Frequency Electronics (FEIM) 12 Mar 212021 Q3 Earnings call transcript

Greetings, and welcome to the Frequency Electronics Third Quarter Fiscal Year 2021 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. Any statements made by the company during this conference call regarding the future constitute forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. uncertainties the cause forward-looking involve differ results inherently from materially statements. statements that actual could to Such Factors that are would the are the included cause periodic Securities or contribute the company's press to and company's Exchange releases filings and report further Commission. in in detailed with such differences obligation changes making date after By no of forward-looking statements these this the statements, update these call. the for undertakes conference company to revisions or pleasure my and to introduce Stanton host, President now your CEO. Sloane, is It

you for make Steve Thank we'll us today. about Thank quarter financial to everyone. you. over state to then joining I'd like through the business, details. a the to Hello, you turn things and comments few take of and the the

Following that, take questions. we'll some

million U.S. are revenues increasing for general Zyfer the programs significant our subsidiaries opportunities business, York in in of a competency. we're reliability generation contract And mention unique opportunities, and won the of Let announced can which to very of after me did the key for by producing York, start timing fully capturing by the resulting is amounts success We report February solid XX capability core backlog and some saying customer in their that new we impacted from chain company quarter end in business see Consistent past million, not performance the frequency operation $XX and is supply COVID-related government on end $X operation. that FEI-New new This backlog. wins gross issues amount in funded, with of revenues number year. environment several margins. is space contract. of million on we of backlog our the we had FEI, to $XX particular, in at business and direction new New up award through last growing fiscal systems. have are I'm a high New with We history. our year-to-date an in contracts funded with operate one only difficult seeing were in and Bookings best Elcom and new investments but for York improving space not it in end very in high FEI's our QX, QX in this the that the deliver our performance the quarter. practices, systems pleased to-date

indicator increasing as Our for increasing revenue revenue performance said for improving business leading And we've on new bodes is before, well forward. margins. very good going a

and significant Hiring contracts. with generated QX million We associated we engineering are and anticipated focus Space our a commitments will these and of cash represents also and rapidly technologies, as production we debt-free. ramp deploy new through operational shareholders' to $X is for ensuring product expanding a improving advancing continually us. up for continuing efficiency meet opportunity towards remain to continue capital us

turn it address commitments We maintaining Steve, COVID our that, your through past take some let and their over go financial over will thank monitor we'll we'll to in Steve? to and this year. want me I continue efforts extraordinary to also for FEI's situation, and then employees questions, With customer and details the

contracts on and follows; the period million, fiscal of components nine was the XXXX of afternoon. to year. revenue as million was year. approximately Other of for in compared XX% of are fiscal the approximately compared compared of and in satellite consolidated primarily FEI-Zyfer XX% and segments compared prior Revenues fiscal York and revenue compared to period period same are same and Stan, recognized industrial consolidated prior The XX% both for under $X.X the prior same York revenue year segment. revenues commercial fiscal for only to in for good payload satellite compared up DoD accounted period million the XX% consolidated The million for the prior months FEI-New programs million prior $XX.X Revenue in accounted $XX.X customers, were for the $XX.X to New a the commercial of the recorded million revenue of the in are from percentage the same which of completion recorded U.S. were revenue you, Intersegment January U.S. year $XX.X Thank revenues $X.X government year. from consolidation. are $XX.X method government non-space ended and to $XX.X to the XX, the prior XX% year. fiscal million and million and eliminated

For gross development due costs near to identified that margin was margin prior in engineering in that several fiscal in the gross phase, increase that programs rate period to period since were higher rate periods in incurred been year completed are had completion. or the compared same margin gross significantly gross XXXX, month nine The and and the margin ending increased XXXX. January as XX, have

a For XXXX and the ending months relating XXXX, revenues. XX% mainly increase litigation. R&D to SG&A in respectively consolidated expenses in for approximately was expense to administrative fees professional nine the due were expense XX, previous selling company's and decrease increase ending The as million ended and consolidated and of January decreased and XX% an $X.X of have R&D were turned efforts XX% into decreased X% R&D The expense $X.X revenue. year-over-year months nine XX, to January $X.X of million and production. XXXX XXXX from and million,

products the to plans to keep at in the However, continue to R&D invest state-of-the-art. company its

improvement consisted are a loss prior in same the XXst, recorded loss upon XXXX, has $X.X year. the from backlog, Based expecting continue. For of $X.X months bookings to and made securities. revenues, January improving company's margin Other margin of operating the rate. of our prior an fiscal reflects and gross the to from we period primarily and derived in million gross improvement compared income ended the nine year Operating significant trend this investment marketable company million the holdings income

of dividend the same XXXX. pre-tax January XXXX compared XX, fiscal approximately from compared in ending investment the loss period from income to dividend in months $X $XXX,XXX This of yields nine the million $XXX,XXX approximately year. for Morion included to prior period pre-tax loss For $XXX,XXX a Morion

months ending January $X.XX recorded the $X.XX or nine Consolidated for provision nine of the consolidated in period the ending previous diluted a $XX,XXX a $X.X XX, year. $XX,XXX XXXX diluted per fiscal tax loss company same to for January compared the $XXX, share or months XXXX. share XX, the of XXXX, net per loss to For compared XXX million was of

January, million strong of working up approximately approximately balance current $XX company's of ratio position XX, backlog reflect $XX Our end the the XXXX. year-end continues and to at fully-funded capital million XX, the XXXX previous to The X. was at April XXXX of from $X million January approximately X.X approximately a sheet

company turn to The liquidity its and we its forward the to Additionally, investing believes back the foreseeable that look operating is future. needs for call your the I company the meet and debt-free. adequate Stan months will next is to XX and questions.

Thank you, Steve.

operator, questions Anastasia? how And one So get this please in. you to ask question, thank who your will explain over we'll you. we turn the limit to to it to

a comes Thank go you. from The ahead. Private Michael Please Investor. [Operator first Eisner Instructions] question

that would area? of be Hi. Elcom’s York revenue the New part

correct. with It's consolidated that's York. Yes, New

right. All

in in COVID million Zyfer? So was $X.X bad like the Last you revenue. how almost did quarter

that causing in think – few it's that we – although issues employees way have their some did employees, of the contracts. folks have about I think had in our it's chain though, had customers administrative COVID some – also some to not a delays about but delays and the from We've supply processing just some

down. quarter in that it's some administrative the slow what and from slipped remotely anticipated course, of of was So working and people sometimes cause unanticipated

going into Okay. Is to the fourth it quarter? be pushed

Well, it’d pushed. be

We haven't lost anything.

not with right just We lost are schedules things any being the are have delayed. contracts. It's slipping

because the dropped supply chain mostly it quarter, was revenue your and of the So but for Elcom.

Because delays. of

be got All I that's the – why you will it lower you. had one Yes, I question. so guess right. revenue. Thank

Sure.

Management. comes question from go ahead. SER with Rebotsky next Sam Asset The Please

this backlog, further which Will million? The Is was lot business? to due million, $XX we million doing contract. didn't next Yes. be this a profitable And backlog more think our quarter the more the $XX in are increase contract? a $XX

be. it that anticipate would we So will

Of in put backlog that funded. into we course, mind keep only what's

be, would do a $X, in the only to if might we the comments wanted that and trying put $X that I in that the let's convert can't a for side backlog. contract million. would So new the unusual you that the at really million some only barring $XX way. why performance that it's if have do on to it mention might arithmetic, we But we you That's expect say, win you're then my funded backlog. so large obviously, $XX circumstance if contract, But business

is this… new a or this Is customer

existing customer. an That’s

Thank Okay. you.

business It's for a doing years. we've customer with that been many

you. Thank Okay.

Sure.

Janney from comes question next Scott. ahead. The Brett Instructions] Please Montgomery with go Reiss [Operator

Hi, Stanton.

Hi.

the do, hiring. engineers? just to it is Is type of nature looking of the can people? sales you're The hiring describe, of Just kind it you

Right now it's mostly engineering and manufacturing.

something so people like far I I year think XX we've this XX another or have XX opening. added and

it's test folks are on the manufacturing mostly or So technicians. floor who technical

you positions? you'll those you're any filling the Do think sets looking trouble skill have for,

also we confident good It's we've this keep And that I easier always the side a mind have but pretty it's said, on get year, challenging manufacturing. do in bit side. to manufacturing to done engineering Well, people, than outsource ability experienced and like to the the hired we've XX. little about

think a it's So keep be I I we'll things. expect don't up with going problem. to

you back queue. in drop questions. my for Great. I'll Thank answering

Sure.

Michael from Investor. Eisner, Please go comes a next Private The question ahead.

releases –? The GPS last that dozen or half done all part pertain Hi. oscillators. IIIF of Is to

core oscillators electronics. I Well, of it's mean, everything. part principally here, and is that's related business our

IIIF coming Well, how's GPS then along?

well Doing day the really exceptionally very and good on it. quality is got feedback well. performing we unit The customer other

think that's swimmingly. going I So

go think When into will do it production? you

Those get units. the got are evaluation saw an order. just two units. you the announcement Soon as – for actually We we

I satellites. think qualified flight the when IIIF fully production you for GPS mean you say

– the weeks units got we getting was we’ve that that So made few the a part of of announcement qualified that the first ago. is and the nature

a Which was you date of when had what them? – couple that

I don't remember. was for announcement It rubidium digital clocks. atomic the

you. All right, thank

Yes.

Sturm, question ahead. next from Walter Investor. a Private Please go The comes

investments enhanced think your like space to company Do would applicable fund Hi, might our happy Yes. fund. if establish a are that? to you be exploration

I'm mean what not sure you applicable.

exploration, Our products, produce about space a talking by that variety NASA. we you're if products are used of

the, is our which we the operating have oscillators to example, Voyager back spacecraft, on going still products For on it. has

name you various applicable. of station, view, Orbiter it We including yes Mars be so. NASA have on space very we'd point electronics that From the missions,

Okay.

keep she'll you. in maybe you Thank mind. So

Sure.

Investor. go ahead. next Eisner, comes question Michael The Please from Private

the What’s outstanding? bids

Total total the bids? outstanding you're dollar asking – of

Yes.

today, of sure some quite I subtract not have I'm to because these awards.

would I you expect probably last puts takes than told time. a not to that. lot it's It's and I typical what different So

something? I million think or XXX

between the last around in remember if somewhere I million it Yes, think call. $XXX I $XXX million was and

right. All you. Thank

comes Management. Please question next ahead. The with from Asset SER Rebotsky Sam go

Yes.

go? that other future? do we did You How to conference present the expect in research expect Do at or a presented any frequency at conference recently. we near

Yes, I think you're referring to Needham.

Yes.

Yes.

it well. went So

going aware anticipating research, We with conversations. calls that's research I'm right get are us we'll of not to that now, but on up we pick periodically further discuss various folks. get anybody

the Do because so be we expect to tell firm backlog Relations story, Investor seems our to an soon hiring improving?

significant. we will handle I to it seems Steve at That so folks, the the Relations we're pretty it. At are and the future least Investor for moment is immediate

luck. Okay, good great. Good,

Thank you.

next comes ahead. Investor. Please Joe The Gersky, question from Private go

just the conversation, the as estimate we better Good as fees. line obviously? fees have mentioned question to are whatever came the last they bottom much for fees afternoon, block it how tell corporation's would that that up. been is Montgomery can relate that suit please how Steve and quarterly your concerns legal is, will our you timeframe finally are be, now, One professional suit. you or much the to onerous Congratulations that get already what In when And us not suit block this so Steve. Can the from quarter. improved an professional on Stan more it are ended, mentioned and Janney Stan

We're number, a not that in to Joe. position disclose

been how number many The have just spent? dollars

Correct.

fees? the Can you us tell legal whether percentage of any has the paid company insurance

Yes, they have.

tell you percentage? They Would can us you – have. what

so. the can't. Steve legal gave are in expenses we numbers, you the No, there SG&A

versus identified you. Thank also. they're healthy. if stay SG&A. healthy expenses know as don't Steve, you legal I Fine. Stan, though stay

Thank you.

Thank you, Joe.

comes The ahead. go question next Walter Sturm, Private from Please Investor.

Hi.

to mention Regarding clocks, liberty I competitor at main don't know atomic that in that about, category? really much your are you

of or of globally in it's depending a Russia, you're Europe, the there's produce Well list the clocks people. that U.S. its then in U.S., in and talking on China lot whether people atomic so a about worldwide,

In the United States.

produces don't and Excelitas folks XX there's atomic know Yes. that atomic or probably clocks. XX clocks XX geez other produce – I or

things so generally, atomic Now sorts when broad that's will clocks. instruments, of a of pretty all clocks be classified stuff, includes you atomic category laboratory say as

referring see, satellites I for but to?

Yes.

Regard to satellites?

So we do…

many arena. There that are competitors in

there's U.S., and talking if I there's few, it in – other the think a company you're only two rubidium about the depends clocks, is there's atomic No, us Excelitas.

the for type And is satellites? Okay. used rubidium

include of what these say of days are those Various, caesium mercury there things, variations At space. we atomic clocks flying moment that most all rubidium, in would is rubidium. ion, is the procured being and

about year, mercury missions, are are clocks. which with an which We Deep talking Clock, there's the NASA There associated experimental was atomic some space the ion NASA. I launched of that is clocks ion clock which is mercury are think last clock, some Space Atomic called

So you're talking depends what just it about. application particular

rubidium Well, from talking that communications atomic about but space satellites for require internet clocks?

of done satellite that the can the be [indiscernible]. precision that on necessarily not with Depends architecture, some but

much. see. I Thank All very you right.

bet. You

the end the have we session. question-and-answer gentlemen, and Ladies of reached

call the Sloane back Stanton to turn closing I'd Now any to remarks. for like

everybody you next quarter. Goodbye. call forward you you. thank joining today. talking for in the We'll look Again, Thank to to

tonight's concludes This conference.

may disconnect you this your your at participation. lines for You Thank time.