Frequency Electronics, Inc.

What they do

FEI designs, develops, and manufactures precision time and low phase noise frequency generation systems from 1 Hz to 46 GHz for space and other challenging environments. Products include master timing systems, power converters, frequency generation, synthesis and distribution systems, and high-precision digital Rubidium atomic frequency standards used in satellite payloads and terrestrial secure command and control systems. Operations run through two reportable segments: FEI-NY (including FEI Government Systems and FEI Communications, and until April 30, 2026, FEI-Elcom) and FEI-Zyfer. The company was founded in 1961 and is headquartered in Mitchel Field, New York.

Revenue drivers

• U.S. Government programs (both segments) — Approximately 91% of fiscal 2026 sales and 94% of fiscal 2025 sales came from U.S. Government programs, won as prime contractor or subcontractor; contracts are typically incrementally funded and require periodic additional funding.
• Satellite payload electronics (FEI-NY) — FEI supplies master timing systems, power converters, and frequency generation, synthesis and distribution systems for commercial and U.S. Government satellites, including competing for GPS III onboard clock ensembles with its Rubidium atomic frequency standard.
• C4ISR and Electronic Warfare (terrestrial) — Ruggedized high-precision clocks combined with specialized software support secure command, control and communications on land, sea and airborne platforms, addressing jamming and GPS spoofing threats.
• FEI-Zyfer segment — A separate reportable segment, alongside FEI-NY, organized by geographic location of subsidiaries; specific product-level revenue is not broken out in the excerpts provided.

Recent performance

First quarter fiscal 2027 revenue was approximately $23.5 million, an all-time record, up 70% year-over-year from $13.8 million and up 52% sequentially. Operating income was $5.2 million versus $0.4 million a year earlier, with gross margin near 46% and operating margin above 22%. Net income was $4.2 million, or $0.41 per diluted share, versus $0.6 million, or $0.07 per diluted share, in the prior-year period. Funded backlog reached a record $129 million at July 31, 2026, up 82% year-over-year and 16% sequentially from $111 million at April 30, 2026. Net cash provided by operating activities was approximately $3.0 million versus $1.2 million used a year earlier.

Strategy

Management guided to $150 million or more in annual revenue by fiscal 2029, ending April 30, 2029, and described the first quarter of fiscal 2027 as a proof point toward that target. The company completed a secondary offering during the quarter, adding approximately $73 million in cash, of which about $14 million arrived after the quarter ended. FEI states it remains debt-free and expects to be cash-generative on an annual basis going forward. It also completed the April 30, 2026 conversion of subsidiary FEI-Elcom into a Delaware LLC, with operations continuing under the FEI-NY segment. Strategic focus is on satellite payloads, C4ISR and EW, which management views as the largest growth opportunities.

Risks

• U.S. Government concentration — About 91% of fiscal 2026 sales came from U.S. Government programs, which may be only partially funded, subject to termination, and dependent on congressional appropriations.
• Funding and shutdown risk — Continuing resolutions, budget cuts, federal debt ceiling issues, or a prolonged government shutdown could cause contract delays, stop-work orders, cancellations, or nonpayment.
• Contract accounting estimates — Most revenue is recognized over time using the cost-to-cost method, so changes in estimated contract costs or gross margins can materially affect reported results, and provisions for anticipated losses are recorded when determinable.
• Tax law and covenant risk — The company continues to evaluate the One Big Beautiful Bill Act's impact on cash taxes, and failure to comply with covenants in its Credit Agreement is cited as a risk factor.

Outlook

Management said the record first quarter gives it increasing confidence in reaching or exceeding $150 million or more in annual revenue by fiscal 2029. Further growth is expected to be supported by the record $129 million funded backlog, a growing order book, and larger end-markets. FEI expects to be cash-generative on an annual basis and remains debt-free. No specific quarterly or full-year fiscal 2027 guidance figures were provided in the excerpts.