ENVIRONMENTAL TECTONICS CORPORATION
ANNOUNCES FIRST QUARTER FISCAL 2004 RESULTS
Southampton, PA: July 18, 2003 - Environmental Tectonics Corporation (AMEX: ETC)
today announced financial results for the first quarter of fiscal 2004.
For the first quarter of fiscal 2004, which ended on May 30, 2003, net
income was $70,000, or $.01 per share (diluted), versus net income of $585,000
or $.08 per share (diluted) for the first quarter of fiscal 2003. Sales for the
first quarter of fiscal 2004 were $6,130,000, as compared to $11,207,000 for the
first quarter of fiscal 2003, a decrease of $5,077,000 or 45.3%, primarily
reflecting decreased domestic entertainment sales (see relevant comments below).
Partial offsets to the lower domestic entertainment sales included increased
domestic sterilizer sales, which benefited from a new ETO sterilizer project,
increased international Aircrew Training Systems sales, which benefited from a
centrifuge project in Malaysia, and higher overall simulation sales for various
projects.
Geographically, domestic sales for the first quarter of fiscal 2004
were $2,824,000, down $5,117,000 or 64.4% from the first quarter of fiscal 2003,
primarily representing the decrease in entertainment sales, and represented
46.1% of the Company's total sales for the first quarter of fiscal 2004. U.S.
Government sales for the first quarter of fiscal 2004 were $335,000 as compared
to $580,000 in the first quarter of fiscal 2003. International sales for the
first quarter of fiscal 2004, including those made by the Company's foreign
subsidiaries, were $2,971,000, an increase of $285,000 or 10.6% over
international sales for the first quarter of fiscal 2003, and represented 48.5%
of total sales for the first quarter of fiscal 2004.
Gross profit for the first quarter of fiscal 2004 was $2,287,000, as
compared to $3,583,000 for the first quarter of fiscal 2003, a decrease of
$1,296,000 or 36.2%. This decrease reflected the decrease in sales which was
only partially offset by a 5.3 percentage point increase in the gross profit
rate as a percent of sales. Increased rates were evidenced in domestic Aircrew
Training Systems and simulator sales, U.S. government hyperbaric sales, and
international Aircrew Training Systems sales.
Selected Financial Data
(thousands, except share and
per share information)
----------------------------------
(unaudited)
Fiscal Quarter Ended
May 30, May 24,
2003 2002
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Sales $ 6,130 $ 11,207
Gross Profit $ 2,287 $ 3,583
Operating Income $ 520 $ 1,075
Pre-tax income $ 133 $ 831
Minority interest $ (4) $ (27)
Net income $ 70 $ 585
Earnings per share
Net income available to
common shareholders $ 70 $ 585
Basic $ .01 $ .08
Average shares 7,157,000 7,147,000
Diluted $ .01 $ .08
Average shares 7,751,000 7,496,000
William F. Mitchell, ETC's President and Chairman, stated "We expect
increased bookings in the last two quarters of fiscal 2004. New business looks
favorable in virtually all areas of our business. Issues surrounding our most
recent large entertainment project, which is now in litigation, had a negative
impact on our operating results for the fourth quarter of fiscal 2003 and the
first quarter of fiscal 2004. The new technology entertainment ride, which we
developed using our proprietary technology, will be open to the public this
summer. Results to date indicate that the ride will be successfully received by
our entertainment customer's guests. We believe that our entertainment customer
for this project breached its contract with our operating subsidiary in several
ways, significantly decreasing our operating results. In the litigation, we are
seeking to recover damages for these breaches of contract and to confirm our
ownership rights in the technology, among other issues.
"On the positive side, our domestic sterilizer sales were up over $1.3
million from the prior period and we are experiencing an increased order flow
for sterilizers.
"Our environmental business continues to be busy with international
projects in Europe and Asia. New business opportunities continue to develop. We
have added significant capability to our environmental team over the last year.
We are poised to be a world leader in environmental test systems. We expect
improved operating margins from this unit of our business.
"Development of our line of unique entertainment products utilizing our
proprietary technologies has advanced and we anticipate our initial sale by the
end of fiscal year 2004. This is an exciting extension of our proven knowledge
of aeromedical technology and our products will offer a unique alternative to
existing attractions.
"We are continuing to develop our Advanced Disaster Management
Simulator, ADMS, and to integrate this product into Fire and Disaster Management
Organizations worldwide. We continue to look for partners that will use the ADMS
tool to support their Homeland Defense Initiatives."
ETC designs, develops, installs and maintains aircrew training systems,
public entertainment systems, process simulation systems (sterilization and
environmental), clinical hyperbaric systems, environmental testing and
simulation systems, and related products for domestic and international
customers.
This press release may include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E
of the Securities Exchange Act of 1934. We have based these forward-looking
statements on our current expectations and projections about future events.
These forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions about the Company that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any other future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should', "could", "would", "expect", "plan", "anticipate", "believe",
"estimate", "continue", or the negative of such terms or similar expressions.
Factors that might cause or contribute to such a discrepancy include, but are
not limited to, contract cancellations, political unrest in customer countries,
unfavorable results in litigation, general economic conditions, and those issues
identified from time to time in our Securities and Exchange Commission filings
and other public documents, including, without limitation, our Annual Report on
Form 10-K for the fiscal year ended February 28, 2003.
Contact: Duane D. Deaner, CFO Tel: 215-355-9100(ext. 1203) Fax: 215-357-4000
ETC - Internet Home Page: http://www.etcusa.com
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