Operator: Thank you for your continued patience. Your meeting will Thank you for your continued patience. You are going to be holding it evenly. If you need assistance at any time, please press 0. A member of our team will be happy to help. to begin. Please standby. Your meeting is about Hello, and welcome to today's OPTEX System Holdings, Inc. Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. Please note that this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the meeting over to Chad George, CEO. Please go ahead, sir.
Chad George: Thank you. Hello. My name is Chad George, and I am the CEO of Optex Systems. I would like to begin by introducing Karen L. Hawkins, our CFO, who will take the opportunity to walk us through our second quarter fiscal 26 financials. I will then return later to add additional perspective on our business and the path forward. Karen?
Karen L. Hawkins: Thank you, Chad. Before we begin, I would like to note that statements made during today's call, including our responses during the Q&A session, may include forward-looking statements. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Factors that could cause such differences are described in our filings with the SEC, including risk factors section of our most recent 10-Ks. We will also make reference to non-GAAP measures such as adjusted EBITDA. Reconciliations to GAAP results are available in our filings. For the 2026, revenue was $600 thousand compared to $10.7 million in the prior year period. For the 6 months, revenue totaled $18.8 million compared to $18.9 million last year, essentially flat year over year. The first half of the year was impacted by the federal government shutdown and delays in approval of the fifth fiscal year 26 appropriations bill. These factors put several contract awards into the second half of the year. Looking ahead, we expect a stronger second half of fiscal year 2026 as delayed awards move forward. We continue to project full year revenue in the range of $43 million to 45 million Gross profit was $3.4 million for the quarter and $5.5 million for the 6 months. Consistent with prior year periods despite the lower revenue. Gross margin improved meaningfully 35.2% for the quarter, up from 31.3%. 29.2% for the 6 months, compared to 29% in the prior year period. This improvement was driven by completion of legacy loss making periscope contracts, improved pricing on newer programs, continued operational efficiencies. Operating expenses were $1.7 million for the quarter compared to $1.1 million last year, an increase of $600 thousand. For the first 6 months, operating expenses were $3.7 million compared to $2.3 million an increase of $1.4 million The increase was driven primarily by Leadership transition costs and organizational changes. Higher stock-based compensation, increased research and development investments, ongoing compliance and systems upgrades, and to a lesser extent inflationary pressures. We expect operating expenses to remain elevated as we continue to invest in R&D, meet cybersecurity maturity model certification requirements and enhanced internal reporting systems. Net income for the quarter was $1.3 million or $0.19 per diluted share compared to $1.8 million last year. For the first 3 months, net income was $1.6 million or $0.23 per diluted share compared to $2.6 million in the prior year period. Adjusted EBITDA was $2 million for the quarter versus $2.4 million last year. And $2.8 million for the 6 months versus $3.6 million last year. The year-over-year decline reflects lower revenue volumes and increased operating expenses. We continue to expect full year adjusted EBITDA in the range of $7.5 million to $8.5 million For the balance sheet and cash flow, we ended the quarter with $4.2 million in cash and cash equivalents compared to $6.4 million at fiscal year end, with no outstanding debt on our revolving credit facility. We used $1.3 million in operating cash flow compared to $4 million generated in the prior year period. This reflects higher operating expenses, increased inventory and input inventory purchases to support the expected second half revenue. Working capital remained strong at $22.6 million compared to $21.1 million at fiscal year end. Orders and backlog. New orders increased 3.8% year-over-year to $16.3 million for the first half. Ending backlog was approximately $36.6 million providing good visibility into the remainder of fiscal year 26. We continue to see steady bookings tied to defense programs. We invested $800 thousand in capital equipment during the first half and have $1.1 million in additional committed investment. We expect full year capital expenditures to range between $2 million and $2.5 million These investments support capacity expansion, new product lines, research and development and enhanced prototyping capability. That concludes the financial portion of our remarks. I will now turn the call back over to Chad for closing comments.
Chad George: Thank you, Karen. While Q2 2026 was impacted by delays in government funding and timing. We remain encouraged by the strength of our backlog, improving gross margins and continued demand across our core defense programs. We have made significant investments in research and development, manufacturing capabilities and organizational structure that we believe position Optex for long term growth and expanded market opportunity. As government procurement normalizes and recently awarded programs ramp into production, we expect stronger revenue performance during the second half of the fiscal year. Our team remains focused on execution, operational efficiency and delivering value to our customers, war fighters and shareholders, and we are confident in the long term direction of the business. With that, I would like to open it up for questions.
Operator: Thank you. And once again, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. We will pause for just a moment to allow everyone an opportunity to signal for questions. I am currently showing no questions in the queue at this time.
Chad George: Okay.
Operator: Any closing remarks?
Chad George: No. Thank you. I appreciate it. Thanks for your time.
Operator: Thank you. That brings us to the end of today's meeting. Appreciate your time and participation. May now disconnect.