Q3 2025 Precision Optics Corp Inc Earnings Call
Good day and welcome to the precision optics reports third quarter fiscal year 2025 financial results Conference call.
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Speaker Change: Please note. This event is being recorded I would now like to turn the conference over to Mr. Robert Blum with Lytham partners. Please go ahead Sir.
Robert Blum: Thank you operator and to everyone joining the call today as the operator mentioned on today's call. We will discuss precision optics third quarter fiscal year 'twenty 25 financial results for the period ended March 31, 2025 with us on the call representing the company today, Dr. Joe Forky precision optics chief.
Speaker Change: I Could've officer, and Wayne called the company's Chief Financial Officer at the conclusion of today's prepared remarks, we will open the call for a question and answer session as the operator indicated if you dial to the traditional teleconference. Fine. Please press Star then one task a question. If you are listening through the webcast portal and we'd like to ask a question.
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Speaker Change: Before we begin with prepared remarks, we submit for the record the following statement.
Speaker Change: 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 27, a of the Securities Act 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.
Speaker Change: Litigation Reform Act of 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.
Speaker Change: Cause future circumstances events or results to differ materially from those projected in 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 Exchange Commission. All forward looking statements contained during this conference call speak only as of the date in which they are.
Speaker Change: Aid 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 of the receipt of new information the occurrence of future events or otherwise.
Dr. Joe: With that said, let me turn the call over to Dr. Joe <unk>, Chief Executive Officer precision optics, Joe. Please proceed.
Speaker Change: Thank you Robert and thank you all for joining our call today.
Speaker Change: Let's start right at the top with the challenges we encountered during the quarter and some of our production programs that led to significantly lower revenue and margins than we expected.
Speaker Change: Having rolled out a number of programs from product development into rapidly ramping production over the last 12 months, we sometimes discover process fixture personnel limitations that can result in low yields delivery delays and reduced efficiency.
Speaker Change: These types of issues resulted in lower shipments didn't plan this quarter underutilization of resources, greater scrap and substantial negative adjusted EBITDA.
Speaker Change: There were also the indirect impacts of management's time and attention and direction of engineering resources to support the production line in addressing these issues.
Speaker Change: While we are disappointed by these results for the quarter, our confidence and excitement for the future remain undiminished we.
Speaker Change: We have made significant progress on resolving the third quarter issues and we have the largest production backlog in over 20 years.
Speaker Change: With a positive response to the launch of our unity platform in Q3, we believe the underlying fundamentals of our strategy for business growth remained strong and we look forward to recovering that growth in Q4 and beyond.
Speaker Change: Today I'll focus my remarks on the following items.
Speaker Change: First the operational challenges we faced in Q3 second how we resolve these challenges third the exciting sales pipeline, we see as we look forward for the unity program rollout and finally, our two new board members.
Speaker Change: One of the major programs driving our production growth is the single use just as Scott.
In mid January daily yields on this product line dropped precipitously to less than 50%.
Speaker Change: This is well below our historical unexpected yields of around 90%.
Speaker Change: As a result, we stopped manufacturing, while we performed a root cause investigation.
Speaker Change: By mid February we had identified the source of the low yields made corrections and restarted production.
Speaker Change: The restart was successful.
Speaker Change: But the ramp back to previous unit production levels took longer than we anticipated mainly due to challenges we experienced in recruiting retaining and training adequate numbers of assembly technicians, particularly for a second shifts.
Speaker Change: Well P. S. He is manufactured products for many years their particular requirements associated with running higher volume lines with multiple shifts led to some challenges that we had to overcome.
Speaker Change: The good news is that we have made significant progress both in improving production yield and in staffing both the first and second shifts.
Speaker Change: And while we continue to improve in both of these areas. The endoscope wind throughput is currently double what it was before the shutdown and we expect this line to contribute significantly more revenue in Q4 than it did in Q3.
Speaker Change: Moreover, the customer for this product was supportive of the yield analysis, we performed and solutions, we implemented and has now asked us to expand our output further by adding a second production line, which we expect to begin producing product in the first half of fiscal 2026.
Speaker Change: The result of production challenges like this and the distraction of engineering resources away from product development work to resolve these issues resulted in a shortfall of approximately $600000 in Q3.
Speaker Change: Separately and incrementally about $300000 of product development revenue was pushed out of Q3 due to a customer imposed delay in one program and the single delayed milestone, which will be delivered in Q4 in one other project.
Speaker Change: Yeah.
Speaker Change: Despite these issues overall systems production revenue, which includes products launched in the last year as well as some legacy products continued its upward growth, increasing over 20% quarter over quarter and more than doubling year over year.
Speaker Change: We had expected greater growth in the quarter, but our confidence and excitement for the future remain undiminished and the demand remains unchanged.
Speaker Change: We have made significant progress resolving third quarter issues and we have a large production backlog dominated by products for customers, who will take delivery as fast as we can build.
Speaker Change: The underlying fundamentals of our strategy are robust and we look forward to posting solid revenue growth in Q4 and beyond.
Speaker Change: Production levels from our aerospace program in particular have continued to ramp as anticipated from approximately $300000 in Q1 to $600000 in Q2 to just under $900000 in Q3.
Speaker Change: Near the end of Q3, we doubled the line capacity by expanding our ISO class seven clean room in building additional tools and fixtures.
Speaker Change: We expect production for this program to set another new record in the fourth quarter as we strive to double output quarter over quarter.
Speaker Change: In April after many months of negotiation, we finalized the main purchase agreement, which will govern our ongoing manufacturing work with this customer.
Speaker Change: The agreement highlights the commitment between the companies to expand production of this product that Leverages <unk> proprietary manufacturing technology.
Speaker Change: Under the terms of the new agreement the customer has agreed to minimum annual purchase commitments of nearly $4 million for 2025 and 2026.
Speaker Change: This commitment along with the backlog greater than $6 million today provides us with a level of predictability and visibility to our growing production schedule, which will help us better forecast and execute production revenue.
Speaker Change: Yeah.
Speaker Change: In Q3, we also started production of two additional programs transitioning from product development.
Speaker Change: One is our second single use program to go into production and micro into scope used for an ophthalmic procedure and the second is a complex sub assembly used for retinal imaging.
Speaker Change: Each of these programs is now running at a one to $200000 per quarter level.
Speaker Change: Finally, there are still many product development programs that continue to move forward, which meet our standard benchmarks for production revenue potential.
Speaker Change: And in particular, a couple of programs that were delayed due to work our customers needed to do before continuing their work for US have now started to move forward again.
Speaker Change: A good example of this is a program that uses a very small single use endoscope for specialty arthroscopic procedure that has been on hold for over a year as our customer evaluated updates and market conditions before deciding to move forward.
Speaker Change: Earlier. This month, we received the purchase order to complete product validation and we now expect this project to move to production near the end of calendar 2025.
Speaker Change: The single use ophthalmic endoscope that started production in the third quarter and the single use Arthroscope Theyre just restarted in our product development pipeline along with our single use cystoscope already in production all represent good examples of the way P. O C has unique capabilities and micro optics and Cmos based.
Speaker Change: Digital imaging are enabling next generation endoscopic systems that support the fast growing single use and disco market.
Speaker Change: As we've discussed on recent calls this segment of the endoscope market is growing at annual rates estimated to be as high as 20% and is being driven by the lower cost and superior performance of these scopes.
Speaker Change: The lower cost comes from the use of photolithography computer chip technology to fabricate Cmos sensors combined with the positioning of the Cmos sensor at the dislocation of an endoscope.
Speaker Change: This eliminates the high cost elements and more traditional endoscopes required to carry the image from the distal to proximal ends of the industry.
Speaker Change: Along with lower costs, the Cmos based scopes generally have better image quality than those based on older imaging technologies.
Speaker Change: With single use Endoscopes surgeons always get brand new scope image quality.
Speaker Change: Hospitals don't need to track scopes through reprocessing procedures, and perhaps most importantly, the possibility of cross contamination from one patient to another is eliminated.
Speaker Change: Now that Cmos sensors have been available for medical devices for a number of years and with early adopters demonstrating that single use endoscopes are technically clinically and economically viable the entire endoscope market is moving in this direction.
Speaker Change: With POC as long term strategic focus on developing technology infrastructure and partnerships, particularly with omni vision a market leader in producing Cmos sensors, we are well positioned to become the supplier of choice for digital Endoscopes and more specifically for single use endoscopes.
Speaker Change: Our unity platform, which we launched in late January further aligns our offerings to this target market.
Speaker Change: As we discussed at length in our last call. The unity platform is designed to utilize standard baseline designs with a library of modular sub systems that can be quickly updated and customized to satisfy specific customer product requirements.
Speaker Change: At a high level unity is expected to revolutionize the way new endoscopic systems are developed by combining the best technology with the best design process.
Speaker Change: This approach reduces risk cost and most importantly time to market.
Speaker Change: The response to the launch of unity at shows in late January and early February along with the demonstration exhibit insertion presentation at the device talk show in May has been very positive.
Speaker Change: We have seen a steady increase in website traffic flow with April levels more than 15% greater than January and today. We are in active discussions with five potential customers motivated by their interest in unity.
Speaker Change: This response bolsters, our confidence that unity will help us bring new programs into our development pipeline in the near term.
Speaker Change: Yeah.
Speaker Change: Before I turn the call over to Wayne I want to make a couple of comments on the recent changes to our board.
Speaker Change: I want to start by thanking and acknowledging Dr. Richard miles for his dedication to POC.
Speaker Change: <expletive> retired from the board in March after serving as a director for nearly 20 years during.
Speaker Change: During that time, he has been a steadfast supporter and contributor to POC.
Speaker Change: Peter in India, who joined US following the acquisition of lighthouse imaging. In 2021 also retired from the board in March He was a great resource of experience and advice and has been a strong contributor during his entire time on the board.
Speaker Change: We are fortunate to have two highly respected individuals with great experience in areas relevant to P. O six current operations joining our board.
Pellegrino: The old Dunkin' and JJ Pellegrino.
Pellegrino: Many of you may know J J from his role as CFO at Lemaitre vascular.
Speaker Change: And as Jack listed company in the medical space.
Speaker Change: J J has record of success in helping to build the company from early beginnings to significant scale and shareholder appreciation are directly relevant to precision optics, especially since much of the matrix growth was driven by scaling production of medical devices and Massachusetts facilities.
Speaker Change: Similarly Bureau, Duncan brings decades of executive leadership and strategic expertise.
Speaker Change: Further strengthening our commitment to innovation and growth, having been a marketing and general management executive at IBM for nearly three decades.
Speaker Change: Viewers experience building and leading sales and marketing teams and in general corporate management will be valuable to us as we work to capitalize on sizable market opportunities.
With that let me turn it over to Wayne to review the financials in more detail I will then provide some closing comments and open the call up for questions Wayne.
Wayne: Thank you Joe.
Wayne: Let me expand on some of Joe's comments on the financial results starting with revenue.
Wayne: But the third quarter revenue was $4 2 million compared to $5 2 million in the third quarter of fiscal 2024, breaking it down projection revenue was $3 2 million compared.
Wayne: Compared to $3 million in the year ago quarter, while engineering revenue was $924000 compared to $2 3 million in the year ago quarter.
Wayne: As Joe mentioned, your low yields forced us to pause production of our single use just to scope, resulting an unplanned increases in non billable sustaining engineering activities to support manufacturing scale up programs and conduct a root cause analysis.
Wayne: Our efforts, while ultimately successful consumer engineering time and resources at Nissan billable activities.
Wayne: With the launch of our unity platform, a customizable solution that encompasses our design approach and the interest generated by our presentations at four major trade shows we will attend this year, we've seen the pace of engineering pipeline opportunities increasing.
Wayne: We also recognize the comparative impact of a full absorption of our engineering team's efforts to bring the single use cystoscopy product to launch when we compare our current results to the year ago quarter.
Wayne: We expect to finish our fiscal year strongly with $6 billion in sales in the next quarter, our backlog and demand for production remained strong driven by the aerospace and single use programs.
Wayne: Turning to gross margin for the quarter ended March 31, 2025, gross margins were 10% compared to 35% in the year ago third quarter as.
Wayne: As we mentioned.
Wayne: The low yields and one month shutdown of the line.
Wayne: Auction engineering resources were contributing factors here.
Wayne: We expect gross margin to recover as manufacturing continues to scale and revenues increase particularly in the fourth quarter.
Wayne: We increased R&D spending in the quarter from 193000 211000 compared to the quarter ending March 31 2024.
Wayne: R&D spending in the current fiscal year increased 300 in $2000 to $930000 compared to $627000. During the nine months ended March 31, 2024, primarily due to our investment in unity.
Wayne: Selling general and administrative expenses or SG&A increased 321000 to $2 2 million during the three months ending March 31, 2025, compared to $1 9 million Jeremy the three months ending March 31 2020.
Wayne: Sure.
Wayne: The increase was primarily due to increased personnel costs, primarily stock based compensation and recruiting expenses.
Wayne: Similar similarly, SG&A spending in the current fiscal year increased $357000 to $5 9 million.
Wayne: <unk> $5.5 million during the nine months ended March 31 2024.
Wayne: As a result of the lower revenue and the associated lower gross profit our net loss was $2 1 million for the quarter compared to 317000 dollar net loss for the same quarter last year.
Wayne: Adjusted EBITDA, which excludes stock based compensation interest expense depreciation and amortization was negative $1 3 million in third quarter of 2025 compared to a positive adjusted EBITDA of $52000 in the same quarter last year.
Wayne: Cash at the end of March was in excess of $2 $5 million during the quarter, we raised approximately $5 million pay down our revolving line of credit and deployed working capital.
Joe Forky: I will now turn the call back over to Joe for some final comments.
Wayne: Yeah.
Speaker Change: Thank you Wayne.
Wayne: Let me finish by summarizing a few key points.
Wayne: We were certainly frustrated by the impact of lower production yields on the single use just the scope and other production programs in the third quarter.
Wayne: But we believe we have corrected the root cause of these issues and are on a pathway to optimal production operations.
Wayne: Our confidence in correcting and achieving optimal yields is based in large part on our success getting through similar issues in our aerospace program, which is now running at 95% yield and continues to grow.
Wayne: Our backlog remained strong our customer relationships remain strong and our pipeline opportunities are expanding due to the introduction of unity.
Wayne: Overall, we expect Q4 revenues to grow significantly from Q3 levels.
Wayne: As discussed there is demand for as many units as we can produce from key production programs.
Wayne: So while the path to reaching $6 million in quarterly revenue based on increasing production volume has been bumpier than we anticipated. We are still confident we will reach this milestone in Q4 and that this will be an inflection point leading to positive adjusted EBITDA.
Wayne: One final note before we take questions, we will be at the medical design and manufacturing exhibit in New York City next week and I would welcome an opportunity to meet with those of you in the area.
Wayne: Please contact Robert if you'd like to set up a time to me.
Wayne: To all of you on the call I. Thank you for your continued support of precision optics, we'd be happy to take questions at this time.
Wayne: We will now begin the question and answer session.
Wayne: To ask a question you May Press Star then one on your Touchtone phone.
Wayne: If youre using a speakerphone please pick up your handset before pressing the Keith if.
Wayne: If anytime your question has been addressed and you would like to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Wayne: Yeah.
Speaker Change: And the first question will come from her Ristow voucher Whiskey Investor. Please go ahead.
Wayne: Okay.
Wayne: Hello.
Wayne: Just to be clear are you, saying that you could oh engineering clients lined up and you're just cool collect whatever new because they got to use your engineers to fix the predictable Shaw.
Wayne: That that was part of the problem yes.
Wayne: Okay. So no no.
Wayne: Nonetheless, this fixed you'll be able to collect engineering fees as well as predictions piece.
Wayne: Correct. So.
Wayne: So it's not just to be clear, it's not just about collecting it's about the execution right. So we use we.
Wayne: We use some of the engineers to work on the issues. We had on the production lines. So they were unable to work on billable.
Wayne: Projects that we could have collected on that's correct.
Wayne: Okay.
Wayne: Nice to.
Speaker Change: This is about your win for the <unk> for the military customer is that is this a program that might bring.
Wayne: Drew you off to 26.
Wayne: Do you see it like as a kind of a long term $1 billion per quarter thing.
Wayne: Or would it be just done.
Wayne: Yeah. So this is for the aerospace program, where they have committed to the $4 million per year, all indications from them and given what we know about the program is that it's likely to continue well beyond 'twenty.
Wayne: 26 that was simply the the.
Wayne: The timeframe that they were willing to commit to as part of the negotiation, but I I have every expectation that it will continue much beyond that similarly.
Wayne: The numbers that we reported that nearly $4 million a year.
Wayne: Are the minimum order levels and already you can see from the backlog that we have today that they've been they have been ordering at a higher rate than that so our hope and expectation is that the order rates will be higher and that they will continue beyond 'twenty six.
Speaker Change: Alright, your backlog you said that you've got $6 billion from that program in your backlog.
Wayne: No.
Wayne: Or are you, saying that you only called backlog for one year okay.
Wayne: No. That's the total backlog for that capital, but we do believe we can we can work through that backlog within 12 months.
Speaker Change: Oh, I'm sorry, yeah.
Speaker Change: I see okay.
Speaker Change: Okay, Oh, that's that's good news.
Speaker Change: Hum that Oh, the telescope program.
Speaker Change: If you did.
Speaker Change: Did you have any.
Speaker Change: Contractual problems because of the.
Speaker Change: The production delay of U O to O killed the cold Clark.
Speaker Change: Audio is the risk of.
Speaker Change: All of them are getting a second supplier or anything like that.
Speaker Change: So so we are okay on the contract.
Speaker Change: This is a customer that we have a very good relationship with them.
Speaker Change: And so they were involved while we were dealing with the shutdown of the line. They had some engineers here they were collaborating with us and we're working together.
Speaker Change: Of course, they were disappointed that we werent satisfying the delivery rates that they would like but they're very cooperative and very supportive.
Speaker Change: Even to the point, where as I mentioned in my comments, but but I went through it quickly. They they gave us a in order to stand up a second production line. After this all actually in the midst of all of this happening, but I think because they saw the the way that we were dealing with the issue and the way that we were resolving it.
Speaker Change: To be fully <unk> to answer your question fully the question of having a second supplier there is.
Speaker Change: A mechanism, where they can manufacture themselves or have a second supplier and we're paid a royalty as part of the agreement we have with them and for risk reasons, they've told us that they will we'll likely do that at some point, but it's not because of the issue. We had this quarter and as I say, despite having that issue. These days.
Speaker Change: Given us a new contract to stand up a second line.
Speaker Change: This is partly because we're delivering slower than they would like but more importantly, with the second line, they're looking forward.
Speaker Change: At the fact that their volume demands are going up faster than they anticipated when they gave us the original order a year ago. So the short answer to your question is there's no contract problems that things are moving forward in a positive way.
Speaker Change: The relationship with the customer is very good.
Speaker Change: Okay. That's good to hear have you.
Speaker Change: Uh huh.
Speaker Change: I apologize if I missed that during the call have you staff up all your all your positions go to fix that.
Speaker Change: I think as of today, we have we have almost a full complement of.
Speaker Change: Of Assembly tax we were now at a point, where we're looking to to have a little bit of extra because we need the line to be running smoothly. So we're still looking for a few more people, but we've done a our team has done a good job of.
Bringing in the assembly tests that we need this is why the the line is running much better today than it was even even a month or so ago.
Speaker Change: And what is the thinking like growing too.
Speaker Change: Good luck.
Speaker Change: The second line, we expect to start running in the first half of fiscal 'twenty six.
Speaker Change: Okay. So sometime in the summer or fall and and we're working to add staff to the existing line now I just said, we're looking for extras partly that.
Speaker Change: Have backup for the line now it's also to to hit the ground and be able to hit the ground running with that second line because we can move people from the first line second line when it's ready to go.
Speaker Change: Yeah that makes sense. Okay. I just forget you want directors you expect the current quarter to come in EBITDA positive, so that probably won't be a need.
Speaker Change: The four additional spoke issues is that correct.
Speaker Change: That's correct.
Speaker Change: Okay, well that's it for me thanks, Good luck.
Speaker Change: Congratulations on all your Oh your customer wins.
Speaker Change: Thanks, and thanks for all those questions.
Speaker Change: Yeah.
Speaker Change: Again, if you have a question. Please press Star then one.
Yeah.
Speaker Change: Yeah.
Speaker Change: Alright, operator, I guess, we'll wait to see if any additional questions come in through the live teleconference line I've got a couple here on the webcast I'm actually you know what it looks like we do have someone on the lifeline Chuck I'll turn it back over to you to queue up the next participant yes, Sir the next question will come from Mr. Rick Teller.
Rick Teller: Investor. Please go ahead.
Speaker Change: Yeah, Hi, Joe I have a question.
Speaker Change: Now.
Speaker Change: Development of the unit decline.
Speaker Change: So basically you're thinking of your engineers and instead of them working designing custom work for our customers who are having them develop this.
Speaker Change: <unk> production line.
Speaker Change: Production.
Speaker Change: Various components and whatnot that they can mix and match and put together modular like you might say.
So.
Speaker Change: That means there.
Speaker Change: Our engineers and instead of bringing in money as they are paid to do work for customers, you're having to pay them and that shows up in your R&D spending.
Speaker Change: Hum how long Hum.
Speaker Change: How long and how heavy will those expenses.
Speaker Change: Who until you can say well we've got the basics of the unity line will develop from here on out although little tweaks and changes.
Speaker Change: Components change and technology changes.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: We don't have to spend much more time on one basic line I'll call. It. The engineers can go back customizing work for clients.
Speaker Change: It'd be a couple of years or a couple of quarters and or we can see R&D jump way way up or or is more modest increases.
Rick Teller: Mhm, Yeah, Great question, Rick, let's see if I can if I can answer this succinctly because there's a there's a lot there.
Rick Teller: So that's the first point I'd make is that as we've talked about in some of our earlier calls what we're really doing here is capitalizing on the on the designs and the IP that we've developed over the years working on programs for our customers because one of the things we always insist on is that we maintain ownership of the IP so that.
Rick Teller: The first thing we're not we're not starting from scratch and so the amount of time that our engineers have to spend in order to put together the package that becomes unity is much less than.
Rick Teller: And then it then would be required if we were not piggybacking on top of the the work we do for our customers, which is in fact billable right. So even though there were some increase in the R&D cost it's not nearly the increase that we would have seen if we were starting from scratch. That's the first thing.
Rick Teller: The second thing is we've we've.
Rick Teller: People can see if they go to our website, but we've identified four sort of families of unity platform.
Rick Teller: Projects that we expect.
Rick Teller: The overall market will sort of gravitate towards and so these are defined the first three are defined by Andrew scope size and then the last one is sort of a catch all for high precision and ultra high definition, all kinds of things we've already essentially completed the first two categories and with those categories. We've gone.
Rick Teller: And launched unity.
Rick Teller: The other two categories.
Rick Teller: We certainly want to to get finished but we have a lot of flexibility on when and how aggressively we pursue those and when and how aggressive we add sort of.
Rick Teller: Additional modular elements to these first two systems that have come out so we.
Rick Teller: We treat the unity program as as a.
Rick Teller: As a regular product development program. So it gets reviewed on a monthly basis by.
Speaker Change: By Wayne and Mahesh, our COO and myself and we evaluate the availability of of engineers.
Speaker Change: To be able to work on the unity program and compare that to the to the need to have the engineers working on other billable revenue product development programs. So having said all that our goal really is to is said to sort of fill in the places where we.
Speaker Change: Might have a gap in product development requirement for specific.
Speaker Change: Engineering discipline, so it will show up as R&D, but as an R&D expense, but in some sense. It's it's trying to utilize some of the overhead that comes from from not being able to run a program continuously because we have customers who need to do their pieces and those sorts of things right. So I guess I guess the.
Short answer and I'm looking at waiting to see if he if he nods is that the increase in R&D I would expect the R&D expense to continue at a similar level that we've seen over the last couple of quarters, maybe slightly lower because we were doing some extra work to get to the unity launch, but it's not going to be a huge increase and its and its.
Speaker Change: It's gonna be sort of a low level sort of steady state for the next few quarters I would say that sound right. When your last sentence is what I would've said, okay [laughter].
Speaker Change: Yeah.
Speaker Change: Okay, then and then one other question related to beauty.
Speaker Change: From the point of view of potential customers, who are saying well we could design.
Speaker Change: We thought of a good move, possibly good new product and we can design it ourselves or get some other independent.
Speaker Change: Independent outfit.
Speaker Change: POC competitor to Hum.
Speaker Change: If I may for us.
Speaker Change: We could go with unity.
Speaker Change: One fluidity of.
Speaker Change: When we developed let's say a customer we're talking about a customer showing up let's say a year from now.
Speaker Change: What would be the difference in terms of time to mark between going with unity versus going with.
Complete custom design.
Speaker Change: Yeah, we've we've looked at that pretty carefully because it's part of what we talk about a lot when we talk with our customers because in some sense. You know. This is this is critically important for them because they always want to get to market as fast as possible. It depends of course on how complex. The system is and how much it's going to deviate from the unity.
Speaker Change: Platform itself, but generally speaking, we expect that it will accelerate the timeline by six to 12 months.
Speaker Change: I'm, sorry, yes, six to 12 months six half of the year to year.
Speaker Change: Okay, good alright, well thank you.
Rick Teller: Thank you Rick.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: Alright, Chuck I'll jump in again, while we wait to see if additional people come and the dial and call. A we do have a couple of web cast questions. Once again, if you're dialed into the webcast are linked into the webcast you can type in your questions through the ask a question feature on the webcast player there.
Speaker Change: A question here Joe surrounding our the facilities a previous calls you've commented on potential need for updated facilities could you provide an update on that.
Speaker Change: Yeah, I'm going to let Wayne take that because he has been working on the leases. Thanks Joe.
Speaker Change: So we operate in three different states.
Speaker Change: And El Paso, Texas.
Speaker Change: That facility down there for a number of years, we've extended our lease recently.
Speaker Change: That lease was expiring so we've extended.
Speaker Change: In Wyndham, Maine.
Speaker Change: We believe that we have we have a lease that's expiring at the end of July.
Speaker Change: So we took the opportunity to locate space.
Speaker Change: Closer to <unk>.
Speaker Change: <unk> with its a better concentration of engineering talent that will help us as we grow up going going forward.
Speaker Change: In Massachusetts, we operate in.
Speaker Change: In four different buildings and at the moment, we're evaluating options.
Speaker Change: For consolidation and expect to make some decisions.
Speaker Change: Okay, great. Thank you Wayne a again a final reminder, if you're dialed in Star then one to ask a question or on the webcast player you can type it into the ask a question feature there perhaps the final question here gentlemen are the tariffs impacting a P O CS business.
Speaker Change: Yeah sure so [laughter].
Speaker Change: In some sense the tariffs are impacting everyone's business to one extent or another but.
Speaker Change:
Speaker Change: There there are let's say so.
Speaker Change: Where we're really in a growth mode. So in terms of the sort of overall expectations, it's not going to change our expectations for the kind of growth that we're going to see.
Speaker Change: And the positive impact that that growth can have having said that we do source components.
Speaker Change: Components overseas that the main part of the business, where we're doing the single use endoscopes and aerospace programs and those sorts of things there are some individual components Cmos sensors come from overseas for instance.
Speaker Change: But those are the the the total value of those components to the overall system is limited because most of the value in those cases are as embodied in the design and the manufacturing the one place where we do see a fair amount of impact is on our Ros optical business. This is a group that's down in El Paso, Texas that.
Speaker Change: Sources, and then builds are individual components and small sub assemblies.
Speaker Change: That group, which today represents about 20% of our business sources sources most of their components.
Speaker Change: From from other companies some in the U S, but many of them outside the U S. A where we're looking at and watching what's happening with the tariffs we have already had some communication with customers.
Speaker Change: And made some initial indications that that if the tariffs end up at an extreme place at a very high place that we'll have to.
Speaker Change: Sure those traditional costs with our customers and by and large are those customers have reacted.
In a in an understanding way right and we also are constantly pursuing alternative suppliers. So I think in the you know the.
Speaker Change: On the whole, we don't expect that the tariffs are going to derail our growth plans or have a major impact on the performance of the company.
Speaker Change: Alright, very good Joe Wayne I am not showing any further questions here, so with that I'll turn it over to you for any closing remarks.
Joe Wayne: Thanks, Robert and thank you everyone for joining us on the call today I look forward to speaking with you. Soon thanks, everyone have a good evening.
Joe Wayne: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Joe Wayne: Yeah.
Joe Wayne: Okay.
Joe Wayne: Yeah.
Joe Wayne: [music].
Joe Wayne: Okay.
Joe Wayne: Yeah.
Joe Wayne: Yeah.
Joe Wayne: [music].