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 Q3 2012
-------------------------------
Sales $ 13,319,000 $ 14,057,000
-------------------------------
Operating Earnings (1): 315,000 1,109,000
- Net R&D Investment 431,000 714,000
- Aerospace Tianjin and Chatsworth Start-up
Losses 428,000 234,000
- Income Tax 7,000 6,000
-------------------------------
Net (Loss) / Earnings $ (551,000) $ 155,000
-------------------------------
(Loss) / Earnings per share
- basic & diluted $ (0.03) $ 0.01
Year-To-Date Results: (nine months ended August 30, 2013 compared with nine
months ended August 31, 2012)
Year-To-Date Year-To- Date
2013 2012
-------------------------------
Sales $ 40,572,000 $ 41,927,000
-------------------------------
Operating Earnings(1): 1,843,000 3,417,000
- Net R&D Investment 1,734,000 1,944,000
- Aerospace Tianjin and Chatsworth Start-
up Losses 1,268,000 641,000
- Income Tax 36,000 8,000
-------------------------------
Net (Loss) / Earnings $ (1,195,000) $ 824,000
-------------------------------
(Loss) / Earnings per share
- basic $ (0.03) $ 0.05
- diluted $ (0.03) $ 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.
Additional information can be found at the Corporation's website www.ftgcorp.com.
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Balance Sheets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(in thousands of Canadian dollars) August 30, November 30,
2013 2012
As at (unaudited) (audited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS
Current assets
Cash $ 3,721 $ 1,446
Accounts receivable 9,511 10,276
Taxes receivable 194 250
Inventories 8,334 7,927
Prepaid expenses 349 432
----------------------------------------------------------------------------
22,109 20,331
Non-current assets
Plant and equipment, net 5,655 5,608
Goodwill 1,039 1,039
Deferred income taxes 1,375 1,375
Intangible assets 208 244
----------------------------------------------------------------------------
Total assets $ 30,386 $ 28,597
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness $ 2,633 $ 994
Accounts payable and accrued liabilities 6,970 7,184
Provisions 347 309
Customer deposits, net of deferred
development 760 843
Current portion of long-term bank debt 304 44
----------------------------------------------------------------------------
11,014 9,374
Non-current liabilities
Long-term bank debt 1,813 361
Subordinated loan 3,833 3,613
Government assistance 898 1,234
----------------------------------------------------------------------------
Total liabilities 17,558 14,582
----------------------------------------------------------------------------
Equity
Deficit $ (10,299) $ (9,104)
Accumulated other comprehensive loss (170) (85)
----------------------------------------------------------------------------
(10,469) (9,189)
Share capital
Common shares 12,681 12,681
Preferred shares 2,218 2,218
Contributed surplus 8,336 8,305
----------------------------------------------------------------------------
Total equity attributable to Firan
Technology Group Corporation shareholders 12,766 14,015
Non-controlling interests 62 -
----------------------------------------------------------------------------
Total equity 12,828 14,015
----------------------------------------------------------------------------
Total liabilities and equity $ 30,386 $ 28,597
----------------------------------------------------------------------------
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of (Loss) Earnings
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
----------------------------------------------------------------------------
(unaudited)
(in thousands of Canadian
dollars, except per share August 30, August 31, August 30, August 31,
amounts) 2013 2012 2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales $ 13,319 $ 14,057 $ 40,572 $ 41,927
----------------------------------------------------------------------------
Cost of sales
Cost of sales 10,702 10,516 31,793 30,912
Depreciation of plant and
equipment 437 419 1,278 1,245
----------------------------------------------------------------------------
Total cost of sales 11,139 10,935 33,071 32,157
----------------------------------------------------------------------------
Gross margin 2,180 3,122 7,501 9,770
----------------------------------------------------------------------------
Expenses
Selling, general and
administrative 2,147 2,016 6,551 6,436
Research and development
costs 501 778 1,944 2,168
Recovery of research and
development costs (70) (64) (210) (224)
Depreciation/amortization
of plant and equipment
and intangible assets 39 35 115 99
Interest expense on short-
term debt 24 11 57 56
Interest expense on long-
term debt 80 69 240 204
Foreign exchange loss
(gain) 29 116 (11) 199
----------------------------------------------------------------------------
Total expenses 2,750 2,961 8,686 8,938
----------------------------------------------------------------------------
(Loss) earnings before
income taxes (570) 161 (1,185) 832
Income tax expense 7 6 36 8
----------------------------------------------------------------------------
Net (loss) earnings $ (577) $ 155 $ (1,221) $ 824
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
Non-controlling interests (26) - (26) -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Equity holders of Firan
Technology Group
Corporation (551) 155 (1,195) 824
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Loss) earnings per share,
attributable to the equity
holders of Firan Technology
Group Corporation
Basic $ (0.03) $ 0.01 $ (0.07) $ 0.05
Diluted $ (0.03) $ 0.01 $ (0.07) $ 0.04
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Comprehensive (loss) income
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
----------------------------------------------------------------------------
(unaudited)
(in thousands of Canadian August 30, August 31, August 30, August 31,
dollars) 2013 2012 2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net (loss) earnings $ (577) $ 155 $ (1,221) $ 824
----------------------------------------------------------------------------
Other comprehensive income
(loss)
Foreign currency
translation adjustments 66 (213) 249 (136)
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges (334) - (334) -
----------------------------------------------------------------------------
(268) (213) (85) (136)
----------------------------------------------------------------------------
Total comprehensive (loss)
income $ (845) $ (58) $ (1,306) $ 688
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
Equity holders of Firan
Technology Group
Corporation $ (819) $ (58) $ (1,280) $ 688
Non-controlling interests $ (26) $ - $ (26) $ -
----------------------------------------------------------------------------
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Changes in Equity
Attributed to the equity holders of Firan
Technology Group Corporation
--------------------------------------------------
--------------------------------------------------
Nine months ended August
30, 2013
(unaudited)
(in thousands of Canadian Common Preferred Contributed
dollars) Shares Shares Deficit Surplus
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30,
2012 $ 12,681 $ 2,218 $ (9,104) $ 8,305
Net loss - - (1,195) -
Stock-based compensation - - - 31
Foreign currency
translation adjustments - - - -
Net unrealized loss on
derivative financial
instruments designated
as cash flow hedges - - - -
Contribution from non-
controlling interests - - - -
----------------------------------------------------------------------------
Balance, August 30, 2013 $ 12,681 $ 2,218 $ (10,299) $ 8,336
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributed to the equity holders of Firan
Technology Group Corporation
--------------------------------------------------
--------------------------------------------------
Nine months ended August
31, 2012
(unaudited) Common Preferred Contributed
(in thousands of dollars) Shares Shares Deficit Surplus
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30,
2011 $ 12,681 $ 2,218 $ (10,032) $ 8,249
Net earnings - - 824 -
Stock-based compensation - - - 40
Foreign currency
translation adjustments - - - -
----------------------------------------------------------------------------
Balance, August 31, 2012 $ 12,681 $ 2,218 $ (9,208) $ 8,289
----------------------------------------------------------------------------
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Changes in Equity
Attributed to the equity
holders of Firan Technology
Group Corporation
----------------------------
----------------------------
Nine months ended August
30, 2013
Accumulated
(unaudited) Other Non-
(in thousands of Canadian Comprehensive controlling Total
dollars) (Loss) Total interests equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30,
2012 $ (85) $ 14,015 $ - $ 14,015
Net loss - (1,195) (26) (1,221)
Stock-based compensation - 31 - $ 31
Foreign currency
translation adjustments 249 249 - $ 249
Net unrealized loss on
derivative financial
instruments designated
as cash flow hedges (334) (334) - (334)
Contribution from non-
controlling interests - - 88 $ 88
----------------------------------------------------------------------------
Balance, August 30, 2013 $ (170) $ 12,766 $ 62 $ 12,828
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributed to the equity
holders of Firan Technology
Group Corporation
----------------------------
----------------------------
Nine months ended August
31, 2012 Accumulated
Other Non-
(unaudited) Comprehensive controlling Total
(in thousands of dollars) Income (Loss) Total interests equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30,
2011 $ 12 $ 13,128 $ - $ 13,128
Net earnings - 824 - $ 824
Stock-based compensation - 40 - $ 40
Foreign currency
translation adjustments (136) (136) - (136)
----------------------------------------------------------------------------
Balance, August 31, 2012 $ (124) $ 13,856 $ - $ 13,856
----------------------------------------------------------------------------
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Condensed Consolidated Statements of Cash Flows
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
----------------------------------------------------------------------------
(unaudited)
(in thousands of Canadian August 30, August 31, August 30, August 31,
dollars) 2013 2012 2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net inflow (outflow) of cash
related to the following:
Operating activities
Net (loss) earnings $ (577) $ 155 $ (1,221) $ 824
Items not affecting cash:
Stock-based compensation 11 15 31 40
Gain on disposal of plant
and equipment - - (25) (2)
Effect of exchange rates
on U.S. dollar Canadian
debt 81 - 189 (17)
Depreciation of plant and
equipment 464 442 1,357 1,308
Amortization of intangible
assets 12 12 36 36
Amortization of deferred
financing costs 7 7 21 43
AMIS interest accretion 73 69 219 183
Amortization of government
assistance (112) (111) (336) (291)
Changes in non-cash
operating working capital 1,930 (455) 218 (2,139)
----------------------------------------------------------------------------
1,889 134 489 (15)
----------------------------------------------------------------------------
Investing activities
Additions to plant and
equipment (196) (487) (1,277) (1,966)
Proceeds from disposal of
plant and equipment - - 25 3
Additions to deferred
financing costs - - - (108)
----------------------------------------------------------------------------
(196) (487) (1,252) (2,071)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net cash flow from operating
and investing activities 1,693 (353) (763) (2,086)
----------------------------------------------------------------------------
Financing activities
Increase in bank
indebtedness 790 842 1,451 842
Proceeds from subordinated
loan and government
assistance - - - 1,490
Proceeds from long-term
bank debt 519 - 1,746 -
Repayments of long-term
bank debt (63) - (125) (1,423)
Funding from non-
controlling interests 26 26
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1,272 842 3,098 909
----------------------------------------------------------------------------
Effects of foreign exchange
rate changes on cash flow 199 (87) (60) (47)
----------------------------------------------------------------------------
Net cash flow 3,164 402 2,275 (1,224)
Cash, beginning of period 557 318 1,446 1,944
----------------------------------------------------------------------------
Cash, end of period $ 3,721 $ 720 3,721 $ 720
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Disclosure of cash payments
Payment for interest $ 31 $ 12 $ 78 $ 78
Payments for income taxes $ - $ 6 $ 22 $ 8
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FOR FURTHER INFORMATION PLEASE CONTACT:
Firan Technology Group Corporation
Bradley C. Bourne
President and CEO
(416) 299-4000 x314
bradbourne@ftgcorp.com
Firan Technology Group Corporation
Joseph R. Ricci
Vice President and CFO
(416) 299-4000 x309
joericci@ftgcorp.com
www.ftgcorp.com
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