FTG Announces 3rd Quarter 2013 Financial Results
FTG Announces 3rd Quarter 2013 Financial Results
Toronto, October 8, 2013 – Firan Technology Group Corporation (TSX:FTG) today announced financial results for the third quarter 2013.
– Grew Aerospace sales by more than 13% in Q3 2013, compared to Q3 2012.
– Expensed $0.4M in Q3 in starting up new Aerospace facilities in Tianjin, China and Chatsworth, California and generated revenues approaching $0.5M from both sites in the quarter
– Generated $1.7M positive cash flow from operations (net of capital expenditures) in the quarter due primarily to the collection of large milestone payments in the Aerospace business.
– Established joint venture with Tianjin Printronics Circuits Ltd (“TPC”) to provide circuit boards to Aerospace customers from low cost country.
“FTG’s third quarter had some very positive developments, such as the creation of our Joint Venture with TPC in China for our Circuit’s business and the continued strong ramp in revenue from our two new Aerospace facilities, but we had some challenges in our Circuits Toronto facility where we had lower than expected sales and some yield issues”, stated Brad Bourne, President and Chief Executive Officer. He added, “We are confident that we can address the challenges in our Toronto facility in our fourth quarter while maintaining our growth momentum across our Aerospace business.”
Third Quarter Results: (three months ended August 30, 2013 compared with three months ended August 31, 2012)
Q3 2013
Sales: $13,319,000
Operating Earnings (1): $315,000
– Net R&D Investment: $431,000
– Aerospace Tianjin and Chatsworth Start-up Losses: $428,000
– Income Tax: $7,000
Net (Loss) / Earnings: ($551,000)
(Loss) / Earnings per share
-basic & diluted: ($0.03)
Q3 2012
Sales: $14,057,000
Operating Earnings (1): $1,109,000
– Net R&D Investment: $714,000
– Aerospace Tianjin and Chatsworth Start-up Losses: $234,000
– Income Tax: $6,000
Net (Loss) / Earnings: $155,000
(Loss) / Earnings per share
-basic & diluted: $0.01
Year-To-Date Results: (nine months ended August 30, 2013 compared with nine months ended August 31, 2012)
Year-To-Date 2013
Sales: $40,572,000
Operating Earnings(1): $1,843,000
– Net R&D Investment: $1,734,000
– Aerospace Tianjin and Chatsworth
Start-up Losses: $1,268,000
– Income Tax: $36,000
Net (Loss) / Earnings: ($1,195,000)
(Loss) / Earnings per share
-basic: ($0.03)
-diluted: ($0.03)
Year-To-Date 2012
Sales: $41,927,000
Operating Earnings(1): $3,417,000
– Net R&D Investment: $1,944,000
– Aerospace Tianjin and Chatsworth
Start-up Losses: $641,000
– Income Tax: $8,000
Net (Loss) / Earnings: $824,000
(Loss) / Earnings per share
-basic: $0.05
-diluted: $0.04
(1) Operating Earnings is not a measure recognized under the 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 the third quarter of 2013 that continue to improve the Corporation and position it for the future, including:
– Achieved 13% growth in Aerospace business compared to same period last year
– Generated $1.7M positive cash flow (operating cash flow, net of capital expenditures)
– Won orders from two (2) new customers for Aerospace Tianjin facility
– Won orders from eight (8) new customers for Aerospace Chatsworth facility
– Invested $0.2M in the quarter and $1.3M year-to-date in capital equipment to improve capabilities across the company
– Added new test equipment and production equipment in all three Aerospace facilities
– Kicked-off activity for FTG Printronics Circuit Corp, the joint venture established with TPC in Tianjin, China to provide circuit boards from a low cost country
For FTG overall sales decreased by $0.7M (5%), from $14.1M in Q3 2012 to $13.3M in Q3 2013. For the first nine months, sales were $40.6M, a decrease of $1.4M or 3% versus the same period last year.
The Circuits Segment sales were down $1.3M or 13% in Q3 2013 versus Q3 2012. Year-to-date Circuits Segment sales were down $3.8M or 12%.
For the Aerospace segment, sales in Q3 2013 were up $0.6M or 12% compared to Q3 2012. For the year-to-date Aerospace segment sales were up $2.5M or 18%.
Net loss at FTG in Q3 2013 was $0.6M compared to net earnings of $0.2M in Q3 2012. Gross margins were depressed in the quarter due to start-up losses at the new aerospace facilities and the weak revenues in the Circuits Toronto facility. Administrative costs were up slightly due to costs associated with the Joint Venture.
The Circuits segment net loss before corporate and interest costs was $0.1M in Q3 2013 compared to net earnings $0.6M in Q3 2012. On a year-to-date basis, the Circuits business net earnings before corporate and interest costs was $0.1M compared to $2.2M for the same period last year. In both cases the decrease is primarily due to weak sales and yield issues in the Circuits Toronto facility.
The Aerospace net earnings before corporate and interest costs was $0.2M in Q3 2013 versus $0.1M in Q3, 2012. The net earnings this year are reduced by the $1.2M start-up losses for the two new facilities. On a year-to-date basis the net earnings before corporate and interests costs was $0.7M compared to $0.4M for the same period last year. Start-up losses for the 9 month period year-to-date were $1.3M.
As at August 30, 2013, the Corporation’s primary source of liquidity included cash of $3.7M, accounts receivable of $9.5M and inventory of $8.3M. Receivables decreased in the quarter due to large milestone payments on two programs in the Aerospace segment. Net working capital at August 30, 2013 was $11.1M.
The Corporation will host a live conference call on Thursday, October 10, 2013 at 8:30 am (EDT) to discuss the results of Q3 2013.
Anyone wishing to participate in the call should dial 416-340-2216 or 1-866-226-1792 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 24, 2013 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 4925971.
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 and a joint venture in Tianjin, China.
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
