Precision Optics Reports First Quarter Fiscal Year 2024 Financial Results
- The company secured significant production orders for advanced imaging sub-assemblies, showcasing its technological capabilities and market demand. The CEO's comments on the revenue decline attributed it to timing differences and the introduction of new customer programs, indicating a strategic shift towards emerging sectors such as medical endoscopes and defense/aerospace commitments.
- The 15% revenue decrease and net loss in Q1 2024 reflect operational challenges and potential market volatility. The decline in gross margins, from 32.2% to 33.9%, may indicate pricing pressures or increased production costs.
Conference Call Scheduled for today, November 14, 2023, at 5:00pm ET.
Q1 2024 Financial Highlights (3 Months Ended September 30, 2023):
- Revenue decreased
15% to$4.3 million $5.1 million - Production revenue was
$2.4 million $3.4 million - Engineering revenue was
$1.9 million $1.6 million - Gross margins were
33.9% compared to32.2% in the same quarter of the previous year. - Net loss for the quarter was (
$464,415 $158,724 - Adjusted EBITDA was (
$244,983 $25,599
Recent Additional Highlights:
- In November 2023, the Company announced the receipt of an
$890,000 - In October 2023, the Company announced the receipt of an initial production order from a top tier defense/aerospace company totaling
$680,000
Precision Optics' CEO, Joseph Forkey, commented, "As anticipated and discussed last quarter, the decline in revenue was attributable to timing differences between the exit of certain mature customer programs, reorders for ongoing products and the introduction of new customer programs, primarily in the areas of medical endoscopes, including single-use devices and new defense / aerospace commitments. Revenue was also impacted by lower order volumes of optical components from our Ross Optical operation as customers sought to rebalance their inventories which had previously grown beyond sustainable levels due to increased ordering in response to concerns about supply chain disruptions. We believe reduced customer demand to be transient, and we have already seen a second quarter recovery in revenue levels both with Ross Optical and in production. We continue to believe that revenue growth should accelerate in the second half of this fiscal year as new programs enter commercial production. Customer programs we're producing have the market potential to support substantial Precision Optics growth."
Dr. Forkey continued, "During the first quarter, engineering revenue was close to the previous quarter's record level and was up
The following table summarizes the fourth quarter and fiscal year (unaudited) results for the periods ended September 30, 2023, and 2022:
Three Months | |||
Ended September 30, | |||
2023 | 2022 | ||
Revenues | |||
Gross Profit | 1,463,611 | 1,639,441 | |
Stock Compensation Expenses | 108,746 | 74,990 | |
Other | 1,760,158 | 1,666,253 | |
Total Operating Expenses | 1,868,904 | 1,741,243 | |
Operating Income (Loss) | (405,293) | (101,802) | |
Net Income (Loss) | (464,415) | (158,724) | |
Income (Loss) per Share | |||
Basic and Fully Diluted | $ (0.08) | $ (0.03) | |
Weighted Average Common Shares Outstanding | |||
Basic and Fully Diluted | 6,066,518 | 5,638,363 | |
Note: The Common Shares in this table reflect shares on a post reverse split basis for all periods presented. |
Conference Call Details
Date and Time: Tuesday, November 14, 2023, at 5:00pm ET
Call-in Information: Interested parties can access the conference call by dialing (844) 735-3662 or
(412) 317-5705.
Live Webcast Information: Interested parties can access the conference call via a live webcast, which is available at https://app.webinar.net/q7ndVdGzwyJ.
Replay: A teleconference replay of the call will be available until November 21, 2023, at (877) 344-7529 or (412) 317-0088, replay access code 1146933. A webcast replay will be available at https://app.webinar.net/q7ndVdGzwyJ.
About Precision Optics Corporation
Founded in 1982, Precision Optics is a vertically integrated optics company primarily focused on leveraging its proprietary micro-optics and 3D imaging technologies to the healthcare and defense/aerospace industries by providing services ranging from new product concept through mass manufacture. Utilizing its leading-edge in-house design, prototype, regulatory and fabrication capabilities as well as its Lighthouse Imaging division's electronic imaging expertise and its Ross Optical division's high volume world-wide sourcing, inspecting and production resources, the Company is able to design and manufacture next-generation product solutions to the most challenging customer requirements. Within healthcare, Precision Optics enables next generation medical device companies around the world to meet the increasing demands of the surgical community who require more enhanced and smaller imaging systems for minimally invasive surgery as well as 3D endoscopy systems to support the rapid proliferation of surgical robotic systems. In addition to these next generation applications, Precision Optics has supplied top tier medical device companies a wide variety of optical products for decades, including complex endocouplers and specialized endoscopes. The Company is also leveraging its technical proficiency in micro-optics to enable leading edge defense/aerospace applications which require the highest quality standards and the optimization of size, weight and power. For more information, please visit www.poci.com.
Non-GAAP Financial Measures
Precision Optics has provided in this press release financial information that has not been prepared in accordance with accounting principles generally accepted in the Unites States of America ("non-GAAP"). The non-GAAP financial measure is Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). Adjusted EBITDA also excludes from Net Income (Loss) the effect of stock-based compensation, restructuring and other acquisition-related items.
This non-GAAP financial measure assists Precision Optics management in comparing its operating performance over time because certain items may obscure the underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to discrete acquisition or restructuring plans that are fundamentally different from the ongoing productivity of the Company. Precision Optics management also believes that presenting this measure allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measure presented above to GAAP results has been provided in the financial tables included with this press release.
About Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements include, but are not limited to, statements that express the Company's intentions, beliefs, expectations, strategies, predictions or any other statements related to the Company's future activities or future events or conditions. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by the Company's management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in the Company's annual report on Form 10-K and in other documents that we file from time to time with the SEC. Any forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement, except as required by law.
Company Contact:
PRECISION OPTICS CORPORATION
22 East Broadway
Telephone: 978-630-1800
Investor Contact:
LYTHAM PARTNERS, LLC
Robert Blum
Telephone: 602-889-9700
poci@lythampartners.com
Following are the Company's Consolidated Balance Sheets at September 30, 2023 and June 30, 2023, and Statements of Cash Flows, for the three months ended September 30, 2023 and 2022:
CONSOLIDATED BALANCE SHEETS | ||||||||
September 30, | June 30, | |||||||
2023 | 2023 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 1,370,469 | $ | 2,925,852 | ||||
Accounts receivable, net of allowance for doubtful accounts of | 4,533,126 | 3,907,407 | ||||||
Inventories | 2,971,211 | 2,776,216 | ||||||
Prepaid expenses | 361,801 | 249,681 | ||||||
Total current assets | 9,236,607 | 9,859,156 | ||||||
Fixed Assets: | ||||||||
Machinery and equipment | 3,243,496 | 3,227,481 | ||||||
Leasehold improvements | 842,455 | 825,752 | ||||||
Furniture and fixtures | 240,917 | 242,865 | ||||||
Total fixed assets | 4,326,868 | 4,296,098 | ||||||
Less—Accumulated depreciation and amortization | 3,914,142 | 3,862,578 | ||||||
Net fixed assets | 412,726 | 433,520 | ||||||
Operating lease right-to-use asset | 317,083 | 358,437 | ||||||
Patents, net | 277,858 | 265,111 | ||||||
Goodwill | 8,824,210 | 8,824,210 | ||||||
TOTAL ASSETS | $ | 19,068,484 | $ | 19,740,434 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Current portion of capital lease obligation | $ | 43,859 | $ | 43,209 | ||||
Current maturities of long-term debt | 513,259 | 513,259 | ||||||
Accounts payable | 1,733,661 | 2,432,264 | ||||||
Customer advances | 1,424,983 | 1,174,690 | ||||||
Accrued compensation and other | 1,239,781 | 927,521 | ||||||
Operating lease liability | 171,075 | 168,677 | ||||||
Total current liabilities | 5,126,618 | 5,259,620 | ||||||
Capital lease obligation, net of current portion | 57,270 | 68,482 | ||||||
Long-term debt, net of current maturities and debt issuance costs | 2,047,665 | 2,175,980 | ||||||
Operating lease liability, net of current portion | 146,008 | 189,760 | ||||||
Stockholders' Equity: | ||||||||
Common stock, | 60,665 | 60,665 | ||||||
Additional paid-in capital | 60,333,680 | 60,224,934 | ||||||
Accumulated deficit | (48,703,422) | (48,239,007) | ||||||
Total stockholders' equity | 11,690,923 | 12,046,592 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 19,068,484 | $ | 19,740,434 | ||||
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES | ||||||||
Three Months | ||||||||
2023 | 2022 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Loss | $ | (464,415) | $ | (158,724) | ||||
Adjustments to reconcile net loss to net cash used in by operating activities - | ||||||||
Depreciation and amortization | 51,564 | 52,411 | ||||||
Stock-based compensation expense | 108,746 | 74,990 | ||||||
Non-cash interest expense | 4,376 | 9,412 | ||||||
Changes in operating assets and liabilities - | ||||||||
Accounts receivable, net | (625,719) | (750,813) | ||||||
Inventories, net | (194,995) | 266,487 | ||||||
Prepaid expenses | (112,120) | 25,950 | ||||||
Accounts payable | (698,603) | 151,945 | ||||||
Customer advances | 250,293 | 127,778 | ||||||
Accrued compensation and other | 307,884 | 400,298 | ||||||
Net cash (used in) provided by operating activities | (1,372,989) | 199,734 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of fixed assets | (30,770) | (16,019) | ||||||
Additional patent costs | (12,747) | (13,155) | ||||||
Net cash used in investing activities | (43,517) | (29,174) | ||||||
Cash Flows from Financing Activities: | ||||||||
Payment of capital lease obligation | (10,562) | (9,950) | ||||||
Payments of long-term debt | (128,315) | (92,857) | ||||||
Net cash used in financing activities | (138,876) | (102,807) | ||||||
Net (decrease) increase in cash and cash equivalents | (1,555,383) | 67,753 | ||||||
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES | |||||||||
Three Months | |||||||||
2023 | 2022 | ||||||||
Net Income (loss) (GAAP) | $ | (464,415) | $ | (158,724) | |||||
Stock based compensation | 108,746 | 74,990 | |||||||
Depreciation and amortization | 51,564 | 52,411 | |||||||
Interest expense | 59,122 | 56,922 | |||||||
Adjusted EBITDA (non-GAAP) | $ | (244,983) | $ | 25,599 | |||||
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SOURCE Precision Optics Corporation
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