Mr. Bradley Bourne reports

FIRAN TECHNOLOGY GROUP CORPORATION ("FTG") ANNOUNCES FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL RESULTS

Firan Technology Group Corp. has released its financial results for the full year and fourth quarter of 2023:

• Full-year bookings were $149.5-million, up 32 per cent over 2022.
• Fourth quarter bookings of $39.0-million were up 9 per cent sequentially and up 22 per cent year over year.
• Firan full-year revenues increased by 51 per cent to $135.2-million, including $22.9-million from acquisitions.
• Firan achieved adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the full year of $19.4-million (2022 -- $8.8-million) and $6.0-million for Q4 2023 (Q4 2022 -- $2.9-million).
• Firan has maintained a strong balance sheet with net debt of $3.6-million, after investments in the year of $25.4-million for acquisitions, $6.5-million for capital expenditures, and $5.9-million for research and development.
• Firan achieved adjusted net earnings of $7.0-million for fiscal 2023 and $2.4-million in Q4 2023.

Business highlights

During 2023, the corporation has invested in technology in existing sites, grown the business organically and completed two acquisitions. 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 2023 that continue to improve the corporation and position it for the future, including:

• Firan acquired Holaday Circuits LLC, of Minnetonka, Minn., subsequently renamed as FTG Circuits Minnetonka LLC, and IMI Inc., of Haverhill, Mass., subsequently renamed as FTG Circuits Haverhill Inc., both of which closed on April 28, 2023.
• Planned integration activities at both acquisitions progressed well through 2023, with improved throughput, improved pricing, cost savings and Firan ERP (enterprise resource planning) implementation well under way at FTG Circuits Minnetonka, and cost savings, equipment investments and growth plans at FTG Circuits Haverhill. More activities and full Firan ERP implementation for both sites are planned for 2024.
• Also in support of the new acquisitions and the overall growth of Firan, Leo LaCroix was hired as executive vice-president, circuits, to oversee the U.S. circuits operations, including the newly acquired sites. Mr. LaCroix has extensive senior management experience in the circuit board industry selling into the defence market.
• As of Nov. 30, 2023, Firan had total backlog of $97.0-million, which is a 49-per-cent increase over the prior-year-end amount of $65.3-million. The two acquisitions added approximately $17.0-million of additional backlog as of their closing date.
• Customer orders received in 2023 totalled $149.5-million, representing a book-to-bill ratio of 1.11:1.
• Firan ended the year with net debt of $3.6-million, which includes a $5.2-million interest-free loan from the government of Canada and a $500,000 favourable-term loan from the Province of Ontario.

For Firan in 2023, overall sales increased by $45.6-million or 51 per cent from $89.6-million in 2022 to $135.2-million in 2023. The newly acquired circuits segment sites in Minnetonka, Minn., and Haverhill, Mass., contributed $22.9-million to Firan's sales in the final seven months of 2023. Strong end-market demand, improved pricing and new program wins in both the commercial and defence markets drove the organic growth of $19.0-million in 2023 as compared with 2022. The average foreign exchange rate in 2023 was 4 per cent (six cents) higher than in 2022, with a positive impact on sales of $3.7-million.

In the fourth quarter, sales were $40.0-million, an increase of $16.2-million or 68 per cent over Q4 2022. The acquisitions contributed $10.3-million to Q4 2023 sales. Strong market demand, new program wins and increasing throughput at the acquired sites drove the organic growth. The average foreign exchange rate was 1 per cent (two cents) higher than Q4 2022, with a positive impact on sales of $400,000.

The circuits segment sales in 2023 were up $32.0-million, or 54 per cent, compared with last year, as a result of acquisitions and organic growth, including pricing actions. In the fourth quarter, sales in the circuits segment were up $12.2-million or 79 per cent, with growth coming both from existing sites as well as ramping throughput at the acquisitions.

For the aerospace segment, sales in 2023 were up $12.0-million or 35 per cent compared with last year. The increase in sales included incremental simulator product revenue of $7.0-million. In Q4 2023, aerospace segment sales were up $3.7-million or 40 per cent, which included strong end-market demand, newly qualified products entering production and increased pricing on existing products.

Gross margin in 2023 was $39.3-million or 29.1 per cent, as compared with $21.3-million or 23.8 per cent in 2022. Excluding government assistance, the gross margin rate improved to 26.7 per cent in 2023 from 23.4 per cent in 2022. Gross margin in Q4 2023 was $10.7-million or 26.9 per cent as compared with $5.7-million or 24.2 per cent in Q4 2022. The increase in the gross margin rate for both the full year and Q4 2023 is due to the operating leverage of increased sales volumes and operational improvements, including pricing actions.

Net earnings after tax at Firan in 2023 were $11.6-million or 48 cents per diluted share, compared with a net profit of $700,000 or three cents per diluted share in 2022. Adjusted net earnings after tax were $7.0-million or 29 cents per diluted share in 2023, compared with $900,000 or four cents in the prior year. The increase in adjusted net earnings is the result of higher sales volume, improved pricing and improved operating performance.

Net earnings after tax at Firan in Q4 2023 were $3.8-million or 16 cents per diluted share, compared with a net profit of $700,000 or three cents per diluted share or share in Q4 2022. Adjusted net earnings after tax were $2.4-million or 10 cents per diluted share in 2023, compared with $1.2-million or five cents. The increase in earnings is the result of higher sales volume and improving results at the acquisitions as integration activities progress.

The circuits segment net earnings before taxes were $8.1-million in 2023, compared with $2.8-million in 2022. The increase in earnings is the result of higher sales volumes, including the impact of the acquisitions, and higher levels of government assistance, which was $2.8-million in 2023, as compared with $300,000 in 2022.

The aerospace segment net earnings before taxes were $10.4-million in 2023, versus $2.7-million in 2022. The increase in earnings is the result of greater sales volumes and operating performance, and higher levels of government assistance, which was $1.0-million in 2023 and nil in 2022.

EBITDA for Firan in 2023 was $22.5-million or 16.7 per cent of sales, compared with $8.6-million or 9.6 per cent of sales in 2022. Adjusted EBITDA for 2023 was $19.4-million or 14.3 per cent of sales, after deducting government assistance and adding back acquisition expenses. The improved results in 2023 stem from improved pricing, improved throughput and the acquisitions.

For Q4 2023, EBITDA was $6.0-million or 15.0 per cent of sales, as compared with $2.4-million or 10.l per cent of sales in the prior-year quarter. Adjusted EBITDA for Q4 2022 was $2.9-million after adding back the costs of the sale-leaseback transaction for the aerospace Chatsworth facility and expenses for the two acquisitions.

As at Nov. 30, 2023, the corporation's net working capital was $41.0-million, compared with $30.5-million at year-end in 2022. The increase is due to higher levels of accounts receivable and inventory as a result of the acquisitions and organic growth, partially offset by a reduced cash balance and increased levels of accounts payable and accrued liabilities.

Firan ended 2023 with negative $3.6-million in net cash, as compared with $12.3-million at the end of 2022.

Subsequent to the year-end, on Jan. 23, 2024, Firan reached a new collective agreement with its 67 unionized production workers at the aerospace Toronto site, following a work stoppage of six weeks. Sales for Q1 2024 will be negatively impacted by approximately $3-million to $4-million as well as a corresponding reduction in profits.

The corporation will host a live conference call on Thursday, Feb. 8, 2024, at 8:30 a.m. Eastern Time, to discuss the results of fiscal year 2023.

If you wish to participate in the call, you should dial 416-764-8658 or 1-888-886-7786, conference ID No. 71906148, 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 March 8, 2024, 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 906148.

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:

• 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.
• 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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