ETC Announces Fiscal 2026 Second Quarter Results

Core Insights - Environmental Tectonics Corporation (ETC) reported a 21% increase in sales and a 26% increase in operating income for the second fiscal quarter of 2026 compared to the previous year, driven by strong sales in Aircrew Training Systems (ATS) and Sterilizer Systems [2][3]. Financial Performance - Net Income: Net income for the second quarter of fiscal 2026 was $1.5 million, or $0.08 diluted earnings per share, down from $1.7 million or $0.09 diluted earnings per share in the same quarter of fiscal 2025 [3][29]. - Net Sales: Net sales reached $17.0 million, a 20.5% increase from $14.1 million in the prior year, primarily due to a 30.9% increase in ATS sales and a 26.9% increase in Sterilizer Systems sales [4][29]. - Gross Profit: Gross profit increased to $5.0 million, up 18.8% from $4.2 million, with a gross profit margin of 29.4%, slightly down from 29.8% in the previous year [5][29]. - Operating Expenses: Operating expenses rose to $2.5 million, a 12.3% increase from $2.2 million, attributed to higher selling and marketing expenses [6][29]. - Operating Income: Operating income was $2.5 million, reflecting a 26.0% increase from $2.0 million in the same quarter of the previous year [7][29]. Tax and Interest Expenses - Interest Expense: Net interest expense for the second quarter was $0.5 million, a significant increase of 132.6% from $0.2 million in the prior year, due to increased borrowing [9][29]. - Income Tax Provision: The income tax provision was $0.4 million, a dramatic increase of 2140.0% compared to $0.0 million in the previous year, related to the utilization of Net Operating Loss (NOL) carryforwards [10][29]. First Half Results - Net Income: For the first half of fiscal 2026, net income was $2.8 million, or $0.15 earnings per diluted share, down from $3.1 million or $0.17 in the same period of fiscal 2025 [11][32]. - Net Sales: Net sales for the first half were $34.6 million, a 25.4% increase from $27.6 million, driven by a 49.6% increase in ATS sales [12][32]. - Gross Profit: Gross profit for the first half was $9.6 million, up 10.6% from $8.7 million, with a gross profit margin of 27.9%, down from 31.6% in the previous year [13][32]. - Operating Expenses: Operating expenses decreased to $5.0 million, a 3.9% decline from $5.2 million, primarily due to reduced research and development expenses [14][32]. - Operating Income: Operating income for the first half was $4.7 million, a 31.9% increase from $3.5 million in the prior year [15][32]. Cash Flow and Investments - Cash Flows: The company used $0.4 million in cash from operating activities during the first half, an improvement from $2.1 million used in the same period of the previous year [18][32]. - Investing Activities: Cash used for investing activities was $0.3 million, slightly up from $0.2 million in the prior year, primarily for capital expenditures [19][32]. - Financing Activities: Financing activities used $1.6 million, including repayments under the credit facility, compared to borrowing $1.6 million in the previous year [20][32].