Frequency Electronics, Inc. (“FEI” or the “Company”) (NASDAQ-FEIM)
is reporting revenues for the three- and nine-month periods of
fiscal 2023, ended January 31, 2023, of approximately $10.6 million
and $27.8 million, respectively, compared to revenues of $12.2
million and $38.1 million, respectively, for the same periods of
fiscal 2022, ended January 31, 2022. Operating income for the third
quarter of fiscal 2023 was $325,000 compared to an operating loss
of $721,000 for the same period of fiscal 2022. Operating loss for
the nine months ended January 31, 2023 was $5.1 million compared to
an operating loss of $2.1 million for the nine months ended January
31, 2022. Net loss from operations for the three and nine months
ended January 31, 2023 was $316,000 or ($0.03) per diluted share
and $5.7 million or ($0.62) per diluted share, respectively,
compared to a net loss of $735,000 or ($0.08) per diluted share for
the three months ended January 31, 2022 and a net loss of $1.8
million or ($0.20) per diluted share for the nine months ended
January 31, 2022.
FEI President and CEO, Tom McClelland commented,
“In the third quarter of fiscal 2023 we began to see the results of
the cost cutting efforts and management reorganization which has
taken place over the last seven months. Revenue and gross margin
have increased substantially quarter over quarter for the
three-month period ended January 31, 2023 compared to the
three-month period ended October 31, 2022, and the Company is
reporting an operating profit for the third quarter. FEI’s backlog
remains strong at quarter end, substantiating our confidence in the
growth of our primary markets. Both commercial and government
satellite businesses continue to show signs of sustained
double-digit growth going forward. Although we still experience
supply chain issues and the effects of inflation, we do see a
definite easing of these problems. Continued vigilance is required
to navigate the challenging economic and geopolitical environment,
but we are nonetheless confident that we are progressing in a
positive direction, and look forward to more improvement in
operating results. The Company is committed to moving towards
sustained profitability and cash generation going forward. Further,
we remain debt free with a strong balance sheet to fund future
growth opportunities.”
Fiscal Year 2023 Selected Financial
Metrics and Other Items
- For the three and nine months ended
January 31, 2023, revenues from satellite payloads were
approximately $5.0 million, or 47%, and $12.8 million, or 46%,
respectively, of consolidated revenues compared to approximately
$7.5 million, or 62%, and $20.9 million, or 55%, respectively, for
the same periods of the prior year.
-
For the three and nine months ended January 31, 2023, revenues for
non-space U.S. Government/DOD customers were approximately $5.0
million, or 47%, and $13.0 million, or 47%, respectively, of
consolidated revenues compared to approximately $4.3 million, or
35%, and $14.9 million, or 39%, respectively, for the same periods
of the prior year.
-
For the three and nine months ended January 31, 2023, revenues from
other commercial and industrial sales accounted for approximately
$652,000, or 6%, and $2.0 million, or 7%, respectively, of
consolidated revenues compared to approximately $405,000, or 3%,
and $2.4 million, or 6%, respectively, for the same periods of the
prior year.
-
Net cash provided by operating activities for the nine months ended
January 31, 2023 was approximately $1.9 million and net cash
provided by operating activities for the nine months ended January
31, 2022 was approximately $4.0 million.
-
Backlog at January 31, 2023 was approximately $54 million, compared
to $40 million at April 30, 2022.
-
In the three months ended January 31, 2023, all three entities had
operating income. Additionally, FY23Q3 vs FY23Q2 showed a
substantial change in performance. During the three months ended
January 31, 2023, sales increased $1.7M or 18.7% compared to last
quarter, gross margin rate increased from 3.9% last quarter to
32.6% during the current quarter, and finally the Company went from
a $2.2 million operating loss last quarter to $325,000 of operating
income during the current quarter.
-
The Company paid a special cash dividend, at $1.00 per share of
common stock, of $9.4 million on January 26, 2023, which was
declared by our Board of Directors on December 20, 2022.
-
Named Tom McClelland permanent President and CEO on January 17,
2023
Investor Conference Call
As previously announced, the Company will hold a
conference call to discuss these results on Thursday, March 09,
2023, at 4:30 PM Eastern Time. Investors and analysts may access
the call by dialing 1-888-506-0062. International callers may dial
1-973-528-0011. Callers should provide participant
access code: 651854 or ask for the Frequency Electronics conference
call.
The archived call may be accessed by calling
1-877-481-4010 (domestic), or 1-919-882-2331 (international), for
one week following the call (replay passcode: 47819. Subsequent to
that, the call can be accessed via a link available on the
company’s website through June 9, 2023.
About Frequency Electronics
Frequency Electronics, Inc. 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. Frequency’s products are used in
satellite payloads and in other commercial, government and military
systems including C4ISR and electronic warfare, missiles, UAVs,
aircraft, GPS, secure communications, energy exploration and
wireline and wireless networks. Frequency has received over 100
awards of excellence for achievements in providing high performance
electronic assemblies for over 150 space and DOD programs. The
Company invests significant resources in research and development
to expand its capabilities and markets.
Frequency’s Mission Statement: “Our mission is
to provide precision time and low phase noise frequency generation
systems from 1 Hz to 50 GHz, for space and other challenging
environments.”
Subsidiaries and Affiliates: FEI-Zyfer provides
GPS and secure timing ("SAASM") capabilities for critical military
and commercial applications; FEI-Elcom Tech provides Electronic
Warfare (“EW”) sub-systems and state-of-the-art RF microwave
products. Additional information is available on the Company’s
website: www.frequencyelectronics.com
Forward-Looking Statements
The statements in this press release regarding
future earnings and operations and other statements relating to the
future constitute “forward-looking” statements pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or
contribute to such differences include but are not limited to, the
risks associated with health epidemics and pandemics, including the
COVID-19 pandemic and similar outbreaks, such as their impact on
our financial condition and results of operations and on our
ability to continue manufacturing and distributing our products,
and the impact of health epidemics and pandemics on general
economic conditions, including any resulting recession, our
inability to integrate operations and personnel, actions by
significant customers or competitors, general domestic and
international economic conditions, reliance on key customers,
continued acceptance of the Company’s products in the marketplace,
competitive factors, new products and technological changes,
product prices and raw material costs, dependence upon third-party
vendors, competitive developments, changes in manufacturing and
transportation costs, the availability of capital, and the outcome
of any litigation and arbitration proceedings. The factors listed
above are not exhaustive and should be read in conjunction with the
other cautionary statements that are included in this release and
in our filings with the Securities and Exchange Commission. The
Company’s Annual Report on Form 10-K and Form 10-K/A for the fiscal
year ended April 30, 2022, filed on July 14, 2022 and December 20,
2022, respectively, with the Securities and Exchange Commission
includes additional factors that could materially and adversely
impact the Company’s business, financial condition and results of
operations, as such factors are updated from time to time in our
periodic filings with the Securities and Exchange Commission, which
are accessible on the Securities and Exchange Commission’s website
at www.sec.gov. Moreover, the Company operates in a very
competitive and rapidly changing environment. New factors emerge
from time to time and it is not possible for management to predict
the impact of all these factors on the Company’s business,
financial condition or results of operations or the extent to which
any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements. Given these risks and uncertainties, investors should
not rely on forward-looking statements as a prediction of actual
results. Any or all of the forward-looking statements contained in
this press release and any other public statement made by the
Company or its management may turn out to be incorrect. The Company
expressly disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
Contact
information: |
Dr. Thomas
McClelland, President and Chief Executive Officer; |
|
Steven Bernstein, Chief Financial Officer; |
TELEPHONE: (516) 794-4500 ext.5000
WEBSITE: www.freqelec.com
Frequency Electronics, Inc. and
SubsidiariesCondensed Consolidated Statements of
Operations(in thousands except per share
data)
|
Three Months Ended |
|
Nine Months Ended |
|
January 31, |
January 31, |
|
(unaudited) |
(unaudited) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues |
$ |
10,620 |
|
|
$ |
12,245 |
|
|
$ |
27,773 |
|
|
$ |
38,136 |
|
Cost of Revenues |
|
7,155 |
|
|
|
9,005 |
|
|
|
23,963 |
|
|
|
26,744 |
|
Gross Margin |
|
3,465 |
|
|
|
3,240 |
|
|
|
3,810 |
|
|
|
11,392 |
|
Selling and
Administrative |
|
2,357 |
|
|
|
2,832 |
|
|
|
6,383 |
|
|
|
9,637 |
|
Research and Development |
|
783 |
|
|
|
1,129 |
|
|
|
2,492 |
|
|
|
3,861 |
|
Operating income (loss) |
|
325 |
|
|
|
(721 |
) |
|
|
(5,065 |
) |
|
|
(2,106 |
) |
Interest and Other, Net |
|
(638 |
) |
|
|
(13 |
) |
|
|
(676 |
) |
|
|
296 |
|
Loss before Income Taxes |
|
(313 |
) |
|
|
(734 |
) |
|
|
(5,741 |
) |
|
|
(1,810 |
) |
Provision for Income
Taxes |
|
3 |
|
|
|
1 |
|
|
|
6 |
|
|
|
3 |
|
Net loss |
$ |
(316 |
) |
|
$ |
(735 |
) |
|
$ |
(5,747 |
) |
|
$ |
(1,813 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
$ |
(0.03 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.62 |
) |
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
9,349 |
|
|
|
9,279 |
|
|
|
9,328 |
|
|
|
9,257 |
|
Frequency Electronics, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets(in thousands)
|
|
January 31, 2023 |
|
|
April 30, 2022 |
|
|
(unaudited) |
|
|
(As Revised) |
ASSETS |
|
|
|
|
|
Cash & Marketable Securities |
$ |
12,854 |
|
$ |
21,525 |
Accounts Receivable, net |
|
5,129 |
|
|
4,291 |
Contract Assets |
|
8,266 |
|
|
8,857 |
Inventories, net |
|
20,562 |
|
|
19,906 |
Other Current Assets |
|
1,154 |
|
|
1,431 |
Property, Plant & Equipment, net |
|
7,733 |
|
|
8,564 |
Other Assets |
|
11,800 |
|
|
11,381 |
Right-of-Use Assets – Operating Leases |
|
7,745 |
|
|
8,805 |
|
$ |
75,243 |
|
$ |
84,760 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Lease Liability - current |
$ |
1,751 |
|
$ |
1,744 |
Contract Liabilities |
|
18,737 |
|
|
11,098 |
Other Current Liabilities |
|
7,630 |
|
|
9,019 |
Other Long-term Obligations |
|
8,490 |
|
|
8,858 |
Operating Lease Liability – non-current |
|
6,261 |
|
|
7,353 |
Stockholders’ Equity |
|
32,374 |
|
|
46,688 |
|
$ |
75,243 |
|
$ |
84,760 |
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