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Revenue: Record $23.5 million in Q1 fiscal 2027, up 70% year over year and 52% sequentially.
Gross Margin: 45.8% in Q1 fiscal 2027, a 9% improvement in gross rate year over year.
Operating Margin: 22% in Q1 fiscal 2027.
Operating Income: $5.2 million in Q1 fiscal 2027, up from $364,000 in the prior-year period.
Net Income: Approximately $4.2 million, or $0.41 per share, in Q1 fiscal 2027, compared to $635,000, or $0.07 per share, in the prior-year period.
Pre-Tax Income: Approximately $5.2 million in Q1 fiscal 2027, compared to approximately $557,000 in the prior-year period.
SG&A Expenses: Approximately 18% of consolidated revenues in Q1 fiscal 2027, down from 26% in the prior-year period; actual expenditures increased by $0.5 million.
Satellite Revenue: $11.8 million from commercial and US government communication satellite programs, approximately 50% of consolidated revenue, compared to $6.5 million (approximately 47%) in the prior-year period.
Non-Space US Government Revenue: $11.1 million from non-space US government Department of Defense customers, approximately 47% of consolidated revenue, compared to $6.9 million (approximately 50%) in the prior-year period.
Other Commercial Industrial Revenue: $605,000, approximately 3% of consolidated revenue, compared to $439,000 in the prior-year period.
Backlog: Record funded backlog of approximately $129 million at end of July, up approximately 82% year over year and 16% sequentially.
Working Capital: Approximately $90 million, with a current ratio of approximately 5.3 to 1.
Capital Raise: Secondary offering of common stock in July raised approximately $14 million, with the green shoe exercised after quarter end.
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Release Date: September 10, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Record first quarter revenue of $23.5 million, up 70% year over year and 52% sequentially.
Gross margin improved to 45.8% and operating margin to 22%, showing significant progress toward long-term targets.
Backlog reached a new record of $129 million, up 82% year over year and 16% sequentially, with book-to-bill of 1.76:1.
Debt-free balance sheet with strong working capital of $90 million and current ratio of 5.3, further strengthened by a $14 million green shoe exercise.
Growth opportunities in space, defense, quantum sensing, and alternative PNT, with new products like DRAFS atomic clock and mercury ion clocks for naval applications.
Production ramp faces challenges in meeting customer schedules, requiring careful allocation of orders and potentially turning down business.
Gross margin may not continue to improve linearly, with potential pressure from proliferated satellite programs that may require lower margins.
Internal R&D expenses are expected to remain under 10% of revenue, but fluctuations may occur and could impact profitability.
No current plans for a cash dividend, which may deter some institutional investors.
Success with new defense tech companies is limited so far, with most traction in space rather than defense.
Q: Jeff Van Rhee of Craig-Hallum asked for an update on the Turbo product line, including bookings strength, revenue trajectory, and use cases.A: CEO Thomas McClelland said FEI is beginning to deliver production-rate Turbo units in relatively small quantities, with volumes expected to pick up soon. Current applications are all manned aircraft, though the company is in discussions regarding drone applications, which he called one of the most exciting areas. FEI has also started development work to radiation-harden Turbo units for space use.
Q: Jeff Van Rhee asked how much of the backlog is funded versus visible but unfunded, and what portion falls within the next 12 months.A: CFO Steven Bernstein clarified that the reported $129 million backlog is fully funded, and that the unfunded portion of visible business is "multiple times" that amount. He estimated roughly 65% of the backlog is scheduled for the next 12 months.
Q: Jeff Van Rhee asked about the volume production ramp, whether FEI is hitting throughput goals, and how it is managing the challenge of keeping up with growth.A: CEO Thomas McClelland called the ramp one of the company's biggest challenges, saying FEI is ramping successfully on a number of fronts but faces real limits. He said management must "thread the needle" between taking on business and delivering on time, and that FEI is declining some "ridiculously optimistic" customer schedules it does not believe are achievable.
Q: Jeff Van Rhee asked for an update on the proliferated LEO opportunity and whether the last 90 days have changed FEI's conviction.A: CEO Thomas McClelland said opportunities are very good, with classified satellites aggressively moving to a proliferated architecture. FEI is transitioning from demonstrating capabilities to initial production on those programs and getting involved in more programs every day. He was more cautious on space data centers, calling talk of 2027 deployment probably overly optimistic, and noted FEI is also involved in lunar missions that require smaller, cheaper, faster production.
Q: Jeff Van Rhee asked whether the order book points to upward or downward pressure on gross margin over the next few quarters, given the strong 45.8% print.A: CEO Thomas McClelland said he sees no particular upward or downward pressure. He said FEI's strategy is to stay disciplined and bid for profitable work, and to be willing to lose programs where competition is extreme and required margins are too low. He noted FEI will accept somewhat lower margins in early-stage proliferated satellite programs, but that meaningful margin pressure has not yet materialized.
Q: Jonathan Siegmann of Stifel asked about penetration and success with new defense tech companies versus traditional primes.A: CEO Thomas McClelland said most success in that arena is in the space environment, with conversations across a number of newer space companies including Intuitive Machines and Astranis. In the defense arena, FEI does not yet have much success, though it is pursuing opportunities with several companies, including Anduril.
Q: Jonathan Siegmann asked how much FEI's business could increase if Patriot and THAAD production rates triple, noting FEI is more on the battery side than the interceptor side.A: CEO Thomas McClelland said the impact is very significant. While new batteries are not built every time missiles are fired, FEI is seeing tremendous business for both THAAD and Patriot, and more missiles fired tends to mean batteries are needed in additional locations, translating into more business.
Q: Stephen Levenson of Big Rock Research asked whether automation could enhance margins, or whether it is impractical for FEI's assemblies.A: CEO Thomas McClelland said automation is not out of the question and is being examined carefully, especially in quartz crystal manufacturing, which is vertically integrated from raw quartz material. FEI is looking at higher-throughput equipment, though production will remain relatively small versus consumer quartz. He also cited thermal vacuum test equipment as another area needing added capacity.
Q: Stephen Levenson asked whether the quantum sensor could gather data for the World Magnetic Model from space, or whether it is mainly terrestrial.A: CEO Thomas McClelland said meaningful measurements can definitely be made from space and there is interest in doing so, though overall quantities would likely remain relatively small. He said FEI is interested in pursuing it.
Q: Michael Eisner, a private investor, asked whether there is a specific area of space expected to drive the most revenue or opportunity.A: CEO Thomas McClelland said revenue is increasing from a variety of directions, which he called the exciting and unique part of this period. He noted launches have exploded from roughly 100 objects a year a decade ago to about 3,700 objects launched by the United States in the last year. Traditional satellite activity is booming while proliferated satellite work is also very active, and success on those programs is bringing more business in the front door.
Q: Michael Eisner asked for the current book-to-bill ratio.A: CFO Steven Bernstein said book-to-bill was approximately 1.76 to 1 for the quarter.
Q: Robert Smith of Center of Performance Investing asked for the current R&D figure and how R&D as a percent of revenue should trend given the growth targets.A: CEO Thomas McClelland said a key strategy is to secure as much external funding for R&D as possible, since the primary customer is the US government and government funding aligns research with customer needs. He said internal R&D funding is expected to stay under 10% of revenue, with absolute R&D spending likely rising over the next couple of years as revenue grows, though quarterly figures will fluctuate.
Q: Robert Smith asked whether FEI would consider initiating a small cash dividend to attract institutions that require a cash payment.A: CEO Thomas McClelland said FEI has paid dividends in the recent past and will certainly consider it going forward, though he made no promises. He said it is definitely on the table.
Q: Jeff Van Rhee asked about the capital raise and how it may affect long-term guidance.A: CEO Thomas McClelland said FEI previously had sufficient capital for the minimum $150 million revenue target by fiscal 2029, but customers are asking for more, faster. The July secondary offering raised capital and brought in long-term oriented institutional investors
For the complete transcript of the earnings call, please refer to the full earnings call transcript.