Firan Technology Group (FTG) Announces Full Year and Fourth Quarter 2015 Financial Results
/EINPresswire.com/ -- TORONTO, ONTARIO -- (Marketwired) -- 02/01/16 -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the full year and fourth quarter 2015.
-- Achieved record annual sales of $72.0M, an increase of 18.7% over full
year 2014
-- Grew Circuits segment 2015 sales by 20.6% over full year 2014
-- Grew Aerospace segment sales by 13.3% over full year 2014
-- Grew sales outside of North America to $15.2M or 21.1% of total sales,
from $10.9M or 17.9% in 2014
-- Improved profitability by $7.3M compared to the previous year, including
one time deferred tax/ITC recovery and AMIS repayment expense
-- Cash flow from operations in the year was $3.6M compared to $1.4M in
2014 after investing $2.1M in capital equipment and deferred development
while maintaining R&D spending above 7% of sales
-- Recovered $6.7M of Investment Tax Credits due to ongoing strong
operating performance of the Canadian sites and an expectation this will
continue in future years
"The year 2015 saw consistent strong performance for FTG as a result of past investments in technology, positive impacts from past key new program wins as well as the strengthening of the US dollar," stated Brad Bourne, President and Chief Executive Officer. He added, "These record results are enabling us to report strong earnings while still investing in our future. As we look forward into 2016, we remain confident of our market position and our ability to continue to grow and perform. With a strong financial foundation, we are looking for ways to accelerate growth through investments in new development programs or acquisitions. We will also continue to invest in R&D across the Corporation to improve our products, our processes and our ability to meet the future demands of our customers."
Full Year Results: (twelve months ended Nov 30, 2015 compared with twelve months ended Nov 30, 2014)
Full Year 2015 Full Year 2014
-------------- --------------
Sales $ 72,045,000 $ 60,699,000
Gross Margin 18,034,000 15,186,000
Gross Margin (%) 25.0% 25.0%
-------------- --------------
Operating Earnings: (1) $ 9,467,000 5,805,000
Net R&D Investment 5,066,000 3,359,000
AMIS early repayment expense $ 556,000 -
Recovery of Investment tax credits (6,736,000) -
Net Earnings before tax 10,581,000 2,446,000
Income Tax Expense 1,033,000 288,000
Non-controlling Interests 11,000 (35,000)
-------------- --------------
Net Earnings after tax $ 9,537,000 $ 2,193,000
-------------- --------------
Earnings per share
- basic $ 0.53 $ 0.12
- diluted $ 0.47 $ 0.11
Fourth Quarter Results: (three months ended Nov 30, 2015 compared with three months ended Nov 30, 2014)
Q4 2015 Q4 2014
-------------- --------------
Sales $ 18,742,000 $ 16,490,000
Gross Margin 4,953,000 4,344,000
Gross Margin (%) 26.4% 26.3%
-------------- --------------
Operating Earnings (1): 2,527,000 2,324,000
Net R&D Investment 1,465,000 1,063,000
AMIS Early Payment Expense $ 556,000 -
Recovery of Investment Tax Credits (6,736,000) -
Net Earnings before Tax 7,242,000 1,261,000
Tax Expense 820,000 70,000
Non-controlling Interests - 2,000
-------------- --------------
Net Earnings After Tax $ 6,422,000 $ 1,189,000
-------------- --------------
Earnings per share
- basic $ 0.36 $ 0.06
- diluted $ 0.32 $ 0.06
(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 2015 that continue to improve the Corporation and position it for the future, including:
-- Renewed and expanded credit facility with existing lender, and
subsequent to year end, extended the term to a 5 year period
-- Repaid AMIS loan in full to the Ontario Government at the end of the
interest free period
-- Signed Master Contract for cockpit control assemblies for C919 Heads
Down Display system in China
-- Shipped 9 sets of ground test hardware for Chinese C919 program
-- Received airworthiness tags from Civil Aviation Authority of China
(CAAC) for control panel assemblies for the C919 aircraft under
development by COMAC
-- Shipped over $3.9M in sales from China manufacturing facilities in 2015
-- Signed new enterprise sourcing agreement with Rockwell Collins for
Circuits business with an estimated 15% increase in activity
-- Completed certification of Aerospace Toronto facility in accordance with
US Department of Defense MIL-DTL-7788
-- Completed additional certification of Circuits Toronto facility to
include rigid flex technology under US Department of Defense MIL-PRF-
31032 certification
-- Renewed NADCAP certification at Circuits Chatsworth
-- Began work on new development program for a control panel assembly for a
helicopter program
-- Completed preliminary and detailed design reviews
-- Shipped engineering breadboard units
For FTG, overall sales increased by $11.3M or 18.7%, from $60.7M in FY2014 to $72.0M in FY2015. Both businesses and every FTG facility participated in the growth in 2015. For the fourth quarter, sales were $18.7M, an increase of $2.3M or 13.7% versus the same period last year.
Revenues benefited from the weakening of the Canadian dollar versus the US dollar which was down 16 cents in 2015 versus last year. Over 80% of FTG's revenues are denominated in US dollars. The weakening of the Canadian dollar over the year increased sales by $7.2M in 2015 but US dollar currency hedges in place in the year reduced reported sales and earnings by $2.3M, resulting in a net sales increase due to exchange rate changes of $4.9M or 8.0%. As a result, approximately 8% of the growth was due to the weakening of the Canadian dollar and 10.7% was increased activity.
The Circuits Segment sales were up $9.3M or 20.6% in 2015 versus 2014. All facilities reported increased revenues. In Q4 2015, sales were up $1.8M or 15.1% compared to Q4 2014.
For the Aerospace segment, sales in 2015 were $17.7M compared to $15.6M last year resulting in a 13.3% growth rate. In Q4 2015, sales were up $0.4M or 9.6% compared to Q4 2014.
Gross margins in 2015 were up $2.8M compared to 2014, primarily as a result of increased sales. Again, the currency hedges that matured in the year reduced revenue and therefore margins and earnings by $2.3M.
Earnings before interest, tax, depreciation and amortization (EBITDA) for 2015 was $7.0M, an increase from $4.7M in 2014.
The following table reconciles EBITDA(2) to the net earnings FY 2015 November 30, 2015.
2015
---------------
Net earnings $9,537,000
Add:
Interest 1,003,000
Income taxes/ITC (5,703,000)
Depreciation 2,070,000
Amortization 137,000
---------------
EBITDA $7,044,000
---------------
(2) EBITDA 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 EBITDA may differ from
other corporations and accordingly may not be comparable to
measures used by other corporations.
Net profit at FTG in 2015 was $9.5M compared to a net profit of $2.2M in 2014. This improvement is the result of higher gross margins, foreign exchange gains, a one-time write up of tax losses/investment tax credits, offset by higher SG&A, R&D spending and a one-time charge associated with the repayment of the AMIS loan.
The Circuits segment net earnings before corporate and interest and other costs was $5.9M in 2015 compared to $5.3M in 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 was $0.6M in 2015 versus $0.1M in 2014. Costs in 2015 related to the development of the C919 cockpit assemblies and one new program of $1.2M which were treated as deferred development and not expensed.
Cash flow from operations after investments in capital equipment and deferred development in 2015 was $3.6M compared to a cash flow of $1.4M in 2014.
As at November 30, 2015, the Corporation's net working capital was $15.0M, an increase of $2.1M over November 30, 2014, primarily due to higher cash and inventories offset by higher accounts payable and the current portion of long term debt.
The Corporation will host a live conference call on Tuesday February 2, 2016 at 11:30 am (EDT) to discuss the results of FY2015.
Anyone wishing to participate in the call should dial 416-340-8527 or 1-800-355-4959 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 16, 2016 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 7827341.
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.
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.
Additional information can be found at the Corporation's website www.ftgcorp.com.
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Balance Sheets
----------------------------------------------------------------------------
(in thousands of Canadian dollars) November 30, November 30,
As at 2015 2014
----------------------------------------------------------------------------
ASSETS
Current assets
Cash $ 3,160 $ 641
Accounts receivable 12,987 13,289
Taxes receivable 231 251
Inventories 11,122 10,426
Prepaid expenses 979 564
----------------------------------------------------------------------------
28,479 25,171
Non-current assets
Plant and equipment, net 5,644 5,643
Deferred income tax assets 2,876 2,145
Investment tax credits receivable 6,736 -
Deferred development costs 387 -
Intangible assets, net 100 148
----------------------------------------------------------------------------
Total assets $ 44,222 $ 33,107
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 10,970 $ 10,021
Provisions 366 410
Customer deposits, net of deferred development 1,044 1,531
Current portion of long-term bank debt 1,058 251
----------------------------------------------------------------------------
13,438 12,213
Non-current liabilities
Long-term bank debt 4,234 1,232
Subordinated loan - 4,219
Government assistance - 339
Deferred tax payable 1,460 -
----------------------------------------------------------------------------
Total liabilities 19,132 18,003
----------------------------------------------------------------------------
Equity
Opening deficit $ (7,909) $ (10,102)
Net earnings during the year 9,537 2,193
Accumulated other comprehensive (loss) (233) (312)
----------------------------------------------------------------------------
1,395 (8,221)
Share capital
Common shares 13,075 12,681
Preferred shares 2,218 2,218
Contributed surplus 8,373 8,411
----------------------------------------------------------------------------
Total equity attributable to FTG's
shareholders 25,061 15,089
Non-controlling interest 29 15
----------------------------------------------------------------------------
Total equity 25,090 15,104
----------------------------------------------------------------------------
Total liabilities and equity $ 44,222 $ 33,107
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FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Earnings
----------------------------------------------------------------------------
Years ended
----------------------------------------------------------------------------
(in thousands of Canadian dollars, except per November 30, November 30,
share amounts) 2015 2014
----------------------------------------------------------------------------
Sales $ 72,045 $ 60,699
----------------------------------------------------------------------------
Cost of sales
Cost of sales 52,048 43,867
Depreciation of plant and equipment 1,963 1,646
----------------------------------------------------------------------------
Total cost of sales 54,011 45,513
----------------------------------------------------------------------------
Gross margin 18,034 15,186
----------------------------------------------------------------------------
Expenses
Selling, general and administrative 10,018 9,430
Research and development costs 5,558 3,777
Recovery of research and development costs (492) (418)
Recovery of investment tax credits (6,736) -
Depreciation of plant and equipment,
amortization of intangible assets 156 168
Interest expense on short-term debt 34 29
Interest expense on long-term debt 413 364
Interest accretion due to early repayment of
AMIS loan 556 -
Foreign exchange (gain) (2,054) (610)
----------------------------------------------------------------------------
Total expenses 7,453 12,740
----------------------------------------------------------------------------
Earnings before income taxes 10,581 2,446
Current income tax expense 9 48
Deferred income tax expense 1,024 240
----------------------------------------------------------------------------
Net earnings $ 9,548 $ 2,158
----------------------------------------------------------------------------
Attributable to:
Non-controlling interest 11 (35)
----------------------------------------------------------------------------
Equity holders of FTG 9,537 2,193
----------------------------------------------------------------------------
Earnings per share, attributable to the equity
holders of FTG
Basic $ 0.53 $ 0.12
Diluted $ 0.47 $ 0.11
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FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Comprehensive
Income
----------------------------------------------------------------------------
Years ended
----------------------------------------------------------------------------
November 30, November 30,
(in thousands of Canadian dollars) 2015 2014
----------------------------------------------------------------------------
Net earnings $ 9,548 $ 2,158
----------------------------------------------------------------------------
Other comprehensive income (loss) to be
reclassified to net earnings in subsequent
years:
Foreign currency translation adjustments 965 634
Net unrealized (loss) on derivative
financial instruments designated as cash
flow hedges (1,178) (695)
Tax impact 295 -
----------------------------------------------------------------------------
82 (61)
----------------------------------------------------------------------------
Total comprehensive income $ 9,630 $ 2,097
----------------------------------------------------------------------------
Attributable to:
Equity holders of FTG $ 9,616 $ 2,130
Non-controlling interest $ 14 $ (33)
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Changes in Equity
Years ended November 30, 2015 and 2014
---------------------------------------------------------------------------
Attributed to the equity holders of FTG
---------------------------------------------
(in thousands of Canadian Common Preferred Contributed
dollars) Shares Shares Deficit Surplus
---------------------------------------------------------------------------
Balance, November 30, 2013 $12,681 $ 2,218 $(10,102) $ 8,347
Net earnings (loss) - - 2,193 -
Stock-based compensation - - - 64
Foreign currency translation
adjustments - - - -
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges - - - -
---------------------------------------------------------------------------
Balance, November 30, 2014 $12,681 $ 2,218 $ (7,909) $ 8,411
Net earnings - - 9,537 -
Stock-based compensation - - - 51
Common shares issued on
exercise of share options 394 (89)
Foreign currency translation
adjustments - - - -
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges, net of
tax impact - - - -
---------------------------------------------------------------------------
Balance, November 30, 2015 $13,075 $ 2,218 $ 1,628 $ 8,373
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FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Changes in Equity
Years ended November 30, 2015 and 2014
----------------------------------------------------------------------------
Attributed to the equity
holders of FTG
--------------------------
Accumulated
Other Non-
(in thousands of Canadian Comprehensive controlling Total
dollars) (Loss) Total interest equity
----------------------------------------------------------------------------
Balance, November 30, 2013 $ (249) $12,895 $ 48 $12,943
Net earnings (loss) - 2,193 (35) 2,158
Stock-based compensation - 64 - 64
Foreign currency translation
adjustments 632 632 2 634
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges (695) (695) - (695)
----------------------------------------------------------------------------
Balance, November 30, 2014 $ (312) $15,089 $ 15 $15,104
Net earnings - 9,537 11 9,548
Stock-based compensation - 51 - 51
Common shares issued on
exercise of share options 305 305
Foreign currency translation
adjustments 962 962 3 965
Net unrealized loss on
derivative financial
instruments designated as
cash flow hedges, net of
tax impact (883) (883) - (883)
----------------------------------------------------------------------------
Balance, November 30, 2015 $ (233) $25,061 $ 29 $25,090
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FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Cash Flows
----------------------------------------------------------------------------
Years ended
----------------------------------------------------------------------------
November 30, November 30,
(in thousands of Canadian dollars) 2015 2014
----------------------------------------------------------------------------
Net inflow (outflow) of cash related to the
following:
Operating activities
Net earnings $ 9,548 $ 2,158
Items not affecting cash:
Non-controlling interest share of net
(earnings) loss (11) 35
Stock-based compensation 51 64
Loss on disposal of plant and equipment - 8
Effect of exchange rates on US dollar debt 118 181
Depreciation of plant and equipment 2,070 1,765
Amortization of intangible assets 49 49
Amortization of deferred financing costs 37 27
Deferred income tax expense 729 240
Investment tax credits (recovery) (6,736) -
AMIS interest accretion 335 313
Interest accretion due to early repayment of
AMIS loan 556 -
Amortization of government assistance (339) (447)
Increase in net unrealized loss on
derivative financial instruments designated
as cash flow hedges (188) (290)
Net change in non-cash operating working
capital (453) (1,003)
---------------------------------------------------------------------------
5,766 3,100
---------------------------------------------------------------------------
Investing activities
Additions to plant and equipment (1,750) (1,678)
Additions to deferred development costs (387) -
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(2,137) (1,678)
---------------------------------------------------------------------------
Net cash flow from operating and investing
activities 3,629 1,422
---------------------------------------------------------------------------
Financing activities
Decrease in bank indebtedness - (1,113)
Proceeds from long-term bank debt 5,341 -
Repayments of long-term bank debt (1,687) (734)
Repayments of subordinated loan (5,110) -
Proceeds from issue of Common shares 305 -
---------------------------------------------------------------------------
(1,151) (1,847)
---------------------------------------------------------------------------
Effects of foreign exchange rate changes on
cash flow 41 70
---------------------------------------------------------------------------
Net increase (decrease) in cash flow 2,519 (355)
Cash, beginning of the year 641 996
---------------------------------------------------------------------------
Cash, end of year 3,160 $ 641
---------------------------------------------------------------------------
Disclosure of cash payments
Payment for interest $ 113 $ 87
Payments for income taxes $ 6 $ 25
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Contacts:
Firan Technology Group Corporation
Bradley C. Bourne
President and CEO
Tel: (416) 299-4000 x314
bradbourne@ftgcorp.com
Firan Technology Group Corporation
Joseph R. Ricci
Vice President and CFO
Tel:(416) 299-4000 x309
joericci@ftgcorp.com
www.ftgcorp.com
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