There appears to be a lot going on at ETC these days. Environmental Tectonics Corporation’s Sterilization System Group (SSG) has secured another major contract worth approximately 2.5 million dollars. This sterilizer retrofit project involves refurbishing 12 industrial sterilizers. The units will be fitted with new state of the art control systems, process vacuum piping, and an additional set of chillers featuring an efficient water loop. This is part of a “green” initiative to make these machines more environmentally friendly. It will also save the customer a substantial amount of money through lower operating and maintenance costs.
Wastewater is nearly eliminated by recycling any H2O used for cooling. Meanwhile the project makes the machines more reliable since additional backup systems create more redundancy. Although the sterilizers were originally manufactured by a different company, ETC specializes in the servicing of many different systems. This project will allow the customer to comply with current environmental standards without purchasing all new equipment.
SSG’s business is to find customized solutions to challenges that are unique to certain cutting edge process systems. They provide steam and ethylene oxide sterilizers, services, consulting, and software systems to the healthcare, medical device, biotechnology, and pharmaceutical industries.
Current ETC News
Although the company faced many financially troubled years, there have been significant signs of a potential turn around since at least November of 2008. The recent release of the last quarter’s results ending in February of 2009 was encouraging. The company finally boasted a profit for a single quarter.
Meanwhile ETC is in the process of delisting their company from the AMEX stock exchange. They have provided Form 25 to the exchange notifying them of this voluntary delisting. They recently entered a deal to get extended revolving credit for the company in exchange for delivering certain Series E preferred stock to H.F. Lenfest. This will create compliance issues because of the terms and conditions agreed upon.
The company intends to relist the stock on the OTB stock exchange, where there should be no compliance issue. Recent action on the stock price has been mixed, but overall it has risen over the 200 day moving average. The fact that it remains over that average despite the delisting suggests that stockholders are more confident in the company than they were just a few months earlier.
The best news is that they still are in a position to grow their business because of the new extended level of credit. The key to their success will be extending their potential profit margin over an entire year. This will be difficult given the current troubles in the economy. However, the recent multi-million dollar deal indicates that it is possible. Regardless, ETC stock remains a somewhat speculative play. The dilution associated with the credit deal, although necessary, may initially dampen the value of each share available.
Moving Forward
It does appear that ETC and other autoclave manufacturers will continue to benefit from the increased attention being paid to the dangers present in many healthcare settings. Recent news stories regarding inadequate sterilization of medical devices coupled with concerns about swine flu make hospital safety concerns more relevant than ever. If you are responsible for ensuring sterile processing at your facility, find out which equipment will deliver the best value for your application by reading our on our free report.
