For Immediate Release
SOUTHAMPTON,
PA, USA, January 13, 2014 - Environmental Tectonics
Corporation (OTC Pink: ETCC) ("ETC" or the "Company")
today reported its financial results for its fiscal 2014 third
quarter ended November 29, 2013.
Fiscal 2014
Third Quarter Results of Operations:
Net Income Attributable to ETC
Net income attributable to ETC was
$136 thousand, or $0.00 diluted earnings per share, in the 2014
third quarter, compared to $1.2 million or $0.05 diluted earnings
per share, during the 2013 third quarter, representing a decrease
of $1.0 million, or 88.5%. The decrease in net income
attributable to ETC reflects a decrease in income before income
taxes of $2.0 million due primarily to a $2.9 million decrease in
gross profit, resulting from a combination of both lower net sales
and lower gross profit margin percentage, offset in part, by a $0.8
million decrease in operating expenses, resulting from an on-going
effort to reduce non-revenue generating expenses.
Net Sales
Net sales in the 2014 third
quarter were $12.3 million, a decrease of $2.8 million, or 18.5%,
compared to 2013 third quarter net sales of $15.1 million.
The reduction reflects decreased ATS sales to the U.S.
Government and decreased sales of Commercial/Industrial products to
Domestic customers, offset in part, by increased ATS sales to
International customers. Given the current progress made on
U.S. Government contracts in the Company's sales backlog, the
Company anticipates the concentration of sales to the U.S.
Government will continue to lessen in fiscal 2014.
Gross Profit
Gross profit for the 2014 third
quarter was $3.6 million compared to $6.5 million in the 2013 third
quarter, a decrease of $2.9 million, or 45.2%. The
significant decrease in gross profit was a combination of both
lower net sales and lower gross profit margin percentage due to
inefficiencies as a result of additional work required on several
contracts, for which we are currently pursuing recovery.
Operating Expenses
Operating expenses, including
sales and marketing, general and administrative, and research and
development, for the 2014 third quarter were $3.0 million, a
decrease of $0.8 million, or 22.3%, compared to $3.8 million for
the 2013 third quarter. The decrease is primarily the result
of an on-going effort to reduce non-revenue generating expenses,
offset in part, by a slight increase in research and development
expenses.
Interest Expense, Net
Interest expense, net, for the
2014 third quarter was $224 thousand compared to $319 thousand in
the 2013 third quarter, a decrease of $95 thousand, or 29.8%,
despite a higher level of bank borrowing due primarily to the
results of the 2012 Financial Restructuring.
Fiscal 2014
First Three Quarters Results of
Operations:
Net Income Attributable to ETC
Net income attributable to ETC was
$307 thousand, or $0.00 diluted earnings per share, in the 2014
first three quarters, compared to $4.2 million or $0.14 diluted
earnings per share, during the 2013 first three quarters,
representing a decrease of $3.9 million, or 92.6%. The
decrease in net income attributable to ETC reflects a decrease in
income before income taxes of $6.7 million due primarily to an $8.1
million decrease in gross profit, resulting from a combination of
both lower net sales and lower gross profit margin percentage,
offset in part, by a $1.5 million decrease in operating expenses,
resulting from an on-going effort to reduce non-revenue generating
expenses.
Net Sales
Net sales in the 2014 first three
quarters were $36.6 million, a decrease of $11.1 million, or 23.2%,
compared to 2013 first three quarters net sales of $47.7 million.
The reduction reflects decreased ATS sales to the U.S.
Government and decreased sales of sterilizers and environmental
testing and simulation devices to Domestic customers, offset in
part, by increased ATS sales to International customers.
Given the current progress made on U.S. Government contracts
in the Company's sales backlog, the Company anticipates the
concentration of sales to the U.S. Government will continue to
lessen in fiscal 2014.
Gross Profit
Gross profit for the 2014 first
three quarters was $11.0 million compared to $19.0 million in the
2013 first three quarters, a decrease of $8.1 million, or 42.4%.
The significant decrease in gross profit was a combination of
both lower net sales and lower gross profit margin percentage due
to increased costs as a result of damage to one of our devices
associated with a U.S. Government contract during the testing phase
and inefficiencies as a result of additional work required on
several other contracts, for which we are currently pursuing
recovery.
Operating Expenses
Operating expenses, including
sales and marketing, general and administrative, and research and
development, for the 2014 first three quarters were $9.5 million, a
decrease of $1.5 million, or 13.3%, compared to $11.0 million for
the 2013 first three quarters. The decrease is primarily the
result of an on-going effort to reduce non-revenue generating
expenses, offset in part, by an increase in research and
development expenses.
Interest Expense, Net
Interest expense, net, for the
2014 first three quarters was $590 thousand compared to $764
thousand in the 2013 first three quarters, a decrease of $174
thousand, or 22.8%, despite a higher level of bank borrowing due
primarily to the results of the 2012 Financial Restructuring.
Cash Flows
from Operating, Investing, and Financing
Activities:
During the 2014 first three
quarters, as a result of an increase in costs and estimated
earnings in excess of billings on uncompleted long-term percentage
of completion ("POC") contracts and a decrease in accounts payable,
the Company used $3.6 million of cash in operating activities
compared to $0.3 million of cash provided by operating activities
in the 2013 first three quarters. Under POC revenue
recognition, these accounts represent the timing differences of
spending on production activities versus collecting on long-term
contracts.
Cash used for investing activities
primarily relates to funds used for capital expenditures of
equipment and software development. The Company's investing
activities used $1.1 million in the 2014 first three quarters
compared to $0.9 million in the 2013 first three quarters.
The Company's financing activities
provided $3.0 million of cash in the 2014 first three quarters,
which primarily reflected borrowings under the Company's various
lines of credit, and was offset, in part, by payments on the Term
Loan. In the 2013 first three quarters, net cash used in
financing activities totaled $0.6 million, primarily for repayments
under the line of credit and dividends paid on Preferred Stock.
About
ETC:
ETC was incorporated in 1969 in
Pennsylvania. For over four decades, we have provided our
customers with products, service, 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 product
areas: (i) software driven products and services used to create and
monitor the physiological effects of flight, including high
performance jet tactical flight simulation, upset recovery and
spatial disorientation, and both suborbital and orbital commercial
human spaceflight; collectively, Aircrew Training Systems; (ii)
altitude (hypobaric) chambers; (iii) the Advanced Disaster
Management Simulator ("ADMS"); (iv) steam and gas (ethylene oxide)
sterilizers; (v) environmental testing and simulation devices; and
(vi) hyperbaric (100% oxygen) chambers for one person (monoplace
chambers).
We operate in two primary business
segments, Aerospace Solutions ("Aerospace") and Commercial/
Industrial Systems ("CIS"). Aerospace encompasses the design,
manufacture, and sale of: (i) Aircrew Training Systems; (ii)
altitude (hypobaric) chambers; (iii) hyperbaric chambers for
multiple persons (multiplace chambers); and (iv) ADMS, as well as
integrated logistics support 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.
CIS encompasses the design, manufacture, and sale of: (i)
steam and gas (ethylene oxide) sterilizers; (ii) environmental
testing and simulation devices; and (iii) hyperbaric (100% oxygen)
chambers for one person (monoplace chambers), 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.
We presently have two foreign
operating subsidiaries. ETC-PZL Aerospace Industries Sp. z
o.o., ("ETC-PZL"), our 95%-owned subsidiary in Warsaw, Poland,
manufactures simulators for our Aerospace segment and provides
software to support our domestic products. Environmental
Tectonics Corporation (Europe) Limited ("ETC-Europe"), our
99%-owned subsidiary, functions as a sales office in the United
Kingdom.
ETC's unique ability to offer
complete systems, designed and produced to high technical
standards, sets it apart from its competition. ETC is
headquartered in Southampton, PA. For more information about
ETC, visit http://www.etcusa.com/.
______________
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 terminology 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: |
Mark Prudenti, CFO |
Phone: |
(215) 355-9100 x1531 |
E-mail: |
mprudenti@etcusa.com |
###
- Financial Tables Follow -
Table A |
|
|
|
|
|
|
|
ENVIRONMENTAL TECTONICS CORPORATION |
SUMMARY
TABLE OF RESULTS |
(in thousands, except per
share information) |
|
|
|
|
|
|
|
|
|
Thirteen
weeks ended |
Thirteen
weeks ended |
|
Variance |
|
29-Nov-13 |
|
23-Nov-12 |
|
$ |
|
% |
Net sales |
$ 12,346 |
|
$ 15,148 |
|
$ (2,802) |
|
-18.5 |
Cost of goods sold |
8,789 |
|
8,657 |
|
132 |
|
1.5 |
Gross profit |
$ 3,557 |
|
$ 6,491 |
|
$ (2,934) |
|
-45.2 |
Gross profit margin % |
28.8% |
|
42.9% |
|
-14.1% |
|
-32.9% |
|
|
|
|
|
|
|
|
Operating expenses |
2,955 |
|
3,804 |
|
(849) |
|
-22.3 |
Operating income |
$ 602 |
|
$ 2,687 |
|
$ (2,085) |
|
-77.6 |
Operating margin % |
4.9% |
|
17.7% |
|
-12.8% |
|
-72.3% |
|
|
|
|
|
|
|
|
Interest expense, net |
224 |
|
319 |
|
(95) |
|
-29.8 |
Other expense (income),
net |
91 |
|
91 |
|
- |
|
0.0 |
Income before income
taxes |
$ 287 |
|
$ 2,277 |
|
$ (1,990) |
|
-87.4 |
Pre-tax income margin % |
2.3% |
|
15.0% |
|
-12.7% |
|
-84.7% |
|
|
|
|
|
|
|
|
Provision for income taxes |
119 |
|
1,074 |
|
(955) |
|
-88.9 |
Net income |
$ 168 |
|
$ 1,203 |
|
$ (1,035) |
|
-86.0 |
Loss attributable to non-controlling interest |
(32) |
|
(25) |
|
(7) |
|
28.0 |
Net income attributable to
ETC |
$ 136 |
|
$ 1,178 |
|
$ (1,042) |
|
-88.5 |
Preferred Stock dividends |
(121) |
|
(286) |
|
165 |
|
-57.7 |
Income attributable to common
and
participating shareholders |
$ 15 |
|
$ 892 |
|
$ (877) |
|
-98.3 |
|
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
|
|
Basic earnings per common and
participating share: |
|
|
|
|
|
|
|
Distributed earnings per share: |
|
|
|
|
|
|
|
Common |
$ - |
|
$ - |
|
$ - |
|
|
Preferred |
$ 0.02 |
|
$ 0.04 |
|
$ (0.02) |
|
-50.0 |
Undistributed earnings per share: |
|
|
|
|
|
|
|
Common |
$ - |
|
$ 0.05 |
|
$ (0.05) |
|
-100.0 |
Preferred |
$ - |
|
$ 0.05 |
|
$ (0.05) |
|
-100.0 |
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$
- |
|
$
0.05 |
|
$
(0.05) |
|
-100.0 |
|
|
|
|
|
|
|
|
Total basic weighted average common and
participating shares |
15,248 |
|
17,151 |
|
|
|
|
|
|
|
|
|
|
|
|
Total diluted weighted average shares |
15,465 |
|
17,317 |
|
|
|
|
Table B |
|
|
|
|
|
|
|
ENVIRONMENTAL TECTONICS CORPORATION |
SUMMARY
TABLE OF RESULTS |
(in thousands, except per
share information) |
|
|
|
|
|
|
|
|
|
Forty
weeks ended |
Thirty-nine
weeks ended |
|
Variance |
|
29-Nov-13 |
|
23-Nov-12 |
|
$ |
|
% |
Net sales |
$ 36,632 |
|
$ 47,720 |
|
$ (11,088) |
|
-23.2 |
Cost of goods sold |
25,674 |
|
28,684 |
|
(3,010) |
|
-10.5 |
Gross profit |
$ 10,958 |
|
$ 19,036 |
|
$ (8,078) |
|
-42.4 |
Gross profit margin % |
29.9% |
|
39.9% |
|
-10.0% |
|
-25.1% |
|
|
|
|
|
|
|
|
Operating expenses |
9,509 |
|
10,973 |
|
(1,464) |
|
-13.3 |
Operating income |
$ 1,449 |
|
$ 8,063 |
|
$ (6,614) |
|
-82.0 |
Operating margin % |
4.0% |
|
16.9% |
|
-12.9% |
|
-76.3% |
|
|
|
|
|
|
|
|
Interest expense, net |
590 |
|
764 |
|
(174) |
|
-22.8 |
Other expense (income), net |
273 |
|
27 |
|
246 |
|
911.1 |
Income before income
taxes |
$ 586 |
|
$ 7,272 |
|
$ (6,686) |
|
-91.9 |
Pre-tax income margin % |
1.6% |
|
15.2% |
|
-13.6% |
|
-89.5% |
|
|
|
|
|
|
|
|
Provision for income taxes |
242 |
|
3,082 |
|
(2,840) |
|
-92.1 |
Net income |
$ 344 |
|
$ 4,190 |
|
$ (3,846) |
|
-91.8 |
(Income) loss attributable to non-controlling
interest |
(37) |
|
(19) |
|
(18) |
|
94.7 |
Net income attributable to
ETC |
$ 307 |
|
$ 4,171 |
|
$ (3,864) |
|
-92.6 |
Preferred Stock dividends |
(372) |
|
(1,390) |
|
1,018 |
|
-73.2 |
(Loss) income attributable to common
and
participating shareholders |
$ (65) |
|
$ 2,781 |
|
$ (2,846) |
|
-102.3 |
|
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
|
|
Basic (loss) earnings per common and
participating share: |
|
|
|
|
|
|
|
Distributed earnings per share: |
|
|
|
|
|
|
|
Common |
$ - |
|
$ - |
|
$ - |
|
|
Preferred |
$ 0.06 |
|
$ 0.14 |
|
$ (0.08) |
|
-57.1 |
Undistributed (loss) earnings per share: |
|
|
|
|
|
|
|
Common |
$ - |
|
$ 0.14 |
|
$ (0.14) |
|
-100.0 |
Preferred |
$ - |
|
$ 0.14 |
|
$ (0.14) |
|
-100.0 |
|
|
|
|
|
|
|
|
Diluted (loss) earnings per
share |
$
- |
|
$
0.14 |
|
$
(0.14) |
|
-100.0 |
|
|
|
|
|
|
|
|
Total basic weighted average common and
participating shares |
15,245 |
|
19,206 |
|
|
|
|
|
|
|
|
|
|
|
|
Total diluted weighted average shares |
15,476 |
|
19,363 |
|
|
|
|
Table C
ENVIRONMENTAL TECTONICS CORPORATION |
OTHER
SELECTED FINANCIAL HIGHLIGHTS |
(amounts
in thousands) |
|
|
|
|
|
|
|
|
|
Thirteen weeks ended |
|
Forty
weeks ended |
Thirty-nine
weeks ended |
|
29-Nov-13 |
|
23-Nov-12 |
|
29-Nov-13 |
|
23-Nov-12 |
EBITDA |
$ 964 |
|
$ 3,095 |
|
$ 2,525 |
|
$ 9,510 |
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
29-Nov-13 |
|
22-Feb-13 |
|
|
|
|
Working capital |
$ 27,402 |
|
$ 25,135 |
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
$ 24,207 |
|
$ 24,219 |
|
|
|
|
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: ETC via Globenewswire
HUG#1754285
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