Mr. Bradley Bourne reports

FIRAN TECHNOLOGY GROUP CORPORATION ("FTG") ANNOUNCES FIRST QUARTER 2024 FINANCIAL RESULTS

Firan Technology Group Corp. has released financial results from its first quarter of 2024.

Highlights:

• First quarter bookings of $37.5-million were up 14 per cent over Q1 2023.
• Firan first quarter revenues of $35.0-million were up 42 per cent over Q1 2023.
• Firan achieved adjusted net earnings in Q1 2024 of $1.1-million.
• Firan achieved adjusted earnings before interest, taxes, depreciation and amortization of $4.6-million, which were up 42 per cent over Q1 2023.

Business highlights

During Q1 2024, the corporation has continued to invest in technology in existing sites, expand the business organically and integrate the two acquisitions completed last year. 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 the following in Q1 2024, which continues to improve the corporation and position it for the future:

• Integration activities at both acquisitions progressed well through 2023 and Q1 2024 with improved throughput, improved pricing, cost savings and FTG ERP implementation completed at Circuits Minnetonka, and cost savings, equipment investments and growth plans at Circuits Haverhill. More activities and full FTG ERP implementation for Circuits Haverhill are planned for the balance of 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 Firan's 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.
• Firan managed through a six-week strike by 67 unionized employees at the FTG Aerospace Toronto facility, which resulted in decreased product shipments during Q1 2024 of approximately $3.0-million. The reduction in revenue had a negative impact on net earnings of approximately $1-million. A new four-year agreement with the employees was concluded, and the employees returned to work on Jan. 23, 2024. The new contract expires in August, 2027.
• Customer orders received in Q1 2024 totalled $37.5-million, resulting in a book to bill ratio of 1.07 to 1.
• As of March 1, 2024, Firan had a total backlog of $99.3-million, which is a 34-per-cent increase over the Q1 2023 backlog of $74.2-million. The two acquisitions added approximately $17.0-million of additional backlog as of their closing date.

For Firan in Q1 2024, overall sales increased by $10.3-million or 41.9 per cent from $24.6-million in Q1 2023 to $35.0-million in Q1 2024. Increased revenue in Q1 2024 is the result of acquisitions and organic growth, partially offset by a strike at the Aerospace Toronto facility and decreased shipments of Simulator products. The average foreign exchange rate in Q1 2024 was consistent with Q1 2023.

The Circuits segment sales in Q1 2024 were up $10.3-million, or 65.9 per cent, compared with last year. The sales increase included a $9.6-million contribution from the newly acquired Circuits sites in Minnetonka and Haverhill. Sales at Circuits Fredericksburg were down while sales at other sites were flat or up.

Sales for the Aerospace segment were flat as compared with Q1 2023 with sales increasing by 45 per cent at Aerospace Chatsworth and by 80 per cent at Aerospace Tianjin, offsetting the sales impact of a strike at the Toronto site and reduced Simulator product shipments. There was a six-week strike at the Aerospace Toronto facility, which negatively impacted revenue in Q1 2024 by approximately $3.0-million.

Gross margin in Q1 2024 was $8.9-million or 25.5 per cent as compared with $9.8-million or 39.7 per cent in Q1 2024. Gross margin in Q1 2023 included $2.9-million of ERC funds. Excluding government assistance, gross margin increased in Q1 2024 by $2.0-million. The increase in gross margin dollars is the result of higher sales volumes. There are still continuing efforts, including cost savings, price increases and production rate increases, to drive gross margins at the acquired sites up to desired levels.

Net earnings after tax at Firan in Q1 2024 were $1.0-million or four cents per diluted share compared with net income of $4.1-million or 17 cents per diluted share in Q1 2023. Adjusted net earnings were $1.0-million or four cents per diluted share in Q1 2024, which are consistent with the same quarter prior year. The six-week strike at Aerospace Toronto had an estimated negative impact on Q1 2024 net earnings of $1-million.

The Circuits segment earnings before interest and income taxes were $2.0-million in Q1 2024 as compared with $3.4-million in Q1 2023. Excluding ERC funds of $2.4-million included in Circuits segment earnings in Q1 2023, Circuits segment EBIT increased to $2.0-million in Q1 2024 from $1.0-million in Q1 2023.

The Aerospace segment EBIT was $1.4-million in Q1 2024 versus $2.3-million in Q1 2023. Excluding ERC funds of $1.0-million included in Aerospace segment EBIT in Q1 2023, Aerospace segment EBIT increased marginally in Q1 2024 from Q1 2023 on flat revenues.

Adjusted EBITDA for Q1 2024, which excludes government assistance and expenses related to the acquisitions, was $4.6-million or 13.0 per cent of net sales, as compared with $3.2-million or 13.0 per cent of net sales in Q1 2023. The strike at Aerospace Toronto decreased adjusted EBITDA by approximately $1.0-million.

As at March 1, 2024, the corporation's net working capital was $41.4-million, compared with $41.1-million at year-end in 2023.

Net debt at the end of Q1 2024 was $7.2-million compared with net debt of $3.6-million at the end of 2023. Free cash flow in Q1 2024 was ($3.3-million) as compared with ($100,000) in Q1 2023. In Q1 2024, cash flow was impacted by cash tax payments of $2.3-million and performance compensation payments of $1.6-million, both due to the strong financial performance in fiscal 2023. Capital expenditures in Q1 2024 were $3.4-million as compared with $600,000 in Q1 2023. Some capital expenditures were accelerated in support of efforts to complete Firan's scope of work related to the government of Canada's ARRI program, which has a completion date of March 31, 2024.

The corporation will host a live conference call on Friday, April 12, 2024, at 8:30 a.m. Eastern Time, to discuss the results of Q1 2024.

Anyone wishing to participate in the call should dial 289-514-5100 or 1-800-717-1738, conference ID 34553, 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 May 12, 2024, and will be available on the Firan website. The number to call for a rebroadcast is 289-819-1325 or 1-888-660-6264, playback passcode No. 34553.

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 designs, 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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