TORONTO, April 14, 2021 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the first quarter 2021.
- FTG continues to manage through the COVID-19 pandemic by focusing on three key strategies:
- FTG’s long-term market diversification strategy enables the Company to mitigate the dramatic downturn in the commercial aerospace market through its involvement in the defense market and other aerospace sectors
- FTG continues to carefully manage costs across the Company, balancing decisions on cost reductions with a goal to retain critical skills to ensure the Company is positioned for a faster recovery in the future
- FTG continues to carefully manage investments and has a stronger balance sheet than before the pandemic
- FTG was approved for an additional $1M in Canada Emergency Wage Subsidy (CEWS) in the quarter which we used to help maintain our workforce in the face of revenue reductions due to COVID-19. The funds were paid to FTG subsequent to quarter end as a result of administrative delays within the government
- FTG received forgiveness of $1.3M in US Paycheck Protection Program funds in the United States as a result of FTG maintaining our workforce for the required period of time
- FTG achieved $14.5M EBITDA for the trailing 12 months, the highest since mid 2019
- FTG increased our net cash on the balance sheet to $13.4M, an increase of $0.8M in Q1 2021
First Quarter Results : (three months ended Mar 5, 2021 compared with three months ended Feb 28, 2020)
|
|
Q1 2021 |
|
|
Q1 2020 |
|
| Sales |
|
$18,970,000 |
|
|
$24,538,000 |
|
|
|
|
| Gross Margin |
|
3,662,000 |
|
|
3,960,000 |
|
| Gross Margin (%) |
|
19.3 |
% |
|
16.1 |
% |
|
|
|
| Operating Earnings (1) : |
|
686,000 |
|
|
242,000 |
|
|
|
|
| • Net R&D Investment |
|
1,382,000 |
|
|
1,081,000 |
|
| • R&D Tax Credits |
|
(127,000 |
) |
|
(172,000 |
) |
| • Foreign Exchange Loss |
|
618,000 |
|
|
49,000 |
|
| • Amortization of Intangibles |
|
89,000 |
|
|
299,000 |
|
| • Forgiveness of debt |
|
(1,336,000 |
) |
|
- |
|
| • Impairment of Intangibles |
|
- |
|
|
1,145,000 |
|
|
|
|
| Net (Loss) Earnings before Tax |
|
60,000 |
|
|
(2,160,000 |
) |
|
|
|
| • Income Tax |
|
487,000 |
|
|
469,000 |
|
| • Non-controlling Interests |
|
(27,000 |
) |
|
(32,000 |
) |
|
|
|
| Net (Loss) Earnings After Tax |
|
($400,000 |
) |
|
($2,597,000 |
) |
|
|
|
| (Loss) Earnings per share |
|
|
| - basic |
|
($0.02 |
) |
|
($0.11 |
) |
| - diluted |
|
($0.02 |
) |
|
($0.11 |
) |
| (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 2021 that continue to improve the Corporation and position it for the future, including:
- Achieved a 0.96:1 book-to-bill ratio for Q1 2021 and increased bookings by 11% compared to Q4 2020
- Received a new development contract from a major Tier 1 Aerospace company for a family of cockpit assemblies that leads to significant future revenues in 2022 and beyond
- Received a significant new customer approval from a major Tier 1 Aerospace company for our Aerospace Tianjin facility opening up significant new revenue opportunities
- Received a new customer approval from a major Airframe company for our Aerospace Toronto and Aerospace Tianjin facilities opening up significant new revenue opportunities and first production parts were shipped within the quarter
- Continued efforts to pivot towards the defense market and have substantially completed qualification/approval at 5 new customers for our sites in both Canada and the US Supported customers’ efforts to begin to re-shore some procurement of aerospace printed circuit boards in support of new US regulations
- Installed Averatek semi-additive circuit board manufacturing equipment in our Circuits Fredericksburg facility and will begin process development in Q2
- Was approved for an additional $1M in Canada Emergency Wage Subsidy (CEWS) which we used to help maintain our workforce in the face of revenue reductions due to COVID-19 however receipt of the funding was delayed until after the end of Q1 due to administrative delays within the government
- Received forgiveness of $1.3M in PPP loans in the US in the quarter as we achieved the requirements for forgiveness under that program
- Managed cost by extending Christmas holiday shutdowns at sites most impacted by the drop in commercial aerospace activities
Overall for FTG, sales decreased by $5.6M or 23% from $24.5M in Q1 2020 to $19M in Q1 2020. The COVID-19 pandemic has negatively impacted commercial aerospace activity and this impacted FTG’s sites predominantly focused on this market, which include Circuits Toronto and the facilities in China.
The Circuits Segment sales in Q1 2021 were down $4.5M, or 27% in Q1 2021 versus Q1 2020. All sites were down but the largest decline was seen in the Circuits Toronto plant which is more heavily exposed to the Commercial Aerospace market. Circuits Chatsworth had a serious COVID-19 event in December and January, and this combined with organizational transitions to strengthen the management team, hurt production and shipments in the quarter.
For the Aerospace Segment, sales in Q1 2021 were $7.0M compared to $8.1M in Q1 last year, a decrease of $1.1M or 14%. Simulator related sales increased by $1.3M in Q1 2021 compared to the same quarter last year, helping to mitigate the downturn in the commercial aerospace market. The Aerospace Tianjin site was down the most at it is exclusively focused on commercial aerospace.
Gross margins in Q1 2021 were $3.7M or 19.3% compared to $4.0M or 16.1% in Q1 2020. The lower sales impacted the overall margin. The Canadian Emergency Wage Subsidy added $0.9M to gross margin or 4.7 percentage points.
Trailing twelve month (TTM) Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG was $14.5M. Lower sales and the operational challenges in Circuits Chatsworth, were offset by wage subsidies in Canada and the PPP forgiveness in the US.
The following table reconciles EBITDA ( 2 ) to the net earnings for the trailing 12 months as at March 5, 2021.
|
Trailing 12 |
|
|
Months |
|
|
|
|
| Net earnings to equity holders of FTG |
3,587,000 |
|
| Add: |
|
|
| Interest, accretion |
754,000 |
|
| Income taxes |
3,402,000 |
|
| Depreciation/Amortization &Stock Comp |
6,767,000 |
|
|
|
|
| EBITDA |
$14,510,000 |
|
| (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 2021 was $0.4M or $0.02 per diluted share compared to a net loss of $2.6M or $0.11 per diluted share in Q1 2020. Revenues were reduced due to the decline in the Commercial Aerospace market as a result of the COVID-19 pandemic. The impairment of intangible assets in Q1 2020 reduced earnings by $1.1M compared to nil in Q1 2021. The CEWS funding in Canada and the PPP forgiveness in the US in Q1 2021 increased earnings by $2.3M. The COVID-19 event and the organizational transitions in Chatsworth negatively impacted earnings in Q1 2021.
The Circuits Segment net earnings before corporate and interest and other costs was $0.6M in Q1 2021 compared to $0.7M in Q1 2020. The lower sales was the most significant impact on the segment profitability offset by CEWS funding and PPP forgiveness. The COVID-19 event in Chatsworth and the transitions in the management team negatively impacted that site’s results in Q1 2021.
The Aerospace net earnings before corporate and interest and other costs increased to $0.2M in Q1 2021 from a loss of $2.0M in Q1 2020. Increased activity in the simulator related business, improved overall operating performance and PPP forgiveness of $0.7M were partially offset by reduced activity in commercial Aerospace. The impairment of the intangible asset in Q1 2020 reduced earnings by $1.1M in that quarter.
As at March 5, 2021, the Corporation’s net working capital was $39.6M, compared to $39.4M at year-end in 2020.
FTG ended Q1 2021 with $13.4M in net cash as compared to $12.6M at the end of 2020. Cashflow would have been $1M higher in the quarter if the CEWS funding had been received before the end of the quarter.
The Corporation will host a live conference call on Thursday, April 15, 2021 at 8:30am (Eastern) to discuss the results of the first quarter 2021.
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. Conference ID is 8719895. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until May 15, 2021 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 8719895.
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 and repairs 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) |
March 5, |
November 30, |
|
| (in thousands of Canadian dollars) |
2021 |
2020 |
|
| ASSETS |
|
|
|
| Current assets |
|
|
|
| Cash and cash equivalents |
$ |
18,073 |
$ |
19,032 |
|
| Accounts receivable |
|
13,257 |
|
16,795 |
|
| Contract assets |
|
906 |
|
985 |
|
| Inventories |
|
18,833 |
|
19,304 |
|
| Prepaid expenses and other |
|
5,071 |
|
3,363 |
|
|
|
56,140 |
|
59,479 |
|
| Non-current assets |
|
|
|
| Plant and equipment, net |
|
11,768 |
|
12,640 |
|
| Right-of-use assets |
|
11,615 |
|
12,130 |
|
| Investment tax credits recoverable |
|
1,012 |
|
1,359 |
|
| Intangible and other assets, net |
|
957 |
|
1,068 |
|
| Total assets |
$ |
81,492 |
$ |
86,676 |
|
| LIABILITIES AND EQUITY |
|
|
|
| Current liabilities |
|
|
|
| Accounts payable and accrued liabilities |
$ |
10,808 |
$ |
13,904 |
|
| Provisions |
|
835 |
|
885 |
|
| Contract liabilities |
|
477 |
|
388 |
|
| Current portion of bank debt |
|
2,300 |
|
2,931 |
|
| Current portion of lease liabilities |
|
1,785 |
|
1,810 |
|
| Income tax payable |
|
362 |
|
155 |
|
|
|
16,567 |
|
20,073 |
|
| Non-current liabilities |
|
|
|
| Bank debt |
|
2,343 |
|
3,464 |
|
| Lease liabilities |
|
10,238 |
|
10,659 |
|
| Deferred tax payable |
|
1,076 |
|
1,192 |
|
| Total liabilities |
|
30,224 |
|
35,388 |
|
| Equity |
|
|
|
| Retained earnings |
$ |
18,735 |
$ |
19,135 |
|
| Accumulated other comprehensive income |
|
1,336 |
|
958 |
|
|
|
20,071 |
|
20,093 |
|
| Share capital |
|
|
|
| Common Shares |
|
21,881 |
|
21,881 |
|
| Contributed surplus |
|
8,343 |
|
8,303 |
|
| Total equity attributable to FTG's shareholders |
|
50,295 |
|
50,277 |
|
| Non-controlling interest |
|
973 |
|
1,011 |
|
| Total equity |
|
51,268 |
|
51,288 |
|
| Total liabilities and equity |
$ |
81,492 |
$ |
86,676 |
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
| Interim Condensed Consolidated Statements of Loss |
|
|
Three months ended |
|
| (Unaudited) |
March 5, |
|
|
February 28, |
|
| (in thousands of Canadian dollars, except per share amounts) |
2021 |
|
|
2020 |
|
|
|
|
|
| Sales |
$ |
18,970 |
|
|
$ |
24,538 |
|
|
|
|
|
| Cost of sales |
|
|
|
| Cost of sales |
|
13,865 |
|
|
|
19,199 |
|
| Depreciation of plant and equipment |
|
1,077 |
|
|
|
994 |
|
| Depreciation of right-of-use assets |
|
366 |
|
|
|
385 |
|
| Total cost of sales |
|
15,308 |
|
|
|
20,578 |
|
| Gross margin |
|
3,662 |
|
|
|
3,960 |
|
|
|
|
|
| Expenses |
|
|
|
| Selling, general and administrative |
|
2,691 |
|
|
|
3,431 |
|
| Research and development costs |
|
1,382 |
|
|
|
1,081 |
|
| Recovery of investment tax credits |
|
(127 |
) |
|
|
(172 |
) |
| Depreciation of plant and equipment |
|
63 |
|
|
|
46 |
|
| Depreciation of right-of-use assets |
|
17 |
|
|
|
12 |
|
| Amortization of intangible assets |
|
89 |
|
|
|
299 |
|
| Interest expense on bank debt, net |
|
39 |
|
|
|
41 |
|
| Accretion on lease liabilities |
|
126 |
|
|
|
137 |
|
| Stock based compensation |
|
40 |
|
|
|
51 |
|
| Foreign exchange loss |
|
618 |
|
|
|
49 |
|
| Forgiveness of debt |
|
(1,336 |
) |
|
|
- |
|
| Impairment of intangible assets |
|
- |
|
|
|
1,145 |
|
| Total expenses |
|
3,602 |
|
|
|
6,120 |
|
|
|
|
|
| Earnings before income taxes |
|
60 |
|
|
|
(2,160 |
) |
|
|
|
|
| Current income tax expense |
|
461 |
|
|
|
434 |
|
| Deferred income tax expense |
|
26 |
|
|
|
35 |
|
| Total income tax expense |
|
487 |
|
|
|
469 |
|
|
|
|
|
| Net loss |
$ |
(427 |
) |
|
$ |
(2,629 |
) |
|
|
|
|
| Attributable to: |
|
|
|
| Non-controlling interest |
$ |
(27 |
) |
|
$ |
(32 |
) |
| Equity holders of FTG |
$ |
(400 |
) |
|
$ |
(2,597 |
) |
|
|
|
|
| Loss per share, attributable to the equity holders of FTG |
|
|
|
| Basic |
$ |
(0.02 |
) |
|
$ |
(0.11 |
) |
| Diluted |
$ |
(0.02 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
| Interim Condensed Consolidated Statements of Comprehensive Loss |
|
|
Three months ended |
|
| (Unaudited) |
March 5, |
|
|
February 28, |
|
| (in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
|
|
|
|
| Net loss |
$ |
(427 |
) |
|
$ |
(2,629 |
) |
|
|
|
|
| Other comprehensive earnings (loss) to be reclassified to |
|
|
|
| net earnings (loss) in subsequent periods: |
|
|
|
|
|
|
|
| Change in foreign currency translation adjustments |
|
(428 |
) |
|
|
248 |
|
| Net gain (loss) on valuation of derivative financial instruments |
|
|
|
| designated as cash flow hedges |
|
1,060 |
|
|
|
(382 |
) |
| Deferred income taxes |
|
(265 |
) |
|
|
96 |
|
|
|
|
|
|
|
367 |
|
|
|
(38 |
) |
|
|
|
|
| Total comprehensive loss |
$ |
(60 |
) |
|
$ |
(2,667 |
) |
|
|
|
|
| Attributable to: |
|
|
|
| Equity holders of FTG |
$ |
(22 |
) |
|
$ |
(2,653 |
) |
| Non-controlling interest |
$ |
(38 |
) |
|
$ |
(14 |
) |
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
| Interim Condensed Consolidated Statements of Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended March 5, 2021 |
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 |
income |
Total |
interest |
equity |
| Balance, November 30, 2020 |
$ |
21,881 |
$ |
- |
$ |
19,135 |
|
$ |
8,303 |
$ |
958 |
|
$ |
50,277 |
|
$ |
1,011 |
|
$ |
51,288 |
|
| Net loss |
|
- |
|
- |
|
(400 |
) |
|
- |
|
- |
|
|
(400 |
) |
|
(27 |
) |
|
(427 |
) |
| Stock-based compensation |
|
- |
|
- |
|
- |
|
|
40 |
|
- |
|
|
40 |
|
|
- |
|
|
40 |
|
| Other comprehensive income (loss) |
|
- |
|
- |
|
- |
|
|
- |
|
378 |
|
|
378 |
|
|
(11 |
) |
|
367 |
|
| Balance, March 5, 2021 |
$ |
21,881 |
$ |
- |
$ |
18,735 |
|
$ |
8,343 |
$ |
1,336 |
|
$ |
50,295 |
|
$ |
973 |
|
$ |
51,268 |
|
|
|
|
|
|
|
|
|
|
| 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 |
|
- |
|
- |
|
(2,597 |
) |
|
- |
|
- |
|
|
(2,597 |
) |
|
(32 |
) |
|
(2,629 |
) |
| Stock-based compensation |
|
- |
|
- |
|
- |
|
|
51 |
|
- |
|
|
51 |
|
|
- |
|
|
51 |
|
| Other comprehensive income (loss) |
|
- |
|
- |
|
- |
|
|
- |
|
(56 |
) |
|
(56 |
) |
|
18 |
|
|
(38 |
) |
| Balance, February 28, 2020 |
$ |
19,323 |
$ |
2,218 |
$ |
15,148 |
|
$ |
8,984 |
$ |
(1,610 |
) |
$ |
44,063 |
|
$ |
1,080 |
|
$ |
45,143 |
|
|
|
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
| Interim Condensed Consolidated Statements of Cash Flows |
|
|
Three months ended |
|
| (Unaudited) |
March 5, |
|
|
February 28, |
|
| (in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
| Net inflow (outflow) of cash related to the following: |
|
|
|
| Operating activities |
|
|
|
| Net loss |
$ |
(427 |
) |
|
$ |
(2,629 |
) |
| Items not affecting cash and cash equivalents: |
|
|
|
| Stock-based compensation |
|
40 |
|
|
|
51 |
|
| Loss on disposal of plant and equipment |
|
1 |
|
|
|
6 |
|
| Effect of exchange rates on U.S. dollar bank debt |
|
(189 |
) |
|
|
53 |
|
| Depreciation of plant and equipment |
|
1,140 |
|
|
|
1,040 |
|
| Depreciation of right-of-use assets |
|
383 |
|
|
|
397 |
|
| Amortization of intangible assets |
|
89 |
|
|
|
299 |
|
| Amortization, other |
|
12 |
|
|
|
3 |
|
| Impairment of intangible assets |
|
- |
|
|
|
1,145 |
|
| Investment tax credits/deferred income taxes |
|
231 |
|
|
|
87 |
|
| Accretion on lease liabilities |
|
126 |
|
|
|
137 |
|
| Forgiveness of debt |
|
(1,336 |
) |
|
|
- |
|
| Net gain (loss) on valuation of derivative financial instruments |
|
|
|
| designated as cash flow hedges, net of taxes |
|
795 |
|
|
|
(286 |
) |
| Net change in non-cash operating working capital |
|
(465 |
) |
|
|
4,022 |
|
|
|
400 |
|
|
|
4,325 |
|
| Investing activities |
|
|
|
| Additions to plant and equipment |
|
(378 |
) |
|
|
(1,046 |
) |
| Recovery of contract and other costs |
|
10 |
|
|
|
6 |
|
| Additions to deferred financing costs |
|
(8 |
) |
|
|
- |
|
|
|
(376 |
) |
|
|
(1,040 |
) |
| Net cash flow from operating and investing activities |
|
24 |
|
|
|
3,285 |
|
| Financing activities |
|
|
|
| Repayments of bank debt |
|
(232 |
) |
|
|
(503 |
) |
| Lease liability payments |
|
(452 |
) |
|
|
(446 |
) |
|
|
(684 |
) |
|
|
(949 |
) |
| Effects of foreign exchange rate changes on cash flow |
|
(299 |
) |
|
|
169 |
|
| Net (decrease) increase in cash flow |
|
(959 |
) |
|
|
2,505 |
|
| Cash and cash equivalents, beginning of the period |
|
19,032 |
|
|
|
7,647 |
|
| Cash and cash equivalents, end of period |
$ |
18,073 |
|
|
$ |
10,152 |
|
|
|
|
|
| Disclosure of cash payments |
|
|
|
| Payment for interest |
$ |
42 |
|
|
$ |
55 |
|
| Payments for income taxes |
$ |
197 |
|
|
$ |
979 |
|
|
|
|
|
