TORONTO, April 13, 2022 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the first quarter 2022.
- FTG achieved a fifth sequential quarter of increased bookings as the aerospace industry recovers from the COVID-19 pandemic.
- First quarter bookings of $26.0M are up 10% over Q4 2021 and up 43% over Q1 2021 and is the best bookings quarter since Q4 2019.
- FTG has maintained strong liquidity with net cash on the balance sheet of $16.2M, after investments in the quarter of $2.1M for capital expenditures and $1.4M for research and development.
- Sales for Q1 2022 were $20.5M, which is an increase of 7.9% over Q1 2021.
First Quarter Results: (three months ended March 4, 2022 compared with three months ended March 5, 2021)
| Q1 2022 | Q1 2021 | |||||
| Sales | $20,461,000 | $18,970,000 | ||||
| Gross Margin | 4,242,000 | 3,662,000 | ||||
| Gross Margin (%) | 20.7% | 19.3% | ||||
| Operating Earnings (1): | 1,016,000 | 686,000 | ||||
| • Net R&D Investment | 1,392,000 | 1,382,000 | ||||
| • R&D Tax Credits | (177,000) | (127,000) | ||||
| • Foreign Exchange Loss | 169,000 | 618,000 | ||||
| • Amortization of Intangibles | 31,000 | 89,000 | ||||
| • Forgiveness of debt | - | (1,336,000) | ||||
| Net (Loss) Earnings before Tax | (399,000) | 60,000 | ||||
| • Income Tax | 332,000 | 487,000 | ||||
| • Non-controlling Interests | 2,000 | (27,000) | ||||
| Net (Loss) Earnings After Tax | ($733,000) | ($400,000) | ||||
| (Loss) Earnings per share | ||||||
| - basic | ($0.03) | ($0.02) | ||||
| - diluted | ($0.03) | ($0.02) | ||||
| Government Assistance included in the Periods: | ||||||
| • Forgiveness of Debt | - | 1,336,000 | ||||
| • Other Government Subsidies | 257,000 | 1,083,000 | ||||
| Total Government Assistance included in the Periods | 257,000 | 2,419,000 | ||||
(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 Q1 2022 that continue to improve the Corporation and position it for the future, including:
- Achieved a 1.27:1 book-to-bill ratio for Q1 2022
- Booked an order valued at $1.3M for Simulator products on a military program with delivery expected in the 2nd half of 2022
- Total backlog as of the end of Q1 2022 is $45.1M, which is up 26% from Q1 2021
- Improved sales compared to Q1 2021 and sequentially from Q4 2021 despite numerous business disruptions including high COVID-related employee absence rate at all FTG sites, government-mandated production suspension in Tianjin during the Winter Olympics, winter storm at the Circuits Fredericksburg site and a fire at the Circuits Chatsworth facility
Overall for FTG, sales increased by $1.5M or 7.9% from $19.0M in Q1 2021 to $20.5M in Q1 2022. The increase in sales reflects a partial recovery of the commercial aerospace market. The market is improving for both domestic and international air travel as governments reduce travel restrictions.
The Circuits Segment sales in Q1 2022 were up $2.2M, or 18.3% versus Q1 2021. All sites were up but the largest percentage increases were at the Circuits Toronto and Tianjin sites, which have a high concentration of Commercial Aerospace customers. Shipments from the Circuits segment continued to be negatively impacted by COVID-related employee absences in all locations and a winter storm impacting the Circuits Fredericksburg site.
The Aerospace Segment sales in Q1 2022 decreased by $0.7M, or 10.1% versus Q1 2021. Lower sales were driven by a reduction in Simulator product revenue of $2.4M in Q1 2022. Excluding the Simulator product line, sales in the Aerospace segment increased by $1.7 million or 38.7% in Q1 2022 relative to Q1 2021, with increased shipments to commercial aerospace customers, primarily from the Toronto and Tianjin sites. The Chatsworth site also recorded increased sales, primarily to military customers. Shipments from the Aerospace segment continued to be negatively impacted by COVID-related employee absences in all locations and production suspension imposed in Tianjin during the Winter Olympics.
Gross margins in Q1 2022 were $4.2M or 20.7% compared to $3.7M or 19.3% in Q1 2021. The increase in gross margin is the result of increased operating leverage on higher sales volumes, operational improvements and reduced provisions for obsolete inventory. Government subsidies included in cost of sales for Q1 2022 were $0.3M as compared to $1.0M in Q1 2021.
Trailing twelve month (TTM) Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG was $9.1M.
The following table reconciles EBITDA(2) to the net earnings for the trailing 12 months as at March 4, 2022.
| Trailing 12 Months | |||
| Net earnings to equity holders of FTG | (77,000) | ||
| Add: | |||
| Interest, accretion | 534,000 | ||
| Income taxes | 2,253,000 | ||
| Depreciation/Amortization &Stock Comp | 6,346,000 | ||
| EBITDA | $9,056,000 | ||
(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 loss after tax at FTG in Q1 2022 was $0.7M or $0.03 per diluted share compared to a net loss of $0.4M or $0.02 per diluted share in Q1 2021. The impact of increased sales and gross margin in Q1 2022 was more than offset by reduced COVID-19 related government subsidies. In Q1 2022, government subsidies were limited to $0.3M from the US Department of Transportation AMJP program, whereas Q1 2021 included $2.4M of wage and rent subsidies in Canada and PPP loan forgiveness in the U.S. Excluding COVID-19 related government subsidies, net loss after tax from FTG’s operations improved by $1.5M in Q1 2022 compared to Q1 2021.
The Circuits Segment net earnings before corporate and interest and other costs was $0.3M in Q1 2022 compared to $0.6M in Q1 2021. The increase in sales was the most significant impact on the segment profitability offset by reduced subsidies from the US and Canadian governments. Q1 2022 included $0.3M of government subsidies whereas Q1 2021 included $1.3M. Excluding the effect of government subsidies, net earnings from the Circuits Segment increased by $0.7M.
The Aerospace Segment net earnings before corporate and interest and other costs was $0.1M in Q1 2022 compared to $0.3M in Q1 2021. Excluding the Simulator product line, increased sales contributed to increased segment profitability, however this was offset by reduced sales of Simulator products and reduced levels of subsidies from the US and Canadian governments. The Aerospace Segment received no government subsidy in Q1 2022 whereas Q1 2021 included $1.1M. Excluding the effect of government subsidies, net earnings from the Aerospace Segment increased by $0.9M.
As at March 4, 2022, the Corporation’s net working capital was $38.8M, compared to $40.0M at year-end in 2021.
FTG ended Q1 2022 with $16.2M in net cash as compared to $17.9M at the end of 2021. Capex investment was robust at $2.1M for the current quarter. This investment is part of our initiative to leverage our strong balance sheet to improve and grow across FTG.
The Corporation will host a live conference call on Thursday, April 14, 2022 at 8:30am (Eastern) to discuss the results of the first quarter of 2022.
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. Conference ID is 5716718. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until May 14, 2022 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 5716718.
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 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 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 | |||||||
| Interim Condensed Consolidated Statements of Financial Position | |||||||
| (Unaudited) | March 4, | November 30, | |||||
| (in thousands of Canadian dollars) | 2022 | 2021 | |||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 18,210 | $ | 20,196 | |||
| Accounts receivable | 14,352 | 16,014 | |||||
| Contract assets | 848 | 818 | |||||
| Inventories | 17,316 | 16,953 | |||||
| Income tax recoverable | 96 | 1 | |||||
| Prepaid expenses and other | 3,062 | 3,162 | |||||
| 53,884 | 57,144 | ||||||
| Non-current assets | |||||||
| Plant and equipment, net | 12,028 | 11,078 | |||||
| Right-of-use assets | 9,715 | 10,098 | |||||
| Investment tax credits recoverable | 248 | 327 | |||||
| Intangible and other assets, net | 774 | 805 | |||||
| Total assets | 76,649 | 79,452 | |||||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 11,996 | $ | 13,803 | |||
| Provisions | 610 | 545 | |||||
| Contract liabilities | 156 | 335 | |||||
| Current portion of bank debt | 936 | 935 | |||||
| Current portion of lease liabilities | 1,420 | 1,553 | |||||
| 15,118 | 17,171 | ||||||
| Non-current liabilities | |||||||
| Bank debt | 1,072 | 1,327 | |||||
| Lease liabilities | 8,914 | 9,123 | |||||
| Deferred tax payable | 824 | 789 | |||||
| Total liabilities | 25,928 | 28,410 | |||||
| Equity | |||||||
| Retained earnings | $ | 18,658 | $ | 19,391 | |||
| Accumulated other comprehensive income | 891 | 478 | |||||
| 19,549 | 19,869 | ||||||
| Share capital | |||||||
| Common Shares | 21,881 | 21,881 | |||||
| Contributed surplus | 8,345 | 8,352 | |||||
| Total equity attributable to FTG's shareholders | 49,775 | 50,102 | |||||
| Non-controlling interest | 946 | 940 | |||||
| Total equity | 50,721 | 51,042 | |||||
| Total liabilities and equity | 76,649 | 79,452 | |||||
| FIRAN TECHNOLOGY GROUP CORPORATION | ||||||||
| Interim Condensed Consolidated Statements of Loss | ||||||||
| Three months ended | ||||||||
| (Unaudited) | March 4, | March 5, | ||||||
| (in thousands of Canadian dollars, except per share amounts) | 2022 | 2021 | ||||||
| Sales | $ | 20,461 | $ | 18,970 | ||||
| Cost of sales | ||||||||
| Cost of sales | 14,734 | 13,865 | ||||||
| Depreciation of plant and equipment | 1,128 | 1,077 | ||||||
| Depreciation of right-of-use assets | 357 | 366 | ||||||
| Total cost of sales | 16,219 | 15,308 | ||||||
| Gross margin | 4,242 | 3,662 | ||||||
| Expenses | ||||||||
| Selling, general and administrative | 3,018 | 2,691 | ||||||
| Research and development costs | 1,392 | 1,382 | ||||||
| Recovery of investment tax credits | (177 | ) | (127 | ) | ||||
| Depreciation of plant and equipment | 57 | 63 | ||||||
| Depreciation of right-of-use assets | 10 | 17 | ||||||
| Amortization of intangible assets | 31 | 89 | ||||||
| Interest expense on bank debt, net | 9 | 39 | ||||||
| Accretion on lease liabilities | 108 | 126 | ||||||
| Stock based compensation | 24 | 40 | ||||||
| Foreign exchange loss | 169 | 618 | ||||||
| Forgiveness of debt | - | (1,336 | ) | |||||
| Total expenses | 4,641 | 3,602 | ||||||
| Earnings (loss) before income taxes | (399 | ) | 60 | |||||
| Current income tax expense | 296 | 461 | ||||||
| Deferred income tax expense | 36 | 26 | ||||||
| Total income tax expense | 332 | 487 | ||||||
| Net loss | $ | (731 | ) | $ | (427 | ) | ||
| Attributable to: | ||||||||
| Non-controlling interest | $ | 2 | $ | (27 | ) | |||
| Equity holders of FTG | $ | (733 | ) | $ | (400 | ) | ||
| Loss per share, attributable to the equity holders of FTG | ||||||||
| Basic | $ | (0.03 | ) | $ | (0.02 | ) | ||
| Diluted | $ | (0.03 | ) | $ | (0.02 | ) | ||
| FIRAN TECHNOLOGY GROUP CORPORATION | ||||||||||
| Interim Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||||||||
| Three months ended | ||||||||||
| (Unaudited) | March 4, | March 5, | ||||||||
| (in thousands of Canadian dollars) | 2022 | 2021 | ||||||||
| Net loss | $ | (731 | ) | $ | (427 | ) | ||||
| Other comprehensive earnings (loss) to be reclassified to | ||||||||||
| net earnings (loss) in subsequent periods: | ||||||||||
| Change in foreign currency translation adjustments | (60 | ) | (428 | ) | ||||||
| Net gain (loss) on valuation of derivative financial instruments | ||||||||||
| designated as cash flow hedges | 637 | 1,060 | ||||||||
| Deferred income taxes on change in valuation of | ||||||||||
| derivative financial instruments designated as cash flow hedges | (160 | ) | (265 | ) | ||||||
| 417 | 367 | |||||||||
| Total comprehensive loss | $ | (314 | ) | $ | (60 | ) | ||||
| Attributable to: | ||||||||||
| Equity holders of FTG | $ | (320 | ) | $ | (22 | ) | ||||
| Non-controlling interest | $ | 6 | $ | (38 | ) | |||||
| FIRAN TECHNOLOGY GROUP CORPORATION | ||||||||||||||||||||||
| Interim Condensed Consolidated Statements of Changes in Equity | ||||||||||||||||||||||
| Three months ended March 4, 2022 | Attributed to the equity holders of FTG | |||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||
| other | Non- | |||||||||||||||||||||
| (Unaudited) | Common | Retained | Contributed | comprehensive | controlling | Total | ||||||||||||||||
| (in thousands of Canadian dollars) | shares | earnings | surplus | income | Total | interest | equity | |||||||||||||||
| Balance, November 30, 2021 | $ | 21,881 | $ | 19,391 | $ | 8,352 | $ | 478 | $ | 50,102 | $ | 940 | $ | 51,042 | ||||||||
| Net income (loss) | - | (733 | ) | - | - | (733 | ) | 2 | (731 | ) | ||||||||||||
| Stock-based compensation | - | - | (7 | ) | - | (7 | ) | - | (7 | ) | ||||||||||||
| Other comprehensive income | - | - | - | 413 | 413 | 4 | 417 | |||||||||||||||
| Balance, March 4, 2022 | $ | 21,881 | $ | 18,658 | $ | 8,345 | $ | 891 | $ | 49,775 | $ | 946 | $ | 50,721 | ||||||||
| Three months ended March 5, 2021 | Attributed to the equity holders of FTG | |||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||
| other | Non- | |||||||||||||||||||||
| (Unaudited) | Common | Retained | Contributed | comprehensive | controlling | Total | ||||||||||||||||
| (in thousands of Canadian dollars) | shares | earnings | surplus | income | Total | interest | equity | |||||||||||||||
| Balance, November 30, 2020 | $ | 21,881 | $ | 19,135 | $ | 8,303 | $ | 958 | $ | 50,277 | $ | 1,011 | $ | 51,288 | ||||||||
| Net loss | - | (400 | ) | - | - | (400 | ) | (27 | ) | (427 | ) | |||||||||||
| Stock-based compensation | - | - | 40 | - | 40 | - | 40 | |||||||||||||||
| Other comprehensive income (loss) | - | - | - | 378 | 378 | (11 | ) | 367 | ||||||||||||||
| Balance, March 5, 2021 | $ | 21,881 | $ | 18,735 | $ | 8,343 | $ | 1,336 | $ | 50,295 | $ | 973 | $ | 51,268 | ||||||||
| FIRAN TECHNOLOGY GROUP CORPORATION | |||||||||
| Interim Condensed Consolidated Statements of Cash Flows | |||||||||
| Three months ended | |||||||||
| (Unaudited) | March 4, | March 5, | |||||||
| (in thousands of Canadian dollars) | 2022 | 2021 | |||||||
| Net inflow (outflow) of cash related to the following: | |||||||||
| Operating activities | |||||||||
| Net loss | $ | (731 | ) | $ | (427 | ) | |||
| Items not affecting cash and cash equivalents: | |||||||||
| Stock-based compensation | 24 | 40 | |||||||
| Loss on disposal of plant and equipment | - | 1 | |||||||
| Effect of exchange rates on U.S. dollar bank debt | (30 | ) | (189 | ) | |||||
| Depreciation of plant and equipment | 1,185 | 1,140 | |||||||
| Depreciation of right-of-use assets | 367 | 383 | |||||||
| Amortization of intangible assets | 31 | 89 | |||||||
| Amortization, other | 6 | 12 | |||||||
| Investment tax credits/deferred income taxes | 236 | 231 | |||||||
| Accretion on lease liabilities | 108 | 126 | |||||||
| Forgiveness of debt | - | (1,336 | ) | ||||||
| Net change in non-cash operating working capital | (283 | ) | 330 | ||||||
| 913 | 400 | ||||||||
| Additions to plant and equipment | (2,109 | ) | (378 | ) | |||||
| Recovery of contract and other costs | 3 | 10 | |||||||
| Additions to deferred financing costs | - | (8 | ) | ||||||
| (2,106 | ) | (376 | ) | ||||||
| Net cash flow from operating and investing activities | (1,193 | ) | 24 | ||||||
| Financing activities | |||||||||
| Repayments of bank debt | (231 | ) | (232 | ) | |||||
| Lease liability payments | (427 | ) | (452 | ) | |||||
| (658 | ) | (684 | ) | ||||||
| Effects of foreign exchange rate changes on cash flow | (135 | ) | (299 | ) | |||||
| Net decrease in cash flow | (1,986 | ) | (959 | ) | |||||
| Cash and cash equivalents, beginning of the period | 20,196 | 19,032 | |||||||
| Cash and cash equivalents, end of period | $ | 18,210 | $ | 18,073 | |||||
| Disclosure of cash payments | |||||||||
| Payment for interest | $ | 25 | $ | 42 | |||||
| Payments for income taxes | $ | 248 | $ | 197 | |||||
