TORONTO, ONTARIO -- (Marketwire) -- 10/10/12 -- Firan Technology Group Corporation (TSX:FTG) today announced financial results for the third quarter 2012.
-- Grew sales by 3% over Q3, 2011 and by 5% year-to-date over the same
period 2011
-- Sixth consecutive profitable quarter
-- Expensed $234,000 in Q3 in starting up new Aerospace facilities in
Tianjin, China and Chatsworth, California
-- Generated revenues over $300,000 from the two new Aerospace sites in the
quarter
-- R&D spending remained above 5% of sales
"FTG's investments in our new Aerospace facilities continue and we are seeing great interest from existing and new customers in utilizing these plants in the future", stated Brad Bourne, President and Chief Executive Officer. He added, "Our Tianjin plant has successfully completed registration of its quality management system to the AS9100 C requirements, ensuring our commitment to quality remains consistent across the Corporation."
Third Quarter Results: (three months ended August 31, 2012 compared with three months ended August 26, 2011)
Q3 2012 Q3 2011
--------------- ---------------
Sales $14,057,000 $13,662,000
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Operating Earnings (1): 1,163,000 1,071,000
- Net R&D Investment 714,000 702,000
- Aerospace Tianjin and Chatsworth start-
up expenses 234,000 37,000
- Severance 54,000 -
- Tax 6,000 -
---------------------------------
Net Earnings $155,000 $332,000
---------------------------------
Earnings per share
- basic & diluted $0.01 $0.02
Year-To-Date 2011 Results: (nine months ended August 31, 2012 compared with nine months ended August 26, 2011)
Year-To-Date 2012 Year-To-Date 2011
----------------- -----------------
Sales $41,927,000 $39,749,000
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Operating Earnings(1): 3,471,000 2,875,000
- Net R&D Investment 1,944,000 2,209,000
- Aerospace Tianjin and Chatsworth
Start-up Expenses 641,000 103,000
- Severance 54,000 -
- Income Tax 8,000 2,000
-------------------------------------
Net Earnings $824,000 $561,000
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Earnings per share
- basic $0.05 $0.03
- diluted $0.04 $0.03
(1) Operating Earnings (Loss) is not a measure recognized under Canadian
generally accepted accounting principles ("GAAP"). 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 (Loss) 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 2012 that continue to improve the Corporation and position it for the future, including:
-- Continued year-over-year sales growth.
-- Achieved profit of $443,000 in the quarter before start-up costs at the
two new Aerospace facilities and severance costs.
-- Completed the implementation of a new ERP system in the existing
Aerospace facility in Toronto. This same ERP system is being implemented
in the new facilities in Tianjin and Chatsworth.
-- Invested $487,000 in the quarter and $1,966,000 year-to-date to build
out two new facilities and increase technological capabilities in our
Circuits' facilities.
-- Successfully completed AS9100 audit for FTG Circuits - Tianjin to
Revision C
For FTG, overall sales increased by $0.4M (3%), from $13.7M in Q3 2011 to $14.1M in Q3 2012. Again, FTG Aerospace drove the growth in the quarter. For the first nine months, sales were $41.9M, an increase of $2.2M or 5% versus the same period last year.
The Circuits Segment sales were down $0.9M or 8% in Q3 2012 versus Q3 2011. Year-to-date Circuits Segment sales were down $0.4M or 1%. Both reductions are due to lower customer demand, from US based customers.
For the Aerospace segment, sales in Q3 2012 were up $1.3M or 47% compared to Q3 2011. Sales from FTG Aerospace Toronto were up 36% with the balance of the growth coming from the two new facilities. For the year-to-date Aerospace segment sales were up $2.5M or 29%.
Gross margins were essentially flat in the quarter, again while incurring start-up costs for the two new Aerospace facilities. Net earnings at FTG in Q3 2012 were $0.2M compared to net earnings of $0.3M in Q3 2011. Administrative costs were up slightly due to foreign exchange losses, severance expenses and higher R&D costs, compared to the same quarter last year.
The Circuits segment net earnings before corporate and interest costs was $0.6M in Q3 201 compared to $0.6M in Q3 2011, on lower sales. On a year-to-date basis, the Circuits business net earnings before corporate and interest costs was $2.2M compared to $1.6M for the same period last year. The improvement is due to lower manufacturing costs ($0.7M), lower R&D costs ($0.4M), offset by lower revenues ($0.4M) and higher foreign exchange losses ($0.2M).
The Aerospace net earnings before corporate and interest costs was $0.1M in Q3 2012 versus $0.2M in Q3, 2011. The net earnings this year are reduced by the $0.2M start-up expenses for the two new facilities. On a year-to-date basis, the net earnings before corporate and interest cost was $0.4M compared to $0.6M for the same period last year. Start-up expenses for the 9 month period year-to-date were $0.6M. Also in this year's expenses were costs related to implementing and new ERP system in our Toronto facility.
As at August 31, 2012, the Corporation's primary source of liquidity included accounts receivable of $9.4M and inventory of $8.3M. Inventories are down $0.5M in the quarter, due to a continued focus on lean manufacturing and cash management. Net working capital at August 31, 2012 was $ 10.9M.
The Corporation will host a live conference call on Thursday, October 11, 2012 at 11:30 am (EDT) to discuss the results of Q3 2012.
Anyone wishing to participate in the call should dial 416-340-8527 or 1-877-240-9772 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 25, 2012 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 8807452.
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 and Chatsworth, California.
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 Consolidated Balance Sheets
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(unaudited) August 31, November 30, December 1,
(in thousands of dollars) 2012 2011 2010
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ASSETS
Current assets
Cash $ 720 $ 1,944 $ 305
Accounts receivable 9,415 9,592 9,332
Taxes receivable 174 378 448
Inventories 8,268 7,973 8,726
Prepaid expenses 511 349 669
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19,088 20,236 19,480
Non-current assets
Plant and equipment, net 5,093 4,474 4,024
Goodwill 1,039 1,039 1,039
Deferred income taxes 1,375 1,375 667
Intangible and other assets 354 293 336
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Total assets $ 26,949 $ 27,417 $ 25,546
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Bank indebtedness $ 842 $ - $ 109
Accounts payable and accrued
liabilities 6,618 8,123 7,420
Provisions 341 485 544
Unearned revenue 260 714 152
Customer deposit, net of
deferred development 141 - -
Current portion of long-term
bank debt - 1,458 3,059
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8,202 10,780 11,284
Non-current liabilities
Subordinated loan 3,545 2,444 1,746
Government assistance 1,346 1,065 914
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Total liabilities 13,093 14,289 13,944
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Contingencies and commitments
Shareholders' equity
Deficit $ (9,208) $ (10,032) $ (11,506)
Accumulated other comprehensive
(loss) income (124) 12 -
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(9,332) (10,020) (11,506)
Share capital
Common shares 12,681 12,681 12,681
Preferred shares 2,218 2,218 2,218
Contributed surplus 8,289 8,249 8,209
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Total shareholders' equity 13,856 13,128 11,602
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Total liabilities and
shareholders' equity $ 26,949 $ 27,417 $ 25,546
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Earnings
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Three months ended Nine months ended
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(unaudited)
(in thousands of
dollars, except per August 31, August 26, August 31, August 26,
share amounts) 2012 2011 2012 2011
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Sales $ 14,057 $ 13,662 $ 41,927 $ 39,749
Cost of sales
Cost of sales 10,516 10,062 30,912 28,945
Depreciation of plant
and equipment 419 453 1,245 1,389
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Total cost of sales 10,935 10,515 32,157 30,334
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Gross margin 3,122 3,147 9,770 9,415
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Expenses
Selling, general and
administrative 1,962 2,003 6,382 6,218
Research and
development costs 778 732 2,168 2,303
Recovery of research
and development costs (64) (30) (224) (94)
Depreciation /
amortization of
office equipment and
intangible assets 35 28 99 84
Interest expense on
short-term debt 11 46 56 133
Interest expense on
long-term debt 69 60 204 166
Severance 54 - 54 -
Foreign exchange loss
(gain) 116 (24) 199 42
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Total expenses 2,961 2,815 8,938 8,852
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Earnings before income
taxes 161 332 832 563
Income tax expense 6 - 8 2
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Net earnings $ 155 $ 332 $ 824 $ 561
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Earnings per share
Basic $ 0.01 $ 0.02 $ 0.05 $ 0.03
Diluted $ 0.01 $ 0.02 $ 0.04 $ 0.03
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Comprehensive (Loss) Income
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Three months ended Nine months ended
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(unaudited) August 31, August 26, August 31, August 26,
(in thousands of dollars) 2012 2011 2012 2011
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Net earnings $ 155 $ 332 $ 824 $ 561
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Other comprehensive (loss)
income
Foreign currency
translation adjustments (213) 195 (136) (119)
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(213) 195 (136) (119)
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Total comprehensive (loss)
income $ (58) $ 527 $ 688 $ 442
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Changes in Shareholders' Equity
Nine months ended August 31, 2012 and August 26, 2011
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(unaudited) Common Preferred
(in thousands of dollars) Shares Shares Deficit
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Balance, December 1, 2010 $ 12,681 $ 2,218 $ (11,506)
Net earnings - - 561
Stock-based compensation - - -
Foreign currency translation
adjustments - - -
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Balance, August 26, 2011 12,681 2,218 (10,945)
Net earnings - - 913
Stock-based compensation - - -
Foreign currency translation
adjustments - - -
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Balance, November 30, 2011 12,681 2,218 (10,032)
Net earnings - - 824
Stock-based compensation - - -
Foreign currency translation
adjustments - - -
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Balance, August 31, 2012 $ 12,681 $ 2,218 $ (9,208)
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Accumulated
Other Total
(unaudited) Contributed Comprehensive Shareholders'
(in thousands of dollars) Surplus (Loss) Income Equity
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Balance, December 1, 2010 $ 8,209 $ - $ 11,602
Net earnings - - 561
Stock-based compensation 29 - 29
Foreign currency translation
adjustments - (119) (119)
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Balance, August 26, 2011 8,238 (119) 12,073
Net earnings - - 913
Stock-based compensation 11 - 11
Foreign currency translation
adjustments - 131 131
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Balance, November 30, 2011 8,249 12 13,128
Net earnings - - 824
Stock-based compensation 40 - 40
Foreign currency translation
adjustments - (136) (136)
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Balance, August 31, 2012 $ 8,289 $ (124) $ 13,856
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FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Cash Flows
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Three months ended Nine months ended
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(unaudited) August 31, August 26, August 31, August 26,
(in thousands of dollars) 2012 2011 2012 2011
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Net inflow (outflow) of cash
related to the following:
Operating activities
Net earnings $ 155 $ 332 $ 824 $ 561
Items not affecting cash:
Stock-based compensation 15 11 40 29
Gain from disposal of
plant and equipment - - (2) (1)
Effect of exchange rates
on U.S. dollar Canadian
debt - 5 (17) (76)
Depreciation of plant and
equipment 442 469 1,308 1,437
Amortization of intangible
assets 12 12 36 36
Amortization of deferred
financing costs 7 - 43 28
AMIS interest accretion 69 44 183 104
Amortization of government
assistance (111) (71) (291) (190)
Changes in non-cash
operating working capital (407) (129) (2,280) (632)
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182 673 (156) 1,296
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Investing activities
Additions to plant and
equipment (487) (471) (1,966) (1,959)
Proceeds from disposals of
plant and equipment - - 3 27
Additions to deferred
financing costs - - (108) -
Net change to customer
deposits/deferred
development (48) - 141 -
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(535) (471) (1,930) (1,932)
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Financing activities
Increase in bank
indebtedness 842 278 842 706
Proceeds from subordinated
loan and government
assistance - - 1,490 960
Repayments of long-term
debt - (208) (1,423) (1,316)
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842 70 909 350
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Effects of foreign exchange
rate changes on cash flow (87) (113) (47) 140
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Net cash flow 402 159 (1,224) (146)
Cash, beginning of period 318 - 1,944 305
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Cash, end of period $ 720 $ 159 $ 720 $ 159
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Disclosure of cash payments
Payment for interest $ 12 $ 62 $ 78 $ 195
Payments for income taxes $ 6 $ - $ 8 $ 2
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