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Firan Technology Group Corporation today announced financial results for the third quarter 2017.
- Increased gross margin to over 27% in Q3
- Realized costs savings due to the closure of the Teledyne PCT facility
- Achieved book-to-bill ratio of 1.23:1 in Q3 2017
- Generated $2.3M in cash from operations used to acquire new equipment and pay down debt
“The third quarter of 2017 saw reduced activity, as predicted, as we transitioned the Teledyne PCT equipment to our Chatsworth facilities”, stated Brad Bourne, President and Chief Executive Officer. He added, “The quarter’s activity was also impacted by the strengthening of the Canadian dollar and the normal slowdown resulting from summer vacations. With the closure of the Teledyne facility, FTG’s cost structure was reduced and this resulted in increased gross margins, despite the above impacts. As activity in Chatsworth continues to ramp up, we expect to see improving operating results for the Corporation.”
FTG accomplished many goals in the third quarter of 2017 that continue to improve the Corporation and position it for the future, including:
- Completed installation and commissioning of the Teledyne PCT related equipment in the Chatsworth facility.
- Increased throughput at Aerospace Chatsworth by 150% over Q2 2017, primarily by increased activity in August.
- After the quarter, increased throughput at Aerospace Chatsworth by over 160% in September 2017 compared to June 2017, further demonstrating increasing production rates.
- Achieved $1.9M in sales resulting from the Photo Etch acquisition, above our target of $1.5M per quarter.
For FTG, overall sales decreased by $4.0M or 17% from $23.2M in Q3 2016 to $19.1M in Q3 2017. The decrease was attributable to both businesses.
Revenues from the Photo Etch acquisition contributed $1.9M in incremental sales during the third quarter, compared to $1.9M in Q3 last year. Revenues from the Teledyne PCT contributed $0.9M in Q3 2017 compared to $3.5M in Q3 last year. Excluding the acquisitions, revenues were down $1.4M compared to Q3 2016, partially due to the strengthening of the Canadian dollar versus the US dollar. Sequentially, revenues were down $6.4M in Q3 versus Q2 2017 due to transition activities, summer vacations and the strengthening of the Canadian dollar. In addition, the Photo Etch related activity was down $1.0M sequentially due to the end of the current phase of a large military simulator program which is a normal business cycle. The Teledyne PCT related activity was down sequentially by $5.3M due to the closure of the Teledyne facility and the time taken to commission equipment in the Chatsworth facility and ramp production. This activity did ramp each month of the quarter as progress was achieved.
The Circuits Segment sales were down by $1.3M or 8.8% in Q3 2017 versus Q3 2016. The decrease is predominantly due to increased intercompany activity supporting the ramp up in Aerospace Chatsworth which is not reflected in consolidated sales. On a year-to-date basis, Circuits sales were up $4.0M or 9.6%.
For the Aerospace segment, sales in Q3 2017 were $5.7M compared to $8.5M in the same quarter last year. The decrease is primarily attributable to the Teledyne PCT transition activities in the quarter. Year-to-date Aerospace sales were up $8.0M or 43.2%.
Gross margins in Q3 2017 were up $0.2M compared to Q3 2016. As a percentage, gross margins increased from 21.6% in Q3 last year to 27.2% in Q3 this year. The increase is principally due to the cost savings from the Teledyne PCT plant closure offset by lower sales.
Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for trailing twelve months is $8.0M.
Net earnings attributable to equity holders of FTG in Q3 2017 were $0.2M compared to a net profit of $3.5M in Q3 2016. The decrease is due to the one-time gains recognized in the prior year with respect to the Photo Etch and Teledyne PCT transactions which contributed $2.3M to last year and the decreased activity in Q3 of this year.
The Circuits segment net earnings before corporate and interest and other costs was $1.7M in Q3 2017 compared to $2.5M in Q3 2016.
The Aerospace net earnings (loss) before corporate and interest and other costs decreased to ($1.3M) versus $2.0M in Q3 2016. The Q3 2016 results included a one-time net gain of $1.7M related to the acquisition of Teledyne PCT and lower activity.
As at Sept 1, 2017, the Corporation’s net working capital was $23.6M, an increase of $1.2M over year-end 2016.The Corporation will host a live conference call on Thursday October 12, 2017 at 8:30 am (EDT) to discuss the results of Q3 2017.
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 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.