Close this search box.

ETC Announces Fiscal 2023 First Quarter Results

SOUTHAMPTON, Pa., July 14, 2022 (GLOBE NEWSWIRE) — Environmental Tectonics Corporation (OTC Pink: ETCC) (“ETC” or the “Company”) today reported its financial results for the thirteen week period ended May 27, 2022 (the “2023 first quarter”).

Robert L. Laurent, Jr., ETC’s Chief Executive Officer and President, stated, “We are pleased with the 32% increase in sales vs. prior year within our Commercial/Industrial Systems business and with the 55% increase in sales of Advanced Disaster Management System products. Though Aircrew Training Solutions sales were down from the prior year, we believe that the sales pipeline remains strong.”

Fiscal 2023 First Quarter Results of Operations

Net Income (Loss) Attributable to ETC

Net loss attributable to ETC was $0.6 million, or ($0.05) diluted loss per share, in the 2023 first fiscal quarter, compared to net income attributable to ETC of $2.2 million during the 2022 first quarter, equating to $0.13 diluted loss per share. The $2.8 million variance is due primarily to the combined effect of a $2.4 million increase in other income in 2022 related to the PPP loan forgiveness, along with increases in operating expenses of $0.3 million and slight reduction in overall revenue.

Net Sales

Net sales in the 2023 first fiscal quarter were $5.87 million, a decrease of only $0.2 million, or (3.5%), compared to 2022 first quarter net sales of $6.1 million. The decrease in net sales was mainly a result of the low backlog entering fiscal year 2023. The backlog, combined with the continued delays we are experiencing with the overall supply chain, resulted in a small reduction in first quarter revenues. Aerospace sales in 2023 first fiscal quarter accounted for 40% of overall sales, compared to 56% in first fiscal quarter 2022. Further, domestic sales of 60% in 2023 first fiscal quarter were increased from 44% in first fiscal quarter of 2022. Bookings in the 2023 first fiscal quarter were $2.2 million, which were driven by $1.2 million of Environmental orders.

Gross Profit

Gross profit for the 2023 first fiscal quarter of $1.6 million decreased slightly compared to $1.7 million in the 2022 first fiscal quarter, while gross profit margin increased by 0.2%. The change in gross profit was a result of the slight revenue change. There were no specific business unit drivers in the first quarter that affected the gross profit in a significant manner.

Operating Expenses

Operating expenses, including sales and marketing, general and administrative, and research and development, for the 2023 first quarter were $2.0 million, an increase of $0.3 million, or 15.2%, compared to $1.7 million for the 2022 first quarter. The increase in operating expenses was due primarily to higher general and administrative expenses, primarily a result of increased expenses related to ETC-PZL and overall employee related costs.

Other Expenses (Income), Net

Other expenses, net for the 2023 first fiscal quarter was $0.1 million compared to other income of $2.4 million for the 2022 first fiscal quarter, an unfavorable variance of $2.5 million due to the prior accounting for the forgiveness of the PPP loan in 2022.

Cash Flows from Operating, Investing, and Financing Activities

During the 2023 first quarter, due primarily from the decrease in contract liabilities and the net loss for the period, the Company used $1.5 million of cash for operating activities compared to only $0.1 million during the 2022 first quarter. Under Accounting Standards Codification (“ASC”) 606, accounts such as contract assets and accounts receivable represent the timing differences of spending on production activities versus the billing and collecting of customer payments.

Cash used for investing activities primarily relates to funds used for capital expenditures of equipment and software development. The Company’s investing activities used $85 thousand during the 2023 first quarter compared to $41 thousand during the 2022 first quarter.

The Company’s financing activities provided $1.1 million of cash during the 2023 first quarter from borrowings under the Company’s credit facility compared to using $1.0 million of cash during the 2022 first quarter under the Company’s credit facility.

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; 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 95%-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

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.

Contact: Joseph F. Verbitski, Jr., CFO
Phone: (215) 355-9100 x1531

– Financial Tables Follow –

Table A
(in thousands, except per share information)
weeks ended
weeks ended
27-May-22 28-May-21 $ %
Net sales $ 5,874 $ 6,080 $ (206 ) (3.5 )
Cost of goods sold 4,246 4,406 160 3.8
Gross profit 1,628 1,674 (46 ) -2.9
Gross profit margin % 27.7 % 27.5 % 0.2 %
Operating expenses 2,031 1,722 (309 ) (15.2 )
Operating loss (403 ) (48 ) (355 ) (88.1 )
Operating margin % -6.9 % -0.8 % -6.1 %
Interest expense, net 124 151 27 21.8
Other income, net 63 (2,409 ) (2,472 )
Income (loss) before income taxes (590 ) 2,210 (2,800 )
Pre-tax margin % -10.1 % 36.3 %
Income tax provision 20 20 0.0
Net income (loss) (610 ) 2,190 (2,800 )
Loss attributable to non-controlling interest 11 3 8
Net income (loss) attributable to ETC (599 ) 2,193 (2,792 )
Preferred Stock dividends (121 ) (121 ) 0.0
Income (loss) attributable to common and participating shareholders $ (720 ) $ 2,072 $ (2,792 )
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 $ (0.05 ) $ 0.13 $ (0.18 )
Preferred $ (0.05 ) $ 0.13 $ (0.18 )
Diluted earnings (loss) per share $ (0.05 ) $ 0.13 $ (0.18 )
Total basic weighted average common and participating shares 15,569 15,569
Total diluted weighted average shares 15,569 15,569
Table B
(amounts in thousands)
weeks ended
weeks ended
EBITDA * $ (177 ) $ 2,679
As of
27-May-22 25-Feb-22
Working capital $ 6,914 $ 6,589
Total shareholders’ equity (deficit) $ 972 $ 1,595

* In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), we also disclose Earnings Before Income, Taxes, Depreciation, and Amortization (“EBITDA”). The presentation of a non-U.S. GAAP financial measure such as EBITDA is intended to enhance the usefulness of financial information by providing a measure that management uses internally to evaluate our expenses and operating performance and factors into several of our financial covenant calculations.

A reader may find this item important in evaluating our performance. Management compensates for the limitations of using non-U.S. GAAP financial measures by using them only to supplement our U.S. GAAP results to provide a more complete understanding of the factors and trends affecting our business.