Firan Technology Group (TSE:FTG) reported what management described as a record start to fiscal 2026, driven by higher revenue, strong bookings, and a growing backlog, though results were pressured by foreign exchange and emerging tariff-related costs in its circuits business.
Record Q1 revenue, bookings, and backlog
President and CEO Brad Bourne said the company posted “record first quarter revenues, earnings, and backlog,” citing strong demand across aerospace and defense end markets. FTG reported bookings of CAD 60 million in the first quarter, up 17% from Q1 2025, translating into a book-to-bill ratio of 1.27:1. Quarter-end backlog totaled CAD 157.9 million, up 11% from the prior year-end.
Adjusted EBITDA fell to CAD 7.3 million from CAD 8.4 million a year earlier. Both Bourne and Knight pointed to a “big swing in the Canadian to U.S. exchange rate” as a headwind, and Knight noted that year-over-year comparisons were also affected by a one-time gold contract gain in the prior-year quarter.
Margins held steady as FX and gold impacts offset operational gains
Knight said FTG recorded gross margin of CAD 14.6 million, or 30.9% of sales, compared with CAD 13.3 million, or 31%, a year earlier. While gross margin dollars improved with higher sales, Knight said the margin rate stayed flat despite a CAD 1.5 million negative foreign exchange variance and a CAD 400,000 gold variance. He said those factors were offset by operational improvements at several U.S. sites and at FTG Aerospace Calgary.
SG&A expense was CAD 6.9 million (14.5% of sales) versus CAD 6.7 million (15.7% of sales) a year ago. Knight attributed the increase primarily to having FTG Aerospace Calgary for a full quarter, plus Hyderabad, India startup expenses and some corporate administrative costs tied to the new leadership team.
R&D expense rose to CAD 2.3 million (4.9% of sales) from CAD 1.6 million (3.8% of sales), reflecting product and process improvements in both the circuits and aerospace segments.
Net earnings were CAD 3.5 million, or CAD 0.14 per diluted share, compared with CAD 3.2 million, or CAD 0.13 per diluted share, in Q1 2025. Knight said the effective tax rate was approximately 5.2% versus 32.9% last year, citing tax-free profit at units with historical tax losses and prior-year tax adjustments. He added that the company still has “substantial tax losses available to offset future income,” including Canadian losses acquired with the FLYHT acquisition in December 2024, though the accounting benefit of those losses has not been recognized in FTG’s financial statements.
Segment performance: aerospace up 12%, circuits up 8.3%
FTG’s aerospace segment sales increased 12% to CAD 17.1 million. Bourne said sales in Toronto and Calgary were up, Tianjin was flat, and activity in Chatsworth declined due to timing of orders. He said the company continued ramping shipments to China’s C919 program and delivered assemblies for Boeing and Airbus.
At FTG Aerospace Calgary (formerly FLYHT), Bourne said the operation achieved “record profitability” in Q1 2026 and continued to benefit from prior-year certification work, the sale of its product portfolio, and the rebuilding of licensing revenues related to its SATCOM radio for Airbus. Calgary revenue included “a pretty even split” between hardware sales (mostly SATCOM radios), data sales, and licensing revenues, Bourne said.
In circuits, Q1 sales rose 8.3% to CAD 31.1 million. Bourne highlighted strong growth in Fredericksburg, Virginia (up over 80%) and Chatsworth (up over 25%), with Minnetonka up 11% and Toronto flat. He also said the company’s top five customers represented 52.7% of revenue, roughly in line with the prior year, and noted that six of the top 10 customers were shared between circuits and aerospace.
Tariffs and FX: management flags cost pressure, seeks pass-through
Management discussed two cost-related pressures: foreign exchange and U.S. tariffs. Knight said FTG’s average exchange rate in Q1 2026 was 1.375 compared with 1.431 in Q1 2025, describing it as a 4% weakening of the U.S. dollar that “hurts results for FTG.” On the Q&A, Knight estimated that “a 1% change in the FX is about CAD 800,000,” reflecting both transactional exposure and translation of U.S. operations into Canadian dollars.
On tariffs, Bourne said tariffs are “now impacting costs in our circuits business” because many materials originate outside North America. He said the impact is largest for U.S. sites, and Toronto is also affected when materials ship via the U.S. to Canada. “We estimate the overall cost impact to be in the $ millions in 2026,” Bourne said, adding that FTG has begun working with customers to pass those costs through.
In response to an analyst question about whether tariff impacts were visible in Q1 results, Bourne said the increased costs were “definitely” present in the quarter and that the company had passed through some of the impact, while continuing discussions with other customers.
Defense program wins, capacity plans, and Hyderabad build-out
Bourne said FTG Circuits had qualified for two significant classified defense programs last year and received initial orders in Q1, with deliveries expected in Q3 2026 and beyond. During Q&A, he said revenue contribution in 2026 should be “modest” but “in the millions of CAD,” with “real volumes” expected to begin in 2027 and beyond. He added that these programs may ultimately involve two or three suppliers, and that allocation would depend on performance and customer relationships.
On capacity, Bourne said FTG shipped CAD 191 million last year and has available capacity “north of 250” across the company, describing capacity primarily as plants and equipment that could be utilized more fully by adding and training staff. He said one exception is Circuits Toronto, which is already running 24/7. Bourne said the company plans about a CAD 5 million investment to add more than CAD 20 million of capacity by expanding bottleneck areas.
FTG also plans to open an aerospace facility in Hyderabad, India in 2026. Bourne said the expansion was driven by both risk mitigation for China operations and the desire to enter a cost-effective region with growth potential, supported by India’s “Make in India” policy and defense spending. He said the facility is “well underway,” with completion now expected mid-2026, and the total investment forecast at approximately $2 million to $3 million. Bourne added that while not the original intent, the initiative could help mitigate potential negative impacts from U.S. tariffs.
Looking ahead, Knight said roughly 80% of the CAD 157.9 million backlog is expected to convert to revenue in 2026. Bourne said FTG intends to increase U.S. sales staff during 2026, continue integration work at FTG Aerospace Calgary, and pursue corporate development opportunities. In Q&A, Bourne characterized Europe as his top priority for expansion, citing Airbus proximity, accelerating European defense spending, and reduced tariff risk.
About Firan Technology Group (TSE:FTG)
Firan Technology Group Corp is a supplier of aerospace and defense electronic products and subsystems. It has two operating segments namely FTG Circuits and FTG Aerospace. FTG Circuits manufactures printed circuit boards within the global marketplace. FTG Aerospace designs and manufactures illuminated cockpit panels, keyboards, bezels, subassemblies, and assemblies for original equipment manufacturers of avionics products and for airframe manufacturers. The company operates in Canada, the United States, Asia, and Europe and generates substantial sales from the United States.
