Frequency Electronics(FEIM) - 2026 Q1 - Quarterly Results

Press Release Overview This section provides an overview of Frequency Electronics' Q1 FY2026 financial results and the newly authorized share repurchase program Headline and Introduction Frequency Electronics, Inc. announced its financial results for the first quarter of fiscal year 2026 and authorized a new $20 million share repurchase program - Frequency Electronics, Inc. announced its financial results for the first quarter of fiscal year 2026[3] - The Company announced a $20 million share repurchase authorization[2][8] Key Financial Highlights (Q1 FY2026 vs Q1 FY2025) For the first quarter of fiscal year 2026, Frequency Electronics experienced declines in revenue, operating income, and net income compared to the prior year, but saw a significant improvement in net cash provided by operating activities and a slight increase in backlog Q1 FY2026 vs Q1 FY2025 Financial Summary (in millions) | Metric | Q1 FY2026 (approx.) | Q1 FY2025 | Change | | :--------------------------------- | :------------------ | :------------------ | :------------------ | | Revenue | $13.8 | $15.1 | -$1.3 | | Operating Income | $0.4 | $2.4 | -$2.0 | | Net Income from operations | $0.6 | $2.4 | -$1.8 | | Diluted EPS | $0.07 | $0.25 | -$0.18 | | Net cash from operating activities | $1.2 (provided) | $1.5 (used) | +$2.7 | | Backlog (as of July 31, 2025) | $71 | $70 (as of April 30, 2025) | +$1 | Management Commentary and Business Outlook This section details management's analysis of Q1 FY2026 performance, strategic initiatives for future growth, and commitment to shareholder returns Q1 FY2026 Performance Analysis CEO Tom McClelland attributed the Q1 FY2026 revenue and operating income declines to timing issues, including revenue pulled forward into Q4 FY2025 and customer-driven delays on key programs, emphasizing these are not cancellations and the underlying business fundamentals remain strong - Q1 FY2026 results reflect declines in revenue and operating income compared to both Q1 FY2025 and Q4 FY2025, primarily due to timing issues[5] - Declines were impacted by revenue booked in Q4 FY2025 that was previously expected in FY2026, and customer-driven delays on key programs, which are not cancellations[5] - The underlying fundamentals of the business remain strong, with an extremely encouraging overall outlook and confidence in an upward trajectory despite non-linear growth[5] Strategic Initiatives and Future Growth The company maintains a historically high backlog, is actively pursuing significant new programs in defense markets, and is investing in quantum sensing through a new Boulder facility and government R&D funding, with expectations for positive contributions by Q3 FY2026 - Backlog remains at a historically high level ($71 million), indicating future success[6] - Actively bidding on new programs, some significantly larger than typical contract wins, with follow-on potential over the next decade in space and non-space defense markets[6] - Opened an engineering facility in Boulder, Colorado, and hired senior scientists to support new initiatives in quantum sensing, anticipating positive bottom-line contributions by Q3 FY2026[6] - Pursuing external government funding for research and development, particularly in the large emerging market of quantum sensing[6] - Will host its second annual Quantum Sensing Summit in New York City in October to explore emerging technologies and reinforce leadership[7] Shareholder Return and Financial Strength FEI highlights its strong fundamentals, profitability in core technologies, and innovation investments, supported by a debt-free balance sheet. The company authorized a $20 million share repurchase program, equivalent to its last two special dividends, to return cash to shareholders and allow future value gains to accrue to equity holders - Strong fundamentals remain unchanged, with continued profitability in core technologies and active investment in innovation for long-term growth[8] - Maintains a debt-free balance sheet and leadership in position, navigation, and timing (PNT) in the industry[8] - Authorized a $20 million share repurchase program, reflecting balance sheet strength and belief in the company's outlook, and serving as an effective tool for rewarding shareholders[8] Company Information This section provides an overview of Frequency Electronics' business, its mission, and details regarding investor relations and legal disclosures About Frequency Electronics Frequency Electronics, Inc. (FEI) is a global leader in high-precision timing, frequency generation, and RF control products for space and terrestrial applications, serving commercial, government, and military sectors. The company is committed to transforming research discoveries into practical products and investing significantly in R&D - FEI is a world leader in the design, development, and manufacture of high precision timing, frequency generation, and RF control products for space and terrestrial applications[11] - Products are used in satellite payloads and various commercial, government, and military systems, including C4ISR, electronic warfare, missiles, UAVs, and GPS[11] - The company's mission is to transform research discoveries into practical, real-world products, building on a legacy of delivering unique precision time and frequency generation products[12] - FEI invests significant resources in research and development to expand its capabilities and markets[11] Investor Relations and Legal Disclosures The press release provides details for an upcoming investor conference call, refers to an 8-K filing for additional information, and includes standard forward-looking statements with associated risks and disclaimers - An investor conference call is scheduled for Thursday, September 11, 2025, at 4:30 PM Eastern Time to discuss the results[10] - Further information can be found in the 8-K filed after market close[9] - The press release contains forward-looking statements subject to inherent risks and uncertainties, and investors should not rely on them as predictions of actual results[13] Financial Statements This section presents the condensed consolidated statements of operations and balance sheets for Frequency Electronics Condensed Consolidated Statements of Operations For the three months ended July 31, 2025, Frequency Electronics reported a decrease in revenues, gross margin, operating income, and net income compared to the same period in 2024 Condensed Consolidated Statements of Operations (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :--- | | Revenues | $13,812 | $15,077 | -$1,265 | | Cost of revenues | $8,730 | $8,379 | +$351 | | Gross margin | $5,082 | $6,698 | -$1,616 | | Selling and administrative | $3,585 | $2,845 | +$740 | | Research and development | $1,133 | $1,488 | -$355 | | Operating income | $364 | $2,365 | -$2,001 | | Income before Income Taxes | $557 | $2,563 | -$2,006 | | Net income | $634 | $2,430 | -$1,796 | | Basic and diluted income per share | $0.07 | $0.25 | -$0.18 | | Weighted average shares outstanding (Basic and diluted) | 9,723 | 9,538 | +185 | Condensed Consolidated Balance Sheets As of July 31, 2025, total assets slightly decreased compared to April 30, 2025, primarily due to lower cash and contract assets, while inventories and accounts receivable increased. Stockholders' equity saw a modest increase Condensed Consolidated Balance Sheets (as of July 31, 2025 vs April 30, 2025, in thousands) | Asset/Liability | July 31, 2025 | April 30, 2025 | Change | | :----------------------------- | :------------ | :------------- | :----- | | Cash and cash equivalents | $4,512 | $4,720 | -$208 | | Accounts receivable, net | $7,440 | $5,914 | +$1,526 | | Contract assets | $14,213 | $17,914 | -$3,701 | | Inventories, net | $24,772 | $23,487 | +$1,285 | | Total Assets | $93,203 | $93,737 | -$534 | | Contract liabilities | $13,105 | $13,454 | -$349 | | Stockholders' equity | $56,319 | $55,620 | +$699 |