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For Immediate Release: July 08, 2015
FTG Announces Second Quarter 2015 Financial Results
Toronto, July 8, 2015 – 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

Sales: $18,769,000

Gross Margin: $4,903,000
Gross Margin (%): 26.1%

Operating Earnings (1): $2,242,000

• Net R&D Investment: $1,106,000

Net Earnings before Tax: $1,136,000

• Tax Expense : $73,000
• Non-controlling Interests: $6,000

Net Earnings After Tax: $1,057,000
Earnings per share
- basic: $0.06
- diluted: $0.05


Q2 2014

Sales: $15,402,000

Gross Margin: $4,326,000
Gross Margin (%): 28.1%

Operating Earnings (1): $1,372,000

• Net R&D Investment: $697,000

Net Earnings before Tax: $675,000

• Tax Expense : $47,000
• Non-controlling Interests: ($12,000)

Net Earnings After Tax: $640,000
Earnings per share
- basic: $0.04
- diluted: $0.03

Year-to-Date Results: (six months ended May 29, 2015 compared with six months ended May 30, 2014)

YTD 2015

Sales: $35,076,000

Gross Margin: $7,972,000
Gross Margin (%): 22.7%

Operating Earnings: (1) $3,752,000

• Net R&D Investment: $2,119,000

Net Earnings before tax: $1,633,000

• Income Tax: $144,000
• Non-controlling Interests: $10,000

Net Earnings after tax: $1,479,000
Earnings per share
- basic : $0.08
- diluted: $0.07


YTD 2014

Sales: $29,391,000

Gross Margin: $7,450,000
Gross Margin (%): 25.3%

Operating Earnings: (1) $2,376,000

• Net R&D Investment: $1,474,000

Net Earnings before tax: $902,000

• Income Tax: $145,000
• Non-controlling Interests: ($28,000)

Net Earnings after tax: $785,000
Earnings per share
- basic : $0.04
- 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.


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.

For further information please contact:

Bradley C. Bourne, President and CEO
Tel: (416) 299-4000 x314
Firan Technology Group Corporation bradbourne@ftgcorp.com

Joseph R. Ricci, Vice President and CFO
Tel:(416) 299-4000 x309
Firan Technology Group Corporation joericci@ftgcorp.com


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


Related files

Q2 2015 Financial Statements - 75.3KB