Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
Please consider a small donation if you think this website provides you with relevant information
| Statement |
|---|
| With a number of production orders in hand that support sequential revenue growth in the back half of fiscal 2024, coupled with continued strength in our engineering pipeline, we remain optimistic for a strong finish to fiscal 2024, and look forward to ongoing growth in future years |
| As we have discussed in earlier calls, single-use endoscopes have many benefits over traditional reusable endoscopes, including ease of inventory control by the hospital; guarantee of brand new image quality for the surgeon in every procedure; and importantly, the virtual elimination of the possibility of cross-contamination from one patient to another |
| Compared to the first quarter, revenues grew by $500,000 due primarily to increasing engineering revenues, improvements in order volumes at Ross, and the production start of the new defense aerospace program that Joe mentioned earlier |
| We believe these higher revenues, along with improved margins, will result in higher profitability and positive adjusted EBITDA |
| Our experience in the marketplace confirms our belief that POC's unique technologies are ideally suited to segments of the medical device market that are experiencing high growth rates |
| First, our engineering pipeline is as large and robust as it has ever been, with record engineering revenue in the second quarter |
| Each of these segments is expanding at double-digit annual growth rates, making them ideal targets for future POC sales and marketing efforts |
| Overall, we continue to anticipate strong engineering revenues and growing production revenues for the remainder of the fiscal year |
| As we have pointed out before, our strong engineering pipeline is a good indicator of potential future production revenue |
| These anticipated increases in revenue, combined with the expected improvement in gross margin, supports our optimism for positive EBITDA in the second half of fiscal 2024 and beyond |
| To expand further, while the overall growth rate of traditional optical targeting systems is in the 5% to 10% range, POC's capabilities are better suited to segments that are still developing, and that rely on next-generation technology |
| With growth in revenue will come increase utilization of our manufacturing capacity, and thus improvement in gross margins and the bottom line |
| The segments of the medical device market that we operate in are growing quickly, and we expect to benefit from this surge in new devices that are coming to the market in the coming years |
| By continuing to support and expand our sales resources, and given the high quality and quantity of potential new customers we have today, we are confident we will have plenty of opportunity to continue to grow our engineering pipeline even as programs move to production |
| This is in line with our expectations that as we continue to expand our engineering pipeline, and as new programs move from engineering to production, we will see higher overall revenues and profitability in the second half of the year, with record quarterly run rates expected by the end of the fiscal year |
| The experience our sales and engineering team that have gained through the support of these two single-use programs, combined with the strong and accelerating market growth, gives us confidence that single use products will continue to be a major source of ongoing growth for many years to come |
| Since the advances in CMOS sensors and micro-optics allow more innovation in these areas today, we believe that the overall growth rate of these segments of the market is considerably higher than that of endoscopy in general, and solidly in the double digits |
| Therefore, we have good reason for optimism that this product may drive substantial growth for us in coming years |
| So this huge growth in engineering -- this large growth in the engineering revenue, it's important for even larger revenues in the production side |
| So the direct labor for the assembly work and production work, we're pretty confident we can bring in when and as we need them for the growth that we see |
| This is consistent with overall market trends, which indicate single-use endoscopy is growing at annual growth rates between 15% and 20% -- significantly higher than that of the endoscopy market in general |
| The combined capabilities of POC in the areas of optical design, particularly at small and micro sizes required for endoscopes, along with the electrical engineering capability required to design and manufacture digital imaging systems, positions us well to compete in the part of the medical device market that requires next-generation CMOS-based endoscopes |
| As we look to the third quarter of fiscal 2024, we expect to see sequential quarterly revenue growth similar to the growth from the first to second quarter, due to key production deliveries against existing customer orders, and a continuation of strong engineering revenue |
| Our historic defense aerospace program also contributed to second quarter revenue, and is expected to increase in revenue for the third quarter |
| Engineering revenue for the quarter was $2.3 million, up 33% compared to the same quarter a year ago, and up 19% sequentially |
| An integrated system will allow us to collect better information, more quickly and productively so we can run the business more efficiently, and it's really going to help us to scale with our existing headcount |
| Engineering revenue was a record $2.3 million compared to $1.7 million last year, an increase of 33% |
| POC's technology is also well-suited for complex imaging products required for robotic systems that need custom complex optical, electronic, and mechanical interfaces, as well as the use of CMOS imagers embedded in the endoscope |
| With our increasing understanding of the defense aerospace market, we believe there are more opportunities in that industry as well |
| While total second quarter revenue was down year-over-year, we grew revenue sequentially from Q1 to Q2, and expect to see continued growth in Q3 in Q4 of this year |
| Statement |
|---|
| Finally, gross margin was negatively impacted by startup inefficiencies associated with programs transitioning to, or restarting production during the second quarter |
| However, revenue from optical components was down $600,000 for the quarter compared to the same quarter last year, primarily due to reduced demand at Ross Optical, which, while improving in the second quarter compared to the first, is still down compared to the prior year |
| Since the margin on materials is only 20%, this factor serves to dampen overall margins |
| Gross margins decreased from Q1 to Q2, resulting in an adjusted EBITDA loss relatively close to that of Q1, despite the increase in revenue in Q2 |
| As a result of the year-over-year decline in revenue and gross margin, net loss during the second quarter was $759,000 compared to a net income of $508,000 in last year's second quarter, which of course includes the $600,000 of technology rights revenue |
| Again, the key driver here was the decrease in production revenue, and the technology rights agreements included in last year's financials |
| Finished products and assemblies was down approximately $400,000 year-over-year due to the elimination of certain products from our customers' portfolios and a pause in the manufacture of one product into the beginning of our next fiscal year while our customer sells through their existing inventory |
| The biggest driver of the gross margin decrease is reduced overall sales and lower utilization of facilities |
| Last year, we recognized $600,000 in one-time revenue pertaining to a technology rights agreement in the second quarter, which makes year-over-year comparisons to this year's second quarter a bit challenging |
| For the second quarter of fiscal 2024, total revenue was $4.8 million, a decrease of 18% compared to $5.9 million in last year's second quarter |
| As we anticipated and discussed on recent calls, this is down year-over-year due to timing differences between reorders for ongoing production, the exit of certain mature customer programs, and the introduction of new customer programs |
| The otoscopy program was restarted by us a few quarters ago, but has been limited by issues associated with one supplier's inability to restart their production of a highly complex critical component |
| However, net of the technology rights revenue, the year-over-year decline for the quarter was 8.8% or $463,000 |
| Adjusted EBITDA, which excludes stock-based compensation, interest expense, depreciation and amortization, was negative $269,000 for the second quarter of fiscal 2024 compared to positive adjusted EBITDA of $866,000 in the second quarter of last year |
| 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 the company's filings with the Securities and Exchange Commission |
| Due to delays in our customers' submission of their 510(k) to the FDA, we now expect production to begin in the fourth quarter of this fiscal year, or first quarter of fiscal 2025 |
| And so while we can sort of pre-positioned those folks, we can't do too much of that, because I have people sitting around and not being productive |
Please consider a small donation if you think this website provides you with relevant information