Firan Technology Group (FTG) Announces First Quarter 2014 Financial
Results
TORONTO, ONTARIO--(Marketwired - Apr 8, 2014) - Firan Technology
Group Corporation (TSX:FTG) today announced financial results for
the first quarter 2014.
- Booked over $15M in new orders in the quarter
- Grew Q1 2014 sales by 7% over Q1 2013
- Grew Q1 activity at FTG Aerospace Tianjin by 245% over Q1
2013
- Grew Q1 activity at FTG Aerospace Chatsworth by 185% over Q1
2013
- Improved net income after tax by $0.8M in Q1 2014 compared to
the same period in 2013
- Generated $1.3M positive cashflow from operations in Q1 2014
compared to $0.2M last year
- Achieved strong operating performance at both established
Circuits facilities
- R&D spending remained above 5% of sales
"The momentum from the end of 2013 has continued into the start
of 2014 with strong results across the company, particularly at our
two new Aerospace facilities in Tianjin and Chatsworth," stated
Brad Bourne, President and Chief Executive Officer. He added, "Our
established Circuits facilities both performed well in the quarter
and we are working hard to get our Circuits Joint Venture through
its start-up and customer qualification phase so it too can
contribute to our success in the future."
First Quarter
Results: (three months ended February 28, 2014 compared with
three months ended March 1, 2013)
|
Q1
2014 |
|
Q1
2013 |
|
|
|
|
|
|
| Sales |
$ |
13,989,000 |
|
$ |
13,015,000 |
|
| Gross Margin |
|
3,124,000 |
|
|
2,082,000 |
|
| Gross Margin (%) |
|
22.3 |
% |
|
16.0 |
% |
|
|
|
|
|
|
|
| Operating Earnings/Loss: (1) |
|
1,020,000 |
|
|
(72,000 |
) |
|
|
|
|
|
|
|
|
•
Net R&D Investment |
|
777,000 |
|
|
597,000 |
|
| Net Earnings before tax |
|
227,000 |
|
|
(669,000 |
) |
|
•
Income Tax |
|
98,000 |
|
|
22,000 |
|
|
•
Non-controlling Interests |
|
(16,000 |
) |
|
- |
|
|
|
|
|
|
|
|
|
| Net Earnings after tax |
$ |
145,000 |
|
$ |
(691,000 |
) |
| Earnings per share |
|
|
|
|
|
|
|
- basic and diluted |
$ |
0.01 |
|
$ |
(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 first quarter of 2014 that
continue to improve the Corporation and position it for the future,
including:
- Signed Letter of Intent for cockpit control assemblies for C919
Heads Up Display system in China
- Grew Aerospace activity at the two new facilities to almost $1M
in Q1 2014
- Achieved sales outside of North America of 16% of total
sales
- Reached full and final settlement of environmental lawsuit with
Emmanuel Tannenbaum and June Realty Ltd with no material impact on
the company
For FTG, overall sales increased by $1.0M or 7.5% from $13.0M in
Q1 2013 to $14.0M in Q1 2014. FTG Circuits and the new Aerospace
facilities drove the growth.
The Circuits Segment sales were up $1.6M or 18% in Q1 2014
versus Q1 2013. Both established facilities had strong growth in
the quarter.
For the Aerospace segment, sales in Q1 2014 were $3.5M compared
to $4.1M 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.
Gross margins were up in Q1 2014 by $1.0M compared to Q1 2013
due to lower start-up costs at the new facilities and higher sales
in the Circuits business. Gross margins in Q1 2014 were 22%
compared to 16% in Q1 2013.
Net profit at FTG in Q1 2014 was $0.15M compared to a net loss
of $0.7M in Q1 2013. This improvement is the result of higher gross
margins and stable SG&A costs. Taxes are higher in Q1 2014 due
to recording taxes on Canadian profit, offset by a reduction in
deferred income taxes. This is a non-cash item.
The Circuits segment net earnings before corporate and interest
and other costs increased to $0.9M in Q1 2014 compared to $0.1M in
Q1 2013, on $1.6M higher sales. The improved results were at both
established facilities. The Circuits joint venture in China did not
have a material impact on profitability.
The Aerospace net earnings before corporate and interest and
other costs increased slightly as start-up losses at the two new
facilities decreased, offset by lower profitability in the Toronto
facility due to lower activity. Costs related to the development of
the C919 cockpit assemblies of $0.6M in Q1 2014 were treated as
deferred development and not expensed.
As at February 28, 2014, the Corporation's primary source of
liquidity included accounts receivable of $12.2M and inventory of
$8.6M. Net working capital at February 28, 2014 was $11.4M.
The Corporation will host a live conference call on Wednesday,
April 9, 2014 at 11:30am (EDT) to discuss the results of Q1
2014.
Anyone wishing to participate in the call should dial
647-788-4922 or 1-877-223-4471 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 April 23, 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 25504567.
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 |
|
|
|
|
|
|
|
| (Unaudited) |
February 28, |
|
November 30, |
|
| (in thousands of Canadian dollars) |
2014 |
|
2013 |
|
| ASSETS |
|
|
|
|
| Current assets |
|
|
|
|
| Cash |
$ |
1,744 |
|
$ |
996 |
|
| Accounts receivable |
|
12,173 |
|
|
12,275 |
|
| Taxes receivable |
|
334 |
|
|
264 |
|
| Inventories |
|
8,606 |
|
|
8,074 |
|
| Prepaid expenses |
|
611 |
|
|
549 |
|
|
|
|
23,468 |
|
|
22,158 |
|
| Non-current assets |
|
|
|
|
|
|
| Plant and equipment, net |
|
5,419 |
|
|
5,587 |
|
| Deferred income taxes |
|
2,307 |
|
|
2,385 |
|
| Intangible assets |
|
184 |
|
|
196 |
|
| Total assets |
$ |
31,378 |
|
$ |
30,326 |
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
| Bank indebtedness |
$ |
1,107 |
|
$ |
1,062 |
|
| Accounts payable and accrued liabilities |
|
8,698 |
|
|
8,027 |
|
| Provisions |
|
479 |
|
|
612 |
|
| Customer deposits, net of deferred development |
|
1,502 |
|
|
930 |
|
| Current portion of long-term bank debt |
|
321 |
|
|
307 |
|
| Current portion of subordinated loan |
|
- |
|
|
510 |
|
|
|
|
12,107 |
|
|
11,448 |
|
| Non-current liabilities |
|
|
|
|
|
|
| Long-term bank debt |
|
1,749 |
|
|
1,753 |
|
| Subordinated loan |
|
3,984 |
|
|
3,396 |
|
| Government assistance |
|
674 |
|
|
786 |
|
| Total liabilities |
|
18,514 |
|
|
17,383 |
|
| Equity |
|
|
|
|
|
|
| Deficit |
$ |
(9,957 |
) |
$ |
(10,102 |
) |
| Accumulated other comprehensive loss |
|
(469 |
) |
|
(249 |
) |
|
|
|
(10,426 |
) |
|
(10,351 |
) |
| Share capital |
|
|
|
|
|
|
|
Common shares |
|
12,681 |
|
|
12,681 |
|
|
Preferred shares |
|
2,218 |
|
|
2,218 |
|
| Contributed surplus |
|
8,356 |
|
|
8,347 |
|
| Total equity attributable to FTG's shareholders |
|
12,829 |
|
|
12,895 |
|
| Non-controlling interests |
|
35 |
|
|
48 |
|
| Total equity |
|
12,864 |
|
|
12,943 |
|
| Total liabilities and equity |
$ |
31,378 |
|
$ |
30,326 |
|
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
| Interim Condensed Consolidated Statements of Earnings
(Loss) |
|
|
|
|
Three months ended |
|
| (unaudited) |
February 28, |
|
March 1, |
|
| (in thousands of Canadian dollars, except per share
amounts) |
2014 |
|
2013 |
|
|
|
|
|
|
| Sales |
$ |
13,989 |
|
$ |
13,015 |
|
|
|
|
|
|
|
|
| Cost of sales |
|
|
|
|
|
|
|
Cost
of sales |
|
10,448 |
|
|
10,523 |
|
|
Depreciation of plant and equipment |
|
417 |
|
|
410 |
|
| Total cost of sales |
|
10,865 |
|
|
10,933 |
|
| Gross margin |
|
3,124 |
|
|
2,082 |
|
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
Selling, general and administrative |
|
2,092 |
|
|
2,074 |
|
|
Research and development costs |
|
847 |
|
|
667 |
|
|
Recovery of research and development costs |
|
(70 |
) |
|
(70 |
) |
|
Depreciation/amortization of plant and equipment and intangible
assets |
|
45 |
|
|
38 |
|
|
Interest expense on short-term debt |
|
14 |
|
|
14 |
|
|
Interest expense on long-term debt |
|
86 |
|
|
78 |
|
|
Foreign exchange gain |
|
(117 |
) |
|
(50 |
) |
| Total expenses |
|
2,897 |
|
|
2,751 |
|
|
|
|
|
|
|
|
| Earnings (loss) before income taxes |
|
227 |
|
|
(669 |
) |
|
|
|
|
|
|
|
| Income tax expense |
|
98 |
|
|
22 |
|
|
|
|
|
|
|
|
| Net earnings (loss) |
$ |
129 |
|
$ |
(691 |
) |
|
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
|
|
| Non-controlling interests |
|
(16 |
) |
|
- |
|
| Equity holders of FTG |
|
145 |
|
|
(691 |
) |
|
|
|
|
|
|
|
| Earnings (loss) per share, attributable to the equity
holders of FTG |
|
|
|
|
|
|
|
Basic |
$ |
0.01 |
|
$ |
(0.04 |
) |
|
Diluted |
$ |
0.01 |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
| Interim Condensed Consolidated Statements of
Comprehensive loss |
|
|
|
|
|
|
|
Three months ended |
|
| (unaudited) |
February 28, |
|
March 1, |
|
| (in thousands of Canadian dollars) |
2014 |
|
2013 |
|
|
|
|
|
|
| Net earnings (loss) |
$ |
129 |
|
$ |
(691 |
) |
|
|
|
|
|
|
|
| Other comprehensive income (loss) to be reclassified to
net earnings (loss) in subsequent periods: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
528 |
|
|
142 |
|
|
Net unrealized loss on derivative financial instruments designated
as cash flow hedges |
|
(748 |
) |
|
(237 |
) |
|
|
(220 |
) |
|
(95 |
) |
|
|
|
|
|
|
|
| Total comprehensive loss |
$ |
(91 |
) |
$ |
(786 |
) |
|
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
|
|
| Equity holders of FTG |
$ |
(75 |
) |
$ |
(786 |
) |
| Non-controlling interests |
$ |
(16 |
) |
$ |
- |
|
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
| Interim Condensed Consolidated Statements of Changes
in Equity |
|
|
|
|
|
|
Three months ended February 28, 2014 |
Attributed to the equity holders of FTG |
|
|
|
|
|
|
(unaudited) (in thousands of Canadian dollars) |
Common Shares |
Preferred Shares |
Deficit |
|
Contributed Surplus |
Accumulated Other Comprehensive (Loss) |
|
Total |
|
Non- controlling interests |
|
Total equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2013 |
$ |
12,681 |
$ |
2,218 |
$ |
(10,102 |
) |
$ |
8,347 |
$ |
(249 |
) |
$ |
12,895 |
|
$ |
48 |
|
$ |
12,943 |
|
| Net
earnings (loss) |
|
- |
|
- |
|
145 |
|
|
- |
|
- |
|
|
145 |
|
|
(13 |
) |
|
132 |
|
|
Stock-based compensation |
|
- |
|
- |
|
- |
|
|
9 |
|
- |
|
|
9 |
|
|
- |
|
|
9 |
|
|
Foreign currency translation adjustments |
|
- |
|
- |
|
- |
|
|
- |
|
528 |
|
|
528 |
|
|
- |
|
|
528 |
|
|
Net unrealized loss on derivative financial instruments designated
as cash flow hedges |
|
- |
|
- |
|
- |
|
|
- |
|
(748 |
) |
|
(748 |
) |
|
- |
|
|
(748 |
) |
|
Balance, February 28, 2014 |
$ |
12,681 |
$ |
2,218 |
$ |
(9,957 |
) |
$ |
8,356 |
$ |
(469 |
) |
$ |
12,829 |
|
$ |
35 |
|
$ |
12,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three
months ended March 1, 2013 |
|
Attributed to the equity holders of FTG |
|
|
|
|
|
|
|
|
(unaudited) (in thousands of Canadian dollars) |
|
Common Shares |
|
Preferred Shares |
|
Deficit |
|
|
Contributed Surplus |
|
Accumulated Other Comprehensive (Loss |
) |
|
Total |
|
|
Non- controlling interests |
|
|
Total equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2012 |
$ |
12,681 |
$ |
2,218 |
$ |
(9,104 |
) |
$ |
8,305 |
$ |
(85 |
) |
$ |
14,015 |
|
$ |
- |
|
$ |
14,015 |
|
| Net
loss |
|
- |
|
- |
|
(691 |
) |
|
- |
|
- |
|
|
(691 |
) |
|
- |
|
|
(691 |
) |
|
Stock-based compensation |
|
- |
|
- |
|
- |
|
|
9 |
|
- |
|
|
9 |
|
|
- |
|
|
9 |
|
|
Foreign currency translation adjustments |
|
- |
|
- |
|
- |
|
|
- |
|
142 |
|
|
142 |
|
|
- |
|
|
142 |
|
|
Net unrealized loss on derivative financial instruments designated
as cash flow hedges |
|
- |
|
- |
|
- |
|
|
- |
|
(237 |
) |
|
(237 |
) |
|
- |
|
|
(237 |
) |
|
Balance, March 1, 2013 |
$ |
12,681 |
$ |
2,218 |
$ |
(9,795 |
) |
$ |
8,314 |
$ |
(180 |
) |
$ |
13,238 |
|
$ |
- |
|
$ |
13,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| FIRAN TECHNOLOGY GROUP CORPORATION |
|
| Interim Condensed Consolidated Statements of Cash
Flows |
|
|
Three months ended |
|
| (unaudited) |
February 28, |
|
March 1, |
|
| (in thousands of Canadian dollars) |
2014 |
|
2013 |
|
| Net inflow (outflow) of cash related to the
following: |
|
|
|
|
| Operating activities |
|
|
|
|
| Net earnings (loss) |
$ |
129 |
|
$ |
(691 |
) |
| Items not affecting cash: |
|
|
|
|
|
|
|
Non-controlling interest share of loss |
|
16 |
|
|
- |
|
|
Stock-based compensation |
|
9 |
|
|
9 |
|
|
Gain
on disposal of plant and equipment |
|
- |
|
|
(25 |
) |
|
Effect of exchange rates on US dollar debt |
|
89 |
|
|
50 |
|
|
Depreciation of plant and equipment |
|
450 |
|
|
436 |
|
|
Amortization of intangible assets |
|
12 |
|
|
12 |
|
|
Amortization of deferred financing costs |
|
7 |
|
|
7 |
|
|
Income tax expense |
|
78 |
|
|
- |
|
|
AMIS
interest accretion |
|
78 |
|
|
73 |
|
|
Amortization of government assistance |
|
(112 |
) |
|
(112 |
) |
| Changes in non-cash operating working capital |
|
524 |
|
|
466 |
|
|
|
1,280 |
|
|
225 |
|
| Investing activities |
|
|
|
|
|
|
|
Additions to plant and equipment |
|
(197 |
) |
|
(717 |
) |
|
Proceeds from disposal of plant and equipment |
|
- |
|
|
25 |
|
|
|
(197 |
) |
|
(692 |
) |
| Net cash flow from (used in) operating and investing
activities |
|
1,083 |
|
|
(467 |
) |
| Financing activities |
|
|
|
|
|
|
|
Decrease in bank indebtedness |
|
- |
|
|
(823 |
) |
|
Proceeds from long-term bank debt |
|
- |
|
|
717 |
|
|
Repayments of long-term bank debt |
|
(85 |
) |
|
(18 |
) |
|
|
(85 |
) |
|
(124 |
) |
| Effects of foreign exchange rate changes on cash
flow |
|
(250 |
) |
|
(155 |
) |
| Net increase (decrease) in cash flow |
|
748 |
|
|
(746 |
) |
| Cash, beginning of year |
|
996 |
|
|
1,446 |
|
| Cash, end of period |
$ |
1,744 |
|
$ |
700 |
|
|
|
|
|
|
|
|
| Disclosure of cash payments |
|
|
|
|
|
|
|
Payment for interest |
$ |
29 |
|
$ |
19 |
|
|
Payments for income taxes |
$ |
25 |
|
$ |
17 |
|
Firan Technology Group CorporationBradley C. BournePresident and
CEO(416) 299-4000 x314bradbourne@ftgcorp.comFiran Technology Group
CorporationJoseph R. RicciVice President and CFO(416) 299-4000
x309joericci@ftgcorp.comwww.ftgcorp.com
Firan Technology (TSX:FTG)
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Firan Technology (TSX:FTG)
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