Firan Technology Group Corporation (“FTG”) Announces Second Quarter 2024 Financial Results
TORONTO, July 10, 2024 (GLOBE NEWSWIRE) -- Firan Technology Group Corporation (TSX: FTG) today announced financial results for the second quarter of 2024.
- Second quarter bookings of $58.7M were up 46% over Q2 2023.
- Second quarter revenues of $38.8M were up 14% over Q2 2023.
- FTG achieved Adjusted Net Earnings in Q2 2024 of $2.6M, which was up 13% over Q2 2023.
- FTG achieved second-quarter Adjusted EBITDA of $6.5M, which was up 25% over Q2 2023.
- FTG achieved Free Cash Flow of $2.0M in Q2 2024, an increase of $2.4M over Q2 2023.
Business Highlights
During Q2 2024, the Corporation has continued to invest in technology in existing sites, grow the business organically, and integrate the two acquisitions completed last year. FTG is strategically deploying its capital in ways that will drive increased shareholder returns for the future in both the near term and long term. Specifically, FTG accomplished the following in Q2 2024, which continues to improve the Corporation and position it for the future:
- Integration activities in Circuits Minnetonka progressed well in the quarter including going live with the FTG ERP system. The ERP transition resulted in a negative impact on production in March and April, but May saw a return to expected throughput levels. The site renewed a multiyear contract with one of its largest customers at improved price levels in the quarter.
- Integration activities in Circuits Haverhill advanced with the receipt of new drills and electrical test equipment. The expansion of the customer base progressed in the quarter. The site installed new servers and the FTG ERP system in Q2 with full implementation targeted through the second half of 2024.
- Customer orders received in Q2 2024 totaled $58.7M, resulting in a book-to-bill ratio of 1.51:1.
- The Corporation was awarded a contract valued at approximately $17.0M to supply cockpit interface assemblies for the display suite on COMAC's C919 aircraft. The period of performance for this contract extends from the second half of 2024 through to the third quarter of 2026. Production will take place at FTG’s manufacturing facilities in Toronto, Canada, and Tianjin, China. Production will start in Toronto and transition to Tianjin during the contract period.
- As of May 31, 2024, FTG had total backlog of $119.6 million, which is a 22% increase over the Q2 2023 backlog of $98.2 million.
Table 1 / Key Financial Metrics
| Three months ended | Six months ended | |||||||
| May 31, | June 2, | May 31, | June 2, | |||||
| 2024 | 2023 | 2024 | 2023 | |||||
| Sales | $38,789 | $33,959 | $73,764 | $58,598 | ||||
| Gross Margin | 10,808 | 9,985 | 19,737 | 19,770 | ||||
| Gross Margin (%) | 27.9 | % | 29.4 | % | 26.8 | % | 33.7 | % |
| Net Earnings to FTG Equity Holders | $2,553 | $2,403 | $3,603 | $6,475 | ||||
| Adjustments | ||||||||
| Government assistance | - | (318 | ) | - | (3,758 | ) | ||
| Acquisition and divesture expenses | - | 179 | - | 536 | ||||
| Adjusted Net Earnings(1) | $2,553 | $2,264 | $3,603 | $3,253 | ||||
| Earnings Per Share | ||||||||
| Basic | $0.11 | $0.10 | $0.15 | $0.27 | ||||
| Diluted | $0.11 | $0.10 | $0.15 | $0.27 | ||||
| Adjusted Earnings Per Share | ||||||||
| Basic | $0.11 | $0.09 | $0.15 | $0.14 | ||||
| Diluted | $0.11 | $0.09 | $0.15 | $0.13 | ||||
| (1) Adjusted Net 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 Adjusted Net Earnings may differ from other corporations and accordingly may not be comparable to measures used by other corporations. | ||||||||
FTG's overall sales saw an increase of $4.8 million, or 14.2%, rising from $34.0 million in Q2 2023 to $38.8 million in Q2 2024. The revenue increase in Q2 2024 was driven by both acquisitions and organic growth, partially offset by a decrease in Simulator products sales. The average foreign exchange rate in Q2 2024 showed less than a 1% difference compared to Q2 2023, having an immaterial impact on sales. Year-to-date, sales have increased by $15.2 million, or 25.9%, compared to year-to-date 2023. Year-to-date sales growth was driven by the acquisitions, organic growth, partially offset by lower simulator product sales and the strike at Aerospace Toronto in Q1 2024.
The Circuits segment sales in Q2 2024 were up $8.4M, or 39.8%, compared to last year. This includes organic growth of $1.1M and growth from acquisitions of $7.3 million. The Circuits sites in Minnetonka and Haverhill were acquired in April 2023, and Q2 2024 includes a full quarter of results for these sites versus one month in Q2 2023. On a year-to-date basis, the Circuits segment sales were up $18.7M or 50.8%, with $16.9M from acquisitions and $1.8M of organic growth.
For the Aerospace segment, sales in Q2 2024 decreased by $3.6M, or 26.4%, compared to last year, primarily due to a $4.4 million decrease in Simulator products sales, partially offset by $0.8M growth in other Aerospace products. On a year-to-date basis, Aerospace segment sales decreased by $3.7 million, or 15.6%. This decrease was primarily due to a $7.5 million drop in Simulator product sales and a $3.0 million impact from the Aerospace Toronto strike in Q1 24, which was partially offset by $6.8 million in organic growth.
Gross margin in Q2 2024 was $10.8M, or 27.9%, as compared to $10.0M, or 29.4%, in Q2 2023. The increase in gross margin dollars primarily stems from higher sales volumes at the newly acquired Circuits sites and operational improvements. The decrease in the gross margin rate is the result of a decrease in sales of Simulator products, which is cyclical in nature, and the inclusion of $0.3M of government assistance in Q2 2023. The go live of the FTG ERP system in Circuits Minnetonka impacted throughput and margins at that site in the quarter.
Net earnings after tax at FTG in Q2 2024 was $2.6 million or $0.11 per diluted share compared to net earnings of $2.4M or $0.10 per diluted share in Q2 2023. Adjusted net earnings was $2.6M or $0.11 per diluted share in Q2 2024 as compared to an adjusted net earnings of $2.3M or $0.09 per diluted share in the prior year quarter. The $0.3M increase in adjusted net earnings is the result of both higher sales volume and operational improvements, partially offset by the decrease in Simulator products sales and the transition to a new ERP system in Circuits Minnetonka. On a year-to-date basis, adjusted net earnings was $3.6M or $0.15 per diluted share compared to an adjusted net earnings of $3.3M or $0.13 per diluted share in the prior year period. The increase in adjusted net earnings for the year-to-date period is inclusive of the negative impacts of the decrease in Simulator products sales and the strike at Aerospace Toronto.
The Circuits segment earnings before interest and income taxes (“EBIT”) was $2.9M in Q2 2024 as compared to $1.9M in Q2 2023. The increase in Circuits segment EBIT is primarily driven by higher sales volume and operational improvements at the legacy sites. During the quarter, the Circuits Minnetonka site went live with the Corporation’s standard ERP system, which resulted in some short-term inefficiency. Year-to-date, Circuits segment EBIT was $5.2M as compared to $5.4M in 2023. Excluding the $2.8M of government assistance in 2023, Circuits segment EBIT increased by $2.6M.
The Aerospace segment EBIT was $1.9M in Q2 2024 versus $2.8M in Q2 2023. The decrease in earnings was driven by the decrease in Simulator products sales. Year-to-date, Aerospace segment EBIT was $3.4M as compared to $5.1M in 2023, primarily due to the decrease in Simulator products sales as well as the strike at Aerospace Toronto.
Table 2 / EBITDA
| Three months ended | Six months ended | Trailing 12 Months | ||||||
| May 31, | June 2, | May 31, | June 2, | |||||
| 2024 | 2023 | 2024 | 2023 | |||||
| Net earnings to equity holders of FTG | $2,553 | $2,403 | $3,603 | $6,475 | $8,749 | |||
| Add: | ||||||||
| Interest, accretion | 585 | 237 | 1,112 | 229 | 2,166 | |||
| Income taxes | 1,122 | 986 | 1,811 | 1,749 | 2,287 | |||
| Depreciation/Amortization/Stock Comp. | 2,223 | 1,695 | 4,511 | 3,165 | 8,746 | |||
| EBITDA(1) | $6,483 | $5,321 | $11,037 | $11,618 | $21,948 | |||
| Adjustments | ||||||||
| Government assistance | - | (318 | ) | - | (3,758 | ) | - | |
| Acquisition and divesture expenses | - | 179 | - | 536 | 79 | |||
| Adjusted EBITDA(1) | $6,483 | $5,182 | $11,037 | $8,396 | $22,027 | |||
| (1) EBITDA and Adjusted EBITDA are not measures recognized under International Financial Reporting Standards (“IFRS”). Management believes that these measures are important to many of the Corporation’s shareholders, creditors and other stakeholders. The Corporation’s method of calculating EBITDA and Adjusted EBITDA may differ from other corporations and accordingly may not be comparable to measures used by other corporations. | ||||||||
EBITDA for FTG in Q2 2024 was $6.5M or 16.7% of sales compared to $5.3M or 15.7% of sales in Q2 2023.
Adjusted EBITDA for Q2 2024 was $6.5M or 16.7% of net sales, as compared to $5.2M or 15.3% of net sales in Q2 2023, with adjustments limited to government assistance, and acquisition expenses in the prior year quarter. The increase in profitability is driven by increased operating leverage from higher sales and operational improvements, partially offset by the decrease in Simulator products sales and the transition to the FTG ERP system in Circuits Minnetonka. For the trailing twelve months period ended May 31, 2024, adjusted EBITDA was $22.0M or 14.6% of sales as compared to $19.4M or 14.3% of sales for the full year 2023.
As at May 31, 2024, the Corporation’s net working capital was $44.8M, compared to $41.0M at year-end in 2023.
Net debt at the end of Q2 2024 was $5.3M compared to net debt of $3.6M at the end of 2023. Free cash flow in Q2 2024 was $2.0M as compared to ($0.4M) in Q2 2023. In addition, FTG has access to committed credit lines of approximately $23.1M.
The Corporation will host a live conference call on Thursday, July 11, 2024, at 8:30am (Eastern) to discuss the results of Q2 2024.
Anyone wishing to participate in the call should dial 1-289-514-5100 or 1-800-717-1738, Conference ID 17352, 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 August 11, 2024, and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 1-289-819-1325 or 1-888-660-6264, Playback Passcode 17352#.
ABOUT FIRAN TECHNOLOGY GROUP CORPORATION
FTG is an aerospace and defence 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, defence, and high technology industries. FTG Circuits has operations in Toronto, Ontario, Chatsworth, California, Fredericksburg, Virginia, Minnetonka, Minnesota, Haverhill Massachusetts and a joint venture in Tianjin, China.
FTG Aerospace manufactures and repairs illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of aerospace and defence 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.
For further information please contact:
Bradley C. Bourne, President and CEO
Firan Technology Group Corporation
Tel: (416) 299-4000 x314
bradbourne@ftgcorp.com
Jamie Crichton, Vice President and CFO
Firan Technology Group Corporation
Tel: (416) 299-4000 x264
jamiecrichton@ftgcorp.com
Additional information can be found at the Corporation’s website www.ftgcorp.com
