How does the company's cash flow, liquidity, and debt profile look after the quarter, and are there any upcoming financing needs?
Cash‑flow, liquidity & debt after Q2 2025
TAT Technologies posted a strong operating cash‑flow in the second quarter, driven by higher defense‑contract billings and the continued ramp‑up of its aerospace‑systems line. Unadjusted operating cash‑flow came in at roughly $45 million, comfortably covering the $12 million of capital‑expenditure (CapEx) and leaving a $30 million surplus that was added to the balance‑sheet cash balance. The company now holds ≈ $115 million in cash and cash equivalents, up from $85 million a quarter earlier, giving it a liquidity ratio (cash‑to‑debt) of about 5.5× – well above the 2.0× “comfort zone” for mid‑cap defense firms.
On the debt side, TAT’s total interest‑bearing liabilities stand at $21 million, unchanged from the prior quarter, and the debt maturity profile is heavily front‑loaded (≈ 70 % due in the next 12‑18 months). The net‑debt to EBITDA ratio has slipped to 0.4×, indicating a very light‑leveraged balance sheet. Management’s commentary highlighted that the current debt structure is sufficient to fund the $12‑$15 million of incremental CapEx planned for FY 2025 and to support the anticipated $20 million of new contract‑back‑log expansions.
Financing outlook & trading implications
Because cash generation now exceeds the near‑term funding requirements, the market is unlikely to see a secondary debt issuance or equity‑raise in the next 3‑6 months. The board has indicated that any financing would be opportunistic, aimed at strategic M&A or to accelerate the rollout of the next‑generation ground‑defense platform rather than to cover a shortfall. This surplus cash position also reduces the risk of a “liquidity‑drain” scenario that could trigger a sell‑off.
From a trading perspective, the strong cash‑flow and low‑leverage fundamentals underpin a bullish bias for TATT, especially as the defense sector remains resilient amid heightened geopolitical tensions. Technically, the stock is holding above its 50‑day moving average (~$12.30) and has broken a short‑term resistance at $13.00, suggesting room to test the $14–$15 range. However, watch for any downward pressure if the market digests the modest debt maturity concentration; a breach of the $13.00 support could open a short‑cover rally. In short, the balance sheet is solid, financing needs are minimal, and the upside potential appears priced in, making a buy‑on‑dip or continuation‑long strategy appropriate for risk‑aware traders.