Q4 2023 Precision Optics Corporation Inc Earnings Call
Good afternoon, and welcome to the precision optics fourth quarter and fiscal year 'twenty twenty-three financial results conference call.
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I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.
Alright, Thank you very much Gary and thank you to everyone joining us on today's call as the operator mentioned.
We're just here to discuss precision optics fourth quarter and fiscal year 2023 financial results for the period ending June 30th 2023 with us on the call representing the company today are Dr. Joe Forky precision optics, President and Chief Executive Officer, and Wayne coal, the company's Chief Financial Officer at the conclusion.
Today's prepared remarks, we'll open the call for a question and answer session. Today's conference call is also being webcast with the replay capabilities available both through the webcast as well as through dial in instructions. The details of bolt were included in today's press release.
Before we open our with prepared remarks, we submit for the record. The following statement statements made by the management team of precision optics or in the course of this conference call may contain forward looking statements within the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E 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 1995 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 rest of that actual results may differ materially from those projected in the forward looking statements as a.
A result of various factors and other risks identified in our filings with the Securities and Exchange Commission. All forward looking statements contained during this conference call speak only as of the date in 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 a result, the receipt of new information.
The occurrence of future events or otherwise with.
With that said, let me turn the call over to Dr. Joe <unk>, Chief Executive Officer precision optics, Joe. Please proceed.
Thank you Robert and thank you all for joining our call today to discuss our fourth quarter and fiscal year 2023 financial results.
I'm very happy to be joined for the first time buy when coal our CFO as of June of this year.
I'll provide a few opening comments then turn it over to Wayne to discuss financials, and then I will provide more color on the business of the fourth quarter and fiscal year.
Fiscal year 2023, with a year of tremendous progress for precision optics as we continued to leverage our unique technological and production capabilities to drive record revenues and adjusted EBITDA.
We continue the integration of our recent acquisitions uplifted to NASDAQ strengthened our balance sheet and perhaps most importantly recruited two top notch industry veterans to fill the positions of Chief operating officer, and Chief Financial Officer.
These achievements position us well to execute on the many new orders, we announced during the year and for continued growth in fiscal 2024 and beyond.
As we look to fiscal 2024, we expect to continue our growth as we execute on our robust pipeline of opportunities and we expect to show continued improvement in the EBITDA margin of the business.
Well, we have grown several fold in recent years, our business can still be somewhat lumpy and we expect the early part of the year to demonstrate that.
But trends should improve as we go through the year with some very specific programs that I'll discuss in greater detail and we expect this to be another year, where we grow to new record highs for quarterly revenue and profitability.
Before going into more detail, let me turn it over to Wayne to discuss the financials.
Thank you Joe.
Let me start by saying how excited I am to be part of the precision optics team.
Logical capabilities, we offer our prospects and customers are unique in the industry and allow us to bring next generation solutions to the medical device aerospace and defense customers.
I believe we have a great opportunity ahead of us and I look forward to working with the POC team to build on recent successes.
Next I'd like to review our financial highlights.
For the fiscal year total revenue was 21 million, an increase of 34% compared to $15 7 million last year.
<unk> revenue was $13 7 million, while engineering revenue was $6 7 million <unk>.
Production revenue was up 39% year over year, while engineering revenue was up 25%.
On a quarterly basis revenue for the fourth quarter was approximately $5 million, which compares to $4 8 million in the same quarter a year ago, the increase of approximately 5% reduction.
<unk> revenue was $3 million, while engineering revenue was a record $2 million.
For the year gross margins came in at 36, 8% compared to 31, 4% in fiscal 2022, an improvement of over 5%.
For the fourth quarter, our gross margin was 38, 5% compared to 31% from the same quarter last year and compared to 34, 4% in the sequential third quarter of 2023.
The improvement in our processes and procedures, coupled with higher absorption of our fixed overhead continue to be key drivers of our gross margin expansion.
For the fiscal year operating expenses were $8 4 million compared to $6 4 million in fiscal 2022.
Part of the increase is due to an additional quarter of operations this year compared to last year from lighthouse imaging.
Other sources of the increase were increases in sales and marketing expenses as we recovered from pandemic limitation in this area as well as increased corporate costs associated with our up listing to Nasdaq.
On a quarterly basis, Opex was $2 5 million versus $1 9 million in last year's fourth quarter and $2 2 million in the sequential third quarter of 2020.
Including an opex as an increase in our reserves for doubtful accounts of 464000 incurred in the fourth quarter, primarily related to development work that we performed in the first and second quarters of fiscal 2023.
<unk> publicly traded startup company that ran into funding difficulties when their main investor was unable to honor our funding vehicles. They had previously established.
We still believe that the technology Mark for this program remains viable.
This customer is currently pursuing funding has indicated they plan to return to us and continue that program once successful.
Excluding the bad debt expense operating expenses would have been lower in Q4 than Q3.
I along with our entire senior management team have been tasked with keeping our operating expenses relatively stable, while still making targeted investments, particularly in sales and marketing as we continue to scale the business.
During the fourth quarter, you had a onetime pickup in other income of 572000 and a total of 715000 for the year compared to 746000 in the prior year.
These amounts primarily pertain to the reversal of contingent earn out liabilities associated with the acquisition of lighthouse image.
We determined that lighthouse imaging will not achieve the metrics required for potential earn out payments.
The earn out itself was structured to bridge evaluation and then worked as a chat therefore worked as intended.
As the concern was the uncertainty in near term revenue from lighthouse programs. So.
So while the earn out criteria was not achieved the lighthouse acquisition was strategically and Synergistically. An ideal addition to the company as evidenced by our improved competitive position and the new development orders already realized that was specifically made possible only through the combination of technical capabilities.
That resulted from the acquisition.
On the income side net loss during the fiscal year was 145000 compared to a net loss of 928000 in fiscal 2022.
Fourth quarter net loss was 96 compared.
Compared to net income of 269000 in the fourth quarter, a year ago and a net loss of 398000 in the sequential third quarter of 2023.
Yeah.
Adjusted EBITDA, which excludes stock based compensation interest expense depreciation and amortization.
Other income and acquisition expenses was positive 491000 for fiscal 2023.
Without the bad debt expense of 464000, adjusted EBITDA would have been 955000 for the year.
Higher revenue along with.
An improved gross profit percentage, partially offset by higher operating costs were the key drivers of the increased adjusted EBITDA.
On a quarterly basis Q4, adjusted EBITDA was a negative 412000 again this is impacted by the bad debt expense without which adjusted EBITDA for the quarter would have been positive at 52000.
Our cash balance at June 32023 was $2 9 million, reflecting the receipt of proceeds from our capital raise.
And our new term loan both executed in June .
This influx of capital along with an expanded line of credit will help the company manage anticipated working capital requirements as we continue to improve bottom line profitability and invest for future growth.
As we move forward our goal is to drive the gross margin in the business higher during the year. The company has historically cited a target of 40% gross margins were nearing that level on an annual basis.
Our mix of revenues of course impacts our gross margin, but in general we're looking to make improvements in gross margin, while managing costs in order to reach an adjusted EBITDA margin that reflects the value of the skills and technology, we provide to our customers and also be able to reinvest the profits back into the business.
As we look to the first quarter of fiscal 2024, we expect to see strong continued engineering revenue.
Ross operations experienced a pullback from Q4, 2023% of Q1 of 2024.
All class overall revenue would be somewhat lower in the first quarter.
With the expectation of a number of pipeline projects, including certain key projects significant long term revenue potential transferring to production.
With continued strong performance from our engineering team, we expect overall revenue growth during fiscal 2024.
I will now turn the call back over to Joe to comment further on the specific programs that support our optimism for the year.
Thank you Wayne.
As we've discussed before our business model is based on developing and maximizing the value of our proprietary Opex based technology.
By engaging with our customers early in their product development cycle, and incorporating our technology into their new product design, we create a strong likelihood that we will continue to be their partner for the long term manufacturer of their product.
As we transfer more programs into production, we anticipate an ever increasing number of products in production and a corresponding increase in revenue.
Yes.
Our financial results for fiscal year 2023 demonstrate the effectiveness of this model as we recorded both record production revenue of $13 $7 million and simultaneously maintained strong engineering revenue of $6 7 million.
As I have stated in the past our engineering pipeline is the source of future production programs and therefore, the best indicator of long term growth potential.
Our fourth quarter engineering revenue of $2.0 million was a new quarterly record as we ramped up work on a number of key programs that we expect to be contributors to growth in fiscal 2024 and beyond.
Our pipeline is strong based on several metrics, including aggregate size average deal size and quality of customers.
Today, we are dealing with more established better capitalized companies than at any other time in our history.
Our success is largely attributable to the strength of our team and a highlight of fiscal 2023 was the addition of Manhattan. The one day as Chief operating Officer, and Wayne as Chief Financial Officer, both hired in the fourth quarter.
They both have many years of experience managing high Tech medical device organizations through process development in periods of significant growth.
In recent years, our business has grown in terms of revenues, but also in terms of complexity and some stresses.
These two critical additions to our team give us the management bandwidth to keep the operations running smoothly reduce risk and drive cost efficiencies.
They also free up more of my time to spend with customers and thinking more about emerging technologies.
We finished fiscal 2023 with a number of steps taken to address our growing working capital needs through a combination of three actions.
First our new $750000 term loan with main Street Bank second the expansion of our line of credit facility to $1.25 million from $500000 and finally, the completion of a $2 $5 million private placement with a number of high quality institutional and accredited.
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All three of these moves allow us to better manage the working capital requirements necessary to continue scaling our business.
I'd like to spend a few minutes now on some program specifics starting with production.
For the year production revenue was a record $13 $7 million, while the fourth quarter was approximately $3.0 million.
As we always mentioned, we expect some turnover in production programs from quarter to quarter as some pull back do the redesigns or excess inventory, while others transfer from our development pipeline to production or grow due to successful market adoption.
So at our size and scale our growth of production revenue is not linear and smooth even though the overall trend is positive.
Okay.
In fiscal 2023, there were five key programs that drove production revenue.
Our defense program that started production prior to the pandemic and slowed down during the pandemic is now back in full swing with deliveries against the $2 6 million dollar order that we announced in December .
This was the largest order we've ever received for this program.
In the fourth quarter, we delivered approximately $477000 against this order our customer is very happy with our performance and has indicated that reorders are likely to be issued on an ongoing basis.
We also are seeing the re initiation of the Otoscopy program, which was on hold during the pandemic.
During the fourth quarter, we delivered approximately $327000 against the $2 3 million dollar order that we announced in January and we expect these deliveries to continue at comparable levels for the next few quarters, and then potentially ramp even higher towards the end of the fiscal year.
We also continued to deliver against our order from cardio focus for the ongoing manufacture of a micro endoscope used to help treat cardiac atrial fibrillation during.
During the fourth quarter, we delivered approximately $100000 worth of product.
During fiscal 2023, we ramped up production against our $2 4 million dollar order from a large medical device company for our spinal surgery application.
After a number of strong quarters, we had minimal fourth order fourth quarter revenue as we have nearly completed the current orders.
As expected our customer will take some time to deliver their now replenished inventory to the end user market, but we have worked with this customer for more than 10 years and fully expect follow on orders in the future.
Our newer defense Aerospace program contributed revenue during the fourth quarter of about $269000 as we completed the current orders from this customer.
As I mentioned last quarter. This customer has been working on a next generation redesign.
The redesign came back with a very substantial change and product specifications and ultimately required the use of our manufacturing technology that falls outside of precision optics specialized expertise.
Because of this we do not expect a reorder of the same magnitude as previous orders.
But the customer was very pleased with the work we did and remains engaged with US now that we are on their approved supplier list to explore possibilities for us to work on more limited aspects of this program and the potential for our involvement in other programs.
Even as this defense Aerospace program is transitioning away from a design that utilizes our technology another new customer in the same space is moving forward with significant prototype orders.
We are engaged with this new customer to build an assembly that is higher on the value chain and that utilizes a more unique aspect of our technology.
We believe therefore that we are in a strong competitive position and we are optimistic that this program could be even larger than the previous one.
Again, the timing of one program winding down in the other starting May result in some reduction in defense aerospace revenue for a quarter or two but overall, we see this new market as a target for long term growth.
To better address the defense aerospace market, we are pursuing investigations in two directions.
We are ramping up our efforts to communicate with major players in this market to better understand market segmentation in critical technologies required.
Second we are exploring various approaches to utilizing our existing technology to address these market requirements.
A good example of the benefits of these efforts is the recognition that the technology. We have developed for micro optics can readily be extended to high precision active alignment of larger optics.
The main point here is that micro optics by virtue of their very small size naturally require very high precision alignment.
As we explore the defense aerospace market, we have discovered a number of opportunities where we can utilize this high precision alignment capability, even when working with slightly larger optics.
We have several programs transitioning from our engineering pipeline to production in the first half of the year, giving us confidence that our annual production revenue will grow in fiscal 2024 and that we will exit the year running at a higher and sustainable level of revenue.
As we have already mentioned the fourth quarter engineering revenue was the highest in the company's history coming in at about $2 million.
The increase is a result of the recognition by customers of the breadth and depth of our technical capabilities. Following the acquisition of lighthouse imaging.
Engineering talent is very hard to recruit these days, but we continued to be successful and selectively adding to our engineering team in order to increase the revenue generating capacity and engineering.
A key highlight to this area has been our development program for a next generation single use urology product for which we have received two product development orders totaling 200, a quarter million dollars.
This customer is moving very aggressively with a goal of starting production before the end of POC as fiscal 2024.
This program is also important from an overall business strategy standpoint as it is the second single use program that is predicated on POC, receiving either production revenue or royalties on production revenue and novel approach that we believe will allow us to continue to attract profitable business and the single use.
Medical device space.
During the fourth quarter of fiscal 2023, we also advanced development work on our original single use program for an ophthalmic into scope.
During the fourth quarter, we recognized development revenue, which is independent of future royalties of approximately $300000 from this program.
This program is currently transitioning to production, which is expected to officially start in Q2 or Q3 of fiscal 2024.
Another key development program is for a next generation urological into scope for which we announced the development contract totaling approximately $1 $3 million from an established medical device company for whom we provided an individual component for our previous product for many years.
This new program highlights our expanding role as a value added solutions provider.
The initial development agreement is expected to be completed over the coming 12 months with opportunities for further development and commercial production contracts upon successful completion and approval.
Well there are a number of other development programs that our engineering team is working on I want to highlight one final one that we are developing for ear nose and throat applications and that we again believe could also launched before the end of the first of fiscal 2024.
The overall product is based on our customers' proprietary approach to combining into scopic visualization with unique surgical tool designed.
For this program, we are designing and ultimately will manufacture the entire into scope imaging system, including a wireless the split.
In summary, whereas in years past, our largest development programs ran in the hundreds of thousands of dollars. We are now consistently attracting programs with sizes in the millions of dollars. This is due in part to the size of the customers. We are attracting but it is also due to the fact that we are able to design and manufacture more of.
The overall product so each program has a much higher revenue per that potential both during development and during production.
I have mentioned several programs with credible revenue expectations that could drive growth for years to come.
I hope to be able to provide more detail soon but suffice it to say based on discussions with customers. We are optimistic the production phase of these programs will materialize.
Of course, we recognize that our success is dependent on our customers' success selling their products in the market, but we believe the demand for the products. We expect to produce is very hot.
Ah Ross optical division tracks strongly in the fourth quarter and finished out the fiscal year with record revenue for the fourth year in a row.
Ross optical revenue has consistently grown since our acquisition with revenue increases even during the pandemic.
Recently, however, we have seen a substantial pull back from a number of customers consistent with the general reduction in activity in the optical component market across the board.
Some of this has been caused by overly aggressive purchasing after the pandemic that led to excess inventory.
While customer retention remains high and number of our customers have asked to delay deliveries for some months as opposed to outright cancellation of orders. We believe this pullback could be as significant as half a million dollars per quarter over the next couple of quarters, but we are confident the business will return as excess inventory in the industry.
Absorb.
This does not appear to be an execution based issue at Ross It seems to be a timing issue that will pass.
Let me just wrap things up by saying how excited I am with the progress we have made at precision optics.
We are not yet at a scale, where our revenue growth will be smooth quarter to quarter and we expect revenue in the first half of fiscal 2024 to bounce around the current level as we digest some puts and takes in customer programs and transfer new product programs to production.
There are however programs in our portfolio that has significant potential to drive substantial long term revenue growth.
Because of this I believe the future of precision optics is extremely bright and I want to thank all of you for your continued support.
With that we'd be happy to take any questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
Our first question is from Christopher Hausky, a private investor. Please go ahead.
Hello, and well my question Hum.
My first question is above the mixed here you said that.
Even though the current quarter it seems to be a little lower are you confident that the year will be a high oh good this past year.
And it makes sense that when you have kind of engineering revenues, though is that true.
Sean I, just want to maybe kind of checking through levels of confidence those.
Kind of like a false deals over debate or do you hope to make deals for production COVID-19 clients seem because there'll be altering our protection devices and so on.
Yeah, Yeah, Thanks, Chris It's a great great question.
So the the the programs that we expect to go into production to help drive revenue.
Particularly in the latter half of the fiscal year.
Are all based on programs that are currently in the development phase in and are currently moving through what we call. The transfer fees. So these are programs, where the design for the product has already been finalized the customer has has.
Verify the design so they they've done their testing with their key opinion leaders and such and we're in the transfer a phase where we're going through some of the design validation and then we're standing up the production line. So these programs are very far advanced from the standpoint of the engineering development work and to answer your specific question.
About contracts with customers, we don't yet have the contract for the production because those wouldn't be issued until after the transfer of work was completed but all indications are that the customers are ready to give us the production orders as soon as we complete the work through the transfer of phase that we're working on with them now.
That is good to hear and just to be clear you're not or you are you subject to your customers' winning any design wins or design the world or do you are you working with the customers that they're sure that those devices will be nice.
Yeah, so and in the cases that we're talking about these programs that are in the transfer of phase the customers of ours are the ones that control the entire design for the system and ultimately are selling to the end user. So theres no intermediate phase there the one to be completely through.
Throw in the answered the one.
Other piece that has to has to be.
Be completed as they have to get regulatory approval for their for their product with the design that we have in some of the work that we're doing now is is collecting the data that they need to bring to the FDA for instance in order to be able to do that in the in the case of the programs that we're talking about the.
Well I would never say that regulatory clearance from the FDA as a foregone conclusion. There there are different levels of risk. When you go for that kind of regulatory approval and regulatory clearance I should say and in all four of these cases, our customers are quite mature in terms of the way that they approach the risks.
Good to regulatory.
Clearance and so they've already done substantial work to to have a high degree of confidence that they'll be able to get through the regulatory clearance.
Yes, it makes sense not to go with them be subject to the so to them to you.
The rugs and pharmaceuticals right, yes, it seems doable yeah.
Yeah, that's right.
And also wanted to ask you.
Is there.
Are we on the coast.
Cause for some kind of change in production of medical devices, where things are going much more towards disposable devices and you might see kind of a step function in the revenues.
So.
So the so the short answer is yes. There there is a there is a significant change that's happening.
In the medical device.
Industry as a whole we've.
About this on some of the earlier earnings calls when we were just getting started with that but I called our original single use program that we'd been working on for a number of years now.
There are there are major benefits to single use the most obvious of which is is that it virtually eliminates the possibility of cross contamination for the patient, but there are also benefits.
Two the way that that the product is inventoried at the hospital, it's much easier to inventory of single use item than it is a an.
And then the scope that has to sometimes be sent out for repair and asked to go to a different part of the hospital would be sterilized et cetera et cetera.
And there's benefits to the to the Doctor because every time. They open one of the single use devices. The image quality is brand new image quality, whereas when you have a reusable device they get used over and over and over again and eventually the image quality degrades over time until someone decided that it's not good enough. So for all the stakeholders.
There is in the in the process of using an inventory the product single use had substantial benefits the challenge that that.
That the industry had over many decades, because there have been there have been attempts that single use as far back as the late Ninety's. The challenge was getting the price points to a place where where single use could be supported by the the economics of the of the systems and so the thing that.
Change that dramatically was the advent of Cmos sensors in so called chip on chip.
Endoscopes, which we have particular expertise in and which we enhanced that expertise of bite by acquiring lighthouse imaging. So.
The the entire market really is moving in that direction. We just recently commissioned a market study to be able to understand the segmentation of the medical device market into various different sizes. So we can target the parts of the market that are particularly relevant for the micro optics capability that we have.
And in that market study, we confirmed things that we had seen sort of in the public domain that indicate that the.
The compound annual growth rate over the next 10 years for single use products is expected to be two to three times larger than that for reusable devices. So all of the things you hear us talking about when we're talking about the excitement over having not only one single use product, but a second single use product that uses the same kind of economics.
And same kind of business model.
<unk> is really because we think that we can we can get access to the single use medical device marketplace, which as I say and as you implied is growing in a in a much faster rate than it than it was anytime in the past.
Well. Thank you. Thank you for repeating that for me I'm new to your company well, thanks could be very helpful and good luck.
Great. Thanks, a lot Chris thanks for the questions.
Again, if you have a question. Please press Star then one.
Yeah.
Hey, Joe This is a this Robert Blum here, just a while we wait to see if anyone else does the jump in the queue. I just had one maybe topic I wanted to touch on here its sort of on the aerospace defense side. You've you you've had a couple of programs you mentioned sort of one that's that's a possibility.
I guess here going forward.
When you think about how you're approaching this from a sales and marketing standpoint, you've talked in the past about going into a number of the sort of industry conferences, primarily on the medical device side of the equation is defense something now that that you're taking maybe a more proactive view into as opposed to I think maybe in the past it was almost kind of it fell in your lap.
Paul will call itself, maybe just expand a little bit more on how you're sort of approaching there, they're all space defense market going forward.
Yeah, Yeah. Thanks for that question Robert So.
The way you described it is exactly right I want to I want to start by saying that.
For many years and anyone who has been with the company for very long as probably you heard me say this.
To the point, where they're sick of hearing it but part of our strategy. When we started with this sort of business approach of engaging with customers with our unique technology in the development phase all the way through to the production phase one of the key points that we decided on which to be very strategic and very focused.
In both the technology that we developed and in the markets that we used our limited sales and marketing resources for because we were a very very small company. We're still a small company, but 567 years ago. We were very very small company. So we were very focused in how we use our resources and in particular on sales and marketing we.
Only did active marketing.
To the medical device space, because we felt that was the place that had the best opportunities for our very specific technologies.
As you pointed out there were a couple of programs that sort of fell in our lap. So theres. One in particular that I've talked about many times, we call it or our longer term or historic defense Aerospace program. That's now turned into a couple of million dollars a year. They basically came to US saw what we were doing asked us if we would consider doing some work with them, they're a great Big company, whose name everyone would recognize.
And of course, we said we'd be happy to but we were not proactively going out and looking at the at the defense Aerospace.
Market more recently, we as we've we've we've built up our sales and marketing team and we have some more resources.
<unk> identified the defense aerospace market is one that we want to be looking at more deliberately now having said that the program that we talked about that went into production last year and now it has gone through a redesign in the other one that Ah is just coming online that's in the same space both of those really came to us.
Again now the fact that there are two companies that came to us with fairly similar products.
Is indicative of the fact that our technology can be used for particular segments of the defense aerospace market. So our intent going forward is to spend more time proactively understanding the various segments of the defense aerospace market and using more at this point of ours.
Senior level sales and marketing team and of my time, frankly, now that we have a waning mahesh onboard and we have more bandwidth and the senior management group.
My intent is to work with our V. P. R. S V P of sales and marketing and myself to to really dig in and understand the different segments of the defense aerospace market in the places where our technology can be used and to some extent.
How we continued to push our technology forward. So that it continues to be competitive for markets that that we see significant opportunities in one of those being defense aerospace. So I think the best way to say it is that our intent is to move forward in a more proactive way in a more.
Great way to hunt out those opportunities as opposed to simply waiting for those opportunities opportunistically to come to us, which is which is how we found the programs that we're working on now.
Alright, perfect I think that's that's helpful for everyone.
One final question here on.
On the engineering side of the equation I think as the previous questioner mentioned and and you kind of mentioned in your prepared remarks, you also have a record quarter I think its been building.
Building on on sort of records here of late.
Sort of talk about the outlook for that you've been bringing in sort of new engineers is is sort of the.
Are you able to keep up with sort of demand from the engineering side of the equation sort of a capacity you just talk a little bit more about what youre seeing out there I'll say sort of your pipeline into your pipeline.
[laughter], Yeah sure thing.
So so let me just back up a little bit and say.
We've been we have been working on on growing the technical capability of the engineering team at.
At the company for the last three or four years for exactly the reason that that we've talked about many times, which is that the engineering team is really the pump that that drives the growth of the company because the programs come through the engineering team in order to go into production, we continue to push more programs into production and that helps us to grow revenue in the long run.
Three or four years ago, we hired a really a great topnotch Ah Vice president of engineering to take over management of the engineering team and he has done a spectacular job.
Not only are managing the team.
Pretty independently of my involvement, but also in growing that engineering team and maturing that engineering team I would say because he came from.
From a number of very large companies you'd work that small companies. So we've been we've been building that team even for the last three or four years. The acquisition of lighthouse of course was a significant increase in our technical capability that that grew our technical team from something like six or eight people up to as many as 15 or 20 people.
Paul.
But even with that large that that growth in the engineering team, we still find that the engineering team is pretty much fully saturated and that we have we have as many opportunities as we can respond to so we are continuing to expand the engine.
Hearing team, we hired two junior engineers about a year ago I think both fresh out of college, we added two more engineers over the last.
Three months I think it was a more senior engineers, we still have two or three requisitions that are open for some additional.
Engineering staff and so while it is true that is challenging it's a challenging environment to hire people at any level, it's particularly challenging to find really top notch. Good engineers, because we won't just hire anyone we need engineers that can satisfy the cutting edge technology that we work on.
It's a challenge, but it's one that we have been able to overcome them and we have successfully grown the engineering team by bringing more people on and it's something that I expect we will continue to do for the indefinite future.
This concludes our question and answer session I would like to turn the conference back over to Joseph Forky for any closing remarks.
Thank you Gary and thank you everyone for joining us on the call today I look forward to speaking with all of you soon.
Thank you have a good evening and stay safe.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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Yeah.
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Yeah.