$FTG.to quick update

Q2 2023 update

FTG released Q2 fiscal 2023 this week. The quarter was well ahead of my expectations.

Some quick highlights:

• Completed acquisitions of IMI and Holaday.

• They gave some updates on the integration of both moving forward. As expected IMI seems relatively simple and low risk where as Holaday seems more complicated, but will also move the needle more.

  • IMI

    • Simple integration

    • 4-5 mil run rate rev

    • Want to engage sales team to grow customer count

    • Some capex to address constraints in production

  • Holaday

    • 30 mil run rate rev before pandemic

    • Similar circuit board as they do in Toronto

    • 3 priorities

      • 1) Ramp throughput and sales

        • they have added staff and are still training new hires

        • at about 24 mil in throughput in May

      • 2) reduce material cost

        • Some saving initiatives due to being a larger company

        • Feel there is 1 mil in savings annually

      • 3) improve pricing

        • They feel Holaday has not been proactive in pricing

• Revenue for the quarter was up due to increased demand and the acquisitions.

• Book to Bill was 1.19 and backlog is now 98 mil.

My Thoughts

Things are looking positive at the moment. Given the prior acquisitions, I am not really concerned about them integrating the businesses long term. My longer term (2024/25) EBITDA is 20ish mil based on the interview with SCD in early 2023, so they are less than 5x that at the moment. I am under exposed to this business and have not participated in the shares being up almost 100% in the last year. I will be taking a closer look on any pullbacks in the share price. There are still come potential earn outs to the acquisition and some potential for more capital than anticipated needed for the businesses to ramp.

Thanks,

Dean

*long a tiny amount of FTG