Shares of Syntec Optics Holdings, Inc. OPTX have gained 22.2% since the company reported its earnings for the quarter ended June 30, 2025. This compares to the S&P 500 index’s 2.5% decline over the same time frame. Over the past month, the stock moved 4.7% versus the S&P 500’s 1.2% decline.
For the second quarter of fiscal 2025, Syntec Optics incurred a net loss of 1 cent per share against a net income of 1 cent per share in the same period last year.
The company reported net sales of $6.6 million, a 6.4% decline from $7 million in the year-ago quarter. This drop in sales, coupled with a rise in cost of goods sold to $5 million from $4.8 million, led to a 26.5% decline in gross profit to $1.6 million. The company swung to a net loss of $0.34 million, against a net income of $0.28 million in the same period last year.
Syntec Optics Holdings, Inc. Price, Consensus and EPS Surprise
Syntec Optics Holdings, Inc. price-consensus-eps-surprise-chart | Syntec Optics Holdings, Inc. Quote
Other Key Business Metrics
Gross margin for the second quarter fell to 24% from 31% in the prior-year period, primarily reflecting a less favorable product and customer mix and increased material costs. General and administrative expenses improved significantly, down 13.5% year-over-year to $1.7 million, driven by reductions in professional fees, advertising, marketing, and healthcare costs.
Adjusted EBITDA, a non-GAAP metric, came in at $0.7 million for the quarter, down from $1.2 million in the prior-year quarter. The decline was largely attributed to the drop in revenue and gross margin compression.
Customer concentration remains notable, with three customers accounting for 43% of quarterly revenues, slightly improved from 53% a year earlier. Revenue by end market showed strength in the medical and defense sectors, which partially offset weakness in the consumer vertical.
Management Commentary
Management attributed the revenue decline to a $1 million contraction in the consumer end market, which was only partially offset by gains of $0.3 million in communications and $0.2 million in defense. However, executives emphasized the benefits of vertical integration and reiterated confidence in the company’s ability to supply mission-critical components for the defense, medical, and communications sectors.
The leadership highlighted Syntec Optics’ polymer-based optics as a strategic advantage, citing their lower weight and cost compared to traditional glass optics. The company continues to focus on expanding its manufacturing capabilities at its 90,000 square-foot facility in Rochester, New York, and remains committed to automation as a means to reduce costs and increase efficiency.
Factors Influencing the Results
A key drag on profitability was the increase in material costs, which offset the benefits from lower overhead and administrative expenses. Cost of goods sold rose to 76% of revenue, compared to 69% a year earlier. In contrast, the improvement in general and administrative expenses was driven by proactive cost reductions in areas like consulting, insurance, and travel.
The decline in other income — from $0.3 million in second-quarter 2024 to just $0.01 million in second-quarter 2025 — also played a significant role in the negative swing in net income. This drop was primarily due to a nonrecurring gain on asset disposal recognized in the prior-year quarter. Interest expense increased to $0.21 million, up from $0.17 million a year ago, reflecting higher leverage and borrowing costs.
Other Developments
The company did note its intent to continue pursuing inorganic growth through bolt-on acquisitions in the fragmented photonics industry. Additionally, Syntec Optics expanded its inventory of raw materials as a strategic buffer against supply chain disruptions, although no material events were disclosed during the reporting period.
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Syntec Optics Holdings, Inc. (OPTX): Free Stock Analysis Report
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