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For Immediate Release: October 07, 2014
FTG Announces Third Quarter 2014 Financial Results
Toronto, October 7, 2014 – 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

Sales: $14,818,000

Gross Margin: $3,392,000
Gross Margin (%): 22.9%

Operating Earnings (loss) (1): $1,105,000

• Net R&D Investment: $822,000
Net Earnings (loss) before tax: $283,000
• Income Tax: $73,000
• Non-controlling Interests: ($9,000)
Net Earnings (loss) after tax: $219,000
Earnings (loss) per share
- basic: $0.01
- diluted: $0.01

Q3 2013

Sales: $13,319,000

Gross Margin: $2,180,000
Gross Margin (%): 16.4%

Operating Earnings (loss) (1): ($139,000)

• Net R&D Investment: $431,000
Net Earnings (loss) before tax: ($570,000)
• Income Tax: $7,000
• Non-controlling Interests: ($26,000)
Net Earnings (loss) after tax: ($551,000)
Earnings (loss) per share
- basic: ($0.03)
- diluted: ($0.03)

Year-to-Date Results: (nine months ended August 29, 2014 compared with nine months ended August 30, 2013)

YTD 2014

Sales: $44,309,000

Gross Margin: $10,842,000
Gross Margin (%): 24.5%

Operating Earnings (1): $3,481,000

• Net R&D Investment: $2,296,000
Net Earnings (loss) before tax: $1,185,000
• Income Tax: $218,000
• Non-controlling Interests: ($37,000)
Net Earnings (loss) after tax: $1,004,000
Earnings (loss) per share
- basic: $0.06
- diluted: $0.05

YTD 2013

Sales: $40,572,000

Gross Margin: $7,501,000
Gross Margin (%): 18.5%

Operating Earnings (1): $549,000

• Net R&D Investment: $1,734,000
Net Earnings (loss) before tax: ($1,185,000)
• Income Tax: $36,000
• Non-controlling Interests: ($26,000)
Net Earnings (loss) after tax: ($1,195,000)
Earnings (loss) per share
- basic: ($0.07)
- diluted: ($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.

For further information please contact:

Bradley C. Bourne, President and CEO
Firan Technology Group Corporation
Tel: (416) 299-4000 x 314 bradbourne@ftgcorp.com

Joseph R. Ricci, Vice President and CFO
Firan Technology Group Corporation
Tel: (416) 299-4000 x 309
joericci@ftgcorp.com


Additional information can be found at the Corporation’s website www.ftgcorp.com


Related files

Q3 2014 Financial Statements - 349.2KB