Firan Technology Group (FTG) Announces Third Quarter 2012 Financial Results
Firan Technology Group (FTG) Announces Third Quarter 2012 Financial Results
Toronto, October 10, 2012 – Firan Technology Group Corporation (TSX:FTG) today announced financial results for the third quarter 2012.
-Grew sales by 3% over Q3, 2011 and by 5% year-to-date over the same period 2011
-Sixth consecutive profitable quarter
-Expensed $234,000 in Q3 in starting up new Aerospace facilities in Tianjin, China and Chatsworth, California
-Generated revenues over $300,000 from the two new Aerospace sites in the quarter
-R&D spending remained above 5% of sales
“FTG’s investments in our new Aerospace facilities continue and we are seeing great interest from existing and new customers in utilizing these plants in the future”, stated Brad Bourne, President and Chief Executive Officer. He added, “Our Tianjin plant has successfully completed registration of its quality management system to the AS9100 C requirements, ensuring our commitment to quality remains consistent across the Corporation.”
Third Quarter Results: (three months ended August 31, 2012 compared with three months ended August 26, 2011)
Q3 2012
Sales: $14,057,000
Operating Earnings (1): $1,163,000
-Net R&D Investment: $714,000
-Aerospace Tianjin and Chatsworth start-up expenses: $234,000
-Severance: $54,000
-Tax: $6,000
Net Earnings: $155,000
Earnings per share:
– basic & diluted: $0.01
Q3 2011
Sales: $13,662,000
Operating Earnings (1): $1,071,000
-Net R&D Investment: $702,000
-Aerospace Tianjin and Chatsworth start-up expenses: $37,000
-Severance: $0.00
-Tax: $0.00
Net Earnings: $332,000
Earnings per share:
– basic & diluted: $0.02
Year-To-Date 2011 Results: (nine months ended August 31, 2012 compared with nine months ended August 26, 2011)
Year-To-Date 2012
Sales: $41,927,000
Operating Earnings(1): $3,471,000
-Net R&D Investment: $1,944,000
-Aerospace Tianjin and Chatsworth Start-up Expenses: $641,000
-Severance: $54,000
-Income Tax: $8,000
Net Earnings: $824,000
Earnings per share:
– basic: $0.05
– diluted: $0.04
Year-To-Date 2011
Sales: $39,749,000
Operating Earnings(1): $2,875,000
-Net R&D Investment: $2,209,000
-Aerospace Tianjin and Chatsworth Start-up Expenses: $103,000
-Severance: $0.00
-Income Tax: $2,000
Net Earnings: $561,000
Earnings per share:
– basic: $0.03
– diluted: $0.03
(1) Operating Earnings (Loss) is not a measure recognized under Canadian generally accepted accounting principles (“GAAP”). 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 (Loss) 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 2012 that continue to improve the Corporation and position it for the future, including:
-Continued year-over-year sales growth.
-Achieved profit of $443,000 in the quarter before start-up costs at the two new Aerospace facilities and severance costs.
-Completed the implementation of a new ERP system in the existing Aerospace facility in Toronto. This same ERP system is being implemented in the new facilities in Tianjin and Chatsworth.
-Invested $487,000 in the quarter and $1,966,000 year-to-date to build out two new facilities and increase technological capabilities in our Circuits’ facilities.
-Successfully completed AS9100 audit for FTG Circuits – Tianjin to Revision C
For FTG, overall sales increased by $0.4M (3%), from $13.7M in Q3 2011 to $14.1M in Q3 2012. Again, FTG Aerospace drove the growth in the quarter. For the first nine months, sales were $41.9M, an increase of $2.2M or 5% versus the same period last year.
The Circuits Segment sales were down $0.9M or 8% in Q3 2012 versus Q3 2011. Year-to-date Circuits Segment sales were down $0.4M or 1%. Both reductions are due to lower customer demand, from US based customers.
For the Aerospace segment, sales in Q3 2012 were up $1.3M or 47% compared to Q3 2011. Sales from FTG Aerospace Toronto were up 36% with the balance of the growth coming from the two new facilities. For the year-to-date Aerospace segment sales were up $2.5M or 29%.
Gross margins were essentially flat in the quarter, again while incurring start-up costs for the two new Aerospace facilities. Net earnings at FTG in Q3 2012 were $0.2M compared to net earnings of $0.3M in Q3 2011. Administrative costs were up slightly due to foreign exchange losses, severance expenses and higher R&D costs, compared to the same quarter last year.
The Circuits segment net earnings before corporate and interest costs was $0.6M in Q3 201 compared to $0.6M in Q3 2011, on lower sales. On a year-to-date basis, the Circuits business net earnings before corporate and interest costs was $2.2M compared to $1.6M for the same period last year. The improvement is due to lower manufacturing costs ($0.7M), lower R&D costs ($0.4M), offset by lower revenues ($0.4M) and higher foreign exchange losses ($0.2M).
The Aerospace net earnings before corporate and interest costs was $0.1M in Q3 2012 versus $0.2M in Q3, 2011. The net earnings this year are reduced by the $0.2M start-up expenses for the two new facilities. On a year-to-date basis, the net earnings before corporate and interest cost was $0.4M compared to $0.6M for the same period last year. Start-up expenses for the 9 month period year-to-date were $0.6M. Also in this year’s expenses were costs related to implementing and new ERP system in our Toronto facility.
As at August 31, 2012, the Corporation’s primary source of liquidity included accounts receivable of $9.4M and inventory of $8.3M. Inventories are down $0.5M in the quarter, due to a continued focus on lean manufacturing and cash management. Net working capital at August 31, 2012 was $ 10.9M.
The Corporation will host a live conference call on Thursday, October 11, 2012 at 11:30 am (EDT) to discuss the results of Q3 2012.
Anyone wishing to participate in the call should dial 416-340-8527 or 1-877-240-9772 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 25, 2012 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 8807452.
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 and Chatsworth, California.
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
