Optex Systems Holdings Inc Segments Disclosure

Note 4 — Segment Reporting

 

The Company’s 2two reportable segments, Applied Optics Center (“Applied Optics Center” or “AOC”) and Optex Systems – Richardson (“Optex Richardson”), are strategic businesses offering similar products to similar markets and customers; however, they are operated and managed separately due to differences in manufacturing technology, equipment, geographic location, and specific product mix. Applied Optics Center was acquired as a unit, and management at the time of the acquisition was retained.

 

The Applied Optics Center segment also serves as the key supplier of laser coated filters used in the production of periscope assemblies for the Optex Richardson segment. Intersegment sales and transfers are accounted for at annually agreed to pricing rates based on estimated segment product cost, which include segment direct manufacturing and general and administrative costs but exclude profits that would apply to third party external customers.

 

The Chief Operating Decision Maker (CODM), which is our CEO, uses the segment revenue, cost of sales and net operating income to assess the Company’s performance and allocation of resources. A summary of segment performance for the twelve months ended September 28, 2025 and September 29, 2024 is included in the table below:

 

Schedule of Summary of Segment Performance

		Optex Systems Richardson				Applied Optics Center Dallas				Other (non- allocated costs and eliminations)				Consolidated				Optex Systems Richardson				Applied Optics Center Dallas				Other (non- allocated costs and eliminations)				Consolidated
		(Thousands) Twelve months ended
		September 28, 2025																September 29, 2024
		Optex Systems Richardson				Applied Optics Center Dallas				Other (non- allocated costs and eliminations)				Consolidated				Optex Systems Richardson				Applied Optics Center Dallas				Other (non- allocated costs and eliminations)				Consolidated
Revenue from External Customers		$	23,761			$	17,576			$	-			$	41,337			$	18,171			$	15,824			$	-			$	33,995
Intersegment Revenues			-				1,157				(1,157	)			-				-				1,042				(1,042	)			-
Total Segment Revenue			23,761				18,733				(1,157	)			41,337				18,171				16,866				(1,042	)			33,995
Total Cost of Sales			17,699				12,738				(1,157	)			29,280				14,401				11,107				(1,042	)			24,466
Gross Profit			6,062				5,995				-				12,057				3,770				5,759				-				9,529
Gross Margin %			25.5	%			32.0	%			-				29.2	%			20.7	%			34.1	%			-				28.0	%
General and Administrative Expense			3,771				771				383				4,925				3,630				653				425				4,708
Segment Allocated G&A Expense			(1,356	)			1,356				-				-				(1,486	)			1,486				-				-
Net General & Administrative Expense			2,415				2,127				383				4,925				2,144				2,139				425				4,708
Operating Income (Loss)			3,647				3,868				(383	)			7,132				1,626				3,620				(425	)			4,821
Operating Income (Loss) %			15.3	%			20.6	%			-				17.3	%			8.9	%			21.5	%			-				14.2	%
Asset Impairment			(804	)			-				-				(804	)			-				-				-				-
Interest Income (Expense)			-				-				23				23				-				-				(47	)			(47	)
Income (Loss) before taxes		$	2,843				3,868				(360	)			6,351			$	1,626				3,620				(472	)			4,774
Income (loss) before taxes %			12.0	%			20.6	%			-				15.4	%			8.9	%			21.5	%			-				14.0	%

 

Optex Systems (OPX) – Richardson, Texas

 

Optex Richardson revenues are primarily in support of prime and subcontracted military customers. Approximately 90% of the Optex Richardson segment revenue is comprised of domestic military customers, and 10% is comprised of foreign military customers. For the twelve months ended September 28, 2025, Optex Richardson represented 58% of the Company’s total consolidated revenue and consisted of the U.S. government, 22%, and two major U.S. defense contractors representing 15% and 10%, of the Company’s consolidated revenue, respectively.

 

Optex Richardson is located in Richardson Texas, with leased premises consisting of approximately 49,100 square feet. As of September 28, 2025, the Richardson facility operated with 87 full-time equivalent employees in a single shift operation. The facilities at Optex Richardson serve as the home office for both the Optex Richardson and Applied Optics Center segments.

 

Applied Optics Center (AOC) – Dallas, Texas

 

The Applied Optics Center serves primarily domestic U.S. customers. Sales to commercial customers represent 10% and military sales to prime and subcontracted customers represent 90% of the total segment revenue. Approximately 94% of the AOC revenue is derived from external customers and approximately 6% is related to intersegment sales to Optex Richardson in support of military contracts. For the twelve months ended September 28, 2025, AOC represented 42% of the Company’s total consolidated revenue and consisted of revenue from the U.S. government, 5%, and two major defense contractors representing 6% and 6% of the Company’s consolidated revenue, respectively.

 

The Applied Optics Center is located in Dallas, Texas with leased premises consisting of approximately 44,867 square feet of space. As of September 28, 2025, AOC operated with 45 full-time equivalent employees in a single shift operation.

 

 

The financial table below presents the information for each of the reportable segments profit or loss as well as segment assets for each year. The Company does not allocate interest expense, income taxes or unusual items to segments.

 Schedule of Segment Reporting Information

		Reportable Segment Financial Information (thousands)
		Twelve months ended September 28, 2025
		Optex Systems Richardson				Applied Optics Center Dallas				Other (non-allocated costs and intersegment eliminations)				Consolidated Total
Revenues from external customers		$	23,761			$	17,576			$	-			$	41,337
Intersegment revenues			-				1,157				(1,157	)			-
Total Revenue			23,761				18,733				(1,157	)			41,337
Interest income			-				-				(23	)			(23	)
Depreciation and Amortization			276				239				-				515
Income (loss) before taxes			2,843				3,868				(360	)			6,351
Other significant noncash items:
Allocated home office expense			(1,356	)			1,356				-				-
Stock compensation expense			-				-				383				383
Warranty expense			-				110				-				110
Segment Assets			22,126				7,930				-				30,056
Expenditures for segment assets			259				245				-				504

 

		Reportable Segment Financial Information (thousands)
		Twelve months ended September 29, 2024
		Optex Systems Richardson				Applied Optics Center Dallas				Other (non-allocated costs and intersegment eliminations)				Consolidated Total
Revenues from external customers		$	18,171			$	15,824			$	-			$	33,995
Intersegment revenues			-				1,042				(1,042	)			-
Total Revenue			18,171				16,866				(1,042	)			33,995
Interest expense			-				-				47				47
Depreciation and Amortization			167				320				-				487
Income (loss) before taxes			1,626				3,620				(472	)			4,774
Other significant noncash items:
Allocated home office expense			(1,486	)			1,486				-				-
Stock compensation expense			-				-				425				425
Warranty expense			17				12				-				29
Segment Assets			17,038				8,480				-				25,518
Expenditures for segment assets			1,382				349				-				1,731