TORONTO, July 10, 2019 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the second quarter 2019.

  • Achieved sales of $32.2M, a 12% increase over Q2 2018 and the highest quarterly revenue in the company’s history
  • Achieved Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $5.2M in Q2 2019, an increase of $1.8M or 54% over Q2 last year
  • Achieved trailing twelve month EBITDA of $13.8M
  • Achieved net income of $2.5M and diluted earnings per share of $0.10 in Q2 2019, a $1.1M or 88% increase over Q2 2018
  • In March 2019, FTG announced it had entered into a definitive purchase agreement to acquire a US based printed circuit board manufacturer, subject to approval of the Committee on Foreign Investment in the United States (CFIUS) and other customary closing conditions.  Subsequent to quarter end, the CFIUS approval was received. Closing is expected to take place in the near future.
  • Achieved quarterly cash flow of $2.3M in Q2 2019 after additions to plant and equipment
  • Net debt at quarter end was $2.2M, the lowest level since 2015 and represent the full repayment of debt assumed to pay for the acquisitions in 2016

“The second quarter of 2019 was a great quarter for FTG with record sales, EBITDA and operating profit.  There was strong performance across the Corporation showing the strategic initiatives from previous years including the acquisitions in 2016 to drive up utilization and the investments in China which have created value for the Corporation,” stated Brad Bourne, President and Chief Executive Officer. He added, “We are excited about our pending acquisition which will add much needed capacity for standard circuit board manufacturing freeing up capacity in existing sites for higher end product and expand our offering for the US defense market.”

Second Quarter Results: (three months ended May 31, 2019 compared with three months ended June 1, 2018)

    Q2 2019     Q2 2018  
Sales $32,235,000   $28,878,000  
     
Gross Margin   9,717,000     7,242,000  
Gross Margin (%)   30.1%     25.1%  
     
Operating Earnings (1):      5,631,000     3,579,000  
     
•  Net R&D Investment   1,443,000     1,071,000  
•  Foreign Exchange Loss (Gain)   140,000     (104,000)  
•  Recovery of Investment Tax Credits   (265,000)     (211,000)  
•  Amortization of Intangibles   272,000     261,000  
•  Restructuring expense   243,000     195,000  
     
Net Earnings before Tax   3,798,000     2,367,000  
     
•  Tax Expense   1,348,000     1,061,000  
•  Non-controlling Interests   (32,000)     11,000  
Net Earnings After Tax $2,482,000   $1,295,000  
     
Earnings per share    
- basic $0.11   $0.06  
- diluted $0.10   $0.05  
     

Year-to-Date: (six months ended May 31, 2019 compared with six months ended June 1, 2018)

    YTD 2019     YTD 2018  
Sales $57,625,000   $56,406,000  
     
Gross Margin   16,471,000     12,089,000  
Gross Margin (%)   28.6%     21.4%  
     
Operating Earnings (1):      8,949,000     5,140,000  
     
•  Net R&D Investment   2,504,000     2,221,000  
•  Foreign Exchange Loss (Gain)   296,000     (130,000)  
•  Recovery of Investment Tax Credits   (415,000)     (363,000)  
•  Amortization of Intangibles   543,000     517,000  
•  Restructuring expense   243,000     195,000  
     
Net Earnings before Tax   5,778,000     2,700,000  
     
•  Tax Expense   2,155,000     1,715,000  
•  Non-controlling Interests   (77,000)     (17,000)  
Net Earnings After Tax $3,700,000   $1,002,000  
     
Earnings per share    
- basic $0.16   $0.04  
- diluted $0.15   $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 Q2 2019 that continue to improve the Corporation and position it for the future, including:

  • Achieved record quarterly sales of $32.2M
  • Achieved Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $5.2M in Q2 2019, an increase of $1.8M or 54% over Q2 last year over Q2 last year
  • Achieved net income of $2.5M and diluted earnings per share of $0.10 in Q2 2019, a $1.1M or 88% increase over Q2 2018
  • Achieved quarterly cash flow of $2.3M in Q2 2019 after additions to plant and equipment
  • Net debt at quarter end was $2.2M, the lowest level since 2015 and represent the full repayment of debt assumed to pay for the acquisitions in 2016.
  • In March 2019, FTG announced it has entered into a definitive agreement to acquire a US based circuit board manufacturer – to add capacity in the Circuits business and to enable FTG to offer standard circuit board product to US based defense contractors.  The acquisition was conditional upon approval of the Committee on Foreign Investment in the United States (CFIUS) and other customary closing conditions.  Subsequent to quarter end the CFIUS approval was obtained.

For FTG, overall sales increased by $3.4M or 11.6% from $28.9M in Q2 2018 to $32.2M in Q2 2019. Both the Circuits and Aerospace segments contributed to the growth. The Canadian dollar was 5.5 cents weaker in Q2 2019 compared to the same quarter last year and this contributed approximately $1.5M to the growth.  Year-to-date 2019 sales increased by $1.2M or 2.2%.  Year-to-date 2018 included $5M one-time adjustment with respect to the C919 development contract.  Excluding this, the growth was $6.2M or 12%.

The Circuits Segment sales in Q2 2019 were $19.3M, up $3.1M or 18.9% versus Q2 2018.  Both North American sites experienced similar growth rates.  Activity in China was approximately $1.1M and is reported in the Circuits Toronto sales as all orders flow through the Toronto site.

For the Aerospace segment, sales in Q2 2019 were $13.0M compared to $12.7M in Q2 of last year.  Aerospace Toronto and Tianjin were up whereas Aerospace Chatsworth was down compared to the same quarter last year.  On a year-to-date basis, sales were down $2.9M but excluding the one-time adjustment on the C919 development program, sales were up $2.1M or 9.8%

Gross margins of $9.7M in Q2 2019 were up $2.5M compared to Q2 2018.  The increase is due to higher sales, improved operating performance, more favorable exchange rates, offset by some one-time costs in the quarter.  For the year-to-date, gross margins were $16.5M, up $4.4M or 36.2%.  Year-to-date gross margins are 28.6% compared to 21.4% last year.  The one-time $5M revenue adjustment on the C919 program last year was at very low margins.  Operating performance in 2019 was improved across the Corporation.

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) for FTG in Q2 2019 was $5.2M compared to $3.4M in Q2 2018.  Trailing twelve month EBITDA is $13.9M.

The following table reconciles EBITDA(2)  to the net earnings for the trailing 12 months as at May 31, 2019.

  Q2 2019 Trailing 12 Months
     
Net earnings   2,482,000   5,573,000
Add:    
Interest   90,000   405,000
Income taxes/ITC/JV   1,358,000   3,117,000
Depreciation/Amortization   1,254,000   4,765,000
     
EBITDA $5,184,000 $13,860,000
  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 profit after tax at FTG in Q2 2019 was $2.5M compared to a net profit of $1.3M in Q2 2018.  Higher margins, were partially offset by higher SG&A costs and higher foreign exchange losses.  For the year-to-date, net profit was $3.7M compared to $1.0M last year.   

The Circuits segment net earnings before corporate and interest and other costs was $3.9M in Q2 2019 compared to $2.8M in Q2 2018.

The Aerospace net earnings before corporate and interest and other costs in Q2 2019 was $0.7M versus $0.1M in Q2 2018.

As at May 31, 2019, the Corporation’s net working capital was $32.5M, an increase of $3.8M over year-end 2018.  Higher accounts receivable was offset by lower accounts payable/accrued liabilities and cash.

Cash flow in Q2 2019 was $2.3M compared to $3.6M in Q2 last year, after investments in capital equipment and deferred development.  In Q2 2019, cash taxes paid were $0.4M.  For the year-to-date period cash flow was $0.4M compared to $3.2M last year.

Net debt to EBITDA was 0.16:1 for the trailing 12 month period.

The Corporation will host a live conference call on Thursday, July 11, 2019 at 8:30 am (EDT) to discuss the results of Q2 2019.

Anyone wishing to participate in the call should dial 647-427-2311 or 1-866-521-4909 and the conference ID is 2793398. The Chairperson is Mr. Brad Bourne.  A replay of the call will be available until August 11, 2019 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, Conference ID 2793398.

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                                                                       
Firan Technology Group Corporation
Tel: (416) 299-4000 x314
bradbourne@ftgcorp.com

Melinda Diebel, Vice President and CFO                                             
Firan Technology Group Corporation
Tel:(416) 299-4000 x264
melindadiebel@ftgcorp.com

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