Frequency Electronics reports Q3 EPS 1c, consensus (3c)

Reports Q3 revenue $13.7M vs. $10.6M last year. FEI President and CEO, Tom McClelland commented, “In the third quarter of fiscal year 2024 we experienced continued revenue growth, reflecting the company’s ability to meet the highly technical needs of its customers in an expanding total addressable market. The backlog of$67M at the end of Q3 is an all-time high for the company, driven in part by the meaningful contract wins we announced in November. That being said, we are reporting an operating loss for the quarter of $0.5 Mattributable to technical challenges primarily on a single new development program. Because we are often working on next generation programs with significant technological advancements, such temporary setbacks are not only an inevitable part of the business, they are necessary in order to keep pushing our technology development forward. We are aggressively managing this program and are confident that the overruns are largely behind us, and that overall we will still generate an operating profit for the year. In addition, the knowledge base and “lessons learned” from such setbacks help position us for improved performance on potential follow-on business. The gross margin performance in this quarter is not reflective of the strong gross margin trends we have recently exhibited, and we are continuing to work towards higher gross margins overall, as we have detailed on recent earnings calls. I believe our overall efforts have put us on a sustainable positive trajectory for growth, profitability and cash flow, and we anticipate generating significant free cash flow in the fourth quarter. The Company remains committed to achieving sustained profitability and cash generation going forward.”