FTG
FTG - The CompanyFTG - InvestorFTG - CircuitsFTG - Aerospace
FTG - News and Events
For Immediate Release: October 03, 2007
Firan Technology Group Corporation (FTG) Announces Financial Results For Third Quarter 2007
Sales growth of 1.6% over Q3 2006, despite strong Canadian dollar
Strong growth in Circuits - Chatsworth operation
Completed move into new facility for Aerospace operation

Toronto, October 3, 2007 Firan Technology Group Corporation (TSX:FTG) today announced the third quarter 2007 results for the period ending August 31, 2007.

FTG achieved $13,895,000 in sales in the third quarter, a 1.6% increase over the third quarter 2006. The Company lost $182,000 in the quarter, primarily due to the strengthening of the Canadian dollar versus the US dollar.

Third Quarter Results: (three months ended August 31, 2007 compared with three months ended September 1, 2006)

Q3 2007

Sales: $13,895,000
Gross Margin: $2,152,000
Net (Loss) Earnings after Tax: ($182,000)
(Loss) Earnings per share basic & diluted: ($0.01)

Q3 2006

Sales: $13,670,000
Gross Margin: $3,100,000
Net (Loss) Earnings after Tax: $300,000
(Loss) Earnings per share - basic & diluted: $0.02

Year to Date Results (nine months ended August 31, 2007 compared with nine months ended September 1, 2006)

YTD 2007

Sales: $43,069,000
Gross Margin: $8,926,000
Net Earnings After Tax: $642,000
Earnings per share:
basic: $0.04
diluted: $0.03

YTD 2006

Sales: $41,797,000
Gross Margin: $9,223,000
Net Earnings After Tax: $886,000
Earnings per share:
- basic: $0.05
- diluted: $0.05

For the year-to-date, net sales are up $1,272,000 or 3% with the results being negatively impacted by the strengthening Canadian dollar.

Net sales increased by $225,000 or 1.6%, from $13,670,000 in the third quarter of 2006 to $13,895,000 in the third quarter of 2007. The Circuits Segment was down $140,000 or 1.3% over the same period last year. Weak market conditions in printed circuit boards and the strengthening Canadian dollar drove the year-over-year change. The Circuits segment is outperforming the overall market, which is down more than 10% in 2007 in North America, excluding any exchange rate impact. The Aerospace segment grew over the same quarter last year by 365,000 or 13.8% due to the investments made in 2006 to increase capacity and the ongoing lean manufacturing program which together with strong customer demand resulted in increased shipments. The increased revenue for the Corporation was achieved in spite of the ongoing strengthening of the Canadian dollar which impacted sales in the quarter by approximately $700,000.

Year-to-date gross margins are $8,926,000 versus $9,223,000 for the same period in 2006. The decrease resulted from internal and external factors experienced in the third quarter as noted below.

Gross margin in the quarter decreased by $948,000 to $2,152,000 as compared to the third quarter of 2006. The decrease in gross margins is attributable to the strengthening Canadian dollar, the ongoing margin squeeze in the circuit board industry due to the industry price pressures and material cost increases and the continued outsourcing of two critical manufacturing processes in the Circuits business. Progress has been made in identifying opportunities to reduce some material costs and all equipment necessary to eliminate the outsourcing has now been purchased, delivered and commissioned in the early part of the fourth quarter.

For the year-to-date, net earnings are $642,000 or $0.04 per share ($0.03 per diluted share) as compared to earning of $886,000 for year-to-date 2006. Earnings at Circuits are down $42,000 pre-tax year-to-date and are down $264,000 after tax due to the items mentioned above that impacted sales and margins, offset by SR&ED tax credits recorded earlier in 2007.

Net losses for the third quarter of 2007 were $182,000 or $0.01 per share ($0.01 per diluted share) as compared with earnings of $300,000 or $0.02 per share ($0.02 per diluted share) in the third quarter of 2006.

In spite of the external pressures facing the business and the continued strengthening of the Canadian dollar, even after the quarter, we are pleased with our overall performance. While these factors have impacted our financial results, we are taking steps to offset them through investments in critical production equipment and processes, commented Brad Bourne, President and CEO, FTG Corporation. He added, Our focus on the aerospace and defence market continues to prove to be a good decision, as this market has been robust and looks strong into the future. Our strong sales team continues to position FTG favourably on a number of key new accounts and programs.

Operating Business Update

FTG Aerospace has completed the move into a new facility that will enable it continue to grow. The move was completed in the first week of the fourth quarter, with no impact to customers and minimal impact to production throughput. In the quarter, the business performed well in all aspects of the business from new customer wins, through revenue growth, profitability, new product development, and operational performance.

FTG Circuits Chatsworth efforts over the past 18 months to penetrate the rigid flex market is yielding positive results and almost 20% of their revenue in the final month of the third quarter was derived from this product. This was a key ingredient in their significant growth in the quarter. Key additions in Operations management have further strengthened the business unit, leading to increased throughput and strong operating metrics. Capacity continue to grow with the installation and commissioning of the equipment and systems purchased for that site over the past year.

FTG Circuits Toronto is well positioned on many of the new aircraft being developed including the new air transport aircraft at Airbus and Boeing. The technology level continues to stretch the capability of the facility in the short term and there continues to be a significant amount of outsourcing costs for a few key processes. These costs will start to decrease now that equipment necessary to undertake these processes in-house has been delivered. The business was impacted in the third quarter by customer demand as two key customers transitioned their assembly work from one contract manufacturer to another. As these actions are concluded and as yields on the new products improve, this should lead to improved financial performance in 2008.

Conference Call

The Company will host a live conference call on October 4, 2007 at 8:30am (EDT) to discuss the results of the third quarter of 2007.

Anyone wishing to participate in the call should dial 416-695-9748 or 1-866-902-2211 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 11, 2007. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053 and the verbal password for the rebroadcast is 3237481#. The replay will also be available on the FTG website at www.ftgcorp.com

Second Quarter Results: (three months ended August 31, 2007 compared with three months ended September 1, 2006)

Reconciliation of EBITDA (1):

Q3 2007

Net earnings: $(182,000)
Add:
Income taxes / (recovery): $(98,000)
Interest expense: $153,000
Amortization of machinery and equipment: $724,000
Other amortization: $32,000
EBITDA: $629,000

Q3 2006

Net earnings: $300,000
Add:
Income taxes / (recovery): $6,000
Interest expense: $129,000
Amortization of machinery and equipment: $781,000
Other amortization: $81,000
EBITDA: $1,297,000

Year to Date Results (nine months ended August 31, 2007 compared with nine months ended September 1, 2006)

YTD 2007

Net earnings: $642,000
Add:
Income taxes / (recovery): $365,000
Interest expense: $426,000
Amortization of machinery and equipment: $2,211,000
Other amortization: $154,000
EBITDA: $3,798,000

YTD 2006

Net earnings: $886,000
Add:
Income taxes / (recovery): $(59,000)
Interest expense: $348,000
Amortization of machinery and equipment: $2,342,000
Other amortization: $297,000
EBITDA: $3,814,000

(1) EBITDA is not a measure recognized under Canadian generally accepted accounting principles (GAAP). EBITDA is calculated as earnings before provision for income taxes, interest expense, amortization of machinery and equipment and amortization of other assets. Management believes that many of the Companys shareholders, creditors, other stakeholders and analysts prefer to assess the Companys performance using EBITDA in addition to the GAAP measures. The Companys method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defense electronics product and subsystem supplier to the North American marketplace. 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 and Chatsworth, California.

FTG Aerospace manufactures illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of avionics products as well as airframe manufacturers.

The Company's shares are traded on the Toronto Stock Exchange under the symbol FTG.

This news release contains certain forward-looking statements. Such statements are based on the current expectations of management of the Company and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Companys 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 Company. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Company and not place undue reliance on forward-looking statements.

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 Companys web site www.ftgcorp.com