Investor Conference Call on November 6, 2019 at 8:00
a.m. ET
TORONTO, Nov. 5, 2019 /CNW/ - Baylin Technologies
Inc. (TSX: BYL) (the "Company" or "Baylin"), a leading,
diversified, global wireless technology management company focused
on research, design, development, manufacturing and sales of
passive and active radio frequency products and services, today
announced its financial results for the three and nine months ended
September 30, 2019. All amounts are stated in Canadian dollars
unless otherwise indicated.
QUARTERLY HIGHLIGHTS
Key highlights for the three months ended September 30,
2019 include the following:
- Revenue was $36.4 million in the
third quarter of 2019, a decrease of $1.8
million or 4.6% compared to the third quarter of 2018. The
decrease was primarily due to weaker sales for Embedded Antenna and
Wireless Infrastructure products compared to the third quarter of
2018, somewhat offset by higher revenue from Asia Pacific products and higher combined
revenue from Advantech Wireless and Alga Microwave products
compared to the third quarter of 2018.
- Gross profit was $12.2 million in
the third quarter of 2019, a decrease of $3.9 million compared to the third quarter of
2018. Gross margin(3) was 33.5% in the third quarter of
2019 compared to 42.3% in the third quarter of 2018. Gross
margin was negatively impacted in the third quarter of 2019 by
sales mix – Asia Pacific revenue
as a percentage of total revenue was higher than anticipated,
however, its products generate lower gross margins than the other
product lines.
- Adjusted EBITDA(2) in the third quarter of 2019 was
$1.2 million compared to $7.1 million in the third quarter of 2018. The
non-recurring items in the third quarter of 2019 amounted to
$0.4 million and were comprised
primarily of expenses related to consulting fees paid to Advantech
Wireless Inc. (the consulting agreement will not be extended after
it expires on December 31, 2019) and
the legal fees for a corporate reorganization of an inactive part
of the Galtronics business. A portion of the decrease in Adjusted
EBITDA in the third quarter of 2019 is due to a payment received in
the third quarter of 2018 of approximately $1.8 million as a result of an indemnity claim
made by the Company against the portion of the cash purchase price
being held in escrow pursuant to the terms of the Advantech
Wireless asset purchase agreement. This amount was included as an
offset against G&A expenses in the third quarter of 2018.
- Net cash at September 30, 2019 decreased from June 30, 2019 primarily due to capital
expenditures, interest expense, a term loan principal repayment and
cash taxes offset somewhat by a decrease in non-cash working
capital and an increase in the revolving credit facility.
"We announced in September that financial results for the third
quarter of 2019 would not meet expectations. Challenging industry
dynamics have continued to soften demand from several of our
primary customers. In addition, the decision to invest in massive
MIMO production in our new facility in Vietnam resulted in expenses in the third
quarter of 2019 that were not anticipated in the 2019 budget.
Additionally, our Infrastructure Group has seen a softening in its
business with its tier one telco customers experiencing a delay
and/or reduction in capital expenditures until 2020 as well as a
postponement of a significant base station project", stated
Randy Dewey, Baylin's President and
Chief Executive Officer.
"We are pleased with the progress that we have made to rectify
the legacy issues of Advantech Wireless that existed at the time we
acquired the business. Although these issues continue to have a
negative impact on profitability, we believe most of them are now
behind us. We stand by our previously stated goals for cost
synergies and we are seeing accelerated revenue opportunities in
adjacent markets where Advantech has not traditionally
participated", added Mr. Dewey.
"We completed the sale of our Kirkland, Quebec facility in October 2019. The proceeds, $7.1 million, were used to pay down the Company's
revolving credit facility", stated Michael
Wolfe, Baylin's Chief Financial Officer. "We have signed a
long-term lease and will continue to operate in the facility",
added Mr. Wolfe.
SELECTED FINANCIAL INFORMATION
Selected financial information of the Company is summarized
below for the periods indicated:
(in $000's
except per share amounts)
|
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
2019
|
2018
|
|
$
|
|
$
|
$
|
$
|
Revenue
|
36,430
|
|
38,189
|
123,294
|
100,205
|
Gross
profit
|
12,212
|
|
16,168
|
44,187
|
39,778
|
Loss before income
taxes
|
(567)
|
|
(1,104)
|
(4,379)
|
(4,931)
|
Income tax
expense
|
151
|
|
695
|
586
|
1,183
|
Net loss
|
(718)
|
|
(1,799)
|
(4,965)
|
(6,114)
|
Basic and diluted net
loss per share
|
($0.02)
|
|
($0.05)
|
($0.12)
|
($0.16)
|
EBITDA(1)
|
824
|
|
4,774
|
8,829
|
5,255
|
Adjusted
EBITDA(2)
|
1,223
|
|
7,100
|
10,475
|
11,435
|
Current
assets
|
77,786
|
|
78,777
|
77,786
|
78,777
|
Total
assets
|
173,457
|
|
166,903
|
173,457
|
166,903
|
Current
liabilities
|
50,838
|
|
33,328
|
50,838
|
33,328
|
Non-current
liabilities
|
49,300
|
|
53,926
|
49,300
|
53,926
|
Total
liabilities
|
100,138
|
|
87,254
|
100,138
|
87,254
|
(1)
|
See "Non-GAAP
Measures". EBITDA refers to earnings before interest, income taxes,
depreciation and amortization.
|
(2)
|
See "Non-GAAP
Measures". Adjusted EBITDA refers to operating income (loss) plus
depreciation and amortization plus non-recurring items.
|
(3)
|
See "Non-GAAP
Measures". Gross margin refers to gross profit divided by
revenue.
|
A copy of the Company's unaudited interim condensed consolidated
financial statements for the three and nine months ended
September 30, 2019 and corresponding management's
discussion and analysis (the "MD&A") are available under the
Company's SEDAR profile on www.sedar.com.
OUTLOOK
Management believes that the issues faced in the third quarter
of 2019 will continue to impact the Company for the balance of the
year and into the first quarter of 2020. While management believes
the issues are transitory, management is focused on improving
financial performance including cost reduction initiatives that are
expected to decrease costs by over $4
million annually.
Management expects gross margin to increase in the fourth
quarter of 2019 and through 2020, returning to historical levels as
the Infrastructure and Embedded Antenna revenue recovers and the
Advantech Wireless and Alga Microwave revenue continues to
grow.
Management continues to be optimistic about the acceleration of
new programs, new contract wins and new major 5G massive MIMO
opportunities.
The Company is continuing to invest in high growth areas and
entering into new markets.
INVESTOR CONFERENCE CALL
Baylin will hold a conference call on November 6, 2019 at 8:00
a.m. (ET) to discuss its financial results for the three and
nine months ended September 30, 2019. The call will be hosted
by Randy Dewey, President and Chief
Executive Officer, Michael Wolfe,
Chief Financial Officer and Daniel
Kim, Executive Vice President of Corporate Development. All
interested parties are invited to participate using the dial-in
details provided below.
Date:
|
November 6,
2019
|
Time:
|
8:00 a.m.
(ET)
|
Dial-in
Number:
|
888-231-8191 or
647-427-7450
|
Conference
ID#:
|
6693762
|
Webcast:
https://event.on24.com/wcc/r/1924935/A6B97A9F852608008CB3CC0F6BB13EB1
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute
"forward-looking statements" that involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance, objectives or achievements of the Company, or industry
results, to be materially different from any future results,
performance, objectives or achievements expressed or implied by
such forward-looking statements. Forward-looking statements are
frequently, but not always, identified by words such as "expects,"
"anticipates," "believes," "intends," "estimates,", "predicts,"
"potential," "targeted," "plans," "possible" and similar
expressions, or statements that events, conditions or results
"will," "may," "could" or "should" occur or be achieved. The
forward-looking statements in this press release include, but are
not limited to, statements regarding the Company's expected product
pipeline, plans to expand the Company's business into new markets,
the Company's ability to achieve organizational efficiencies, and
other statements regarding the Company's plans, objectives and
expectations. These statements reflect the Company's current views
regarding future events and operating performance and are based on
information currently available to the Company as of the date of
this press release. These forward-looking statements involve a
number of risks, uncertainties and assumptions and should not be
read as guarantees of future performance or results and will not
necessarily be accurate indications of whether or not such
performance or results will be achieved. Those assumptions and
risks include, but are not limited to, the Company's ability to
successfully allocate capital as needed and to develop new
products, as well as the fact that the Company's results of
operations and business outlook are subject to significant risk,
volatility and uncertainty. Additional factors that could cause
actual results, performance or achievements to differ materially
include, but are not limited to the risk factors discussed in the
Company's Annual Information Form dated March 13, 2019 which is available on the
Company's profile at www.sedar.com. All of the forward-looking
statements made in this press release are qualified by these
cautionary statements and other cautionary statements or factors
contained herein, and there can be no assurance that the actual
results or developments will be realized or, even if substantially
realized, that they will have the expected consequences to, or
effects on, the Company. Unless required by applicable securities
law, the Company does not intend and does not assume any obligation
to update these forward-looking statements.
NON-GAAP MEASURES
This press release includes a number of measures that are not
prescribed by Canadian generally accepted accounting principles
("GAAP") and as such may not be comparable to similar measures
presented by other companies. We believe these measures are
commonly employed to measure performance in our industry and are
used by analysts, investors, lenders and interested parties to
evaluate financial performance and our ability to incur and service
debt to support our business activities. While management of the
Company believes that non-GAAP measures are helpful supplemental
information, they should not be considered in isolation as an
alternative to net income, cash flows generated by operating,
investing or financing activities, or other financial statement
data presented in accordance with GAAP. See "Non-GAAP Measures" on
page 2 of the MD&A for further information.
ABOUT BAYLIN
Baylin Technologies Inc. (TSX: BYL) is a diversified leading
global wireless technology management company. Baylin focuses on
research, design, development, manufacturing and sales of passive
and active radio-frequency products and services. Baylin aspires to
meet its customers' needs and anticipate the direction of the
market. For further information, please visit
www.baylintech.com.
SOURCE Baylin Technologies Inc.