FTG Announces First Quarter 2014 Financial Results
Toronto, April 8, 2014 – Firan Technology Group Corporation (TSX:FTG) today announced financial results for the first quarter 2014.
• Booked over $15M in new orders in the quarter
• Grew Q1 2014 sales by 7% over Q1 2013
• Grew Q1 activity at FTG Aerospace Tianjin by 245% over Q1 2013
• Grew Q1 activity at FTG Aerospace Chatsworth by 185% over Q1 2013
• Improved net income after tax by $0.8M in Q1 2014 compared to the same period in 2013
• Generated $1.3M positive cashflow from operations in Q1 2014 compared to $0.2M last year
• Achieved strong operating performance at both established Circuits facilities
• R&D spending remained above 5% of sales
“The momentum from the end of 2013 has continued into the start of 2014 with strong results across the company, particularly at our two new Aerospace facilities in Tianjin and Chatsworth”, stated Brad Bourne, President and Chief Executive Officer. He added, “Our established Circuits facilities both performed well in the quarter and we are working hard to get our Circuits Joint Venture through its start-up and customer qualification phase so it too can contribute to our success in the future.”
First Quarter Results: (three months ended February 28, 2014 compared with three months ended March 1, 2013)
Gross Margin: $3,124,000
Gross Margin (%): 22.3%
Operating Earnings/Loss (1): $1,020,000
• Net R&D Investment: $777,000
Net Earnings before tax: $227,000
• Income Tax: $98,000
• Non-controlling Interests: ($16,000)
Net Earnings after tax: $145,000
Earnings per share
- basic and diluted: $0.01
Gross Margin: $2,082,000
Gross Margin (%): 16.0%
Operating Earnings/Loss (1): ($72,000)
• Net R&D Investment: $597,000
Net Earnings before tax: ($669,000)
• Income Tax: $22,000
• Non-controlling Interests: $0.00
Net Earnings after tax: ($691,000)
Earnings per share
- basic and diluted: ($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.
FTG accomplished many goals in the first quarter of 2014 that continue to improve the Corporation and position it for the future, including:
• Signed Letter of Intent for cockpit control assemblies for C919 Heads Up Display system in China
• Grew Aerospace activity at the two new facilities to almost $1M in Q1 2014
• Achieved sales outside of North America of 16% of total sales
• Reached full and final settlement of environmental lawsuit with Emmanuel Tannenbaum and June Realty Ltd with no material impact on the company
For FTG, overall sales increased by $1.0M or 7.5% from $13.0M in Q1 2013 to $14.0M in Q1 2014. FTG Circuits and the new Aerospace facilities drove the growth.
The Circuits Segment sales were up $1.6M or 18% in Q1 2014 versus Q1 2013. Both established facilities had strong growth in the quarter.
For the Aerospace segment, sales in Q1 2014 were $3.5M compared to $4.1M 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.
Gross margins were up in Q1 2014 by $1.0M compared to Q1 2013 due to lower start-up costs at the new facilities and higher sales in the Circuits business. Gross margins in Q1 2014 were 22% compared to 16% in Q1 2013.
Net profit at FTG in Q1 2014 was $0.15M compared to a net loss of $0.7M in Q1 2013. This improvement is the result of higher gross margins and stable SG&A costs. Taxes are higher in Q1 2014 due to recording taxes on Canadian profit, offset by a reduction in deferred income taxes. This is a non-cash item.
The Circuits segment net earnings before corporate and interest and other costs increased to $0.9M in Q1 2014 compared to $0.1M in Q1 2013, on $1.6M higher sales. The improved results were at both established facilities. 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 increased slightly as start-up losses at the two new facilities decreased, offset by lower profitability in the Toronto facility due to lower activity. Costs related to the development of the C919 cockpit assemblies of $0.6M in Q1 2014 were treated as deferred development and not expensed.
As at February 28, 2014, the Corporation’s primary source of liquidity included accounts receivable of $12.2M and inventory of $8.6M. Net working capital at February 28, 2014 was $11.4M.
The Corporation will host a live conference call on Wednesday, April 9, 2014 at 11:30am (EDT) to discuss the results of Q1 2014.
Anyone wishing to participate in the call should dial 647-788-4922 or 1-877-223-4471 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 April 23, 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 25504567.
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.
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
Joseph R. Ricci, Vice President and CFO
Firan Technology Group Corporation
Tel:(416) 299-4000 x309
Additional information can be found at the Corporation’s website www.ftgcorp.com