MITCHEL FIELD, N.Y., March 15, 2018 (GLOBE NEWSWIRE) -- Frequency Electronics, Inc. (NASDAQ:FEIM) reported revenues for the third quarter of fiscal 2018, which ended January 31, 2018, of $10.6 million as compared to $11.4 million in the same quarter of fiscal 2017. Revenues for the first nine months of fiscal 2018 were $31.9 million compared to $34.4 million recorded in the same period of the prior year.
The Company recorded an operating loss of $7.3 million for the quarter ended January 31, 2018, compared to an operating loss of $904,000 in the third quarter of fiscal 2017. Operating loss for the first nine months of fiscal year 2018 was $9.0 million compared to an operating loss of $2.5 million in the first nine months of fiscal year 2017. For the nine months ended January 31, 2018 the Company incurred approximately $8.3 million of non-cash charges compared to $3.8 million of non-cash charges in the same period of the previous fiscal year.
Net loss for the third quarter of fiscal 2018 was $10.4 million or ($1.15) per diluted share compared to net income of $338,000 or $0.04 per diluted share for the third quarter of the prior year. Included in the $10.4 million loss are miscellaneous charges of approximately $300,000 and a non-cash charge for additional inventory write-down, reflected in cost of goods sold for the quarter, of $5.0 million. Also, reductions in tax rates associated with the recent tax law change reduced the valuation of FEI's previously booked deferred tax asset by $5 million, which resulted in an approximately $5 million (non-cash) charge. This was offset by a $2.2 million tax benefit (tax reduction) resulting from the operating loss in the quarter, for a net tax related change of $2.8 million. For the year to date, net loss was $11.3 million or ($1.20) per diluted share, compared to $1.4 million or ($0.09) per diluted share for the same period of the prior year.
Commenting on these results and the business outlook, Chairman of the Board Joel Girsky said:
"While the last three and nine months results continued to be impacted by previously discussed delays in satellite related orders, change is underway at FEI. We expect over $50 million of new satellite related contract awards this current 2018 calendar year, compared to under $3 million of such awards for all of calendar 2017. We anticipate an imminent award of a particular contract that would be significant not only in terms of financial value, but also would result in the development of a key new timing technology which will be broadly applicable for future space and terrestrial systems. Despite the challenging environment, FEI generated positive cash flow from operations for the last three and nine-month periods.
The tax asset write-down is the result of the new income tax regulation of December 2017. The inventory write-down is primarily due to recent government mandates which impose age limits on the use of certain space qualified parts and recent technological advances in our designs which limited the utility of some of our existing parts inventory.
FEI CEO, Martin Bloch, commented: "In addition to being at an inflection point in the satellite business, I am particularly encouraged by the number of opportunities we see in our US Government/DOD non-space market, including secure communication/command and control and electronic warfare applications where our advanced technology provides critical performance advantages. We are pursuing a number of these opportunities presently."
Stanton Sloane, FEI's COO, added: "I am pleased with the progress we have made in restructuring manufacturing and inventory control, and am very excited about the new technologies we will be developing on the upcoming contracts. These will move us into a new era of frequency and timing standards."
Fiscal 2018 Selected Financial Metrics and Other Items:
Investor Conference Call
As previously announced, the Company will hold a conference call to discuss these results on Thursday, March 15, 2018, at 4:30 PM Eastern Time. Investors and analysts may access the call by dialing 1-877-407-9205. International callers may dial 1-201-689-8054. Ask for the Frequency Electronics conference call.
The call will be archived on the Company's website through June 15, 2018. The archived call may also be retrieved at 1-877-481-4010 (domestic) or 1-919-882-2331 (international) using Conference ID #: 13677685.
About Frequency Electronics
Frequency Electronics, Inc. is a world leader in the design, development and manufacture of high precision timing, frequency control and synchronization products for space and terrestrial applications. Frequency's products are used in satellite payloads and in other commercial, government and military systems including C4ISR markets, missiles, UAVs, aircraft, GPS, secure radios, energy exploration and wireline and wireless communication networks. Frequency has received over 100 awards of excellence for achievements in providing high performance electronic assemblies for over 150 space and DOD programs. The Company invests significant resources in research and development and strategic acquisitions world-wide to expand its capabilities and markets.
Frequency's Mission Statement: "Our mission is to provide precision time and low phase noise frequency generation systems from 1 Hz to 46 GHz, for space and other challenging environments."
Subsidiaries and Affiliates: Gillam-FEI provides expertise in network synchronization and monitoring; FEI-Zyfer provides GPS and secure timing ("SAASM") capabilities for critical military and commercial applications; FEI-Asia provides cost effective manufacturing capabilities; FEI-Elcom Tech provides added resources for state-of-the-art RF microwave products. Frequency's Morion affiliate supplies high-quality, cost effective oscillators and components. Additional information is available on the Company's website: www.frequencyelectronics.com
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
The Statements in this press release regarding the future constitute "forward-looking" statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, inability to integrate operations and personnel, actions by significant customers or competitors, general domestic and international economic conditions, consumer spending trends, reliance on key customers, continued acceptance of the Company's products in the marketplace, competitive factors, new products and technological changes, product prices and raw material costs, dependence upon third-party vendors, competitive developments, changes in manufacturing and transportation costs, the availability of capital, and other risks 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 release.
Contact information: Martin B. Bloch, President and CEO:
TELEPHONE: (516) 794-4500 WEBSITE: www.frequencyelectronics.com
Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
(in thousands except per share data)
Nine Months ended January 31, | Quarter Ended January 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Revenues | $ | 31,932 | $ | 34,411 | $ | 10,572 | $ | 11,383 | ||||
Cost of Revenues | 28,060 | 23,590 | 13,424 | 8,116 | ||||||||
Gross Margin | 3,872 | 10,821 | (2,852 | ) | 3,267 | |||||||
Selling and Administrative | 7,796 | 8,483 | 2,749 | 2,834 | ||||||||
Research and Development | 5,071 | 4,832 | 1,708 | 1,337 | ||||||||
Operating Loss | (8,995 | ) | (2,494 | ) | (7,309 | ) | (904 | ) | ||||
Interest and Other, Net | 1,179 | 309 | 50 | 96 | ||||||||
Loss before Income Taxes | (7,816 | ) | (2,185 | ) | (7,259 | ) | (808 | ) | ||||
Provision (benefit) for income taxes | 2,750 | (1,392 | ) | 2,848 | (1,188 | ) | ||||||
Net (Loss) Income from Continuing Operations | (10,566 | ) | (793 | ) | (10,107 | ) | 380 | |||||
Loss from Discontinued Operations, net of tax | (697 | ) | (599 | ) | (289 | ) | (42 | ) | ||||
Net (Loss) Income | $ | (11,263 | ) | $ | (1,392 | ) | $ | (10,396 | ) | $ | 338 | |
Basic and Diluted Net (Loss) Income per Share: | ||||||||||||
(Loss) Income from Continued Operations | $ | (1.20 | ) | $ | (0.09 | ) | $ | (1.15 | ) | $ | 0.04 | |
(Loss) Income from Discontinued Operations | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.03 | ) | $ | 0.00 | |
(Loss) Income per Share | $ | (1.27 | ) | $ | (0.16 | ) | $ | (1.18 | ) | $ | 0.04 | |
Average Shares Outstanding | ||||||||||||
Basic | 8,836 | 8,780 | 8,846 | 8,797 | ||||||||
Diluted | 8,836 | 8,780 | 8,846 | 8,980 |
Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
January 31, 2018 | April 30, 2017 | ||||
(unaudited) | (audited) | ||||
(in thousands) | |||||
ASSETS | |||||
Cash & Marketable Securities | $ | 13,224 | $ | 9,978 | |
Accounts Receivable | 7,835 | 10,986 | |||
Costs and Estimated Earnings | |||||
in Excess of Billings, net | 4,122 | 7,964 | |||
Inventories | 25,899 | 29,051 | |||
Other Current Assets | 3,253 | 3,711 | |||
Current Assets Held for Sale | 8,477 | 8,165 | |||
Property, Plant & Equipment | 13,868 | 14,813 | |||
Other Assets | 27,132 | 28,082 | |||
Non-Current Assets Held for Sale | 531 | 569 | |||
$ | 104,341 | $ | 113,319 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current Liabilities | $ | 6,792 | $ | 5,862 | |
Current Liabilities Held for Sale | 2,121 | 2,249 | |||
Other Long-term Obligations | 14,982 | 14,661 | |||
Non-Current Liabilities Held for Sale | 1,795 | 1,215 | |||
Stockholders' Equity | 78,651 | 89,332 | |||
$ | 104,341 | $ | 113,319 |
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