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SOUTHAMPTON, Pa., Oct. 14 /PRNewswire-FirstCall/ -- Environmental
Tectonics Corporation ("ETC" or "the Company") (Amex: ETC) today announced
financial results for the second quarter of fiscal 2006.
For the second quarter of fiscal 2006, which ended on August 26, 2005, the Company had a net loss of $1,620,000, or ($0.18) per share (diluted), versus a net loss of $1,984,000 or ($0.26) per share (diluted) for the second quarter of fiscal 2005. Sales for the second quarter of fiscal 2006 were $6,255,000, as compared to $6,523,000 for the second quarter of fiscal 2005, a decrease of $268,000 or 4.1%, reflecting sales decreases in most product areas, most notably entertainment (down $831,000, 97.1%), hyperbaric (down $516,000, 57.5%) and simulation (down $390,000, 107.4%). Partial offsets were sales increases in sterilizers (up $1,026,000, 340.9%) and Aircrew Training Systems (ATS) (up $345,000, 12.3%). Entertainment in the prior period benefited from initial sales of our Wild Earth(TM) and Monster Truck rides, hyperbaric in the current period suffered from reduced domestic sales of monoplace chambers, and simulation in the prior period benefited from the sale of an airport driver training simulator to Nashville Airport. Sterilizer sales were favorably impacted by multiple domestic sales of small and mid-size chambers while ATS sales benefited from a contract for several F-16 aircraft flight simulators and other equipment which is being produced by our Polish subsidiary. Geographically, domestic sales for the second quarter of fiscal 2006 were $2,831,000, down $473,000 or 14.3% from the second quarter of fiscal 2005, primarily reflecting the aforementioned decreases in entertainment, hyperbaric and simulation sales with domestic sterilizer sales acting as a partial offset. Domestic sales represented 45.3% of the Company's total sales for the second quarter of fiscal 2006, down from 50.7% for the second quarter of fiscal 2005. U.S. Government sales for the second quarter of fiscal 2006 were $630,000 as compared to $619,000 for the second quarter of fiscal 2005. International sales for the second quarter of fiscal 2006, including those made by the Company's foreign subsidiaries, were $2,794,000, an increase of $194,000 or 7.5% from international sales for the second quarter of fiscal 2005, and represented 44.6% of total sales for the second quarter of fiscal 2006 as compared to 39.8% for the second quarter of fiscal 2005. Gross profit for the second quarter of fiscal 2006 was $1,253,000, as compared to $1,021,000 for the second quarter of fiscal 2005, an increase of $232,000 or 22.7%, despite the decrease in sales between the two periods. The increase was the result of an improvement in the gross profit rate as a percent of sales, which rose to 20.0% in the current quarter as compared to 15.7% for the prior year's quarter. The improvement resulted from higher gross margin dollars domestically for sterilizers on the aforementioned sales increase, slightly higher sales at a better rate for environmental and a better rate internationally for simulation projects. Selling and administrative expenses for the second quarter of fiscal 2006 were down $873,000, 28.0%, from the second quarter of fiscal 2005 primarily reflecting a significant reduction in legal costs associated with the Company's ongoing litigation and contract claims activities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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William F. Mitchell, ETC's President and Chairman, stated, "World conditions and global events have continued to provide a difficult market for ETC's core aeromedical and simulation businesses, although our sterilizer and environmental product areas have experienced some positive trends during fiscal 2006. On the positive side, we managed to increase our gross margin, both in dollars and as a percent of revenue, despite a 4.2% year-to-date decrease in sales. Helped by a 12.2% decrease in general and administrative expenses, primarily litigation spending, our year-to-date operating loss was reduced by 43.0%. "In response to our disappointing performance, we have instituted some significant actions including cost-cutting measures and operating efficiencies which have reduced our annual payroll by 15-20% and resulted in a consolidation of our selling efforts. We have refocused some of our businesses and introduced new business models in others. Our Polish subsidiary, ETC-PZL, has been very successful in coordinating a major technology transfer in building F-16 aircraft simulators for L-3 Corporation. And we have strengthened our Board of Directors, which now includes a retired US Air Force General, a retired US Navy Admiral, a successful businessman, and a well- respected investor. "We are continuing to build a demonstration centrifuge-based Advanced Tactical Flight Simulator (ATFS) to show to potential customers. The trainer will be available January 2007 for demonstrations and contract research. We feel this product holds the key to saving both pilot lives and tight government funds. "Our Advanced Disaster Management Simulation (ADMS) line has seen a large increase in requests for sales proposals which run the gamut from selling incident training to local emergency response personnel to complete simulation systems for America's ports. We feel this product area has great potential going forward. "Although it appears this year will be another difficult one for operating results, you can rest assured that all of us at ETC are 100% committed to taking any actions which will improve your Company's performance." | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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