Firan Technology Group Corporation (“FTG”) Announces Full Year and Fourth Quarter 2020 Financial Results

February 10, 2021 5:10 PM EST

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

TORONTO, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the full year and fourth quarter 2020.

  • FTG has managed successfully through the COVID-19 pandemic in 2020 as a result of three key strategies or actions:ο  FTG’s long-term market diversification strategy enabled the Company to mitigate the dramatic downturn in the commercial aerospace market through its involvement in the stable defense marketο  FTG carefully managed costs across the Company, balancing decisions on cost reductions with a goal to retain critical skills to ensure the Company is positioned for a faster recovery in the futureο  FTG carefully managed investments in the year and ended 2020 with a stronger balance sheet than before the pandemic
  • Achieved over $102M in annual sales, a 9% decline, during a very challenging year for the Aerospace industry
  • Maintained gross margins above 25% for the year
  • Received $3.2M in Canada Emergency Wage Subsidy (CEWS) which we used to help maintain our workforce in the face of revenue reductions due to COVID-19
  • Received $3.3M in US Paycheck Protection Program funds in the United States, which remain classified as loans at year-end
  • Achieved $13.4M EBITDA in the year, or 13.1%
  • Achieved $11.1M in Free Cash Flow (FCF) for the year, the highest ever achieved at FTG (FCF is defined as operating activities less investing activities, excluding acquisitions, less lease liability payments)
  • In Q4 2020, achieved 98.7% of Q4 2019 sales or $26.7M
  • Generated $4.1M in FCF in Q4 2020 and ended the quarter with $12.6M in net cash on the balance sheet

Full Year Results: (twelve months ended Nov 30, 2020 compared with twelve months ended Nov 30, 2019)

  Fiscal 2020  Fiscal 2019 
Sales$102,435,000 $112,653,000 
   
Gross Margin 26,419,000  30,264,000 
Gross Margin (%) 25.8% 26.9%
   
Operating Earnings (1): 11,963,000  15,818,000 
   
• R&D Investment 5,284,000  4,846,000 
• R&D Tax Credits (735,000) (669,000)
• Foreign Exchange Loss 1,042,000  785,000 
• Amortization of Intangibles 581,000  1,128,000 
• Impairment of Intangibles 1,145,000  - 
   
Net Earnings before Tax 4,646,000  9,728,000 
   
• Income Tax 3,384,000  3,746,000 
• Non-controlling Interests (128,000) (76,000)
   
Net Earnings After Tax$1,390,000 $6,058,000 
   
Earnings per share  
- basic$0.06 $0.27 
- diluted$0.06 $0.25 
   

Fourth Quarter Results: (three months ended Nov 30, 2020 compared with three months ended Nov 30, 2019)

  Q4 2020  Q4 2019 
Sales$26,711,000 $27,075,000 
   
Gross Margin 7,063,000  5,870,000 
Gross Margin (%) 26.4% 21.7%
   
Operating Earnings (1): 3,808,000  2,745,000 
   
• Net R&D Investment 1,318,000  1,339,000 
• R&D Tax Credits (165,000) (260,000)
• Foreign Exchange Loss 446,000  253,000 
• Amortization of Intangibles 91,000  301,000 
   
Net Earnings before Tax 2,118,000  1,112,000 
   
• Income Tax 840,000  504,000 
• Non-controlling Interests (30,000) 33,000 
   
Net Earnings After Tax$1,308,000 $575,000 
   
Earnings per share  
- basic$0.06 $0.03 
- diluted$0.06 $0.03 
   

(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 2020 that continue to improve the Corporation and position it for the future, including:

  • Purchased and installed an automated, highly secure backup system to protect Information Technology data across the Company
  • In July, FTG completed a new 2-year committed Credit Facility with our existing financial institution, which includes an operating facility of $USD 10.0 million and a capex facility of $USD 10.0 million, as well as sufficient capacity for foreign exchange forward contracts and precious metal forward contracts
  • Received $3.2M in Canada Emergency Wage Subsidy (CEWS) which we used to help maintain our workforce in the face of revenue reductions due to COVID-19
  • Received $3.3M in PPP loans in the US, that were classified as loans at the end of 2020
  • Reduced overtime across FTG and a series of one-week plant shutdowns (to reduce wage costs) particularly in sites focused on the commercial aerospace markets
  • Reduced headcount by approximately 7% through the year primarily through attrition
  • Achieved a 0.87:1 book-to-bill ratio for 2020 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 programs
  • Completed integration of FTG Circuits Fredericksburg into FTG including converting to FTG standard ERP system, completing AS9100 certification and achieving NADCAP accreditation
  • FTG Aerospace Toronto was approved by Transport Canada as an approved maintenance organization (AMO) opening up future aftermarket opportunities

For FTG in 2020, overall sales decreased by $10.2M or 9% from $112.7M in 2019 to $102.4M in 2020.   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. In our fourth quarter, sales were down 1.3% from $27.1 in Q4 2019 to $26.7M in Q4 2020. The drop is due to the COVID-19 pandemic offset by strong shipments in our simulator related business, primarily focused on defense programs. In Q4 2019, FTG was also subjected to a cyberattack that negatively impacted operating results in that quarter.

The Circuits Segment sales in 2020 were down $5.6M, or 8% in 2020 versus 2019. The largest decline was seen in the Circuits Toronto plant which is more heavily exposed to the Commercial Aerospace market. Offsetting this was 140% growth for the Circuits Fredericksburg site as it was part of FTG for the full year in 2020 as compared to only 4 ½ months in 2019. For the full year, operating performance in Circuits Chatsworth was below 2019 levels and as a result organizational improvements were made in the fourth quarter and subsequent to year-end. In the fourth quarter, sales in the Circuits Segment were $14.1M vs $18.6M in Q4 2019. Again, Circuits Toronto saw the largest decline, while Circuits Chatsworth was up Q4 over Q4. The increase at Circuits Chatsworth was primarily due to their focus on the defense market.

For the Aerospace Segment, sales in 2020 were $36.6M compared to $41.2M last year, a decrease of $4.6M or 11%. Simulator related sales remained strong for the full year as FTG’s activity in that market primarily relates to defense simulators. For the full year, simulator sales were up 8% compared to 2019. In Q4 2020, Aerospace Segment sales were up $4.2M or 50% primarily due to timing of simulator related shipments which were very strong in Q4 2020. Simulator related sales were up over $6M in Q4 2020 compared to Q4 2019.

Gross margins in 2020 were $26.4M or 25.8% compared to $30.3M or 26.9% in 2019. The lower sales impacted the overall margin. The Canadian Emergency Wage Subsidy added $2.8M to gross margin or 2.7 percentage points. In the fourth quarter, gross margins were $7.1M compared to $5.9M in Q4 2019. The CEWS added $1.4M to the Q4 2020 gross margin or 5.2 percentage points.

Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG in 2020 was $13.4M compared to $14.6M in 2019.   Lower sales and profitability were offset by wage subsidies in Canada of $3.2M.

The following table reconciles net earnings to EBITDA(2) for the year ended November 30, 2020.

  Fiscal 2020
  
Net earnings 1,390,000
Add: 
Interest & Accretion 767,000
Income taxes 3,384,000
Depreciation/Amortization/Stock Comp & Impairment 7,883,000
  
EBITDA$13,424,000

(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 profit after tax at FTG in 2020 was $1.4M or $0.06 per diluted share compared to a net profit of $6.1M or $0.25 per diluted share in 2019. Revenues were reduced due to the decline in the Commercial Aerospace market as a result of the COVID-19 pandemic which reduced margins and profitability. The impairment of intangible assets in 2020 reduced earnings by $1.1M compared to nil in 2019. In the fourth quarter, net profit was $1.3M compared to $0.6M in Q4 2019. Included in Q4 2020 was a recovery of $0.3M resulting from insurance proceeds from the fire in Fredericksburg earlier in the year, offset by $0.2M for preferred share conversion premium expense.

The Circuits Segment net earnings before corporate and interest and other costs was $6.9M in 2020 compared to $12.5M in 2019.   The lower sales was the most significant impact on the segment profitability.   For the full year, operating performance in Circuits Chatsworth was below 2019 levels and as a result, organizational improvements were made in the fourth quarter and subsequent to year-end. This site’s operations have also been the site most affected by COVID-19 due to various absences over the course of the year.

The Aerospace net earnings before corporate and interest and other costs in the full year was $1.5M in 2020 versus $1.1M in 2019. While sales were down in 2020, operating performance at the Toronto and Chatsworth sites more than offset the impact of the lower sale and the $1.1M asset impairment charge taken in this segment in Q1 2020.

As at November 30, 2020, the Corporation’s net working capital was $39.1M, compared to $28.6M at year-end in 2019. The increase is due to higher cash and lower accounts payable offset by lower accounts receivable and inventories.

FTG ended 2020 with $12.6M in net cash as compared to $2.2M at the end of 2019.  

The Corporation will host a live conference call on Thursday, February 11, 2021 at 8:30am (Eastern) to discuss the results of fiscal year 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 March 12, 2021 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 9077906.        

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, 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 CorporationTel: (416) 299-4000 x314bradbourne@ftgcorp.com

Jamie Crichton, Vice President and CFO                                                Firan Technology Group CorporationTel:(416) 299-4000 x264jamiecrichton@ftgcorp.com

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

FIRAN TECHNOLOGY GROUP CORPORATION   
Consolidated Statements of Financial Position   
       
As at  November 30,November 30, 
(in thousands of Canadian dollars) 2020 2019  
ASSETS    
Current assets   
Cash and cash equivalents$ 19,032$7,647  
Accounts receivable 16,795 21,085  
Contract assets 985 432  
Inventories  19,304 21,990  
Prepaid expenses and other 3,363 1,770  
     59,479 52,924  
Non-current assets   
Plant and equipment, net 12,640 13,830  
Right-of-use assets 12,130 -  
Deferred income tax assets - 724  
Investment tax credits recoverable 1,359 3,035  
Intangible and other assets, net 1,068 2,864  
Total assets $ 86,676$73,377  
LIABILITIES AND EQUITY   
Current liabilities   
Accounts payable and accrued liabilities$ 13,904$17,104  
Provisions  885 946  
Contract liabilities 388 216  
Current portion of bank debt 2,931 5,416  
Current portion of lease liabilities 1,810 -  
Income tax payable 155 639  
     20,073 24,321  
Non-current liabilities   
Bank debt  3,464 -  
Lease liabilities 10,659 -  
Deferred tax payable 1,192 1,297  
Total liabilities 35,388 25,618  
Equity    
Retained earnings$ 19,135$17,745  
Accumulated other comprehensive income (loss) 958 (1,554) 
     20,093 16,191  
Share capital   
 Common Shares 21,881 19,323  
 Preferred Shares - 2,218  
Contributed surplus 8,303 8,933  
Total equity attributable to FTG's shareholders 50,277 46,665  
Non-controlling interest 1,011 1,094  
Total equity 51,288 47,759  
Total liabilities and equity$ 86,676$73,377  
       

FIRAN TECHNOLOGY GROUP CORPORATION    
Consolidated Statements of Earnings    
       
    Years ended 
   November 30, November 30, 
(in thousands of Canadian dollars, except per share amounts)2020 2019 
       
Sales $ 102,435  $112,653  
       
Cost of sales    
 Cost of sales 70,307   78,788  
 Depreciation of plant and equipment 4,146   3,601  
 Depreciation of right-of-use assets 1,563   -  
Total cost of sales 76,016   82,389  
Gross margin 26,419   30,264  
       
Expenses    
 Selling, general and administrative 13,286   13,732  
 Research and development costs 5,284   4,846  
 Recovery of investment tax credits, net (735)  (669) 
 Depreciation of plant and equipment 221   163  
 Depreciation of right-of-use assets 52   -  
 Amortization of intangible assets 581   1,128  
 Interest expense on bank debt, net 211   290  
 Accretion on lease liabilities 556   -  
 Stock based compensation 130   261  
 Foreign exchange loss 1,042   785  
 Impairment of intangible assets 1,145   -  
Total expenses 21,773   20,536  
       
Earnings before income taxes 4,646   9,728  
       
Current income tax expense 3,715   4,296  
Deferred income tax recovery (331)  (550) 
Total income tax expense, net 3,384   3,746  
       
Net earnings$ 1,262  $5,982  
       
Attributable to:    
Non-controlling interest$ (128) $(76) 
Equity holders of FTG$ 1,390  $6,058  
       
Earnings per share, attributable to the equity holders of FTG    
 Basic$ 0.06  $0.27  
 Diluted$ 0.06  $0.25  
       

FIRAN TECHNOLOGY GROUP CORPORATION   
Consolidated Statements of Comprehensive Income (Loss)   
      
    Years ended
   November 30, November 30,
(in thousands of Canadian dollars)2020 2019
      
Net earnings$ 1,262  $5,982 
      
Other comprehensive earnings (loss) to be reclassified to   
 net earnings in subsequent periods:   
      
 Change in foreign currency translation adjustments (296)  (308)
 Net gain (loss) on valuation of derivative financial instruments   
  designated as cash flow hedges 3,803   (644)
 Deferred income taxes (950)  161 
      
    2,557   (791)
      
Total comprehensive income $ 3,819  $5,191 
      
Attributable to:   
Equity holders of FTG$ 3,902  $5,278 
Non-controlling interest$ (83) $(87)
      

FIRAN TECHNOLOGY GROUP CORPORATION        
Consolidated Statements of Changes in Equity        
          
    Years ended November 30, 2020 and November 30, 2019 
    Attributed to the equity holders of FTG   
      Accumulated   
      other  Non- 
  CommonPreferredRetainedContributedcomprehensive   controlling Total
(in thousands of Canadian dollars)sharessharesearningssurplusincome (loss)Totalinterestequity
Balance, November 30, 2018$ 19,323 $ 2,218 $ 11,687$ 8,672 $ (774)$ 41,126 $ 1,181 $ 42,307 
Net earnings (loss) -  -  6,058 -  -  6,058  (76) 5,982 
Stock-based compensation -  -  - 261  -  261  -  261 
Other comprehensive loss -  -  - -  (780) (780) (11) (791)
Balance, November 30, 2019$ 19,323 $ 2,218 $ 17,745$ 8,933 $ (1,554)$ 46,665 $ 1,094 $ 47,759 
Net earnings (loss) -  -  1,390 -  -  1,390  (128) 1,262 
Stock-based compensation -  -  - 130  -  130  -  130 
Transfer from contributed surplus to share capital for        
 PSU’s exercised 760    (760) -  -  -  - 
Common shares repurchase and issue on exercise        
 of PSU's (420) -  - -  -  (420) -  (420)
Common shares issued on exercise of option to convert        
 Preferred shares into Common shares 2,218  (2,218) - -  -  -  -  - 
Other comprehensive income -  -  - -  2,512  2,512  45  2,557 
Balance, November 30, 2020$ 21,881 $ - $ 19,135$ 8,303 $ 958 $ 50,277 $ 1,011 $ 51,288 
          
          

FIRAN TECHNOLOGY GROUP CORPORATION    
Consolidated Statements of Cash Flows    
        
      Years ended 
    November 30, November 30, 
(in thousands of Canadian dollars)2020 2019 
Net inflow (outflow) of cash related to the following:    
Operating activities    
Net earnings$ 1,262  $5,982  
Items not affecting cash and cash equivalents:    
 Stock-based compensation 130   261  
 Conversion of preferred shares 155   -  
 Gain on disposal of plant and equipment (302)  (53) 
 Effect of exchange rates on US dollar debt (292)  24  
 Depreciation of plant and equipment 4,367   3,764  
 Depreciation of right-of-use assets 1,615   -  
 Amortization of intangible assets 581   1,128  
 Amortization, other 45   12  
 Impairment of intangible assets 1,145   -  
 Investment tax credits/deferred income taxes 2,295   877  
 Accretion on lease liabilities 556   -  
 Net gain (loss) on valuation of derivative financial instruments    
  designated as cash flow hedges, net of taxes 2,853   (483) 
Net change in non-cash operating working capital 1,369   395  
     15,779   11,907  
Investing activities    
 Additions to plant and equipment (3,219)  (3,069) 
 Acquisition of Colonial Circuits Inc., net of cash acquired -   (3,817) 
 Recovery (additions) of contract and other costs 56   (11) 
 Additions to deferred financing costs (28)  -  
 Proceeds from disposal of plant and equipment 324   53  
     (2,867)  (6,844) 
Net cash flow from operating and investing activities 12,912   5,063  
Financing activities    
 Proceeds from bank debt 3,309   -  
 Repayments of bank debt (2,056)  (2,031) 
 Lease liability payments (1,845)  -  
 Repurchase of common shares on exercise of PSU's (420)  -  
 Payment on conversion of preferred shares (155)  -  
     (1,167)  (2,031) 
Effects of foreign exchange rate changes on cash flow (360)  (411) 
Net increase in cash flow 11,385   2,621  
Cash and cash equivalents, beginning of the year 7,647   5,026  
Cash and cash equivalents, end of year$ 19,032  $7,647  
        
Disclosure of cash payments    
 Payment for interest$ 197  $306  
 Payments for income taxes$ 1,779  $1,750  
        

Primary Logo

Source: Firan Technology Group Corporation


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Globe Newswire, Press Releases

Related Entities

Earnings, Definitive Agreement