Frequency Electronics (FEIM) 13 Sep 222023 Q1 Earnings call transcript

Greetings. And welcome to the Frequency Electronics Q1 Fiscal '23 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. [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 release 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 Thomas host, President Officer. now your Chief McClelland, Executive is It

you. Thank

fiscal to continued of challenging really correct aggressive X are but first in quarter participation change, The month financially, first The my the with quarter. XXXX things be to was in which steps made resulted remaining here in leadership progress.

limited. So the to was the opportunity impact first quarter clearly results

milestones the implemented York. are factoring FEI-New wherever over designed planned being term close or efficiency we a management taken FEI's and also such quarter, can in meet to accelerate result in that the and carefully deliverables, changes to will changes reduction are hit program necessary our the since in costs targets. steps have XX% we which and have possible. been However, of beat improve Aggressive revenue labor progress which These for first to longer still

of and specific the also Finally, finally impacted some XXXX the delays, QX year are fiscal have which ending. XXXX results

must this now delay Similarly, program in geopolitical deliveries the used program into pandemic generating aware cited of year electronic to eight-month after revenue supply implement COVID-XX a still getting prepared challenges not of parts. months to with and for a to Nonetheless, problems. delay delays of slows development us activities. above government remotely, processes deal These now for slow frustrating atomic is for hard are a future. the example, these promised to be which clock continues chain administrative adaptations already the is last delays of spite real-time the translates is reality. our contractual government FEI, commonly life, which successful fact allow work But as routinely challenges. fact be major the likely the ongoing manufacturing For well are foreseeable working such of over Everyone in a U.S. be almost eight much going will we to events, of due to a Accordingly, we're further started. to forward, which

but into three as a our those go We already have the lot things like Steve the are in now on through in turn changes a who numbers. CFO, as front us, results. over quarters to will that well and future financial result of to next some of Bernstein, I'd the over made work the improvement in of optimistic will anticipated dramatic

and Tom, you, afternoon. good Thank

on $X.X eliminated Intersegment Other prior for fiscal consolidation. to XX% XX% industrial prior compared year. XXXX, satellite for XX%, XX, in U.S. $XX of fiscal in the segments Revenues period year. prior contracts $XXX,XXX the recognized the of components only prior $XXX,XXX compared the ended same compared three to programs payload York non-space are are to revenue FEI-New were in $X.X York percentage both to or the $X.X July of and million, the revenues the XX%, was million and million DOD million accounted in consolidated fiscal the $X.X compared and and was revenues million, which FEI-Zyfer year. and under satellite the commercial of same are completion months $X.X prior million are primarily fiscal period period the government method commercial recorded same for For the in in segment. as were compared in customers, are approximately fiscal Revenues or recorded year. approximately to The revenue Revenue consolidated FEI-New from follows: from U.S. of year and government revenue of the

development XXXX, gross 'XX. ended particularly technical underabsorption affected engineering to cost decreased several The due phase margin margin gross challenges and margin as was three chain decrease this For in months costs resulting XX, year impacts as the on cost the well quarter. the margin period and same gross July to programs on sales was experience gross that margin due fiscal in rate also programs Gross to rate supply in decrease from by complex compared problems. increased as of

$X.X are three plans SG&A invest focus revenues. in XX, and the consolidated R&D decrease XX%, and quarter 'XX the ended in for projects continue selling from a phase. currently three for XX, XX% first as 'XX, fees revenue. future for to due decrease decreased as to of year the art. in expenses and 'XX approximately months $XXX,XXX million on at well compensation production fiscal option XX% three months in state to the its period ended to months July expense. compared expense professional of related July approximately is expense year the of reduction keep July the a 'XX, ended in the largely and and For of XX, in XX, to expense decreases decrease XX% The products company the The were July $X.X the of to for respectively, million were 'XX, consolidated and to R&D months ended administrative R&D as deferred prior stock end three

resulted year. $X.X payout the derived company's coupled operating of ended 'XX, of to compared to on purchases, This For loss and may securities. the approximately pretax redemptions XX, $X.X Operating mentioned pretax previously yields from securities from income the prior consisted the Earnings loss year. additional million with on July gross million loss or $X.X operating fluctuating the an investment income marketable $X.X three an levels for the and primarily sales, holdings of the costs of losses in dividend regarding the loss based fiscal of securities. interest Other compared margin. rates, of million revenue, reported largely company million a vary timing months decrease maturities in prior

recorded July net 'XX Consolidated 'XX, $X.X share and year. provision a for ended X $X.XX company the $X,XXX. For loss the the months million compared the was to $X.X of 'XX $X.XX or XX, million or months fiscal XX, prior net loss share per three July ended tax per in

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

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

Thanks, Steve. now to questions. We'll the open floor your

we Richard questions. Certainly. open Instructions] question Ladies your and And [ph]. is have gentlemen, a live. from for [Operator line now Richard, is now Johns the floor

annual Yes. Thank you. I'm wondering for if you meeting. fixed yet the the date

Yes.

So a it's October X. we have do date,

forward look coming. to I'll right. All

going because be of we be decided to -- a only again. It's to COVID, again, remote in. have It call it will

I see.

be Can insight by shocked into have pretty how it before profitable Investors will a you'll quarters. negative been of right. give any be again? you couple recently us All long Okay.

but as possible. give we I don't as hard good think answer, Well, that's question. definitive a quickly can working we're to a profitable get

profitable year. is the by Our to not if break the least, at goal be of end fiscal even

good you, Okay. Thank luck.

Thank you.

a Michael, from is have also line we your live. Michael And coming question Eisner [ph].

You may go ahead.

the coming Did in you. delayed? second were the orders Thank that start in, quarter

we're in, significant third Of and that have quarter. second do anticipating more and, isn't quarter the second several quarter course, have orders in the over. come we during the But fact,

got ones Did those saying delayed. start yet? I'm Well, they

delay X not that There's started has yet.

press the said release projected Because and for quarter. the Okay. third now second

was I So if start wondering they again.

yet. start didn't They

place? in The that did take right. All York, reduction XX% New

months. place. taken anticipate are -- at this But taking retirements the we -- next that over It's which The couple will taken we it's XX% has mostly point. well, place some place voluntary be -- there of

left. Have

correct. That's

And what the --- percent York? doesn't is company to in have Roughly, New of

Based on headcount? what,

be Roughly, exact. Yes. to have doesn't it

thirds, It's think. about I two

All right, GPS right. thirds. Did production? IIIF All stop two

us III. I think about it's specifics difficult for talk GPS to

programs. customers GPS we atomic which involved future in That one unit very as actually in place be near test We a have limited being III. agreements navigation system we said, our delivered production on satellites. an flying non-disclosure on have we clock satellite the And in we'll with anticipate of global some navigation going global have major those

can all at point that's think say we time. this I in

right. move I Did office? more New All you understand. people Zyfer York from to

not move New from did York. to California We people Zyfer in

Production rather.

of place either to all move although here to to it California. reviewing activity most as in or efficient take in where from New that for New we're some We York production did production California York, it's

also moving from New And to people production? Elcom, you or New are York Jersey

is taking we any XXX% that. people Jersey Jersey, either We to York. New New New The to activity production or don't are from production moving and in anticipate change not place

right. All

question. Just you do One these 'XX? -- geopolitical of two year know the is, When expect chains questions. like parts hard by I supply fiscal to you all and one be and delays mentioned or more COVID over like the that end is this a

rather forward, Well, little reality COVID guess figure not winter. issues can't definitive fall the for planning than start of it's to any that. look to are I all a with, these good we're the like of really give concerned to We'd think year, these with like what course, major we see And that going all this to things how my but challenges. a on things a school the going question. be out have is going the sickness And is answer. attitude really know after to we don't bit we and to over deal this that in of But

just-in-time But that significant The whereas lead looking happen adapt modifications to applications, environment. somewhat of limited we're to things especially for in We're to what far. tend sort of to that's regard. at modified to times long. some a was be unpredictable extent pretty affected And we've inventory looking there having manufacturing to to is this things. -- where approach kind so Ukraine approach again, space by it's other in going available things, our been geopolitical of So to kind previously, at inventory, a

with. That guys was think that's over release, Are or you I looking CEO? the you for In press CEO Moriond interim FEI. and full-time a said president around [ph]

at point future. any I down of have youngster anymore. Board for I the But a any time guess looking. to not speak not in can't I'm I this But Directors. particular Well, the plans time I'm step at in don't

it's likely position going So now. I'm in from XX be years that still this not to

And final question.

this changes I read about on to right think, improvement comment operations you you what anything talked in looking can before -- I You you're conference call, do? the man, and are manufacturing

we I small rather I have than company. to -- talk specific Well, think things, think about we're a what

adaptable. be to have We

change they kind about chain or supply able we been things the be in think problems different of of way, we've a come to adapt. sort talking to I an to have the whether end

so that tendency, working happen. we we arena Rather And we're Otherwise, manufacturing adapt roles, having space, where not is to people have able on what and which really willing than all, just things are just very to changes -- make one is on and real work. especially people these in it's workforce be to in adaptable. the can size take time going and multiple that have a fits to a we a

Sir, I Yes, time. appreciate understand. your I

Sorry, had questions. many I so

okay. It's

Thank you.

have Please a [ph]. Cooper line from question Michael ahead. is we go Michael, And coming your live.

problems? a book happened What the have is was thought from happened Sloane? Stan $XXX the mess quarter was? your to that before of it not What is that for the Or what to you million Hello. million Do there market $XXX it engineering reduced you? technology, guys not you bid Stan Is was Sloane.

Okay.

see. let's So

lumped that's questions First, together. of several kind

programs. say of other all, I there's he's that. Obviously, with much retired. Stan technical a That any technical our But of specifics. of that of It's the of there unusual. It, nature impossible kind occurs really business, things. space we With difficult do it's don't questions, more ahead Sloane at those predict had thing are we on think on problems development are welcome things programs. don't to any problems to can in the to that time. because of difficult I again, the First think combination talk some have think of especially But these often regard time. are to I some programs. than

these frustrating time. are there point made talked is easier. storm that, issues. think with along have which But we at programs. on delays things any ourselves, The a guess, haven't pretty I I of can really that space blame things delays we're that We are anything technical financial issues in have looking very, the the other that at, of for about, this combination perfect results of only occurred several terrible very kind

lot experienced think The year the and half that problems I company going impact think was impact and only the and that's -- pretty other impact not frightened the -- was But minimal the that really only been about we of was first thing, the we're is -- really say, year But I'll to the last pandemic it's reality and the of have, the we everybody -- have this. a things supply chain surfaced. that in I unknowns.

your So at that in way more it pandemic on this pandemic. the sort I is point question. business was the affected of time, early hope answers by than during

which down believe I bring size that optically -- other I were other I clock But I the follow. that the haven't going clock, in magnitude -- weight. pumped a seen any optical companies of and reduction to some Yeah. was revenues -- don't pumped you pulsed developing with

would kinds contract on vertical program proceeding? opportunities in you had million or is based can the of introduce you terrestrial applications How market? $XX the And opportunities about I that technology. Do can all to way that develop that the of you have government products So you $XX million talk and that new that believe industry. you specifically a have to in anything with

Yeah.

very about that. in So can a five-year things development talk and We're I a promising about into time. underway. look development That effort point this at is year

is We basic the first in the are a demonstration program, participating of three-phase phase capability. a

sort third is production of prototypes The building phase preliminary phase. phase and second initial low-rate very is the

yeah, And think won't we're that, that. reason successful in that to point good. this looks no There's at forward believe everything to looking time. I be

bring that I the And dozens we're about that an being is from program that the universities of out little bit a laboratories. technologies and are effort make there viable and the products. are think national of just idea there to things in investigated say those that to some technology, participating atomic by are laboratory commercially advanced this clock

because pulsed is we and we're big think few technologies now that promising, promising standard that's the in most optically a strongly really a this utilizes it in one I the but refined order little mature a not right feel rubidium advance adds most just producing performance. of to very elements and pumped that if approach provide

So about that we're pretty whole thing. excited

it's But five-year to to horizon get time a significant revenue.

yes. it's fair think say, I to

turnaround $XX I CEO a taking dire, you any have $XXX for a CEOs of needy whatever million. don't And turnaround background situation, from turnaround you're $XX mean, a very a million in interviewed job? an in excess existential situation, have you revenue that growth And to situation. doing as the million, of a now, then to a well

done have You that, not correct?

That's correct.

people And have opportunity? for how interviewed this you many

Zero.

you. Thank

remarks. to I'd no time. Thank closing in questions the you. further there for management now are to like at And this floor back queue turn

All right. Thanks.

I and will we everybody think much, call. long. the appreciate at this very point, you I participated. until close next time, so Thank the who

conference This and call. you, today's Thank gentlemen. conclude ladies does

phone lines day. this your for a participation. you Thank your disconnect wonderful at have may You time. And