Frequency Electronics(US:FEIM)2025-12-11 22:32Financial Data and Key Metrics Changes - The company reported revenue of $17.1 million for the second quarter, up 24% sequentially, marking the third highest quarter of revenue in the past decade [3][12] - Consolidated net income for the quarter was approximately $1.8 million, or $0.18 per share, compared to approximately $2.7 million, or $0.28 per share for the same period of the previous fiscal year [17] - The fully funded backlog at the end of October 2025 was approximately $82 million, up from approximately $70 million for the previous fiscal year [18] Business Line Data and Key Metrics Changes - Revenue from commercial and U.S. government satellite programs was approximately $4.6 million, or 27%, down from $9.4 million, or 59%, in the same period of the prior fiscal year [12] - Revenue from non-space U.S. government and Department of Defense customers was $11.9 million, accounting for approximately 69% of consolidated revenue, compared to 37% for the prior fiscal year [13] Market Data and Key Metrics Changes - The company anticipates significant growth in sectors such as quantum sensing, proliferated satellites, and alternative position navigation and timing (ALT-PNT) programs, which are expected to contribute to future revenue growth [5][6] - The defense business is experiencing a boom, with increased spending anticipated in missiles, munitions, and modernization initiatives [9] Company Strategy and Development Direction - The company is focusing on expanding its core business while also pursuing new growth opportunities in emerging markets [7] - Strategic partnerships with major prime contractors are crucial for current and future business, providing an advantageous position on many programs [8] - The company is actively hiring senior scientists in Colorado to enhance its capabilities in quantum technology and low-phase noise oscillator technology [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a strong multi-year growth period, supported by a significant backlog and ongoing business development [3][10] - The company believes that defense spending will remain robust regardless of political changes, driven by global security concerns [59] Other Important Information - The company is debt-free and maintains a strong working capital position of approximately $31 million, with a current ratio of approximately 2.6-1 [18] - The company plans to continue investing in R&D to keep its products at the state of the art, despite fluctuations in R&D expenditures [16] Q&A Session Summary Question: Can you provide details on the Golden Dome Awards? - Management indicated that specifics are still being defined, but they anticipate participation in various aspects of the program, particularly in ground-based and space-based missile defense [22][24] Question: What activities are ongoing in Colorado? - The focus in Colorado is on quantum technology and low-phase noise oscillator development, with several senior scientists hired from NIST [25][26] Question: Will margins normalize in the near term? - Management confirmed that they expect margins to normalize as program requirements have been cleared up and new contracts are anticipated [36] Question: How does the company view growth opportunities irrespective of political changes? - Management believes that growth in the space business is driven by technology rather than politics, and defense spending will likely remain stable due to global security concerns [58][59] Question: Is there potential for TURbO in commercial drones? - Management sees potential for TURbO in both military and commercial applications, but anticipates more immediate opportunities in military [63][64] Question: What is the status of international business? - The company has some significant business overseas and is actively pursuing additional opportunities, though export controls present challenges [71][72]