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Precision Optics (POCI) - 2025 Q1 - Earnings Call Transcript
POCIPrecision Optics (POCI)2024-11-15 03:32
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Financial Data and Key Metrics Changes - For Q1 2025, revenue was 4.2million,slightlydownfrom4.2 million, slightly down from 4.3 million in Q1 2024, aligning with previous expectations [44] - Gross margins decreased to 27% from 34% year-over-year, impacted by manufacturing pauses and resource allocation towards R&D [45] - The net loss for the quarter was 1.3million,comparedtoalossof1.3 million, compared to a loss of 464,000 in the previous year [49] - Adjusted EBITDA was negative 1million,worseningfromnegative1 million, worsening from negative 245,000 in the prior year [50] Business Line Data and Key Metrics Changes - The production segment is expected to grow significantly, driven by single-use endoscopes, with revenue projected to increase from 6.6millionlastyeartoover6.6 million last year to over 10 million this year [40] - Product development revenue is anticipated to remain flat in fiscal 2025 due to resource allocation towards a new platform solution [39] - The Ross Optical division is expected to have flat revenue year-over-year, with signs of market recovery anticipated for fiscal 2026 [43] Market Data and Key Metrics Changes - The company has received its first production order for a single-use ophthalmic product, expected to begin production in January 2025, marking a significant milestone [11][29] - The market for treatment of benign prostate hyperplasia is expected to continue robust growth, with the company estimating 3.6millionindeliveriesforthecurrentfiscalyear[28]CompanyStrategyandDevelopmentDirection−Thecompanyremainsfocusedonsingle−useendoscopetechnologyasakeydriverforlong−termgrowth,withstrongcustomerengagementconfirmingmarketpositioning[10]−Strategicinvestmentsinpartnershipsandtechnologydevelopmentareexpectedtoleadtosubstantialrevenuegrowthinthesingle−usesegment[25]−Thecompanyplanstolaunchanewplatformsolutiontoreducedevelopmentriskandtimetomarketforcustomers[37]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedoptimismforQ2andtheremainderofthefiscalyear,expectingsignificantrevenueandprofitabilityimprovementsasproductionissueshavebeenresolved[9][56]−Thecompanyisconfidentinitslong−termprospectsduetostrongcustomerretentionandrecurringrevenuefromsingle−usemedicaldevices[54]OtherImportantInformation−ThecashbalanceattheendofQ12025was3.6 million in deliveries for the current fiscal year [28] Company Strategy and Development Direction - The company remains focused on single-use endoscope technology as a key driver for long-term growth, with strong customer engagement confirming market positioning [10] - Strategic investments in partnerships and technology development are expected to lead to substantial revenue growth in the single-use segment [25] - The company plans to launch a new platform solution to reduce development risk and time to market for customers [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q2 and the remainder of the fiscal year, expecting significant revenue and profitability improvements as production issues have been resolved [9][56] - The company is confident in its long-term prospects due to strong customer retention and recurring revenue from single-use medical devices [54] Other Important Information - The cash balance at the end of Q1 2025 was 636,000, with a recent direct offering netting 1.2 million to support working capital [52] - The company is evaluating alternatives to support growth in manufacturing and attract engineering talent [53] Q&A Session Summary Question: What type of visibility will you have to orders against the initial 9 million order for next year? - The company expects about 3.6milliontobedeliveredinthecurrentfiscalyear,withindicationsoffollow−onordersexpectedtowardsthemiddleorendoffiscal2026[60][61]Question:Whatsortofvisibilitydoyouhaveforthesecondprogram?−Theinitialorderisastockingorderfor3.6 million to be delivered in the current fiscal year, with indications of follow-on orders expected towards the middle or end of fiscal 2026 [60][61] Question: What sort of visibility do you have for the second program? - The initial order is a stocking order for 340,000, with follow-on orders expected to be around 1.5millionforthefirstyearafterlaunch[64][66]Question:Canyouquantifyfurtherinsightsintotimelinesforadvancementtoproductionforsingle−useprograms?−Therearetwoprogramsmovingforward,withoneexpectedtoenterproductioninthenext12monthsandanotherin12to24months[70][74]Question:Aresingle−useprogramslargerthanthe1.5 million for the first year after launch [64][66] Question: Can you quantify further insights into timelines for advancement to production for single-use programs? - There are two programs moving forward, with one expected to enter production in the next 12 months and another in 12 to 24 months [70][74] Question: Are single-use programs larger than the 1 million minimum run rate you desire for advancement? - Typically, single-use programs will start above the $1 million range, with quantities of 10,000 units or higher [75][76] Question: Are there opportunities to regrow the engineering base? - The engineering team has been growing, and updates to facilities and tools are expected to support significant growth starting in fiscal 2026 [80][86] Question: Can you help understand the fixed versus variable expenses on COGS? - Lower revenues impact margins significantly due to relatively fixed costs, with variable costs primarily being materials and some labor [88] Question: Does management expect Intuitive Surgical to be a potential customer? - The company has a long-standing relationship with Intuitive Surgical and believes its technologies could have broad applications in the robotic endoscopy market [92][93]