FIRAN TECHNOLOGY GROUP CORPORATION (“FTG”) ANNOUNCES THIRD QUARTER 2021 FINANCIAL RESULTS

TORONTO, ONTARIO – (October 13, 2021) – Firan Technology Group Corporation (TSX: FTG) today announced financial results for the third quarter of 2021.

• FTG achieved a third sequential quarter of increased bookings as the aerospace industry recovers from the COVID-19 pandemic.
• Third-quarter bookings are up 7% over Q2 2021 and up 28% over Q4 2020.
• FTG increased net cash on the balance sheet to $17.1M, an increase of $2.3M in Q3 2021 again showing the cash-generating nature of the business. Over the past 21 months, during the pandemic, FTG has generated $13M in Free Cash Flow, after investments in R&D and capital equipment.
• FTG received forgiveness of USD 1.3M, being the residual of US Paycheck Protection Program funds received by our US operations as a result of FTG maintaining our workforce for the required period of time.
• FTG was approved for an additional $0.7M in Canada Emergency Wage Subsidy (CEWS) in the quarter which we used to help maintain our workforce in the face of revenue reductions due to COVID-19.
• Extended the existing $20M USD committed credit facility with our primary lender to July 2026 with improved financial terms.

Third Quarter Results: (three months ended September 3, 2021, compared with three months ended August 28, 2020)

(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 Q3 2021 that continue to improve the Corporation and position it for the future, including:

Achieved a 1.06:1 book-to-bill ratio for Q3 2021. Increased bookings by 7% compared to Q2 2021, and by 28% compared to Q4 2020 as the Commercial aerospace industry moves into recovery.

• FTG Aerospace Chatsworth has been awarded a $3.7M CAD after-market contract from the United States Defense Logistics Agency (DLA) to provide electronic assemblies to retrofit airborne radar systems on various US defense aircraft.
• Shipped first parts to a new customer for a bezel to be used on the new US T-7A trainer jet. Received first orders from a second customer for cockpit panels, also for the US trainer jet program.
• The Averatek semi-additive circuit board manufacturing equipment in our Circuits Fredericksburg facility completed installation and was operational in Q2. Activities are underway with over 10
  potential customers to develop this process to address future industry demands.
• Subsequent to quarter end, FTG Circuits Chatsworth has been approved for USD 0.4M of funding from the Aviation Manufacturing Jobs Protection (AMJP) program, which will be used to offset
  eligible employee compensation costs for a six-month period ending March 2022.
• FTG Aerospace Chatsworth, which maintained an engineering office in Dallas-Fort Worth since the acquisition of Photo-Etch in 2016, will close this office by the end of 2021. Some employees will move to a work-from-home model, and some roles will move to the Chatsworth site in California.
  This will result in a $200K reduction in costs in 2022 and beyond.

Overall for FTG, sales decreased by $4.6M or 19% from $24.4M in Q3 2020 to $19.7M in Q3 2021. The COVID-19 pandemic has negatively impacted commercial aerospace activity, as well as the weaker US dollar, which has negatively impacted sales reported in Canadian currency. The average exchange rate for Q3 2021 was $1.25 as compared to $1.34 for Q3 2020. This represents approximately a $1.6M negative impact on sales in the quarter compared to Q3 last year. On a year-to-date basis, sales were $59.0M compared to $75.7M for the same period last year. The drop is due to the COVID-19 pandemic, timing on Simulator-related orders, and the year-to-date foreign exchange impact.

The Circuits Segment sales were down $2.6M or 17% from $15.7M in Q3 2020 to $13.1M in Q3 2021. All sites were down but the largest decline was seen in the Circuits Toronto plant which is more heavily exposed to the Commercial Aerospace market. On a year-to-date basis, net sales were $38.1M as compared to $51.7M for the prior-year period.

For the Aerospace Segment, sales were down $2.0M or 24% from $8.7M in Q3 2020 to $6.6M in Q3 2021. Simulator-related sales were down $2.8M in Q3 2021, which was partially mitigated by the continued strength in military business, which is primarily executed at the FTG Chatsworth site. On a year-to-date basis, net sales were $21.0M as compared to $24.0M for the prior-year period.
Gross margins in Q3 2021 were $3.8M or 19.2% compared to $6.7M or 27.6% in Q3 2021. The lower sales impacted the overall margin. The CEWS added $0.7M to gross margin or 3.3 percentage points (Q3 2020 – $0.7M or 2.9 percentage points). On a year-to-date basis, gross margin was $12.9M or 21.8% as compared to $19.4M or 25.6% for the comparable prior-year period. The decline in gross margin is due to the lower level of sales, partially offset by CEWS of $2.6M in 2021 as compared to $1.4M in 2020.

Trailing Twelve Month (TTM) earnings before interest, tax, depreciation, and amortization (EBITDA) for FTG was $11.3M. Lower sales, unfavourable foreign exchange impact, and some operational challenges in Circuits Chatsworth, were partially offset by wage subsidies in Canada and the PPP forgiveness in the US.

The following table reconciles net earnings to EBITDA(2) for the quarter and the trailing 12 months ended September 3, 2021.

(2) EBITDA are not measures recognized under International Financial Reporting Standards (“IFRS”). Management believes that these measures are 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 earnings after tax at FTG in Q3 2021 was $0.8M or $0.03 per diluted share compared to $0.6M or $0.03 per diluted share in Q3 2020. Revenues were reduced due to the decline in the Commercial Aerospace market as a result of the COVID-19 pandemic and the weaker US dollar. In Q3 2021, the average FX rate was 1.25 as compared to 1.34 in Q3 2020. The reduction in sales in Q3 2021 is offset by $1.6M of debt forgiveness, whereas Q3 2020 had no debt forgiveness. For the year-to-date period, FTG incurred a net earnings of $0.4M or $0.01 per share as compared to a net earnings of $0.1M or $0.00 per share for the comparable period of 2020. Apart from the reduction in sales, the 2021 year-to-date period included $3.0M of debt forgiveness, whereas the prior year
period included $1.1M of impairment of intangible assets.

The Circuits Segment net earnings before corporate and interest and other costs was $1.6M in Q3 2021 compared to $1.1M in Q3 2020. Segment profitability was negatively impacted by lower sales and operational issues at the Chatsworth site. We are addressing the operational issues at Chatsworth through continuous improvement initiatives and investment in capital equipment. PPP debt forgiveness of $1.6M helped offset reduced sales and operational issues.

The Aerospace net earnings before corporate and interest and other costs in the quarter was $0.3M in Q3 2021 versus $1.1M in Q3 2020. Segment profitability was negatively impacted by lower sales and the weaker US dollar. As at September 3, 2021, the Corporation’s net working capital was $40.5M, compared to $39.4M at year-end in 2020.

Net cash at the end of Q3 2021 was $17.1M compared to net cash of $12.6M at the end of 2020.

The Corporation will host a live conference call on Thursday October 14, 2021 at 8:30am (Eastern) to discuss the results of Q3 2021.

Anyone wishing to participate in the call should dial 647-427-2311 or 1-866-521-4909 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 November 14, 2021 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 416-621-4642 or 1-800-585-8367, Conference ID 6469182.

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, 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
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