Core Insights - Frequency Electronics, Inc. (FEIM) reported a significant decline in net income and revenues for the quarter ended January 31, 2026, with net income falling to 16 cents per share from $1.60 per share year-over-year [1][2] - The company's stock has underperformed the S&P 500 index, declining 11.4% since the earnings report, although it has seen a slight increase of 0.5% over the past month [1] Financial Performance - Revenues for the quarter were approximately $16.9 million, down about 10.8% from $18.9 million in the prior-year period [2] - Operating income sharply declined to $1.3 million from $3.5 million, reflecting a drop of roughly 63% [2] - Net income fell significantly to $1.6 million compared to $15.4 million in the prior-year quarter [2] Backlog and Revenue Mix Trends - The company's backlog reached a record $83 million as of January 31, 2026, up from $70 million at the start of the fiscal year, indicating strong demand visibility [3] - Approximately 74% of quarterly revenues were derived from U.S. government and satellite programs, totaling about $12.5 million compared to $7.4 million in the prior-year quarter [3] - Revenue from commercial and other markets declined to approximately $0.2 million from $0.4 million a year ago, indicating a heavier reliance on government-related business [3] Margin and Expense Dynamics - Profitability pressures were driven by lower revenues, shifting program mix, and rising costs, with gross margin declining year over year due to increased material costs [4] - Selling and administrative expenses rose approximately 6% to about $3.6 million, while research and development spending increased to $1.8 million, representing about 10% of revenues [4] - Overall operating expenses increased by roughly $0.5 million, further compressing operating income [4] Management Commentary and Growth Drivers - Management emphasized establishing a higher baseline for long-term growth despite near-term financial softness, with recent contract wins totaling approximately $45 million expected to support future revenue expansion [6] - The company continues to see strong momentum in its core space and defense business, particularly in satellite payloads and missile-related systems [7] - Investments are being made in emerging areas such as quantum sensing, magnetometers, and alternative position, navigation, and timing (ALT-PNT) technologies, which are expected to drive growth over the next three to five years [7] Liquidity and Balance Sheet Position - The company ended the quarter with a notably low cash balance of $0.1 million, down from $4.7 million at the end of the prior fiscal year, characterized as a temporary low point [9] - The company remains debt-free and reported collecting over $11 million in cash early in the fourth quarter, which is expected to strengthen liquidity [9]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended January 31, 2026 OR For the transition period from __________ to __________ Commission File No. 1-8061 FREQUENCY ELECTRONICS, INC. (Exact name of Registrant as specified in its charter) | Delaware | 11-1986657 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation o ...

Core Insights - Frequency Electronics, Inc. (FEIM) has secured two contracts valued at approximately $45 million, indicating a strong performance in both traditional space satellite and new proliferated satellite sectors [2]. Management View - CEO Thomas McClelland highlighted the achievement of record Q3 awards, which signals a push toward a backlog exceeding $100 million [2]. - The expansion of defense contracts is a key focus for the company, reflecting its strategic direction in the growing defense sector [2].

Core Insights - The company reported a record fully funded backlog of approximately $83 million as of January 31, 2026, an increase from about $70 million at the end of the fiscal year on April 30, 2025, with expectations to exceed $100 million soon as new business enters the fiscal fourth quarter [1][7][8] - Two new contracts valued at approximately $45 million were announced, one related to traditional space satellite programs and the other to the proliferated satellite model, indicating the company's success in both established and emerging markets [4][5][6][7] - The revenue mix has shifted significantly towards defense, accounting for about 74% of total revenue compared to 39% a year earlier, which has impacted gross margins and operating income [6][16] Financial Performance - For the three months ended January 31, 2026, consolidated revenue was reported at $16.9 million, down from $18.9 million in the prior-year period, attributed to strong prior-year execution that pulled forward some revenue [9][11] - Operating income decreased to approximately $1.3 million from about $3.5 million in the prior-year quarter, with net income for the quarter at approximately $1.6 million, or $0.16 per share, compared to $15.4 million, or $1.60 per share, in the prior-year quarter [14] - Gross margin and gross margin rate decreased due to a change in revenue mix, with lower-margin programs dominating the recent quarter, though management expects margins to improve as higher-rate production ramps up [12][13] Market Outlook - The company is actively pursuing additional contracts of similar magnitude across both business lines, with expectations for further awards within the calendar year [3][5] - There is an increasing demand for alternative positioning, navigation, and timing (ALT-PNT) solutions, with the company already securing new business in this area and anticipating more in the future [15] - The company plans to participate in key industry conferences, including the Craig-Hallum NewSpace Conference and the Morgan Stanley Golden Dome and National Security Innovation Summit, to enhance its market presence [17]

Financial Data and Key Metrics Changes - For the third fiscal quarter, the company reported revenue of $16.9 million, which is down from $18.9 million for the same period in the prior fiscal year and essentially the same as the second fiscal quarter of this fiscal year [13][19] - The revenue from commercial and U.S. government satellite programs was approximately $4.2 million, accounting for 25% of total revenue, compared to $11.2 million or 59% in the same period of the prior fiscal year [14] - Revenues from non-space U.S. government and Department of Defense customers were $12.5 million, representing 74% of consolidated revenue, up from 39% in the prior fiscal year [15] - Consolidated net income for the three months ended January 31, 2026, was approximately $1.6 million or $0.16 per share, compared to approximately $15.4 million or $1.60 per share for the same period of the previous fiscal year [20] Business Line Data and Key Metrics Changes - Revenue from satellite payload contracts was recognized primarily under the percentage of completion method and reported only in the FEI New York segment [15] - The company experienced a decrease in gross margin and gross margin rate due to a change in the mix of high-margin production satellite programs in the prior year versus lower-margin programs in the current period [16] - Selling, General, and Administrative (SG&A) expenses increased to approximately 21% of consolidated revenue, up from 18% in the prior year [17] Market Data and Key Metrics Changes - The company’s fully funded backlog at the end of January 2026 was approximately $83 million, a new all-time high, compared to approximately $70 million for the previous fiscal year [21] - The company anticipates that the new contracts announced will start to enter backlog in the current fiscal fourth quarter, contributing to the growth towards the $100 million backlog target [7][69] Company Strategy and Development Direction - The company is focusing on growth in large and growing end markets, including quantum sensing and proliferated satellites, alongside ongoing strength in space and defense businesses [3][4] - The management emphasized the importance of maintaining a balance between traditional and new business lines, expecting both to grow simultaneously [5] - The company is investing in R&D to keep its products at the state of the art, with plans to continue this investment in the future [18] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the current geopolitical climate, including the ongoing war, which has increased reliance on traditional defense technologies [9][11] - There is an expectation for strong opportunities in both traditional defense and next-generation modalities, particularly in alternative positioning, navigation, and timing systems [11][12] - The management expressed optimism about the future growth of the TURbO program, indicating significant revenue potential [34][35] Other Important Information - The company is debt-free and believes its liquidity is adequate to meet operating and investing needs for the next 12 months [23] - The company has already collected over $11 million of cash since February 1, 2026, which is expected to continue building through the quarter [22] Q&A Session Summary Question: Insights on proliferated constellation deals - The management noted success in winning contracts where they can provide a technical edge, but emphasized challenges in low-cost environments [26][27] Question: Details on the $45 million contracts - The management indicated both contracts are significant but did not disclose specific proportions [28][29] Question: Cost structure and operating expenses - The management explained that investments in Colorado are a significant part of current operating expenses, which should normalize over time [31][32] Question: Updates on the TURbO program - The management expressed increased optimism about TURbO, expecting significant revenue growth in the near future [34][35] Question: Clarification on proliferated satellites - The management described proliferated satellites as systems with many more satellites, typically in low Earth orbit, designed to be less costly and more rapidly produced [40][42] Question: Addressing GPS jamming and alternative navigation - The management discussed ongoing projects in magnetic navigation and other non-satellite alternatives to GPS, indicating government interest and funding for these technologies [88][90]

Financial Data and Key Metrics Changes - For Q3 fiscal 2026, the company reported revenue of $16.9 million, which is down from $18.9 million in the same period of the prior fiscal year and essentially unchanged from the second fiscal quarter of this year [13][19] - The revenue from commercial and U.S. government satellite programs was approximately $4.2 million, accounting for 25% of total revenue, compared to $11.2 million or 59% in the same period of the prior fiscal year [13][14] - Consolidated net income for Q3 fiscal 2026 was approximately $1.6 million or $0.16 per share, compared to approximately $15.4 million or $1.60 per share for the same period of the previous fiscal year [20] Business Line Data and Key Metrics Changes - Revenue from non-space U.S. government and Department of Defense customers was $12.5 million, up from $7.4 million in the same period of the prior fiscal year, accounting for approximately 74% of consolidated revenue [14] - Other commercial and industrial revenues were approximately $180 thousand, down from approximately $367 thousand in the prior fiscal year [14] Market Data and Key Metrics Changes - The company’s backlog at the end of January 2026 was approximately $83 million, a new all-time high, compared to approximately $70 million for the previous fiscal year ended April 30, 2025 [21] - The company anticipates that backlog could exceed $100 million in the near future, supported by new contracts and ongoing business [6][21] Company Strategy and Development Direction - The company is focusing on growth in large and emerging markets, including quantum sensing and proliferated satellites, alongside its traditional space and defense businesses [3][4] - The management emphasized the importance of maintaining a balance between traditional and new business lines, expecting both to grow simultaneously [5] Management's Comments on Operating Environment and Future Outlook - The current geopolitical climate, including ongoing conflicts, is expected to drive demand for defense programs, which the company is heavily involved in [9][11] - Management expressed optimism about the future growth of the company, particularly in the defense sector and alternative positioning, navigation, and timing systems [12] Other Important Information - The company is debt-free and believes its liquidity is adequate to meet operating and investing needs for the next 12 months [22] - The company plans to continue investing in R&D to keep its products at the forefront of technology [18] Q&A Session Summary Question: Insights on proliferated satellite wins - Management noted that success in proliferated constellation deals is linked to providing a technical edge, while cost-driven contracts pose challenges [26][27] Question: Details on the $45 million contracts - Management indicated that both contracts are significant but did not disclose specific proportions [28][29] Question: Funded backlog timing - Management confirmed that the new contracts will significantly impact the current quarter's backlog [30] Question: Cost structure and operating expenses - Management clarified that some operating expenses are due to investments in Colorado, and they expect expenses to normalize [31][33] Question: Update on Turbo's market reception - Management expressed increased optimism about Turbo's revenue potential, expecting significant growth in the coming quarters [34][35] Question: Clarification on proliferated satellites - Management explained that proliferated satellites differ from traditional systems by having many more, less costly satellites, which allows for continuous production [40][42] Question: Gross margins on new satellite programs - Management anticipates lower gross margins initially for proliferated satellites but expects strong margins in the long run [48][49] Question: Alternative positioning and navigation systems - Management discussed ongoing projects in magnetic navigation and other non-satellite alternatives to GPS, with current revenue from development activities [88][95] Question: Impact of new contracts on backlog - Management confirmed that the new contracts could have a significant long-term impact on backlog, potentially following a 10x revenue realization pattern [99][100]

Financial Performance - Revenue for Q3 2026 was approximately $16.9 million, a decrease of 10.6% compared to $18.9 million in Q3 2025[3] - Operating income for the nine months ended January 31, 2026, was $3.3 million, down from $8.5 million in the same period of 2025, representing a decline of 61.2%[3] - Net income for Q3 2026 was $1.6 million or $0.16 per diluted share, compared to $15.4 million or $1.60 per diluted share in Q3 2025, a decrease of 89.6%[3] - Total revenues for the nine months ended January 31, 2026, were $47.8 million, down from $49.8 million in the same period of 2025, a decrease of 4.0%[3] - The company reported a gross margin of $18.2 million for the nine months ended January 31, 2026, compared to $22.6 million in the same period of 2025, reflecting a decline of 19.5%[14] Growth Opportunities - The backlog as of January 31, 2026, was approximately $83 million, an increase from $70 million at April 30, 2025[3] - The company has secured two new contracts worth approximately $45 million, marking significant near-term growth opportunities[5] - The company anticipates continued growth in quantum sensing and satellite applications, contributing to market expansion over the next 3 to 5 years[5] Cash Position - Cash collected since February 1, 2026, exceeded $11 million, indicating a positive cash flow trend moving forward[6] - The company remains debt-free with a healthy cash position, setting the stage for substantial top-line growth and profitability[6]

Core Insights - Frequency Electronics, Inc. reported financial results for the third quarter and nine months of fiscal year 2026, showing a decline in revenue and net income compared to the same periods in fiscal year 2025 [2][3]. Financial Performance - Revenue for the three months ended January 31, 2026, was approximately $16.9 million, down from $18.9 million in the same period of 2025, representing a decrease of about 5.3% [2]. - For the nine months ended January 31, 2026, revenue was approximately $47.8 million, compared to $49.8 million in the same period of 2025, a decrease of about 4% [2]. - Operating income for the three months ended January 31, 2026, was $1.3 million, down from $3.5 million in the same period of 2025, a decline of approximately 62.9% [2]. - Net income for the three months ended January 31, 2026, was $1.6 million or $0.16 per diluted share, compared to $15.4 million or $1.60 per diluted share in the same period of 2025, a significant decrease of about 89.6% [2][11]. - The backlog as of January 31, 2026, was approximately $83 million, an increase from $70 million at April 30, 2025 [2]. Strategic Outlook - The company has secured two new contracts worth approximately $45 million, which are expected to contribute to near-term growth [4]. - The company is optimistic about future growth opportunities in quantum sensing and satellite applications, which are anticipated to expand its market presence over the next 3 to 5 years [4]. - The company aims to build upon its established higher revenue base and expects continued strength in its core business, which will support future growth initiatives [3][4]. Cash Position and Investments - As of January 31, 2026, the company reported cash and cash equivalents of $86,000, a decrease from $4.72 million at April 30, 2025 [12]. - The company remains debt-free and anticipates a growing cash position, with over $11 million collected since February 1, 2026 [5]. - The company expects meaningful operating leverage to flow through the income statement in the coming years, setting the stage for substantial top-line growth and profitability [5].

Core Viewpoint - Frequency Electronics, Inc. has secured two contracts valued at approximately $45 million for satellite programs, indicating a strong growth trajectory in both traditional and proliferated satellite markets [1][2]. Group 1: Contract Awards - The contracts awarded to Frequency Electronics are expected to contribute to the funded backlog in the current fiscal fourth quarter of 2026 [1]. - The company anticipates additional contracts of similar value within the calendar year, highlighting a positive outlook for future business [1][2]. Group 2: Company Overview - Frequency Electronics is a leader in precision timing and frequency control products for both space and terrestrial applications, with a diverse range of products used in various military and commercial systems [3]. - The company has received over 100 awards for excellence in providing high-performance electronic assemblies for more than 150 space and Department of Defense programs [3]. - Significant investments in research and development are made to expand capabilities and market reach, aligning with the company's mission to transform research into practical products [3].

Company Overview - Frequency Electronics, Inc. (FEI) is a leader in the design, development, and manufacture of high precision timing, frequency generation, and RF control products for both space and terrestrial applications [4] - The company's products are utilized in satellite payloads and various systems including C4ISR, electronic warfare, missiles, UAVs, aircraft, GPS, secure communications, and energy exploration [4] - FEI has received over 100 awards for excellence in providing high-performance electronic assemblies for more than 150 space and Department of Defense (DOD) programs [4] Upcoming Conference Call - Frequency Electronics will hold a conference call to discuss its third-quarter results for the fiscal year 2026, which ended on January 31, 2026 [1] - The call is scheduled for March 11, 2026, at 4:30 PM Eastern Time and will be accessible via webcast and telephone [2] Access Information - Investors can access the conference call through the Investor Relations section of Frequency's website or by dialing specific phone numbers provided for domestic and international callers [2] - A replay of the call will be available for one week after the event, with further access through a link on the company's website until June 11, 2026 [3]