SYNTEC OPTICS HOLDINGS, INC. (OPTX)·Q2 2024 Earnings Summary

Executive Summary

• Q2 2024 showed a sequential rebound with net sales of $7.01M (+12% q/q), a return to positive adjusted EBITDA ($1.32M) and EPS ($0.01), though revenue remained below the prior-year quarter ($7.69M) due to lower custom tooling and NRE, partially offset by stronger product sales (+20% y/y to ~$7.0M) .
• Management guided Q3 2024 revenue to $9.5–$11.0M, indicated gross margin should hold or slightly improve, and forecast positive net income for 2H 2024; G&A to rise modestly to support ramped engineering, quality, and pilot production .
• Order momentum spans space optics (LEO satellites), defense microdisplays (freeform prism subsystem), and AI-driven data center optics (initial order expected to more than double to ~$3.2M annually within a year) — positioning optical content as the near-term growth catalyst .
• Liquidity at quarter-end included an unused $3.7M revolver and $4.8M equipment line; cash was $0.83M. Sequential margin expansion was driven by reduced accounting and production-related expenses as new product ramps scale .

What Went Well and What Went Wrong

What Went Well

• Product revenue mix improved: product sales rose ~20% y/y to ~$7.0M while total net sales were $7.01M; the shift from development to production improved mix and profitability dynamics .
• Profitability inflected: adjusted EBITDA rose to $1.32M from -$0.67M in Q1; EPS improved to $0.01 from -$0.03 in Q1, reflecting cost controls and volume leverage on ramping programs .
• Commercial traction in new end markets: “entered the high-growth data center market driven by the deployment of Artificial Intelligence, with the first product order forecasted to more than double to $3.2 million annually within a year,” and secured follow-on space and defense optics orders .

What Went Wrong

• Year-over-year revenue decline: net sales fell 8.9% y/y to $7.01M as custom tooling (-$0.8M) and non-recurring engineering (-$1.1M) weakened versus Q2 2023, despite stronger product sales .
• Lower y/y adjusted EBITDA vs Q2 2023 ($1.32M vs $1.78M) as gross profit dipped ~$0.2M and G&A rose to enable launches; indicates scaling costs ahead of revenue ramp .
• Working capital/cash: cash decreased to $0.83M (from $2.16M at 12/31/23), though liquidity supported by unused revolver/equipment lines; operating cash flow was -$1.98M for 1H 2024 as inventories rose to support ramps .

Financial Results

KPIs and mix

• Product Revenue ($USD): $5.8M (Q2 2023) → ~$7.0M (Q2 2024), +20% y/y .
• Cash & Equivalents ($USD): $61,178 (6/30/2023 end-of-period) ; $1,684,308 (3/31/2024) ; $830,479 (6/30/2024) .
• Liquidity: unused $3.7M revolver; unused $4.8M equipment LOC at Q2 end .

Estimate comparison

• Wall Street/S&P Global consensus data for Q2 2024 and Q3 2024 was unavailable via our data feed at this time; we could not perform an estimates beat/miss comparison. Values unavailable from S&P Global due to data access limits.

Guidance Changes

Earnings Call Themes & Trends

Note: We could not locate a Q2 2024 earnings call transcript in our document corpus. Themes below reflect management commentary from filings and press release.

Management Commentary

• “At the previous earnings call, we provided guidance for second quarter 2024 revenue to be between $6.4 and $7.0 million. I am excited to report that our revenues came in just above $7 million, as anticipated. The company ramps up space optics, data center connectivity products for increased Artificial Intelligence deployment, night vision optics and opto-mechanicals, mission-critical biomedical products, and other diverse new launches.” — Dean Rudy, CFO .
• “Third quarter 2024 revenue is expected to be in the range of $9.5–$11.0 million… We expect our gross margin to hold level or slightly improve… G&A costs are expected to increase modestly to enable ramped-up engineering, quality, and pilot production.” — Company Guidance .
• “We expect positive net income in the second half of the year, enabling further investments to energize our continued growth.” — Company Outlook .

Q&A Highlights

• We did not find a Q2 2024 earnings call transcript in our document corpus or filings; therefore, Q&A highlights and any clarifications from a call are unavailable in primary sources for this quarter.

Estimates Context

• S&P Global consensus estimates for Q2 2024 and Q3 2024 were not available via our data feed at the time of analysis; as a result, we cannot quantify beats/misses versus consensus or the degree of guidance vs. Street. Values unavailable from S&P Global due to data access limits.

Key Takeaways for Investors

• Mix shift toward volume products is underway: product revenue +20% y/y with dedicated production cells and an automated medical optics line planned — a positive setup for gross margin durability as ramps scale .
• Sequential operating recovery: Q2 adjusted EBITDA ($1.32M) and EPS ($0.01) rebounded after Q1 softness; y/y comps still reflect higher G&A investment for launches .
• Pipeline-driven growth: Space/LEO, defense microdisplays, and AI-driven data center optics orders provide multi-end-market growth vectors heading into 2H 2024 .
• Near-term catalyst: Q3 guide of $9.5–$11.0M and “positive net income” in 2H 2024 suggest momentum; execution on volume ramps and cost discipline are key to sustaining profitability .
• Liquidity adequate to support ramps: $3.7M undrawn revolver and $4.8M equipment LOC at Q2 end; monitor operating cash conversion as inventories normalize with production scaling .
• Watch list: sustainability of product-driven growth vs. weaker custom tooling/NRE; Opex discipline as G&A rises to support ramps; and gross margin trajectory as higher-yield production matures .

Supporting detail and source references

• Financial statements, non-GAAP reconciliation, and guidance: Q2 2024 8-K/press release .
• Prior quarter comps and end-market commentary: Q1 2024 10-Q .