SOUTHAMPTON, PA — Environmental Tectonics Corporation (OTC: ETCC) reported solid fiscal results for its second quarter ended August 29, 2025, with sales and operating income both rising double digits year over year, driven by strong demand for its Aircrew Training Systems (ATS) and Sterilizer Systems.
Chief Executive Officer and President Robert L. Laurent, Jr. said, “We are pleased with the 21% and 26% increase in ETC sales and operating income, respectively, versus the prior year, driven by an increase in sales of Aircrew Training Systems and Sterilizer Systems during the second quarter. We exit the quarter with a sales backlog of $62 million and a large pipeline of opportunities.”
Net income for the quarter totaled $1.5 million, or $0.08 per diluted share, compared with $1.7 million, or $0.09 per share, in the same period last year. The decrease stemmed from a $0.4 million non-cash tax expense related to the partial use of the company’s net operating loss carryforward, despite higher pre-tax earnings.
Quarterly net sales rose 20.5% to $17.0 million, up from $14.1 million in the prior year. ATS revenue climbed 30.9%, while Sterilizer Systems increased 26.9%. These gains were partly offset by a 59.2% decline in ADMS sales.
Gross profit increased 18.8% to $5.0 million, with gross margin slightly lower at 29.4% due to construction-related work within the ATS business that carries lower margins. Excluding that project, margins improved to 35.7%, up from 31.0% in the prior-year quarter. Operating expenses rose 12.3% to $2.5 million on higher marketing costs tied to increased sales.
Operating income reached $2.5 million, a 26% increase over the prior-year period. Net interest expense rose to $0.5 million, reflecting higher borrowing tied to leaseback transactions of demonstration equipment and inventory.
For the first half of fiscal 2026, ETC reported net income of $2.8 million, or $0.15 per diluted share, compared with $3.1 million, or $0.17 per share, last year. Sales rose 25.4% to $34.6 million, while operating income grew 31.9% to $4.7 million.
Cash used in operating activities totaled $0.4 million during the first half, compared with $2.1 million a year earlier. Financing activities used $1.6 million, primarily for credit facility repayments, while investing activities consumed $0.3 million for equipment and software development.
Laurent said the company remains encouraged by its backlog and strong customer demand, particularly in its aerospace and sterilization systems businesses, positioning ETC for continued growth through the remainder of the fiscal year.
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