TAT Technologies Ltd. - Q2 2026 Financial Summary
Business Context and Reporting Period
TAT Technologies Ltd. (NASDAQ: TATT), a supplier of products and services for commercial and military aerospace and ground defense industries, reported financial results for the second quarter ended June 30, 2026. The filing was submitted on August 5, 2026. The company operates in OEM heat transfer solutions, aviation accessories, and MRO services.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Revenue | $52.9 million | $43.1 million | $94.1 million | $85.2 million |
| Gross Profit | $13.3 million (25.2%) | $10.8 million (25.1%) | $23.4 million (24.8%) | $20.8 million (24.4%) |
| Operating Income | $5.6 million (10.6%) | $4.4 million (10.3%) | $8.6 million (9.1%) | $8.6 million (10.1%) |
| Net Income (GAAP) | $8.1 million | $3.4 million | $11.5 million | $7.3 million |
| Diluted EPS (GAAP) | $0.61 | $0.30 | $0.87 | $0.64 |
| Adjusted Net Income | $4.66 million | $3.4 million | $8.06 million | $7.3 million |
| Adjusted Diluted EPS | $0.35 | $0.30 | $0.61 | $0.64 |
| Adjusted EBITDA | $7.4 million (14.0%) | $6.1 million (14.0%) | $12.3 million (13.1%) | $11.8 million (13.8%) |
| Cash Flow from Operations | $(0.6) million | $6.9 million | $1.4 million | $1.9 million |
| Cash and Equivalents | $54.6 million | $43.5 million (Q2 2025) | $54.6 million | $43.5 million (Q2 2025) |
| Total Debt | $11.2 million | $11.7 million (Q2 2025) | $11.2 million | $11.7 million (Q2 2025) |
Note: Total Debt calculated as Current maturities of long-term debts ($0.164M) + Long-term debts, net ($11.018M) as of June 30, 2026.
Material Changes vs. Prior Period
- Revenue Growth: Q2 revenue increased 22.8% year-over-year, driven by strong demand and easing supply chain conditions. YTD revenue grew 10.4%.
- Profitability: Operating income rose 26.8% in Q2. However, YTD operating margin decreased slightly from 10.1% to 9.1% due to higher operating expenses.
- Non-Recurring Gain: Q2 Net Income was significantly boosted by a $4.3 million (net of tax) gain from the sale of a minority interest in an unconsolidated entity. Excluding this, adjusted net income grew 35.2%.
- Cash Flow: Operating cash flow turned negative in Q2 ($(0.6) million) compared to $6.9 million in Q2 2025, primarily due to increases in accounts receivable and inventory.
- Backlog: Backlog and long-term agreements reached a record $615 million as of June 30, 2026, up from $580 million at the end of Q1 2026.
Guidance, Outlook, and Risks
- Strategic Expansion: The company expanded its relationship with Honeywell Aerospace, becoming the sole authorized distributor for spare parts for the 331-200 APU platform and extending its MRO license through 2036.
- Outlook: Management expects continued profitable growth driven by historically high demand, expanding platform coverage, and a record backlog. Supply chain conditions are improving but have not fully normalized.
- Risks: Forward-looking statements are subject to risks including general airline industry conditions, order cancellations, component supply continuity, and regional geopolitical conflicts (specifically mentioning hostilities involving Israel, Hamas, Hezbollah, and Iran).
Investor Verification Checklist
- Non-GAAP Adjustments: Verify the sustainability of earnings by analyzing the $4.3 million one-time gain from the equity investment sale.
- Cash Conversion: Investigate the reversal in operating cash flow (from positive $6.9M to negative $0.6M) driven by working capital changes (receivables and inventory buildup).
- Backlog Quality: Assess the composition of the record $615 million backlog to ensure it aligns with current revenue growth rates.
- Geopolitical Exposure: Review the specific impact of regional conflicts on supply chains and operations as disclosed in the risk factors.
- Debt Structure: Confirm the terms of the new long-term debt proceeds ($10.9M) and repayment schedule noted in the cash flow statement.