around your expectations here for really when this will fully normalize on a full quarter basis, if you even have that visibility? And then I'll get back in queue. Igal Zamir: I have to split my answer into 3 different levels, parallel tracks. On a macro level, what we see in the industry more and more is more parts producers or raw material producers that are extending their lead times. There is so much pain around on-time delivery and some of the vendors just choose to increase lead time, so they can meet their turnaround expectations or delivery expectations. So that's one factor that affects you because when they announced that they have a new extended lead time, all of a sudden, it creates a rupture in the system. Some of the OEMs that were used to keep very large inventory to support shops like ours are also under pressure to reduce inventory, and they are as a measure to reduce their inventory, reducing their level of inventories, more aligned with their subcontractors lead times. and the availability or ability to react fast to changing demand. We need to remember on the OEM, it's fairly easy to project and to anticipate 6 to 12 months in advance and to provide the vendors enough lead time. And general saying, we don't have problems there at all. Going to your last question, OEM stabilized as a general thing. But on the MRO, because of the nature of the business and because of the large fluctuations in power consumption between different airlines, between different times of the year, there is much more volatility. And that's more challenging. And now that the lead times are expanding, it's becoming more and more challenging. The last factor is the specific crisis that we had in Q1 with one major OEM that just couldn't ship. And when we announced it first time when we published our annual results, we said that we have a problem and we didn't see the light at the end of the tunnel, but we've been getting a lot of promises for recovery, which took a lot of time. Eventually, they caught up. So this major crisis that we experienced in Q1 is behind us. And now we are more into general supply chain challenges in MRO and aerospace with extended lead times and the need to predict much more in advance, which is difficult, what you will need and when you will need and be able to give the vendors enough time to react. So obviously, it's a challenge, and we are adjusting our systems to these new expectations and new lead times, mainly affecting landing gear and APU. Matthew Chesler: And the next question is from Alexandra Mandery from Truist. Alexandra Eleni Mandery: Great results. So I was wondering how your progress is on gaining content on APU, MRO for Boeing 737 and A320 series. What is your strategy like to gain content there? And has it shifted at all over time? Igal Zamir: I think I remember that you asked me more or less the same question 3 months ago in the last call, and it's pretty much the same. I think that we are gaining traction on the -- nice traction on the 500 engine. And on the Boeing 737 and the Airbus 320, it's more of a one-off opportunities than long-term contracts. And I believe that given the very competitive nature from the 131 and it's expected, and I don't anticipate any major -- by the way, we are competing all the time on RFPs and hoping to win some of them, but we are not targeting the large airlines as a key opportunity for growth in this platform. Alexandra Eleni Mandery: All right. And then are you seeing any impacts of higher jet fuel prices or conflict in the Middle East impacting your customers or the business? And what have you heard from your airline customers? Igal Zamir: Obviously, they are concerned about it, but we didn't see any impact. If you look at industry data, utilization of aircraft is in a very healthy position and the fleets are flying. It puts some constraint on the airline profitability, but it doesn't affect -- they need to keep the fleet flying and the utilization is high. So it doesn't affect MRO, general saying. Matthew Chesler: Let's now ask the -- answer the question from Josh Sullivan at Jones Trading, who submitted it via chat. And here's the question. With the supply chain improving here, how do we think about backlog conversion going forward? Should we expect the impressive backlog to release here? Or can it extend even as you deliver more? Can it expand even as you deliver more? Igal Zamir: Ehud, feel free to add after, I'll give my 2 cents. But as a general thing, most -- the vast majority of the of the backlog increase, the value of the long-term agreement is long-term agreement. So we're not expecting any, I call it, miracles quarter-over-quarter. Obviously, Q1 was a one-time dip that we recover from it. But moving forward, any new win that we published is going to be spread over 3 to 5 years, and we are expecting a steady growth, not any major jump. There was a little bit of factor this quarter of specific backlogs of engines that were stuck in the bidding, and we couldn't bring them to the finish line. Obviously, we recognized them in Q2. But looking forward, I don't see -- there is no expectation. Obviously, things can change, and we may be surprised by very large intake, but I don't have any indication today that suggests that such a jump is expected. Ehud, I don't know if you have any further color to add. Ehud Ben-Yair: Yes. I think the only thing to add is just we want to make sure that the audience and the analysts that are covering the company understand that this quarter had some catch-up from the previous quarter. So I'm suggesting all those who are trying to understand the past and try to forecast the future, obviously, is to look at the average of the first 6 months of the year rather than thinking that the second quarter is the baseline for the future. Obviously, the company will continue to grow, but I need to make sure that people understand exactly the results. Matthew Chesler: Josh's follow-up question is on M&A. He's asking what leverage levels are you comfortable with? And what areas are in the strategic interest at this point? Does the extended lead time dynamic influence your M&A thoughts as well? Igal Zamir: Ehud, would you like to take it? Ehud Ben-Yair: Yes. So first of all, I would say that with the M&A in general, we are doing very good progress. I think we're looking now at a very healthy funnel of very interesting opportunities. And as I said a few minutes ago, we are very disciplined about it. We define the strategic deals that we're looking for. We define what are the prices that we are willing to pay, and we are going to be very, very disciplined. But in general, I'm very encouraged with the fact that there is a very, very healthy funnel. With regards to the other financial aspect that we communicated in the past and this is still the plan, any deal that will be executed will be at a lower multiple than we are trading for sure. And we usually go for -- to finance it with a 50% credit and 50% the money that will come from the capital market. We're not going to expose the company too much in terms of leverage, and we want to keep it as a healthy leverage, nothing more than that. We're not going to take any risk. Matthew Chesler: Let's move back to a live question. We have Jaeson Schmidt from Lake Street. Jaeson Schmidt: Just curious if you could discuss the supply chain dynamics in the landing gear market. I know you had some open work orders last quarter, but given the sequential and year-over-year improvement in the landing gear business, just wondering if we should take that the supply conditions have eased there as well. Igal Zamir: Jaeson, before we start, just let's all make sure that we remember landing gear is a very small portion of the business, about 5%. And we don't see the recovery as we reported in the last few quarters, the dynamics that we see is a drastic extension of lead times, in some cases, to more than 12 months, major -- which has a major impact on the ability to adjust to the needs. These are very expensive parts. You need to remember that on landing gear, not like the APU where you can use USM parts and find solutions from the market when the OEM gets stuck. On landing gear, there is a general saying there is much more usage of new parts from the OEM. And when these parts are not available, then you cannot complete the work. I don't -- we don't have a visibility to when this trend is going to stabilize, but it really affects the lending gear business. Jaeson Schmidt: Understood. And then just as a follow-up, can you help us think about operating expenses and that trend through the second half of this year? Igal Zamir: Yes, you need to remind that and we discussed it second half of last year, we invested a lot in establishing infrastructure to support the good strategic growth and to support M&A. So we expanded our overhead at the group level in a meaningful way in the second half of last year in preparation. Obviously, we are working very hard to get going with M&A and to show the first deal whenever we will be ready. And moving forward, I think that we have the infrastructure today that we need to support the growth. And as we continue growing, it will help us improve the operating margin. Matthew Chesler: The next question is a follow-up from Jeff Van Sinderen at B. Riley. Jeff Van Sinderen: Great. Can you guys hear me now? Igal Zamir: Yes, Jeff. Jeff Van Sinderen: Let me add my congratulations on the strong results for the quarter. Just wanted to circle back to supply chain for a moment, if we could. Wondering what still needs to happen for normalization there? Are there specific remaining bottlenecks that you're working on? And then what do you think is the time frame for normalization? Igal Zamir: That, I would say, is a tricky question because in most cases, we are dealing with the OEMs that have their own supply chain challenges. So it's a pass-through from subcontractors to the OEMs, not something that we can definitely impact one way or the other. So we are more dependent on the OEM actions. When it comes to direct material -- as I said it before, when it comes to direct material [indiscernible] from the source, it stabilized when you look at all the raw materials for our thermal components, as example, we have no issues. When it comes to parts that we are sourcing from OEMs, and these OEMs have a very large network of subcontractors and some of them are really struggling to catch up, I still that we are seeing after COVID effect. So many, many small subcontractors disappeared or shut down their business during COVID, lots of single source dependency and now they need to develop new sources and to certify them, which is a very long process in aerospace. But that's my personal thought. What we experience is the relationship with the OEM and what we are projecting to you guys is more based on what the OEMs are telling us. There's another factor that affects some of the businesses. In normal times, there is a large market of USM parts available as a substitution for OEM parts when there is a shortage of parts. But these days, airlines, the retirement of old fleets are much slower than normal because airline are forced to keep on flying old fleets. Everybody is searching for the USM parts, which makes them -- which makes it much more difficult to find them. And even if you find them, you pay much more than what we used to pay in the past. So that's the dynamic. We see it all over the place, and we see many of our competitors and other industry players sharing the same dynamic. The only thing that we can do, and we've been doing it is to drastically increase our inventory to keep much more buffers to deal with all of this. Jeff Van Sinderen: Okay. That's really helpful. It seems like you're handling it very effectively. Could you maybe elaborate a little bit more on your expanded relationship with Honeywell and how you expect that relationship to benefit your business in the future? Igal Zamir: First of all, the relationship with Honeywell is extremely important to us. It's one of our -- the APUs in general is one of our strategic product lines and represents the fastest growth opportunity for TAT. We are making good -- we made great strides on the 250 platform over the last few years. We are growing this type of engine very, very fast. And now with distribution, it gives us the full -- we can support the full ecosystem, not just providing MRO services and leasing, but now also supporting customers and other industry players, including competitors with parts when they need them. I see it as an opportunity also to grow the distribution. In general, we find the distribution business very interesting. And this first deal basically on top of being a good deal for TAT and expanding the business and everything that we mentioned is also the first time that we are going to experiment and get proficient in dealing with distribution, which hopefully we can do in distribution services, which hopefully we can do more in the future. And I think that the expansion of the agreement in 6 more years is also a critical component, a major advantage for TAT, which provides a lot of visibility and help us to secure a profitable growth for the next 10 years. Matthew Chesler: We have a question that was e-mailed in from [ Sergio Heber ], who's asking us to walk through the working capital dynamic in the second quarter in terms of operating cash flow. And then related to that, is there anything that we should be thinking about in terms of working capital and cash flow as it relates to the expanded relationship with Honeywell? Ehud Ben-Yair: Yes. So the operating cash flow in the second quarter of 2026 was impacted from 2 things mainly. One thing is continued increasing inventory as explained before. We started purchasing inventory for the distribution and deal. Also we strategically invested in inventory on areas where we felt that the shortages and risk in the market in order to again with the situation that we were in Q1 of this year. Looking forward for the rest of the year, I'm expecting inventory to continue growing. Again, that's a strategic decision here, and it will have some impact on the working capital. On the other hand, as I mentioned before, there were several deals that were not collected during the second quarter of the year, and they were pushed for collection in Q3 for this year, which will create a positive impact on the cash flow. So all in all, just to summarize all those details, I'm expecting operating cash flow to continue to trend in this way. I'm expecting inventory to continue growing. As I said, there are 2 factors, the distribution thing and the lack of parts in the market. On the other hand, as the CFO of the company, I'm not concerned. We have enough cash. We are generating profit. So we have the internal resources to deal with those demands without increasing any line of credit or taking [indiscernible]. Matthew Chesler: Thank you, Ehud. With that, there are no more questions in the queue that haven't already been addressed at some point during the conversation today. So with that, we are going to bring the conference call to a close. I wanted to thank everyone for joining us today, and we look forward to keeping you updated on the company's progress on future earnings calls. With that, you may now disconnect your lines. Ehud Ben-Yair: Thank you very much. Igal Zamir: Thanks. 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Revenue Increases 22.8% as Demand Remains Strong and Supply Chain Conditions Ease; Backlog and Long-Term Agreements Reach Record $615 Million CHARLOTTE, N.C., Aug. 5, 2026 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT) (TASE: TAT Tech), a leading supplier of products and services for the commercial and military aerospace and ground defense industries, today reported financial results for the second quarter ended June 30, 2026. Financial highlights: Revenues were $52.9 million, a 22.8% increase compared to $43.1 million in the second quarter of 2025. For the first half of 2026, revenues increased by 10.4% to $94.1 million compared to $85.2 million in the first half of 2025. Gross profit increased by 23.0% to $13.3 million, representing 25.2% of revenues, compared to $10.8 million (25.1% of revenues) in the second quarter of 2025. For the first half of 2026, gross profit increased by 12.4% to $23.4 million compared to $20.8 million in the first half of 2025 (24.8% of revenues in the first half of 2026 compared to 24.4% of revenues in the first half of 2025). Operating Income increased by 26.8% to $5.6 million (10.6% of revenues) compared to $4.4 million (10.3% of revenues) for Q2 2025. For the first half of 2026, operating income was $8.6 million (9.1% of revenues) compared to $8.6 million (10.1% of revenues) in the first half of 2025 Net Income of $8.1 million (Diluted EPS of $0.61) compared to $3.4 million for Q2 2025 (Diluted EPS of $0.3). The second quarter of 2026 included a $4.3 million (Diluted EPS of $0.26) net of tax, non-operating gain from the sale of a minority interest in an unconsolidated entity. Excluding the non-recurring benefit, net income would have been $4.66 million, an increase of 35.2% compared to the previous period (and Adjusted Diluted EPS of $0.35). For the first six months of the year, net profit was $11.5 (Diluted EPS of $0.87) million. Excluding the one-time net impact of the minority interest sale, net profit for the first six months was $8.06 million, an increase of 11.0% compared to $7.3 million in the previous period. Adjusted EBITDA was $7.4 million (14.0% of revenues), a 22.7% increase from $6.1 million (14.0% of revenues) for Q2 2025. Adjusted EBITDA for the first half of 2026 increased by 4.1% to $12.3 million (13.1% of revenues) compared to $11.8 million (13.8% of revenues) in the first half of 2025. Cash flow used in operations for the second quarter was $(0.6) million compared to $6.9 million provided by operations in Q2 2025. Cash flow from operations was $1.4 million in the first half of 2026 compared to $1.9 million in the first half of 2025. Backlog and Long-Term Agreements: approximately $615 million as of June 30, 2026, up from approximately $580 million on March 31, 2026, reflecting continued strong customer demand and providing multi-year revenue visibility. "Continued strong demand and solid execution drove nearly 23% revenue growth and continued profitability improvements," said Igal Zamir, TAT's CEO and President. "This performance reflects our strategic position in the market, targeting high-demand services backed by established and solid relationships with OEMs. In part, improving supply chain conditions enabled us to convert previously constrained customer demand into revenue in the quarter, further enhancing results. Demand across our end markets remains robust and customer loyalty remained strong despite the supply chain shortages, driving backlog and long-term agreements to the highest in company history. Although supply chain conditions have not fully normalized, we remain focused on securing the components our customers need, reinforcing our position as a trusted aftermarket partner and supporting long-term profitable growth." "We have expanded our strategic relationship with Honeywell Aerospace" Zamir continued. "We became the sole authorized distributor(*) of spare parts for the 331-200 auxiliary power unit platform (APU), extended our MRO license through 2036, and acquired three Honeywell Aerospace 131-9A APUs to expand our leasing business. These agreements strengthen our position in the APU aftermarket and ensure that we will continue to be a valued partner for Honeywell for a long time to come." "We believe the combination of historically high customer demand, expanding platform coverage, and a record backlog, combined with improving supply chain conditions, positions TAT well for continued profitable growth," Concluded Zamir. (*) As previously disclosed in the Company's Report on Form 6-K filed on July 14, 2026. Investor Call Information TAT Technologies will host an earnings webcast and conference call today, August 5, 2026, at 8:00 a.m. Eastern Time to discuss second quarter results. Investors may register using the link below or by visiting the Company's website. Webcast Registration: https://us06web.zoom.us/webinar/register/WN_MRtan_3wQoG9XfDYLkuNeA Investor Relations Website: https://tat-technologies.com/investors/ Non-GAAP Financial Measures To supplement its GAAP results, the Company presents Adjusted EBITDA to provide investors with additional insight into underlying operating performance. Adjusted EBITDA excludes the Company's share in results of affiliated companies, share-based compensation, income taxes, net financial (expenses) income, and depreciation and amortization. Adjusted EBITDA should not be considered as an alternative to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of Adjusted EBITDA below. About TAT Technologies TAT Technologies Ltd. (NASDAQ: TATT) (TASE: TAT Tech) is a leading provider of services and products to the commercial and military aerospace and ground defense industries, providing OEM heat transfer solutions and aviation accessories, MRO services for aviation components, including heat transfer solutions, overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps and MRO services on APU's, landing gears and other aircraft components for airlines, air cargo carriers, maintenance service centers and the military. For more information, please visit www.tat-technologies.com. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements include, without limitation, statements regarding possible or assumed future operating results, demand conditions, supply chain conditions, customer relationships, backlog conversion, market position, and growth prospects. 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 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, LTAs and backlog, the price and continuity of supply of component parts used in our operations, the war and hostilities between Israel and Hamas, Hezbollah and Iran, regional shipping disruptions and other risks detailed from time to time in the Company's filings with the Securities and 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. Shareholders 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. The Company undertakes no obligation to update publicly or revise any forward-looking statement. Contact: Eran YungerDirector of IRTel: [email protected] UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP)  (UNAUDITED) View original content:https://www.prnewswire.com/news-releases/tat-technologies-reports-record-second-quarter-2026-results-302843077.html

TAT Technologies Ltd. (TATT) came out with quarterly earnings of $0.35 per share, beating the Zacks Consensus Estimate of $0.28 per share. This compares to earnings of $0.3 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +25.00%. A quarter ago, it was expected that this company would post earnings of $0.19 per share when it actually produced earnings of $0.26, delivering a surprise of +36.84%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. TAT Technologies, which belongs to the Zacks Aerospace - Defense Equipment industry, posted revenues of $52.94 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 17.30%. This compares to year-ago revenues of $43.1 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. TAT Technologies shares have lost about 6.7% since the beginning of the year versus the S&P 500's gain of 13%. While TAT Technologies has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for TAT Technologies was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.43 on $54.33 million in revenues for the coming quarter and $1.52 on $198.21 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Aerospace - Defense Equipment is currently in the top 31% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Mercury Systems (MRCY), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 18. This maker of processing systems and software is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of -19.2%. The consensus EPS estimate for the quarter has been revised 10% higher over the last 30 days to the current level. Mercury Systems' revenues are expected to be $264.88 million, down 3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TAT Technologies Ltd. (TATT) : Free Stock Analysis Report Mercury Systems Inc (MRCY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in TAT Technologies Ltd.? Here are five stocks we like better. Record Q2 performance: Revenue rose 23% year over year to $52.9 million, while adjusted net income excluding a one-time gain reached $4.6 million, or $0.35 per diluted share. TAT ended June with a record $650 million backlog and long-term agreements. Honeywell relationship expanded: TAT became Honeywell Aerospace’s sole global authorized distributor for spare parts for the 331-200/250 APU platform, extended its MRO license through 2036 and acquired three 131-9A APUs for trading and leasing. Supply-chain and cash-flow pressures remain: Landing-gear and OEM component shortages continue, prompting higher inventory investments and procurement costs. Operating cash flow turned negative during the quarter, although TAT maintained $43 million in net cash and secured a new $100 million revolving credit facility. TAT Technologies (NASDAQ:TATT) reported record second-quarter results for 2026 as improving supply-chain conditions helped the aviation aftermarket company convert previously constrained demand into revenue. Management said the company ended June with a record $650 million backlog and long-term agreements, while expanding its relationship with Honeywell Aerospace. Second-quarter revenue rose nearly 23% year over year to $52.9 million from $43.1 million. Gross profit increased 23% to $13.3 million, with gross margin remaining above 25%. Operating income reached $5.6 million, or 10.6% of revenue, compared with $4.4 million, or 10.3% of revenue, a year earlier. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Net income was $8.1 million, or $0.61 per diluted share, compared with $3.4 million, or $0.30 per share, in the prior-year period. The quarter included a one-time gross gain of approximately $4.3 million from the sale of a minority interest in an unconsolidated entity, along with a $900,000 tax-related charge. Excluding the gain from the minority-interest sale, net income was $4.6 million, or $0.35 per diluted share. President and CEO Igal Zamir said the quarter represented “an important inflection point” for the company, citing strong commercial-aviation fundamentals, high aircraft utilization and longer aircraft service lives. → 3 Drone Stocks That Should Soar After the Summer Slump TAT expanded its strategic relationship with Honeywell Aerospace during the quarter. The company became Honeywell’s sole global authorized distributor of spare parts for the 331-200/250 auxiliary power unit, or APU, platform. TAT also extended its MRO license for that platform through 2036 and acquired three Honeywell Aerospace 131-9A APUs for its trading and leasing operations. Zamir said the agreement adds a distribution capability that TAT previously did not have on the 331-200/250 platform. The company had historically provided MRO and service support for the platform, but can now offer parts, repairs and return services across the lifecycle. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure The executive said the extended agreement provides long-term visibility for an important OEM relationship and supports TAT’s position as an aftermarket partner to airlines, OEMs and MRO providers. Management said supply-chain conditions improved significantly in the second quarter, particularly following a specific first-quarter disruption involving a major OEM. However, the company said conditions have not fully normalized, especially for OEM-supplied components and landing gear. Chief Financial Officer Ehud Ben-Yair said supply-chain inefficiencies raised procurement costs in certain product lines and limited the company’s potential operating leverage. The stronger Israeli shekel also created more than $600,000 in foreign-exchange losses during the quarter. Landing gear, which represents about 5% of total revenue, remains affected by supply constraints. Zamir said lead times for some landing-gear parts have extended beyond 12 months, while the availability of used serviceable material has tightened as airlines keep older fleets in operation longer. “We don’t see the recovery as we reported in the last few quarters,” Zamir said regarding the landing-gear supply chain, adding that the company has limited visibility into when the trend will stabilize. TAT has responded by increasing inventory buffers and, when necessary, purchasing components at higher costs to protect customer delivery schedules. Management expects inventory requirements to become more efficient as supply conditions improve, but said working capital will remain elevated in the near term. Adjusted EBITDA, excluding the one-time gain, was $7.4 million, or 14% of revenue, compared with $6.1 million, also 14% of revenue, in the year-earlier quarter. Cash used in operating activities was $0.6 million, compared with positive operating cash flow of $7 million in the second quarter of 2025. Ben-Yair attributed the change to strategic inventory investments, including inventory for the Honeywell distribution agreement, as well as revenue that had not been collected by quarter-end. He said the company expects some of those collections during the third quarter. TAT ended the quarter with net cash of $43 million. The company also recently secured a new five-year, $100 million revolving credit facility with U.S.-based banks. Management said acquisitions remain a central part of TAT’s long-term growth strategy. The company is evaluating a pipeline of potential targets that could expand MRO capabilities, thermal-systems operations, platform coverage and geographic reach. Ben-Yair said TAT intends to remain disciplined on valuations and maintain what he characterized as healthy leverage. For the first six months of 2026, revenue rose 10.4% to $94.1 million. Gross profit increased 12.4% to $23.4 million, producing a 24.8% gross margin. Operating income was flat at $8.6 million. First-half net income increased 58.1% to $11.5 million, including the $3.4 million net benefit from the one-time transaction. Excluding that benefit, net income would have increased approximately 11% to $8.1 million. Adjusted EBITDA, excluding the one-time gain, rose 4.1% to $12.3 million, or a 13.1% margin. Management said heat-exchanger revenue grew 7.8% in the second quarter, while the APU business benefited from supply-chain recovery and new long-term contract wins. Trading and leasing revenue increased 17%, and the additional 131-9A APUs are expected to support future leasing activity. Zamir said TAT entered the second half with stronger momentum, improving supply-chain conditions and greater visibility from its record backlog. Management expects growth to be steady rather than driven by an unusual quarterly backlog release, noting that much of the backlog consists of multiyear agreements. TAT Technologies Ltd. is a global provider of environmental control and thermal management solutions for the aerospace industry. The company specializes in the design, manufacturing and support of aircraft environmental control systems (ECS), heat exchangers and related components. Its product portfolio serves commercial and military airframers, engine manufacturers and airlines, offering critical systems that regulate cabin pressure, temperature and ventilation on fixed-wing and rotary aircraft. Key offerings include air cycle machines, preconditioned air units, steam/water separators and specialty heat exchangers engineered to meet stringent aerospace standards. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "TAT Technologies Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved a record quarter with 23% revenue growth, driven by the conversion of previously constrained customer demand as supply chain conditions began to improve. The company reached its highest backlog in history at $650 million, providing significant long-term visibility into future revenue streams. Expanded the strategic relationship with Honeywell Aerospace, becoming the sole global authorized distributor for spare parts for the 331-200/250 APU platform. Strategic prioritization of customer support led to targeted inventory investments and higher procurement costs, which temporarily dampened short-term profitability to ensure long-term reliability. Commercial aviation fundamentals remain exceptionally healthy as high utilization rates and aging fleets drive sustained demand for aftermarket MRO services. Management is actively pivoting toward inorganic growth, having built a robust M&A pipeline and completed initial due diligence on several targets. The expanded Honeywell agreement extends the MRO license to 2036, securing long-term profitability and visibility for the APU business segment. Management expects inventory requirements to become more efficient as supply chain normalization continues, though working capital will remain elevated in the near term. Future revenue growth is expected to be steady rather than characterized by major quarterly jumps, as new contract wins are typically spread over 3 to 5 years. The company plans to utilize its new $100 million revolving line of credit to support a disciplined M&A strategy focused on expanding MRO capabilities and geographic presence. Operating leverage is expected to improve as the company scales against the infrastructure and overhead investments made in late 2025. Reported a nonrecurring one-time gross gain of approximately $4.3 million from the sale of a minority interest in an unconsolidated entity. A nonrecurring tax charge of $900,000 was recorded, resulting in a net one-time benefit of $3.4 million to net profit. Foreign exchange volatility served as a headwind, with the strength of the Israeli shekel against the U.S. dollar causing losses of over $600,000 in Q2. Supply chain challenges in the landing gear segment remain persistent with lead times extending beyond 12 months, limiting visibility on full normalization. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed that the specific supply crisis from Q1 has passed, and engines that were stuck awaiting final parts have now been shipped. Shop volume has normalized to approximately 40-50 engines in process at any given time, though new contract wins will likely drive a gradual increase. Normalization is hindered by OEMs extending lead times to manage their own subcontractor pressures and a lack of Used Serviceable Material (USM) as airlines fly older fleets longer. While raw materials for thermal components have stabilized, MRO parts sourced from OEMs remain volatile due to the disappearance of small subcontractors during the pandemic. TAT intends to remain disciplined, targeting acquisitions at lower multiples than its own trading price. The preferred financing structure for deals is a 50/50 split between credit and capital markets to maintain a healthy leverage ratio. Inventory is expected to continue growing to support the new distribution agreement and to buffer against market shortages. Management noted that Q2 cash flow was also impacted by revenue recognized but not yet collected, which is expected to convert in Q3.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Revenue slightly declined year-over-year due to industry-wide supply chain disruptions that delayed the release of open work orders in APU and Landing Gear segments. Record customer demand drove the total backlog and long-term agreements to an all-time high of approximately $580 million at the end of Q1. Management attributed the revenue softness to shortages of standard commodity-level parts from key OEM partners, rather than a lack of demand or internal capacity. Gross margin expanded by 80 basis points to 24.4%, driven by operational discipline, cost management, and structural improvements across business lines. The APU segment saw record intake and a higher-than-usual book-to-bill ratio, while the Trading and Leasing business grew 29% despite inherent quarterly variability. Operational milestones included a 97% on-time delivery rate for the heat exchanger business, which remains a consistent foundation for the platform. Management maintains confidence in full-year 2026 revenue and EBITDA growth, viewing Q1 supply disruptions as bounded and temporary. Recovery in the APU segment is expected to be gradual over the next few months as part flow from OEM partners shows recent signs of improvement. The company is utilizing alternative sourcing and strategic inventory of core engine components to mitigate the impact of commodity-level part shortages. M&A remains a top priority for 2026, with a newly established corporate development team actively evaluating accretive bolt-on acquisitions. Operating expenses are being monitored closely to align with the anticipated ramp-up in revenue as missing components arrive and units are released. Approximately $15.5 million in APU and Landing Gear work orders remained open at quarter-end due to missing components, shifting revenue into future periods. Landing Gear supply chain resolution is at an earlier stage than APU, with higher risk due to potential prioritization of internal shops by OEM suppliers. Geopolitical unrest in the Middle East has created a 'counter trend' where increased demand for military readiness is balanced by delayed scheduled maintenance for active aircraft. New tax legislation allows for the deferral of U.S. tax payments to the end of 2026, providing additional short-term cash flow flexibility. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed that the $15.5 million in open work orders represents near-complete units that will be recognized as revenue once commodity parts arrive. There has been no notable slippage in the backlog; demand remains robust with no indications of intake being negatively impacted by the current environment. Recovery will be a gradual process over several months rather than a one-time event, though OEM partners report the root causes of shortages are behind them. The shortage is specifically tied to low-complexity commodity parts needed for final assembly, not the technically complex core engine components which TAT holds in strategic inventory. TAT aims to complete at least one acquisition in 2026 but remains disciplined on valuation, targeting multiples lower than the company's current trading level. The focus is on targets that provide added value to customers, such as those with PMA (Parts Manufacturer Approval) capabilities to further insulate the supply chain.

Image source: The Motley Fool. Wednesday, May 20, 2026 at 8 a.m. ET Chief Executive Officer — Igal Zamir Chief Financial Officer — Ehud Ben-Yair Vice President, Investor Relations & Strategy — Matthew Chesler Igal Zamir: Thank you, Matt. Good morning, everybody, and thanks for joining us. We appreciate your continued interest in TAT. TAT Technologies entered 2026 with a robust operational foundation and the record customer demand in the first quarter reinforce our confidence in the trajectory we are on. Demand for our services has never been stronger and the value of our long-term agreement and backlog reached an all-time high, growing to approximately $580 million at the end of Q1, reflecting new contracts win and strong customer intake in MRO. We continue to make significant progress on our organizational infrastructure and operational plans for margin expansion. M&A remains a key priority. We established a team with direct industry relationships and operating experience required to source and execute the right transactions in this market. We are not in a rush. We are building towards the right outcomes. In parallel, during Q1, we experienced supply chain disruptions, leading to delayed completing open work orders and deliveries. As a result, our revenue slightly declined year-over-year, not fully utilizing our growing backlog. We expect this obstacle to be resolved in the next few months, allowing TAT the growth trajectory. I will walk you through what drove the quarter, what remains fully intact in the business and how we are thinking about the balance of 2026. Ehud will then take you through the financial details. Let me begin with the backlog because it's the most important signal that we can give you about where the business stands today. Backlog and long-term agreements increased to $580 million as of March 31 from $550 million at the end of 2025. This is a record for TAT and mostly related to new contract wins. When it comes to ongoing MRO demand, to give you a sense of the magnitude of the timing dynamics, we ended the quarter with approximately $15.5 million of APU and Landing Gears open work orders at our shops. We estimate that a material portion of this work, which was near completion, but could not be released due to missing components would have been shipped and recognized in the quarter if part has been available. Switching to the first quarter results. So turning into the quarter itself, we have a slight decline in revenue year-over-year. As explained, this softness reflects constraints in component availability from some key OEM partners that delayed the completion of release -- and the release of units in APUs and Landing Gear operations. The APU components in questions are not technically complex. They are standard commodity level parts, but until they arrive, units cannot be released. The associated work remains under contract, volume shifted into future periods rather than being lost. The demand is there, the contracts are there, the capacity and workforce is there, and our confidence in the full year revenue and EBITDA growth remains intact. Ehud will walk you through the financial details in a moment, including margin performance and cash flow, both of which tells a more complete story about the health of the business. Product line commentary. Let me briefly walk you through the performance across our service lines. In heat exchangers, we continue to see growing demand. Q1 of 2025 revenue reflected a huge effort to close late orders from 2024. The following quarters of '25 and '26 reflected the ongoing demand for our -- for both our OEM and MRO customers. Even against this higher base of Q1 '25, we look into '26 and are seeing increasing orders in both OEMs and MRO market. This business benefits from our -- more than 60 years of OEM and MRO experience, long-term supply relationship and diversified commercial and defense customer base. It continues to generate consistent recurring demand and remains the foundation of the platform. In the heat exchanger business, we achieved an operational milestone this quarter, delivering more than 97% of customers order on time. In APU, intake was at a record level at this quarter. We won business and added new customers. We are seeing increased flow of newer engine platforms. And we exited the quarter with more contracted work than we entered, achieving a higher level of book-to-bill than usual. Our customer relationships are strong. We continue to support and engage customers even when the final delivery is delayed. We are in an active ongoing dialogue with our supply partners and have seen improvement in parts flow over the recent months. The business is fully ready to convert volume at the moment parts will flow and we expect it to. In Landing Gear, component availability is a limiting factor and supply situation in this business is at an earlier stage of resolution than what we see on the APU. Once again, our market position is unchanged. Customer demand has not changed. What I can tell you is that we are not waiting for this to resolve itself. We have ongoing dialogue with our OEM partners, and we have established new processes with them to increase transparency and drive towards resolution. The level of engagement and the steps being taken give us more visibility into the path forward than what we had at the beginning of the year. Landing Gear is a smaller portion of the overall business, yet we will continue to press for resolution with the same urgency that we have applied from the beginning. Finally, Trading and Listing delivered 29% year-over-year growth strong results for a business with inherent variability from quarter-to-quarter. The timing of asset transactions don't follow a straight line and the demand picture in this business continue to be very high. Q4 of 2025 was a record quarter for this business and our ability to complete certain engines exchanges in Q1 was limited by the same parts availability constraints affecting the MRO operations. The underlying demand picture remains strong, and we expect the business to be a meaningful contribution to our consolidated results. Switching a little bit to the industry. Stepping back from the quarter, what we hear from our customers and see in our own order flow continues to point to an encouraging direction. Demand for MRO services remained strong and the need to maintain and extend service life of existing fleet is there. That is the environment TAT operates in, and it continues to support our long-term opportunity. The supply chain dynamics that affected our first quarter is an industry-wide phenomenon. Major OEMs and operators across the aerospace ecosystem have commented publicly on similar pressure in the recent weeks. As we shared in the past, in order to overcome it, TAT maintains a meaningful strategic inventory of critical APU parts. The recent shortage, which started in Q4 of '25 is in standard commodity level components, which are required in all APUs final assembly after the overhaul. While we have seen improvement in part flow over the recent months and while part sources expressed their confidence in their recovery, the broader environment remains dynamic, and we are not in a position to predict the precise pace of normalization. Switching to M&A. M&A remains a key priority for TAT and our progress on this front is meaningful. Over the past 9 months, we have invested in building a team with direct industry relationships and operational experience required to source and execute transactions in this market. We brought a dedicated corporate development leadership with career spent in aerospace. We upgraded the Board with directors who bring scaled company operating backgrounds and add further connectivity into the broader aerospace ecosystem. We developed our internal systems and procedures to enable us to close M&A opportunities and integrate them into our business. That team is now actively engaged directly with potential acquisition targets with private equity firms that own assets in our addressable market and with a network of advisers and bankers who brings additional deal flow. As a result, our pipeline has expanded. We are evaluating opportunities, which is a notable change from where we were 6 months ago. Our focus continues to be on accretive bolt-on acquisitions that strategically fit into our platform, expand our addressable market and deepen the value we deliver to customers. As we look ahead towards the balance of 2026, our confidence rests on three key factors. First, demand is the strongest it has been ever for TAT. Our record backlog of approximately $580 million reflects sustained engagement across all four of our service lines and the pipeline of new business continues to build. Second, our customer relationships remain fully intact and our customers have continued to work with us in partnership throughout this period. Third, TAT itself is a stronger company than it was at the beginning of 2025 operationally, institutionally and strategically. The investments we have made in the team, our processes and our balance sheet position us to convert demand into growth as the supply environment normalize. We are moving forward with conviction and indications from our suppliers are pointing close to normalization. Based on our visibility and what we are hearing directly from our customer partners, we continue to believe that 2026 will be a year of meaningful growth in both revenue and EBITDA. The supply chain timing dynamics we navigated in Q1 does not change that view. When parts flow, we are ready. And the backlog tells you exactly what is waiting on the other side. With that, I will turn the call over to Ehud for more detailed review on the financial results. Ehud Ben-Yair: Thank you, Igal. Good morning, everyone. Good afternoon to those that are on the other side of the ocean. As I walk you through the first quarter financial details, the headline is straightforward. While the supply chain disruption affected the timing of revenue recognition during this period, we expanded gross margin year-over-year, generated positive operating cash flow and ended the quarter with a balance sheet that continues to support both organic growth and our M&A priorities. First quarter revenue was $41.1 million compared to $42.1 million in the first quarter of 2025. As Igal described, the year-over-year decline reflected industry-wide aerospace supply chain timing, not demand. The increase in our WIP inventory and parts is a reflection of the amount of work that could be recognized at the end of the quarter. Gross profit increased by 0.8% year-over-year to $10 million. Gross margin expanded approximately 80 basis points to 24.4% compared to 23.6% in the first quarter of '25. This margin expansion reflects the operational discipline and structural progress we have made across the businesses, including improvement in our cost structure and operating efficiencies and continued focus on cost management across our operations. As we move forward, towards the year. We are monitoring expenses very close until revenue will start ramping up again. This is without harming our operational capabilities to ramp production when missing parts arrive. Operating income for the quarter was $3 million or 7.3% of revenue compared to $4.2 million or 9.9% of revenue in the first quarter of 2025. While gross profit increased year-over-year, operating expenses were higher in the period. This increase reflects our planned investment in next-generation R&D, the strengthening of our organizational structure and executive teams to pursue strategic M&A, strengthening the strategic sales team and the enhancement of our finance infrastructure to support SOX compliance, ongoing regulatory demand and expansions. Net income was $3.4 million compared to $3.8 million in the first quarter of 2025. Diluted earnings per share were $0.26 compared to $0.34 in the first quarter of '25. Net interest income in Q1 of 2026 were $39,000 compared to net expenses of $58,000 in the prior quarter. This is mainly due to a lower level of debt, offset by the impact of the Israeli shekel against the U.S. dollar exchange rate, which impacted some of our long-term loans. Taxes on income were $0.1 million for the 3 months ended March 31, 2026, compared to $0.6 million for the same period in 2025. The decrease primarily reflects lower taxable income and the impact of jurisdictional mix during the period. I want to remind the audience again that while taxes expenses are booked, the these are mainly accounting movements between deferred tax assets and liability. The new bill allowed us to defer tax payment in the United States to the end of 2026, while previously expected to start in Q1 of '26. Also in Israel, we have enough carryforward losses that will take us through the end of 2026. Adjusted EBITDA was $4.9 million or 11.8% of revenue compared to $5.7 million or 13.6% of revenue in the first quarter of 2025. Moving to the cash flow. Cash flow from operating activities was positive at $1.9 million in the first quarter compared to negative of $5 million in the first quarter of 2025. Turning to the balance sheet. We ended the quarter with $51.2 million in cash and $11.2 million in total debt, resulting in a debt-to-EBITDA ratio of 0.45 calculated over the last 4 quarters of EBITDA. Shareholders' equity stood at $180.5 million, resulting in an equity-to-balance ratio of 77.5%. Our strong financial position gives us meaningful flexibility to continue investing in organic growth opportunities and advance the M&A pipeline. To summarize, the volume deferred during the period is contracted and supported by a record backlog. Gross margin continued to expand, operating cash flow remains positive and our balance sheet is well positioned to support our growth strategy. While supply chain constraints affected the timing of revenue recognition in the quarter, the underlying demand remains intact, and we are well positioned to realize this contracted volume as supply conditions normalize. And with that, I will return the call back to Igal. Igal Zamir: Thank you, Ehud. Before we move to questions, I would like to leave you with a few clear takeaways from today. Customer demand at TAT is at record level with our backlog growing to approximately $580 million, the majority of which reflects new business wins. The supply chain disruptions that affected our quarter is bounded and temporary. The deferred volume is contracted business that we expect to convert when supply conditions will allow. And TAT itself is a more capable company than what we were a year ago with the operational, institutional and strategic infrastructure to continue advancing our growth priorities, including M&A. I want to thank our employees around the world. Their professionalism, particularly in the quarter and acquired hand-on coordination with our customers and suppliers is what makes our continued progress possible. With that, I will turn over to Matt for questions. Matthew Chesler: Thank you, Igal. We're now going to open up to the Q&A session. [Operator Instructions] The first question is from Ben Klieve at Benchmark. Ben, please go ahead. Benjamin Klieve: First question around the backlog. It's great to hear really a steadfast belief here that the supply chain problems are not having an impact on your backlog. And I want to lean into this. Clearly, your backlog ramped considerably in the first quarter. You had a couple of really nice wins. And I'm wondering if below those really nice wins, if there is any slippage either in the first quarter or second quarter to date from any of these customers that have been negatively impacted by the parts dynamic or perhaps customers that have had more macro challenges here around the price of jet fuel, any of the low-cost commercial providers, anything like that. So has there been any slippage out of backlog here, again, either in the first quarter or second quarter to date? Igal Zamir: So let me address -- I'll try to address the question in several ways. First of all, maybe just to expand on what we just covered in the opening remarks. When you think -- when you look -- I mentioned earlier that we finished the quarter with $15.5 million of APUs and Landing Gear in open orders. And we believe that a material portion of it should have been released and recognized during the quarter if the parts would have been there. And also, if you look -- so that's kind of a reflection of the -- you can estimate what could have been in the quarter. We're entering the quarter and during the quarter, we were expecting Q1 to be to continue the trajectory of the growth that we had in the last few years. So from a demand perspective, we were expecting and hoping for a very strong quarter. The second way to look at the -- and where we were at the end of the quarter is looking at the balance sheet, and I mentioned something about it. If you look at the inventory -- substantial inventory increase that we had during Q1, a big portion of this inventory increase that you see on the balance sheet relates to the open work orders, the value of the work that was done into the open work orders, another indicator for how much could have been added. As a general saying to the third question -- that I believe that you asked, as a general saying, the work is there. The demand is there, and we see the buildup of intake. We don't have -- so far, we don't see any indications. There are always exceptions here and there. But as a general saying, we don't see any impact on intake due to the environment. We actually see continuing strong momentum on intake. Benjamin Klieve: Okay. That's very helpful. And then one other one for me and then I'll get back in queue is around your expectations, not necessarily for the timing of the parts, your access to the parts, but kind of the progression of getting from where you are today to when you'll be fully -- have full inventory. Are you expecting kind of a one-time event where these parts unlocks, especially on the APU side, all come in at once? Or do you think this is going to be kind of a trickling over several months or several quarters for you to get to the full inventory position that you need? Igal Zamir: So okay. Again, I will split the answer into a few segments. First of all, let's start with APU, which is the vast majority of the opportunity that we have ahead of us in terms of catch-up. So first of all, we did a few things. While we are working very, very actively with our OEM partners to resolve the part situation, we are also extensive efforts to bring alternative solutions and to make sure that we have the parts from -- not just from the OEM agreements that we have, and it's contributing to the ramp-up. The OEM partners themselves are reporting on a substantial improvement on their side. But in the same time, they have a huge backlog, not just for TAT. We are only one of many, many customers that they have and the problems affect everybody. And therefore, I believe that the back to normal will take a couple of months. I don't expect any one go where all of a sudden next week or whatever we see all the parts in one day. It will be a process. They are optimistic that the problem -- the root cause of the problem is behind them and that they are on a recovery trajectory. We do see increase in -- a substantial increase in the last few weeks in deliveries, but it will take a few months. Matthew Chesler: The next question is going to be from Jonathan Siegmann from Stifel. Jonathan Siegmann: Maybe just to talk a little bit more about the parts shortage. Is there any risk that given these OEM suppliers who are having some problems delivering these parts are not -- are prioritizing their own internal use of these parts and you as a third-party partner are lower priority? Just maybe if you could address that concern, I would appreciate it. Igal Zamir: I would say, again, I need to split the answer on the APU, there is 0 risk. There is no risk. And as we stated in the comments at the beginning, when it comes to the APU, you have the main engine components, all the -- we call it the core of the engine component, the impeller, the big parts and whatever, we have plenty of them in stock. We established a meaningful strategic inventory a year ago. So when an engine come and we need to do the work, we have all the parts in-house. This is why we have so much work orders that are very close to completion where the overhaul was done. But the challenge that we have today is on the all kinds of commodity level parts without going into too many details that you need in order to reassemble the engine after the overhaul was done. There is no conflict between us and -- that I'm aware of between us and the OEM production. And so I don't see any risk there. On the Landing Gear, it's a different story because the Landing Gear -- the OEM itself that is producing the main Landing Gear parts is supplying to us and also supplying to their own shop. So in theory, there can be a conflict. We are working very actively with them and trying to verify that we are going to make sure that the allocation is done according to the customer needs and not just based on prioritizing the OEM versus the partners. So there is more risk there, but it's a much, much smaller portion of the problem. Jonathan Siegmann: And your freight customers, sometimes they can be the most sensitive to changing macro conditions. Any color on what they may be saying or thinking at current time? Igal Zamir: I would say just as -- At least one of our largest customers, freight customer is suffering from the same OEM, from the same part issue on another -- on their needs, unrelated to what we do for them. And so we are -- it's a known problem in the industry, among the industry players and everybody is affected. So not only that we get a good collaboration and actually, our customers are part of the solution in the sense that they are helping us to put pressure to resolve the problem. But we also -- and also we work very closely with our customers to make sure that we take care of the needs. No customer will get stuck without spare units and very openly and very engaging with our customers. So it looks like it's under -- we are managing it properly, and we are on the right direction in terms of the trajectory. Matthew Chesler: Thank you. Next on to Josh Sullivan from Jones Trading, who has submitted a question. Josh is asking whether the supply chain disruptions opened up any conversation around vertical integration or mergers and acquisitions. Ehud Ben-Yair: I think it's -- by the way, Josh, good question. I would say in general, there is a potential here, and we are looking at several ideas. But I must say that currently, there's nothing on the table or something that will mature in the next quarter or 2. Matthew Chesler: He's also asking -- so you're saying, I know your visibility points to a recovery in the latter half of the year. However, if the supply chain disruptions were to continue to linger, when does the OEM issue become an operational issue for the flying industry? [Technical Difficulty] Igal Zamir: I couldn't hear the question. Can you please repeat? Matthew Chesler: I think Josh was asking you to look at your crystal ball. No, he's saying, I know your visibility points to a recovery in the latter half of the year. However, if the supply chain disruption were to continue to linger longer, when does the OEM issue become more of an operational issue or an industry-wide issue for the flying ecosystem? Igal Zamir: Just again, I'm sorry, I could barely hear the question. Let me try and address the -- what I believe was the question. We are already -- as we stated before, we are in an active recovery mode. We see more parts coming and we feel that the direction is the right direction. So a combination of what we actually... [Technical Difficulty] Ehud Ben-Yair: I think Igal has some connectivity issues. Let me try to answer this question. I think at the end of the -- again, I want to split the answer to two to the APU and the landing gear. On the APU, I don't see any risk like this. We are seeing it recovering, and we believe that, as we said, it will be end by the second half of the year. I don't see any -- currently, we don't see any risk to the whole industry -- continue flying or something like this. On the landing gear, it's a good question. Currently, the situation is not that... We don't see the supply chain getting better. As I said, we're working very close with the OEM trying to solve the issue, try to find creative ways to solve them. But there is a concern. There is a concern. There are some parts of the currently we don't get any answer from -- any complete answer from the OEM, and it may evolve to maybe a larger problem, but not right now. Again, we keep monitoring the situation and understand what's going on and solve the issues. Matthew Chesler: Okay. Thank you for that. Let's move on to some questions that have been submitted by investors in advance and during the call. So thinking more broadly in light of the implications of the conflict in the Middle East, are you seeing -- Iran -- are you seeing any delays in securing new APU maintenance contracts for the 131 and 500 models? Igal Zamir: Actually, as we already demonstrated during the quarter, we are on a very strong trajectory on securing new business, including the 500, and we published substantial wins during the first quarter, and we continue to work to expand. So the conflict by itself did not affect the ability to close more business. Matthew Chesler: Okay. Next question. Has TAT Israel experienced any increased activity as a result of the Israeli Air Force's operations during the current conflict? Igal Zamir: So I think in general, on the military side, we see -- on one hand, we definitely see increasing demand due to the global unrest. And in parallel, some of the capabilities that we have and services that we provide are focused on the fleet that is currently is in use in the Middle East, both by Israel and the U.S. Air Force. And so I think that there is more focus on keeping the aircraft flying than taking them to our MRO cycles. So it's kind of, let's call it, a counter trend. On one hand, there is a growing demand. On the other hand, in some short-term we may experience here and there some delays. All in all, it's positive trend. By the way, when I'm talking about delays, if an aircraft is flying in operations in the Middle East, the Air Force will try to push the scheduled maintenance until the conflict is over. So you may see less intake coming on the immediate term. And on the other hand, when you look at it more mid term and long term, the overall demand is growing and the positive impact -- the overall blended impact of these two trends is positive. Matthew Chesler: Okay. Here's a financial question. Do you still expect gross margin expansion of several percentage points over the next 12 months despite the current challenges? Ehud Ben-Yair: I don't want to relate to the numbers or the amount of percentage, but I can say definitely that the gross margin is going to improve in 2026, given everything that we mentioned before, we are working on our operational efficiencies. We're monitoring expenses very closely this year. We have our own initiatives that we are executing. I commented on this in several earnings calls in the past. Every quarter, we are completing more and more and more cost efficiencies initiatives, and we see them in the results. You can also see this quarter that even though the revenue was lower compared to previous quarters, we managed to keep a very high level of gross margin and even improve it compared to the previous quarter. And obviously, as revenue will pick up during the year, the more revenue growth, we see an upward trend in the gross margin and in the EBITDA margin as well. Matthew Chesler: Great. There's a question around cargo. I guess to what extent is the strait of hormuz situation affecting demand from cargo customers, if any? Igal Zamir: So from where we see it, we see a steady demand. We didn't see any major change that we can measure in terms of more demand growing because of the need to use more air-freight than sea-freight. So we see the demand meets our expectation. Nothing that is notable that I can speak about. Matthew Chesler: So we're going to go back and take a live question. We have one that just came in from Sergey Glinyanov from Freedom Capital Markets. Sergey, please go ahead, ask your question. Sergey Glinyanov: You hear me? Matthew Chesler: Yes, we do. Sergey Glinyanov: Yes. Great. So I just would like to clarify, do you expect next quarter will be weak as well, especially in APU line? Because previously, some analysts asked about backlog, and I see that it's really strong. But timing is really -- we need to clarify the timing when your revenue will continue to grow again. Igal Zamir: Yes. So, I'll try to compile what we discussed before into a few comments. First of all, we have lots of APUs where the work was done. We are just waiting for the last remaining parts for us that are required for assembly, so we can assemble the units and sell them. We stated that we see a part -- we see a recovery. The recovery in the parts availability is already happening. And we are forecasting that the revenue will grow. So it's not going to be a [ 0-1 ] impact, and it's -- we are not promising a full recovery, but we are on a positive recovery trend. And we have plenty of work. Actually, we have a huge amount of work in the company. And while when the parts arrive, these units, a few days later, are the engines are assembled and shipped to the customer. So we expect a recovery, but the recovery is gradual over the coming few months. Sergey Glinyanov: Yes. And maybe you can put some color on what parts particularly we were exposed to supply chain. So you mentioned, Igal, that some commodity level parts were exposed, but maybe you can name some particular parts. Igal Zamir: I prefer to keep it at this level, not to expose our OEM and to be too specific. But if you think about it, when you think about an engine, you have the main engine component where we don't have any issue and we have the general thing, we don't have any issue, and we have substantial amounts of inventory. So you can do all the work on the components. You take the engine, you break it into all the pieces, then you have to overhaul and repair pieces that are not or replace the main parts if they are not functioning well. And when all the work is done, you need to assemble the engine. For the final assembly, there is a long list of small parts that are more commodity parts that are required, and this is where the challenge is. Matthew Chesler: The next question is from Alexandra Mandery from Truist. Please go ahead. Alexandra Eleni Mandery: Can you guys hear me? Matthew Chesler: Yes, we can. Igal Zamir: Yes. Good morning, Alexandra. Alexandra Eleni Mandery: So that's great to hear that you're in the process of discussing solutions to the supply chain issues with the OEMs. Can you provide additional color on some potential solutions with the OEM not ease the issue? And I guess the second question kind of tied to that is, do you have any interest in acquisitions that could include PMA capabilities for the commodity level parts that could ease the supply chain? Igal Zamir: So when it comes -- as a general thing, without going to specifics, theoretical solutions for OEM parts can be PMA or can be sourcing the same parts from other sources in the market that happen to keep them in inventory. And in parallel to overcoming the problem with the OEM and in collaboration with the OEMs as we find these alternative solutions on the short-term, we are utilizing them. And in terms of the second question, it really depends on your question about potentially acquiring PMA capabilities. It depends on the type of product and the relationship or the contracts that we have with our existing OEMs. In some cases, we can do it in some cases not. But as a general thing, as we think about expanding our MRO capabilities and adding more capabilities that we don't have today with PMA. And PMA facilities is definitely something that we will be looking at. Matthew Chesler: So I'd like to ask a question for Ehud that was submitted from through the chat function around M&A. Ehud, can you talk a little bit about the M&A funnel, what you're prioritizing and how the current environment might factor into that thinking? Ehud Ben-Yair: Yes, sure. Thank you for the question. So as Igal mentioned at the beginning of his speech, we first -- in the last couple of months, we built the infrastructure. So we hired the people, we set the routine. We set the connection, the network. We defined the strategy. And then in the last couple of months, we went to the market started getting opportunities and started sourcing opportunities by ourself. The strategy in general, again, it was communicated in the past. I'll just repeat it. We're looking for companies, either an OEM or MRO, something close to our areas that we're working right now. And the main issue is to provide additional benefit or additional added value to our customers. We raised the money several months ago. The money that was raised was mainly to give us some kind of a first cushion to start being active in the M&A market as we see it right now. There are several interesting opportunities. And I want to indicate to everybody that we are committed to be very, very disciplined. So on one hand, we want to make our first acquisition, and we promised ourselves and promised everybody else that we're going to do at least one deal this year. But on the other, we're not in a rush. We will be very disciplined. We'll find the right target in the right price that fits our strategy and then that will be very swift and very quick to close a deal. There is another thing which is very interesting in the last 2 months, I would say, is the multiples in the industry. So in the previous quarter, we saw multiples for the aviation industry climbing up very fast. And then when the oil crisis started and the turbulence in the market started, we saw multiples for our type of companies going down. It creates a certain dynamic also in the M&A area. And it's very interesting for us to see where it's going to land. But the one thing I can say is that in any case, we will -- any company that we will acquire will be at a lower multiple than the multiple that we are trading right now. To summarize, there are a few opportunities which are interesting right now. We're looking at them. But again, as I said, we are not promising anything. We're -- but the only thing I'm promising is to be very strategic and very disciplined on it. Matthew Chesler: At this time, Igal, I'd like to turn the call back over to you for some closing remarks. Igal, if you can hear us... Igal Zamir: Yes. Thank you, Matt. So thank you all for joining us today and for your continued engagement with TAT. The first quarter highlights both the strength of the customer demand of our services and the impact of an industry-wide supply chain dynamics that we expect to resolve over time. Beneath that timing dynamic, we -- the underlying business is operating well. Demand is at record level. Our backlog continues to grow. Gross margin is expanding and our balance sheet supports strategic priorities we are pursuing, including M&A. We look forward to updating you on our progress through the balance of 2026. Thank you again for your time today and for your continued confidence in TAT. Matthew Chesler: Thank you, everyone, for joining us today. You may now disconnect your lines. Igal Zamir: Thank you very much. Before you buy stock in Tat Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tat Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $475,063!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,369,991!* Now, it’s worth noting Stock Advisor’s total average return is 996% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 21, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Tat Tech (TATT) Q1 2026 Earnings Transcript was originally published by The Motley Fool

CHARLOTTE, N.C., May 20, 2026 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT) (TASE: TATT) ("TAT" or the "Company") a leading provider of products and services to the commercial and military aerospace and ground defense industries, today reported its unaudited results for the three-month period ended March 31, 2026. Financial highlights for the first quarter of 2026: Revenues were $41.1 million; a slight decrease of 2.4% compared to $42.1 million in the first quarter of 2025, driven primarily by component part shortages and delayed deliveries from certain OEM suppliers. Gross profit remained stable at $10.0 million. Gross margin improved by 80 basis points to 24.4% of revenues, compared to 23.6% of revenues in the first quarter of 2025. Operating income was $3.0 million, a decrease from $4.2 million in the first quarter of 2025, reflecting a margin of 7.3% versus 9.9% in the first quarter of 2025. Net income totaled $3.4 million, a slight decrease compared to $3.8 million in the first quarter of 2025. Adjusted EBITDA was $4.9 million, representing 11.8% of revenues, a decrease from $5.7 million representing 13.6% of revenues in the first quarter of 2025. Operating cash flow for the quarter was positive $1.9 million compared to negative $(5.0) million used in operating activities in the first quarter of 2025, reflecting a significant improvement in cash generation. Mr. Igal Zamir, TAT's CEO and President, commented: "TAT Technologies entered 2026 with a robust operational foundation, and the record customer demand in the first quarter reinforced our confidence in the trajectory we are on. Demand for our services has never been stronger, and the value of our long-term agreements and backlog reached an all-time high, growing to approximately $580 million at the end of Q1, reflecting new contract wins and exceptionally strong customer intake across all four of our service lines." As opposed to this strong momentum entering the year, and as previously communicated, we experienced some supply chain disruptions that affected the results of the first quarter. These distruptions were triggered by certain OEM suppliers, leading to delays in finish goods and deliveries. Primarily as a result of these delays, our revenue slightly declined YoY, not fully utilizing our growing backlog. We expect this obstacle to be resolved in the next few months, allowing TAT the continued growth trajectory we started last year. "As we look ahead through the rest of 2026, we are confident in the fundamentals of the business. Demand is at an all-time high and our record backlog provides strong revenue expectations. Subject to the anticipated resolution of our recent supply chain disruptions, we expect our growth trajectory will resume in the second quarter and the second half of the year, driven primarily by stronger demand and record backlog. We remain well-positioned to deliver growth and long-term value for our shareholders," concluded Mr. Zamir. Non-GAAP Financial Measures To supplement the consolidated financial statements presented in accordance with GAAP, the Company also presents Adjusted EBITDA. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors with a more complete understanding of the Company's underlying operational results, trends and performance. Adjusted EBITDA is calculated as net income excluding the impact of: the Company's share in results of affiliated companies, share-based compensation, taxes on income, financial (expenses) income, net, and depreciation and amortization. Adjusted EBITDA, however, should not be considered as an alternative to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of Adjusted EBITDA below. Investor Call Information TAT Technologies will host an earnings webcast and conference call today, May 20, 2026, at 8:00 a.m. Eastern Time to discuss first quarter results. Investors may register using the link below or by visiting the Company's website. Webcast Registration: Here Investor Relations Website: https://tat-technologies.com/investors/ Contact: Mr. Eran YungerDirector of [email protected] About TAT Technologies Ltd We are a leading provider of solutions and services to the aerospace and defense industries. We operate four operational units: (i) original equipment manufacturing ("OEM") of heat transfer solutions and aviation accessories through our Kiryat Gat facility (TAT Israel); (ii) maintenance repair and overhaul ("MRO") services for heat transfer components and OEM of heat transfer solutions through our subsidiary Limco Airepair Inc. ("Limco"); (iii) MRO services for aviation components through our subsidiary, Piedmont Aviation Component Services LLC ("Piedmont") (mainly Auxiliary Power Units ("APUs") and landing gear); and (iv) overhaul and coating of jet engine components through our subsidiary, Turbochrome Ltd. ("Turbochrome"). TAT's activities in the area of OEM of heat transfer solutions and aviation accessories through TAT Israel primarily include the design, development and manufacture of (i) a broad range of heat transfer solutions, such as pre-coolers heat exchangers and oil/fuel hydraulic heat exchangers, used in mechanical and electronic systems on board commercial, military and business aircraft; (ii) environmental control and power electronics cooling systems installed on board aircraft and ground applications; and (iii) a variety of mechanical aircraft accessories and systems such as pumps, valves, and turbine power units. TAT's activities in the area of MRO and OEM of heat transfer solutions include the MRO of heat transfer components and to a lesser extent, the manufacturing of certain heat transfer solutions. TAT's Limco subsidiary operates a Federal Aviation Administration ("FAA")-certified repair station, which provides heat transfer MRO services 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 MRO of APUs and landing gear. 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's activities in the area of jet engine overhaul through its Turbochrome facility includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps. Safe Harbor for Forward-Looking Statements This press release and/or this report contains "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements 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, LTAs and backlog, the price and continuity of supply of component parts used in our operations (including the risk that recent delivery delays and part shortages are not resolved in a timely manner), our ability to successfully identify, execute, and integrate potential merger and acquisition transactions 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. Shareholders 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. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS View original content:https://www.prnewswire.com/news-releases/tat-technologies-reports-first-quarter-2026-results-backlog-and-long-term-agreements-increase-to-580-million-on-strong-demand-302776931.html