Precision Optics Corporation Inc (POCI) 2023 Q3 法說會逐字稿

Good afternoon, everyone, and welcome to the Precision Optics reports third quarter fiscal year 2023 financial results conference call. (Operator Instructions) Please also note today's event is being recorded. At this time, I would like to turn the floor over to Robert Blum with Lytham Partners. Sir, please go ahead.

大家下午好，歡迎參加精密光學報告 2023 財年第三季度財務業績電話會議。 （操作員說明）另請注意今天的活動正在錄製中。現在，我想將發言權交給 Lytham Partners 的 Robert Blum。先生，請繼續。

All right. Thank you very much. And as the operator indicated, thank you for joining us today to discuss Precision Optics' third quarter fiscal year 2023 financial results for the period ended March 31, 2023.

好的。非常感謝。正如該運營商所表示的，感謝您今天加入我們討論 Precision Optics 截至 2023 年 3 月 31 日的 2023 財年第三季度財務業績。

A couple of notes here. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. Today's conference call is also being webcast with replay capabilities available both through the webcast as well as through dial-in instructions. The details of both were included in today's press release.

這裡有一些註釋。在今天準備好的發言結束後，我們將開始問答環節。今天的電話會議也採用網絡廣播，並可通過網絡廣播和撥入指令進行重播。兩者的詳細信息均包含在今天的新聞稿中。

Also, before we begin with prepared remarks, we submit for the record the following statements. Statements made by the management team of Precision Optics during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

此外，在我們開始準備好的評論之前，我們提交以下聲明以供記錄。 Precision Optics 管理團隊在本次電話會議期間發表的聲明可能包含 1933 年證券法修訂案第 27A 條和 1934 年證券交易法修訂案第 21E 條含義內的前瞻性陳述，以及此類前瞻性陳述是根據1995 年《私人證券訴訟改革法案》的安全港條款做出的。

Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually, or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in our filings with the Securities and Exchange Commission.

前瞻性陳述描述了未來的期望、計劃、結果或戰略，通常前面有“可能”、“未來”、“計劃”或“計劃”、“將”或“應該”、“預期”、“預期”、 “草案”、“最終”或“預測”等詞語。請聽眾注意，此類陳述受到多種風險和不確定性的影響，可能導致未來情況、事件或結果與前瞻性陳述中的預測存在重大差異，包括實際結果可能與預測存在重大差異的風險由於我們向美國證券交易委員會提交的文件中發現的各種因素和其他風險，前瞻性陳述中出現了上述情況。

All forward-looking statements contained during this conference call speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. The company does not undertake any obligation to publicly update any forward-looking statements whether as the result of the receipt of new information, the occurrence of future events or otherwise.

本次電話會議期間包含的所有前瞻性陳述僅代表截至發布之日的情況，並且基於管理層截至該日期的假設和估計。公司不承擔公開更新任何前瞻性陳述的義務，無論是由於收到新信息、未來事件的發生還是其他原因。

With that said, let me turn the call over to Dr. Joe Forkey, Chief Executive Officer, Precision Optics. Joe, please proceed.

話雖如此，讓我將電話轉給 Precision Optics 首席執行官 Joe Forkey 博士。喬，請繼續。

Thank you, Robert, and thank you all for joining our call today to discuss our third quarter fiscal year 2023 financial results. On the whole, I'm pleased with the continued progress made during the quarter with revenue up 9% compared to the same quarter a year ago as we began our ramped up production for a number of programs in the last 12 months.

謝謝羅伯特，也感謝大家今天參加我們的電話會議，討論我們 2023 財年第三季度的財務業績。總體而言，我對本季度取得的持續進展感到滿意，隨著我們在過去 12 個月內開始提高多個項目的產量，收入比去年同期增長了 9%。

Looking specifically at our production revenue, we were up 17% compared to the same quarter a year ago and up 2% sequentially. This is a new all-time record for production revenue. This increase has been driven by the maturing of a number of programs as they have moved from the development pipeline to production, as well as increases in existing production programs as they gain traction in their markets.

具體來看我們的生產收入，與去年同期相比增長了 17%，比上一季度增長了 2%。這是製作收入的新紀錄。這一增長是由許多項目的成熟（因為它們已從開發渠道轉向生產）以及現有生產項目在市場上獲得吸引力而增加所推動的。

With this kind of organic growth, combined with the increase in company size from our two recent acquisitions, it has become clear that to continue to operate effectively, we needed to enhance our executive management team. I'm really pleased that we were able to recruit Mahesh Lawande to join POC in the newly formed role of Chief Operating Officer. Mahesh has a really impressive resonate, which is filled with experience ideally suited to helping us drive development, speed, production volume, acquisition integration, and overall, operational efficiency as we move forward.

通過這種有機增長，再加上我們最近兩次收購而擴大的公司規模，很明顯，為了繼續有效運營，我們需要增強我們的執行管理團隊。我真的很高興我們能夠招募 Mahesh Lawande 加入 POC，擔任新成立的首席運營官一職。 Mahesh 有著令人印象深刻的共鳴，他擁有豐富的經驗，非常適合幫助我們在前進過程中推動開發、速度、產量、收購整合以及整體運營效率。

Bringing on Mahesh is an indication of our recognition that we have reached the stage as a company where we need to optimize our business model and drive an inherent level of profitability and consistency. We have also initiated the recruitment process for a permanent Chief Financial Officer, and that process is moving along quickly.

引入 Mahesh 表明我們認識到，作為一家公司，我們已經達到了需要優化業務模式並提高固有盈利水平和一致性的階段。我們還啟動了永久首席財務官的招聘流程，並且該流程進展迅速。

Our enhanced business model where we apply our deep technical knowledge to support a customer from the early design phase all the way through mass manufacture continues to show great signs of success. Not only does this model leverage our capabilities within micro-optics, 3D endoscopy and digital imaging to bring new and innovative products to the market. It also creates long-term customer relationships where our technology becomes an integral part of these products, and we become a critical supplier to our customers. So as they grow, we grow with them.

我們增強的業務模式繼續顯示出巨大的成功跡象，即我們應用深厚的技術知識從早期設計階段一直到大規模製造為客戶提供支持。該模型不僅利用我們在微光學、3D 內窺鏡和數字成像方面的能力，將新的創新產品推向市場。它還建立了長期的客戶關係，使我們的技術成為這些​​產品不可或缺的一部分，並且我們成為客戶的關鍵供應商。因此，隨著他們的成長，我們也與他們一起成長。

We are pleased to have another quarter with increasing production revenue since this is ultimately the driver of topline growth. Equally important, however, is the size of our development pipeline, which is the source of future production programs; and therefore, the best indicator of long-term growth potential.

我們很高興又一個季度生產收入有所增加，因為這最終是收入增長的驅動力。然而，同樣重要的是我們的開發渠道的規模，這是未來生產計劃的來源；因此，這是長期增長潛力的最佳指標。

Our product development pipeline is as large as it has ever been. In April, we announced the addition of another major development program to our portfolio, and we are now in discussions with customers pretty much continuously about other new significant programs. Whereas in years past, our largest development programs ran in the hundreds of thousands of dollars, you can see from the recent announcements, we are consistently seeing programs now in the millions of dollars.

我們的產品開發渠道與以往一樣龐大。四月份，我們宣佈在我們的產品組合中增加另一個主要開發項目，現在我們正在與客戶持續討論其他新的重要項目。在過去的幾年裡，我們最大的開發項目耗資數十萬美元，從最近的公告中可以看出，我們現在看到的項目一直在數百萬美元。

This is due in large part to our expanded capabilities that allow us to develop a more complete product that is higher on the value chain. These new programs will backfill the projects that recently transitioned to production for that are currently in our so-called transfer phase, which is the development phase between finalizing product design and beginning long-term production.

這在很大程度上歸功於我們能力的擴展，使我們能夠開發出價值鏈更高的更完整的產品。這些新計劃將回填最近過渡到生產的項目，因為這些項目目前處於我們所謂的轉移階段，即完成產品設計和開始長期生產之間的開發階段。

Today, we have four programs in transfer phase with production starts expected in the next three to 12 months. The exact timing of these production starts is difficult to predict, but we expect them to continue our recent trend of overall revenue growth. This gives us great optimism for the future.

目前，我們有四個項目處於轉移階段，預計將在未來 3 至 12 個月內開始生產。這些生產開始的確切時間很難預測，但我們預計它們將延續我們近期整體收入增長的趨勢。這讓我們對未來充滿樂觀。

Recognizing that the engineering work we do is the core competency that allows us to attract customers, develop new technology, design and build next-generation products, and ultimately, drive production revenue, we made the decision during the third quarter to continue development on a few programs that had run over budget and to share the excess costs with our customers. We did this both to support our long-term relationships with these customers, but also to protect technologies that we believe will be useful for future projects and will generally support our overall competitive position in the market.

認識到我們所做的工程工作是我們吸引客戶、開發新技術、設計和製造下一代產品並最終推動生產收入的核心競爭力，我們在第三季度決定繼續開發很少有項目超出預算，並與我們的客戶分擔超額成本。我們這樣做既是為了支持我們與這些客戶的長期關係，也是為了保護我們相信對未來項目有用並總體上支持我們在市場中的整體競爭地位的技術。

The cost overruns that we absorbed were caused by an underestimation of the amount of work that would be required to complete certain tasks during the development of these products. While it is always difficult to predict with certainty how much time will be required to invent new products and technologies, the issues we experienced in the third quarter were compounded by the process inefficiencies associated with having multiple POC sites working on the same projects.

我們吸收的成本超支是由於低估了這些產品開發過程中完成某些任務所需的工作量造成的。雖然總是很難準確預測發明新產品和技術需要多少時間，但我們在第三季度遇到的問題因多個 POC 站點從事同一項目而導致的流程效率低下而變得更加複雜。

We have been working over the last few quarters to update our tools and procedures as we integrate our recent acquisitions. Driving completion of this process improvement is a clear near-term priority for Mahesh, our new COO.

在過去的幾個季度中，我們一直在努力更新我們的工具和程序，以整合我們最近的收購。對於我們的新任首席運營官 Mahesh 來說，推動完成這一流程改進顯然是近期的首要任務。

The cost overruns totaled approximately $200,000 during the third quarter, which is equivalent to approximately $300,000 in engineering revenue we could have charged to customers. Excluding the impact of these costs, the third quarter would have looked very similar to the first and second quarters on a revenue, gross profit, and adjusted EBITDA basis, excluding the $600,000 of revenue associated with our licensing agreements in the second quarter.

第三季度的成本超支總計約 200,000 美元，相當於我們本可以向客戶收取的工程收入約 300,000 美元。排除這些成本的影響，第三季度的收入、毛利潤和調整後的 EBITDA 基礎上與第一季度和第二季度非常相似，不包括與第二季度許可協議相關的 600,000 美元收入。

As we've talked about on previous calls, we are focused this year on both the topline and bottom-line growth. We still expect a solid 20% or more increase in topline revenue for the year. And while the bottom line will show improvement, we recognize there are still opportunities to further increase profitability.

正如我們在之前的電話會議中談到的那樣，我們今年的重點是營收和利潤的增長。我們仍然預計今年的總收入將穩定增長 20% 或更多。雖然利潤將有所改善，但我們認識到仍有機會進一步提高盈利能力。

As a company whose revenue has grown by multiples over the last several years, we recognize the need to demonstrate a level of operating profitability that supports additional investment in our capacity and capabilities. In this fiscal year, we made improvements in our gross margins, but we require a level of operational maturity to be more profitable, more consistently. I believe we have talented people, new, and existing within POC capable of delivering this goal.

作為一家在過去幾年中收入成倍增長的公司，我們認識到需要展示一定的運營盈利水平，以支持對我們的產能和能力進行額外投資。在本財年，我們的毛利率有所提高，但我們需要一定程度的運營成熟度才能實現更高的盈利、更穩定的盈利。我相信 POC 內部有才華橫溢的新員工和現有員工能夠實現這一目標。

All in all with production revenue at record levels, the development pipeline as strong as it has ever been. An updated executive team in place and strong interest from the marketplace, we believe we are well positioned to finish the fiscal year on a strong note and to move into fiscal 2024 with a great opportunity for ongoing growth in revenue and profitability.

總而言之，製作收入達到創紀錄水平，開發渠道一如既往地強勁。憑藉更新的管理團隊和市場的濃厚興趣，我們相信我們已經做好了充分準備，能夠以強勁的表現結束本財年，並在進入 2024 財年時獲得收入和盈利能力持續增長的絕佳機會。

I'd like to spend a few minutes now on some specifics. We currently have 0.5 dozen major programs contributing to production revenue, plus a large number of contributions from our Ross Optical division that supplied smaller orders to many customers.

我現在想花幾分鐘討論一些具體細節。目前，我們有 0.5 打主要項目貢獻了生產收入，再加上我們的羅斯光學部門為許多客戶提供較小訂單的大量貢獻。

Production revenue during the third quarter was $3.7 million, an increase of about $70,000 from the sequential second quarter or 2%, and up about $500,000 or 17% from the third quarter a year ago. Again, this is a new record for quarterly production revenue.

第三季度的製作收入為 370 萬美元，比第二季度增加約 7 萬美元，即 2%，比去年第三季度增加約 50 萬美元，即 17%。這再次創下了季度生產收入的新紀錄。

The key drivers during the quarter were our new defense/aerospace production program; our historic defense program, for which we received a significant follow-on order in December; our cardiac atrial fibrillation program with CardioFocus; our spinal program for a major, long-time customer we have worked with for over 10 years; and two other legacy endoscope products, one from historic POC activities and one from our Lighthouse acquisition.

本季度的主要驅動因素是我們新的國防/航空航天生產計劃；我們歷史性的國防計劃，我們在 12 月收到了一份重要的後續訂單；我們與 CardioFocus 合作的心房顫動計劃；我們為一位與我們合作超過 10 年的主要長期客戶提供脊柱項目；以及另外兩種傳統內窺鏡產品，一種來自歷史性的 POC 活動，另一種來自我們收購的 Lighthouse。

Our newer defense/aerospace program contributed revenue during the third quarter of about $425,000. This is the tail end of two production orders that we have delivered against over the past year. As we talked about last quarter, we are currently working with this customer on a next-generation redesign. This redesign will impact production during the fourth quarter, but we expect it to ramp back up in the first half of fiscal 2024. We are pleased with the overall development of this program to date and look forward to a long, profitable future with this customer.

我們較新的國防/航空航天項目在第三季度貢獻了約 425,000 美元的收入。這是我們去年交付的兩份生產訂單的尾部。正如我們上季度談到的，我們目前正在與該客戶合作進行下一代重新設計。此次重新設計將影響第四季度的生產，但我們預計產量將在 2024 財年上半年回升。我們對該計劃迄今為止的整體發展感到滿意，並期待與該客戶建立長期、盈利的未來。

Our defense program that started production prior to the pandemic slowed down dramatically during the pandemic and since has recovered is now in full swing with deliveries against the largest order we've received for this program to date. In December, we announced a $2.6 million order for this product. In the third quarter, we delivered approximately $263,000 against this order as we ramp up to a rate that we believe will be in the $0.5 million range per quarter as we work through this order and anticipated follow-on orders.

我們的國防計劃在大流行之前就開始生產，但在大流行期間急劇放緩，之後已經恢復，目前正在全面展開，交付是我們迄今為止收到的該計劃的最大訂單。 12 月，我們宣布了該產品 260 萬美元的訂單。第三季度，我們根據該訂單交付了約 263,000 美元，我們相信在處理該訂單和預期的後續訂單時，我們的交付速度將達到每季度 50 萬美元的範圍。

We also successfully executed against our $2.4 million order from a large medical device company for a spinal surgery application. We will have fourth-quarter revenue associated with this restocking order after which we expected temporary slowdown while the customer delivers product to the market. We have worked with this customer for more than 10 years and fully expect to ramp production up again in the future.

我們還成功執行了一家大型醫療器械公司 240 萬美元的脊柱手術應用訂單。我們將獲得與此補貨訂單相關的第四季度收入，之後我們預計在客戶向市場交付產品時會出現暫時放緩。我們已經與該客戶合作了 10 多年，並完全期望在未來再次提高產量。

Production programs can ebb and flow based on timing and success of the product we produce in the market. I just referred to programs that will slow or paused for various reasons such as design changes or inventory management. And currently, new programs will come online, and we see a handful of programs currently going through our transfer phase that we expect will launch into production between Q1 and Q3 of fiscal 2024.

生產計劃可能會根據我們生產的產品在市場上的時間和成功情況而變化。我剛剛提到了由於設計變更或庫存管理等各種原因會減慢或暫停的程序。目前，新項目將上線，我們看到一些項目目前正處於轉移階段，我們預計這些項目將在 2024 財年第一季度至第三季度之間投入生產。

Specifically, we are expecting initial production contracts for the single-use ophthalmic micro endoscope, laparoscope for robotic surgery, and ophthalmic scanning device, as well as the re-initiation of the otoscopy program which went on hiatus during the pandemic. This last program is one for which we already received the new production order for $2.3 million, which we announced in January of this year. There was no revenue associated with this product in the third quarter, but we expect production to ramp in the fourth quarter and beyond to a steady level of approximately $0.5 million per quarter.

具體來說，我們預計將獲得一次性眼科微型內窺鏡、機器人手術腹腔鏡和眼科掃描設備的初步生產合同，以及重新啟動在大流行期間中斷的耳鏡項目。我們已經收到了價值 230 萬美元的新生產訂單，這是我們在今年 1 月宣布的最後一個項目。第三季度沒有與該產品相關的收入，但我們預計第四季度及以後的產量將達到每季度約 50 萬美元的穩定水平。

On the whole, we expect total production revenue levels to remain steady over the next quarter or two, and expect we will exceed our goal of 20% topline growth for fiscal 2023. Based on customer expectations and timing of programs including those that may temporarily slow in those coming online, we anticipate strong quarterly growth in production as we enter the new fiscal year.

總體而言，我們預計未來一兩個季度的總生產收入水平將保持穩定，並預計我們將超過2023 財年20% 營收增長的目標。基於客戶期望和計劃的時間安排，包括那些可能暫時放緩的計劃在即將上線的產品中，我們預計隨著進入新財年，產量將出現強勁的季度增長。

Our engineering revenue during the third quarter was $1.4 million, which was down about $300,000 from the sequential second quarter and down $250,000 from last year's third quarter. The primary reason for this is the cost overruns on certain programs for which we agreed to absorb the cost instead of billing it to our customers. As we build for this work, our engineering sales would have been right in line with the levels in recent quarters.

第三季度我們的工程收入為 140 萬美元，比第二季度下降了約 30 萬美元，比去年第三季度下降了 25 萬美元。造成這種情況的主要原因是某些計劃的成本超支，我們同意承擔成本而不是向客戶收取費用。當我們為這項工作進行建設時，我們的工程銷售將與最近幾個季度的水平保持一致。

I point this out because it's important to understand that our engineering group is running at a high-utilization rate despite what appears to be a pullback in revenue in the third quarter. There is no slowdown in what our development team is doing. And in fact, we are continually looking at ways to ramp up our engineering capacity to meet the constant inflow of inquiries from new and existing customers.

我指出這一點是因為重要的是要了解我們的工程團隊正在以高利用率運行，儘管第三季度的收入似乎有所下降。我們的開發團隊的工作並沒有放緩。事實上，我們一直在尋找提高工程能力的方法，以滿足新客戶和現有客戶不斷湧入的詢問。

As we discussed last quarter, we entered into a technology licensing and royalty agreement for the new single-use ophthalmic product we have jointly been developing with our customer for the last few years. This agreement was unique for Precision Optics in many ways, providing both us and our customer with a number of benefits.

正如我們上季度討論的那樣，我們為過去幾年與客戶共同開發的新型一次性眼科產品簽訂了技術許可和特許權使用費協議。該協議在很多方面對於 Precision Optics 來說都是獨一無二的，為我們和我們的客戶帶來了許多好處。

As you may recall, we are initially producing the product in our garden facility. And the customer may, at some point, in the future, transfer production to their own or a third-party facility using tools and fixtures that we have designed and validated.

您可能還記得，我們最初是在我們的花園設施中生產該產品。客戶可能在未來的某個時候，使用我們設計和驗證的工具和固定裝置將生產轉移到他們自己的或第三方設施。

In return, they have agreed to pay us royalties for an agreed-upon period of time if and when production is moved out of a POC facility. We are, in effect, being paid a royalty not only for the IP and the product design but also for the IP and know-how in the production process. Importantly, we maintain ownership and control of these technologies and have broad leeway to use these technologies on other products.

作為回報，如果生產轉移出 POC 設施，他們同意在約定的時間內向我們支付特許權使用費。實際上，我們不僅為知識產權和產品設計支付特許權使用費，還為生產過程中的知識產權和專有技術支付特許權使用費。重要的是，我們保留對這些技術的所有權和控制權，並擁有在其他產品上使用這些技術的廣泛餘地。

As part of this agreement, we received a one-time payment of $600,000 upon execution of the agreement. This payment was recognized as revenue during the second fiscal quarter.

作為本協議的一部分，我們在協議執行後收到了一次性付款 600,000 美元。這筆付款在第二財季被確認為收入。

During the third quarter, we recognized development revenue, which is independent of future royalties of approximately $300,000 from this program. This program is one of the ones that is in transfer phase now, and we expect to begin production in Q2 or Q3 of fiscal 2024. This agreement is important because it not only paves the way for this first single-use program to launch into production, it also serves as a template for engaging with other potential customers in the single-use market, which we estimate is growing at a rate of 15% to 20% per year.

在第三季度，我們確認了開發收入，該收入獨立於該計劃未來約 300,000 美元的特許權使用費。該項目是目前處於轉移階段的項目之一，我們預計將在 2024 財年第二季度或第三季度開始生產。該協議很重要，因為它不僅為第一個一次性項目投入生產鋪平了道路，它還可以作為與一次性市場中其他潛在客戶互動的模板，我們估計該市場正以每年15% 至20% 的速度增長。

Last week, we announced a $1.5 million follow-on development order for our single-use urology program. This follow-on order was approximately twice the size of our original development order and demonstrates the quick progress we are making on this product.

上週，我們宣布了一項 150 萬美元的一次性泌尿科項目後續開發訂單。這個後續訂單的規模大約是我們最初開發訂單的兩倍，展示了我們在該產品上取得的快速進展。

It also is a great example of the programs we can attract with the expanded technical breadth we have due to the combined capabilities of both Precision Optics and Lighthouse Imaging. Between our single-use ophthalmology micro endoscope and our single-use urology program, we have made great strides to position ourselves as leaders in this rapidly growing market, which, presently, has few competitive players when it comes to the unique capabilities we provide within micro-optics and digital imaging, particularly for programs that have customer design requirements that cut across multiple engineering disciplines.

這也是我們可以通過精密光學和燈塔成像的綜合能力擴大技術廣度來吸引項目的一個很好的例子。在我們的一次性眼科微型內窺鏡和一次性泌尿科項目之間，我們取得了長足的進步，將自己定位為這個快速增長的市場的領導者，目前，就我們提供的獨特能力而言，該市場幾乎沒有競爭者微光學和數字成像，特別是對於具有跨多個工程學科的客戶設計要求的項目。

It has taken us some time to make the technological advancements to get to this point, and there will still be advancements yet to come. But I believe that we are in a great position to be a leader in this space.

我們花了一些時間才取得技術進步才達到這一點，而且未來還會有進步。但我相信我們有能力成為這個領域的領導者。

Let me comment now on some of the financial highlights of the third quarter. Revenue for the third quarter was approximately $5.0 million, which compares to $4.7 million in the same quarter a year ago, an increase of approximately 9%. Production revenue was a record of $3.7 million, while engineering revenue was $1.4 million.

現在讓我評論一下第三季度的一些財務亮點。第三季度收入約為500萬美元，較去年同期的470萬美元增長約9%。製作收入達到創紀錄的 370 萬美元，而工程收入則達到 140 萬美元。

Our gross margin was 34.4% for the third quarter compared to 37.2% in the same quarter last year. As we talked about, the impact of the last engineering revenue of about $300,000 associated with the costs we absorbed impacted gross margins by approximately 4%. Without the effect of these overruns, gross margin would have been approximately 38% during the third quarter in line with our target of 40% gross margins.

第三季度毛利率為 34.4%，而去年同期為 37.2%。正如我們所討論的，與我們吸收的成本相關的最後約 300,000 美元的工程收入影響了毛利率約 4%。如果沒有這些超支的影響，第三季度的毛利率將約為 38%，符合我們 40% 毛利率的目標。

Operating expenses in the third quarter were $2.2 million compared to approximately $1.8 million in the previous year's third quarter, and $2.0 million in the sequential second quarter. On a cash basis, excluding depreciation and amortization as well as stock-based compensation, operating expenses were approximately $1.7 million compared to approximately $1.5 million in the third quarter of last year and $1.7 million in the second quarter of this year. The year-over-year increase is mainly due to increases in sales and marketing expenses as the market has recovered from the pandemic, as well as increase of corporate costs associated with our uplisting to Nasdaq. We continue to keep our operating expenses relatively stable while still making targeted investments, particularly in sales and marketing, to continue to grow the business.

第三季度的運營費用為 220 萬美元，而去年第三季度的運營費用約為 180 萬美元，第二季度的運營費用為 200 萬美元。按現金計算，不包括折舊和攤銷以及股票薪酬，運營費用約為 170 萬美元，而去年第三季度約為 150 萬美元，今年第二季度約為 170 萬美元。同比增長主要是由於市場從疫情中復蘇導致銷售和營銷費用增加，以及我們在納斯達克上市相關的企業成本增加。我們繼續保持運營費用相對穩定，同時仍然進行有針對性的投資，特別是在銷售和營銷方面，以繼續發展業務。

Net loss during the third quarter was $398,000 compared to a net loss of $114,000 in the third quarter of last year. Again, the biggest delta here is the engineering cost absorption, along with non-cash, stock-based compensation expenses.

第三季度淨虧損為 398,000 美元，而去年第三季度淨虧損為 114,000 美元。同樣，這裡最大的增量是工程成本吸收，以及非現金、基於股票的補償費用。

During the third quarter, we had a one-time pickup in other income of $143,000. This is related to a negotiated modification of our earn-out agreement with the sellers of Lighthouse Imaging, whereby we reduced the second-year maximum earn-out potential from $750,000 to $600,000 along with the modification of the earn-out targets. This modification reflects our desire to maintain the incentive for Lighthouse to push development programs through to production while also recognizing that many of these programs have taken longer to get to production than Lighthouse anticipated.

第三季度，我們的其他收入一次性增加了 143,000 美元。這與我們與 Lighthouse Imaging 賣家協商修改的盈利協議有關，根據該協議，我們將第二年的最大盈利潛力從 750,000 美元減少到 600,000 美元，同時修改了盈利目標。這一修改反映了我們希望保持對 Lighthouse 的激勵，將開發項目推向生產，同時也認識到其中許多項目的生產時間比 Lighthouse 預期的要長。

The earn-out structure was originally included in the acquisition transaction in large part to take into account the difficulty in predicting the time it takes to develop new medical devices. We remain optimistic that many of the programs brought by Lighthouse will progress into production, but they are clearly taking longer than what's forecasted.

最初將盈利結構納入收購交易中，很大程度上是考慮到難以預測開發新醫療設備所需的時間。我們仍然樂觀地認為 Lighthouse 帶來的許多項目將投入生產，但它們顯然需要比預測更長的時間。

It's important to reiterate here that the main purpose of the acquisition was not to acquire a book of business with specific customers, but to combine the two technical teams to create a combined company that is better able to compete in the medical device marketplace, particularly in the segment of the market that requires both optical and electronic technical expertise, a subset of which is the single-use market. As I mentioned on previous calls, there is no doubt that this goal of the acquisition has been completely successful and we continue to attract new business that neither of the companies could have competed for independent.

在此需要重申的是，此次收購的主要目的不是獲得特定客戶的業務記錄，而是將兩個技術團隊合併起來，創建一家能夠更好地在醫療器械市場競爭的合併公司，特別是在醫療器械市場。需要光學和電子技術專業知識的市場部分，其中一部分是一次性市場。正如我在之前的電話會議中提到的，毫無疑問，這一收購目標已經完全成功，我們將繼續吸引兩家公司都無法獨立競爭的新業務。

Adjusted EBITDA which excludes stock-based compensation, interest expense, depreciation, amortization, other income, and acquisition expenses was positive $9,000 for Q3 compared to $218,000 for the third quarter a year ago. Once again, the delta is largely the engineering cost absorption.

第三季度調整後 EBITDA（不包括股票薪酬、利息費用、折舊、攤銷、其他收入和收購費用）為正 9,000 美元，而去年同期為 218,000 美元。再次強調，增量主要是工程成本的吸收。

Our cash balance at the end of the third quarter was slightly over $600,000, which was up a couple of hundred thousand dollars from the end of the second quarter and about flat relative to the start of the fiscal year last June. Accounts receivable were down compared to the end of the second quarter as we have been successful in collecting some, although not all, of the overdue receivables we discussed last quarter. We will continue to manage cash aggressively as we accommodate the growth and the company's working capital needs.

第三季度末我們的現金餘額略高於 60 萬美元，比第二季度末增加了幾十萬美元，與去年 6 月財年開始時基本持平。與第二季度末相比，應收賬款有所下降，因為我們成功收回了上季度討論的部分（儘管不是全部）逾期應收賬款。我們將繼續積極管理現金，以滿足增長和公司的營運資金需求。

As we look to the fourth quarter of fiscal 2023 and beyond, we expect our run rate of overall production revenue to be steady or slightly higher compared to Q3 as some projects slow down or stop, but new projects come online. We expect Q4 to look more like Q3 as to the impact of the cost overruns we discussed. Overall, we expect solid revenue growth to exceed our target of 20% for this fiscal year.

展望 2023 財年第四季度及以後，我們預計整體生產收入運行率將穩定或略高於第三季度，因為一些項目放緩或停止，但新項目上線。就我們討論的成本超支的影響而言，我們預計第四季度看起來更像第三季度。總體而言，我們預計本財年收入穩健增長將超過 20% 的目標。

As we look into fiscal 2024, based on the program traction we have and new programs coming into development, we expect to continue to aggressively grow revenue while improving our total business model to increase operating margins. We will continue to invest in sales and delivery capacity to take advantage of opportunities we see in the market.

展望 2024 財年，根據我們現有的計劃牽引力和正在開發的新計劃，我們預計將繼續大幅增長收入，同時改進我們的總體業務模式，以提高營業利潤。我們將繼續投資於銷售和交付能力，以利用我們在市場上看到的機會。

And thank you all for your continued support of Precision Optics, and I'd now be happy to take any questions.

感謝大家對 Precision Optics 的持續支持，我現在很樂意回答任何問題。

(Operator Instructions)

（操作員說明）

Hey, Joe, this is Robert Blum here. While we wait to see if there's any questions that come in, a couple of topics that I thought maybe you can expand on here for us. First, you've talked a lot about single use here. Maybe talk a little bit about the mix of single use versus traditional medical devices versus maybe some of the defense opportunities as a whole.

嘿，喬，我是羅伯特·布魯姆。當我們等待是否有任何問題出現時，我認為您可以在這里為我們擴展幾個主題。首先，您在這裡談論了很多關於一次性使用的問題。也許可以談談一次性醫療設備與傳統醫療設備的組合，或者整體上的一些防禦機會。

Yeah, sure, Robert. So it's true, a lot of what I talked about in the remarks today had to do with single use. This is the part of the minimally invasive surgical market that's growing quite dramatically because of the innovations in technology that now make single-use imaging devices feasible, whereas they weren't feasible even five years ago or seven years ago.

是的，當然，羅伯特。確實如此，我今天在發言中談到的很多內容都與一次性使用有關。這是微創手術市場的一部分，由於技術的創新，現在使一次性成像設備變得可行，而它們甚至在五年前或七年前都是不可行的，因此增長得相當快。

So there's a lot of excitement around single use. That part of the market is growing 2 to 3 times faster than the reusable part of the market. But it is true that many of our opportunities still exist in the reusable space. And in fact, three of the four programs that I talked about that are in our transfer phase right now are in the reusable space.

因此，一次性使用有很多令人興奮的地方。這部分市場的增長速度是可重複使用部分市場的 2 到 3 倍。但確實，我們的許多機會仍然存在於可重複使用的空間中。事實上，我談到的目前處於傳輸階段的四個程序中的三個都位於可重用空間中。

So we still see that as a significant part of the market where we have significant opportunities. I think there's a little more excitement over the single-use part of the market because it's a new technology, and we have a lot of customers coming to us.

因此，我們仍然認為這是市場的重要組成部分，我們擁有巨大的機會。我認為市場上的一次性部分更令人興奮，因為它是一項新技術，而且我們有很多客戶來找我們。

But basically, what happens is when a new customer comes to us, they always want to know if we can make the product single use. And then if we can't make it single use, they very often will want to go to a reusable version. And the differentiator there, of course, is the complexity of the device, and whether or not we can hit the financial requirements for a single-use product.

但基本上，當新客戶來到我們這裡時，他們總是想知道我們是否可以使產品一次性使用。如果我們不能使其一次性使用，他們通常會想要使用可重複使用的版本。當然，其中的區別在於設備的複雜性，以及我們是否能夠滿足一次性產品的財務要求。

It's also important, I think, for me to point out that we are still pretty heavily involved in expanding our presence in the defense/aerospace market. We've talked a lot about a couple of new programs, the one program that's come back online.

我認為，對我來說，指出我們仍然大力參與擴大我們在國防/航空航天市場的業務也很重要。我們已經談論了很多新程序，其中一個程序已重新上線。

The defense/aerospace opportunities are really quite significant for us. And because it's a new market for us, we've been in it over the years, but it's a new focus for us. I think there are lots of opportunities for that part of our business to grow relatively quickly.

國防/航空航天機會對我們來說確實非常重要。因為這對我們來說是一個新市場，我們多年來一直在其中，但它對我們來說是一個新的焦點。我認為我們的這部分業務有很多機會可以相對快速地增長。

Our efforts to start working more deliberately in the defense/aerospace market is timed quite well with some movement that we see, or with the change in attitude that we see in that marketplace, with a very strong interest and re-onshoring almost everything that's done for the defense/aerospace market. Now it's obviously true that a lot of that market already had great restrictions on exports. But given the current geopolitical environment, the requirements there are even stronger than they have been in the past. And so that also is contributing to the great opportunities that we see in defense/aerospace.

我們在國防/航空航天市場上開始更謹慎地開展工作的時間恰逢我們看到的一些動向，或者我們在該市場看到的態度變化，我們懷著非常強烈的興趣，並將幾乎所有所做的事情重新外包適用於國防/航空航天市場。現在，很明顯，許多市場已經對出口施加了很大的限制。但考慮到當前的地緣政治環境，那裡的要求比過去更加強烈。因此，這也為我們在國防/航空航天領域看到的巨大機遇做出了貢獻。

So all three of those areas, I think, are primed for us to expand. And I think just because we're starting from smaller amounts of revenue today in the single-use and in the defense/aerospace parts of our business, those will grow more quickly on a percentage basis. But by -- really all three of those markets, single-use medical device, reusable medical device, and defense/aerospace are all prime markets for us to find significant growth.

因此，我認為所有這三個領域都為我們的擴張做好了準備。我認為，僅僅因為我們今天在一次性使用和國防/航空航天業務方面的收入較少，這些收入將以百分比為基礎增長得更快。但事實上，所有這三個市場，一次性醫療設備、可重複使用醫療設備和國防/航空航天都是我們尋求顯著增長的主要市場。

That's perfect. Thank you for that color there. Maybe one more question before operator turn it back over.

那很完美。謝謝你那裡的顏色。在操作員將其轉回之前，也許還有一個問題。

You've talked in the past about the three original programs for the production, the defense, the otoscopy, the cardiac sort of had some slowdowns during the pandemic. It looks like all three are sort of have come back with new production orders. Are we done with the impact of the pandemic? Or are there still some lingering effects, specifically as it relates to your business, of course?

您過去曾談到製作、防禦、耳鏡、心臟等三個原始項目在大流行期間出現了一些放緩。看起來這三個人都帶著新的生產訂單回來了。我們已經擺脫了大流行的影響了嗎？或者是否仍然存在一些揮之不去的影響，特別是與您的業務相關的影響？

Yeah, it's an interesting question. The acute impacts -- the acute effects of the pandemic, I think, are pretty clearly over some. It's interesting that there do seem to be some ongoing residual effects. So everybody talked about the supply chain impact six months ago or a year ago, particularly with the electronics parts that we use.

是的，這是一個有趣的問題。我認為，這種流行病的嚴重影響對某些人來說已經非常明顯了。有趣的是，似乎確實存在一些持續的殘餘影響。因此，每個人在六個月前或一年前都談論了供應鏈的影響，特別是我們使用的電子零件。

I think by and large, a lot of people including us have designed our way out of the supply chain issues associated with electronic components. And as you pointed out, Robert, all three of the programs that were delayed because of the pandemic now are coming back online. The third of those, was our otoscopy program that I mentioned in the prepared remarks, is just going online in this quarter, Q4.

我認為總的來說，包括我們在內的很多人都已經設計出解決與電子元件相關的供應鏈問題的方法。正如羅伯特您所指出的，由於大流行而推遲的所有三個項目現在都已恢復上線。其中第三個是我在準備好的發言中提到的我們的耳鏡檢查計劃，該計劃將於本季度第四季度上線。

So we'll start to see that revenue from that product ramping back up to about $0.5 million per quarter. That when I think took the longest of any of the programs, we're working on to come back online.

因此，我們將開始看到該產品的收入每季度回升至約 50 萬美元。當我認為所有計劃中花費時間最長的時候，我們正在努力恢復上線。

The interesting thing is that there are still some residual. I would call it sort of oscillations to the inventory buildup that happened. And so we are seeing a little bit a couple of cases where our customers came back and said, build this whole bunch of inventory because the pandemic's over. And now they find they have a little bit of excess, and now they're going to sell that off a little bit and then come back. So there's a little bit of this oscillation.

有趣的是，還有一些殘留。我將其稱為庫存積累的振盪。因此，我們看到了一些案例，我們的客戶回來說，建立這整堆庫存，因為大流行已經結束了。現在他們發現他們有一點多餘的東西，現在他們要把它賣掉一點然後再回來。所以有一點這種振盪。

The spinal surgery product is a good example of that where we've been filling a pretty significant order for the last year. Our customers told us they're going to take a little pause while they burn down some of their inventory, and then they'll come back. So there's a little bit of that that's still happening out there. But by and large, I would say that the impacts of the pandemic are pretty much over.

脊柱手術產品就是一個很好的例子，我們去年已經完成了相當大的訂單。我們的客戶告訴我們，他們會在燒掉一些庫存時暫停一下，然後就會回來。所以有些事情仍然在發生。但總的來說，我想說，大流行的影響已經基本結束。

All right. Perfect, Joe. Thanks for that. Jamie, I'll turn it over to you in the event that there are any additional questions.

好的。完美，喬。感謝那。傑米，如果還有任何其他問題，我會將其轉交給您。

(Operator Instructions) And at this time, I'm showing no questions. I'd like to turn the floor back over to management for any closing remarks.

（操作員說明）此時，我沒有提出任何問題。我想將發言權交還給管理層，讓他們發表結束語。

Thank you, Jamie, and thank you all for joining us today on the call. I look forward to speaking to all of you again soon. Thanks and have a good night.

謝謝杰米，也感謝大家今天加入我們的電話會議。我期待很快再次與大家交談。謝謝，祝您有個美好的夜晚。

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

女士們先生們，我們今天的電話會議和演示就到此結束。我們感謝您的加入。您現在可以斷開線路。