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     140  0 Kommentare Firan Technology Group Corporation (“FTG” or “the Corporation”) Announces Full Year and Fourth Quarter 2019 Financial Results

    TORONTO, Feb. 13, 2020 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the full year and fourth quarter 2019.

    • Achieved record full year sales of $112.7M, an increase of $8.2M after excluding a $5M revenue adjustment on a development contract from Q1 last year
    • Achieved EBITDA of $14.6M, an increase of $4.1M (39%) over last year
    • Achieved net income of $6.1M and diluted earnings per share of $0.25, an increase of 111% over 2018
    • Generated $8.5M in full year free cash flow, inclusive of capital expenditures of $3.1M but exclusive of $3.8M of net cash consideration paid for the Colonial business (now referred to as FTG Circuits-Fredericksburg)
    • At year end, had net cash of $2.2M on the balance sheet.
     
    Full Year Results: (twelve months ended Nov 30, 2019 compared with twelve months ended Nov 30, 2018)
     
        FY 2019       FY 2018  
    Sales $ 112,653,000     $ 109,420,000  
         
    Gross Margin   30,264,000       25,262,000  
    Gross Margin (%)   26.9 %     23.1 %
         
    Operating Earnings (1):   15,818,000       10,978,000  
         
    •  Net R&D Investment   4,846,000       4,740,000  
    •  R&D Tax Credits   (669,000 )     (1,016,000 )
    •  Foreign Exchange Loss (Gain)   785,000       (75,000 )
    •  Amortization of Intangibles   1,128,000       1,049,000  
         
    Net Earnings before Tax   9,728,000       6,280,000  
         
    •  Income Tax   3,746,000       3,415,000  
    •  Non-controlling Interests   (76,000 )     (10,000 )
         
    Net Earnings after tax $ 6,058,000     $ 2,875,000  
    Earnings per share    
    - basic $ 0.27     $ 0.13  
    - diluted $ 0.25     $ 0.12  

    Fourth Quarter Results: (three months ended Nov 30, 2019 compared with three months ended Nov 30, 2018)

        Q4 2019       Q4 2018  
    Sales $ 27,075,000     $ 28,013,000  
         
    Gross Margin   5,870,000       7,264,000  
    Gross Margin (%)   21.7 %     25.9 %
         
    Operating Earnings (1):   2,745,000       3,453,000  
         
    •  Net R&D Investment   1,339,000       1,375,000  
    •  R&D Tax Credits   (260,000 )     (283,000 )
    •  Foreign Exchange Loss   253,000       89,000  
    •  Amortization of Intangibles   301,000       266,000  
         
    Net Earnings before Tax   1,112,000       2,006,000  
         
    •  Income Tax   504,000       769,000  
    •  Non-controlling Interests   33,000       11,000  
         
    Net Earnings After Tax $ 575,000     $ 1,226,000  
         
    Earnings per share    
    - basic $ 0.03     $ 0.05  
    - diluted $ 0.03     $ 0.05  
     
    (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 2019 that continue to improve the Corporation and position it for the future, including:

    • Received Canadian Technical Standard Order (TSO) approval for a Cursor Control Device enabling FTG to begin production of this product under development over the past 3 years
    • On July 15, 2019, FTG successfully closed the acquisition of Colonial Circuits Inc., in Fredericksburg Virginia
    • Achieved sales from Colonial of approximately $3.6M from July to November
    • Began the certification process for the Colonial facility to the Aerospace AS9100 certification with completion planned for early 2020, opening up significant new market opportunities for that site
    • Worked with key suppliers to achieve material cost savings for the Colonial site, in line with costs at other existing FTG sites.
    • In November, FTG reached agreement with its represented staff at FTG Aerospace Toronto. The contract is for four years, with improvements in benefits and wages in line with typical collective agreements in Ontario this year.

    For FTG, overall sales increased by $3.2M or 3.0% from $109.4M in 2018 to $112.7M in 2019. Adjusting for the revenue recognition impact of $5M from the C919 program in Q1 2018, the increase in sales is $8.2M or 7.9%. In Q4, FTG was the subject of a cyber-attack that impacted all sites in North America, except the recently acquired business in Fredericksburg, Virginia. The affected sites lost production from a few days to a few weeks. This impacted the 2019 sales in the quarter and the year as deliveries were delayed beyond year end. The acquisition of FTG Circuits Fredericksburg business, which closed July 15, 2019, contributed $3.6M to 2019 sales. Also contributing to the growth was the weakening of the Canadian dollar by 3.8 cents in 2019 compared to the prior year, which added approximately $3M to annual sales. 

    FTG’s China sites were not impacted by the cyber-attack in Q4. They are however being impacted by measures taken by the Chinese government in Q1 2020 to control the spread of the corona virus outbreak and are expected to lose approximately 10 days of production in the quarter.

    Q4 2019 sales of $27.1M were $0.9M lower than Q4 2018, net of the contribution of $2.4M from the acquisition of the FTG Circuits Fredericksburg business. In September 2019, FTG was the subject of a cyber-attack which impacted FTG’s systems across North America. Overall lost production was approximately 10% of normal quarterly sales. Also in Q4 2019 compared to Q4 2018, shipments of products for the simulator market were down temporarily by approximately $3M as previous orders were completed and new orders could not be assembled until the arrival of longer lead components. Simulator related revenues are expected to rebound in the second half of 2020. 

    The Circuits Segment sales were $71.4M, up $7.4M or 11.5% in 2019 versus 2018. In Q4 sales were $18.6M compared to $17.4M in Q4 last year. In Q4 2019, sales were impacted by the cyber-attack but offset by the incremental $2.4M in sales from the acquired business in Virginia.

    For the Aerospace segment, sales in 2019 were $41.2M compared to $45.3M last year. 2018 had the $5M one-time adjustment in program revenue. In Q4 2019 sales were $8.4M compared to $10.7M in Q4 2018. The drop in Q4 2019 is due partly to the cyber-attack as well as a drop in simulator activity of $3M year-over-year. The drop in simulator activity is the result the conclusion of existing orders and a gap in shipments until longer lead components arrive. Simulator revenues are expected to rebound in the second half of 2020 as the backlog in simulator work at year end was over $8.0M.

    Gross margins in 2019 were $30.3M or 26.9% compared to $25.3M or 23.1% in 2018. The benefit of increased sales was combined with improving operational efficiency across the company. The cyber-attack in Q4 2019 negatively impacted gross margins in the quarter and the full year.

    Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for 2019 was $14.6M compared to $10.5M in 2018.

    The following table reconciles EBITDA(2) to the net earnings for 2019.

        2019
       
    Net earnings   6,058,000
    Add:  
    Interest   290,000
    Income taxes/ITC   3,077,000
    Depreciation/Amortization/Stock Comp   5,165,000
       
    EBITDA $ 14,590,000
     
    (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 2019 was $6.1M or $0.25 per diluted share compared to a net profit of $2.9M or $0.12 per diluted share in 2018. Net profit after tax in Q4 2019 was $0.6M, a decrease of $0.6M compared to Q4 2018. The decrease is the result of lower sales (cyber-attack and lower simulator activity) offset by the income from the new Virginia facility.

    The Circuits segment net earnings before corporate and interest and other costs was $12.0M in 2019 compared to $9.4M in 2018.

    The Aerospace net earnings before corporate and interest and other costs in the quarter was $0.7M in 2019 versus ($0.4M) in 2018.

    As at November 30, 2019, the Corporation’s net working capital was $28.6M, compared to $28.7M at year end in 2018. At year-end 2019, all debt is classified as current as the bank facility agreement currently in place expires in less than 12 months. Activity is underway to obtain a new bank facility in 2020.

    Net cash at the end of 2019 was $2.2M compared to net debt of $2.4M at the end of 2018. Excluding the Colonial purchase price of $3.8M, the year-end 2019 net cash position would have been $6.0M, with annual free cash flow of $8.5M.

    The Corporation will host a live conference call on Friday, February 14, 2020 at 10:000 am (Eastern) to discuss the results of 2019.

    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 March 15, 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 8595811.

    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 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
    Consolidated Statements of Financial Position
         
    As at November 30,
      November 30,
    (in thousands of Canadian dollars)   2019       2018  
    ASSETS    
    Current assets    
    Cash $ 7,647     $ 5,026  
    Accounts receivable   21,085       18,051  
    Contract assets   432       645  
    Taxes recoverable   -       189  
    Inventories   21,990       24,634  
    Prepaid expenses   1,770       1,816  
        52,924       50,361  
    Non-current assets    
    Plant and equipment, net   13,830       12,078  
    Deferred income tax assets   724       732  
    Investment tax credits receivable   3,035       4,620  
    Deferred development costs   279       276  
    Intangible assets and other assets, net   2,585       3,069  
    Total assets $ 73,377     $ 71,136  
    LIABILITIES AND EQUITY    
    Current liabilities    
    Accounts payable and accrued liabilities $ 17,104     $ 16,278  
    Provisions   946       849  
    Contract liabilities   216       1,966  
    Current portion of bank debt   5,416       2,019  
    Income tax payable   639       563  
        24,321       21,675  
    Non-current liabilities    
    Bank debt   -       5,404  
    Deferred tax payable   1,297       1,750  
    Total liabilities   25,618       28,829  
    Equity    
    Retained earnings $ 17,745     $ 11,687  
    Accumulated other comprehensive loss   (1,554 )     (774 )
        16,191       10,913  
    Share capital    
    Common Shares   19,323       19,323  
    Preferred Shares   2,218       2,218  
    Contributed surplus   8,933       8,672  
    Total equity attributable to FTG's shareholders   46,665       41,126  
    Non-controlling interest   1,094       1,181  
    Total equity   47,759       42,307  
    Total liabilities and equity $ 73,377     $ 71,136  


    FIRAN TECHNOLOGY GROUP CORPORATION      
    Consolidated Statements of Earnings      
           
      Years ended
      November 30,   November 30,
    (in thousands of Canadian dollars, except per share amounts)   2019       2018  
           
    Sales $ 112,653     $ 109,420  
           
    Cost of sales      
    Cost of sales   78,788       81,143  
    Depreciation of plant and equipment   3,601       3,015  
    Total cost of sales   82,389       84,158  
    Gross margin   30,264       25,262  
           
    Expenses      
    Selling, general and administrative   13,732       13,333  
    Research and development costs   4,846       4,740  
    Recovery of investment tax credits   (669 )     (1,016 )
    Depreciation of plant and equipment   163       134  
    Amortization of intangible assets   1,128       1,049  
    Interest expense on bank debt   290       521  
    Stock based compensation   261       296  
    Foreign exchange loss (gain)   785       (75 )
    Total expenses   20,536       18,982  
           
    Earnings before income taxes   9,728       6,280  
           
    Current income tax expense   4,296       3,230  
    Deferred income tax (recovery) expense   (550 )     185  
    Total income tax expense   3,746       3,415  
           
    Net earnings $ 5,982     $ 2,865  
           
    Attributable to:      
    Non-controlling interest $ (76 )   $ (10 )
    Equity holders of FTG $ 6,058     $ 2,875  
           
    Earnings per share, attributable to the equity holders of FTG      
    Basic $ 0.27     $ 0.13  
    Diluted $ 0.25     $ 0.12  


    FIRAN TECHNOLOGY GROUP CORPORATION        
    Consolidated Statements of Comprehensive Income        
             
        Years ended
        November 30,   November 30,
    (in thousands of Canadian dollars)     2019       2018  
             
    Net earnings   $ 5,982     $ 2,865  
             
    Other comprehensive loss to be reclassified to net earnings        
    in subsequent periods:        
             
    Change in foreign currency translation adjustments     (308 )     421  
    Change in net unrealized loss on derivative financial instruments        
    designated as cash flow hedges     (644 )     (1,873 )
    Change in tax impact     161       468  
             
          (791 )     (984 )
             
    Total comprehensive income   $ 5,191     $ 1,881  
             
    Attributable to:        
    Equity holders of FTG   $ 5,278     $ 1,914  
    Non-controlling interest   $ (87 )   $ (33 )


    FIRAN TECHNOLOGY GROUP CORPORATION
    Consolidated Statements of Changes in Equity
                     
      Years ended November 30, 2019 and November 30, 2018
      Attributed to the equity holders of FTG
       
              Accumulated      
              other   Non-  
      Common Preferred Retained Contributed comprehensive
      controlling Total
    (in thousands of Canadian dollars) shares shares earnings surplus loss Total interest equity
    Balance, November 30, 2017 $ 19,295   $ 2,218   $ 8,812   $ 8,384   $ 187   $ 38,896   $ 1,214   $ 40,110  
    Net earnings (loss)   -     -     2,875     -     -     2,875     (10 )   2,865  
    Stock-based compensation   -     -     -     296     -     296     -     296  
    Common Shares issued on exercise of                
    share options   28     -     -     (8 )   -     20     -     20  
    Change in foreign currency translation adjustments   -     -     -     -     443     443     (23 )   420  
    Change in net unrealized loss on derivative financial                
    instruments designated as cash flow hedges, net of                    
    tax impact   -     -     -     -     (1,404 )   (1,404 )   -     (1,404 )
    Balance, November 30, 2018 $ 19,323   $ 2,218   $ 11,687   $ 8,672   $ (774 ) $ 41,126   $ 1,181   $ 42,307  
    Net earnings (loss)   -     -     6,058     -     -     6,058     (76 )   5,982  
    Stock-based compensation   -     -     -     261     -     261     -     261  
    Change in foreign currency translation adjustments   -     -     -     -     (297 )   (297 )   (11 )   (308 )
    Change in net unrealized loss on derivative financial                    
    instruments designated as cash flow hedges, net of                    
    tax impact   -     -     -     -     (483 )   (483 )   -     (483 )
    Balance, November 30, 2019 $ 19,323   $ 2,218   $ 17,745   $ 8,933   $ (1,554 ) $ 46,665   $ 1,094   $ 47,759  


    FIRAN TECHNOLOGY GROUP CORPORATION
    Consolidated Statements of Cash Flows
             
        Years ended
        November 30,   November 30,
    (in thousands of Canadian dollars)     2019       2018  
    Net inflow (outflow) of cash related to the following:        
    Operating activities        
    Net earnings (attributable to Equity holders of FTG)   $ 5,982     $ 2,865  
    Items not affecting cash:        
    Stock-based compensation     261       296  
    (Gain) loss on disposal of plant and equipment     (53 )     25  
    Effect of exchange rates on US dollar debt     24       284  
    Depreciation of plant and equipment     3,764       3,149  
    Amortization of intangible assets     1,128       1,049  
    Amortization of deferred financing costs     12       12  
    Investment tax credits/deferred income taxes     1,546       2,640  
    Investment tax credits recovery     (669 )     (1,016 )
    Increase in net unrealized loss, decrease in net unrealized gain on        
    derivative financial instruments designated as cash flow hedges     (483 )     (1,404 )
    Net change in non-cash operating working capital     395       3,869  
          11,907       11,769  
    Investing activities        
    Additions to plant and equipment     (3,069 )     (3,021 )
    Acquisition of Colonial Circuits Inc., net of cash acquired     (3,817 )     -  
    (Additions to) recovery of deferred development costs, other     (11 )     143  
    Proceeds from disposal of plant and equipment     53       30  
          (6,844 )     (2,848 )
    Net cash flow from operating and investing activities     5,063       8,921  
    Financing activities        
    (Decrease) in bank indebtedness     -       (6,444 )
    Proceeds from bank debt     -       1,289  
    Repayments of bank debt     (2,031 )     (1,928 )
    Proceeds from issue of Common Shares     -       20  
          (2,031 )     (7,063 )
    Effects of foreign exchange rate changes on cash flow     (411 )     416  
    Net increase in cash flow     2,621       2,274  
    Cash, beginning of the year     5,026       2,752  
    Cash, end of year   $ 7,647     $ 5,026  
             
    Disclosure of cash payments        
    Payment for interest   $ 306     $ 529  
    Payments for income taxes   $ 1,750     $ 24  
             


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    Firan Technology Group Corporation (“FTG” or “the Corporation”) Announces Full Year and Fourth Quarter 2019 Financial Results TORONTO, Feb. 13, 2020 (GLOBE NEWSWIRE) - Firan Technology Group Corporation (TSX: FTG) today announced financial results for the full year and fourth quarter 2019. Achieved record full year sales of $112.7M, an increase of $8.2M after excluding …