Precision Optics Stock Earnings Reports

Precision Optics reported record Q1 fiscal 2026 revenue of $6.7M (up 46% YoY excluding tariff pass-throughs). Growth was driven by two large manufacturing programs: an aerospace systems program (Q1 net of tariffs ~$2.5M; backlog >$9M; recent line expansion to boost throughput ~50%) and a single-use cystoscope program (Q1 net of tariffs ~$1.5M; production issues from H2 FY25 largely resolved; ramping to hundreds of units/week). Gross margin for the aerospace program is now in the mid-30% range after customers agreed to reimburse tariffs on a pass-through basis; consolidated gross margin was 14.4% (down YoY) due to under-absorption in micro-optics and product development as several programs moved from development to production. Product development revenue was weak in Q1 ($656k) but management expects a recovery (50–75% QoQ increase in Q2) and announced two new development contracts (~$1.4M total) — one augmented-reality subassembly (defense) and a high-resolution borescope (jet engine inspection). Management reaffirmed prior full-year guidance: fiscal 2026 revenue > $25M and roughly $0.5M positive adjusted EBITDA. Operating expenses were roughly flat YoY; Q1 net loss was $1.6M and adjusted EBITDA was negative $1.2M. Cash was ~$1.4M and debt ~$1.7M; company is negotiating to expand debt availability to fund growth. Management emphasized operational growing pains from scaling production but expects margin improvement through yield gains, pricing adjustments, tariff pass-throughs, fixed-cost absorption from higher volumes, process improvements, and potential future automation once volumes justify it. Overall thesis: transitioning to a higher-volume, more predictable manufacturing profile with a recovering product development pipeline, which should drive improving margins and profitability through FY26.