Precision Optics Corporation, Inc. Q2 FY2026 earnings call

Manufacturing Programs - Aerospace program had $2.7M revenue in Q2, sustained high-volume performance, demand strong, forecast to increase shipment levels. Cystoscope program had $2.0M revenue in Q2, made progress on improving operations with design and supply chain updates scheduled. Ophthalmic device program ramping, yields up, production increasing. - Operational Improvements - Added COO in October, production running better, invested in sales and marketing, pipeline of product development opportunities growing. - Product Development - Engineering revenue increased sequentially, bookings in Q2 highest in over a year, pipeline of programs advancing to production. - Ross Optical - Revenue above $1 million for two consecutive quarters, backlog highest in over 3 years, expected to have improved margins in second half.

Revenue for Q2 reached $7.4 million. Production revenue was $6.4 million (net of tariffs), up 92% year-over-year and 9% sequentially. Engineering revenue was $1 million, down 29% year-over-year but up 47% sequentially. Aerospace program generated $2.7 million in Q2, cystoscope program $2.0 million. Ross Optical delivered revenue above $1 million for two consecutive quarters and has highest backlog in over 3 years. Product development/engineering revenue increased sequentially and forecasted to continue increasing.

• Increased full year revenue guidance to $26M - $28M from previous $25M. - Revised full year adjusted EBITDA guidance to negative $2.5M - negative $3.0M. - Q3 expected to be strong improvement over Q2, Q4 expected to be positive adjusted EBITDA.

Q: Can you clarify if design revisions for yield shortfalls are within internal control, lead time for P&L impact and bridging gap without dilutive equity raise?

A: Design change for cystoscope yield improvement approved by customer, initial parts received, awaiting formal approval, anticipate going into production in next month. Discussions with lenders ongoing, expect to announce new loan facility in third quarter, received grant funding, uncertain on equity financing need.

Q: Comment on facility changes and when they will be up and running?

A: Facilities updates in main operation and Massachusetts facility complete, including engineering group. Production facilities being updated, more substantial overhaul in 6 - 12 months.

Q: Comment on loan discussions and certainty of reaching positive EBITDA without dilution?

A: Loan discussions advanced, confident in successful bank discussions.

Q: Long-term return on investments in production infrastructure?

A: Significant leverage from management and support infrastructure for production, programs have long-term needs, expect significant return.

Q: Which program is getting higher-than-expected order flow for revenue increase?

A: Aerospace and single-use cystoscope programs, aerospace ramping faster.

Q: Clarify borescope program relation to defense and aerospace?

A: Borescope program in product development phase, contributing to product development revenue increase, likely to go into production in a year, expected to increase production revenue then