U.S. markets closed
  • S&P 500

    3,310.11
    +39.08 (+1.19%)
     
  • Dow 30

    26,659.11
    +139.16 (+0.52%)
     
  • Nasdaq

    11,185.59
    +180.72 (+1.64%)
     
  • Russell 2000

    1,561.58
    +18.30 (+1.19%)
     
  • Crude Oil

    36.11
    -1.28 (-3.42%)
     
  • Gold

    1,867.90
    -11.30 (-0.60%)
     
  • Silver

    23.33
    -0.03 (-0.15%)
     
  • EUR/USD

    1.1681
    -0.0069 (-0.58%)
     
  • 10-Yr Bond

    0.8350
    +0.0540 (+6.91%)
     
  • GBP/USD

    1.2917
    -0.0070 (-0.54%)
     
  • USD/JPY

    104.6170
    +0.3160 (+0.30%)
     
  • BTC-USD

    13,470.11
    -72.80 (-0.54%)
     
  • CMC Crypto 200

    264.65
    +21.97 (+9.05%)
     
  • FTSE 100

    5,581.75
    -1.05 (-0.02%)
     
  • Nikkei 225

    23,331.94
    -86.57 (-0.37%)
     

Firan Technology Group Corporation (“FTG”) Announces Third Quarter 2020 Financial Results

Firan Technology Group Corporation
·16 mins read

TORONTO, Oct. 07, 2020 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the third quarter 2020.

  • Ended Q3 2020 with over $47M in total backlog, of which $26M is due in Q4 2020

  • Generated $3.2M in cash in Q3 and ended the quarter with $8.8M in net cash on the balance sheet

  • Achieved a gross margin percentage of 27.6%

  • Received $0.8M in Canadian Emergency Wage Subsidy in the quarter

  • Entered into a new 2 year, $20M USD committed credit facility on terms similar to the previous agreement with our current lender

Third Quarter Results: (three months ended August 28, 2020 compared with three months ended August 30, 2019)

Q3 2020

Q3 2019

Sales

$24,364,000

$27,953,000

Gross Margin

6,722,000

7,923,000

Gross Margin (%)

27.6%

28.3%

Operating Earnings (1):

3,600,000

4,367,000

• R&D Investment

1,302,000

1,223,000

• R&D Tax Credits

(195,000)

(214,000)

• Foreign Exchange Loss

1,011,000

236,000

• Amortization of Intangibles

94,000

284,000

Net Earnings before Tax

1,388,000

2,838,000

• Income Tax

773,000

1,087,000

• Non-controlling Interests

(30,000)

(32,000)

Net Earnings After Tax

$645,000

$1,783,000

Earnings per share

- basic

$0.03

$0.08

- diluted

$0.03

$0.07

Year-to-Date: (nine months ended August 28, 2020 compared with nine months ended August 30, 2019)

YTD 2020

YTD 2019

Sales

$75,724,000

$85,578,000

Gross Margin

19,356,000

24,394,000

Gross Margin (%)

25.6%

28.5%

Operating Earnings (1):

8,155,000

13,073,000

• R&D Investment

3,966,000

3,507,000

• R&D Tax Credits

(570,000)

(409,000)

• Foreign Exchange Loss

596,000)

532,000

• Amortization of Intangibles

490,000

827,000

• Impairment of Intangibles

1,145,000

-

Net Earnings before Tax

2,528,000

8,616,000

• Income Tax

2,544,000

3,242,000

• Non-controlling Interests

(98,000)

(109,000)

Net Earnings After Tax

$82,000

$5,483,000

Earnings per share

- basic

$0.00

$0.24

- diluted

$0.00

$0.22

(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 2020 that continue to improve the Corporation and position it for the future, including:

  • Received further Canadian government support to offset the impact of COVID-19, in the form of $0.8M grant

  • Reduced overtime across FTG to reduce wage costs, particularly in sites focused on the commercial aerospace markets

  • Reduced headcount by 3-4% primarily through attrition

  • Achieved a 0.87:1 book-to-bill ratio with increased backlog in the US sites focused more on defense work and decreased backlog in Canadian and Chinese sites focused more on commercial aerospace programs

  • Backlog negatively impacted by strengthening Canadian dollar that reduced backlog by approximately $3M compared to prior quarter

  • FTG Aerospace Toronto was approved by Transport Canada as an approved maintenance organization (AMO) opening up future aftermarket opportunities

For FTG, overall sales decreased by $3.6M or 13% from $28.0M in Q3 2019 to $24.4M in Q3 2020. The Canadian dollar was $0.02 weaker in Q3 this year versus Q3 last year. The COVID-19 pandemic has negatively impacted commercial aerospace activity this year and this impacted FTG’s sites predominantly focused on this market which include Circuits Toronto and the facilities in China. On a year-to-date basis, sales were $75.7M compared to $85.6M for the same period last year. The drop is due to the COVID-19 pandemic in combination with timing on simulator related orders.

The Circuits Segment sales were down $2.6M, or 14% in Q3 2020 versus Q3 2019. Included in Q3 2020 were sales of $1.6M from Circuits Fredericksburg compared to $1.2M in Q3 last year when that site was acquired. Circuits Fredericksburg was slightly impacted by a fire in that facility at the start of the quarter. The facility is fully operational and remediation is complete. The Toronto and the Joint Venture in China sites were all down in the quarter due to reduced demand. Year-to-date sales in the Circuits Segment were $51.7M vs $52.8M in 2019. Circuits Fredericksburg contributed $6.3M in 2020 compared to $1.2M in 2019.

For the Aerospace Segment, sales in Q3 2020 were $8.7M compared to $9.6M in Q3 last year. Simulator related sales were down $1M in Q3 2020. Simulator revenues are expected to be strong in the fourth quarter. The Aerospace sites were negatively impacted by extended component lead times as a result of COVID-19 impacts on the supply chain. Year-to-date 2020, Aerospace Segment sales were down $8.8M or 27%, partly due to lower demand and partly due to timing of simulator related orders.

Gross margins in Q3 2020 were $6.7M or 27.6% compared to $7.9M or 28.3% in Q3 2019. The lower sales impacted the overall margin while strong cost control and the Canadian wage subsidy partially offset this drop.

Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for Q3 2020 was $3.3M compared to $4.3M in Q3 2019.

The following table reconciles net earnings to EBITDA(2) for the quarter and the trailing 12 months ended August 28, 2020.

Q3 2020

Trailing 12 Months

Net earnings to equity holders of FTG

645,000

657,000

Add:

Interest, accretion

200,000

630,000

Income taxes

773,000

3,048,000

Depreciation/Amortization Stock Comp./Impairment

1,646,000

7,615,000

EBITDA

$3,264,000

$11,950,000

(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 profit after tax at FTG in Q3 2020 was $0.6M or $0.03 per diluted share compared to a net profit of $1.8M or $0.07 per diluted share in Q3 2019. Net profit after tax in Q3 2020 was impacted by the lower sales, offset by strong cost controls and the Canadian wage subsidy.

The Circuits Segment net earnings before corporate and interest and other costs was $1.2M in Q3 2020 compared to $3.3M in Q3 2019. The lower sales was the most significant impact on the segment profitability. For the year-to-date, the net earnings before corporate and interest and other costs was $5.7M compared to $9.4M in the first 9 month of 2019.

The Aerospace net earnings before corporate and interest and other costs in the quarter was $1.2M in Q3 2020 versus $0.1M in Q3 2019. The improvement is primarily due to improved performance at the Chatsworth facility, offset by the impact of lower sales. In the first 9 months of 2020, the net earnings before corporate and interest and other costs was ($0.2M) compared to $1.3M in the same period last year. Reduced sales impacted earnings and Q1 2020 included $1.1M cost for impairment of intangible assets.

As at August 28, 2020, the Corporation’s net working capital was $37.1M, compared to $28.6M at year-end in 2019. The increase is due to higher cash, higher inventories, lower accounts payable offset by lower accounts receivable. Also at year-end, all debt was classified as current and with the new bank facility, $4.2M is now long term debt.

Net cash at the end of Q3 2020 was $8.8M compared to net cash of $2.2M at the end of 2019.

The Corporation will host a live conference call on Thursday October 8, 2020 at 8:30am (Eastern) to discuss the results of Q3 2020.

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 7, 2020 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 3473018.

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


FIRAN TECHNOLOGY GROUP CORPORATION

Interim Condensed Consolidated Statements of Financial Position

(Unaudited)

August 28,

November 30,

(in thousands of Canadian dollars)

2020

2019

ASSETS

Current assets

Cash

$

15,710

$

7,647

Accounts receivable

15,634

21,085

Contract assets

498

432

Inventories

23,456

21,990

Prepaid expenses

2,332

1,770

57,630

52,924

Non-current assets

Plant and equipment, net

13,206

13,830

Right-of-use assets

12,540

-

Deferred income tax assets

724

724

Investment tax credits receivable

1,587

3,035

Deferred development costs

218

279

Intangible assets and other assets, net

943

2,585

Total assets

$

86,848

$

73,377

LIABILITIES AND EQUITY

Current liabilities

Accounts payable and accrued liabilities

$

11,994

$

17,104

Provisions

767

946

Contract liabilities

2,623

216

Current portion of bank debt

2,704

5,416

Current portion of lease liabilities

1,717

-

Income tax payable

732

639

20,537

24,321

Non-current liabilities

Bank debt

4,246

-

Lease liabilities

11,080

-

Deferred tax payable

1,412

1,297

Total liabilities

37,275

25,618

Equity

Retained earnings

$

17,827

$

17,745

Accumulated other comprehensive loss

583

(1,554

)

18,410

16,191

Share capital

Common Shares

19,663

19,323

Preferred Shares

2,218

2,218

Contributed surplus

8,285

8,933

Total equity attributable to FTG's shareholders

48,576

46,665

Non-controlling interest

997

1,094

Total equity

49,573

47,759

Total liabilities and equity

$

86,848

$

73,377


FIRAN TECHNOLOGY GROUP CORPORATION

Interim Condensed Consolidated Statements of Earnings (loss)

Three months ended

Nine months ended

(Unaudited)

August 28,

August 30,

August 28,

August 30,

(in thousands of Canadian dollars, except per share amounts)

2020

2019

2020

2019

Sales

$

24,364

$

27,953

$

75,724

$

85,578

Cost of sales

Cost of sales

16,203

19,097

52,080

58,564

Depreciation of plant and equipment

1,048

933

3,111

2,620

Depreciation of right-of-use assets

391

-

1,177

-

Total cost of sales

17,642

20,030

56,368

61,184

Gross margin

6,722

7,923

19,356

24,394

Expenses

Selling, general and administrative

2,827

3,367

10,314

10,728

Research and development costs

1,302

1,223

3,966

3,507

Recovery of investment tax credits, net

(195

)

(214

)

(570

)

(409

)

Depreciation of plant and equipment

62

40

162

123

Depreciation of right-of-use assets

12

-

37

-

Amortization of intangible assets

94

284

490

827

Interest expense on bank debt, net

61

69

159

236

Accretion on lease liabilities

139

-

417

-

Stock based compensation

21

80

112

234

Foreign exchange loss

1,011

236

596

532

Impairment of intangible assets

-

-

1,145

-

Total expenses

5,334

5,085

16,828

15,778

Earnings before income taxes

1,388

2,838

2,528

8,616

Current income tax expense

734

1,044

2,429

3,115

Deferred income tax expense

39

43

115

127

Total income tax expense

773

1,087

2,544

3,242

Net earnings (loss)

$

615

$

1,751

$

(16

)

$

5,374

Attributable to:

Non-controlling interest

$

(30

)

$

(32

)

$

(98

)

$

(109

)

Equity holders of FTG

$

645

$

1,783

82

5,483

Earnings per share, attributable to the equity holders of FTG

Basic

$

0.03

$

0.08

$

-

$

0.24

Diluted

$

0.03

$

0.07

$

-

$

0.22


FIRAN TECHNOLOGY GROUP CORPORATION

Interim Condensed Consolidated Statements of Comprehensive Income (Loss)

Three months ended

Nine months ended

(Unaudited)

August 28,

August 30,

August 28,

August 30,

(in thousands of Canadian dollars)

2020

2019

2020

2019

Net earnings (loss)

$

615

$

1,751

$

(16

)

$

5,374

Other comprehensive earnings (loss) to be reclassified to

net earnings (loss) in subsequent periods:

Change in foreign currency translation adjustments

(1,071

)

(634

)

(305

)

(344

)

Change in net unrealized loss (gain) on derivative financial instruments

designated as cash flow hedges

4,117

543

3,257

(782

)

Change in tax impact

(1,030

)

(136

)

(814

)

195

2,016

(227

)

2,138

(931

)

Total comprehensive income

$

2,631

$

1,524

$

2,122

$

4,443

Attributable to:

Equity holders of FTG

$

2,685

$

1,613

$

2,219

$

4,580

Non-controlling interest

$

(54

)

$

(89

)

$

(97

)

$

(137

)



FIRAN TECHNOLOGY GROUP CORPORATION

Interim Condensed Consolidated Statements of Changes in Equity

Nine months ended August 28, 2020

Attributed to the equity holders of FTG

Accumulated

other

Non-

(Unaudited)

Common

Preferred

Retained

Contributed

comprehensive

controlling

Total

(in thousands of Canadian dollars)

shares

shares

earnings

surplus

loss

Total

interest

equity

Balance, November 30, 2019

$

19,323

$

2,218

$

17,745

$

8,933

$

(1,554

)

$

46,665

$

1,094

$

47,759

Net earnings (loss)

-

-

82

-

-

82

(98

)

(16

)

Stock-based compensation

-

-

-

112

-

112

-

112

Transfer from contributed surplus to share capital for

PSU’s exercised

760

(760

)

-

-

-

-

Common shares repurchase and issue on exercise

of PSU's

(420

)

-

-

-

-

(420

)

-

(420

)

Change in foreign currency translation adjustments

-

-

-

-

(306

)

(306

)

1

(305

)

Change in net unrealized loss on derivative financial

instruments designated as cash flow hedges, net of

tax impact

-

-

-

-

2,443

2,443

-

2,443

Balance, August 28, 2020

$

19,663

$

2,218

$

17,827

$

8,285

$

583

$

48,576

$

997

$

49,573

Nine months ended Augus 30, 2019

Attributed to the equity holders of FTG

Accumulated

Other

Non-

(Unaudited)

Common

Preferred

Retained

Contributed

Comprehensive

controlling

Total

(in thousands of Canadian dollars)

shares

shares

earnings

surplus

loss

Total

interest

equity

Balance, November 30, 2018

$

19,323

$

2,218

$

11,687

$

8,672

$

(774

)

$

41,126

$

1,181

$

42,307

Net earnings (loss)

-

-

5,483

-

-

5,483

(109

)

5,374

Stock-based compensation

-

-

-

234

-

234

-

234

Change in foreign currency translation adjustments

-

-

-

-

(316

)

(316

)

(28

)

(344

)

Change in net unrealized loss on derivative financial

instruments designated as cash flow hedges

net of tax impact

-

-

-

-

(587

)

(587

)

-

(587

)

Balance, August 30, 2019

$

19,323

$

2,218

$

17,170

$

8,906

$

(1,677

)

$

45,940

$

1,044

$

46,984


FIRAN TECHNOLOGY GROUP CORPORATION

Interim Condensed Consolidated Statements of Cash Flows

Three months ended

Nine months ended

(Unaudited)

August 28,

August 30,

August 28,

August 30,

(in thousands of Canadian dollars)

2020

2019

2020

2019

Net inflow (outflow) of cash related to the following:

Operating activities

Net earnings (loss)

$

615

$

1,751

$

(16

)

$

5,374

Items not affecting cash:

Stock-based compensation

21

80

112

234

Loss (gain) on disposal of plant and equipment

-

-

6

(1

)

Effect of exchange rates on US dollar debt

(415

)

(111

)

(217

)

15

Depreciation of plant and equipment

1,111

973

3,274

2,743

Depreciation of right-of-use assets

403

-

1,214

-

Amortization of intangible assets

94

284

490

827

Amortization, other

17

3

28

9

Impairment of intangible assets

-

-

1,145

-

Investment tax credits/deferred income taxes

950

779

1,555

1,331

Accretion on lease liabilities

139

-

417

-

Decrease (increase) in net unrealized loss on derivative financial instruments

designated as cash flow hedges, net of taxes

3,087

(35

)

2,442

(737

)

Net change in non-cash operating working capital

(2,653

)

3,603

588

(1,001

)

3,369

7,327

11,038

8,794

Investing activities

Additions to plant and equipment

(236

)

(1,384

)

(2,721

)

(2,385

)

Acquisition of Colonial Circuits Inc., net of cash acquired

-

(3,817

)

-

(3,817

)

Recovery (additions) of contract and other costs

11

13

60

(6

)

(225

)

(5,188

)

(2,661

)

(6,208

)

Net cash flow from operating and investing activities

3,144

2,139

8,377

2,586

Financing activities

Proceeds from bank debt

-

-

3,309

-

Repayments of bank debt

(514

)

(505

)

(1,552

)

(1,526

)

Lease liability payments

(448

)

-

(1,360

)

-

Repurchase of common shares on exercise of PSU's

-

-

(420

)

-

(962

)

(505

)

(23

)

(1,526

)

Effects of foreign exchange rate changes on cash flow

(730

)

(36

)

(291

)

(176

)

Net increase in cash flow

1,452

1,598

8,063

884

Cash, beginning of the period

14,258

4,312

7,647

5,026

Cash, end of period

$

15,710

$

5,910

15,710

$

5,910

Disclosure of cash payments

Payment for interest

$

46

$

74

$

155

$

245

Payments for income taxes

$

18

$

265

$

1,136

$

1,386