SOURCE: Optex Systems Holdings, Inc.

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February 12, 2014 06:00 ET

Optex Systems Holdings, Inc. Releases First Quarter 2014 Results

RICHARDSON, TX--(Marketwired - February 12, 2014) - Optex Systems Holdings, Inc. (OTCQB: OPXS), a leading manufacturer of optical sighting systems and assemblies primarily for Department of Defense applications, reported operating results for the three months ended December 29, 2013.

Revenues for the three months ended December 29, 2013 were $3.4 million as compared to revenues during the same period one year ago of $3.9 million, a decrease $0.5 million or 12.8%. The decreased revenue is primarily due to lower revenue in plastic and glass periscopes due to reduced spending by the U.S. Government compared to prior year levels. There continues to be uncertainty in future U.S. military spending over the next 10 years pending Congressional resolution of the sequestration cuts to defense spending which began in fiscal year 2013. The potential ramifications of the circumstances surrounding the 2012 Congressional budget sequestration have resulted in yet more uncertainty and potential cuts in spending by the U.S. military, and we have had to explore other avenues of revenue. We continue to explore opportunities for manufacturing outside of our traditional product lines for products which could be manufactured, using our current capabilities in order to expand our existing capacity. Given the sizable reduction in backlog entering fiscal year 2014, we do not anticipate being able to fully offset the reduced government spending with alternative business in the next nine months.

Backlog, as of December 29, 2013, was $10.4 million as compared to a backlog of $17.6 million as of December 30, 2012, representing a decrease of $7.2 million or 40.9%.In the three months ending December 29, 2013, Optex Systems Holdings received $1.6 million in new orders consisting of $1.5 million in periscopes and $0.1 million in other product lines.

Gross margin during the three months ended December 29, 2013 was $0.6 million or 17.7% of revenues as compared to a gross margin of $0.7 million or 17.9% for the three months ended December 30, 2012. The slight decrease in gross margin percentage for the quarter, as compared to the prior year quarter, is primarily due to changes in product mix between the two periods. During the three months ended December 29, 2013, we recorded a net loss applicable to common shareholders of $(0.01) million as compared to net income applicable to common shareholders of $0.04 million during the three months ended December 30, 2012. The decrease in net income of $(0.05) million is primarily attributable to lower revenue and associated operating income of $0.07 million, partially offset with changes in deferred tax benefits.

As of December 29, 2013, we had cash and cash equivalents of $1.5 million. During the period from September 29, 2013 through December 29, 2013, we increased cash and cash equivalents by $0.6 million primarily attributable to decreased purchases and inventory and collections on open accounts receivable, which was partially offset by payments against the credit facility. We believe our resources and liquidity are sufficient for the next twelve months of operations.

Danny Schoening, Optex's CEO commented, "We believe that the first quarter performance is indicative of the remaining fiscal year due to the change in the U.S. defense spending purchasing pattern. During the quarter we announced the additional $1 million award of our Digital Day and Night (DDAN) product and we remain encouraged that the improved performance of this upgrade is both value-added and provides better protection to the warfighter. We also continue to see the purchasing pattern of long term, large quantity solicitations being replaced with smaller quantities with shorter delivery requirements."

"While our primary efforts continue to be the production of high-quality, high-value periscopes and sighting systems, the Company continues to actively pursue acquisition opportunities both in the defense and commercial sectors that will take advantage of our manufacturing and technical strengths," stated Merrick Okamoto, Chairman.

Optex, which was founded in 1987, is a Richardson, Texas based ISO 9001:2008 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

Safe Harbor Statement
This press release and other written reports and oral statements made from time to time by the Company may contain so-called "forward-looking statements," all of which are subject to risks and uncertainties. You can identify these forward-looking statements by their use of words such as "expects," "plans," "will," "estimates," "forecasts," "projects" and other words of similar meaning. You can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address the Company's growth strategy, financial results and product and development programs. 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.

Optex Systems Holdings, Inc.  
Consolidated Balance Sheets  
   (Thousands, except share data)  
   December 29, 2013
  September 29, 2013  
Current Assets           
Cash  $1,455   $882  
Accounts Receivable   1,720    3,118  
Net Inventory   7,062    7,579  
Prepaid Expenses   64    36  
Total Current Assets   10,301    11,615  
Property and Equipment           
Property Plant and Equipment   1,704    1,704  
Accumulated Depreciation   (1,479 )  (1,460 )
Total Property and Equipment   225    244  
Other Assets           
Deferred Tax Asset - Long Term   1,082    1,077  
Prepaid Royalties - Long Term   173    180  
Security Deposits   21    21  
Total Other Assets   1,276    1,278  
Total Assets  $11,802   $13,137  
Current Liabilities           
Accounts Payable  $775   $989  
Accrued Expenses   377    706  
Accrued Warranties   25    25  
Customer Advance Deposits - Short Term   720    769  
Credit Facility   304    858  
Total Current Liabilities   2,201    3,347  
Other Liabilities           
Customer Advance Deposits - Long Term   1,741    1,935  
Total Other Liabilities   1,741    1,935  
Total Liabilities   3,942    5,282  
Stockholders' Equity           
Optex Systems Holdings, Inc. Preferred Stock ($0.001 par 5,000 authorized, 1,016 series A preferred issued and outstanding, respectively)   -    -  
Optex Systems Holdings, Inc. - (par $0.001, 2,000,000,000 authorized, 157,346,607 shares issued and outstanding, respectively)   157    157  
Additional Paid-in-capital   17,940    17,922  
Retained Earnings (Deficit)   (10,237 )  (10,224 )
Total Stockholders' Equity   7,860    7,855  
Total Liabilities and Stockholders' Equity  $11,802   $13,137  
The accompanying notes are an integral part of these financial statements  
Optex Systems Holdings, Inc.
Consolidated Statements of Operations
   (Thousands, except common share data)
   Three months ended
   December 29, 2013   December 30, 2012
Revenues  $3,354   $3,850
Total Cost of Sales   2,736    3,152
Gross Margin  $618   $698
General and Administrative   629    635
Operating Income (Loss)  $(11 ) $63
Other Expenses         
Interest Expense - Net   7    -
Total Other  $7   $-
Income (Loss) Before Taxes  $(18 ) $63
Deferred Income Taxes (Benefit)   (5 )  22
Net Income (Loss) After Taxes  $(13 ) $41
Less preferred stock dividend (accrued) waived  $-   $-
Net income (loss) applicable to common shareholders  $(13 ) $41
Basic and diluted income (loss) per share  $(0.0001 ) $0.0003
Weighted average common shares outstanding   157,346,607    152,346,607
The accompanying notes are an integral part of these financial statements

Contact Information

    Optex Systems Holdings, Inc.
    Stan Hirschman
    (972) 764-5700
    1420 Presidential Drive
    Richardson, TX 75081