TORONTO, ONTARIO -- (Marketwired) -- 10/07/14 -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the third quarter 2014.
-- Grew Q3 sales by $1.5M or 11% compared to same quarter 2013
-- Booked $15M in new orders in the quarter
-- Grew Circuits business by 21% in Q3 2014 compared to same period in 2013
-- Grew Q3 activity at FTG Aerospace Tianjin by 78% over Q3 2013
-- Grew Q3 activity at FTG Aerospace Chatsworth by 80% over Q3 2013
-- Improved net income after tax by $0.8M in Q3 2014 compared to the same
period in 2013
-- R&D spending remained above 5% of sales
"FTG's momentum has continued in Q3 2014 with strong results across the Corporation, particularly at our Circuits business and the two new Aerospace facilities in Tianjin and Chatsworth where we continued to see progress on qualification activities, strong orders and increased shipments," stated Brad Bourne, President and Chief Executive Officer. He added, "We achieved a breakthrough in getting our Circuits Joint Venture through its start-up and customer qualification phase with our first major aerospace customer qualification so it too can contribute to our success in the future."
Third Quarter Results: (three months ended August 29, 2014 compared with three months ended August 30, 2013)
Q3 2014 Q3 2013
--------------------------------
Sales $ 14,818,000 $ 13,319,000
Gross Margin 3,392,000 2,180,000
Gross Margin (%) 22.9% 16.4%
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Operating Earnings (loss): (1) 1,105,000 (139,000)
- Net R&D Investment 822,000 431,000
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Net Earnings (loss) before tax 283,000 (570,000)
- Income Tax 73,000 7,000
- Non-controlling Interests (9,000) (26,000)
--------------------------------
Net Earnings (loss) after tax $ 219,000 $ (551,000)
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Earnings (loss) per share
- basic $ 0.01 $ (0.03)
- diluted $ 0.01 $ (0.03)
Year-to-Date Results: (nine months ended August 29, 2014 compared with nine months ended August 30, 2013)
YTD 2014 YTD 2013
--------------------------------
Sales $ 44,309,000 $ 40,572,000
Gross Margin 10,842,000 7,501,000
Gross Margin (%) 24.5% 18.5%
--------------------------------
Operating Earnings: (1) 3,481,000 549,000
- Net R&D Investment 2,296,000 1,734,000
--------------------------------
Net Earnings (loss) before tax 1,185,000 (1,185,000)
- Income Tax 218,000 36,000
- Non-controlling Interests (37,000) (26,000)
--------------------------------
Net Earnings (loss) after tax $ 1,004,000 $ (1,195,000)
--------------------------------
Earnings (loss) per share
- basic $ 0.06 $ (0.07)
- diluted $ 0.05 $ (0.07)
(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 third quarter of 2014 that continue to improve the Corporation and position it for the future, including:
-- Achieved sales outside of North America of 18% of total sales with
growth in both Europe and Asia.
-- Completed AS9100C recertification in Aerospace Toronto and Tianjin,
adding design to the certification for Tianjin.
-- Completed Nadcap AC7119 certification in Circuits Toronto, and qualified
for 2 year merit recertification program.
-- Achieved approval for FTG Printronics joint venture from first major
North American Aerospace customer after successfully passing site audit
and all testing of qualification products.
For FTG, overall sales increased by $1.5M or 11.3% from $13.3M in Q3 2013 to $14.8M in Q3 2014. FTG Circuits and the new Aerospace facilities drove the growth. Year-to-date sales were up $3.6M to $44.2M in 2014, compared to the same period last year.
The Circuits Segment sales were up $1.9M or 21% in Q3 2014 versus Q3 2013. On a year-to-date basis, sales grew $6.2M or 23% compared to the first nine months of last year. We continue to see strong demand from existing customers, particularly in commercial aircraft programs.
For the Aerospace segment, sales in Q3 2014 were $4.2M compared to $4.5M in the same quarter last year. Strong increases at the two new facilities in Tianjin China and Chatsworth California were offset by a drop in activity in Toronto. The drop was due to the end of a large military simulator program at that facility. For the first nine months of 2014, sales were $11.2M compared to $13.8M in 2013. Sales increased dramatically at the two new facilities but were down at the Toronto facility for the reasons noted above.
Gross margins were up in Q3 2014 by $1.2M compared to Q3 2013 due to lower start-up costs at the new facilities and higher sales in the Circuits business. Gross margins in Q3 2014 were 22.9% compared to 16.4% in Q3 2013. On a year-to-date basis, gross margins increased to 24.5% compared to 18.5% for the same period last year. Increased sales and a weaker Canadian dollar helped drive this increase.
Net profit at FTG in Q3 2014 was $0.2M compared to a net loss of $0.55M in Q3 2013. This improvement is the result of higher sales and higher gross margins, partially offset by higher R&D costs. Taxes are higher in Q3 2014 due to recording taxes on Canadian profit. This is a non-cash item. For the first nine months, net profit was $1.0M compared to a net loss of $1.2M for the same period last year.
The Circuits segment net earnings increased to $0.9M in Q3 2014 compared to $0.0M in Q3 2013. The improved results were at both established facilities. The Circuits joint venture in China did not have a material impact on profitability. On a year-to-date basis, the Circuits segment net earnings were $2.6M compared to $0.4M in 2013.
The Aerospace net earnings before corporate and interest and other costs decreased to $0.0M in Q3 2014 compared to $0.2M profit for the same period in 2013. This was due to lower profitability in the Toronto facility on lower activity. Costs related to the development of the C919 cockpit assemblies of $0.1M in Q3 2014 were treated as deferred development and not expensed. Year-to-date net earnings were $0.4M compared to a profit of $0.7M in the first nine months of 2013.
FTG used $0.5M of cash in Q3 2014 compared to cash generation of $1.7M in Q3 2013. The difference is the result of timing of payments on development programs on the C919 program and higher capital spending in Q3 2014. As at August 29, 2014, the Corporation's primary source of liquidity included accounts receivable of $10.8M and inventory of $9.8M. Net working capital at August 29, 2014 was $12.5M.
The Corporation will host a live conference call on Wednesday, October 8, 2014 at 8:30am (EDT) to discuss the results of Q3 2014.
Anyone wishing to participate in the call should dial 647-788-4919 or 1-877-291-4570 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 October 22, 2014 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 11256425.
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.
Additional information can be found at the Corporation's website www.ftgcorp.com.
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Balance Sheets
----------------------------------------------------------------------------
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(unaudited)
August 29, November 30,
(in thousands of Canadian dollars) 2014 2013
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ASSETS
Current assets
Cash $ 1,546 $ 996
Accounts receivable 10,789 12,275
Taxes receivable 181 264
Inventories 9,783 8,074
Prepaid expenses 557 549
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22,856 22,158
Non-current assets
Plant and equipment, net 5,265 5,587
Deferred income taxes 2,205 2,385
Intangible assets, net 160 196
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Total assets $ 30,486 $ 30,326
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LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness $ 544 $ 1,062
Accounts payable and accrued liabilities 7,957 8,027
Provisions 496 612
Customer deposits, net of deferred
development 1,080 930
Current portion of long-term bank debt 237 307
Current portion of subordinated loan - 510
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10,314 11,448
Non-current liabilities
Long-term bank debt 1,230 1,753
Subordinated loan 4,141 3,396
Government assistance 450 786
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Total liabilities 16,135 17,383
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Contingencies
Equity
Deficit $ (9,098) $ (10,102)
Accumulated other comprehensive income
(loss) 167 (249)
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(8,931) (10,351)
Share capital
Common shares 12,681 12,681
Preferred shares 2,218 2,218
Contributed surplus 8,370 8,347
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Total equity attributable to FTG's
shareholders 14,338 12,895
Non-controlling interest 13 48
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Total equity 14,351 12,943
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Total liabilities and equity $ 30,486 $ 30,326
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Earnings (Loss)
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Three months ended Nine months ended
----------------------------------------------------------------------------
(unaudited)
(in thousands of Canadian
dollars, except per share August 29, August 30, August 29, August 30,
amounts) 2014 2013 2014 2013
----------------------------------------------------------------------------
Sales $ 14,818 $ 13,319 $ 44,209 $ 40,572
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Cost of sales
Cost of sales 10,990 10,702 32,092 31,793
Depreciation of plant and
equipment 436 437 1,275 1,278
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Total cost of sales 11,426 11,139 33,367 33,071
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Gross margin 3,392 2,180 10,842 7,501
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Expenses
Selling, general and
administrative 2,200 2,147 7,002 6,551
Research and development costs 892 501 2,506 1,944
Recovery of research and
development costs (70) (70) (210) (210)
Depreciation/amortization of
plant and equipment and
intangible assets 42 39 130 115
Interest expense on short-term
debt 8 24 21 57
Interest expense on long-term
debt 91 80 276 240
Foreign exchange (gain) loss (54) 29 (68) (11)
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Total expenses 3,109 2,750 9,657 8,686
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Earnings (loss) before income
taxes 283 (570) 1,185 (1,185)
Income tax expense 73 7 218 36
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Net earnings (loss) $ 210 $ (577) $ 967 $ (1,221)
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Attributable to:
Non-controlling interest $ (9) $ (26) $ (37) $ (26)
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Equity holders of FTG $ 219 $ (551) $ 1,004 $ (1,195)
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Earnings (loss) per share,
attributable to the equity
holders of FTG
Basic $ 0.01 $ (0.03) $ 0.06 $ (0.07)
Diluted $ 0.01 $ (0.03) $ 0.05 $ (0.07)
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
----------------------------------------------------------------------------
(unaudited)
(in thousands of Canadian August 29, August 30, August 29, August 30,
dollars) 2014 2013 2014 2013
----------------------------------------------------------------------------
Net earnings (loss) $ 210 $ (577) $ 967 $ (1,221)
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Other comprehensive income
(loss) to be reclassified to
net earnings (loss) in
subsequent periods:
Foreign currency translation
adjustments 25 66 486 249
Net unrealized gain (loss) on
derivative financial
instruments designated as
cash flow hedges 112 48 (68) (334)
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137 114 418 (85)
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Total comprehensive income
(loss) $ 347 $ (463) $ 1,385 $ (1,306)
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Attributable to:
Equity holders of FTG $ 354 $ (437) $ 1,420 $ (1,280)
Non-controlling interest $ (7) $ (26) $ (35) $ (26)
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Changes in Equity
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Nine months ended August
29, 2014 Attributed to the equity holders of FTG
-------------------------------------------------
(unaudited)
(in thousands of Canadian Common Preferred Contributed
dollars) Shares Shares Deficit Surplus
---------------------------------------------------------------------------
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Balance, November 30, 2013 $ 12,681 $ 2,218 $ (10,102) $ 8,347
Net earnings (loss) - - 1,004 -
Stock-based compensation - - - 23
Foreign currency
translation adjustments - - - -
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges - - - -
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Balance, August 29, 2014 $ 12,681 $ 2,218 $ (9,098) $ 8,370
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Nine months ended August
30, 2013 Attributed to the equity holders of FTG
-------------------------------------------------
(unaudited)
(in thousands of Canadian Common Preferred Contributed
dollars) Shares Shares Deficit Surplus
---------------------------------------------------------------------------
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Balance, November 30, 2012 $ 12,681 $ 2,218 $ (9,104) $ 8,305
Net loss - - (1,195) -
Stock-based compensation - - - 31
Foreign currency
translation adjustments - - - -
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges - - - -
Contribution from non-
controlling interests - - - -
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Balance, August 30, 2013 $ 12,681 $ 2,218 $ (10,299) $ 8,336
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Changes in Equity
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Nine months ended August Attributed to the equity
29, 2014 holders of FTG
--------------------------
(unaudited)
Accumulated
Other
Comprehensive Non-
(in thousands of Canadian (Loss) controlling Total
dollars) Income Total interest equity
----------------------------------------------------------------------------
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Balance, November 30, 2013 $ (249) $ 12,895 $ 48 $ 12,943
Net earnings (loss) - 1,004 (37) 967
Stock-based compensation - 23 - 23
Foreign currency
translation adjustments 484 484 2 486
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges (68) (68) - (68)
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Balance, August 29, 2014 $ 167 $ 14,338 $ 13 $ 14,351
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Nine months ended August Attributed to the equity
30, 2013 holders of FTG
--------------------------
(unaudited)
(in thousands of Canadian Accumulated
dollars) Other Non-
Comprehensive controlling Total
Loss Total interest equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2012 $ (85) $ 14,015 $ - $ 14,015
Net loss - (1,195) (26) (1,221)
Stock-based compensation - 31 - 31
Foreign currency
translation adjustments 249 249 - 249
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges (334) (334) - (334)
Contribution from non-
controlling interests - - 88 88
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Balance, August 30, 2013 $ (170) $ 12,766 $ 62 $ 12,828
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Cash Flows
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Three months ended Nine months ended
----------------------------------------------------------------------------
(unaudited)
(in thousands of Canadian August 29, August 30, August 29, August 30,
dollars) 2014 2013 2014 2013
----------------------------------------------------------------------------
Net inflow (outflow) of cash
related to the following:
Operating activities
Net earnings (loss) $ 210 $ (577) $ 967 $ (1,221)
Items not affecting cash:
Non-controlling interest share
of net loss 9 26 37 26
Stock-based compensation 7 11 23 31
Gain on disposal of plant and
equipment - - - (25)
Effect of exchange rates on US
dollar debt 7 81 89 189
Depreciation of plant and
equipment 466 464 1,369 1,357
Amortization of intangible
assets 12 12 36 36
Amortization of deferred
financing costs 7 7 21 21
Income tax expense 60 - 180 -
AMIS interest accretion 78 73 234 219
Amortization of government
assistance (112) (112) (336) (336)
Net change in non-cash operating
working capital (764) 1,930 (184) 218
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(20) 1,915 2,436 515
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Investing activities
Additions to plant and
equipment (448) (196) (1,002) (1,277)
Proceeds from disposal of
plant and equipment - - - 25
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(448) (196) (1,002) (1,252)
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Net cash flow (used in) from
operating and investing
activities (468) 1,719 1,434 (737)
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Financing activities
Increase (decrease) in bank
indebtedness 537 790 (563) 1,451
Proceeds from long-term bank
debt - 519 - 1,746
Repayments of long-term bank
debt (494) (63) (665) (125)
Funding from non-controlling
interests - 88 - 88
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43 1,334 (1,228) 3,160
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Effects of foreign exchange rate
changes on cash flow 111 111 344 (148)
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Net (decrease) increase in cash
flow (314) 3,164 550 2,275
Cash, beginning of the period 1,860 557 996 1,446
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Cash, end of period $ 1,546 $ 3,721 1,546 $ 3,721
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Disclosure of cash payments
Payment for interest $ 21 $ 31 $ 69 $ 78
Payments for income taxes $ - $ - $ 25 $ 22
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Contacts:
Firan Technology Group Corporation
Bradley C. Bourne
President and CEO
(416) 299-4000 x 314
bradbourne@ftgcorp.com
Firan Technology Group Corporation
Joseph R. Ricci
Vice President and CFO
(416) 299-4000 x 309
joericci@ftgcorp.com
www.ftgcorp.com
