Q4 2025 Frequency Electronics Inc Earnings Call
Greetings and welcome to the frequency electronics fiscal year end 2025 earnings release conference call. At this time all participants are in a listen only mode. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being written.
Got it 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 actual 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 call.
Call. It does now my pleasure to introduce your host Thomas Mcclelland, President and Chief Executive Officer.
Thomas Mcclelland: Good afternoon, everyone.
Thomas Mcclelland: The fiscal fourth quarter.
Thomas Mcclelland: We just reported the highest revenue quarter for the company in the past 25 years and I'd like to provide some additional context on that.
Thomas Mcclelland: We've demonstrated strong growth over the past several years and we believe the growth potential for our company is expanding even further.
Thomas Mcclelland: For reasons I'll get into shortly.
Thomas Mcclelland: While we do not provide guidance.
Thomas Mcclelland: Given the Lumpiness of contract awards I would be remiss, if I did not mention.
Thomas Mcclelland: This recently ended quarter benefited from strong execution.
Thomas Mcclelland: That allowed the company to produce revenue on certain programs in fiscal year 'twenty five.
Thomas Mcclelland: We originally expected to produce over a more extended period of time in fiscal year, 'twenty five 'twenty six and beyond.
Thomas Mcclelland: In other words, well the trend here is very much an effort one.
Thomas Mcclelland: I think it's prudent to expect every quarter in the near term.
Thomas Mcclelland: Exactly like this from a top line perspective.
Thomas Mcclelland: So in the medium term it is directionally, where we're headed.
Thomas Mcclelland: It's important to keep in mind that the allocations for our space and defense related programs from the recently passed legislation in Congress are very positive for the direction. The company is going but as the Bill just passed last week.
Thomas Mcclelland: The additional revenue from those contract awards will flow in over the coming quarters and years as our customers now submit bids for increased available funds.
Thomas Mcclelland: Critically as we position the company to take advantage of all the opportunities we've discussed before.
Thomas Mcclelland: And others I'll discuss in a moment.
Thomas Mcclelland: We're also expanding our customer base beyond those traditional prime contractors.
Thomas Mcclelland: We maintain excellent relationships with the traditional primes and are working on numerous projects with them.
Thomas Mcclelland: And then anticipate meaningful growth with them going forward.
Thomas Mcclelland: But we've also already been actively submitting bids alongside next generation defense companies, which are increasingly getting attention in this administration.
Thomas Mcclelland: We believe this positions F E extremely well to benefit from industry trends, we see playing out over the next five to 10 plus years.
Thomas Mcclelland: Some of the opportunities that will further accelerate our growth are.
Thomas Mcclelland: Golden Dome, we're already involved in several key missile programs and anticipate additional opportunities.
Thomas Mcclelland: It was for terrestrial and space applications.
Thomas Mcclelland: A P M T.
Thomas Mcclelland: Which is alternate position navigation and timing.
Thomas Mcclelland: The vulnerability of GPS is well documented at this point as stories of jamming and spoofing, especially in the mid east and Eastern Europe corroborate.
Thomas Mcclelland: F P is quantum magnetometer development.
Thomas Mcclelland: Representing in the Jan level, a poll approach to navigation.
Thomas Mcclelland: As part of.
Thomas Mcclelland: A particularly relevant solution.
Thomas Mcclelland: Small, but very high performance rubidium atomic clock.
Thomas Mcclelland: Which we stubbed turbo for timing units rubidium oscillator is a key ingredient and other proposed alternative navigation approaches.
Thomas Mcclelland: Okay.
Thomas Mcclelland: Another important item is a G. P S enhancements such as resilient G. P S.
Thomas Mcclelland: Augmenting GPS satellites with a large number of lower cost satellites.
Thomas Mcclelland: Uh-huh quantum sensing.
Thomas Mcclelland: F T I is well positioned to succeed in the growing quantity sensor market.
Thomas Mcclelland: Just on our expertise in atomic clocks. We're currently developing solid state diamond based quantum magnetic sensor devices in collaboration with M. I T Lincoln Labs Sim.
Thomas Mcclelland: Similarly for collaborating with scientists at NIST.
Thomas Mcclelland: To develop rydberg sensors, allowing for extremely compact microwave antennas.
Thomas Mcclelland: Last year MTI sponsored a quantum summit in New York City to bring together scientists to discuss progress in quantum sensors.
Thomas Mcclelland: I would like to announce that the F. P. I will host a quantum summit again this year in October in particular on October 29th and 30th.
Thomas Mcclelland: All in all I'm happy with our performance vigilant regarding the changes in Washington, and very enthusiastic about our future.
Thomas Mcclelland: Steve.
Steve: Thank you Tom and good afternoon.
Speaker Change: For the fiscal year ended April 32025, consolidated revenue was $69 8 million compared to $55 3 million for the same period of the prior fiscal year.
Speaker Change: The components of revenue are as follows revenue from commercial and U S. Government satellite programs was approximately $40 9 million or 15, 9% compared to $23 2 million or 42% in the same period of the prior fiscal year.
Speaker Change: Revenue on satellite payload contracts are recognized primarily under the percentage of completion method and are recorded only in the FBI New York segment.
Speaker Change: Revenues from non space U S government Dod customers, which are recorded in both the FBI in New York and <unk> segments were $26 5 million compared to 29 million in the same period of the prior fiscal year and accounted for approximately 38% of consolidated revenue compared to 52%.
Speaker Change: For the prior fiscal year.
Speaker Change: Other commercial industrial revenue was $2 4 million and $3 1 million for the fiscal year ended April 30 at 25 and 24, respectively.
Speaker Change: Company has encouraged by significant revenue growth compared to the prior fiscal year. The majority of the increase in revenue for fiscal year 'twenty five as compared to fiscal year. 'twenty. Four was the result of increase in sales in the U S government EOD satellite market.
Speaker Change: For the fiscal year, ending April 32025, the gross profit and gross profit percentage increased as a result of several factors.
Speaker Change: The increase in gross profit dollars was directly related to the significant increase in revenue over the prior fiscal year period as well as the increase in gross margin and <unk>.
Speaker Change: Majority of the increase in the gross profit percentage as compared to the prior fiscal year was in the <unk> segment and was attributable to the company's performance on several traditional space programs at higher margin and ahead of schedule. In addition, the company is new programs that are progressing well and the company anticipates they will generate.
Speaker Change: <unk> additional revenue and profits.
Speaker Change: In the fiscal year, ending April 32, 5% and 24, selling and administrative expenses were 18% of consolidated revenue in both periods. While total SG&A expense increased in fiscal year 'twenty five as compared to the prior fiscal year SG&A expense remain constant as a percentage of revenue in fiscal <unk>.
Speaker Change: 25, the approximately $2 $1 million increase is made up of mainly payroll related items, such as four one K expense stock option expense bonus accrual in.
Speaker Change: In addition to these expenses trade show and related costs also increased during the fiscal year 'twenty five.
Speaker Change: R&D expense for the fiscal year, ending April 30, 25 increased to $6 1 million from $3 4 million, an increase of $2 7 million and were approximately 9% and 6% respectively of consolidated revenue.
Speaker Change: The company funded R&D amounts was higher in fiscal year, 'twenty five as compared to previous fiscal year, partially because of the previous fiscal year R&D expansion searchers with lower than planned and some of the expense were subsequently captured in fiscal year 'twenty five.
Speaker Change: The increase in R&D expense also reflects the company's commitment to maintain its technical excellence the company expects future R&D investment to be in line with or even potentially above historical spending.
Speaker Change: For the fiscal year, ending April 30, 25, the company recorded operating income of $11 7 million compared to an operating income of $5 million in the prior fiscal year. The increase is mainly attributable to the company a significant increase in revenue and gross margin during fiscal year 'twenty five as noted above from.
Speaker Change: Traditional space programs that have been executed ahead of schedule well within budget and technologically performed well the positive effect of the cost cutting measures instituted by management have also contributed to the increase.
Speaker Change: The change in other income expense from prior fiscal year was relatively minimal all three categories presented were slightly lower in fiscal year 'twenty five compared to the prior fiscal year.
Speaker Change: This yields pre tax income of approximately $12 1 million compared to $5 5 million for the prior fiscal year.
Speaker Change: For the fiscal year, ending April 30, 25, the valuation allowance decreased by approximately $13 9 million from the prior fiscal year, primarily due releasing the majority of the valuation allowance recorded against deferred tax asset. This change in estimate occurred in the third quarter of fiscal 'twenty five.
Speaker Change: Consolidated net income for the year ending April 30, 25 was $23 7 million or $2 46 per share compared to $5 6 million or <unk> 59 per share in the previous fiscal year.
Speaker Change: Our fully funded backlog at the end of April 25 was approximately $17 million compared to $78 million for the previous fiscal year April 30 of 'twenty for the company's balance sheet continues to reflect strong working capital position of approximately $30 million at April 32005, and a current ratio of approximately two points.
Speaker Change: Three to one Additionally, the company is debt free.
Speaker Change: Cash went down by approximately $13 6 million since prior fiscal year end of this decrease the dividend paid in Q2.
Speaker Change: Our fiscal 'twenty five accounted for approximately $9 6 million of it are the additional $4 million decrease was related to the timing of billing and revenue contract liabilities went down $8 2 million since year end contract liabilities are generated as part of 606 accounting when the billings are in <unk>.
<unk> of revenue taken on specific programs, we expect that cash will fluctuate quarter to quarter. However, we expect its trends I'll be higher over time.
Speaker Change: The company believes as liquidity is adequate to meet its operating and investing needs for the next 12 months in the foreseeable future I will turn the call back to Tom and we look forward to your questions. Shortly.
Speaker Change: Thanks, Steve.
Speaker Change: We're now ready for questions.
Speaker Change: Secondly at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys. Once again, please press star one on your phone at this time, if you wish to ask a question.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: And the first question today is coming from.
Speaker Change: Brett Reiss from Janney Montgomery Scott.
Speaker Change: Brett Your line is live.
Speaker Change: Hi, Tom Hi, Steve can you guide gloomy.
Speaker Change: Yes, yes, great great.
Speaker Change: Nice quarter, great ended the year.
Speaker Change: Tom you rattled dork.
Speaker Change: A number.
Growth potential areas the Golden dome, the a P M. He resilient G P S.
Speaker Change: Hmm will walk through the process as to how you will allocate corporate time and resources to these various.
Speaker Change: Growth opportunities.
Speaker Change: Well.
Speaker Change: Not quite sure how to answer that question.
Speaker Change: Where we're actively pursuing our proposals at this time.
Speaker Change: Oh and all of those areas.
Speaker Change: Uh huh.
Speaker Change: And I think we have ongoing discussions with all our.
Speaker Change: Prime customers.
Speaker Change: About these topics as we go and what our capabilities are.
Speaker Change: In this arena.
Speaker Change:
Speaker Change: Hi, Tom I apologize I didn't ask the question.
Speaker Change: You know right now in the right way.
Speaker Change: Of the five or six areas you mention which one do you think has the greatest hits.
Speaker Change: Potential that might lead to a greater allocation of corporate resources and attention.
Speaker Change: Okay, I see well you know.
Speaker Change: That's a little hard to say also.
Speaker Change: Think of the AR.
Speaker Change: Uh huh.
Speaker Change: At the moment I think the quantum sensor area looks quite promising.
Speaker Change: We know that.
Speaker Change: That GPS is as vulnerable and the magnetic Tom it or activity that we're working on certainly looks a very promising and there is a huge addressable market there in terms of.
Speaker Change: Uh huh.
Speaker Change: Providing alternate to GPS navigation, especially I think in commercial aircraft.
Speaker Change: Oh.
Speaker Change: So.
Speaker Change: That's certainly a big one, but I think Golden Dawn.
Speaker Change: It looks like a big thing also but so little bit ambiguous as to how the funding is going up.
Speaker Change: Uh huh.
Speaker Change: You know happened on that one.
Speaker Change: So we'll just have to see.
Speaker Change: All right last one from me.
Speaker Change: Because of these tremendous growth.
Opportunity.
Speaker Change: R&D spend is going to move up.
Speaker Change: We've got a strong balance sheet, but do we have enough cash.
Speaker Change: Two to fund it.
Speaker Change: Greater amount of R&D, that's needed to take advantage of these opportunities.
Speaker Change: At this point in time, we are calling for them.
Speaker Change:
Speaker Change: Have the adequate to cash in order to fund debt we we.
Speaker Change:
Speaker Change: As I stated in our press release, it's really a targeted use of internal funds.
Speaker Change: Are we.
Speaker Change: You know I think where we're being somewhat cautious and careful about just what we spend our resources.
Speaker Change: I think we're in a pretty good position to do that and to continue doing that going forward.
Speaker Change: But two you know, we'll we'll keep an eye on that and have to evaluate that.
Speaker Change: In the future.
Speaker Change: We we.
Speaker Change: There are a lot of external funding.
Are things that we.
Speaker Change: We see and where we're working on a painting and I think.
Speaker Change: That that supplements our use of our internal funds are significantly.
Speaker Change: Great. Thank you for taking my questions and enjoy the rest of this summer.
Speaker Change: Thank you.
Speaker Change: Thank you and once again Thats star one if you wish to ask a question. The next question is coming from Christopher Chomsky, Who's a private investor Chris Your line is live.
Christopher Chomsky: Hello, Congratulations on good results.
Speaker Change: You mentioned the.
Speaker Change: So you mentioned in your press release.
Speaker Change: It might be some short term uncertainty.
Speaker Change: Can you elaborate on that.
Speaker Change: Well it I'm not sure uncertainty is the right way to referred to it.
Speaker Change: I think that there will be some variability in the you know the.
Speaker Change: The.
Speaker Change: The timing of contracts.
Speaker Change: Is.
Speaker Change: Really what we're talking about and we've already seen this.
Speaker Change: The New administration is intent on the.
Speaker Change: Making their mark.
Speaker Change: Things so the timing of a lot of programs.
Speaker Change: There are are already in the works or are changing.
Speaker Change: And.
Speaker Change: We have to deal with that are obviously, so you know.
Speaker Change: I think it's very clear that overall.
Speaker Change: There are the administration has in turn times spending even more money.
Speaker Change: Things that are.
Speaker Change: That are in our area of expertise.
Speaker Change: But they're going to not necessarily spend them.
Speaker Change: In the same ways that was imagined the prior to this administration.
Speaker Change: So.
Speaker Change: This is the thing we just have to have to roll with the punches in terms of how the timing of these things plays out.
Speaker Change: Yeah.
Speaker Change: Okay and in Europe. So the lights are either not to use the Palomar something do you use it up by the ability, which is what that should upset.
Speaker Change: Okay. So does that does that include the variability and timing does that include stuff. That's all going to in your 70 million DAU or backlog.
Speaker Change: I'm not quite sure I understand the question.
Speaker Change: So the variability issues you mentioned with those include projects that already in your 70 million backlog that was no no no not really not really the 70.
Speaker Change: We don't anticipate.
Speaker Change: Any variability in the backlog.
Speaker Change: Only thing I would say is that.
Speaker Change: There are contracts can be terminated.
Speaker Change: We don't anticipate that with anything in our backlog at this point in time, but a.
Speaker Change: Certainly has happened so I guess in that sense, there is the potential for variability but.
Speaker Change: The backlog is pretty solid I think it's it's with our future.
Speaker Change: Works at a we have to.
Speaker Change: Looked at the variability in the timing of when things occur.
Speaker Change: Yeah.
Speaker Change: Alright, so so we think there'll be with future concerns there'll be some variability in the short term, but in the medium term you will see certain kind of relative certainty for kind of growth.
Speaker Change: What.
Speaker Change: Oh, what are could you just tell me you know.
Speaker Change: What do you mean by short term midterm.
Speaker Change: [laughter] I think short term, we're really talking about the next a year or so.
Speaker Change: And the medium term I think we're looking at a two to five years.
Speaker Change: Our long term beyond the five year point.
Speaker Change: Alright, and I've got a question about the quantum because I know it seems that we're not yet.
Speaker Change: The point, where or commercial quantum systems that are coming out, but a lot of money is going into research would you say that at this stage.
Speaker Change: As you.
Speaker Change: Even though you probably your your time was a public needed for the research stage as well would you say at this stage is enough to make you know kind of a like a multiple of revenue.
Speaker Change:
Speaker Change: Uh huh.
Speaker Change: Yes, yes, we are there is a I think significant revenue from the research stage, we might better be characterized as development as opposed to research because I think the.
Speaker Change: The the sciences are well understood in these areas is really developing products based on that science that we're working on and to the extent that this development is externally funded it certainly generates revenue.
Speaker Change: And indeed, our profit.
Speaker Change: So yeah.
Speaker Change: I hope that answers your question Oh, Yeah, Oh, Yeah definitely it does and would you expect would you expect to to Duke.
Speaker Change: I mean would you expect to get the federally funded revenue or would your class b kind of asking you to do so.
Speaker Change: Developmental near all income statement as well.
Speaker Change: Well that's a that's a really good question I think are in some cases.
Speaker Change: We did.
Speaker Change: The.
Speaker Change: The the funding agencies.
Speaker Change: Uh huh.
Speaker Change: I don't have enough money to support all of the work that needs to be done and so we supplement that with our internal funding.
Speaker Change: But I think that's usually a pretty small.
Speaker Change: The amount of the of the total.
Speaker Change: The funding that is a to be had.
Speaker Change: I'm sorry.
Speaker Change: It's a relatively small thing and that I think we we accounted for in our budget for internal R&D funding on an annual basis that is going up a little bit but are just are a.
Speaker Change: A little bit in order to support these are these new technologies and things.
Speaker Change: Yes.
Speaker Change: Okay. It's good to hear that the small month well. It is this is all for me a good luck again and congratulations again.
Speaker Change: Okay. Thank you.
Speaker Change: Yes.
Speaker Change: Thank you and once again it was star one if you wish to ask a question. The next question is coming from Michael Eisner.
Speaker Change: Michael is a private investor.
Michael Eisner: Hi, how are you.
Speaker Change: Hi, Michael.
Speaker Change: Are you still working on my house and linking.
Speaker Change: Jack.
Speaker Change: Yes, yes.
Speaker Change: [laughter] who's paying for that arent getting feedback.
Speaker Change:
Speaker Change: Uh huh.
Speaker Change: So were funded by light us.
Speaker Change: At this point in time.
Speaker Change: That means they are paying for.
Speaker Change: Uh huh.
Speaker Change: I'm not I'm not sure I understand the question.
Speaker Change: So you have to be <unk>.
Speaker Change: Go ahead.
Speaker Change: Let's say you have you have to do R&D man, who is that.
Speaker Change: Okay.
Speaker Change: Proven.
Speaker Change: Well that is the development.
Speaker Change: You know this is development activity.
Speaker Change: That is primarily funded by lighthouse.
Speaker Change: Just like.
Speaker Change: The last question there was a small amount of internal funding that supplements that.
Speaker Change: But thats primarily.
We will get to keep the technology also right.
Speaker Change: Yes.
Speaker Change: And I is cheap cheap, yes, we add back in play I go over it's over with a while ago I heard something about that.
Speaker Change: No no that's.
Speaker Change: That's not true G. P. S. Three of US are indeed very active.
Speaker Change: And in fact, we're currently delivering our products for the G. P. S. Three F program.
Speaker Change: Which are launching are we up to now.
Speaker Change: Now.
Speaker Change: Well I don't think so.
Speaker Change: There are there are there's GPS III and there's GPS three F.
Speaker Change: F. I think is for a follow on.
Speaker Change: So the the current launches the last launch that occurred was a GPS three launch.
Speaker Change:
Speaker Change: And I believe it was.
Speaker Change: The eighth GPS III satellite.
Speaker Change: Okay, Yeah, I remember them.
Speaker Change: Yeah.
Speaker Change: So there there are still additional.
Speaker Change: <unk> GPS three satellites for launch.
Speaker Change: I think nine and 10 in particular and GPS three F starts with.
Speaker Change: Number 11.
Speaker Change: So nothing no GPS three satellites have launched yet.
Speaker Change: Okay well.
Speaker Change: Actually the 12 million dollar contract that you just announced was that a continuation of previous contract.
Speaker Change: Ah yes.
Speaker Change: But at what time, you went to like November 2023.
Speaker Change: Oh, I don't remember exactly yeah.
Speaker Change: Oh, Oh Oh.
Speaker Change: No. It was not a continuation of our of those contracts it was a separate.
Speaker Change: Alright.
Speaker Change:
Speaker Change: Right.
Speaker Change: How how far we're going to them.
Speaker Change: Application.
Speaker Change: So we don't get a spoof they're gonna be jammed up.
Speaker Change: Well, we're we're oh it actively.
Speaker Change: Actively pursuing it.
Speaker Change: I I think.
Speaker Change: Thank our development activity is basically a two year program.
Speaker Change: And we.
Speaker Change: We should have a prototype demonstrations.
Speaker Change: At the end of that period.
Speaker Change: Yeah.
Speaker Change: Two years.
Speaker Change: Alright, well be the only one that.
Speaker Change: We are into only coming down so perfectly integrated.
Speaker Change: So all this stuff from beginning to end.
Speaker Change: Well I.
Speaker Change: I don't know that I can say, we're the only company that's vertically integrated but I think it is indeed true that we are vertically integrated.
Speaker Change: And and as I've said before I think currently we feel strongly that that's key to our continued success.
Speaker Change: Because it allows us to control all.
Speaker Change: We're working in technology areas that.
Speaker Change: Our fairly esoteric and if we rely on other suppliers to provide key ingredients.
Speaker Change: We lose control of those key ingredients and it's hard to get the kind of performance that's required.
Speaker Change: In these areas. So we do feel that's key I think it is a differentiator there are.
Speaker Change: Now.
Speaker Change: So many companies out there that are are vertically integrated in the way that we are.
Speaker Change: I hesitate to say that we have a monopoly on that.
Speaker Change: He is a microchip can they go away.
Speaker Change: Really not.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Oh microchip.
Speaker Change: I don't think so no.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: Good for us.
Speaker Change: Alright, good job that's it for me.
Speaker Change: Okay. Thanks, Michael Thank you.
Speaker Change: Thank you. The next question is coming from George Marina from Patrick Ventures.
Speaker Change: George Your line of lives.
Speaker Change: Hey, Tom Thanks for taking my questions.
Speaker Change: The first one is on gross margin this quarter was a little bit down can you sort of outlined the are the reasons why.
Speaker Change:
Speaker Change: I don't think Theres anything Super significant.
Speaker Change: I think.
Speaker Change: There's just a general lumpiness from quarter to quarter.
Speaker Change: How things play out I think we're we're pretty comfortable with where the gross margin as a overall.
Speaker Change: If you look out into next into this current coming fiscal year for 25 year run of 43% gross margin for the year and 37% in this last quarter would you be sort of targeting the high thirty's or more low forty's for this coming year.
Speaker Change: Well I think we're where we're targeting our 40 or more and where we end up we.
Speaker Change: We'll see.
Speaker Change: Thank God.
Speaker Change: That's where we're.
Speaker Change: You know trying to maintained a very disciplined approach in terms of our margins.
Speaker Change: And so.
Speaker Change: So yeah that's.
Speaker Change: Where we're aiming and Oh, we do have to have to see.
Speaker Change: Uh huh.
Speaker Change: The timing of things et cetera.
Speaker Change: So it comes into play.
Speaker Change: Okay, and then on quantum sensing.
Speaker Change: Could you sort of characterize where size up a little bit for for this coming fiscal year, what kind of development like.
Speaker Change: Revenue opportunity is there is it material like 10% of your business or less or more than that and then secondly, when would you hope to have product revenue out of this area.
Speaker Change: Far off.
Speaker Change: So so.
Speaker Change: I think it's at this.
Over the next fiscal year, I would anticipate that a it's less than a percent.
Speaker Change: Of our of our overall revenue number one and number two I anticipate our products.
Speaker Change: Sort of five years out from now.
Speaker Change: I think that's a reasonable expectation.
Speaker Change: Okay, and then are any of the other newer products coming out before then these other things you mentioned.
Speaker Change: Definitely.
Speaker Change: We we are are we.
Speaker Change: We have products, which are going to be available.
Speaker Change: Within the next fiscal year.
Speaker Change: The compact rubidium standard.
Speaker Change: Is going to be available.
Yes.
Is that the turbo you're talking about.
Speaker Change: Yes.
Speaker Change: Out in this fiscal year, you hope is product.
Speaker Change: It will yes.
Speaker Change: What kind of addressable market is that being kind of a size that upper characterize it.
Speaker Change:
Speaker Change: At well, it's a it's a are.
Speaker Change: A growing addressable market.
Speaker Change: Thank God.
Speaker Change:
Probably a $1 million to $2 million.
Speaker Change: Within the next.
Speaker Change: A year or so.
Speaker Change: And growing after that.
Speaker Change: Hum.
Speaker Change: Okay. Thank you Tom.
Speaker Change: Thank you and the next question is coming from Brent Ericsson Brent is a private investor French your line of science.
Speaker Change: Hi, Thank you for your leadership and I think saw the employees for their hard work.
Speaker Change: Much appreciated.
Speaker Change: My question is when.
Speaker Change: What do you target for our SG&A and R&D for 2026 going forward.
Speaker Change: As a percentage of revenue.
Speaker Change: I'll, let Steve respond to that question I believe there'll be very similar to where they are this year.
Speaker Change: Approximately SG&A, we ran 18% in the last two years.
Speaker Change: And R&D somewhere in the six to eight or 9% range.
Speaker Change: And do you target taxes, I mean, I know you had you didnt have any more carryforwards, but you had some a few more Nols left you still see taxes, and a 1.5% to 2% range.
Speaker Change: Again, depending I think for next year is we'll use more Nols, we still have a.
Speaker Change: A bunch left.
Speaker Change: But you know with the new tax law changes stop in California's where right now we pay our taxes because they suspended the use of Nols I still believe if we have a good year. It is still the majority of it will be covered some may not based on where it comes and so forth.
Speaker Change: But it will not be a normal 21% tax here next year either.
Speaker Change: You still feel like in a single digits.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Last quarter U.
Speaker Change: You spoke about F D, a bids where even though it's successful and what kind of investment.
Speaker Change: Expense do you see coming from D. A.
Speaker Change: So so at this point in time, that's a little bit up in the air.
Speaker Change: Actually the the new administration.
Speaker Change: As a rethinking.
Speaker Change: The U S D. A process, we we are still.
Speaker Change: Looking at our tracking layer activity from a S D a.
Speaker Change: What are the transport or a data layer.
Speaker Change: As a.
Currently being re imagined and how that's going to play out is not clear at this point in time.
Speaker Change: There's no indication of even maybe a timeframe I know you were early you mentioned short medium term to be.
Speaker Change: You know one to five years or one to two years.
Speaker Change: Do you personally think that it's somewhere in the within the next nine to 12 months.
Speaker Change: Definitely.
Speaker Change: I think.
Speaker Change: Yes.
Speaker Change: Yes, I think something is going to pop up.
Speaker Change: Within that timeframe, yes.
Speaker Change: Okay.
Speaker Change: Alright, I'll I'll back out thank you for your time.
Speaker Change: Okay. Thanks.
Speaker Change: Thank you and there are no other questions from the lines at this time I will now hand, the call back to Thomas Mclaughlin for closing remarks.
Thomas Mclaughlin: Okay, I think I'd like to thank everybody for participating in this call.
Speaker Change: And have a nice summer.
Thomas Mclaughlin: Thank you.
Thomas Mclaughlin: Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.