Q4 2025 Optex Systems Holdings Inc Earnings Call

December 17, 2025

Operator: Thank you for holding. We look forward to talking with you soon. Please hold the line, and we'll be right back with you.

Speaker #4: We look forward to talking with you soon. Please hold the line, and we'll be right back with you.

Speaker #6: Greetings. Welcome to the Optex Systems Holdings Inc. Q4 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator: Greetings. Welcome to the Optex Systems Holdings, Inc. Q4 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If you wish to join the queue to ask a question, please press star one on your telephone keypad. You may press star two if you would like to remove your question from the queue. It is now my pleasure to turn the floor over to your host, Danny Schoening. Danny, the floor is yours.

Speaker #6: If you wish to join the queue to ask a question, please press star one (*) on your telephone keypad. You may press star two (*) if you would like to remove your question from the queue.

Speaker #6: It is now my pleasure to turn the floor over to your host, Danny Schoening. Danny, the floor is yours.

Speaker #7: Thank you, John. Hello, my name is Danny Schoening, and I'm the Chairman and CEO of Optex Systems. I'd like to begin by introducing Karen Hawkins, our CFO, who will walk you through the financials, and then I'll come back in to talk a little more about the business.

Danny Schoening: Thank you, John. Hello. My name is Danny Schoening, and I'm the Chairman and CEO of Optex Systems. I'd like to begin by introducing Karen Hawkins, our CFO, who will walk you through the financials, and then I'll come back in to talk a little more about the business. Karen?

Speaker #7: Karen?

Speaker #8: Okay. Hello. I’d have to begin by reading the Safe Harbor statement. I would like to briefly discuss the use of this call. Statements made during today’s call and our responses during question-and-answer may include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made.

Karen Hawkins: Okay. Hello. I'd have to begin by reading the Safe Harbor Statement. I would like to briefly discuss the use of forward-looking statements during this call. Statements made during today's call and our response during question and answers may include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made. Factors that could cause actual results to differ are described in our annual filings with the SEC, including the risk factor section of our annual report on Form 10-K filed with the SEC. Now we will move on to discuss the financial information. We ended the 28 September 2025 period with a strong cash balance of $6.4 million, up from $1.0 million as of the year-end of 29 September 2024.

Speaker #8: Factors that could cause actual results to differ are described in our annual filings with the SEC, including the risk factors section of our annual report on Form 10-K filed with the SEC.

Speaker #8: Now, we will move on to discuss the financial information. We ended the September 28, 2025, period with a strong cash balance of $6.4 million, up from $1.0 million as of the year ended September 29, 2024.

Speaker #8: Our accounts receivable increased $0.8 million to $4.6 million from $3.8 million as of September year-end on higher revenue. Accounts payable increased $0.3 million to $1.5 million from $1.2 million as of September year-end on material purchases in support of the increased revenue.

Karen Hawkins: Our accounts receivable increased $0.8 million to $4.6 million from $3.8 million as of September year-end on higher revenue. Accounts payable increased $0.3 million to $1.5 million from $1.2 million as of September year-end on material purchases in support of the increased revenue. Our accrued contract loss reserves decreased to $0.1 million as of 28 September 2024 from $0.3 million as of 29 September 2024, primarily due to shipments against our legacy IDIQ multi-year contracts combined with improved manufacturing overhead rates over our prior year estimate costs. We expect these programs to wind down within the next fiscal year. During the 12 months, we paid $1 million against the line of credit, bringing the balance to zero from September year-end September 2024 year-end balance of $1.0 million. The $3 million line of credit was renewed on 21 May 2025, for an additional 24 months through May 2027.

Our accounts receivable increased $0.8 million to $4.6 million from $3.8 million as of September year-end on higher revenue. Accounts payable increased $0.3 million to $1.5 million from $1.2 million as of September year-end on material purchases in support of the increased revenue. Our accrued contract loss reserves decreased to $0.1 million as of 28 September 2024 from $0.3 million as of 29 September 2024, primarily due to shipments against our legacy IDIQ multi-year contracts combined with improved manufacturing overhead rates over our prior year estimate costs. We expect these programs to wind down within the next fiscal year. During the 12 months, we paid $1 million against the line of credit, bringing the balance to zero from September year-end September 2024 year-end balance of $1.0 million. The $3 million line of credit was renewed on 21 May 2025, for an additional 24 months through May 2027.

Speaker #8: Our accrued contract loss reserves decreased to $0.1 million as of September 28 from $0.3 million as of September 29, 2024, primarily due to shipments against our legacy IDIQ multi-year contracts combined with improved manufacturing overhead rates over our prior year estimated costs.

Speaker #8: We expect these programs to wind down within the next fiscal year. During the 12 months, we paid $1.0 million against the line of credit, bringing the balance to zero from the September year-end 2024 balance of $1.0 million.

Speaker #8: The $3 million line of credit was renewed on May 21, 2025, for an additional 24 months through May 2027. Our total working capital was $21.1 million as compared to a September 2024 year-end balance of $15.1 million, with the increased cash.

Karen Hawkins: Our total working capital was $21.1 million as compared to a September 2024 year-end balance of $15.1 million with the increased cash. For the cash flow, our operating cash flow for the 12 months was $6.9 million compared to $1 million in the prior 12 months, driven primarily by higher net income and other changes in non-cash expenses and working capital. During the 12 months, our capital spending was $0.5 million as compared to $1.7 million in the prior year period, which included $1.1 million for the acquisition of a SpeedTracker product line in 2024. For the 12 months, we paid $1.4 million in taxes compared to the prior year period of $1.2 million. Over the next 12 months, the company plans to utilize approximately $2.4 million of our excess cash for capital investments.

Our total working capital was $21.1 million as compared to a September 2024 year-end balance of $15.1 million with the increased cash. For the cash flow, our operating cash flow for the 12 months was $6.9 million compared to $1 million in the prior 12 months, driven primarily by higher net income and other changes in non-cash expenses and working capital. During the 12 months, our capital spending was $0.5 million as compared to $1.7 million in the prior year period, which included $1.1 million for the acquisition of a SpeedTracker product line in 2024. For the 12 months, we paid $1.4 million in taxes compared to the prior year period of $1.2 million. Over the next 12 months, the company plans to utilize approximately $2.4 million of our excess cash for capital investments.

Speaker #8: For the cash flow, our operating cash flow for the 12 months was $6.9 million, compared to $1.0 million in the prior 12 months, driven primarily by higher net income and other capital.

Speaker #8: During the 12 changes in non-cash expenses and working months, our capital spending was $0.5 million as compared to $1.7 million in the prior year period.

Speaker #8: Which included $1.1 million for the acquisition of a speed tracker product line in 2024. For the 12 months we for the 12 months, we paid $1.4 million in taxes compared to the prior year period of $1.2 million.

Speaker #8: Over the next 12 months, the company plans to utilize approximately $2.4 million of our excess cash to expand our current capacity, as well as develop new capabilities to expand for capital investments.

Karen Hawkins: We plan to expand our current capacity as well as develop new capabilities to expand into adjacent markets. We will be replacing old obsolete equipment with new or upgraded systems to reduce downtime and drive capacity improvements for both Optex Richardson and the Applied Optex Center. In addition, we will be expanding our capabilities to support new product lines at AOC as well as new capital improvements with a focus towards research and rapid prototype development at Optex Richardson. Onto stockholders' equity. Our ending outstanding share balance was 6,920,658 shares as of 28 September 2025, as compared to 6,873,938 as of 29 September 2024. During the 12 months, we issued 16,885 shares to employees, net of taxes withheld, for 24,000 shares of vested or restricted stock units against our stock compensation plan.

We plan to expand our current capacity as well as develop new capabilities to expand into adjacent markets. We will be replacing old obsolete equipment with new or upgraded systems to reduce downtime and drive capacity improvements for both Optex Richardson and the Applied Optex Center. In addition, we will be expanding our capabilities to support new product lines at AOC as well as new capital improvements with a focus towards research and rapid prototype development at Optex Richardson. Onto stockholders' equity. Our ending outstanding share balance was 6,920,658 shares as of 28 September 2025, as compared to 6,873,938 as of 29 September 2024. During the 12 months, we issued 16,885 shares to employees, net of taxes withheld, for 24,000 shares of vested or restricted stock units against our stock compensation plan.

Speaker #8: We will be replacing old, obsolete equipment with new or upgraded systems to reduce downtime and drive capacity improvements for both Optex Richardson and the Applied Optex Center.

Speaker #8: In addition, we will be expanding our capabilities to support new product lines at AOC, as well as new capital improvements with a focus towards research and rapid prototype development at Optex Richardson.

Speaker #8: On to stockholders' equity. Our ending outstanding share balance was 6,920,658 shares as of September 28, 2025, as compared to 6,873,938 as of September 29, 2024.

Speaker #8: During the 12 months, we issued 16,885 shares to employees, net of taxes withheld, for 24,000 shares of vested or restricted stock units against our stock compensation plan.

Speaker #8: Additionally, we issued 29,835 restricted shares, which include 22,800 shares issued to three independent board members, and 7,035 shares, which were net of 2,965 tax shares withheld from 10,000 shares to Chad George upon his hiring as president of the company in August 2025.

Karen Hawkins: Additionally, we issued 29,835 restricted shares, which include 22,800 shares issued to three independent board members, and 7,035 shares, which were net of 2,965 tax shares withheld for 10,000 shares to Chad to Chad George upon his hiring as president of the company in August 2025. Vesting of the restricted shares occurs on 1 January 2026. Moving on to the statement of operations. Revenue. For the 12 months ended 28 September 2025, our total revenue increased by $7.3 million or 21.6% compared to the prior year period. The Optex Richardson segment realized a 30.8% increase in revenue, and the Applied Optex Center segment realized an increase of 11.1% compared to the prior fiscal year.

Additionally, we issued 29,835 restricted shares, which include 22,800 shares issued to three independent board members, and 7,035 shares, which were net of 2,965 tax shares withheld for 10,000 shares to Chad to Chad George upon his hiring as president of the company in August 2025. Vesting of the restricted shares occurs on 1 January 2026. Moving on to the statement of operations. Revenue. For the 12 months ended 28 September 2025, our total revenue increased by $7.3 million or 21.6% compared to the prior year period. The Optex Richardson segment realized a 30.8% increase in revenue, and the Applied Optex Center segment realized an increase of 11.1% compared to the prior fiscal year.

Speaker #8: Vesting of the restricted shares occurs on January 1, 2026. Moving on to the statement of operations, revenue for the 12 months ended September 28, 2025—our total revenue increased by $7.3 million, or 21.6%, compared to the prior year period.

Speaker #8: The Optex Richardson segment realized a 30.8% increase in revenue, and the Applied Optex Center segment realized an increase of 11.1% compared to the prior fiscal year.

Speaker #8: The increase in revenue at Optex Richardson was primarily driven by a 50% increase in production throughput on our periscope line, whereas the Applied Optex Center increase was driven by higher customer demand for military laser filters, which was partially offset by lower customer demand in optical assemblies.

Karen Hawkins: The increase in revenue at Optex Richardson was primarily driven by a 50% increase in production throughput on our periscope line, whereas the Applied Optex Center increase was driven by higher customer demand for military laser filters, which was partially offset by lower customer demand in optical assemblies. Gross profit. Consolidated gross profit for the 12 months ended 28 September 2025 increased by $2.5 million or 26.5% to $12.1 million compared to the prior year period of $9.5 million. Our gross profit improved to 29.2% in the fiscal year 2025 as compared to 28% in the prior fiscal year. The higher gross profit was attributable to the higher revenue, changes in product mix combined with more favorable manufacturing overhead rates as the fixed costs remain constant across the higher level revenue. General administrative.

The increase in revenue at Optex Richardson was primarily driven by a 50% increase in production throughput on our periscope line, whereas the Applied Optex Center increase was driven by higher customer demand for military laser filters, which was partially offset by lower customer demand in optical assemblies. Gross profit. Consolidated gross profit for the 12 months ended 28 September 2025 increased by $2.5 million or 26.5% to $12.1 million compared to the prior year period of $9.5 million. Our gross profit improved to 29.2% in the fiscal year 2025 as compared to 28% in the prior fiscal year. The higher gross profit was attributable to the higher revenue, changes in product mix combined with more favorable manufacturing overhead rates as the fixed costs remain constant across the higher level revenue. General administrative.

Speaker #8: Gross profit. Consolidated gross profit for the 12 months ended September 28, 2025, increased by $2.5 million, or 26.5%, to $12.1 million compared to the prior year period of $9.5 million.

Speaker #8: Our gross profit improved to 29.2% in the fiscal year 2025 as compared to 28% in the prior fiscal year. The higher gross profit was attributable to the higher revenue, changes in product mix, combined with more favorable manufacturing overhead rates, as the fixed costs remain constant across the higher level revenue.

Speaker #8: General Administrative. For the years ended September 28, 2025, and September 29, 2024, we recorded operating expenses of $4.9 million and $4.7 million, respectively.

Karen Hawkins: For the years ended 28 September 2025, and 29 September 2024, we recorded operating expenses of $4.9 million and $4.7 million, respectively. General administrative costs increased $0.2 million or 4.3% during the fiscal year due to increased royalties and selling expenses, increased labor and fringe costs, and increased information technology costs, which was offset by reductions in investor relation expenses. Operating profit. For the year ended 28 September 2025, we recorded operating income of $7.1 million as compared to operating income of $4.8 million during the year ended 29 September 2024. The $2.3 million or 47.9% increase in operating income is primarily due to increased gross profit of $2.5 million, which is offset by the $0.2 million increase in G&A spending. Net income and EBITDA.

For the years ended 28 September 2025, and 29 September 2024, we recorded operating expenses of $4.9 million and $4.7 million, respectively. General administrative costs increased $0.2 million or 4.3% during the fiscal year due to increased royalties and selling expenses, increased labor and fringe costs, and increased information technology costs, which was offset by reductions in investor relation expenses. Operating profit. For the year ended 28 September 2025, we recorded operating income of $7.1 million as compared to operating income of $4.8 million during the year ended 29 September 2024. The $2.3 million or 47.9% increase in operating income is primarily due to increased gross profit of $2.5 million, which is offset by the $0.2 million increase in G&A spending. Net income and EBITDA.

Speaker #8: General administrative costs increased $0.2 million, or 4.3%, during the fiscal year due to increased royalties and selling expenses, increased labor and fringe costs, and increased information technology costs, which was offset by reductions in investor relations expenses.

Speaker #8: Operating profit. For the year ended September 28, 2025, we recorded operating income of $7.1 million, as compared to operating income of $4.8 million during the year ended September 29, 2024.

Speaker #8: The $2.3 million, or 47.9%, increase in operating income is primarily due to increased gross profit of $2.5 million, which is offset by the $0.2 million increase in G&A spending.

Speaker #8: Net income and EBITDA. During the year ended September 28, 2025, we recorded net income applicable to common shareholders of $5.1 million, as compared to net income applicable to common shareholders of $3.8 million during the year ended September 29, 2024.

Karen Hawkins: During the year ended 28 September 2025, we recorded net income applicable to common shareholders of $5.1 million as compared to net income applicable to common shareholders of $3.8 million during the year ended 29 September 2024. The increase of net income of $1.3 million is primarily attributable to increased operating income of $2.3 million, offset by $0.8 million in asset impairment for our SpeedTracker product line acquisition and increased federal income tax expense of $0.2 million. Our Adjusted EBITDA increased by $2.3 million to $8 million during the 12 months ended 28 September 2025, as compared to $5.7 million during the 12 months ended 29 September 2024, on increased revenue and gross profit. For orders and backlog. During the 12 months ended 28 September 2025, the company booked $36.2 million in new orders, representing a 0.5% decrease from the prior year-end orders of $36.4 million.

During the year ended 28 September 2025, we recorded net income applicable to common shareholders of $5.1 million as compared to net income applicable to common shareholders of $3.8 million during the year ended 29 September 2024. The increase of net income of $1.3 million is primarily attributable to increased operating income of $2.3 million, offset by $0.8 million in asset impairment for our SpeedTracker product line acquisition and increased federal income tax expense of $0.2 million. Our Adjusted EBITDA increased by $2.3 million to $8 million during the 12 months ended 28 September 2025, as compared to $5.7 million during the 12 months ended 29 September 2024, on increased revenue and gross profit. For orders and backlog. During the 12 months ended 28 September 2025, the company booked $36.2 million in new orders, representing a 0.5% decrease from the prior year-end orders of $36.4 million.

Speaker #8: The increase of net income of $1.3 million is primarily attributable to increased operating income of $2.3 million, offset by $0.8 million in asset impairment for our speed tracker product line acquisition and increased federal income tax expense of $0.2 million.

Speaker #8: Our adjusted EBITDA increased by $2.3 million to $8.0 million during the 12 months ended September 28, 2025, as compared to $5.7 million during the 12 months ended September 29, 2024, on increased revenue and gross profit.

Speaker #8: For orders and backlog, during the 12 months ended September 28, 2025, the company booked $36.2 million in new orders, representing a 0.5% decrease from the prior year period orders of $36.4 million.

Speaker #8: The orders for the most recently completed 12 months consist of $21.3 million for our Optex Richardson segment and $14.9 million attributable to the Applied Optex Center segment.

Karen Hawkins: The orders for the most recently completed 12 months consist of $21.3 million for our Optex Richardson segment and $14.9 million attributable to the Applied Optex Center segment. Backlog as of 28 September 2025 was $39.1 million as compared to backlog of $44.2 million as of 29 September 2024. We believe a portion of the reduced demand is related to the delay in award of ARC3 Abrams replenishment contracts to the prime contractors, as well as the delay in award for the BNVG Night Vision Goggle program, both of which were expected during the 2025 fiscal year. We also believe the delay in passing the annual congressional appropriations bill by the US government has negatively impacted our orders during the last three months of fiscal year 2025.

The orders for the most recently completed 12 months consist of $21.3 million for our Optex Richardson segment and $14.9 million attributable to the Applied Optex Center segment. Backlog as of 28 September 2025 was $39.1 million as compared to backlog of $44.2 million as of 29 September 2024. We believe a portion of the reduced demand is related to the delay in award of ARC3 Abrams replenishment contracts to the prime contractors, as well as the delay in award for the BNVG Night Vision Goggle program, both of which were expected during the 2025 fiscal year. We also believe the delay in passing the annual congressional appropriations bill by the US government has negatively impacted our orders during the last three months of fiscal year 2025.

Speaker #8: Backlog as of September 28, 2025, was $39.1 million, as compared to backlog of $44.2 million as of September 29, 2024. We believe a portion of the reduced demand is related to the delay in award of ARC III Abrams Replenishment contracts to the prime contractors, as well as the delay in award for the BNVG Night Vision Goggle Program, both of which were expected during the 2025 fiscal year.

Speaker #8: We also believe the delay in passing the annual congressional appropriations bill by the U.S. government has negatively impacted our orders during the last three months of fiscal year 2025.

Speaker #8: As a result of the government shutdown and the November—or the October 14th, 2025—continuing resolution, which only funds the government spending through January 30th, 2026, the slowdown of contract awards has continued through the first fiscal quarter of 2026.

Karen Hawkins: As a result of the October 2025 government shutdown and the 14 November 2025 continuing resolution, which only funds the government spending through 30 January 2026, the slowdown of contract awards has continued through Q1 2026. While we are hopeful government funding issues will be resolved by the end of January, we're unable to predict the outcome past January 2026. Recent events. Last, I would like to highlight some of the recent events occurring after 28 September 2025, which include the resignation of Danny Schoening, a CEO, and the appointment of his successor, Chad George, as CEO, both effective as of 20 December 2025. We are excited about the leadership and experience of Chad George that Chad George brings to the Optex Systems Holdings team. Mr.

As a result of the October 2025 government shutdown and the 14 November 2025 continuing resolution, which only funds the government spending through 30 January 2026, the slowdown of contract awards has continued through Q1 2026. While we are hopeful government funding issues will be resolved by the end of January, we're unable to predict the outcome past January 2026. Recent events. Last, I would like to highlight some of the recent events occurring after 28 September 2025, which include the resignation of Danny Schoening, a CEO, and the appointment of his successor, Chad George, as CEO, both effective as of 20 December 2025. We are excited about the leadership and experience of Chad George that Chad George brings to the Optex Systems Holdings team. Mr.

Speaker #8: While we are hopeful government funding issues will be resolved by the end of January, we're unable to predict the outcome past January 2026. Recent events.

Speaker #8: Last, I would like to highlight some of the recent events occurring after September 28, 2025, which include the resignation of Danny Schoening, our CEO, and the appointment of his successor, Chad George, as CEO, both effective as of December 20, 2025.

Speaker #8: We are excited about the leadership and experience of Chad George that Chad George brings to the Optex Systems Holdings team. Mr. Schoening will remain on the board, continuing his role in the position of chairman and will continue to serve as the company's facilities security officer.

Karen Hawkins: Schoening will remain on the board, continuing his role in the position of chairman, and will continue to serve as the company's facility security officer. Concurrently with Mr. George's appointment as Chief Executive Officer, the board selected Mr. George to serve as a director on the board, effective as of 20 December 2025, until the company's 2026 annual meeting of shareholders. In connection with Mr. George's election as a director of the board, the board increased the total number of board seats from four to five. These events and corresponding documents have been filed in the 8-Ks as of 4 December 2025. That concludes the financial portion of this call. I will now turn the mic back over to Danny Schoening for his comments in the period performance.

Schoening will remain on the board, continuing his role in the position of chairman, and will continue to serve as the company's facility security officer. Concurrently with Mr. George's appointment as Chief Executive Officer, the board selected Mr. George to serve as a director on the board, effective as of 20 December 2025, until the company's 2026 annual meeting of shareholders. In connection with Mr. George's election as a director of the board, the board increased the total number of board seats from four to five. These events and corresponding documents have been filed in the 8-Ks as of 4 December 2025. That concludes the financial portion of this call. I will now turn the mic back over to Danny Schoening for his comments in the period performance.

Speaker #8: Concurrently with Mr. George's appointment as chief executive officer, the board selected Mr. George to serve as a director on the board, effective as of the company's 2026 annual meeting on December 20, 2025, until the shareholders.

Speaker #8: In connection with Mr. George's election as a director of the board, the board increased the total number of board seats from four to five.

Speaker #8: These events and corresponding documents have been filed in the 8-Ks as of December 4, 2025. That concludes the financial portion of this call.

Speaker #8: I will now turn the perch back over to Danny Schoening for his comments in the period performance.

Speaker #2: Thank you, Karen. As we continue to add new investors, I'd like to do a quick review of the products and services we provide from both divisions, which Karen just highlighted.

Danny Schoening: Thank you, Karen. As we continue to add new investors, I'd like to do a quick review of the products and services we provide from both divisions, which Karen just highlighted. The Applied Optex Center, or AOC's core technology, is thin film coatings. We apply these proprietary coatings to either absorb or reflect certain wavelengths of light or electromagnetic energy. A common use of this technology would be to protect soldiers' eyes, image-intensifier tubes used in night vision goggles, and also used to protect sensitive sensors from these same laser sources or to reduce the infrared signatures to decrease their detection from thermal cameras. AOC supplies these both externally to customers like the US DoD, Elbit, L3, Harris, to name a few, or they supply them internally to Optex, our second division.

Speaker #2: The Applied Optics division, or AOC, core technology is thin film coatings. We apply these proprietary coatings to either absorb or reflect certain wavelengths of light or electromagnetic energy.

Speaker #2: A common use of this technology would be to protect soldiers' eyes, image-intensifier tubes used in night vision goggles, and also to protect sensitive sensors from these same laser sources, or to reduce the infrared signatures to decrease their detection from thermal cameras.

Speaker #2: AOC supplies these both externally to customers like the US DoD, Elbit, L3 Harris, to name a few, or they supply them divisionally. Recapping the internally to Optex, our second products from our Optex division, Optex uses these same filters and builds them into laser-protected periscopes and other sighting systems.

Danny Schoening: Recapping the products from our Optex Division, Optex uses these same filters and builds them into laser-protected periscopes and other sighting systems. These include US Navy ship binoculars, Howitzer support sighting systems, and sighting systems on Bradley, Abrams, etc. If you'd like to learn more about the products or customers, I suggest that you go back and listen to our previous earnings calls where I go through a little bit in more depth. 2025 has truly been an exciting year on so many fronts, leading with the obvious that 21.6% revenue growth was achieved by many individual actions coming together. Starting with the customer set, we've continued to stay in front of them and listen to their needs. Product reliability continues to come up first. Our customers appreciate the Optex reputation for reliability.

Recapping the products from our Optex Division, Optex uses these same filters and builds them into laser-protected periscopes and other sighting systems. These include US Navy ship binoculars, Howitzer support sighting systems, and sighting systems on Bradley, Abrams, etc. If you'd like to learn more about the products or customers, I suggest that you go back and listen to our previous earnings calls where I go through a little bit in more depth. 2025 has truly been an exciting year on so many fronts, leading with the obvious that 21.6% revenue growth was achieved by many individual actions coming together. Starting with the customer set, we've continued to stay in front of them and listen to their needs. Product reliability continues to come up first. Our customers appreciate the Optex reputation for reliability.

Speaker #2: These include U.S. Navy ship binoculars, howitzer support sighting systems, and sighting systems on Bradley, Abrams, etc. If you'd like to learn more about the products or customers, I suggest that you go back and listen to our previous earnings calls, where I go through a little bit in more depth.

Speaker #2: 2025 has truly been an exciting year on so many fronts. Leading with the obvious, the 21.6% revenue growth was achieved by many individual actions coming together.

Speaker #2: Starting with the customer set, we've continued to stay in front of them and listen to their needs. Product reliability continues to come up first.

Speaker #2: Our customers appreciate the Optex reputation for reliability. Next, we've increased our capacity through the internal activities of CNC machining, automating processes that use robotics, and we've continued to develop our supply base and bring these capabilities up to those required by our customers.

Danny Schoening: Next, we've increased our capacity through the internal activities of CNC machining, automating processes, the use of robotics, and we've continued to develop our supply base and bring these capabilities up to those required by our customers. You've heard me comment on this over the last couple of years, but in 2025, it really all came together. Our employees really stepped up when asked to put in the overtime or take on new process qualifications. If that didn't help us keep us busy enough, led by Chad, we also completed a rigorous strategic review of our strengths, weaknesses, opportunities, and threats and identified the key personnel and equipment sets to not only supplement our current product set, but to bring on additional capabilities in the space of reticles, coatings, and optical assembly.

Next, we've increased our capacity through the internal activities of CNC machining, automating processes, the use of robotics, and we've continued to develop our supply base and bring these capabilities up to those required by our customers. You've heard me comment on this over the last couple of years, but in 2025, it really all came together. Our employees really stepped up when asked to put in the overtime or take on new process qualifications. If that didn't help us keep us busy enough, led by Chad, we also completed a rigorous strategic review of our strengths, weaknesses, opportunities, and threats and identified the key personnel and equipment sets to not only supplement our current product set, but to bring on additional capabilities in the space of reticles, coatings, and optical assembly.

Speaker #2: You've heard me comment on this over the last couple of years, but in 2025, it really all came together. Our employees really stepped up when asked to put in the overtime or take on new process qualifications.

Speaker #2: If that didn't help keep us busy enough, led by Chad, we also completed a rigorous strategic review of our strengths, weaknesses, opportunities, and threats, and identified the key personnel and equipment sets to not only supplement our current product set, but to bring on additional capabilities in the space of reticles, coatings, and optical assembly.

Speaker #2: We really have a cohesive process, which highlights the effectiveness of having a strong management and board relationship. I can't emphasize that enough. When the board is proactive and forward-leaning with management, it's very rewarding.

Danny Schoening: We really have a cohesive process which highlights the effectiveness of having a strong management and board relationship. I can't emphasize that enough. When the board is proactive and forward-leaning with management, it's very rewarding. Looking into 2026, the task at hand is how to continue this growth trajectory. From a budgeting and planning perspective, we continue to plan around double-digit growth while working several new opportunities. In the past, we've been very successful with driving the factory through the production of our existing products while adding a select number of additional revenue-generating items to the mix. All indications are that we'll start the production of the Lightweight Transit, which replaces the artillery's Aiming Circle, along with the initial builds of the driver periscope assembly for the XM-30, which is tasked to replace the Bradley Fighting Vehicle.

We really have a cohesive process which highlights the effectiveness of having a strong management and board relationship. I can't emphasize that enough. When the board is proactive and forward-leaning with management, it's very rewarding. Looking into 2026, the task at hand is how to continue this growth trajectory. From a budgeting and planning perspective, we continue to plan around double-digit growth while working several new opportunities. In the past, we've been very successful with driving the factory through the production of our existing products while adding a select number of additional revenue-generating items to the mix. All indications are that we'll start the production of the Lightweight Transit, which replaces the artillery's Aiming Circle, along with the initial builds of the driver periscope assembly for the XM-30, which is tasked to replace the Bradley Fighting Vehicle.

Speaker #2: Looking into 2026, the task at hand is how to continue this growth trajectory. From a budgeting and planning perspective, we continue to plan around double-digit growth while working several new opportunities.

Speaker #2: In the past, we've been very successful with driving the factory through the production of our existing products, while adding a select number of additional revenue-generating items to the mix.

Speaker #2: All indications are that we'll start the production of the lightweight transit, which replaces the artillery's aiming circle, along with the initial builds of the driver periscope assembly for the XM30, which is tasked to replace the Bradley fighting vehicle.

Speaker #2: Two examples of the types of multi-year programs where we target, we execute, and we win. So, as some investors have asked, yes, I'm cranked up on where we're sitting in the process and product mix that we have developed.

Danny Schoening: Two examples of the types of multi-year programs where we target, we execute, and we win. So, as some investors have asked, yes, I'm cranked up on where we're sitting in the process and product mix that we've developed. So, with that said, we formally announced the promotion of Chad George to replace me as the CEO. I had conversations with the board over a year ago that I was a little concerned about the business decisions that I was making that were going to be impactful in the next three to five years, and then that was on the outside of my runway. So, we decided to start looking, and when we found the right candidate, we pulled the trigger, and that's exactly what happened. The timing worked out perfectly for all of us involved, and we've been systematically working through the handoff for the last four months.

Two examples of the types of multi-year programs where we target, we execute, and we win. So, as some investors have asked, yes, I'm cranked up on where we're sitting in the process and product mix that we've developed. So, with that said, we formally announced the promotion of Chad George to replace me as the CEO. I had conversations with the board over a year ago that I was a little concerned about the business decisions that I was making that were going to be impactful in the next three to five years, and then that was on the outside of my runway. So, we decided to start looking, and when we found the right candidate, we pulled the trigger, and that's exactly what happened. The timing worked out perfectly for all of us involved, and we've been systematically working through the handoff for the last four months.

Speaker #2: So, with that said, we formally announce a promotion of Chad George to replace me as the CEO. I had conversations with the board over a year ago that I was a little concerned about the business decisions that I was making.

Speaker #2: They were going to be impactful in the next three to five years, and then that was on the outside of my runway. So we decided to start looking, and when we found the right candidate, we pulled the trigger, and that's exactly what happened.

Speaker #2: The timing worked out perfectly for all of us involved, and we've been systematically working through the handoff for the last four months. I'm still the largest shareholder and will continue to be chairman of the board.

Danny Schoening: I'm still the largest shareholder and will continue to be chairman of the board. On a support level, I'll remotely continue to be the facility security officer, which handles the paperwork and processes side of dealing with the classified documents and personnel who have their security clearances. So, at the end of the day, it's been a very thoughtful, well-pounded-out process, which I think our shareholders expect and deserve. So, with that transition, I'd now like to hand the call over to Chad for his comments before we open it up for questions. Chad?

I'm still the largest shareholder and will continue to be chairman of the board. On a support level, I'll remotely continue to be the facility security officer, which handles the paperwork and processes side of dealing with the classified documents and personnel who have their security clearances. So, at the end of the day, it's been a very thoughtful, well-pounded-out process, which I think our shareholders expect and deserve. So, with that transition, I'd now like to hand the call over to Chad for his comments before we open it up for questions. Chad?

Speaker #2: On a support level, our remote employee continued to be the facility security officer, which handles the paperwork and process side of dealing with the classified documents and personnel who have their security clearances.

Speaker #2: So at the end of the day, it's been a very thoughtful, well-planned-out process, which I think our shareholders expect and deserve. So, with that transition, I'd now like to hand the call over to Chad for his comments before we open it up for

Speaker #2: questions. Chad? Thank you,

Karen Hawkins: Thank you, Danny. I just want to start by saying I'm very excited to be here and that your leadership has put this business in a strong position, and I'm confident that we're going to be able to continue that performance as we move forward here. I'm very excited about the products and the capabilities that we're investing in and bringing to Optex, and I'm confident that we'll be able to continue this growth and this type of performance moving forward. Thank you.

Chad George: Thank you, Danny. I just want to start by saying I'm very excited to be here and that your leadership has put this business in a strong position, and I'm confident that we're going to be able to continue that performance as we move forward here. I'm very excited about the products and the capabilities that we're investing in and bringing to Optex, and I'm confident that we'll be able to continue this growth and this type of performance moving forward. Thank you.

Speaker #3: Danny, I just want to start by saying I'm very excited to be here, and that your leadership has put this business in a strong position. I'm confident that we're going to be able to continue that performance as we move forward here.

Speaker #3: I'm very excited about the products and the capabilities that we're investing in and bringing to Optex, and I'm confident that we'll be able to continue this growth and this type of performance moving forward.

Speaker #2: Great. So with that, I'd like to answer a couple of—

Danny Schoening: Great. So, with that, I'd like to answer a couple of questions. Let's see, one was sent in, and hopefully we can take a few more from the callers. So, the first one is from Howard Deshong. So, Howard's been a longtime Optex investor, so thank you, Howard, for sending this in. Howard asks, "I'm a little bit surprised at the way Danny announced his sudden departure while I assumed it would have happened with the August hire. I thought that would have been a longer transition period. What steps has everyone taken to ensure that the transition will be a smooth one?" Yes. So, Howard, from the outside, it may look like it was quick, but it really wasn't. So, Chad and I had discussions for several months prior to his coming on board with Optex.

Speaker #2: Questions. Let's see. One was sent in, and thank you. Hopefully, we can take a few more from the callers. So the first one is from Howard Deshong.

Speaker #2: So, Howard's been a long-time Optex investor, so thank you, Howard, for sending this in. Howard asks, "I'm a little bit surprised at the way Danny announced his sudden departure, while I assumed it would have happened with the August hire."

Speaker #2: I thought that would have been a longer transition period. What steps has everyone taken to ensure that the transition will be a smooth one?

Speaker #2: Yeah, so Howard, from the outside, it may look like it was quick, but it really wasn't. Chad and I had discussions for several months prior to his coming on board with Optex.

Speaker #2: Once he came on board as president, we discussed the objective of getting from point A to point B. The board and I worked out kind of a transition period of actions and reports that we'd look at.

Danny Schoening: Once he came on board as president, we discussed, you know, the objective from getting from point A to point B. The board and I worked out kind of a transition period of actions and reports that we'd look at, and then we finally made the decision and then executed. So, from the outside, it may have seemed like it was maybe a little bit compressed, but from the inside, it really wasn't, and we really went through the method that we're happy with. So, I'm still around, but the reins have been handed over as effective tomorrow, and we're looking forward to a great 2026 and beyond. So, with that, John, I'll hand it back to you if there's any callers or if there's been any additional questions that have been sent in.

Once he came on board as president, we discussed, you know, the objective from getting from point A to point B. The board and I worked out kind of a transition period of actions and reports that we'd look at, and then we finally made the decision and then executed. So, from the outside, it may have seemed like it was maybe a little bit compressed, but from the inside, it really wasn't, and we really went through the method that we're happy with. So, I'm still around, but the reins have been handed over as effective tomorrow, and we're looking forward to a great 2026 and beyond. So, with that, John, I'll hand it back to you if there's any callers or if there's been any additional questions that have been sent in.

Speaker #2: And then we finally made the decision, and then executed. So it may, from the outside, have seemed like it was maybe a little bit compressed, but from the inside, it really wasn't.

Speaker #2: And we really went through the method that we're happy with. So I'm still around, but the reins have been handed over as effective tomorrow.

Speaker #2: And we're looking forward to a great 2026 and beyond. So, with that, John, I'll hand it back to you if there are any callers or if there have been any additional questions that have been sent in.

Speaker #1: Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Operator: Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. Once again, that's star one if you have a question or a comment. Okay. There are currently no questions in the queue. I would like to turn the floor back to Danny Schoening for any closing remarks.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #1: Once again, please press *1 if you have a question or a comment. Once again, that's *1 if you have a question or a comment.

Speaker #1: Okay. There are currently no questions in the queue. I would like to turn the floor back to Danny Schoening for any closing remarks.

Speaker #2: Very good. Thank you, John. So, on my behalf and on behalf of all the Optex employees, we thank you for joining us, and we look forward to 2026. Have a happy and safe holiday season.

Danny Schoening: Very good. Thank you, John. So, on my behalf and all of the Optex employees, we thank you for joining us, and we look forward to 2026, and happy and safe holidays. Thank you. Goodbye.

Speaker #2: Thank you. Goodbye.

Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Q4 2025 Optex Systems Holdings Inc Earnings Call

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