Shares of Optex Systems Holdings, Inc. (OPXS Quick QuoteOPXS - Free Report) have declined 8.5% since the company reported its earnings for the quarter ended June 29, 2025. This compares unfavorably with the S&P 500 index, which gained 1.2% over the same period. Over the past month, Optex shares slipped 7.7%, while the broader index advanced 2.5%, highlighting relative underperformance against the market benchmark.

In the quarter, Optex reported earnings per share of 22 cents, up from 18 cents in the prior-year quarter.  

The company reported revenues of $11.1 million, up 22.6% from $9.1 million a year earlier. Net income came in at $1.5 million, an increase of 19.7% from $1.3 million in the year-ago quarter. Operating income rose 18.3% year over year to $1.9 million.

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

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

Other Key Business Metrics

Gross profit for the quarter reached $3.2 million, up 10% from the prior-year quarter, though gross margin compressed to 28.5% from 31.8%, reflecting changes in product mix and cost dynamics. Adjusted EBITDA, a non-GAAP measure, increased 15.7% to $2.1 million. 

The company reported working capital of $19.4 million, compared to $15.1 million at the end of fiscal 2024. Operating cash flow for the first nine months was $5.4 million, driven by improved net income and favorable working capital adjustments. Cash on hand stood at $4.9 million at the quarter’s close, with no outstanding borrowings on the revolving credit line. Accounts receivable totaled $4.1 million, expected to be collected in the fourth quarter.

Management Commentary

Chief executive officer Danny Schoening described the quarter as “record-breaking” for revenues, emphasizing Optex’s commitment to operational excellence and customer support. He credited the company’s new program wins in domestic and international markets as evidence of its growing industry presence. Schoening highlighted efficient factory performance and reiterated a focus on sustaining growth momentum through continued investment in innovation and customer value creation.

Factors Influencing Results

Revenue growth was fueled by higher periscope production at the Richardson, TX, facility and increased customer demand across both the Optex Richardson and Applied Optics segments. The decline in gross margin year over year stemmed largely from product mix changes, offset partially by volume-driven profit gains. Management noted that the company’s defense products are primarily sourced domestically, mitigating risks from tariffs or supply chain disruptions, though some commercial optical assemblies rely on components sourced from Taiwan. The company stated that existing inventory adequately covers the current backlog, while future orders may reflect pricing adjustments for any tariff impacts.

Management expressed confidence in sustaining growth by leveraging its backlog, which stood at $38.3 million at quarter-end, down 16% year over year. Importantly, subsequent contract wins after June 29 boosted backlog to $45 million as of Aug. 5, 2025, including 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.

Other Developments

During the reported quarter, the company’s new awards represented an expansion of its footprint across domestic and international defense markets. These contracts are expected to support revenue visibility in future periods, reinforcing management’s outlook for continued growth despite recent backlog fluctuations.