ETC Announces Fiscal 2026 Second Quarter Results

Rhea-AI Summary

Environmental Tectonics Corporation (OTCID: ETCC) reported results for the thirteen weeks ended August 29, 2025 (2026 fiscal Q2). Net sales rose 20.5% to $17.0M, driven by ATS and Sterilizer Systems, while gross profit increased 18.8% to $5.0M. Operating income grew 26.0% to $2.5M. Net income was $1.48M ($0.08 diluted), down from $1.70M a year earlier due to a $0.4M non-cash tax expense. The company exits the quarter with a $62M backlog and reports higher interest expense tied to recent leaseback financing.

Positive

• Net sales +20.5% to $16.97M in 2026 fiscal Q2
• Operating income +26.0% to $2.49M in 2026 fiscal Q2
• Gross profit +18.8% to $4.98M in 2026 fiscal Q2
• Order backlog $62M at quarter end
• ATS sales +30.9% year-over-year in the quarter

Negative

• Net income down 12.7% to $1.48M in 2026 fiscal Q2
• Gross margin down 0.4 ppt to 29.4% in 2026 fiscal Q2
• Interest expense up 132.6% to $0.54M in 2026 fiscal Q2
• Income tax provision increased $0.4M (non-cash NOL utilization)

SOUTHAMPTON, Pa., Oct. 14, 2025 (GLOBE NEWSWIRE) -- Environmental Tectonics Corporation (OTCID: ETCC) (“ETC” or the “Company”) today reported its financial results for the thirteen week period ended August 29, 2025 (the “2026 second fiscal quarter”).

Robert L. Laurent, Jr., ETC’s Chief Executive Officer and President stated, “We are pleased with the 21% and 26% increase in ETC sales and operating income, respectively vs. prior year driven by an increase in sales of Aircrew Training Systems (“ATS”) and Sterilizers Systems during the 2026 second fiscal quarter. We exit the quarter with a sales backlog of $62 million and a large pipeline of opportunities”.

Fiscal 2026 Second Quarter Results of Operations

Net Income

Net income was $1.5 million, or $0.08 diluted earnings per share in the 2026 fiscal second quarter, compared to net income of $1.7 million during the 2025 fiscal second quarter, equating to $0.09 diluted earnings per share. The $0.2 million decrease is a result of a $0.2 million increase in income before income tax being more than offset by a $0.4 million non-cash tax expense attributable to the partial utilization of our Net Operating Loss (NOL). The $0.2 million increase in income before income tax is attributable to a $2.9 million or 20.5% increase in net sales slightly offset by a 0.4% decrease in gross profit margin and a $0.3 million or 12.3% increase in operating expenses in fiscal second quarter 2026 as compared to fiscal second quarter 2025.

Net Sales

Net sales in the 2026 fiscal second quarter were $17.0 million, an increase of $2.9 million, or 20.5%, compared to 2025 fiscal second quarter net sales of $14.1 million. The increase in net sales was driven by a $2.7 million or 30.9% increase in ATS and a $0.9 million or 26.9% increase in Sterilizer Systems net sales in 2026 fiscal second quarter compared to 2025 fiscal second quarter net sales partially offset by a $0.7 million or 59.2% decrease in ADMS sales.

Gross Profit

Gross profit for the 2026 fiscal second quarter of $5.0 million increased from $4.2 million in the 2025 fiscal second quarter, an increase of $0.8 million or 18.8%. Gross profit margin of 29.4% decreased 0.4% in the 2026 fiscal second quarter compared to 29.8% in the 2025 fiscal second quarter. The decrease in gross profit margin as a percentage of sales was a direct result of the increase in revenue related to the construction of an aeromedical center building within the ATS business unit, which yields a lower margin than ETC’s core businesses as the work is being performed by a sub-contracted construction firm. Excluding the impact of the lower margins realized from the aeromedical center building revenue, gross profit margin was 35.7% for second fiscal quarter 2026 as compared to 31.0% for second fiscal quarter 2025. The increase in gross profit margin, excluding the aeromedical center building revenue, is attributable to positive job cost revisions in both the Aerospace and CIS business segments in the 2026 fiscal second fiscal quarter.

Operating Expenses

Operating expenses, including sales and marketing, general and administrative, and research and development, for the 2026 fiscal second quarter were $2.5 million, an increase of $0.3 million, or 12.3%, compared to $2.2 million for the 2025 fiscal second quarter, attributable to an increase in selling and marketing expenses on higher sales.

Operating Income

Operating income for the 2026 fiscal second quarter was $2.5 million, an increase of $0.5 million, or 26.0%, compared to $2.0 million for the 2025 fiscal second quarter. The increase in operating income in 2026 fiscal second quarter as compared to 2025 fiscal second quarter is attributable to a $2.9 million or 20.5% increase in net sales slightly offset by a 0.4% decrease in gross profit margin and a $0.3 million or 12.3% increase in operating expenses in fiscal quarter 2026 as compared to fiscal second quarter 2025.

Interest Expense, Net

Interest expense, net, for the 2026 fiscal second quarter was $0.5 million compared to $0.2 million in the 2025 fiscal second quarter, an increase of $0.3 million, or 132.6%, reflecting increased borrowing attributable to the leaseback of the demonstration equipment and inventory in fiscal 2025 fourth quarter and fiscal 2026 second quarter, respectively.

Income Tax Provision

Income tax provision for the 2026 fiscal second quarter was $0.4 million compared to $0.0 million in the 2025 fiscal second quarter, an increase of $0.4 million, or 2140.0%. The increase relates to 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.

2026 Fiscal First Half Results of Operations

Net Income

Net income was $2.8 million, or $0.15 earnings per diluted share, in the 2026 fiscal first half, compared to net income of $3.1 million during the 2025 fiscal first half, equating to $0.17 earnings per diluted share. The $0.3 million decrease is a result of a $0.5 million increase in income before income tax being more than offset by a $0.8 million non-cash tax expense attributable to the utilization of our Net Operating Loss (NOL) carryforward. The $0.5 million increase in income before income tax is attributable to a $7.0 million or 25.4% increase in sales and a $0.2 million or 3.9% decrease in operating expenses slightly offset by a 3.7% decrease in gross profit margin in 2026 fiscal first half as compared to 2025 fiscal first half.

Net Sales

Net sales in the 2026 fiscal first half were $34.6 million, an increase of $7.0 million, or 25.4%, compared to 2025 fiscal first half net sales of $27.6 million. The increase in net sales was driven by a $7.4 million or 49.6% increase in ATS in 2026 fiscal first half compared to 2025 fiscal first half net sales partially offset by a $0.6 million or 32.1% decrease in ADMS sales.

Gross Profit

Gross profit for the 2026 fiscal first half of $9.6 million increased from $8.7 million in the 2025 fiscal first half, an increase of $0.9 million or 10.6%. Gross profit margin of 27.9% decreased 3.7% in the 2026 fiscal first half compared to 31.6% in the 2025 fiscal first half. The decrease in gross profit margin as a percentage of sales was a direct result of the increase in revenue related to the construction of an aeromedical center building within the ATS business unit, which yields a lower margin than ETC’s core businesses as the work is being performed by a sub-contracted construction firm. Excluding the impact of the lower margins realized from the aeromedical center building revenue, gross profit margin was 35.0% for fiscal 2026 first half as compared to 32.4% for 2025 fiscal first half. The increase in gross profit margin, excluding the aeromedical center building revenue, is attributable to positive job cost revisions in both the Aerospace and CIS business segments in the 2026 fiscal first half.

Operating Expenses

Operating expenses, including sales and marketing, general and administrative, and research and development, for the 2026 fiscal first half were $5.0 million, a decrease of $0.2 million, or 3.9%, compared to $5.2 million for the 2025 fiscal first half. The decrease in operating expenses was primarily due to decreased research and development expenses slightly offset by higher sales and marketing expense.

Operating Income

Operating income for the 2026 fiscal first half was $4.7 million, an increase of $1.1 million, or 31.9%, compared to $3.5 million for the 2025 fiscal first half. The increase in operating income in 2026 fiscal first half as compared to 2025 fiscal first half is attributable to a $7.0 million or 25.4% increase in net sales and a $0.2 million or 3.9% decrease in operating expenses slightly offset by a 3.7% decrease in gross profit margin in 2026 fiscal first half as compared to 2025 fiscal first half.

Interest Expense, Net

Interest expense, net for the 2026 fiscal first half was $1.1 million compared to interest expense, net of $0.3 million for the 2025 fiscal first half, an unfavorable variance of $0.8 million. The unfavorable variance was primarily attributable to an increase in borrowing attributable to the leaseback of the demonstration equipment in 2025 fiscal fourth quarter and inventory in the 2026 fiscal second quarter.

Cash Flows from Operating, Investing, and Financing Activities

During the 2026 fiscal first half, the Company used $0.4 million of cash from operating activities, due primarily to an increase in contract assets and reduction in accounts payable slightly offset by an increase in net income, an increase in contract liabilities and a decrease in accounts receivable as compared to using $2.1 million during the 2025 fiscal first half.

Cash used for investing activities was $0.3 and $0.2 million during the 2026 and 2025 fiscal first half, respectively, primarily relates to funds used for capital expenditures on equipment and software development.

The Company’s financing activities used $1.6 million during the first half of fiscal 2026 included repayments of $1.7 million during the first half of fiscal 2026 under the Company’s credit facility slightly offset by $0.1 received related to the net purchase of common stock as compared to borrowing $1.6 million of cash during the 2025 fiscal first half under the Company’s credit facilities.

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.

Table A
Environmental Tectonics Corporation
Summary Table of Results
(unaudited)
		Thirteen weeks ended								Variance
(in thousands, except per share information)		August 29, 2025				August 23, 2024				($)				(%)
Net sales		$	16,967			$	14,083			$	2,884			20.5
Cost of goods sold			11,983				9,886				2,097			21.2
Gross Profit			4,984				4,197				787			18.8
Gross profit margin %			29.4%				29.8%				-0.4%			-1.3%
Operating expenses			2,491				2,219				272			12.3
Operating income			2,493				1,978				515			26.0
Operating margin %			14.7%				14.0%				0.7%			5.0%
Interest expense, net			542				233				309			132.6
Other expense, net			23				29				(6	)		-20.7
Income before income taxes			1,928				1,716				212			12.4
Pre-tax margin %			11.4%				12.2%				-0.8%			-6.6%
Income tax provision			448				20				428			2140.0
Net income			1,480				1,696				(216	)		-12.7
Preferred Stock dividends			(121	)			(121	)			-			0.0
Income attributable to common and
participating shareholders		$	1,359			$	1,575			$	(216	)		-13.7
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		$	0.09			$	0.10			$	(0.01	)		-10.0
Preferred		$	0.09			$	0.10			$	(0.01	)		-10.0
Diluted earnings per share		$	0.08			$	0.09			$	(0.01	)		-11.1
Total basic weighted average common and participating shares			15,704				15,569
Total diluted weighted average shares			16,628				16,725

Table B
Environmental Tectonics Corporation
Summary Table of Results
(unaudited)
(in thousands, except per share information)		Twenty-six weeks ended								Variance
		August 29, 2025				August 23, 2024				($)				(%)
Net sales		$	34,568			$	27,575			$	6,993			25.4
Cost of goods sold			24,922				18,851				6,071			32.2
Gross Profit			9,646				8,724				922			10.6
Gross profit margin %			27.9%				31.6%				-3.7%			-11.7%
Operating expenses			4,989				5,194				(205	)		-3.9
Operating income			4,657				3,530				1,127			31.9
Operating margin %			13.5%				12.8%				0.7%			5.5%
Interest expense, net			1,105				349				756			216.6
Other (income) expense, net			(55	)			85				(140	)		-164.7
Income before income taxes			3,607				3,096				511			16.5
Pre tax margin %			10.4%				11.2%				-0.8	%		-7.1%
Income tax provision (benefit)			837				40				797			1992.5
Net income			2,770				3,056				(286	)		-9.4
Preferred Stock Dividends			(242	)			(242	)			-			0.0
Income attributable to common and
participating shareholders		$	2,528			$	2,814			$	(286	)		-10.2
Per share information:
Basic earnings per common and participating share:
Distributed earnings per share:
Common		$	-			$	-
Preferred		$	0.04			$	0.04			$	-			0.0
Undistributed earnings per share:
Common		$	0.16			$	0.18			$	(0.02	)		-11.1
Preferred		$	0.16			$	0.18			$	(0.02	)		-11.1
Diluted earnings per share		$	0.15			$	0.17			$	(0.02	)		-11.8
Total basic weighted average common and
participating shares			15,684				15,569
Total diluted weighted average shares			16,649				16,725

Contact: Tim Kennedy, CFO
Phone: (215) 355-9100 x1531
E-mail: tkennedy@etcusa.com

FAQ

What were ETCC Q2 2026 net sales and how did they change versus Q2 2025?

ETCC reported $16.97M in Q2 2026 net sales, a 20.5% increase versus Q2 2025.

How much backlog did ETCC report at the end of fiscal Q2 2026?

The company reported a $62 million backlog at quarter end (August 29, 2025).

Why did ETCC net income decline in Q2 2026 despite higher sales?

Net income fell to $1.48M largely due to a $0.4M non-cash tax expense from partial NOL utilization.

How did ETCC operating income and gross profit perform in Q2 2026?

Operating income rose 26.0% to $2.49M and gross profit increased 18.8% to $4.98M in Q2 2026.

What drove ETCC revenue growth in the 2026 fiscal second quarter?

Revenue growth was driven by higher sales of Aircrew Training Systems (ATS) and Sterilizer Systems.

Did ETCC report any financing-related cost changes in Q2 2026?

Yes—interest expense rose to $0.54M in Q2 2026, up 132.6%, tied to leaseback borrowings.