SOUTHAMPTON, Pa., Oct. 15, 2024 (GLOBE NEWSWIRE) -- Environmental Tectonics Corporation (OTC Pink: ETCC) ("ETC" or the "Company") today reported its financial results for the thirteen week period ended August 23, 2024 (the "2025 fiscal second quarter") and the twenty-six week period ended August 23, 2024.
Robert L. Laurent, Jr., ETC's Chief Executive Officer and President stated, "We are pleased with the overall 56% increase in 2025 fiscal second quarter sales vs. prior year, as well our improvements in gross margin, operating margin and our $2.1 million increase in net income in the 2025 fiscal second quarter versus the prior year. We ended the 2025 fiscal second quarter with a backlog of $109 million. The large backlog positions us well moving forward."
2025 Fiscal Second Quarter Results of Operations
Net Income (Loss)
Net income was $1.7 million, or $0.09 earnings per diluted share, in the 2025 fiscal second quarter, compared to net loss of ($0.4) million during the 2024 fiscal second quarter, equating to ($0.04) earnings per diluted share. The $2.1 million variance is due primarily to increased sales and improved gross profit margin.
Net Sales
Net sales in the 2025 fiscal second quarter were $14.1 million, an increase of $5.1 million, or 56.2%, compared to 2024 fiscal second quarter net sales of $9.0 million. The increase in net sales was driven by a $4.3 million or 100.4% increase in ATS, a $0.4 million or 51.7% increase in ADMS and a $0.3 million or 10.5% increase in Sterilizer Systems net sales in 2025 fiscal second quarter compared to 2024 fiscal second quarter net sales.
Gross Profit
Gross profit for the 2025 fiscal second quarter of $4.2 million increased from $2.3 million in the 2024 fiscal second quarter, an increase of $1.9 million or 83.3%. Gross profit margin of 29.8% increased 4.4% in the 2025 fiscal second quarter compared to 25.4% in the 2024 fiscal second quarter. The increase in gross profit was due to higher net sales within the ATS, ADMS and Sterilizer Systems business units, along with an increased overhead absorption resulting from higher production levels.
Operating Expenses
Operating expenses, including sales and marketing, general and administrative, and research and development, for the 2025 fiscal second quarter were $2.2 million, a decrease of $0.1 million, or 6.1%, compared to $2.4 million for the 2024 fiscal second quarter. Operating expenses decreased due primarily to lower research and development expense for the 2025 fiscal second quarter as compared to the 2024 fiscal second quarter. The increase in sales and gross profit margin along with the decrease in operating expenses resulted in an improvement in operating margin from (-0.8%) in the 2024 second fiscal quarter to 14.0% in the 2025 fiscal second quarter.
2025 Fiscal First Half Results of Operations
Net Income (Loss)
Net income was $3.1 million, or $0.17 earnings per diluted share, in the 2025 fiscal first half, compared to net loss of ($1.5) million during the 2024 fiscal first half, equating to ($0.11) earnings per diluted share. The $4.6 million variance is attributable to an increase in sales and improved gross profit margin.
Net Sales
Net sales in the 2025 fiscal first half were $27.6 million, an increase of $10.9 million, or 65.3%, compared to 2024 fiscal first half net sales of $16.7 million. The increase in net sales is primarily attributable to a $7.7 million or 106.8% increase in ATS 2025 fiscal first half net sales and a $3.2 million or 54.1% increase in sterilizer systems net sales in the 2025 fiscal first half as compared to the 2024 fiscal first half.
Gross Profit
Gross profit for the 2025 fiscal first half was $8.7 million compared to $4.1 million in the 2024 fiscal first half, an increase of $4.6 million, or 111.5%. Gross profit margin of 31.6% increased 6.9% in the 2025 fiscal first half compared to 24.7% in the 2024 fiscal first half. The increase in gross profit was primarily due to an increase in net sales and gross profit margin within the ATS and Sterilizer Systems business units.
Operating Expenses
Operating expenses, including sales and marketing, general and administrative, and research and development, for the 2025 fiscal first half were $5.2 million, an increase of $0.2 million, or 4.4%, compared to $5.0 million for the 2024 fiscal first half. The increase in operating expenses was primarily due to increased expense related to higher sales and personnel expense and general and administrative expense slightly offset by a decrease in research and development expense. The increase in sales and gross profit margin along with the decrease in operating expenses resulted in an improvement in operating margin from (-5.1%) in the 2024 fiscal first half to 12.8% in the 2025 fiscal first half.
Interest Expense, Net
Interest expense, net for the 2025 fiscal first half was $0.3 million compared to interest expense, net of $0.4 million for the 2024 fiscal first half, a favorable variance of $0.1 million. The favorable variance was primarily attributable to an increase in interest income included in the proceeds received related to the 2020 and 2021 Employee Retention Credits received in the 2025 first fiscal first half.
Cash Flows from Operating, Investing, and Financing Activities
During the 2025 fiscal first half, the Company used $2.1 million of cash from operating activities, due primarily from an increase in contract assets and reduction in accounts payable and contract liabilities, slightly offset by an increase in net income and a decrease in accounts receivable and prepaid expenses and other assets, as compared to using $5.9 million during the 2024 fiscal first half.
Cash used for investing activities was $0.2 million during the 2025 and 2024 fiscal first half and primarily relates to funds used for capital expenditures on equipment and software development.
The Company's financing activities included borrowings of $1.6 million during the first half of fiscal 2025 under the Company's credit facility as compared to borrowing $4.7 million of cash during the 2024 fiscal first half under the Company's credit facilities.
About ETC
ETC was incorporated in 1969 in Pennsylvania. For over five decades, we have provided our customers with products, services, and support. Innovation, continuous technological improvement and enhancement, and product quality are core values that are critical to our success. We are a significant supplier and innovator in the following areas: (i) software driven products and services used to create and monitor the physiological effects of flight, including high performance jet tactical flight simulation, fixed and rotary wing upset prevention and recovery and spatial disorientation, and both suborbital and orbital commercial human spaceflight, collectively, Aircrew Training Systems ("ATS"); (ii) altitude (hypobaric) chambers; (iii) hyperbaric chambers for multiple persons (multiplace chambers); (iv) Advanced Disaster Management Simulators ("ADMS"); (v) steam and gas (ethylene oxide) sterilizer systems ("Sterilizer Systems" or "Sterilizers"); and (vi) environmental testing and simulation systems ("ETSS").
We operate in two primary business segments, Aerospace Solutions ("Aerospace") and Commercial/Industrial Systems ("CIS"). Aerospace encompasses the design, manufacture, and sale of: (i) ATS products; (ii) altitude (hypobaric) chambers; (iii) hyperbaric chambers for multiple persons (multiplace chambers); and (iv) ADMS, as well as integrated logistics support ("ILS") for customers who purchase these products or similar products manufactured by other parties. These products and services provide customers with an offering of comprehensive solutions for improved readiness and reduced operational costs. Sales of our Aerospace products are made principally to U.S. and foreign government agencies and to civil aviation organizations. CIS encompasses the design, manufacture, and sale of: (i) steam and gas (ethylene oxide) sterilizer systems; and (ii) ETSS; as well as parts and service support for customers who purchase these products or similar products manufactured by other parties. Sales of our CIS products are made principally to the healthcare, pharmaceutical, and automotive industries.
ETC-PZL Aerospace Industries Sp. z o.o. ("ETC-PZL"), our 100%-owned subsidiary in Warsaw, Poland, is currently our only operating subsidiary. ETC-PZL manufactures certain simulators and provides software to support products manufactured domestically within our Aerospace segment.
The majority of our net sales are generated from long-term contracts with U.S. and foreign government agencies (including foreign military sales ("FMS") contracted through the U.S. Government) for the research, design, development, manufacture, integration, and sustainment of ATS products, including Chambers and the simulators manufactured and sold through ETC-PZL, collectively, ATS. The Company also enters into long-term contracts with domestic customers for the sale of sterilizers and ETSS. Net sales of ADMS are generally much shorter term in nature and vary between domestic and international customers. We generally provide our products and services under fixed-price contracts.
ETC's unique ability to offer complete systems, designed and produced to high technical standards, sets it apart from its competition. ETC's headquarters is located in Southampton, PA. For more information about ETC, visit http://www.etcusa.com/.
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Forward-looking Statements
This news release contains forward-looking statements, which are based on management's expectations and are subject to uncertainties and changes in circumstances. Words and expressions reflecting something other than historical fact are intended to identify forward-looking statements, and these statements may include words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "future", "predict", "potential", "intend", or "continue", and similar expressions. We base our forward-looking statements on our current expectations and projections about future events or future financial performance. Our forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about ETC and its subsidiaries that may cause actual results to be materially different from any future results implied by these forward-looking statements. We caution you not to place undue reliance on these forward-looking statements.
- Financial Tables Follow -
| Table A | ||||||||||||||||
| Environmental Tectonics Corporation | ||||||||||||||||
| Summary Table of Results | ||||||||||||||||
| (in thousands, except per share information) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Thirteen weeks ended | Variance | |||||||||||||||
| August 23, 2024 | August 25, 2023 | ($) | (%) | |||||||||||||
| Net sales | $ | 14,083 | $ | 9,016 | $ | 5,067 | 56.2 | |||||||||
| Cost of goods sold | 9,886 | 6,726 | 3,160 | 47.0 | ||||||||||||
| Gross Profit | 4,197 | 2,290 | 1,907 | 83.3 | ||||||||||||
| Gross profit margin % | 29.8% | 25.4% | 4.4% | 17.3% | ||||||||||||
| Operating expenses | 2,219 | 2,364 | (145 | ) | -6.1 | |||||||||||
| Operating income (loss) | 1,978 | (74 | ) | 2,052 | 2772.9 | |||||||||||
| Operating margin % | 14.0% | -0.8 | % | 14.8% | 1799.0% | |||||||||||
| Interest expense, net | 233 | 228 | 5 | 2.2 | ||||||||||||
| Other expense, net | 29 | 93 | (64 | ) | -69.0 | |||||||||||
| Income (loss) before income taxes | 1,716 | (395 | ) | 2,111 | 534.4 | |||||||||||
| Pre-tax margin % | 12.2% | -4.4 | % | 16.6% | 377.3% | |||||||||||
| Income tax provision | 20 | 40 | (20 | ) | -50.0 | |||||||||||
| Net income (loss) | 1,696 | (435 | ) | 2,131 | 489.9 | |||||||||||
| Preferred Stock dividends | (121 | ) | (121 | ) | - | 0.0 | ||||||||||
| Income (loss) attributable to common and | ||||||||||||||||
| Participating shareholders | $ | 1,575 | $ | (556 | ) | $ | 2,131 | 383.2 | ||||||||
| Per share information: | ||||||||||||||||
| Basic earnings (loss) per common and participating share: | ||||||||||||||||
| Distributed earnings per share: | ||||||||||||||||
| Common | $ | - | $ | - | $ | - | ||||||||||
| Preferred | $ | 0.02 | $ | 0.02 | $ | - | 0.0 | |||||||||
| Undistributed earnings (loss) per share: | ||||||||||||||||
| Common | $ | 0.10 | $ | (0.04 | ) | $ | 0.14 | 350.0 | ||||||||
| Preferred | $ | 0.10 | $ | (0.04 | ) | $ | 0.14 | 350.0 | ||||||||
| Earnings (loss) per diluted share | $ | 0.09 | $ | (0.04 | ) | $ | 0.13 | 325.0 | ||||||||
| Total basic weighted average common and participating shares | 15,569 | 15,569 | ||||||||||||||
| Total diluted weighted average shares | 16,725 | 15,569 | ||||||||||||||
| Table B | ||||||||||||||||
| Environmental Tectonics Corporation | ||||||||||||||||
| Summary Table of Results | ||||||||||||||||
| (in thousands, except per share information) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Twenty-six weeks ended | Variance | |||||||||||||||
| August 23, 2024 | August 25, 2023 | ($) | (%) | |||||||||||||
| Net sales | $ | 27,575 | $ | 16,683 | $ | 10,892 | 65.3 | |||||||||
| Cost of goods sold | 18,851 | 12,559 | 6,292 | 50.1 | ||||||||||||
| Gross Profit | 8,724 | 4,124 | 4,600 | 111.5 | ||||||||||||
| Gross profit margin % | 31.6% | 24.7% | 6.9% | 27.9% | ||||||||||||
| Operating expenses | 5,194 | 4,973 | 221 | 4.4 | ||||||||||||
| Operating income (loss) | 3,530 | (849 | ) | 4,379 | 515.8 | |||||||||||
| Operating margin % | 12.8% | -5.1 | % | 17.9% | 351.0% | |||||||||||
| Interest expense, net | 349 | 426 | (77 | ) | -18.1 | |||||||||||
| Other expense, net | 85 | 143 | (58 | ) | -40.6 | |||||||||||
| Income (loss) before income taxes | 3,096 | (1,418 | ) | 4,514 | 318.3 | |||||||||||
| Pre tax margin % | 11.2% | -8.5 | % | 19.7% | 231.8% | |||||||||||
| Income tax provision | 40 | 80 | (40 | ) | -50.0 | |||||||||||
| Net (loss) income | 3,056 | (1,498 | ) | 4,554 | 304.0 | |||||||||||
| Preferred Stock Dividends | (242 | ) | (242 | ) | - | 0.0 | ||||||||||
| Income (loss) attributable to common and | ||||||||||||||||
| Participating shareholders | $ | 2,814 | $ | (1,740 | ) | $ | 4,554 | 261.7 | ||||||||
| Per share information: | ||||||||||||||||
| Basic earnings (loss) per common and participating share: | ||||||||||||||||
| Distributed earnings per share: | ||||||||||||||||
| Common | $ | - | $ | - | ||||||||||||
| Preferred | $ | 0.04 | $ | 0.04 | $ | - | 0.0 | |||||||||
| Undistributed (loss) per share: | ||||||||||||||||
| Common | $ | 0.18 | $ | (0.11 | ) | $ | 0.29 | 263.6 | ||||||||
| Preferred | $ | 0.18 | $ | (0.11 | ) | $ | 0.29 | 263.6 | ||||||||
| Earnings (loss) per diluted share | $ | 0.17 | $ | (0.11 | ) | $ | 0.28 | 254.5 | ||||||||
| Total basic weighted average common and participating shares | 15,569 | 15,569 | ||||||||||||||
| Total diluted weighted average shares | 16,725 | 15,569 | ||||||||||||||
