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For Immediate Release: October 11, 2016
FTG Announces Q3 2016 Financial Results
Toronto, October 11, 2016 – 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

Sales: $23,187,000

Gross Margin: $5,011,000
Gross Margin (%): 21.6%

Operating Earnings (1): $2,307,000

• Net R&D Investment: $748,000
• Bargain Purchase Gain: ($5,578,000)
• Restructuring Expense: $3,245,000
• Foreign Exchange loss (gain): $13,000

Net Earnings before Tax: $3,879,000

• Tax Expense: $383,000
• Non-controlling Interests: $11,000

Net Earnings After Tax: $3,485,000
Earnings per share:
- basic: $0.17
- diluted: $0.15

Q3 2015

Sales: $18,227,000

Gross Margin: $5,109,000
Gross Margin (%): 28.0%

Operating Earnings (1): $2,314,000

• Net R&D Investment: $1,482,000
• Bargain Purchase Gain: $0.00
• Restructuring Expense: $0.00
• Foreign Exchange loss (gain): ($874,000)

Net Earnings before Tax: $1,706,000

• Tax Expense: $69,000
• Non-controlling Interests: $1,000

Net Earnings After Tax: $1,636,000
Earnings per share:
- basic: $0.09
- diluted: $0.08


Year-to-Date Results: (nine months ended Aug 26, 2016 compared with nine months ended Aug 28, 2015)

YTD 2016

Sales: $59,881,000

Gross Margin: $13,623,000
Gross Margin (%): 22.8%

Operating Earnings: (1): $5,754,000

• Net R&D Investment: $2,272,000
• Bargain Purchase Gain: ($7,189,000)
• Restructuring Expense: $3,915,000
• Foreign Exchange Loss (Gain): $318,000

Net Earnings before tax: $6,438,000

• Income Tax: $1,136,000
• Non-controlling Interests: $17,000

Net Earnings after tax: $5,285,000

Earnings per share:

- basic: $0.27
- diluted: $0.25

YTD 2015

Sales: $53,303,000

Gross Margin: $13,081,000
Gross Margin (%): 24.5%

Operating Earnings: (1): $5,163,000

• Net R&D Investment: $3,601,000
• Bargain Purchase Gain: $0.00
• Restructuring Expense: $0.00
• Foreign Exchange Loss (Gain): ($1,777,000)

Net Earnings before tax: $3,339,000

• Income Tax: $213,000
• Non-controlling Interests: $11,000

Net Earnings after tax: $3,115,000

Earnings per share:

- basic: $0.17
- diluted: $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.


Q3 2016

Net earnings: $3,496,000
Add:
Interest : $77,000
Income taxes/ITC/JV: $220,000
Depreciation/Amortization: $808,000

EBITDA: $4,601,000

Training 12 Months

Net earnings: $11,724,000
Add:
Interest : $877,000
Income taxes/ITC/JV: ($5,296,000)
Depreciation/Amortization: $2,563,000

EBITDA: $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.

For further information please contact:

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

Melinda Diebel, Vice President and CFO
Tel: (416) 299-4000 x 264
Firan Technology Group Corporation
melindadiebel@ftgcorp.com


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