Environmental Tectonics Corp. (ETCC) research, news, and more from GeoInvesting

Company description

Tue, 11 Jun 2024 18:38:35 GMT

Environmental Tectonics Corporation provides engineering solutions to its customers with products, service and support. Its segments include Aerospace Solutions (Aerospace) and Commercial/Industrial Systems (CIS). The Aerospace segment encompasses the design, manufacture, and sale of ATS products; altitude (hypobaric) chambers; hyperbaric chambers for multiple persons (multiplace chambers), and ADMS, as well as integrated logistics support for customers who purchase these products or similar products manufactured by other parties. The CIS segment encompasses the design, manufacture, and sale of steam and gas (ethylene oxide) sterilizers and ETSS, as well as parts and service support for customers who purchase these products or similar products manufactured by other parties. Sales of its CIS products are made principally to the healthcare, pharmaceutical, and automotive industries. It sells its sterilizers to medical device manufacturers, pharmaceutical manufacturers, and universities.

Research

Tue, 10 Jun 2025 17:34:49 GMT

Environmental Tectonics Corporation (OTC:ETCC) ($1.86; $17.6M market cap) announced Q4 and full-year 2025 results:

Q4 2025 sales of $19.1 million vs. $16.4 million in the prior year
Adjusted Q4 2025 EPS of $0.11 vs. $0.17 in the prior year
Full-year 2025 sales of $62.9 million vs. $43.3 million in the prior year
Full-year 2025 adjusted EPS of $0.44 vs. $0.09 in the prior year

"Our strong backlog and pipeline of opportunities once again translated into increases in net sales, gross profit margin, operating income and net income. These results reflect growth in each of our business units with sales increasing to $62.9 million, gross profit increasing to $18.5 million, and net income increasing to $13.1 million or $0.75 diluted earnings per share in fiscal 2025 as compared to net income of $1.8 million or $0.09 diluted earnings per share in fiscal 2024. We believe we remain well positioned for the future with a backlog of $87 million and a strong pipeline of opportunities as of February 28, 2025." — Robert L. Laurent, Jr., CEO and President

Key Takeaway:

As we previously highlighted, the main issue with ETCC is that margins can fluctuate widely depending upon revenue mix in the quarter. While it is nice to see the company maintain profitability, volatility in profitability will significantly depress valuation multiples. Also, the backlog is down sequentially and year over year, roughly 20%. The case for ETCC is one that it has become a deep value stock where valuation will be depressed until an inflection point leads to a more consistent margins profile.

Research

Mon, 13 Jan 2025 17:39:42 GMT

Environmental Tectonics (OTC:ETCC) ($2.39; $22.5m market cap) announced Q3 2025 results: (released at/near open on Friday)

Sales of $16.3 million vs $10.2 million in the prior year
EPS of $0.14 vs EPS of $0.02 in the prior year

Robert L. Laurent, Jr., ETC’s Chief Executive Officer and President stated, “We are extremely pleased with the overall 59% increase in third quarter sales versus the prior year, as well as our net income of $2.4 million compared to net income of $0.5 million the prior year, an increase of 390%. At the same time, bookings remain strong in the third quarter, which has contributed to the current $102.6 million backlog. This continued acceleration in sales and strong backlog position us well moving forward.”

As we have mentioned in prior notes, while backlog has been down to flat , the company has done a nice job of replenishing the backlog as it works through a large contract secured in 2023. Without further due diligence is difficult to understand determine if the quarters could remain lumpy. The company also has a difficult Q4 comp coming up, followed by two easier comps.

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Environmental Tectonics Corporation provides engineering solutions to its customers with products, service and support. Its segments include Aerospace Solutions and Commercial/Industrial Systems

Research

Tue, 15 Oct 2024 04:00:00 GMT

Environmental Tectonics (OTC:ETCC) ($1.84; $17.3m market cap) announced Q2 2025 results:

Sales of $14.1 million vs $9.0 million in the prior year
EPS of $0.09 vs loss of $0.04 in the prior year

“We are pleased with the overall 56% increase in 2025 fiscal second quarter sales vs. prior year, as well our improvements in gross margin, operating margin and our $2.1 million increase in net income in the 2025 fiscal second quarter versus the prior year. We ended the 2025 fiscal second quarter with a backlog of $109 million. The large backlog positions us well moving forward.”

After Q1 2025 results we mentioned we wanted to keep a close eye on the backlog. The backlog did decrease slightly sequentially from $114 at the end of Q1, but still is at near record levels. We will continue to monitor contract wins, but the company is now at $0.17 for the first 6 months of fiscal 2025, or a roughly $0.34 annual run-rate. Shares are trading at a forward P/E of 5.4 on that run-rate.

Environmental Tectonics Corporation provides engineering solutions to its customers with products, service and support. Its segments include Aerospace Solutions and Commercial/Industrial Systems.

Research

Tue, 10 Sep 2024 16:26:07 GMT

Environmental Tectonics (OTC:ETCC) ($1.74; $16.8m market cap) announced it has been awarded $13.4 million in new contract awards.

$9.7 million in contracts from three international customers in the Aeromedical Training Solutions business
In addition, ETC’s Commercial/Industrial Systems Segment was awarded $3.7 million in contracts from two domestic customers.

While they do not specify the time frame for delivery on these contracts, the $13.4 million represents near a quarter's worth of revenues.

Research

Thu, 18 Jul 2024 14:34:35 GMT

Environmental Tectonics (OTC:ETCC) ($1.88; $17.7m market cap) announced Q1 2025 results:

Sales of $13.5 million vs $7.7 million in the prior year
EPS of $0.08 vs loss of $0.08 in the prior year

“We are pleased with the 76% increase in ETC sales vs. prior year driven by a 116% increase in sales of Aircrew Training Solutions vs. prior year and a 91% increase in sales vs. prior year within our Sterilizer Systems business. As a result of the strong bookings in the first quarter of fiscal 2025, ETC finished the quarter with a record backlog of approximately $114 million, which we anticipate will continue to drive increases in production, sales and profitability over the next 2-years.”

In early June we highlighted two things we need to pay attention to with ETCC

The replenishment of backlog in the coming quarters, to allow the current momentum to be sustained past a few quarters of elevated financial results. They checked this box by finishing Q1 with a record backlog and visibility statement. Backlog was up from $108.9 million.
Determine if any new backlog will consist of higher margin contracts. Well, even though the results were sequentially lower than the strong Q4 EPS results of $0.17 per share, the Q1 2025 results of $0.08 per share are still respectable, given the current valuation of the stock on the potentially more reliable EPS run-rate as posited below.

Using Q1 EPS as a run rate, which we think is fair based on record backlog and comments from management, a run rate of $0.32 seems very possible. Applying a modest P/E of 10 equals a near term target of $3.20 or 70% upside from yesterday’s closing price of $1.88.

There could also be upside surprises to these assumptions, if margins improve and backlog continues to increase. There’s also the possibility that our P/E assumption is too low given that the company now has offered a two-year window of visibility. And the market loves visibility.

We’d once again like to thank Geoinvesting member, Dennis Bottjen, for bringing this idea to our platform.

Research

Tue, 11 Jun 2024 17:57:50 GMT

Environmental Tectonics (OTC:ETCC) ($1.46; $13.7m market cap) a follow up to yesterday's Q4 2024 earnings coverage. While reading through the annual report there are two items worth noting, one positive and one possibly a negative.

Positive takeaway, the company expects to realize at least 59% of its total backlog ($108.9 million) in the next 12 months. Therefore implying roughly $64 million in sales for fiscal 2025, or $16 million per quarter, which is right around the Q4 level in which the company reported $0.17 EPS.
The negative - The majority of this uptick is from a large contract

“We entered fiscal 2024 with a solid sales backlog, due in large part to an $85.4 million international contract award for an aeromedical center.”

We will have to pay close attention to two things:

The replenishment of backlog in the coming quarters, to allow the current momentum to be sustained past a few quarters of elevated financial results.
Determining if any new backlog will consist of higher margin contracts.

If the current level of business can be maintained, the stock is trading a current run-rate P/E of only 2.14x.

Research

Mon, 10 Jun 2024 17:44:04 GMT

Environmental Tectonics (OTC:ETCC) ($0.99; $9.3m market cap) announced Q4 and full year 2024 results:

Q4 sales of $16.4 million vs $8.8 million in the prior year
Q4 EPS of $0.17 vs loss of $0.10 in the prior year
Full year sales of $43.3 million vs $26.3 million in the prior year
Full year EPS of $0.09 vs a loss of $0.13 in the prior year

“Our strong backlog and pipeline of opportunities has translated into solid results with sales increasing to $43.3 million, gross profit increasing to $12.5 million, and net income attributable to ETC increasing to $1.8 million or $0.09 earnings per diluted share in fiscal 2024 as compared to a net loss attributable to ETC of ($1.6) million or ($0.13) loss per diluted share in fiscal 2023. We believe we remain well positioned for the future with a backlog of $109 million compared to $104 million at prior year-end.”

GeoInvesting Premium Member Dennis Bottjen initially alerted us to ETCC. That was back in July 2023 when the stock was trading near $0.80, and we monitored the stock after that, deciding at the time of Dennis’ bullish stance to hold off on publishing anything to Geo until we began to understand the company a little deeper. Our more in-depth coverage on the company finally made it to GeoInvesting after a strong January 2024 fiscal Q4 2024 earnings report.

One caveat we need to be aware of is that ETCC has experienced lumpy quarters in the past.

Environmental Tectonics Corporation is principally engaged in the design, manufacture, and sale of software driven products and services used to recreate and monitor the physiological effects of motion on humans and equipment and to control, modify, simulate, and measure environmental conditions.

Research

Wed, 08 May 2024 14:39:17 GMT

Environmental Tectonics (OTC:ETCC) ($0.75; $7.0m market cap) announced three contracts totaling $15.9 million.

awarded $13.9 million in contracts from two multi-national medical device manufacturers. .

“These contracts reflect ETC Sterilization Systems Group’s dedication to innovation in our mechanical designs, control systems and software expertise to meet the challenging requirements of this market,”

awarded a $2.0 million contract as the environmental simulation equipment supplier for a new, state-of-the-art auto racing test cell project.

“We feel this project will be an important step in ETSS becoming a leading supplier of racing air systems test equipment for race teams in the U.S. and Europe,”

Our Q3 earnings coverage from January 2024 can be found here.

Research

Wed, 17 Jan 2024 15:27:21 GMT

Environmental Tectonics (OTC:ETCC) ($0.86; $17.4m market cap) reported its Q3 2024 results on January 12, 2024:

Sales of $10.2 million vs $6.4 million in the prior year
EPS of $0.02 vs a loss of $0.06 in the prior year

“We are extremely pleased with the overall 58% increase in third quarter sales versus prior year, as well as our return to profitability with net income of $0.5 million compared to a loss of $0.8 million versus the prior year. At the same time, bookings remain strong increasing 108% in the third quarter when compared to prior year. This has increased our backlog 383% from the prior year to the current $114.5 million. This continued acceleration in sales and increased backlog, along with a solid pipeline of opportunities, position us well moving forward.”

We have been waiting to see if ETCC could reach profitability for about a year or so, on the heels of a growing backlog. It’s great to see that they finally achieved this milestone. We will reach out to management to see if we can determine if consistent profitability is now in the cards. We definitely like what the company does.

Contributor Articles

Wed, 03 Jan 2024 05:00:00 GMT

A Premium Member, Ryan Wesley, has brought ETCC to our attention. He pointed out to us ETCC's recent $85 million contract award, which contributed to a $104 million backlog, with 54% of it expected to be completed by the end of February 2024. The company's annual revenues have shown a steady increase over the past few years, with notable quarterly revenues following the contract announcement.

However, a key concern of his is the company's historical difficulty in turning large revenues into profits, partially due to preferred stock issues. Ryan sees potential in the recent contract win to overcome these challenges and has taken a small position in ETCC. They are seeking feedback and thoughts on the potential of ETCC, especially with the increasing focus on space travel.

Feel free to share your insights and opinions on ETCC!

Original Communication:

"...

Have you looked at ETCC lately ?

They were awarded an $85 million contract last February, resulting in a $104 million backlog, and stated that approx 54% (56 million) of the backlog was expected to be completed by end of February 2024.

Total annual revenues in recent years:

YE Feb 2023 26.3 mill
Feb 2022 19.1 mil
Feb 2021 16.3 mill

They reported 7.7 mill and 9 mill revenues in the two quarters since the 85 mill contract was announced....so IF they report as had been anticipated, that would be 39.3 mill for the remaining two quarters.

Historically it seems as if the problem here is that large revenues don't result in profits, partially due to the Preferred stock. But might this recent contract win be large enough to overcome that ?

I don't have a strong opinion either way but I bought a small position since it seems possible enough to be worth a shot, especially if they announce more large contract wins....which seems more possible than in recent years due to more attention being paid to space travel.

I welcome any thought you have re ETCC....thanks

..."