SOURCE: Baylin Technologies Inc.

Baylin Technologies Inc.

August 13, 2014 07:00 ET

Baylin Technologies Announces Second Quarter 2014 Results

TORONTO, ON--(Marketwired - Aug 13, 2014) - Baylin Technologies Inc. (TSX: BYL), a global provider of innovative antenna solutions for the mobile, broadband and wireless infrastructure markets, today announced its financial results for the three months ended June 30, 2014. All figures are stated in United States dollars unless otherwise noted.

Second Quarter 2014 Highlights

  • Revenue was $10.8 million in Q2 2014, compared to $28.1 million for Q2 2013
  • Gross profit for Q2 2014 was $2.0 million, compared to $10.6 million for Q2 2013
  • Adjusted EBITDA in Q2 2014 was $(2.6) million, compared to 6.2 million for Q2 2013
  • Total cash and cash equivalents were $32.8 million at June 30, 2014

"As we communicated at the beginning of the year, our financial results for the first half of 2014 were negatively affected by our mobile business," said Ephraim Ulmer, President and CEO. "However, as a result of the industry moving away from IMA antenna technology and back towards LDS antenna technology, our Vietnam expansion and our new 4GA LTE antenna technology, we are confident that our mobile business will see a turnaround late this year and into 2015. Our infrastructure antenna business continues to grow strongly, providing revenue diversification. The revenues year to date in infrastructure are greater than the total revenues we reported in 2013. Our focus going forward is to secure contracts from mobile OEMs and to continue building on the momentum in our infrastructure business."

   
   
Selected Financial Information  
(In thousands of United States dollars except per share amounts)  
    Three Months Ended June 30     Six Months Ended June 30  
2014     2013   % Change     2014     2013   % Change  
Revenue   10,748     28,158   (61.8 )   21,999     45,843   (52.0 )
Gross profit   2,023     10,556   (80.8 )   4,548     16,442   (72.3 )
R&D   1,782     1,894   (5.9 )   3,614     3,588   0.7  
Operating expenses   3,513     2,999   17.1     6,667     5,336   24.9  
Operating income (loss)   (3,272 )   5,663   (157.8 )   (5,733 )   7,518   (176.3 )
Adjusted EBITDA1   (2,556 )   6,243   (140.9 )   (4,323 )   8,601   (150.3 )
Net income (loss)   (2,408 )   4,321   (155.7 )   (6,258 )   5,673   (210.3 )
Net income (loss) per share                                
  Basic and Diluted   (0.13 )   0.38   (134.2 )   (0.33 )   0.50   (166.0 )
                                 
Issued and outstanding                                
  Common shares   18,733,918     N/A         18,733,918     N/A      
                                 
                                 

The Company's complete financial statements and Management's Discussion & Analysis for Q2 2014 are available at baylintech.com/investor-relations/ and www.sedar.com/.

Financial Summary

Revenue for Q2 2014 was $10.8 million, a decrease of 61.8% from Q2 2013 revenue of $28.1 million. The year-over-year decrease was as a result of a substantial reduction in orders from a key mobile customer.

Gross profit for Q2 2014 was $2.0 million, yielding a gross margin of 18.8%, as compared to Q2 2013 gross profit of $10.6 million and gross margin of 37.5%. The year-over-year decrease was a result of price reductions for the Company's traditional antenna products.

Research and Development ("R&D") expenses for Q2 2014 were $1.8 million, a 5.9% decrease over $1.9 million in Q2 2013. This reduction was due to a decrease in payrolls during the period.

General and Administrative ("G&A") expenses for Q2 2014 were $2.6 million, a $0.3 million increase compared to $2.3 million for Q2 2013. Professional service costs increased during the period, mainly due to additional compliance and regulatory expenses associated with a public listing.

Sales and Marketing expenses for Q2 2014 were $0.9 million, a 26.5% increase compared to $0.7 million in Q2 2013. The Company saw increased costs as part of its continuing efforts to gain market share and to support its business development activities. Most of the increase was related to trade shows and exhibitions.

The Q2 2014 net loss was mainly due to reduced order volume for the Company's mobile antenna products by one of its key customers.

As at June 30, 2014, Baylin had working capital of $33.2 million, compared with $41.4 million at December 31, 2013.

As at June 30, 2014 there were 18.7 million common shares outstanding.

Q2 2014 CONFERENCE CALL

WHEN: Wednesday, August 13, 2014 at 8:00 AM EDT

CONFERENCE CALL/WEBCAST: You can join the call by dialing 647-427-7450 or 1-888-231-8191 and referencing conference ID: 74678612. A live audio webcast will be available through http://bit.ly/1ni1uC0. An archived replay of the webcast will be available for 365 days.

(1) Non-IFRS Measures

Baylin uses EBITDA and Adjusted EBITDA to measure its strength and its future ability to generate and sustain earnings. EBITDA refers to earnings before interest (finance expenses, net), taxes, depreciation and amortization. Adjusted EBITDA refers to EBITDA less items of an exceptional nature that are outside of the ordinary course of business. Such items include, but are not limited to, certain exceptional, non-recurring share-based compensation, capital gains and losses, restructuring costs, recognition of significant provisions and other significant non-cash transactions. Baylin does not believe these items reflect the underlying performance of its business. EBITDA and Adjusted EBITDA are non-IFRS performance measures.

Baylin believes that, in addition to net earnings, EBITDA and Adjusted EBITDA are useful complementary measures of pre-tax profitability and are commonly used by the financial and investment community for valuation purposes.

About Baylin

Baylin (TSX: BYL) is a leading global technology company with more than 35 years of experience in designing, producing and supplying innovative antennas for the mobile, broadband and wireless infrastructure industries. We strive to meet our customers' needs by being their trusted partner from initial design to production with an extensive portfolio of custom engineered solutions as well as leading edge off-the-shelf antenna product.

Forward Looking Statements

Certain statements contained in this news release, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking statements and information contained herein, we have made numerous assumptions. Although our management believes that the assumptions made and the expectations represented by such statement or information are reasonable, there can be no assurance that any forward-looking statement or information referenced herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Such risks, uncertainties and other factors include, among other things those risks identified in Baylin's prospectus filed on SEDAR at www.sedar.com.

Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of Baylin. Accordingly, readers should not place undue reliance on forward-looking statements or information. Baylin undertakes no obligation to reissue or update any forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information herein are qualified by this cautionary statement.

 
 
INTERIM CONDENSED CONSOLIDATED STATMENTS OF FINANCIAL POSITION
U.S dollars in thousands
 
    June 30,   December 31,
    2014   2013
    Unaudited   Audited
ASSETS            
             
CURRENT ASSETS:            
  Cash and cash equivalents   $ 32,771   $ 45,058
  Trade receivables, net     7,925     8,905
  Other accounts receivable     1,684     1,895
  Inventories     6,642     5,493
             
      49,022     61,351
             
NON-CURRENT ASSETS:            
  Property, plant and equipment     21,935     21,420
  Lease deposits     1,069     1,033
  Deferred taxes     952     921
             
      23,956     23,374
             
    $ 72,978   $ 84,725
             
             
   
INTERIM CONDENSED CONSOLIDATED STATMENTS OF FINANCIAL POSITION  
U.S dollars in thousands  
   
    June 30,     December 31,  
    2014     2013  
    Unaudited     Audited  
LIABILITIES AND EQUITY                
                 
CURRENT LIABILITIES:                
  Credit from banks and others   $ 4,043     $ 6,685  
  Trade payables     8,730       9,479  
  Other accounts payable     2,728       3,462  
  Income tax payable     309       356  
                 
      15,810       19,982  
                 
NON-CURRENT LIABILITIES:                
  Loans from banks     1,030       1,630  
  Finance lease liabilities     961       1,661  
  Employee benefit liabilities     1,484       1,358  
  Deferred taxes     400       500  
                 
      3,875       5,149  
                 
TOTAL LIABILITIES:     19,685       25,131  
                 
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:                
  Share capital and premium     80,766       80,766  
  Foreign currency translation reserve     3,506       3,672  
  Capital reserve from transactions with non-controlling interests     101       101  
  Share-based payment reserve     743       620  
  Accumulated deficit     (31,823 )     (25,565 )
                   
  Total equity     53,293       59,594  
                 
    $ 72,978     $ 84,725  
                 
                 
   
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (LOSS) (UNAUDITED)  
U.S dollars in thousands, except per share data  
   
    Six months ended
June 30,
    Three months ended
June 30,
 
    2014     2013     2014     2013  
                                 
Revenues   $ 21,999     $ 45,853     $ 10,748     $ 28,158  
                                 
Cost of revenues     17,451       29,411       8,725       17,602  
                                 
Gross profit     4,548       16,442       2,023       10,556  
                                 
Operating expenses:                                
Selling and marketing expenses     1,998       1,238       925       731  
Research and development expenses     3,614       3,588       1,782       1,894  
General and administrative expenses     4,665       3,955       2,584       2,153  
Other expenses, net     4       143       4       115  
                                 
      10,281       8,924       5,295       4,893  
                                 
Operating income (loss)     (5,733 )     7,518       (3,272 )     5,663  
                                 
Finance income     1,050       54       882       18  
Finance expense     (1,614 )     (621 )     (115 )     (322 )
                                 
Income (loss) before income tax     (6,297 )     6,951       (2,505 )     5,359  
Tax benefit (income tax)     39       (1,278 )     97       (1,038 )
                                 
Net income (loss)     (6,258 )     5,673       (2,408 )     4,321  
                                 
Other comprehensive income (loss):                                
                                 
Amounts to be reclassified to profit or loss under specific conditions:                                
Adjustments arising from translating financial statements of foreign operations     (166 )     110       58       117  
                                 
Total comprehensive income (loss)   $ (6,424 )   $ 5,783     $ (2,350 )   $ 4,438  
                                 
Basic and diluted earnings (loss) per share (in US dollars)   $ (0.33 )   $ 0.50     $ (0.13 )   $ 0.38  
                                 
                                 
   
INTERIM CONDENSED CONSOLIDATEDSTATEMENT OF CASH FLOWS (UNAUDITED)  
U.S dollars in thousands  
   
    Six months ended
June 30,
 
    2014     2013  
Cash flows from operating activities:                
                 
Net income (loss)   $ (6,258 )   $ 5,673  
                 
Adjustments to reconcile net income (loss) to net cash used in operating activities:                
                 
Adjustments to the profit or loss items:                
                 
Share-based compensation     123       -  
Depreciation of property, plant and equipment     1,410       1,083  
Finance expense, net     564       567  
Income tax (tax benefit)     (39 )     1,278  
Loss from sale of property, plant and equipment     4       -  
Change in employee benefit liabilities, net     80       102  
                 
      2,142       3,030  
Changes in asset and liability items:                
                 
Decrease (increase) in trade receivables     961       (5,062 )
Decrease (increase) in other accounts receivable     141       (1,078 )
Increase in inventories     (1,185 )     (1,032 )
Decrease (increase) in trade payables     (706 )     3,393  
Decrease (increase) in other accounts payable     (725 )     1,175  
                 
      (1,514 )     (2,604 )
Cash paid and received during the period for:                
                 
Interest paid     (224 )     (394 )
Interest received     216       4  
Taxes paid     (47 )     (951 )
                 
      (55 )     (1,341 )
                 
Net cash provided by (used in) operating activities   $ (5,685 )   $ 4,758  
                 
                 
   
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)  
U.S dollars in thousands  
   
    Six months ended
June 30,
 
    2014     2013  
Cash flows from investing activities:                
                 
Purchase of property, plant and equipment   $ (1,946 )   $ (1,414 )
Proceeds from long-term loans to related parties     -       2,209  
Proceeds from sale of property, plant and equipment     41       -  
                 
Net cash provided by (used in) investing activities     (1,905 )     795  
                 
Cash flows from financing activities:                
                 
Repayment of long-term loan from banks     (600 )     -  
Repayment of finance lease liabilities     (746 )     -  
Repayment of other long-term liabilities     -       (72 )
Repayment of long-term loans from shareholders     -       (2,389 )
Proceeds (Repayment) of short-term credit from banks, net     (2,698 )     79  
                 
Net cash used in financing activities     (4,044 )     (2,382 )
                 
Exchange differences on balances of cash and cash equivalents     (653 )     (56 )
                 
Increase (decrease) in cash and cash equivalents     (12,287 )     3,115  
Cash and cash equivalents at the beginning of the year     45,058       6,997  
                 
Cash and cash equivalents at the end of the period   $ 32,771     $ 10,112  

Contact Information

  • For further information, please contact:
    Investor relations
    Conrad Seguin
    TMX Equicom
    T: 416.815.0700 x 251
    Email Contact