Core Viewpoint - The Zacks Equity Research team highlights recent performance and outlook for several companies, including UnitedHealth Group, Honeywell, Shopify, and Optex Systems, emphasizing their respective strengths and challenges in the current market environment [2][4][5][6][12]. UnitedHealth Group Inc. (UNH) - UnitedHealth's shares have declined by 3.9% over the past six months, slightly better than the Zacks Medical - HMOs industry's decline of 4.6% [4]. - The company faces rising medical costs, with a medical care ratio (MCR) projected at 89.1% for 2025, alongside elevated debt and interest expenses impacting financial flexibility [4]. - Despite the share price decline, UnitedHealth's fourth-quarter earnings exceeded estimates, supported by steady revenue growth from Optum and UnitedHealthcare, and strong cash flow with significant shareholder returns [5]. Honeywell International Inc. (HON) - Honeywell's shares have outperformed the Zacks Diversified Operations industry over the past six months, increasing by 18.6% compared to 1.4% for the industry [6]. - The company benefits from strong performance in commercial aviation and building automation, particularly in the Aerospace segment driven by defense business strength and growth in air transport flight hours [6]. - However, Honeywell faces challenges in its Industrial Automation segment due to lower demand, increasing operating costs, and significant balance sheet debt from acquisitions [8]. Shopify Inc. (SHOP) - Shopify's shares have underperformed the Zacks Internet - Services industry, declining by 12.7% compared to a 43.1% increase for the industry [9]. - The company is experiencing gross margin pressure due to higher hosting costs and a new paid trial program, which affects profitability [9]. - Despite these challenges, Shopify's expanding merchant base and investment in AI-driven tools are expected to enhance customer engagement and operational efficiency [10][11]. Optex Systems Holdings, Inc. (OPXS) - Optex Systems' shares have outperformed the Zacks Aerospace - Defense Equipment industry, increasing by 20.1% compared to 18.6% for the industry [12]. - The company reported a 31.7% year-over-year increase in Q1 FY26 orders, driven by strong demand for periscopes and optical assemblies, with quarterly revenues rising by 11.6% to $9.1 million [12][13]. - Recent multi-year contract awards exceeding $6 million provide revenue visibility into 2027, although gross margins have declined due to mix pressure and higher general and administrative costs [13].

Shares of Optex Systems Holdings, Inc. (OPXS) have declined 2.9% since the company reported results for the quarter ended Dec. 28, 2025, underperforming the S&P 500 index, which fell 1.6% over the same period. Over the past month, however, the stock has edged down 0.9%, outperforming the broader market’s 1.9% decline.For the fiscal first quarter of 2026, Optex Systems reported net income of 3 cents per share compared with 12 cents per share in the prior-year quarter.Revenues rose 11.6% year over year to $9. ...

Core Insights - Optex Systems reported first-quarter fiscal 2026 results showing higher revenue and order growth, but faced margin pressure due to legacy programs and increased costs [4][7] - The company anticipates that the first quarter will represent the lowest profitability of the fiscal year, with expectations for sequential improvement in operating results as margins recover and revenue increases [1][7] Financial Performance - Operating income was $0.1 million, down from $0.9 million in the prior-year period, while net income was $0.2 million and adjusted EBITDA was $0.7 million [1][7] - Revenue for the quarter reached $9.1 million, reflecting an 11.6% year-over-year increase, but gross margin declined to 22.9% [3][7] - General and administrative expenses rose to $1.9 million, primarily due to higher labor costs, stock compensation, and professional services [2] Segment Performance - Optex-Richardson revenue increased by 55.9% year over year, driven by higher periscope production and increased XM30 activity, while AOC revenue declined by 20.1% due to lower volumes [6][8] - New orders totaled $7.9 million, up 31.7% year over year, with Optex-Richardson orders rising by 46.2% [15] Capital Investments and Stock Buyback - The board approved a new stock buyback program authorizing up to $10 million, replacing the prior program [5][17] - Management plans to invest approximately $2.4 million in fiscal 2026 for capital improvements aimed at expanding capacity and supporting new product development [19] Balance Sheet and Cash Flow - At the end of the quarter, the company had $5.8 million in cash, down from $6.4 million at fiscal year-end, with accounts receivable slightly decreasing to $4.4 million [11] - Inventory increased to $15.0 million as production ramped up for the XM30 program, while total working capital was reported at $21.2 million [12] Future Outlook - Management expects to generate net income and positive operating cash flow over the next nine months, with plans to fund capital investments through existing cash and operating cash flow [18] - The company anticipates additional laser filter awards as government funding resumes, which could positively impact future revenue [15]

Financial Data and Key Metrics Changes - The company ended the first quarter with a cash balance of $5.8 million, down from $6.4 million at the fiscal year-end [2] - Accounts receivable decreased to $4.4 million from $4.6 million, while inventory increased to $15 million from $14.3 million due to ramped-up production for the XM30 program [2][3] - Operating cash uses were $0.1 million compared to an operating cash generation of $2.8 million in the prior year period, primarily due to lower profitability and increased inventory [4] - Revenue for the first quarter increased 11.6% year-over-year to $9.1 million, with net income totaling $0.2 million and adjusted EBITDA at $0.7 million [5][8] Business Line Data and Key Metrics Changes - Optex-Richardson revenue rose 55.9%, driven by higher periscope production and increased XM30 activity [5] - Applied Optics Center (AOC) revenue declined 20.1%, primarily due to lower laser filter and optical assembly volumes [6] - New orders for the quarter totaled $7.9 million, a 31.7% increase year-over-year, with Optex-Richardson orders rising 46.2% [8] Market Data and Key Metrics Changes - Backlog totaled $37.9 million, down from $42 million last year, primarily due to program delays stemming from the 2025 government shutdown [8] - The company expects AOC revenues to improve in the second half of fiscal year 2026, supported by recent bookings and anticipated contract awards [7] Company Strategy and Development Direction - The company plans to invest approximately $2.4 million in capital improvements during fiscal year 2026, focusing on expanding capacity and developing new capabilities [4][5] - Investments in research and development, along with expanded capabilities, are expected to drive revenue growth and improve margin performance as older programs wind down [12][13] - The company is entering a period of accelerating opportunity, with a focus on execution, operational discipline, and innovation [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustainable growth and improving profitability, highlighting the strong pricing and higher value programs in the current backlog [13][14] - The leadership transition and temporary overlap of senior roles contributed to increased general and administrative expenses, but these costs are not expected to continue beyond the first quarter [7][8] Other Important Information - The company announced a new stock repurchase program authorizing up to $10 million in common stock purchases, replacing the prior program [9] - The company has invested in additional machining and assembly equipment to support the XM30 vehicle program, which represents a significant opportunity for the Richardson segment [11] Q&A Session Summary Question: No questions were received during the Q&A session - The operator confirmed that there were no questions from participants during the call [15]

Financial Data and Key Metrics Changes - The company ended the first quarter with a cash balance of $5.8 million, down from $6.4 million at the fiscal year-end [3] - Accounts receivable totaled $4.4 million, slightly down from $4.6 million [3] - Inventory increased to $15 million from $14.3 million, reflecting ramped-up production for the XM30 program [3] - Operating cash uses during the quarter were $0.1 million compared to an operating cash generation of $2.8 million in the prior year [5] - Revenue for the first quarter increased 11.6% year-over-year to $9.1 million [6] - Net income totaled $0.2 million, with adjusted EBITDA at $0.7 million [9] Business Line Data and Key Metrics Changes - Optex-Richardson revenue rose 55.9%, driven by higher periscope production and increased XM30 activity [6] - Applied Optics Center (AOC) revenue declined 20.1%, primarily due to lower laser filter and optical assembly volumes [6] - New orders for the quarter totaled $7.9 million, a 31.7% increase year-over-year, with Optex-Richardson orders rising 46.2% [9] Market Data and Key Metrics Changes - Backlog totaled $37.9 million, down from $42 million last year, primarily due to program delays from the 2025 government shutdown [9] - AOC revenues are expected to improve in the second half of fiscal year 2026, supported by recent bookings and anticipated contract awards [7] Company Strategy and Development Direction - The company is focused on expanding capacity, developing new capabilities, and enhancing research and rapid prototyping [5][6] - Investments in capital improvements are expected to total approximately $2.4 million during fiscal year 2026 [5] - The company aims to broaden its addressable market and create additional revenue streams through new product lines [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustainable growth and improving profitability [14] - The current backlog reflects stronger pricing and higher value programs, providing visibility into continued growth [13] - The company anticipates EBITDA improvement as margins recover and revenues increase [9] Other Important Information - The board approved a new stock repurchase program authorizing up to $10 million in common stock purchases [10] - The company has invested in additional machining and assembly equipment to support the XM30 vehicle program [12] Q&A Session Summary - No questions were received during the Q&A session, indicating a lack of immediate inquiries from participants [15]

Revenue Performance - Total revenues for the three months ended December 28, 2025, increased by $0.9 million, or 11.6%, compared to the prior year period, reaching $9.145 million[10] - Optex Richardson revenue increased by $1.9 million or 55.9% for the same period, driven by higher production levels and customer demand[3] - Applied Optics Center revenue decreased by $1.0 million or 20.1%, primarily due to lower customer demand for laser filters and optical assemblies[4] - Revenue for the three months ended December 28, 2025, was $9,145,000, an increase of 11.6% compared to $8,198,000 for the same period in 2024[25] Profitability - Consolidated gross profit slightly decreased to $2.096 million, with a gross margin percentage dropping from 26.0% to 22.9%[5] - Operating income fell to $0.1 million, an 83.7% decrease from the prior year, attributed to lower gross profit and higher general and administrative costs[7] - Gross profit for the same period was $2,096,000, slightly down from $2,128,000, resulting in a gross margin of 22.9%[25] - Operating income decreased to $149,000 from $916,000, indicating a decline in operational efficiency[25] - Net income applicable to common shareholders was $0.2 million, down 71.3% from $0.8 million in the prior year[8] - Net income for the quarter was $242,000, down from $844,000, reflecting a decrease of 71.4% year-over-year[25] - Basic income per share was $0.04, compared to $0.12 in the prior year, showing a significant decline in earnings per share[25] Financial Position - As of December 28, 2025, working capital was $21.2 million, with cash reserves of approximately $5.8 million and no outstanding balance on the revolving credit line[16][17] - Total assets increased to $30,211,000 from $30,056,000, indicating a growth of 0.5%[22] - Total liabilities decreased to $5,466,000 from $5,765,000, a reduction of 5.2%[22] - Stockholders' equity rose to $24,745,000 from $24,291,000, reflecting an increase of 1.9%[22] Future Plans and Outlook - The company plans to invest a total of $2.4 million in capital expenditures for fiscal year 2026 to expand capacity and develop new capabilities[18] - A new stock repurchase program was approved, allowing the company to buy up to $10 million in shares of its common stock[19] - The company continues to focus on manufacturing optical sighting systems for Department of Defense applications, with products installed on various military vehicles[26] - Future outlook includes addressing risks such as funding for defense programs and potential supply chain challenges[28] Orders and Demand - The company booked $7.9 million in new orders, representing a 31.7% increase over the prior year period[13]

Cost Increases and Financial Impact - The company has experienced substantial increases in the costs of aluminum, steel, gold, and acrylic commodities since fiscal year 2021, affecting segment margins for deliveries against orders during the year ended September 28, 2025, and the first fiscal quarter of 2026[99]. - Approximately 3% of the contract backlog is for items priced prior to fiscal year 2021, which are currently in a loss condition due to cost increases[99]. - Consolidated gross profit for the same period was $2.096 million, with a gross margin percentage decrease from 26.0% to 22.9% due to higher costs in the Applied Optics Center segment[108]. - Operating income decreased by $0.8 million to $149,000, primarily due to lower gross profit and increased general and administrative spending of $0.7 million[109]. - Net income decreased by $0.6 million to $242,000 for the three months ended December 28, 2025, compared to $844,000 for the prior year period[113]. - Adjusted EBITDA decreased by $0.4 million to $728,000 for the three months ended December 28, 2025, compared to $1.137 million for the prior year period[113]. - The Company recognized $174,000 in new loss reserves against long-term IDIQ contracts during the three months ended December 28, 2025[151]. - The Company had contract loss reserves of $185,000 as of December 28, 2025, related to older legacy contracts affected by inflationary cost increases[151]. Revenue and Orders - Total revenues for the three months ended December 28, 2025, increased by $0.9 million, or 11.6%, compared to the prior year period, driven by increased revenue at the Optex Richardson segment[107]. - The company booked $7.9 million in new orders during the three months ended December 28, 2025, representing a 31.7% increase over the prior year period[118]. - Orders for the Optex Richardson segment increased by $1.2 million, or 46.2%, primarily due to increased demand for periscope products[120]. - For the three months ended December 28, 2025, total revenue increased by $0.9 million or 11.6% to $9.145 million compared to $8.198 million in the prior year period[127]. - Optex Richardson revenue increased by $1.9 million or 55.9% due to higher production levels and customer demand for various products[129]. - Applied Optics Center revenue decreased by $1.0 million or 20.1% primarily due to lower demand for laser filters and optical assemblies[130]. Backlog and Future Expectations - Backlog as of December 28, 2025, was $37.9 million, a decrease of 9.8% from $42.0 million as of December 29, 2024[121]. - Optex Richardson backlog decreased by $3.1 million or 10.0% to $27.9 million due to lower customer demand for periscopes[122]. - Applied Optics Center backlog decreased by $1.0 million or 9.1% to $10.0 million, attributed to lower demand for laser filters[123]. - The company anticipates new contract awards against current outstanding proposal requests for laser filters due to approved funding following the government shutdown[101]. - The company anticipates an increase in laser filter awards over the next three quarters due to approved government appropriations and outstanding proposals[120]. Government Contracts and Risks - A significant portion of revenue is derived from U.S. Government contracts, which are subject to annual congressional appropriations; the company did not experience a slowdown in total consolidated contract awards during the first three months of fiscal year 2026[101]. - The federal government was in a shutdown from October 1, 2025, to November 12, 2025, which affected contract awards for laser filters at the Applied Optics Center[101]. - The company does not foresee significant material risks from recent tariff uncertainties, as defense products are primarily sourced domestically and existing customer backlog is covered with inventory[102]. - The company is both a prime and sub-prime contractor to the U.S. Department of Defense, with contracts issued through major defense contractors[94]. - The company has not experienced any material pending terminations for convenience or default on existing contracts[96]. Financial Management and Expenses - General and administrative expenses increased by $0.7 million, driven by higher labor costs and additional staffing during the transition of executive leadership[109]. - General and administrative expenses increased by 58.3% to $1.9 million due to higher labor costs and increased legal and IT service costs[132]. - The company plans to utilize current cash and available credit to fund capital equipment purchases and R&D for new programs[138]. - As of December 28, 2025, the outstanding balance under the Texas Capital Facility was zero, with total interest expense also at zero for the quarter[147]. - The Company declared and paid no dividends during the three months ended December 28, 2025, and there are no outstanding declared and unpaid dividends[147]. - A new stock repurchase program was approved, allowing the Company to purchase up to $10,000,000 in shares of its common stock[148]. Warranty and Tax Assets - As of December 28, 2025, the Company had accrued warranty costs of $168,000, an increase from $162,000 as of September 28, 2025, primarily due to estimated warranties for optical assemblies[150]. - The Company monitors actual warranty costs against expected values quarterly and adjusts estimates accordingly[150]. - The net carrying value of deferred tax assets as of December 28, 2025, was $1.2 million, with a valuation allowance of $800,000 against those assets[154]. Loan Agreement and Obligations - The Loan Agreement requires maintaining a fixed charge coverage ratio of at least 1.25:1 and a total leverage ratio of 3.00:1[146]. - The Company is obligated to accept new task awards against certain loss contracts until contract expiration, which may lead to material losses if costs continue to rise[151].

Core Viewpoint - Optex Systems Holdings, Inc. has secured a new contract valued at $2.19 million from a U.S. Government Prime Contractor for a Night Vision Goggle system, with deliveries scheduled from Q2 2026 to early 2027 [1] Company Summary - Optex Systems Holdings, Inc. is recognized as a leading manufacturer of precision optical sighting systems for both military and commercial applications [1] - The awarded contract signifies the company's ongoing engagement with government contracts, enhancing its revenue stream and market presence [1] Industry Summary - The contract supports the development of Night Vision Goggle systems, indicating a continued investment in advanced military technology by the U.S. government [1] - The timeline for deliveries extending into early 2027 suggests a long-term commitment to enhancing military capabilities through advanced optical systems [1]

Core Viewpoint - Optex Systems Holdings, Inc. plans to report its financial performance for Q1 of fiscal 2026 on February 11, 2026 [1] Financial Performance Announcement - The company will hold an investor conference call on February 11, 2026, at 4:30 pm ET to discuss its financial results [1]

Core Insights - The future of warfare is shifting away from traditional land vehicles and main battle tanks, indicating a potential transformation in defense strategies and investment opportunities in the aerospace and defense sectors [1]. Group 1: Industry Trends - The US Army is actively seeking a replacement for the Bradley Fighting Vehicle, highlighting ongoing developments in military vehicle technology and procurement [1]. Group 2: Investment Opportunities - The Aerospace Forum aims to identify investment opportunities within the aerospace, defense, and airline industries, leveraging data analytics to inform investment strategies [1].