FTG Releases Full Year and Q4 2017 Financial Results


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Firan Technology Group Corporation (TSX:FTG) today announced financial results for the full year and fourth quarter 2017.

  • Achieved record annual sales of $94.7M, an increase of 9% over full year 2016
  • Completed the integration of PhotoEtch and closed the facility in December 2016
  • Closed the Teledyne PCT facility in May and ramped up production in Chatsworth in Q4
  • Completed equipment installation for a dedicated outer layer production facility for Aerospace circuit boards at FTG Printronics Circuit – the joint venture in Tianjin China

“2017 was a year of transitioning work from the acquired facilities in 2016 to FTG facilities.  There were many challenges in the transitions and it took longer than expected but by year end the transitions were complete,” stated Brad Bourne, President and Chief Executive Officer. He added, “Going into 2018, we are pleased with our position in the market and our growth opportunities that could materialize from organic sales and from acquisitions.”

Business Highlights

FTG accomplished many goals in 2017 that continue to improve the Corporation and position it for the future, including:

  • Announced a renewed 3 year agreement to supply circuit boards to a wide range of aircraft in a contract valued at over $12M USD
  • Announced the transition of PhotoEtch’s largest customer to FTG’s existing sites with 100% retention rate
  • Closed the PhotoEtch facility in December 2016, and opened a small engineering office in Fort Worth to retain the PhotoEtch engineering team
  • Achieved sales resulting from the PhotoEtch acquisition of $8.7M in 2017 versus the target of $6.0M
  • Completed certification of Circuits Chatsworth facility for one type of rigid flex technology used at Teledyne PCT under the US Department of Defense MIL-PRF-31032 certification
  • Closed the Teledyne PCT facility at the end of May
  • Completed installation and commissioning of the Teledyne PCT related equipment in the Chatsworth facility.
  • Achieved sales resulting from the Teledyne PCT acquisition of $22.2M in 2017 versus the target of $16M
  • Achieved sales resulting from the Teledyne PCT acquisition of $4.9M in Q4 in the Chatsworth facility versus the target of $4M per quarter
  • Completed equipment installation for a dedicated outer layer production facility for Aerospace circuit boards at FTG Printronics Circuit – the joint venture in Tianjin China
  • FTG cockpit products flew on the first flight of the COMAC C919 aircraft in China

For FTG, overall sales increased by $7.6M or 8.7% from $87.1M in 2016 to $94.7M in 2017.  The increase was attributable to both segments. Year over year, the USD/CAD exchange rate dropped by about 2.5% and this negatively impacted sales by $2M.  In Q4 2017 compared to Q4 2016, sales were down $4.4M due to lower sales from the acquired sites of $9.7M offset by an increase in sales at the Aerospace Chatsworth site of $5.2M.  The high sales from the acquired sites last year was partially due to customers ordering safety stock ahead of the transition of production to FTG sites.  From Q4 this year to Q4 last year, the USD/CAD exchange rate dropped by almost 7 cents impacting sales by $1.4M.  Sales activity in Q4 in the Circuits Chatsworth business were down $0.6M compared to Q4 2016 and $0.7M sequentially due to some temporary operational issues encountered during the quarter.

Revenues from the PhotoEtch acquisition contributed $8.7 M in incremental sales during 2017, compared to $6.0M last year (9 months of activity in 2016). Revenues from the Teledyne PCT contributed $22.2M in 2017 compared to $11.4M last year (5 months of activity in 2016).  In Q4, revenue from Teledyne PCT customers totaled $4.9M versus our target of $4.0M, and revenue from PhotoEtch totaled $1.6M versus our target of $1.5M.  Teledyne related sales were up $3.0M sequentially due to the ramp up of activity in Chatsworth and PhotoEtch related sales were down sequentially by $0.3M due to timing of production orders.

The Circuits Segment sales increased by $2.3M or 4.0% in 2017 versus 2016.  The increase was from the Toronto facility.  In Q4 sales were down $3.1M due to the above mentioned operational issues in Chatsworth reducing sales by $0.6M, and a lower USD/CAD exchange rate of almost 7 cents in Q4 2017 versus the same quarter last year, impacting sales by $0.8M.

For the Aerospace segment, sales in 2017 were $35.6M compared to $30.3M last year. The increase is primarily attributable to the inclusion of a full year of sales from the PhotoEtch and Teledyne PCT acquisitions in 2017 results.  In Q4, sales were down $1.7M compared to the same quarter last year due to lower sales to Teledyne customers of approximately $2.5M offset by increased activity with other customers and the impact of the lower USD/CAD exchange rate.

Gross margins in 2017 were $23.1M (24.4%) compared to $19.4M (22.2%) in 2016.  In Q4 gross margin was $5.3M (23.1%) compared to $5.7M (21.0%) as a result of lower sales, offset by lower operating costs due to the elimination of the two acquired facilities in 2017.  Q4 2017 was impacted by the operational issues in Circuits Chatsworth, the lower USD/CAD exchange rate and various temporary costs to ramp up Aerospace Chatsworth such as expedite costs, outsourcing costs, travel, etc. 

Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for trailing twelve months is $7.6M.

Net earnings attributable to equity holders of FTG in 2017 were $1.3M compared to a net profit of $5.9M in 2016.  The decrease is due to the one-time gains on acquisition recognized in the prior year with respect to the PhotoEtch and Teledyne PCT transactions which contributed a net of $2.7M to last year, an increase of $3.0M in R&D costs in 2017 due in large part to the transition of work from the acquired work, and higher amortization of intangible costs in 2017 of $0.6M, offset by higher revenues and costs saved by closing the acquired facilities.

The Circuits segment net earnings before corporate and interest and other costs was $8.5M in 2017 compared to $9.8M in 2016.  The earnings in 2016 had a net gain of $0.6M as a result of the bargain purchase gain offset by restructuring expenses.

The Aerospace net earnings (loss) before corporate and interest and other costs decreased to ($2.5M) versus $2.5M in 2016. In 2016, the bargain purchase gain offset by restructuring expenses increased net earnings by $2.5M. 

As at Nov 30, 2017, the Corporation’s net working capital was $24.4M, an increase of $2.0M over year end 2016.

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.

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