Frequency Electronics, Inc.

Good afternoon, everyone. We have a very positive story to tell regarding the fiscal year that ended April 30th. Revenues have grown consistently throughout the year, and we expect that to continue in the near term going forward. The backlog of $78 million is a historic high for the company, and we anticipate the backlog will remain strong based on a very healthy new business outlook. The company is reporting an operating profit for the year of $5 million, with the operating loss in the third quarter being followed by profitable fourth quarter. We anticipate continued long-term growth in our primary end markets of space, navigation, secure communication, and timing. Our proven heritage technical expertise in these disciplines allows us to continue to win new business while maintaining healthy gross margins. This puts us on a very solid footing going forward and gives us some breathing room to develop new technologies and products in these markets as they evolve over the next decade. As we've discussed in the past, there is a growing concern with the vulnerability of satellite assets and thus a move to lower cost easily replaceable satellite hardware. The company continues to respond to new business opportunities in this arena. In some cases, these programs involve higher risk and potentially lower gross margins, but are essential for the long-term strength of the company. Our very healthy backlog of traditional satellite programs, incorporating our legacy technology allows us to participate in these more risky programs while maintaining growth and profitability overall. I would like to add a few words about our other press release today. As you have hopefully seen today, the Board of Directors authorized a $1 per share special dividend, and I encourage you to read that press release for the details regarding the record and payment dates coming up in August. This is the second such dividend that the Board has authorized in approximately a year and a half. I'm proud of the continued progress we have made on profitability and cash generation, which allows us to reward our shareholders in this fashion. While we're not committing to a certain cadence or amount of such dividends in the future, It's reasonable that should we continue to make progress, the Board will consider similar capital plans in the future. We're able to do this while maintaining a debt-free balance sheet and continuing to invest in next-generation programs, which we are winning and are poised to continue to win. As we've seen over just the past two quarters, the past The path to improved profitability is not always going to be perfectly linear, especially given some of the bleeding edge technology that we're working on. But as I said earlier, business is booming and we believe it is prudent to return excess cash to shareholders so that future gains in profitability can accrue in a more pronounced manner to equity holders. I'll now turn things over to our CFO, Steve Bernstein, who will fill you in on the financial details.

Thank you, Tom, and good afternoon. Before we jump into the details of the company's results for the fiscal year ended April 30th, 24, I would like to remind everyone that, as mentioned on previous calls, there will be times the company's results will fluctuate quarter over quarter and that a single quarter is not indicative of future results. As an example, sometimes the effect of changes taken in one quarter can reverse in another quarter as engineering problems are solved and revenue and profitability flow through. For an accurate view of the company's performance, it's important to review the entire year and other significant items. For the fiscal year ended April 30, 2024, consolidated revenue was $55.3 million compared to $40.7 million for the same period of the prior fiscal year. The components of revenue are as follows. Revenue from commercial and U.S. government satellite programs was approximately $23.2 million or 42 percent compared to $17.9 million or 44 percent in the same period of the prior fiscal year. Revenues on satellite payload contracts are recognized primarily under the percentage of completion method and are recorded only in the FEI New York segment. Revenue from non-space U.S. government and DOD customers, which are recorded in both the FEI New York and FEI Zephyr segments, were $29 million compared to $20.3 million in the same period of the prior fiscal year. and accounted for approximately 52% of consolidated revenue compared to 50% for the prior fiscal year. Other commercial industrial revenue was $3.1 million and $2.6 million for the fiscal years ended April 30, 24, and 23, respectively. The significant increase in revenue for the period was primarily related to increase in U.S. government orders. For the fiscal year ended April 30, 24, gross margin and gross margin rate as compared to the same period in fiscal year 23. The gross margin dollars increased as direct result of the increase in revenue. The gross margin rate increased significantly due to the fact that many of the technical challenges faced in the prior fiscal year have been resolved, and as a result, the related programs are now moving forward and running more efficiently. Previous programs that sustained lower margins due to technical issues are near completion or have been completed. For the fiscal year ending April 30, 24, and 23, SG&A expenses were approximately 18% and 23%, respectively, of consolidated revenue. While total SG&A expenses increased in fiscal year 24 as compared to the prior fiscal year, SG&A expenses decreased as a percentage of revenue in fiscal year 24 due to an increased revenue as well as the company successfully monitoring costs given the current economic conditions. R&D expense for the fiscal year ended April 30th, 24 increased to 3.4 million from 3.1 million for the fiscal year ended April 30th, 23. An increase of 300,000 and we're approximately 6% and 8% respectively of consolidated revenue. The company's funded R&D amount was slightly higher in fiscal year 24 as compared to the previous fiscal year, reflecting the company's commitment to maintaining its technical excellence. The company expects future R&D investment to be in line with or even potentially above historic commitments. For the fiscal year ending April 30th, 24, the company recorded operating income of $5 million compared to an operating loss of $4.7 million in the prior fiscal year. The change from an operating loss to operating income year-over-year is attributable to the company's significant increase in revenue and margin during the fiscal year 24, along with the positive effects of cost-cutting measures instituted by management. Other income can be derived from reclaiming of metals, refunds, interest on deferred trust assets, or the sale of fixed assets, interest expenses related to the deferred compensation payments made to retired employees. This yields pre-tax income of approximately $5.5 million compared to a $5.4 million pre-tax loss for the prior fiscal year. For the fiscal year ended April 30th, 24, the company recorded a tax benefit of $130,000 compared to a tax revision of $74,000 for the same period of the prior fiscal year. Consolidated debt income for the fiscal year ended April 30th, 24 was $5.6 million or 59 cents per share compared to a $5.5 million net loss or negative 59 cents per share in the previous fiscal year. Our fully funded backlog at the end of April 24 was approximately $78 million, compared to approximately $56 million for the previous fiscal year ended April 30, 2023. The company's balance sheet continues to reflect strong working capital position of approximately $27 million at April 30, 2024, and a current ratio of approximately 1.8 to 1. Additionally, the company is debt-free. The company believes that its liquidity is adequate to meet its operating and investing needs for the next 12 months and the foreseeable future. I will turn that call back to Tom, and we look forward to your questions.

Okay. Thank you, Steve. And we're now prepared to take questions.