Frequency Electronics, Inc.

mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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. Such statements inherently involve uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences are included in the company's press releases and are further detailed in the company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements for revisions or changes after the date of this conference call. It is now my pleasure to introduce your host, Thomas McClelland, President and Chief Executive Officer.

Good afternoon, everyone. The fiscal fourth quarter we just reported was the highest revenue quarter for the company in the past 25 years, and I'd like to provide some additional context on that. We've demonstrated strong growth over the past several years, and we believe the growth potential for our company is expanding even further for reasons I'll get into shortly. While we do not provide guidance, given the lumpiness of contract awards, I would be remiss if I did not mention that this recently ended quarter benefited from strong execution that allowed the company to produce revenue on certain programs in fiscal year 25 that we originally expected to produce over a more extended period of time. in fiscal year 25, 26, and beyond. In other words, while the trend here is very much an upward one, I do not think it's prudent to expect every quarter in the near term to look exactly like this from a top line perspective. Though in the medium term, it is directionally where we're headed. It's important to keep in mind that the allocations for space and defense related programs from the recently passed legislation in Congress are very positive for the direction the company is going. But as the bill just passed last week, the additional revenue from those contract awards will flow in over the coming quarters and years as our customers now submit bids for increased available funds. As we position the company to take advantage of all the opportunities we've discussed before and others I'll discuss in a moment, we're also expanding our customer base beyond the traditional prime contractors. We maintain excellent relationships with the traditional primes and are working on numerous projects with them and anticipate meaningful growth with them going forward. But we've also already been actively submitting bids alongside next generation defense companies, which are increasingly getting attention in this administration. We believe this positions FEI extremely well to benefit from industry trends we see playing out over the next 5 to 10 plus years. Some of the opportunities that will further accelerate our growth are Golden Dome were already involved in several key missile programs and anticipate additional opportunities both for terrestrial and space applications. APMT, which is Alternate Position Navigation and Timing, The vulnerability of GPS is well documented at this point, as stories of jamming and spoofing, especially in the Mideast and Eastern Europe corroborate. FEI's quantum magnetometer development, representing an unjammable approach to navigation, is part of a particularly relevant solution. Our small but very high performance rubidium atomic clock, which we've dubbed Turbo for timing units rubidium oscillator, is a key ingredient in other proposed alternate navigation approaches. Another important item is GPS enhancements, such as resilient GPS. augmenting GPS satellites with a large number of lower-cost satellites. Quantum sensing. FDI is well-positioned to succeed in the growing quantum sensor market based on our expertise in atomic clocks. We're currently developing solid-state diamond-based quantum magnetic sensors sensor devices in collaboration with MIT Lincoln Labs. Similarly, we're collaborating with scientists at NIST to develop Rydberg sensors, allowing for extremely compact microwave antennas. Last year, FDI sponsored a quantum summit in New York City to bring together scientists to discuss progress in quantum sensors. I'd like to announce that FEI will host a quantum summit again this year in October, in particular on October 29th and 30th. All in all, I'm happy with our performance, vigilant regarding the changes in Washington, and very enthusiastic about our future.

Steve? Thank you, Tom. and good afternoon. For the fiscal year ended April 30th, 2025, consolidated revenue was $69.8 million compared to $55.3 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 $40.9 million, or 59 percent compared to 23 0.2 million or 42 percent in the same period of the prior fiscal year. Revenue on satellite payload contracts are recognized primarily under the percentage of completion method and are recorded only in the FEI New York segment. Revenues from non-space U.S. government and DOD customers, which are recorded in both the FEI New York and FEI Zephyr segments, were 26.5 million compared to 29 million in the same period of the prior fiscal year and accounted for approximately 38% of consolidated revenue compared to 52% for the prior fiscal year. Other commercial industrial revenue was $2.4 million and $3.1 million for the fiscal year ended April 30th, 25 and 24 respectively. The company is encouraged by significant revenue growth compared to the prior fiscal year. The majority of the increase in revenue for fiscal year 25 as compared to fiscal year 24 was a result of increase in sales in U.S. government DOD satellite market. For the fiscal year ending April 30, 2025, the gross profit and gross profit percentage increased as a result of several factors. The increase in gross profit dollars was directly related to the significant increase in revenue over the prior fiscal year period, as well as the increase in gross margin. The majority of the increase in the gross profit percentage as compared to the prior fiscal year was in the FEI New York segment and was attributable to the company's performance on several traditional space programs at higher margin and ahead of schedule. In addition, the company has new programs that are progressing well and the company anticipates they will generate additional revenue and profits. In the fiscal year ending April 30th, 25 and 24, Selling and administrative expenses were 18% of consolidated revenue in both periods. While total SG&A expense increased in fiscal year 25 as compared to the prior fiscal year, SG&A expense remained constant as a percentage of revenue in fiscal year 25. The approximately $2.1 million increase is made up of mainly payroll-related items such as 401 expense, stock option expense, bonus accrual, In addition to these expenses, trade show and related costs also increased during the fiscal year 25. R&D expense for the fiscal year ending April 30, 25 increased to $6.1 million from $3.4 million, an increase of $2.7 million, and were approximately 9 percent and 6 percent respectively of consolidated revenue. The company funded R&D amounts was higher in fiscal year 25 as compared to previous fiscal year, partially because of the previous fiscal year R&D expenditures were lower than planned and some of the expense were subsequently captured in fiscal year 25. The increase in R&D expense also reflects the company's commitment to maintain its technical excellence. The company expects future R&D investment to be in line with or even potentially above historical spending. For the fiscal year ending April 30th, 25, the company recorded operating income of $11.7 million compared to an operating income of $5 million in the prior fiscal year. The increase is mainly attributable to the company's significant increase in revenue and gross margin during fiscal year 25, as noted above, from traditional space programs that have been executed ahead of schedule, well within budget, and technologically performed well. The positive effect of cost-cutting measures instituted by management have also contributed to the increase. The change in other income expense from prior fiscal year was relatively minimal. All three categories presented were slightly lower in fiscal year 25 compared to prior fiscal year. This yields pretax income of approximately $12.1 million compared to $5.5 million for the prior fiscal year. For the fiscal year ending April 30th, 25, the valuation allowance decreased by approximately $13.9 million from the prior fiscal year, primarily due releasing the majority of the valuation allowance recorded against deferred tax asset. This change in estimate occurred in the third quarter of fiscal 25. Consolidated net income for the year ending April 30th, 25 was $23.7 million or $2.46 per share, compared to $5.6 million, or $0.59 per share, in the previous fiscal year. Our fully funded backlog at the end of April 25 was approximately $70 million, compared to $78 million for the previous fiscal year, April 30, 2024. The company's balance sheet continues to reflect strong working capital position of approximately $30 million at April 30, 2025, and the current ratio of approximately 2.3 to 1. Additionally, the company is debt-free. Cash went down by approximately $13.6 million since prior fiscal year end. Of this decrease, the dividend paid in Q2 of fiscal 25 accounted for approximately $9.6 million of it. The additional $4 million decrease was related to timing of billing and revenue. Contract liabilities went down $8.2 million since year end. Contract liabilities are generated as part of 606 accounting when the billings are in excess of revenue taken on specific programs. We expect that cash will fluctuate quarter to quarter. However, we expect its trend to be higher over time. The company believes that its liquidity is adequate to meet its operating investing needs for the next 12 months and the foreseeable future. I will turn the call back to Tom, and we look forward to your questions shortly. Thanks, Steve.