TORONTO, ONTARIO -- (Marketwired) -- 07/08/15 -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the second quarter 2015.
-- Achieved record sales of $18.8M -- Grew Q2 2015 sales by 22% over Q2 2014 -- Circuits segment grew by 15% in the quarter -- Aerospace segment grew by 43% in the quarter -- R&D spending exceeded 5% of sales -- Profit increased by 65% in Q2 2015, compared to Q2 2014
"The second quarter of 2015 saw record sales for FTG with all sites participating in the growth," stated Brad Bourne, President and Chief Executive Officer. He added, "These record sales are enabling us to report strong earnings while still investing in our future. In the quarter, we won another control panel assembly program and began work on it. We continued to invest in R&D across the Corporation to improve our products, our processes and our ability to meet the future demands of our customers."
Second Quarter Results: (three months ended May 29, 2015 compared with three
months ended May 30, 2014)
Q2 2015 Q2 2014
----------------------------
Sales $ 18,769,000 $ 15,402,000
Gross Margin 4,903,000 4,326,000
Gross Margin (%) 26.1% 28.1%
----------------------------
Operating Earnings (1): 2,242,000 1,372,000
- Net R&D Investment 1,106,000 697,000
Net Earnings before Tax 1,136,000 675,000
- Tax Expense 73,000 47,000
- Non-controlling Interests 6,000 (12,000)
----------------------------
Net Earnings After Tax $ 1,057,000 $ 640,000
----------------------------
Earnings per share
- basic $ 0.06 $ 0.04
- diluted $ 0.05 $ 0.03
Year-to-Date Results: (six months ended May 29, 2015 compared with six
months ended May 30, 2014)
YTD 2015 YTD 2014
----------------------------
Sales $ 35,076,000 $ 29,391,000
Gross Margin 7,972,000 7,450,000
Gross Margin (%) 22.7% 25.3%
----------------------------
Operating Earnings: (1) 3,752,000 2,376,000
- Net R&D Investment 2,119,000 1,474,000
Net Earnings before tax 1,633,000 902,000
- Income Tax 144,000 145,000
- Non-controlling Interests 10,000 (28,000)
----------------------------
Net Earnings after tax $ 1,479,000 $ 785,000
----------------------------
Earnings per share
- basic $ 0.08 $ 0.04
- diluted $ 0.07 $ 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 the second quarter of 2015 that continue to improve the Corporation and position it for the future, including:
-- Shipped 9 sets of ground test hardware for Chinese C919 program
-- Began work on new development program for a control panel assembly for a
helicopter program
-- Achieved sales outside of North America of 24% of total sales
-- Completed certification of Aerospace Toronto facility in accordance with
US Department of Defense MIL-DTL-7788
-- 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 $3.4M or 22% from $15.4M in Q2 2014 to $18.8M in Q2 2015. Both business segments participated in the growth. Revenues also benefited from the weakening of the Canadian dollar versus the US dollar which was down 14 cents in Q1 2015 versus the same quarter last year. Over 80% of FTG's revenues are denominated in US dollars. US dollar currency hedges in place in the quarter reduced reported sales and earnings by $0.5M. As a result, approximately 10% of the growth was due to the weakening of the Canadian dollar and 12% was increased activity. For the year-to-date, sales were up $5.7M or 19%.
The Circuits Segment sales were up $1.8M or 15% in Q2 2015 versus Q2 2014. All facilities reported increased revenues. On a year-to-date basis, Circuits sales were up $4.1M or 19%.
For the Aerospace segment, sales in Q2 2015 were $5.0M compared to $3.5M in the same quarter last year resulting in a 43% growth rate. All facilities participated in the growth.
Gross margins in Q2 2015 were up $0.6M compared to Q2 2014 as a result of increased sales. Again, the currency hedges that matured in the quarter reduced revenue and therefore margins and earnings by $0.5M.
Earnings before interest, tax, depreciation and amortization (EBITDA(2)) for FTG for trailing twelve months is $5.6M, an increase from $5.1M from the previous quarter.
The following table reconciles EBITDA(2) to the net earnings for trailing twelve months ended May 29, 2015 (TTM).
TTM
-------------
Net earnings $ 2,890,000
Add:
Interest 406,000
Income taxes 287,000
Depreciation 1,864,000
Amortization 149,000
-------------
EBITDA $ 5,596,000
-------------
(2) 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 at FTG in Q2 2015 was $1.1M compared to a net profit of $0.6M in Q2 2014. This improvement is the result of higher gross margins and lower SG&A expenses, offset by higher R&D spending and losses on USD currency hedges.
The Circuits segment net earnings before corporate and interest and other costs was $1.6M in Q2 2015 compared to $1.6M 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 was $0.2M versus a loss of $0.1M in Q2 2014. Costs related to the development of the C919 cockpit assemblies and one new program of $0.3M in Q2 2015 were treated as deferred development and not expensed.
As at May 29, 2015, the Corporation's net working capital was $13.1M, an increase of $1.0M over Q1 2015 with the largest component of the increase being higher Accounts Receivable.
The Corporation will host a live conference call on Thursday, July 9, 2015 at 11:30 am (EDT) to discuss the results of Q2 2015.
Anyone wishing to participate in the call should dial 416-340-2216 or 1-866-225-0198 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 July 23, 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 4162210.
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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Unaudited) May 29, November 30,
(in thousands of Canadian dollars) 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS
Current assets
Cash $ 203 $ 641
Accounts receivable 14,851 13,289
Taxes receivable 391 251
Inventories 10,300 10,426
Prepaid expenses 561 564
----------------------------------------------------------------------------
26,306 25,171
Non-current assets
Plant and equipment, net 5,495 5,643
Deferred income taxes 2,025 2,145
Intangible and other assets, net 240 148
----------------------------------------------------------------------------
Total assets $ 34,066 $ 33,107
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 9,970 $ 10,021
Provisions 447 410
Customer deposits, net of deferred development 1,911 1,531
Current portion of long-term bank debt 887 251
----------------------------------------------------------------------------
13,215 12,213
Non-current liabilities
Long-term bank debt - 1,232
Subordinated loan 4,387 4,219
Government assistance 113 339
----------------------------------------------------------------------------
Total liabilities 17,715 18,003
----------------------------------------------------------------------------
Equity
Deficit $ (6,430) $ (7,909)
Accumulated other comprehensive (loss) (663) (312)
----------------------------------------------------------------------------
(7,093) (8,221)
Share capital
Common shares 12,787 12,681
Preferred shares 2,218 2,218
Contributed surplus 8,412 8,411
----------------------------------------------------------------------------
Total equity attributable to FTG's shareholders 16,324 15,089
Non-controlling interest 27 15
----------------------------------------------------------------------------
Total equity 16,351 15,104
----------------------------------------------------------------------------
Total liabilities and equity $ 34,066 $ 33,107
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Earnings
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Six months ended
----------------------------------------------------------------------------
(Unaudited)
(in thousands of Canadian dollars, May 29, May 30, May 29, May 30,
except per share amounts) 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales $ 18,769 $ 15,402 $ 35,076 $ 29,391
----------------------------------------------------------------------------
Cost of sales
Cost of sales 13,383 10,654 26,161 21,102
Depreciation of plant and
equipment 483 422 943 839
----------------------------------------------------------------------------
Total cost of sales 13,866 11,076 27,104 21,941
----------------------------------------------------------------------------
Gross margin 4,903 4,326 7,972 7,450
----------------------------------------------------------------------------
Expenses
Selling, general and
administrative 2,460 2,710 4,830 4,802
Research and development costs 1,209 767 2,471 1,614
Recovery of research and
development costs (103) (70) (352) (140)
Depreciation of plant and
equipment, amortization of
intangible assets 40 43 82 88
Interest expense on short-term
debt 18 5 27 13
Interest expense on long-term debt 90 93 184 185
Foreign exchange loss (gain) 53 103 (903) (14)
----------------------------------------------------------------------------
Total expenses 3,767 3,651 6,339 6,548
----------------------------------------------------------------------------
Earnings before income taxes 1,136 675 1,633 902
Current income tax expense 13 5 24 25
Deferred income tax expense 60 42 120 120
----------------------------------------------------------------------------
Net earnings $ 1,063 $ 628 $ 1,489 $ 757
----------------------------------------------------------------------------
Attributable to:
Non-controlling interest $ 6 $ (12) 10 (28)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Equity holders of FTG $ 1,057 $ 640 1,479 785
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share, attributable to
the equity holders of FTG
Basic $ 0.06 $ 0.04 $ 0.08 $ 0.04
Diluted $ 0.05 $ 0.03 $ 0.07 $ 0.04
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Comprehensive Income
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Six months ended
----------------------------------------------------------------------------
(Unaudited)
May 29, May 30, May 29, May 30,
(in thousands of Canadian dollars) 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings $ 1,063 $ 628 $ 1,489 $ 757
----------------------------------------------------------------------------
Other comprehensive income (loss) to
be reclassified to net earnings in
subsequent years:
Foreign currency translation
adjustments 15 (68) 881 463
Net unrealized gain (loss) on
derivative financial instruments
designated as cash flow hedges 605 568 (1,230) (180)
----------------------------------------------------------------------------
620 500 (349) 283
----------------------------------------------------------------------------
Total comprehensive income $ 1,683 $ 1,128 $ 1,140 $ 1,040
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
Equity holders of FTG $ 1,677 $ 1,141 $ 1,128 $ 1,066
Non-controlling interest $ 6 $ (13) $ 12 $ (26)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Changes in Equity
----------------------------------------------------------------------------
Six months ended
May 29, 2015 Attributed to the equity holders of FTG
---------------------------------------------------------
(in thousands of Common Preferred Contributed
Canadian dollars) Shares Shares Deficit Surplus
----------------------------------------------------------------------------
Balance, November
30, 2014 $ 12,681 $ 2,218 $ (7,909) $ 8,411
Net earnings - - 1,479 -
Stock-based
compensation - - - 26
Common shares
issued on exercise
of share options 106 (25)
Foreign currency
translation
adjustments - - - -
Net unrealized loss
on derivative
financial
instruments
designated as cash
flow hedges - - - -
----------------------------------------------------------------------------
Balance, May 29,
2015 $ 12,787 $ 2,218 $ (6,430) $ 8,412
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months ended Attributed to the equity
May 29, 2015 holders of FTG
-----------------------------
Accumulated
Other Non-
(in thousands of Comprehensive controlling Total
Canadian dollars) (Loss) Total interest equity
----------------------------------------------------------------------------
Balance, November
30, 2014 $ (312) $ 15,089 $ 15 $ 15,104
Net earnings - 1,479 10 1,489
Stock-based
compensation - 26 - 26
Common shares
issued on exercise
of share options 81 81
Foreign currency
translation
adjustments 879 879 2 881
Net unrealized loss
on derivative
financial
instruments
designated as cash
flow hedges (1,230) (1,230) - (1,230)
----------------------------------------------------------------------------
Balance, May 29,
2015 $ (663) $ 16,324 $ 27 $ 16,351
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months ended
May 30, 2014 Attributed to the equity holders of FTG
---------------------------------------------------------
(unaudited)
(in thousands of Common Preferred Contributed
Canadian dollars) Shares Shares Deficit Surplus
----------------------------------------------------------------------------
Balance, November
30, 2013 $ 12,681 $ 2,218 $ (10,102) $ 8,347
Net earnings (loss) - - 785 -
Stock-based
compensation - - - 16
Foreign currency
translation
adjustments - - - -
Net unrealized loss
on derivative
financial
instruments
designated as cash
flow hedges - - - -
----------------------------------------------------------------------------
Balance, May 30,
2014 $ 12,681 $ 2,218 $ (9,317) $ 8,363
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months ended Attributed to the equity
May 30, 2014 holders of FTG
-----------------------------
Accumulated
(unaudited) Other Non-
(in thousands of Comprehensive controlling Total
Canadian dollars) (Loss) Income Total interest equity
----------------------------------------------------------------------------
Balance, November
30, 2013 $ (249) $ 12,895 $ 48 $ 12,943
Net earnings (loss) - 785 (28) 757
Stock-based
compensation - 16 - 16
Foreign currency
translation
adjustments 461 461 2 463
Net unrealized loss
on derivative
financial
instruments
designated as cash
flow hedges (180) (180) - (180)
----------------------------------------------------------------------------
Balance, May 30,
2014 $ 32 $ 13,977 $ 22 $ 13,999
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Cash Flows
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Six months ended
----------------------------------------------------------------------------
May 29, May 30, May 29, May 30,
(in thousands of Canadian dollars) 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net inflow (outflow) of cash related
to the following:
Operating activities
Net earnings $ 1,063 $ 628 $ 1,489 $ 757
Items not affecting cash:
Non-controlling interest share of
net (earnings) loss (6) 12 (10) 28
Stock-based compensation 12 7 26 16
Effect of exchange rates on US
dollar debt (6) (7) 132 82
Depreciation of plant and
equipment 511 453 1,001 903
Amortization of intangible assets 12 12 24 24
Amortization of deferred financing
costs 7 7 14 14
Deferred income tax expense 60 42 120 120
AMIS interest accretion 84 78 168 156
Amortization of government
assistance (113) (112) (226) (224)
Increase in net unrealized loss on
derivative financial instruments
designated as cash flow hedges 605 568 (535) 225
Net change in non-cash operating
working capital (2,061) 56 (1,198) 580
----------------------------------------------------------------------------
168 1,744 1,005 2,681
----------------------------------------------------------------------------
Investing activities
Additions to plant and equipment (425) (357) (667) (554)
Additions to deferred development
costs (116) - (116) -
----------------------------------------------------------------------------
(541) (357) (783) (554)
----------------------------------------------------------------------------
Net cash flow from operating and
investing activities (373) 1,387 222 2,127
----------------------------------------------------------------------------
Financing activities
Decrease in bank indebtedness - (1,100) - (1,100)
Repayments of long-term bank debt (44) (86) (742) (171)
Common shares issued 81 - 81 -
----------------------------------------------------------------------------
37 (1,186) (661) (1,271)
----------------------------------------------------------------------------
Effects of foreign exchange rate
changes on cash flow 21 (85) 1 8
----------------------------------------------------------------------------
Net (decrease) increase in cash flow (315) 116 (438) 864
Cash, beginning of the period 518 1,744 641 996
----------------------------------------------------------------------------
Cash, end of period $ 203 $ 1,860 203 $ 1,860
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Disclosure of cash payments
Payment for interest $ 20 $ 19 $ 40 $ 48
Payments for income taxes $ 3 $ - $ 5 $ 25
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contacts:
Firan Technology Group Corporation
Bradley C. Bourne
President and CEO
(416) 299-4000 x314
bradbourne@ftgcorp.com
Firan Technology Group Corporation
Joseph R. Ricci
Vice President and CFO
(416) 299-4000 x309
joericci@ftgcorp.com
www.ftgcorp.com
