Precision Optics Corporation, Inc. ((POCI)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Precision Optics Corporation, Inc. recently held its earnings call, revealing a mix of achievements and challenges. The company celebrated record-breaking revenue and secured significant contracts, yet faced hurdles with gross margins and production issues. Despite these obstacles, the sentiment remained optimistic, with positive projections for fiscal 2026.
Record-Breaking Quarterly Revenue
Precision Optics reported its highest quarterly revenue in company history, reaching $6.2 million. This achievement sets an annualized run rate of approximately $25 million, marking a significant milestone for the company.
Major Production Contracts
The company secured long-term contracts with a leading aerospace company and a surgical robotics firm. These agreements enhance Precision Optics’ visibility and confidence in its future revenue streams, underscoring its strategic growth in key sectors.
Facility Expansion and Relocation
To support its long-term growth, Precision Optics expanded its operations by relocating its headquarters to Littleton, Massachusetts, and opening a new facility in South Portland, Maine. This expansion is expected to bolster the company’s production capabilities.
Revenue and Margin Growth Forecast
Looking ahead to fiscal 2026, Precision Optics anticipates a revenue increase of over 30%, reaching approximately $25 million. The company also expects gross margins to recover to about 30%, a significant improvement from the 18% recorded in 2025.
Increased Production Capacity
The company reported a substantial increase in production capacity for its aerospace program, with quarterly revenue rising from $300,000 in Q1 to nearly $2 million in Q4. This growth highlights the company’s ability to scale its operations effectively.
Gross Margin Challenges
Precision Optics faced gross margin challenges in the latter half of fiscal 2025, with margins dropping to 13% in Q4. These issues were primarily due to production yield problems, increased labor costs, and tariffs.
Single-Use Cystoscope Production Issues
The production of the single-use cystoscope encountered significant challenges, resulting in a zero gross margin in Q4. Yield issues, labor costs, and tariffs were the main contributors to these difficulties.
Increased Net Loss
The company reported a net loss of $1.4 million for the quarter and $5.8 million for the year, compared to $3 million in the previous year. This increase in net loss reflects the financial pressures faced by Precision Optics.
Tariff Costs Impact
Tariff costs in Q4 amounted to approximately $180,000, accounting for about 3% of the gross margin. This significant impact on profitability underscores the challenges posed by external economic factors.
Forward-Looking Guidance
For fiscal 2026, Precision Optics projects revenues of around $25 million, a 30% increase from fiscal 2025. This growth is driven by a 75% increase in the systems manufacturing business, particularly in aerospace and single-use cystoscope programs. The company expects gross margins to improve to 30%, aided by better manufacturing yields and tariff reimbursements. Additionally, Precision Optics aims for a positive adjusted EBITDA of $0.5 million and is addressing operational challenges by hiring key personnel, including a new COO.
In conclusion, Precision Optics Corporation’s earnings call highlighted both achievements and challenges. While the company celebrated record revenue and secured major contracts, it faced significant margin and production issues. However, the forward-looking guidance for fiscal 2026 remains optimistic, with expectations of revenue and margin growth, positioning the company for a promising future.