ETC Announces Fiscal 2025 Second Quarter Results
SOUTHAMPTON, PA, USA, October 15, 2024 – 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.
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.
Financial Table Follows
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 terminology 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.