SOURCE: Baylin Technologies

Baylin Technologies

November 06, 2014 07:00 ET

Baylin Technologies Announces Third Quarter 2014 Results

Company Reports Sequential Increases in Revenue and Gross Margin

TORONTO, ON--(Marketwired - Nov 6, 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 and nine months ended September 30, 2014. All figures are stated in United States dollars unless otherwise noted.

Third Quarter 2014 Highlights

  • Revenue in Q3 2014 was $13.4 million, up 25.0% from $10.7 million in Q2 2014.
  • Gross profit for Q3 2014 was $3.2 million, up 57.8% from $2.0 million in Q2 2014. 
    • Gross profit margin was 23.8% in Q3 2014, compared to 18.8% in Q2 2014.
  • Adjusted EBITDA in Q3 2014 was $(1.4) million, an improvement of $1.2 million from Q2 2014 adjusted EBITDA of $(2.6) million.
  • Total cash and cash equivalents were $30.3 million at September 30, 2014.
  • Strengthened senior team by adding industry experts Mike Moon (Country Manager, Galtronics Korea) and Ray Hild (North American Vice President - Infrastructure Sales).
  • Company has taken steps to reduce cost given decrease in mobile phone antenna revenue in 2014.

"In the third quarter, we saw sequential growth across all three of our product lines -- broadband, mobile and infrastructure -- which translated into meaningful revenue and profitability improvements compared to Q2 2014," said Ephraim Ulmer, President and Chief Executive Officer of Baylin. "Emerging from a challenging first half of 2014, we're encouraged by our success in diversifying the business by product line and customer. Our infrastructure revenue continues to grow strongly and we have sales momentum with our in-building, stadium, and, more recently, our outdoor DAS products. Third-quarter revenue from these products was more than double the revenue we generated in all of 2013. We're also pleased with the results and pipeline in broadband, where our sales efforts over the past 18 months are yielding results, and we have become a leader in carrier-grade home gateways, a new product area. This will be one of the growth drivers for the broadband product line, moving into 2015. Lastly, despite significant industry headwinds in the mobile space, we are winning new projects and a number of phone and tablet OEMs are evaluating our 4GA™* leading broadband antenna technology which is specifically optimized for devices with high speed LTE Advanced connectivity."

 
Selected Financial Information
(In thousands of United States dollars except per share amounts)
    Three Months Ended September 30   Nine Months Ended September 30
2014   2013   % Change   2014   2013   % Change
Revenue   13,431   19,954   (32.7)   35,430   65,807   (46.2)
Gross profit   3,193   5,822   (45.2)   7,741   22,264   (65.2)
R&D   2,020   1,800   (12.2)   5,634   5,388   4.6
Operating expenses   3,260   8,542   (61.8)   9,927   13,878   (28.5)
Operating income (loss)   (2,087)   (4,520)   (53.8)   (7,820)   2,998   (360.8)
Adjusted EBITDA1   (1.366)   2,499   (154.7)   (5,689)   11,100   (151.3)
Net income (loss)   (2,864)   (5,202)   (44.9)   (9,122)   471   (2,036.7)
Net income (loss) per share                        
  Basic and Diluted   (0.15)   (0.45)   (66.7)   (0.49)   0.04   (1,325.0)
                         
Issued and outstanding                        
  Common shares   18,733,918   N/A       18,733,918   N/A    
                         
 
 
 

Financial Summary
Revenue for Q3 2014 was $13.4 million, an increase of 25.0% from $10.7 million in Q2 2014, driven by higher sales in the Company's three product lines. Compared with Q3 2013, revenue decreased by 32.7%. The year-over-year decrease was as a result of a previously disclosed substantial reduction in orders from a key mobile customer. This was the main factor in the year-over-year decreases in revenue, gross profit and adjusted EBITDA. The reduction in revenue from this one customer was offset, in part, by strong sales of new antenna products in broadband and infrastructure.

Gross profit for Q3 2014 was $3.2 million, an increase of $1.2 million over $2.0 million in Q2 2014. Gross margin for Q3 2014 was 23.8%, compared with 18.8% in Q2 2014. These sequential improvements reflect higher sales in all product lines, particularly in broadband and infrastructure. Q3 2013 gross profit was $5.8 million and gross margin was 29.2%.

General and Administrative ("G&A") expenses for Q3 2014 were $2.3 million, a 71.1% decrease compared to $7.9 million for Q3 2013. The year-over-year decrease was a result of a $6.1 million share-based compensation expense recognized in Q3 2013.

Sales and Marketing expenses for Q3 2014 were $1.0 million, a 44.4% increase compared to $0.7 million in Q3 2013. The increase is due to greater trade show participation and recruitment of new sales and marketing employees, which are aimed at generating increased support for the continued growth in sales momentum and greater brand awareness.

Q3 2014 adjusted EBITDA improved by $1.2 million to $(1.4) million compared to $(2.6) million in Q2 2014. Adjusted EBITDA for Q3 2013 was $2.5 million. The year-over-year decrease reflects the above mentioned reduction in orders from a key mobile customer.

As at September 30, 2014, Baylin had working capital of $28.0 million, compared with $41.4 million at December 31, 2013.

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

The Company's complete financial statements and Management's Discussion & Analysis for Q3 2014 are available at baylintech.com/investor-relations/ and www.sedar.com/.

Q3 2014 CONFERENCE CALL

WHEN: Thursday, November 6, 2014 at 8:00 AM EST

CONFERENCE CALL/WEBCAST: You can join the call by dialing 647-427-7450 or 1-888-231-8191 and referencing conference ID: 26231804. A live audio webcast will be available through http://bit.ly/1tk4Nx9. An archived replay of the webcast will be available for 365 days.

(1) Non-IFRS Measures

Baylin use 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 and discontinued operations. 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.

* 4GA™ is a trademark of Galtronics Corporation

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
 
    September 30,   December 31,
    2014   2013
    Unaudited   Audited
ASSETS            
             
CURRENT ASSETS:            
  Cash and cash equivalents   $ 30,309   $ 45,058
  Trade receivables, net     9,789     8,905
  Other accounts receivable     1,794     1,895
  Inventories     7,057     5,493
             
      48,949     61,351
             
NON-CURRENT ASSETS:            
  Property, plant and equipment     23,623     21,420
  Lease deposits     1,005     1,033
  Deferred taxes     983     921
             
      25,611     23,374
             
    $ 74,560   $ 84,725
             
             
   
   
INTERIM CONDENSED CONSOLIDATED STATMENTS OF FINANCIAL POSITION  
U.S. dollars in thousands  
   
    September 30,     December 31,  
    2014     2013  
    Unaudited     Audited  
LIABILITIES AND EQUITY                
                 
CURRENT LIABILITIES:                
  Credit from banks and others   $ 7,844     $ 6,685  
  Trade payables     10,244       9,479  
  Other accounts payable     2,596       3,462  
  Income tax payable     308       356  
                 
      20,992       19,982  
                 
NON-CURRENT LIABILITIES:                
  Loans from banks     730       1,630  
  Finance lease liabilities     583       1,661  
  Employee benefit liabilities     1,363       1,358  
  Deferred taxes     375       500  
                 
      3,051       5,149  
                 
TOTAL LIABILITIES:     24,043       25,131  
                 
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:                
  Share capital and premium     80,766       80,766  
  Foreign currency translation reserve     3,532       3,672  
  Capital reserve from transactions with non-controlling interests     101       101  
  Share-based payment reserve     805       620  
  Accumulated deficit     (34,687 )     (25,565 )
                   
  Total equity     50,517       59,594  
                 
    $ 74,560     $ 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  
   
    Nine months ended
September 30,
    Three months ended
September 30,
 
    2014     2013     2014     2013  
                                 
Revenues   $ 35,430     $ 65,807     $ 13,431     $ 19,954  
                                 
Cost of revenues     27,689       43,543       10,238       14,132  
                                 
Gross profit     7,741       22,264       3,193       5,822  
                                 
Operating expenses:                                
Selling and marketing expenses     2,983       1,920       985       682  
Research and development expenses     5,634       5,388       2,020       1,800  
General and administrative expenses     6,939       11,898       2,274       7,943  
Other expenses, net     5       60       1       (83 )
                                 
      15,561       19,266       5,280       10,342  
                                 
Operating income (loss)     (7,820 )     2,998       (2,087 )     (4,520 )
                                 
Finance income     1,152       212       102       158  
Finance expense     (2,519 )     (1,205 )     (905 )     (584 )
                                 
Income (loss) before income tax     (9,187 )     2,005       (2,890 )     (4,946 )
Tax benefit (income tax)     65       (1,534 )     26       (256 )
                                 
Net income (loss)     (9,122 )     471       (2,864 )     (5,202 )
                                 
Other comprehensive income (loss):                                
                                 
Amounts to be reclassified to profit or loss under specific conditions:                                
Adjustments arising from translating financial statements of foreign operations     (140 )     244       26       134  
                                 
Total comprehensive income (loss)   $ (9,262 )   $ 715     $ (2,838 )   $ (5,068 )
                                 
Basic and diluted earnings (loss) per share (in US dollars)   $ (0.49 )   $ 0.04     $ (0.15 )   $ (0.45 )
                                 
                                 
   
   
INTERIM CONDENSED CONSOLIDATEDSTATEMENT OF CASH FLOWS (UNAUDITED)  
U.S. dollars in thousands  
   
    Nine months ended
September 30,
 
    2014     2013  
Cash flows from operating activities:                
                 
Net income (loss)   $ (9,122 )   $ 471  
                 
Adjustments to reconcile net income (loss) to net cash used in operating activities:                
                 
Adjustments to the profit or loss items:                
                 
Share-based compensation     185       6,100  
Depreciation of property, plant and equipment     2,131       2,002  
Finance expense, net     1,367       993  
Income tax (tax benefit)     (65 )     1,534  
Loss from sale of property, plant and equipment     5       -  
Change in employee benefit liabilities, net     -       181  
                 
      3,623       10,810  
Changes in asset and liability items:                
                 
Decrease (increase) in trade receivables     (933 )     900  
Decrease (increase) in other accounts receivable     26       (1,517 )
Increase in inventories     (1,605 )     (418 )
Decrease (increase) in trade payables     834       (1,181 )
Decrease (increase) in other accounts payable     (849 )     266  
                 
      (2,527 )     (1,950 )
Cash paid and received during the period for:                
                 
Interest paid     (349 )     (861 )
Interest received     283       124  
Taxes paid     (83 )     (1,386 )
                 
      (149 )     (2,123 )
                 
Net cash provided by (used in) operating activities   $ (8,175 )   $ 7,208  
                 
                 
   
   
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)  
U.S. dollars in thousands  
   
    Nine months ended
September 30,
 
    2014     2013  
Cash flows from investing activities:                
                 
Purchase of property, plant and equipment   $ (4,490 )   $ (5,209 )
Proceeds from long-term loans to related parties     -       2,130  
Rental lease proceeds (deposits)     38       (209 )
Proceeds from sale of property, plant and equipment     41       -  
                 
Net cash provided by (used in) investing activities     (4,411 )     (3,288 )
                 
Cash flows from financing activities:                
                 
Deferred share issuance cost     -       (363 )
Receipt of long-term loan from banks     -       3,230  
Repayment of long-term loan from banks     (900 )     (100 )
Repayment of finance lease liabilities     (1,116 )     (905 )
Repayment of other long-term liabilities     -       (110 )
Repayment of long-term loans from shareholders     -       (2,479 )
Proceeds (Repayment) of short-term credit from banks, net     1,060       (3,871 )
                 
Net cash used in financing activities     (956 )     (4,598 )
                 
Exchange differences on balances of cash and cash equivalents     (1,207 )     57  
                 
Decrease in cash and cash equivalents     (14,749 )     (621 )
Cash and cash equivalents at the beginning of the year     45,058       6,997  
                 
Cash and cash equivalents at the end of the period   $ 30,309     $ 6,376  
                 

Contact Information

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