SOUTHAMPTON, PA — Environmental Tectonics Corporation (OTC Pink: ETCC) this week reported robust financial performance for the first quarter of fiscal 2025, ending May 24, 2024. The company recorded a notable 76% increase in sales compared to the prior year, driven primarily by a surge in demand for its Aircrew Training Solutions (ATS) and Sterilizer Systems.
CEO Robert L. Laurent, Jr. expressed optimism about the company’s future. “We are pleased with the 76% increase in ETC sales vs. prior year driven by a 116% increase in sales of Aircrew Training Solutions vs. prior year and a 91% increase in sales vs. prior year within our Sterilizer Systems business,” Laurent said. The company concluded the quarter with a record backlog of approximately $114 million, which is expected to bolster production, sales, and profitability over the next two years.
Financial Highlights
ETC reported a net income of $1.4 million, translating to $0.08 per diluted share, for the first quarter of fiscal 2025. This marks a significant turnaround from the net loss of $1.1 million, or ($0.08) per diluted share, during the same period last year. The improvement in net income was attributed to a $5.8 million rise in net sales and a 9.6% increase in gross profit margin, albeit partially offset by higher operating expenses and a $0.3 million loss at the subsidiary ETC-PZL.
Net sales for the quarter reached $13.5 million, up from $7.7 million in the same quarter last year. This growth was fueled by a $3.4 million increase in ATS sales and a $2.9 million boost in Sterilizer Systems sales.
Gross profit surged to $4.5 million from $1.8 million last year, a 146.8% increase. The rise in gross profit was driven by higher sales in the ATS and Sterilizer Systems divisions, along with a more favorable product mix and increased overhead absorption.
Expenses and Cash Flow
Operating expenses for the quarter were $3.0 million, up 14% from $2.6 million the previous year. This increase was mainly due to higher selling expenses linked to rising sales and overall employee costs.
Net interest expense decreased to $0.1 million from $0.2 million last year, reflecting higher interest income from Employee Retention Credits.
Cash flows from operating activities were $2.9 million, a significant improvement from the $5.1 million used in the same period last year. This gain was due to net income and a decrease in current assets, partially offset by a decrease in current liabilities. Cash used for investing activities was $0.1 million, down from $0.2 million last year, while financing activities used $3.1 million of cash, compared to $4.3 million provided by borrowings the previous year.
As ETC continues to capitalize on strong bookings and a record backlog, the company is poised for sustained growth in the coming years.
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