Environmental Tectonics Corporation's fiscal 2027 second-quarter income from continuing operations fell 19.7% despite an 8.6% sales increase, as aerospace project cost revisions and weaker contract margins cut into profit.
Income from continuing operations was $1.193 million, or $0.06 per diluted share, for the 13 weeks ended Aug. 28. ETC reported $1.486 million, or $0.08 per diluted share, for the comparable quarter a year earlier in its Oct. 19 results release.
Sales rose to $18.319 million from $16.876 million. Excluding aeromedical building sales, ETC said sales grew 18.6% from the year-earlier quarter.
Gross profit declined to $4.413 million from $4.866 million, while gross margin narrowed to 24.1% from 28.8%. ETC cited two unfavorable job-cost revisions in its Aerospace segment and lower margins on completed contracts. A sale-and-leaseback transaction had benefited the year-earlier quarter.
Environmental Test and Simulation Systems sales increased by $2.0 million, and Advanced Disaster Management Simulators sales rose by $0.7 million. Those gains were partly offset by declines of $0.6 million in Sterilizer Systems and $0.8 million in Aircrew Training Systems.
After the quarter ended, ETC sold its Polish subsidiary, ETC-PZL Aerospace Industries sp. z.o.o., to Fabryka Artykułów Turystycznych i Sportowych Polsport sp. z o.o. ETC said the sale would let it focus resources on its core businesses. Under a 10-year agreement, ETC-PZL will serve as a preferred supplier for certain products, while ETC may also manufacture those products internally.
ETC classified the subsidiary's results as discontinued operations in both quarters. Including those operations, net income fell to $829,000, or $0.04 per diluted share, from $1.480 million, or $0.08 per diluted share.
For the first 26 weeks of fiscal 2027, sales increased 1.9% to $34.491 million. Income from continuing operations fell to $1.806 million from $2.382 million in the comparable period.
