Frequency Electronics Q4 Earnings Call Highlights

Frequency Electronics said it expects to return to growth in fiscal 2027, backed by a record $111 million funded backlog and the company’s largest annual bookings total ever. Management also said the fourth-quarter book-to-bill ratio was nearly 3-to-1. The company outlined ambitious three-year targets of at least $150 million in revenue , along with minimum 50% gross margin and 30% operating margin by fiscal 2029. Management said the plan is supported by a shift toward higher-rate production and more consistent manufacturing.

Fourth-quarter revenue fell to $15.4 million from $19.9 million a year earlier, but executives said the decline reflected a difficult comparison and a restructuring of the FEI-Elcom business. Growth opportunities are centered on space, defense, alternative PNT , and programs tied to GPS-denied environments and missile replenishment.

Frequency Electronics NASDAQ: FEIM said it expects to return to growth in fiscal 2027 after what management described as a year of “digestion,” citing a record funded backlog, strong bookings and expanding demand across space and defense markets. On the company’s fourth-quarter fiscal 2026 earnings call, President and Chief Executive Officer Thomas McClelland said Frequency Electronics ended the fiscal year with a funded backlog of $111 million, the highest in company history. He said bookings in fiscal 2026 were also the largest annual total the company has recorded, with the fourth-quarter book-to-bill ratio nearly three times. “After a year of digestion, we’re returning to growth now,” McClelland said. “This quarter, which ends in two weeks, will be the beginning of a multi-year ascent to a much bigger Frequency Electronics.”

Frequency Electronics said it is targeting at least $150 million in revenue within three years, a level McClelland said represents a 34% compound annual growth rate from fiscal 2026. He said the company has not historically provided guidance because its business can be nonlinear by quarter or year, but management is more confident in projecting multi-year growth due to the expansion of its backlog and order book. The company also introduced three-year margin targets. McClelland said Frequency Electronics is establishing minimum targets of 50% gross margin and 30% operating margin by fiscal 2029. He said depreciation and amortization expenses have historically been in the low- to mid-single digits as a percentage of revenue, and management expects that trend to continue. McClelland said the path to higher margins is tied to a shift in the company’s operating model. Frequency Electronics is moving from what he described as a “bespoke manufacturer of exquisite products with more episodic production schedules” to a higher-rate production company making more units of similar products on a more consistent basis. He said that should improve overhead absorption and reduce non-recurring engineering as a percentage of the total business.

Chief Financial Officer Steven Bernstein said consolidated revenue for the three months ended April 30, 2026, was $15.4 million, down from $19.9 million in the same quarter a year earlier. Bernstein noted that the year-earlier fourth quarter was the company’s highest revenue quarter in 25 years, making for a difficult comparison. For the quarter, revenue from commercial and U.S. government satellite programs was approximately $7.7 million, or 50% of consolidated revenue, compared with $12 million, or 60%, in the prior-year period. Revenue from non-space U.S. government and Department of Defense customers was $6.8 million, or 44% of consolidated re...