Firan Technology Group Corporation (FTG or Corporation) Announces Second Quarter 2018 Financial Results

TORONTO, July 11, 2018 (GLOBE NEWSWIRE) — Firan Technology Group Corporation (TSX:FTG) today announced financial results for the second quarter of 2018.

  • Achieved record sales of $28.9M, an increase of 13% over Q2 2017
  • Grew Aerospace segment by 42% over Q2 last year
  • Gross margins increased by $1.5M or 26% over Q2 last year
  • Generated cash flow from operations of $3.6M compared to cash usage of $0.4M in Q2 2017

“The second quarter of 2018 began to demonstrate the earnings benefits from our acquisitions in 2016,” stated Brad Bourne, President and Chief Executive Officer. He added, “While we continued to experience some increased costs in the quarter related to the transition, we also achieved a dramatic improvement in our net earnings and cash flow.”

 
Second Quarter: (three-months ended June 1, 2018 compared with three-months ended June 2, 2017)
  Q2 2018
  Q2 2017
 
Sales $28,878,000   $25,513,000  
     
Gross margin   7,242,000     5,753,000  
Gross margin (%)   25.1%     22.5%  
     
Operating earnings (1):   3,579,000     2,581,000  
•  Net R&D investment   1,071,000     1,846,000  
•  Recovery of investment tax credits   (211,000 )   (188,000 )
•  Amortization of intangibles   261,000     286,000  
•  Foreign exchange (gain) loss   (104,000 )   (118,000 )
•  Restructuring expense   195,000      
Earnings before income taxes   2,367,000     755,000  
•  Current income tax (recovery) expense   22,000     (41,000 )
•  Deferred income tax expense   1,039,000     691,000  
•  Non-controlling interests   11,000     (19,000 )
Net earnings, attributable to the equity holders of FTG $1,295,000   $124,000  
Earnings per share, attributable to the equity holders of FTG
Basic $0.06   $0.01  
Diluted $0.05   $0.01  

 
Year-to-Date: (six-months ended June 1, 2018 compared with six-months ended June 2, 2017)
  YTD 2018
  YTD 2017
 
Sales $56,406,000   $52,685,000  
     
Gross margin   12,089,000     12,639,000  
Gross margin (%)   21.4%     24.0%  
     
Operating earnings (1):   5,140,000     5,598,000  
•  Net R&D investment   2,221,000     3,256,000  
•  Recovery of investment tax credits   (363,000 )   (329,000 )
•  Amortization of intangibles   517,000     567,000  
•  Foreign exchange (gain) loss   (130,000 )   43,000  
•  Restructuring expense   195,000      
Earnings before income taxes   2,700,000     2,061,000  
•  Current income tax (recovery) expense   40,000     (24,000 )
•  Deferred income tax expense   1,675,000     1,179,000  
•  Non-controlling interests   (17,000 )   (18,000 )
Net earnings, attributable to the equity holders of FTG $1,002,000   $924,000  
Earnings per share, attributable to the equity holders of FTG
Basic $0.04   $0.04  
Diluted $0.04   $0.04  
  1. Operating earnings is not a measure recognized under International Financial Reporting Standards (“IFRS”). Management believes that this measure is important to many of the Corporation’s shareholders, creditors and other stakeholders. The Corporation’s method of calculating operating earnings may differ from other corporations and accordingly may not be comparable to measures used by other corporations.

Business Highlights

FTG accomplished many goals in the second quarter of 2018 that continue to improve the Corporation and position it for the future, including:

  • Completed C-130 contract with CAE on schedule and on cost
  • Renewed contract with Rockwell Collins for Printed Circuit Boards from North American and China facilities
  • Won new cursor control device assembly for use on Airbus aircraft already in service
  • Achieved sales resulting from the PhotoEtch acquisition of $1.5M in the quarter compared to $2.9M in the second quarter of last year and a target of $1.5M. The PhotoEtch related revenues will ramp up significantly in the second half of 2018 as shipments begin on the KC-46 simulator assembly contract.
  • Achieved sales resulting from the Teledyne PCT acquisition of $5.0M in the quarter compared to $5.0M in the second quarter of last year and a target of $4.0M

For FTG, overall sales increased by $3.4M or 13.2% from $25.5M in Q2 2017 to $28.9M in Q2 2018. This increase was experienced by the Aerospace segment and was driven by the shipment of the majority of the C-130 program for CAE from the Aerospace Toronto facility and a ramp up of activity in the Aerospace Chatsworth facility. Offsetting these gains, was the impact of changes in the foreign exchange rates (the Canadian dollar was 6 cents stronger in Q2 this year which translated into a reduction in sales of approximately $1M).

For the year-to-date period, sales were up $3.7M or 7.1% due to the items noted above and the one-time revenue recognition of $5.0M from the C919 program with SAVIC in the first quarter of this year.

Sales in the Circuits segment were down $0.4M or 2.3% comparing Q2 2018 versus Q2 2017. On a year-to-date basis, Circuits segment sales were down by $1.7M or 5.3%.

For the Aerospace segment, sales in Q2 2018 were $12.7M compared to $8.9M in the same quarter last year resulting in a 41.8% growth rate. Included in the Q2 2018 results are $1.5M in sales from the acquisition of PhotoEtch and approximately $4.5M of Teledyne PCT incremental sales. Year-to-date sales were up $5.4M or 26.1% in the Aerospace segment.

Gross margins in Q2 2018 were up $1.5M or 25.9% compared to Q2 2017. The benefit of increased sales and the cost savings of closing the Teledyne PCT facility was partially offset by some transition related costs.

Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for Q2 2018 was $3.4M and $8.4M for the trailing twelve months.

The following table reconciles EBITDA(2)  to the net earnings for Q2 2018 and trailing twelve months.

  Q2 2018 Trailing Twelve
Months
Net earnings $1,295,000 1,347,000
Add:    
     
•  Interest 132,000 517,000
•  Income taxes/ITC 850,000 2,159,000
•  Depreciation/Amortization 1,144,000 4,385,000
EBITDA $3,421,000 $8,408,000
  1. EBITDA is not a measure recognized under International Financial Reporting Standards (“IFRS”). Management believes that this measure is important to many of the Corporation’s shareholders, creditors and other stakeholders. The Corporation’s method of calculating EBITDA may differ from other corporations and accordingly may not be comparable to measures used by other corporations.

Net earnings at FTG in Q2 2018 were $1.3M compared to a net profit of $0.1M in Q2 2017. Q2 2018 had higher sales and the elimination of the Teledyne PCT facility costs as well as reductions in R&D spending.  These improvements were partially offset by some restructuring costs this year.

The Circuits segment net earnings before corporate and interest and other costs was $2.8M in Q2 2018 compared to $2.6M in Q2 2017. The Circuits joint venture in China was profitable in Q2 of this year.

The Aerospace segment’s net earnings before corporate and interest and other costs was $0.1M versus ($1.0M) in Q2 2017. Q2 2017 included operating and transitional costs for the Teledyne PCT facility which was closed during that quarter. FTG Aerospace Tianjin was profitable in Q2 of this year.

As at June 1, 2018, the Corporation’s net working capital was $27.8M, an increase of $3.4M over 2017 year end. Higher accounts receivables and net bank debt was offset by higher customer deposits.

The Corporation will host a live conference call on Thursday, July 12, 2018 at 8:30 am (EDT) to discuss the results of Q2 2018.

Anyone wishing to participate in the call should dial 647-427-2311 or 1-866-521-4909 and identify that you are calling to participate in the FTG conference call. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until July 26, 2018 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 416-621-4642 or 1-800-585-8367, pass code 3678495.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defense electronics product and subsystem supplier to customers around the globe. FTG has two operating units:

FTG Circuits is a manufacturer of high technology, high reliability printed circuit boards. Our customers are leaders in the aviation, defense, and high technology industries. FTG Circuits has operations in Toronto, Ontario, Chatsworth, California and a joint venture in Tianjin, China.

FTG Aerospace manufactures illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of aerospace and defense equipment. FTG Aerospace has operations in Toronto, Ontario, Chatsworth, California, Fort Worth, Texas and Tianjin, China.

The Corporation’s shares are traded on the Toronto Stock Exchange under the symbol FTG.

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements. These forward-looking statements are related to, but not limited to, FTG’s operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains words such as “anticipate”, “believe”, “expect”, “plan” or similar words suggesting future outcomes. Such statements are based on the current expectations of management of the Corporation and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Corporation’s industry, generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Corporation. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Corporation and not place undue reliance on forward-looking statements. Other than as may be required by law, FTG disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

For further information please contact:  
   
Bradley C. Bourne, President and CEO Tel: (416) 299-4000 x314
Firan Technology Group Corporation bradbourne@ftgcorp.com
   
Melinda Diebel, Vice President and CFO Tel:(416) 299-4000 x264
Firan Technology Group Corporation melindadiebel@ftgcorp.com

Additional information can be found at the Corporation’s website www.ftgcorp.com

 
 
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Balance Sheets
 
(Unaudited) June 01, November 30,
(in thousands of Canadian dollars) 2018 2017
ASSETS    
Current assets    
Cash $    3,797 $ 2,752
Accounts receivable     19,942   17,983
Taxes receivable     319   209
Inventories     25,216   25,079
Prepaid expenses     936   1,506
      50,210   47,529
Non-current assets    
Plant and equipment, net     11,986   12,222
Deferred income tax assets     394   395
Investment tax credits receivable     5,285   6,420
Deferred development costs     269   681
Intangible assets and other assets, net     3,454   3,768
Total assets $    71,598 $ 71,015
LIABILITIES AND EQUITY    
Current liabilities    
Bank indebtedness $    3,889 $ 6,444
Accounts payable and accrued liabilities     13,135   13,341
Provisions     414   390
Customer deposits     3,074   1,268
Current portion of long-term bank debt     1,921   1,726
      22,433   23,169
Non-current liabilities    
Long-term bank debt     6,283   6,040
Deferred tax payable     1,769   1,696
Total liabilities     30,485   30,905
Equity    
Retained earnings $    9,814 $ 8,812
Accumulated other comprehensive income     2   187
      9,816   8,999
Share capital    
Common shares     19,312   19,295
Preferred shares     2,218   2,218
Contributed surplus     8,527   8,384
Total equity attributable to FTG’s shareholders     39,873   38,896
Non-controlling interest     1,240   1,214
Total equity     41,113   40,110
Total liabilities and equity $    71,598 $ 71,015
 

<td class="gnw_padding_left_none gnw_align_left gnw_vertical_align_bott

Leave a Comment

 
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Earnings
 
  Three months ended     Six months ended
(Unaudited) June 01,   June 02,     June 01,   June 02,
(in thousands of Canadian dollars, except per share amounts) 2018   2017     2018   2017
                 
Sales $    28,878     $ 25,513       $    56,406     $ 52,685  
                 
Cost of sales                
Cost of sales     20,864       18,937
<< Sep 2018 >>
MTWTFSS
27 28 29 30 31 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30