Blab Business
Environmental Tectonics Reports Fiscal 2026 Results, Backlog Surges to $61 Million
On June 12 2026, Environmental Tectonics Corporation (OTC Pink: ETCC) released its financial results for the 52‑week period ending February 27 2026. The aerospace‑simulation specialist posted a net income of $3.0 million— a 76.7 % drop from the $13.1 million earned in fiscal 2025— and a diluted earnings per share of $0.15.
Net sales for the year slid modestly to $62.7 million, a 0.4 % decline from the $62.9 million recorded in 2025. The contraction was largely driven by an $8.7 million drop in International sales within the Commercial/Industrial Systems (CIS) segment. That loss was partially offset by a $3.3 million rise in International Aerospace Solutions revenue and a $5.2 million increase in Domestic sales.
Gross profit fell to $17.6 million, down 5.2 % from the prior year, as lower sales of Aeromedical Center building and sterilizer systems pulled the margin down to 28.0 % from 29.4 %. Excluding the Aeromedical Center building line, the margin improves to 33.8 % versus 32.1 % in 2025. Operating expenses climbed 6.2 % to $10.9 million, with selling and marketing costs the main driver. Interest expense nearly doubled to $2.2 million, largely because of borrowing linked to a lease‑back transaction for demonstration equipment.
The company’s income tax provision for 2026 was $1.2 million, compared with a $5.6 million tax benefit in 2025. The shift reflects a partial reversal of a valuation allowance on federal and state deferred tax assets recorded in 2025. In the 13‑week fiscal fourth quarter, net income was a modest $0.1 million, or $0.00 diluted EPS, versus $7.6 million in the same period of 2025. Net sales fell 19.0 % to $15.5 million, driven by a 59.0 % decline in sterilizer system sales and a 33.8 % drop in Aeromedical Center building sales. Gross profit margin, however, improved to 28.0 % from 24.6 % in the prior year’s quarter.
Cash flow statements show that operating activities used $0.4 million in 2026, a $3.5 million improvement over the $3.9 million used in 2025, driven by higher contract liabilities and net income. Investing activities used $0.3 million, a reversal of the $3.6 million inflow seen in 2025, largely due to the sale‑leaseback of demonstration equipment. Financing activities used $1.2 million, down from $1.7 million in 2025, reflecting repayment of debt under the company’s credit facility.
Liquidity and capital resources remained robust at year‑end. Working capital stood at $22.0 million, up from $19.7 million a year earlier, mainly because of increased accounts receivable and contract assets. The PNC Revolving Line of Credit had $1.2 million of available credit on February 27 2026, rising to $1.9 million on June 12 2026. The company expects its liquidity to cover operating expenses, capital expenditures, and debt repayment throughout fiscal 2027.
CEO Robert L. Laurent, Jr. said the company’s backlog and pipeline support continued profitability. “Our strong backlog and pipeline of opportunities has resulted in the third consecutive year of positive gross profit, operating income and net income,” he noted. He added that the backlog was $61 million as of February 27 2026 and that three contract awards announced in the first quarter of fiscal 2027 would push the backlog above $80 million.
Chief Financial Officer Tim Kennedy reported that on May 26 2026 the maturity date of the PNC Credit Facilities was extended from June 30 2026 to June 30 2028, a two‑year extension that the company views as an important milestone.
Environmental Tectonics is headquartered in Southampton, Pennsylvania, and has been in business since 1969. Its product portfolio includes aviation training systems (ATS), advanced disaster management simulators (ADMS), sterilizer systems, and environmental testing and simulation systems (ETSS). The company’s only operating subsidiary, ETC‑PZL Aerospace Industries Sp. z o o., is located in Warsaw, Poland.
The company’s revenue is largely derived from long‑term contracts with U.S. and foreign government agencies and from domestic and international customers in the healthcare, pharmaceutical, and automotive sectors. ETC’s business model emphasizes integrated, high‑technology solutions that combine hardware, software, and support services.
The company’s next major corporate event will be the announcement of fiscal 2027 first‑quarter results, expected in July 2026. Investors will also be watching the company’s continued progress on backlog expansion, the impact of the extended credit facility, and the performance of its key product segments.
Environmental Tectonics Corporation remains a niche player in aerospace and industrial simulation markets, with a focus on long‑term, fixed‑price contracts and a strong emphasis on technology development and customer support.
Net sales for the year slid modestly to $62.7 million, a 0.4 % decline from the $62.9 million recorded in 2025. The contraction was largely driven by an $8.7 million drop in International sales within the Commercial/Industrial Systems (CIS) segment. That loss was partially offset by a $3.3 million rise in International Aerospace Solutions revenue and a $5.2 million increase in Domestic sales.
Gross profit fell to $17.6 million, down 5.2 % from the prior year, as lower sales of Aeromedical Center building and sterilizer systems pulled the margin down to 28.0 % from 29.4 %. Excluding the Aeromedical Center building line, the margin improves to 33.8 % versus 32.1 % in 2025. Operating expenses climbed 6.2 % to $10.9 million, with selling and marketing costs the main driver. Interest expense nearly doubled to $2.2 million, largely because of borrowing linked to a lease‑back transaction for demonstration equipment.
The company’s income tax provision for 2026 was $1.2 million, compared with a $5.6 million tax benefit in 2025. The shift reflects a partial reversal of a valuation allowance on federal and state deferred tax assets recorded in 2025. In the 13‑week fiscal fourth quarter, net income was a modest $0.1 million, or $0.00 diluted EPS, versus $7.6 million in the same period of 2025. Net sales fell 19.0 % to $15.5 million, driven by a 59.0 % decline in sterilizer system sales and a 33.8 % drop in Aeromedical Center building sales. Gross profit margin, however, improved to 28.0 % from 24.6 % in the prior year’s quarter.
Cash flow statements show that operating activities used $0.4 million in 2026, a $3.5 million improvement over the $3.9 million used in 2025, driven by higher contract liabilities and net income. Investing activities used $0.3 million, a reversal of the $3.6 million inflow seen in 2025, largely due to the sale‑leaseback of demonstration equipment. Financing activities used $1.2 million, down from $1.7 million in 2025, reflecting repayment of debt under the company’s credit facility.
Liquidity and capital resources remained robust at year‑end. Working capital stood at $22.0 million, up from $19.7 million a year earlier, mainly because of increased accounts receivable and contract assets. The PNC Revolving Line of Credit had $1.2 million of available credit on February 27 2026, rising to $1.9 million on June 12 2026. The company expects its liquidity to cover operating expenses, capital expenditures, and debt repayment throughout fiscal 2027.
CEO Robert L. Laurent, Jr. said the company’s backlog and pipeline support continued profitability. “Our strong backlog and pipeline of opportunities has resulted in the third consecutive year of positive gross profit, operating income and net income,” he noted. He added that the backlog was $61 million as of February 27 2026 and that three contract awards announced in the first quarter of fiscal 2027 would push the backlog above $80 million.
Chief Financial Officer Tim Kennedy reported that on May 26 2026 the maturity date of the PNC Credit Facilities was extended from June 30 2026 to June 30 2028, a two‑year extension that the company views as an important milestone.
Environmental Tectonics is headquartered in Southampton, Pennsylvania, and has been in business since 1969. Its product portfolio includes aviation training systems (ATS), advanced disaster management simulators (ADMS), sterilizer systems, and environmental testing and simulation systems (ETSS). The company’s only operating subsidiary, ETC‑PZL Aerospace Industries Sp. z o o., is located in Warsaw, Poland.
The company’s revenue is largely derived from long‑term contracts with U.S. and foreign government agencies and from domestic and international customers in the healthcare, pharmaceutical, and automotive sectors. ETC’s business model emphasizes integrated, high‑technology solutions that combine hardware, software, and support services.
The company’s next major corporate event will be the announcement of fiscal 2027 first‑quarter results, expected in July 2026. Investors will also be watching the company’s continued progress on backlog expansion, the impact of the extended credit facility, and the performance of its key product segments.
Environmental Tectonics Corporation remains a niche player in aerospace and industrial simulation markets, with a focus on long‑term, fixed‑price contracts and a strong emphasis on technology development and customer support.
