TORONTO -- Firan Technology Group reported quarterly revenue fell 16.4% to $22.9 million for the period ended Dec. 31.
Gross margin rose 210 basis points to 23.1%, as lower sales were offset by lower operating costs due to the elimination of two acquired facilities in 2017. Operating income was down 3.6% to $2.14 million. Net income before taxes fell42% from a year ago to $661,000, while net income dripped 70% to $191,000.
Sales at the company's printed circuits segment were down $3.1 million due to operational issues in Chatsworth, CA, which reduced sales by $600,000, and a lower US-Canada exchange rate in the period, which impact sales by $800,000.
For the year, FTG reported record sales of $94.7 million, up 9% over 2016. Gross margin was 24.4%, up 220 basis points from a year ago. Pretax income fell 54% to $3.5 million. Net income plunged 79% to $1.7 million. Currency exchange negatively impacted sales by $2 million. Sales at the company's printed circuits segment increased $2.3 million or 4% in 2017 versus 2016. The increase was from the Toronto facility.
During the year, FTG completed the integration of PhotoEtch and closed the facility in December, closed the Teledyne PCT facility in May, and ramped up production in Chatsworth in the fourth quarter. It also completed equipment installation for a dedicated outer-layer production facility for aerospace circuit boards at FTG Printronics Circuit – its JV in Tianjin, China.
“2017 was a year of transitioning work from the acquired facilities in 2016 to FTG facilities. There were many challenges in the transitions and it took longer than expected but by year end the transitions were complete,” said Brad Bourne, president and chief executive. “Going into 2018, we are pleased with our position in the market and our growth opportunities that could materialize from organic sales and from acquisitions.”
Sales from the Teledyne PCT acquisition were $22.2 million in 2017 versus the target of $16 million, including $4.9 million in the December quarter, versus a target of $4 million per quarter.
FTG said overstocking by customers ahead of the closing of certain acquired sites last year and the transition of production to FTG sites impacted sales by $4.4 million.
Revenues from the PhotoEtch acquisition contributed $8.7 million in incremental sales during 2017, compared to $6 million in 2016 (nine months of activity). Teledyne-related sales were up $3 million sequentially due to the ramp of activity in Chatsworth, and PhotoEtch-related sales were down $300,000 sequentially due to timing of production orders.