TAT Technologies (NASDAQ: TATT) books record quarter while cash flow shrinks

Posted by Renee Jackson on Nov 2nd, 2026

What happened

TAT Technologies Ltd. (NASDAQ: TATT) reported record third-quarter revenue of $55.6 million, up 20.2% from $46.2 million a year earlier. Adjusted EBITDA rose 60.9% to $10.9 million from $6.8 million, and the adjusted EBITDA margin reached a record 19.6% against 14.6% in the third quarter of 2025.

For holders, the quarter shows the profit rebound widening margins, not just adding sales. President and CEO Igal Zamir credited strong customer demand, an improved product mix and greater operational efficiency.

Two items temper the headline. The nine-month figures include a one-time gain, and operating cash flow fell as inventory grew.

Key numbers

Metric	Latest	Change	Source
Q3 2026 revenue	$55.6 million	from $46.2 million, +20.2%	SEC 6-K, Exhibit 99.1
Q3 2026 adjusted EBITDA	$10.9 million	from $6.8 million, +60.9%	SEC 6-K, Exhibit 99.1
Q3 2026 adjusted EBITDA margin	19.6%	from 14.6%	SEC 6-K, Exhibit 99.1
Nine-month adjusted EBITDA	$27.4 million	from $18.6 million, +47%	SEC 6-K, Exhibit 99.1
Nine-month adjusted EBITDA excluding one-time FAV gain	$23.0 million	from $18.6 million	SEC 6-K, Exhibit 99.1
Nine-month operating cash flow	$5.2 million	from $9.4 million	SEC 6-K, Exhibit 99.1

Where the margin gain came from

Gross profit rose 48.2% to $17.2 million in the third quarter, a 30.9% margin against 25.1% a year earlier. Operating income rose 71.8% to $9.0 million, or 16.3% of revenue, from $5.3 million and 11.4% in the third quarter of 2025. Both grew faster than revenue, so each dollar of sales kept more profit.

Net income was $7.7 million, or $0.58 per diluted share, versus $4.8 million and $0.37 a year earlier.

Over nine months, revenue rose 13.8% to $149.6 million from $131.5 million. Gross profit rose 25.2% to $40.5 million, a 27.1% margin against 24.6%. Operating income was $17.6 million against $13.9 million.

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What the FAV gain does to the nine-month figures

Nine-month adjusted EBITDA rose 47% to $27.4 million from $18.6 million. That total includes a one-time pre-tax gain of $4.3 million from the sale of the company's equity investment in First Aviation Services Inc. (FAV). Without the gain, adjusted EBITDA was $23.0 million, still above the prior-year figure.

Net income shows the same split. Nine-month net income was $19.1 million, or $1.46 per diluted share, versus $12.1 million and $1.02 a year earlier. It includes a one-time gain of $3.4 million net of tax. Adjusted diluted EPS, which removes the gain, was $1.20.

The gain is in the nine-month results, not the third quarter. The income statement shows none for that quarter.

Cash flow and inventory

Operating cash flow fell to $3.8 million in the third quarter from $7.5 million a year earlier. Over nine months it fell to $5.2 million from $9.4 million.

The company blamed the decline mainly on inventory increases of $10.6 million in the quarter and $20.5 million over nine months. It said the inventory supports the ramp-up of its long-term agreements, including an expanded agreement with Honeywell.

Inventory stood at $95.3 million on Sept. 30, up from $75.5 million at the end of 2025. Cash and cash equivalents were $53.7 million, against $51.3 million at year-end.

Why it matters

OptimistFi has argued that TAT's upside depends on proving its profit rebound reflects durable qualified work, not a temporary aerospace cycle. Wider margins and backlog and long-term agreements of approximately $577 million as of Sept. 30 support that view.

Against that, the one-time FAV gain flatters the nine-month profit lines. Cash conversion also weakened while inventory built. The case now turns on whether that inventory becomes sales and cash. OptimistFi's read of the filing is mixed.

What's next

TAT scheduled a webcast and conference call for 8:00 a.m. Eastern on Nov. 2 to discuss the third-quarter results. The company said it enters the final quarter of 2026 with strong momentum, backed by customer relationships, backlog and long-term agreements.

Operating cash flow is the number to track. Inventory turning into sales and cash would back the durability argument. Another period of rising inventory and falling operating cash flow would weaken it.