FEIM - Earnings call transcript Q2 2018 | Frequency Electronics, Inc.

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Operator

Greetings and welcome to the Frequency Electronics Second Quarter Fiscal Year 2018 Earnings Release Conference Call. [Operator Instructions] 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. statements, for undertakes the revisions this call. forward-looking update obligation date these conference statements these or making the no Company to of By changes after pleasure your It to now my host, is Mr. introduce the of Frequency Chairman Girsky, Board Joel Electronics. of

Joel Girsky

Steve, you take Stan Thank calling much Bernstein, Sloane, Sitting with and in, you. is the afternoon CFO. it. for me appreciate Steve so this and if certainly Martin Good please everyone, here afternoon, call. you thank would we Bloch, our Dr.

Steve Bernstein

quarter second ending In and afternoon. and good results and Joel this refer Gillam-FEI operations. quarters you, the discussed reports, fiscal XXXX discontinued call of financial to October XX-Q results otherwise as Thank financial XXXX stated, continuing Unless on are operations. for presented XX,

approximately to $X.X compared are revenues and revenues prior and commercial including in were consolidation. Interest compared XX% FEI the commercial approximately compared to satellite were in to recorded consolidated the New fiscal government of FEI to XX% which For the six compared segments, and non-space fiscal in York $XX.X for months for in to year million XX% for $X.X U.S. year. recorded approximately ending eliminated same $X were million the million $X.X from 'XX. U.S. DoD Revenue $X XXXX the 'XX the accounted programs XX% and Elcom consolidated of from segment. Zyfer October period to for compared from of million of for York both, revenues industrial compared accounted revenues in and XX, the million in XX% accounted revenue consolidated New are only revenues segment million of Other market Revenues and XXXX. fiscal government period are XXXX FEI customers same fiscal approximately XX% satellite FDI

costs. For and gross primarily is and overhead six lower unabsorbed margin due revenue to period XXXX, ended XX, margin three October rate manufacturing and months the gross decrease

period consolidated ending were months XXXX, six of and the administrative XXXX XX% and revenues. selling October For respectively, XX, approximately XX% expenses and

percentage current $XXX,XXX year-over-year. The Research to products new the and represents and ending future secure the commercial large XX, fiscal next-generation related DoD previous The to are loss XXXX communication, gross leading to Although and represent Operating address products, satellite R&D dollar and in to for enhance keep same expects through to months beyond similar, a to additional activity the R&D markets. opportunities the six the year Company's command technology continue control for of applications, the frequency competitiveness. Company payload rate million XX% Company's this months year. time the is XX% period ended of October October income to comparable and operating the loss and edge for was marketable compared and sales Investment expenditures XX, intended six during last million of holdings investment same at XXXX development reduction $X.X the the from primarily period was derived of level securities. of period of $X.X the year.

income investment investment the of Company equity was than The its of divested mainly period in converted future management Company fiscal ending is XXXX, three of lower in its year quarter cash ended process in XXXX, XXXX to cash. which XX, in months the the the XX, securities strategies. July holdings in to evaluating its were For October same due account the

XXXX diluted the for year. loss prior per year. of months same or six XXXX. for $X.XX loss XXXX no Loss of $XXX,XXX to ending October the loss compared ending year to recorded period This six compared gain a period the during benefit six a share for $X.XX of ending taxes. as $X $X.XX prior last or borrowings the per result $XXX,XXX $XXX,XXX or of compared same fiscal discontinued $X.X $X.XX no October is a fiscal month net XX, the months loss the loss diluted gains diluted being compared for interest continuing $X.X of for a October Company in $X.XX of XX, the to million last to months to year. or or operations diluted share there pretax the period provision share a year. from Consolidated pretax for of of share fiscal compared period for per months loss six $XXX,XXX the from to million 'XX million months operations As XX, the $X.XX yields in $X.X result, compared was net to of million per a for $XXX,XXX of line fiscal $XX,XXX during share the loss the same net a credit The 'XX diluted per XX, The the share is $XXX,XXX July ending for 'XX. ending 'XX compared of loss approximately income the or three decrease benefit is XXXX of of six diluted expense was net same per Consolidated or taxes

last backlog to of at the fiscal Our quarter of million 'XX. and fully the $XX at October end XX, compared $XX million funded the end end $XX at was XXXX of million

operations capital maintain of XX, flow October cash to the For with positive flow cash sheet Company continues for working a Company year. forward positive of a $XX the over from going very strong the anticipates the Frequency balance the six and position XXXX, months million. generated ending remainder

will back your to turn have healthy forward And Martin. $XX.X position million. look we later. We a call questions point, of cash to this At the I

Martin Bloch

everybody. afternoon, Good

most invested press term Martin, enormous in it this year, for the as down to new industries time in breath. technology disappointed just calendar of As satellite. degree The submit for a such reasons. is million of potential frequency The that until $XX be this, we but future dynamic satellite our time products, the during required back; of affordable satellites in more have we the planned taking of -- mentioned because technologies the space, commercial old for the that space this products development all are their all we're Chairman, products basically new other improvement day, satellite pressure is of of satellite the new not reasons and release, this are invested, it's going addressing in the role more we where at and have that industry revenues business same high we and booking were paid geosynchronous on customers spite because for of looking of and during the Joel channels and the to XXXX. deep with of attention away, than low Boeing, and our getting power the customers of Orbital a various is of for basic confidence lot integrate idea Girsky, smaller, have divisions how awarded and satellite Lockheed of experienced be settles and the many were that new challenges more In almost will really the not the research

to production, which longer of stability success. of degree supplying we -- the when few we be goes this a to affordability function going the key quite the into economy will systems, as now are and systems demonstration communication a have factor to For again, be big on the programs time a are this that give secure for secure

in to our prosper progress great to system large address continue making our to market are high future and will I'd to better is this for We be for Stan, frequency time to sensitivity -- and go and our to like waiting of decide turn he make that remarks. in hold over a breathlessly few able timing this because confidence years.

Stanton Sloane

couple Martin. just you, will Thank remarks. brief And I a make of

over the operations, all, Also, on phase, several technologies. not be and an year the that basis. reduce months. and businesses. We'd next changes anticipate to restructure respect business to dollars mentioned finalized the yet Jersey Martin costs; to a our they taking G-sensitive New new implemented annual million we're actions to low but the These that with are ongoing New respect First produce applies York with both that savings will order low will of of on business couple business

particular in traditional more market DoD timing, communications months mobile and applications as really aircraft, in across our missiles applications our those well We as are focus had have UADs, pretty and increasing coming and front as precision we're there. helicopters, excited pursuit will Board secure about the ongoing business and to be so on such platform the all an that I the add. technologies that's Martin,

Martin Bloch

so for hours but embarrassing our to rather I questions. stockholders they can can I'd over turn it talk ask much

Operator

Robatsky [Operator first proceed the [ph] Please question of Asset Management. from with line of Instructions] Sam question. comes Our your Sir

Unidentified Analyst

produced? and $XX security in how how the how on that of that to far what And as be -- backlog, is satellites? somehow on have expect sales we million we as R&D, is satellites in the is kind get going much to all cyber -- spent we the much the much -- Could and

Martin Bloch

only for any on why and this include this development pursue either does programs business business, communication satellite satellites million DoD on that other is $XX that due to I specifically we business relates satellite related That or has said, that's to satellites to the related not space, area, and that technology. secure

number, other business confident. hopefully that I'm added this the the that on communication and to pursuing high areas secure in will So we're add fairly

we R&D and pay we it's customers, technology. corporation have -- best the space, If you're investment is estimate which which as XX-XX and EW about and to the from -- sponsored asking well secure related to some as positioning a of as communication made, are some by our as that about

Unidentified Analyst

it done? like talked Is period mean, XX, be accurate transaction about which fiscal We sale getting the XXXX report subsequent Gillam April we'd before to and or or year. the an that occur I date to -- would is going your be to Okay. rid that with of that in April

Martin Bloch

but it done April lot fiscal effort and present that it get I'm we're putting XX more that XX in will be before to XXXX. is Our not of earlier before confident accomplish a view we'll it to done if April able XX% be

Unidentified Analyst

the then least Okay. be will $XX million XX appear in make to our than get $XX the backlog we quarter get XX, we or year we million or And just so can while be and XX expect versus and have sufficient more April it back versus subsequently make do so at ending even one I to million further XX we the we profit? a more into can break of With $XX before XX business, queue. with

Martin Bloch

timing, have high are and degree ours this very, At have of and but we time on programs in spend September this and look August, make fiscal control, a that very but we'll at sure have the right predict to want all expected going to that July, most forward it important a and how keep to you is the but that my unfortunately is they they are we abreast mission success. is much moved that depends to that's I'm to moment that's something little confidence we that very -- is the and make to to quarter fourth significantly going contribute to hard to what I profitable XXXX contribution

Operator

comes of [ph], question. private question Please Jones your next Richard line with a from Our proceed the investor.

Unidentified Analyst

understood. a uptown that never but you've than their I've I maybe you that… Martin of the think I lot I a a they've the up, and converters or satellites believe have supply XX something question I about said know uptown like it's something more you've customer had sent iridium converters, for that satellites, Basically,

Martin Bloch

update on an give Go that. Not you ahead. quite. I'll

Unidentified Analyst

anything don't that I several this iridium the said etcetera add million that the per satellite understand but revenues and they to million because additional $XX piece past Okay. just of what you've enable earn But more uptown couldn't that you satellites converters might business upto is produced upto than in have a much. also didn't

could So on me that understanding some give please? you

Martin Bloch

one an converters. satellites are because be over satellites converters, performing this in are orbits that December well and iridium They we -- converters it's it's the providing really at orbit plus. the industry telephony to where are a and so large, are nothing XX we significance the is on production respect of an additional and is converter will close XX get The supplying higher X,XXX date there Upto new any in uptown with our With XX in [ph] on and frequency the turmoil. converters to has frequency are job L-band getting very satellite significant our first and -- customers customers launched been XX satellites. like and not business KA-band for is and the Absolutely. for primarily is to and is new any a awarded we did on higher requirements KU-band

that going We are breathlessly we're see small it's have a a have we the a lot view to is going to more some classified provided The the will but more to waiting bandwidth that preliminary shake need to how but out. because programs going and at that all to they quantity, vehicles provide channels launch weight on be they same to much are smaller put the converter have lighter up anticipate. to they

have see order they to the this get probably provide any to passengers address X.X don't get and us. from aircraft meantime, and they provide want their the they didn't to inexpensive want customer where everybody guess you billion that to internet high is As on that and can any definition In scrambling for how our and market. video market done when read, it be what, largest don't they is business business, customers

shakes is and waiting of anxious not everybody just the want that up. satellites very are it in I again, are near something that's business, military out future. redefining to the to need how emphasize see So they commercial

every XXXX is XXXX. related want year see to and opportunity $XX have in to I shakeout We satellite going that million calendar emphasize and confident expectation again, be in highly on why satellite very that work to that's the

Unidentified Analyst

And that $XX satellite, -- million figure $XX is is upto a million prospect? reasonable this per still

Martin Bloch

those It's to originally will more -- converters satellites this more more going smaller in many, need is they be to On it's reasonable take a more than more past the on but will lot prospect. to except affordable converters have but a few than many done to channels it's have and you good objective. planned. -- going provide we much because are There be a this bandwidth

Operator

private [ph], proceed question. Our with next Please question Isner a Michael your comes from the line of investor.

Unidentified Analyst

Can backlog you comment on what is the today?

Martin Bloch

backlog we contracts. you definition, $XX.X I know, value the million. only backlog, think And report as the the by contract is -- don't this contract the count in backlog funded value a we funded as of

Unidentified Analyst

$XX confident the million going you're counting get satellites, to feel you Zyfer? But just not in

Martin Bloch

million testing business of have that in count not very $XX and that is it be and related the providing pursuing we system that they have does field The feasibility successful that happens, is whatever and will a been number. targeted satellite in satellite this, on secure additive communication to Zyfer any that

Unidentified Analyst

year, how were during ago is while to you mentioned A you that looking coming along? save million $X this

Martin Bloch

a take to have I look.

hard cost operation, about right objectives and in see has a production achieve improving can savings of combining Stan of by achieve. I at our efficiency our undertaken year New the research half capability sacrificing York Elcom the reduced we facility past to and think and by what our we're our without want task looking we've New to very $X in we and million other and York that

Unidentified Analyst

up I next year in from… is think Elcom lease your

Martin Bloch

the development to Yes, will in at New product savings, a and for center that of York. of secure and that's applications research thing. and savings move done manufacturing and significant minus until become that's EW a smaller We'll part facility the our the other involved will be

Unidentified Analyst

$XX you're in pretty you satellites, sound I gives question; mean but question don't that? million what that, saying confident to you about on Final

Martin Bloch

that have we for the getting that's great R&D investment this made in Well, getting and proposals we've and from are our that our feedback we of customers the submitted we programs jobs. their probability a have the

Unidentified Analyst

and the keep Some bigger won't of it in-house? try companies

Martin Bloch

they that in-house. cannot of technology No, this keep a they is difficulty majority The work can't. it

Unidentified Analyst

hear. nice Thank That's you. to

Martin Bloch

I'm just happy, Mike. as

Operator

follow-up proceed question the Asset your from of Robatsky [Operator Sir Instructions] We question. have a Sam Management. of with line [ph] Please

Unidentified Analyst

look results what of at? and I you seems more; what consolidating to Gillam. bulk the rid -- have making With you deals other at up had desirable looking It you could an have been what ability brought have lot acquisitions of kick to getting onboard up a to tyres very make And acquisition. to hope Martin, Stan soon? the you acquisition of profitable in-house besides

Martin Bloch

that's that We precision the reduce same and smaller keep his acquisitions right communication our basically task look other supplement things that EW to for this, and are are quest a will of objective of opportunities this is [ph] and he he main is added our our has. definitely, one technologies looking earn major you idea and companies in programs that the onboard, problem because size always have and us add to will will the low in low performance and secure And can to becoming we with at Stan that's and our phase, G-sensitivity is time, that on with keep build open. definitely the eyes an

Unidentified Analyst

companies, many two you looking one to Are parameters increase or how are of $XX bulk companies have what do you But at million at to your kind and sales? company, currently? $XX and fit looking million million; presently that the you up $XX requirements

Martin Bloch

increase I that I Like about all and with NDAs everybody off it's sales stage. sales, are with you a a is at defined we're That's said, opportunities the have All since make not have shareholders. this future. net tell much in you can later profitability talking not we it's to we commitment just rather to a for increasing I to the and good on looking

Unidentified Analyst

profitability, price, I but higher it's extent your low I but you to good think if then and at and I believe stock sales, is found could you flexibility something, stock with no Okay. sales you or improve better stock but a looking with that stock it's appreciate to street this believe your sales your whether mean, give not there the at stock give profitability. at -- this too and it's I the at cheap you currently more companies look and price with that would profitability find level your your if could you -- high you're you extent agree acquire you I will that that that the to things help an start appropriate improve

So that's my…

Martin Bloch

future. in opportunity the growth good a And

Unidentified Analyst

Exactly, yes. must there there out for be But you. one

Martin Bloch

is. sure I'm there

Unidentified Analyst

Okay. Good luck.

Operator

private question question. next comes [ph], Please Our with line the from Cooper Michael of your investor. a proceed

Unidentified Analyst

I here. of have questions a couple

on sign I indicate and couple they And revenue in competitive of breaking should increasing overall I all out think there, that inch they business, think a success weeks seem share. it dealing landscape; directly your frequency it starting and long or quarter indication timing kind contracts are with and start their was were know, good coming or renewing they business, of so ago market some view to that about you're just I with So question the quarter. it the being is competing an -- you they increasing with and of and released is that Frequency market one to talked seeing we're your contracts; the are this just also in and as maybe you the Are they kind going forward to see this equipment's is along Sammy next timeframes [ph] their of in Electronics? Michael released progress side to on you

Martin Bloch

Let me it separate [indiscernible].

[ph] of are. are the of very communication shaking 'XX on support in satellite companies there and the the the think secured for companies the two that competition good timing, world and one see this, few the the experienced and FEI; When in off everybody. in on States competitor other in they future. our that $XX I but We've respect leveling that looking the a have First the of timing, little is in forward programs out this, of and believe pursuit and report from of some they this we're calendar are to technology are very very possibility areas they million and to Michael worth there and some comes in the And idea have people Sammy to to turf we I satellite next-generation maybe are sales, we few in plus the business near space we sign that's and United a them that some competed increased indicates related the best area. next-generation satellite it of in book

is competition. their the are indication of but some or little I satellite no they think answer So major both, the programs, is positive in

Unidentified Analyst

you give the flavor more performance question on you My of a and I GPS that bit your commercial you… around second think little And, is operations. division? can financial

Martin Bloch

talking you Are about FEI-Zyfer?

Unidentified Analyst

X.X Yes. Where this your X.X finance quarter. went that you're out working from it to on

increasing business revenue around at quarters margins that division? in types and the just momentum over So gains looking these we the that in your is gross be few there? robust and next that of Should sales very

Martin Bloch

are we definition exactly don't looking the your best -- know Well, do my again, so answer to I I'll question.

this on -- there EW communication this secured communication, past, increased additional area booking I yes, I looking in a to is -- and If market great Elcom book market to secured and in because answer for you need big are and and we looking and revenues such navigation so business many are that a as communication looking space personally a synchronization FEI-Zyfer, and this. our improve or emphasized and on as the I the at that and secure opportunities see to are bigger be secured positioning than on was

will have How Elcom will FEI that are are of XXXX year. hard to they in So it expected and pursuing this coming in calendar predict. fiscal business success FEI-Zyfer much significant is they fall and

Unidentified Analyst

that kind are Now in gross you margin than or margins higher on you of area that XX% the generally? XX% report your gross side;

Martin Bloch

a of of we them have zero to ingredients margin to and we the have -- area with on FEI but key their higher assistance in at grain product is that one FEI-Zyfer's manufactured salt time sell believe profit. that that's take it much the that this precision Well, key the because I

the at So they key profit that blocks. which a is building timing we York have make units on New the FEI

So, higher York. definitely than but are considerably margins New their profit

the run are technology margins dependent support amount personnel on Our a volume profit you because of fixed business. and need to very

can revenue. revenue key have on we margins this, that in the significant to our improvement increase, is our our As see you increase

Unidentified Analyst

well around closer mean, increase XX% quarter-over-quarter? even -- XX% XX% or are revenue you as to or And I

Martin Bloch

in systems of great the performance. division, had New yes. that delivering they that zero industry York I in profit in No, remember again, by portion have want the FEI indicate yes, they've a is timing FEI-Zyfer, are shipped that they New at had York. to --

Operator

a Please proceed Our your next comes question Michael investor. [ph], with of the Isner from line private question.

Unidentified Analyst

was It's answered, on it Zyfer.

Operator

the audio concluding of like to remarks. no are the portion over now further questions to turn the conference management I conference. for There would back over

Martin Bloch

Joel?

Joel Girsky

all behalf a employees good employees in Thank much, wish that there Frequency who understand you of of management breaking of thank is success appreciate those you rear the calling and on we'll bunch ends me, with for talk Electronics, we hard Gentlemen, happy, the achieve sitting year. here all we and end Please interest are here a to is want. really your certainly all the all very at And it. we who and the healthy holiday of new you season QX. you to

Martin Bloch

Thanks, everybody.

Operator

you conference. participation. concludes for This Thank your today's

You may this at a lines of time, wonderful and rest have day. your disconnect your

Frequency Electronics (FEIM) 13 Dec 172018 Q2 Earnings call transcript