Frequency Electronics(US:FEIM)2023-07-14 21:44Financial Data and Key Metrics Changes - For the three months ending April 30, 2023, the company reported a tax provision of $68,000 compared to a $3,000 tax benefit for the same period of the prior fiscal year [1] - Consolidated net income for the three months ending April 30, 2023, was approximately $246,000 or $0.03 per share compared to an approximately $6.8 million loss or $0.74 per share for the same period of the previous fiscal year [1] - Revenue increased from $17.2 million during the first half of fiscal 2023 to $23.6 million during the second half of fiscal 2023 [47] - Gross profit percentage went from 2% in the first half of fiscal 2023 to 31.8% in the second half of fiscal 2023 [47] - Operating income loss improved from $5.4 million in the first half of fiscal 2023 to an operating income of $717,000 in the second half of fiscal 2023 [47] Business Line Data and Key Metrics Changes - Revenue from commercial and U.S. government satellite programs was approximately $5.1 million or 39% of consolidated revenue compared to $5.2 million or 51% of consolidated revenue in the same period of the prior fiscal year [48] - Revenue on satellite payload contracts is recognized primarily under the percentage of completion method and is recorded only in the FEI-New York segment [48] - Commercial and industrial revenue was approximately $563,000 compared to approximately $249,000 in the prior fiscal year [49] - R&D expense for the three months ending April 30, 2023, decreased to approximately $658,000 from $1.1 million for the three months ending April 30, 2022 [69] Market Data and Key Metrics Changes - Revenues from non-space U.S. government and DOD customers were $7.3 million compared to $4.7 million in the same period of the prior fiscal year, accounting for approximately 56% of consolidated revenue compared to 46% for the prior fiscal year [67] - The fully funded backlog at the end of April 2023 was approximately $56 million compared to $40 million for the previous fiscal year ended April 30, 2022 [52] Company Strategy and Development Direction - The company plans to significantly increase R&D funding over the next couple of years and is actively pursuing external funding for development efforts [4] - The company is focusing on improving performance and lowering costs in the position, navigation, and timing arena through collaboration with major customers [43] - The company anticipates continued growth in both commercial and government satellite businesses, despite the challenging economic and geopolitical environment [64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in significant revenue growth and profitability based on existing contracts and anticipated new contracts [5] - The company remains debt-free with a strong balance sheet to fund future growth opportunities [64] - Management acknowledged the challenges posed by inflation and supply chain issues but noted improvements in lead times for parts [99] Other Important Information - The Zyfer division has made a dramatic comeback, with a small overall operating loss of about $160,000 in fiscal year 2023 compared to an operating loss of over $2 million in fiscal year 2022 [44] - The company has regrouped after layoffs and is seeing positive results from cost-cutting efforts and management reorganization [46] Q&A Session Summary Question: What is the company's outlook on self-funding growth opportunities? - Management indicated that the company is now able to self-fund growth opportunities following the transition to profitability [91] Question: How much of the backlog is deliverable in fiscal 2024? - Management stated that it is difficult to estimate, but there are several major programs anticipated in the near future [94][95] Question: What are the principal learnings from the past year? - Management emphasized the importance of attention to detail and the need to pursue new business opportunities profitably [121][122] Question: How is the company addressing the challenges of part delays and inflation? - Management noted that while challenges remain, there have been improvements in lead times for parts, which is encouraging [99]