Frequency Electronics Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brett Reiss - Janney Montgomery Scott LLC - Analyst : Yes, and gentlemen, thanks for the opportunity to asking a question or two and Tom, the StarLink satellite program that Space X has that so many the militaries are using the conflicts that are going on is the satellite sides of those satellites of the size where and you know, our atomic clocks and our frequency generators. Can you touch on these potential sales opportunities?

Question: Brett Reiss - Janney Montgomery Scott LLC - Analyst : These are some organizations that are looking to develop these similar systems, do know who they are and you already have your foot in the door or is it's someone that yourselves people have to first get to know?

Question: Brett Reiss - Janney Montgomery Scott LLC - Analyst : Great. I'm going to drop back in queue.

Question: Brett Reiss - Janney Montgomery Scott LLC - Analyst : Right.

Question: Tim Hasara - Sinnet Capital LLC - Analyst : Just I just wonder, did you I just wanted to confirm you said 50% gross margins in the next six months to a year that, Chris?

Question: Tim Hasara - Sinnet Capital LLC - Analyst : Right. I would assume the three new contracts that you announced in November would be at much higher gross margin than that and help the mix there. Would that be correct?

Question: Tim Hasara - Sinnet Capital LLC - Analyst : And with respect to those three contracts, I would assume that you will book those as the percent of completion through the term, I guess all three of them or approximately five years. Can you do a (multiple speakers)?

Question: Tim Hasara - Sinnet Capital LLC - Analyst : And Rich, with respect to the booking those on a quarterly basis, well, can you give us any kind of estimate or guidance, will it be somewhat linear

Question: Tim Hasara - Sinnet Capital LLC - Analyst : Great. I don't have any other questions.

Question: George Marema - Pareto Ventures - Analyst : I had a question about your SG&A R&D expenses is it has a revenues increase and if you get near your gross margin, won't let me ask it differently. You get towards your gross margin goal what would net margins approximately look like?

Question: George Marema - Pareto Ventures - Analyst : So we expect it to stay at that current level where it is now, unless things substantially grow, I'd say in assets for, you know, secular net margins expand and for as a percentage of sales.

Question: George Marema - Pareto Ventures - Analyst : No, net margin. Or let's say your gross margin does hit 50%, what would you anticipate the net margin to be? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2023 / 9:30PM, FEIM.OQ - Q2 2024 Frequency Electronics Inc Earnings Call

Question: George Marema - Pareto Ventures - Analyst : Yes. So the SG&A right now is about 2.5 a quarter. You don't expect that to increase too much?

Question: George Marema - Pareto Ventures - Analyst : Right. And also, Tom, after you've won a couple of these big jobs here recently, Tom, what does the opportunity outlook over the next couple of years look like now the opportunity set pipeline, do you have a sense?

Question: George Marema - Pareto Ventures - Analyst : You mentioned you may have some small wins here in the coming week flash month. Do you are there any big ones in the pipeline or that there are you want to moderate what's going on out there?

Question: George Marema - Pareto Ventures - Analyst : Okay. And if I may ask one last one, U.S. and since you are there for many years there, I know you're new is the CEO., but you have some history with the company. Can you kind of maybe compare and contrast or describe maybe qualitatively the difference between today and sitting back around 2018, there was a similar, I say, setup in terms of huge opportunities, a lot of wins, but it just didn't really materialize. What kind of happened then what's to prevent that from everything to kind of fall apart again now?

Question: George Marema - Pareto Ventures - Analyst : I appreciate the candor. And if I may slip in one real one last quick one here on and I know you guys don't give guidance you guys as a company have good visibility quarter to quarter on what revenues and costs look like or you don't have much visibility?

Question: George Marema - Pareto Ventures - Analyst : Can you consider giving quarterly guidance at quarter end?

Question: George Marema - Pareto Ventures - Analyst : Thank you.

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : Yes, good afternoon. And I hope I appreciate all the color as other callers have reflected. And just real quick, you talked about a target gross margin above 50%. What sort of quarterly revenue run rate with that contemplate?

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : Yes. No, I appreciate that. But I mean, if a 50% gross margin is your target you must have some sort of underlying assumption in terms of what sort of revenues you'd need to get there. So that's done my that's my cost. (multiple speakers)

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : Okay. But just so I'm clear you're not you're not talking about your your six to 12 month goal being your necessarily getting 50% gross margin on your contracts. You're talking about being able to show that in a quarterly report?

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : Well, I think there's the distinction between bidding a project at a 50% gross margin and actually bringing that now to your financial results.

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : When you put out that target, you're talking about the latter, correct?

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : Okay. Can you quantify your bidding activity at all, you know, the amount of outstanding bids or the sales funnel are in some way quantify?

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : Okay. And Steve, I was just curious, you said if you have a lot of NOLs. Can you what would they be on a cumulative basis, roughly?

Question: Jeffrey Cohen - Mulholland Capital Management - Analyst : All right. That's all I had. Thanks so much.