TORONTO, Feb. 06, 2019 (GLOBE NEWSWIRE) — Firan Technology Group Corporation (TSX: FTG) today announced financial results for the full year and fourth quarter 2018.

• Achieved record full year sales in 2018 of $109.4M compared to $94.7M in 2017
• Grew Aerospace segment by 27% over last year and grew Circuits segment by 8% over last year
• Achieved record EBITDA of $10.5M, an increase of $2.9M or 38% over last year
• Achieved net income of $2.9M and diluted earnings per share of $0.12, a 127% increase over 2017
• Generated $8.9M in cash flow from operations, after investments in capital equipment and all development programs, compared to cash usage of $0.9M in 2017

“FTG made great progress in 2018 in demonstrating the strength of the company and our earning potential”, stated Brad Bourne, President and Chief Executive Officer. He added, “Our sales growth was exceptional and as each quarter passed the operating results improved.”

Full Year Results:  (twelve months ended Nov 30, 2018 compared with twelve months ended Nov 30, 2017)
	FY 2018			FY 2017
Sales	$	109,420,000		$	94,695,000
Gross Margin		25,262,000			23,125,000
Gross Margin (%)		23.1	%		24.4	%
Operating Earnings (1):		11,433,000			10,013,000
•  Net R&D Investment		4,520,000			6,277,000
•  Restructuring Expense		455,000			–
•  Foreign Exchange (Gain)		(75,000	)		(211,000	)
•  Recovery of Investment Tax Credits		(796,000	)		(657,000	)
•  Amortization of Intangibles		1,049,000			1,107,000
Net Earnings before tax		6,280,000			3,497,000
•  Income Tax		3,415,000			2,290,000
•  Non-controlling Interests		(10,000	)		(62,000	)
Net Earnings after tax	$	2,875,000		$	1,269,000
Earnings per share
– basic	$	0.13		$	0.06
– diluted	$	0.12		$	0.05

Fourth Quarter Results: (three months ended Nov 30, 2018 compared with three months ended Nov 30, 2017)

	Q4 2018			Q4 2017
Sales	$	28,013,000		$	22,866,000
Gross Margin		7,264,000			5,287,000
Gross Margin (%)		25.9	%		23.1	%
Operating Earnings (1):		3,713,000			2,137,000
•  Net R&D Investment		1,320,000			1,353,000
•  Restructuring Expense		260,000			–
•  Foreign Exchange Loss		89,000			18,000
•  Recovery of Investment Tax Credits		(228,000	)		(162,000	)
•  Amortization of Intangibles		266,000			267,000
Net Earnings before Tax		2,006,000			661,000
•  Tax Expense		769,000			498,000
•  Non-controlling Interests		11,000			(28,000	)
Net Earnings After Tax	$	1,226,000		$	191,000
Earnings per share
– basic	$	0.05		$	0.01
– diluted	$	0.05		$	0.01

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 2018 that continue to improve the Corporation and position it for the future, including:

• Growing the revenue from the simulator market dramatically in 2018 to over 10% of total revenue as a result of:
  • A new multimillion dollar contract with FlightSafety for KC-46 simulator cockpit assemblies
  • Ongoing simulator work with CAE for C-130 simulators
  • New simulator work with CAE on a new military program for FTG Toronto and a new commercial program for FTG Tianjin
  • New simulator work with Rockwell’s simulation subsidiary in Tianjin
• Strengthened our cockpit product assembly business by:
  • Signing a contract amendment with Shanghai Avionics for C919 cockpit product assemblies valued at $4M USD and shipping first redesigned hardware for the flight test program
  • Won three new cursor control device assemblies for use on air transport, business jet and rotary wing aircraft
  • Completed qualification testing of a  cursor control device for a helicopter program and a power supply for the LE-700 training aircraft in China
• Won a contract to develop cockpit panels for the Orion manned spacecraft being developed for NASA
• Received our first ever patent for High Temperature Rigid Flex circuit board technology in the UK
• Completed our first robotic automation project including Industry 4.0 technology at our Circuits Toronto facility

For FTG, overall sales increased by $14.7M or 15.5% from $94.7M in 2017 to $109.4M in 2018.  Both the Circuits and Aerospace segments contributed to the growth. For the full year the average exchange rate between the Canadian and US dollar was 1.2 cents stronger in 2018 versus 2017.  For the fourth quarter, sales were $28.0M compared to $22.9M in Q4 last year, an increase of 22.5%. 

The Circuits Segment sales in 2018 were $64.1M, up $5.0M or 8.4% versus 2017.  In the fourth quarter, Circuits sales were up by $3.7M or 27% to $17.4M.

For the Aerospace segment, sales in 2018 were $45.3M compared to $35.6M last year resulting in a 27.4% growth rate. In the fourth quarter sales were up $1.5M or 15.8%.

Gross margins in 2018 were up $2.1M compared to 2017 to $25.3M.  In 2018 the gross margin was 23.1% compared to 24.4% in 2017.  The margin in 2018 was impacted by extra costs incurred in Chatsworth to support the transition of revenue from the acquisitions in 2016 and inventory provisions also taken in Chatsworth to adjust the acquired inventory to the FTG standard inventory valuation methodology.  In Q4 2018 the gross margins were $7.3M or 25.9% compared to $5.3M or 23.1% in Q4 2017.

Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for Q4 2018 was $3.0M compared to $1.8M in Q4 2017.  EBITDA was $10.5M for the full year 2018.

The following table reconciles EBITDA⁽²⁾  to the net earnings for the trailing 12 months as at Nov 30, 2018.

			Trailing 12 Months
	Net earnings			2,865,000
	Add:
	Interest			521,000
	Income taxes/ITC/JV			2,629,000
	Depreciation/Amortization			4,506,000
	EBITDA		$	10,521,000

2. EBITDA 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 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 2018 was $2.9M compared to a net profit of $1.3M in 2017.  Higher margin and lower R&D spending was offset by higher SG&A costs and $0.5M of restructuring costs in 2018.  Q4 2018 had net income after tax of $1.2M compared to $0.2M in Q4 2017. 

The Circuits segment net earnings before corporate and interest and other costs was $9.4M in 2018 compared to $8.5M in 2017.

The Aerospace net earnings before corporate and interest and other costs in 2018 was ($0.4M) versus ($2.5M) in 2017.  2018 had higher sales and lower R&D costs offset by $1.7M inventory provision increases and $0.3M in restructuring costs.

As at November 30, 2018, the Corporation’s net working capital was $28.7M, an increase of $4.3M over year end 2017.  Higher cash and accounts receivables were offset by lower inventories and higher accounts payable and accrued liabilities and provisions. 

Net debt to EBITDA, was 0.23:1 for the trailing 12 month period.

The Corporation will host a live conference call on Thursday, February 7, 2019 at 8:30 am (EST) to discuss the results of 2018.

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 February 21, 2019 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 6665806.

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, 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
[email protected]

Melinda Diebel, Vice President and CFO
Firan Technology Group Corporation
Tel:(416) 299-4000 x264
[email protected]

Additional information can be found at the Corporation’s website www.ftgcorp.com

 

FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Balance Sheets
As at				November 30,			November 30,
(in thousands of Canadian dollars)				2018			2017
ASSETS
Current assets
Cash				$	5,026		$	2,752
Accounts receivable					18,696			17,983
Taxes receivable					189			209
Inventories					24,634			25,079
Prepaid expenses					1,816			1,506
					50,361			47,529
Non-current assets
Plant and equipment, net					12,078			12,222
Deferred income tax assets					732			395
Investment tax credits receivable					4,620			6,420
Deferred development costs					276			681
Intangible assets and other assets, net					3,069			3,768
Total assets				$	71,136		$	71,015
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness				$	–		$	6,444
Accounts payable and accrued liabilities					16,278			13,341
Provisions					849			390
Customer deposits					1,966			1,268
Current portion of long-term bank debt					2,019			1,726
Income tax payable (provincial)					563			–
					21,675			23,169
Non-current liabilities
Long-term bank debt					5,404			6,040
Deferred tax payable					1,750			1,696
Total liabilities					28,829			30,905
Equity
Retained earnings				$	11,687		$	8,812
Accumulated other comprehensive (loss) income					(774	)		187
					10,913			8,999
Share capital
Common shares					19,323			19,295
Preferred shares					2,218			2,218
Contributed surplus					8,672			8,384
Total equity attributable to FTG’s shareholders					41,126			38,896
Non-controlling interest					1,181			1,214
Total equity					42,307			40,110
Total liabilities and equity				$	71,136		$	71,015

 

FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Earnings
			Years ended
			November 30,				November 30,
(in thousands of Canadian dollars, except per share amounts)			2018				2017
Sales			$	109,420			$	94,695
Cost of sales
	Cost of sales			81,143				68,754
	Depreciation of plant and equipment			3,015				2,816
Total cost of sales				84,158				71,570
Gross margin				25,262				23,125
Expenses
	Selling, general and administrative			13,174				12,508
	Research and development costs			4,740				6,497
	Recovery of research and development costs			(220	)			(220	)
	Recovery of investment tax credits			(796	)			(657	)
	Depreciation of plant and equipment			134				117
	Amortization of intangible assets			1,049				1,107
	Interest expense on short-term debt			221				258
	Interest expense on long-term debt			300				229
	Foreign exchange (gain)			(75	)			(211	)
	Restructuring expenses			455				–
Total expenses				18,982				19,628
Earnings before income taxes				6,280				3,497
Current income tax expense				3,230				1,525
Deferred income tax expense				185				765
Total income tax expense				3,415				2,290
Net earnings			$	2,865			$	1,207
Attributable to:
Non-controlling interest			$	(10	)		$	(62	)
Equity holders of FTG			$	2,875			$	1,269
Earnings per share, attributable to the equity holders of FTG
	Basic		$	0.13			$	0.06
	Diluted		$	0.12			$	0.05

 

FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Comprehensive Income
			Years ended
			November 30,				November 30,
(in thousands of Canadian dollars)			2018				2017
Net earnings			$	2,865			$	1,207
Other comprehensive income (loss) to be reclassified to net earnings
	in subsequent periods:
	Foreign currency translation adjustments			209				(458	)
	Net unrealized (loss) gain on derivative financial instruments
		designated as cash flow hedges		(1,591	)			282
	Tax impact			398				(71	)
				(984	)			(247	)
Total comprehensive income			$	1,881			$	960
Attributable to:
Equity holders of FTG			$	1,914			$	1,013
Non-controlling interest			$	(33	)		$	(53	)

 

FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Changes in Equity
				Years ended November 30, 2018 and November 30, 2017
						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			Income (Loss)			Total			interest			equity
Balance, November 30, 2016		$	19,051	$	2,218	$	7,543	$	8,381		$	443		$	37,636		$	443		$	38,079
Net earnings (loss)			–		–		1,269		–			–			1,269			(62	)		1,207
Stock-based compensation			–		–		–		173			–			173			–			173
Common shares issued on exercise of
	share options and PSU’s		244		–		–		(170	)		–			74			–			74
Foreign currency translation adjustments			–		–		–		–			(467	)		(467	)		9			(458	)
Net unrealized gain on derivative financial
	instruments designated as cash flow
	hedges, net of tax impact		–		–		–		–			211			211			–			211
Contribution from non-controlling
	interest		–		–		–		–			–			–			824			824
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 and PSU’s		28		–		–		(8	)		–			20			–			20
Foreign currency translation adjustments			–		–		–		–			232			232			(23	)		209
Net unrealized gain on derivative financial
	instruments designated as cash flow
	hedges, net of tax impact		–		–		–		–			(1,193	)		(1,193	)		–			(1,193	)
Balance, November 30, 2018		$	19,323	$	2,218	$	11,687	$	8,672		$	(774	)	$	41,126		$	1,181		$	42,307

 

FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Cash Flows
				Years ended
				November 30,				November 30,
(in thousands of Canadian dollars)				2018				2017
Net inflow (outflow) of cash related to the following:
Operating activities
Net earnings				$	2,865			$	1,207
Items not affecting cash:
	Non-controlling interest share of net loss				10				62
	Stock-based compensation				296				173
	Loss (gain) on disposal of plant and equipment				25				(17	)
	Effect of exchange rates on US dollar debt				284				(230	)
	Depreciation of plant and equipment				3,149				2,933
	Amortization of intangible assets				1,049				1,107
	Amortization of deferred financing costs				12				12
	Current/deferred income tax expense				2,420				2,622
	Investment tax credits (recovery)				(796	)			(657	)
	(Increase) in net unrealized loss, decrease in net unrealized gain on derivative
	financial instruments designated as cash flow hedges				(1,404	)			868
Net change in non-cash operating working capital					3,859				(2,053	)
					11,769				6,027
Investing activities
	Additions to plant and equipment				(3,021	)			(7,086	)
	Recovery of deferred development costs, other				143				59
	Proceeds from disposal of plant and equipment				30				81
					(2,848	)			(6,946	)
Net cash flow from operating and investing activities					8,921				(919	)
Financing activities
	(Decrease) in bank indebtedness				(6,444	)			(539	)
	Proceeds from long-term bank debt				1,289				1,921
	Repayments of long-term bank debt				(1,928	)			(1,526	)
	Funding from non-controlling interest				–				824
	Proceeds from issue of Common shares				20				74
					(7,063	)			754
Effects of foreign exchange rate changes on cash flow					416				(235	)
Net increase (decrease) in cash flow					2,274				(400	)
Cash, beginning of the year					2,752				3,152
Cash, end of year				$	5,026			$	2,752
Disclosure of cash payments
	Payment for interest			$	529			$	490
	Payments for income taxes			$	24			$	6