TORONTO, ONTARIO -- (Marketwired) -- 10/11/16 -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the third quarter 2016.
-- Achieved record sales of $23.2M, up 27% from Q3 2015.
-- Closed the acquisition of the assets of Teledyne Printed Circuit
Technology (PCT)
-- Completed equity raise to support above acquisition, issuing 3.45M
common shares
"The third quarter of 2016 saw record sales for FTG", 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 closed our second acquisition of the year. In both cases, the acquisitions increase our access to key new markets and customers. Our intention is to transition the work to existing FTG facilities and rapidly drive up our utilization rates thereby maximizing future profits."
Third Quarter Results: (three months ended Aug 26, 2016 compared with three months ended Aug 28, 2015)
Q3 2016 Q3 2015
------------------------------
Sales $23,187,000 $18,227,000
Gross Margin 5,011,000 5,109,000
Gross Margin (%) 21.6% 28.0%
------------------------------
Operating Earnings (1): 2,307,000 2,314,000
- Net R&D Investment 748,000 1,482,000
- Bargain Purchase Gain (5,578,000) -
- Restructuring Expense 3,245,000 -
- Foreign Exchange loss (gain) 13,000 (874,000)
Net Earnings before Tax 3,879,000 1,706,000
- Tax Expense 383,000 69,000
- Non-controlling Interests 11,000 1,000
------------------------------
Net Earnings After Tax $3,485,000 $1,636,000
------------------------------
Earnings per share
- basic $0.17 $0.09
- diluted $0.15 $0.08
Year-to-Date Results: (nine months ended Aug 26, 2016 compared with nine
months ended Aug 28, 2015)
YTD 2016 YTD 2015
------------------------------
Sales $59,881,000 $53,303,000
Gross Margin 13,623,000 13,081,000
Gross Margin (%) 22.8% 24.5%
------------------------------
Operating Earnings: (1) 5,754,000 5,163,000
Net R&D Investment 2,272,000 3,601,000
Bargain Purchase Gain (7,189,000) -
Restructuring Expense 3,915,000 -
Foreign Exchange Loss (Gain) 318,000 (1,777,000)
Net Earnings before tax 6,438,000 3,339,000
Income Tax 1,136,000 213,000
Non-controlling Interests 17,000 11,000
------------------------------
Net Earnings after tax $5,285,000 $3,115,000
------------------------------
Earnings per share
- basic $0.27 $0.17
- diluted $0.25 $0.15
(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 2016 that continue to improve the Corporation and position it for the future, including:
-- Began the transition of PhotoEtch customers and activity to other FTG
Aerospace sites
-- Closed the acquisition of the assets of Teledyne PCT
-- Raised new equity via the issue of 3.45 million shares at $2.00 per
share, less expenses
-- Announced a new contract to supply cockpit products for a US military
simulator program, a PhotoEtch customer
-- FTG Aerospace Chatsworth was selected as a top performing supplier by
Lockheed Martin Aeronautics
-- Entered into an agreement to license the eSurface technology as a semi
additive manufacturing process for certain advanced technology printed
circuit boards
For FTG, overall sales increased by $5.0M or 27% from $18.2M in Q3 2015 to $23.2M in Q3 2016. Both business segments contributed to the growth. Revenues benefited from the PhotoEtch acquisition which closed on March 18th and contributed $1.8M in incremental sales during the third quarter as well as the Teledyne PCT acquisition closed on July 8th and contributed $3.5M in the quarter. Excluding the acquisitions, revenues were down $0.3M or 2% compared to Q3 2015.
The Circuits Segment sales were up $0.8M or 5.8% in Q3 2016 versus Q3 2015. On a year-to-date basis, Circuits sales were up $1.0M or 2.6%. The Teledyne PCT acquisition revenue is approximately 20% Circuits.
For the Aerospace segment, sales in Q3 2016 were $8.5M compared to $4.3M in the same quarter last year resulting in a 96% growth rate. Included in the Q3 2016 results are $1.9M in sales from the acquisition of PhotoEtch and $2.8M from Teledyne PCT. Year-to-date Aerospace sales were up $5.5M or 43%.
Gross margins in Q3 2016 were down $0.1M compared to Q3 2015. Margins were essentially flat from the existing FTG sites before increased expenses related to lower R&D efforts are Circuits Chatsworth and lower deferred development costs at Aerospace Toronto which resulted in higher cost of sales. At the PhotoEtch site, margins were essentially zero and at Teledyne PCT they were approximately 15%.
Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for trailing twelve months is $9.9M.
The following table reconciles EBITDA(2) to the net earnings for Q3 2016 and trailing 12 months.
Trailing 12
Q3 2016 Months
------------------------------
Net earnings $3,496,000 11,724,000
Add:
Interest 77,000 877,000
Income taxes/ITC/JV 220,000 (5,296,000)
Depreciation/Amortization 808,000 2,563,000
------------------------------
EBITDA $4,601,000 $9,868,000
------------------------------
(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 after tax at FTG in Q3 2016 was $3.5M compared to a net profit of $1.6M in Q3 2015. This improvement is the gain on the purchase of Teledyne offset by the restructuring charge and by lower foreign exchange gains.
The Circuits segment net earnings before corporate and interest and other costs was $2.5M in Q3 2016 compared to $2.1M in Q3 2015.
The Aerospace net earnings before corporate and interest and other costs increased to $2.0M versus $0.0M in Q3 2015. The results benefited from the gain on the acquisition, offset by a restructuring charge for the acquisitions of both PhotoEtch and Teledyne PCT. Costs related to the development of the C919 cockpit assemblies and one new program were treated as deferred development and not expensed, but in both cases the activity in the quarter was significantly reduced due to customer requested delays on the programs.
As at Aug 26, 2016, the Corporation's net working capital was $22.1M, an increase of $7.0M over year end 2015, primarily due to the assets acquired from PhotoEtch and Teledyne PCT.
The Corporation will host a live conference call on Wednesday October 12, 2016 at 1:30 pm (EDT) to discuss the results of Q3 2016.
Anyone wishing to participate in the call should dial 416-340-2220 OR 1-866-225-2055 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 26, 2016 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 4501417.
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, Hudson, New Hampshire 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.
Additional information can be found at the Corporation's website www.ftgcorp.com
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Balance Sheets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Unaudited) August 26, November 30,
(in thousands of Canadian dollars) 2016 2015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS
Current assets
Cash $ 3,097 $ 3,160
Accounts receivable 18,005 12,987
Taxes receivable 140 231
Inventories 21,122 11,122
Prepaid expenses 1,386 979
----------------------------------------------------------------------------
43,750 28,479
Non-current assets
Plant and equipment, net 8,287 5,644
Deferred income tax assets 1,505 2,876
Investment tax credits receivable 7,235 6,736
Deferred development costs 691 387
Intangible assets, net 5,181 100
----------------------------------------------------------------------------
Total assets $ 66,649 $ 44,222
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness $ 5,070 $ -
Accounts payable and accrued liabilities 14,372 10,970
Provisions 394 366
Customer deposits, net of deferred development 315 1,044
Current portion of long-term bank debt 1,511 1,058
----------------------------------------------------------------------------
21,662 13,438
Non-current liabilities
Long-term bank debt 6,197 4,234
Deferred tax payable 1,555 1,460
----------------------------------------------------------------------------
Total liabilities 29,414 19,132
----------------------------------------------------------------------------
Equity
Retained earnings $ 6,913 $ 1,628
Accumulated other comprehensive income (loss) 701 (233)
----------------------------------------------------------------------------
7,614 1,395
Share capital
Common shares 18,972 13,075
Preferred shares 2,218 2,218
Contributed surplus 8,388 8,373
----------------------------------------------------------------------------
Total equity attributable to FTG's
shareholders 37,192 25,061
Non-controlling interest 43 29
----------------------------------------------------------------------------
Total equity 37,235 25,090
----------------------------------------------------------------------------
Total liabilities and equity $ 66,649 $ 44,222
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Earnings
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
----------------------------------------------------------------------------
(Unaudited) August 26, August 28,August 26, August 28,
(in thousands of Canadian dollars,
except per share amounts) 2016 2015 2016 2015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales $ 23,187 $ 18,227 $ 59,881 $ 53,303
----------------------------------------------------------------------------
Cost of sales
Cost of sales 17,567 12,620 44,609 38,781
Depreciation of plant and
equipment 609 498 1,649 1,441
----------------------------------------------------------------------------
Total cost of sales 18,176 13,118 46,258 40,222
----------------------------------------------------------------------------
Gross margin 5,011 5,109 13,623 13,081
----------------------------------------------------------------------------
Expenses
Selling, general and
administrative 2,595 2,663 7,905 7,493
Research and development costs 818 1,552 2,482 4,023
Recovery of research and
development costs (70) (70) (210) (422)
Recovery of investment tax
credits (152) - (499) -
Depreciation of plant and
equipment and amortization
of intangible assets 184 36 282 118
Interest expense on short-term
debt 31 7 51 34
Interest expense on long-term
debt 46 89 130 273
Foreign exchange loss (gain) 13 (874) 318 (1,777)
Bargain purchase gain (5,578) - (7,189) -
Restructuring expenses 3,245 - 3,915 -
----------------------------------------------------------------------------
Total expenses 1,132 3,403 7,185 9,742
----------------------------------------------------------------------------
Earnings before income taxes 3,879 1,706 6,438 3,339
Current income tax expense 15 9 46 33
Deferred income tax expense 368 60 1,090 180
----------------------------------------------------------------------------
Total income tax expense 383 69 1,136 213
Net earnings $ 3,496 $ 1,637 $ 5,302 $ 3,126
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
Non-controlling interest $ 11 $ 1 17 11
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Equity holders of FTG $ 3,485 $ 1,636 5,285 3,115
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share, attributable
to the equity holders of FTG
Basic $ 0.17 $ 0.09 $ 0.27 $ 0.17
Diluted $ 0.15 $ 0.08 $ 0.25 $ 0.15
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
----------------------------------------------------------------------------
August August August August
(Unaudited) 26, 28, 26, 28,
(in thousands of Canadian dollars) 2016 2015 2016 2015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings $ 3,496 $ 1,637 $ 5,302 $ 3,126
----------------------------------------------------------------------------
Other comprehensive income (loss) to
be reclassified to net earnings in
subsequent periods:
Foreign currency translation
adjustments (100) 56 688 937
Net unrealized gain (loss) on
derivative financial instruments
designated as cash flow hedges 143 (425) 324 (1,655)
Tax impact (36) - (81) -
----------------------------------------------------------------------------
7 (369) 931 (718)
----------------------------------------------------------------------------
Total comprehensive income $ 3,503 $ 1,268 $ 6,233 $ 2,408
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
Equity holders of FTG $ 3,493 $ 1,267 $ 6,219 $ 2,395
Non-controlling interest $ 10 $ 1 $ 14 $ 13
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Changes in Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months ended August 26,
2016 Attributed to the equity holders of FTG
-----------------------------------------------
-----------------------------------------------
(Unaudited) Opening
(in thousands of Canadian Common Preferred Retained Contributed
dollars) Shares Shares Earnings Surplus
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2015 $ 13,075 $ 2,218 $ 1,628 $ 8,373
Net earnings - - 5,285 -
Stock-based compensation - - - 35
Common shares issued on
exercise of share options 78 (20)
Common shares issued 5,819 - - -
Foreign currency translation
adjustments - - - -
Net unrealized gain on
derivative financial
instruments designated as
cash flow hedges, net of tax
impact - - - -
----------------------------------------------------------------------------
Balance, August 26, 2016 $ 18,972 $ 2,218 $ 6,913 $ 8,388
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months ended August 28,
2015 Attributed to the equity holders of FTG
-----------------------------------------------
-----------------------------------------------
(Unaudited) Opening
(in thousands of Canadian Common Preferred Retained Contributed
dollars) Shares Shares (Deficit) Surplus
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2014 $ 12,681 $ 2,218 $ (7,909) $ 8,411
Net earnings - - 3,115 -
Stock-based compensation - - - 39
Common shares issued on
exercise of share options 188 - - (45)
Foreign currency translation
adjustments - - - -
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges - - - -
----------------------------------------------------------------------------
Balance, August 28, 2015 $ 12,869 $ 2,218 $ (4,794) $ 8,405
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Changes in Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months ended August 26, Attributed to the equity
2016 holders of FTG
-------------------------
-------------------------
Accumulated
(Unaudited) Other Non-
(in thousands of Canadian Comprehensive controlling Total
dollars) Income (Loss) Total interest equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2015 $ (233) $ 25,061 $ 29 $ 25,090
Net earnings - 5,285 17 5,302
Stock-based compensation - 35 - 35
Common shares issued on
exercise of share options - 58 - 58
Common shares issued - 5,819 - 5,819
Foreign currency translation
adjustments 691 691 (3) 688
Net unrealized gain on
derivative financial
instruments designated as
cash flow hedges, net of tax
impact 243 243 - 243
----------------------------------------------------------------------------
Balance, August 26, 2016 $ 701 $ 37,192 $ 43 $ 37,235
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months ended August 28, Attributed to the equity
2015 holders of FTG
-------------------------
-------------------------
Accumulated
(Unaudited) Other Non-
(in thousands of Canadian Comprehensive controlling Total
dollars) Income (Loss) Total interest equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2014 $ (312) $ 15,089 $ 15 $ 15,104
Net earnings - 3,115 11 3,126
Stock-based compensation - 39 - 39
Common shares issued on
exercise of share options - 143 - 143
Foreign currency translation
adjustments 935 935 2 937
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges (1,655) (1,655) - (1,655)
----------------------------------------------------------------------------
Balance, August 28, 2015 $ (1,032) $ 17,666 $ 28 $ 17,694
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Cash Flows
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
----------------------------------------------------------------------------
August August August August
(Unaudited) 26, 28, 26, 28,
(in thousands of Canadian dollars) 2016 2015 2016 2015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net inflow (outflow) of cash related
to the following:
Operating activities
Net earnings $ 3,496 $ 1,637 $ 5,302 $ 3,126
Items not affecting cash:
Non-controlling interest share of
net (earnings) (11) (1) (17) (11)
Stock-based compensation 11 13 35 39
Effect of exchange rates on US
dollar debt (22) 40 (132) 172
Depreciation of plant and equipment 640 522 1,734 1,523
Amortization of intangible assets 154 12 198 36
Amortization of deferred financing
costs 3 7 8 21
Deferred income tax expense 403 60 1,465 180
Investment tax credits (recovery) (152) - (499) -
AMIS interest accretion - 84 - 252
Amortization of government
assistance - (113) - (339)
Decrease (increase) in net
unrealized loss on derivative -
financial instruments designated -
as cash flow hedges 107 (426) 1,126 (961)
Net change in non-cash operating
working capital (5,891) 1,120 (12,897) (78)
----------------------------------------------------------------------------
(1,262) 2,955 (3,677) 3,960
----------------------------------------------------------------------------
Investing activities
Additions to plant and equipment (3,373) (278) (4,502) (945)
Additions to intangible assets (4,340) - (5,280) -
Additions to deferred development
costs (292) (120) (303) (236)
Additions to deferred financing
costs (11) - (11) -
----------------------------------------------------------------------------
(8,016) (398) (10,096) (1,181)
----------------------------------------------------------------------------
Net cash flow from operating and
investing activities (9,278) 2,557 (13,773) 2,779
----------------------------------------------------------------------------
Financing activities
Increase in bank indebtedness 1,550 - 5,070 -
Proceeds from long-term bank debt 3,390 - 3,390 -
Repayments of long-term bank debt (300) (479) (842) (1,221)
Proceeds from issue of Common
shares 5,851 62 5,876 143
----------------------------------------------------------------------------
10,491 (417) 13,494 (1,078)
----------------------------------------------------------------------------
Effects of foreign exchange rate
changes on cash flow 113 (42) 216 (41)
----------------------------------------------------------------------------
Net increase (decrease) in cash flow 1,326 2,098 (63) 1,660
Cash, beginning of the period 1,771 203 3,160 641
----------------------------------------------------------------------------
Cash, end of period $ 3,097 $ 2,301 3,097 $ 2,301
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Disclosure of cash payments
Payment for interest $ 77 $ 17 $ 181 $ 57
Payments for income taxes $ - $ 1 $ 14 $ 6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contacts:
Firan Technology Group Corporation
Bradley C. Bourne
President and CEO
(416) 299-4000 x 314
bradbourne@ftgcorp.com
Firan Technology Group Corporation
Melinda Diebel
Vice President and CFO
(416) 299-4000 x 264
melindadiebel@ftgcorp.com
