POCI

This article first appeared on GuruFocus. Value-Added Sales: Record $308.2 million, up 15% year-over-year and 18% sequentially. Adjusted EPS: Record $1.90, up 39% year-over-year and 50% sequentially. Adjusted EBITDA: Record $71.8 million, or 23.3% of value-added sales, up 29% year-over-year with 250 basis points of margin expansion. Performance Materials Value-Added Sales: $190 million, up 13% year-over-year and 36% sequentially. Performance Materials Adjusted EBITDA: $48.3 million, or 25.4% of value-added sales, up 16% year-over-year with 80 basis points of margin expansion. Electronic Materials Value-Added Sales: $87.4 million, up 15% year-over-year. Electronic Materials Adjusted EBITDA: Record $28 million, or 32% of value-added sales, up 57% year-over-year with nearly 900 basis points of margin expansion. Precision Optics Value-Added Sales: $30.8 million, up 26% year-over-year. Precision Optics Adjusted EBITDA: $6.6 million, or 21.4% of value-added sales, up 206% year-over-year. Free Cash Flow: $59 million generated in the quarter, with approximately 150% cash conversion. Net Debt: Approximately $421 million, with leverage at 1.8 times. Full-Year 2026 Adjusted EPS Guidance: Raised to $6.80 to $7.20, up from prior guidance of $6 to $6.50. Warning! GuruFocus has detected 5 Warning Signs with MTRN. Is MTRN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record quarterly sales and earnings, with all three business segments achieving double-digit sales and EBITDA growth. Adjusted EBITDA margin exceeded 23% for the first time, driven by strong operational leverage and disciplined execution. Electronic materials delivered a record 32% adjusted EBITDA margin, marking its fifth consecutive quarter of margin expansion. Precision Optics surpassed 20% margins, delivering its best profit in over five years and continuing its transformational performance. Record backlog up roughly 30% year-over-year and 20% since the start of the year, with incoming orders in the first half growing nearly 30% year-over-year. Raised full-year adjusted EPS guidance to $6.80-$7.20, representing approximately a 30% increase year-over-year at the midpoint. Strong free cash flow generation of $59 million in the quarter, with approximately 150% cash conversion. Defense orders up 50% year-to-date, with $90 million in incoming orders and over $500 million in open RFQs. Space orders doubled year-over-year, and the company secured a new $15 million program for a major commercial space customer. Semiconductor sales up 23% year-over-year, driven by AI adoption and growth in power and communication markets. Adjusted EBITDA benefited from one-time items totaling $2 million to $3 million, which may not be recurring. Electronic materials margin of 32% may not be sustainable at that level for the full year due to a richer mix in Q2. R&D spend remained flat year-to-date despite significant revenue growth, potentially limiting future innovation support. The company did not increase its CapEx outlook despite record backlog, which could strain capacity if demand continues to outpace investment. Energy market growth is steady but not accelerating, with oil and gas rig counts not increasing, and new energy applications are still in development. The company did not provide specific 2027 guidance, leaving uncertainty about the sustainability of current growth rates. Potential for customer over-ordering or pre-buying in the current strong demand environment, which could lead to a future shakeout. The $15 million space contract win is relatively small compared to the company's overall backlog, and its contribution may be limited. The company's leverage ratio of 1.8 times, while below target, still indicates a significant net debt position of approximately $421 million. The company's growth is heavily dependent on continued geopolitical tensions and defense spending, which could be volatile. Q: In defense, orders are up 50% year to date. How would you describe your outlook for growth, not necessarily for this year, but for 2027 and beyond relative to where you saw things entering this year?A: Jugal Vijayvargiya (President and CEO): Defense has certainly been an important driver of growth. We've been talking about the level of new bookings on defense, and they continue to increase every quarter. We have $90 million of incoming orders year-to-date and over $500 million in open RFQs, up from around $300 million last quarter. With everything going on in the world and the general spending that the US and allied countries are projecting, we expect this trend to continue and have defense be a strong driver of growth for our business, not only for this year, but in the out years as well. Q: Given the strength you're seeing in the order book and the improvement in the cost structure, where do the margins go from the 32% that you reported this quarter in Electronic Materials?A: Shelly Chadwick (CFO): We're really excited about the performance of that business this quarter. Mix is certainly in play here; we had a very nice mix in Q2. As we look at the book for the full year, that's probably a richer mix than we'll see all year. But it's undeniable that there's been a big step forward in that business. It's partly a little bit of volume, but it's a lot of the improvements that have been made in the business and making sure we get the value for our products. I expect that structurally margins are going to be well ahead of last year. This is not a new floor. Q: Can you take a deeper dive into Precision Optics? What are the biggest drivers of the top-line growth year to date and where do you see the most opportunity going forward?A: Jugal Vijayvargiya (President and CEO): Precision Optics has had a wonderful run over the last five quarters. We made leadership changes and general business changes in that area, and it's made great dividends. The top-line has improved, and the bottom line has improved even more. There's significant support from new business activity, particularly in the semiconductor, defense, and space areas. On the operational side, the team has made significant progress on manufacturing, productivity, and yields. Delivering 20% plus margins hasn't been seen in the last five years, so it's really a milestone quarter. Our expectation is that this business will continue to improve and contribute to the mid-term target of 23% margin for the overall company. Q: You noted that the space order book is up 100% year on year. Where are you seeing the fastest growth today, and where could the largest addressable markets or largest longer-term opportunities lie?A: Jugal Vijayvargiya (President and CEO): This is a very exciting market for us. Our business in the last three to four years has grown six times. It's a relatively good size business for uswhen you look at aerospace and defense for the quarter, roughly 25% of the business is directionally in the space side. Launch and satellites are our two largest areas. Looking at growth, in-space propulsion and surface power are really high growth opportunities. The ground-to-space market is a little more emerging, but it's an exciting area for us. Q: Can you talk about any impact from higher energy and freight costs? How much pricing is in that 13% growth number for Performance Materials, and can you push pricing harder given the strong demand environment?A: Jugal Vijayvargiya (President and CEO): We learned a lot during the COVID timeframe on how to manage supply and constraints. We also learned during inflationary times about managing appropriate pricing mechanisms. If we are seeing cost impacts, we are appropriately discussing those with our customers and making sure prices are adjusted. We want to make sure that we're not the sponge. Price is an important enabler to our growth, not only in PM but across the board, because we want to make sure we are getting the value we deliver and the appropriate return for that value. Q: Your R&D expense is flattish while revenues are up well above double-digits. Would I be correct in thinking your business is going to become a little more R&D intensive, and what are your plans for staffing and resourcing?A: Jugal Vijayvargiya (President and CEO): R&D is an extremely important enabler because innovation is at the core of what we do. Many of the R&D activities are actually being funded by our customers and various government entities. It's a very similar model to the CapEx model, where we work with customers on jointly funded R&D activities. We are leveraging our portfolio in a platform development way. R&D is a very important enabler, and we're focused on doing it in a very cost-effective way, leveraging support from our customers as needed. Q: Your value-added revenue growth is 15% while backlog is up 30%. What gives you confidence that the orders you're taking are for current demand and not just buffer stocks or safety stocks for your customers?A: Jugal Vijayvargiya (President and CEO): Our order book is broad-based and runs across our important end markets. When you look at the type of orders we're getting, we believe it is for consumption now and maybe in the next six to nine months, not inventory buildup. In defense, we know what's happening with global defense spending, so we believe it's for builds that are happening. In commercial aerospace, we look at the increasing build rates at Boeing, Airbus, and Comac. In new energy applications, it's for the development that CFS and other companies are doing. In semiconductors, we know what's going on with data centers and AI applications. We feel pretty good about what we're seeing across the board. Q: You used the term "one-time items" that may have boosted EBITDA this quarter. What did that refer to?A: Shelly Chadwick (CFO): We have one-time things every quarter that usually go both ways. This quarter, we had a few that all went the positive way, so it was a little bit more impactfulcall it a few million, $2 million to $3 million in total. Nothing major stands out: a refund, a settlement, a little bit of royalty income. Just a number of good guys that helped along the results a little bit, but nothing overly material. Q: Can you tell us more about the new $15 million contract win? What is For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Wednesday, May 13, 2026 at 5:00 p.m. ET Chief Executive Officer — Joseph N. Forkey Chief Financial Officer — Wayne Coll Dr. Joe Forkey, Precision Optics' chief executive officer and Wayne Coll, the company's chief financial officer. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. Again, if you dialed in through the traditional teleconference line, as the operator indicated, If you are listening to the webcast portal and would like to ask a question, you can submit your question through the ask a question feature in the webcast player. Before we begin with prepared remarks, we submit for the record the following statement. Statements made by the management team of Precision Optics during the course of this conference call may contain forward looking statements within the meaning of Section 27A of the Securities Act of 2030 as amended, and Section 21E of the Securities Exchange Act of 2030 as amended, and such forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 2 thousand. Forward looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may. Future, plan or planned, will or should, expected, anticipates, draft eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties, that could cause future circumstances, events or results to differ materially from those projected in the forward looking statements including the risks that actual results may differ materially from those projected in the forward looking statements as a result of various factors and other risks identified in the company's filings with the Securities and Exchange Commission. All forward looking statements contained during this conference call speak only as of the date on which they were made, and are based on management's assumptions and estimates as of such date. Company does not undertake any obligation to publicly update any forward looking statements whether as a result of the receipt of new information, the occurrence of future events, or otherwise. Alright. With that said, let me turn the call over to Dr. Joe Forkey, chief executive officer of Precision Optics. Joe? Please proceed. Joseph N. Forkey: Thank you, Robert. And thank you all for joining our call today. Last quarter, we said Precision Optics had strong production demand, but we are still working through the challenges of scaling a much larger manufacturing business. In the third quarter, revenue continued to grow and we began to see the payoff of the investments we have made in the last few quarters improving manufacturing processes, and efficiency. Revenue was $8.7 million, new quarterly record for Precision Optics and more than double the quarterly revenue of a year ago. More importantly, we achieved positive adjusted EBITDA, a major milestone reflects both the strength of our core production programs and the manufacturing improvements we have made over the last several quarters. Our 2 largest production programs continue to drive the business. Revenue from our top tier aerospace customer reached $3.6 million a new record. Representing 44% sequential growth. This was the result of our investment in production capacity now achieving improved efficiency. Production yields on this line have now increased to 97% consistently a significant improvement from previous months that were typically in the 85% to 95% range. Because our customer has faced bottlenecks elsewhere in their deployment process, they have asked us to slow production against our existing backlog in Q1 and 2027, with new orders expected for Q3. All indications are that we continue to be the sole source for this assembly. And that the long term prospects for this program remain extremely high. Our single use cystoscope program also contributed record revenue at $2.2 million in the third quarter, an all time high and representing approximately 10% sequential growth. More importantly, we have made dramatic progress in terms of production yields and costs. Here too, yields have increased to current rates above 90% but not yet to the targeted 95% level, which we expect to achieve in Q4. Beyond those 2 lead programs, we continue to advance newer programs, including our single use ophthalmic endoscope program, supported by a $3.5 million follow on production order that we just announced last week. Our Ross Optical division also contributed significantly to the quarter's improved bottom line. Revenue for Ross Optical was approximately $1.3 million compared to $1 million in Q2 and $800 thousand a year ago. Representing 65% year-over-year growth. This is important because this business can support higher revenue without a proportional increase in headcount or other fixed costs. So incremental revenue contributes meaningfully to gross profit and adjusted EBITDA. As a result of revenue growth and production improvements, our overall gross margin improved to 24% compared to 10% a year ago and 3% in Q2. While we still have work to do, the quarter showed that our operational improvements are beginning to translate into stronger financial performance as our production lines become more stable and the higher revenue levels leverage the manufacturing infrastructure we have built over recent quarters. The process and personnel updates that have driven the results are directly attributable to the change we made in our operating leadership bringing on Joe Traut as chief operating officer in October. Joe has rebuilt the operations team. Making changes where needed and empowering others to act with urgency to deliver more product with greatly improved efficiency. Joe and his team have made great progress in 6 months, and I am confident we are seeing just the beginning of what they can accomplish going forward. We also strengthened our balance sheet in March. Through an oversubscribed $10 million public offering led by existing and new investors and including participation from directors and officers. This capital supports our growth plans, and I want to thank all of our investors for their support. Given the strength of our results, our visibility into the remainder of the fiscal year, we are increasing fiscal 26 revenue guidance to a range of $29 million to $31 million compared to our previous guidance of $26 million to $28 million This represents 52% to 62% growth over fiscal 25 revenue of $19.1 million. We are also increasing fiscal 26 adjusted EBITDA guidance to a range of negative $2.5 million to negative $2.7 million compared to our previous guidance of negative $2.5 million to negative $3 million This translates into another quarter of roughly breakeven adjusted EBITDA in Q4. For comparison, adjusted EBITDA was negative $3.7 million in fiscal 25, and negative $2.7 million in the first 6 months of the current fiscal year. As we look forward to Q4, and into fiscal 27, we anticipate continued strong performance from our lead aerospace and cystoscopy production lines, along with our quickly ramping single use ophthalmic endoscope line. And with the highest backlog in many quarters, we believe that the recent increases in Ross Optical revenues are sustainable and will continue to contribute to positive margins and bottom line profitability going forward. In addition to the continuation of these strong producing programs, we expect as many as 5 to 6 programs in the development pipeline to move to production in fiscal 27. 3 of these are scheduled to enter production over the next 6 months. A low volume single use device for small joint arthroscopy, an upper GI scope, and a robotic surgery articulating rigid scope. While there are always timeline, yields, and efficiency challenging challenges, when development programs are transitioning to production. Our new operations team is deeply experienced and already working closely with the production and product development teams to ensure a smooth transfer and efficient drive to profitable volume production. This was a fantastic quarter for POC, and we believe it is just the beginning of leveraging our improved operational infrastructure. With high revenues supported by our existing programs, new programs entering production today and new production slated for the next 6 to 12 months, along with a strong outlook for Ross optical revenue and high variable margins, We believe the recent positive trends will continue to drive growing profitability. In light of our operating performance, and growing confidence in our production capabilities, which contributed to our successful capital raise, we are thinking about strategic investments in our business in 2 specific areas. First, we are investing in capabilities required to become the leading production company in micro optics. Including components and systems. Especially those that are small and complex. We have learned through the ramp of the production programs I spoke to before that there are greater requirements to becoming a premier production company than we initially expected. Investments go beyond simply increased production capacity, and we require investment in quality assurance, manufacturing engineering, supply chain management, and other functions. We have made several of these out of necessity in recent months, and we will continue on this path to enhance and stabilize these capabilities to be well prepared for the anticipated ongoing increase in production volume. Along with this, we continue to evaluate multiple options for potential updates to our manufacturing facility. Second, we want to grow with the markets we currently serve. All of which continue to exhibit strong growth trajectories able to support the substantial long term growth of POC. We participate in 3 primary markets. Medical device, defense and aerospace, and satellite communications. We have previously considered satellite communications as part of aerospace but have begun to treat that segment separately as we work to better understand market drivers and primary participants. Medical device, which remains our largest and most immediate opportunity, continues to move toward minimally invasive procedures. Smaller imaging systems, and single use devices. This aligns directly with our core strengths, particularly in micro optics and digital imaging. Market data continues to support these observations, with recent reports estimating the disposable endoscope market will grow at a compound annual growth rate of approximately 15% to 20% over the next 10 years. This is also where our Unity platform becomes important. Unity was designed to reduce development costs time to market, and execution risk through a modular imaging architecture that can support reusable and single use endoscopic systems. As more customers look to bring advanced imaging products to market efficiently, we believe Unity can enhance our role as a development and production partner and provide a strong competitive advantage. Today, we have 1 Unity program in our product development pipeline, and are in discussions with 4 additional sales prospects today. The second major market is defense aerospace. Which is increasingly driving optical systems to smaller size, weight, and power or SWAP. We believe there are opportunities in a broad range of products from autonomous vehicles to directed energy weapons. Interest and budgets for these types of systems have increased substantially given the wars in Ukraine and Israel. We are adding resources and emphasis here. As evidenced by our recent participation at the SPIE Defense and Security Conference at the National Harbor in Maryland just 2 weeks ago. Our recently announced development agreement for a high end jet engine inspection borescope is a good example of the complex optical opportunities precision optics can be highly competitive. The third market focus is satellite communications and related infrastructure. Current market studies estimate this market to be growing at 15% to 25% per year. We see opportunities similar to the program which is currently our largest revenue generator, in both ground based and space based systems as satellite networks continue to expand. Across medical device defense aerospace, and satellite communications, we are finding a common theme that customers need smaller, more precise, higher performance optical systems. We will be investing in go to market resources to expand our presence and customer reach within these sectors. And we will consider add on capabilities as needed to complement and broaden our current offer. Investments will be made with discipline, and high expectations of returns which we think is achievable given current market dynamics. With that overview, let me turn it over to Wayne review the financials in more detail. Wayne? Wayne Coll: Thank you, Joe. Let me expand on some of Joe's comments on the financial results starting with revenue. For the third quarter, total revenue was $8.7 million compared to $4.2 million in the year ago third quarter, an increase of $4.5 million or 108%. Revenue was also up compared to $7.4 million in the prior sequential quarter. Breaking it down, production revenue was approximately $7.6 million compared to $3.3 million in the year ago quarter and $6.4 million in the prior sequential quarter. Product development or engineering revenue was $1.1 million compared to $900 thousand in the year ago quarter and $1 million in the previous quarter. Our aerospace program contributed $3 million in revenue during the quarter. While the single use cystoscope program contributed $2.2 million in revenue. Net of tariffs. Ross Optical revenue was $1.3 million in the quarter, compared to $1 million in the sequential second quarter and $800 thousand in the year ago third quarter. Both represented quarterly records. As we discussed last quarter, successfully negotiated agreements with these customers to pass through tariffs without markup. Total revenue net of tariffs would have been $8.3 million. For the quarter, gross margin was 23.6% compared to 10% in the year ago third quarter and 2.8% in the prior sequential quarter. Gross profit increased to $2.1 million compared to $418 thousand in the year ago quarter. As Joe discussed, the improvement was especially meaningful because it reflects the operational progress we have made in the business. Higher production volumes, better throughput, and improved yields all contributed to stronger gross profit performance. The gross margin was also impacted by the recording of a $225 thousand refundable credit from the Commonwealth of Massachusetts economic development incentive program which is earned by POC as we increase the number of employees at our Massachusetts locations. Given our anticipated growth, we expect additional refundable credits from the EDIP program in future periods. Total operating expenses were approximately $2.1 million during the third quarter compared to approximately $2.5 million in the year ago third quarter. Breaking it down, SG&A expenses were $1.9 million during this quarter, compared to $2.2 million the year ago quarter. The decrease was primarily due to lower stock based compensation and recruiting costs partially offset by increased consulting, bonuses, and bad debt expense. R&D expenses were $267 thousand during the quarter, compared to $211 thousand in the year ago quarter an increase of $56 thousand. R&D expenses primarily represent employee related expenses to support product improvements, development of new technologies, and standardized approaches to address opportunities in our 3 primary markets. As a result of the factors I have discussed, our net loss for the quarter was $108 thousand compared to a net loss of $2.1 million in the year ago third quarter compared to a net loss of $1.8 million in the sequential second quarter. Adjusted EBITDA, which excludes stock based compensation, interest expense, depreciation and amortization, was positive $300 thousand in the third quarter. Compared to negative $1.3 million in the year ago third quarter and negative $1.5 million in the sequential second quarter. This was a major milestone for the company and reflects the combination of record revenue, improved manufacturing performance, better yield, and continued operating expense discipline. As Joe discussed, we believe the third quarter provides evidence that the investments we have made in operations, leadership manufacturing infrastructure, and production capacity are beginning to translate into improved profitability. Cash at 3/31/2026 was $10.7 million compared to approximately $900 thousand at 12/31/2025. During the quarter, we completed an oversubscribed $10 million public offering to support our growth plans, The offering included participation from both existing and new investors as well as participation from directors and officers. This financing significantly strengthened our balance sheet and provides additional flexibility as we continue to scale production support working capital needs, and invest in the growth opportunities Joe discussed earlier. Bank debt at 3/31/2026 was approximately $1.5 million. We continue to engage in productive discussions with our current as well as alternate commercial banks. To improve our loan facilities commensurate with our growth plans. As Joe mentioned, based on the strength of our third quarter results, and our visibility into the remainder of the fiscal year, we are increasing our fiscal 26 revenue guidance to a range of $29 million to $31 million compared to our previous guidance of $26 million to $28 million. We are also increasing our fiscal 2020 adjusted EBITDA guidance to a range of negative $2.5 million to negative $2.7 million compared to our previous guidance of negative $2.5 million to negative $3 million. With year to date revenue of $22.8 million and positive adjusted EBITDA achieved in the third quarter, our updated outlook reflects the improved operating performance of the business continued strength in our core production programs, and our expectation that the recent positive trends will continue into the fourth quarter. I will now turn the call back over to Joe for some final comments. Joseph N. Forkey: Thank you, Wayne. Before we take questions, let me recap just a few points. First, Q3 revenue reached a new quarterly record of $8.7 million driven by continued strength in our core production programs. Second, we achieved positive adjusted EBITDA. Which is a major milestone for Precision Optics and demonstrates the impact of our strong production volumes, improved yields, better throughput, and the overall impact of the operational changes we have put in place. Third, with the ongoing strength of our base production programs, newer production programs ramping today, and a number of programs slated to move from development to production in fiscal 27, we anticipate continued profitable growth. And finally, we strengthened the balance sheet through our oversubscribed $10 million public offering and increased our full year guidance based on the strength of our results and visibility into the fourth quarter. In many ways, this quarter demonstrates the business model we have been building towards. Our production programs are scaling, our operations are improving, Our pipeline remains active. And our financial performance is beginning to reflect that progress. We still have work ahead of us. But we are encouraged by the trajectory of the business and believe Precision Optics is well positioned to create significant long term value for shareholders. With that, we would be happy to take any questions. Operator: Thank you. We will now begin the question-and-answer session. You are using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Once again, if you would like to ask a question on the phone, please press star. Then 1, and wait for your name to be announced. Robert Blum: Alright, Darcy. This is Robert. While we wait to see if anyone queues up through the live teleconference line, we want to remind everyone that listening to the webcast, if you would like to ask a question and you are listening on the webcast player, again, you can type that into the ask a question box there on the player. We do have a couple of questions online, Joe and Wayne. So why do not we get to those first here? The first question here is, can you comment on revenue expectations in Q4 for aerospace and the cystoscope? And what do we expect in Q1 for this as well? Joseph N. Forkey: So generally speaking, we expect both of those programs to continue at similar levels that we saw in Q3. With the 1 caveat that the aerospace program, our customers asked us to pull back a bit in Q1 and Q2. So for that particular program, we may see oh, I do not know, 15% to 20% pullback in Q1 and Q2. We expect that some of these other programs that are coming online will make up that difference But generally speaking, over the long run, we expect both of those programs to continue at the same levels and even to continue growing. Robert Blum: All right. Very good. The next question here is can you discuss more about the customer requested slowdown and what happens if it moves to a license model. Joseph N. Forkey: So the customer requested slowdown is for the aerospace program for which there is no licensing model. And I guess what I can say is that we have heard from our customer that they take the assembly that we make, and then they combine it with components from many other suppliers and build it into satellites. And that process of combining it and building it into satellites is running slower than they anticipated. So they have had some challenges on their side. And because of that, they have excess inventory of the parts that we are building. And that is the reason for the slowdown. They have also said very clearly that they expect to be back up to similar levels as before. Once we get through these next couple quarters. So we see this as a bit of a blip and not a long term issue. And then maybe just on the licensing side? So there is no licensing for the for the aerospace program. I am sorry. I think he was referring to the medical device. Side. Oh, to the to the other to the other program. I am sorry. So there is a licensing option for both of our single use programs, and that licensing option is that we will stand up we will duplicate our production line in our customer's facility or another facility of their choice. We did not talk about it today, but the cystoscope customer has funded us to build out another production line in our facility and has asked us to build a production line in their facility. We have been working on that. We see this as a positive for a couple of reasons. The first 1 is they invoke this clause by building the production line in their facility and not a third party. We always expected that they would wanna have duplication of supply for this critical component. So duplicating it within their own facility is the ideal situation for us as opposed to going to a competitor. And the third piece is that for the units that they build in their facility, we will collect the royalty. So at the end of the day, we benefit financially when we are either building things in our facility or when they are building things in their facility, We have always known that there would be some mix. Right now, we will be running basically 3 shifts on 2 lines. They will be running 1 shift, maybe 1.5 shifts. On the airline. So that ends up being a pretty good mix. And so we see this as a way of that product continuing the impact from that product continuing to grow even as our production levels stay the same or grow by just a small amount. Robert Blum: Alright. Very good. Today, investor, question needs to be expanded upon. Please let us know. Again, if you are in the webcast portal there, please type your question into the ask a question feature there on the screen. Next question pertains to Unity with the adoption of Unity, is the time frame for conversion of R&D into production shortened. Joseph N. Forkey: It is. So that is 1 of the main benefits of the Unity program, the Unity platform. And that is that is 1 of the reasons that we put Unity together. Because we expected that the reduction in time to market would be attractive to our customers. And certainly, it is attractive to us. We wanna move things through the engineering pipeline and into production. We are starting to see this bear out. We only have 1 program right now in the engineering pipeline that is using Unity. It has benefited from the Unity platform, so the time to production is shorter. I guess I would expand on this answer a little bit and say that we launched Unity a little over a year ago, about 15 months ago. And I have to say, I expected that by now, we would have a product development pipeline full of Unity projects. And we do not. We have 1. But the good news is that our sales and marketing team, I think, has done a good job. We frankly had to figure out the best way to market the Unity platform because it is a little bit different than simply going out and saying, we can design an endoscope and then build it for you. Going out and saying we are starting with a platform is a slight different message. And so the way that we bring that messaging to the market took us a little while to figure out. The good news is that, as I mentioned in the in the comments today, we have 4 now that our sales team is talking to about potential Unity projects. there is no guarantee that they will all come into the engineering pipeline. But we are starting to see some more traction with Unity. And so we do expect that as we move forward, it will contribute to an increase in the programs in the product development pipeline, and it will have that benefit of moving things through the pipeline and into production faster than we have been able to do in the past. Alright. Robert Blum: Very good. Next question here is on Ross Optical. Do you view the significant increase in sales for Ross Optical this quarter as sort of a new run rate for that business? Joseph N. Forkey: Yes, that is a great question. I wish I had a very precise and certain answer. We have been having discussions internally about what the causes are. So there are a couple of things we are thinking about. 1 is that we know that people were holding back earlier in this fiscal year and really over the last 12 months because of uncertainty surrounding the tariffs. With the Supreme Court ruling, there seems to be some settling of where the tariffs are going to be. And people can only customers can only hold out so long before their inventory gets to a level where they have to reorder. So we think some of it is coming from that, that there is some dip because people were holding back because of the tariffs. And now they are coming back online. There is some thought that there could be some folks who are doing what we saw after the pandemic when there were supply chain disruptions because of the war in Ukraine, that we could be seeing some people building excess inventory because of the concerns over supply chain. That 1, we think, is a little less likely because the supply chain disruptions, of course, are specific to The Middle and not a lot of optics come through The Middle East. But there is a concern that could be part of it as well, that people could be building up their inventory to an excessive amount. So could be either of those things. We also are seeing, however, that we are getting new customers with meaningful size new orders. So given everything that we are seeing and especially because we are seeing some new customers with new orders, we are seeing some customers who have been ordering at small volumes starting to pick up their volumes because their business is starting to grow some more We do believe that the majority of it is coming from an increase in the need in that marketplace. And so we do believe that this is sustainable and that it will continue. All right. Robert Blum: Very good. Next question here is about sort of manufacturing capacity. Can you talk more about growing out the facilities, where the company stands now square footage wise or other? And where we will be roughly a year from now. And as an extension of that, what is the capacity utilization currently and where can we get to on that? Joseph N. Forkey: Yeah. that is a great question. So we have talked in previous calls about the facilities updates that we have already made. So a facility update in Massachusetts moving the professional roles, if you like, the roles other than manufacturing to a new facility closer to Boston. We made a move of a similar nature in Portland to a new facility in South Portland for the engineering team. We moved the production from Wayne down to our Massachusetts facilities a little farther West of Massachusetts in Gardner, Mass. Where our headquarters was. And we have talked a couple times about the need to update the facilities that are in Gardner. And so we are the manufacturing facilities. And we are looking at multiple options now for what the best approach is to update those facilities. In terms of capacity, we have today, we are in 3 buildings in that location in Gardner. 1 of those buildings has an enormous amount of space. That our landlord rents out to various different people. And there is there is always additional space available for us. So instead of giving a capacity number today, what I would say is if we decided to and we needed to, we could expand the footprint of the Gardner facility to double the size that it is today. So we do not expect that the facility question will impede our ability to continue to roll out the new production programs. Having said that, being in 3 buildings in Gardner is not ideal. Some of the space in the facilities that we are in Gardner is not quite at the level that we would like it to be in terms of the modernness of the clean room air handlers, and those sorts of things. So there clearly needs to be some update. The big question is, how do we do the update? Do we keep everything in Gartner? Do we move to a different facility? Do we pull it all together into 1 building? And those are exactly the questions that we are looking at now. Again, we do not expect the answer to any of these questions to delay us. In being able to roll the new programs into production. But it is part of what we will be looking at over the next 12 months in order to update the facility so we will be ready for the ongoing continuous growth in the long run. That we continue to expect. Robert Blum: All right. Very good. Quick reminder, everyone. Again, you are listening to the traditional teleconference line and would like to ask a question, press star then 1 on your telephone keypad. Again, if you are listening to the webcast player, type your question into the ask a question box there on the player. The next question here is regarding pipeline. It says here, you mentioned 4 projects in the pipeline. Is that correct? Over what time frame will you get answers on these? And where in magnitude of revenue potential do these projects fit compared to other projects? Joseph N. Forkey: So I think this question is referring to the 4 programs that I mentioned are in the sales prospects, sales pipeline. Pipeline. Differentiated from our engineering pipeline, which is robust and moving programs into production. Assuming I have that right, these 4 programs are the 4 Unity programs There are many more programs beyond that are in our sales funnel, our sales pipeline, if you like. And our general target when we look at new programs coming into the engineering pipeline or that we are targeting with our sales team. Is that these programs, particularly when they are a Unity program, would be programs that ultimately in production would lead to $1 million to $3 million a year in revenue when they get into production. As they go through the engineering pipeline, they typically run anywhere from $1 million to $2 million over a couple of years. As they move through the engineering pipeline. Robert Blum: Alright. Very good. The next question here is regarding tariffs. What is the scale of tariff refunds you expect? And will those be passed on to customers? Wayne Coll: Yes. So we are still in the process of reviewing what that all looks like. There is a part of those tariff refunds, for instance, in the situations where we have negotiated agreements with our customers both for the cystoscope and the satellite line where we will be refunding those tariffs We do expect to not have to refund all of those tariff refunds. And so we think it will be a net positive in terms of the bottom line. But it will, of course, reduce sales at the time those credit memos are issued. Robert Blum: Alright. Next question here. I guess more of a comment here, but maybe a question here. When will you be able to talk more about specific customers and projects in order to, as other optics companies are able to highlight specifically the contracts to a greater degree, when you are able to provide more color to attract investor and customer interest. So I think specifically is reference the ability to name customers and projects here. Joseph N. Forkey: Yeah. We would love to name specific customers. And we talk with our customers about that routinely. The challenge we have, particularly with our very large customers, that they are always hesitant and frankly, do not allow us to do that. I think as we move forward, in some cases, it becomes obvious to everyone in the industry because of the characteristics of the product. And the ramp in the timing of the ramp that we are going through and that our customers are going through. Sometimes, it becomes fairly general knowledge, and I think we can probably confirm things when we get to that level. We will continue to work with our customers to be able to name specific names. But as of right now, we have not been able to do that. We would love to do it. We will continue pushing on it. But I do not I do not have any prediction for when we will be successful. Robert Blum: Alright. Next question here regarding the cystoscope line. You mentioned in previous calls pending improvements in the cystoscope line. Have all of these improvements been realized in the third quarter? Joseph N. Forkey: They have not been. So as I said in my comments, we have made significant progress on that line, in particular with the yield now at over 90% consistently and continuing to grow. that is compared to previous times when we have had yields typically in the 80% range, sometimes even below that. So getting to 90% in the third quarter was a huge accomplishment. But we have a whole series of additional improvements that we are looking at and that our customer is looking at with us It really is a great partnership. To be able to get us consistently above 95%, and I think there is a good chance we could even get to 97% to 98%. So there are plenty of improvements from a yield standpoint. The other thing we continue to look at, and, you know, we have not emphasized this as much, but it certainly is part of what is been happening, is that there are updates to the procedures that we are using to the tools and to the fixtures. These things take a little bit longer. To update because it is not simply training people better. it is it is actually changing the process a little bit. And so there are a series of updates to the to the procedures that we are using and the tools and the fixtures. That we expect will continue to allow us to reduce the touch time. Or the other way to say it is to increase the throughput with the same number of technicians. And so we have seen some improvements there again, there is more to be done. I think we will see significant increase again in Q4. into next year. and then I think we will continue to see increase even beyond that into Q1, Q2, The other thing is as the volumes continue to increase, we will get to points where the volumes are high enough that the return on investment for more significant changes in the tools and fixtures again to drive down the touch time even more. Will become possible. So I think this is 1 of those cases where we will see continuous improvement over the long run. Robert Blum: Alright. Very good. This will be my final reminder. If you would like to ask a question online, ahead and type that into the ask a question box on the webcast player. Question here is, does the industry recognize your momentum And if so, at what point do you expect revenue to, quote, hockey stick? Joseph N. Forkey: I am not going to predict when the hockey stick will come. We are focused on continuing to drive programs into the engineering pipeline and continue to drive the engineering pipeline programs into production. We see revenue continuing to increase in a nice, healthy way as we move forward. The question about whether the industry recognizes us is an interesting 1. I think that with some of the marketing work that we have done around Unity, we are getting we are getting better exposure out there in the marketplace. I also think that with the new facilities that we have in Portland and the new facilities that we have in Massachusetts, having customers come and see us here helps with the impression that they get of the company. Having them see the production lines that we already have running, gives us added credibility that we can not only do the top notch engineering, which we have been known for many years, But now customers can see that we can roll those into production and be very successful. With production. So all of these improvements that we talked about here from a financial standpoint also roll into improvements in our ability to market ourselves to the to the industry. So I cannot give specific predictions on hockey sticks or specific numbers on how much better we are being recognized today. But we do see that. We do sense the momentum in the marketplace that people will come and talk to us and talk about things that we are talking about publicly. And recognize that we have made progress. So I think all of those things are just going to help to accelerate the rate at which we can pull new programs into the engineering pipeline and, of course, those rolling through into production to help grow their revenue. So we are pretty excited about it. Robert Blum: Alright. Very good. A question here. And more broadly, talk about expectations for profitability here. Joseph N. Forkey: So I guess what I would say is this quarter was basically breakeven. A little bit positive from breakeven. At the same revenue levels that we are at now with the improvements that we continue to make, we would expect that would continue to grow in the positive direction. We have that little bit of slowdown on the aerospace program that we have to manage through. We have got some other programs coming online. So I think we will see things continue to grow there, but it will be close to breakeven. But in general, as we have new programs going into production, and as we have more programs coming into Ross Optical, those will have a very high variable margin. So I think getting to breakeven is 1 thing. Moving beyond breakeven I think, can accelerate pretty quickly because of the fact that we are leveraging the infrastructure that we have already put in place. So we do see this quarter that we are reporting on here is really an inflection point, and we expect to see growing profitability as we move forward. Robert Blum: All right. Very good. Well, with that, Joe, I will turn it over to you for any closing remarks. Joseph N. Forkey: Thank you, Robert. Thanks, everyone, for joining us on the call today. We will look forward to speaking with you again in a couple of months. Everyone. Have a good evening. Operator: The conference has now concluded. Thank you for attending today's presentation. You may disconnect. Before you buy stock in Precision Optics, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Precision Optics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. POCI Q3 2026 Earnings Transcript was originally published by The Motley Fool

Conference Call Scheduled for today, May 13, 2026, at 5:00pm ET LITTLETON, Mass., May 13, 2026 (GLOBE NEWSWIRE) -- Precision Optics Corporation, Inc. (NASDAQ: POCI), a leading designer and manufacturer of advanced optical instruments for the medical and defense/aerospace industries, announced operating results on an unaudited basis for its third quarter fiscal year 2026 for the period ended March 31, 2026. Q3 2026 Financial Highlights (3 Months Ended March 31, 2026): Revenue was $8.7 million, a quarterly record, compared to $4.2 million in the same quarter of the previous fiscal year, representing growth of approximately 108%, and compared to $7.4 million in the most recent sequential quarter. Production revenue, or total revenue net of engineering revenue, was $7.6 million, a quarterly record, compared to $3.3 million in the same quarter of the previous fiscal year, representing growth of approximately 131%, and compared to $6.4 million in the most recent sequential quarter. Engineering revenue was $1.1 million compared to $0.9 million in the same quarter of the previous fiscal year, an increase of 22%, and compared to $1.0 million in the most recent sequential quarter. Gross margins were 23.6% compared to 10.0% in the same quarter of the previous fiscal year and compared to 2.8% in the most recent sequential quarter. Net loss for the quarter was $(0.1) million, compared to $(2.1) million in the same quarter of the previous fiscal year, and compared to $(1.8) million in the most recent sequential quarter. Adjusted EBITDA was $0.3 million for the quarter compared to $(1.3) million in the same quarter of the previous fiscal year and compared to $(1.5) million in the most recent sequential quarter. Recent Additional Highlights: Increased production to a top-tier aerospace company. Third quarter fiscal 2026 revenue totaled $3.6 million from this customer, a quarterly revenue record. Increased production of cystoscopy surgery system. Third quarter fiscal 2026 revenue totaled $2.2 million from this customer, a quarterly revenue record. Received a $3.5 million follow-on production order for single-use ophthalmic program, with shipments expected to commence during the fourth fiscal quarter. The Company’s Ross Optical operations saw continued strong volume growth, driving a 65% year-over-year growth in the segment’s revenues. Completed an oversubscribed $10 million public offering in March 2026 to support the growth plans of the Company. FY 2026 Financial Guidance (Year Ended June 30, 2026): The Company is increasing its previously announced guidance for fiscal year 2026 revenue to be in a range of $29 to $31 million, compared to previously announced guidance of $26 to $28 million. The newly increased revenue guidance represents 52% to 62% growth over the Company’s fiscal year 2025 revenue. The Company is increasing its previously announced guidance for fiscal year 2026 Adjusted EBITDA to be in a range of $(2.5) to $(2.7) million, compared to previously announced guidance of $(2.5) to $(3.0) million. “Our third quarter results were highlighted by revenue of $8.7 million, a new quarterly revenue record, and positive adjusted EBITDA, reflecting the continued strength of our core production programs and meaningful improvements in manufacturing performance,” said Joe Forkey, CEO of Precision Optics. “Revenue growth was driven primarily by increased volumes in our aerospace and single-use cystoscope programs, both of which continue to perform at strong levels, as well as our Ross Optical segment. We achieved significant improvements in manufacturing efficiency, which drove a dramatic improvement in gross margins. Our new manufacturing leadership and production team have done an outstanding job improving execution while supporting higher production volumes.” “We expect production revenue to remain strong and so we are increasing our revenue and adjusted EBITDA guidance for the fiscal year.” “Industry trends remain highly favorable and with the additional capital raised recently we are strategically investing in the ongoing capabilities expansion and acceleration of our go-to-market planning to accelerate overall growth,” Forkey concluded. The following table summarizes the third quarter and year-to-date (unaudited) results for the periods ending March 31, 2026, and 2025: Conference Call Details Date and Time: Wednesday, May 13, 2026, at 5:00 p.m. 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/l90v4RE3K1N. Replay: A teleconference replay of the call will be available for seven days, at (855) 669-9658 or (412) 317-0088, replay access code 3475317. A webcast replay will be available at https://app.webinar.net/l90v4RE3K1N. About Precision Optics Corporation Founded in 1982, Precision Optics is a vertically integrated optics company primarily focused on leveraging its proprietary micro-optics, 3D imaging and digital 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 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). In addition to the aforementioned items, Adjusted EBITDA also excludes from Net Income (Loss) the effect of stock-based compensation. 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 within the meaning of U.S. federal securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release include, without limitation, the Company’s projections for future revenue, gross margins and Adjusted EBITDA, expectations regarding margin improvement and operational performance, anticipated product and program expansion, and the Company's strategic outlook. The forward-looking statements contained in this press release are based on certain assumptions and analyses made by the management of the Company in light of their respective experience and perception of historical trends, current conditions, and expected future developments and their potential effects on the Company as well as other factors they believe are appropriate in the circumstances. There can be no assurance that future developments affecting the Company will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the parties), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the demand for the Company's products, global supply chains and economic activity in general and other risks and uncertainties identified in the Company's filings with the SEC. Should one or more of these risks or uncertainties materialize or should any of the assumptions being made prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. Company Contact: PRECISION OPTICS CORPORATION 550 King Street, Bldg. A Suite 100 Littleton, MA 01460 Telephone: 978-630-1800 Investor Contact: LYTHAM PARTNERS, LLC Robert Blum Telephone: 602-889-9700 [email protected]

This article first appeared on GuruFocus. Release Date: May 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Precision Optics Corp Inc (NASDAQ:POCI) achieved a new quarterly revenue record of $8.7 million, more than doubling from the previous year. The company reported positive adjusted EBITDA, marking a significant milestone in its financial performance. Production yields have improved significantly, with the aerospace program reaching a consistent 97% yield. The Ross Optical division experienced a 65% year-over-year revenue growth, contributing to the improved bottom line. POCI successfully completed an oversubscribed $10 million public offering, strengthening its balance sheet and supporting growth plans. The aerospace customer requested a slowdown in production due to bottlenecks in their deployment process, potentially impacting future revenue. Despite improvements, the single-use SystemScope program has not yet reached the targeted 95% production yield. The company still faces challenges in scaling its manufacturing operations to meet increased demand. There is uncertainty regarding the sustainability of the recent increase in Ross Optical sales, with potential concerns about inventory buildup. POCI's profitability remains close to breakeven, with ongoing efforts needed to achieve consistent positive earnings. Warning! GuruFocus has detected 6 Warning Signs with POCI. Is POCI fairly valued? Test your thesis with our free DCF calculator. Q: Can you comment on revenue expectations in Q4 for aerospace and the CISO scope, and what do we expect in Q1 for this as well? A: Dr. Joe Forkey, CEO: We expect both programs to continue at similar levels as in Q3, with a potential 15-20% pullback in aerospace in Q1 and Q2 due to customer requests. However, other programs coming online should compensate for this. Q: Can you discuss more about the customer-requested slowdown, and what happens if it moves to a license model? A: Dr. Joe Forkey, CEO: The slowdown is due to our aerospace customer's slower-than-expected satellite assembly process, leading to excess inventory. They expect to return to previous levels after a couple of quarters. There is no licensing model for the aerospace program. Q: With the adoption of Unity, is the time frame for conversion of R&D into production shortened? A: Dr. Joe Forkey, CEO: Yes, Unity reduces time to market, which is attractive to customers and us. We have one program in the pipeline benefiting from Unity, and we expect more traction with four potential Unity projects in discussions. Q: Do you view the significant increase in sales for Ross Optical this quarter as a new run rate for that business? A: Dr. Joe Forkey, CEO: While some increase may be due to customers catching up on orders post-tariff uncertainty, we are also seeing new customers and increased orders from existing ones. We believe the increase is sustainable. Q: Can you talk more about growing out the facilities, where the company stands now, and where we will be roughly a year from now? A: Dr. Joe Forkey, CEO: We have space to double our current facility size in Gardner, Massachusetts, if needed. We are evaluating options to update our facilities to support long-term growth without delaying new production programs. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Precision Optics Corp (NASDAQ:POCI) reported third-quarter financial results on Wednesday. The transcript from the company's third-quarter earnings call has been provided below. This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/. View the webcast at https://app.webinar.net/l90v4RE3K1N Precision Optics Corporation Inc reported record quarterly revenue of $8.7 million, doubling from the previous year and achieving positive adjusted EBITDA for the first time. Key growth drivers included the aerospace and single-use cystoscope programs, with aerospace revenue reaching $3.6 million and cystoscope $2.2 million. The company increased fiscal 2026 revenue guidance to $29-$31 million and adjusted EBITDA guidance to negative $2.5 to $2.7 million, reflecting strong production volumes and operational improvements. Operational highlights included a 97% production yield for the aerospace program and significant yield improvements in the cystoscope line, with expectations to reach 95% yields soon. Strategically, the company is focusing on micro optics capabilities and exploring growth opportunities in medical devices, defense, aerospace, and satellite communications. The company completed a $10 million public offering to support growth plans, strengthening its balance sheet significantly. Management expressed confidence in continued profitability growth, backed by a robust development pipeline and ongoing operational enhancements. OPERATOR Good day and welcome to the Precision Optics reports Third Quarter Fiscal Year 2026 Financial Results Conference Call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one on your telephone keypad. To withdraw your question, please press the star key, then two. Please note this event is being recorded. I would now like to hand the conference over to Mr. Robert Bloom, Lipham Partners. Please go ahead. Robert Bloom (Moderator) All right, thank you, Darcy, and thank you to everyone joining the call today. As the operator mentioned, on today's call we will Discuss Precision Optics third quarter fiscal year 2026 financial results and this for the period ended March 31, 2026. With us on the call representing the company today are Dr. Joe Forkey, Precision Optics Corporation Inc Chief Executive, and Wayne Cole, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question and answer session again. If you dialed in through the traditional teleconference line as the operator indicated, please press star then one to ask a question. If you are listening through the webcast portal and would like to ask a question, you can submit your question through the Ask a Question feature in the webcast player. Before we begin with prepared remarks, we submit for the record the following statement. Statements made by the management team of Precision Optics during the course of this conference call may contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 is amended and Section 21E of the Securities Exchange Act of 1934 is amended and such forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan, or planned, will or should, expected, anticipates, draft, eventually,, or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward looking statements, including the risks that actual results may differ materially from those projected in the forward looking statements as a result of various factors and other risks identified in the Company's filings with the securities and Exchange Commission. All forward looking statements contained during this conference call speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. The Company does not undertake any obligation to publicly update any forward looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise. All right, with that said, let me turn the call over to Dr. Joe Forke, Chief Executive Officer, Precision Optics. Joe, please proceed. Joe Forkey Thank you Robert and thank you all for joining our call today. Last quarter we said Precision Optics Corporation Inc had strong production demand, but we're still working through the challenges of scaling a much larger manufacturing business. In the third quarter revenue continued to grow and we began to see the payoff of the investments we've made in the last few quarters improving manufacturing processes and efficiency. Revenue was $8.7 million, a new quarterly record for Precision Optics and more than double the quarterly revenue of a year ago. More importantly, we achieved positive adjusted ebitda, a major milestone that that reflects both the strength of our core production programs, and the manufacturing improvements we've made over the last several quarters. Our two largest production programs continue to drive the business. Revenue from our top tier aerospace customer reached $3.6 million, a new record representing 44% sequential growth. This was the result of our investment in production capacity, now achieving improved efficiency. Production yields on this line have now increased to 97% consistently, a significant improvement from previous months that were typically in the 85 to 95% range. Because our customer has faced bottlenecks elsewhere in their deployment process, they have asked us to slow production against our existing backlog in Q1 and Q2 of fiscal 2027 with new orders expected for Q3. All indications are that we continue to be the sole source for this assembly and that the long term prospects for this program remain extremely high. Our single use Cystoscope program also contributed record revenue at $2.2 million in the third quarter, an all time high and representing approximately 10% sequential growth. More importantly, we have made dramatic progress in terms of production yields and costs. Here too, yields have increased to current rates above 90%, but not yet to the targeted 95% level which we expect to achieve in Q4. Beyond those two lead programs, we continue to advance newer programs, including our single use Ophthalmic Endoscope program supported by a $3.5 million follow on production order that we just announced last week. Our Ross Optical division also contributed significantly to the quarter's improved bottom line. Revenue for Ross Optical was approximately $1.3 million compared to 1.0 million in Q2 and 0.8 million a year ago, representing 65% year over year growth. This is important because this business can support higher revenue without a proportional increase in headcount or other fixed costs, so incremental revenue contributes meaningfully to gross profit and adjusted ebitda. As a result of revenue growth and production improvements, our overall gross margin improved to 24% compared to 10% a year ago and 3% in Q2. While we still have work to do, the quarter showed that our operational improvements are beginning to translate into stronger financial performance as our production lines become more stable and the higher revenue levels leverage the manufacturing infrastructure we've built over recent quarters. The process and personnel updates that have driven the results are directly attributable to the change we made in our operating leadership, bringing on Joe Trout as Chief Operating Officer in October of last year. Joe has rebuilt the operations team, making changes where needed and empowering others to act with urgency to deliver more product with greatly improved efficiency. Joe and his team have made great progress in six months and I am confident we are seeing just the beginning of what they can accomplish going forward. We also strengthened our balance sheet in March through an oversubscribed $10 million public offering led by existing and new investors and including participation from directors and officers. This capital supports our growth plans and I want to thank all of our investors for their support. Given the strength of our results and our visibility into the remainder of the fiscal year, we are increasing fiscal 2026 revenue guidance to a range of 29 to $31 million compared to our previous guidance of 26 to $28 million. This represents 52 to 62% growth over fiscal 2025 revenue of $19.1 million. We are also increasing fiscal 2026 adjusted EBITDA guidance to a range of -$2.5 to -$2.7 million compared to our previous guidance of negative 2.5 to negative 3.0 million dollars. This translates into another quarter of roughly breakeven adjusted EBITDA in Q4. For comparison, adjusted EBITDA was -$3.7 million in fiscal 2025 and -$2.7 million in the first six months of the current fiscal year. As we look forward to Q4 and into fiscal 2027, we anticipate continued strong performance from our lead aerospace and cystoscopy production lines along with our quickly ramping single use ophthalmic endoscope line and with the highest backlog in many quarters, we believe that the recent increases in Ross Optical revenues are sustainable and will continue to contribute to positive margins and bottom line profitability going forward. In addition to the continuation of these strong revenue producing programs, we expect as many as five to six programs in the development pipeline to move to production in fiscal 2027. Three of these are scheduled to enter production over the next six months. A low volume single use device for small joint arthroscopy, an upper GI scope and a robotic surgery articulating rigid scope. While there are always timeline, yield and efficiency challenges when development programs are transitioning to production, our new operations team is deeply experienced and already working closely with the production and product development teams to ensure a smooth transfer and efficient drive to profitable volume production. This was a fantastic quarter for POC and we believe it's just the beginning of leveraging our improved operational infrastructure with high revenues supported by our existing programs, new programs entering production today and new production slated for the next six to 12 months, along with a strong outlook for Ross Optical revenue and high variable margins, we believe the recent positive trends will continue to drive growing profitability. Joe Forkey In light of our operating performance and growing confidence in our production capabilities which contributed to our successful capital raise, we are thinking about strategic investments in our business in two specific areas. First, we are investing in capabilities required to become the leading production company in micro optics, including components and systems, especially those that are small and complex. We have learned through the ramp of the production programs I spoke to before that there are greater requirements to becoming a premier production company than we initially expected. Joe Forkey Investments go beyond simply increased production capacity. We require investment in quality assurance, manufacturing, engineering, supply chain management and other functions. We have made several of these out of necessity in recent months and will continue on this path to enhance and stabilize these capabilities to be well prepared for the anticipated ongoing increase in production volumes. Along with this, we continue to evaluate multiple options for potential updates to our manufacturing facilities. Joe Forkey Second, we want to grow within the markets we currently serve, all of which continue to exhibit strong growth trajectories able to support the substantial long term growth of poc. We participate in three primary markets medical device defense and aerospace and satellite communications. We have previously considered satellite communications and as part of aerospace, but have begun to treat that segment separately as we work to better understand market drivers and primary participants. Joe Forkey Medical Device, which remains our largest and most immediate opportunity, continues to move toward minimally invasive procedures, smaller imaging systems and single use devices. This aligns directly with our core strengths, particularly in micro optics and digital imaging. Market data continues to support these observations with recent reports estimating the disposable income market will grow at a compound annual growth rate of approximately 15 to 20% over the next 10 years. This is also where our Unity platform becomes important. Unity was designed to reduce development costs, time to market and execution risk to through a modular imaging architecture that can support reusable and single use endoscopic systems. As more customers look to bring advanced imaging products to market efficiently, we believe Unity can enhance our role as a development and production partner and provide a strong competitive advantage. Today we have one Unity program in our product development pipeline and are in discussions with four additional sales prospects today. The second major market is Defense aerospace which is increasingly driving optical systems to smaller size, weight and power or swap. We believe there are opportunities in a broad range of products from autonomous vehicles to directed energy weapons. Interest and budgets for these types of systems have increased substantially given the wars in Ukraine and Iran. We are adding resources and emphasis here as evidenced by our recent participation at the SPIE Defense and Security and Security Conference at the national harbor in Maryland just two weeks ago. Our recently announced development agreement for a high end jet engine inspection borescope is a good example of the complex optical opportunities where precision optics can be highly competitive. The third market focus is satellite communications and related infrastructure. Current market studies estimate this market to be growing at 15 to 25% per year. We see opportunities similar to the program which is currently our largest revenue generator in both ground based and space based systems. As satellite networks continue to expand across medical device, defense, aerospace and satellite communications, we are finding a common theme that customers need smaller, more precise, higher performance optical systems. We will be investing in go to market resources to expand our presence and customer reach within these sectors and we will consider add on capabilities as needed to complement and broaden our current offerings. Investments will be made with discipline and high expectations of returns which we think is achievable given current market dynamics. With that overview, let me turn it over to Wayne to review the financials in more detail. Wayne Cole (Chief Financial Officer) Wayne, thank you Joe. Let me expand on some of Joe's comments on the financial results starting with revenue for the third quarter. Total revenue was $8.7 million compared to $4.2 million in the year ago third quarter, an increase of $4.5 million or 108%. Revenue was also up compared to 7.4 million in the prior sequential quarter. Breaking it down. Production revenue was approximately 7.6 million compared to 3.3 million in the year ago quarter and 6.4 million in the prior sequential quarter. Product development or engineering revenue was 1.1 million compared to 900,000 in the year ago quarter and $1 million in the previous quarter. Our aerospace program contributed $3.6 million in revenue during the quarter, while the single use cystoscope program contributed $2.2 million in revenue net of tariffs. Ross Optical revenue was 1.3 million in the quarter compared to 1 million in the sequential second quarter and $800,000 in the year ago third quarter. Both represented quarterly records. As we discussed last quarter, we successfully negotiated agreements with these customers to pass through tariffs. Without markup, total revenue net of tariffs would have been $8.3 million for the quarter. Gross margin was 23.6% compared to 10% in the year ago third quarter and 2.8% in the prior sequential quarter. Gross profit increased to 2.1 million compared to $418,000 in the year ago quarter. As Joe discussed, the improvement was especially meaningful because it reflects the operational progress we have made in the business. Higher production volumes, better throughput and improved yields all contributed to stronger gross profit performance. The gross margin was also impacted by the recording of a $225,000 refundable credit from the Commonwealth of Massachusetts Economic Development Incentive Program, which is earned by POC as we increase the number of employees at our Massachusetts locations. Given our anticipated growth, we expect additional refundable credits from the E DT program in future periods. Total operating expenses were approximately $2.1 million during the third quarter compared to approximately $2.5 million in the year ago third quarter. Breaking it down SGA expenses were $1.9 million during this quarter compared to $2.2 million in the year ago quarter. The decrease was primarily due to lower stock based compensation and recruiting costs partially offset by increased consulting bonuses and bad debt expense. R and D expenses were $267,000 during the quarter compared to $211,000 in the year ago quarter and an increase of $56,000. R&D expenses primarily represent employee related expenses to support product improvements, development of new technologies, and standardized approaches to address opportunities in our three primary markets. As a result of the factors I've discussed, our net loss for the quarter was $108,000 compared to a net loss of $2.1 million in the year ago third quarter compared to a net loss of $1.8 million in the sequential second quarter. Adjusted EBITDA, which excludes stock based compensation, interest expense, depreciation and amortization, was positive $300,000 in the third quarter compared to -$1.3 million in the year ago third quarter and -$1.5 million in the sequential second quarter. This was a major milestone for the company and reflects the combination of record revenue, improved manufacturing performance, better yields, and continued operating expense discipline. As Joe discussed, we believe the third quarter provides evidence that the investments we have made in operations, leadership, manufacturing infrastructure and production capacity are beginning to translate into improved profitability. Cash at March 31, 2026 was $10.7 million compared to approximately $900,000 at December 31, 2025. During the quarter, we completed an oversubscribed $10 million public offering to support our growth plans. The offering included participation from both existing and new investors as well as participation from directors and officers. This financing significantly strengthened our balance sheet and provides additional flexibility as we continue to scale production, support working capital needs and invest in the growth opportunities Joe discussed earlier. Bank debt at March 31, 2026 was approximately $1.5 million. We continue to engage in productive discussions with our current as well as alternate commercial banks to improve our loan facilities commensurate with our growth plans. As Joe mentioned, based on the strength of our third quarter results and our visibility into the remainder of the fiscal year, we are increasing our fiscal 2026 revenue guidance to a range of 29 to $31 million compared to our previous guidance of 26 to $28 million. We are also increasing our fiscal 2026 adjusted EBITDA guidance to a range of -$2.5 million to -$2.7 million compared to our previous guidance of -$2.5 million to -$3 million with year to date revenue of $22.8 million and positive adjusted EBITDA achieved in the third quarter. Our updated outlook reflects the improved operating performance of the business, continued strength in our core production programs, and our expectation that the recent positive trends will continue into the fourth quarter. I will now turn the call back over to Joe for some final comments. Joe Forkey Thank you, Wayne. Before we take questions, let me recap just a few points. First, Q3 revenue reached a new quarterly record of $8.7 million driven by continued strength in our core production programs. Second, we achieved positive adjusted ebitda, which is a major milestone for precision optics and demonstrates the impact of our strong production volumes, improved yields, better throughput and overall impact of the operational changes we have put in place. Third, with the ongoing strength of our base production programs, newer production programs ramping today, and a number of programs slated to move from development to production in fiscal 2027, we anticipate continued profitable growth. And finally, we strengthened the balance sheet through our oversubscribed $10 million public offering and increased our full year guidance based on the strength of our results and visibility into the fourth quarter. In many ways, this quarter demonstrates the business model we have been building towards. Our production programs are scaling, our operations are improving, our pipeline remains active and our financial performance is beginning to reflect that progress. We still have work ahead of us, but we are encouraged by the trajectory of the business and believe Precision Optics is well positioned to create significant long term value for shareholders. With that, we'd be happy to take any questions. OPERATOR Thank you. We will now begin the question and answer session. To ask a question, you may press the Star then one on your telephone keypad. If you are using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. At this time, we will pause momentarily to assemble our roster. Once again, if you would like to ask a question on the phone, please press Star then one and wait for your name to be announced. Robert Bloom (Moderator) All right, Darcy, this is Robert. While we wait to see if anyone queues up through the live teleconference line, we want to remind everyone that's listening to the webcast, if you'd like to ask a question and you're listening to the webcast player again, you can type that into the Ask a question box there on the player. We do have a couple of questions online, Joe and Wayne, so why don't we get to those first here? The first question here is, can you comment on revenue expectations in Q4 for aerospace and the cisoscope, and what do we expect in Q1 for this as well? Joe Forkey So generally speaking, we expect both of those programs to continue at similar levels that we saw in Q3, with the one caveat that the aerospace program, our customers asked us to pull back a bit in Q1 and Q2. So for that particular program, we may see, approximately, 15, 20% pullback in Q1 and Q2. We expect that some of these other programs that are coming online will make up that difference. But generally speaking, over the long run, we expect both of those programs to continue at the same levels and even to continue growing. Robert Bloom (Moderator) All right, very good. The next question here is, can you discuss more about the customer requested slowdown and what happens if it moves to a license model? Joe Forkey So the customer requested slowdown is for the aerospace program for which there is no licensing model. And I guess what I can say is that we've heard from our customer that they take the assembly that we make and then they combine it with components from many other suppliers and build it into satellites. And that process of combining it and building it into satellites running slower than they anticipated. So they've had some challenges on their side and because of that they have excess inventory of the part that we're building and that's the reason for the slowdown. They've also said very clearly that they expect to be to be back up to similar levels as before once we get through these next couple quarters. So we see this as a bit of a blip and not a long term issue. And then maybe just on the licensing side. So there is no licensing for the aerospace program. Sorry, I think he was referring to the medical device side. Oh, to the other program. I'm sorry. So there is a licensing option for both of our single use programs. And that licensing option is that will stand up, will duplicate our production line in our customer's facility or another facility of their choice. We didn't talk about it today, but the Cystoscope customer has funded us to build out another production line in our facility and has asked us to build a production line in their facility. So we've been working on that. We see this as a positive for a couple reasons. The first one is they invoke this clause by building the production line in their facility, not a third party. We always expected that they would want to have duplication of supply for this critical component. So duplicating it within their own facility is the ideal situation for us as opposed to going to a competitor. And the third piece is that for the units that they build in their facility will collect the royalty. So at the end of the day, we benefit financially when we're either building things in our facility or when they're building things in their facility. We've always known that there would be some mix. Right now we'll be running basically three shifts on two lines. They'll be running one shift, maybe one and a half shifts on their line. So that that ends up being a pretty good mix. And so we see this as a way of that product continuing the impact from that product continuing to grow even as our production levels stay the same or grow by just a small amount. Robert Bloom (Moderator) All right, very good. To the investor question needs to be expanded upon. Please let us know again if you're in the webcast portal there. Please type your question into the Ask a Question feature there on the screen. Next question pertains to Unity. With the adoption of Unity, is the time frame for conversion of R and D into production shortened? Joe Forkey It is. So that's one of the main benefits of the Unity program, the Unity platform. And that's one of the reasons that we put Unity together because we expected that the reduction in time to market would be attractive to our customers, and certainly it's attractive to us. We want to move things through the engineering pipeline and into production. We're starting to see this bear out. We only have one program right now in the engineering pipeline that's using Unity. It has benefited from the Unity platform. So the time to production is shorter. I guess I would expand on this answer a little bit and say that we launched Unity a little over a year ago, about 15 months ago. And I have to say I expected that by now we would have a product development pipeline full of Unity projects. And we don't. We have one. But the good news is that our sales and marketing team, I think, has done a good job. We frankly had to figure out the best way to market the Unity platform because it is a little bit different than simply going out and saying we can design an endoscope and then build it for you. Going out and saying we're starting with a platform is a slightly different message. And so the way that we bring that messaging to the market took us a little while to figure out. The good news is that as I mentioned in the comments today, we have four customers now that our sales team is talking to about potential Unity projects. There's no guarantee that they'll all come into the engineering pipeline, but we are starting to see some more traction with Unity. And so we do expect that as we move forward, it will contribute to an increase in the programs in the product development pipeline, and it will have that benefit of moving things through the pipeline and into production faster than we've been able to do in the past. Robert Bloom (Moderator) All right, very good. Next question. Here is on Ross Optical. Do you view the significant increase in sales for Roth Optical this quarter, sort of a new run rate for that business? Joe Forkey Yeah, that's a great question. I wish I had a very precise and certain answer. We've been having discussions internally about what the causes are. So there are a couple of things we're thinking about. One is that we know that people were holding back earlier in this fiscal year and really over the last 12 months because of uncertainty surrounding the tariffs. With the Supreme Court ruling, there seems to be some settling of where the tariffs are going to be. And people can only. Customers can only hold out so long before their inventory gets to a level where they have to reorder. So we think some of it is coming from that, that there was some dip because people were holding back because of the tariffs, and now they're coming back online. There Is some thought that there could be some folks who are doing what we saw after the pandemic when there were supply chain disruptions because of the war in Ukraine, that we could be seeing some people building excess inventory because of the concerns over supply chain. That one we think is a little less likely because the supply chain disruptions, of course, are specific to the Middle east and not a lot of optics come through the Middle East. But there is a concern that that could be part of it as well, that people could be building up their inventory to an excessive amount. So it could be either of those things. We also are seeing, however, that we're getting new customers with meaningful size new orders. So given everything that we're seeing, and especially because we are seeing some new customers with new orders, we're seeing some customers who have been ordering at small volumes starting to pick up their volumes because their business is starting to grow some more. We do believe that the majority of it is coming from an increase in the need in that marketplace. And so we do believe that this is sustainable and that it will continue. Robert Bloom (Moderator) All right, very good. Next question here is about sort of manufacturing capacity. Can you talk more about growing out the facilities where the company stands now, square footage wise or other, and where we will be roughly a year from now? And as an extension of that, what is the capacity utilization currently and where can we get to on that? Joe Forkey Yeah, that's a great question. So we've talked in previous calls about the facilities updates that we've already made. So a facility update in Massachusetts,, moving the professional roles, if you like, the roles other than manufacturing, to a new facility closer to Boston. We made a move of similarly in Maine to a new facility in South Portland for the engineering team. We moved the production from Maine down to our Massachusetts, facilities a little farther west of Massachusetts, in Gardner, Mass. Where our headquarters was. And we've talked a couple times about the need to update the facilities that are in Gardner. And so we're the manufacturing facilities. And we're looking at multiple options now for what the best approach is to update those facilities in terms of capacity we have today, we're in three buildings in that location in Gardner. One of those buildings has an enormous amount of space that our landlord rents out to various different people. And there's always additional space available for us. So instead of giving a capacity number today, what I would say is if we decided to, and we needed to, we could expand the footprint of the Gardner facility to double the size that it is today. So we don't expect that the Facility question will impede our ability to continue to roll out the new production programs. Having said that, being in three buildings in Gardner is not ideal. Some of the space in the facilities that we're in in Gardner is not quite at the level that we would like it to be in terms of the modern ness of the clean room, air handlers, and those sorts of things. So there clearly needs to be some update. The big question is, how do we do the update? Do we keep everything in Gardner? Do we move to a different facility? Do we pull it all together into one building? And those are exactly the questions that we're looking at now. Again, we don't expect the answer to any of these questions to delay us in being able to roll the new programs into production. But it is part of what we'll be looking at over the next 12 months in order to update the facility. So we'll be ready for the ongoing continuous growth in the long run that we continue to expect. Robert Bloom (Moderator) All right, very good. Quick reminder, everyone. Again, if you are listening through the traditional teleconference line and would like to ask a question, press star, then one on your telephone keypad. Again, if you're listening through the webcast player, type your question into the Ask a question box there on the player. The next question here is regarding pipeline. It says here you mentioned four projects in the pipeline. Is that correct? Over what time frame will you get answers on these? And where in magnitude of revenue potential do these projects fit compared to other projects? Joe Forkey So I think this question is referring to the four programs that I mentioned are in the sales prospects sales pipeline, differentiated from our engineering pipeline, which is is robust in moving programs into production. Assuming I have that right, these four programs are the four unity programs. There are many more programs beyond that that are in our sales funnel, our sales pipeline, if you like. And our general target when we look at new programs coming into the engineering pipeline or that we're targeting with our sales team, is that these programs, particularly when they are unity program, would be programs that ultimately in production would lead to 1 to 3 million dollars a year in revenue when they get into production. As they go through the engineering pipeline, they typically run anywhere from a million to $2 million over a couple of years as they move through the engineering pipeline. Robert Bloom (Moderator) All right, very good. The next question here is regarding tariffs. What is the scale of tariff refunds you expect and will those be passed on to customers? Joe Forkey Yes. So we're still in the process of reviewing what that all looks like. There is a part of those tariff refunds for instance, in the situations where we've negotiated agreements with our customers, both for the scope and the satellite line, where we'll be refunding those tariffs, we do expect to not have to refund all of those tariff refunds. And so we think it'll be a net positive in terms of the bottom line. But it will, of course, reduce sales at the time those credit memos are issued. Robert Bloom (Moderator) All right, next question here. I guess more of a comment here, but maybe a question here. When will you be able to talk more about specific customers and projects in order to use as other optics companies are able to highlight specifically the contracts to more of a degree when you're able to provide more color to attract investor and customer interest? So I think specifically is referencing the ability to name customers and projects here. Joe Forkey Yeah, we would love to name specific customers. And we talk with our customers about that routinely. The challenge we have, particularly with our very large customers, is that they're always hesitant and frankly, don't allow us to do that. I think as we move forward, in some cases, it becomes obvious to everyone in the industry because of the characteristics of the product and the ramp and the timing of the ramp that we're going through and that our customers are going through. Sometimes it becomes fairly general knowledge. And I think we can probably confirm things when we get to that level. We will continue to work with our customers to be able to name specific names. But as of right now, we haven't been able to do that. We would love to do it. We'll continue pushing on it. But I don't have any prediction for when we'll be successful. Robert Bloom (Moderator) All right, next question here. Regarding the cystoscope line, you mentioned in previous calls pending improvements in the cystoscope line. Have all of these improvements been realized in the third quarter? Joe Forkey They have not been. So as I said in my comments, we've made significant progress on that line. In particular, with the yield now at over 90% consistently and continuing to grow. That's compared to previous times when we've had yields typically in the 80% range, sometimes even below that. So getting to 90% in the third quarter was a huge accomplishment. But we have a whole series of additional improvements that we are looking at and that our customer is looking at with us. It really is a great partnership to be able to get us consistently above 95%. And I think there's a good chance we could even get to 97, 98%. So there are plenty of improvements from a yield standpoint. The other thing we continue to look at and you know, we haven't emphasized this as much, but it certainly is. Part of what's been happening is that there are, there are updates to the procedures that we're using, to the tools and to the fixtures. These things take a little bit longer to update because it's not simply training people better, it's actually changing the process a little bit. And so there are a series of updates to the procedures that we're using and the tools and the fixtures that we expect will continue to allow us to reduce the touch time or the other way to say it is to increase the throughput with the same number of technicians. And so we've seen some improvements there, but again, there's more to be done. I think we will see significant increase again in Q4, and then I think we'll continue to see increase even beyond that into Q1, Q2, into next year. The other thing is as the volumes continue to increase, we will get to points where the volumes are high enough that the return on investment for more significant changes in the tools and fixtures, again to drive down the touch time, even more will become possible. So I think this is one of those cases where we'll see continuous improvement over the long run. Robert Bloom (Moderator) All right, very good. This will be my final reminder. If you'd like to ask a question online, go ahead and type that into the Ask a Question box on the webcast player. Question here is, does the industry recognize your momentum and if so, at what point do you expect revenue? To quote hockey stick. Joe Forkey I'm not going to predict when the hockey stick will come. We're focused on continuing to drive programs into the engineering pipeline and continue to drive the engineering pipeline programs into production. We see revenue continuing to increase in a nice healthy way as we move forward. The question about whether the industry recognizes us is an interesting one. I think that with some of the marketing work that we've done around unity, we're getting better exposure out there in the marketplace. I also think that with the new facilities that we have in Portland and the new facilities that we have in Massachusetts, having customers come and see us here helps with the impression that they get of the company. Having them see the production lines that we already have running gives us added credibility that we can not only do the top notch engineering, which we've been known for for many years, but now customers can see that we can roll those into production and be very successful with production. So all of these improvements that we've talked about here from a financial standpoint also roll into improvements in our ability to market ourselves to the, to the industry. So I can't give specific predictions on hockey sticks or specific numbers on how much better we're being recognized today. But we do see that we do sense the momentum in the marketplace, that people will come and talk to us and talk about things that we're talking about publicly and recognize that we've made progress. So I think all of those things are just going to help to accelerate the rate at which we can pull new programs into the engineering pipeline and of course, those rolling through into production to help grow the revenue. So we're pretty excited about it. Robert Bloom (Moderator) All right, very good question here. And more broadly, talk about expectations for profitability here. Joe Forkey So I guess what I would say is this quarter was basically breakeven a little bit positive from break even at the same revenue levels that we're at now. With the improvements that we continue to make, we would expect that that would continue to grow, grow in the positive direction. We have that little bit of slowdown on the aerospace program that we have to manage through. We've got some other programs coming online. So I think we'll see things continue to grow there. But it'll be close to break even. But in general, as we have new programs going into production and as we have more programs coming into Ross Optical, those will have a very high variable margin. So I think getting to break even is one thing. Moving beyond break even I think can accelerate pretty quickly because of the fact that we're leveraging the infrastructure that we've already put in place. So we do see this quarter that we're reporting on here is really an inflection point and we expect to see growing profitability as we move forward. Robert Bloom (Moderator) All right, very good. Well, with that, Joe, I will turn it over to you for any closing remarks. Joe Forkey Thank you, Robert. Thanks, everyone, for joining us on the call today. We will look forward to speaking with you again in a couple of months. Thanks, everyone. Have a good evening. Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice. Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. 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LITTLETON, Mass., May 06, 2026 (GLOBE NEWSWIRE) -- Precision Optics Corporation, Inc. (Nasdaq: POCI) (the "Company"), a leading designer and manufacturer of advanced optical instruments for the medical and defense/aerospace industries, today announced that it has scheduled a conference call to discuss the Company’s third quarter fiscal year 2026 financial results on Wednesday, May 13, 2026, at 5:00 p.m. ET. The Company intends to release its financial results and to file its 10-Q after the close of the market on Wednesday, May 13, 2026, followed by the conference call. Conference Call Details Date and Time: Wednesday, May 13, 2026, at 5:00 p.m. 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/l90v4RE3K1N. Replay: A teleconference replay of the call will be available for seven days, at (855) 669-9658 or (412) 317-0088, replay access code 3475317. A webcast replay will be available at https://app.webinar.net/l90v4RE3K1N. About Precision Optics Corporation Founded in 1982, Precision Optics is a vertically integrated optics company primarily focused on leveraging its proprietary micro-optics, 3D imaging and digital 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 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. About Forward-Looking Statements This press release contains forward-looking statements within the meaning of U.S. federal securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this press release are based on certain assumptions and analyses made by the management of the Company in light of their respective experience and perception of historical trends, current conditions, and expected future developments and their potential effects on the Company as well as other factors they believe are appropriate in the circumstances. There can be no assurance that future developments affecting the Company will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the parties), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the demand for the Company's products, global supply chains and economic activity in general and other risks and uncertainties identified in the Company's filings with the SEC. Should one or more of these risks or uncertainties materialize or should any of the assumptions being made prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. Company Contact: PRECISION OPTICS CORPORATION 550 King Street, Building A, Suite 100 Littleton, MA 01460 Telephone: 978-630-1800 Investor Contact: LYTHAM PARTNERS, LLC Robert Blum Telephone: 602-889-9700 [email protected]

Materion reported strong demand with value-added sales up ~10% year-over-year excluding precision clad strip, driven by an 18% increase in Electronic Materials and a 43% jump in Precision Optics, and exited the quarter with the highest backlog in company history (backlog +20% YoY). The company delivered a record first-quarter adjusted EBITDA margin of 20.2% and adjusted EPS of $1.27 (up 12% YoY), led by a near-doubling of Electronic Materials adjusted EBITDA and margin expansion across key segments. Management said the precision clad strip production ramp is on schedule and expects a “meaningful step-up” in Q2, reaffirming full‑year expectations for low double‑digit revenue growth and adjusted EPS guidance of $6.00 to $6.50, with normalized clad performance in the back half of the year. Interested in Materion Corporation? Here are five stocks we like better. Materion (NYSE:MTRN) reported first-quarter fiscal 2026 results highlighted by double-digit value-added sales growth excluding precision clad strip, record first-quarter adjusted EBITDA margin, and an expanding backlog supported by strength in semiconductor and aerospace and defense demand. President and CEO Jugal Vijayvargiya said value-added sales were up 10% year-over-year excluding precision clad strip, citing “strong demand across most of our end markets.” Electronic Materials sales increased 18% versus last year, driven by what Vijayvargiya described as “AI-led demand for high-performance memory and data storage applications,” along with strengthening demand in power applications and communication devices. → Meta Posted Its Best Sales Growth Since 2021—So Why Did Shares Fall? Precision Optics delivered a 43% year-over-year sales increase as “new business coming online across multiple end markets and applications,” Vijayvargiya said. Performance Materials sales were “roughly flat, excluding precision clad,” which Vijayvargiya attributed primarily to shipment timing, while noting the order book continued to build across aerospace and defense, energy, and telecom and data center. Materion exited the quarter with what management called the highest backlog in company history. Vijayvargiya said order backlog was up more than 20% year-over-year and 15% since the start of the year. He also cited defense orders of $60 million in the first quarter and “more than $300 million in open RFQs,” adding that over the last 12 months aerospace and defense order rates were up 50%, energy up 20%, and semiconductor up 10%. → Verizon’s Signal Strength: The Turnaround Call Is Loud and Clear Vice President and CFO Shelly Chadwick said first-quarter value-added sales were $261.8 million, up 10% from the prior year when excluding precision clad strip; overall value-added sales rose 1%. Adjusted earnings per share were $1.27, up 12% year-over-year. Adjusted EBITDA was $52.9 million, or 20.2% of value-added sales, which Chadwick described as “a record first quarter margin for Materion.” She said the company delivered 140 basis points of margin expansion driven by higher volume, favorable price mix, and strong operational performance, “particularly within Electronic Materials and Precision Optics.” Performance Materials: Value-added sales were $139.5 million, down 13% year-over-year and up 5% sequentially. Chadwick attributed the year-over-year decline to lower precision clad strip sales as production levels ramped through the quarter. Adjusted EBITDA was $28 million (20.1% margin), down 32% year-over-year, driven by lower clad strip volumes and the impact of operational challenges in the back half of 2025 that “amortized into this year.” Electronic Materials: Value-added sales were $91.6 million, up 18% year-over-year. Adjusted EBITDA reached a record $25.9 million, up 95% year-over-year, with a record adjusted EBITDA margin of 28.3%. Chadwick said the improvement reflected higher volume, favorable price mix, and strong execution. Precision Optics: Value-added sales were $30.7 million, up 43% year-over-year and the segment’s strongest quarter since 2021. Adjusted EBITDA was $5.5 million (17.9% margin), and Chadwick said the segment delivered “five consecutive quarters of bottom-line improvement.” → Alphabet’s Earnings Didn’t Just Beat—They Changed the Story Management provided updates on the precision clad strip quality issue that pressured Performance Materials results. Vijayvargiya said the production ramp-up is progressing well and “remains on schedule,” adding the company is producing “at the same rate as before the quality issue.” He told analysts the team made “significant progress” working with the customer and that manufacturing process changes were implemented, with learnings being applied more broadly across the company. Chadwick said underutilization of the plant impacted profitability in the quarter and noted the company is “going a little bit slower” with additional steps that are affecting profitability in the near term. She said Materion expects “a really strong step up on the top line in Q2,” and “very normalized” top- and bottom-line performance in the back half for clad specifically. For Performance Materials overall, Chadwick said the company expects a meaningful top-line step-up next quarter and “more than 200 basis points step up from a profitability perspective,” with “even better profitability” in the back half as it works past operational issues and the clad impact. Vijayvargiya framed artificial intelligence as a broad demand driver for Materion beyond deposition materials, describing the company as “a critical enabler of the AI ecosystem.” He pointed to roles for engineered alloys and beryllium-based materials across data center infrastructure, connectivity networks, energy systems, and space-related applications, and highlighted Precision Optics’ relevance in semiconductor manufacturing and data center expansion. During the Q&A, Vijayvargiya said semiconductor results were strong in the first quarter and that order rates improved sequentially exiting Q1. He said Materion is seeing growth across power semiconductors, communications, logic, memory, and data storage rather than in “one or two areas.” He added that sales in high-performance memory and data storage aligned to AI applications were up 47% year-over-year in Q1, and he expects that to continue. Management also emphasized the contribution of prior new business efforts. Vijayvargiya said qualification cycles in Electronic Materials typically run 12 to 24 months and that initiatives pursued during the downturn are now contributing as markets recover. Asked about pricing versus volume, he said price played a role but was “not the main part” of the Electronic Materials growth story, pointing instead to market recovery and new business wins. Chadwick said the recent margin performance in Electronic Materials reflects both operational work completed over the last few years and volume, while noting margins “bounce around a little bit with mix.” She said the company expects the trend of stronger margins in the segment to continue. For full-year 2026, Chadwick said the company now expects low double-digit top-line growth and affirmed adjusted EPS guidance of $6.00 to $6.50, with “growing confidence” in delivering toward the upper end. Vijayvargiya said Materion expects a “meaningful step-up in sales in Q2 and throughout the rest of the year,” and he anticipates double-digit growth each quarter, with stronger growth in the back half. Chadwick added that from an earnings perspective she expects “probably a 15%-20% step up” in EPS next quarter, with “much more meaningful step-ups in the back half” as performance flows through. On cash and leverage, Chadwick said Materion ended the quarter with net debt of approximately $474 million and $192 million of available capacity on its credit facility, with leverage at 2.1x, “slightly below the midpoint” of the targeted range. She said the company strategically built inventory in Q1 to support expected sales growth, temporarily constraining free cash flow generation, but reiterated expectations for strong free cash flow for the full year as volume increases and working capital normalizes. Discussing capital spending, Chadwick said planned capex supports organic growth opportunities across all three businesses, including capacity and capability expansion as well as plant recapitalization. She also referenced a previously discussed $65 million customer investment to expand capacity on the beryllium side of Performance Materials, which she said would be “somewhat additive” and not all spent in one year. Materion Corporation (NYSE: MTRN) is a global supplier of advanced materials and precision-engineered solutions. The company develops and manufactures high-performance alloys, engineered clad and composite materials, precision thin film products, and advanced optical and electronic materials. Materion's offerings address critical performance requirements for industries where material properties such as strength, wear resistance, conductivity and optical clarity are paramount. Materion's core businesses include beryllium and beryllium composites for aerospace and defense platforms, nickel- and copper-based specialty alloys for industrial and medical applications, optical coatings and substrates for scientific instrumentation, and electronic materials used in semiconductor production. The article "Materion Q1 Earnings Call Highlights" was originally published by MarketBeat.

Value-added sales grew 10% year-over-year when excluding precision clad strip, reflecting broad-based demand across high-growth end markets. Electronic Materials achieved record 28.3% EBITDA margins, benefiting from AI-driven demand for high-performance memory and data storage alongside operational cost improvements. Precision Optics delivered its fifth consecutive quarter of profitability improvement, driven by new business wins in semiconductor lithography and automotive applications. Performance Materials experienced temporary year-over-year weakness due to shipment timing and the ramp-up of precision clad strip production following previous quality issues. The company exited the quarter with its highest backlog in history, up 20% year-over-year, fueled by a 50% increase in aerospace and defense order rates. Management characterized Materion as a 'critical enabler' of the AI ecosystem, supplying foundational materials for data centers, high-speed connectivity, and next-generation energy systems. Management raised expectations to low double-digit top-line growth for the full year 2026, supported by record backlog and strengthening order rates. Earnings guidance was affirmed at $6.00 to $6.50 per share, with management expressing increased confidence in delivering toward the upper end of that range. Performance Materials is expected to see a meaningful sequential step-up in Q2 and throughout the year as precision clad strip production normalizes and defense shipments accelerate. Electronic Materials growth is projected to continue, supported by semiconductor market outgrowth and the realization of new business wins qualified over the last 18-24 months. The company remains committed to its midterm EBITDA margin target of 23%, with significant bottom-line step-ups anticipated in the second half of 2026. Precision clad strip production has successfully returned to pre-quality issue rates, though Q1 profitability was impacted by underutilization during the ramp-up phase. Inventory was strategically built in Q1 to support anticipated high volume in Q2 and the second half, which temporarily constrained free cash flow generation. Defense demand is accelerating, evidenced by $300 million in open RFQs and a record $60 million in Q1 bookings, partly driven by global geopolitical tensions. The Konasol acquisition is progressing, with small-scale activity expected by year-end and meaningful sales contributions projected for the 2027-2028 timeframe. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the 1,000 basis point margin expansion to operational improvements made during the market downturn and a favorable mix of high-performance AI applications. While mix may fluctuate, the underlying cost structure improvements are considered sustainable, bringing margins closer to typical high-end electronic material levels. The $300 million in open RFQs includes both incumbent renewals and new technologies in optics and space, with typical conversion cycles of 12 to 24 months. Increased defense budgets in Washington and international demand are expected to sustain this momentum for the next 3 to 5 years. Current production is meeting existing customer schedules, but Materion maintains additional capacity if the customer's U.S. applications receive regulatory approval. The company is applying manufacturing process 'learnings' from the previous quality issue across the broader organization to improve overall quality standards. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

Conference Call Scheduled for today, February 17, 2026, at 5:00pm ET GARDNER, Mass., Feb. 17, 2026 (GLOBE NEWSWIRE) -- Precision Optics Corporation, Inc. (NASDAQ: POCI), a leading designer and manufacturer of advanced optical instruments for the medical and defense/aerospace industries, announced operating results on an unaudited basis for its second quarter fiscal year 2026 for the period ended December 31, 2025. Q2 2026 Financial Highlights (3 Months Ended December 31, 2025): Revenue was $7.4 million, a quarterly record, compared to $4.5 million in the same quarter of the previous fiscal year, representing growth of approximately 63%, and compared to $6.7 million in the most recent sequential quarter. Production revenue was $6.4 million, a quarterly record, compared to $3.1 million in the same quarter of the previous fiscal year, representing growth of approximately 105%, and compared to $6.0 million in the most recent sequential quarter. Engineering revenue was $1.0 million compared to $1.4 million in the same quarter of the previous fiscal year, a decrease of 29%, and compared to $0.7 million in the most recent sequential quarter. Gross margins were 2.8% compared to 23.6% in the same quarter of the previous fiscal year. Net loss for the quarter was $(1.8) million, compared to $(1.0) million in the same quarter of the previous fiscal year. Adjusted EBITDA was $(1.5) million for the quarter compared to $(0.6) million in the same quarter of the previous fiscal year. FY 2026 Financial Guidance (Year Ended June 30, 2026): The Company is currently projecting revenue for fiscal year 2026 to be in a range of $26 to $28 million, which represents 36% to 47% growth over the Company’s fiscal year 2025 revenue. The Company is currently projecting fiscal year 2026 Adjusted EBITDA to be approximately $(2.5) to ($3.0) million compared to $(3.7) million in fiscal 2025. “Our second quarter results demonstrate the continued strength of demand across our core production programs, with record revenue of $7.4 million driven by 105% year-over-year growth in Production,” said Joe Forkey, CEO of Precision Optics. “Our aerospace program continues to perform at record shipment levels and is positioned for further expansion, while our single-use cystoscope program delivered its sixth consecutive record quarter of revenue. At the same time, our new single-use ophthalmic program is ramping and will be a key contributor to future growth. “We are investing to build out required infrastructure of people and process in our production business. This is occurring while ramping programs and addressing associated inefficiencies. We are seeing tangible operational improvements that began to take hold toward the end of the quarter under new operations leadership. We expect margin performance to improve as we move through the second half of the fiscal year, Product Development bookings have increased for the third consecutive quarter to their highest level in over a year, and our Ross Optical division is entering the third quarter with its strongest backlog in more than three years. We believe the combination of sustained top-line growth, operational discipline, and strengthening bookings positions Precision Optics to transition from a period of investment and scaling to one of increasingly profitable growth,” Forkey concluded. The following table summarizes the second quarter and year-to-date (unaudited) results for the periods ending December 31, 2025, and 2024: Conference Call Details Date and Time: Tuesday, February 17, 2026, at 5:00 p.m. 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/Zo5aLdzPzmg. Replay: A teleconference replay of the call will be available for seven days, at (855) 669-9658 or (412) 317-0088, replay access code 3100136. A webcast replay will be available at https://app.webinar.net/Zo5aLdzPzmg. About Precision Optics Corporation Founded in 1982, Precision Optics is a vertically integrated optics company primarily focused on leveraging its proprietary micro-optics, 3D imaging and digital 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 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). In addition to the aforementioned items, Adjusted EBITDA also excludes from Net Income (Loss) the effect of stock-based compensation. 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 within the meaning of U.S. federal securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release include, without limitation, the Company’s projections for future revenue, gross margins and Adjusted EBITDA, expectations regarding margin improvement and operational performance, anticipated product and program expansion, and the Company's strategic outlook. The forward-looking statements contained in this press release are based on certain assumptions and analyses made by the management of the Company in light of their respective experience and perception of historical trends, current conditions, and expected future developments and their potential effects on the Company as well as other factors they believe are appropriate in the circumstances. There can be no assurance that future developments affecting the Company will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the parties), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the demand for the Company's products, global supply chains and economic activity in general and other risks and uncertainties identified in the Company's filings with the SEC. Should one or more of these risks or uncertainties materialize or should any of the assumptions being made prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. Company Contact: PRECISION OPTICS CORPORATION 22 East Broadway Gardner, Massachusetts 01440-3338 Telephone: 978-630-1800 Investor Contact: LYTHAM PARTNERS, LLC Robert Blum Telephone: 602-889-9700 [email protected]

This article first appeared on GuruFocus. Release Date: February 17, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Precision Optics Corp Inc (NASDAQ:POCI) reported record revenue of $7.4 million for Q2 2026, driven by a 92% year-over-year increase in production revenue. The aerospace program generated $2.7 million in revenue, maintaining high volume performance and expected to increase further in Q4. Operational improvements have been implemented, leading to increased throughput and efficiency, which are expected to positively impact financial results in Q3 and Q4. The Ross Optical division showed signs of recovery with revenue above $1 million for the second consecutive quarter and the highest backlog in over three years. Product development bookings are at their highest level in over a year, indicating a rebound in engineering revenue and future growth potential. Gross margins were significantly lower at 2.8% compared to 14.2% in the prior quarter, due to manufacturing inefficiencies and high levels of production scrap. The company reported a net loss of $1.8 million for the quarter, an increase from the $1.0 million loss in the same quarter last year. Adjusted EBITDA was negative $1.5 million, reflecting ongoing challenges in achieving profitability. The timing shift in margin recovery has resulted in a revised full-year adjusted EBITDA guidance of negative $2.5 to $3.0 million, down from a previously expected positive $500,000. The company is facing challenges in yield and labor utilization on its single-use cystoscope program, impacting gross margins negatively. Warning! GuruFocus has detected 6 Warning Signs with POCI. Is POCI fairly valued? Test your thesis with our free DCF calculator. Q: Can you clarify if the design revisions required to fix yield shortfalls are within your internal manufacturing control, or are you waiting on customer approval? What is the lead time for these revisions to impact the P&L, and can you bridge the gap without a diluted equity raise? A: The design change for the Cystoscope line has been approved by our customer. We have received initial parts and completed necessary engineering builds. We expect the design change to go into production in the next month. Regarding financials, we are in advanced discussions with lenders and expect to announce a new loan facility in Q3. Equity financing is an option, but we are uncertain if it will be needed. - Dr. Joe Forke, CEO, and Wayne Cole, CFO. Q: Can you comment on facility changes and when they will be operational? A: We have completed updates in our main operation in Maine and some Massachusetts facilities, including moving to a new headquarters. The last piece is updating production facilities, which is ongoing. We plan a more substantial overhaul in the next 6 to 12 months to prepare for future needs. We have the necessary facilities to execute current programs. - Dr. Joe Forke, CEO. Q: Can you talk about your loan discussions and the certainty of reaching positive EBITDA without dilution? A: Loan discussions are quite advanced, and we are confident in their success. We are exploring funding from multiple sources and believe the bank discussions will be successful. - Dr. Joe Forke, CEO. Q: What long-term return do you expect from investments in production infrastructure? A: Investments in operations personnel and infrastructure will support higher production levels. We underestimated the need for management investment, but the current team can support much higher production. We expect significant leverage and returns from these investments, supported by strong indications of continued program demand. - Dr. Joe Forke, CEO. Q: Which programs are driving the increased revenue guidance for the year? A: The increased revenue guidance is primarily driven by the aerospace program and the single-use cystoscope, with the aerospace program ramping faster than expected. - Dr. Joe Forke, CEO. Q: Is it primarily the Boroscope business driving aerospace growth? A: We have two major defense aerospace programs in production. The Boroscope program is in the product development phase and contributes to increased product development revenue. It is expected to enter production in about a year, further increasing production revenue. - Dr. Joe Forke, CEO. For the complete transcript of the earnings call, please refer to the full earnings call transcript.