SOUTHAMPTON, Pa., July 11, 2025 (GLOBE NEWSWIRE) — Environmental Tectonics Corporation (OTC Pink: ETCC) (“ETC” or the “Company”) today reported its financial results for the thirteen week period ended May 30, 2025 (the “2026 first fiscal quarter”).
Robert L. Laurent, Jr., ETC’s Chief Executive Officer and President stated, “We are pleased with the 39% increase in ETC operating income vs. prior year driven by an increase in sales of Aircrew Training Systems (“ATS”) and a decrease in operating expenses as compared to the prior year, as well as our 34% gross profit margin excluding the impact of lower margin sales related to construction of an aeromedical center during the 2026 first fiscal quarter. We exit the quarter with a sales backlog of $73 million and a large pipeline of opportunities.”
Fiscal 2026 First Quarter Results of Operations
Net Income
Net income was $1.3 million, or $0.07 diluted earnings per share, in the 2026 first fiscal quarter, compared to net income of $1.4 million during the 2025 first fiscal quarter, or $0.08 diluted earnings per share. The $0.1 million decrease is primarily attributable to a $0.4 million, or 385.3% increase in interest expense, net and a $0.4 million, or 1850.0% increase in income tax provision in the 2026 first fiscal quarter as compared to 2025 first fiscal quarter partially offset by the net effect of a $0.9 million increase in ATS net sales, excluding the Aeromedical center building revenue, and a $0.7 million decrease in Commercial/Industrial Systems (“CIS”) net sales, and a $0.5 million decrease in operating expenses.
Net Sales
Net sales in the 2026 first fiscal quarter were $17.6 million, an increase of $4.1 million, or 30.5%, compared to 2025 first fiscal quarter net sales of $13.5 million. The increase in net sales was mainly a result of a $4.8 million, or 74.9% increase in ATS sales, $3.9 million of which relates to aeromedical center building revenue, slightly offset by a $0.8 million, or 14.2% decrease in Sterilizer Systems sales in the 2026 first fiscal quarter as compared to 2025 first fiscal quarter.
Gross Profit
Gross profit for the 2026 first fiscal quarter was $4.7 million (26.5% of net sales) compared to $4.5 million in 2025 first fiscal quarter (33.6% of net sales). The decrease in gross profit margin as a percentage of sales was a direct result of the increase in aeromedical center building revenue within the ATS business unit, which is lower margin than ETC’s core businesses as the work is being performed by a sub-contracted construction firm. Excluding the impact of the aeromedical center building revenue, gross profit margin was 34.3% for first fiscal quarter 2026 as compared to 33.9% for first fiscal quarter 2025.
Operating Expenses
Operating expenses, including sales and marketing, general and administrative, and research and development, for the 2026 first fiscal quarter were $2.5 million, a decrease of $0.5 million, or 16.0%, compared to $3.0 million for the 2025 first fiscal quarter. The decrease in operating expenses was due primarily to lower research and development expense at ETC-PZL in 2026 first fiscal quarter as compared to 2025 first fiscal quarter. In 2025 first fiscal quarter, ETC-PZL had limited sales which resulted in employees working on non-chargeable research and development projects.
Operating Income
Operating income for the 2026 fiscal first quarter was $2.2 million, an increase of $0.6 million, or 39.4%, compared to $1.6 million for the 2025 first fiscal quarter. The increase in operating income is attributable to the net effect of a $0.9 million increase in ATS net sales, excluding the Aeromedical center building revenue, and a $0.7 million decrease in Commercial/Industrial Systems (“CIS”) net sales, and a $0.5 million decrease in operating expenses.
Interest Expense, Net
Interest expense, net, for the 2026 first fiscal quarter was $0.6 million compared to $0.1 million in the 2025 first fiscal quarter, an increase of $0.4 million, or 385.3%, reflecting increased borrowing attributable to the leaseback of the demonstration equipment in 2025 fourth fiscal quarter.
Income Tax Provision
Income tax provision for the 2026 first fiscal quarter was $0.4 million compared to $0.0 million in the 2025 first fiscal quarter, an increase of $0.4 million, or 1850.0%. The increase is a non-cash tax expense attributable to the utilization of our Net Operating Loss (NOL) carryforward for which a deferred tax asset was established in the fourth quarter of fiscal 2025.
Cash Flows from Operating, Investing, and Financing Activities
During the 2026 first fiscal quarter, cash flows used in operating activities were $2.7 million, a decrease of $5.6 million compared to cash flows provided by operating activities of $2.9 million during 2025 first fiscal quarter. Cash flows during the 2026 first fiscal quarter primarily decreased as a result of an increase in accounts receivable, net, slightly offset by an increase in accounts payable, trade for 2026 first fiscal quarter as compared to 2025 first fiscal quarter.
Cash used for investing activities primarily relates to funds used for capital expenditures of equipment and software development. The Company’s investing activities used $0.1 million during the 2026 and 2025 first fiscal quarter.
The Company’s financing activities provided $1.0 million of cash during the 2026 first fiscal quarter from borrowings under the Company’s credit facility as compared to repayments under the Company’s credit facility of $3.1 during the 2025 first fiscal quarter.
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) sterilizers (“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) sterilizers; 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 foreign and U.S. governments and 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 as well as long-term contracts with domestic and international customers for the sale of Sterilizer systems. The Company also enters into long-term contracts with domestic customers for the sale of 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/. The information contained on our website is not incorporated by reference in this news release.
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. Except as required by law, we assume no obligation to update or revise any forward looking statements.
| Contact: | Tim Kennedy, CFO |
| Phone: | (215) 355-9100 x1531 |
| E-mail: | tkennedy@etcusa.com |
– Financial Table Follows –
| Table A | |||||||||||||||
| ENVIRONMENTAL TECTONICS CORPORATION | |||||||||||||||
| SUMMARY TABLE OF RESULTS | |||||||||||||||
| (in thousands, except per share information) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Thirteen weeks ended | Variance | ||||||||||||||
| (in thousands, except per share information) | May 30, 2025 | May 24, 2024 | ($) | (%) | |||||||||||
| Net sales | $ | 17,601 | $ | 13,492 | $ | 4,109 | 30.5 | ||||||||
| Cost of goods sold | 12,939 | 8,965 | 3,974 | 44.3 | |||||||||||
| Gross Profit | 4,662 | 4,527 | 135 | 3.0 | |||||||||||
| Gross profit margin % | 26.5 | % | 33.6 | % | -7.1 | % | -21.1 | % | |||||||
| Operating expenses | 2,498 | 2,975 | (477 | ) | -16.0 | ||||||||||
| Operating income | 2,164 | 1,552 | 612 | 39.4 | |||||||||||
| Operating margin % | 12.3 | % | 11.5 | % | 0.8 | % | 6.9 | % | |||||||
| Interest expense, net | 563 | 116 | 447 | 385.3 | |||||||||||
| Other (income) expense, net | (78 | ) | 55 | (133 | ) | -241.8 | |||||||||
| Income before income taxes | 1,679 | 1,381 | 298 | 21.6 | |||||||||||
| Pre-tax margin % | 9.5 | % | 10.2 | % | -0.7 | % | -6.9 | % | |||||||
| Income tax provision | 390 | 20 | 370 | 1850.0 | |||||||||||
| Net income | 1,289 | 1,361 | (72 | ) | -5.3 | ||||||||||
| Preferred Stock dividends | (121 | ) | (121 | ) | – | 0.0 | |||||||||
| Income attributable to common and | |||||||||||||||
| participating shareholders | $ | 1,168 | $ | 1,240 | $ | (72 | ) | -5.8 | |||||||
| Per share information: | |||||||||||||||
| Basic earnings per common and participating share: | |||||||||||||||
| Distributed earnings per share: | |||||||||||||||
| Common | $ | – | $ | – | $ | – | |||||||||
| Preferred | $ | 0.02 | $ | 0.02 | $ | – | 0.0 | ||||||||
| Undistributed earnings per share: | |||||||||||||||
| Common | $ | 0.07 | $ | 0.08 | $ | (0.01 | ) | -12.5 | |||||||
| Preferred | $ | 0.07 | $ | 0.08 | $ | (0.01 | ) | -12.5 | |||||||
| Diluted earnings per share | $ | 0.07 | $ | 0.08 | $ | (0.01 | ) | -12.5 | |||||||
| Total basic weighted average common and participating shares | 15,665 | 15,569 | |||||||||||||
| Total diluted weighted average shares | 16,998 | 16,062 | |||||||||||||
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