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Frequency Electronics(FEIM) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the three months ended July 31, 2020, consolidated revenue was $13 million, up 3% compared to $12.6 million for the same period of the prior fiscal year [8] - The company recorded a net loss of $262,000 or $0.03 per diluted share, compared to a net loss of $591,000 or $0.07 per diluted share in the previous year [14] - The gross margin and gross margin rate both increased marginally over the same period in fiscal 2020, primarily due to product mix [10] Business Line Data and Key Metrics Changes - Revenue from commercial and U.S. government satellite programs was $6.7 million, accounting for approximately 51% of consolidated revenues, compared to 31% for the same period of the prior fiscal year [8] - Revenues from non-space U.S. Government and DOD customers were $5.3 million, accounting for approximately 41% of consolidated revenue, down from 54% in the prior fiscal year [9] - Other commercial and industrial revenues decreased to $1 million from $1.9 million in the prior fiscal year [9] Market Data and Key Metrics Changes - The fully funded backlog at the end of July 2020 was approximately $38 million, up approximately $2 million from the previous year-end [15] - The company believes that its liquidity is adequate to meet its operating and investing needs for the next 12 months and the foreseeable future [15] Company Strategy and Development Direction - The company is focusing on internal operational improvements and cost reductions, including the rollout of a new ERP system to streamline manufacturing and program management processes [7] - The company is well positioned to service the space market as the U.S. increases its focus there, leveraging over 50 years of experience in space operations [5] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the direction of the business and expects overall financial performance to continue to improve as programs are completed [4][7] - The company anticipates continuing growth in the space domain, particularly as it relates to U.S. military applications [5] Other Important Information - R&D expenses decreased to $1.2 million from $2.3 million, reflecting previous R&D efforts that have transitioned to production [12] - Selling and administrative costs increased to approximately 25% of consolidated revenue due to additional insurance costs and professional fees related to litigation [11] Q&A Session Summary Question: What is the current status of bids and nonfunded backlog? - The company does not report nonfunded backlog, only the funded backlog of approximately $38 million [18] - The total number of outstanding bids is around 600 to 625 [19] Question: Does the company participate in missile contracts? - Yes, the company provides various electronics, including small quartz oscillators, for missile contracts in addition to satellite contracts [20] Question: Are there expectations for multiple precision oscillator contracts? - The company hopes to see more contracts as they have several pending in the competitive process [22] Question: What percentage of funded backlog is expected to ship in the current fiscal year? - The company expects to ship between 70% and 80% of the funded backlog [36]