Precision Optics Reports Third Quarter Fiscal Year 2022 Financial Results

May 16th, 2022 16:30 EST

Company reports 37% organic revenue growth and positive adjusted EBITDA

Conference Call Scheduled for today, May 16, 2022 at 5:00pm ET

GARDNER, Mass., May 16, 2022 /PRNewswire/ -- Precision Optics Corporation, Inc. (OTCQB: PEYE), a leading designer and manufacturer of advanced optical instruments for the medical and defense industries, announced operating results on an unaudited basis for its fiscal year 2022 third quarter ended March 31, 2022.

Third quarter fiscal 2022 highlights:

  • Revenue for the quarter ended March 31, 2022 increased 89% to $4.65 million compared to $2.46 million in the same quarter of the previous fiscal year. Lighthouse, which was acquired on October 5, 2021, contributed $1.29 million in third quarter revenue.
  • Excluding contributions from Lighthouse, revenue for the third quarter increased 37% compared to the same quarter of the previous year.
  • Gross margins for the quarter ended March 31, 2022 were 37% compared to 33% in the same quarter of the prior year. Excluding Lighthouse, gross margins exceeded 40%.
  • Net loss of $113,897 during the quarter included $231,115 of stock-based compensation and $52,778 of interest expense. This compared to net income of $552,280 in the same quarter a year ago, which included $808,962 of other income related to the forgiveness of the SBA PPP loan.
  • Adjusted EBITDA, defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation and acquisition-related expenses, was $218,193.
  • The Company's cash position at the end of the third quarter was $831,585.

Recent additional highlights:

  • In February 2022, the Company announced $1.5 million production orders from a large defense/aerospace customer for a new optical application.
  • In February 2022, the Company received notice that one of its customer's products has received 510(k) clearance from the FDA.
  • In March 2022, the Company announced $2.5 million production orders from a large medical device company for an existing product in the spinal surgery market.
  • In May 2022, the Company announced the first successful transfer to production of a Lighthouse engineering pipeline product and first shipments against a $600,000 production order for a next generation otoscope application.

Precision Optics' CEO, Joseph Forkey, commented, "I am extremely pleased with the financial results of the quarter as well as our position for future growth. The third quarter was highlighted by strong organic revenue growth of 37% year-over-year and 19% quarter-over-quarter, as we continue to be awarded production contracts for new products successfully exiting our engineering pipeline and as existing products see a rebound from pandemic delays. We also achieved improvements in gross margins as we better absorbed our fixed costs and continued to realize efficiencies in our manufacturing processes.  Overall, we achieved a return to positive adjusted EBITDA and look to grow our profitability while we invest in our business. As we look to the future, we believe the strong trends we have seen the last couple of quarters are likely to continue, following the recent receipt of new production agreements, a large and growing pipeline where we expect multiple new projects to advance to production in the coming twelve months, and recent industry trends toward the return of elective surgeries."

The following table summarizes the third quarter (unaudited) results for the periods ended March 31, 2022 and 2021:

Three Months

Ended March 31,

2022

2021

Revenues

$                    4,651,352

$                    2,458,290

Gross Profit

1,728,209

818,024

Stock Compensation Expenses

196,403

74,794

Other

1,592,927

999,248

Total Operating Expenses

1,789,330

1,074,042

Operating Income (Loss)

(61,121)

(256,018)

Net Income (Loss)

(113,899)

552,278

Income (Loss) per Share

Basic

$                            (0.01)

$                             0.04

Fully Diluted

$                            (0.01)

$                             0.04

Weighted Average Common Shares Outstanding

Basic

16,803,040

13,243,595

Fully Diluted

16,803,040

14,068,459

Conference Call DetailsDate and Time: Monday, May 16, 2022 at 5:00pm 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/m9wML1WElGV.

Replay: A teleconference replay of the call will be available until May 23, 2022 at (877) 344-7529 or (412) 317-0088, confirmation #5109011. A webcast replay will be available at https://app.webinar.net/m9wML1WElGV.     

About Precision Optics CorporationFounded in 1982, Precision Optics is a vertically integrated optics company primarily focused on leveraging its proprietary micro-optics and 3D 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 Lighthouse Imaging division's electronic imaging expertise and 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). Adjusted EBITDA also excludes from Net income from continuing operations the effect of Stock-based compensation, Restructuring and other acquisition related expenses and Proceeds from extinguished debt relating to the SBA Payroll Protection Plan loan.

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 StatementsThis press release contains forward-looking statements. Forward-looking statements include, but are not limited to, statements that express the Company's intentions, beliefs, expectations, strategies, predictions or any other statements related to the Company's future activities or future events or conditions. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by the Company's management. These statements are not guarantees of future performances and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in the Company's annual report on Form 10-K and in other documents that we file from time to time with the SEC. Any forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement, except as required by law.

Following are the Company's Consolidated Balance Sheets at March 31, 2022 and June 30, 2021, and Statements of Operations, for the three and nine month periods ended March 31, 2022 and 2021:

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(UNAUDITED)

March 31,2022

June 30,2021

ASSETS

Current Assets:

Cash and cash equivalents

$

831,585

$

861,650

Accounts receivable, net of allowance for doubtful accounts of $253,633 at March 31, 2022 and $251,383 at June 30, 2021

3,347,692

1,878,755

Inventories

2,965,220

1,885,395

Prepaid expenses

318,551

150,635

Total current assets

7,463,048

4,776,435

Fixed Assets:

Machinery and equipment

3,196,585

3,084,511

Leasehold improvements

812,283

792,723

Furniture and fixtures

216,810

178,640

4,225,678

4,055,874

Less: Accumulated depreciation and amortization

3,599,491

3,461,622

Net fixed assets

626,187

594,252

Operating lease right-to-use asset

140,607

61,247

Patents, net

212,952

141,702

Goodwill

8,824,210

687,664

TOTAL ASSETS

$

17,267,004

$

6,261,300

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Current portion of capital lease obligation

$

40,102

$

38,347

Current maturities of long-term debt

367,714

Current portion of acquisition earn out liability

898,855

166,667

Accounts payable

2,538,040

1,205,149

Customer advances

1,018,275

450,084

Accrued compensation and other

862,496

589,616

Operating lease liability

45,405

61,247

Total current liabilities

5,770,887

2,511,110

Capital lease obligation, net of current portion

122,096

152,397

Long-term debt, net of current maturities

2,053,070

Acquisition earn out liability, net of current portion

697,408

166,666

Operating lease liability, net of current portion

95,202

Stockholders' Equity:

Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding 16,887,840 shares at March 31, 2022 and 13,282,476 at June 30, 2021

168,878

132,825

    Additional paid-in capital

56,723,154

50,464,280

    Accumulated deficit

(48,363,691)

(47,165,978)

Total stockholders' equity

8,528,341

3,431,127

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

17,267,004

$

6,261,300

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDEDMarch 31, 2022 AND 2021(UNAUDITED)

Three MonthsEnded March 31,

Nine MonthsEnded March 31,

2022

2021

2022

2021

Revenues

$

4,651,352

$

2,458,290

$

10,884,737

$

8,001,641

Cost of goods sold

2,923,143

1,640,266

7,397,914

5,353,999

Gross profit

1,728,209

818,024

3,486,823

2,647,642

Research and development expenses, net

214,898

146,063

433,248

443,609

Selling, general and administrative expenses

1,574,432

927,979

3,974,824

2,671,176

Business acquisition expenses

172,174

Total operating expenses

1,789,330

1,074,042

4,580,246

3,114,785

Operating loss

(61,121)

(256,018)

(1,093,423)

(467,143)

Other income (expense)

  Interest expense

(52,778)

(666)

(104,290)

(2,202)

  Gain on forgiveness of bank note

808,962

808,962

Net income (loss)

$

(113,899)

$

552,278

$

(1,197,713)

$

339,617

Income (loss) per share:

Basic

$

(0.01)

$

0.04

$

(0.08)

$

0.03

Fully diluted

$

(0.01)

$

0.04

$

(0.08)

$

0.02

Weighted average common shares outstanding:

Basic

16,803,040

13,243,595

15,545,869

13,208,805

Fully diluted

16,803,040

14,068,459

15,545,869

13,841,700

PRECISION OPTICS CORPORATION, INC AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA

Three Months Ended March 31

2022

2021

Net income from Continuing operations (GAAP)

$               (113,899)

$                    552,278

Stock Based Compensation

231,116

86,027

Depreciation & Amortization

48,198

33,779

Interest Expense

52,778

666

Proceeds from Extinguished Debt

(808,962)

Adjusted EBITDA (non-GAAP)

$                  218,193

$                 (136,212)

SOURCE Precision Optics Corporation

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