FIRAN TECHNOLOGY GROUP CORPORATION (“FTG”) ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

TORONTO, ONTARIO – (July 12, 2023) – Firan Technology Group Corporation (TSX: FTG) today announced financial results for the second quarter of 2023.

• Second quarter bookings of $40.3M were up 48% over Q2 2022 and up 22% over Q1 2023. This was the 10th sequential quarter of bookings growth.
• FTG second quarter revenues of $34.0M were up 52% over Q2 2022, as FTG ramps up production to meet customer demand. Revenue included $3.4M from the newly acquired Circuits sites in Minnetonka, MN and Haverhill, MA.
• FTG achieved Net Earnings in Q2 2023 of $2.4M, which was up $2.4M from Q2 2022.
• Net debt on the balance sheet as of Q2 2023 is $6.4M, which is 0.46x Adjusted EBITDA for the trailing 12 months period ended June 2, 2023.

Business Highlights

FTG continued to play offence in the first half of 2023. The company has invested in technology in existing sites, grown the business organically, and completed two acquisitions. Through all these actions, FTG is strategically deploying its capital in ways that will drive increased shareholder returns for the future in both the near term and long term.

Specifically, FTG accomplished many goals in Q2 2023 that continue to improve the Corporation and position it for the future, including:

• On April 28, 2023, the Corporation completed the acquisition of Holaday Circuits, LLC based in Minnetonka, Minnesota, a suburb of Minneapolis. FTG acquired 100% of Holaday for cash consideration of approximately $24.4M and contingent consideration up to $6.0M, subject to final closing adjustments.
  The business is operating as FTG Circuits Minnetonka LLC.
• Also on April 28, 2023, the Corporation completed the acquisition IMI, Inc. (“IMI”) based in Haverhill, Massachusetts, north of Boston. FTG acquired 100% of the common shares of IMI for cash consideration of $1.8M, subject to final closing adjustments. The business is operating as FTG Circuits Haverhill Inc.
• Achieved a 1.19:1 book-to-bill ratio for Q2 2023 resulting in increased backlog of $98.2M compared to $65.5M at the end of 2022. Backlog as of Q2 2023 includes $18.2M at the newly acquired sites.
• FTG added 17 staff in Q2 2023, including operations leadership, to help increase throughput. FTG now employs approximately 680 people across its nine operating sites.
• FTG received $0.3M in Employee Retention Credits (ERC) for its U.S. sites as they retained their staff through the pandemic for a total of $3.8M received during 2023.
• FTG received funding of $1.1 million in the quarter for a total of $3.7M received to-date under the Canadian Aerospace Regional Recovery Initiative (ARRI) program.
• FTG received $0.5M as the initial draw on a conditional loan provided by the Ontario Ministry of Economic Development, Job Creation and Trade pursuant to the Advanced Manufacturing and Innovation Competitiveness (AMIC) program.
• On June 1, 2023, FTG announced the acceptance by the Toronto Stock Exchange (the “TSX”) of FTG’s Notice of Intention to Make a Normal Course Issuer Bid (“NCIB”). Pursuant to the NCIB, FTG is authorized to purchase over the next 12 months, up to an aggregate of 1,195,550 Common Shares, being approximately 5% of its Common Shares outstanding.

For FTG in Q2 2023, overall sales increased by $11.6M or 52.2% from $22.3M in Q2 2022 to $34.0M in Q2 2023. Increased revenue in Q2 2023 is the result of robust demand across our markets and specifically increased Simulator product activity, acquisitions and favourable foreign exchange rates. The average foreign exchange rate in Q2 2023 was 7% (8.5 cents) higher than in Q2 2022, with a positive impact on sales of $1.6M. On a year-to-date basis, sales increased by $15.8M or 37.0% from 2022.

The Circuits segment sales in Q2 2023 were up $5.7M, or 36.8% compared to last year. The sales increase included a $3.4M contribution from the newly acquired Circuits sites in Minnetonka and Haverhill for the five-week period following close of the acquisitions. On a year-to-date basis, the Circuits segment sales were up $7.1M or 24.0%.

For the Aerospace segment, sales in Q2 2023 were up $5.7M or 71.4% compared to last year. Aerospace segment sales in Q2 2023 included $4.9M of revenue from Simulator products as compared to $0.7M in Q2 2022. On a year-to-date basis, the Aerospace segment sales were up $8.0M or 50.6%.

Gross margin in Q2 2023 was $10.0M or 29.4% as compared to $5.6M or 25.2% in Q2 2022. Excluding government assistance, the gross margin rate improved to 28.6% in Q2 2023 up from 24.9% in Q2 2022. The increase in the gross margin rate is due to the operating leverage of increased sales volumes, operational
improvements including favourable pricing actions, and favourable exchange rates.

Net earnings after tax at FTG in Q2 2023 was $2.4M or $0.10 per diluted share compared to a net income of $0.0M or nil per diluted share in Q2 2022. The acquisitions did not materially impact earnings in the quarter. Adjusted net earnings was $2.3M or $0.09 per diluted share in Q2 2023 as compared to an adjusted net loss of ($0.0M) or nil per diluted share in the prior year quarter. The $2.2M increase in adjusted net earnings is the result of higher sales volume, operational improvements and a more favourable foreign exchange rate. On a year-to-date basis adjusted net earnings after tax was $3.3M or $0.13 per diluted share compared to a net loss of ($1.0M) or ($0.04) per diluted share in the prior year period.

The Circuits segment earnings before interest and income taxes was $1.7M in Q2 2023 as compared to $0.8M in Q2 2022. Higher sales drove the increase in earnings. The acquisitions did not materially impact earnings for this segment.

The Aerospace segment earnings before interest and income taxes was $2.7M in Q2 2023 versus $0.5M in Q2 2022. The increase in earnings was driven by higher sales including Simulator products, and improved pricing on a range of products.

The trailing twelve month earnings before interest, tax, depreciation and amortization (EBITDA) was $16.8M or $13.7M for adjusted EBITDA as compared to approximately $9M for the full year 2022.

EBITDA for FTG in Q2 2023 was $5.3M or 15.7% of sales compared to $2.1M or 9.4% of sales in Q2 2022. On a year-to-date basis, EBITDA in 2023 was $11.6M or 19.8% compared to $3.4M or 8.0% in 2022.

Adjusted EBITDA for Q2 2023, which excludes government assistances, and expenses related to the acquisitions, was $5.2M or 15.3% of net sales, as compared to $2.1M or 9.2% of net sales in Q2 2022. The increase in profitability is driven by increased operating leverage from higher sales, operational improvements and a favourable foreign exchange impact. For the trailing twelve months period ended June 2, 2023, adjusted EBITDA
was $13.7M or 13.0% of sales.

As at June 2, 2023, the Corporation’s net working capital was $34.5M, compared to $30.5M at year-end in 2022.

Net debt at the end of Q2 2023 was ($6.4M) compared to net cash of $12.3M at the end of 2022, after the combined impact of a net cash outlay of $26.3M for acquisitions, net proceeds of $8.5M from the Aerospace Chatsworth facility sale leaseback transaction, and receiving $3.8M from the U.S. Employment Retention Credit program (“ERC”). In addition, FTG has access to committed credit lines of approximately $21.5M.

The Corporation will host a live conference call on Thursday, July 13, 2023 at 8:30am (Eastern) to discuss the results of Q2 2023.

Anyone wishing to participate in the call should dial 416-764-8658 or 1-888-886-7786 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 September 13, 2023 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 416-764-8692 or 1-877-674-7070, Playback Passcode 132339#.

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, Fredericksburg, Virginia and a joint venture in Tianjin, China.

FTG Aerospace manufactures and repairs 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
Firan Technology Group Corporation
Tel: (416) 299-4000 x314
bradbourne@ftgcorp.com

Jamie Crichton, Vice President and CFO
Firan Technology Group Corporation
Tel: (416) 299-4000 x264
jamiecrichton@ftgcorp.com

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