Frequency Electronics (FEIM) Q1 2026 earnings summary

Executive summary

• Q1 FY2026 revenue was $13.8M, down from $15.1M year-over-year, due to customer-driven delays, with the shortfall expected to be recovered in upcoming quarters.

• Net income was $0.6M ($0.07/share), down from $2.4M ($0.25/share) prior year; operating income dropped to $0.4M from $2.4M.

• Profitability declined as investments in growth and higher SG&A continued despite lower revenue; fundamentals and backlog remain strong.

• The company is actively bidding on larger contracts and expects meaningful new business, with a robust pipeline in both legacy and next-generation technologies.

• Strategic investments include a new engineering facility in Boulder, Colorado, focused on quantum sensing and staffed by leading scientists.

Financial highlights

• Q1 FY2026 consolidated revenue: $13.8M (vs. $15.1M prior year); commercial and U.S. government satellite revenue: $6.5M (47% of total); non-space U.S. government/DOD revenue: $6.9M (50% of total).

• Gross margin was $5.1M (36.8% of revenue), down from $6.7M (44.4%) year-over-year.

• SG&A expenses rose to $3.6M (26% of revenue, up from 19%) due to one-time growth investments; R&D expense fell to $1.1M (8% of revenue, down from $1.5M or 10%).

• Net cash provided by operating activities was $1.2M, a turnaround from a $1.5M use in the prior year.

• Fully funded backlog at July 2025: $71M (up from $70M at April 2025); working capital: $30M; current ratio: 2.3; company remains debt-free.

Outlook and guidance

• Revenue shortfall from Q1 is expected to be made up in upcoming quarters, with delayed revenue recognized predominantly in the current fiscal year.

• Customer-driven delays are resolved, and significant progress is being made toward expanding the business.

• Boulder facility expected to contribute positively to earnings by Q3 FY2026.

• No formal guidance provided due to the lumpy nature of contract awards.

• Liquidity is considered adequate for both short- and long-term needs.