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]
Frequency Electronics(FEIM) - 2025 Q2 - Quarterly Report