TORONTO, ONTARIO--(Marketwired - April 9, 2015) - Firan Technology Group Corporation (TSX:FTG) today announced financial results for the first quarter of 2015.
- Booked over $20M in new orders in the quarter
- Grew Q1 2015 sales by 16% over Q1 2014
- Circuits segment grew by 22% in the quarter, with FTG Printronics in China growing by 280%
- R&D spending exceeded 6% of sales
- Profit increased by 190% in Q1 2015, compared to Q1 2014
- Earnings of $1.1M before one-time costs related to unexpected program cancellation and inventory adjustment and increased net R&D for development of common controller card/power card for cockpit control assemblies.
- Paid down net debt by $0.5M, after investing $1.0M in net R&D and $250K in capital equipment.
"The first quarter of 2015 saw continued progress in key initiatives across the company including our development cockpit control assembly programs in China and related R&D efforts that depressed earnings slightly but continue to position the Company for future long term success," stated Brad Bourne, President and Chief Executive Officer. He added, "Our established Circuits facilities both performed well in the quarter even with a couple of one-time costs related to a program cancellation and inventory adjustment while our Circuits Joint Venture in China began to see revenue growth resulting from the customer qualification activities over the past 18 months."
First Quarter Results: (three months ended February 27, 2015 compared with three months ended February 28, 2014)
| |
Q1 2015 |
|
Q1 2014 |
|
| |
|
|
|
|
| Sales |
$ |
16,307,000 |
|
$ |
13,989,000 |
|
| |
|
|
|
|
|
|
| Gross Margin |
|
3,069,000 |
|
|
3,124,000 |
|
| Gross Margin (%) |
|
18.8 |
% |
|
22.3 |
% |
| |
|
|
|
|
|
|
| Operating Earnings (1): |
|
1,510,000 |
|
|
1,004,000 |
|
| |
|
|
|
|
|
|
| |
• Net R&D Investment |
|
1,013,000 |
|
|
777,000 |
|
| |
|
|
|
|
|
|
|
| |
Net Earnings before Tax |
|
497,000 |
|
|
227,000 |
|
| |
|
|
|
|
|
|
|
| |
• Tax Expense |
|
71,000 |
|
|
98,000 |
|
| |
• Non-controlling Interests |
|
4,000 |
|
|
(16,000 |
) |
| |
|
|
|
|
|
|
| Net Earnings After Tax |
$ |
422,000 |
|
$ |
145,000 |
|
| Earnings per share |
|
|
|
|
|
|
| |
- basic |
$ |
0.02 |
|
$ |
0.01 |
|
| |
- diluted |
$ |
0.02 |
|
$ |
0.01 |
|
| (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 first quarter of 2015 that continue to improve the Corporation and position it for the future, including:
- Signed Master Contract for cockpit control assemblies for C919 Heads Down Display system in China
- Signed new enterprise sourcing agreement with Rockwell Collins for the Circuits business with an estimated 15% increase in activity
- Achieved sales outside of North America of 18% of total sales
- Subsequent to quarter end, completed certification of Aerospace Toronto facility in accordance with US Department of Defense MIL-DTL-7788
- Subsequent to quarter end, completed additional certification of Circuits Toronto facility to include rigid flex technology under US Department of Defense MIL-PRF-31032 certification
For FTG, overall sales increased by $2.3M or 16.6% from $14.0M in Q1 2014 to $16.3M in Q1 2015. FTG Circuits drove the growth, aided by the new Aerospace facilities. Revenues also benefitted from the weakening of the Canadian dollar versus the US dollar which was down 11 cents or 10% in Q1 2015 versus the same quarter last year. Over 80% of FTG's revenues are denominated in US dollars.
The Circuits Segment sales were up $2.3M or 22% in Q1 2015 versus Q1 2014. Both established facilities had strong growth in the quarter.
For the Aerospace segment, sales in Q1 2015 were $3.5M compared to $3.5M in the same quarter last year. Increases at the two new facilities in Tianjin China and Chatsworth California were offset by a drop in activity in Toronto.
Gross margins in Q1 2015 were relatively flat compared to Q1 2014. In Circuits, Gross margins were up, after absorbing $0.5M in unexpected one-time costs related to a program cancellation and inventory adjustment. Gross margins in Aerospace were down due to lower sales in the Toronto facility. Also driving gross margins is total throughput which includes the change in work-in-process (WIP) and finished goods (FGI) to determine total activity in the quarter. In Q1 2015, WIP and FGI were down $0.1M as compared to being up $0.4M in Q1 2014, causing a reduction in margins this year but improving inventory turns.
Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for trailing twelve months is $5.0M, an increase from $4.7M from previous quarter.
Net profit at FTG in Q1 2015 was $0.4M compared to a net profit of $0.15M in Q1 2014. This improvement is the result of stable gross margin offset by higher R&D spending in the Aerospace business but benefiting from increased foreign exchange gains on balance sheet items due to the weakening of the Canadian dollar.
The Circuits segment net earnings before corporate and interest and other costs increased to $1.2M in Q1 2015 compared to $0.9M in Q1 2014. The Circuits joint venture in China did not have a material impact on profitability.
The Aerospace net earnings before corporate and interest and other costs decreased by $0.3M due to lower sales in the Toronto facility and increased R&D costs. Costs related to the development of the C919 cockpit assemblies of $0.12M in Q1 2015 were treated as deferred development and not expensed.
As at February 27, 2015, the Corporation's primary source of liquidity included accounts receivable of $12.6M and inventory of $10.5M. Net working capital at February 27, 2015 was $12.1M.
The Corporation will host a live conference call on Friday, April 10, 2015 at 11:30am (Eastern) to discuss the results of Q1 2015.
Anyone wishing to participate in the call should dial 416-340-2216 or 1-866-223-7781 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 April 24, 2015 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 905-694-9451 or 1-800-408-3053, pass code 3332882.
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 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.
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
|
|
|
| Interim Condensed Consolidated Balance Sheets |
|
|
|
|
| |
|
|
|
|
| (Unaudited) |
February 27, |
|
November 30, |
|
| (in thousands of Canadian dollars) |
2015 |
|
2014 |
|
| ASSETS |
|
|
|
|
| Current assets |
|
|
|
|
| Cash |
$ |
518 |
|
$ |
641 |
|
| Accounts receivable |
|
12,628 |
|
|
13,289 |
|
| Taxes receivable |
|
321 |
|
|
251 |
|
| Inventories |
|
10,510 |
|
|
10,426 |
|
| Prepaid expenses |
|
538 |
|
|
564 |
|
| |
|
24,515 |
|
|
25,171 |
|
| Non-current assets |
|
|
|
|
|
|
| Plant and equipment, net |
|
5,586 |
|
|
5,643 |
|
| Deferred income taxes |
|
2,085 |
|
|
2,145 |
|
| Intangible assets, net |
|
136 |
|
|
148 |
|
| Total assets |
$ |
32,322 |
|
$ |
33,107 |
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
| Accounts payable and accrued liabilities |
$ |
10,432 |
|
$ |
10,021 |
|
| Provisions |
|
438 |
|
|
410 |
|
| Customer deposits, net of deferred development |
|
1,418 |
|
|
1,531 |
|
| Current portion of long-term bank debt |
|
152 |
|
|
251 |
|
| |
|
12,440 |
|
|
12,213 |
|
| Non-current liabilities |
|
|
|
|
|
|
| Long-term bank debt |
|
778 |
|
|
1,232 |
|
| Subordinated loan |
|
4,303 |
|
|
4,219 |
|
| Government assistance |
|
226 |
|
|
339 |
|
| Total liabilities |
|
17,747 |
|
|
18,003 |
|
| Equity |
|
|
|
|
|
|
| Deficit |
$ |
(7,487 |
) |
$ |
(7,909 |
) |
| Accumulated other comprehensive (loss) |
|
(1,283 |
) |
|
(312 |
) |
| |
|
(8,770 |
) |
|
(8,221 |
) |
| Share capital |
|
|
|
|
|
|
| |
Common shares |
|
12,681 |
|
|
12,681 |
|
| |
Preferred shares |
|
2,218 |
|
|
2,218 |
|
| Contributed surplus |
|
8,425 |
|
|
8,411 |
|
| Total equity attributable to FTG's shareholders |
|
14,554 |
|
|
15,089 |
|
| Non-controlling interest |
|
21 |
|
|
15 |
|
| Total equity |
|
14,575 |
|
|
15,104 |
|
| Total liabilities and equity |
$ |
32,322 |
|
$ |
33,107 |
|
| |
|
|
| |
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
|
| Interim Condensed Consolidated Statements of Earnings |
|
|
| |
|
|
| |
Three months ended |
|
| (Unaudited) |
February 27, |
|
February 28, |
|
| (in thousands of Canadian dollars, except per share amounts) |
2015 |
|
2014 |
|
| |
|
|
|
|
| Sales |
$ |
16,307 |
|
$ |
13,989 |
|
| |
|
|
|
|
|
|
| Cost of sales |
|
|
|
|
|
|
| |
Cost of sales |
|
12,778 |
|
|
10,448 |
|
| |
Depreciation of plant and equipment |
|
460 |
|
|
417 |
|
| Total cost of sales |
|
13,238 |
|
|
10,865 |
|
| Gross margin |
|
3,069 |
|
|
3,124 |
|
| |
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
| |
Selling, general and administrative |
|
2,370 |
|
|
2,092 |
|
| |
Research and development costs |
|
1,262 |
|
|
847 |
|
| |
Recovery of research and development costs |
|
(249 |
) |
|
(70 |
) |
| |
Depreciation/amortization of plant and equipment and intangible assets |
|
42 |
|
|
45 |
|
| |
Interest expense on short-term debt |
|
9 |
|
|
8 |
|
| |
Interest expense on long-term debt |
|
94 |
|
|
92 |
|
| |
Foreign exchange gain |
|
(956 |
) |
|
(117 |
) |
| Total expenses |
|
2,572 |
|
|
2,897 |
|
| |
|
|
|
|
|
|
| Earnings before income taxes |
|
497 |
|
|
227 |
|
| |
|
|
|
|
|
|
| Deferred income tax expense |
|
60 |
|
|
78 |
|
| Current income tax expense |
|
11 |
|
|
20 |
|
| |
|
|
|
|
|
|
| Net earnings |
$ |
426 |
|
$ |
129 |
|
| |
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
|
|
| Non-controlling interest |
$ |
4 |
|
$ |
(16 |
) |
| Equity holders of FTG |
$ |
422 |
|
$ |
145 |
|
| |
|
|
|
|
|
|
| Earnings per share, attributable to the equity holders of FTG |
|
|
|
|
|
|
| |
Basic |
$ |
0.02 |
|
$ |
0.01 |
|
| |
Diluted |
$ |
0.02 |
|
$ |
0.01 |
|
| |
|
| |
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
| Interim Condensed Consolidated Statements of Comprehensive (Loss) |
|
| |
|
| |
Three months ended |
|
| (Unaudited) |
February 27, |
|
February 28, |
|
| (in thousands of Canadian dollars) |
2015 |
|
2014 |
|
| |
|
|
|
|
| Net earnings |
$ |
426 |
|
$ |
129 |
|
| |
|
|
|
|
|
|
| Other comprehensive (loss) to be reclassified to net earnings in subsequent years: |
|
|
|
|
|
|
| |
Foreign currency translation adjustments |
|
866 |
|
|
531 |
|
| |
Net unrealized loss on derivative financial instruments designated as cash flow hedges |
|
(1,835 |
) |
|
(748 |
) |
| |
|
(969 |
) |
|
(217 |
) |
| |
|
|
|
|
|
|
| Total comprehensive (loss) |
$ |
(543 |
) |
$ |
(88 |
) |
| |
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
|
|
| Equity holders of FTG |
$ |
(549 |
) |
$ |
(75 |
) |
| Non-controlling interest |
$ |
6 |
|
$ |
(13 |
) |
| |
|
| |
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
| Interim Condensed Consolidated Statements of Changes in Equity |
|
| |
|
| |
|
| Three months ended February 27, 2015 |
Attributed to the equity holders of FTG |
|
|
|
|
|
(in thousands of Canadian dollars) |
Common
Shares |
Preferred
Shares |
Deficit |
|
Contributed
Surplus |
Accumulated
Other
Comprehensive
(Loss) |
|
Total |
|
Non-
controlling
interest |
|
Total
equity |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, November 30, 2014 |
$ |
12,681 |
$ |
2,218 |
$ |
(7,909 |
) |
$ |
8,411 |
$ |
(312 |
) |
$ |
15,089 |
|
$ |
15 |
|
$ |
15,104 |
|
| Net earnings |
|
- |
|
- |
|
422 |
|
|
- |
|
- |
|
|
422 |
|
|
4 |
|
|
426 |
|
| Stock-based compensation |
|
- |
|
- |
|
- |
|
|
14 |
|
- |
|
|
14 |
|
|
- |
|
|
14 |
|
| Foreign currency translation adjustments |
|
- |
|
- |
|
- |
|
|
- |
|
864 |
|
|
864 |
|
|
2 |
|
|
866 |
|
| Net unrealized loss on derivative financial instruments designated as cash flow hedges |
|
- |
|
- |
|
- |
|
|
- |
|
(1,835 |
) |
|
(1,835 |
) |
|
- |
|
|
(1,835 |
) |
| Balance, February 27, 2015 |
$ |
12,681 |
$ |
2,218 |
$ |
(7,487 |
) |
$ |
8,425 |
$ |
(1,283 |
) |
$ |
14,554 |
|
$ |
21 |
|
$ |
14,575 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended February 28, 2014 |
|
Attributed to the equity holders of FTG |
|
|
| |
Common
Shares |
Preferred
Shares |
Deficit |
Contributed
Surplus |
Accumulated
Other
Comprehensive
(Loss) |
Total |
Non-
controlling
interest |
Total
equity |
| |
| (unaudited) |
| (in thousands of Canadian dollars) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, November 30, 2013 |
$ |
12,681 |
$ |
2,218 |
$ |
(10,102 |
) |
$ |
8,347 |
$ |
(249 |
) |
$ |
12,895 |
|
$ |
48 |
|
$ |
12,943 |
|
| Net earnings (loss) |
|
- |
|
- |
|
145 |
|
|
- |
|
- |
|
|
145 |
|
|
(16 |
) |
|
129 |
|
| Stock-based compensation |
|
- |
|
- |
|
- |
|
|
9 |
|
- |
|
|
9 |
|
|
- |
|
|
9 |
|
| Foreign currency translation adjustments |
|
- |
|
- |
|
- |
|
|
- |
|
528 |
|
|
528 |
|
|
3 |
|
|
531 |
|
| Net unrealized loss on derivative financial instruments designated as cash flow hedges |
|
- |
|
- |
|
- |
|
|
- |
|
(748 |
) |
|
(748 |
) |
|
- |
|
|
(748 |
) |
| Balance, February 28, 2014 |
$ |
12,681 |
$ |
2,218 |
$ |
(9,957 |
) |
$ |
8,356 |
$ |
(469 |
) |
$ |
12,829 |
|
$ |
35 |
|
$ |
12,864 |
|
| |
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
| |
|
| Interim Condensed Consolidated Statements of Cash Flows |
|
| |
Three months ended |
|
| |
February 27, |
|
February 28, |
|
| (in thousands of Canadian dollars) |
2015 |
|
2014 |
|
| Net inflow (outflow) of cash related to the following: |
|
|
|
|
| Operating activities |
|
|
|
|
| Net earnings |
$ |
426 |
|
$ |
129 |
|
| Items not affecting cash: |
|
|
|
|
|
|
| |
Non-controlling interest share of net (earnings) loss |
|
(4 |
) |
|
16 |
|
| |
Stock-based compensation |
|
14 |
|
|
9 |
|
| |
Effect of exchange rates on US dollar debt |
|
138 |
|
|
89 |
|
| |
Depreciation of plant and equipment |
|
490 |
|
|
450 |
|
| |
Amortization of intangible assets |
|
12 |
|
|
12 |
|
| |
Amortization of deferred financing costs |
|
7 |
|
|
7 |
|
| |
Deferred income tax expense |
|
60 |
|
|
78 |
|
| |
AMIS interest accretion |
|
84 |
|
|
78 |
|
| |
Amortization of government assistance |
|
(113 |
) |
|
(112 |
) |
| |
Increase in net unrealized loss on derivative financial instruments designated as cash flow hedges |
|
(1,140 |
) |
|
(343 |
) |
| Net change in non-cash operating working capital |
|
863 |
|
|
524 |
|
| |
|
837 |
|
|
937 |
|
| Investing activities |
|
|
|
|
|
|
| |
Additions to plant and equipment |
|
(242 |
) |
|
(197 |
) |
| |
|
(242 |
) |
|
(197 |
) |
| Net cash flow from operating and investing activities |
|
595 |
|
|
740 |
|
| Financing activities |
|
|
|
|
|
|
| |
Repayments of long-term bank debt |
|
(698 |
) |
|
(85 |
) |
| |
|
(698 |
) |
|
(85 |
) |
| Effects of foreign exchange rate changes on cash flow |
|
(20 |
) |
|
93 |
|
| Net decrease in cash flow |
|
(123 |
) |
|
748 |
|
| Cash, beginning of the period |
|
641 |
|
|
996 |
|
| Cash, end of period |
$ |
518 |
|
$ |
1,744 |
|
| |
|
|
|
|
|
|
| Disclosure of cash payments |
|
|
|
|
|
|
| |
Payment for interest |
$ |
20 |
|
$ |
29 |
|
| |
Payments for income taxes |
$ |
2 |
|
$ |
25 |
|