Reading time ( words)
Firan Technology Group Corporation (FTG) today announced financial results for the full year and fourth quarter 2016.
- Achieved record annual sales of $87.1M, an increase of 20.9% over full year 2015
- Grew Q4 sales to $27.2M, an increase of 45.3% over Q4 2015
- Grew Aerospace segment by 70.8% over full year 2015
- Grew Circuits segment sales by 4.6% over full year 2015
- Completed the integration of PhotoEtch and closed the facility in December 2016
- Continued the transition of Teledyne PCT, expect transition to continue through Q2 2017
- Began equipment installation for a dedicated outer layer production facility for Aerospace circuit boards at FTG Printronics Circuit – the joint venture in Tianjin China
“The year 2016 saw a dramatic change in FTG with the completion of two acquisitions,” stated Brad Bourne, President and Chief Executive Officer. He added, “As we transition the revenue from these acquisitions to existing FTG facilities, we will drive up utilization rates and see increased profitability.”
FTG accomplished many goals in 2016 that continue to improve the Corporation and position it for the future, including:
- Signed two new sourcing agreements with a leading US based Aerospace customer for the Circuits Toronto and Chatsworth businesses for applications in Business, Regional and Air Transport Aircraft and well as Defense and Space applications
- Received initial production orders from two large aerospace customers at the FTG Printronics Circuits joint venture in China
- Completed certification of Circuits Chatsworth facility for rigid flex technology under US Department of Defense MIL-PRF-31032 certification, positioning this site in the top two technology providers worldwide
- Achieved recertification of the FTG Printronics Circuit joint venture under the AS9100 designation
- Completed the acquisition of the assets of PhotoEtch, and subsequent to year-end, closed the facility moving work to existing FTG facilities.
- Completed the acquisition of the assets of Teledyne Printed Circuit Technology (PCT)
- Raised new equity via the issue of 3.45M shares at $2.00 per share, less expenses
- Announced five year agreement with Esterline to supply cockpit products for the C Series aircraft
- Entered into an agreement to license the eSurface technology as a semi additive manufacturing process for certain advanced technology printed circuit boards
- Announced a new contract to supply cockpit products for a US military simulator program, a PhotoEtch customer
- FTG Aerospace Chatsworth was selected as a top performing supplier by Lockheed Martin Aeronautics
- Hired Melinda Diebel as CFO who brings strong financial and manufacturing experience, replacing Joe Ricci who is retiring
- Added Mike Andrade to the Board of Directors, bringing his strong manufacturing and technology experience to FTG.
For FTG, overall sales increased by $15.1M or 20.9%, from $72.0M in FY2015 to $87.1M in FY2016. Both Circuits and Aerospace participated in the growth in 2015. For the fourth quarter, sales were $27.2M, an increase of $8.5M or 45% versus the same period last year, as the full benefit of the acquisitions are seen in FTG’s revenues.
Revenues benefited from the PhotoEtch acquisition which closed on March 18th and contributed $6.0M in incremental sales during the remaining 8.5 months subsequent to the acquisition. This translates into an $8.5M annual run rate, well above our expectations which was $6.0M annually. The Teledyne PCT acquisition closed on July 8th and contributed $11.5M during the 5.5 months subsequent to the acquisition. This is tracking at over $24M, also well above our target of 75% of historic revenues or $15.6M annually. A portion of this demand results from some customers placing short term demand related to safety stock requirements and is not expected to be sustained after the transition period. Excluding the acquisitions, revenues were down $2.3M or 3.2% compared to full year 2015.
The Circuits segment sales were up $2.5M or 4.6% in 2016 versus 2015. In Q4 2016, sales were up $1.5M or 10.7% compared to Q4 2015.
For the Aerospace segment, sales in 2016 were $30.3M compared to $17.7M last year resulting in a 70.8% growth rate. In Q4 2016, sales were up $7.0M or 144.7% compared to Q4 2015.
Gross margins in 2016 were up $1.3M compared to 2015. While the benefits of the acquisitions are seen immediately in revenues, the benefits to gross margins will only result once the acquired facilities are closed and the manufacturing activity is moved to existing FTG facilities.
Earnings before interest, tax, depreciation and amortization (EBITDA) for 2016 was $10.2M, an increase from $7.0M in 2015.
Net profit at FTG in 2016 was $5.9M compared to a net profit of $9.5M in 2015. The profit in 2015 included a gain from a $6.7M recovery of investment tax credits, and a $2M foreign exchange gain, neither of which were significant in the 2016 results. In 2016, results were positively impacted by bargain purchase gains, offset by restructuring charges for a net benefit of $3.1M. Also as a result of the acquisitions, there was a $5.3M intangible asset created which will be amortized over 5 years. In 2016, this amortization negatively impacted earnings by $0.4M.
The Circuits segment net earnings before corporate and interest and other costs was $9.8M in 2016 compared to $5.9M in 2015.
The Aerospace net earnings before corporate and interest and other costs was $2.5M in 2016 versus $0.6M in 2015. Costs in 2016 related to the development of the C919 cockpit assemblies and one new program of $1.3M were treated as deferred development and not expensed.
Cash flow from operations after investments in capital equipment and deferred development but before the acquisitions and related restructuring in 2016 was $2.5M, compared to a cash flow of $3.6M in 2015.
As at November 30, 2016, the Corporation’s net working capital was $22.4M, an increase of $7.4M over November 30, 2015, primarily due to the working capital resulting from the acquisitions completed during the year.
The Corporation will host a live conference call on Thursday February 9, 2017 at 8:30 am (EST) to discuss the results of FY2016.
Anyone wishing to participate in the call should dial 416-340-2220 or 1-866-225-2055 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 23, 2017 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 4501417.
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, Hudson, New Hampshire 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.