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Firan Technology Group Corporation (FTG) posted strong financial results for the first quarter of 2025, with a 22.6% increase in revenue year-over-year, reaching $42.9 million. The company reported earnings per share (EPS) of $0.13, meeting market expectations. Following the earnings announcement, FTG's stock price rose by 2.71%, reflecting investor confidence in its growth trajectory and strategic initiatives. InvestingPro analysis shows the company maintains a "GREAT" financial health score of 3.16, supported by strong profitability metrics and robust liquidity position.
Key Takeaways
- Revenue increased by 22.6% year-over-year to $42.9 million.
- EPS met expectations at $0.13.
- Stock price rose by 2.71% post-earnings.
- Strong performance driven by strategic acquisitions and product innovations.
- Expansion into new markets, including a new aerospace facility in India.
Company Performance
Firan Technology Group demonstrated robust performance in Q1 2025, with significant growth in revenue and profitability. The company's total bookings reached $51.5 million, marking a 37% increase from the previous year. Adjusted EBITDA more than doubled to $8.4 million, and adjusted net earnings surged over 200% to $3.3 million. These results highlight FTG's successful execution of its growth strategy and operational improvements. According to InvestingPro data, FTG maintains impressive financial metrics with a return on equity of 16% and an Altman Z-Score of 9.1, indicating strong financial stability.
Financial Highlights
- Revenue: $42.9 million, up 22.6% year-over-year.
- Earnings per share: $0.13, meeting expectations.
- Gross margin: 31%, up from 25.5% in Q1 2024.
- Adjusted EBITDA: $8.4 million, up from $4.6 million in Q1 2024.
- Total bookings: $51.5 million, a 37% increase year-over-year.
Earnings vs. Forecast
FTG's EPS of $0.13 met market expectations, indicating stable financial performance. Revenue was reported at $42.87 million, aligning with the company's strong growth trajectory. The results underscore FTG's ability to meet market expectations consistently, which is crucial for maintaining investor confidence.
Market Reaction
Following the earnings announcement, FTG's stock experienced a 2.71% increase, closing at $7.39. This positive market reaction reflects investor optimism about the company's strategic initiatives and future growth prospects. The stock's performance is particularly notable against its 52-week range, suggesting strong market confidence. InvestingPro subscribers can access detailed valuation metrics, including Fair Value estimates and comprehensive financial health scores, along with 12+ additional ProTips that provide deeper insights into FTG's investment potential.
Outlook & Guidance
FTG anticipates continued growth in 2025, with a backlog of $142 million, including $60 million due in Q2. The company plans to explore further mergers and acquisitions, particularly in Europe, and is monitoring US tariffs to develop mitigation strategies. FTG's expansion into new markets, such as India, and its focus on product innovation are expected to drive future growth. The company's strong momentum is supported by a 19.89% revenue growth rate and healthy P/E ratio of 16.07, as reported by InvestingPro.
Executive Commentary
CEO Brad Byrne expressed confidence in FTG's performance, stating, "We are off to a great start in 2025. These are by far our best Q1 results ever." He emphasized the company's commitment to participating in all segments of the aerospace and defense markets, stating, "Our goal is to participate in all segments of the aerospace and defense markets." Byrne also highlighted FTG's strong growth trajectory, saying, "We are confident we are on a strong long-term growth trajectory."
Risks and Challenges
- Potential challenges with the strategic pivot away from the US market.
- Supply chain constraints could impact production and delivery timelines.
- US tariffs may affect cost structures and profitability.
- Competitive pressures from major industry players like Airbus and Boeing.
- Macroeconomic factors and geopolitical tensions could influence market conditions.
Q&A
During the earnings call, analysts inquired about the C919 program ramp-up in China, tariff implications, and supply chain constraints. FTG addressed these concerns by outlining strategies for mitigating tariffs and managing supply chain challenges, reinforcing its commitment to overcoming potential obstacles and sustaining growth.
Full transcript - Firan Technology Group Corporation (FTG) Q1 2025:
Joelle, Conference Operator: Good morning, everyone. My name is Joelle, and I will be your conference operator today. I would like to welcome everyone to the Feet GQ1 twenty twenty five Analyst Call. All lines have been placed on mute. There will be a question and answer session following the call.
If you would like to ask a question during this time, simply press followed by the one on your telephone keypad. If you would like to withdraw your question, please please press 2. Please note that this call is being recorded. I would now like to turn the call over to mister Brad Byrne, president and chief executive officer of FTG. Mister Byrne, you may proceed.
Brad Byrne, President and CEO, FTG (Friend Technologies Group Corporation): Thank you. Good morning. I'm Brad Born, President and CEO of FTG for Friend Technologies Group Corporation. Also on the call today is Jamie Clemson, our Chief Financial Officer. Before we go any further, I must caution you that this call may contain forward looking statements.
Such statements are based on the current expectations of management of the company and inherently involve numerous risks and uncertainties known and unknown, including economic factors and the company's industry generally. The preceding list does not exhaustive of all possible factors. Such forward looking statements are not guarantees of future performance, and actual events or results could differ materially from those expressed or implied by forward looking statements made by the company. The listeners are cautioned to consider these and other factors carefully when making decisions with respect to the company and not place undue reliance on forward looking statements. The company does not undertake and has no specific intention to update any forward looking statements written or oral, that may be made from time to time by or on its behalf, whether as a result of new information, future events or otherwise.
We are off to a great start in 2025. These are by far our best Q1 results ever. And to start the year, we closed the acquisition of FLYHT, adding another growth lever to FTG overall. I'd like to welcome the people from FLYHT to FTG and thank everyone at FTG for their hard work and their contributions to our continued success. In the first quarter of twenty twenty five, FTG accomplished many financial goals, including total bookings reached $51,500,000 in the quarter, marking a 37% increase over Q1 twenty twenty four.
The quarter end backlog stood at a $142,500,000 a 43% rise from the previous year. Revenue was $42,900,000 in the quarter, a 22.6% increase over Q1 twenty twenty four. Adjusted EBITDA was $8,400,000 up from $4,600,000 in Q1 last year. Adjusted net earnings rose by over 200% to 3,300,000.0 And we maintained a strong balance sheet with net debt of 8,300,000.0 after the acquisition of Point where we paid 4,300,000.0 in cash and assumed 9,400,000.0 in debt. In the quarter, we also paid out the earn out from our Circus Minnetonka acquisition of $1,500,000 We invested in CapEx and deferred development.
We paid off our DSU plan. We paid out twenty twenty four bonuses and profit sharing and PSUs earned. We generated operating cash flow, less lease payments of 9,300,000.0 in q one twenty twenty five. Other accomplishments in our quarter included the closing of our acquisition of FLYHT based in Calgary. FLYHT is an important addition to FTG, increasing our penetration of the aftermarket, which typically has higher margins and increasing our penetration of Airbus.
We clearly have performed in Boeing and the air transport market. We also see production in sourcing opportunities that could benefit other FTG sites as FLY has historically outsourced all their manufacturing. We also announced in the quarter a new contract from DaValon Canada where we will provide updated cockpit control assemblies for the new the Havilland Canada Air five one five aerial firefighting aircraft. This is also strategic as there's a contract that we will increase our activity outside The US and therefore not be impacted by any potential U. S.
Tariffs. FTG announced plans to open an aerospace facility in Hyderabad, India to support strategic growth and expand our market presence there. FTG completed a new three year banking agreement with BMO Corporate Finance providing improved flexibility, reduced cost to support growth and corporate development objectives. And we strengthened our leadership team with the addition of Bill Cazadi as Executive Vice President, FTG Circuits. Bill comes to FTG with extensive experience in all aspects of the circuit board industry, including experience in senior management roles at Sanmina Summit and Hughes Circuits.
Bill will be responsible for all six of FTG's circuit businesses or sites. In addition, Marco Sinica is joining FTG in a newly created role as executive vice president, FTG Aerospace. Marco comes to FTG with extensive experience in all aspects of the aerospace industry, and most recently, Marco was responsible for new aircraft development as De Havilland Aircraft to Canada. Marco will be responsible for FTG's four aerospace sites as well as the sites under construction in India. Jamie will provide more details on our Q1 results shortly.
Let me turn to some external items. Our end market demand remains strong. Airbus delivered seven sixty six aircraft last year, but more importantly, they're looking to ramp to over 1,000 aircraft annually in the next few years. Airbus has a backlog of over 8,000 orders, which is over a decade worth of production at current production rates. For 2025, they're projecting growth of 7% over last year.
In the first quarter this year, shipments were, however, down down 7% due to supply chain issues primarily related to engines. At Boeing, they shipped just under 350 planes last year, down from the 500 in 2023. The drop drop was due in part to the safety incident on the Alaska Air seven thirty seven as well as the Machina strike later in last year. While looking forward, Boeing has plans to ramp their production to almost 700 planes annually in the next two years. Boeing's backlog is almost 6,000 planes, so also over a decade worth of orders at their term production rate.
In q one this year, Boeing shipped a 30 aircraft, which is up significantly from last year. Boeing two is constrained by supply chain issues on some models, including seat delays for their Boeing seven eighty seven. While while 2024 might have been a low point for Boeing, it also be it has also become clear that Airbus is outperforming Boeing in the air transport market with a two to one advantage in aircraft shipped last year and a 60% market share based on order backlog. This has implications for FTC's plans going forward. In the business jet market, Bombardier reported a mid single digit shipment increase last year, even in light of a short work stoppage they had during the year.
They are not providing guidance for 2025 due to the uncertainty around U. S. Tariffs, which are okay for them for now, but are still somewhat fluid. In the helicopter market, Bell Helicopter reported flat for deliveries in 2024 compared to 2023, but with an overall 5% revenue growth for the year. But Bell also has some key military helicopter wins in the past few years that will drive significant growth going forward.
All this bodes well for us as we look to future demand in the coming years. I've also looked at the results from some key defense contractors. For instance, Lockheed Martin reported a 5% revenue growth last year compared to the prior year and gave guidance of 4% to 5% growth this year. Also related to defense, Boeing was recently selected to develop and produce the next generation air dominant fighter in The US. This is good news for them.
Based on the supply chain approach on the previous air superiority fighter in The US, the F-twenty two, I would expect the sourcing for this program will be for US only suppliers. We did have content on the F-twenty two while it was in production through our Chatsworth facility. We are better positioned now to increase our content on US only procurement with five US based sites. Looking at the longer term, Boeing's most recent twenty year forecast shows long term industry growth, and it continues to show 20% of all new aircraft deliveries going to China and close to 40% to Asia, as has been the case in the recent forecast. The business jet market is already seeing traffic recover.
Our recent business jet forecast for Honeywell similarly predicts growth in this market in the coming years with near term double digit growth rates for the sector. The simulator market mirrors the end market application, but as we always remind everyone about this market, it is lumpy, so we see large year to year variations. So as we have said for many years, MTG's goal is to participate in all segments of the aerospace and defense markets that each boost through their independent business cycles. It is not often that all segments are growing as seems to be the case now. Beyond all this, let me give you a quick update on some key metrics for FTG for our first quarter of twenty twenty five.
First, as already noted, our the leading indicator of our business is our bookings for new orders. Our bookings were 51,500,000 in the quarter, and we added backlog due to the FLYHT acquisition. This resulted in a record backlog of $142,000,000 at the end of Q1. Our first quarter sales were $42,900,000 which is $7,900,000 or 23% above Q1 last year. The growth is approximately 50% from our organic activity and 50% from the acquisition of FLYHT.
In our aerospace business, sales were up $5,200,000 or 53% from Q1 last year. The strike at the aerospace funnel facility last year negatively impacted those results and the acquisition of FLYHT this year boosted Q1 twenty twenty five. On the circuit side of our business, our sales in the first quarter were up $2,800,000 or 11% over Q1 last year. All of this is organic growth. Of note, growth at Circuits Minnetonka was about 10% in the quarter and at Circuits payroll was about 50%.
Overall at FTG, our top five customers accounted for 52.1% of the total revenues in our first quarter. This compares to 56.5% last year. It is great to see the drop in customer concentration as we add sites and expand our customer base. Also interesting to note, of our top 10 customers, seven are customers shared between circuits and aerospace. We like to see the shared customers as it means we are maximizing our penetration of these customers by selling both cockpit products and circuit boards.
Given the actions of the new US administration in The US of implementing tariffs, it's also good to see that one of our top 10 customers is inside The US and is in fact in China. And another seven of our top 10 have some operations inside The US. While on this topic, 72.2% of FTG sales are to US based customers. This includes sales by U. S.
Sites as well as sales from FTG sites in Canada or China. This compares to 82% in Q1 last year. While sales grew by 8% into The U. S. In q one, sales grew by 49% in Canada, Eighty Three Percent in Asia, and a 30% into Europe as we benefit from previous efforts to expand globally, including things like our content on the c nine nineteen aircraft in China and acquiring a flight with sales globally.
In 2024 in twenty twenty five first quarter, '30 '4 point '6 percent of total revenues came from our aerospace business compared to 27.7% last year. The aerospace business share increased due to strong growth at Aerospace Toronto and the acquisition of FLYHT. I'd now like to turn the call over to Jamie, who will summarize some of our financial results for Q1 twenty twenty five, and afterwards, I will talk about some key priorities we are working on. Jamie? Thanks, Brad.
Good morning, everyone. I would like to provide some additional detail on our financial performance for Q1. FTG achieved a gross margin of $13,300,000 or 31% in Q1 twenty twenty five compared to $8,900,000 or 25.5% in Q1 twenty twenty four. The gross margin rate is up 5.6 percentage points as a result of the following: organic sales growth and improved operating performance in the circuit segment, resulting in higher leverage over fixed costs Increased sales in the aerospace segment from the flight acquisition and the fact that Q1 twenty four had a negative 3,000,000 impact from the six week strike at the Arrow Toronto site, both of which boosted our gross margin rate. Foreign exchange rates were also favorable with the Canadian dollar trading at $1.43 versus $1.35 to the U.
S. Dollar, which is favorable by approximately 6%. Lastly, during Q1 'twenty five, FTG settled its portfolio of gold forward contracts, which resulted in a reduction of cost of sales of approximately 600 ks. This was done in connection with our changing banks. In terms of productivity, annualized revenue per employee was 234 k in q one twenty five, approximately 9% better than q one twenty four.
SG and A expense was 6,700,000.0 in q one twenty twenty five, up from 4,800,000.0 in q one twenty four. And as a percentage of sales, it increased to 15.7% from 13.7. This increase includes $1,000,000 from the Flight acquisition, acquisition related professional fees of a hundred k, either a bad start up cost of just under a hundred k and higher performance compensation. There are increases in some of the other operating expense line items, which in the case of r and d expense, amortization of intangibles, notional interest expense, and accretion on lease liabilities that are principally the result of the Floyd acquisition. The corporation also had a foreign exchange gains of 900 k in q one twenty five as compared to FX losses of 200 k in Q1 'twenty four.
These gains and losses are primarily related to the revaluation of U. S. Dollar denominated assets and liabilities at the balance sheet day. Adjusted EBITDA was $8,400,000 or 19.5% of sales for Q1 'twenty five as compared to $4,600,000 in Q1 'twenty four. Adjustments for the current quarter included acquisition and the Hyderabad start up costs and stock based comp expense adjusted for both the current year and prior year.
On a trailing twelve months basis, revenue was $170,000,000 and adjusted EBITDA was $29,600,000 or 17.4% of sales. Our net debt position as of Q1 'twenty five was $8,300,000 as compared to $700,000 as of q four twenty twenty four, which equates to 0.28 times adjusted EBITDA. During q q one twenty five, cash from operations less lease liability payments was $9,300,000. Items included in the change in net debt for the quarter included 4,300,000.0 of cash used for the for the FLYHT acquisition as well as assumption of debt at FLYHT of 9,400,000.0. Dollars capital expenditures and deferred development costs of $1,100,000 final settlement of the Holiday Circuits earn out of $1,500,000 net repayment of debt, bad debt of 8,700,000.0 payment of year end performance comp of 1,800,000, settlement of the DSU liability for 800,000.0 and the purchase of FTT shares on the market for 600 k to settle for PSU obligation.
During Q1 twenty five, FTG completed a new bank deal with BMO Corporate Finance, which provides 20,000,000 US of committed financing lines and uncommitted 15,000,000 accordion facility for acquisitions. There are also facilities for FX forwards, precious metal forwards and credit cards. As of the close of q one twenty five, FTG's use of the credit facility was $3,500,000 FTG has a total backlog of $142,000,000 as of Q1 twenty twenty five, with 89% of that backlog scheduled for the next four quarters. Our focus will be delivering quality products to our customers on time and improving the efficiency of our operations. Our complete set of filings are now available on steviaplus.com.
Back to Brad. Thanks, Jamie. Let me delve into some important items for future FTP starting with the negative items. Tariffs or credit tariffs are the new normal, and uncertainties surrounds tariffs each and every day. This makes it challenging to plan and react, but we are focused on this all day every day as it evolves.
We have two sites in which are now subject to high US tariffs. For aerospace Tianjin, this should have minimal impact as the site ships completed product to Canadian and Chinese customers. They ship some components of subassemblies to our Toronto sites to then make the final product for shipment to US customers. None of the work from aerospace Tianjin should attract US tariffs. For our circuit board joint venture, a small amount of work ships directly to The US and will be subject to the high tariff.
But over the past five years, they've already been subject to a 25% tariff on their exports to the But they also work from Canada and Europe that will not be subject to any US tariffs. Our growth plans for this business is to focus on customers in China, Europe and Canada, and we're and we're making good progress on all of these plans. As of yesterday, our US sites shipped almost exclusively to US customers, so there will not be any tariff on shipments to customers. As of yesterday, they would have seen in tariffs on input costs or raw materials they buy. But as of this morning, those tariffs have been paused for ninety days.
And so the US site at this moment looks like they are not subject to input cost tariffs or tariffs in shipping to customers. And in Canada, it's the same situation. The FTG sites are well positioned. They are not subject to any tariffs on input costs. And at this moment, they're not subject to any tariff on shipments to US customers.
All of FTG products are USMCA compliant. But every day is a new day, so all this can change at any point in time. As a reminder, we estimate about 55,000,000 of sales to customers located in The US originate at FTG sites in Canada or China. While we are not exposed to tariffs between Canada and US at this moment, if they did happen, we do not believe the impact would be immediate. It will take time for the aerospace and defense supply chain to react to tariffs and find alternate sources of supply.
But we are concerned and we are taking actions to mitigate any impact to FTG. First, our recent acquisitions in The US have reduced our exposure as they are inside the wall and would not be subject to tariffs or on sales. Going along with this, our long term strategy to be a global player has resulted in sales inside of North America of over 26,000,000 last year and was almost 12,000,000 in Q1 this year. We are taking additional steps. In 2024, we made a conscious decision to find ways to increase our exposure to Airbus, not because of tariff, but because they are the stronger performer in the air transport market.
But whatever we do in this regard can also help mitigate U. S. Tariffs. And more recently, we have made a conscious decision to pivot away from The U. S.
Market for our sites based in Canada and China. Obviously, the focus on Airbus is part of this. Subsequent to year end, in our first quarter, we announced a significant new contract with the Havilland on their Canadair five fifteen water bomber aircraft. This is a Canadian program that we will support from our Toronto facility. We are also looking to become more locally focused by aligning U.
S. Customers with U. S. Manufacturing sites and non U. S.
Customers with non U. S. Manufacturing sites. We have identified $4,000,000 5 million dollars of revenue for non U. S.
Customers being manufactured in The U. S. Have begun the process of moving this work out of our U. S. Sites and thereby potentially freeing up some capacity to move work in the other direction.
The acquisition of FLYHT will also help mitigate our exposure to tariffs. FLYHT's largest customers in Canada and they sell globally. As we look to in source the manufacturing of FLYHT products, we will do so in a manner to minimize our exposure to tariffs. On the topic of FLYHT, we acquired it for a couple of key strategic reasons. First, we have expressed our desire to increase our activity in the high margin aftermarket segment of our business for a number of years, and the acquisition of FLYHT does this.
Also, as noted, we are looking for ways to increase our activity with Airbus and FLYHT has a SATCOM radio that is installed as an option on new Airbus aircraft. They are sold by our licensing agreement with the average annual volume being 200 to 300 units. Finally, we think the timing of this acquisition could be superb. Flight has spent significant time and money investing and updating products and developing new products and the bulk of these investments are done. We think we can leverage these investments to generate strong results for the company going forward.
Now that we own FLYHT, we have three key actions. First, we need to reduce costs. FLYHT took a significant cost in September of last year and another $1,000,000 dropped out due to the elimination of the public company costs when we closed our deal. We will manage their costs going forward. Second, we need to sell the new products.
This is really the key action now, so let me delve a little deeper into this. There are three products that matter. There's a TETCOM radio that is sold into the aftermarket and license for delivery to Airbus as a factory option. For the aftermarket, the product is established and sales are well established and ongoing. This product can be used as a safety backup voice system or can be used to transmit data useful for the airline over the Iridium satellite system.
When it is used for airline data over Iridium, flight gets a recurring revenue stream reselling Iridium data services. The licensing agreement for Airbus has been in a hiatus for a few years due to a multiyear delivery in 2022, but this is expected to kick back in starting in 2026 and result in a multimillion dollar uptick in revenues when it does. The second product is a water vapor sensing system or WZSS2. Its purpose is to collect humidity outside of the aircraft as applied and provides us data to weather agencies such as NOAA in The U. S.
And UKMet in England and find it useful in weather forecasting. This product was modernized and updated last year. It was in qualification testing when we acquired FLYHT. We've had a challenge with the accuracy of the unit in tests and have been working with Boeing at their lab and at FLYHT to resolve this anomaly. And the good news is that as of March, it has been resolved.
This has delayed sales in Q1 this year, but there are firm orders from both Noah and UK Met. These can ship now as we complete FCCs for the relevant aircraft expected to be ERJs and Boeing seven thirty seven. Once in service, there's also a data revenue stream associated with this product. And the third product is brand new. It's a five g wireless quick access recorder or WQAR.
This product collects data from the aircraft in flight and downloads it to the airline's operations while at the gate using a wireless or cell phone connection. The flight product is the first five g WQAR on the market. This product is qualified. The key now is to get approval to install it on various aircraft types. The aircraft testing required for a Boeing seven thirty seven in Canada has been completed, and we expect the Canadian FTC in Q2.
This will then be expanded to Europe and China, which are expected to be the largest markets for this product. Aircraft testing for the A320 family of aircraft is expected to be done in April in Europe. Once complete in Europe, the priority will be to expand this approval to include China. And to go along with this, we have the FLYHT sales team focused on aggressively selling these products as they become available. And finally, our third priority at FLYHT is to in source the manufacturing to capture this margin within FTG.
We are quoting the SATCOM radio product from both our chat source and funnel sites as we speak. These actions should enable FLYHT to become a positive addition to FTG and further mitigate the risk from US tariffs. In q one, FLYHT did generate a small positive EBITDA in our results. Also, as announced after our year end, we are implementing plans to open an aerospace facility in Hyderabad, India. What we just recently announced, we've been working on these plans throughout 2024.
First, our decision to expand geographically was partly us looking for an insurance policy against anything negative happening to our China operation, but it's also partly to expand into a new region with growth potential. As we analyze options, we concluded India is a very cost effective place for manufacturing. And with Prime Minister Modi's making India policy coupled with significant defense spending, it would be an ideal place to operate. We selected Hyderabad as an aerospace hub primarily focused on manufacturing, unlike Bangalore, which is more engineering and software focused. Our legal entity in India is established, bank accounts are set up, our first employees are hired.
We have selected to have a facility built to suit due to the favorable location and the option to expand if or when necessary. This decision does mean we'll have to wait for most of 2025 to get our facility completed. In the meantime, we will be sourcing the necessary equipment to be ready to go. Our estimated total investment is approximately $2,000,000 While not the original intent, we believe this initiative will also help mitigate any negative impact on U. Tariffs.
And finally, we are developing clients who add sales resources in Canada, Europe and even Asia to support our pivot away from The U. S. Market. This would be for both the legacy FTG sites as well as flights. Integration of the sites we acquired in 2023 is substantially complete.
We will continue to drive growth and operating performance, but we do this at all our sites. As noted earlier, the sites are growing on a year over year basis. We see opportunities to continue to grow going forward with our constraint being more on how fast we can ramp production rather than finding growth opportunities. As we entered Q2 twenty twenty five, we see continued strong demand across most sites. Of our $142,000,000,000 backlog, over $60,000,000 is due in Q2.
We are expecting to grow in 2025. The easiest aspect of our growth will be having the Fright acquisition as part of FTG for over eleven months in the year, but there will be organic growth too. We still expect to see further benefit from the high value assembly orders first booked in 2023 and more booked in 2024 for our aerospace business. These assemblies go on both Boeing and Airbus aircraft, and we will see the benefit of the C919 program in China moving into production. We shipped our first production orders last year, and production will increase through 2025.
The geopolitical situation in China remains complex. But in 2024, both our operations in China had another record year. We repatriated cash back to Canada during 2022, 'twenty three and 'twenty four, and in total, we've now brought back 3,600,000.0 in cash. By doing this, we don't have surplus cash stranded in China and reduces our exposure if things ever deteriorated between China and the West. A more positive note in China, the C919 program is now in production, and this will benefit our Tianjin operations going forward and make us less susceptible to geopolitical uncertainties.
We continue to assess possible corporate development opportunities that could fit with either of our businesses, but our near term priority is to integrate our recent acquisition. With a focus on operational excellence in all parts of FTG, our strong financial performance last year and in Q1 this year, our recent acquisitions and our key sales wins, we are confident we are on a strong long term growth trajectory. One final note, many people have noticed that we are recruiting for a new CFO. This might be Jamie's last analyst call. It is his decision to retire.
We are disappointed to see it. But after just over five years of service at FTG, he's done amazing things for the company. He's helped us get through a cyber attack. He helped us get through the COVID pandemic. He's helped us with financing both with banks and with government agencies.
He's helped us complete three acquisitions and he's really being a key player in transforming FTG into what it is today. For sure, I thank him so much for his service. We will miss him, but he's not allowed to go anywhere until we do announce a new CFO. This concludes our presentation. I thank you all for your attention.
I'd now like to open the phones for your questions. Joel?
Joelle, Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two.
If you are if you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Steve Hansen with Raymond James. Your line is now open.
Brad Byrne, President and CEO, FTG (Friend Technologies Group Corporation): Yeah. Good morning, guys. Thanks for the time. Brett, question for you on The US. I I understand the tariff shifting that you're undertaking.
Are there also opportunities that the tariffs present for your US facilities if other sites might be importing product into The US that might be a challenge now? Is there opportunities to go after there domestically? Yeah. Again, every day is a new day. But depending on where the competitors are, if, you know, what country they're in inside The US, tariff rates rates are different, For sure, it can create opportunities for The US site.
But, you know, as of as of this morning, tariffs are paused, so that benefit has gone away for the moment. But if it comes back, I would say generally, The US sites would benefit against competitors in any area or country with one of the higher tariff rates. Understood. And and and the opportunity that you described with the Havilland, the more recent one, is interesting. It sounds like you've also had new avionics fleet that they're they're looking to upgrade in the in the dash eight.
Is that something you could offer the opportunity? I'm seeing what other opportunities domestically here in Canada. Yes. Definitely. And, you know, to have one's an evolving company.
I think they have some pretty aggressive growth objectives. We've been we've been doing business with them or parts that have rolled into to have one over the last number of years. I think we have a pretty good relationship with them. I think anytime they are looking at new programs, new upgrades, it creates an opportunity for us. It's not a guarantee, but it creates an opportunity.
Sure. And then just on the on the aerospace aerospace side specifically, not to get too much into the weeds, but you described you had an incremental tailwind from the freight comp last year, and you also had some new incremental business from flight. But I'm I'm just was there something that also got missed out? Because it looks like or something that slipped away. It looks like organic growth there might have been lower if I just take the the additions of 3,000,000 on the straight comp.
I just wanted to understand if there's something underneath there that also slipped away. Yeah. I can't even end it slipped away, but I I would say there's definitely, you know, some, I mean, the never ending timing challenges within that business, primarily around our supply chain components and that. We're also in the midst of we have a significant program where we're doing eight different box assemblies for cockpits that go on Boeing and Airbus aircraft. It's been a challenging program due to our customer or their customer.
Of the eight assemblies, one of them has moved to production, the other seven have been delayed. And so for sure that those things have also impacted the aerospace business on a short term basis. But one day, we will get through that, and you'll see the benefit. Understood. That's helpful.
I'll jump back in the queue. Thanks. Yes. Thank you.
Joelle, Conference Operator: Your next question comes from Russell Stanley with Beacon. Your line is now open.
Brad Byrne, President and CEO, FTG (Friend Technologies Group Corporation): Good morning and congrats on the quarter. Maybe first if I could ask around China and the C919 program. It sounds like Comac wants to really accelerate the ramp here. I'm just wondering if you can talk to how the ramp up of production and sales compares to your expectations. Are you tracking ahead or in line?
Any color on that would be helpful. Yeah. I mean, the the ramp from the customer from Comax is strong. It's really strong. You know, last year, we shipped, I don't know, 15 or so ships that they want us to ship 70 to 80 ships that's this year.
It's a big number. It's a huge ramp. It's a challenge for us. And, you know, in the midst of that, we're trying to move our production from Tahoe to Tianjin, which is where it will stay long term. But, yeah, the the demand from the customer has been huge.
The ramp is fast, and they want to go beyond that. Our goal is going to be how to keep up with their demand. Thanks on that. And maybe understanding the near term priority is still the integration of FLYHT looking ahead and the resumption of M and A. Just wondering your latest thoughts around Europe.
I've seen some really encouraging news there as far as potential for defense spending more aggressive activity. I'm wondering what your latest thoughts are in that market as as potentially being a target. Yeah. It's definitely a target for M and A at some point. It's on the list.
And for either business, either on the circuit side of things or on the software product side of things. And it's, you know, twofold. Again, one one reason we're interested in Europe and a footprint in Europe is to, again, increase our activity with Airbus, so it's on the commercial aerospace side. The other reason is what you just said. If you look at Europe as a entity, European defense market is definitely the second largest defense market in the world, and they are definitely looking to ramp their spending.
So it's an opportunity. It's attractive to us. We would love to find find the right deal to to pull the trigger and go. Nothing's on the table at this point, but it's definitely something we are trying to find a way to move forward with. Great.
And maybe one last question for me. Just around margins, be it growth or EBITDA, there's an excellent quarter. I think we're all ahead of what we had in the quarter. And if anything in the quarter you would call out as being unsustainable, you know, looking ahead to the rest of 2025.
Joelle, Conference Operator: We're not even using that.
Brad Byrne, President and CEO, FTG (Friend Technologies Group Corporation): Yeah. Really, I mean, Jamie talked to one item, which was, you know, we had in in our transition bank, we had to basically cancel over or close the gold hedges we had, and that that gave us about a half a million dollar pickup in the quarter. Other than that, I think it was pretty clean, but I don't if Jamie, do have other items? Right. But I I guess I'd also point to the, you know, FX gain, you know, both FX gains and losses come and go based on exchange rates.
Nothing has happened yet in terms of a, you know, a real change in rates, but a repeat of that, you know, would not be likely. Got it. That's helpful color. Congrats again. I'll get back in the queue.
Thanks, Bob.
Joelle, Conference Operator: Your next question comes from Nick Korkoran with Acumen. Your line is now open.
Brad Byrne, President and CEO, FTG (Friend Technologies Group Corporation): Good morning, guys. Congrats on a great quarter. Just a couple of questions for me. The first is the backlog saw a pretty strong uptick in the quarter. Any details on what drove that?
And and maybe more specifically, how much was the De Havilland contract? Yeah. I I guess, what drove the growth in the backlog, two things come to mind. First one is the acquisition of flight. Flight did come with the backlog.
And so let's say that was something on the order of 8,000,000 or in that in that range, so that got added in the backlog. Definitely, the the have on contract also was significant got added in the backlog. It was on the order of about 6,000,000. And other than that, it's just strong demand in all our markets was still just everywhere. And so that also just drives the backlog up.
Great. And then I think you mentioned that 60,000,000 is deliverable in the second quarter. Any indication what constraints might might be to to achieving that full number? Yeah. I don't Lots of constraints we deal with every day.
That's what we do. You know, some of the stuff I I talked about a moment ago. So for sure, we still need to get through some customer approvals on some of the cockpit box assemblies we're trying to get out the door. So, you know, there's customer approvals needed on that. Supply chain challenges, you know, we have our challenges that other people in the industry have.
You need a % of all your components to be able to ship products. So that even if you get to 99%, doesn't matter. So there's the supply chain challenges, and that's just ramping. And generally, you know, to ramp, we need to add people. Adding people is doable, but adding people and getting them to the point where they are contributing and adding to the throughput, it does not happen instantaneously.
The day someone new walks in the door is not the day they start to contribute. There is a multi month process to bring people up to speed, get them trained and adding value. So that is also a constraint in our ability to ramp to support the backlog. That's helpful. And maybe one last question for me just on tariffs.
Right now, looks like 10% tariffs across the board is is kind of the status quo in The US. How much is that key pass through? Standby. I don't know. It it depends on how it works.
Right? Most when we're shipping, the customer is paying the tariff directly, and so those are automatic. If the tariff is on input costs, we are definitely absorbing that cost. And then how much of that we can pass through? I don't know yet because we haven't had to pass any on as of this moment.
But our goal is definitely to pass those costs on dollar for dollar wherever we can. That's great color. Thanks for taking my questions. Thanks, Nick.
Joelle, Conference Operator: Your next question comes from Steve Hansen with Raymond James. Your line is now open.
Brad Byrne, President and CEO, FTG (Friend Technologies Group Corporation): Yes. Thanks. Just to follow-up on cadence of deliveries for your customers. Boeing had some really strong deliveries last month, I believe, just 40 aircraft or so. How much of a of a inventory would they carry in advance?
In other words, if they announced the production rate increase, you know, next month, is is that something they would have already accounted for and pulled forward? Or would that sort of step change your orders in tandem? Like, how much of a lag lead lag is there around those deliveries versus your own production? There is a a lag, and it's a relatively significant lag between them, you know, shipping more aircraft and when it hit the supply chain. The supply chain, you know, typically is gonna see that increase a lot sooner than Boeing in terms of their delivery.
But there's two things going on there as well. That it's really weird situation at Boeing right now that they have a number of aircraft in inventory. And in some cases, they're missing a component or two. They're the same challenges we have. So there are scenarios where, you know, you can see an uptick in their month to month deliveries.
It's not really, you know, impacting positively or negatively on the supply chain like us. But generally speaking, I would say, you know, we'd be at least we would see an increase at least six months before Boeing would report an increase in deliveries to their end customer, at least six months. That makes sense. Appreciate the color. Thanks.
Thank you.
Joelle, Conference Operator: There are no further questions at this time. I will now turn the call over to Brad for closing remarks.
Brad Byrne, President and CEO, FTG (Friend Technologies Group Corporation): Thank you. The replay of the call will be available until Saturday, 05/10/2025 at the numbers listed on our press release. The replay will also be available on our website in a few days. I thank you all for your interest and participation. Thank you.
Joelle, Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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