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Frequency Electronics Q1 Earnings Rise Y/Y on Satellite Payload Growth

Frequency Electronics, Inc. FEIM reported earnings per share of 25 cents for the first quarter of fiscal 2025, up from 22 cents in the same quarter of fiscal 2024.

Revenues increased 22% year over year, reaching $15.1 million compared to $12.4 million a year earlier.

Frequency Electronics delivered a strong first quarter for fiscal 2025, characterized by revenue growth, margin expansion, and disciplined financial management. While government revenues showed some relative weakness, the performance in satellite payloads and the overall backlog point to a positive outlook for the remainder of the year.

Frequency Electronics, Inc. Price, Consensus and EPS Surprise

Frequency Electronics, Inc. Price, Consensus and EPS Surprise
Frequency Electronics, Inc. Price, Consensus and EPS Surprise

Frequency Electronics, Inc. price-consensus-eps-surprise-chart | Frequency Electronics, Inc. Quote

FEIM’s Quarterly Performance Overview

Operating income rose to $2.4 million, a 15% increase from $2.1 million in the prior-year quarter. Net income similarly improved to $2.4 million, up from $2 million.

Frequency Electronics’ gross margin increased from $4.9 million in the first quarter of fiscal 2024 to $6.7 million in the first quarter of fiscal 2025. This expansion in margin can be attributed to better cost control and increased efficiencies within the production process.

Selling and administrative expenses grew to $2.8 million, up from $2.3 million in the prior-year quarter. However, research and development (R&D) expenses also increased, from $0.5 million to $1.5 million, reflecting greater investment in innovation and product development. This increased R&D spending is likely aimed at maintaining the company’s competitive edge, particularly in space-related technologies and advanced RF control systems.

The company ended the quarter with a backlog of $70 million, down from $78 million at the end of fiscal 2024, yet still significantly higher than previous years. This backlog reflects a historically high level, providing strong visibility into future revenue streams.

Frequency Electronics’ Segment Performance

Satellite Payloads

Revenues from satellite payloads were a major contributor, accounting for $8.3 million, or 55% of total revenues compared with $4.9 million, or 39% in the prior-year period. This significant increase underscores the strong demand for Frequency Electronics’ space-related products.

Non-space U.S. Government/Department of Defense (DOD) Customers

Revenues from non-space government customers, including the DOD, totaled $6.3 million, representing 42% of total revenues. This marks a decline from $6.9 million (55%) in the same quarter of fiscal 2024. While still a key revenue driver, the relative decrease in government business may indicate a shift in product mix.

Other Commercial and Industrial Sales

Revenues from other commercial and industrial sales saw a slight dip, falling to $0.5 million (4% of revenue) from $0.7 million (5%) a year ago.

FEIM’s Balance Sheet Position (As of July 31, 2024)

Frequency Electronics ended the quarter with $16.2 million in cash and cash equivalents, down from $18.3 million at the end of fiscal 2024. Total assets increased slightly to $84.3 million from $83.3 million over the same period.

Contract liabilities decreased from $21.6 million at the end of fiscal 2024 to $20.9 million. Other current liabilities fell to $6.8 million from $7.5 million in fiscal 2024. Meanwhile, other long-term obligations remained stable at $8.1 million.

Stockholders' equity dropped significantly to $33.2 million from $39.8 million at the end of fiscal 2024.

Cash Flows for FEIM

Net cash used in operations came in at $1.5 million in the first quarter of fiscal 2025, while the metric amounted to $2.8 million in the prior-year quarter.

FEIM’s Management Guidance

The CEO expressed optimism about continued growth in new business during fiscal 2025, supported by the company’s competitive product offerings and a favorable market environment.

Other Developments for Frequency Electronics

A significant development in the quarter was the announcement of a special cash dividend of $1.00 per share, paid on Aug. 29, 2024. The total payout amounted to approximately $9.6 million. This dividend highlights the company's commitment to returning capital to shareholders.

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