Precision Optics Corporation — Fiscal Year 2026 Earnings Summary

Financial Performance

• Q4 2026 revenue reached a quarterly record of $8.8 million, up 42% year-over-year from $6.2 million and up 1% sequentially from $8.7 million; production revenue hit a record $8.0 million, up 57% year-over-year from $5.1 million.
• Fiscal 2026 revenue set a record at $31.5 million, a 65% increase from $19.1 million in the prior year; production revenue doubled to $28.1 million from $14.2 million.
• Q4 2026 gross margin improved to 25.3% from 13.0% in the prior year quarter and 23.6% in the prior sequential quarter; fiscal 2026 gross margin was 17.2%, down slightly from 17.8% in the prior year.
• Q4 2026 net loss narrowed to $(0.1) million compared to $(1.4) million in the prior year quarter; fiscal 2026 net loss declined to $(3.6) million (or $(0.43) per share) from $(5.8) million (or $(0.85) per share) in the prior year.
• Q4 2026 Adjusted EBITDA was $0.4 million, an improvement from $(0.9) million in the prior year quarter; fiscal 2026 Adjusted EBITDA was $(2.1) million, an improvement of approximately $1.6 million from $(3.7) million in the prior year.
• Cash and cash equivalents increased to $9.8 million at June 30, 2026, from $1.8 million at June 30, 2025.
• Total liabilities were $11.99 million at June 30, 2026, compared to $7.53 million at June 30, 2025; long-term debt decreased to $711,305 from $1.29 million.
• Stockholders' equity grew to $20.35 million at June 30, 2026, from $12.26 million at June 30, 2025, driven by a public offering and stock option exercises.

Guidance and Future Outlook

• Fiscal 2027 revenue is expected to range between $30 million and $33 million, similar to fiscal 2026 levels.
• The 2027 outlook reflects a temporary pause in demand from an existing satellite customer, offset by growth in single-use medical device programs, renewed defense production, additional programs transitioning to production, and new engineering engagements.
• The company anticipates a stronger second half of fiscal 2027 as orders are expected to resume from the existing satellite customer.
• Fiscal 2027 Adjusted EBITDA is projected to range between $(1.2) million and $(1.7) million.

Business Segments and Product Lines

• The company achieved record quarterly revenue from an existing top-tier aerospace customer and continued strong production of its single-use cystoscopy surgery system.
• Production ramped up under a previously announced $3.5 million follow-on order for a single-use ophthalmic program.
• The company received a $1.3 million follow-on production order from a large defense company.
• An initial engineering order was received from a U.S. space technology company.
• The company appointed Peter Thier as Senior Vice President of Sales and Marketing to lead the rebuilding of the product development pipeline.
• An initial engineering order was received from a second satellite customer, with potential to build a meaningful long-term production relationship.

Market and Competitive Landscape

• Precision Optics operates in the medical device, defense/aerospace, and satellite communications markets, leveraging proprietary micro-optics and ultra-high precision imaging technologies.
• The company serves demanding customer requirements across minimally invasive and robotic surgery applications, including micro-endoscopes and digital imaging.
• The company's Ross Optical division provides global sourcing, inspection, and production of custom and catalog optics.

Risks and Challenges

• Fiscal 2027 revenue guidance is significantly impacted by a temporary pause in production with an existing satellite customer.
• Forward-looking statements regarding revenue, EBITDA, and customer demand involve risks and uncertainties, including global supply chains and economic activity, which could cause actual results to differ materially.
• The company cannot provide a reconciliation of forward-looking Adjusted EBITDA guidance to GAAP net income without unreasonable efforts due to the difficulty in forecasting stock-based compensation expense.

Management Commentary and Tone

• CEO Joe Forkey described fiscal 2026 as a year of transformation, highlighting record quarterly revenue, a second consecutive quarter of positive Adjusted EBITDA, and 65% revenue growth for the year.
• Management expressed confidence in returning to record quarterly revenue levels in the second half of fiscal 2027 as the satellite customer resumes orders and new customer relationships grow.
• The company plans to continue investing in capabilities, capacity, and market penetration to capitalize on significant market opportunities.

Other Key Points

• The company completed a public offering of common stock in fiscal 2026, generating net proceeds of $10.63 million.
• Proceeds from the exercise of stock options totaled $39,999 in fiscal 2026.
• Issuance of common stock for employee services and consulting totaled $100,500 in fiscal 2026.
• Operating lease right-of-use assets obtained in exchange for operating lease liabilities were $2.63 million in fiscal 2026.
• The company reported a net increase in cash and cash equivalents of $8.07 million during fiscal 2026.