Financial Data and Key Metrics Changes - Gross profit improved to 29.2% in fiscal year 2025 compared to 28% in the prior fiscal year, driven by higher revenue and favorable manufacturing overhead rates [2] - Operating income increased by $2.3 million, or 47.9%, to $7.1 million in fiscal year 2025 from $4.8 million in fiscal year 2024 [3] - Net income applicable to common shareholders rose to $5.1 million in fiscal year 2025 from $3.8 million in fiscal year 2024, an increase of $1.3 million [3] - Adjusted EBITDA increased by $2.3 million to $8 million during the 12 months ended September 28, 2025, compared to $5.7 million in the prior year [4] Business Line Data and Key Metrics Changes - The company booked $36.2 million in new orders during the 12 months ended September 28, 2025, a 0.5% decrease from $36.4 million in the prior year [4] - Backlog as of September 28, 2025, was $39.1 million, down from $44.2 million as of September 29, 2024 [4] Market Data and Key Metrics Changes - Reduced demand attributed to delays in government contracts, including ARC3 Abrams replenishment contracts and the BNVG Night Vision Goggle program, impacting orders in the last three months of fiscal year 2025 [5] Company Strategy and Development Direction - The company aims to continue double-digit growth while exploring new opportunities, including the production of the Lightweight Transit and driver periscope assembly for the XM30 [11] - A strategic review identified key personnel and equipment to enhance product capabilities in reticles, coatings, and optical assembly [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about resolving government funding issues by the end of January 2026, despite current uncertainties [5] - The transition of leadership from Danny Schoening to Chad George was described as well-planned, with a focus on maintaining business performance [12][16] Other Important Information - Danny Schoening resigned as CEO, with Chad George appointed as his successor effective December 20, 2025, while Schoening remains as Chairman of the Board [6][7] Q&A Session Summary Question: Concerns about the transition period following the CEO's departure - Management clarified that the transition was planned over several months, ensuring a smooth handover of responsibilities [15][16]

Financial Data and Key Metrics Changes - Gross profit improved to 29.2% in fiscal year 2025 compared to 28% in the prior fiscal year, driven by higher revenue and favorable manufacturing overhead rates [2] - Operating income increased by $2.3 million, or 47.9%, to $7.1 million in fiscal year 2025, primarily due to increased gross profit [3] - Net income applicable to common shareholders rose to $5.1 million in fiscal year 2025 from $3.8 million in the prior year, an increase of $1.3 million [3] - Adjusted EBITDA increased by $2.3 million to $8 million during the 12 months ended September 28, 2025, compared to $5.7 million in the previous year [4] Business Line Data and Key Metrics Changes - The company booked $36.2 million in new orders during the 12 months ended September 28, 2025, a 0.5% decrease from $36.4 million in the prior year [4] - Backlog as of September 28, 2025, was $39.1 million, down from $44.2 million as of September 29, 2024 [4] Market Data and Key Metrics Changes - Reduced demand attributed to delays in government contracts, including ARC3 Abrams replenishment contracts and the BNVG Night Vision Goggle program, impacting orders in the last three months of fiscal year 2025 [5] Company Strategy and Development Direction - The company aims to continue double-digit growth while exploring new opportunities, including the production of the Lightweight Transit and driver periscope assembly for the XM30 [11] - A strategic review identified key personnel and equipment to enhance product capabilities in reticles, coatings, and optical assembly [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about resolving government funding issues by the end of January 2026, despite uncertainties beyond that date [5] - The transition of leadership from Danny Schoening to Chad George was described as well-planned, with a focus on maintaining the company's strong position [12][16] Other Important Information - Danny Schoening resigned as CEO, with Chad George appointed as his successor effective December 20, 2025, while Schoening remains as Chairman of the Board [6][7] Q&A Session Summary Question: Concerns about the transition period following the CEO's departure - Management clarified that the transition was planned over several months, ensuring a smooth handoff despite external perceptions of a quick change [15][16]

Financial Data and Key Metrics Changes - The gross profit improved to 29.2% in fiscal year 2025 compared to 28% in the prior fiscal year, attributed to higher revenue and favorable manufacturing overhead rates [2] - Operating income increased by $2.3 million, or 47.9%, to $7.1 million for the year ended September 28, 2025, compared to $4.8 million in the previous year [3] - Net income applicable to common shareholders rose to $5.1 million from $3.8 million, an increase of $1.3 million, primarily due to increased operating income [3] - Adjusted EBITDA increased by $2.3 million to $8 million during the 12 months ended September 28, 2025, compared to $5.7 million in the prior year [4] Business Line Data and Key Metrics Changes - The company booked $36.2 million in new orders during the 12 months ended September 28, 2025, a 0.5% decrease from $36.4 million in the prior year [4] - Backlog as of September 28, 2025, was $39.1 million, down from $44.2 million as of September 29, 2024 [4] Market Data and Key Metrics Changes - A portion of the reduced demand is attributed to delays in government contracts, including the ARC3 Abrams replenishment contracts and the BNVG Night Vision Goggle program, which were expected during fiscal year 2025 [5] - The delay in passing the annual congressional appropriations bill has negatively impacted orders during the last three months of fiscal year 2025 [5] Company Strategy and Development Direction - The company aims to continue its growth trajectory with plans for double-digit growth while exploring new opportunities [11] - The strategic review identified key personnel and equipment to enhance product capabilities in reticles, coatings, and optical assembly [10] - The company is set to start production of new products, including the Lightweight Transit and driver periscope assembly for the XM30 [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about resolving government funding issues by the end of January 2026, despite current uncertainties [5] - The transition of leadership from Danny Schoening to Chad George was described as well-planned, with a focus on maintaining business continuity and performance [12][17] Other Important Information - Danny Schoening resigned as CEO, with Chad George appointed as his successor effective December 20, 2025 [6] - The board increased the total number of board seats from four to five following the leadership transition [6] Q&A Session Summary Question: Concerns about the transition period following the CEO's departure - Management clarified that the transition was planned over several months, ensuring a smooth handover of responsibilities [16][17]

Financial Performance - Total revenues increased by $7.3 million, or 21.6%, to $41.3 million for the fiscal year 2025 compared to $34.0 million in fiscal year 2024[2] - Gross profit rose by $2.5 million to $12.1 million, with a gross margin of 29.2% for fiscal year 2025, up from 28.0% in fiscal year 2024[3] - Operating income increased by $2.3 million to $7.1 million, representing a 47.9% increase compared to the previous year[4] - Net income applicable to common shareholders was $5.1 million, a 36.6% increase from $3.8 million in fiscal year 2024[5] - Adjusted EBITDA increased by $2.3 million to $8.0 million, a 40.1% increase compared to $5.7 million in the prior year[7] Orders and Working Capital - New orders booked totaled $36.2 million, a slight decrease of 0.5% from $36.4 million in the previous year[10] - Working capital improved to $21.1 million as of September 28, 2025, compared to $15.1 million as of September 29, 2024[12] - Cash and cash equivalents increased to $6.4 million, up from $1.0 million in the previous year[21] Investment and Growth Strategies - The company plans to invest $2.4 million in capital expenditures over the next twelve months to expand capacity and develop new capabilities[14] - Future growth strategies may be influenced by changes in military spending and customer demand, as well as supply chain challenges[28] Operational Challenges and Risks - The company experienced a slowdown in contract awards due to the U.S. government shutdown and anticipates potential revenue impacts in fiscal year 2026[11] - The company faces risks related to defense program funding, geopolitical unrest, and competition, which could impact financial performance[29] - Optex anticipates potential delays in contract deliveries and revenue recognition due to various operational uncertainties[28] - Risks include labor shortages and production delays, which could affect the fulfillment of contracts[29] Market Position and Compliance - Optex Systems manufactures optical sighting systems primarily for Department of Defense applications, with products installed on various U.S. military vehicles including Abrams and Bradley fighting vehicles[26] - The company is ISO 9001:2015 certified, indicating a commitment to quality management systems[26] - Optex delivers products directly to military services and prime contractors, enhancing its market reach[26] Forward-Looking Statements - Optex does not assume the obligation to update forward-looking statements, highlighting the uncertainty in predicting future results[30] - The company encourages stakeholders to evaluate risks as outlined in its SEC filings, including Forms 10-K, 10-Q, and 8-K[30]

Contracts and Awards - The company was awarded a new contract for optical sub-assemblies valued at $2.3 million, with deliveries scheduled from April 2026 through December 2026[33]. - A firm fixed price purchase order from General Dynamics Land Systems - Canada was awarded for laser protected periscopes, amounting to $1.6 million, to be delivered in fiscal year 2026[33]. - The company received a five-year requirement-type contract from the Army Contracting Command for Abrams-based optical sighting systems, estimated first-year order amount exceeding $4.3 million[33]. - Significant contracts with a total award value of more than $1.0 million include a $7.4 million IDIQ contract for periscopes with DLA Land and Maritime[52]. - A $3.4 million follow-on contract was awarded by the Israeli Ministry of Defense for refurbishing Night Vision Rifle Scopes, with deliveries starting in Q1 of fiscal year 2024[69]. - The company has a backlog of $1.1 million associated with two government prime contracts pending termination, with expectations to recover all incurred costs[40]. Financial Performance - Total external revenues increased by $7.3 million for the fiscal year 2025, representing a 21.6% increase compared to fiscal year 2024[196]. - Gross profit for the fiscal year 2025 was $12.057 million, with a gross margin of 29.2%[196]. - Operating income for the fiscal year 2025 was $7.132 million, with an operating income margin of 17.3%[196]. - Consolidated operating income rose by $2.3 million to $7.1 million for the year ended September 28, 2025, compared to $4.8 million in the prior fiscal year[201]. - New orders booked totaled $36.2 million for the twelve months ended September 28, 2025, a 0.5% decrease from $36.4 million in the prior year[204]. - Backlog as of September 28, 2025, was $39.1 million, down 11.5% from $44.2 million as of September 29, 2024[207]. Supply Chain and Production - Approximately 83% of the company's material requirements are single-sourced across 104 suppliers, representing about 96% of active supplier order values[39]. - Recent supply chain disruptions, including those caused by geopolitical events, have led to market-wide material shortages and increased costs for critical components such as aluminum and steel[126]. - The ability to fulfill backlog orders may be limited by supply chain disruptions and labor shortages, potentially delaying revenue recognition[124]. - The company has experienced substantial increases in costs for materials and may face challenges in recovering these costs on fixed-price contracts[128]. - The manufacturing process utilizes six sigma techniques and process standardization to improve output and reduce costs[88]. Market and Demand - The company continues to see an increase in demand for precision optics due to global unrest, focusing on observation and situational awareness applications[20]. - The company anticipates the opportunity to integrate night vision and optical sights products into commercial applications[36]. - The company is exploring opportunities to adapt products for commercial use, targeting markets with potential for solid revenue growth[70]. - The company plans to focus on four product areas for commercialization, including Big Eye Binoculars and Thin Film Coatings[73]. Labor and Employment - As of September 28, 2025, the company had 132 full-time equivalent employees, maintaining good relations with employees who are not currently unionized[108]. - The company faces significant labor market challenges, including low unemployment and competition for skilled workers, which could increase production costs and impede growth[123]. Cybersecurity - The company recognizes the increasing volume and sophistication of cyber threats and has implemented a comprehensive cybersecurity risk management program[164]. - The company's cybersecurity program includes risk assessment, policies and procedures, training, auditing, and incident response[165]. - The board of directors is responsible for overseeing cybersecurity risk management policies and protocols[168]. Corporate Governance - Mr. George's initial annual base salary as the new CEO is $300,000, with an annual increase of 3.5%[24]. - The board increased the total number of board seats from four to five with the appointment of Mr. George as a director[27]. Risks and Challenges - The company faces competitive pressures from well-entrenched competitors, which may lead to lower prices and affect financial performance[107]. - Delays in the U.S. government's budget process could adversely affect future revenues, as procurement of products and services may be delayed or canceled[120]. - Approximately 99% of contracts contain termination clauses for convenience, which could affect future revenues; however, the company expects to recover all incurred costs plus a reasonable fee from contracts pending termination, representing $1.1 million in backlog[116]. - The company has several multiyear IDIQ contracts at fixed prices, currently at low profit rates or in a loss condition[115]. Revenue Sources - Approximately 90% of the company's business during the twelve months ended September 28, 2025, was in support of U.S. military products[55]. - Approximately 95% of total company revenue is generated from domestic customers, with only 5% from foreign customers[141]. - The company's revenues for the fiscal year ended September 28, 2025, were derived from U.S. government agencies (29%), four major U.S. defense contractors (19%, 10%, 6%, and 6%), and other customers (30%)[141].

Core Viewpoint - Optex Systems Holdings, Inc. reported its financial results for the year ending September 28, 2025, highlighting significant developments in the company and its market position [1]. Financial Performance - The company has shown growth in its financial metrics, reflecting a strong performance in the precision optical sighting systems sector for military and commercial applications [1]. - CEO Danny Schoening expressed optimism about the company's progress and achievements over the past year, indicating a positive outlook for future operations [1].

Core Viewpoint - Optex Systems Holdings, Inc. plans to report its financial performance for the fourth quarter of fiscal 2025 on December 17, 2025 [1] Group 1 - The company is a leading manufacturer of precision optical sighting systems for military and commercial applications [1] - An investor conference call is scheduled for December 17, 2025, at 5:00 pm ET [1]

Core Insights - Optex Systems Holdings (NASDAQ: OPXS) operates primarily in the optical sighting systems market, focusing on military and defense revenues while also having a presence in the commercial sector [1] Group 1: Company Overview - The company is either the sole or primary provider in its market segment, which gives it a distinct competitive advantage [1] Group 2: Market Position - The military and defense segment is the predominant source of revenue for Optex Systems, indicating a strong reliance on government contracts and defense spending [1]

Core Viewpoint - Optex Systems Holdings, Inc. experienced a decline in share price of 8.5% following its earnings report for the quarter ended June 29, 2025, contrasting with a 1.2% gain in the S&P 500 index during the same period [1] Financial Performance - The company reported earnings per share of 22 cents, an increase from 18 cents in the prior-year quarter [1] - Revenues reached $11.1 million, reflecting a 22.6% increase from $9.1 million a year earlier [2] - Net income was $1.5 million, up 19.7% from $1.3 million in the same quarter last year [2] - Operating income rose 18.3% year over year to $1.9 million [2] Key Business Metrics - Gross profit for the quarter was $3.2 million, a 10% increase from the prior-year quarter, although gross margin decreased to 28.5% from 31.8% due to changes in product mix and cost dynamics [3] - Adjusted EBITDA increased by 15.7% to $2.1 million [3] Working Capital and Cash Flow - Working capital was reported at $19.4 million, up from $15.1 million at the end of fiscal 2024 [4] - Operating cash flow for the first nine months was $5.4 million, supported by improved net income and favorable working capital adjustments [4] - Cash on hand was $4.9 million at the quarter's close, with no outstanding borrowings on the revolving credit line [4] - Accounts receivable totaled $4.1 million, expected to be collected in the fourth quarter [4] Management Commentary - CEO Danny Schoening described the quarter as "record-breaking" for revenues, highlighting the company's commitment to operational excellence and customer support [5] - The CEO credited new program wins in both domestic and international markets as evidence of Optex's growing industry presence [5] - Management emphasized a focus on sustaining growth momentum through continued investment in innovation and customer value creation [5] Factors Influencing Results - Revenue growth was driven by higher periscope production at the Richardson, TX facility and increased customer demand across both Optex Richardson and Applied Optics segments [6] - The decline in gross margin was primarily due to product mix changes, partially offset by volume-driven profit gains [6] - The company sources most of its defense products domestically, which mitigates risks from tariffs or supply chain disruptions [6] Backlog and Future Orders - The backlog stood at $38.3 million at quarter-end, down 16% year over year, but subsequent contract wins increased it to $45 million as of August 5, 2025 [7] - New contracts included a $10.2 million five-year contract for optical sighting systems, a $2.8 million order for the XM30 program, and a $1.6 million order for laser filters [7] Other Developments - The company's new awards during the reported quarter expanded its footprint in domestic and international defense markets, supporting revenue visibility in future periods [8]

Company Overview - Optex Systems Holdings, Inc. is a leading manufacturer of precision optical sighting systems for military and commercial applications, founded in 1987 and based in Richardson, Texas [3] - The company is ISO 9001:2015 certified and primarily serves the Department of Defense (DOD) [3] - Optex's products are utilized in various U.S. military land vehicles, including the Abrams and Bradley fighting vehicles, and the Stryker family of vehicles [3] Upcoming Conference - Optex Systems is scheduled to present at the 2025 Annual Gateway Conference on September 4 at 11:30 a.m. Pacific Time [2] - The presentation will be webcast live and available for replay, with executives available for one-on-one meetings throughout the conference [2] Conference Details - The Gateway Conference provides a platform for public and private companies to connect with investors, analysts, and partners [4] - Attendees will have access to presentations and one-on-one meetings with senior executives from over 75 companies across various sectors, including technology, healthcare, and financial services [5]