- Achieved a book-to-bill ratio in Q2 of 0.97:1
- Ended Q2 2020 with over
$50M in total backlog, of which$28M is due in Q3 2020 - Generated
$3.0M in cash in Q2 and ended the quarter with$6.4M in net cash on the balance sheet - Achieved highest gross margin percentage of 32.3%
- Achieved net income of
$2.0M in the quarter (7.6% of sales) - Received
$0.8M in Canadian Emergency Wage Subsidy in the quarter - Received
$3.3M ($2.4M USD ) in loans from the US Paycheck Protection Program (PPP), which can be forgiven in future periods if certain conditions are met - Subsequent to quarter-end, FTG entered into a new 2 year,
$20M USD committed credit facility on terms similar to the previous agreement
Second Quarter Results: (three months ended
Q2 2020 | Q2 2019 | |||||
Sales | ||||||
Gross Margin | 8,674,000 | 9,717,000 | ||||
Gross Margin (%) | 32.3 | % | 30.1 | % | ||
Operating Earnings (1): | 4,313,000 | 5,388,000 | ||||
• | 1,583,000 | 1,168,000 | ||||
• R&D Tax Credits | (203,000 | ) | 10,000 | |||
• Foreign Exchange (Gain) Loss | (464,000 | ) | 140,000 | |||
• Amortization of Intangibles | 97,000 | 272,000 | ||||
Net Earnings before Tax | 3,300,000 | 3,798,000 | ||||
• Income Tax | 1,302,000 | 1,348,000 | ||||
• Non-controlling Interests | (36,000 | ) | (32,000 | ) | ||
Net Earnings After Tax | ||||||
Earnings per share | ||||||
- basic | ||||||
- diluted | ||||||
Year-to-Date: (six months ended
YTD 2020 | YTD 2019 | |||||
Sales | ||||||
Gross Margin | 12,634,000 | 16,471,000 | ||||
Gross Margin (%) | 24.6 | % | 28.6 | % | ||
Operating Earnings (1): | 4,555,000 | 8,706,000 | ||||
• | 2,664,000 | 2,284,000 | ||||
• R&D Tax Credits | (375,000 | ) | (195,000 | ) | ||
• Foreign Exchange (Gain) Loss | (415,000 | ) | 296,000 | |||
• Amortization of Intangibles | 396,000 | 543,000 | ||||
• Impairment of Intangibles | 1,145,000 | - | ||||
Net Earnings before Tax | 1,140,000 | 5,778,000 | ||||
• Income Tax | 1,771,000 | 2,155,000 | ||||
• Non-controlling Interests | (68,000 | ) | (77,000 | ) | ||
Net (Loss) Earnings After Tax | ( | ) | ||||
(Loss) Earnings per share | ||||||
- basic | ( | ) | ||||
- diluted | ( | ) | ||||
(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 Q2 2020 that continue to improve the Corporation and position it for the future, including:
- Received Canadian, US and Chinese government support to offset the impact of COVID-19, in the form of grants, forgivable loans and reduced or delayed tax remittances
- Implemented hiring freeze, wage freeze and new capital spending freeze across FTG to maintain a strong balance sheet during the uncertain times related to the COVID-19 pandemic
- Maintained solid bookings with a 0.97:1 book-to-bill ratio with increasing backlog in the US sites focused more on defense work and decreasing backlog in Canadian and Chinese sites focused more on commercial aerospace programs
- Bookings in Q2 increased by
$1.5M compared to Q1 2020
For FTG, overall sales decreased by
The Circuits Segment sales were up
For the Aerospace Segment, sales in Q2 2020 were
Gross margins in Q2 2020 were
Earnings before interest, tax, depreciation and amortization (EBITDA) for FTG for Q2 2020 was
The following table reconciles net earnings to EBITDA(2) for the quarter and the trailing 12 months ended
Q2 2020 | Trailing 12 Months | |||
Net earnings to equity holders of FTG | 2,034,000 | 1,795,000 | ||
Add: | ||||
Interest, accretion | 198,000 | 499,000 | ||
Income taxes | 1,302,000 | 3,362,000 | ||
Depreciation/Amortization Stock Comp./Impairment | 1,682,000 | 7,309,000 | ||
EBITDA | $ | 5,216,000 | $ | 12,965,000 |
(2) | 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 may differ from other corporations and accordingly may not be comparable to measures used by other corporations. |
Net profit after tax at FTG in Q2 2020 was
The Circuits Segment net earnings before corporate and interest and other costs was
The Aerospace net earnings before corporate and interest and other costs in the quarter was
As at
Net cash at the end of Q2 2020 was
Subsequent to quarter end, FTG Circuits Fredericksburg had a fire in the production area of the plant. No employees were injured. One piece of equipment was damaged but work-around production processes have been created while that equipment is repaired or replaced. While there was smoke and water damage in significant parts of the building, production resumed within a few days, and building remediation is ongoing.
Also subsequent to the end of Q2 2020, FTG entered into an amended and restated two-year committed credit facility with the same major financial institution, which will expire in July, 2022. The amended credit facility is a
The Corporation will host a live conference call on
Anyone wishing to participate in the call should dial 647-427-2311 or 1-866-521-4909 and identify that you are calling to participate in the FTG conference call. The Chairperson is Mr.
ABOUT
FTG is an aerospace and defense electronics product and subsystem supplier to customers around the globe. FTG has two operating units:
The Corporation's shares are traded on the
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:
Tel: (416) 299-4000 x314
bradbourne@ftgcorp.com
Tel:(416) 299-4000 x264
jamiecrichton@ftgcorp.com
Additional information can be found at the Corporation’s website www.ftgcorp.com
Interim Condensed Consolidated Statements of Financial Position | ||||||
(Unaudited) | ||||||
(in thousands of Canadian dollars) | 2020 | 2019 | ||||
ASSETS | ||||||
Current assets | ||||||
Cash | $ | 14,258 | $ | 7,647 | ||
Accounts receivable | 19,308 | 21,085 | ||||
Contract assets | 317 | 432 | ||||
Inventories | 23,284 | 21,990 | ||||
Prepaid expenses | 1,518 | 1,770 | ||||
58,685 | 52,924 | |||||
Non-current assets | ||||||
Plant and equipment, net | 14,406 | 13,830 | ||||
Right-of-use assets | 13,187 | - | ||||
Deferred income tax assets | 724 | 724 | ||||
Investment tax credits receivable | 2,506 | 3,035 | ||||
Deferred development costs | 218 | 279 | ||||
Intangible assets and other assets, net | 1,084 | 2,585 | ||||
Total assets | $ | 90,810 | $ | 73,377 | ||
LIABILITIES AND EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | $ | 16,998 | $ | 17,104 | ||
Provisions | 904 | 946 | ||||
Contract liabilities | 3,288 | 216 | ||||
Current portion of bank debt | 5,603 | 5,416 | ||||
Current portion of lease liabilities | 1,755 | - | ||||
Income tax payable | 115 | 639 | ||||
28,663 | 24,321 | |||||
Non-current liabilities | ||||||
Bank debt | 2,245 | - | ||||
Lease liabilities | 11,608 | - | ||||
Deferred tax payable | 1,373 | 1,297 | ||||
Total liabilities | 43,889 | 25,618 | ||||
Equity | ||||||
Retained earnings | $ | 17,182 | $ | 17,745 | ||
Accumulated other comprehensive loss | (1,457 | ) | (1,554 | ) | ||
15,725 | 16,191 | |||||
Share capital | ||||||
Common Shares | 19,663 | 19,323 | ||||
Preferred Shares | 2,218 | 2,218 | ||||
Contributed surplus | 8,264 | 8,933 | ||||
Total equity attributable to FTG's shareholders | 45,870 | 46,665 | ||||
Non-controlling interest | 1,051 | 1,094 | ||||
Total equity | 46,921 | 47,759 | ||||
Total liabilities and equity | $ | 90,810 | $ | 73,377 | ||
Interim Condensed Consolidated Statements of Earnings (loss) | |||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
(Unaudited) | |||||||||||||||||
(in thousands of Canadian dollars, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Sales | $ | 26,822 | $ | 32,235 | $ | 51,360 | $ | 57,625 | |||||||||
Cost of sales | |||||||||||||||||
Cost of sales | 16,678 | 21,659 | 35,877 | 39,467 | |||||||||||||
Depreciation of plant and equipment | 1,069 | 859 | 2,063 | 1,687 | |||||||||||||
Depreciation of right-of-use assets | 401 | - | 786 | - | |||||||||||||
Total cost of sales | 18,148 | 22,518 | 38,726 | 41,154 | |||||||||||||
Gross margin | 8,674 | 9,717 | 12,634 | 16,471 | |||||||||||||
Expenses | |||||||||||||||||
Selling, general and administrative | 4,056 | 4,119 | 7,487 | 7,361 | |||||||||||||
Research and development costs | 1,583 | 1,168 | 2,664 | 2,284 | |||||||||||||
Recovery (reversal) of investment tax credits, net | (203 | ) | 10 | (375 | ) | (195 | ) | ||||||||||
Depreciation of plant and equipment | 54 | 40 | 100 | 83 | |||||||||||||
Depreciation of right-of-use assets | 13 | - | 25 | - | |||||||||||||
Amortization of intangible assets | 97 | 272 | 396 | 543 | |||||||||||||
Interest expense on bank debt, net | 57 | 90 | 98 | 167 | |||||||||||||
Accretion on lease liabilities | 141 | - | 278 | - | |||||||||||||
Stock based compensation | 40 | 80 | 91 | 154 | |||||||||||||
Foreign exchange (gain) loss | (464 | ) | 140 | (415 | ) | 296 | |||||||||||
Impairment of intangible assets | - | - | 1,145 | - | |||||||||||||
Total expenses | 5,374 | 5,919 | 11,494 | 10,693 | |||||||||||||
Earnings before income taxes | 3,300 | 3,798 | 1,140 | 5,778 | |||||||||||||
Current income tax expense | 1,261 | 1,294 | 1,695 | 2,071 | |||||||||||||
Deferred income tax expense | 41 | 54 | 76 | 84 | |||||||||||||
Total income tax expense | 1,302 | 1,348 | 1,771 | 2,155 | |||||||||||||
Net earnings (loss) | $ | 1,998 | $ | 2,450 | $ | (631 | ) | $ | 3,623 | ||||||||
Attributable to: | |||||||||||||||||
Non-controlling interest | $ | (36 | ) | $ | (32 | ) | $ | (68 | ) | $ | (77 | ) | |||||
Equity holders of FTG | $ | 2,034 | $ | 2,482 | $ | (563 | ) | $ | 3,700 | ||||||||
Earnings (loss) per share, attributable to the equity holders of FTG | |||||||||||||||||
Basic | $ | 0.09 | $ | 0.11 | $ | (0.02 | ) | $ | 0.16 | ||||||||
Diluted | $ | 0.08 | $ | 0.10 | $ | (0.02 | ) | $ | 0.15 | ||||||||
Interim Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
(Unaudited) | ||||||||||||||||
(in thousands of Canadian dollars) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net earnings (loss) | $ | 1,998 | $ | 2,450 | $ | (631 | ) | $ | 3,623 | |||||||
Other comprehensive earnings (loss) to be reclassified to net earnings (loss) | ||||||||||||||||
in subsequent periods: | ||||||||||||||||
Change in foreign currency translation adjustments | 518 | 302 | 766 | 290 | ||||||||||||
Change in net unrealized loss on derivative financial instruments designated as cash flow hedges | (478 | ) | (1,258 | ) | (860 | ) | (1,325 | ) | ||||||||
Change in tax impact | 120 | 314 | 216 | 331 | ||||||||||||
160 | (642 | ) | 122 | (704 | ) | |||||||||||
Total comprehensive income (loss) | $ | 2,158 | $ | 1,808 | $ | (509 | ) | $ | 2,919 | |||||||
Attributable to: | ||||||||||||||||
Equity holders of FTG | $ | 2,187 | $ | 1,851 | $ | (466 | ) | $ | 2,967 | |||||||
Non-controlling interest | $ | (29 | ) | $ | (43 | ) | $ | (43 | ) | $ | (48 | ) | ||||
Interim Condensed Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||
Six months ended | Attributed to the equity holders of FTG | |||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
other | Non- | |||||||||||||||||||||||
(Unaudited) | Common | Preferred | Retained | Contributed | comprehensive | controlling | Total | |||||||||||||||||
(in thousands of Canadian dollars) | shares | shares | earnings | surplus | loss | Total | interest | equity | ||||||||||||||||
Balance, | $ | 19,323 | $ | 2,218 | $ | 17,745 | $ | 8,933 | $ | (1,554 | ) | $ | 46,665 | $ | 1,094 | $ | 47,759 | |||||||
Net (loss) | - | - | (563 | ) | - | - | (563 | ) | (68 | ) | (631 | ) | ||||||||||||
Stock-based compensation | - | - | - | 91 | - | 91 | - | 91 | ||||||||||||||||
Transfer from contributed surplus to share capital for | ||||||||||||||||||||||||
PSU’s exercised | 760 | (760 | ) | - | - | - | - | |||||||||||||||||
Common shares repurchase and issue on exercise | ||||||||||||||||||||||||
of PSU's | (420 | ) | - | - | - | - | (420 | ) | - | (420 | ) | |||||||||||||
Change in foreign currency translation adjustments | - | - | - | - | 741 | 741 | 25 | 766 | ||||||||||||||||
Change in net unrealized loss on derivative financial | ||||||||||||||||||||||||
instruments designated as cash flow hedges, net of | ||||||||||||||||||||||||
tax impact | - | - | - | - | (644 | ) | (644 | ) | - | (644 | ) | |||||||||||||
Balance, | $ | 19,663 | $ | 2,218 | $ | 17,182 | $ | 8,264 | $ | (1,457 | ) | $ | 45,870 | $ | 1,051 | $ | 46,921 | |||||||
Six months ended | Attributed to the equity holders of FTG | |||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Other | Non- | |||||||||||||||||||||||
(Unaudited) | Common | Preferred | Retained | Contributed | Comprehensive | controlling | Total | |||||||||||||||||
(in thousands of Canadian dollars) | shares | shares | earnings | surplus | loss | Total | interest | equity | ||||||||||||||||
Balance, | $ | 19,323 | $ | 2,218 | $ | 11,687 | $ | 8,672 | $ | (774 | ) | $ | 41,126 | $ | 1,181 | $ | 42,307 | |||||||
Net earnings (loss) | - | - | 3,700 | - | - | 3,700 | (77 | ) | 3,623 | |||||||||||||||
Stock-based compensation | - | - | - | 154 | - | 154 | - | 154 | ||||||||||||||||
Change in foreign currency translation adjustments | - | - | - | - | 261 | 261 | 29 | 290 | ||||||||||||||||
Change in net unrealized loss on derivative financial | ||||||||||||||||||||||||
instruments designated as cash flow hedges | ||||||||||||||||||||||||
net of tax impact | - | - | - | - | (994 | ) | (994 | ) | - | (994 | ) | |||||||||||||
Balance, | $ | 19,323 | $ | 2,218 | $ | 15,387 | $ | 8,826 | $ | (1,507 | ) | $ | 44,247 | $ | 1,133 | $ | 45,380 |
Interim Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(in thousands of Canadian dollars) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Net inflow (outflow) of cash related to the following: | |||||||||||||||||||
Operating activities | |||||||||||||||||||
Net earnings (loss) | $ | 1,998 | $ | 2,450 | $ | (631 | ) | $ | 3,623 | ||||||||||
Items not affecting cash: | |||||||||||||||||||
Stock-based compensation | 40 | 80 | 91 | 154 | |||||||||||||||
Loss on disposal of plant and equipment | - | (8 | ) | 6 | (1 | ) | |||||||||||||
Effect of exchange rates on US dollar debt | 145 | 140 | 198 | 126 | |||||||||||||||
Depreciation of plant and equipment | 1,123 | 899 | 2,163 | 1,770 | |||||||||||||||
Depreciation of right-of-use assets | 414 | - | 811 | - | |||||||||||||||
Amortization of intangible assets | 97 | 272 | 396 | 543 | |||||||||||||||
Amortization, other | 8 | 3 | 11 | 6 | |||||||||||||||
Impairment of intangible assets | - | - | 1,145 | - | |||||||||||||||
Investment tax credits/deferred income taxes | 518 | 206 | 605 | 552 | |||||||||||||||
Accretion on lease liabilities | 141 | - | 278 | - | |||||||||||||||
Increase in net unrealized loss on derivative financial instruments | |||||||||||||||||||
designated as cash flow hedges, net of taxes | 711 | (652 | ) | 425 | (702 | ) | |||||||||||||
Net change in non-cash operating working capital | (781 | ) | (485 | ) | 3,241 | (4,572 | ) | ||||||||||||
4,414 | 2,905 | 8,739 | 1,499 | ||||||||||||||||
Investing activities | |||||||||||||||||||
Additions to plant and equipment | (1,439 | ) | (610 | ) | (2,485 | ) | (1,001 | ) | |||||||||||
Recovery (additions) of contract and other costs | 43 | (1 | ) | 49 | (19 | ) | |||||||||||||
(1,396 | ) | (611 | ) | (2,436 | ) | (1,020 | ) | ||||||||||||
Net cash flow from (used in) operating and investing activities | 3,018 | 2,294 | 6,303 | 479 | |||||||||||||||
Financing activities | |||||||||||||||||||
Decrease in bank indebtedness | - | (995 | ) | - | - | ||||||||||||||
Proceeds from bank debt | 3,309 | - | 3,309 | - | |||||||||||||||
Repayments of bank debt | (535 | ) | (512 | ) | (1,038 | ) | (1,021 | ) | |||||||||||
Lease liability payments | (466 | ) | - | (912 | ) | - | |||||||||||||
Repurchase of common shares on exercise of PSU's | (420 | ) | - | (420 | ) | ||||||||||||||
1,888 | (1,507 | ) | 939 | (1,021 | ) | ||||||||||||||
Effects of foreign exchange rate changes on cash flow | (800 | ) | (101 | ) | (631 | ) | (172 | ) | |||||||||||
Net increase (decrease) in cash flow | 4,106 | 686 | 6,611 | (714 | ) | ||||||||||||||
Cash, beginning of the period | 10,152 | 3,626 | 7,647 | 5,026 | |||||||||||||||
Cash, end of period | $ | 14,258 | $ | 4,312 | $ | 14,258 | $ | 4,312 | |||||||||||
Disclosure of cash payments | |||||||||||||||||||
Payment for interest | $ | 54 | $ | 90 | $ | 109 | $ | 171 | |||||||||||
Payments for income taxes | $ | 138 | $ | 383 | $ | 1,117 | $ | 1,122 | |||||||||||
Source:
2020 GlobeNewswire, Inc., source