Frequency Electronics (FEIM) Q1 2027 earnings summary

Executive summary

• Achieved record quarterly revenue of $23.5 million, up 70% year-over-year and 52% sequentially, driven by strong growth in both FEI-NY and FEI-Zyfer segments.

• Funded backlog reached a record $129 million, up 82% year-over-year and 16% sequentially, reflecting robust order activity in core space and defense markets and expansion into new areas.

• Net income rose to $4.2 million ($0.41 per share), up from $0.6 million ($0.07 per share) in the prior year, reflecting higher sales and improved margins.

• Gross margin improved to 45.8% from 36.8% year-over-year, attributed to favorable product mix and operational efficiencies.

• Successfully completed a $73 million secondary stock offering, strengthening the balance sheet and enabling capacity expansion to meet increased customer demand.

Financial highlights

• Revenues: $23.5 million, up from $13.8 million year-over-year.

• Operating income rose to $5.2 million (22% of revenue), up from $0.4 million in the prior year period.

• Gross margin for the quarter was 45.8%, and operating margin was 22%, both showing substantial improvement.

• Cash and cash equivalents increased to $61.4 million as of July 31, 2026, up from $1.6 million at April 30, 2026.

• Working capital stood at $90 million with a current ratio of 5.3:1; company remains debt-free.

Outlook and guidance

• Confident in meeting or exceeding $150 million annual revenue by fiscal 2029, with potential to reach this target sooner due to capacity expansion.

• Approximately 67% of backlog is expected to convert to revenue within the next 12 months.

• Management expects internally generated cash to be adequate for R&D and operational needs.

• No significant upward or downward pressure on gross margins anticipated in the near term; disciplined bidding strategy to maintain profitability.

• Estimated annual effective tax rate for fiscal year ending April 30, 2027, is 24.9%.