Shares of Optex Systems Holdings, Inc. (OPXS) have gained 19.1% since the company reported its earnings for the quarter ended March 30, 2025, notably outpacing the S&P 500’s 1% change in the same period. Over the past month, OPXS stock has surged 42.9%, significantly outperforming the S&P 500’s 11.4% rise, reflecting strong investor enthusiasm in response to robust quarterly results and management commentary.For the fiscal second quarter ended March 30, 2025, Optex reported earnings per share of 26 cents co ...

Financial Performance - For the three months ended March 30, 2025, revenue increased by $2.2 million, or 25.9%, compared to the prior year period, reaching $10.73 million[3] - For the six months ended March 30, 2025, total revenues increased by $3.4 million, or 22.2%, compared to the prior year period, totaling $18.93 million[3] - Consolidated gross profit for the three months ended March 30, 2025, increased by $0.8 million, or 31.4%, reaching $3.36 million[4] - Operating income for the three months ended March 30, 2025, increased by $0.9 million, or 65.0%, totaling $2.24 million[5] - Net income for the three months ended March 30, 2025, increased by $0.7 million, or 66.5%, reaching $1.77 million[12] - Adjusted EBITDA for the three months ended March 30, 2025, increased by $0.8 million, or 49.4%, totaling $2.44 million[12] Backlog and Working Capital - As of March 30, 2025, the company had a backlog of $41.1 million, a decrease of $3.1 million, or 7.0%, from the previous year[2] - Working capital as of March 30, 2025, was $17.9 million, an increase from $15.1 million as of September 29, 2024[6] - The company generated operating cash of $4.0 million during the six months ended March 30, 2025[6] - Cash and cash equivalents as of March 30, 2025, were approximately $3.5 million, with no draws against its revolving credit line[7] Company Overview - Optex Systems manufactures optical sighting systems primarily for Department of Defense applications, with products installed on various U.S. military vehicles[23] - The company is ISO 9001:2015 certified, indicating a commitment to quality management standards[23] - Optex's product offerings include periscope configurations, rifle and surveillance sights, and night vision optical assemblies[23] - The company delivers products directly to military services and prime contractors, indicating a strong position in the defense supply chain[23] Forward-Looking Statements and Risks - Forward-looking statements highlight expectations for growth strategy and financial performance, including revenue and net income[25] - Risks include potential funding issues for defense programs and competition in the market, which could impact financial results[26] - The company anticipates challenges related to supply chain and labor shortages, which may affect production timelines[26] - Optex is focused on technological advancements and delivering innovations to maintain market competitiveness[26] - The company does not assume the obligation to update forward-looking statements, emphasizing the uncertainty in predicting future results[27] Investor Relations - Contact information for investor relations is provided, indicating openness to communication with stakeholders[28]

Financial Performance - Net income for the three months ended March 30, 2025, increased by $0.7 million to $1.8 million compared to $1.1 million for the prior year period[113] - Adjusted EBITDA for the three months ended March 30, 2025, increased by $0.8 million to $2.4 million compared to $1.6 million for the prior year period[113] - Net income for the six months ended March 30, 2025, increased by $1.1 million to $2.6 million compared to $1.5 million for the prior year period[114] - Adjusted EBITDA for the six months ended March 30, 2025, increased by $1.2 million to $3.6 million compared to $2.4 million for the prior year period[114] - For the three months ended March 30, 2025, total revenues increased by $2.2 million, or 25.9%, compared to the prior year period[119] - For the six months ended March 30, 2025, total revenues increased by $3.4 million, or 22.2%, compared to the prior year period[120] - Consolidated gross profit for the three months ended March 30, 2025 increased by $0.8 million, or 31.4%, compared to the prior year period[121] - Operating income for the three months ended March 30, 2025 increased by $0.9 million, or 65.0%, compared to the prior year period[122] - The gross margin for the three months ended March 30, 2025 was 31.3%, compared to 30.0% in the prior year period[121] - The operating income margin for the three months ended March 30, 2025 was 20.8%, compared to 15.9% in the prior year period[122] - For the six months ended March 30, 2025, total revenue was $18.93 million, an increase of $3.4 million or 22.2% from $15.49 million in the prior year[138] - The gross margin for the six-month period ended March 30, 2025, improved to 29.0%, up from 27.4% in the prior year, with gross profit increasing to $5.5 million[141] Revenue and Orders - The increase in net income and adjusted EBITDA is primarily driven by increased revenue and gross profit[115] - During the six months ended March 30, 2025, the company booked $15.7 million in new orders, representing a 12.3% decrease over the prior year period[125] - Optex Richardson segment orders decreased by $2.2 million, or 19.8%, compared to the prior year period[125] - The company experienced a 500.0% increase in Day Windows orders during the six months ended March 30, 2025[127] - The Applied Optics Center orders remained flat compared to the prior year period[125] - As of March 30, 2025, total backlog was $41.1 million, a decrease of $3.1 million or 7.0% from $44.2 million as of March 31, 2024[128] - Optex Richardson revenue increased by $2.0 million or 47.8% for the three months ended March 30, 2025, driven by increased production volume in the periscope product line[133] Production and Supply Chain - The company has increased periscope production levels by 50% over the fiscal year 2024 level due to improvements in labor market and supplier performance[106] - Significant material shortages were experienced during the fiscal year ended October 1, 2023, affecting production levels and delivery dates[105] - Approximately 7% of the Optex Richardson segment backlog consists of items priced prior to 2021, which has been affected by rising costs of aluminum, steel, and acrylic commodities[104] - The company does not anticipate significant material risks from recent tariff uncertainties, as most defense products are sourced domestically[107] Contracts and Opportunities - The company is both a prime and sub-prime contractor to the Department of Defense, with contracts covering various military applications[99] - The Company announced a $5.7 million award for laser filter units for the Applied Optics Center, expected to increase total backlog to $46.8 million[129] - The Company is pursuing international and commercial opportunities while reviewing potential new products to utilize existing production capacity[131] Financial Position and Cash Flow - As of March 30, 2025, working capital was $17.9 million, an increase from $15.1 million as of September 29, 2024[143] - The Company expects to generate net income and positive cash flow from operating activities over the next twelve months, but uneven revenue levels could create a working capital shortfall[152] - The Company entered into a Business Loan Agreement for a revolving line of credit of $3 million, with an interest rate of 7.07% per annum as of March 30, 2025[153] - The Credit Facility replaced a prior $2 million line of credit, and as of March 30, 2025, there was zero borrowed under the Credit Facility[155] - The Company is in compliance with all covenants under the Credit Facility as of March 30, 2025[154] Acquisitions and Costs - On January 18, 2024, the Company acquired intellectual property related to the Speedtracker Mach product line for $1 million, with potential future payments based on milestones[149] - The acquisition included transaction costs of $30 thousand, with a total earnout payment of $238 thousand contingent on achieving revenue milestones[150] - As of March 30, 2025, the Company had accrued warranty costs of $106 thousand, an increase of $54 thousand from $52 thousand as of September 29, 2024[157] - The Company recognized $11 thousand and $18 thousand in loss reserves on new contract awards during the three and six months ended March 30, 2025[158] - The Company had $226 thousand and $259 thousand of contract loss reserves as of March 30, 2025, and September 29, 2024, respectively[158] - The Loan Agreement requires the Company to maintain a fixed charge coverage ratio of at least 1.25:1 and a total leverage ratio of 3.00:1[154]

Company Overview - Optex Systems Holdings, Inc. is based in Richardson, Texas, and was founded in 1987. The company is ISO 9001:2015 certified and specializes in manufacturing optical sighting systems and assemblies primarily for Department of Defense (DOD) applications [4] - The company's products are utilized in various U.S. military land vehicles, including the Abrams and Bradley fighting vehicles, Light Armored and Armored Security Vehicles, and the Stryker family of vehicles. Additionally, Optex produces periscope configurations, rifle and surveillance sights, and night vision optical assemblies [4] Event Participation - Optex Systems Holdings, Inc. will participate in the 15th Annual LD Micro Invitational on April 9th and 10th, 2025, at the Westin Grand Central in New York [1] - CEO Danny Schoening expressed enthusiasm about attending the LD Micro event, highlighting the opportunity to connect with investors, showcase company progress, and discuss future growth [2] Industry Context - LD Micro, founded in 2006, serves as an independent resource in the micro-cap space, providing valuable insights through the LD Micro Index and annual investor conferences [3]

Core Insights - Optex Systems Holdings, Inc. (OPXS) reported a decline in share price of 3.9% following its earnings report for the quarter ended December 29, 2024, contrasting with a 0.6% growth in the S&P 500 index during the same period [1] - The company achieved earnings per share of 12 cents for the first quarter of fiscal 2025, a significant increase from 6 cents in the prior-year period, with revenues rising to $8.2 million, marking a 17.7% increase from $7 million year-over-year [2] - Gross profit increased by 26.4% year-over-year to $2.1 million, with an improved gross margin of 26% compared to 24.2% in the previous year, driven by a favorable product mix and higher revenue against a relatively fixed cost base [3] - Net income nearly doubled, rising 95.8% to $0.8 million compared to $0.4 million in the prior-year quarter, while adjusted EBITDA increased by 50% year-over-year to $1.1 million [4] Business Metrics - As of December 29, 2024, Optex reported a backlog of $42 million, down 6.7% from $45 million at the end of December 2023, attributed to the timing of customer orders, with new orders expected to contribute to fiscal 2025 revenues [5] - The company generated $2.8 million in operating cash flow during the quarter, primarily due to increased net income and accounts receivable collections, and held $2.5 million in cash at quarter-end, up from $1 million as of September 29, 2024 [6] Management Outlook - CEO Danny Schoening emphasized the company's growth trajectory, noting a four-year compounded annual revenue growth rate exceeding 20%, and expressed confidence in maintaining this momentum through strong customer engagement [7] - For fiscal 2025, Optex expects revenues to exceed $38 million, supported by its backlog and anticipated new orders, with a focus on profitable and sustainable growth through operational efficiencies and customer collaboration [8] Other Developments - During the quarter, Optex continued investments in working capital and infrastructure, reflected in higher cash balances and improved accounts receivable collections [9]

Financial Performance - Total revenues for the three months ended December 29, 2024, increased by $1.2 million, or 17.7%, compared to the prior year period, primarily driven by increased revenue at the Applied Optics Center[111]. - Consolidated gross profit for the same period increased by $0.4 million, or 26.4%, primarily due to changes in product mix and higher revenue against a fixed cost base at the Applied Optics Center segment[112]. - Operating income for the three months ended December 29, 2024, increased by $0.4 million compared to the prior year period, driven by higher revenue and gross profit[113]. - Net income for the three months ended December 29, 2024, increased by $0.4 million to $0.8 million, compared to $0.4 million for the prior year period[119]. - Adjusted EBITDA for the same period increased by $0.4 million to $1.1 million, compared to $0.8 million for the prior year period[119]. - For the three months ended December 29, 2024, total revenue increased by $1.2 million or 17.7% to $8.2 million compared to $6.97 million in the prior year period[132]. Orders and Backlog - The company booked $6.0 million in new orders during the three months ended December 29, 2024, representing a 40.6% decrease from $10.1 million in the prior year period[122]. - Orders for the Optex Richardson segment decreased by $3.6 million, or 58.1%, primarily due to order timing[124]. - Backlog as of December 29, 2024, was $42.0 million, a decrease of 6.7% from $45.0 million as of December 31, 2023[126]. - Orders for the Applied Optics Center decreased by $0.5 million, or 12.8%, from the prior year period, primarily due to order timing[125]. - Optex Richardson backlog increased by $1.7 million or 5.8% to $31.0 million as of December 29, 2024, driven by higher customer demand for periscopes[128]. - Applied Optics Center backlog decreased by $4.7 million or 29.9% to $11.0 million as of December 29, 2024, attributed to the timing of customer orders[129]. Supply Chain and Labor Issues - Optex Systems, Inc. reported significant increases in the costs of aluminum, steel, and acrylic commodities, negatively impacting net income for the quarter ended December 29, 2024[104]. - The company experienced material shortages affecting periscope products, which have delayed production and delivery schedules[106]. - The fiscal year ended October 1, 2023, and the first half of the fiscal year ended September 29, 2024, were marked by significant supplier delays and labor shortages[106]. - Forward-looking statements indicate expectations of continued challenges due to supply chain issues and material costs, impacting future financial performance[96]. - Improvements in the local labor market since 2023 have allowed Optex to increase its direct labor force and employee overtime, contributing to better supplier performance[107]. Contracts and Government Relations - Optex Systems, Inc. primarily manufactures products for the Department of Defense, with less than 1% of revenue related to resale of products manufactured by others[99]. - The company is both a prime and sub-prime contractor to the Department of Defense, with contracts also serving foreign governments[100]. - The U.S. military spending trends indicate a significant reduction in spending for ground system military programs, directly impacting revenue for the Optex Systems Richardson segment[108]. Financial Position and Assets - As of December 29, 2024, the company had working capital of $15.9 million, an increase from $15.1 million as of September 29, 2024[137]. - The company acquired certain intellectual property related to the Speedtracker Mach product line for $1 million, with potential additional payments based on future milestones[143]. - The company has a deferred tax asset valuation allowance of ($0.8) million against deferred tax assets of $1.7 million, resulting in a net deferred tax asset of $0.9 million as of December 29, 2024[155]. - The valuation allowance for deferred tax assets is due to historical losses and may not be fully recognized due to IRS Section 382 limitations related to a change in control[155]. Warranty and Loss Reserves - As of December 29, 2024, the company accrued warranty costs of $22 thousand, down from $52 thousand as of September 29, 2024, due to lower-than-expected warranty returns[153]. - The company had contract loss reserves of $213 thousand as of December 29, 2024, compared to $259 thousand as of September 29, 2024, primarily related to older legacy periscope IDIQ contracts[154]. - During the three months ended December 29, 2024, the company recognized $7 thousand in loss reserves on new contract awards and reduced existing loss reserves by $53 thousand[154]. - The company monitors actual warranty costs incurred against expected values on a quarterly basis and adjusts estimates accordingly[153]. - The company has not experienced significant changes to warranty trends in the past three years and does not anticipate significant impacts in the near term[153]. - Future taxable income forecasts related to deferred tax assets are subject to change due to market conditions and profitability uncertainties[155]. General and Administrative Expenses - General and administrative expenses increased by 7.2% to $1.2 million for the three months ended December 29, 2024, compared to $1.1 million in the prior year[135]. - The company generated operating cash of $2.8 million during the three months ended December 29, 2024, primarily driven by higher net income and collections against accounts receivable[137]. Accounting Estimates - The company’s accounting estimates involve significant estimation uncertainty and may materially impact financial condition or results of operation[156].

Core Viewpoint - Optex Systems Holdings, Inc. reported strong financial performance for the fiscal year ended September 29, 2024, with significant revenue and profit growth, despite a decline in stock price. Financial Performance - Total revenues increased by 32.5% to $34 million from $25.7 million in fiscal 2023, driven by higher demand for military products [2] - Operating income rose by 73% to $4.8 million, with adjusted EBITDA increasing by 69.7% year over year to $5.7 million [3] - Earnings per share (EPS) increased by 61.8% to 55 cents from 34 cents in fiscal 2023 [6] - Gross profit improved by 44% year over year to $9.5 million, with gross margins increasing by 220 basis points to 28% [7] Demand and Orders - The backlog reached $44.2 million, a 5.7% increase from $41.8 million at the beginning of the fiscal year, with new orders booked at $36.4 million, a 5.2% rise compared to $34.6 million in fiscal 2023 [8] - CEO Danny Schoening highlighted the company's ability to secure multi-year contracts for key products, contributing to operational efficiencies [5] Operational Efficiency - Revenue growth was primarily attributed to strong demand for military optical products, which offset reduced orders for optical assemblies [9] - The Applied Optics Center segment's margin expanded from 29.3% in fiscal 2023 to 34.1% in fiscal 2024 due to significant upgrades [11] Financial Position - As of September 29, 2024, the company had $1 million in cash and no outstanding balance on its $3 million credit facility, with working capital improving to $15.1 million from $13.5 million [10]

Company Operations and Contracts - The company manufactures optical sighting systems primarily for the U.S. Department of Defense and foreign military applications, with less than 1% of revenue from resale of third-party products[19]. - On January 18, 2024, the company acquired the Speedtracker Mach product line for $1 million, with potential future payments based on revenue milestones, which are currently deemed highly unlikely to be achieved[21][22]. - The company was awarded a three-year IDIQ contract for Optically Improved Periscopes with a maximum potential value of $6.5 million on December 11, 2024[23]. - A new contract for Laser Filter Units and Window Assemblies supporting Night Vision devices was valued at $2.0 million, with deliveries scheduled from March 2025 to February 2026[24]. - The company received contracts totaling $2.1 million for laser protected periscopes, with expected deliveries from May 2025 to April 2026[25]. - A contract for laser filter units supporting the XM-157 NGWS Scope was valued at $2.5 million, with deliveries from August 2024 to July 2025[26]. - The company anticipates integrating night vision and optical sights products into commercial applications, expanding its market reach[38]. - Approximately 96% of contracts contain termination clauses for convenience, allowing for recovery of incurred costs but potentially affecting future revenues[44]. - The company is actively marketing new periscopes internationally and completed its first international shipment utilizing new technology in March 2014[123]. Financial Performance and Projections - 84% of the company's business during the twelve months ended September 29, 2024, was in support of U.S. military products[75]. - For fiscal year 2025, total military spending is projected at $878.5 billion, an increase of 2.2% over estimated 2024 spending[76]. - Military procurement spending is expected to increase by $18.6 billion, or 12.6%, in fiscal year 2025 compared to estimated spending in fiscal year 2024[76]. - The National Defense Authorization Act for Fiscal Year 2025 requests $895 billion, representing an increase of $11.3 billion, or 1.3%, over the prior year[77]. - The fiscal year 2025 budget request for major ground system programs decreased by 4.7% from fiscal year 2024 levels and by 27.2% from fiscal year 2023 levels[80]. - The total ground systems vehicles budget for fiscal year 2025 is $6,232.8 million, down from $6,542.0 million in fiscal year 2024[81]. - The Abrams Tank Modification/Upgrade budget for fiscal year 2025 is $1,020.2 million, a significant decrease from $896.5 million in fiscal year 2024[81]. - Approximately 77% of gross business revenue is derived from six major customers, including U.S. government agencies and defense contractors[94]. - For the fiscal year ended September 29, 2024, 94% of total revenue was generated from domestic customers, with U.S. government agencies contributing 20% and four major defense contractors accounting for 25%, 7%, 6%, and 6% respectively[170]. Regulatory Compliance and Risks - The company is subject to various laws and regulations that impact revenue, operating costs, and profit margins, including the Federal Acquisition Regulation (FAR)[46]. - The company currently holds 10 active DSP-5 licenses with a total contract value of $679.93 million[56]. - The company has no history of defective pricing claim adjustments and no outstanding defective pricing claims pending[57]. - The approval process for export/import licenses can take from several weeks to six months or more[56]. - The company is currently in compliance with all applicable regulations and does not have any pending claims due to noncompliance[57]. - Warranty and product liability claims could materially affect financial condition, as the company warrants product quality for twelve months post-delivery[163]. - The company is exposed to technological changes and must continuously enhance existing products to remain competitive in the defense technology supply industry[162]. - Cybersecurity threats pose a risk to the company's information technology systems, which are critical for operations and data integrity[164]. - The company recognizes cybersecurity risks and has implemented a comprehensive risk management strategy to protect its information and systems[202]. Supply Chain and Material Management - Approximately 7% of material requirements are single-sourced, representing about 15% of active supplier order values, which poses a risk to supply chain stability[43]. - Supply chain disruptions due to geopolitical events and labor shortages are expected to continue, affecting supplier delivery lead times and material availability[154]. - The company has a backlog that may be affected by supply chain disruptions, potentially delaying product delivery and revenue recognition[150]. - The company has experienced substantial increases in costs for aluminum, steel, and acrylic commodities, impacting overall profitability[154]. - The company has sought to minimize the impact of slower U.S. military orders by obtaining foreign military orders and expanding its customer base[144]. Innovation and Product Development - The Applied Optics Center has seen a substantial increase in orders from new and existing customers, which is expected to offset the impact of ground systems reductions[84]. - The acquisition of the Applied Optics Center has created new commercial product opportunities, particularly in thin film coatings and optical assemblies[90]. - The company plans to focus on four product areas for commercialization, including Big Eye Binoculars and Optex Outdoors for civilian markets[88][92]. - The company believes that its future success will depend on the innovation and technical expertise of its personnel[114]. - The company competes primarily on the basis of product design, engineering, pricing, quality, and customer support[125]. Workforce and Employment - The company has 128 full-time equivalent employees as of September 29, 2024, including a small temporary workforce to handle peak loads[130]. - The company faces significant risks related to labor costs and workforce retention due to low unemployment and tight labor markets, which could impede business plans[147]. - The company relies heavily on key personnel, with only two employment agreements in place, which poses a risk to business continuity if key employees leave[151]. Capital and Stock Information - Future capital requirements will depend on factors such as backlog fulfillment, procurement of production contracts, and general economic conditions[175]. - The company may need to raise additional capital in the future, which may not be available on acceptable terms, potentially affecting operations and financial condition[174]. - The stock price has ranged from a low of $2.87 to a high of $10.30 since being listed on Nasdaq in March 2023, indicating potential volatility[188]. - As of December 18, 2024, there were approximately 6,896,738 shares of common stock outstanding with 87 shareholders of record[216]. - The company has no plans to pay dividends in the foreseeable future despite having done so in the past[217]. Legal Matters - The company is involved in ongoing lawsuits and claims but does not expect any to materially impact its business or financial condition[210].

Core Viewpoint - Zacks Investment Research has initiated coverage of Optex Systems Holdings, Inc. (OPXS) with an Outperform rating, highlighting the company's strong financial performance and strategic positioning in the defense sector, making it an attractive investment opportunity in the military-grade optical systems market [1] Financial Performance - Optex Systems has shown robust growth, with revenues increasing from $17.6 million to $24.6 million for the nine months ended June 30, 2024, representing a 39.8% year-over-year growth [2] - The company's net income rose from $0.8 million to $2.8 million year over year for the same period, indicating improved operational efficiency [5] Order Backlog and Contracts - The expanding order backlog increased from $43.5 million to over $47 million, reflecting successful contract acquisitions and sustained market demand [3] - Significant contracts include a $3.8 million order for laser-protected periscopes and a $2.5 million contract for laser filter units, reinforcing Optex Systems' role as a key supplier to the U.S. Department of Defense and foreign military clients [3] Market Positioning - The company is well-positioned to benefit from increased U.S. military spending and global demand for advanced optical systems amid ongoing geopolitical tensions [4] - Optex Systems' stock has outperformed the broader market, trading at a discount compared to industry peers, making it an appealing option for growth-focused investors in the defense sector [7] Strategic Focus - The company's strategic focus on innovation is evident through its involvement in advanced projects like the Integrated Visual Augmentation System, positioning it for sustained growth in a competitive market [5] - Optex Systems is recognized as a standout contender in the defense sector due to its strong financial performance, strategic contract wins, and innovative approach [8]

Core Insights - Optex Systems Holdings, Inc. reported a significant improvement in earnings for the quarter ended June 30, 2024, with an EPS of 18 cents, up from 9 cents in the same period last year [1] - Revenues for the quarter reached $9.1 million, reflecting a 26.3% increase from $7.2 million in the comparable quarter of the previous year [1] Revenue Performance - The robust quarterly performance was driven by increased deliveries in the Optex Richardson segment and the Applied Optics Center segment, with the Richardson segment contributing a revenue increase of $1.6 million and the Applied Optics Center adding $0.3 million [2] - The growth in military product demand offset a decline in commercial optical assemblies [2] Profitability Metrics - Gross profit surged by 68.3% to $2.9 million from $1.7 million in the previous year, with gross margin expanding to 31.8% from 23.9% [3] - Operating income more than doubled, increasing by 114.8% to $1.6 million from $0.8 million in the prior-year quarter, while net income rose 118.9% to $1.3 million from $0.6 million [4] - Adjusted EBITDA nearly doubled to $1.8 million for the quarter, compared to $0.9 million in the same period last year [4] Backlog and Future Outlook - The company's backlog as of June 30, 2024, was $45.6 million, a 9.6% increase from $41.6 million as of July 2, 2023, indicating a positive outlook for continued revenue growth [5] Financial Position - As of June 30, 2024, cash and cash equivalents decreased to $0.5 million from $1.2 million as of October 1, 2023, while total assets increased to $24.9 million from $22.2 million [6] - Stockholders' equity improved to $17.7 million from $14.9 million as of October 1, 2023 [7] - Operating cash flows for the nine months ended June 30, 2024, were reported at $1 million [7] Strategic Investments - During the nine months ended June 30, 2024, the company invested $1 million in the acquisition of intellectual property to strengthen its product offerings and maintain a competitive edge in the defense sector [8]