ETC Announces Fiscal 2013 Full Year and Fourth Quarter Results
(Thomson Reuters ONE) -
For Immediate Release
Fiscal 2013 Highlights:
* Gross profit margin as a percentage of net sales of 39.6%
* Pre-tax income increased 17.8% to a record $8.8 million
* Diluted earnings per share increased 46.2% to $0.19
* EBITDA increased 16.9% to a record $11.7 million
* Completed a financial restructuring that reduces annual net cash payments
for dividends and interest by approximately $1.5 million, and reduced Common
Stock equivalents by 5 million shares
SOUTHAMPTON, PA, USA, May 23, 2013 - Environmental Tectonics Corporation (OTC
Pink: ETCC) ("ETC" or the "Company") today reported an increase in net income
attributable to ETC for fiscal 2013 to $5.0 million, or $0.19 per diluted share,
compared to net income attributable to ETC of $4.9 million, or $0.13 per diluted
share, in fiscal 2012. This improvement was achieved on lower net sales of
$62.8 million for fiscal 2013, compared to $66.3 million in fiscal 2012. The
5.3% reduction in net sales reflects decreased sales to the U.S. Government and
to International customers, offset in part by increased sales to Domestic
customers.
Income before income taxes for fiscal 2013 increased to $8.8 million, a $1.3
million, or 17.8%, increase compared to $7.5 million in fiscal 2012. The
increase in income before income taxes was due primarily to an increase in gross
profit margin as a percentage of net sales to 39.6% for fiscal 2013 compared to
35.5% in fiscal 2012, which was the result of a more profitable product and
customer sales mix, combined with a 3.0% decrease in operating expenses.
William F. Mitchell, ETC's President and Chief Executive Officer, stated, "We
are very pleased that ETC achieved increased profitability and earnings per
share on lower net sales in fiscal 2013, which reflects both solid operating
income and the positive affect of our financial restructuring."
Business Overview:
ETC is 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
("ATS"); (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 0.0, ("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/.
Fiscal 2013 Results of Operations:
Domestic sales in fiscal 2013 were $19.0 million, an increase of $2.4 million,
or 14.5%, over fiscal 2012, and represented 30.3% of total net sales, compared
to 25.1% in fiscal 2012. The increase in Domestic sales is primarily a result
of a $3.0 million, or 42.8%, increase in sales of Sterilization Systems, which
reflects record orders received in fiscal 2012, and a $1.3 million, or 74.4%,
increase in sales of Environmental Testing and Simulation Systems. These
increases were partially offset by a $0.9 million, or 41.9%, decrease in sales
of ADMS, as well as smaller decreases in other categories.
U.S. Government sales in fiscal 2013 were $22.2 million, a decrease of $5.0
million, or 18.3%, from fiscal 2012, which reflect lower sales related to a high
performance human centrifuge, offset in part, by increased sales related to a
suite of altitude (hypobaric) chambers. U.S. Government sales represented
35.4% of total net sales in fiscal 2013 compared with 41.0% in fiscal 2012.
Given the existing progress made on U.S. Government contracts in the Company's
sales backlog, the Company anticipates the concentration of sales with the U.S.
Government will continue to lessen in fiscal 2014.
International sales in fiscal 2013, including those of the Company's foreign
subsidiaries, were $21.5 million, a decrease of $1.0 million, or 4.3%, from
fiscal 2012, due primarily to a $1.6 million, or 11.8%, decrease in sales of ATS
related products, and a $1.1 million, or 40.1%, decrease in Hyperbaric sales.
These decreases were offset, in part, by a $1.0 million, or 44.7%, increase in
ETC-PZL sales, as well as smaller increases in other product categories. In
aggregate, International sales represented 34.3% of the Company's total net
sales, an increase over 33.9% in fiscal 2012. In both fiscal 2013 and fiscal
2012, International sales totaling at least $500,000 were made to customers in
eight (8) different countries. Fluctuations in sales to international countries
from year to year primarily reflect percentage of completion revenue recognition
on the level and stage of development and production on multi-year long-term
contracts.
Segment sales
Aerospace sales were $42.3 million in fiscal 2013, a decrease of $6.6 million,
or 13.5%, from sales of $48.9 million in fiscal 2012. This decrease was
primarily due to less revenue recorded on one of our international contracts for
multiple Aerospace products as the aeromedical center in which this equipment is
housed was dedicated in October 2012. Sales of these products accounted for
67.4% of our total net sales for fiscal 2013 versus 73.8% in fiscal 2012. Sales
within our CIS segment increased $3.1 million, or 17.7%, and constituted 32.6%
of our total net sales for fiscal 2013 compared to 26.2% in fiscal 2012.
Given the Company's sales backlog as of February 22, 2013, it is anticipated
that our Aerospace segment will begin to generate more of its revenues from
International contracts, while sales within our CIS segment are expected to be
affected by a lower sales backlog entering fiscal 2014.
Gross profit
Gross profit for fiscal 2013 increased by $1.3 million, or 5.7%, over fiscal
2012. This improvement was achieved despite lower sales due primarily to a more
profitable product and customer sales mix. Gross profit margin as a percentage
of net sales increased to 39.6% in fiscal 2013 over 35.5% in fiscal 2012. This
increase was due primarily to fiscal 2012 costs related to a U.S. government
contract, and to a more profitable product and customer sales mix in fiscal
2013.
Operating expenses
Selling and marketing expenses for fiscal 2013 of $5.6 million increased
slightly over fiscal 2012. As a percentage of net sales, selling and marketing
expenses increased to 8.9% in fiscal 2013 from 8.3% in fiscal 2012 due primarily
to lower net sales in fiscal 2013.
General and administrative expenses for fiscal 2013 of $8.2 million decreased
slightly by $0.3 million, or 3.8%, from fiscal 2012. The decrease is primarily
the result of lower professional fees and an on-going effort to reduce non-
revenue generating expenses. As a percentage of net sales, general and
administrative expenses increased to 13.0% in fiscal 2013 compared to 12.8% in
fiscal 2012 due primarily to lower net sales in fiscal 2013.
Research and development expenses include spending for potential new products
and technologies, and work performed internationally under government grant
programs. This spending, net of grant payments from the Polish and Turkish
governments, totaled $1.2 million for fiscal 2013 compared to $1.4 million in
fiscal 2012, a decrease of $0.2 million, or 16.5%. The decrease was a result of
more research and development employees being assigned to specific contracts;
thus, expenses related to these employees were included in cost of sales in
fiscal 2013. Most of the Company's research efforts, which were and continue to
be a significant cost of its business, are included in cost of sales for applied
research for specific contracts, as well as research for feasibility and
technology updates. As a percentage of net sales, research and development
expenses decreased slightly to 1.9% in fiscal 2013 compared to 2.1% in fiscal
2012.
Operating income
Operating income increased $1.8 million, or 22.2%, to $9.9 million for fiscal
2013 compared to $8.1 million in fiscal 2012. The 5.7% increase in gross profit
combined with a 3.0% reduction in operating expenses generated the increase in
operating income.
On a segment basis, Aerospace had operating income of $9.1 million for fiscal
2013, a $1.9 million, or 26.7%, increase in operating income compared to $7.2
million in fiscal 2012. CIS had operating income of $3.9 million for fiscal
2013, a $0.2 million, or 4.2%, decrease in operating income compared to $4.1
million in fiscal 2012. These segment operating results were offset, in part,
by unallocated corporate expenses.
Given the positive operating performance in fiscal 2013, the level and mix of
the Company's sales backlog as of February 22, 2013, open proposals and
proposals under preparation, which include quotations for some significant
potential international contract awards, and the Company's continuing positive
feedback from potential customers for its ATFS technology, it is anticipated
that the Company will produce income from operations in fiscal 2014.
Net income attributable to ETC
Net income attributable to ETC was $5.0 million, or $0.19 per diluted share, in
fiscal 2013 versus $4.9 million, or $0.13 per diluted share, in fiscal 2012; an
increase of $0.1 million, or 1.5%. Operating income for fiscal 2013 was $9.9
million versus $8.1 million in fiscal 2012, an increase of $1.8 million, or
22.2%. Operating income was favorably affected in dollars by a higher gross
profit and was favorably affected as a percentage of net sales by a 3.0%
decrease in operating expenses. The significant increase in diluted earnings
per share was due in part to increased income and also to reduced shares
outstanding following the repurchase of 386 shares of Series D Preferred Stock,
representing all of the Company's issued and outstanding shares of Series D
Preferred Stock, and 9,614 shares of Series E Preferred Stock, representing a
significant portion of the Company's issued and outstanding Series E Preferred
Stock.
Fiscal 2013 Fourth Quarter Results of Operations:
Net sales for the fiscal 2013 fourth quarter ("the 2013 quarter") of $15.1
million, decreased $1.8 million, or 11.0% compared to net sales of $16.9 million
in the fiscal 2012 fourth quarter ("the 2012 quarter"). The decrease reflects
decreased sales to Domestic customers and to the U.S. Government, while sales to
International customers remained relatively flat.
Despite lower net sales, income before income taxes for the 2013 quarter was
$1.6 million, a $1.0 million, or 167.1%, increase over the 2012 quarter. The
increase in income before income taxes was due primarily to an increase in gross
profit margin as a percentage of net sales to 38.7% for the 2013 quarter
compared to 32.3% in the 2012 quarter, which was the result of a more profitable
product and customer sales mix, combined with a 19.2% decrease in operating
expenses.
Domestic sales for the 2013 quarter were $4.3 million, a decrease of $1.3
million, or 23.4%, compared to $5.6 million in the 2012 quarter, and represented
28.4% of total net sales in the 2013 quarter compared to 33.0% in the 2012
quarter. The decrease in Domestic sales is primarily a result of lower sales of
Hyperbaric (monoplace) chambers, Environmental Testing and Simulation Systems,
and spare parts. These decreases were offset, in part, by an increase in sales
of Sterilization Systems, which reflects record orders received in fiscal 2012.
U.S. Government sales for the 2013 quarter were $3.7 million, a decrease of $0.5
million, or 12.9%, compared to $4.2 million in the 2012 quarter, which reflect
lower sales related to a high performance human centrifuge, offset, in part, by
increased sales related to a suite of altitude (hypobaric) chambers. U.S.
Government sales represented 24.6% of total net sales in the 2013 quarter
compared to 25.1% in the 2012 quarter. Given the existing progress made on U.S.
Government contracts in the Company's sales backlog as of February 22, 2013, the
Company anticipates the concentration of sales with the U.S. Government will
continue to lessen in fiscal 2014.
International sales in both the 2013 quarter and the 2012 quarter, including
those of the Company's foreign subsidiaries, were $7.1 million. Although
International sales remained flat quarter over quarter, there was a shift in
sales away from ATS, primarily due to less revenue recorded on one of our
international contracts for multiple Aerospace products as the aeromedical
center in which this equipment is housed was dedicated in October 2012, and
towards ETC-PZL and Sterilization Systems.
Segment sales
Aerospace sales were $10.1 million for the 2013 quarter, a decrease of $1.4
million, or 11.9%, compared to sales of $11.5 million in the 2012 quarter.
Sales of these products accounted for 67.2% of total net sales in the 2013
quarter compared to 67.9% in the 2012 quarter. CIS sales decreased $0.5
million, or 9.0%, to $4.9 million for the 2013 quarter compared to $5.4 million
in the 2012 quarter, and constituted 32.8% of total net sales in the 2013
quarter compared to 32.1% in the 2012 quarter.
Gross profit
Gross profit for the 2013 quarter was $5.8 million compared to $5.4 million in
the 2012 quarter, an increase of $0.4 million, or 6.8%. The increase in gross
profit was achieved despite a decrease in net sales, due primarily to the
increase in gross profit margin as a percentage of net sales to 38.7% for the
2013 quarter from 32.3% in the 2012 quarter. This increase was due primarily to
costs incurred in the 2012 quarter related to a U.S. government contract, and to
a more profitable product and customer sales mix for the 2013 quarter.
Operating expenses
Selling and marketing expenses for the 2013 quarter of $1.5 million remained
unchanged compared to the 2012 quarter. As a percentage of net sales, selling
and marketing expenses increased to 9.6% in the 2013 quarter from 8.7% in the
2012 quarter. The increase is primarily the result of a decrease in net sales.
General and administrative expenses for the 2013 quarter were $2.2 million
compared to $2.5 million in the 2012 quarter, a decrease of $0.3 million, or
13.0%. As a percentage of net sales, general and administrative expenses
decreased to 14.9% in the 2013 quarter from 15.2% in the 2012 quarter. The
decrease is primarily the result of lower professional fees and an on-going
effort to reduce non-revenue generating expenses.
Research and development expenses include spending for potential new products
and technologies, and internationally, work performed under government grant
programs. This spending, net of grant payments from the Polish and Turkish
governments, totaled $0.3 million for the 2013 quarter compared to $0.9 million
for the 2012 quarter, a decrease of $0.6 million, or 68.9%. The decrease was a
result of more research and development employees being assigned to specific
contracts; thus, expenses related to these employees were included in cost of
sales in the 2013 quarter. Most of the Company's research efforts, which were
and continue to be a significant cost of its business, are included in cost of
sales for applied research for specific contracts, as well as research for
feasibility and technology updates. As a percentage of net sales, research and
development expenses decreased to 1.8% in the 2013 quarter compared to 5.0% in
the 2012 quarter.
Operating income
Operating income increased by $1.3 million, or 231.7%, to $1.9 million for the
2013 quarter compared to $0.6 million in the 2012 quarter. Operating income as
a percentage of net sales increased to 12.5% for the 2013 quarter from 3.4% in
the 2012 quarter. The 6.8% increase in gross profit combined with a 19.2%
reduction in operating expenses generated the increase in operating income.
On a segment basis, Aerospace had operating income of $2.2 million for the 2013
quarter, a $1.8 million increase from operating income of $0.4 million in the
2012 quarter. CIS had operating income of $0.5 million in the 2013 quarter, a
$0.6 million decrease from operating income of $1.1 million in the 2012 quarter.
These segment operating results were offset, in part, by unallocated corporate
expenses of $0.8 million and $1.0 million in the 2013 quarter and the 2012
quarter, respectively.
Net income attributable to ETC
Net income attributable to ETC was affected by an income tax provision of $0.8
million for the 2013 quarter compared to an income tax benefit of $0.3 million
in the 2012 quarter. As a result, net income attributable to ETC was $0.8
million for the 2013 quarter, or $0.04 per diluted share, versus $0.9 million,
or $0.02 per diluted share, in the 2012 quarter. The significant increase in
diluted earnings per share was due in part to increased operating income, offset
by a higher tax provision, and also the positive affect of reduced shares
outstanding following the repurchase of 386 shares of Series D Preferred Stock,
representing all of the Company's issued and outstanding shares of Series D
Preferred Stock, and 9,614 shares of Series E Preferred Stock, representing a
significant portion of the Company's issued and outstanding Series E Preferred
Stock.
______________
Forward-looking Statements:
This press release contains forward-looking statements, which are based on
management's current 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, but are not
the exclusive means of identifying such statements. The Company's actual
results could differ materially from those anticipated in forward-looking
statements as a result of a variety of factors. We caution you not to place
undue reliance on these forward-looking statements.
Contact: Bob Laurent, CFO
Phone: 215-355-9100 (Ext. 1550)
E-mail: rlaurent(at)etcusa.com
###
- Financial Tables Follow -
Table A
ENVIRONMENTAL TECTONICS CORPORATION
SUMMARY TABLE OF RESULTS
(amounts in thousands, except per share information)
Fiscal year ended Variance
--------------------------------- -------------------------
22-Feb-13 24-Feb-12 $ %
---------------- ---------------- ----------------- -------
Net sales $ 62,773 $ 66,294 $ (3,521) -5.3
Cost of goods sold 37,904 42,763 (4,859) -11.4
---------------- ---------------- ----------------- -------
Gross profit $ 24,869 $ 23,531 $ 1,338 5.7
Gross profit
margin % 39.6% 35.5% 4.1% 11.5%
Selling and marketing
expenses 5,570 5,481 89 1.6
General and
administrative
expenses 8,186 8,513 (327) -3.8
Research and
development expenses 1,169 1,400 (231) -16.5
---------------- ---------------- ----------------- -------
Operating expenses 14,925 15,394 (469) -3.0
---------------- ---------------- ----------------- -------
Operating income $ 9,944 $ 8,137 $ 1,807 22.2
Operating margin
% 15.8% 12.3% 3.5% 28.5%
Interest expense, net 1,005 734 271 36.9
Other expense
(income), net 118 (85) 203 -238.8
---------------- ---------------- ----------------- -------
Income before income
taxes $ 8,821 $ 7,488 $ 1,333 17.8
Pre-tax income
margin % 14.1% 11.3% 2.8% 24.8%
Provision for income
taxes 3,859 2,620 1,239 47.3
---------------- ---------------- ----------------- -------
Net income $ 4,962 $ 4,868 $ 94 1.9
(Income) expense
attributable to non-
controlling interest (14) 5 (19) 380.0
---------------- ---------------- ----------------- -------
Net income
attributable to ETC $ 4,948 $ 4,873 $ 75 1.5
Preferred Stock
dividend (1,511) (2,208) 697 -31.6
---------------- ---------------- ----------------- -------
Income applicable to
common and
participating
shareholders $ 3,437 $ 2,665 $ 772 29.0
---------------- ---------------- ----------------- -------
Basic earnings per
common and
participating
share:
Distributed
earnings per share:
$ $ $
Common - - -
---------------- ---------------- ----------------- -------
$
Preferred $ 0.17 $ 0.20 (0.03) -15.0
---------------- ---------------- ----------------- -------
Undistributed
earnings per share:
Common $ 0.19 $ 0.13 $ 0.06 46.2
---------------- ---------------- ----------------- -------
Preferred $ 0.19 $ 0.13 $ 0.06 46.2
---------------- ---------------- ----------------- -------
Diluted earnings per
share $ 0.19 $ 0.13 $ 0.06 46.2
---------------- ---------------- ----------------- -------
Total basic weighted
average common and
participating shares 18,212 20,209
Total diluted
weighted average
shares 18,375 20,497
Table B
ENVIRONMENTAL TECTONICS CORPORATION
SUMMARY TABLE OF RESULTS
(amounts in thousands, except per share information)
Thirteen weeks ended Variance
-------------------------------- -------------------------
22-Feb-13 24-Feb-12 $ %
---------------- --------------- ----------------- -------
Net sales $ 15,053 $ 16,910 $ (1,857) -11.0
Cost of goods sold 9,220 11,449 (2,229) -19.5
---------------- --------------- ----------------- -------
Gross profit $ 5,833 $ 5,461 $ 372 6.8
Gross profit
margin % 38.7% 32.3% 6.4% 19.8%
Selling and marketing
expenses 1,445 1,468 (23) -1.6
General and
administrative
expenses 2,243 2,578 (335) -13.0
Research and
development expenses 264 848 (584) -68.9
---------------- --------------- ----------------- -------
Operating expenses 3,952 4,894 (942) -19.2
---------------- --------------- ----------------- -------
$
Operating income $ 1,881 567 $ 1,314 231.7
Operating margin
% 12.5% 3.4% 9.1% 267.6%
Interest expense, net 241 182 59 32.4
Other expense
(income), net 91 (195) 286 -146.7
---------------- --------------- ----------------- -------
Income before income $
taxes $ 1,549 580 $ 969 167.1
Pre-tax income
margin % 10.3% 3.4% 6.9% 202.9%
Income tax provision
(benefit) 777 (320) 1,097 -342.8
---------------- --------------- ----------------- -------
$ $
Net income $ 772 900 (128) -14.2
Expense attributable
to non-controlling
interest 5 32 (27) -84.4
---------------- --------------- ----------------- -------
Net income $ $
attributable to ETC $ 777 932 (155) -16.6
Preferred Stock
dividend (121) (552) 431 -78.1
---------------- --------------- ----------------- -------
Income applicable to
common and
participating $
shareholders $ 656 380 $ 276 72.6
---------------- --------------- ----------------- -------
Basic earnings per
common and
participating
share:
Distributed
earnings per share:
$ $ $
Common - - -
---------------- --------------- ----------------- -------
$ $
Preferred $ 0.02 0.05 (0.03) -60.0
---------------- --------------- ----------------- -------
Undistributed
earnings per share:
$
Common $ 0.04 0.02 $ 0.02 100.0
---------------- --------------- ----------------- -------
$
Preferred $ 0.04 0.02 $ 0.02 100.0
---------------- --------------- ----------------- -------
Diluted earnings per $
share $ 0.04 0.02 $ 0.02 100.0
---------------- --------------- ----------------- -------
Total basic weighted
average common and
participating shares 15,231 20,222
Total diluted weighted
average shares 15,412 20,430
Table C
ENVIRONMENTAL TECTONICS CORPORATION
OTHER SELECTED FINANCIAL HIGHLIGHTS
(amounts in thousands)
Fiscal year ended Thirteen weeks ended
------------------------------ ----------------------------
22-Feb-13 24-Feb-12 22-Feb-13 24-Feb-12
-------------- --------------- -------------- -------------
$ $
EBITDA $ 11,669 $ 9,982 2,258 1,266
As of
------------------------------
22-Feb-13 24-Feb-12
-------------- ---------------
Working capital $ 25,135 $ 27,786
Total shareholders' $ 24,219 $ 30,825
equity
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: ETC via Thomson Reuters ONE
[HUG#1704311]
Datum: 23.05.2013 - 22:34 Uhr
Sprache: Deutsch
News-ID 263222
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contact information:
Town:
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