0001185185-25-000806
SEC filingFrequency Electronics reported strong satellite revenue growth and a net income of $23.7M, with a $1.00 special dividend in fiscal 2025.
At April 30, 2025, Frequency Electronics had cash and cash equivalents of $4.7M, down from $18.3M due to the $9.6M special dividend paid in August 2024. The company has no debt and a healthy equity base of $55.6M. Working capital improved to $29.7M, with a current ratio of 2.3. Inventory remained stable at $23.5M, supported by a $10.3M reserve.
The company disclosed no purchase commitments. Operating lease liabilities total $8.8M (undiscounted $10.3M) with annual payments averaging $2.1M through 2030. Contract liabilities (deferred revenue) were $13.6M, representing advance payments from customers.
In fiscal 2025, the company paid a special cash dividend of $1.00 per share ($9.6M total). No regular quarterly dividends were declared. The company repurchased $0.4M of common stock (24,264 shares withheld for employee taxes). Under its existing $5M repurchase authorization, $1.1M remains. Capital expenditures were $1.8M (2.6% of sales), primarily for equipment. No debt was issued or repaid.
Revenue by segment: FEI-NY $53.3M (76% of consolidated), up 32.3% YoY, driven by satellite payload programs. FEI-Zyfer $18.7M (27%), up 2.9%. Intersegment sales of $2.1M eliminated. Foreign sales were 6% of total revenue. Satellite program revenue surged 76% to $40.9M, with government space programs comprising 53% of total revenue.
FY2025 net income was $23.7M, but operating cash flow was negative $(1.4M), a significant divergence. The primary driver was a $12.1M deferred tax benefit (non-cash) and large working capital outflows: contract assets increased $7.7M, contract liabilities decreased $8.0M, and inventories rose $1.3M. These swings reflect timing of revenue recognition and customer payments.
Capex of $1.8M was modest relative to net income but exceeded operating cash flow. The company funded capital returns—$9.6M in dividends and $0.4M in share repurchases—entirely from prior cash reserves, as evidenced by the $13.2M decline in cash and restricted cash.
Anomalies: The $12.1M deferred tax benefit is a large non-cash item that reversed in FY2025; no such benefit existed in FY2024. The loss provision accrual swung from $(1.1M) to $0.1M, and accounts payable decreased $1.0M after increasing $0.9M in FY2024. These working capital changes, combined with the tax benefit, explain the stark contrast between net income and CFO.