FREQUENCY ELECTRONICS INC
For the period ended Oct 31, 2025. Filed Dec 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Oct 31, 2025 · Filed Dec 15, 2025
FEIM$60.22+11.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-07-31; filed 2025-09-15.
0001185185-25-001203
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-10-31; filed 2025-12-15.
0001185185-25-002057
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 43 previous paragraphs and 47 current paragraphs.
24 unchanged; 17 reworded; 4 added; 2 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
The revenue for the three months ended October, 31, 2025 was higher than revenues in the prior period due to an increase in non-space DOD products, in the FEI-Zyfer segment. This increase was in both shipment-based products as well as products accounted for under the POC method.
Current report
For the three months and six months ended October 31, 2025, both gross margin (“GM”) and GM Rate decreased compared to the same periods in the prior fiscal year. The decrease in GM and GM Rate were attributable to a change in the mix of high margin production satellite programs in the prior year periods versus lower margin programs with significant non-recurring engineering (“NRE”) effort during the three and six months ended October 31, 2025.
Current report
For the six months ended October 31, 2025, the Company recorded an income tax benefit of $107,915 which includes a discrete tax benefit of $612,685. The discrete income tax benefit is primarily due to stock compensation windfall deductions and a remeasurement of the net deferred tax asset due to a new state filing. The calculation of the overall income tax provision consists of current U.S. federal and state income taxes. For the six months ended October 31, 2024, the Company recorded an income tax provision of $271,522 which includes a discrete tax benefit of $4,222.
Current report
In March 2005, the Company’s Board of Directors authorized the repurchase of up to $5.0 million worth of shares of the Company’s common stock. On September 9, 2025, the Company’s Board of Directors approved a new share repurchase authorization in the amount of $20.0 million. Under this new share repurchase authorization, the Company’s shares of common stock may be purchased on a discretionary basis from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. This repurchase program may be suspended or discontinued at any time without notice. The new share repurchase authorization replaced the Company’s existing share repurchase authorization under which approximately $0.6 million remained. This new share repurchase authorization does not have an expiration date.
Removed paragraphs (2)
Previous report
The revenue for the three months ended July, 31, 2025 is lower than revenues in the prior period due to several customer imposed program delays. These delays are not expected to result in revenue reductions as the revenue shortfalls are anticipated to be realized in the upcoming quarters, predominately in this fiscal year.
Previous report
For the three months ended July 31, 2025, both gross margin (“GM”) and GM rate decreased compared to the same period in the prior fiscal year. The decrease in GM was primarily due to a decrease in revenue; and the decrease in GM rate was attributable to quarterly fluctuations in the mix of business activity between higher margin programs and lower margin programs, including cumulative catch-up adjustments for some ongoing programs. As we have stated in the past, gross margins on the manufacturing of existing products are generally high; whereas, gross margins on development efforts and new products are typically lower.
Reworded paragraphs (17)
Previous wording
The Company believes its most critical accounting policies to be the recognition of revenue and costs on production contracts and the valuation of inventory. Both of these areas require the Company to make use of reasonable estimates including estimating the cost to complete a contract, the realizable value of its inventory and the market value of its products. Changes in estimates can have a material impact on the Company’s financial position and results of operations. The Company’s significant accounting policies did not change during the three months ended July 31, 2025.
Current wording
The Company believes its most critical accounting policies to be the recognition of revenue and costs on production contracts and the valuation of inventory. Both of these areas require the Company to make use of reasonable estimates including estimating the cost to complete a contract, the realizable value of its inventory and the market value of its products. Changes in estimates can have a material impact on the Company’s financial position and results of operations. The Company’s significant accounting policies did not change during the three and six months ended October 31, 2025.
Previous wording
The table below sets forth for the three months ended July 31, 2025 and 2024, respectively, the percentage of consolidated revenues represented by certain items in the Company’s condensed consolidated statements of operations or notes to the condensed consolidated financial statements:
Current wording
The table below sets forth for the three and six months ended October 31, 2025 and 2024, respectively, the percentage of consolidated revenues represented by certain items in the Company’s condensed consolidated statements of operations or notes to the condensed consolidated financial statements:
Previous wording
For the three months ended July 31, 2025, revenues from commercial and U.S. Government communication satellite programs accounted for approximately 47% of consolidated revenues compared to approximately 55% of consolidated revenues during this same period in the prior fiscal year. Revenues are recognized primarily over time under the percentage-of-completion (“POC”) method. Revenues from the satellite market are recorded in the FEI-NY segment. Revenues from non-space U.S. Government/Department of Defense (“DOD”) customers, which are recorded in both the FEI-NY and FEI-Zyfer segments, accounted for approximately 50% of consolidated revenues for the three months ended July, 31, 2025 compared to approximately 42% of consolidated revenue during the same period in the prior fiscal year. Other commercial and industrial revenues for the three months ended July 31, 2025 and 2024 accounted for approximately 3% of consolidated revenue.
Current wording
For the three months ended October 31, 2025, revenues from commercial and U.S. Government communication satellite programs accounted for approximately 27% of consolidated revenues compared to approximately 59% of consolidated revenues during this same period in the prior fiscal year. Revenues are recognized primarily over time under the percentage-of-completion (“POC”) method. Revenues from the satellite market are recorded in the FEI-NY segment. Revenues from non-space U.S. Government/Department of Defense (“DOD”) customers, which are recorded in both the FEI-NY and FEI-Zyfer segments, accounted for approximately 70% of consolidated revenues for the three months ended October, 31, 2025 compared to approximately 37% of consolidated revenue during the same period in the prior fiscal year. Other commercial and industrial revenues for the three months ended October 31, 2025 accounted for approximately 3% of consolidated revenue compared to 4% in the same period of the prior fiscal year.
Previous wording
For the three months ended July 31, 2025 and 2024, selling, general, and administrative (“SG&A”) expenses were approximately 26% and 19%, respectively, of consolidated revenues. The increase in SG&A expenses during the three months ended July 31, 2025 was an increase in payroll related expenses, including stock compensation, and investments in the future growth of the Company, including expansion into Colorado and Quantum sensing, which are expected to continue through the fiscal year.
Current wording
For the three months ended October 31, 2025 and 2024, selling, general, and administrative (“SG&A”) expenses were approximately 21% of consolidated revenues in both periods. For the six months ended October 31, 2025 and 2024, SG&A expenses were approximately 23% and 20%, respectively, of consolidated revenues. The increase in SG&A expenses during the three months ended October 31, 2025 was due to fluctuations in the various expense accounts that make up SG&A. For the six months ended October 31, 2025 an increase in payroll related expenses, including stock-based compensation, and investments in the future growth of the Company, including expansion into Colorado and Quantum sensing, resulted in increased SG&A expenses. These increased SG&A expenses are expected to continue through the remainder of fiscal year 2026.
Previous wording
For the three months ended July 31, 2025, operating income decreased due to lower revenue and gross margin and increased SG&A as described above.
Current wording
For the three and six months ended October 31, 2025, operating income decreased due to lower gross margin and increased SG&A as described above.
Previous wording
Other income (expense), net is derived from various sources. The income can come from reclaiming of metal, refunds, interest on deferred trust assets, or the sale of a fixed asset. Interest expense is related to the deferred compensation payments made to retired employees. The majority of the approximately $0.2 million of investment income for the three months ended July 31, 2025, was from interest income and unrealized gains on assets held in the Frequency Electronics, Inc. Deferred Compensation Trust.
Current wording
Other income (expense), net is derived from various sources. The other income (expense), net can come from reclaiming of metal, refunds, interest on deferred trust assets, or the sale of a fixed asset. Interest expense is related to the deferred compensation payments made to retired employees. The majority of the approximately $0.2 million and $0.4 million of investment income for the three and six months ended October 31, 2025, respectively, was from interest income and unrealized gains on assets held in the Frequency Electronics, Inc. Deferred Compensation Trust.
Previous wording
On July 4, 2025, President Trump signed the OBBBA into law. In accordance with U.S. GAAP, the Company will account for the tax effects of changes in tax law in the period of enactment which is the quarter ended July 31, 2025. The OBBBA made changes to the U.S. tax code, including, but not limited to: (1) allowing taxpayers to fully deduct domestic research expenditures for tax years beginning after December 31, 2024, (2) provides a catch-up relief provision for taxpayers to accelerate deductions for unamortized domestic research expenditures, (3) a permanent provision for 100% bonus depreciation deductions for most tangible personal property with a recovery period of 20 years or less, acquired and placed in service after January 19, 2025, and (4) for tax years beginning after December 31, 2024, restores Adjusted Taxable Income by adding back amortization and depreciation to calculate the limitation on interest deductions (effectively returning to EBITDA).
Current wording
On July 4, 2025, President Trump signed the OBBBA into law. In accordance with U.S. GAAP, the Company accounted for the tax effects of changes in tax law in the period of enactment during the first quarter of fiscal year 2026. The OBBBA made changes to the U.S. tax code, including, but not limited to: (1) allowing taxpayers to fully deduct domestic research expenditures for tax years beginning after December 31, 2024, (2) provides a catch-up relief provision for taxpayers to accelerate deductions for unamortized domestic research expenditures, (3) a permanent provision for 100% bonus depreciation deductions for most tangible personal property with a recovery period of 20 years or less, acquired and placed in service after January 19, 2025, and (4) for tax years beginning after December 31, 2024, restores Adjusted Taxable Income by adding back amortization and depreciation to calculate the limitation on interest deductions (effectively returning to EBITDA).
Previous wording
The estimated annual effective tax rate for the fiscal year ending April 30, 2026 is 20.96%. This calculation reflects an estimated income tax expense based on our current fiscal year annual pretax income forecast which includes non-deductible expenses, estimated research and development credits, and state income taxes. The estimate of the annual effective tax rate is based on evaluations of possible future events and may be subject to revision in subsequent reporting periods.
Current wording
The estimated annual effective tax rate for the fiscal year ending April 30, 2026 is 21.69%. This calculation reflects an estimated income tax expense based on our current fiscal year annual pretax income forecast which includes non-deductible expenses, estimated research and development credits, and state income taxes. The estimate of the annual effective tax rate is based on evaluations of possible future events and may be subject to revision in future reporting periods.
Previous wording
For the three months ending July 31, 2025, the Company recorded an income tax benefit of $77,270 which includes a discrete income tax benefit of $193,919. The discrete income tax benefit is primarily due to stock compensation windfall tax benefits. For the three months ending July 31, 2024, the Company recorded an income tax provision of $132,930 which included a discrete income tax expense of $6,894.
Current wording
For the three months ending October 31, 2025, the Company recorded an income tax benefit of $30,644 which includes a discrete income tax benefit of $418,766. The discrete income tax benefit is primarily due to stock compensation windfall deductions and a remeasurement of the net deferred tax asset due to a new state filing. The calculation of the overall income tax provision consists of current U.S. federal and state income taxes. For the three months ending October 31, 2024, the Company recorded an income tax provision of $138,592 which included a discrete tax income benefit of $9,577.
Previous wording
The effective tax rate for the three months ended July 31, 2025 was an income tax benefit of 13.89% on pretax income of $0.6 million compared to an income tax provision of 5.19% on pretax income of $2.6 million in the comparable prior fiscal year period. The effective tax rate for the three months ended July 31, 2025 differs from the U.S. federal statutory rate of 21% primarily due to non-deductible expenses, state income taxes, R&D credits and discrete items.
Current wording
The effective tax rate for the three months ended October 31, 2025 was an income tax benefit of 1.73% on pretax income of $1.8 million compared to an income tax provision of 4.96% on pretax income of $2.8 million in the comparable prior fiscal year period. The effective tax rate for the three months ended October 31, 2025 differs from the U.S. federal statutory rate of 21% primarily due to non-deductible expenses, state income taxes, R&D credits and discrete items.
Previous wording
The Company’s consolidated balance sheets continue to reflect a strong working capital position of approximately $29.6 million at July 31, 2025 and approximately $29.7 million at April 30, 2025. Included in working capital at July 31, 2025 and April 30, 2025 was $4.5 million and $4.7 million, respectively, of cash and cash equivalents. The Company’s current ratio was 2.3 to 1 at both July 31, 2025 and at April 30, 2025.
Current wording
The Company’s consolidated balance sheets continue to reflect a strong working capital position of approximately $31.3 million at October 31, 2025 and approximately $29.7 million at April 30, 2025. Included in working capital at October 31, 2025 and April 30, 2025 was $3.0 million and $4.7 million, respectively, of cash and cash equivalents. The Company’s current ratio was 2.6 to 1 at October 31, 2025 compared to 2.3 to 1 as of April 30, 2025.
Previous wording
Net cash provided by operating activities for the three months ended July 31, 2025 was approximately $1.2 million and net cash used in operating activities for the three months ended July 31, 2024 was approximately $1.5 million. The increase in net cash provided by operating activities in the first three months of fiscal 2026 as compared to the prior fiscal year period was primarily due to timing of billings and cash collections. For the three months ended July 31, 2025 and 2024, the Company incurred approximately $1.3 million, in both periods, of non-cash operating expenses including amortization of ROU assets, depreciation and amortization, inventory net realizable value adjustments, deferred compensation, and accruals for employee benefit programs.
Current wording
Net cash provided by operating activities for the six months ended October 31, 2025 and 2024 was approximately $0.6 million and $2.4 million, respectively. The decrease in net cash provided by operating activities in the first six months of fiscal 2026 as compared to the prior fiscal year period was primarily due to timing of billings and cash collections and a decrease in net income. For the six months ended October 31, 2025 and 2024, the Company incurred approximately $2.7 million and $2.5 million, respectively, of non-cash operating expenses including amortization of ROU assets, depreciation and amortization, inventory net realizable value adjustments, deferred compensation, and accruals for employee benefit programs.
Previous wording
Net cash used in investing activities for the three months ended July 31, 2025 and 2024 was approximately $0.8 million and $0.3 million, respectively, all relating to purchases of capital expenditures.
Current wording
Net cash used in investing activities for the six months ended October 31, 2025 and 2024 was approximately $1.4 million and $0.8 million, respectively, all relating to purchases of capital expenditures.
Previous wording
Net cash used in financing activities for the three months ended July 31, 2025 and 2024 was $0.6 million and $0.1 million, respectively, all related to purchase of treasury stock.
Current wording
Net cash used in financing activities for the six months ended October 31, 2025 was $1.0 million, all related to purchase of treasury stock. Net cash used in financing activities for the six months ended October 31, 2024 was $9.7 million, of which $9.6 million was related to the payout of a special cash dividend of $1.00 per share of common stock paid on August 29, 2024.
Previous wording
The Company has been authorized by its Board of Directors to repurchase up to $5.0 million worth of shares of its common stock when appropriate opportunities arise. During the three months ended July 31, 2025, the Company acquired 21,910 shares, at a weighted average share price of $26.60 per share, for withholdings pursuant to RSU tax repayments. As of July 31, 2025, the Company has repurchased approximately $4.4 million of its common stock out of the $5.0 million authorization. During the three months ended, July 31, 2024, the Company repurchased 4,569 shares of outstanding common stock at a weighted average share price of $13.60 per share.
Current wording
During the three months ended October 31, 2025, the Company acquired 10,219 shares at a weighted average share price of $36.72 per share. The Company acquired these shares to satisfy tax withholding requirements upon the vesting of previously granted RSU awards. As of October 31, 2025, the Company had repurchased approximately $0.4 million of its common stock out of the $20.0 million authorized under the new share repurchase authorization. During the three months ended October 31, 2024, the Company repurchased 7,893 shares of outstanding common stock at $12.62 per share, respectively.
Previous wording
As of July 31, 2025, the Company’s consolidated funded backlog was approximately $71 million compared to approximately $70 million at April 30, 2025. Approximately 64% of the backlog, as of July 31, 2025, is expected to be realized in the next twelve months. The Company excludes from backlog any contracts or awards for which it has not received authorization to proceed. On fixed price contracts, the Company excludes any unfunded portion. Over time, as partially funded contracts become fully funded, the Company will add the additional funding to its backlog. The backlog is subject to change for various reasons, including possible cancellation of orders, change orders, terms of the contracts and other factors beyond the Company’s control. Accordingly, the backlog is not necessarily indicative of future revenues or profits (losses) which may be realized when the results of such contracts are reported.
Current wording
As of October 31, 2025, the Company’s consolidated funded backlog was approximately $82 million compared to approximately $70 million at April 30, 2025. Approximately 69% of the backlog, as of October 31, 2025, is expected to be realized in the next twelve months. The Company excludes from backlog any contracts or awards for which it has not received authorization to proceed. On fixed price contracts, the Company excludes any unfunded portion. Over time, as partially funded contracts become fully funded, the Company will add the additional funding to its backlog. The backlog is subject to change for various reasons, including possible cancellation of orders, change orders, terms of the contracts and other factors beyond the Company’s control. Accordingly, the backlog is not necessarily indicative of future revenues or profits (losses) which may be realized when the results of such contracts are reported.
Previous wording
The Company believes that its liquidity is adequate to meet its short-term operating and investment needs through at least September 15, 2026 and its long-term operation and investment needs for the foreseeable future thereafter.
Current wording
The Company believes that its liquidity is adequate to meet its short-term operating and investment needs through at least December 12,2026 and its long-term operation and investment needs for the foreseeable future thereafter.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
For the six months ended October 31, 2025, revenues from commercial and U.S. Government communication satellite programs accounted for approximately 36% of consolidated revenues compared to approximately 57% of consolidated revenues during this same period in the prior fiscal year. Revenues from non-space U.S. Government/DOD customers accounted for approximately 61% of consolidated revenues for the six months ended October, 31, 2025 compared to approximately 39% of consolidated revenue during the same period in the prior fiscal year. Other commercial and industrial revenues for the six months ended October 31, 2025 accounted for approximately 3% of consolidated revenue compared to 4% in the same period of the prior fiscal year. The slight increase in revenue for this six month period, compared to the same period in the previous fiscal year, was attributable to the FEI-Zyfer segment and the increased demand for non-space DOD products.
Current report — wording carried from elsewhere
The effective tax rate for the six months ended October 31, 2025 was an income tax benefit of 4.64% on pretax income of $2.3 million compared to an income tax provision of 5.07% on pretax income of $5.4 million in the comparable prior fiscal year period. The effective tax rate for the six months ended October 31, 2025 differs from the U.S. federal statutory rate of 21% primarily due to non-deductible expenses, state income taxes, R&D credits and discrete items.