Shares of Optex Systems Holdings, Inc. (OPXS Quick QuoteOPXS - Free Report) have declined 3.9% since the company reported its earnings for the quarter ended Dec. 29, 2024. This compares to the S&P 500 index’s 0.6% growth over the same time frame. Over the past month, the stock has gained 0.8% compared with the S&P 500’s 3.7% growth.

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For the first quarter of fiscal 2025, Optex reported an earnings per share of 12 cents, up from 6 cents in the prior-year period.

It posted revenues of $8.2 million, a 17.7% increase from $7 million in the year-ago quarter. This growth was primarily driven by higher demand for periscopes, laser filters and day windows, partially offset by lower revenues from commercial optical assemblies and other products.

Gross profit rose 26.4% year over year to $2.1 million, reflecting an improved gross margin of 26% compared to 24.2% in the year-ago period. The increase in gross profit was attributed to a favorable product mix and higher revenue against a relatively fixed cost base.

Operating income surged 65.6% to $0.9 million from $0.6 million a year ago as revenue growth outpaced general and administrative expense increases. 

Net income nearly doubled, rising 95.8% to $0.8 million compared to $0.4 million in the prior-year quarter.

Adjusted EBITDA, a non-GAAP measure, increased 50% year over year to $1.1 million, primarily reflecting higher revenue and gross profit.

Key Business Metrics

As of Dec. 29, 2024, Optex reported a backlog of $42 million, down 6.7% from $45 million at the end of December 2023. Management attributed this decline to the timing of customer orders but noted that new orders are anticipated in the near term, some of which are expected to contribute to fiscal 2025 revenues.

The company generated $2.8 million in operating cash flow during the quarter, primarily driven by increased net income and accounts receivable collections. As of quarter-end, Optex held $2.5 million in cash, up from $1 million as of Sept. 29, 2024. The company also fully repaid its outstanding credit facility balance of $1 million during the quarter.

Management Commentary and Outlook

CEO Danny Schoening highlighted the company’s continued growth trajectory, noting a four-year compounded annual revenue growth rate exceeding 20%. He expressed confidence in maintaining this momentum, citing strong customer engagement in both new product designs and ongoing supply requirements.

For fiscal 2025, Optex expects revenues to exceed $38 million, supported by its backlog and anticipated new orders. Management reiterated its focus on profitable and sustainable growth, emphasizing operational efficiencies and customer collaboration as key drivers.

Other Developments

During the quarter, Optex continued its investments in working capital and infrastructure, as reflected in higher cash balances and improved accounts receivable collections.