FTG Announces 4th Quarter and Full Year 2010 Financial Results
FTG Announces 4th Quarter and Full Year 2010 Financial Results
Toronto, February 23, 2011 – Firan Technology Group Corporation (TSX: FTG) today announced financial results for the fourth quarter and the fiscal year ended November 30, 2010.
Fourth Quarter Highlights:
-Grew sales by 7% over Q4, 2009, and by 6% over Q3, 2010
-Strongest quarterly revenue in last 6 quarters or in last 8 quarters
on a currency adjusted basis
-Ended 2010 with order backlog above $14M compared to $13.7M at the
end of FY 2009
-Recorded $1,287,000 operating income excluding R&D expense, goodwill
impairment charges and increase in future tax asset carrying value
compared to $297,000 for the same period in FY 2009 representing a
$990,000 improvement in Q4 2010 over the same quarter of the prior
year
Full Year Highlights:
-Improved gross margin by 4.0 percentage points over 2009, on lower
revenues
-Maintained R&D investments at over 6% of revenue to ensure continued
growth in technology and capabilities to support new customer demands
-Reduced net debt by $1.9M during the year, and by $5.2M over past two
years.
-Signed agreement for $5.2M loan under the Ontario Government Advanced
Manufacturing Investment Strategy Program and received first
installment in the amount of $2.66M
“As I look back on 2010, we accomplished many critical tasks and have ended the year with a stronger and more capable company. The year started at the bottom of the market cycle but improved each quarter. Within FTG we strengthened our team, our technologies and our operating performance. Our accomplishments and our continued focus on Operational Excellence makes me confident the future will continue to improve at FTG”, stated Brad Bourne, President and Chief Executive Officer.
Fourth Quarter Results: (three months ended November 30, 2010 compared with three months ended November 30, 2009)
Q4 2010:
Sales: $14,052,000
Gross Margin: 30.3%
Operating Earnings before (1): $1,287,000
-Net R&D
-Severance
-Tax and Goodwill
Net R&D: $871,000
Severance: $0.00
Tax and Goodwill: $2,503,000
Net Earnings / (Loss): ($2,087,000)
Earnings / (Loss) per share:
– basic: ($0.11)
– diluted: ($0.11)
Q4 2009
Sales: $13,122,000
Gross Margin: 20.9%
Operating Earnings before (1): $297,000
– Net R&D
– Severance
– Tax and Goodwill
Net R&D: $707,000
Severance: $0.00
Tax and Goodwill: ($192,000)
Net Earnings / (Loss): ($218,000)
Earnings / (Loss) per share:
– basic: ($0.01)
– diluted: ($0.01)
Fiscal Year 2010 Results: (twelve months ended November 30, 2010 compared with twelve months ended November 30, 2009)
FY 2010:
Sales: $49,260,000
Gross Margin: 27.5%
Operating Earnings before (1): $2,932,000
-Net R&D
-Severance
-Tax and Goodwill
Net R&D: $2,950,000
Severance: $386,000
Tax and Goodwill: $2,505,000
Net Loss: ($2,909,000)
Loss per share:
– basic: ($0.16)
– diluted: ($0.16)
FY 2009:
Sales: $55,380,000
Gross Margin: 23.5%
Operating Earnings before (1): $2,322,000
– Net R&D
– Severance
– Tax and Goodwill
Net R&D: $3,369,000
Severance: $231,000
Tax and Goodwill: ($188,000)
Net Loss: ($1,090,000)
Loss per share:
– basic: ($0.06)
– diluted: ($0.06)
(1) Operating Earnings is not a measure recognized under Canadian generally accepted accounting principles (“GAAP”). 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 2010 that continue to improve the Corporation and position it for the future, including:
-Improved financial results each quarter, excluding one time non-cash
charges or income, and in Q4 achieved $1,000,000 improvement in
operating earnings compared to Q4 2009
-Strengthened FTG’s team in sales with experienced staff in the U.S.
South West and California, Quality and Program Management at FTG
Aerospace, Production Control at FTG Circuits Toronto, Operations at
FTG Circuits Chatsworth and IT at the Corporate office
-Designed and shipped over $1,100,000 of higher level assemblies at
FTG Aerospace
-Shipped qualification units for very high volume military ground
vehicle display product
-Ramped production of rigid flex circuit boards in Chatsworth to 20%
of total production
-Ordered advanced Laser Direct Imaging equipment for both Circuits’
facilities to improve capabilities and yields
-Extended collective agreement for one year with the represented staff
at FTG Circuits-Toronto
-Improved yields at both Circuits’ facilities
-Secured $5.1M in Ontario government funding (“AMIS”) in support of
technology investments in FTG Circuits-Toronto business
For FTG overall, sales decreased by 11%, from $55.4M in 2009 to $49.3M in 2010 due to reduced demand in the first half of the year offset by increased demand in the third and fourth quarters. The declining value of the US dollar compared to 2009 caused a $5.1M (9%) reduction in reported sales as over 85% of sales in 2010 were denominated in US dollars and the average exchange rate declined over $0.15 in the year.
For the full year, the Circuits Segment sales were down $6.1M or 14% in FY2010 versus FY2009. Approximately 60% of the decline was due to the declining value of the US dollar while the balance resulted from lower demand in the first six months of the year. In Q4 sales were flat compared to the same quarter last year.
For the Aerospace segment, sales in FY 2010 were flat compared to FY2009. This business followed a similar trend with reduced sales in the first six months and then strong growth thereafter. The business reached record sales levels in the fourth quarter. This increase was primarily the result of new programs where the equipment being supplied includes higher end assemblies including both hardware and software development. Also during the year, activity progressed towards establishing FTG Aerospace – Tianjin in China with related expenses totaling $133,000 incurred in 2010.
In fiscal year 2010 compared to fiscal year 2009, FTG’s net loss increased by $1.8M to $2.9M. Excluding the positive effect of the increased carrying value of a future tax asset offset by the impairment of the goodwill, FTG’s bottom line improved by $0.7M year-over-year. The profitability was negatively impacted by the drop in revenue and the lower US dollar exchange rate, offset by increased yields in the Circuits business and ongoing, aggressive cost management across the company. Key investments in R&D were maintained at over 6% of revenue for the full year.
As at November 30, 2010, the Corporation’s primary source of liquidity included accounts receivable of $9.3M, inventory of $8.7M, $2.4M of availability on its AMIS term loan and U.S. $6M of availability remaining on its revolving line of credit. Net working capital at November 30, 2010 was $8.8M after the reclassification of $2.3M of its term loan which matures July 14, 2011. Net debt decreased by $1.9M to $5.5M in 2010 due in part to the revaluation of U.S. dollar denominated debt and management of the balance sheet.
The Corporation will host a live conference call on February 25, 2011 at 8:30 am (EST) to discuss the results of 2010.
Anyone wishing to participate in the call should dial 416-340-2216 or 1-877-440-9795 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 March 10, 2011 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 7774268.
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.
For further information please contact:
Bradley C. Bourne, President and CEO
Tel: (416) 299-4000 x314
Firan Technology Group Corporation bradbourne@ftgcorp.com
Joseph R. Ricci, Vice President and CFO
Tel:(416) 299-4000 x309
Firan Technology Group Corporation joericci@ftgcorp.com
Additional information can be found at the Corporation’s website www.ftgcorp.com
