Company Overview - Frequency Electronics, Inc. (FEI) is a leader in 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 programs [4] Upcoming Events - Frequency Electronics will hold a conference call on March 13, 2025, at 4:30 PM Eastern Time to discuss the results for the third quarter of fiscal year 2025, which ended on January 31, 2025 [1] - The call will be accessible via webcast on the company's Investor Relations website and through a dedicated phone line for both domestic and international callers [2] Financial Information - A telephone replay of the conference call will be available for one week following the call, with specific domestic and international numbers provided for access [3] - The archived call can also be accessed via a link on the company's website until June 13, 2025 [3] Mission Statement - The company's mission is to transform research discoveries into practical products, emphasizing excellence and creating value for customers, employees, and stockholders [4]

Core Viewpoint - Frequency Electronics, Inc. will hold a conference call to discuss its third-quarter results for fiscal year 2025 on March 13, 2025, at 4:30 PM Eastern Time [1]. Company Overview - Frequency Electronics, Inc. (FEI) is a leader in 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 programs [4]. - The company emphasizes significant investment in research and development to enhance its capabilities and market reach [4]. - FEI's mission is to transform research discoveries into practical products, maintaining a legacy of delivering unique precision time and frequency generation products [4].

Company Overview - Frequency Electronics, Inc. (FEI) is a leading provider of precision timing and frequency control products for both space and terrestrial applications [2] - The company specializes in high precision timing, frequency generation, and RF control products, which are utilized in satellite payloads and various military and commercial systems [2] - 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 [2] Upcoming Events - FEI's management team will participate in the 27th Annual Needham Growth Conference from January 14 to January 17, 2025 [1] - CEO Tom McClelland will present on January 15 at 8:00 AM, followed by one-on-one conferences from 8:45 AM to 6:00 PM on the same day [1] Mission and Vision - The company's mission is to transform research discoveries into practical products, emphasizing excellence and creating value for customers, employees, and stockholders [2]

Core Insights - Frequency Electronics, Inc. (FEI) has been awarded contracts valued at approximately $11 million to supply precision quartz oscillators, synthesizers, and receivers for aerospace programs, with deliveries scheduled through 2026 [1][2] - The contracts emphasize FEI's leadership in the high-performance frequency control industry and its commitment to supporting critical aerospace and defense programs [1] - FEI's quartz oscillators are recognized for their reliability, stability, and precision, which are essential for navigation and timing systems in extreme conditions [1] Company Overview - Frequency Electronics, Inc. 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 [3] - The company's products are utilized in various sectors, including satellite payloads, military systems, and secure communications, with over 100 awards for excellence in high-performance electronic assemblies [3] - FEI invests significantly in research and development to enhance its capabilities and expand its market reach [3] Leadership Commentary - The President and CEO of FEI, Tom McClelland, expressed pride in being selected as a trusted supplier for high-profile aerospace programs, highlighting the growing demand for advanced timing solutions in the industry [2]

Financial Performance - Revenues for the three months ended October 31, 2024, increased to $15,820,000, up 16.5% from $13,575,000 for the same period in 2023[15] - Gross margin improved to $7,619,000 for the three months ended October 31, 2024, compared to $4,330,000 in the prior year, reflecting a gross margin percentage increase from 31.9% to 48.2%[15] - Operating income for the six months ended October 31, 2024, was $4,983,000, a significant increase from $2,998,000 for the same period in 2023, representing a 66.1% growth[15] - Net income for the three months ended October 31, 2024, was $2,654,000, compared to $797,000 in the same period last year, marking a 232.4% increase[15] - Total consolidated revenues for the three months ended October 31, 2024, were $15.8 million, an increase of 16.4% compared to $13.6 million for the same period in 2023[42] - Operating income for the three months ended October 31, 2024, was $2.6 million, compared to $0.9 million for the same period in 2023, representing a significant improvement[42] - The significant increase in revenue for the six months ended October 31, 2024, was primarily due to an increase in contract awards from prior periods that moved into production[67] Research and Development - Research and development expenses rose to $1,613,000 for the three months ended October 31, 2024, up from $840,000 in the prior year, indicating a focus on innovation[15] - Research and development expenses represented 10.2% of revenues for the three months ended October 31, 2024, compared to 6.2% in the same period of 2023[66] - R&D expenditures for the three months ended October 31, 2024, were $1.6 million, a 92.0% increase from $840,000 in the same period of 2023, driven by modernization of products[72] - The Company plans to continue investing in R&D for space applications and may pursue acquisitions to expand its product range, expecting internally generated cash to fund these efforts[89] Cash Flow and Liquidity - Cash and cash equivalents at the end of the period were $11,040,000, compared to $8,708,000 at the end of October 2023, reflecting a year-over-year increase of 26.5%[17] - The company reported a net cash provided by operating activities of $2,352,000 for the six months ended October 31, 2024, compared to a net cash used of $(2,981,000) in the same period last year[17] - Net cash provided by operating activities for the six months ended October 31, 2024, was approximately $2.4 million, compared to a net cash used of $2.9 million in the same period of 2023[85] - The Company incurred approximately $9.7 million in net cash used in financing activities for the six months ended October 31, 2024, primarily due to a special cash dividend of $1.00 per share[87] Shareholder Returns - The company paid dividends totaling $9,567,000 during the six months ended October 31, 2024, indicating a commitment to returning value to shareholders[17] - The company declared a special cash dividend of $1.00 per share, totaling approximately $9.6 million, paid on August 29, 2024[24] - During the quarter ended October 31, 2024, the Company repurchased a total of 7,893 shares at an average price of $12.62 per share[112] - The approximate dollar value that may yet be purchased under the share repurchase plan is $1,354,252[112] Assets and Liabilities - Total liabilities decreased to $41,583,000 as of October 31, 2024, down from $43,437,000 at the end of April 2024[12] - Total stockholders' equity decreased to $36,192,000 as of October 31, 2024, down from $39,816,000 at the end of April 2024[12] - As of October 31, 2024, the total assets amounted to $36,192 million, with a net income of $2,654 million for the six months ended October 31, 2024[20] - The company’s total liabilities included a deficit of $14,943 million as of October 31, 2024[20] - The total lease liabilities as of October 31, 2024, amounted to $5.3 million, a decrease from $6.2 million as of April 30, 2024[34] Internal Controls and Compliance - The Company identified a material weakness in internal control over financial reporting related to the calculation of loss provision accruals in contracts with customers[103] - Management concluded that the internal control over financial reporting was not effective as of April 30, 2024, due to the identified material weakness[101] - The Company is currently remediating the material weakness by improving controls over the calculation of loss provision accruals and implementing enhanced review and monitoring controls[106] - The errors resulting from the material weakness were corrected prior to the issuance of the consolidated financial statements as of April 30, 2024[103] - Management believes that the audited consolidated financial statements fairly presented the financial position and results of operations in conformity with GAAP despite the material weakness[104] Segment Performance - The FEI-NY segment generated revenues of $11.5 million for the three months ended October 31, 2024, up 24.5% from $9.3 million in the same period of 2023[42] - The FEI-Zyfer segment reported revenues of $4.6 million for the three months ended October 31, 2024, a slight decrease of 4.1% from $4.8 million in the same period of 2023[42] - Revenues from commercial and U.S. Government communication satellite programs accounted for approximately 59% of consolidated revenues for the three months ended October 31, 2024, compared to 34% in the prior fiscal year[66] Taxation - The effective tax rate for the three months ended October 31, 2024, was 4.96% on pretax income of $2.8 million, compared to 0.7% on pretax income of $800,000 in the prior year[82] - The estimated annual effective tax rate for the fiscal year ending April 30, 2025, is projected to be 5.15%[79] Other Financial Metrics - The Company reported a consolidated funded backlog of approximately $81 million as of October 31, 2024, up from $78 million at April 30, 2024, with 65% expected to be realized in the next twelve months[92] - The Company's current ratio was 1.8 to 1 at October 31, 2024, compared to 1.9 to 1 as of April 30, 2024, indicating a strong working capital position[84] - The company maintained a full valuation allowance against its deferred tax assets as of October 31, 2024, indicating potential future adjustments[56] - The company is evaluating the impact of new accounting standards issued by FASB, which may affect financial disclosures starting in fiscal year 2025[53][54]

Shares of Frequency Electronics, Inc. (FEIM) have gained 26.2% since the company reported its earnings for the quarter ended Oct. 31, 2024. This compares to the S&P 500 index’s 1% growth over the same time frame. Over the past month, the stock has gained 24.4% compared with the S&P 500’s 2.1% growth.For the second quarter of fiscal 2025, Frequency Electronics reported net income from operations of 28 cents per share compared with 8 cents per share in the year-ago quarter.  Revenues of $15.8 million denoted ...

Financial Data and Key Metrics - Revenue for the six months ended October 31, 2024, was $30.9 million, up from $26 million in the same period of the prior fiscal year [11] - Gross margin increased due to a large space program completing a major milestone, with older lower-margin programs nearing completion [14] - Operating income for the six months ended October 31, 2024, was $5 million, compared to $3 million in the prior year [20] - R&D expenses increased to $3.1 million, or 10% of revenue, up from $1.3 million, or 5% of revenue, in the prior year [17] - Consolidated net income for the six months ended October 31, 2024, was $5.1 million, or $0.53 per share, compared to $2.8 million, or $0.30 per share, in the previous fiscal year [23] - Backlog reached an all-time high of $81 million, up from $70 million at the end of the first quarter and $78 million at the end of the last fiscal year [4] Business Line Data and Key Metrics - Revenue from commercial and U.S. government satellite programs was $17.7 million, or 57% of total revenue, compared to $9.5 million, or 37%, in the prior year [11] - Revenue from non-space U.S. government and DOD customers was $12.1 million, or 39% of total revenue, down from $15.1 million, or 58%, in the prior year [12] - Other commercial and industrial revenue was $1.1 million, down from $1.4 million in the prior year [13] Market Data and Key Metrics - The U.S. government space business accounted for more than half of the revenue and operating income for the first half of the fiscal year [5] - Less than 10% of the backlog is associated with proliferated small satellites, but this is expected to grow significantly over the next decade [6] Company Strategy and Industry Competition - The company is focusing on developing smaller, lower-cost products for the proliferated small satellite market, leveraging existing technologies [7] - R&D spending is expected to remain at approximately 10% of revenue to support product modernization and new business opportunities [8] - The company is pursuing Cooperative Research and Development Agreements (CRADAs) with NIST and other government laboratories to advance quantum sensor technology [10] Management Commentary on Operating Environment and Future Outlook - Management is cautiously optimistic about the government fiscal year 2025 budget being passed expeditiously, which would accelerate funding availability [10] - The company is well-positioned to participate in the rapidly developing quantum sensor market, with potential government funding expected in the next two quarters [9] - The backlog strength and strong working capital position of $23 million provide confidence in meeting operating and investing needs for the next 12 months [23] Other Important Information - The company hosted the Quantum Sensor Summit in October 2024, which was well-attended and received positive feedback [9] - SG&A expenses increased to 20% of revenue, driven by payroll-related expenses and costs associated with the Quantum Sensor Summit [15] Q&A Session Summary Question: Competitive Advantage in Small Satellite Products - The company's advantage lies in its history of designing high-quality products and its ability to adapt existing technologies for smaller, lower-cost satellite applications [28][32] - The company is targeting a "sweet spot" in the market, offering smaller, lower-power, and lower-cost products with good performance, though not as high as its premium offerings [29][30] Question: Risk of Small Satellites Cannibalizing Existing Business - While there is potential for small satellites to impact the traditional satellite business, the company believes there will still be demand for high-precision timing and frequency hardware in certain applications [33][34] Question: Revenue Growth and Backlog Correlation - Revenue growth is expected to track qualitatively with backlog growth, though not instantaneously [40] Question: Technical Challenges in Developing Small Satellite Products - The primary challenge is adapting terrestrial products to survive in the space environment, particularly dealing with radiation effects in low Earth orbit [43][46] Question: Government Budgetary Environment - The company is optimistic about the new administration and expects the government fiscal year 2025 budget to be passed expeditiously, which would benefit space-related funding [51] Question: Gross Margins and R&D Spending - Gross margins reached 48%, and R&D spending is expected to remain at approximately 10% of revenue for the foreseeable future [56][57] Question: Quantum Sensor Revenue - Quantum sensor revenue is not significant in the current quarter but is a focus area for future growth [58] Question: Non-Space Government Business Recovery - The company anticipates variability in non-space government business but expects significant growth, though timing is uncertain [75] Question: GEO Contract Prospects - The company expects significant work in GEO contracts over the next six to nine months, with proposals out to multiple primes [80] Question: Zyfer Unit Performance and R&D Priorities - The Zyfer unit is performing well, with R&D focused on smaller, cheaper products and integrating navigation capabilities in the absence of GPS [86][87]

Financial Performance - Revenues for Q2 FY2025 were approximately $15.8 million, a 16.1% increase from $13.6 million in Q2 FY2024[3] - Operating income for Q2 FY2025 was $2.6 million, compared to $0.9 million in Q2 FY2024, reflecting a significant growth of 188.9%[3] - Net income for Q2 FY2025 was $2.7 million or $0.28 per diluted share, up from $0.8 million or $0.08 per diluted share in Q2 FY2024[3] - Gross margins for Q2 FY2025 were 48%, reflecting successful operational improvements[4] - Net cash provided by operating activities was approximately $2.4 million in the first half of FY2025, a turnaround from net cash used in operations of $3.0 million in the same period of FY2024[9] - The company remains debt-free and has paid two special dividends over the past two years, indicating strong financial health[5] Revenue Composition - Revenues from satellite payloads accounted for approximately 59% of consolidated revenues in Q2 FY2025, up from 35% in Q2 FY2024[6] - Revenues from non-space U.S. Government/DOD customers decreased to 37% of consolidated revenues in Q2 FY2025, down from 60% in Q2 FY2024[7] Backlog and R&D - The backlog reached an all-time high of $81 million as of October 31, 2024, compared to $70 million at the end of Q1 FY2025[4] - Internal R&D expenditures increased to 10% of revenue in FY2025, supporting competitive positioning in the quantum sensors market[5]

Financial Data and Key Metrics - Revenue for Q1 FY2025 increased by 22% to $15.1 million compared to $12.4 million in the same period last year [3][9] - Operating income improved by 15% to $2.4 million compared to $2.1 million in the prior fiscal year [3][12] - Gross margin reached its highest level in 24 years, driven by increased revenue and resolved technical challenges [11] - R&D expenses increased to $1.5 million (10% of revenue) from $506,000 (4% of revenue) in the prior year, primarily due to product modernization efforts [12] - Net income for Q1 FY2025 was $2.4 million ($0.25 per share) compared to $2 million ($0.22 per share) in the same period last year [14] Business Line Performance - Revenue from commercial and U.S. Government satellite programs increased to $8.3 million (55% of total revenue) from $4.9 million (39%) in the prior year [9] - Revenue from non-space U.S. Government and DOD customers decreased to $6.3 million (42% of total revenue) from $6.9 million (55%) in the prior year [9] - Other commercial and industrial revenues decreased to $544,000 from $672,000 in the prior year [10] Market Performance - The company continues to win significant production contracts in space, navigation, secure communication, and timing markets, with healthy margins expected [4] - Initial contracts have been secured for low-cost synchronization systems for proliferated satellite programs, indicating success in the growing small satellite market [5] - The company is attracting external funding for quantum sensor development, particularly in quantum magnetometer applications [6] Strategic Direction and Industry Competition - The company is focusing on disciplined growth in its core business while investing in new technologies like quantum sensors and low-cost satellite systems [8] - A quantum sensor summit is being sponsored in New York City to foster collaboration and maintain U.S. leadership in quantum technology [7] - The company is well-positioned to transition quantum technologies from laboratory to real-world applications, leveraging its expertise in atomic clock technologies [6][42] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about continued revenue, profit, and margin growth, supported by a historically high backlog of $70 million [3] - The company is cautiously optimistic about its participation in proliferated satellite programs, despite the inherent risks of government funding phases [37][38] - Management highlighted the importance of maintaining high gross margins on core heritage business while managing expectations for newer programs [22] Other Important Information - The company has a strong working capital position of $21 million and is debt-free, with adequate liquidity for the next 12 months and beyond [14] - The fully funded backlog at the end of July 2024 was $70 million, down from $78 million at the end of the previous fiscal year [14] Q&A Session Summary Question: Involvement in MEMS technology and DARPA Chip-Scale Atomic Clock work - The company utilizes MEMS technology in some products but does not internally develop it, focusing instead on high-performance applications [16] - The company is not currently involved in DARPA's Chip-Scale Atomic Clock work, though it has participated in past efforts [17] Question: R&D and SG&A expenses - R&D expenses are expected to fluctuate quarterly, with an annual estimate of $3 million to $4 million [18][19] - SG&A expenses are expected to remain steady, with no significant increases anticipated [20] Question: Gross margins and capacity for growth - Gross margins are not expected to increase significantly, with the focus on maintaining high margins on core business [22] - The company has sufficient plant and equipment capacity but faces challenges in hiring skilled personnel to support growth [22] Question: Backlog and new contracts - The company anticipates replenishing its backlog with significant new business in the current and future quarters, particularly in satellite and non-satellite programs [24][25] Question: Quantum sensor development - The company is in the early stages of developing quantum sensor products, with a focus on transitioning laboratory technologies into real-world applications [42][43] - Potential applications include magnetic anomaly mapping for GPS-denied navigation and Rydberg sensors for compact microwave antennas [44][45] Question: Tax rate and unfunded backlog - The company expects a low single-digit tax rate for FY2025, primarily due to NOLs, with some exceptions due to California tax rules [33] - The unfunded backlog is significantly larger than the $70 million funded backlog, but the company does not disclose specific figures due to its unpredictability [29]

MITCHEL FIELD, N.Y., Sept. 10, 2024 (GLOBE NEWSWIRE) -- Frequency Electronics, Inc. ("FEI" or the "Company") (NASDAQ-FEIM) is reporting revenues for the first quarter ended July 31, 2024, of approximately $15.1 million, compared to revenues of $12.4 million, for the same period of fiscal year 2024, ended July 31, 2023. Operating income for the first quarter of fiscal year 2025 was $2.4 million compared to operating income of $2.1 million for the same period of fiscal year 2024. Net Income from operations wa ...