For the quarter ended December 28, 2025, total revenues increased by $0.9 million, or 11.6%, year-over-year. The Optex Richardson segment led with a 55.9% surge from higher periscope production, XM30 display deliveries, muzzle reference systems and big eye binocular sales, while Applied Optics Center revenue fell 20.1% due to reduced laser filter and optical assembly demand. New order bookings and anticipated contract awards are expected to drive Applied Optics Center recovery in the second half of fiscal 2026.

Consolidated gross margin declined from 26.0% to 22.9% as higher shipments under legacy loss contracts and a loss reserve tied to gold usage on Abrams day window coatings weighed on profitability. This was partially offset by improved labor performance on periscope lines, favorable product mix shifts and the near completion of long-term loss contracts in the Optex Richardson segment.

Operating expenses rose 58.3% to $1.9 million, reflecting increased labor and fringe costs, stock compensation, legal and IT services, plus $0.3 million of non-recurring CEO transition charges. Chad George assumed the CEO role in December, coinciding with senior retirements that temporarily elevated G&A. The company plans sustained R&D investments to support new product development and anticipates margins will normalize as legacy contracts roll off and higher-margin backlog orders ramp up.