Okay. After 20 minutes, I'm going to hold up a five-minute sign. After 24 minutes, I'll hold up a one-minute sign. That's about it.
Okay. Where are you going to be? In the back?
Yes, I'll be sitting right there.
Oh, over there. Okay.
All right.
Okay. PowerPoint. This green is go, red is back. Can I introduce you?
Yeah.
Okay. All right, everybody. I'd like to introduce our next presenter here at the Planet Microcap Showcase Toronto in partnership with Microcap Club. Joining us right now is Brad Bourne from Firan Technology Group Corporation.
Okay. Thank you. Good morning. Let me just get right into it. As always, there will be forward-looking statements or there could be, so treat them with caution. For those of you who are new to the FTG story, we are an aerospace and defense electronics company. Our market focus, obviously, is aerospace defense. Within that, we have two product offerings. We do cockpit and avionics products, runs under the name FTG Aerospace. We do printed circuit boards, run under the name FTG Circuits. Again, just focused in aerospace and defense. A bit of an overview for anyone new to the story. We are going to start with the geography. We have 10 sites today, three in Canada, two in Toronto, one in Calgary. We have five sites across the U.S. We have two sites in China. As we talk today, we are building out a site in India.
Ten today, hopefully 11 next year. Growth over the last three years has been growing about 34% on average. Big growth that was coming out of the pandemic. The pandemic was not the best time to be in aerospace and defense, but right now there is strong growth kind of across everything we're doing. That growth is really made up about half of organic growth, half through acquisitions during that period. 25.2 million shares outstanding. Largest shareholder is Oakw est, which is a family fund, just under 20%. Then me, just over 10%. The rest are under 10%. The rest of this is really what are we doing to drive the business. Four strategic initiatives. First one is just manage costs, manage efficiencies. Good or bad, we are a manufacturer. We make our money, we make our revenue building and shipping product. If you're a manufacturer, costs matter.
Providing value to customers, that matters. We focus on that all day, every day. I'll talk about that one. I'll talk about the other three. Next one's around growth and increasing operating leverage. We are a manufacturer. We have fixed costs. If we can drive the top line, top line drives the bottom line. We look for ways to expand our margins beyond that, partly through technology, partly through market positioning. The fourth initiative for us is acquisitions. I'll talk more about that. First one, in terms of just managing the business, five key people. There's me and then four guys who do all the work. Interestingly enough, I should update this slide maybe as of today. I have a new CFO starting this morning. He is not here. He's finding his way around the office. Jamie's retiring. That was announced a while back.
The new guy, who's Drew Knight, is starting today. That would be a bit of a change. Jamie was good for us, and I hope Drew will be as good as Jamie is. I have Peter running sales, driving growth. I have two guys running the business. At 10 sites, for sure, it was more than what I could manage. I hired Bill Cesari to run the circuits business. He's from the U.S., spent the last 30 years in the circuits business in aerospace and defense, so a perfect background. Also this year, I hired Marco Venica to run the aerospace business. Same thing. He's got good aerospace background. Actually, his last role before coming to FTG was working at De Havilland. Both of these are really going to help drive our operating performance. On to growth. A number of things to drive growth.
First one's really, this is a bit of economics. The FTG economics, I really touched on this, but a little bit of data. Why does growth matter? Because we're a manufacturer, because we have these fixed costs. About 30% of my costs are fixed. If I can drive revenue, those fixed costs don't change. I have great contribution margin in this company. Growth matters. We focus a lot of time on that. Not really growth-related, but the right-hand part of this slide is just a chart of exchange rate over the years between Canadian dollar and U.S. dollar. The aerospace industry globally runs in U.S. dollars. That used to be a huge risk or upside or something for us to manage. It's becoming less critical these days as I have more and more activity in the U.S. In that case, all my costs and my revenue is in U.S. dollars.
For my Canadian sites, exchange rate matters. For sure, I'm happy anytime the exchange rate is north of CAD 1.25 and has been north of that for a while now. At that rate, that really just helps drive increased profitability for my Canadian sites. A little bit on market demand. I'm not going to spend a lot of time on this, but the simple message is our goal at FTG is to participate in all of the subsegments of aerospace and defense. Air transport, which is what this chart's about, but also business jets, helicopters, general aviation, the defense side, the same thing. I want to play in all these different market segments because they all tend to run on their own cycle. At any point in time, some are up, some are down, but I have a good stable revenue stream.
The interesting thing right now, and over the last couple of years, and it looks like the next couple of years, they're all in a growth mode. This is about air transport. Green bars are Airbus, gold bars are Boeing. For sure, the pandemic hurt them both. Boeing had a series of other challenges. They've had a bit of a challenge over the last few years. Right now, both of them are trying to drive a 50% increase in their production rates, which just drives the demand through their supply chain, including us. Huge demand, huge expectation. They're going to have this big production rate increase. I don't know if they're going to get to 50%, but they're going to grow. Defense spending, it's a very simple chart, but this is the U.S. defense budget over the last number of years. It's growing. It's growing for the obvious reason.
There's a lot of geopolitical tensions around the world these days, and there's just a lot of spend. I could show you the same chart for Europe. I could show you the same chart for Canada. It would be smaller numbers, but the trend is up. This is driving demand on the defense side of the business. Beyond that, what are we trying to do to grow? First one is grow with the market. That one's the easy one. That's what I just talked about. We'd like to grow faster than the market. Our favorite way to change market share is to get content on new programs. You have to be patient in aerospace and defense in doing that. A development program, I think they all start saying they're about five years. They all end up being about 10 years.
You have to be patient, but you have to get involved in them and ride that development program into production. We've done it a number of times. We were involved a number of years ago on the 787 with some circuit board content. It was five years of development. It went into production, and we do a few million dollars a year of circuit boards for that aircraft today, and we'll keep doing it as long as it's in production. We did that in China. They're developing the C919 aircraft. We got involved 12 years ago. They said it was going to be a four-year development program. It went into production last year, but it's in production. That's yet another annuity we've added into our revenue going forward. Winning content, new programs, really important. We'd spend a lot of time on that. Operational performance matters.
All my customers, they're pretty sophisticated. They're multi-billion dollar multinational companies. They have sophisticated supply chain organizations. They all have the same message. If you perform, you get more work. If you don't, you get less work. We spend a lot of time making sure we perform. We invest in technology. We want to make sure we have the right technology available to support our customers when they're working on the next aircraft. I think we've done a pretty good job on that. We have a global offering. Certainly, the global environment is more complex these days, but have no doubt aerospace and defense is a global business. The fact that we have solutions from the U.S., from Canada, from China, soon from India is a benefit to us. The last lever of growth for us is acquisitions. More on that in a minute. On to margins.
As I say, if we grow, we can expand our margins just by having the high contribution margin. What else can we do? First one is more of a defensive thing, but barriers to entry. The good news is these are huge and significant barriers to entry for someone who would be trying to get into this business. I touched on technology. I'll talk about that a little bit more. Government certifications, though. If you want to do work for the U.S. military and most other militaries use their approvals, you need to be approved. They don't just say yes or no. They approve you for different levels of technology. Cockpit products are seven different products you can be approved for. We are approved for all of them in our two North American sites.
On the circuit board side, it's way more complicated, but you can be approved through a number of different technologies. FTG is either the first or second most approved circuit board manufacturer for the U.S. military in the world, including U.S. companies. We put a lot of time into getting these approvals. The more you're approved for, the more you can bid on, the more work you can win. The same with customer approvals. This industry is regulated and very conservative. Customers really don't look to add suppliers unless they really need to. Once you're inside the tent, that's a huge barrier against other people. We spend a lot of time getting approvals, again, at different technology levels, different product types across a world-class customer base. Customer relationships matter. This is not consumer marketing. There's probably 50 companies in the world that matter to me.
You have to have deep relationships with these customers, not at a buyer level, but at a purchasing level, engineering level, quality level, all different functions because they're all involved in whether you win in the future. Again, operational performance matters. If you perform, that's a great barrier against other people. Balance sheet. Our customers track our performance, and they track all their suppliers' performance. They don't want to be putting a lot of time and effort into suppliers that might not be around in a few years. Financial strength, huge barrier. The global footprint, again, the fact that we have that, it's a global industry, is a huge benefit for us and a barrier against others. Beyond that, for each of the businesses, the cockpit product business, I've been at FTG 23 years. When I started, we were a panel supplier. That's the lowest technology in the value chain.
We have worked our way up. We supply all the different products in the cockpit now up to electronic assemblies. Why does that matter? Because of the value of them. If I can move up to the assembly level products, my revenue per aircraft increases dramatically, like 10 times what it could be at a cockpit panel level. That's why we do it. On the circuit side, it's a bit of a different play. This is not move up the value chain. This would be the one-stop shop for all circuit board technologies. I bet you guys don't realize there's all these different technologies. For sure, before I got to FTG, I did not realize there's all these different circuit technologies. My customers buy them all. If you can supply one or two of them, that's not ideal.
If you can supply the full range, they like that because then they can consolidate their spend into you. Their goal generally is to have higher spend with fewer suppliers. It's easier for them to manage. If you can offer the full range of products, that aligns with their supply chain objectives. I don't try to do all the products at every site, but I do try to do all the products when I use all of the different sites, each one of them focusing in different areas. Last thing on market positioning is just we spend some time, and actually, I love this stuff, of benchmarking FTG against other people in aerospace and defense. I benchmark us against our customers, against our competitors, against other best-in-class players in aerospace and defense, just to see what's possible.
I benchmark financial metrics, but also, you know, we try to delve deeper as to the guys who have the best margins, the best financial results, what are they doing? Can we replicate some of that? The one interesting example for us is aftermarket. If you sell your product into the aftermarket, for sure, the prices are higher, the margin opportunities are higher. We had said for the last number of years, we want to layer on an aftermarket component to FTG's business. When I get to our most recent acquisition, it was specifically done to move us faster into the aftermarket. I don't want to get out of original equipment manufacturing. I like that business, but if I can layer on a higher margin component in aftermarket, that's just one more way to drive our margins. The last way around acquisitions, we've done a number of them.
This is the timeline since, well, since before I got there, since the beginning of the company, but I was there since 2003. We don't do them every year. We do them when we find the right target that is aligned with our strategic direction and something that can create value for us. For sure, we are a value investor when doing acquisitions. The multiples we have paid on acquisitions have ranged, surprisingly, from two times EBITDA to about five and a half times EBITDA. We don't pay big multiples, but we've been pretty successful with these acquisitions. As I say, it's half of the growth of FTG, nominally speaking, is expected to be driven through acquisitions. The last one I bought was FLYHT. FLYHT's based in Calgary. They are focused in the aftermarket. It was a challenging business. It's been around.
It was on the Venture Exchange for many years. I'm sure they presented at this conference at some point over those years. They had a dream. They did a lot of investment. The good news for me, when, you know, they had a leader that was really the heart and soul of the company, and a couple of years ago, he passed away. They lost that. Eventually, they just ran out of runway, which is a terrible pun for this business. They needed to ultimately sell the business. They had been spending a lot of money developing products, upgrading their existing products. Timing was perfect for us. I think from that perspective, it was a company I'd tracked for 15 years. When it became available, for sure, I was interested. Why did we do it? Again, to get into the aftermarket business.
They have one product that's sold as original equipment on Airbus. Airbus has been doing well, better than Boeing for the last number of years. We had an objective to see if we could find ways to increase our Airbus content. FLYHT helped us do that. It moves us up one more step in technology. FLYHT was outsourcing all of their manufacturing. When I bring it into FTG, I can insource the manufacturing to other FTG sites and really capture the manufacturing margin as well as their margin. That's why I did it. Their products, three products, Satcom Radio, that's a product that sells onto the Airbus aircraft, as well as they sell it into the aftermarket. Their new product is a wireless quick access recorder. I won't try to explain it right now, but it's a brand new product.
It is the first product on the market that is a 5G Wireless Quick Access Recorder. The development was done. They'd spent millions of dollars on that development. We just need to get it approved for different aircraft types and sell it. We had our first sale in our Q3 this year. So far, it's tracking to our expectations. The last one is a weather product. Weather sensing product is actually sensing water vapor outside the aircraft. I will admit, initially, I didn't think this was a real product, but they have done a marvelous job. The weather agencies in the U.S. and in the U.K. are buying it and having it installed on aircraft so that the weather agencies get this data, which they believe helps them with weather forecasts going forward. It seems like it really is a great product.
Brand, just updated as well, so ready to go. The investment spent. Our timing's great on this. Four things that we're looking to do. First one, reduce costs. FLYHT never made money. I'm going to say on average, they lost CAD 4 million a year. We took CAD 4 million of cost out of the business. That brings it right away to a break-even business. Second thing, we just got to go sell these products. They'd made the investment in it. I think we can do it. As I say, we're seeing good results so far this year. We just need to stay focused on that. We need to pursue additional approvals from the various agencies in all the different countries: Canada, the U.S., Europe, China, approvals to be able to sell this onto more aircraft. We're making good progress on that this year as well. Then insource the manufacturing.
Those are the four things we're working on to get value from this acquisition. We're going to continue to look for future acquisitions. It can be to drive technology, expand our geographic coverage. Europe is obviously an idea there, and so on. Our capital allocation strategy is pretty simple. We will invest all, reinvest in the business to ramp it organically. We will continue to pursue acquisition opportunities. We do have an NCIB in place. It has actually not bought shares over the last few years as our stock has moved up dramatically, but it's still in place today. A little bit on financials. This is from the middle of the pandemic in 2021. Quarterly revenue is the green bars, quarterly EBITDA is the gold bar. It's not a perfectly straight line, but in what I said earlier, at CAD 20 million a quarter, I was struggling to have EBITDA.
I'm now north of CAD 40 million a quarter, and I'm doing CAD 7 or CAD 8 million a quarter of EBITDA. We can see a path to continue to drive revenue and therefore drive EBITDA. Balance sheet, super strong. Since 2023, we've done three acquisitions, spent CAD 50 million. We have CAD 9 million of debt right now. This business generates great cash. We can reinvest it. I believe it continues. We will continue to do that. This is just cash versus income. Income is the gold bar. Cash is the green bar. Pre-pandemic, we were consistently more than 100% cash conversion. During the pandemic, we were a million percent cash conversion because we had no income. Coming out of the pandemic with a huge growth, we did build some working capital, which reduced our cash conversion, but we're still cash flow positive.
We're just working to get the balance sheet back under control, get our working capital under control. Really, the drive is back to 100% cash conversion. We'll see when we will get there, but that is what we're focused on achieving. That's our stock price. It cranked up, but just recently, it's tailed off a little bit. We had one big investor that sold a million shares last week and drove it down a little bit. Overall, we've had a great return. I tend to look long term. Over the last decade, it's been a 500% return, but our multiple is not high. We had three analysts covering us. All of them were projecting significant growth in our results and our stock price. I don't give guidance, but they do. They are expecting that we will continue to perform the way we have.
We do focus on ESG, in particular, the environmental stuff as a manufacturer. If we certainly use things that could harm the environment, we make sure we take every possible step to not let that happen. That is the FTG story. Are there questions? Yes, sir.
Are you looking to the top ticket one companies have expanded? I do Bill 10 a lot. You said it was a loss for a long, long time. The CAD 4 million a year, I guess you've got CAD 20 million, CAD 40 million of the tax loss carryforwards. You have to have another brand new top ticket.
Yes. Actually, I was working on that yesterday with my Corporate Controller, but we have CAD 114 million of tax losses from the FLYHT acquisition. That's the good news. For sure, we can use it against FLYHT income going forward. The CRA complicates it a lot, actually, about whether we could use it to shield other FTG tax losses. I could go into that for a long time with you, but CRA says it has to be the same or similar business. For sure, I think it is, but they get into very details as to what they mean by the same or similar business. If it meets the criteria, you can use the tax losses on the other parts of FTG. If it doesn't meet the criteria, you cannot.
That's a terrific equation. I wrote cash offers. Potential hurdles as to what got them. The materials would be a great time.
Sorry, one more time.
I had some thoughts. What's your next?
Yeah. Yes and no. My goal with all my acquisitions is to pay cash because I know I can generate the cash to pay it off. Back in 2019, I bought a company in Virginia. Within three months, I had paid off the cash I used for that acquisition. My first choice is cash. When I bought the business in 2023 in Minnesota, we got into the due diligence, created some issues, there were some concerns. The original offer was all cash, but we told them we were concerned with it, so we needed to modify that to cash upfront plus an earnout if the results happen. That is why that moved to a cash plus earnout.
Recently, when we bought FLYHT, for sure, I wanted to pay all cash, but generally, FLYHT shareholders were all underwater, and the FLYHT board pushed me really hard to give them some option for stock so they saw a path to possibly recovering some of their previous losses. In the end, we did that. Again, my first choice is always cash. Yes, sir. I got the first one. I did not. Tariffs, the second one. Right. Okay. Let's start with the easy one, the tariffs. Tariffs are creating lots of uncertainty in every business, including FTG. It is a very interesting scenario right now, particularly between my Canadian sites and my U.S. sites. The good news is everything I make is covered under the USMCA agreement today. What happens tomorrow? Who knows?
As of today, for my Canadian sites, I have no real tariff impact on my costs because it is in Canada, and I have no real tariff impact to my customers because of the USMCA. At my U.S. sites, I am definitely seeing cost pressure on input costs because anything that is brought into the U.S. comes in with a tariff. Obviously, they are not seeing any tariff going to their customers. The outcome of that is the best place for me right now, manufacturing today, is Canada, not the U.S. That seems to be the opposite of the intent of tariffs, but that is my reality. What happens tomorrow? Who knows? We certainly manage it all day, every day. We worry about it. Where we have seen input cost increases due to tariffs in the U.S., we have notified all our customers. We are passing it on.
I would say they all did not like it, but we are not the first one of their suppliers to do it, so they acknowledge it is happening. It will not impact our margins. Return on equity, I do not know. There are lots of different ways of measuring that. If you do it on stock price, as I say, over the last 10 years, it's a 500% return. I don't know what the math works out to on that. I get measured. We issue senior management FTG PSUs based on achieving a 15% return on equity compound. Generally, our PSUs pay out. We're north of 15%. I don't know. Hopefully, that answers your question.
Standing. Right?
Yeah. It depends, right? I mean, the printed circuit board industry, it's interesting. When I, I don't know, I can say when I got involved, the printed circuit board manufacturing capacity in North America was about CAD 11 billion capacity. The printed circuit board capacity in North America now is CAD 3 billion. It's, you know, hundreds and hundreds of manufacturers have closed. The only area where you can be successful, to the best of my knowledge, is aerospace and defense. If you were a printed circuit board manufacturer and you were involved in iPhones, you're gone. It's gone to Asia. If you're a manufacturer, consumer products have gone to Asia. Industrial products have gone to Asia. Aerospace and defense stays here. Very different business, super high mix, low volume. I ship 30 different part numbers a day over to my Toronto plant. You need to be approved.
You know, my costs are gigantically high compared to guys who do consumer products. I have the quality system, and I have all the things required to do aerospace and defense. I don't compete with those guys who do consumer products. You know, when you get to aerospace and defense right now, because of the ramp in demand everywhere, there is definitely constrained capacity in the industry. It's the number, not number one, it's for sure one of the topics that I hear everywhere from customers is there's just not enough manufacturers right now to supply the product and the product they think they're going to be buying over the next few years. I'm hearing that in the U.S. I'm hearing that in Europe. It is an interesting but good challenge for the business. I definitely have equipment capacity available. I need to add people to get at it.
I need to be running more off-shifts in the afternoon shift, night shift to get at my capacity. I'm working on doing that. It's a constrained capacity for sure. I am out of time. I'll be around for a bit. Happy to talk outside of this room. Thank you.