Precision Optics Corporation, Inc. Q4 FY2025 earnings call

• Fourth quarter revenue was the highest in the company's history, with an annualized run rate of ~$25 million. - Two major programs transitioned from development to production, driving revenue. - Addressing gross margin challenges by improving yields, fixture/processes, and tariff reimbursement. - Invested in facilities by moving headquarters to Littleton, MA and South Portland, ME. - Hired manufacturing/quality engineers and a new COO, Joe Traut, with industry experience.

The fourth quarter revenue was $6.2 million, with an annualized run rate of approximately $25 million. The systems manufacturing business is expected to grow over 75% in fiscal 2026. The aerospace program had Q4 revenue of just under $2 million, with a backlog of nearly $9 million and a mid-30% gross margin range. The single-use cystoscope had Q4 revenue of nearly $800,000, continuing the revenue increase trend. Product development is recovering, expected to increase from $4.9 million in 2025 to $5.6 million in 2026. Micro-optics labs revenue dropped from $2.1 million in 2025 to $1.3 million in 2026 due to timing. Ross Optical is expected to be flat at $3.7 million to $3.8 million.

• Fiscal 2026 revenue expected to be ~$25 million, a >30% increase from 2025 ($19 million). - Gross margin expected to be ~30% in 2026, with improvement in the second half. - Expect adjusted EBITDA of ~$0.5 million positive in 2026.

• Gross margin challenges due to yield issues, labor touch time, and tariffs. - Uncertainty regarding tariff reimbursement agreements. - Start-up challenges with new production lines, like the single-use cystoscope program.

Q: How to square guidance with revenue trends?

A: Conservative guidance due to timing of orders and pass-through capital costs.

Q: What's the status of tariff reimbursement?

A: Verbal agreements, need to document.

Q: How does the medical program cost reimbursement work?

A: Open book pricing, negotiated short-term price increase, aiming for original margins.

Q: Impact of engineering resources on production orders?

A: Engineers working on other programs, pipeline has 6-8 programs, 3 in verification/validation for production.

Q: Details on the second single-use program?

A: Ramping slowly, using cystoscope lessons, customer doubled forecast.

Q: Gross margin back half weighting?

A: Strengthening in back half due to cystoscope line work and aerospace ramp.