0001493152-26-023833
SEC filingSyntec Optics' Q1 2026 revenue fell 8% to $6.5M, swinging to a net loss of $0.9M from a $0.3M profit, driven by a sharp 58% gross profit decline due to material cost inflation and weak medical market sales.
Syntec Optics reported a challenging first quarter for 2026. Net sales declined 8% year-over-year to $6.5 million, driven primarily by a $1.0 million drop in the medical end-market, partially offset by a $0.4 million increase in consumer sales. Gross profit fell sharply by 58% to $1.0 million, as cost of goods sold increased 17% due to higher material costs, particularly aluminum. Consequently, gross margin contracted from 32.7% to 14.8%. Operating income swung from a profit of $0.5 million to a loss of $0.8 million, and net income of $0.3 million turned into a net loss of $0.9 million. Diluted loss per share was ($0.02) versus earnings of $0.01 in the prior-year period.
Total assets decreased slightly to $23.5 million from $24.3 million at year-end 2025. Cash improved to $0.6 million from $0.4 million, despite operating cash flow of $0.5 million, as the company invested $0.3 million in capex. Accounts receivable declined by $0.8 million, reflecting lower sales. Inventory was relatively flat at $7.8 million. On the liability side, accounts payable decreased by $0.3 million, while the line of credit remained at $6.8 million. Total debt (including finance leases) stood at $4.5 million, with related-party debt increasing by $0.2 million. Stockholders' equity fell to $8.7 million from $9.5 million due to the net loss.
Operating cash flow improved to $0.5 million from $0.3 million in the prior year, driven by favorable working capital changes, particularly a $0.7 million decrease in accounts receivable. However, this was partially offset by the net loss of $0.9 million and a $0.3 million decline in payables. Depreciation and amortization provided $0.5 million in non-cash add-backs. Free cash flow (operating cash flow less capex) was $0.2 million, compared to $0.1 million a year ago. Financing activities provided $0.1 million, primarily from related-party borrowing, while investing activities used $0.3 million for equipment purchases.
Management attributed the revenue decline to a $1.0 million decrease in medical sales, partly offset by growth in consumer markets. The increase in cost of goods sold was tied to higher aluminum prices. General and administrative expenses remained flat at $1.7 million. Interest expense was slightly lower at $0.2 million. The company did not provide quantified forward guidance. Subsequent to quarter end, Syntec Optics completed a public offering of 3.29 million shares, raising approximately $21.5 million in net proceeds. These funds were used to repay the $6.8 million line of credit in full, with the remaining balance used for working capital and growth initiatives. The company also obtained a waiver for prior debt covenant noncompliance and amended the credit facility, extending the maturity to June 30, 2027 and removing certain financial covenants.
Revenue was disaggregated by end-market: Communication ($1.8M, flat), Consumer ($1.6M, +37%), Defense ($1.6M, flat), and Medical ($1.5M, -39%). The company operates as a single reporting segment. Stock-based compensation of $75,000 was recognized for board members. The company adopted ASU 2025-05 on credit losses effective January 1, 2026, with no material impact. An immaterial reclassification was made to long-term debt presentation for the prior period. The company maintains a $7.5 million revolving credit facility with M&T Bank, which has been extended to June 30, 2027. As of March 31, 2026, the company was not in compliance with certain financial covenants, but obtained a waiver on May 13, 2026. The company identified material weaknesses in internal controls related to documentation, segregation of duties, and IT general controls, and is implementing remediation measures.