Mr. Bradley Bourne reports

FIRAN TECHNOLOGY GROUP CORPORATION ("FTG") ANNOUNCES THIRD QUARTER 2023 FINANCIAL RESULTS

Firan Technology Group Corp. has released financial results for the third quarter of 2023:

• Third quarter bookings of $35.7-million were up 28 per cent over Q3 2022.
• Firan third quarter revenues of $36.6-million were up 59 per cent over Q3 2022, as Firan ramps up production to meet customer demand. Revenue included $9.2-million from the newly acquired Circuits sites.
• Firan achieved net earnings in Q3 2023 of $1.3-million, which were up $600,000 from second quarter 2022.
• Net debt on the balance sheet as of Q3 2023 is $5.7-million, which is 0.36 times adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the trailing 12 months.

Business highlights

Firan continued to play offence through the first three quarters of 2023. The company has invested in technology in existing sites, built the business organically and completed two acquisitions. Through all these actions, Firan 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, Firan accomplished many goals in Q3 2023 that continue to improve the corporation and position it for the future, including:

• Backlog at the end of Q3 2023 is $98.0-million compared with $65.5-million at the end of 2022. Backlog as of Q3 2023 includes $18.2-million at the newly acquired sites.
• Firan employs approximately 700 people across its nine operating sites after adding additional staff in Q3 2023, including executive leadership at the Circuits Minnetonka site. Firan staffing is essentially in line with customer demand as reflected by the parity between bookings and shipments in the quarter.
• Firan received funding of $700,000 in the quarter for a total of $4.4-million received to date under the Canadian aerospace regional recovery initiative (ARRI) program.
• During Q3 2023, Firan bought back 6,200 common shares.

For Firan, overall sales increased by $13.5-million or 58.5 per cent from $23.1-million in Q3 2022 to $36.6-million in Q3 2023. Increased revenue in Q3 2023 is the result of organic growth, acquisitions and favourable foreign exchange rates. The average foreign exchange rate in Q3 2023 was 3 per cent (4.2 cents) higher than in Q3 2022, with a positive impact on sales of $800,000. On a year-to-date basis, sales increased by $29.3-million or 44.5 per cent from 2022.

The Circuits segment sales in Q3 2023 were up $12.7-million, or 86.8 per cent, compared with last year. The sales increase included a $9.2-million contribution from the newly acquired Circuits sites in Minnetonka and Haverhill. On a year-to-date basis, the Circuits segment sales were up $19.8-million or 44.7 per cent.

For the Aerospace segment, sales in Q3 2023 were up $300,000 or 3.9 per cent compared with last year. On a year-to-date basis, the Aerospace segment sales were up $8.4-million or 32.9 per cent, which included incremental Simulator revenue of $7.2-million primarily delivered in the first half of 2023.

Gross margin in Q3 2023 was $8.8-million or 24.0 per cent as compared with $5.7-million or 24.7 per cent in Q3 2022. The decrease in the gross margin rate is due to increased sales volumes offset by lower gross margins in the Circuits Minnetonka site. Margins at that site are expected to increase over time as it ramps up throughput, achieve material cost savings and adjust pricing.

Net earnings after tax at Firan in Q3 2023 was $1.3-million or five cents per diluted share compared with a net income of $700,000 or three cents per diluted share in Q3 2022. Adjusted net earnings were $1.4-million or six cents per diluted share in Q3 2023 as compared with an adjusted net earnings of $800,000 or three cents per diluted share in the prior-year quarter. The $600,000 increase in adjusted net earnings is the result of higher sales volume, operational improvements and a more favourable foreign exchange rate. On a year-to-date basis, adjusted net earnings were $4.7-million or 19 cents per diluted share compared with a net loss of $300,000 or one cent per diluted share in the prior-year period.

The Circuits segment earnings before interest and income taxes were $2.2-million in Q3 2023 as compared with $800,000 in Q3 2022. Higher sales and improved pricing drove the increase in earnings. The Minnetonka and Haverhill acquisitions did not materially impact earnings before interest and income taxes for this segment.

The Aerospace segment earnings before interest and income taxes were $1.6-million in Q3 2023 versus $1.4-million in Q3 2022. The increase in earnings was driven by higher sales and improved pricing on a range of products.

The trailing 12-month earnings before interest, tax, depreciation and amortization (EBITDA) were $18.9-million or $15.9-million for adjusted EBITDA as compared with approximately $9-million for full-year 2022.

EBITDA for Firan in Q3 2023 was $4.9-million or 13.4 per cent of sales compared with $2.8-million or 11.9 per cent of sales in Q3 2022. On a year-to-date basis, EBITDA in 2023 was $16.5-million or 17.3 per cent compared with $6.2-million or 9.4 per cent in 2022.

Adjusted EBITDA for Q3 2023, which excludes government assistance and expenses related to the acquisitions, was $5.0-million or 13.6 per cent of net sales, as compared with $2.8-million or 12.1 per cent of net sales in Q3 2022. The increase in profitability is driven by increased operating leverage from higher sales, operational improvements and a favourable foreign exchange impact. For the trailing 12-month period ended Sept. 1, 2023, adjusted EBITDA was $15.9-million or 15.1 per cent of sales.

As at Sept. 1, 2023, the corporation's net working capital was $35.2-million, compared with $30.5-million at year-end in 2022.

Net debt at the end of Q3 2023 was $5.7-million compared with net cash of $12.3-million at the end of 2022, after the combined impact of a net cash outlay of $26.3-million for acquisitions, net proceeds of $8.5-million from the Aerospace Chatsworth facility sale leaseback transaction and receiving $3.8-million from the U.S. employment retention credit program. In addition, Firan has access to committed credit lines of approximately $22.3-million.

The corporation will host a live conference call on Thursday, Oct. 12, 2023, at 8:30 a.m. Eastern Time to discuss the results of Q3 2023.

Anyone wishing to participate in the call should dial 416-764-8658 or 1-888-886-7786 and identify that you are calling to participate in the Firan conference call. The chairperson is Brad Bourne. A replay of the call will be available until Nov. 12, 2023, and will be available on the Firan website. The number to call for a rebroadcast is 416-764-8692 or 1-877-674-7070, playback passcode 572945 followed by the number sign.

About Firan Technology Group Corp.

Firan is an aerospace and defence electronics product and subsystem supplier to customers around the globe. Firan has two operating units:

1. FTG Circuits is a manufacturer of high-technology, high-reliability printed circuit boards. Its customers are leaders in the aviation, defence and high-technology industries. FTG Circuits has operations in Toronto, Ont., Chatsworth, Calif., Fredericksburg, Va., Minnetonka, Minn., and Haverhill, Mass., and a joint venture in Tianjin, China.
2. FTG Aerospace manufactures and repairs illuminated cockpit panels, keyboards and subassemblies for original equipment manufacturers of aerospace and defence equipment. FTG Aerospace has operations in Toronto, Ont., Chatsworth, Calif., and Tianjin, China.

The corporation's shares are traded on the Toronto Stock Exchange under the symbol FTG.

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