Frequency Electronics (FEIM) Q3 2026 earnings summary

Executive summary

• Q3 FY26 revenue was $16.9 million, with nine-month revenue at $47.8 million, both down year-over-year due to lower satellite program revenues and higher SG&A expenses.

• Net income for Q3 FY26 was $1.6 million ($0.16/share), and $4.0 million ($0.41/share) for nine months, both significantly below prior year levels due to lower revenue and a prior-year tax benefit.

• Backlog reached a record $83 million as of January 31, 2026, up from $70 million at April 30, 2025, with new awards expected to push it above $100 million.

• Two new contracts totaling $45 million were announced, among the largest in company history, spanning both traditional and proliferated satellite programs.

• Company maintains strong working capital of $32–32.4 million and a current ratio of 2.6:1 as of January 31, 2026.

Financial highlights

• Q3 FY26 revenue: $16.9 million, down from $18.9 million YoY, and nine-month revenue: $47.8 million, down 4% YoY.

• Operating income for Q3 FY26 was $1.3 million, and $3.3 million for nine months, both lower YoY.

• Gross margin for Q3 FY26 was 39.2%, down from 43.8% YoY, with a nine-month margin of 38.1% versus 45.4% YoY.

• SG&A expenses increased to 21% of revenue from 18% YoY, with a 12.3% YoY increase for the nine months.

• R&D expense for Q3 FY26 was $1.8 million (10% of revenue), with nine-month R&D at $4.1 million, down 9.7% YoY.

Outlook and guidance

• Management anticipates additional contract awards of similar magnitude in both traditional and new business lines within the calendar year.

• Expects backlog to surpass $100 million soon, with further growth as new awards are added.

• Gross margin expected to improve over time as higher-rate production and follow-on business increase, though short-term margins on proliferated satellite programs will be lower.

• Continued investment in R&D and expansion into quantum sensing, ALT-PNT, and proliferated satellite applications.

• Liquidity is considered adequate for both short- and long-term needs, with no debt.