Precision Optics (US:POCI)2020-09-24 23:48Financial Data and Key Metrics Changes - For Q4 2020, overall revenue was $2.24 million, a decrease of 6% compared to $2.38 million in Q4 2019 and $2.37 million in Q3 2020 [21] - Adjusted EBITDA improved by more than $150,000 from Q3 2020 due to a decrease in operating expenses [11] - Gross margin for Q4 was 29%, down from 36% in Q4 2019 and 34% in Q3 2020 [26] - The fiscal year ended with a net loss of $1.4 million compared to a loss of $615,000 in fiscal 2019 [39] Business Line Data and Key Metrics Changes - Ross Optical operations generated revenue of $1.13 million in Q4, contributing to a total of $9.9 million for the fiscal year, an increase of $3.1 million compared to fiscal 2019 [24] - The otoscopy product faced a revenue impact of approximately $100,000 due to supply chain issues, while the cardiac program saw a $200,000 revenue reduction due to decreased deliveries [13][14] - Operating expenses for Q4 were $973,000, down from $1.28 million in Q3 2020 [29] Market Data and Key Metrics Changes - The medical devices and defense/aerospace industries are viewed as resilient markets, with expectations for revenue recovery in the first quarter of fiscal 2021 [18][19] - Discussions about new development projects have rebounded to pre-COVID levels, indicating a recovery in market activity [17] Company Strategy and Development Direction - The company is focusing on expanding sales and marketing efforts, investing in proprietary technology, and exploring merger and acquisition opportunities [31] - Strategic investments have been made to enhance customer engagement and develop proprietary intellectual property [33] - The integration of Ross Optical is seen as successful, with plans to leverage combined operations rather than report Ross Optical as a separate unit [43][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to normalized operations and improving revenue and gross margins in Q1 2021 [19] - The company is prepared to take steps to reduce expenses if necessary but aims to align revenues from existing and new products quickly [42] - The balance sheet is strong, with a cash balance of $1.1 million at the end of Q4, positioning the company well for growth [40] Other Important Information - The company reported a GAAP net loss of $323,000 in Q4, with adjusted EBITDA showing a loss of $207,000 [38] - The company is exploring high-volume product opportunities and has seen interest in single-use products [34] Q&A Session Summary Question: Opportunities to increase gross margins through acquisitions - Management is confident there are small optics companies with profitable margins but is not currently engaged with any [72] - The focus has been on integrating Ross Optical successfully before pursuing further acquisitions [73] - Management believes that investments made prior to COVID would have led to breakeven without the pandemic's impact [75] Question: Future profitability and acquisition strategy - Management sees growth opportunities even without acquisitions, but acknowledges the optics industry is fragmented and will look for potential candidates [77]