Precision Optics Corporation reported first‑quarter fiscal 2026 revenue of $6.7 million, a 59% increase from the $4.2 million earned in the same period a year earlier. The jump was driven by production deliveries under multi‑year agreements with a leading aerospace customer ($2.5 million) and a surgical robotics firm ($1.6 million). These two segments accounted for roughly 70% of total revenue, underscoring the company’s focus on high‑margin, high‑growth markets.
Gross margin fell to 14.2% from 26.6% in the prior year, a decline largely attributable to lower revenue in legacy segments and under‑utilization of engineering resources. The uneven revenue mix—heavy reliance on the aerospace and surgical robotics contracts—meant that the company could not fully offset the higher cost of goods sold associated with its more complex, low‑volume defense projects. Management noted that margin compression is expected to ease as production efficiencies are realized and new development agreements come online.
In addition to the revenue‑boosting contracts, Precision Optics secured two large development orders: a $700,000 agreement for augmented‑reality sub‑assemblies and a $678,000 contract for a high‑resolution borescope. These deals expand the company’s footprint in defense and aerospace and add to a backlog that now exceeds $9 million, up from $6 million reported in the prior quarter. The backlog growth reflects the company’s ability to lock in future revenue while it ramps up production capacity.
The company reiterated its fiscal 2026 outlook, projecting revenue above $25 million and positive adjusted EBITDA of approximately $0.5 million. CEO Dr. Joe Forkey emphasized that the company is “operating at a new level” and that fiscal 2026 will be a year of transition with “substantially higher revenue leading to increasingly profitable operations.” He also highlighted the upcoming line expansion that will allow a 50% increase in aerospace program throughput, positioning the company to meet the backlog without compromising margins.
Overall, Precision Optics’ record revenue signals strong demand in its core aerospace and surgical robotics markets, while margin compression highlights the short‑term cost pressures of scaling new, complex contracts. The company’s guidance and backlog growth suggest confidence in continued revenue momentum, but investors will likely monitor how quickly the company can convert the high‑margin contracts into sustainable profitability as it navigates the transition from legacy to defense‑focused production.
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