Shares of Optex Systems Holdings, Inc. (OPXS Quick QuoteOPXS - Free Report) 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 compared to 16 cents a year earlier. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The company posted a 25.9% year-over-year revenue increase to $10.7 million, up from $8.5 million in the prior-year period. Net income rose by 66.5% to $1.8 million, compared to $1.1 million a year ago. Gross profit jumped 31.4% to $3.4 million, and gross margin expanded by 130 basis points to 31.3%, driven by increased sales volume and better absorption of fixed costs. Operating income also climbed 65% to $2.2 million, highlighting improved efficiency across both segments.

Optex Systems Holdings, Inc. Price, Consensus and EPS Surprise

Optex Systems Holdings Inc. price-consensus-eps-surprise-chart | Optex Systems Holdings Inc. Quote

Operational Metrics Reflect Strength Across Segments

The six-month figures further support Optex’s growth narrative. Revenues increased 22.2% year over year to $18.9 million for the six months ended March 30, 2025, while net income grew 74.9% to $2.6 million. Gross margin over the six-month period rose to 29%, from 27.4% in the year-ago period, bolstered by higher product demand and optimized production. Adjusted EBITDA for the six-month period rose 49.6% to $3.6 million, signaling robust underlying profitability.

Backlog as of March 30, 2025, stood at $41.1 million, down 7% from $44.2 million as of both March 31 and Sept. 29, 2024. However, management quickly followed up the quarter with a $5.7 million laser filter contract for the Applied Optics Center, set for delivery between August 2025 and December 2026.

Management Emphasizes Execution and Capacity Expansion

CEO Danny Schoening credited the strong quarterly performance to enhanced periscope production capacity and elevated demand for laser filters, especially at the Applied Optics Center. He emphasized Optex’s operational execution and alignment with customer expectations. The company’s focus on maintaining high product quality and customer support was highlighted as a cornerstone of its recent momentum.

Headline Drivers: Increased Demand and Efficiency Gains

Revenue growth during the quarter was primarily attributed to greater periscope production and heightened customer demand for laser filter products. The corresponding increase in gross profit was largely due to improved absorption of fixed costs on a higher revenue base. The company’s manufacturing facilities in Richardson were instrumental in scaling production efficiently. Additionally, Optex reported a decrease in inventory to $13.9 million from $14.9 million as of Sept. 29, 2024, signaling progress in inventory management and product turnover.

Other Developments

During the quarter, Optex took financial steps to strengthen its balance sheet by repaying $1 million against its credit facility, reducing its outstanding debt to zero as of March 30, 2025. The company ended the quarter with $3.5 million in cash and a working capital position of $17.9 million, up from $15.1 million at the end of fiscal 2024. These moves reflect a conservative financial strategy aimed at maintaining liquidity and funding operational needs internally.