Frequency Electronics, Inc.

For the three months ended April 30, 2026, consolidated revenue was $15.4 million versus $19.9 million in the prior-year quarter. Full-year fiscal 2026 revenue decreased by approximately $6.6 million, or 9%, versus fiscal 2025. Management said adjusted for pre-revenue investments and non-recurring charges, gross margin would have been approximately 36% and operating margin approximately 1% for the quarter, and approximately 41% and 11% for the fiscal year. Forward-looking targets announced on the call include at least $150 million of revenue within three years, a minimum gross margin of 50% by fiscal 2029, and a minimum operating margin of 30% by fiscal 2029.

Thomas McClelland framed fiscal 2026 as a deliberate reset period and said the company is now positioned for a multi-year ascent. He emphasized backlog growth, a nearly 3x book-to-bill in Q4, and strong demand across proliferated satellites, space defense, quantum sensing, and defense timing applications. His tone was confident and highly optimistic, repeatedly stressing that the company is moving from bespoke, episodic production toward higher-rate manufacturing and that it has already won business in the new markets it is targeting.

Steven Bernstein highlighted that Q4 was a difficult comparison because the prior-year fourth quarter was the highest-revenue quarter in 25 years. He detailed the quarter’s $15.4 million of revenue versus $19.9 million last year, and said adjusted gross margin and operating margin would have been about 36% and 1% for the quarter, and 41% and 11% for the full year, absent the investments and non-recurring charges. He also said the company made significant cash investments in fiscal 2026, that those investments were funded with cash on hand from operations, and that cash generation should return to normal in fiscal 2027.

Analysts focused on the growth drivers behind the backlog, the timing of record quarters, the impact of GPS jamming and battlefield demand, and the consequences of exiting FEI-Elcom. Management said war-related GPS jamming and spoofing are expanding the market for precise atomic clocks and alternate navigation, while missile replenishment and space defense are also boosting demand. On guidance, management clarified that fiscal 2027 should include several new record revenue quarters, and that the $111 million backlog should be worked off over the next three years, with the FEI-Elcom wind-down creating about $1 million of revenue forgone in Q4 but not expected to hinder performance overall.