Question · Q4 2025
Chris Vachowski inquired about Precision Optics Corporation's conservative revenue guidance for fiscal year 2026, especially given expected increases from major customers and engineering revenues. He also asked about the company's ability to charge capital costs to customers, the renegotiated pricing and tariff reimbursements for the medical program, the current status of engineering resource allocation, and the potential impact of past engineering resource deployment on future production orders.
Answer
Joseph Forkey, CEO & President, Precision Optics Corporation, explained that the guidance is slightly conservative due to an expected $800,000 decrease in micro-optics lab revenue from a timing-related order and a shift from lower-margin tooling/fixturing revenue to higher-margin production revenue. He confirmed the ability to charge capital costs with a small, low-risk markup. For the medical program, he detailed that the customer agreed to higher near-term pricing to cover startup costs, with a negotiated step-down schedule to original margins, and verbal agreements are in place for tariff reimbursements. He clarified that while some engineering is still needed for product redesigns to improve yields, the need for engineers on the production line has substantially decreased due to new hires and process improvements, freeing up resources for new product development. He also noted that the engineering pipeline is robust, with several programs nearing production and new programs being onboarded, mitigating concerns about past resource allocation impacting future production orders.