TAT Technologies: $45 Million In New Contracts

TAT Technologies shares have gained 23% since my previous report as investors responded positively to the company’s latest contract wins and continued growth prospects. The recent announcement of $45 million in new MRO contracts reinforces the strong demand environment for aerospace aftermarket services and provides further support for my Strong Buy rating. While aerospace supply chain challenges remain a headwind, the company’s growth trajectory remains intact.

New Contracts Validate The MRO Growth Story For TAT Technologies

TAT Technologies recently secured $45 million in contracts covering auxiliary power units (APUs) and heat exchangers for international commercial and cargo airlines. While the contracts span five to ten years and therefore contribute approximately $4.5-$9 million annually, they provide further validation of the company’s value proposition in attractive aerospace aftermarket niches.

The contract awards also add to an already substantial backlog of approximately $580 million, providing visibility on future revenue generation and demonstrating continued customer confidence in TAT’s capabilities.

Supply Chain Challenges Continue To Impact Results

First-quarter results were affected by aerospace supply chain constraints, particularly within the landing gear business. Revenue declined 2.4% to $41.1 million while adjusted EBITDA decreased 15.5% to $4.9 million.

However, approximately $15.5 million in APU and landing gear work remained in progress because required materials were unavailable. Management expects conditions in the APU business to improve during the second half of the year, while landing gear supply challenges remain an area to monitor.

Conclusion

The aerospace supply chain remains the primary risk for TAT Technologies, but the recent contract wins demonstrate that customer demand remains strong. Combined with a growing backlog, improving cash conversion, and a net cash balance sheet, the company’s growth outlook remains attractive. As valuation attention gradually shifts toward 2028 earnings potential, I maintain my Strong Buy rating and increase my base-case price target to $56.67.