Shares of Frequency Electronics, Inc. FEIM have gained 10.4% because the firm reported its earnings for the quarter ended Jan. 31, 2025. This compares to the S&P 500 index’s 0.7% development over the identical timeframe. Over the previous month, the inventory has declined 7.5% in contrast with the S&P 500’s 8.5% lower.
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Frequency Electronics delivered a sturdy monetary efficiency for its third quarter of fiscal 2025, with web earnings of $1.60 per share, a major enhance from 1 cent within the prior-year quarter.
Revenues reached $18.9 million, a 38% enhance from $13.7 million within the prior-year interval.
The corporate reported working earnings of $3.5 million within the fiscal third quarter, a major enchancment from the $0.5 million working loss within the prior yr. Web earnings noticed an much more substantial enhance, reaching $15.4 million within the fiscal third quarter in comparison with $0.1 million within the year-ago interval.
Frequency Electronics, Inc. Value, Consensus and EPS Shock
Frequency Electronics, Inc. price-consensus-eps-surprise-chart | Frequency Electronics, Inc. Quote
Key Enterprise Metrics
Gross margin improved considerably, climbing to 44% for the quarter from 23% within the prior-year quarter. This enchancment was largely pushed by income development within the firm’s core enterprise areas and the profitable execution of high-margin contracts.
Revenues from satellite tv for pc payloads surged to $11.2 million (59% of complete income) within the third quarter of fiscal 2025, up from $6.8 million (50%) within the year-ago interval. In distinction, non-space U.S. Authorities and Division of Protection revenues declined to $7.4 million within the fiscal third quarter from $6 million a yr earlier. Industrial and industrial income additionally noticed a decline, totaling $0.4 million within the fiscal third quarter, down from $0.9 million in fiscal 2024.
The corporate’s backlog stood at $73 million as of Jan. 31, 2025, in comparison with $78 million on the finish of fiscal 2024, indicating continued demand for its merchandise.
Administration Commentary and Strategic Outlook
CEO Thomas McClelland expressed optimism in regards to the firm’s trajectory, highlighting robust development in core companies and continued demand for FEIM’s expertise. He famous that the quarter marked FEIM’s highest revenues in a decade, pushed by the completion of key program milestones and the conversion of a traditionally excessive backlog into revenues.
Trying forward, the corporate stays centered on increasing its presence in proliferated satellite tv for pc applications and quantum sensing. Administration anticipates further contract wins over the subsequent few quarters, although it acknowledged potential delays in authorities funding and contract awards resulting from federal workforce reductions.
Funding in R&D and Aggressive Positioning
Analysis and improvement (R&D) spending elevated considerably, reaching $1.4 million for the third quarter of fiscal 2025, up from $1 million within the prior yr. This represented 8% of revenues in comparison with 7% within the prior-year quarter. The elevated R&D funding helps the corporate’s initiatives in proliferated satellites and quantum sensing, positioning it for future development in high-tech protection and house functions.
FEIM is growing quantum sensors, together with magnetometers for GPS-denied navigation and submarine detection and Rydberg sensors for superior radio frequency functions. These new applied sciences are anticipated to generate significant revenues over time, although no merchandise have been commercialized but.
Monetary Place and Liquidity
FEIM maintained a powerful monetary place, remaining debt-free with a working capital of roughly $27 million as of Jan. 31, 2025. The corporate’s money stability declined to $5.5 million from $18.3 million at fiscal year-end, primarily because of the fee of a $9.6 million particular dividend within the second quarter of fiscal 2025 and the timing of billings and income assortment.
Regardless of the money decline, administration expressed confidence within the firm’s liquidity, emphasizing that it has adequate assets to help ongoing operations and strategic investments.
Different Developments
Throughout the quarter, FEIM continued to strengthen its workforce and technological capabilities. Administration famous an bettering expertise acquisition surroundings, significantly in government-related analysis roles, as federal uncertainty has led some scientists to discover private-sector alternatives.
The corporate can be actively engaged in bidding for contracts with the House Growth Company and is working to adapt its current expertise to be used in radiation-heavy house environments. Whereas FEIM faces competitors from trade gamers reminiscent of Microchip’s Chip-Scale Atomic Clock, administration believes that its experience in high-stability, high-performance timing options offers it a aggressive edge within the proliferated satellite tv for pc market.
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