Segment Reporting

3 Months Ended

Dec. 28, 2025

Note 3 - Segment Reporting

The Company’s 2two reportable segments, Applied Optics Center (“Applied Optex 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 includes 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 segment revenue, cost of sales and net operating income to assess the Company’s performance and allocation of resources. For the periods ended December 20, 2025 and three months ended December 29, 2024, the Company’s CODM was Danny Schoening, CEO. Danny Schoening resigned his position as CEO effective as of December 20, 2025, at which time Chad George assumed the position of CEO and CODM.

A summary of segment performance for the three months ended December 28, 2025 and December 29, 2024 is included in the table below:

	Optex Richardson						Other			Consolidated			Optex Richardson			Dallas			Other			Consolidated
	(Thousands)
	Three months ended
	December 28, 2025												December 29, 2024
	Optex Richardson			Applied Optics Center Dallas			Other (non-allocated costs and eliminations)			Consolidated			Optex Richardson			Applied Optics Center Dallas			Other (non-allocated costs and eliminations)			Consolidated

Revenue from External Customers	$	5,325			3,820			-			9,145		$	3,415			4,783			-			8,198
Intersegment Revenues		-			217			(217	)		-			-			271			(271	)		-
Total Segment Revenue		5,325			4,037			(217	)		9,145			3,415			5,054			(271	)		8,198

Total Cost of Sales		3,992			3,274			(217	)		7,049			3,088			3,253			(271	)		6,070

Gross Profit		1,333			763			-			2,096			327			1,801			-			2,128
Gross Margin %		25.0	%		18.9	%		-			22.9	%		9.6	%		35.6	%		-			26.0	%

General and Administrative Expense		1,355			380			212			1,947			940			180			92			1,212
Segment Allocated G&A Expense		(415	)		415			-			-			(328	)		328			-			-
Net General & Administrative Expense		940			795			212			1,947			612			508			92			1,212

Operating Income (Loss)		393			(32	)		(212	)		149			(285	)		1,293			(92	)		916
Operating Income (Loss) %		7.4	%		(0.8	)%		-			1.6	%		(8.3	)%		25.6	%		-			11.2	%

Interest Income (Expense)		-			-			48			48			-			-			(13	)		(13	)

Income (Loss) before taxes	$	393			(32	)		(164	)		197			(285	)		1,293			(105	)		903
Income (Loss) before taxes %		7.4	%		(0.8	)%		-			2.2	%		(8.3	)%		25.6	%		-			11.0	%

Optex Richardson (OPX) – Richardson, Texas

Optex Richardson revenues are primarily in support of prime and subcontracted military customers. Approximately 94% of the Optex Richardson segment revenue is comprised of domestic military customers, and 6% is comprised of foreign military customers. For the three months ended December 28, 2025, Optex Richardson represented 58% of the Company’s total consolidated revenue and consisted of revenue from the U.S. Government (17%), and three major U.S. defense contractors representing 17%, 14% and 6%, 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 December 28, 2025, the Richardson facility operated with 91 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 – Dallas, Texas

The Applied Optics Center serves primarily domestic U.S. customers. Sales to commercial customers represent 3% and military sales to prime and subcontracted customers represent 97% of the total segment revenue for the three months ended December 28, 2025. Approximately 95% of the AOC revenue was derived from external customers and approximately 5% was related to intersegment sales to Optex Richardson in support of military contracts. For the three months ended December 28, 2025, AOC represented 42% of the Company’s total consolidated revenue and consisted of revenue from four major defense contractors representing 12%, 7%, 6% and 5% 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 December 28, 2025, AOC operated with 45 full-time equivalent employees in a single shift operation.

The financial tables below present information on the reportable segments’ profit or loss for each period, as well as segment assets as of each period end. The Company does not allocate interest expense, income taxes or unusual items to segments.

	Reportable Segment Financial Information (thousands)
	As of and for the three months ended December 28, 2025
	Optex Systems Richardson			Applied Optics Center Dallas			Other (non-allocated costs and intersegment eliminations)			Consolidated Total

Revenues from external customers	$	5,325		$	3,820		$	-		$	9,145
Intersegment revenues		-			217			(217	)		-
Total revenue	$	5,325		$	4,037		$	(217	)	$	9,145

Depreciation and amortization	$	34		$	56		$	-		$	90

Interest income	$	-			-		$	(48	)	$	(48	)

Income (loss) before taxes	$	393		$	(32	)	$	(164	)	$	197

Other significant noncash items:
Allocated home office expense	$	(415	)	$	415		$	-		$	-
Stock compensation expense	$	-		$	-		$	212		$	212
Warranty expense	$	-		$	6		$	-		$	6

Segment assets	$	22,279		$	7,932		$	-		$	30,211
Expenditures for segment assets	$	24		$	432		$	-		$	456

	Reportable Segment Financial Information (thousands)
	As of and for the three months ended December 29, 2024
	Optex Systems Richardson			Applied Optics Center Dallas			Other (non-allocated costs and intersegment eliminations)			Consolidated Total

Revenues from external customers	$	3,415		$	4,783		$	-		$	8,198
Intersegment revenues		-			271			(271	)		-
Total revenue	$	3,415		$	5,054		$	(271	)	$	8,198

Depreciation and amortization	$	64		$	65		$	-		$	129

Interest expense		-			-		$	13		$	13

Income (loss) before taxes	$	(285	)	$	1,293		$	(105	)	$	903

Other significant noncash items:
Allocated home office expense	$	(328	)	$	328		$	-		$	-
Stock compensation expense	$	-		$	-		$	92		$	92
Warranty expense	$	-		$	(30	)	$	-		$	(30	)

Segment assets	$	16,881		$	7,925		$	-		$	24,806
Expenditures for segment assets	$	74		$	245		$	-		$	319

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-21

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-21

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-31

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-15

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-42

Reference 7: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 48
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-48

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 270
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482964/270-10-50-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (ee)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 11: http://fasb.org/us-gaap/role/ref/otherTransitionRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 12: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 54
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-54

Reference 13: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 47
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-47

Reference 14: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 54
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-54

Reference 15: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 47
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-47

Reference 16: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 54
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-54

Reference 17: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 47
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-47

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-22

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 34
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-34

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-26C

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-26B

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-40

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/280/tableOfContent

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-26

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-41

+ Details

Optex Systems Holdings Inc 10-Q