Precision Optics Corporation (POCI) Conference August 19, 2025 09:30 AM ET Speaker0Alright. Hello, and welcome to the Precision Optics fireside chat. My name is Robert Blum, managing partner here at Lithium Partners. And today, I'll be moderating a q and a discussion with Joe Forkey, the chief executive officer at Precision Optics. As a reminder, Precision Optics trades under the ticker POCI on the Nasdaq.Alright, Joe. Welcome.Speaker1Thanks, Robert. Nice to be here.Speaker0Alright. Let's, well, a couple of ...

Core Viewpoint - Powerfleet (NASDAQ: AIOT) is poised for a significant rebound after a more than 50% correction from its 2025 high, with promising growth indicators emerging from its FQ4 results [2][4]. Group 1: Financial Performance - FQ4 results showed tepid performance relative to analyst forecasts, but the company experienced hypergrowth with a 200% year-over-year revenue increase, supported by acquisitions [4]. - The company improved profitability in FQ4, with a 49% increase in its core service business and organic growth of 20% in the Video segment and 17% in Warehouse Safety [5]. - Gross margin improved by 700 basis points, and adjusted EBITDA margin expanded by 500 basis points, leading to a 65% increase in EBITDA [6]. Group 2: Strategic Outlook - The company completed transformation efforts involving acquisitions and reorganizations, focusing on higher-margin IoT-enabled SaaS video and warehouse safety/security operations [3]. - The outlook is positive, with opportunities for cross- and upselling through new clients and acquisitions, indicating confidence in growth expansion [7]. - Analysts forecast a sustainable growth rate of 20% annually in 2026, with earnings growth expected to exceed 100% over the next three to five years [8]. Group 3: Market Sentiment and Analyst Ratings - Analysts have a bullish outlook on Powerfleet, with a 12-month price target of $10.50, representing a 115.38% upside from the current price of $4.88 [9]. - Institutional interest is strong, with over 70% of the stock owned by institutions, which have been actively buying, totaling nearly half a billion dollars in shares during H1 [11]. - Post-release price action indicates a positive market sentiment, with an 8% surge in stock price, suggesting potential for further gains [12].

BUSINESS UPDATE June 2025 Important Disclaimers The contents of this presentation are not to be construed as legal, regulatory, business, accounting or tax advice. You should consult your own attorney, business advisor, accountant and tax advisor as to legal, regulatory, business, accounting and tax advice. This presentation has been prepared exclusively for the internal confidential use of the recipient only. This presentation is confidential. Any reproduction of distribution of this presentation, in whole ...

Financial Data and Key Metrics Changes - For Q3 FY2025, revenue was $4.2 million, down from $5.2 million in Q3 FY2024, with production revenue at $3.2 million compared to $3.0 million year-over-year, while engineering revenue fell to $924,000 from $2.3 million [22][24] - Gross margins decreased to 10% from 35% in the same quarter last year, attributed to low yields and a one-month shutdown of production lines [24] - The net loss for the quarter was $2.1 million, compared to a net loss of $317,000 in the same quarter last year, with adjusted EBITDA at negative $1.3 million compared to a positive $52,000 [25] Business Line Data and Key Metrics Changes - The single-use cystoscope program faced significant production challenges, leading to a drop in daily yields to below 50%, necessitating a halt in manufacturing for root cause analysis [9][10] - Despite production challenges, overall systems production revenue increased over 20% quarter-over-quarter and more than doubled year-over-year [11] - The aerospace program's production revenue grew from approximately $300,000 in Q1 to just under $900,000 in Q3, with expectations for further growth in Q4 [12] Market Data and Key Metrics Changes - The single-use endoscope market is growing at annual rates estimated to be as high as 20%, driven by lower costs and superior performance of new technologies [16][17] - The company has a backlog greater than $6 million, with a commitment from a military customer for minimum annual purchases of nearly $4 million for 2025 and 2026 [13][35] Company Strategy and Development Direction - The company is focused on resolving production issues and expanding its Unity platform, which aims to streamline the development of new endoscopic systems [18][19] - The Unity platform is expected to reduce time to market by 6 to 12 months compared to custom designs, enhancing competitiveness [59] - The company is actively pursuing alternative suppliers to mitigate the impact of tariffs on its business [68][69] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resolving production issues and anticipates significant revenue growth in Q4, projecting $6 million in sales [26][28] - The company maintains strong customer relationships and a robust pipeline of opportunities, particularly with the Unity platform [27] Other Important Information - The company has made recent changes to its Board, adding two new members with relevant experience in the medical device industry [20][21] - R&D spending increased due to investments in the Unity platform, with expectations for steady state expenses in the coming quarters [24][55] Q&A Session Summary Question: Were engineering clients affected by production issues? - Yes, engineering resources were diverted to address production issues, impacting revenue collection [31][32] Question: Will engineering fees be collected now that issues are resolved? - Correct, with production issues resolved, the company expects to collect both engineering and production fees [32] Question: Is the aerospace program expected to continue beyond 2026? - Yes, indications suggest the program will continue beyond 2026, with higher order rates anticipated [33][34] Question: Are there any contractual issues due to production delays? - No, the company has a good relationship with the customer and is moving forward positively [36][38] Question: Is staffing adequate for production needs? - The company is close to full staffing for assembly technicians and is looking to add a few more for smooth operations [39] Question: When will the second production line be operational? - The second line is expected to start running in the first half of fiscal 2026 [40] Question: Will the current quarter be EBITDA positive? - Yes, the company expects to achieve positive EBITDA in the current quarter [43][44]

Financial Data and Key Metrics Changes - For Q3 2025, revenue was $4.2 million, down from $5.2 million in Q3 2024. Production revenue increased to $3.2 million from $3 million, while engineering revenue decreased to $924,000 from $2.3 million [21][24] - Gross margins fell to 10% from 35% year-over-year, attributed to low yields and a one-month shutdown of production lines [23] - The net loss for the quarter was $2.1 million compared to a net loss of $317,000 in the same quarter last year. Adjusted EBITDA was negative $1.3 million, down from a positive $52,000 [24] Business Line Data and Key Metrics Changes - The single-use cystoscope program faced significant yield issues, dropping to less than 50% before corrective actions were taken [8] - Systems production revenue, including new and legacy products, grew over 20% quarter-over-quarter and more than doubled year-over-year [10] - Aerospace program production revenue increased from approximately $300,000 in Q1 to just under $900,000 in Q3, with expectations for further growth in Q4 [11] Market Data and Key Metrics Changes - The single-use endoscope market is growing at annual rates estimated to be as high as 20%, driven by lower costs and superior performance of new technologies [15][16] - The company has a production backlog exceeding $6 million, indicating strong demand for its products [12] Company Strategy and Development Direction - The company is focused on resolving production challenges and expanding its Unity platform, which aims to streamline the development of new endoscopic systems [17] - The Unity platform is designed to reduce risk, cost, and time to market, with positive responses from potential customers [18] - The company is committed to leveraging its proprietary manufacturing technology and partnerships to become a leading supplier in the single-use endoscope market [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming production challenges and anticipates significant revenue growth in Q4, aiming for $6 million in sales [26] - The company expects to achieve positive adjusted EBITDA in the upcoming quarter, indicating a recovery from recent setbacks [43] Other Important Information - The company has made changes to its Board, adding two new members with relevant experience in the medical device industry [19][20] - The company is actively pursuing alternative suppliers to mitigate the impact of tariffs on its business [68][69] Q&A Session Summary Question: Were engineering resources diverted to fix production issues? - Yes, engineering resources were used to address production challenges, impacting billable projects [30][31] Question: Will the aerospace program continue beyond 2026? - The aerospace program is expected to continue beyond 2026, with minimum annual purchase commitments of nearly $4 million for 2025 and 2026 [32][33] Question: Are there any contractual issues due to production delays? - There are no contractual issues; the customer has been supportive and has even placed additional orders [35][38] Question: Is the company fully staffed for production? - The company is close to full staffing for assembly technicians and is looking to add a few more to ensure smooth operations [39] Question: When will the second production line be operational? - The second production line is expected to start running in the first half of fiscal 2026 [40] Question: Will the current quarter be EBITDA positive? - Yes, the expectation is for the current quarter to be EBITDA positive, reducing the need for additional stock issues [43]