Q1 2025 TAT Technologies Ltd Earnings Call
Yeah.
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You have joined the meeting as an attendee and will be muted until the end of the program.
Operator: Welcome to the TAT Technologies First Quarter 2025 Earnings Conference Call. Please note that today's conference may be recorded.
Speaker Change: Welcome to the <unk> technologies first quarter 2025 earnings Conference call. Please note that today's conference maybe recorded.
Matt Chesler: My name is Matt Chesler, and I'm a partner with FNKAR, a US-based investor relations firm supporting Iran Younger, TAT's internal head of investor relations.
Matt Schaeffler: My name is Matt Schaeffler, and I'm, a partner with F. N K E. R. A U S based investor relations firm supporting Iran younger.
Speaker Change: These internal head of Investor Relations.
Matt Chesler: Hosting today's call is Igal Zamir, our president and CEO, and Ehud Ben Yair, our CFO. Before getting started, we'd like to draw your attention to the fact that certain matters discussed on this call today may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. For more information visit www.fema.gov These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or applied by these forward-looking statements. The forward looking statements are made as of the date of this call and accepted as required by law.
Amir: Hosting todays call is eagle's Amir, our president and CEO and <unk> are our CFO.
Speaker Change: Before getting started.
Speaker Change: We'd like to draw your attention to the fact that certain matters discussed on this call today may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, and other provisions of the federal Securities laws.
Speaker Change: These forward looking statements are based on management's current expectations and are not guarantees of future performance.
Speaker Change: Actual results could differ materially from those expressed in or implied by these forward looking statements.
Speaker Change: The forward looking statements are made as of the date of this call and except as required by law Ta T technologies assumes no obligation to update or revise them.
Matt Chesler: TAT Technologies assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements.
Speaker Change: Investors are cautioned not to place undue reliance on these forward looking statements.
Matt Chesler: For a more detailed discussion of how these and other risks and uncertainties could cause TAT's actual results to differ materially from those indicated in these forward-looking statements, please see our annual report on Form 20-F for the fiscal year ended December 31, 2024, and other filings we may make with the SEC. The financial measures discussed today include non-GAAP measures. We believe investors focus on non-GAAP financial measures in comparing results between periods and among our peer companies that publish similar non-GAAP measures.
Speaker Change: For a more detailed discussion of how these and other risks and uncertainties could cause <unk> actual results to differ materially from those indicated in these forward looking statements. Please see our annual report on form 20-F for the fiscal year ended December 31, 2024, and other filings we may make with the SEC.
Speaker Change: The financial measures discussed today include non-GAAP measures, we believe investors focus on non-GAAP financial measures and comparing results between periods and among our peer companies that publish similar non-GAAP measures. Please see yesterday evening's form 6K, our earnings release and the investors section of our.
Matt Chesler: please see yesterday evening's Form 6K, our earnings release, and the investor section of our website at tat-technologies.com for a reconciliation of non-GAAP financial measures to GAAP measures. Non-GAAP financial information should not be considered in isolation from or as a substitute for or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures that we use have limitations and may differ from those used by other companies.
Speaker Change: Our web site at <unk> gas.
Speaker Change: <unk> dot com for a reconciliation of non-GAAP financial measures to GAAP measures.
Speaker Change: non-GAAP financial information should not be considered in isolation from or as a substitute for or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes.
Speaker Change: The non-GAAP financial measures that we have.
Eyal: That we use have limitations and may differ from those used by other companies now with all of that said I would like to turn the call over to Eyal.
Matt Chesler: Now, with all of that said, I would like to turn the call over to Igal.
Igal Zamir: Good morning, everybody. And thanks for joining us for the first quarter learning calls. And I really appreciate your interest in the support as we review the company's performance and discuss our strategic direction moving forward. As you probably see, we started 2025 on a strong note, delivering another quarter of double digit revenue growth with profitability growing even faster than revenue, reinforcing the momentum we established last year, or actually, I would say, in the last three years. Our focus on customer operation excellence, market expansion and strategic growth continue to drive results that are ahead of the industry average.
Eyal: Good morning, everybody and thanks for joining us for the first quarter. It had any calls and I really appreciate your interest and the support as we review the company's performance and discussed however, our strategic direction moving forward.
Eyal: As you probably see we started 2025 on a strong note delivering another quarter of double digit revenue growth with profitability.
Eyal: Profitability growing even faster than our revenue reinforcing the momentum we established last year.
Eyal: I would say in the last three years.
Eyal: I will focus on customer operation excellence.
Eyal: Market expansion and strategic growth continued to drive results that are ahead of the industry all of which we expect to continue and outpaced the industry for the foreseeable future.
Igal Zamir: We expect to continue and outpace the industry for the foreseeable future. First quarter revenue increased by 23.6% to $42.1 million, up from $34.1 million in the same period last year. This growth was fueled by strong demand across our core business sales line, along with the.
Eyal: First quarter revenue increased by 23, 6% to $42 1 million up from $34 1 million in the same period last year. This growth was fueled by strong demand that caused our coal business those line.
Eyal: Along with that.
Operator: Gentlemen, I just want to check that you still hear me, we have a Yeah, we heard you, but there was a little pause. You're back online now.
Speaker Change: Gentlemen, I just want to check that you'll still hear me.
Speaker Change: Sure.
Eyal: Yes, we heard you, but there was a little pause.
Eyal: You are back online now.
Operator: Igal, so please speak.
Eyal: So please speak.
Igal Zamir: I apologize for this, we had like a power shutdown here. Our gross profit increased from 40.9% to $10 million, which, with the gross margin expanding by 290 basis points to 23.6%, comparing to the 20.7% in the first quarter of 2024. This improvement reflects our ongoing efforts to optimize cost structure, improve operational efficiencies, and enhance product mix. We spent a lot of time talking about it in the previous calls. We are continuing to invest a lot of effort and energy in improving our internal efficiencies and cost structure, which reflects in the results. Adjusted EBITDA increased by 56.2% to $5.7 million, translating to an adjusted EBITDA margin of 13.6%, a notable improvement from our 10.8% in the same period last year.
Eyal: I apologize for this we had.
Eyal: Paolo shutdown here.
Eyal: Our gross profit.
Eyal: This format, 49% to 10.
Eyal: $1 million all of which are.
Eyal: With the with the gross margin expanding for 12.
Eyal: 290 basis points to 23, 6% comparing to the 27% in the first quarter of 2024.
Eyal: This improvement reflects our ongoing efforts to optimize cost structure and improve operational efficiency and enhance.
Eyal: Yeah.
Eyal: Product mix that we spent a lot of time talking about it in the previous calls we are continuing to invest a lot of effort and energy in improving our internal efficiencies and cost structure, which reflected in the results.
Eyal: Adjusted EBITDA increased by 56, 2% to $5 7 million.
Eyal: Translating to an adjusted EBITDA margin of 13, 6% and multiple improvement for malware.
Eyal: 10, 8% in the same period last year. This improvement is a testament of our hall.
Igal Zamir: This improvement is a testament of our... or Biodisciplined Expense Management. Our backlog and long-term agreement rose to $439 million during the first quarter, providing us with strong visibility. It also provides us with an important runway for continued growth amid the rapidly evolving aviation market landscape in both commercial and government end markets. The aviation sector is currently navigating several macroeconomic headwinds, including policy change during the proposed tariffs and broader economic uncertainties, all of which have the potential to impact supply chain and customer purchasing behavior. Long-term, our robust... backlog position, as well as our demonstrated ability to outperform the industry.
Speaker Change: Well by a disciplined expense management.
Speaker Change: Our backlog in a long term agreement also of $439 million or doing during the first quarter, providing us with strong visibility. It also provide us.
Speaker Change: With an important pathway for continued growth I meet the rapidly evolving aviation market landscape in both commercial and government end markets.
Speaker Change: The aviation sector is currently navigating several law macroeconomic headwinds, including policy changing their proposed.
Speaker Change: And the broader economic.
Speaker Change: Uncertainties, all of which have the potential to impact supply chain and customer purchasing behavior long term more robust.
Speaker Change: Backlog position as well as our as our demonstrated ability to outperform the industry.
Speaker Change: And.
Igal Zamir: And, you know, while in parallel, we expect we can anticipate some near-term volatility, particularly in the MRO intake. So bottom line, when we look at the outlook, given the backlog, given the value of the long-term agreement that we are signing and increasing all the time, we have a very positive outlook on the long-term. Short-term, given all the macroeconomic factors, we can expect more volatility from the industry. The expansion of our APU will continue to grow our addressable market. We are now authorized on the 131 APU, the 331-500, which serves the Boeing 777 and Boeing 737 and the Airbus A320.
Speaker Change: While in parallel we expect we can anticipate some near term volatility in particular in the MRO intake.
Speaker Change: So bottom line when we look at.
Speaker Change: The outlook given the given the backlog given the value of the long term agreement that we are signing any changing all the time, we have a very positive.
Speaker Change: Outlook on the long term.
Speaker Change: Short term given all the macroeconomic.
Speaker Change: <unk>, we can expect more volatility from the industry.
Speaker Change: The expansion of our Apu will continue to grow our addressable market, we all know otherwise day on the <unk>.
Speaker Change: 131, Apu or the <unk> 500, which of the Boeing 777, and Boeing 737, and the Airbus <unk> hundred 20.
Igal Zamir: Now, only a year ago, we secured our first customer for these engines. And since then, we have onboarded several additional customers, both new and long-term and longstanding. We are well-positioned as a trusted and reliable partner for serving various Honeywell APUs with top-tier quality and exceptional Our pipeline of opportunities for APU work continues to expand and we are participating in multiple discussions to expand our APU work. To meet this growing demand, we strategically increased our inventory level during the quarter. While supply chain issues persist, maintaining a higher inventory level position up to meet timeliness reliability. This approach is not just a safeguard, it's a strategic decision and strategic asset that we believe that we have enabling us to maintain our competitive advantage and continue to market growth.
Speaker Change: Only a year ago, we secured our first customer for this engender and since then we.
Speaker Change: We have on boarded several additional customers, both new and long term and long standing we are well positioned as a trusted and reliable partner for serving various Honeywell Apu as we talked to you a quality and exceptional lift.
Speaker Change: Our pipeline of opportunities for IPO will continue to expand and we are participating in multiple discussions to expand our IPO walk.
Speaker Change: To meet this growing demand, we strategically increased our inventory levels during the quarter, while supply chain issues, the perceived maintaining a higher inventory level position up to meet them.
Speaker Change: Timeliness reliability.
Speaker Change: This approach is not just a safeguard is a strategic decision and strategic asset that we believe that we have enabling us to maintain our competitive advantage and continue to.
Speaker Change: Market growth as a result, we recorded a net cash outflow in the quarter. However, we are confident that this investment will drive revenue growth and enhance customer satisfaction in the coming quarters positioning us for continued.
Igal Zamir: As a result, we recorded the net cash outflow in the quarter. However, we are confident that this investment will drive revenue growth and enhance customers' satisfaction in the coming quarters, positioning us for continued success. Our growth strategy is based on growing our MRO and OEM business, as well as our trading division. This diversified approach provides us with the agility and operational flexibility needed to navigate periods of economical uncertainty. Given the ongoing tariffs uncertainty, our supply chain team is working closely with our suppliers and customers to align expectations, adjust planning, and maintain a high service level that our partners rely on.
Speaker Change: Yes.
Speaker Change: Our growth strategy is based on growing our MRO and OEM business as well as our trading division.
Speaker Change: This diversified approach provides us with the agility and operational flexibility needed to navigate periods of economic uncertainty given the ongoing tariff uncertainty our supply chain team is working closely with our suppliers and customers to align expectation adjust planning and maintain a high service level that our partner <unk>.
Speaker Change: <unk>.
Igal Zamir: In summary, we are concluding a strong quarter and are optimistic about our prospect for the remainder of 2025. In short term, we will continue to navigate the variety of industry-wide challenges. The supply chain remains challenged. economic uncertainty sometimes cause customers to slow down maintenance plans. To date, we have weathered these challenges successfully. Long-term, my optimism has increased even though my short-term outlook is somewhat cautious. We see encouraging demand for our products and services, strong interest from both new and existing customers, and the outpaced the broader industry, all while continuing to expand margins.
Speaker Change: In summary, we.
Speaker Change: We are concluding a strong quarter and are optimistic about our prospects for the remainder of 2025 and show them. We will continue to navigate the variety of industry wide challenges.
Speaker Change: The supply channel remains challenged.
Speaker Change: Economic uncertainty, sometimes caused customers to slow down maintenance plans.
Speaker Change: To date, we have whether it is the challenge challenges successfully.
Speaker Change: Long term my optimism has increased even even though my short term outlook is somewhat cautious.
Speaker Change: We see encouraging demand for our products and services strong interest from both new and existing customers.
Speaker Change: And the potential to achieve long term growth rates that significantly significantly outpaced the broader industry.
Speaker Change: All while continuing to expand margin.
Igal Zamir: And thank you very much.
Speaker Change: And thank you very much and with that I will tell them to our CFO Danielle to provide further insights into our financial performance and business outlook.
Ehud Ben: And with that, I will turn to our CFO, Ehud Ben-Yair, to provide further insights into our financial performance and business outcomes.
Ehud Ben: Thank you, Igal.
Speaker Change: Thank you Yigal.
Ehud Ben: Good morning, everybody. I will quickly review the results. the first quarter of 2025. So revenue went up to $42.1 million compared to $34.1. It's an increase of 24% year over year. Gross profit landed at $10 million compared to $7.1 million. It's a 41% increase compared to the previous period. And also, the gross margin went up to 23.6 compared to 20.7. It's a 290 bit points compared to the previous quarter. Operating profit at $4.2 million compared to $2.2 million. It's an 89% increase and the operating margin is already at 9.9% compared to 6.5% in the previous period.
Speaker Change: Good morning, everybody.
Speaker Change: I'll quickly review the results.
Speaker Change: The first quarter of 2025, so revenue went up to $42 1 million compared to 34.1, it's an increase of 24% year over year gross profit glenda that $10 million compared to $7 1 million.
Speaker Change: 41% increase compared to the previous period and also the gross margin went up to 23, 6% compared to 27 290 basis points compared to the previous quarter.
Speaker Change: Operating profit.
Speaker Change: At $4 2 million compared to 2.2, 89% increase and the operating margin is already at nine 9%.
Speaker Change: Fell to six 5% in the previous period.
Ehud Ben: Also, the adjusted EBITDA went up to $5.7 million compared to $3.7 million. It's a 56% increase. And the EBITDA margin went up to 13.6% compared to 10.8% in the previous period. Net profits landed at $3.8 million compared to $2.1 million.
Speaker Change: Also the adjusted EBITDA went up to $5 7 million compared to $3 7 million.
Speaker Change: 56% increase in the EBITDA margin went up to 13, 6% compared to 10, 8% in the previous period net profits Glenda $3 8 million compared to two point.
Speaker Change: One <unk>.
Ehud Ben: Several insights to take in consideration when analyzing the results of the quarter. Again, we're improving our margins all over the place. Especially in this quarter, OEM revenue and margin went up compared to previous period. On behalf of the MRO work, as we still suffer a lot of supply chain issues in the market, which lead, in some cases, to a slight reduce in the profitability. Nonetheless, on the overall company side, we continue to improving our margin. The second thing that impacts the net profit, and we mentioned it in the previous quarters already, is the tax expenses.
Speaker Change: Several early insights too.
Speaker Change: Okay.
Speaker Change: <unk> taken consideration when analyzing the results of the quarter.
Speaker Change: Again, while improving our margin all over the place.
Especially in this quarter OEM.
Speaker Change: Revenue and margin when top up compared to previous period.
Speaker Change: On behalf of the MRO work.
Speaker Change: We still suffer a lot of the supply chain issues in the market, which in some cases too.
Speaker Change: Reducing the slightly reducing the profitability and nonetheless on the overall company size.
Speaker Change: Two improving.
Speaker Change: Martin.
Speaker Change: Second thing that impacted the net profit and we mentioned it in the previous quarters already is the tax expenses at this stage well.
Ehud Ben: At this stage, where all the tax expenses are accounting expenses, these are non-cash expenses, mainly reduction of tax assets. As mentioned before, we are expecting to be tax profitable and start paying taxes both in Israel and in the U.S. at the end of 2025.
Speaker Change: All the tax expenses, our accounting expenses. These are noncash expenses, mainly reduction of tax assets.
Speaker Change: And as mentioned before we're expecting to be profitable and start paying taxes, both in Israel and in the U S. At the end of 2025.
Speaker Change: Okay.
Ehud Ben: In terms of the strategic growth engines and the product mix of the quarter, So the heat exchange product line went up to $18.4 million compared to 14.2. It's a 30% increase year over year. The APU segment also from $9.2 million to $12.3 million. It's a 34% increase. The trading and listing, as mentioned before, it's down by 27% to $2.1 million. We mentioned in the past that trading and listing are some cases opportunistic and in some cases really based on the specific need of the customers. And it can vary between quarter to quarter. In this quarter, a certain deal was postponed to Q2 and this is the reason that you see the reduction in the trading and listing in Q1 of 2025.
Speaker Change: In terms of the.
Speaker Change: The strategic growth engines in the product mix of.
Speaker Change: The qualitative.
Speaker Change: So the heat exchanger product line went up to $18 4 million compared to 14 point towards a 30% increase year over year. The Apu segment also from $9 2 million.
Speaker Change: To $12 3, million% to 34% increase the trading and listing as mentioned before alright.
Speaker Change: <unk> by 27% to $2 $1 million, we mentioned in the past that training in this in some cases opportunistic meaning.
Speaker Change: Some cases really based on the specific needs of the customers.
Speaker Change: And it can vary between quarter to quarter in this quarter.
Speaker Change: Certain certain deal was postponed to Q2 and this is the reason that you see the reduction in the trading and listing in Q1 of 2025 and the landing gear as again as mentioned in the past.
Ehud Ben: And the lending year as again as mentioned in the past started ticking up at the end of Q4 and continues the trend in Q1 of 2025. landed at $3.3 million compared to $1.5 million in the previous quarter. It's a 127% So just to quickly review the tools trending, you will see that, again, we continue. continue to grow the margin. Just looking at the first quarter of 2023, revenue were at $25.2 million. Now we are already at $42.1 million. The gross profit also started at $4.3 million in the first quarter of 2023, moved up to $7.1 million in Q1 of 2024, and we're already at $10 million in the first quarter of 2025.
Speaker Change: Charter ticking up at the end of Q4 and continues the trend in Q1 of 2025.
Speaker Change: Landed at $3 3 million compared to one five.
Speaker Change: In the previous quarter to 127% increase.
Speaker Change: So just quickly review the tools trending you will see that again, we compete.
Speaker Change: Hello.
Speaker Change: <unk> continues to grow the margin.
Speaker Change: Just looking at the.
Speaker Change: First quarter of 2023 revenue were at $25 2 million now we are already at $42 1 million.
Speaker Change: Gross profit also started at $4 3 million in the first quarter of 2023 and moved up to seven $1 million in Q1 of 2020 full and we're already at $10 million in the first quarter of 2025.
Ehud Ben: Same trend goes with the operating income that went up from almost a million dollars in Q1 of 2023 to $2.2 million in Q1 of 2024 and $4.2 million in Q1 of 2025. We're almost doubling our operating income year after year.
Speaker Change: Same trend goes with the operating income that went up from.
Almost $1 million in Q1 of 2023 to $2 2 million in Q1 of 'twenty 'twenty, four and $4 2 million in Q1 of 2025, we are almost doubling our operating core operating income.
Year after year.
Ehud Ben: With regards to the backlog, as we already mentioned, we continue to increase our backlog. We saw a very strong trend in Q1 of 2025. We secured backlog and orders and LTAs worth of $52 million this quarter, which led to an increase in the total backlog value to $439 million. With regards to the mix of the product, it remains pretty much the same as in previous quarter. More than 50%, actually 54% of the backlog and orders is 54% is heat exchanger, sorry, and APU is 27%. And the remaining, most of the remaining is landing year, which is 13.
Speaker Change: With regards to the backlog as <unk> already mentioned, we continue to increase our backlog we saw a very strong trend in Q1 of <unk>.
Speaker Change: 2025, we secured backlog and all deals.
Speaker Change: And LTA worth of $52 million this quarter, which led to an increase in the total.
Speaker Change: Backlog value to $439 million.
Speaker Change: With regards to the mix of the product it remains pretty much the same as in previous quarter.
Speaker Change: More than 50% actually 54% of the.
Speaker Change: Of the backlog in oil <unk> is 54% is heat exchanger, sorry, and Apu is 27% in the remaining most of the remaining is landing gear, which is 13.
Speaker Change: <unk>.
Igal Zamir: And by this, I return the call to Igal. So as we've said it before, when we look forward strategically, You know, we have the same growth engine that we discussed in the past, and this is why I said it earlier that we are extremely optimistic about the long-term outlook for the company. We are starting with the APUs, over two billion dollar addressable market, we are proving more and more our ability to provide great service and fast turnaround time and competitive pricing to customers and we're basically just starting to scratch the surface of this huge addressable market, and with the amount of interest that we are getting and the active RFPs that we are participating in, we believe that that's a substantial growth engine for the next few years, for the coming few years.
Speaker Change: And by this I E.
Speaker Change: During the call to <unk>.
Speaker Change: So as we've said it before when we look forward strategically.
Speaker Change:
Speaker Change: At the same growth engine that we discussed in the past we and this is why I said it earlier that we are extremely optimistic about the long term outlook for the company.
Speaker Change: We are starting with apu's over $2 billion addressable market.
We are moving more and more of our ability to provide great service and fast turnaround time and competitive pricing to customer then.
Speaker Change: Basically just starting to scratch the surface of this a huge addressable market and we the amount of.
Speaker Change: Of interest that we're getting in the active.
Speaker Change: And the active Rfps that we are participating in we believe that that's a substantial growth engine for the next few years for the coming period.
Igal Zamir: Lending gear MRO cycle as anticipated, Ehud stated it, we already see it, it's coming, we see a very nice growth in lending gear work and expecting it to continue. The thermal solution MRO, TAT is the leading player in the industry, one of the largest players, especially on the MRO side, we are cost-effective, we are providing amazing service to our customers, way better than most of the competitors, and we expect to continue and grow this business as a result. Thermal solution OEMs, the outlook for new aircraft, fleet conversions, all the next generation aircraft, Evo 1000, whatever, it presents a long-term strategic opportunity for TAT, and the trading and leasing, while trading and leasing and Ehud touched on it has two components, we have the leasing activity which is more stable month by month, with major demand for our products on the leasing side, provide the general steady flow of revenue and profitability, and then you have the trading side that is more based on availability of of components, engines, gears, and such, and specific demand from airlines.
Speaker Change: Lending gave them a whole cycle is anticipated they would stay to date, we already see it it's coming we see a very nice growth in lending you walk and expecting it to continue.
Speaker Change: The <unk> solution and Marvel.
Speaker Change: We it is.
Speaker Change: <unk>, the leading player in the industry one of the largest players in there, especially on the MRO side.
Speaker Change: Ill close effective well, providing amazing service to our customers the way better than most of the competitors and we expect to continue and grow this business as a result.
Speaker Change: They will most solution Oems the outlook for the new for new aircraft.
Speaker Change: Conversions all the next generation aircraft equal thousand whatever represents a long term strategic opportunity for the 48 P M.
Speaker Change: The trading of leasing why.
Speaker Change: In our trading and listing of notes touch on it as two components, we have the leasing activity, which is more stable month by month.
Speaker Change: With major demand for our products on the leasing side provides a general steady flow of revenue and our profitability and and then you have the trading side that is more <unk>.
Speaker Change: Just on availability of.
Speaker Change:
Speaker Change: Of the components engines, gales and such and specific demand from from airlines, So while it's not as consistent as our ongoing.
Igal Zamir: So while it's not as consistent as our ongoing business, it is growing and there is a lot of demand. And as we increase the amount of assets that we can afford to keep for these deals, we will be exposed to more and more deals and growing business. with a very nice margin.
Speaker Change: <unk> business. It is growing and there is a lot of demand.
Speaker Change: And as we increase the amount of assets that we can afford to keep for this deal we will be exposed to more and more deals and growing business.
Speaker Change: With the very nice margin.
Speaker Change: Just before going to Q&A.
Igal Zamir: before going to the Q&A, we detected some technical issues during the call. So if some of the audience, some of the audience didn't hear something well, we'll be happy to repeat whatever was missing during the pitch.
Speaker Change: We was detected some.
Speaker Change: Hum.
Speaker Change: Some technical issues during the call.
Speaker Change: Some of the audience someone from the audience Didnt hear something well, we will be happy to repeat whatever was missing during the during the during the beach.
Matt Schaeffler: We can now move to Matt for the Q&A session.
Matt Chesler: And I'll move to Matt for the Q&A. Okay, thank you very much.
Matt Schaeffler: Okay. Thank you very much we're now going to.
Matt Chesler: We're now going to move to the Q&A session. To ask a question, please use the Q&A widget at the bottom of your screens. Just note, if we do run into a time constraint, someone from the IR team will get back to you if your question is not asked on today's call. We've already seen that some questions are coming in. And with that, let's pause for a moment to build the queue further.
Matt Schaeffler: Move to the Q&A session.
Matt Schaeffler: To ask a question. Please use the Q&A widget at the bottom of your screens.
Matt Schaeffler: Just note if we do run into a time constraint someone from the IR team will get back to you. If your question is not asked on today's call.
Matt Schaeffler: We've already seen some questions are coming in and with that let's pause for a moment to build the queue further.
Matt Schaeffler: Okay.
Matt Chesler: The first question is from Josh Sullivan at Benchmark. Thank you, Josh. He's congratulating us on the quarter.
Matt Schaeffler: The first question is from Josh Sullivan at benchmark.
Speaker Change: Thank you Josh.
Speaker Change: Congratulating us on the quarter.
Josh Sullivan: And then, can you explore backlog incremental sequentially this quarter a little bit further? Provide some color on the increase. Was it driven by, you know, repeat customers versus new relationships? And then, how are new APU relationships and orders evolved?
Speaker Change: And then can.
Speaker Change: You explore backward incremental sequentially this quarter.
Speaker Change: Further provide some color on the increase was driven by repeat customers versus new relationships.
Speaker Change: And then how our new <unk> relationships and orders evolving.
Speaker Change: You all did come through to you.
Igal Zamir: Igal, did that come through to you? You know, we're not hearing your answer. You may be on mute.
Speaker Change: We're not hearing your answer maybe on mute.
Igal Zamir: Gentlemen, can you hear me now? Now we can hear you. Please proceed, you all.
Speaker Change: Gentlemen, can you hear now.
Speaker Change: Now we can hear you. Please proceed you are.
Speaker Change: Okay.
Igal Zamir: First of all, we really apologize. We have some... Just one second, Matt. We're really appalled at all of this.
Speaker Change: First of all regarding radio polo Gaslog, we have some time.
Matt Schaeffler: Just one second Matt.
Speaker Change: I really apologize for all of this we are a major issue some kind of initial here with the network.
Igal Zamir: We have a major issue, some kind of an issue here with the network, so I wonder the technology. I'm reconnected via hotspot to my iPhone. I hope that you can hear us well now. Matt, please repeat the question. Great, let's go forward.
Matt Schaeffler: Alright.
Matt Schaeffler: One does a technology I'm recalling I reconnected.
Matt Schaeffler: Via hotspots.
Matt Schaeffler: And I hope that.
Speaker Change: I hope that you can hear us well now and Matt. Please repeat the question Greg.
Matt Schaeffler: Great.
Igal Zamir: So the first question was from Josh Sullivan at Benchmark. Josh is asking if we could go into further detail on the incremental backlog sequentially this quarter, talking about some of the reasons for the increase sequentially, whether it was driven by repeat customers versus new relationships, and then how are AP relationships and orders evolving? So two things. First of all, it's a combination of existing customers and new customers. We won, we stated it in the past, you know, when we when we win, we come with an official announcement only when we have substantial wins. But we we are all the time winning more and more business that is less meaningful for a standalone, you know, PR, but what we are getting new customers.
Matt Schaeffler: So the first question was from Josh Sullivan of benchmark.
Matt Schaeffler: Josh is asking if we could go into further detail on the <unk>.
Matt Schaeffler: The incremental black backlog sequentially this quarter.
Matt Schaeffler: Talking about some of the.
Matt Schaeffler: The reasons for the increase sequentially, whether that was driven by repeat customers versus new relationships and then.
Howard: Howard <unk> relationships and orders evolving.
Howard: So two things first of all it's a combination of existing customers and new customers. We won and we stated it in the past when we when we win.
Howard: We come with no official announcement only when we have substantial wins.
Howard: But we are all the time, winning more and more business that is less meaningful for <unk> standalone.
Howard: But what we are adding new customers.
Igal Zamir: But it's both on the both on the it's across the business lines, it's APOs, lending gear and thermal components. So in reality, it's a combination between between new and existing and between the various business line, nothing, nothing unique that stands out more than more than others.
Howard: And it's both on the both on the it is across the business lines. Its IPO of their lending Gill and net several components.
So.
Howard: In reality, it's a combination.
Howard: Between between new and existing and between the various business line nothing nothing unique that stands out more than and more than others.
Igal Zamir: Great, let's let's shift over to profitability. Josh is asking about the margin improvement. How much of that, that that that improvement in margins is pricing versus, you know, operational actions that you've taken to drive efficiencies throughout the organization? I don't think it has anything to do with pricing. It's mostly operational efficient, it's mostly mostly operational efficiency. And obviously, there is always a some level of mix of products that we don't control it is what it is, whatever we get.
Speaker Change: Great, let's shift over to profitability, Josh is asking about the margin improvement.
Howard: How much of that.
Howard: So that improvement in margins as pricing versus.
Howard: The operational actions that you've taken to drive efficiencies throughout the organization.
Howard: I don't think that it has anything to do with pricing, it's mostly operational efficient it's mostly most of the operational efficiencies and obviously there is always some level of mix of products that we don't control. It is what it is whatever we get but we have we have major initiatives around improving profitability, which we.
Igal Zamir: But we have we have major initiatives around improving profitability, which we and you know, and We stated in the past that we believe that a company like TAT needs to be at 25% gross margin, at least at 25% gross margin and 15% EBITDA. And this is definitely where we want to be in the future. And we are very committed to getting there and investing a lot of time and energy in it. So Again, it's mostly operational efficiency is very... Nothing to do with pricing changes. Okay, great.
Howard: And.
Howard: We said that we stated in the past that we believe that the company like the <unk> needs to be at the 25% gross margin at least 25% gross margin and 15% EBITDA.
Howard: And this is we're definitely where we want to be in the future and we are very committed to getting there.
Best thing a lot of time and energy in it so.
Again, it's mostly operational efficiencies.
Howard: And nothing to do with pricing changes.
Speaker Change: Okay great.
Igal Zamir: He has an additional question around, you know, supply chain, you know, what's your, from where you're sitting, what are you seeing in terms of the supply chain at this point? And what are you, what are you doing to, to manage that with your customers? So, first of all, supply chain, it's an ever-evolving situation, you know.
Howard: Is it additional question around.
Supply chain.
Howard: What's your from where you're sitting what are you seeing.
Howard: In terms of the supply chain at this point.
Howard: What are you what are you doing to manage that with your customers.
Howard: So first of our supply chain, it's an ever evolving situation.
Igal Zamir: On a very high level macro trend, I personally believe that the industry is in a recovery mode. But still, every time suppliers, we wake up to surprises from suppliers, business lines that were already stabilized, and we thought that everything is okay, and all of a sudden, deliveries are being pushed, sometimes in months, with no expectation, with no advance warning. So, the overall trend is, I think that the overall trend is positive, and the industry is on a recovery mode, but it's still extremely volatile, and ups and downs, and it's not consistent across business lines.
Howard: On a very high level macro trends I personally believe that the industry is in a recovery mode.
Howard: But still everytime suppliers, we wake up to surprise us on supply out of the business lines that we have already stabilized then we felt that everything is okay and all of this out then.
Howard: No.
Howard: Deliveries are being pushed sometimes eight months.
Howard: With no expectation with no advanced warning. So the overall trend is I think that the overall trend is positive in the industry is on a recovery mode.
Howard: But it's still extremely volatile and the ups and downs.
Howard: And it's not consistent across business lines. So.
Igal Zamir: So, The only thing that we can do, and we are doing it strategically, is to increase inventories. and you see it in our numbers. And we, I believe that the companies that will be able to overcome the supply chain challenges first will enjoy the growth. I think that part of the reason that we are growing is that we are providing great service to our customers. across the business line. When you think about turnaround times that we are demonstrating to our customers on the MRO side, way better than what we hear that competitors are providing. This is a critical strategic advantage for the growth of the company.
Howard: The only thing that we can do and this is why we're doing it strategically is to increase inventories.
Howard: And youll see it in our numbers.
Howard: I believe that the companies that will be able to overcome the supply chain challenges first we'll enjoy the growth I think that part of the reason that we're growing is that we are providing great service to our customers.
Howard: Across the business line when you think about turnaround times that we are demonstrating to our customers on the MRO side.
Howard: Way better than what we hear that competitors are providing this is a critical strategic advantage for the growth of the company.
Igal Zamir: It comes with the cost of inventory and turning cash into inventory versus cash in the bank. But that's what we are doing, and we plan to continue until such day in the future where the industry will really be more stabilized.
Howard: Comes with the cost of inventory and turning cash into inventory versus cash in the bank.
Howard: But thats, what we are doing and we planned to continue until such day in the future.
Howard: The industry will really be most tabulate.
Operator: And we did have an investor question asking about your current capacity and how that serves your medium term growth outlook.
Speaker Change: We did have an investor question asking about your current capacity.
Howard: If your medium term growth outlook, but I think you just addressed that.
Igal Zamir: But I think you just addressed that in your most recent response. So maybe just to add to it, and we spoke about it in the past, from a technology standpoint, equipment and everything else, we are well positioned to more than double the capacity. So obviously, the bottleneck is supply chain and having the parts, we are overcoming it by strategic purchase of inventory where needed.
Speaker Change: In your most recent response.
Howard: Maybe.
Howard: Just to add to it and we spoke about it in the past format.
Howard: Technology standpoint equipment, and everything else, we are well positioned to more than double the capacity. So obviously the bottleneck is supply chain and having the parts. We are overcoming it by a strategic purchase of inventory will need it.
Igal Zamir: From a facility standpoint, equipment and everything else, with all the investments that we have done over the last five years, we are well positioned to, if I have to guess, at least double the capacity. Okay.
Howard: From a facility standpoint equipment and everything else, we all without the investments that we have done over the last five years.
Howard: We're well positioned.
Howard: I would if I have to guess at least double the capacity.
Howard: Okay.
Howard: Okay.
Howard: Let's.
Ehud Ben: Let's shift to taxes. We have a question from Sergei Glinev from Freedom, and he's asking, how should we think about your tax provision for the second quarter and the remaining part of the year as you've started to recognize non-cash items in Q1? Is that clear, Ehud? Yes, that's clear. Thank you for the question.
Howard: Let's shift to taxes, we have a question from.
Speaker Change: So Jay linear from freedom.
Howard: He is asking.
Howard: How should we think about your tax provision.
Howard: For the second quarter and the remaining part of the year as you have started to recognize noncash items in Q1.
Howard: Is that clear a hood, yes, that's clear thank you for the question.
Howard:
Ehud Ben: think what what we're going to see until the end of the year is the The average tax expenses that you see right now out of the net profit will continue to stay around the same level. There's a mix of different taxes between Israel and the U.S., but we believe that the profitability between Israel and the U.S. is going to continue the same until the end of the year. So we can assume the same the same tax rate for the following quarters.
Speaker Change: I think what David what we are going to stay until the end of the year is the.
Speaker Change: The average tax expenses that you see right now out of the net profit will continue to stay around the same level the mix of different taxes between Israel.
Speaker Change: In the U S, but we believe that the profitability with <unk> in the U S to continue the same until the end of the year.
Speaker Change: So you can assume the same.
Speaker Change: The same tax rate for the following.
Ehud Ben: As I mentioned before, and I'm emphasizing it again, these are just. These are non-cash tax expenses until Q3, and by Q4, it's going to be, it's going to become a tax which which are followed by...
Speaker Change: As I mentioned before.
Speaker Change: <unk> sizing it again these are just.
Speaker Change: These are noncash tax expenses.
Until Q3 and by Q4.
Speaker Change: Going to be it's going to become an a tax expenses, which are which are followed by cash.
Speaker Change: Okay.
Ehud Ben: Sergey is also following up with a question around our opportunity with defense customers in light of the current budgetary landscape, you know, particularly in the United States.
Speaker Change: <unk> also following up with a question around our opportunity with defense customers in light of the current budgetary landscape.
Speaker Change: And United States.
Igal Zamir: So, can you comment on the opportunities for growth within the government of defense? I think that, uh, by the way, I, I, Yesterday we had an internal meeting asking the same questions, the opportunities, it's a good point, the opportunities are definitely there and the budgets are in place. We don't see any quick turnaround here from strategic decisions in the government side into immediate buying decisions. There are solicitations that are being opened by the Air Force or Navy or Army in the US from time to time. It's more based on schedule, in our case, for TAT.
Speaker Change: So can you comment on the opportunities for growth within.
Speaker Change: The government or defense.
Speaker Change: Market.
Speaker Change:
Speaker Change: I think that.
Speaker Change: By the way I guess.
Speaker Change: Yesterday, we had an internal meeting with asking the same question as the opportunity is a good point that we put the opportunities differently.
Natalie Dale and the budgets are in place.
Speaker Change: Sure.
Speaker Change: We don't see any quick turnaround here format strategic decisions in the Gulf of insight into.
Speaker Change: Immediate buying decisions.
Speaker Change: Now they also reputation that there'll be an open by the by the Air Force on the deal.
Speaker Change: In the U S.
Speaker Change: From time to time.
Speaker Change: It's more based on schedule in our case for <unk>, So I'm not expecting any.
Igal Zamir: So I'm not expecting any immediate reaction or substantial growth. Having said this, we have our defense sales team dedicated to selling to the US Armed Forces and hoping, being in close contact with the buying offices and looking forward to RFPs, to solicitations to get open so we can bid on them. So I believe that strategically, this segment is growing and needs to continue and grow.
Speaker Change: Immediate reaction or substantial growth having said this.
Speaker Change: We are.
Speaker Change: We have our.
Speaker Change: Tim.
Speaker Change: Defense sales team dedicated to.
Speaker Change: To selling to the U S armed forces.
Speaker Change: And.
Speaker Change: Hoping.
Speaker Change: In close contact with the with the buying offices and looking forward to two rfps too.
Speaker Change: Patients to get open. So we can so we can beat on them. So I believe that.
Speaker Change: Strategically.
Speaker Change: Digitally. This this segment is growing and there needs to continue and grow.
Operator: Nothing special that can be reported short-term. Okay.
Shelton: Nothing special that can be reported Shelton.
Speaker Change: Okay.
Igal Zamir: There's another growth-oriented question here. You know, one is around, you know, we highlighted a few logos in the global logistics sector with the FedExes, UPSes, and DHLs of the world as customers. And so, you know, there's a specific question around, you know, APU revenue opportunity with these customers. But, you know, there's also a question in here around, you know, in general, the pipeline for APU-131. You know, perhaps and talk to those opportunities.
Speaker Change: There is another growth oriented question here one is around.
Speaker Change: Highlighting a few logos in global logistics sector with the fed acts as UBS, <unk> and <unk> of the world as customers.
Speaker Change: And so yes, there is a specific question around.
Apu revenue opportunity with these customers.
Speaker Change: There's also a question here around.
Speaker Change: General the pipeline for AP 131.
Speaker Change: Perhaps.
Speaker Change: If you can talk to those opportunities.
Speaker Change: Okay.
Igal Zamir: First of all, when it comes to UPS, FedEx, and DHL. They are existing customers. We have great relationship with the three entities and we have some opportunities to grow within their product lines. It depends on when their existing contracts will come to term and then they will open them to RFPs and we are definitely in a great position to secure more business from them based on success over the next few years. I, we are not, when you look at the overall potential for the APU, the commercial, the commercial market is the biggest opportunity. And basically today, any airline, almost any airline in the world is a potential customer for TAT.
Speaker Change: First of all when it comes to.
Speaker Change: UBS, Fedex and DHL with our existing customers.
Speaker Change: We have a great relationship with the way the three entities and we have some opportunities to grow within their product lines. It depends on when the data.
Speaker Change: There are existing contracts will come to term in there and then that we would open them to Rfps and we are definitely in a great position to.
Speaker Change: To secure them.
Speaker Change: More business from them.
Speaker Change: Based on the based on success over the last few years.
Speaker Change: We are not.
Speaker Change: When you look at the overall potential for the Ipos the commercial the commercial market is the biggest opportunity and basically today any airline in the almost any airline in the world is a potential customer of <unk>.
Igal Zamir: Airlines are typically on a three to five year agreement. And when the agreement comes to term, unless if they have a major, major problem, they don't change vendors in the middle of a term, even if they are struggling. They get to the end of the term, they open RFPs. We are participating in a lot of RFPs.
Speaker Change: Airlines are typically on a three to five years game.
<unk> and <unk>.
Speaker Change: And when the agreement comes to tail, Melissa unless if they have a major major.
Speaker Change: Problem, they don't change vendors in the middle of a tail.
Speaker Change: Even if they are struggling to get to the to the end of the time. They open rfps that we're participating in auto for in a lot of Rfps.
Speaker Change: And.
Igal Zamir: And I believe, if you remember, in 2024, we deliberately decided to wait with participating in RFPs because we didn't feel confident enough to secure long-term. And at the end of 24, we mentioned in conference calls that we feel more confident with the fact that we are gaining experience and improving the operations and efficiency and being ready. We, in 2025, we are going to participate in large RFPs, which we do. There is a very nice funnel of opportunities. And I believe that it's just going to grow. I call it a positive snowball effect. You start slow and small, and then you gain and you win.
Speaker Change: And I believe you know if you remember in 2024, we deliberately decided to wait with participating in Rfps, because we didnt feel confident enough to secure long term and at the end of 'twenty four we we mentioned in conference calls that.
Speaker Change: We feel more confident we deal with.
Speaker Change: With the fact that we are gaining experience and improving the operations and efficiency and being ready.
Speaker Change: It did in 2025, we are going to participate in large rfps, which we do.
There is a very nice funnel of opportunities.
Speaker Change: And I believe that it's just going to grow.
Speaker Change: I call. It a positive mobile effect, you start slow and small and then youll gain and you win and we the wins youll become more awareness to the companies, becoming and we are positioning ourselves I think thats, we are slowly, but surely positioning ourselves as a key player in this.
Igal Zamir: And with the wins, you become more, the awareness to the company is becoming, and we are positioning ourselves. I think that we are slowly but surely positioning ourselves as a key player in this segment, which will bring more and more customers to consider us in a serious way as their future vendor. And the numbers are huge. We are talking about 131 engines. We are talking about more than, I don't know, between 16 to 18,000 engines that are flying today, that are in use today around the world. So.
In this segment, which will bring more and more customers to consider us as in a serious way as their future Wendell.
Speaker Change: And the numbers.
Speaker Change: Huge we are talking about 131 engine, we're talking about more than I don't know between 16% to 18000 engines that are flying today that are in use today around the world.
Speaker Change: So.
Operator: Great, appreciate it. I think that answers it.
Speaker Change: Great I appreciate I think that answers that.
Josh Sullivan: On the landing gear opportunity, Josh Sullivan is asking where we're at in that cycle.
Speaker Change: On the landing gear opportunity, Josh Sullivan is asking.
Speaker Change: We're at in that cycle, how should we expect it to ramp up.
Igal Zamir: How should we expect it to ramp up? Or what early signs should we look for, either externally or internally, to evaluate your performance? Well, you're already seeing the results in the lending year increased. It's more than doubled, and we just started.
Speaker Change: Or what what early signs should we look for either externally or internally to evaluate your performance.
Speaker Change: We're already seeing the results in the landing gear increased its more than doubled.
Speaker Change: And we just started the big cycle starts.
Igal Zamir: The big cycle starts this year and will peak in the next three years, 26 to 28. You know, if you look at announcements made by the OEM, there is not enough capacity to support the industry, to support 26 to 28 demand. So when they are combining all the vendors like us that have the ability to support, where there is a lack of capacity, so we hope and believe that we are going to see a very nice increase.
Speaker Change: To start this year and will peak in the next three years 26 to 28.
Speaker Change: If you look at the announcements made by the Oems there is not enough capacity to support.
Speaker Change: The industry to support the 26 to 28 demand.
Speaker Change: So I went there combining all the vendors like us that have the ability to support where there is a lack of capacity. So we hope that.
Speaker Change: We hope and believe that we are going to see a very nice.
Speaker Change: The increase.
Operator: Next question is from an investor. When do you expect the redial domicile process to be completed? Can you please repeat the question? When do you expect the re-domicile process to complete?
Speaker Change: Next question is from an investor when do you expect the readout domicile process to be completed.
Speaker Change: Can you. Please repeat the question when do you expect the re domicile process to complete.
Speaker Change: Perhaps that's not a great question, we need clarification on the on the on the <unk>.
Igal Zamir: That's not a great question. We need a clarification on the question. Okay. From an operational standpoint, we are based in the U.S., the management is in the U.S., our headquarters is in Charlotte, we operate like most of the customers and the vast majority of the employees are in the U.S. If you look at it, leaving the registration aside, if you just look from an operation and management standpoint, we are a U.S. company today.
Speaker Change: On the question Okay. Okay.
Speaker Change: Well, let's see how from an operation out of home.
Speaker Change: Yes.
Speaker Change: From an operational standpoint, we are based in the U S. The management in the U S. Our headquarters in Charlotte we operate.
Speaker Change: Most of the customers and most of the vast majority of the employees of <unk>.
Speaker Change: If you look at the living.
Speaker Change: Living the <unk>.
Speaker Change: Administration aside if you just look from operation and management standpoint, we are a U S company.
Speaker Change: Today.
Igal Zamir: I don't know if that was the question or whether that was another question. Obviously, we have a very strong business in Israel that is doing great and we are definitely planning to continue and develop it, but the company is based in the U.S. And I don't know if it answered the question or not.
Speaker Change: I don't know if that was the question of whether there was another question. Obviously, we have a very strong business in Israel that is doing great.
Speaker Change: Ill definitely.
Speaker Change: Definitely planning to continue and develop it but the company is based in the U S.
Speaker Change: And I don't know if it answered the question on that.
Speaker Change: Okay.
Operator: Let me prompt others to submit questions. We will now pause to evaluate the queue.
Speaker Change: Let me prompt others to submit questions.
Speaker Change: We will now pause to evaluate the queue.
Speaker Change: Okay.
Matt Chesler: Gal and Ehud, I believe we are at a good point here for me to turn the call back over to you. Maybe just to summarize, we are really pleased with the results. Another quarter of continuing improvement in all aspects of the business. Strategically, when we look at the company long term, we are very optimistic about all the opportunities and the growing demand and the RFPs and bids that we are participating in and the opportunity to continue to grow the company. I'm really proud in our team and the ability to overcome many of the supply chain challenges and others.
Speaker Change: <unk> I believe we are at a.
Speaker Change: Good points here for me to turn the call back over to you.
Speaker Change: So maybe just to summarize we are really pleased with our results and other another quarter of continuing improvement in all aspects of the business.
Speaker Change: And.
When we look at the strategically when we look at the company.
Speaker Change: Long term we're very.
Very optimistic about other opportunities and the growing demand in the amount of.
Speaker Change: Okay.
Speaker Change: As rfps and bids that we're participating in and the opportunities to continue to grow the company.
Speaker Change: I'm really proud in our team and their ability to overcome.
Speaker Change: Many of the supply chain challenges and others, we're not using it as an excuse but to add that we are using it as a springboard to.
Igal Zamir: We are not using it as an excuse, but rather we are using it as a springboard to show the industry and our customers that we are providing better service and much, faster turnaround times, which really helps our customers. The outlook is strong on a strategic base. Obviously, we did a great job in Q1 overcoming the short-term headwinds and some short-term challenges and concerns in the industry. We continue to do it. All in all, the company is in the right direction and executing our plans.
Speaker Change: To show.
Speaker Change: The industry and our customers that we are providing better service and much much faster turnaround times.
Speaker Change: Rich.
Speaker Change: Which really helps our customers.
Speaker Change: So the outlook is the outlook is strong on a strategic basis, obviously, we did a great job in Q1, overcoming the short term headwinds and some short term challenges and concerns in the industry.
Speaker Change: And we'll continue to do it and so all in all all in all the companies in the right direction.
Speaker Change: Executing our plans.
Igal Zamir: I wanted to use the opportunity and just thank everybody for joining us today and for showing confidence in us and in the company. We appreciate the partnership and looking forward to continue working together.
Speaker Change: And.
Speaker Change: I wanted to use the opportunity and just thank everybody for joining us today and for showing confidence in us and in the company and we appreciate the partnership and looking forward to to continue and working together.
Igal Zamir: Thank you, Igal.
Speaker Change: Thank you all this concludes the earnings call you may now disconnect your lines.
Operator: This concludes the earnings call. You may now disconnect your lines. Thank you. Goodbye.
Speaker Change: Thank you.
Speaker Change: Goodbye.