On Wednesday, TAT Technologies Ltd. (NASDAQ:TATT) posted first-quarter results that came in below Wall Street expectations.
Despite the weaker-than-expected numbers, shares of the company climbed 4.93% after the release as investors focused on TAT’s record backlog and management’s optimistic outlook for future operations.
Revenue Pressured by Supply Chain Constraints
Adjusted earnings per share totaled $0.26, missing the analyst consensus estimate of $0.31. Revenue reached $41.1 million, below the projected $44.16 million.
Quarterly revenue declined 2.4% year over year from $42.1 million in the first quarter of 2025. The company said the decrease was mainly driven by shortages of component parts and delivery delays from certain OEM suppliers.
Even with the revenue decline, gross margin improved to 24.4%, up 80 basis points from 23.6% in the same period last year.
Profitability Metrics and Cash Flow
Net income for the quarter was $3.4 million, compared with $3.8 million in the prior-year quarter. Adjusted EBITDA came in at $4.9 million, representing 11.8% of revenue, versus $5.7 million, or 13.6% of revenue, a year earlier.
Operating cash flow showed notable improvement, turning positive at $1.9 million compared with negative $5.0 million used in operating activities during the first quarter of 2025.
Record Backlog Supports Outlook
“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,” said Igal Zamir, CEO and President.
Management said supply chain disruptions involving certain OEM suppliers limited the company’s ability to fully capitalize on its expanding backlog during the quarter. TAT expects those issues to ease over the coming months, positioning the company to return to growth during the second quarter and the latter half of 2026.