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

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 2020Generated $3.2M in cash in Q3 and ended the quarter with $8.8M in net cash on the balance sheetAchieved a gross margin percentage of 27.6%Received $0.8M in Canadian Emergency Wage Subsidy in the quarterEntered 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)Year-to-Date: (nine months ended August 28, 2020 compared with nine months ended August 30, 2019)(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 HighlightsFTG 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 grantReduced overtime across FTG to reduce wage costs, particularly in sites focused on the commercial aerospace marketsReduced headcount by 3-4% primarily through attritionAchieved 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 programsBacklog negatively impacted by strengthening Canadian dollar that reduced backlog by approximately $3M compared to prior quarterFTG Aerospace Toronto was approved by Transport Canada as an approved maintenance organization (AMO) opening up future aftermarket opportunitiesFor 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.(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.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 CORPORATIONFTG 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 STATEMENTSThis 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.comJamie Crichton, Vice President and CFO                                                
Firan Technology Group Corporation
Tel:(416) 299-4000 x264
jamiecrichton@ftgcorp.comAdditional information can be found at the Corporation’s website www.ftgcorp.com