Frequency Electronics (FEIM) Q3 2026 earnings summary

Executive summary

• Third quarter revenue was $16.9 million, flat sequentially but down from $18.9 million year-over-year, with nine-month revenue at $47.8 million, both among the highest in a decade but below prior year periods due to contract timing and lower satellite program revenues.

• Net income for the quarter was $1.6 million ($0.16 per share), and $4.0 million ($0.41 per share) for nine months, both significantly below the prior year due to lower satellite revenues and higher SG&A expenses.

• Backlog reached a record $83 million at quarter end, up from $70 million at April 30, 2025, with new awards expected to push it toward or above $100 million soon.

• Two new contracts totaling approximately $45 million were secured, spanning both traditional and proliferated satellite markets, among the largest in company history.

• Company maintains strong positioning in traditional and next-generation space and defense markets, including quantum sensing and alternative navigation programs.

Financial highlights

• Revenue for the quarter was $16.9 million, down from $18.9 million year-over-year, and $47.8 million for nine months, down 4% year-over-year.

• Gross margin for the quarter was 39.2%, down from 43.8% in the prior year, with gross margin and rate declining due to a shift from high-margin satellite programs to lower-margin, non-recurring engineering projects.

• Operating income was $1.3 million for the quarter and $3.3 million for nine months, both lower year-over-year.

• SG&A expenses increased to 21% of revenue from 18% year-over-year, with a 12.3% increase for the nine months; R&D expenses were $4.1 million for nine months, or 10% of revenue.

• Cash and cash equivalents at quarter end were $86,000, with over $11 million collected after quarter-end, and stockholders’ equity increased to $60.2 million.

Outlook and guidance

• Management anticipates additional contract awards of similar magnitude in both traditional and new business lines within the calendar year.

• Expects backlog to surpass $100 million soon as new contracts are added, with 69% of current backlog expected to be realized in the next twelve months.

• Gross margin expected to improve over time as higher-rate unit production and follow-on business increase.

• Optimistic about significant revenue growth from the TURbO product line and expansion in quantum sensing, ALT-PNT, and proliferated satellite applications.

• Liquidity is considered adequate for both short- and long-term needs, with no debt.