Key Highlights

  • Revenue rose 20.2% to a record USD 55.6 million from USD 46.2 million in the third quarter of 2025.
  • Gross profit increased 48.2% to USD 17.2 million, producing a record gross Margin of 30.9% for the quarter.
  • Adjusted EBITDA reached a record of nearly USD 11 million, and profitability grew faster than revenue.
  • Nine-month Revenue rose 13.8% to USD 149.6 million, and nine-month gross margin improved 250 basis points to 27.1%.

Record Quarter

TAT Technologies Ltd. (NASDAQ:TATT) reported record third-quarter 2026 revenue of USD 55.6 million, up 20.2% from USD 46.2 million. Gross Profit increased 48.2% to USD 17.2 million, a record gross margin of 30.9%. Adjusted EBITDA was a record of nearly USD 11 million. Nine-month revenue rose 13.8% to USD 149.6 million from USD 135.5 million, and nine-month gross margin was 27.1%, up 250 basis points. Operating Income was USD 9.0 million, or 16.3% of revenue, compared with USD 5.3 million, or 11.4%, and Net Income rose to USD 7.7 million from USD 4.8 million, with diluted EPS of USD 0.58 versus USD 0.37. Adjusted EBITDA increased 60.9% to USD 10.9 million, or 19.6% of revenue, compared with USD 6.8 million, or 14.6%. For nine months, operating income rose 27.3% to USD 17.6 million, net income rose 58.3% to USD 19.1 million, or about USD 15.7 million excluding a USD 3.4 million after-tax gain on an asset sale in the second quarter, and adjusted EBITDA rose 47% to USD 27.4 million, or 18.3% of revenue.

Margin Drivers

Management cited a capacity shift from landing gear to the higher-margin APU business, healthy trading activity, the addition of distribution and operational efficiency initiatives. Chief executive Igal Zamir said the APU Business grew on new contracts won this year and improved Supply chain, Demand is robust across APUs and heat exchangers, and trading, leasing and distribution added to record results through the expanded relationship with Honeywell Aerospace.

Cash flow from Operating Activities was USD 3.8 million despite a USD 10.6 million inventory investment, mostly to support the new distribution channel. During the quarter the company converted shekel-denominated loans into U.S. dollar-denominated loans, which lowered the Interest Rate and removed foreign exchange exposure on the loans. A new distribution agreement announced early in the quarter, along with existing MRO agreements, one recently extended to 2036, provides a foundation for growth that management believes can outpace the broader industry.

Industry Backdrop

Management acknowledged that rising oil prices raise concern about air travel and airline spending, but noted that maintenance spending at six major U.S. airlines rose 3% year over year in the third quarter to about USD 3.3 billion, with trailing twelve-month spending up 4%. It said any spending reductions would initially affect discretionary items such as cabin interiors, upgrades and retrofits rather than essential maintenance, and that customer intake across its businesses remains at a high level.

The company enters the final quarter with strong customer demand, a healthy backlog, long-term agreements and a solid financial position. Management said it anticipates finishing the year on a strong note and delivering Operating Leverage and sustained margin improvement, and believes the company is positioned to build on the momentum in 2027.

Aftermarket Demand Indicators

Items to follow include APU run rate, the contribution of distribution, airline maintenance spending and heat exchanger demand.