Firan Technology Group Announces Profitable and Substantially Improved Q3 2005 Quarterly Results
Firan Technology Group Corporation (TSX:FTG) today announced the third quarter results for the period ending August 26, 2005.
The Company had operating earnings before tax in the quarter of $293,000, an improvement from the pre-tax operating profit of $166,000 in the second quarter of 2005. Included in operating earnings for the quarter is a charge of $385,000 related to severances in the FTG Circuits Toronto segment to right-size the business, and a recovery of $360,000 from a customer for costs incurred in prior quarters. The performance for the quarter resulted from substantially improved yields for FTG Circuits Toronto compared to the first and second quarter of 2005, and strong performance in FTG Circuits Chatsworth. FTG Aerospace continues to achieve positive performance, although sales and profit were less than the third quarter of 2004 and the second quarter of 2005.
Net sales for the third quarter of 2005 were $13,218,000, a decrease of 1% compared with $13,361,000 for the third quarter of 2004 and a 7% decrease over the second quarter of 2005. The strength in the Canadian dollar versus the prior year reduced reported sales for the quarter by approximately $1,000,000 and $2,900,000 on a year to date basis. On a year-to-date basis, net sales were $39,411,000, an increase of $3,234,000 or 9% over the comparable period in 2004.
The combined Circuits businesses’ net sales for the quarter were $10,964,000, an increase of $163,000 or 2% over the prior year. The strength of the Canadian dollar compared to the prior year reduced sales by more than $900,000. Net sales recorded from the Chatsworth facility were $3,327,000 for the quarter. Although reported sales at the Toronto facility were lower than the prior year and the second quarter, yields improved substantially, resulting in substantially improved operating results. On a year-to-date basis, net sales for the Circuits segment were $32,659,000, an increase of $2,858,000 or 10% over the comparable period in 2004. The strength of the Canadian dollar has reduced reported sales for the Circuits’ segment by approximately $2,500,000 on a year to date basis.
In the quarter, FTG Circuits Toronto renewed its agreement with a major long-term customer for a period of 3 years. This new agreement includes scope from additional divisions as compared to the previous agreement and is valued at $20 million to $30 million over the period.
Aerospace sales for the current quarter at $2,254,000 decreased 12% or were $306,000 lower than the same quarter last year. Shipments for Aerospace were lower for the quarter due to a shutdown in the month of August, change in the mix of products and a significant effort to support a key customer work through technical challenges on an important military product. However, Aerospace maintains a strong order backlog, and anticipates strong sales and shipment levels for the balance of the year. The book to bill ratio for Aerospace was 1.10 to 1 during the third quarter of 2005. On a year to date basis, net sales for Aerospace were $6,751,000 compared to $6,376,000 for the comparable period in 2004, an increase of 6%.
Net income for the third quarter was $119,000 or earnings of $0.01 per share ($0.01 per diluted share) as compared with net earnings of $758,000 or $0.05 per share ($0.04 earnings per diluted share) in the same period in 2004.
The balance sheet remained strong at the end of the third quarter. Net working capital at August 26, 2005 was $5,564,000 as compared to $6,026,000 at November 30, 2004. The slight decrease in working capital results from reclassification of over $2 million of debt to current liabilities, as it has less than 12 months to maturity, and is in the process of being renegotiated. In addition, the Company had a strong cash position at the end of the quarter with cash on hand of $1,943,000 and was undrawn on its’ US and Canadian operating lines.
"While we have come through some difficult times, I am pleased with the positioning of our businesses for the future. We have substantially increased yields and reduced costs for FTG Circuits Toronto, and have dramatically improved operating results. FTG Circuits Chatsworth continues its strong performance, as it has since we acquired the business. The Aerospace business continues to benefit from strong demand, and we continue to increase resources to handle the demand.", stated Mr. Brad Bourne, President and Chief Executive Officer.
The Company will host a live conference call on Thursday September 29, 2005 at 8:30am (EDT) to discuss the results of the third quarter of 2005.
Anyone wishing to participate in the call should dial 416-695-9722 or 1-888-333-4519 and identify that you are calling into the FTG conference call. The Chairperson is Bradley Bourne. A replay of the call will be available until October 6, 2005. The number to call for a rebroadcast is 416-695-5275 or 1-866-518-1010.