Frequency Electronics, Inc. (“FEI” or the “Company”) (NASDAQ-FEIM)
reported revenues for the third quarter of fiscal 2020, which ended
January 31, 2020, of $9.6 million compared to $13.2 million in the
third quarter of fiscal 2019. Revenues for the nine months of
fiscal 2020 were $31.3 million compared to $36.3 million recorded
in the same period of the prior year. The Company recorded
operating loss of $1.6 million for the third quarter of fiscal
2020, compared to an operating loss of $394,000 in the third
quarter of fiscal 2019. Operating loss for the nine months of
fiscal 2020 was $7.3 million compared to operating loss of $540,000
in the nine months of fiscal 2019. Net loss for the third quarter
of fiscal 2020 was $1.6 million or ($0.17) per diluted share
compared to net loss of $321,000 or ($0.04) per diluted share for
the third quarter of the prior year. Net loss for the nine months
of fiscal 2020 was $7.1 million or ($0.78) per diluted share
compared the net loss of $168,000 or ($0.02) per diluted share for
the nine months of fiscal 2019.
FEI CEO, Stanton Sloane, commented on third
quarter results, “Our third quarter financials were impacted
principally by two issues. Firstly, by the termination of a problem
program that has been the source of persistent technical and
financial issues. Cleaning up this problem has been a focus for
some months and I am glad to now put it behind us. That said, I
have also instituted best practices to ensure we avoid this sort of
problem in the future.
“Revenue decreases, the second issue for the
quarter, resulted in large part from slippages in US Government
funding to prime contractors on space programs where we are a
potential supplier of frequency generation/conversion systems. On
several of these programs, the prime contractors have been awarded
the contracts, but they either were not yet fully funded or there
have been extended negotiations regarding the technical baselines,
resulting in delays of sub-contract awards, which of course, impact
the timing of our revenues. On some of these programs, FEI is in a
very strong position as the supplier of choice and it is simply a
matter of timing. I would add that the total value of potential new
business opportunities we are pursuing is approximately $660m. That
is the best leading indicator of future revenue and profit growth.
We have invested significant resources in R&D and
infrastructure to position the company to win more than our fair
share of these opportunities and I am confident that we will do
so.”
Fiscal 2020 Selected Financial Metrics
and Other Items
- For the nine months ended January
31, 2020 satellite related revenues, both for Government/DOD and
commercial end use were approximately $14.7 million compared to
$17.3 million for the same period of fiscal 2019. Commercial and
U.S. Government satellite payload programs accounted for
approximately 47% of consolidated revenues compared to 48% of
consolidated revenues for the same period of fiscal 2019.
- For the nine months ended January
31, 2020 sales for non-space related U.S. Government/DOD, end use
were $12.7 million compared to $17.1 million for the same period of
fiscal 2019. Sales for U.S. Government/DOD non-space end use
accounted for approximately 41% of consolidated revenues compared
to 47% of consolidated revenues for the same period of fiscal
2019.
- Sales for other commercial and
industrial applications were approximately $3.9 million for fiscal
2020 compared to $2.0 million for the same period of fiscal 2019.
Commercial and industrial applications accounted for approximately
12% of consolidated revenues, compared to 5% for the same period of
the prior year.
- Research and development expense
were $4.8 million for the nine months of fiscal 2020 compared to
$5.1 million for the same period of fiscal 2019.
- Backlog at the end of the quarter
ended January 31, 2020 was approximately $36 million. Subsequent to
quarter end the Company received over $3.5M in additional funding
on 2 existing contracts.
Investor Conference Call
As previously announced, the Company will hold a
conference call to discuss these results on Thursday, March 12,
2020, at 4:30 PM Eastern Time. Investors and analysts may access
the call by dialing 1-877-407-9205. International callers may dial
1-201-689-8054. 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), use
pin 33571 for one week following the call. Subsequent to that, the
call can be accessed via a link available on the company’s website
through June 12, 2020.
About Frequency Electronics
Frequency Electronics, Inc. is a world leader in
the design, development and manufacture of high precision timing,
frequency control and synchronization products for space and
terrestrial applications. Frequency’s products are used in
satellite payloads and in other government, military and
commercial, systems including C4ISR, EW, missiles, UAVs, aircraft,
secure communications, energy exploration and wireline and wireless
communication networks. With over one thousand systems delivered to
defense department and commercial customers, Frequency has received
more than 100 awards for excellence 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 sub-systems
for Electronic Warfare (“EW”) and state-of-the-art RF microwave
products. Additional information is available on the
Company’s website:
www.frequencyelectronics.com
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995:
The statements in this press release regarding
future earnings and operations and other statements relating to the
future constitute "forward-looking" statements within the meaning
of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1933 or the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The words
“believe,” “may,” “will,” “could,” “should,” “would,” “anticipate,”
“estimate,” “expect,” “project,” “intend,” “objective,” “seek”
“strive,” “might,” “likely result,” “build,” “grow,” “plan,”
“goal,” “expand,” “position,” or similar words, or the negatives of
these words, or similar terminology, identify forward-looking
statements. All statements by the Company that address activities,
events or developments that the Company expects or anticipates will
occur in the future, including all statements by the Company
regarding its expected financial position, revenues, cash flows and
other operating results, business position, legal proceedings or
similar matters, are forward-looking statements. These statements
are based on assumptions that the Company believes are reasonable,
but are subject to a wide range of risks and uncertainties, and a
number of factors could cause the Company’s actual results to
differ materially from those expressed in the forward-looking
statements referred to above. Factors that would cause or
contribute to such differences include, but are not limited to,
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, changes in contractual terms, the
availability of capital, and other risks detailed in the Company's
periodic report filings with the Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on
these forward-looking statements, which relate only to events as of
the date on which the statements are made and which reflect
management’s analysis, judgments, belief, or expectation only as of
such date. Any and all of the forward-looking statements contained
in this Form 10-Q and any other public statements 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 statement, whether as a result of new information,
future events or otherwise, except as required by
law. Contact information: Stanton Sloane, President,
Chief Executive Officer and Steven Bernstein, Chief Financial
Officer
TELEPHONE: (516) 794-4500
WEBSITE: WWW.FREQUENCYELECTRONICS.COM
Frequency Electronics, Inc. and
SubsidiariesCondensed Consolidated Statements of
Operations(in thousands except per share
data)(Unaudited)
|
Nine Months Ended January
31, |
|
Three Months Ended January
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
$ |
31,270 |
|
|
$ |
36,345 |
|
|
$ |
9,628 |
|
|
$ |
13,193 |
|
Cost of Revenues |
|
25,358 |
|
|
|
23,953 |
|
|
|
6,488 |
|
|
|
9,093 |
|
Gross Margin |
|
5,912 |
|
|
|
12,392 |
|
|
|
3,140 |
|
|
|
4,100 |
|
Selling and
Administrative |
|
8,362 |
|
|
|
7,838 |
|
|
|
3,619 |
|
|
|
2,657 |
|
Research and Development |
|
4,813 |
|
|
|
5,094 |
|
|
|
1,082 |
|
|
|
1,837 |
|
Operating Loss |
|
(7,263 |
) |
|
|
(540 |
) |
|
|
(1,561 |
) |
|
|
(394 |
) |
Interest and Other, Net |
|
265 |
|
|
|
410 |
|
|
|
34 |
|
|
|
133 |
|
Loss before Income Taxes |
|
(6,998 |
) |
|
|
(130 |
) |
|
|
(1,527 |
) |
|
|
(261 |
) |
Income Tax Benefit |
|
48 |
|
|
|
38 |
|
|
|
19 |
|
|
|
(60 |
) |
Net Loss |
$ |
(7,046 |
) |
|
$ |
(168 |
) |
|
$ |
(1,546 |
) |
|
$ |
(321 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
$ |
(0.78 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Shares
Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
9,059 |
|
|
|
8,899 |
|
|
|
9,104 |
|
|
|
8,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frequency Electronics, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets
|
January 31, 2020 |
|
April 30, 2019 |
|
(unaudited) |
|
|
|
|
|
|
|
(in thousands) |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash & Marketable Securities |
$ |
9,730 |
|
$ |
11,882 |
Accounts Receivable, Net |
|
4,073 |
|
|
6,362 |
Costs and Estimated Earnings |
|
|
|
|
|
in Excess of Billings, Net |
|
8,011 |
|
|
6,670 |
Inventories, Net |
|
23,487 |
|
|
23,356 |
Other Current Assets |
|
2,391 |
|
|
3,082 |
Current Assets Held for Sale |
|
- |
|
|
1,347 |
Property, Plant & Equipment, Net |
|
12,011 |
|
|
13,038 |
Right -of -Use Assets |
|
11,197 |
|
|
- |
CSV of Life Insurance |
|
14,821 |
|
|
14,292 |
Other Assets |
|
4,447 |
|
|
6,540 |
Non-Current Assets Held for Sale |
|
- |
|
|
202 |
|
$ |
90,168 |
|
$ |
86,771 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Lease liability, current |
$ |
2,059 |
|
$ |
- |
Other current liabilities |
|
5,931 |
|
|
4,759 |
Current Liabilities Held for Sale |
|
- |
|
|
1,078 |
Non-Current Lease Liability |
|
9,579 |
|
|
- |
Other Long-term Obligations |
|
15,774 |
|
|
15,592 |
Non-Current Liabilities Held for Sale |
|
- |
|
|
2,253 |
Stockholders’ Equity |
|
56,825 |
|
|
63,089 |
|
$ |
90,168 |
|
$ |
86,771 |
Frequency Electronics (NASDAQ:FEIM)
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Frequency Electronics (NASDAQ:FEIM)
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