TAT Technologies : Report of Periodic or Interim Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 20-F/A

(Amendment No. 1)

• REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 2023

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _____________
• SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report .........................

Commission file number: 0-16050

TAT TECHNOLOGIES LTD.

(Exact name of Registrant as specified in its charter and translation of Registrant's name into English)

Israel

(Jurisdiction of incorporation or organization)

Hamelacha 5, Netanya 4250540, Israel

(Address of principal executive offices)

Ehud Ben-Yair

Chief Executive Officer

Telephone: [phone]

Email: [e-mail]

Hamelacha 5 St,

Natanya 4250540, Israel

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary Shares, NIS 0.90 Par Value	TATT	NASDAQ Global Market
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer's classes of capital or Common stock as of the close of the period covered by the annual report:

Ordinary Shares, par value NIS 0.90 per share

10,102,612

(as of December 31, 2023)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒
		Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒	International Financial Reporting Standards as issued by the	Other ☐
	International Accounting Standards Board ☐

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The registrant's auditor is Kesselman & Kesselman, Tel-Aviv, Israel (PCAOB ID Number 1309)

EXPLANATORY STATEMENT

This Amendment No. 1 on Form 20-F/A (the "Amendment") to the annual report on Form 20-F for the fiscal year ended December 31, 2023, filed on March 6, 2024 (the "Original Filing"), is being filed by TAT Technologies Ltd. (the "Company") solely to correct a typographical errors in Item 5 "Operating and Financial Review and Prospects" in the Original Filing.

As required by Rule 12b-15 of the Securities and Exchange Act of 1934, as amended, the Company is also filing or furnishing the certifications required under Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 as exhibits to this Amendment No. 1.

This Amendment makes no other changes to the Original Filing other than as described above.

Item 5. Operating and Financial Review and Prospects

Operating Results

The following discussion of our results of operations should be read together with our consolidated financial statements and the related notes, which appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward- looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this annual report.

Overview

TAT is reliant on the robustness of the commercial and military aerospace and ground defense industries. Any downturn in these industries could weaken demand for its solutions and services and negatively impact its financial results. The commercial airline industry is cyclical and has historically been subject to fluctuations due to general economic and political conditions, such as fuel and labor costs, price competition, downturns in the global economy and national and international events.

TAT's cost of revenues for OEM operations and MRO services consists of component and material costs, direct labor costs, quality assurance costs, shipping expenses, royalties, overhead related to manufacturing and depreciation of manufacturing equipment. TAT's gross margin is affected by the proportion of its revenues generated from each of its operational segments.

The principal factors that affect the operating income of TAT's four segments, in addition to their gross profit, is the expenditure on selling and marketing expenses and general and administrative expenses. While TAT closely monitors its operating expenses to prevent unnecessary spending, we believe that these operating expenses may increase in the future in accordance with our plans to grow the business.

TAT's research and development expenses are related to new products and technologies or significant improvement of existing products and technologies.

TAT's selling and marketing expenses are related to commission payments, compensation and related expenses of TAT's sales teams, participation in trade shows, travel expenses, advertising expenses and related costs for facilities and equipment.

TAT's general and administrative expenses are related to compensation and related expenses for executive, finance and administrative personnel, professional fees such as legal, audit, SOX, internal audit, insurance premiums and general corporate expenses and related costs for facilities and equipment.

Sources of Revenues

TAT, directly and through its subsidiaries, provides a variety of solutions and services to the commercial and military aerospace and ground defense industries, including:

1. OEM of heat transfer solutions and aviation components, such as heat exchangers, pre-coolers and oil/fuel hydraulic coolers (through TAT Israel);
2. MRO services for heat transfer components and OEM of heat transfer solutions (through our Limco subsidiary);
3. MRO services for aviation components (through our Piedmont subsidiary); and
4. Overhaul and coating of jet engine components (through our Turbochrome subsidiary).

TAT's revenues from its four operational segments for the three years ended December 31, 2023 were as follows:

										Year Ended December 31,
		2023						2022					2021
		Revenues	% of				Revenues	% of				Revenues	% of
		in	Total		in	Total				in	Total
		Thousands	Revenues		Thousands	Revenues				Thousands	Revenues
Revenues
OEM of heat transfer solutions and aviation accessories		27,555			24.2%			21,844				25.8%		25,997			33.3%
MRO services for heat transfer components and OEM of		32,995		29%							29.3%		18,846
heat transfer solutions					24,796							24.2%
MRO services for aviation components		50,760		44.5%			35,879				42.4%		33,232			42.6%
Overhaul and coating of jet engine components		6,854		6%			5,770				6.8%		3,834			4.9%
Eliminations		(4,370)		(3.7)%			(3,733	)			(4.3)%		(3,916)			(5)%
Total Revenues	$	113,794			100%		$	84,556				100	%	$	77,973				100%

The following table reflects the geographic breakdown of TAT's revenues for each of the three years ended December 31, 2023:

									Years Ended December 31,
			2023				2022					2021
			Revenues	% of			Revenues	% of				Revenues	% of
			in	Total		in	Total				in	Total
			Thousands			Revenues			Thousands			Revenues				Thousands			Revenues
United States	$	81,999			72%	$	56,570				66.9%	$	47,947		61.5%
	Israel		7,698			7%		7,162				8.5%		7,745		9.9%
	Other		24,097			21%		20,824				24.6%		22,281		28.6	%
Total	$	113,794			100%	$	84,556				100.0%	$	77,973		100.0%

Costs and Expenses

Cost of revenues. TAT's cost of revenues for OEM operations and MRO services consists of component and material costs, direct labor costs, quality assurance costs, royalties, shipping expenses, overhead related to manufacturing and depreciation of manufacturing equipment.

TAT's gross margin was affected by the proportion of TAT's revenues generated from OEM operations and MRO services in each of the reported years.

Research and development expenses, net. Research and development expenses, net are related to new products and technologies or to a significant improvement of products and technologies, net of grants and participations received.

Selling and marketing expenses. Selling and marketing expenses consist primarily of commission payments, compensation and related expenses of TAT's sales teams, participation in trade shows, travel expenses, advertising expenses and related costs for facilities and equipment.

General and administrative expenses. General and administrative expenses consist of compensation and related expenses for executive, finance and administrative personnel, professional fees such as legal, audit, SOX, internal audit, other general corporate expenses and related costs for facilities and equipment.

Other income (expense). Other income (expense) results from capital gain on sale of property and equipment and onetime expenses.

Financial income (expense), net. Financial income (expense), net consists of exchange rate and interest income or expense. Interest income or expense relates to the interest received from or paid to banks and changes in the rate of the NIS or other currencies against the U.S. dollar.

Tax expense (income). Tax expense consists of Israeli and U.S. federal and state taxes on the income of TAT's business and changes in deferred tax assets or liabilities.

Critical Accounting Policies and Estimates

TAT's consolidated financial statements are prepared in accordance with U.S. GAAP. These accounting principles require management to make certain estimates, judgments and assumptions based upon information available at the time that they are made, historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. While all the accounting policies impact the financial statements, certain policies may be viewed to be critical. These policies are those that are both most important to the portrayal of TAT's financial condition and results of operations and require management's most difficult, subjective and complex judgments and estimates. Actual results could differ from those estimates.

In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting among available alternatives would not produce a materially different result. Management has reviewed these critical accounting policies and related disclosures with TAT's audit committee.

TAT's management believes the significant accounting policies which affect management's more significant judgments and estimates used in the preparation of TAT's consolidated financial statements and which are the most critical to aid in fully understanding and evaluating the reported financial results include the following:

• Inventory valuation
• Income taxes
• Allowance for current expected credit losses (CECL)

Inventory valuation

Inventories are stated at the lower of cost and net realizable value. Cost of raw material and parts is determined using the moving average basis. Cost of work in progress and finished products is calculated based on actual costs and the capitalized production costs, mainly labor and overhead and is determined based on the average basis. TAT's policy for valuation of inventory and commitments to purchase inventory, including the determination of obsolete or excess inventory, requires it to perform a detailed assessment of inventory at each balance sheet date which includes a review of, among other factors, an estimate of future demand for products within specific time frames, valuation of existing inventory, as well as product lifecycle and product development plans. The business environment in which TAT operates, the wide range of products that TAT offers and the relatively short sales cycles TAT experiences, all contribute to the exercise of judgment relating to maintaining and writing-off of inventory levels. The estimates of future demand that TAT uses in the valuation of inventory are the basis for its revenue forecast, which is also consistent with its short-term manufacturing plan. Inventory reserves are also provided to cover risks arising from slow- moving items. Inventory management remains an area of management focus as TAT balances the need to maintain strategic inventory levels to ensure competitive lead times against the risk of inventory obsolescence due to changing technology and customer requirements. TAT writes down obsolete or slow-moving inventory in an amount equal to the difference between the cost of inventory and the net realizable value based upon assumptions about future demand, market conditions and sale forecasts.

If actual market conditions are less favorable than TAT anticipates, additional inventory write-downs may be required.

Income Taxes

TAT operates within multiple tax jurisdictions and is subject to audits in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve. In management's opinion, adequate provisions for income taxes have been made for all years. Although management believes that its estimates are reasonable, no assurance can be given that the final tax outcome of these issues will not be different than those reflected in its historical income tax provisions.

TAT uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax bases of assets and liabilities and net operating loss and credit carry forwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more likely than not that some portion of the deferred tax assets will not be realized. To the extent that TAT's decisions and assumptions and historical reporting are determined not to be compliant with applicable tax laws, TAT may be subject to adjustments in its reported income for tax purposes as well as interest and penalties.

According to an acceptable interpretation that prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. The interpretation also provides guidance on de-recognition of tax positions, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. In addition, the interpretation requires significant judgment with respect to determining what constitutes an individual tax position as well as assessing the outcome of each tax position. Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate of the effective tax rate and consequently, affect our operating results.

Losses generated prior to January 1, 2018 will still be subject to the 20-year carryforward limitation. Other potential impacts due to the Act include the repeal of the domestic manufacturing deduction, modification of taxation of controlled foreign corporations, a base erosion anti-abuse tax, modification of interest expense limitation rules, modification of limitation on deductibility of excessive executive compensation, and taxation of global intangible low-taxed income.

Allowances for Current Expected Credit Losses

TAT performs ongoing credit evaluations of its customers' financial condition and requires collateral as deemed necessary. Accounts receivable have been reduced by an allowance for current expected losses. The Company maintains the allowance for estimated losses resulting from the inability of the Company's customers to make required payments. In judging the adequacy of the allowance for doubtful accounts, TAT considers multiple factors including the aging of receivables, historical bad debt experience and the general economic environment. Management applies considerable judgment in assessing the realization of receivables, including assessing the probability of collection and the current credit worthiness of each customer. If the financial condition of TAT's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Key Indicators

TAT's management evaluates its performance by focusing on key performance indicators, which are revenues, sources of revenues, gross profit and operating income. These key performance indicators are primarily affected by the competitive landscape in which TAT operates and its ability to meet the challenges posed.

	The following table presents, for the periods indicated, information concerning TAT's results of operations:
				Year Ended December 31
		2023			2022			2021
					(in thousands)
	Revenues
	OEM of heat transfer solutions and aviation accessories	$	27,555	$	21,844	$	25,977
	MRO services for heat transfer components and OEM of heat transfer solutions		32,995		24,796		18,846
	MRO services for aviation components		50,760		35,879		33,232
	Overhaul and coating of jet engine components		6,854		5,770		3,834
	Eliminations		(4,370)		(3,733)		(3,916)
	Total revenues		113,794		84,556			77,973
	Cost of revenues
	OEM of heat transfer solutions and aviation accessories		20,193		18,778		24,044
	MRO services for heat transfer components and OEM of heat transfer solutions		30,176		20,750		16,922
	MRO services for aviation components		41,788		28,890		26,444
	Overhaul and coating of jet engine components		4,110		3,495		2,978
	Eliminations		(4,941)		(3,285)		(3,685	)
Total cost of revenues		91,326		68,628		66,703
	Gross profit		22,468		15,928		11,270
	Research and development costs, net		715		479		517
	Selling and marketing		5,523		5,629		5,147
	General and administrative		10,558		9,970		8,354
	Other expenses (income)		(433)		(90)		(468)
	Restructuring expenses, net		-		1,715			1,755
	Operating income (loss)		6,075		(1,775	)		(4,035	)
	Financial income (expense), net		(1,330)		127		(540)
	Income (loss) before taxes on income (tax benefit)		4,745		(1,648	)		(4,575	)
	Taxes on income (tax benefit)		576		98		(662)
income (loss) before equity investment		4,169		(1,746)		(3,913)
	Share in results of affiliated company and impairment of share in affiliated companies		503		184		(76	)
Net income (loss) from continued operation	$	4,672	$	(1,562)	$	(3,989	)
	Net income (loss) from discontinued operation		-		-		427
	Net income (loss)	$	4,672	$	(1,562)	$	(3,562)

The following table presents, for the periods indicated, information concerning TAT's results of operations as a percentage of revenues:

				Year Ended December 31,
			2023		2022				2021
	Revenues
	OEM of heat transfer solutions and aviation components		24.2%	25.8%			33.3		%
	MRO services for heat transfer components and OEM of heat transfer solutions		29		29.3			24.2
	MRO services for aviation components		44.5		42.4			42.6
	Overhaul and coating of jet engine components		6		6.8			4.9
	Eliminations		(3.7)	(4.4)			(5)
	Total revenues		100		100				100
	Cost of revenues
	OEM of heat transfer solutions and aviation components		17.4		22.2			30.8
	MRO services for heat transfer components and OEM of heat transfer solutions		26.5		24.5			21.7
	MRO services for aviation components		36.7		34.2			33.9
	Overhaul and coating of jet engine components		3.6		4.1			3.8
	Eliminations		(4)	(3.9)			(4.7)
Cost of revenues	80.2		81.2			85.5
	Gross profit		19.7		18.8			14.5
	Research and development costs, net		0.6		0.6			0.7
	Selling and marketing		4.8		6.7			6.6
	General and administrative		9.3		11.8				10.7
	Other expenses (income)		(0.4)	(0.1)			(0.6)
	Restructuring expenses, net		0		2			2.2
			14.3		21				19.6
	Operating income (loss)		5.3		(2.1)			(5.1		)
	Financial income (expense), net		(1.2)	0.2			(0.7)
Income (loss) before taxes on income (tax benefit)	4.2		(1.9)			(5.8)
	Taxes on income (tax benefit)		0.5		0.1				(0.8)
	income (loss) before equity investment		3.7		(2.1)			(5)
	Share in results of affiliated company and impairment of share in affiliated companies		0.4		0.2			(0.1		)
Net income (loss) from continued operation	4.1		(1.8)			(5.1	)
	Net income (loss) from discontinued operation		-		-				0.5
	Net income (loss)		4.1%	(1.8)%			(4.6)%

* Less than 0.1 percent