Precision Optics (POCI) Q4 2024 earnings summary

Executive summary

• FY2024 revenue was $19.1M, down from $21.0M in FY2023 but slightly above guidance, with declines in optical components and finished products partially offset by record engineering design services revenue.

• Product development/engineering revenue hit a record $8.3M, up 24% year-over-year, helping offset lost business and program discontinuations.

• Net loss widened to $3.0M ($0.49/share) from $0.14M in FY2023, driven by lower revenues and gross profit.

• Operational investments included new engineering hires, a new VP of Sales and Marketing, ERP system implementation, and manufacturing consolidation.

• The company raised $1.2M–$1.4M in equity post-year-end and received a lender waiver after missing a debt covenant.

Financial highlights

• FY2024 revenue: $19.1M (down 6.6%–9.2% year-over-year, excluding prior year’s $600K one-time license revenue).

• Gross margin for the year: 30.3% (vs. 36.8% prior year, or 34.9% adjusted for one-time item); Q4 gross margin: 21.7%–22%.

• Net loss for FY2024: $2.95M–$3.0M; Q4 net loss: $1.4M.

• Adjusted EBITDA: negative $1.6M for the year (vs. positive $491K prior year); Q4 adjusted EBITDA: negative $1.1M.

• Cash at June 30, 2024: $0.4M, down from $2.9M prior year; $1.2M–$1.4M raised in equity post-year-end.

Outlook and guidance

• Q1 FY2025 revenue expected between $4.2M and $4.4M, flat year-over-year due to lingering program delays.

• Double-digit revenue growth projected for FY2025, with significant increases starting Q2 and record quarterly revenues expected before year-end.

• Adjusted EBITDA breakeven targeted at quarterly revenue of ~$5.5M, expected in Q2 and beyond.

• Ross Optical division and optical components expected to rebound as industry conditions improve in 2025.