FTG Announces 7.9% Sales Growth in Q1 2022


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Firan Technology Group Corporation 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.

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.

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.

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