TORONTO, April 08, 2020 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the first quarter 2020.
- Ended Q1 2020 with over $51M in total backlog. Of this, over $30M is due in Q2 2020
- Generated $3.5M in cash in Q1 and ended the quarter with $5.2M in net cash on the balance sheet
- Included in the Q1 2020 net loss was a non-cash expense to reduce the intangible asset from an acquisition in 2016 due to increased market uncertainty going forward
First Quarter Results: (three months ended Feb 28, 2020 compared with three months ended Mar 1, 2019)
|
Q1 2020
|
|
Q1 2019
|
| Sales |
$24,538,000 |
|
$25,390,000 |
|
|
|
| Gross Margin |
|
3,960,000 |
|
|
6,754,000 |
| Gross Margin (%) |
|
16.1% |
|
|
26.6% |
|
|
|
| Operating Earnings (1): |
|
242,000 |
|
|
3,318,000 |
|
|
|
| • R&D Investment |
|
1,081,000 |
|
|
1,116,000 |
| • R&D Tax Credits |
|
(172,000) |
|
|
(205,000) |
| • Foreign Exchange Loss |
|
49,000 |
|
|
156,000 |
| • Amortization of Intangibles |
|
299,000 |
|
|
271,000 |
| • Impairment of Intangibles |
|
1,145,000 |
|
|
- |
|
|
|
| Net (Loss) Earnings before Tax |
|
(2,160,000) |
|
|
1,980,000 |
|
|
|
| • Income Tax |
|
469,000 |
|
|
807,000 |
| • Non-controlling Interests |
|
(32,000) |
|
|
(45,000) |
|
|
|
| Net (Loss) Earnings After Tax |
($2,597,000) |
|
$1,218,000 |
|
|
|
| (Loss) Earnings per share |
|
|
| - basic |
($0.11) |
|
$0.05 |
| - diluted |
($0.11) |
|
$0.05 |
|
|
|
(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 Q1 2020 that continue to improve the Corporation and position it for the future, including:
- Continued to receive orders across FTG at consistent historical rates through Q1
- Through ongoing improvements in working capital management and some significant advance payments on future orders, improved FTG’s net cash position to $5.2M
- Went live with FTG standard ERP System in Circuits Fredericksburg site
- Achieved AS9100 certification of FTG Circuits Fredericksburg site
- Maintained a number of other certifications across FTG through regularly planned external audits
For FTG, overall sales decreased by $0.9M or 3.4% from $25.4M in Q1 2019 to $24.5M in Q1 2020. Circuits Fredericksburg contributed $2.1M in Q1 2020, compared to $0 last year. Impacting sales in Q1 2020 was a $2M drop in simulator related sales compared to Q1 last year. Also negatively impacting sales in Q1 2020 was the shutdown of FTG’s operations in Tianjin, China for the month of February.
The Circuits Segment sales were up $1.3M, or 8.2% in Q1 2020 versus Q1 2019. Included in Q1 2020 were sales of $2.1M from Circuits Fredericksburg, acquired in July last year. The drop in sales at existing sites was at FTG Circuits Toronto. The lower activity was not due to a reduction in orders, and activity recovered towards the end of Q1.
For the Aerospace segment, sales in Q1 2020 were $8.1M compared to $10.2M in Q1 last year. Simulator related sales were down $2M in Q1 2020, which impacted all three sites. Simulator revenues are expected to rebound in the second half of 2020 as the backlog in simulator work at the end of Q1 2020 was over $8.0M.
Gross margins in Q1 2020 were $4.0M or 16.1% compared to $6.8M or 26.6% in Q1 2019. The lower sales hurt margins in Q1 this year, as did the overhead costs of the Circuits Fredericksburg facility.
Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for Q1 2020 was $1.0M compared to $3.3M in Q1 2019.
The following table reconciles EBITDA(2) to the net earnings for the trailing 12 months as at Feb 28, 2020.
|
Trailing 12
Months |
|
|
| Net earnings to equity holders of FTG |
|
2,243,000 |
| Add: |
|
| Interest, accretion |
|
391,000 |
| Income taxes |
|
3,408,000 |
| Depreciation/Amortization/Stock Comp./Impairment |
|
6,881,000 |
|
|
| EBITDA |
$12,923,000 |
(2) EBITDA are not measures recognized under International Financial Reporting Standards (“IFRS”). Management believes that these measures are 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 loss after tax at FTG in Q1 2020 was $2.6M or ($0.11) per diluted share compared to a net profit of $1.2M or $0.05 per diluted share in 2018. Net profit after tax in Q1 2020 was impacted by the lower sales and by the write down of the intangible asset related to the acquisition of the Teledyne PCT business in 2016, due to increased uncertainty in the aerospace and defense market.
The Circuits segment net earnings before corporate and interest and other costs was $0.8M in Q1 2020 compared to $2.3M in Q1 2019.
The Aerospace net earnings before corporate and interest and other costs in the quarter was ($0.8M) in Q1 2020 (excluding the non-cash intangible asset expense) versus $0.6M in Q1 2019. The drop is due primarily to reduced sales from the simulator related market and the shutdown of Aerospace Tianjin in February due to the COVID-19 pandemic.
As at February 28, 2020, the Corporation’s net working capital was $25.8M, compared to $28.6M at year-end in 2019. All debt is classified as current as the bank facility agreement currently in place expires in less than 12 months. Activity is underway to obtain a new bank facility in 2020.
Net cash at the end of Q1 2020 was $5.2M compared to net cash of $2.2M at the end of 2019.
The Corporation will host a live conference call on Thursday April 9, 2020 at 8:30am (Eastern) to discuss the results of Q1 2020.
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 May 9, 2020 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 7695678.
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, Fredericksburg, Virginia 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
Jamie Crichton, Vice President and CFO
Firan Technology Group Corporation
Tel:(416) 299-4000 x264
jamiecrichton@ftgcorp.com
Additional information can be found at the Corporation’s website www.ftgcorp.com
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
|
| Interim Condensed Consolidated Statements of Financial Position |
|
|
|
|
|
|
|
| (Unaudited) |
|
February 28, |
November 30, |
| (in thousands of Canadian dollars) |
|
2020 |
|
|
2019 |
|
| ASSETS |
|
|
|
| Current assets |
|
|
| Cash |
|
|
$ |
10,152 |
|
$ |
7,647 |
|
| Accounts receivable |
|
19,199 |
|
|
21,085 |
|
| Contract assets |
|
556 |
|
|
432 |
|
| Income tax receivable |
|
247 |
|
|
- |
|
| Inventories |
|
|
20,489 |
|
|
21,990 |
|
| Prepaid expenses |
|
1,476 |
|
|
1,770 |
|
|
|
|
|
|
52,119 |
|
|
52,924 |
|
| Non-current assets |
|
|
| Plant and equipment, net |
|
13,923 |
|
|
13,830 |
|
| Right-of-use assets |
|
13,434 |
|
|
- |
|
| Deferred income tax assets |
|
724 |
|
|
724 |
|
| Investment tax credits receivable |
|
2,983 |
|
|
3,035 |
|
| Deferred development costs |
|
267 |
|
|
279 |
|
| Intangible assets and other assets, net |
|
1,152 |
|
|
2,585 |
|
| Total assets |
|
$ |
84,602 |
|
$ |
73,377 |
|
| LIABILITIES AND EQUITY |
|
|
| Current liabilities |
|
|
| Accounts payable and accrued liabilities |
$ |
14,566 |
|
$ |
17,104 |
|
| Provisions |
|
|
920 |
|
|
946 |
|
| Contract liabilities |
|
4,154 |
|
|
216 |
|
| Bank debt |
|
|
4,966 |
|
|
5,416 |
|
| Current portion of lease liabilities |
|
1,729 |
|
|
- |
|
| Income tax payable |
|
- |
|
|
639 |
|
|
|
|
|
|
26,335 |
|
|
24,321 |
|
| Non-current liabilities |
|
|
| Lease liabilities |
|
11,792 |
|
|
- |
|
| Deferred tax payable |
|
1,332 |
|
|
1,297 |
|
| Total liabilities |
|
39,459 |
|
|
25,618 |
|
| Equity |
|
|
|
| Retained earnings |
$ |
15,148 |
|
$ |
17,745 |
|
| Accumulated other comprehensive loss |
|
(1,610 |
) |
|
(1,554 |
) |
|
|
|
|
|
13,538 |
|
|
16,191 |
|
| Share capital |
|
|
|
Common Shares |
|
19,323 |
|
|
19,323 |
|
|
Preferred Shares |
|
2,218 |
|
|
2,218 |
|
| Contributed surplus |
|
8,984 |
|
|
8,933 |
|
| Total equity attributable to FTG's shareholders |
|
44,063 |
|
|
46,665 |
|
| Non-controlling interest |
|
1,080 |
|
|
1,094 |
|
| Total equity |
|
45,143 |
|
|
47,759 |
|
| Total liabilities and equity |
$ |
84,602 |
|
$ |
73,377 |
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
|
|
| Interim Condensed Consolidated Statements of (Loss) Earnings |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
| (Unaudited) |
February 28, |
|
March 1, |
| (in thousands of Canadian dollars, except per share amounts) |
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
| Sales |
|
$ |
24,538 |
|
|
$ |
25,390 |
|
|
|
|
|
|
|
| Cost of sales |
|
|
|
|
Cost of sales |
|
19,199 |
|
|
|
17,808 |
|
|
Depreciation of plant and equipment |
|
994 |
|
|
|
828 |
|
|
Depreciation of right-of-use assets |
|
385 |
|
|
|
- |
|
| Total cost of sales |
|
20,578 |
|
|
|
18,636 |
|
| Gross margin |
|
3,960 |
|
|
|
6,754 |
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
Selling, general and administrative |
|
3,431 |
|
|
|
3,242 |
|
|
Research and development costs |
|
1,081 |
|
|
|
1,116 |
|
|
Recovery of investment tax credits |
|
(172 |
) |
|
|
(205 |
) |
|
Depreciation of plant and equipment |
|
46 |
|
|
|
43 |
|
|
Depreciation of right-of-use assets |
|
12 |
|
|
|
- |
|
|
Amortization of intangible assets |
|
299 |
|
|
|
271 |
|
|
Interest expense on bank debt, net |
|
41 |
|
|
|
77 |
|
|
Accretion on lease liabilities |
|
137 |
|
|
|
- |
|
|
Stock based compensation |
|
51 |
|
|
|
74 |
|
|
Foreign exchange loss |
|
49 |
|
|
|
156 |
|
|
Impairment of intangible assets |
|
1,145 |
|
|
|
- |
|
| Total expenses |
|
6,120 |
|
|
|
4,774 |
|
|
|
|
|
|
|
| (Loss) earnings before income taxes |
|
(2,160 |
) |
|
|
1,980 |
|
|
|
|
|
|
|
| Current income tax expense |
|
434 |
|
|
|
777 |
|
| Deferred income tax expense |
|
35 |
|
|
|
30 |
|
| Total income tax expense |
|
469 |
|
|
|
807 |
|
|
|
|
|
|
|
| Net (loss) earnings |
$ |
(2,629 |
) |
|
$ |
1,173 |
|
|
|
|
|
|
|
| Attributable to: |
|
|
|
| Non-controlling interest |
$ |
(32 |
) |
|
$ |
(45 |
) |
| Equity holders of FTG |
$ |
(2,597 |
) |
|
$ |
1,218 |
|
|
|
|
|
|
|
| (Loss) earnings per share, attributable to the equity holders of FTG |
|
|
|
|
Basic |
$ |
(0.11 |
) |
|
$ |
0.05 |
|
|
Diluted |
$ |
(0.11 |
) |
|
$ |
0.05 |
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
|
|
|
| Interim Condensed Consolidated Statements of Comprehensive (Loss) Income |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
| (Unaudited) |
|
February 28, |
|
March 1, |
| (in thousands of Canadian dollars) |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
| Net (loss) earnings |
|
$ |
(2,629 |
) |
|
$ |
1,173 |
|
|
|
|
|
|
|
|
| Other comprehensive loss to be reclassified to net (loss) earnings |
|
|
|
|
|
in subsequent periods: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in foreign currency translation adjustments |
|
|
248 |
|
|
|
(12 |
) |
|
Change in net unrealized loss on derivative financial instruments |
|
|
|
|
|
|
designated as cash flow hedges |
|
|
(382 |
) |
|
|
(67 |
) |
|
Change in tax impact |
|
|
96 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(38 |
) |
|
|
(62 |
) |
|
|
|
|
|
|
|
| Total comprehensive (loss) income |
|
$ |
(2,667 |
) |
|
$ |
1,111 |
|
|
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
| Equity holders of FTG |
|
$ |
(2,653 |
) |
|
$ |
1,116 |
|
| Non-controlling interest |
|
$ |
(14 |
) |
|
$ |
(5 |
) |
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
|
|
|
|
|
| Interim Condensed Consolidated Statements of Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended February 28, 2020 |
|
|
Attributed to the equity holders of FTG |
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
other |
|
Non- |
|
| (Unaudited) |
Common |
Preferred |
Retained |
Contributed |
comprehensive
|
|
|
|
controlling |
Total |
| (in thousands of Canadian dollars) |
shares |
shares |
earnings |
surplus |
loss |
Total |
interest |
equity |
| Balance, November 30, 2019 |
$ |
19,323 |
$ |
2,218 |
$ |
17,745 |
|
$ |
8,933 |
$ |
(1,554 |
) |
$ |
46,665 |
|
$ |
1,094 |
|
$ |
47,759 |
|
| Net (loss) earnings |
|
- |
|
- |
|
(2,597 |
) |
|
- |
|
- |
|
|
(2,597 |
) |
|
(32 |
) |
|
(2,629 |
) |
| Stock-based compensation |
|
- |
|
- |
|
- |
|
|
51 |
|
- |
|
|
51 |
|
|
- |
|
|
51 |
|
| Change in foreign currency translation adjustments |
|
|
- |
|
- |
|
- |
|
|
- |
|
230 |
|
|
230 |
|
|
18 |
|
|
248 |
|
| Change in net unrealized loss on derivative financial |
|
|
|
|
|
|
|
| instruments designated as cash flow hedges, net of |
|
|
|
|
|
|
|
| tax impact |
|
- |
|
- |
|
- |
|
|
- |
|
(286 |
) |
|
(286 |
) |
|
- |
|
|
(286 |
) |
| Balance, February 28, 2020 |
$ |
19,323 |
$ |
2,218 |
$ |
15,148 |
|
$ |
8,984 |
$ |
(1,610 |
) |
$ |
44,063 |
|
$ |
1,080 |
|
$ |
45,143 |
|
|
|
|
|
|
|
|
|
|
|
| Three months ended March 1, 2019 |
|
|
Attributed to the equity holders of FTG |
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
Other |
|
Non- |
|
| (Unaudited) |
Common |
Preferred |
Retained |
Contributed |
Comprehensive |
|
controlling |
Total |
| (in thousands of Canadian dollars) |
shares |
shares |
earnings |
surplus |
loss |
Total |
interest |
equity |
| Balance, November 30, 2018 |
$ |
19,323 |
$ |
2,218 |
$ |
11,687 |
|
$ |
8,672 |
$ |
(774 |
) |
$ |
41,126 |
|
$ |
1,181 |
|
$ |
42,307 |
|
| Net earnings (loss) |
|
- |
|
- |
|
1,218 |
|
|
- |
|
- |
|
|
1,218 |
|
|
(45 |
) |
|
1,173 |
|
| Stock-based compensation |
|
- |
|
- |
|
- |
|
|
74 |
|
- |
|
|
74 |
|
|
- |
|
|
74 |
|
| Foreign currency translation adjustments |
|
- |
|
- |
|
- |
|
|
- |
|
(52 |
) |
|
(52 |
) |
|
40 |
|
|
(12 |
) |
| Net unrealized loss on derivative financial |
|
|
|
|
|
|
|
|
| instruments designated as cash flow hedges |
|
|
|
|
|
|
|
|
| net of tax impact |
|
- |
|
- |
|
- |
|
|
- |
|
(50 |
) |
|
(50 |
) |
|
- |
|
|
(50 |
) |
| Balance, March 1, 2019 |
$ |
19,323 |
$ |
2,218 |
$ |
12,905 |
|
$ |
8,746 |
$ |
(876 |
) |
$ |
42,316 |
|
$ |
1,176 |
|
$ |
43,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
|
|
|
| Interim Condensed Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
| (Unaudited) |
|
February 28, |
|
March 1, |
| (in thousands of Canadian dollars) |
|
|
2020 |
|
|
|
2019 |
|
| Net inflow (outflow) of cash related to the following: |
|
|
|
|
| Operating activities |
|
|
|
|
| Net (loss) earnings |
|
$ |
(2,629 |
) |
|
$ |
1,173 |
|
| Items not affecting cash: |
|
|
|
|
|
Stock-based compensation |
|
|
51 |
|
|
|
74 |
|
|
Loss on disposal of plant and equipment |
|
|
6 |
|
|
|
7 |
|
|
Effect of exchange rates on US dollar debt |
|
|
53 |
|
|
|
(14 |
) |
|
Depreciation of plant and equipment |
|
|
1,040 |
|
|
|
871 |
|
|
Depreciation of right-of-use assets |
|
|
397 |
|
|
|
- |
|
|
Amortization of intangible assets |
|
|
299 |
|
|
|
271 |
|
|
Amortization of deferred financing costs |
|
|
3 |
|
|
|
3 |
|
|
Impairment of intangible assets |
|
|
1,145 |
|
|
|
- |
|
|
Investment tax credits/deferred income taxes |
|
|
87 |
|
|
|
346 |
|
|
Accretion on lease liabilities |
|
|
137 |
|
|
|
- |
|
|
Increase in net unrealized loss on derivative financial instruments |
|
|
|
|
|
|
designated as cash flow hedges, net of taxes |
|
|
(286 |
) |
|
|
(50 |
) |
| Net change in non-cash operating working capital |
|
|
4,022 |
|
|
|
(4,087 |
) |
|
|
|
|
|
|
4,325 |
|
|
|
(1,406 |
) |
| Investing activities |
|
|
|
|
|
Additions to plant and equipment |
|
|
(1,046 |
) |
|
|
(391 |
) |
|
Recovery (additions) of contract and other costs |
|
|
6 |
|
|
|
(18 |
) |
|
|
|
|
|
|
(1,040 |
) |
|
|
(409 |
) |
| Net cash flow from (used in) operating and investing activities |
|
|
3,285 |
|
|
|
(1,815 |
) |
| Financing activities |
|
|
|
|
|
Increase in bank indebtedness |
|
|
- |
|
|
|
995 |
|
|
Repayments of bank debt |
|
|
(503 |
) |
|
|
(509 |
) |
|
Lease liability payments |
|
|
(446 |
) |
|
|
- |
|
|
|
|
|
|
|
(949 |
) |
|
|
486 |
|
| Effects of foreign exchange rate changes on cash flow |
|
|
169 |
|
|
|
(71 |
) |
| Net increase (decrease) in cash flow |
|
|
2,505 |
|
|
|
(1,400 |
) |
| Cash, beginning of the period |
|
|
7,647 |
|
|
|
5,026 |
|
| Cash, end of period |
|
$ |
10,152 |
|
|
$ |
3,626 |
|
|
|
|
|
|
|
|
|
| Disclosure of cash payments |
|
|
|
|
|
Payment for interest |
|
$ |
55 |
|
|
$ |
81 |
|
|
Payments for income taxes |
|
$ |
979 |
|
|
$ |
738 |
|
|
|
|
|
|
|
|
|
