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TI

TEL INSTRUMENT ELECTRONICS CORP (TIKK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue was $2.84M, down 0.9% y/y, with gross margin compressing to 26% and diluted EPS to common of −$0.02; management attributed margin pressure to low‑margin CRAFT ECP invoices and funded engineering mix .
  • Backlog improved to $7.0M at quarter‑end, with management signaling “strong growth” ahead on SDR‑OMNI/MIL adoption and the expected commencement of CRAFT ECP and MADL production later in FY2025 .
  • Sequentially, the subsequent Q2 FY2025 showed continued parts‑related shipment constraints, driving gross margin to 12% and dilutive losses; backlog rose to $7.9M and management highlighted receipt of a $1.55M MADL order and Airbus SDR‑OMNI follow‑ons as catalysts .
  • No earnings call transcript was published for Q1 FY2025; investor updates were via 8‑K and press release only. Wall Street consensus (S&P Global) was unavailable for Q1 FY2025, so estimate comparisons cannot be provided .

What Went Well and What Went Wrong

  • What Went Well
    • Airbus selected SDR‑OMNI for worldwide manufacturing after an extensive technical evaluation; follow‑on SDR‑OMNI orders arrived in Q2, and Boeing authorized SDR‑OMNI for inclusion in its approved supplier listing .
    • CRAFT ECP Test Readiness Review completed in April 2024, a key milestone that generated a progress billing and bolstered cash; production is projected to commence in Q4 FY2025 .
    • Operating expenses fell 23% y/y in Q1 due to funded engineering, supporting profitability despite margin headwinds; CEO reiterated confidence in SDR‑OMNI/MIL replacing obsolete military test sets .
  • What Went Wrong
    • Gross margin declined to 26% in Q1 (from 45% y/y) on low‑margin CRAFT ECP invoices; Q2 gross margin fell further to 12% amid parts delays, leading to a larger operating loss .
    • To common shareholders, diluted EPS was −$0.02 in Q1 (impacted by preferred dividends), versus +$0.06 diluted in the prior‑year quarter; Q2 recorded −$0.28 basic and diluted per share .
    • Internal controls: management concluded disclosure controls were not effective in Q1, citing inventory control weaknesses (with remediation underway); Q2 reiterated the material weakness in inventory controls .

Financial Results

  • Quarterly trend and y/y comparison
MetricQ1 FY2024 (Jun 30, 2023)Q3 FY2024 (Dec 31, 2023)Q1 FY2025 (Jun 30, 2024)Q2 FY2025 (Sep 30, 2024)
Revenue ($USD)$2,866,929 $2,403,099 $2,842,176 $1,777,342
Gross Margin ($USD)$1,294,549 $968,118 $745,902 $206,940
Gross Margin (%)45.2% 40.0% 26.2% 12.0%
Operating Income ($USD)$420,250 $247,114 $71,924 $(999,614)
Net Income ($USD)$295,292 $133,809 $42,248 $(814,594)
EPS – Basic (Common)$0.07 $0.01 $(0.02) $(0.28)
EPS – Diluted (Common)$0.06 $0.02 $(0.02) $(0.28)
  • Segment breakdown (Net Sales)
Segment Net Sales ($USD)Q3 FY2024Q1 FY2025Q2 FY2025
Avionics Government$2,025,707 $2,374,860 $1,216,469
Avionics Commercial$377,392 $467,316 $560,873
Total$2,403,099 $2,842,176 $1,777,342
  • KPIs and balance sheet items
KPI ($USD)Q3 FY2024 (Dec 31, 2023)Q1 FY2025 (Jun 30, 2024)Q2 FY2025 (Sep 30, 2024)
Backlog$6.0M $7.0M $7.9M
Cash$220,791 $149,550 $242,366
Accounts Receivable$1,176,203 $1,763,680 $813,801
Inventories (net)$4,319,840 $5,208,229 $4,989,908
Line of Credit Outstanding$690,000 $1,000,000 $965,000

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
CRAFT ECP production revenuesFY2025 Q4 start; multi‑yearN/AProjected ~$5M annual revenues once full‑rate production commences; TRR completed Apr 2024 New qualitative guide (raised visibility)
MADL (F‑35) productionFY2025 Q4 startN/A$1.55M production order received in Oct 2024; full‑rate production expected in Q4 FY2025 New order (positive)
SDR‑OMNI commercialFY2025N/AAirbus selection; follow‑on orders; Boeing approval listing for SDR‑OMNI Positive traction
Backlog trajectoryFY2025 H2N/ABacklog $7.9M at Q2 with management referencing >$9M current sales backlog; negotiating CRAFT ECP increase and multi‑year IDIQs Improving backlog
Formal financial guidance (revenue/margins, tax rate)FY2025NoneNone issued; management expects revenue/profit improvement in H2 FY2025 Maintained (no formal guidance)

Earnings Call Themes & Trends

Note: No Q1 FY2025 earnings call transcript found; themes compiled from filings and press releases.

TopicPrevious Mentions (Q3 FY2024)Previous Mentions (FY2024 PR)Current Period (Q1 FY2025)Trend
Supply chain/parts delaysImproving but still impacting shipments; hired Supply Chain Manager Parts shortages impacted FY2024; easing expected Low‑margin CRAFT ECP true‑up; parts issues for CRAFT; normal production resuming (except CRAFT parts at that time) Easing overall, but program‑specific overruns persist
SDR‑OMNI adoptionInitial deliveries; >$720K sold by 12/31/23 Strong prospects; Airbus selection Airbus selected SDR‑OMNI; additional volume orders; Boeing listing in Q2 Building commercial momentum
SDR‑OMNI/MILIntroduced; two int’l orders, U.S. military expected Only multi‑purpose test set meeting Class 1 mil specs Unique specs; potential to replace thousands of obsolete sets; initial DOD orders in Q2 Expanding military traction
CRAFT ECPOn schedule; TRR expected May (generated $1.2M billing) Critical driver; PRR later in 2024; Q4 FY2025 production start TRR completed; gross margin impact from true‑up; production start projected Q4 FY2025 Nearing production phase
MADL (F‑35)Partially funded production PO ~$1.5M; complete order in FY2025 Development completed; negotiating up to 119 test sets Negotiations for up to 119 sets; Q2 receipt of $1.55M production order Transitioning to production
Legal/AeroflexPaid $6.56M judgment; case closed Case paid; no ongoing obligations No new litigation issues Resolved; no current impact
Internal controlsEffective (Q3 FY2024) N/ANot effective; inventory controls weakness; remediation plan Weakness identified and in remediation

Management Commentary

  • “We are expecting strong growth for the balance of FY 2025 due to the success of the SDR‑OMNI and SDR‑OMNI/MIL and the expected commencement of MADL and CRAFT ECP production later this year.” – CEO Jeffrey O’Hara .
  • “CRAFT ECP production is projected to commence in the fourth quarter of this fiscal year and should generate annual revenues of around $5 million.” – CEO .
  • “We were thrilled that Airbus selected our SDR‑OMNI commercial test set… Additional volume orders were received from Airbus in the second quarter, and we continue to gain traction in the commercial marketplace.” – CEO .
  • “The second quarter was again impacted by late deliveries of key components… We are now in receipt of all required parts for our major product lines and the third and fourth quarters should show a marked improvement in both revenues, profitability, and cash position.” – CEO .

Q&A Highlights

  • No Q1 FY2025 earnings call transcript or Q&A was available; investor communication was via 8‑K and press releases .

Estimates Context

  • S&P Global consensus estimates for Q1 FY2025 were unavailable for this issuer during this analysis window; as a result, we cannot provide revenue/EPS versus Street comparisons [functions:GetEstimates error].
  • Given the absence of consensus, investors should anchor on backlog progression ($7.0M → $7.9M) and program transition timing (CRAFT ECP and MADL) to gauge likely H2 revenue/margin inflection .

Key Takeaways for Investors

  • Margin pressure is program‑mix driven (CRAFT ECP true‑up and low‑margin invoices), not demand‑driven; backlog at $7.0M in Q1 and $7.9M in Q2 underpins H2 visibility as parts availability normalizes .
  • Watch the CRAFT ECP production start (Q4 FY2025) and LRIP progress—management guides ~$5M annual revenue potential, which can materially lift margin dollars and operating leverage .
  • SDR‑OMNI adoption is a commercial catalyst (Airbus win, Boeing listing) and SDR‑OMNI/MIL has strategic military potential given Class 1 specs and initial DOD and international orders—important secular driver through FY2026 .
  • Preferred dividends materially impact EPS to common (-$0.02 in Q1); consider cash flow and operating income trends versus GAAP EPS when assessing earnings power pre‑full production ramp .
  • Inventory control material weakness identified; remediation is underway—monitor progress as improved controls should reduce operational noise and support sustainable margins .
  • Liquidity remains adequate (LoC renewed to July 31, 2025; $965K drawn at Q2) with working capital supporting ramp; MADL and CRAFT ECP production should improve cash conversion in H2 .
  • Near‑term trading: catalysts include CRAFT/MADL production commencement and additional SDR‑OMNI/MIL orders; risks center on lingering parts delays and program margin true‑ups .