FEIM - Earnings call transcript Q3 2019 | Frequency Electronics, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Frequency Electronics Third Quarter Fiscal Year 2019 Earnings Release Conference Call. [Operator Instructions]. At this time, it is my pleasure to turn the floor over to Martin Bloch. Sir, the floor is yours.

Martin Bloch

Thank you, Christie. everybody. afternoon, Good

turn but I wire all, they to that just press say not at our First point. this is would having NASDAQ It release, our releasing service shows successful details who to and available back necessity. this turn it some the no that call on been website of more and will ado, further to Difficulty] need [Technical in for Bernstein, like go over the through I it's IT have then the Steve Steve. me, precise With problems, would to like

Steven Bernstein

Thank afternoon. good you, Martin, and

year. the million For XXXX, year. revenues of months to Government year revenue million to revenues commercial million for are ended satellite in and increased revenues approximately $XX.X Other $XX.X for compared for FEI-Zyfer revenues X% XX, and these consolidated $X XXXX XXXX, the For were customers, of method; revenues XXXX to U.S. and government from satellite contracts market fiscal recorded fiscal are the in ended segments of recorded the to $XX.X are fiscal first for approximately January as The eliminated only the compared compared in on consolidated are York period million in in of to same million revenue XX% consolidated components XX% segment; $XX.X revenues follows: of million revenues XX, fiscal in fiscal approximately compared accounted primarily the the fiscal previous was and in X industrial which X XX% in are approximately DOD revenues compared of the XXXX; consolidated X and Intersegment of programs the completion from the non-space U.S. percentage XX% to approximately consolidation. million, to last FEI-New revenue accounted to under from from period months $XX.X accounted and up York prior declined both $XX.X months FEI-New $X.X the payload compared for commercial recognized January the of XX% same XXXX. million

over higher nine the in revenues, repair margin cost increased the significant the in primarily XXXX. cost. from gross The XX.X% rate from same reduced XX.X% gross prior to XX, reflected write-downs. January the gross rate same ended XXXX, for month fiscal margin and gross and manufacturing margin of For fiscal period gross period year's inventory resulted XXXX, The margin period increase rate overhead margin decreased and

XX, XXXX For respectively the consolidated XX% months X revenues. XX% approximately expenses administrative ending and January of and selling and XXXX, were

the R&D for and X-month products XX, investments January comparable January SG&A revenue XXXX, and XXXX revenue the The the edge expenses ended SG&A respectively XX, in keep the the fiscal were company's XXXX gross the to of represent due expenditures intended of secure company's leading however address year. in of loss increase income during divestment was and the reduced the and securities to the a 'XX, X development revenue, percentage holdings of $X.X loss and approximately derived and X margin XX, approximately Research marketable margin at year. revenues. next-generation commercial of to period 'XX. of and applications. and increase the ending ending XX, to were from securities. million resulted the XX% year. January company's gain period months decreased the ended opportunities XXXX the expenses of million the year. for loss additional Other XX, similar X-month $X.X For divesting and XX, large of dollar the The beyond ending XX% time consolidated investments a at both XX% R&D to same activity $XXX,XXX the communications, income The a of rate R&D level in XX% competitiveness. to of period new applications, and expects of The and to the months pretax DOD period sales from X products million through million for in compared income the compared year pretax months the command-and-control enhance period income satellite technology related of of year. and total was a expenses X of compared and other same fiscal year's last for X ending million This approximately Last fiscal the XXXX, sales for for current frequency period a the a same holdings the gross balance $X.X loss of both yields payload company XXXX future equity compared on approximately to XXXX rate for account. $X.X to were $XXX,XXX months rate January previous January continue last and preceding $XXX,XXX as operating January XXXX, Other in $X includes reflects

share the ended of million XX, or provision to the for $X.XX XXXX, continuing Difficulty] $XXX,XXX a [Technical January company for For ended from prior per compared $XX.X months the $XX,XXX X of operations was period XXXX, January X year. XX, the share of the tax loss or $X.XX same recorded months a per

fiscal Martin, is believes company investing for of and January the at The at company's balance for turn and its and to months million to XX:X. XX end backlog look continues XX adequate the end position we reflect working will foreseeable your later. previous XXXX strong the to future. sheet the the fully-funded call was and Our I over to of as XX, up back million $XX of its Thank the year. million, needs meet $XX operating you. -- $XX liquidity The capital forward XXXX, of the a from ratio current January questions

Martin Bloch

Executive our Thank Officer, you, Stan to Sloane. the Steve. I'd call Chief now like over to turn to

Stanton Sloane

everybody. Thanks, Martin. Hello,

year the improve fiscal pleased from each increased this As to I'm of and Revenue year. QX. last efforts progress quarter we to continue this the between as our as financial well in X with year quarter very performance, months comparable

sensitive very business Our improving These forward. leading going numbers. indicator are revenue increases in results a good overall to line financial for is top

continue with on to operations our on also our subsidiaries improving rationalizing focus Asia emphasis and manufacturing shaping profitability, We and in Elcom portfolio. business

it investments substantial bids well. details in And development, customer-funded options Our production the opportunities programs. outstanding, are the include ever development the while is number only new opportunities in in research value as we the significant not continue producing can't and The bids been. several of exciting and for but of future bids, of largest and discuss has outstanding research total

of positions Steve, changer not to as turn While advanced a to be terrestrial program, provide numbers comment next-generation significant if look atomic I'll of award other a would yesterday QX game your I atomic for space of space DRAFS for I us and questions event, only our Martin contract not standard, well. and frequency GPS the didn't us back clock rubidium for This announcement Martin. technology the qualification it to later. remiss on Lockheed is GPS I'll for applications program. digital our forward from Like IIIF the clocks but for And

Martin Bloch

the add. of nice everybody. With all speeches, have little Hi, very I to

and rubidium opportunity for on is IIIF program, is with satellite using revenue want that $XX that we're in a achievement our growth have quartz X Frequency of the for The XXXX, GPS very to That's United especially I'm per XX the clocks government years. The for on very next fiscal for devoted substantial approximately I plan we and the and million to satellites opportunity, track great the remaining and program. I'm States the to over satellites at encouraged thank the Just delighted development. team research opportunity launch X Electronics

orbit company Voyager longest timing knowledge, on in was which systems delivered everybody's to the in have over was for when that course, We for it we satellites operating redundant of in Voyager since X and clock JPL was XXXX? launched the clock orbit XXXX. established, X, -- Just X,XXX and, supplied in

on almost clock a century of that's continuous half So operation this.

to appreciate address Sloane this if Martin our Frequency appreciation your deliver Steven taken much, and and on I'm us customers question-and-answers, now is I either IIIF orbit Bloch. And to participate the course, on Stan forward our questions. on or the other is that the Stan to quartz Thank I and turn military for longevity reliable the other opportunity many programs. express to clock secure GPS have satellites. our We has -- and that of part of opens I team very want you I'd and have the forever. looking as questions opportunity and at clocks would we to also now this to program express to thanks the mentioned, have Bernstein, hardware on from individual that secured to to atomic of my like over

Operator

John first [Operator question an [ph], Individual Richard Instructions]. Investor. And our from comes

Unidentified Analyst

could wondering in the I'm you today. if You've in past, that have bids also and total of the could jamming that I'm I'm business? part us hoping number give the And the you And spoofing outstanding? it on an you Martin, hoping that us opportunities? tell what's update, the given of number happening to and hear

Martin Bloch

Well, okay.

on can this. that. You're given With time away as the number participate that of and timing satellite, we [indiscernible] and fixed are anybody, $XXX the of large very precision The precision it's of is I'll well applicable so precision sensitive very platforms, the to requested we the in but is the addressing respect market me as a where million, to more being are have able time becoming I to number to tell our answer but more for are to commercial it and mobile application bids, because also and and getting And exact necessary, number secure terrestrial excess sources is is satellite getting and more military that's being spoof no and smarter sensitive adversaries and GPS to continuously jam our and encouraged that other on we to key in smarter arena. communication positioning there. by and our more development you

Operator

Sam Asset And move Rebotsky Management. next SER with to we'll

Sam Rebotsky

time backlog, $X.X million $XX be recorded? period going we that does that's And to million, the include the $X.X So million? what over got funded of is

Steven Bernstein

QX. this So is

to backlog answer about The is, the months. in no, the So reflected performance yet. backlog question not your XX of that on it's is period

Sam Rebotsky

months. XX

Okay.

Martin Bloch

best it's challenge our as we can. as do to And

Sam Rebotsky

was quarter. sales quarter? I put and Okay. and it a there I front don't What quarter of similar, me. don't the were profit the between the previous previous and think it in I happened have the I front. previous this have in assume quarter

Steven Bernstein

me I either. of it front don't have Steve? in

Stanton Sloane

We got right here.

Steven Bernstein

The second. One was up either. well. little from a of quarter-over-quarter bit not as QX. were $X money sales by million about profitable QX The lost We

Sam Rebotsky

you the Okay. this say, more than we in And second lost quarter, quarter?

Steven Bernstein

about -- lost QX. may No. would we a the be I say, They were in more same, little about

Sam Rebotsky

Okay.

all backlog, of not of spoke we're had of I mean, whatever doing think, kinds where or we always number Now seems you the all cut come with a something, always of bidding a always backlog there we rational $XXX I that is fortunate Lockheed the number on, work -- or million to to that is all today? Could probably are bidding their getting? in presumably and coattails. we ride stuff contracts sort we on can fit be evaluate they're around,

Martin Bloch

tell to you, the have and with only I'll we're Well, participating programs in be live are near future. visualized that

Just of GPS IIIF program. an as example

about one are thing to from receivables and be just heavy So of that or the at hypothetical programs. programs very be item, a in in is our our to the and going will our Frequency spite cash guesses. don't that on effort period I of funded investments they and our realized losses are reasonable add that this the participate IR&D We proposals time. within and development, in put high pollutant product XXXX not the slight team on We funded proud put which are wild same. want XXXX in either

Sam Rebotsky

Okay. That sounds good.

Do $X tax Or we more if time it to we over the is hire? million sooner frame? it how Stan, we it sooner? people credit many just people is Is hire years. related XX Now, XX-year get over

Stanton Sloane

new a No, of number it's we jobs create. to tied

Sam Rebotsky

-- far, many how created so how And jobs? many we've Okay.

Martin Bloch

number the disclose. to not we That's want that

Sam Rebotsky

you get races. get hope and Okay, to business the profits, that's and you understandable. off you're all some right, look, Well, Martin,

press the get and on time. Okay, releases out

Martin Bloch

atomic We clock, and their did on blame and that why get IT they it probably they department, out have didn't a good time, that's problem. NASDAQ have

Operator

we'll Michael Next Iser move Private a Investor. to [ph]

Unidentified Analyst

on? million what's you -- spent be said that for they News spent money expansion, to said $X.X going Newsday

Stanton Sloane

Variety in systems the building. of infrastructure improvements, improvements, building

Unidentified Analyst

article The Newsday right. XX hired they All comment not that if the did you And in that jobs sure far. I'm hired Newsday number article. you -- is that so correct.

Martin Bloch

not comment We're going that. to on

Unidentified Analyst

one And just they did. Newsday Yes, commenting that put on out. more what question. I'm

with satellite be said new could $XX per You clock? it the digital million rubidium atomic

Martin Bloch

on estimate million one our opportunity the than $XX per clock more plus is the about Well, satellite. on but there's clock satellite,

Unidentified Analyst

million? $XX

Martin Bloch

$XX million.

Unidentified Analyst

satellite. $XX million per

Martin Bloch

satellite. million per $XX

Unidentified Analyst

contract, was the right. was And for? just what that or $X.X to design All million that it

Stanton Sloane

before clocks, initial you that's is programs. flag That's go for qualification clock qualification and to the can test of the part you what through for. And have the

Unidentified Analyst

issue And been have with be really your with on... working background, that because an what this you shouldn't that's

Stanton Sloane

It's of since founded. we're company evolution technology the an working was

we're So comfortable pretty it. with

Unidentified Analyst

many X be next years? satellites And do expect X how -- the to that would you

Martin Bloch

said, government IIIF GPS the program. satellites in Well, XX on the additional Frank as

Unidentified Analyst

Yes, because not assume. the be I XX, first to going you're on,

Martin Bloch

the counting XX, government is last next-generation not the is The GPS IIIF satellites this procure. what XX. XX is the plans first This to

Unidentified Analyst

or on you the XX anyway first get there can Is no?

Martin Bloch

an earlier finish we the yet. We're We qualification be and to the on get able working don't know It fast problem. in satellite. might how on depends we

Unidentified Analyst

would it satellite? it per roughly, clocks many how be And

Martin Bloch

Three, plus four. a possible

Unidentified Analyst

or per X satellite? roughly So it's clocks X

Martin Bloch

mission also very a time mission. carry satellite, without The don't the clock is Yes. satellite but they and main precision expensive the of to have

Unidentified Analyst

you? So they need

Martin Bloch

They be need us. Nice needed. to

Unidentified Analyst

a this? there you are the for Is ones? competition Or much only

Martin Bloch

No, source there is that's on this The United probably about States, in and it. another

Unidentified Analyst

have record? proven You a track

Martin Bloch

history over history a of clocks space also program. satellite clocks great on have secure in atomic X,XXX of a We great and

we we're deserve. confident get So share more to very the than

Unidentified Analyst

competition All program right. And to is get expect there of what this out all you no percent of if the there? do

Martin Bloch

something god That's only knows.

Operator

move Cooper an we to next And Investor. Michael [ph],

Unidentified Analyst

Can a to a [indiscernible] Sloane $X contracts budget. and investor into within within I year if where of Electronics some turning understanding of a like a about are market and The about area talked market. probably billion second the engineering some opportunities my if today... through on to is was and question the be given ago nicely then something And mistaken, potential DOD company seems about worth an -- around I I'm that's getting into think, that that, talk not of group or presentation kind $X question those the going? about, Stan DOD had of had you contract Frequency correct. had working some range And my progress you programs? billion And

Martin Bloch

it take you please. Stan,

Stanton Sloane

hear little we're hard So you. to

there referring Needham you think noise probably on what effort we market was the We have. guess, or we are but in the a have part -- of I last an communication for referring The rest was your my I which here, are to. number you opportunity to presented I other conferences, to that you're was year. is at think, the question, Cowen size of the And types the of technology the That is what part? referring

Unidentified Analyst

to $X was been So billion that contracts they early wondering contracts I to potential revenue? were of into and a future Are you of I opening And kind think some that small number contracts, those areas continue $X progressing? various had just to they larger market, thing? how billion of up market the starting unfolding like look some are

Stanton Sloane

IIIF. GPS those is announced obviously just of one we So yesterday,

on it. my project are things So we take progressing as

Martin Bloch

question. promising. It for very much good very Thank the you looks

Unidentified Analyst

One other over on And that off-the-shelf progressing? is questions. your more products. my question... shift small to second then How just And two

Martin Bloch

Off-the-shelf?

Stanton Sloane

not not think, where I I'm we Yes. the way you're from. sure don't the business. that getting characterize certainly

Our missions. business of are and products R&D core is specific development, involves here and adapted engineering usually semi-customer or but a nonrecurring based for technologies, customer, by on lot typically large

Martin Bloch

off-the-shelf. not They're are but a are might they quantity, There be specific. large mission

Unidentified Analyst

Frequency been They seem And in around reading for finance the only a is autonomous Or How it markets and GPS is any lot in for secure things then looking the Electronics be my Defense highways, other cars timing intelligent are of at? just and be get of enhanced I into they will way? heavily and requirement news Okay. all GPS more looking any question to Department like sector. does those have of at signals. GPS IoT

Martin Bloch

that for be And is worth This the can you is easily GPS GPS area. $XXX electronics, are a less can you exactly Martin. more know smarter to more is It and half-a-mile been we're spoofed excited emphasizes this problem this about jammed have signal you don't needs we're GPS-related own to be There precision accuracy. part get but can time jammed, however for means jam available that's and it solve you it's don't has And adversary, your in addressing market than what the that problems. within is. you market. and X timing, What the of a our if have very it

Operator

And next Investor. we Richard to Individual move John [ph], an on

Unidentified Analyst

could spoofing the a about recent activity how And the Lockheed talk of feel us your this coming You've the you the given a area? that think order, Can prospect in is on? about point space give with about of excited bit you and example you an in why little are jamming? you recent at progress orders

Martin Bloch

think the definitely I if basically, GPS and and as jamming listen Well, has of military become security. report and many spoofing well any homeland a type on this of commonplace you operations commercial to affects it as

you every that's precise you invested get where market an more lot have upcoming of that's is our available effort mission. we're So and to at market. precise to this very about and place excited time a price, time This our more need turn, we those and affordable

Operator

to And now on Iser Private a we Investor. move [ph] Michael

Unidentified Analyst

question. follow-up had just I a

On besides market is rubidium the it GPS there of the what Lockheed just size atomic clock, out the digital IIIF, Lockheed? besides

Stanton Sloane

satellite. clock rubidium high of the require is that not on precision So any can that IIIF be the for next-generation sources, It timing unique to clocks GPS satellite would space. used

would every sort to potentially satellite that significant every of applicable be system, requires communication the that So secure market timing.

Unidentified Analyst

of clock? as type this of see this beginning do selling you So just

Stanton Sloane

It's specific program Yes. the design. for this first

Operator

over back to And time. be Martin turn questions no for to there appear further this it remarks. closing with I'll that, at

Martin Bloch

for Christie, much, again. this very Thank you listening Thank this. you on on Okay.

because -- the that's you, Have to to line much presentation. clear line, months. hard products improve talk and to improve Stan, the follows for line, a X thank the giving automatically. top We'll mission. you very working listening. We our Bye. the with Thank you are bottom top good for And summer. and We a Steve in

Operator

you does your participation. today's That We teleconference. conclude for thank

your You lines a may day. disconnect great have this and time, at

Frequency Electronics (FEIM) 14 Mar 192019 Q3 Earnings call transcript