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Conference will begin in one moment. Thank you for your patience. Greetings and welcome to the Frequency Electronics, Inc. third quarter fiscal 2026 earnings release conference call. As a reminder, this conference is being recorded. Any statements made by the company during this conference call regarding the future constitute forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements inherently involve uncertainties that could cause results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences are included in the company's press releases and are further detailed in the company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements for revisions or changes after the date of this conference call. It is now my pleasure to introduce your host, Thomas McClelland, President and Chief Executive Officer. Good afternoon.

And thanks for joining Frequency Electronics, Inc.’s third quarter fiscal year 2026 earnings call. With me today is our CFO, Steven Bernstein. On our second quarter fiscal 2026 earnings call in December, I discussed our vision for how we see the growth in our company developing in the coming years. Specifically, I told you that the exciting growth prospects we have in large and growing end markets, which are larger than our historical addressable markets, will come in addition to continuing strength and growth in our ongoing businesses in space and defense. These new markets, such as quantum sensing, proliferated satellites, and alternative position, navigation, and timing programs, are built upon our industry-leading capabilities in our core space and defense programs. I also told you on that December call that we anticipate multiple awards in the coming months, some of which are as large or larger than the biggest ones we have historically announced. Today, we are very pleased to report significant progress on all of these fronts. In a separate press release that came out at the same time as our earnings report after the close of market today, we announced that we were awarded two contracts, valued at approximately $45 million. One of these contracts is in the domain of Frequency Electronics, Inc.’s traditional space satellite programs, and one is part of the new proliferated satellite paradigm. Customer confidentiality prevents us from discussing these with greater specifics at this time, but there are two important points to consider. First, of course, is that these contracts reflect our ability to continue to win meaningful contracts in our traditional space business while also winning significant business in our next-generation markets at the same time. In other words, while our business is never perfectly linear, we are definitely not projecting a dislocation in which the traditional business wanes while the new business replaces it. Rather, they will both grow and pave the way for us to become a substantially larger company. Second, we are already actively working on additional contracts of similar magnitude in both our traditional and new business lines, and anticipate additional awards in this calendar year. On the December call, I also told you that while backlog in any given quarter can fluctuate given newly funded awards and what is converted into revenue in a given quarter, based on what we are seeing coming down the road, we believe it is reasonable that we could see backlog north of $100 million in the not too distant future. Our January quarter-end backlog was at a new record for Frequency Electronics, Inc., and, of course, this backlog amount was prior to the award of the contracts announced today. This new business announced today will start to enter backlog in this current fiscal fourth quarter, which should help us make further progress towards the $100 million mark in the near future. Now that $100 million level, by the way, is not meant to indicate a level we are capping at, but a level we are currently building towards. Adding more awards like the ones we announced today could push us well past that over time. Steven will provide more financial details a little bit later, but I would make a few financial comments here. For the third fiscal quarter, we reported revenue of $16.9 million, essentially the same as the second fiscal quarter. This revenue number is down year-over-year because of the particularly strong execution we exhibited in fiscal 2025, which allowed the company to produce revenue on certain programs in fiscal 2025 that we had originally expected to produce over a much more extended period of time well into fiscal 2026, essentially pulling forward some revenue as we have discussed in previous calls. Nonetheless, this was still the fourth highest quarter of revenue in the past ten years, with only three higher quarters having occurred within the past four quarters. As we said on the December call, though our business does not proceed in a perfectly linear fashion, we have established a new higher base and we anticipate building upon that base now and in the years to come. Before I turn things over to Steven, I would like to make a few comments on the current state of the world and how it relates to Frequency Electronics, Inc.’s business. Obviously, most immediately, our country is now at war. As we have discussed on previous calls, we are involved in numerous defense programs, including Golden Dome, the Patriot missile system, the B-2 bomber, and the Terminal High Altitude Area Defense missile system, the THAAD system, as well as other multi-domain defense systems. Missile systems and interceptors have been in the news quite a bit over the past two weeks, and I would like to remind you of remarks we have made previously on our calls. Our exposure on major missile programs is principally in the missile batteries, which are ground-based units used to detect, track, and intercept incoming threats, generally by firing missiles at those threats. As the government increases the deployment of these batteries, our business will expand along with that, and we have already seen that in the current quarter. Further, the early days of this war as well as the action earlier this year in Venezuela have shown an increased reliance on traditional jet fighters and naval fleets, as opposed to next-generation defense technologies. Similar to our discussion earlier on our space positioning in the traditional and emerging markets, we believe this military deployment is a good example of how there remain strong opportunities in our traditional defense business even as we are engineering products for next-generation modalities. We expect defense to continue to be a meaningful and growing business for Frequency Electronics, Inc. for many years. Meanwhile, in the Ukraine-Russia war and in the Strait of Hormuz, GPS jamming has become ubiquitous, creating dead zones that threaten civilian aircraft, telecom and financial systems, shipping firms, and NATO allies. The need for alternative position, navigation, and timing systems, Alt PNT, including the use of quantum sensing and magnetometers, is paramount, and we expect to be a part of that solution set in the years to come. In fact, in this current fiscal year, we have already won some new business in both magnetometers and other quantum sensing, including business won out of our new Colorado facility. We expect a lot more Alt PNT business in the years to follow. Our technology is used in systems and programs that play critical roles in keeping our country and our military safe. We are very proud of this work, and it creates an additional sense of mission for our team. I would like to thank our employees, our customers, and our shareholders, all of whom we serve by carrying out this important work. Lastly, we will be participating in two investor conferences in the fiscal fourth quarter, and we look forward to meeting with a number of you at the Craig-Hallum New Space Conference on March 25 and the Morgan Stanley Golden Dome and National Security Innovation Summit on June 15. I will now turn the call over to Steven to provide some more financial detail, and I look forward to taking your questions during the Q&A following Steven’s remarks. Steven?

Thank you, Tom, and good afternoon. For the three months ended 01/31/2026, consolidated revenue was $16.9 million compared to $18.9 million for the same period of the prior fiscal year and substantially similar to the second quarter of this fiscal year, as Tom mentioned earlier and which we have described on the past several calls. The components of revenue: revenue from commercial and U.S. government satellite programs was approximately $4.2 million, or 25%, compared to $11.2 million, or 59%, in the same period of the prior fiscal year. Revenues on satellite payload contracts are recognized primarily under the percentage-of-completion method and reported only in the FEI New York segment. Revenues from non-space U.S. government and Department of Defense customers, which are recorded in both the FEI New York and FEI Cypress segments, were $12.5 million compared to $7.4 million in the same period of the prior fiscal year and accounted for approximately 74% of consolidated revenue compared to 39% for the prior fiscal year. Other commercial and industrial revenues were $180,000 compared to approximately $367,000 in the prior fiscal year. The revenue for the three months ending 01/31/2026 was lower than the revenues in the prior period partly as a result of certain space programs in the FEI New York segment during the prior fiscal year that were being expedited during the period due to very aggressive schedules. In addition, several new space bookings anticipated for the three months ending 01/31/2026 are now anticipated in fiscal ’26 Q4. For the three months and nine months ending 01/31/2026, both gross margin and gross margin rate decreased compared to the same periods in the prior fiscal year. The decrease in gross margin and gross margin rate is attributable to a change in the mix of high-margin production satellite programs in the prior-year periods versus lower-margin programs with significant nonrecurring engineering efforts during the three months ending 01/31/2026. Going forward, the mix of programs will vary in any given quarter, but in general, we expect our gross margin to move up over time, particularly as we add more business with a higher rate of unit production and follow-on business from successful programs. For the three months ending 01/31/2026 and 01/31/2025, selling, general, and administrative expenses increased by approximately $213,000 and were approximately 21% of consolidated revenue, up from 18% in the prior year. The increase in SG&A expenses during the three months ending 01/31/2026 was due to fluctuations in various expense accounts that make up SG&A. R&D expense for the three months ending 01/31/2026 increased to approximately $1.8 million from $1.4 million for the three months ending 01/31/2025, an increase of approximately $327,000, and were approximately 10% and 8%, respectively, of consolidated revenue. Fluctuations in R&D expenditures will occur in some periods due to current operational needs supporting ongoing programs. The company plans to continue to invest in R&D in the future to keep its products at the state of the art. In total, operating expenses increased approximately $540,000, but this includes approximately $500,000 of nonrecurring expenses, so we anticipate showing more operating leverage going forward as additional revenue should expand at a much faster rate than expenses. For the three months ended 01/31/2026, the company reported operating income of approximately $1.3 million compared to operating income of approximately $3.5 million in the prior fiscal year. Operating income decreased due to lower revenue, lower gross margin, and increased SG&A described earlier. Other income (expense), net, is derived from various sources. The majority of the approximately $200,000 of investment income for the three months ending 01/31/2026 was from interest income and unrealized gains on assets held in the Frequency Electronics, Inc. deferred compensation trust. This yields pretax income of approximately $1.4 million for the three months ending 01/31/2026 compared to approximately $3.6 million pretax income for the three months ended 01/31/2025. For the three months ending 01/31/2026, the company recorded an income tax benefit of approximately $127,000, which includes a discrete tax benefit of approximately $568,000. The discrete income tax benefit is primarily due to a stock compensation windfall deduction. For the three months ended 01/31/2025, the company reported an income tax benefit of $11.8 million, which included a discrete income tax benefit of $11.9 million. The discrete income tax benefit in the comparable period is primarily due to the release of the valuation allowance. Consolidated net income for the three months ended 01/31/2026 was approximately $1.6 million, or $0.16 per share, compared to approximately $15.4 million, or $1.60 per share, for the same period of the previous fiscal year. Our fully funded backlog at January 2026 was approximately $83 million, a new all-time high for Frequency Electronics, Inc., as compared to approximately $70 million for the previous fiscal year ended April 30, 2025. The company's balance sheet continues to reflect a strong working capital position of approximately $32 million at 01/31/2026 and a current ratio of approximately 2.6 to 1. The amount of cash reported as of the quarter end January 31 should represent a low point going forward, which is a combination of investments made by the company, purchases of stock, and collections coming in early in the fiscal fourth quarter that were in just after the third quarter. Specifically, we have already collected over $11 million of cash since 02/01/2026, and we expect that to continue building through the quarter. Additionally, the company is debt free, and the company believes that its liquidity is adequate to meet its operating and investing needs for the next twelve months and the foreseeable future. I will turn the call back to Tom, and we look forward to your questions shortly.

Thanks, Steven. We will now open for questions.

Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset while we poll for questions. Once again, please press 1 if you have a question or a comment. The first question comes from Jeff Van Rhee with Craig-Hallum. Please proceed.

Great. Thanks for taking the questions. A couple for you here, guys. So, Tom, the proliferated win—talk to me about what you are learning out in the marketplace and your ability to win in these proliferated constellation deals. I know it is something you have sort of felt your way through. Looks like you have got some success and you are sort of guiding to continued success. Where do you have the right to win? Where do you win? Where do you not have a right to play? Just what have you learned there?

Well, I think when we can provide some technical edge, we are very successful. We are seeing that, and that is what the win that we announced today reflects. When there are systems that have minimal technical requirements and all of the emphasis is just on the lowest possible cost, then it is a much bigger challenge for us.

Mhmm. Realizing your hands are somewhat tied, talk to me to the degree you can on the $45 million. I think you said there is a couple wins in there. Are these roughly equal in size? I know you said one was proliferated, one was not, but just rough proportion of what is in there?

Well, I am going to dodge that one a little bit, Jeff. But let me just say they are both significant.

And in terms of the coming into funded backlog, I think that phrasing was they will start to come into backlog. I mean, can you give us some swag at how quickly that is going to play into the backlog?

Just a reminder that we talk about funded backlog. So it is a question of the funding profile on each of these programs. But the reality is that it will be pretty significant in the quarter that we are in currently. I do not think I can say a whole lot more than that at this point.

Okay. And, Steven, on the cost structure, I was unclear. I think you referenced there were some unusuals in there. Obviously, R&D has bumped up considerably over the last few quarters. I am trying to understand what the steady-state OpEx levels are going forward. So just what was in there this quarter that was one-time and not?

Well, we have in the general operating expenses— we still have investments that we are making into Colorado. It is the largest piece of that. And once that is done, it should normalize pretty much. That was one of the larger pieces of it.

And so when you say normalize, are we going to go up from this level as we go forward into future quarters, or was there unusual in here and we should step down from here?

Well, again, operating expenses in general—unfortunately, there is always some bump, whether at 3%, 4%, 5%, based on just the normal growth of normal expenses. So I do not see any—unless something changes, I do not see a large increase, but I do not see a large decrease.

Okay. Maybe last for me. Tom, with respect to Turbo, I know you had given some color commentary in a few prior quarters that you felt it had the potential to go from a couple million to maybe $20 million in the out year if things go right. Just your updated thinking on Turbo based on market reception, pipeline, etcetera? Thanks.

I think if anything, we are more optimistic about Turbo. We are beginning to see significant revenue at this time, and every indication is that this is going to grow dramatically over the next—even over the next couple of quarters and definitely over the next couple of years.

Got it. Thanks so much.

Our next question comes from Chris Pokosky, private investor. Please proceed.

Hello. Thank you for taking my questions. And congratulations on the new wins. Could you clarify what exactly is the proliferated satellite? Is it the Starlink-type satellite? I am not asking if it is Starlink or not, just if it is that type of satellite.

It is actually a pretty good question. I am not sure I really like that term “proliferated satellites,” but it is one that is being used out there. I think the distinction we are trying to make is between what we call traditional satellite systems, where there may be three to five satellites in a constellation, oftentimes in geosynchronous orbits, versus these newer satellite systems that are being envisioned at this point in time, often, but not always, in low Earth orbit, but consisting of many, many more satellites, typically from 300 to, in some cases, many thousands, and SpaceX is now talking about a constellation of a million satellites. But I think that the real distinguishing feature is the thought process that goes behind these systems. What has become very clear recently is that satellites are vulnerable from our enemies, and this has been demonstrated recently that both the Chinese and the Russians in particular have the capability to destroy other satellites. When we have a satellite system that has only a couple of satellites in it, if one of those satellites gets destroyed, it is a huge loss for us. It can represent billions of dollars, in fact. So the idea is, instead of having a couple of satellites worth a billion dollars each, to have a system where there are many more satellites, but the individual satellites are much less costly. The simple way I like to look at it is that the system itself may overall cost the same amount of money, but instead of those costs being distributed over a few satellites—three, four, five satellites—it is distributed over 300 or a thousand satellites. In order to make that approach work, obviously the individual satellites have to cost a lot less. So that is what we end up looking at. We look at individual satellites. The contribution that we make in our product to an individual satellite has to cost a lot less than what we would deliver for one of the traditional satellites. And then, of course, another important feature is that if you are going to launch 300 instead of three, you need to do it at a much more rapid pace than is necessary for the three satellites. So the production rate has to increase dramatically. This lower cost and more rapid production makes for a significantly different manufacturing approach than with the traditional satellites. We are actually investing in order to really get involved in a very significant way in this new kind of satellite business. One of the attractive features is that, on an ongoing basis, many of these systems are envisioned to have just a continuous ongoing production of satellites. The idea is that the individual satellites are intended to have a shorter lifetime—instead of fifteen years for traditional satellites, maybe three to five years for the newer satellites—and so we get into a production mode where we are delivering on a scheduled basis, say, the first 300 satellites in a 300-satellite system, but as soon as we are done delivering the 300 satellites, we have to start all over again, because the first satellites that were launched are nearing the end of life and have to be replaced with new ones. So it makes for potentially a much more continuous kind of production, and that is something that we think makes for a much more predictable business, and it is also in many ways more attractive business than the traditional satellites where we would have a large-scale production activity over a couple of years, and then when we are finished with three or four satellites, we are done perhaps for the next decade until people are talking about potentially replacing those satellites. Anyway, it is probably a more long-winded answer than you wanted, but let me leave it at that.

That was very appreciated. Please feel free to be as long-winded as you want. So it seems like there will be some headwinds or some tailwinds for gross margins. I am sure having continuous production would really help gross margins. But then having a new satellite program which requires limited cost, that might hurt gross margins. So do you think you will be able to keep your gross margins on this new proliferated satellite program? And is there going to be, like, a learning period where gross margins will be lower?

It is a good question, and something we have talked about on previous calls. I think we do anticipate, in the short run, somewhat lower gross margins on the proliferated satellite business as it gets refined in the initial years. But at the same time—and it is really one of the things we are trying to emphasize today—is that the traditional satellite business is still alive and well, and that is a business where our gross margins are very strong. So whereas we have to invest to some extent in the proliferated satellites, we have really good gross margins with the traditional satellites. I also want to emphasize that, in the long run, we anticipate very strong margins for the proliferated satellite business as well.

Okay. And you mentioned that in this current quarter things are going—this $45 million—some of it is going to the funded backlog. Are you allowed to tell us when actual production would start?

That is something I think we are not prepared to get into. It is a very early stage of these programs, and the schedules are being worked out now with our customers.

Alright. Thanks. Good luck.

Thank you. Next question is from Michael Eisner, private investor.

Michael, please proceed.

Congratulations on the two contracts and future contracts. Most of my questions are answered. Can you comment on Golden Dome?

I do not think there is a whole lot I can say. From our point of view, Golden Dome is just sort of being defined at this point in time. We have spoken specifically in the past and earlier today about some of the programs—Patriot missile and THAAD—which I think are, in some ways of thinking, considered part of the Golden Dome concept. We are also involved in several other missile programs, which we cannot talk about in specific. But we are very, very involved in a number of things that are part of the Golden Dome concept. And, of course, satellites are also a very, very important part of the Golden Dome concept, and we are very involved in that also. Other than that, Michael, I do not think I can really get into any specifics.

Comment. Frequency Electronics, Inc. has been around 60, 70 years, and Frequency is a nice name, good name, respected name. Did you ever think of adding to Frequency—maybe Frequency Quantum Sensing, for example, or Timing—the more what the company actually does?

We have thought about it, and there have been all sorts of suggestions along the lines that you are suggesting right now and quite a number of other ones also. I do not think I want to say a whole lot more than that. But, at the moment, we are sticking with the 65-year-old name that we have.

Yeah. I just thought because it does so much more now, and we keep on—it sounds like from this call—getting involved with more stuff in technology. I did not say technology company.

One thing I will say: we have given some thought to this kind of thing, and I am not going to say one way or the other what the future will bring, but I think there is—we have just been talking about it—there is a tremendous amount of business that we are looking at at this point of time, and we are anticipating very, very significant growth. I think the important thing to do is concentrate on executing that business effectively, and that is what we are focusing on, and we feel that is way more important than the name we provide to the company.

Okay. That is fine. Thank you. See you.

Once again, if you have a question or a comment, please press 1. We have a follow-up coming from Jeff Van Rhee with Craig-Hallum. Please proceed, Jeff.

Great. Thanks. Yes, just a few from you guys. In terms of the script, Steven, I might have missed it. I thought you had said you had some bookings push-outs, and I did not quite catch it. I think you said Q1 went to Q4. Just that for me. And then, Tom, you have been talking about $100 million backlog you thought in relatively near future—sounded like slightly different verbiage here, so maybe it is not quite as near as you thought it had been. Just connect those two dots for me and help me understand what is going on there.

I think that, again, we cannot really get into quantitative specifics. But I do think that the $100 million mark is going to be breached relatively quickly. Just what we talked about today—the numbers—our backlog is up from what it was last quarter slightly, and we just announced today $45 million of new contracts, and that is going to begin hitting the backlog this quarter. There is more in the input pipeline, so we are very quickly approaching the $100 million mark.

Mhmm. Yeah. Understood. And just back to the original question, Steven, did you reference contracts pushing out from Q1 to Q4? And if so, can you expand on that?

To Q4, and that is why some of the revenue was down and dropped because—

I said they pushed from Q3. The very specifically—the contracts that we just announced. One of the frustrating things in the satellite business is our wonderful government—they like to get their satellite hardware as quickly as possible, but they are not so fast in executing contracts.

To say the least. Okay. Thanks so much.

Alright.

Next question comes from Robert Smith with Center for Performance Investing.

Good afternoon, Tom. Steve. Hi. I just wanted to congratulate you, Tom, on your transforming this company and positioning it for future growth, and I am hopeful that you can continue to execute, and I think you are doing a wonderful job. And kudos to you. Grateful to be aboard. Thanks so much.

I appreciate it, and we will do our best.

Our next question, we have a follow-up actually from Chris Pokosky, private investor. Please proceed.

Hello. Thanks for taking my follow-up. I wanted to ask if you can expound a little bit on the alternative position and navigation. Now, obviously, there is GPS jamming all over the place. How do you help address that, and would that lead to your devices being actually deployed in kind of the terrestrial—in the boats and cars and so on?

For alternative navigation, there are dozens or more things that people are considering. I think it is maybe worth just a little bit of discussion about this. We all have come to depend on GPS, Global Positioning System, over the last couple of decades, but the one thing that distinguishes GPS is the “G” part of it—the global. It is available literally any place on the surface of the Earth. When people talk about alternatives to GPS, sometimes they talk about other satellite navigation systems which are potentially also global in reach, but in general, people like to talk about things that are not satellite systems. The whole idea is that the satellite Global Positioning System is vulnerable—the satellites can be destroyed or damaged by our enemies in particular—and also the signals can be jammed. If you just replace one satellite system with another satellite system, you have essentially the same problems that you had with the original system. So people talk primarily about non-satellite alternatives, and in general, the non-satellite alternatives are not global in reach. That means that, usually, when you talk about alternatives, you are talking about employing multiple approaches to navigation. One alternative may work in a particular environment—say, an urban environment—and another approach will work over the ocean or in the middle of the desert someplace. With all of that preliminary being said, there are a couple of things that we are involved in and think are going to become important over the next couple of years and probably over the next decade. One of them that we are working on very actively right now is so-called magnetic navigation. The idea here is that the magnetic field around the surface of the Earth is not exactly constant. It varies by small amounts, and the exact magnetic field and direction is location sensitive. So if you have a very accurate map of the magnetic field in a region on the surface of the Earth, and you have a means of measuring the magnetic field, then you can compare your measurements to the magnetic map and locate yourself with really quite good precision—probably not at this point in time with the same precision that we get from GPS, but under the right conditions, it can be pretty close to that. That is something that we are pursuing. We are pursuing the magnetometer end of this—the sensor for measuring the magnetic field—and, of course, that by itself is not going to allow you to navigate. You also have to have the magnetic maps, which, by the way, is something that we are looking at: helping to improve the existing magnetic maps of the surface of the Earth. Another alternative to GPS that is considered is really a similar kind of concept, but you can imagine using a combination of fixed terminals on the surface of the Earth and drones, and those fixed terminals and drones effectively act as a mini GPS system. The drones are equivalent to the GPS satellites, and in a localized area, that kind of configuration provides a means of very, very precise localized navigation. These are just a couple of things that Frequency Electronics, Inc. is actually involved in, in terms of alternative navigation. There are, of course, many other things that people talk about—various detecting radiofrequency signals from radio stations and using that, inertial navigation, and various other things. I will just leave it at that for now.

Well, thanks for the thorough answer. And are you getting any revenue right now? I guess production revenue will be a couple of years out.

We are, because the U.S. government is very interested in developing these technologies and they are funding development activities. So we are getting revenue from those development funds. But we anticipate over the next decade turning that development revenue into product-based revenue.

Alright. Thanks again.

The next question is from Sam Nelson, private investor. Sam, please proceed.

Hi, Tom. Thanks for taking my question. I was just trying to get a better idea of, with the new contracts, how that award might ultimately flow through the backlog. I think on previous calls, you had described how ultimately the impact might be, like, 10x the initial value that is realized on the backlog, and just to clarify, I was wondering if we could look at these new contract awards in a similar way where the initial realized amount of the contract that is falling in backlog—could we 10x that, or what might the impact ultimately be?

I think, without making specific kinds of statements, that the 10x approximation is reasonably valid here. The contribution to backlog depends on the initial funding on these contracts. Something along those lines—again, not providing specific guidance.

Okay. Thank you.

Okay. We have no further questions in the queue. I would like to turn the floor back to management for any closing remarks.

Thank you for taking the time to listen and participate in today’s earnings call, and we look forward to providing further updates in the coming months. Thank you.