RICHARDSON, TX / ACCESSWIRE / February 12, 2024 / Optex Systems Holdings, Inc. (Nasdaq:OPXS), a leading manufacturer of precision optical sighting systems for domestic and worldwide military and commercial applications, announced financial results for the three months ended December 31, 2023.
Danny Schoening, CEO of Optex Systems Holdings, Inc., commented, "We are off to a great start in 2024. Our results clearly show that the supply chain is strengthening and we are successfully executing on the historically high backlog. Demand remains high as Optex and our customers continue to achieve wins in the marketplace. The future is very exciting."
For the three months ended December 31, 2023, our total revenues increased by $2.9 million, or 72.5%, compared to the prior year three-month period. The Optex Systems segment realized a $1.8 million, or 109.6% increase, and the Applied Optics Center segment realized an increase of $1.2 million, or 47.6%, in external revenue compared to the prior year three-month period.
Gross profit increased $1.0 million, or 134.9%, from $0.7 million for the three months ended January 1, 2023 to $1.7 million in the three months ended December 31, 2024. Optex Systems gross profit increased by $0.4 million and the Applied Optics Center gross profit increased by $0.6 million. The increase is primarily due to higher revenue combined with higher fixed cost absorption at both the Applied Optics Center and Optex Richardson segments related to increased production volume.
For the three months ended December 31, 2023, we recorded operating income of $0.6 million as compared to an operating loss of $0.3 million during the three months ended January 1, 2023. The $0.8 million increase in operating income is primarily due to higher revenue and gross profit, partially offset by increased general and administrative expenses.
As of December 31, 2023, Optex Systems Holdings had working capital of $13.0 million, as compared to $13.5 million as of October 1, 2023. During the three months ended December 31, 2023, we generated operating cash of $2.3 million, paid $1.0 million against our line of credit and spent $0.1 million on acquisitions of property and equipment. During the period, our inventory increased $0.5 million in support of new program awards and increasing revenues anticipated over the next nine months.
At December 31, 2023, the Company had $2.4 million in cash and an outstanding payable balance of zero against its line of credit. At December 31, 2023, our outstanding accounts receivable balance was $2.4 million.
Our key performance measures for the three months ended December 31, 2023 and January 1, 2023 are summarized below.
(Thousands) Three months ended | ||||||||||||
Metric | December 31, 2023 | January 1, 2023 | % Change | |||||||||
Revenue | $ | 6,968 | $ | 4,040 | 72.5 | |||||||
Gross Profit | $ | 1,684 | $ | 717 | 134.9 | |||||||
Gross Margin % | 24.2 | % | 17.7 | % | 36.7 | |||||||
Operating Income (Loss) | $ | 553 | $ | (282 | ) | - | ||||||
Net Income (Loss) | $ | 431 | $ | (223 | ) | - | ||||||
Adjusted EBITDA (non-GAAP) | $ | 758 | $ | (166 | ) | - | ||||||
During the three months ended December 31, 2023, the Company booked $10.1 million in new orders, representing a 9.8% decrease over the prior year period orders of $11.2 million. The orders for the most recently completed three months consist of $6.2 million for our Optex Richardson segment and $3.9 million attributable to the Applied Optics Center segment.
Backlog as of December 31, 2023 was $45.0 million as compared to backlog of $40.1 million as of January 1, 2023 and $41.8 million as of October 1, 2023, representing an increase of 12.2% and 7.7%, respectively.
The table below summarizes our three-month operating results for the periods ended December 31, 2023 and January 1, 2023, in terms of both the GAAP net income measure and the non-GAAP Adjusted EBITDA measure. We believe that including both measures allows the reader to better evaluate our overall performance.
(Thousands) Three months ended | ||||||||
| December 31, 2023 | January 1, 2023 | |||||||
Net Income (Loss) (GAAP) | $ | 431 | $ | (223 | ) | |||
Add: | ||||||||
Depreciation and Amortization | 92 | 81 | ||||||
Federal Income Tax Expense (Benefit) | 115 | (59 | ) | |||||
Stock Compensation | 113 | 35 | ||||||
Interest Expense | 7 | - | ||||||
Adjusted EBITDA - Non GAAP | $ | 758 | $ | (166 | ) | |||
Adjusted EBITDA has limitations and should not be considered in isolation or a substitute for performance measures calculated under GAAP. This non-GAAP measure excludes certain cash expenses that we are obligated to make. In addition, other companies in our industry may calculate Adjusted EBITDA differently than we do or may not calculate it at all, which limits the usefulness of Adjusted EBITDA as a comparative measure.
During the three months ended December 31, 2023, we recorded net income of $0.4 million as compared to a net loss of $0.2 million during the three months ended January 1, 2023. The increase in net income of $0.7 million is primarily attributable to the increase in operating profit, partially offset by an increase in federal income tax expense of $0.2 million over the prior year period.
Our Adjusted EBITDA increased by $0.9 million to $0.8 million during the three months ended December 31, 2023 as compared to ($0.2) million during the three months ended January 1, 2023. The increase in EBITDA is primarily driven by increased revenue and operating profit during the current year three-month period as compared to the prior year three-month period.
Highlights of the Consolidated and Segment Results of Operations have been prepared in accordance with GAAP. These financial highlights do not include all information and disclosures required in the consolidated financial statements and footnotes and should be read in conjunction with our Quarterly Report on Form 10-Q for the three months ended December 31, 2023 filed with the SEC on February 12, 2024.
Subsequent to the end of the quarter, on January 18, 2024, the Company acquired certain intellectual property and technical and marketing information relating to the Speedtracker Mach product line and entered into an asset purchase agreement and a contract manufacturing agreement with RUB Aluminium s.r.o. ("RUB"). The Company acquired the assets using $1 million cash on hand, with potential additional future cash payments based on successful completion of defined milestones. The initial term of the contract manufacturing agreement is one year, subject to additional one-year renewal terms.
Optex Systems Holdings, Inc.
Condensed Consolidated Balance Sheets
| (Thousands, except share and per share data) | ||||||||
| December 31, 2023 (Unaudited) | October 1, 2023 | |||||||
ASSETS | ||||||||
Cash and Cash Equivalents | $ | 2,373 | $ | 1,204 | ||||
Accounts Receivable, Net | 2,430 | 3,624 | ||||||
Inventory, Net | 12,685 | 12,153 | ||||||
Contract Asset | 258 | 336 | ||||||
Prepaid Expenses | 154 | 219 | ||||||
Current Assets | 17,900 | 17,536 | ||||||
Property and Equipment, Net | 964 | 998 | ||||||
Other Assets | ||||||||
Deferred Tax Asset | 887 | 922 | ||||||
Right-of-use Asset | 2,615 | 2,740 | ||||||
Security Deposits | 23 | 23 | ||||||
Other Assets | 3,525 | 3,685 | ||||||
Total Assets | $ | 22,389 | $ | 22,219 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts Payable | $ | 1,796 | $ | 810 | ||||
Operating Lease Liability | 625 | 620 | ||||||
Federal Income Taxes Payable | 326 | 247 | ||||||
Accrued Expenses | 992 | 1,265 | ||||||
Accrued Selling Expense | 280 | 336 | ||||||
Accrued Warranty Costs | 48 | 75 | ||||||
Contract Loss Reserves | 308 | 243 | ||||||
Customer Advance Deposits | 481 | 481 | ||||||
Current Liabilities | 4,856 | 4,077 | ||||||
Other Liabilities | ||||||||
Credit Facility | - | 1,000 | ||||||
Operating Lease Liability, net of current portion | 2,156 | 2,282 | ||||||
Other Liabilities | 2,156 | 3,282 | ||||||
Total Liabilities | 7,012 | 7,359 | ||||||
Commitments and Contingencies | - | |||||||
Stockholders' Equity | ||||||||
Common Stock - ($0.001 par, 2,000,000,000 authorized, 6,823,693 and 6,763,070 shares issued and outstanding, respectively) | 7 | 7 | ||||||
Additional Paid in Capital | 21,371 | 21,285 | ||||||
Accumulated Deficit | (6,001 | ) | (6,432 | |||||
Stockholders' Equity | 15,377 | 14,860 | ||||||
Total Liabilities and Stockholders' Equity | $ | 22,389 | $ | 22,219 | ||||
The accompanying notes in our Quarterly Report on Form 10-Q for the three months ended December 31, 2023 filed with the SEC on February 12, 2024 are an integral part of these financial statements.
Optex Systems Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| (Thousands, except share and per share data) | ||||||||
| Three months ended | ||||||||
| December 31, 2023 | January 1, 2023 | |||||||
Revenue | $ | 6,968 | $ | 4,040 | ||||
Cost of Sales | 5,284 | 3,323 | ||||||
Gross Profit | 1,684 | 717 | ||||||
General and Administrative Expense | 1,131 | 999 | ||||||
Operating Income (Loss) | 553 | (282 | ||||||
Other Expense | (7 | ) | - | |||||
Income (Loss) Before Taxes | 546 | (282 | ||||||
Income Tax Expense (Benefit) | $ | 115 | $ | (59 | ||||
Net Income (Loss) | $ | 431 | $ | (223 | ||||
Basic income (loss) per share | $ | 0.06 | $ | (0.03 | ||||
Weighted Average Common Shares Outstanding - basic | 6,666,290 | 6,537,808 | ||||||
Diluted income (loss) per share | $ | 0.06 | $ | (0.03 | ||||
Weighted Average Common Shares Outstanding - diluted | 6,721,661 | 6,537,808 | ||||||
The accompanying notes in our Quarterly Report on Form 10-Q for the three months ended December 31, 2023 filed with the SEC on February 12, 2024.are an integral part of these financial statements.
ABOUT OPTEX SYSTEMS
Optex, which was founded in 1987, is a Richardson, Texas based ISO 9001:2015 certified concern, which manufactures optical sighting systems and assemblies, primarily for Department of Defense (DOD) applications. Its products are installed on various types of U.S. military land vehicles, such as the Abrams and Bradley fighting vehicles, Light Armored and Armored Security Vehicles, and have been selected for installation on the Stryker family of vehicles. Optex also manufactures and delivers numerous periscope configurations, rifle and surveillance sights, and night vision optical assemblies. Optex delivers its products both directly to the military services and to prime contractors. For additional information, please visit the Company's website at www.optexsys.com.
Safe Harbor Statement
This press release contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the products and services described herein. You can identify these statements by the use of the words "may," "will," "could," "should," "would," "plans," "expects," "anticipates," "continue," "estimate," "project," "intend," "likely," "forecast," "probable," and similar expressions.
These forward-looking statements represent our expectations, beliefs, intentions or strategies concerning future events, including, but not limited to, any statements regarding growth strategy; product and development programs; financial performance and financial condition (including revenue, net income, profit margins and working capital); customer demand; orders and backlog; expected timing of contract deliveries to customers and corresponding revenue recognition; increases in the cost of materials and labor; costs remaining to fulfill contracts; contract loss reserves; labor shortages; follow-on orders; the impact of the COVID-19 pandemic; supply chain challenges; the continuation of historical trends; the sufficiency of our cash balances for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of operations, financial condition or cash flows; anticipated problems and our plans for future operations; and the economy in general or the future of the defense industry.
These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, continued funding of defense programs and military spending, the timing of such funding, general economic and business conditions, including unforeseen weakness in the Company's markets, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in the U.S. Government's interpretation of federal procurement rules and regulations, changes in spending due to policy changes in any new federal presidential administration, market acceptance of the Company's products, shortages in components, production delays due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions and restructurings or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, changes to export regulations, increases in tax rates, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, unanticipated costs under fixed-price service and system integration engagements, changes in the market for microcap stocks regardless of growth and value and various other factors beyond our control.
You must carefully consider any such statement and should understand that many factors could cause actual results to differ from the Company's forward-looking statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. The Company does not assume the obligation to update any forward-looking statement. You should carefully evaluate such statements in light of factors described in the Company's filings with the SEC, especially on Forms 10-K, 10-Q and 8-K. In various filings the Company has identified important factors that could cause actual results to differ from expected or historic results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete list of all potential risks or uncertainties.
Contact:
IR@optexsys.com
1-972-764-5718
SOURCE: Optex Systems Holdings, Inc.
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