Lucrative government contracts are a prized windfall for certain companies. When those types of contracts are gained in tandem with ones secured in private industry, major growth in revenue tends to follow. The Sterilization Systems Group (SSG) is a division of Environmental Tectonics Corp (Amex: ETC) and they focus on such a strategy. The company recently generated valuable revenue for its parent organization through the receipt of 3 new contracts. One of the deals is repeat business with the Air Force for the M138 Portable Field Sterilization System.
The other two new contracts are for bulk sized steam sterilization systems from separate life science research organizations. These are totally new clients who want equipment custom built on site. One deal concerns building an autoclave to be put together in sections and certified on location. The other is a sterilization system that includes a patented roller-locking door which possesses the industry’s smallest ‘footprint’ to chamber volume ratio. For details on this announcement, click on iStockAnalyst.
ETC has many divisions within the company that provide different products and services; but they all have a few things in common. They generally deal with technology and government contracts – usually with the one or more parts of the Department of Defense. The company as a whole custom designs, develops, installs, and maintains aircrew training systems, disaster management training and services, entertainment products, sterilizers (both steam and gas), environmental testing products, hyperbolic chambers, and related products for domestic and international aerospace and biomedical markets.
The company was founded in 1969 by the current President and CEO, William F. Mitchell. One of the first products produced by ETC was a high altitude, decompression chamber for the U.S. Navy in 1971. This product laid the foundation for the BioMedical Systems, Sterilization Systems, and Testing and Simulations Systems divisions within the business model. Since then, the company has substantially diversified its efforts and has delved into a variety of related technology markets.
ETC As A Public Company
Environmental Tectonics Corp (ETC) is microcap stock that trades on the Amex market with a market cap of only about 12.65 million dollars with only 9.01 million shares outstanding. This public company currently has their low price per share at levels not seen since the fall of 1995. Its price has fallen substantially over the years from as high as 17.25 dollars per share in January of 2000 to only 1.40 at the end of October of 2008. Now it appears to be finally forming a base for a possible price floor.
The stock is relatively cheap. Fundamentals for the company are slowly improving. If support levels from 1995 of about 1.25 per share can hold, then look for a significant multi-year reversal in trend due to increased revenue growth with an outlook for eventual profitability.
When the general market begins to recover, this stock is one to watch for signs of a reversal. A lot may depend upon who is elected as U.S. President and the ultimate fate of Defense spending. Regardless, private organizations and industry could potentially fill the revenue gap.
ETC could very well bottom out with the rest of the market and may even out-perform expectations. The volume of trades is currently too low to gauge any convincing investor sentiment; but announcing these 3 new contracts is a good start. Future prospects depend upon how soon the company turns a profit again. That depends upon the strength of near term contracts.