Precision Optics Reports Second Quarter Fiscal Year 2024 Financial Results

About this update from Precision Optics Corporation, Inc.

Conference Call Scheduled for today, February 14, 2024 , at 5:00pm ET . GARDNER, Mass. , Feb. 14, 2024 /PRNewswire/ -- Precision Optics Corporation, Inc. (NASDAQ: POCI), a leading designer and manufacturer of advanced optical instruments for the medical and defense industries, announced operating results on an unaudited basis for its second quarter fiscal year 2024 for the period ended December 31, 2023 . Q2 2024 Financial Highlights (3 Months Ended December 31 , 2023): Revenue decreased 18% to $4.8 million , compared to $5.9 million in the same quarter of the previous fiscal year, but up 12% from the most recent sequential quarter. The year ago second quarter included a one-time sale of $600,000 of technology rights relating to a single-use medical device developed for a customer. Engineering revenue increased 33% to $2.3 million compared to $1.7 million in the same quarter of the previous fiscal year, and up 19% from the most recent sequential quarter. Production revenue was $2.6 million compared to $3.6 million in the same quarter of the previous fiscal year, and $2.4 million in the most recent sequential quarter. Gross margins were 30.1% compared to 44.2% in the same quarter of the previous year. Removing the impact of the technology rights revenue, gross margins a year ago would have been 37.8%. Net loss for the quarter was ( $758,802 ), compared to a net income of $508,668 in the same quarter of the previous year. Adjusted EBITDA was ( $269,034 ) for the quarter compared to $866,450 in the same quarter of the previous year. Recent Additional Highlights: In November 2023 , the Company announced the receipt of initial purchase orders towards a $1.4 million total program development project to develop a highly complex imaging sub-assembly for a next generation ophthalmoscope for one of the world's largest technology-focused medical device companies. In December 2023 , the Company announced the signing of a production and technology license agreement with a leading surgical robotics company to supply a single-use endoscope assembly used in their cystoscopy robotic surgery system. Precision Optics' CEO, Joseph Forkey , commented, "The Company's results for Q2 were generally in-line with our expectations and consistent with what we have communicated previously. While revenue was lower compared to last year due to timing differences between reorders for ongoing production, the exit of certain mature customer programs and the introduction of new customer programs, we have begun to see the rebound we expected with two new programs moving to production in the quarter and another restarting after a pandemic-related hold. These programs contributed to a 6% quarter-over-quarter increase in production revenue, which, combined with record engineering revenue led to a 12% increase in total revenue compared to the first quarter. Margins for the second quarter were lower than the first quarter, due to a differing sales mix, lower than normal production yields on certain programs starting or re-starting production as well as other one-time charges. We believe these margin issues are transient and will be substantially resolved in the second half of the year, with gross margins returning to historical levels. Dr. Forkey continued, "The growth we expect in the second half of fiscal 2024 is supported by the strength of our engineering pipeline, a leading indicator of future production volumes. Engineering revenue was $2.3 million during the second quarter – a new quarterly record, up 33% year-over-year, and up 19% sequentially. We anticipate volumes from production orders coming on-line to lift our overall revenue to new quarterly record run-rates in this fiscal year. Precision Optics' core competencies -- micro-optics, digital imaging, 3D endoscopy, and single-use medical devices -- uniquely position us at the center of market segments that are significantly outpacing the growth of the broader medical device and defense / aerospace industries, providing us with an ongoing opportunity to significantly grow into the future. I look forward to an exciting second half of fiscal 2024." The following table summarizes the second quarter and fiscal year to date (unaudited) results for the periods ended December 31, 2023 , and 2022: Three Months Six Months Ended December 31 , Ended December 31 , 2023 2022 2023 2022 Revenues $4,824,289 $5,886,961 $9,145,544 $10,972,262 Gross Profit 1,450,976 2,599,472 2,914,587 4,238,913 Stock Compensation Expenses 382,431 108,746 491,177 319,776 Other 1,772,707 1,919,661 3,532,865 3,449,874 Total Operating Expenses 2,155,138 2,028,407 4,024,042 3,769,650 Operating Income (Loss) (704,162) 571,065 (1,109,455) 469,263 Net Income (Loss) (758,802) (508,668) (1,223,217) 349,944 Income (Loss) per Share Basic $ (0.13) $ (0.09) $ (0.20) $ 0.06 Fully Diluted $ (0.13) $ (0.09) $ (0.20) $ 0.06 Weighted Average Common Shares Outstanding Basic 6,066,572 5,638,302 6,066,545 5,638,302 Fully Diluted 6,066,572 5,935,911 6,066,545 5,937,471 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 : Wednesday, February 14, 2024 , 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/5l19x2DzRKG . Replay : A teleconference replay of the call will be available until February 21, 2024 , at (877) 344-7529 or (412) 317-0088, replay access code 9304851. A webcast replay will be available at https://app.webinar.net/5l19x2DzRKG . About Precision Optics Corporation Founded in 1982, Precision Optics is a vertically integrated optics company primarily focused on leveraging its proprietary micro-optics and 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 designs and manufactures next-generation product solutions to meet 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, including single-use medical devices, 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 with 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 risk factors. 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 Gardner, Massachusetts 01440-3338Telephone: 978-630-1800 Investor Contact: LYTHAM PARTNERS, LLC Robert Blum Telephone: 602-889-9700 [email protected] PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31 , June 30 , 2023 2023 ASSETS Current Assets: Cash and cash equivalents $ 987,044 $ 2,925,852 Accounts receivable, net of allowance for doubtful accounts of $731,256 at December 31, 2023 and $606,715 at June 30, 2023 3,511,544 3,907,407 Inventories 3,099,986 2,776,216 Prepaid expenses 234,121 249,681 Total current assets 7,832,695 9,859,156 Fixed Assets: Machinery and equipment 3,253,746 3,227,481 Leasehold improvements 832,305 825,752 Furniture and fixtures 362,287 242,865 Total fixed assets 4,448,338 4,296,098 Less—Accumulated depreciation and amortization 3,966,839 3,862,578 Net fixed assets 481,499 433,520 Operating lease right-to-use asset 275,329 358,437 Patents, net 283,643 265,111 Goodwill 8,824,210 8,824,210 TOTAL ASSETS $ 17,697,376 $ 19,740,434 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of capital lease obligation $ 44,519 $ 43,209 Current maturities of long-term debt 513,259 513,259 Accounts payable 1,675,742 2,432,264 Customer advances 1,158,242 1,174,690 Accrued compensation and other 747,793 927,521 Operating lease liability 173,503 168,677 Total current liabilities 4,313,058 5,259,620 Capital lease obligation, net of current portion 45,890 68,482 Long-term debt, net of current maturities and debt issuance costs 1,919,350 2,175,980 Operating lease liability, net of current portion 101,826 189,760 Stockholders' Equity: Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding – 6,067,518 shares at December 31, 2023 and 6,066,518 at June 30, 2023 60,675 60,665 Additional paid-in capital 60,718,801 60,224,934 Accumulated deficit (49,462,224) (48,239,007) Total stockholders' equity 11,317,252 12,046,592 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,697,376 $ 19,740,434 PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022 (UNAUDITED) Three MonthsEnded December 31 , Six MonthsEnded December 31 , 2023 2022 2023 2022 Revenues $ 4,824,289 $ 5,886,961 $ 9,145,544 $ 10,972,262 Cost of Goods Sold 3,373,313 3,287,489 6,230,957 6,733,349 Gross Profit 1,450,976 2,599,472 2,914,587 4,238,913 Research and Development Expenses 221,728 155,264 434,486 365,891 Selling, General and Administrative Expenses 1,933,410 1,873,143 3,589,556 3,403,759 – Total Operating Expenses 2,155,138 2,028,407 4,024,042 3,769,650 Operating Income (Loss) (704,162) 571,065 (1,109,455) 469,263 Interest Expense (54,640) (62,397) (113,762) (119,319) Net Income (Loss) $ (758,802) $ 508,668 $ (1,223,217) $ 349,944 Loss Per Share: Basic (0.13) $ 0.09 (0.20) $ 0.06 Fully Diluted $ (0.13) $ 0.09 $ (0.20) $ 0.06 Weighted Average Common Shares Outstanding: Basic 6,066,572 5,638,302 6,066,545 5,638,302 Fully Diluted 6,066,572 5,935,911 6,066,545 5,937,471 PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022 (UNAUDITED) Six MonthsEnded December 31 , 2023 2022 Cash Flows from Operating Activities: Net Income (Loss) $ (1,223,217) $ 349,944 Adjustments to reconcile net loss to net cash used in by operating activities - Depreciation and amortization 104,261 104,750 Stock-based compensation expense 491,177 319,776 Non-cash interest expense 8,752 16,966 Changes in operating assets and liabilities - Accounts receivable, net 395,863 (1,368,650) Inventories, net (323,770) 232,963 Prepaid expenses 15,560 271 Accounts payable (756,522) 216,060 Customer advances (16,448) (110,132) Accrued compensation and other (188,480) 255,162 Net cash (used in) provided by operating activities (1,492,824) 17,110 Cash Flows from Investing Activities: Purchases of fixed assets (152,240) (13,583) Additional patent costs (18,532) (24,054) Net cash used in investing activities (170,772) (37,637) Cash Flows from Financing Activities: Payments of capital lease obligations (21,282) (20,049) Payments of long-term debt (256,630) (183,855) Gross proceeds from the exercise of stock options 2,700 - Net cash used in financing activities (275,212) (203,904) – Net (decrease) increase in cash and cash equivalents (1,938,808) (224,431) Cash and cash equivalents, beginning of period 2,925,852 605,749 Cash and cash equivalents, end of period $ 987,044 $ 381,318 PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA Three Months Six Months Ended December 31 , Ended December 31 , 2023 2022 2023 2022 Net Income (loss) (GAAP) $ (758,802) $ 508,668 $ (1,223,217.00) $ 349,944 Stock based compensation 382,431 244,786 491,177.00 319,776 Depreciation and Amortization 52,697 52,667 104,261.00 105,078 Interest expense 54,640 60,329 113,762.00 117,251 Adjusted EBITDA (non-GAAP) $ (269,034) $ 866,450 $ (514,017) $ 892,049 View original content to download multimedia: https://www.prnewswire.com/news-releases/precision-optics-reports-second-quarter-fiscal-year-2024-financial-results-302062206.html SOURCE Precision Optics Corporation

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