TAT Technologies Grows Revenue by 35%, Increases Net Income by 33% and Adjusted EBITDA by 70% for the Third Quarter of 2024

Rhea-AI Summary

TAT Technologies (NASDAQ: TATT) reported strong Q3 2024 financial results with significant growth across key metrics. Revenue increased 35.2% to $40.5 million, marking the 8th consecutive quarter of revenue expansion. Gross profit rose 45.9% to $8.5 million, while net income grew 33% to $2.9 million ($0.26 per diluted share). The company's Adjusted EBITDA showed remarkable growth of 70% to $5.1 million. During Q3, TAT raised $9.9 million through share issuance and reported a positive operating cash flow of $2.8 million. The company's orders and LTA backlog reached $423 million, indicating strong future demand despite ongoing supply chain challenges.

Positive

• Revenue increased 35.2% YoY to $40.5 million in Q3'24
• Gross profit margin improved to 21% from 19.4% YoY
• Net income grew 33% to $2.9 million
• Adjusted EBITDA increased 70% to $5.1 million
• Orders and LTA backlog reached $423 million
• Positive operating cash flow of $2.8 million in Q3'24

Negative

• Supply chain challenges persist for APUs and landing gear parts
• Nine-month operating cash flow turned negative at ($4.9) million
• Share dilution from $9.9 million capital raise

Insights

Financial Analyst

The Q3 2024 results demonstrate robust financial performance with significant growth across key metrics. Revenue growth of 35.2% to $40.5 million marks the eighth consecutive quarter of expansion, while gross margins improved by 160 basis points to 21%. The net income increase of 33% to $2.9 million and Adjusted EBITDA growth of 70% to $5.1 million reflect improved operational efficiency.

Notable is the substantial backlog of $423 million in orders and long-term agreements, providing strong revenue visibility. The successful capital raise of $9.9 million strengthens the balance sheet, though working capital management needs attention given the negative operating cash flow of $4.9 million year-to-date. The company's strategy to build inventory addresses supply chain challenges but requires monitoring for cash flow implications.

Supply Chain Analyst

The aerospace supply chain dynamics are creating both challenges and opportunities for TAT. The company's strategic decision to increase parts inventory for APUs and landing gears reflects the persistent industry-wide supply constraints. While this approach may pressure working capital in the short term, it positions TAT advantageously to capture market share by ensuring better customer service and delivery reliability.

The focus on internal process improvements targeting enhanced profitability and improved turnaround times is important in the current market environment. The substantial backlog indicates strong market demand, but success will depend on effectively managing the supply chain bottlenecks while maintaining operational efficiency.

Company Delivers 8^th Consecutive Quarter of Expanding Revenues

Company will host a webcast to review its financial results and provide a business update

NETANYA, Israel, Nov. 18, 2024 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: 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 and nine months ended September 30, 2024 (Q3'24).

Financial Highlights for Third Quarter and First Nine Months of 2024:

• Revenues increased by 35.2% to $40.5 million in Q3'24 vs. $29.9 million for Q3'23. Year-to-date revenues increased by 36% to $111.1 million compared to $82.0 million for the same period last year.
  
  
• Gross profit increased by 45.9% to $8.5 million (21% as a percentage of revenues) in Q3'24 compared to $5.8 million (19.4% as a percentage of revenues) for Q3'23. Year-to-date gross profit increased by 51.8% to $23.5 million (21.2% as a percentage of revenues) vs. $15.5 million (18.9% as a percentage of revenues) for the same period last year.
  
  
• Net lncome increased by 33% to $2.9 million, or $0.26 per diluted share in Q3'24, compared with net income of $2.2 million, or $0.24 per diluted share, in Q3'23. For the nine-month period that ended on September 30, 2024, net income increased by 77% to $7.6 million, or $0.69 per diluted share compared with a net income of $4.3 million, or $0.47 per diluted share, in the nine-month period that ended on September 30, 2023.
  
  
• Adjusted EBITDA increased by 70% to $5.1 million in Q3'24 compared with $3.0 million in Q3'23. Adjusted EBITDA for the nine-month period that ended on September 30, 2024, increased by 70% to $13.1 million compared with $7.7 million in the nine-month period that ended on September 30, 2023.
  
  
• Cash flow from operations in Q3'24 was positive $2.8 million compared to negative ($3.7) million in Q3'23. For the nine-month period ended on September 30, 2024, cash flow from operations was negative ($4.9) million compared to positive $0.5 million in the nine-month period that ended on September 30, 2023.
  
  
• During Q3 2024 the Company raised $9.9 million in shares from the capital markets.

Mr. Igal Zamir, TAT's CEO and President commented, "TAT delivered record revenue and profitability in the third quarter as we executed on long-term agreements and onboarded new customers. Our increased scale, continued operational efficiency and a 160 basis point expansion of our gross margins enabled an 33% improvement in net income and a 70% improvement in Adjusted EBITDA."

"As we look towards next year, we see the demand for our products and services continues to grow, as our orders and LTA backlog increased to $423 million," continued Mr. Zamir. "Supply of parts for APUs and landing gears continues to be challenging. We are preparing ourselves with a higher level of parts inventory in order to be able to better support our customers. We are also very focused on internal processes improvements that will yield with improved profitability and a better turnaround time and on-time delivery for the benefit of our customers. We continue being positive of the outcome into 2025."

Investor Call Information

TAT Technologies will host a webcast to review its financial results and provide a business update on Tuesday November 19, 2024, at 8:15 a.m. ET.  Interested investors can register for the webcast at https://shorturl.at/jHNWV or visit the investor relations section of the Company's website at https://tat-technologies.com/investors/. 

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 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 alternative to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor it is meant to be predictive of potential future results. Adjusted EBITDA is not 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 in pages 13 below.

About TAT Technologies LTD

TAT Technologies Ltd. is a leading provider of services and products to the commercial and military aerospace and ground defense industries. TAT operates under four segments: (i) Original equipment manufacturing ("OEM") of heat transfer solutions and aviation accessories through its Gedera facility; (ii) MRO services for heat transfer components and OEM of heat transfer solutions through its Limco subsidiary; (iii) MRO services for aviation components through its Piedmont subsidiary; and (iv) Overhaul and coating of jet engine components through its Turbochrome subsidiary. TAT controlling shareholders is the FIMI Private Equity Fund.

TAT's activities in the area of OEM of heat transfer solutions and aviation accessories primarily include the design, development and manufacture of (i) 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 in and ground applications; and (iii) a variety of other mechanical aircraft accessories and systems such as pumps, valves, and turbine power units.

TAT's activities in the area of MRO Services for heat transfer components and OEM of heat transfer solutions primarily include the MRO of heat transfer components and to a lesser extent, the manufacturing of certain heat transfer solutions. TAT's Limco subsidiary operates an 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, landing gears and other aircraft components. 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 overhaul and coating of jet engine components includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps.

For more information of TAT Technologies Ltd., please visit our website: 
www.tat-technologies.com

Contact:
Mr. Eran Yunger 
Director of IR
erany@tat-technologies.com 

Safe Harbor for Forward-Looking Statements

This press release contains forward-looking statements which include, without limitation, statements regarding possible or assumed future operation results. These statements are hereby identified as "forward-looking statements" for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause our results to differ materially from management's current expectations. Actual results and performance can also be influenced by other risks that we face in running our operations including, but are not limited to, general business conditions in the airline industry, changes in demand for our services and products, the timing and amount or cancellation of orders, the price and continuity of supply of component parts used in our operations, the change of control that will occur on the sale by the receiver of the Company's shares held by our previously controlling stockholders, and other risks detailed from time to time in the Company's filings with the Securities Exchange Commission, including, its annual report on form 20-F and its periodic reports on form 6-K. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (In thousands)
	September 30,		December 31,
	2024		2023
	(unaudited)		(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$ 8,570		$15,979
Accounts receivable, net of allowance for credit losses of $345 as of September 30, 2024 and December 31, 2023  respectively	29,693		20,009
Restricted deposit	-		661
Other current assets and prepaid expenses	7,269		6,397
Inventory	61,875		51,280
Total current assets	107,407		94,326
NON-CURRENT ASSETS:    Restricted deposit	298		302
Investment in affiliates	2,890		2,168
Funds in respect of employee rights upon retirement	652		664
Deferred income taxes	1,085		994
Intangible assets, net	1,620		1,823
Property, plant and equipment, net	41,108		42,554
Operating lease right of use assets	2,627		2,746
Total non-current assets	50,280		51,251
Total assets	$ 157,687		$145,577
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans	$ 2,089		$2,200
Short term loans	2,623		12,138
Accounts payable	12,904		9,988
Accrued expenses and other	16,617		13,952
Operating lease liabilities	1,127		1,033
Total current liabilities	35,360		39,311
NON CURRENT LIABILITIES:
Long-term loans	11,383		12,886
Liability in respect of employee rights upon retirement	953		1,000
Operating lease liabilities	1,489		1,697
Total non-current liabilities	13,825		15,583
Total liabilities	$49,185		$54,894
EQUITY:
Share capital	-		3,140
Translation reserves	121		-
Additional paid-in capital	89,608		76,335
Treasury stock at cost	(2,088)		(2,088)
Accumulated other comprehensive income	-		27
Retained earnings	20,861		13,269
Total shareholders' equity	108,502		90,683
Total liabilities and shareholders' equity	$157,687		$145,577

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (In thousands, except share and per share data)
	Three months ended			Nine months ended				Year ended
	September 30,							December 31,
	2024	2023		2024		2023		2023
	(Unaudited)	(Unaudited)		(Unaudited)		(Unaudited)		(Audited)
Revenues:
Products	$ 12,164	$ 10,003		$ 35,831		$ 25,461		$35,241
Services	28,295	19,932		75,241		56,496		78,553
	40,459	29,935		111,072		81,957		113,794
Cost of revenue, net:
Products	8,535	7,550		25,194		19,372		30,517
Services	23,443	16,571		62,347		47,086		60,809
	31,978	24,121		87,541		66,458		91,326
Gross Profit	8,481	5,814		23,531		15,499		22,468
Operating expenses:
Research and development, net	326	194		946		450		715
Selling and marketing, net	1,994	1,350		5,647		3,807		5,523
General and administrative, net	2,715	2,547		8,940		7,482		10,588
Other income	-	(37)		(390)		(478)		(433)
	5,035	4,054		15,143		11,261		16,393
Operating income	3,446	1,760		8,388		4,238		6,075
Interest expenses	(420)	(408)		(1,183)		(1,214)		(1,683)
Other financial income (expenses), Net	(315)	283		(308)		433		353
Income before taxes on income (tax benefit)	2,711	1,635		6,897		3,457		4,745
Taxes on income (tax benefit)	15	(390)		(94)		(479)		576
Income before share of equity investment	2,696	2,025		6,991		3,936		4,169
Share in profits of equity investment of affiliated companies	169	126		601		347		503
Net Income	$ 2,865	$ 2,151		$ 7,592		$  4,283		$4,672
Basic and diluted income per share
Net income per share	$ 0.27	$ 0.24		$ 0.73		$ 0.48		$ 0.52
Net income per diluted shares	$ 0.26	$ 0.24		$ 0.69		$ 0.47		$ 0.51
Weighted average number of shares outstanding
Basic	10,609,867	8,929,332		10,462,012		8,929,332		8,961,689
Diluted	10,829,749	9,134,476		11,055,263		9,134,476		9,084,022

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)
	Three months ended				Nine months ended						Year ended
	September 30,										December 31,
	2024		2023		2024			2023			2023
	(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)			(Audited)
Net income	$ 2,865		$ 2,151			$ 7,592			$ 4,283				$4,672
Other comprehensive income (loss), net
Change in foreign currency translation Adjustments	(43)		-			121			-				-
Net unrealized gain (loss) from derivatives	-		(24)			(27)			2				53
Total comprehensive income	$ 2,822		$2,149			$ 7,686			$4,285				$4,725

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In thousands, except share data)
		Share capital								Accumulated
		Number of shares issued			Amount		Additional paid-in capital		Translation reserves	other comprehensive income (loss)		Treasury shares		Retained earnings	Total equity
BALANCE AT DECEMBER 31, 2022		9,186,019			$ 2,842		$ 66,245		-	$ (26)		$ (2,088)		$ 8,597	$ 75,570
CHANGES DURING THE YEAR ENDED DECEMBER 31, 2023:
Comprehensive loss		-			-		-			53		-		4,672	4,725
Exercise of option		32,466			8		157			-		-		-	165
Issuance of common shares net of issuance costs of $141		1,158,600			290		9,774			-		-		-	10,064
Share based compensation		-			-		159			-		-		-	159
BALANCE AT DECEMBER 31, 2023		10,377,085			$ 3,140		$ 76,335		-	$ 27		$ (2,088)		$ 13,269	$ 90,683
CHANGES DURING THE PERIOD ENDED SEPTEMBER 30, 2024 (unaudited):
Comprehensive profit									121	(27)		-		7,592	7,686
Exercise of option		84,006			12		(12)		-	-		-		-	-
Cancel of shares per value					(3,152)		3,152		-	-		-		-	-
Issuance of common shares net of issuance costs of $152		673,340			-		9,923		-	-		-		-	9,923
Share based compensation		-			-		210							-	210
BALANCE AT SEP 30, 2024 (unaudited)		11,134,431			-		$       89,608		$              121	-		$   (2,088)		$  20,861	$ 108,502

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
		Three months ended				Nine months ended			Year ended
		September 30,							December 31,
		2024		2023		2024	2023		2023
		(Unaudited)		(Unaudited)		(Unaudited)	(Unaudited)		(Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income Adjustments to reconcile net income to net cash provided by (used in) operating activities:		$2,865		$2,151		$7,592	$  4,283		$     4,672
Depreciation and amortization		1,514		1,099		4,319	3,040		4,710
Loss (gain) from change in fair value of derivatives		-		-		22	-		(9)
Change in funds in respect of employee rights upon retirement		(8)		22		12	119		116
Change in operating right of use asset and operating leasing liability		4		(1)		5	(7)		22
Non cash finance (income) expenses		217		(254)		(271)	(502)		(172)
Decrease in provision for restructuring expenses		-		(15)		(63)	(105)		(126)
Change in allowance for credit losses		(40)		(83)		-	(88)		(182)
Share in results of affiliated Company		(170)		(126)		(601)	(347)		(503)
Share based compensation		21		8		210	129		159
Liability in respect of employee rights upon retirement		(45)		(28)		(47)	(155)		(148)
Capital gain from sale of property, plant and equipment		-		(43)		(355)	(529)		(530)
Deferred income taxes, net		12		(388)		(91)	(464)		235
Changes in operating assets and liabilities:
Increase in trade accounts receivable		(3,456)		(4,051)		(9,706)	(2,927)		(4,205)
Decrease (increase)  in other current assets and prepaid expenses		(547)		(23)		(872)	1,416		(341)
Increase in inventory		(5,112)		(4,450)		(10,655)	(4,734)		(5,400)
Increase (decrease) in trade accounts payable		3,825		480		2,916	(1,675)		(245)
Increase in accrued expenses and other		3,710		1,976		2,728	3,039		4,202
Net cash used  in operating activities		$  2,790		$(3,726)		$(4,857)	$493		$     2,255
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment		-		37		1,306	1,972		2,002
Purchase of property and equipment		(1,621)		(569)		(3,588)	(3,024)		(5,102)
Purchase of intangible assets		-		-		-	-		(479)
Net cash provided by (used in) investing activities		$(1,621)		$(532)		$(2,282)	$(1,052)		$(3,579)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term loans		(504)		(461)		(1,454)	(1,307)		(1,701)
Net change in short term credit from banks		(10,072)		1,000		(9,404)	1,000		1,000
Proceeds from long-term loans received		-		249		-	249		712
Issuance of common shares		-		-		12	-		-
Proceeds from issuance of common shares, net		9,923		-		9,923	-		10,064
Exercise of options		-		-		(12)	165		165
Cash flows provided by (used in) financing activities		$(653)		$788		$(935)	$107		$10,240
Net increase (decrease) in cash and cash equivalents and restricted cash		516		(3,470)		(8,074)	(452)		8,916
Cash and cash equivalents and restricted cash at beginning of period		8,352		11,044		16,942	8,026		8,026
Cash and cash equivalents and restricted cash at end of period		$8,868		$7,574		$8,868	$7,574		$16,942
SUPPLEMENTARY INFORMATION ON INVESTING ACTIVITIES NOT INVOLVING CASH FLOW:
Additions of operating lease right-of-use assets and operating lease liabilities		228		-		818	-		1345
Reclassification of inventory to property, plant and equipment		-		-		60	-		68
Supplemental disclosure of cash flow information:
Interest paid		(437)		(373)		(1,289)	(1.071)		(1,438)

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES  RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP) (UNAUDITED) (In thousands)
	Three months ended			Nine months ended		Year ended
	September 30,			September 30,		December 31,
	2024		2023	2024	2023	2023
Net income (loss)	$2,865		$2,151	$7,592	$4,283	$4,672
Adjustments:
Share in results and sale of equity
investment of affiliated companies	(169)		(126)	(601)	(347)	(503)
Taxes on income (tax benefit)	15		(390)	(94)	(480)	576
Financial expenses (income), net	735		125	1,491	781	1,330
Depreciation and amortization	1,565		1,240	4,463	3,381	4,902
Share based compensation	112		9	299	129	159
Adjusted EBITDA	$5,123		$ 3,009	$ 13,150	$ 7,747	$ 11,136

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TAT TECHNOLOGIES LTD.
(Registrant)

By: /s/ Ehud Ben-Yair
Ehud Ben-Yair 
Chief Financial Officer

Date: November 18, 2024

 

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SOURCE TAT Technologies Ltd.

FAQ

What was TAT Technologies (TATT) revenue growth in Q3 2024?

TAT Technologies reported a 35.2% revenue growth in Q3 2024, reaching $40.5 million compared to $29.9 million in Q3 2023.

How much did TAT Technologies (TATT) raise in the capital markets during Q3 2024?

TAT Technologies raised $9.9 million through share issuance in the capital markets during Q3 2024.

What is TAT Technologies (TATT) current order backlog?

TAT Technologies reported orders and LTA backlog of $423 million as of Q3 2024.

How much did TAT Technologies (TATT) Adjusted EBITDA grow in Q3 2024?

TAT Technologies' Adjusted EBITDA increased by 70% to $5.1 million in Q3 2024 compared to $3.0 million in Q3 2023.