Frequency Electronics, Inc.

For the 3 months ended July 31, 2026, revenue was $23.5 million, up 70% year over year and 52% sequentially. Gross margin was 45.8%, operating margin was 22%, operating income was $5.2 million versus $364 thousand a year ago, pretax income was about $5.2 million versus about $557 thousand, and net income was approximately $4.2 million, or $0.41 per share, versus $634 thousand, or $0.07 per share, in the prior-year period. Backlog ended the quarter at approximately $129 million versus $111 million at April 30, 2026 and $71 million a year ago. Looking ahead, management said it remains confident in reaching or exceeding its $150 million annual revenue target by fiscal 2029, and noted the July capital raise could help it reach that target sooner and potentially make it larger; no next-quarter revenue or EPS guide was provided.

Thomas McClelland struck a confident, expansion-oriented tone, calling the quarter a proof point for the company’s return to growth. He emphasized multiple long-term demand drivers: stronger satellite activity, missile replenishment and battery demand, secure communications, proliferated LEO and classified satellites, quantum sensing, and possible submarine/naval uses for its advanced clocks. He also said the company will stay disciplined on margins and avoid chasing business that would force it into overly aggressive schedules or lower returns.

Steven Bernstein focused on the financial step-up from higher volume and operating leverage. He said revenue from commercial and U.S. government communication satellite programs was $11.8 million, non-space U.S. government DoD revenue was $11.1 million, and other commercial industrial revenue was $605 thousand; the higher revenue base drove gross margin and a 9-point gross margin-rate improvement versus last year. He also cited SG&A at about 18% of revenue versus 26% a year ago, operating income of $5.2 million, net income of $4.2 million or $0.41 per share, working capital of about $90 million, a current ratio of about 5.3-to-1, and a debt-free balance sheet. He noted the July secondary added about $73 million, including about $14 million from the green shoe after quarter-end, and that liquidity is adequate for the next 12 months and the foreseeable future.

Analysts focused on Turbo, backlog visibility, production ramp capacity, proliferated LEO, gross margin durability, and end-market penetration beyond traditional space customers. Management said Turbo is just beginning production-rate deliveries, currently in manned aircraft with drone and space uses under discussion, and that the company is ramping production but is not willing to accept unrealistically aggressive customer schedules. On proliferated satellites, management said it is moving from demonstrating capabilities into initial production and that activity is increasing every day; it also said the current quarter’s book-to-bill was about 1.76-to-1 and that about 65% of backlog is within 12 months. Management also said internal R&D should stay under 10% of revenue, prefers externally funded R&D, and is open to considering a small cash dividend in the future.