Firan Technology Group Corporation (FTG) Shows Continued Strong Growth In Q3 2008
Firan Technology Group Corporation (FTG) Shows Continued Strong Growth In Q3 2008
Toronto, October 8, 2008 – Firan Technology Group Corporation (TSX:FTG) today announced the third quarter 2008 results for the period ending August 29, 2008.
-13% sales growth over Q3, 2007
-Profit of $190,000 or $0.01 per share including Filtran
restructuring and R&D investments.
-Profit of $436,000 or $0.02 per share excluding Filtran restructuring
and R&D investments
-Positive cash flow from operations of $951,000
We are extremely pleased with the sales growth FTG has experienced and our qualification at many key new customers is expected to enable us to maintain our growth rate in the future. Our focus on the aerospace and defence market is proving to be a good decision as this market continues to be robust,” commented Brad Bourne, President and CEO, FTG Corporation. He added, “Our strategy of increasing the technical capabilities of the Corporation to address the complete range of products required by our customers, through internal R&D and acquisition, is also paying off. This year, our acquisition of Filtran Microcircuits has accelerated FTG’s penetration of high speed, radio frequency circuit boards and brought many new customers yielding immediate benefits to FTG”.
Third Quarter Results: (three months ended August 29, 2008 compared with three months ended August 31, 2007)
Q3 2008:
Sales: $15,748,000
Gross Margin: $3,559,000
Earnings Before Undernoted Items (1): $397,000
SR&ED Tax Recovery: $0.00
Filtran R&D: $129,000
Filtran Operating Losses: $0.00
Filtran Restructuring: $117,000
Tax (Recovery): ($39,000)
Net Earnings / (Loss) After Tax: $190,000
Earnings / (Loss) per share – basic & diluted: $0.01
Q3 2007:
Sales: $13,895,000
Gross Margin: $3,050,0000
Earnings Before Undernoted Items (1): ($366,000)
SR&ED Tax Recovery: ($86,000)
Filtran R&D: $0.00
Filtran Operating Losses: $0.00
Filtran Restructuring: $0.00
Tax (Recovery): ($98,000)
Net Earnings / (Loss) After Tax: ($182,000)
Earnings / (Loss) per share – basic & diluted: ($0.01)
Year to Date Results: (nine months ended August 29, 2008 compared with nine months ended August 31, 2007)
YTD 2008:
Sales: $45,804,000
Gross Margin: $10,844,000
Earnings Before Undernoted Items (1): $476,000
SR&ED Tax Recovery: $0.00
Filtran R&D: $503,000
Filtran Operating Losses: $472,000
Filtran Restructuring: $325,000
Tax (Recovery) Expense: ($173,000)
Net (Loss) / Earnings After Tax: ($651,000)
(Loss) / Earnings per share – basic: ($0.04)
(Loss) / Earnings per share – diluted: ($0.04)
YTD 2007:
Sales: $43,069,000
Gross Margin: $10,250,000
Earnings Before Undernoted Items (1): ($42,000)
SR&ED Tax Recovery: ($1,049,000)
Filtran R&D: $0.00
Filtran Operating Losses: $0.00
Filtran Restructuring: $0.00
Tax (Recovery) Expense: $365,000
Net (Loss) / Earnings After Tax: $642,000
(Loss) / Earnings per share – basic: $0.04
(Loss) / Earnings per share – diluted: $0.03
(1) Earnings Before Undernoted Items 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.
Net sales increased by $1,853,000 or 13%, from $13,895,000 in the third quarter of 2007 to $15,748,000 in the third quarter of 2008. Excluding the impact of the strengthening Canadian dollar versus the US dollar, sales were up approximately $2.3M or 16% over the same period last year.
The Circuits Segment sales were up $1.9M or 17% over the same period last year. Excluding the acquisition of Filtran, sales were up $1.2M or 11%. The acquisition of Filtran increased sales during the quarter by $0.7M. All of these sales were generated from the existing FTG sites as Filtran was closed at the end of March, 2008. The transition continues to progress well. All of the Filtran equipment has been moved to FTG’s facilities and all critical items are operational. Year-to-date FTG has been qualified at a number of key new accounts as a result of this acquisition including Merrimac Industries, Lockheed Martin Corporation, L-3 Narda, Raytheon, Macom, and many others. FTG’s share of high speed and RF printed circuit boards has increased dramatically this year and should continue to increase as more qualifications are completed and some key programs ramp up.
For the Aerospace segment, sales in the third quarter, 2008 were $3,002,000 compared to $3,018,000 in Q3, 2007. Sales in the third quarter 2007 were unusually high due to a surge in shipments at the end of the quarter just ahead of the move to the new facility. The business continues to see strong demand from existing and new customers.
For the year-to-date, the Corporation’s sales are up $2.7M or 6% versus the same period last year. Excluding the impact of the exchange rate, sales are up 15% year over year.
FTG continued to experience strong bookings in Q3, 2008. Total bookings in the quarter were over $16M and the book-to-bill for the Corporation was 1.04:1. The book-to-bill was 0.97:1 for FTG Circuits and 1.32:1 for FTG Aerospace. The Aerospace figure is impacted by the timing of large individual orders and this typically smoothes out over a full year period. Total backlog of orders at the end of Q3 was $16M. FTG continues to add customers and reduce its dependence on any one customer.
Gross margin increased by $509,000 to $3,559,000 or 23% of sales for the third quarter of 2008 as compared with $3,050,000 or 22% of sales in the third quarter of 2007. The increase in gross margin is directly attributable to the higher sales at FTG and the ongoing focus on higher technology products offset by the impact of the exchange rate and material cost increases.
Net earnings for the third quarter of 2008 were $190,000 or $0.01 per share ($0.01 per diluted share) as compared to a loss of $182,000 or a loss of $0.01 per share (loss of $0.01 per diluted share) in the third quarter of 2007. FTG continues to invest in R&D to expand its product offerings and capture new customers and programs. R&D costs in Q3 2008 were $715,000 including R&D related to Filtran products versus $984,000 in Q3, 2007. Included in the third quarter 2008 was $117,000 in restructuring costs related to the Filtran acquisition. Included in Q3, 2007 was a recovery of $86,000 for research and development costs. Year to date, net loss is $651,000 versus a profit of $642,000 for the same period last year.
FTG had many accomplishments in Q3 2008 that continue to improve the Corporation and position it for the future, including:
-The continued transition of the equipment and customers of Filtran
Microcircuits, Inc. to existing FTG facilities
-A reduction of sales to the United States from 86% in Q3, 2007 to 74%
in Q3, 2008, reducing the Corporation’s exposure to the US dollar.
FTG had positive cash flow from operations of $951,000 in Q3, 2008 versus a negative of $68,000 in Q3, 2007. This improvement is due to improved results from operations and improved working capital management across the Corporation. Specifically, Accounts Receivable were down $65,000 versus Q3 2007 while sales were up 13%. Similarly, inventories are down $265,000 or 3% versus Q3, 2007. Since completing the acquisition of Filtran in Q1, 2008, FTG’s total bank debt has been reduced by $978,000, even while incurring $828,000 Filtran R&D and restructuring costs in Q2 and Q3 of this year.
“To continue to improve our financial performance, FTG remains focused on achieving Operational Excellence. Our customers demand high quality products, on time delivery and outstanding customer service. FTG has won awards from Rockwell and General Dynamics so far this year. We will relentlessly strive for award winning performance from across our customer base”, added Mr. Brad Bourne, President and CEO.
“Both FTG facilities in Canada have overcome the strength of the Canadian dollar through significant top line growth and have performed well again in our third quarter,” stated Joe Ricci, Vice President and CFO, FTG Corporation. He added, “We have been pleased with our positive cash flow over the past six months, which is the result of improved operational performance and our focus on controlling our working capital. This effort is creating a stronger balance sheet and could enable FTG to undertake future strategic investments to further strengthen the Corporation’s performance.”
The Corporation will host a live conference call on Thursday October 9, 2008 at 8:30am (EDT) to discuss the results of the third quarter of 2008.
Anyone wishing to participate in the call should dial 416-641-6136 or 1-866-223-7781 and identify that you are calling into the FTG conference call. The Chairperson is Brad Bourne. A replay of the call will be available until October 23, 2008 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053, passcode 3271444.
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 located in Toronto, Ontario.
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
