|
Firan Technology Group Corporation TSX: FTG 
|
Jan 28, 2009 18:28 ET
Firan Technology Group (FTG) Announces Record Sales for Fourth Quarter and Full Year 2008
TORONTO, ONTARIO--(Marketwire - Jan. 28, 2009) - Firan Technology Group Corporation (TSX:FTG) today announced financial results for the fourth quarter and the fiscal year ended November 30, 2008.
- 38% sales growth in Q4, 2008, 14% in fiscal 2008
- 29% gross margin in Q4, 2008 compared to 14% in Q4, 2007
- $5.6M increase in earnings in 2008 versus 2007
- Continued strong contribution from acquired Filtran Microcircuits business
"2008 was a challenging and very satisfying year for FTG as we continued to execute on our growth initiatives and met or exceeded our targets. Our continued focus on investment in technologies and Operational Excellence provides us with the tools to grow market share and exceed customer expectations", stated Brad Bourne, President and Chief Executive Officer. "In addition to the numerous successes this year, we made great progress on our cost reduction initiatives and we moved forward with our FTG Aerospace facility in China. Combined with this, our past investments and market focus put FTG in a strong position to weather the anticipated tough global economic conditions in 2009", he added.
Fourth Quarter Results: (three months ended November 30, 2008 compared with
---------------------- three months ended November 30, 2007)
Q4 2008 Q4 2007
----------- -----------
Sales $17,376,000 $12,563,000
Gross margin 5,014,000 1,737,000
Earnings before undernoted items (1) 872,000 (1,716,000)
Recovery of R&D costs - 1,934,000
Filtran related costs
R&D 163,000 -
Operating losses - -
Restructuring and severance 266,000 -
Income taxes - 2,823,000
Net earnings (loss) after tax $443,000 $(6,473,000)
Earnings (loss) per share - basic $0.03 ($0.37)
- diluted $0.02 ($0.37)
Fiscal Year 2008 Results (twelve months ended November 30, 2008 compared
------------------------ with twelve months ended November 30, 2007)
Fiscal Year 2008 Fiscal Year 2007
---------------- ----------------
Sales $63,180,000 $55,632,000
Gross margin 15,858,000 11,987,000
Earnings (loss) before undernoted items(1) 1,348,000 (1,758,000)
Recovery of R&D costs - 885,000
Filtran related costs
R&D 666,000 -
Operating losses 472,000 -
Restructuring and severance 591,000 -
Income taxes (recovery) (173,000) 3,188,000
Net (loss) ($208,000) ($5,831,000)
(Loss) per share
- basic ($0.01) ($0.33)
- diluted ($0.01) ($0.33)
Normalized EBITDA(2) $4,928,000 $1,949,000
Business Highlights
FTG accomplished many goals in 2008 that continue to improve the company and position it for the future, including:
- Successful acquisition and integration of Filtran Microcircuits into FTG's existing Circuits facilities in Toronto and Chatsworth
- Contract wins or renewals, new or increased qualification levels, and/or new programs with Cobham, GE Aviation, GE Transport, Honeywell, L-3 Communications, Lockheed Martin, Merrimac Industries, Raytheon, Rockwell Collins, Sanmina-SCI, and others.
- Expanded production facility for FTG Circuits - Chatsworth
- Increased technical capabilities in the Circuits business including pre and post bonded RF circuit cards, multi-layer RF circuit cards, high density interconnects, and buried passive components
- Increased technical capabilities in the Aerospace business including lighting power supplies, increased electronic design and test capabilities and higher value added products including hardware and software development
- Signed investment agreement for the creation of FTG Aerospace - Tianjin in China in 2009
- Customer awards for performance from Rockwell Collins, General Dynamics and Sandia National Labs
- Strengthened management team with additions and promotions across the company.
Mr. Bourne added, "The Corporation's external focus will continue to be in the aerospace and defense markets and on strengthening our leadership positions in the market segments in which we participate. With a solid business foundation and a great management team, we continue to proactively take steps to further improve performance and increase shareholder value."
Sales increased by $4.8M or 38%, from $12.6M in the fourth quarter of 2007 to $17.4M in the fourth quarter of 2008.
The Circuits Segment sales in Q4 were up $4.2M or 43% over the same period last year. The transition of Filtran work is mostly complete and continues to progress well. All of the Filtran equipment is operational in FTG's facilities in Toronto and Chatsworth. In 2008 FTG has been qualified at a number of key new accounts as a result of this acquisition including Merrimac Industries, Lockheed Martin Corporation, L-3 Narda, Raytheon, Cobham, and many others. FTG's share of high speed and RF printed circuit boards has increased dramatically this year and should continue to increase as more qualifications are completed and some key programs ramp up.
For the Aerospace segment, sales in the fourth quarter 2008 were $3.5M compared to $2.9M in Q4, 2007, an increase of 23%. During the quarter, this business captured some key new programs where the equipment being supplied includes higher end assemblies including both hardware and software development. A number of additional opportunities with higher engineering content and higher value added products are also being pursued for the near future. The business continues to see strong demand from existing and new customers. Also as announced, an investment agreement was signed in the fourth quarter as part of a plan to establish FTG Aerospace - Tianjin in China in 2009. Activities are being ramped up to accomplish this including establishing the necessary legal framework, sourcing equipment, sourcing suppliers and working with potential new customers as a result of this initiative.
The Corporation's sales grew in fiscal year 2008 to $63.2M an increase of over $7.5M compared to 2007, the sixth consecutive year of growth representing total growth of 144% since 2002. The foundation for the sustained growth is the result of the corporate development activities including the merger of FTG and Circuit World in 2003, the acquisition of Young Electronics in December 2004 and the acquisition of Filtran Microcircuits in December 2007. The strong yearly performance is also the result of organic growth through the enhanced sales organization, significant investment in technology across all of FTG's businesses, a daily focus on Operational Excellence and the resulting capture of many new customers and programs. For the full year 2008, $2.6M of sales were derived from Filtran customers.
Fiscal year 2008 sales for the Circuits' segment were $49.9M, an increase of $6.5M or 15% over the comparable period in 2007.
Fiscal year 2008 sales for the Aerospace segment were $13.3M compared to $12.2M for the comparable period in 2007, an increase of 8%.
FTG earned $0.44M in Q4, 2008 including Filtran related R&D and restructuring costs of $0.4M for the same period. This is compared to a $1.7M loss in the same period of 2007, before the write down of FTG's tax asset in Canada. The improved performance is the result of increased sales, investments in technology, and tight cost controls across FTG.
FTG earned $1.3M before one-time Filtran related expenses of $1.5M in FY 2008, compared to a loss of $1.8M for FY 2007 before adjustments for writing off the tax asset in Canada, representing a $3.1M improvement over the past year. Net loss for FY 2008 was $0.2M compared to a loss of $5.8M in the prior year - an improvement of over $5.6M, even with significant investments in Filtran integration, R&D and restructuring costs in 2008.
Normalized earnings before interest, taxes, depreciation and amortization (EBITDA) (2) for the full year were $4.9M, an increase of $3.0M, or 153% over 2007.
As at November 30, 2008, the Corporation's primary source of liquidity included, accounts receivable of $14.7M and inventory of $9.2M. Net working capital at November 30, 2008 was $10.4M. The Corporation was in full compliance with all of its bank covenants at November 30, 2008.
According to the US Census Bureau and Aerospace Industries Association estimates at the end of 2008, the backlog of orders for new commercial aircraft was at record levels. Meanwhile the global economic situation has weakened substantially over the last year, and in particular, financing availability has diminished and costs have increased. This development has resulted in a very uncertain view of future market conditions for FTG's markets.
The situation is also uncertain for defence spending based on conflicting indicators such as the election of a Democratic President in the U.S. (where Democrats have historically been seen to reduce defence spending), which may be offset by a high level of global conflict and ongoing military activities in a number of regions. While there is uncertainty in the markets in which FTG operates, management believes the downside risk to be lower than in many commercial electronics markets that are already seeing 20-30% reductions in demand.
(1) Earnings Before Undernoted Items is not a measure recognized under Canadian generally accepted accounting principles ("GAAP"). Management believes that this measure is important to many of the Company's shareholders, creditors and other stakeholders. The Company's method of calculating Earnings Before Undernoted Items may differ from other companies and accordingly may not be comparable to measures used by other companies.
Full Year Full Year
Reconciliation of Normalized EBITDA(2): 2008 2007
---------- ----------
Net (loss) ($208,000) ($5,831,000)
Add:
Income taxes (recovery) (173,000) 3,188,000
Interest expense 701,000 578,000
Amortization of capital assets 2,652,000 2,977,000
Amortization of intangible assets 48,000 -
Amortization of other assets 179,000 152,000
Recovery of R&D costs - 885,000
Filtran operating losses 472,000 -
Filtran restructuring and severance 591,000 -
Filtran R&D 666,000 -
Normalized EBITDA $4,928,000 $1,949,000
---------- ----------
---------- ----------
(2) Normalized EBITDA is not a measure recognized under Canadian generally
accepted accounting principles ("GAAP"). Normalized EBITDA is
calculated as earnings before provision for income taxes, interest
expense, amortization of capital assets, amortization of intangibles,
amortization of other assets,SR&ED's and Filtran related costs.
Management believes that many of the Company's shareholders, creditors,
other stakeholders and analysts prefer to assess the Company's
performance using normalized EBITDA in addition to the GAAP measures.
The Company's method of calculating Normalized EBITDA may differ from
other companies and accordingly may not be comparable to measures used
by other companies.
The Company will host a live conference call on January 29, 2009 at 8:30am (EDT) to discuss the results of 2008.
Anyone wishing to participate in the call should dial 416-641-6136 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 February 12, 2009 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053, pass code 3280980.
ABOUT FIRAN TECHNOLOGY GROUP CORPORATION
FTG is an aerospace and defense electronics product and subsystem supplier to the North American marketplace. 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 and Chatsworth, California.
FTG Aerospace manufactures illuminated cockpit panels, keyboards and
sub-assemblies for original equipment manufacturers of avionics
products as well as airframe manufacturers located in Toronto, Ontario.
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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
November 30, 2008 November 30, 2007
(in thousands of dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS
CURRENT
Cash $ 170 $ 234
Accounts receivable 14,711 10,542
Taxes receivable 299 302
Inventories 9,150 7,621
Prepaid expenses 445 412
Future income taxes 270 -
----------------------------------------------------------------------------
25,045 19,111
CAPITAL ASSETS 7,329 7,757
FUTURE INCOME TAXES - 34
GOODWILL 4,583 3,904
OTHER INTANGIBLE ASSETS 431 -
----------------------------------------------------------------------------
$ 37,388 $ 30,806
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES
CURRENT
Bank indebtedness $ 2,977 $ 400
Accounts payable and accrued liabilities 9,872 7,613
Current portion of long-term debt 1,833 1,368
----------------------------------------------------------------------------
14,682 9,381
LONG-TERM DEBT 6,104 5,900
----------------------------------------------------------------------------
20,786 15,281
----------------------------------------------------------------------------
CONTINGENCIES AND COMMITMENTS
SHAREHOLDERS' EQUITY
Share capital
Common shares 12,681 12,681
Preferred shares 2,218 2,218
Contributed surplus 8,071 7,939
Deficit (6,692) (6,484)
Accumulated other comprehensive income
(loss) 324 (829)
----------------------------------------------------------------------------
16,602 15,525
----------------------------------------------------------------------------
$ 37,388 $ 30,806
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Loss
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(in thousands of dollars Year Ended
except per share amounts) November 30, 2008 November 30, 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SALES $ 63,180 $ 55,632
COST OF SALES 47,322 43,645
----------------------------------------------------------------------------
15,858 11,987
----------------------------------------------------------------------------
EXPENSES
Selling, general and administrative 8,089 7,040
Research and development costs 3,492 3,150
Filtran research and development costs 666 -
Recovery of research and development costs - 885
Amortization of capital assets 2,652 2,977
Amortization of intangible assets 48 -
Interest expense on long-term debt 521 565
Interest expense on short-term debt 180 13
Restructuring and severance 591 -
----------------------------------------------------------------------------
16,239 14,630
----------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (381) (2,643)
(RECOVERY OF) PROVISION FOR INCOME TAXES (173) 3,188
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NET LOSS $ (208) $ (5,831)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NET LOSS PER SHARE
Basic $ (0.01) $ (0.33)
Diluted $ (0.01) $ (0.33)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Shareholders' Equity
Year Ended November 30, 2008 and 2007 (in thousands of dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Common Preferred Total Contributed
Shares Shares Capital Surplus
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2007 $ 12,681 $ 2,218 $ 14,899 $ 7,939
----------------------------------------------------------------------------
Net loss
Other comprehensive income:
Foreign currency translation
adjustments
Comprehensive income
Stock based compensation 132
----------------------------------------------------------------------------
Balance, November 30, 2008 $ 12,681 $ 2,218 $ 14,899 $ 8,071
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
Other Total Deficit Total
Comprehensive and Shareholders'
Deficit Income ("AOCI") AOCI Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance,
November 30, 2007 $ (6,484) $ (829) $ (7,313) $ 15,525
----------------------------------------------------------------------------
Net loss (208) (208) (208)
Other comprehensive
income:
Foreign currency
translation
adjustments 1,153 1,153 1,153
------------------------
Comprehensive income 945 945
------------------------
------------------------
Stock based
compensation 132
----------------------------------------------------------------------------
Balance,
November 30, 2008 $ (6,692) $ 324 $ (6,368) $ 16,602
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Common Preferred Total Contributed
Shares Shares Capital Surplus
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2006 $ 12,681 $ 2,218 $ 14,899 $ 7,804
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net loss
Other comprehensive loss:
Foreign currency
translation
adjustments
Comprehensive loss
Stock based compensation 135
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, November 30, 2007 $ 12,681 $ 2,218 $ 14,899 $ 7,939
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
Other Total Deficit Total
Comprehensive and Shareholders'
Deficit Income ("AOCI") AOCI Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance,
November 30, 2006 $ (653) $ 1 $ (652) $ 22,051
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net loss (5,831) (5,831) (5,831)
Other comprehensive
loss:
Foreign currency
translation
adjustments (830) (830) (830)
----------------------------
----------------------------
Comprehensive loss (6,661) (6,661)
----------------------------
----------------------------
Stock based compensation 135
----------------------------------------------------------------------------
Balance,
November 30, 2007 $ (6,484) $ (829) $ (7,313) $ 15,525
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Cash Flows
----------------------------------------------------------------------------
Year Ended
----------------------------------------
(in thousands of dollars) November 30, 2008 November 30, 2007
----------------------------------------------------------------------------
NET (OUTFLOW) INFLOW OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net loss $ (208) $ (5,831)
Items not affecting cash
Stock based compensation expense 132 135
Future income taxes (173) 3,190
Recovery of research and
development costs - 1,120
Effect of exchange rates on
U.S. dollar Canadian debt 902 (430)
Amortization of capital assets 2,652 2,977
Amortization of intangible assets 48 -
Changes in non-cash operating
working capital (2,733) (1,418)
----------------------------------------------------------------------------
620 (257)
----------------------------------------------------------------------------
INVESTING
Acquisition of Filtran
Microcircuits Inc. (1,462) -
Additions to capital assets (666) (3,983)
Repayment from related party - 154
----------------------------------------------------------------------------
(2,128) (3,829)
----------------------------------------------------------------------------
FINANCING
Increase in bank indebtedness 2,268 400
Proceeds from capital expenditure
facility 501 2,634
Repayments of long-term debt (1,417) (1,031)
----------------------------------------------------------------------------
1,352 2,003
----------------------------------------------------------------------------
Effects of foreign exchange rate
changes on cash flow 92 (31)
----------------------------------------------------------------------------
NET CASH FLOW (64) (2,114)
CASH, BEGINNING OF YEAR 234 2,348
----------------------------------------------------------------------------
CASH, END OF YEAR $ 170 $ 234
----------------------------------------------------------------------------
DISCLOSURE OF CASH PAYMENTS
Payments for interest $ 701 $ 577
Payments for income taxes $ 4 $ -
Refund of income taxes $ 73 $ 167
----------------------------------------------------------------------------
For more information, please contact
Firan Technology Group CorporationBradley C. Bourne
President and CEO
(416) 299-4000 x314
Email: bradbourne@ftgcorp.com
or
Firan Technology Group Corporation
Joseph R. Ricci
Vice President and CFO
(416) 299-4000 x309
Email: joericci@ftgcorp.com
Website: www.ftgcorp.com