FTG Announces Second Quarter 2014 Financial Results
FTG Announces Second Quarter 2014 Financial Results
Toronto, July 14, 2014 – Firan Technology Group Corporation (TSX:FTG) today announced financial results for the second quarter 2014.
-Grew sales by $1.2M or 8% compared to same quarter 2013
-Booked over $16M in new orders in the quarter
-Grew Q2 activity at FTG Aerospace Tianjin by 121% over Q2 2013
-Grew Q2 activity at FTG Aerospace Chatsworth by 51% over Q2 2013
-Improved net income after tax by $0.6M in Q2 2014 compared to the same
period in 2013
-Generated $1.2M positive cashflow from operations in Q2 2014 compared
to $1.6M usage last year
-Achieved strong operating performance at both established Circuits
facilities
-R&D spending remained above 5% of sales
“FTG’s momentum has continued through the first half of 2014 with strong results across the company, particularly at our two new Aerospace facilities in Tianjin and Chatsworth where we continued to see progress on qualification activities, strong orders and increased shipments”, stated Brad Bourne, President and Chief Executive Officer. He added, “Our established Circuits facilities both performed well in the quarter and we made significant progress in getting our Circuits Joint Venture through its start-up and customer qualification phase so it too can contribute to our success in the future.”
Second Quarter Results: (three months ended May 30, 2014 compared with three months ended May 31, 2013)
Q2 2014
Sales: $15,402,000
Gross Margin: $4,326,000
Gross Margin (%): 28.1%
Operating Earnings (1): $1,372,000
-Net R&D Investment: $697,000
Net Earnings before tax: $675,000
-Income Tax: $47,000
-Non-controlling Interests: ($12,000)
Net Earnings after tax: $640,000
Earnings per share
– basic: $0.04
– diluted: $0.03
Q2 2013
Sales: $14,238,000
Gross Margin: $3,239,000
Gross Margin (%): 22.7%
Operating Earnings (1): $760,000
-Net R&D Investment: $706,000
Net Earnings before tax: $54,000
-Income Tax: $7,000
-Non-controlling Interests: $0.00
Net Earnings after tax: $47,000
Earnings per share
– basic: $0.00
– diluted: $0.00
Year-to-Date Results: (six months ended May 30, 2014 compared with six months ended May 31, 2013)
YTD 2014
Sales: $29,391,000
Gross Margin: $7,450,000
Gross Margin (%): 25.3%
Operating Earnings (1): $2,376,000
-Net R&D Investment: $1,474,000
Net Earnings before tax: $902,000
-Income Tax: $145,000
-Non-controlling Interests: ($28,000)
Net Earnings (loss) after tax: $785,000
Earnings (loss) per share
– basic: $0.04
– diluted: $0.04
YTD 2013
Sales: $27,253,000
Gross Margin: $5,321,000
Gross Margin (%): 19.5%
Operating Earnings (1): $688,000
-Net R&D Investment: $1,303,000
Net Earnings before tax: ($615,000)
-Income Tax: $29,000
-Non-controlling Interests: $0.00
Net Earnings (loss) after tax: ($644,000)
Earnings (loss) per share
– basic: ($0.04)
– diluted: ($0.04)
(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 the second quarter of 2014 that continue to improve the Corporation and position it for the future, including:
-Shipped 10,000th cockpit product from FTG Aerospace Tianjin facility
-Achieved sales outside of North America of 19% of total sales with
growth in both Europe and Asia
-Renewed Circuits Toronto facility lease for 5 years at similar costs
to the previous lease
-Completed Preliminary Design Review (PDR) for the Heads Down Display
control panel assemblies for the Chinese C919 development program.
For FTG, overall sales increased by $1.2M or 8.2% from $14.2M in Q2 2013 to $15.4M in Q2 2014. FTG Circuits and the new Aerospace facilities drove the growth. Year-to-date sales were up $2.1M to $29.4M in Q2 2014, compared to the same period last year.
The Circuits Segment sales were up $2.8M or 30% in Q2 2014 versus Q2 2013. Both established facilities had strong growth in the quarter. On a year-to-date basis, sales grew $4.3M or 24% compared to the first six months of last year.
For the Aerospace segment, sales in Q2 2014 were $3.5M compared to $5.1M in the same quarter last year. Strong increases at the two new facilities in Tianjin China and Chatsworth California were offset by a drop in activity in Toronto. The drop was due to the end of a large military simulator program at that facility. As well, Q2 2013 had a significant shipment of Ground Test Hardware for the C919 development program compared to no shipment in Q2 2014. For the first six months of 2014, sales were $7M compared to $9.2M in 2013. Sales increased dramatically at the two new facilities but were down at the Toronto facility for the reasons noted above.
Gross margins were up in Q2 2014 by $1.1M compared to Q2 2013 due to lower start-up costs at the new facilities and higher sales in the Circuits business. Gross margins in Q2 2014 were 28% compared to 23% in Q2 2013. On a year-to-date basis, gross margins increased to 25.3% compared to 19.5% for the same period last year. Increased sales and a weaker Canadian dollar helped drive this increase.
Net profit at FTG in Q2 2014 was $0.6M compared to a net profit of $0.05M in Q2 2013. This improvement is the result of higher gross margins, partially offset by higher SG&A costs. Taxes are higher in Q2 2014 due to recording taxes on Canadian profit, offset by a reduction in deferred income taxes. This is a non-cash item. For the first six months, net profit was $0.8M compared to a net loss of $0.6M for the same period last year.
The Circuits segment net earnings increased to $1.6M in Q2 2014 compared to $0.4M in Q2 2013. The improved results were at both established facilities. The Circuits joint venture in China did not have a material impact on profitability. On a year-to-date basis, the Circuits segment net earnings were $2.6M compared to $0.4M in 2013.
The Aerospace net earnings before corporate and interest and other costs decreased to a loss of $0.1M in Q2 2014 compared to $0.6M profit for the same period in 2013. This was due to lower profitability in the Toronto facility on lower activity. Costs related to the development of the C919 cockpit assemblies of $0.67M in Q2 2014 were treated as deferred development and not expensed. Year-to-date net earnings were a loss of $0.1M compared to a profit of $0.5M in the first six months of 2013.
FTG generated $1.2M of positive cashflow in Q2 2014 compared to cash usage of $1.6M in Q2 2013. The improvement is the result of increased income and lower accounts receivable, partially offset by higher inventories. As at May 30, 2014, the Corporation’s primary source of liquidity included accounts receivable of $10.9M and inventory of $9.5M. Net working capital at May 30, 2014 was $12.5M.
The Corporation will host a live conference call on Tuesday, July 15, 2014 at 8:30am (EDT) to discuss the results of Q2 2014.
Anyone wishing to participate in the call should dial 647-788-4922 or 1-877-223-4471and 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 July 29, 2014 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, pass code 23573687.
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
Firan Technology Group Corporation
Tel: (416) 299-4000 x314
bradbourne@ftgcorp.com
Joseph R. Ricci, Vice President and CFO
Firan Technology Group Corporation
Tel: (416) 299-4000 x309
joericci@ftgcorp.com
Additional information can be found at the Corporation’s website www.ftgcorp.com
