Reading time ( words)
Firan Technology Group Corporation today announced financial results for the first quarter of 2015.
- Booked over $20M in new orders in the quarter
- Grew Q1 2015 sales by 16% over Q1 2014
- Circuits segment grew by 22% in the quarter, with FTG Printronics in China growing by 280%
- R&D spending exceeded 6% of sales
- Profit increased by 190% in Q1 2015, compared to Q1 2014
- Earnings of $1.1M before one-time costs related to unexpected program cancellation and inventory adjustment and increased net R&D for development of common controller card/power card for cockpit control assemblies.
- Paid down net debt by $0.5M, after investing $1.0M in net R&D and $250K in capital equipment.
"The first quarter of 2015 saw continued progress in key initiatives across the company including our development cockpit control assembly programs in China and related R&D efforts that depressed earnings slightly but continue to position the Company for future long term success," stated Brad Bourne, President and Chief Executive Officer. He added, "Our established Circuits facilities both performed well in the quarter even with a couple of one-time costs related to a program cancellation and inventory adjustment while our Circuits Joint Venture in China began to see revenue growth resulting from the customer qualification activities over the past 18 months."
- FTG accomplished many goals in the first quarter of 2015 that continue to improve the Corporation and position it for the future, including:
- Signed Master Contract for cockpit control assemblies for C919 Heads Down Display system in China
- Signed new enterprise sourcing agreement with Rockwell Collins for the Circuits business with an estimated 15% increase in activity
- Achieved sales outside of North America of 18% of total sales
- Subsequent to quarter end, completed certification of Aerospace Toronto facility in accordance with US Department of Defense MIL-DTL-7788
- Subsequent to quarter end, completed additional certification of Circuits Toronto facility to include rigid flex technology under US Department of Defense MIL-PRF-31032 certification
For FTG, overall sales increased by $2.3M or 16.6% from $14.0M in Q1 2014 to $16.3M in Q1 2015. FTG Circuits drove the growth, aided by the new Aerospace facilities. Revenues also benefitted from the weakening of the Canadian dollar versus the US dollar which was down 11 cents or 10% in Q1 2015 versus the same quarter last year. Over 80% of FTG's revenues are denominated in US dollars.
The Circuits Segment sales were up $2.3M or 22% in Q1 2015 versus Q1 2014. Both established facilities had strong growth in the quarter.
For the Aerospace segment, sales in Q1 2015 were $3.5M compared to $3.5M in the same quarter last year. Increases at the two new facilities in Tianjin China and Chatsworth California were offset by a drop in activity in Toronto.
Gross margins in Q1 2015 were relatively flat compared to Q1 2014. In Circuits, Gross margins were up, after absorbing $0.5M in unexpected one-time costs related to a program cancellation and inventory adjustment. Gross margins in Aerospace were down due to lower sales in the Toronto facility. Also driving gross margins is total throughput which includes the change in work-in-process (WIP) and finished goods (FGI) to determine total activity in the quarter. In Q1 2015, WIP and FGI were down $0.1M as compared to being up $0.4M in Q1 2014, causing a reduction in margins this year but improving inventory turns.
Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for trailing twelve months is $5.0M, an increase from $4.7M from previous quarter.
Net profit at FTG in Q1 2015 was $0.4M compared to a net profit of $0.15M in Q1 2014. This improvement is the result of stable gross margin offset by higher R&D spending in the Aerospace business but benefiting from increased foreign exchange gains on balance sheet items due to the weakening of the Canadian dollar.
The Circuits segment net earnings before corporate and interest and other costs increased to $1.2M in Q1 2015 compared to $0.9M in Q1 2014. The Circuits joint venture in China did not have a material impact on profitability.
The Aerospace net earnings before corporate and interest and other costs decreased by $0.3M due to lower sales in the Toronto facility and increased R&D costs. Costs related to the development of the C919 cockpit assemblies of $0.12M in Q1 2015 were treated as deferred development and not expensed.
As at February 27, 2015, the Corporation's primary source of liquidity included accounts receivable of $12.6M and inventory of $10.5M. Net working capital at February 27, 2015 was $12.1M.
The Corporation will host a live conference call on Friday, April 10, 2015 at 11:30am (Eastern) to discuss the results of Q1 2015.
Anyone wishing to participate in the call should dial 416-340-2216 or 1-866-223-7781 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 April 24, 2015 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 3332882.
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 and Tianjin, China.
The Corporation's shares are traded on the Toronto Stock Exchange under the symbol FTG.