Investor Conference Call on November 10, 2022 at 8:00
a.m. ET
TORONTO, Nov. 9, 2022
/CNW/ - Baylin Technologies Inc. (TSX: BYL) (the "Company" or
"Baylin"), a diversified global wireless technology company focused
on research, design, development, manufacture, and sale of
passive and active radio frequency
products, satellite communications products, and supporting
services, today announced its financial results for the three and
nine months ended September 30, 2022. All amounts are stated
in Canadian dollars unless otherwise indicated.
THIRD QUARTER SUMMARY
- Revenue of $30.0 million in the
third quarter of 2022, a decrease of $0.2
million (0.8%) compared to the third quarter of 2021. The
decrease was primarily due to weaker sales in the Asia Pacific business line, which was
adversely affected by production volume reductions at the
Asia Pacific's largest customer.
The decrease was partially offset by stronger sales in the Embedded
Antenna business line, which was mainly attributable to increased
demand from new customers for home networking products.
- Gross profit of $7.9 million
in the third quarter of 2022, an increase of $1.6 million (25.8%) compared to the third
quarter of 2021. Gross margin was 26.4% in the third quarter of
2022 compared to 20.8% in the third quarter of 2021. The
improvement in gross margin resulted from a balanced product mix
due to both changes in pricing strategy and a data driven focus on
contribution margin at the business line level, which in the third
quarter of 2022 was primarily generated by: (i) operating and
financial efficiencies in the Asia
Pacific business line; and, (ii) consistent growth in the
Embedded Antenna business line.
- Adjusted EBITDA(2) of $0.1
million in the third quarter of 2022, the fourth consecutive
quarter of positive Adjusted EBITDA. Adjusted EBITDA was
$0.8 million higher compared to
negative $0.7 million in the third
quarter of 2021. The increase in Adjusted EBITDA was mainly due to
the increase in gross profit discussed above, partially offset by
an increase in operating expenses compared to the prior year
period.
- Backlog(4) was $37.4
million at September 30, 2022,
primarily due to a higher level of backlog in the Satcom and
Asia Pacific business lines
compared to the backlog at December 31,
2021. Backlog at September 30,
2022 was an increase of $8.0
million (27.3%) compared to the backlog at September 30, 2021 as a result of improved
marketing, business development and sales activities.
- Net loss of $4.9 million in the
third quarter of 2022, which was comparable to the net loss in the
third quarter of 2021. Net loss in the third quarter of 2022 was
primarily due to an operating loss of $3.4
million, interest expenses as well as income tax expenses.
On a per share basis, a net loss of $0.06 per share in the third quarter of 2022
compared to a net loss of $0.07 per
share in the third quarter of 2021.
- Net debt(3) was $21.5
million at September 30, 2022,
an increase of $9.2 million from
December 31, 2021, primarily due to
an increase in non-cash working capital, capital expenditures and
interest payments.
RECENT DEVELOPMENTS
Product Development
In September 2022, Galtronics
announced that it had expanded its multibeam antenna portfolio with
the addition of three new products. The new products cover multiple
spectrum bands, enabling Galtronics to sell to all major US and
Canadian wireless carriers. These products build on its first
multibeam antenna, which has been successfully deployed by a Tier 1
US carrier throughout the United
States over the past 18 months. The new products all use
patent pending beam-tracking stability technology, which makes them
ideal solution for stadium, venue, and special event
deployments.
Also in September 2022, Advantech
Wireless announced the release of Genesis, a new solid-state power
amplifier platform ("SSPA") for satellite communications. The
Genesis family of SSPAs provides high-end features that are unique
to this product line, including a modular platform, streamlined
manufacturability, and ease of serviceability. The platform runs on
proprietary internal communications architecture, amplifiers can be
linked together enabling amplifiers to operate more powerfully
without the need for an outboard logic controller.
Credit Facility
In September 2022, the Company and
its lenders (Royal Bank of Canada
and HSBC Bank Canada) agreed to further amendments to the Credit
Agreement, among others, to extend the maturity date of the
Company's credit facilities for a further year from September 30, 2022 to September 29, 2023.
SELECTED FINANCIAL INFORMATION
The table below discloses selected financial information for the
periods indicated.
(in $000's except
per share amounts)
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
|
2022
|
|
2021
|
Change
|
Change
|
2022
|
2021
|
Change
|
Change
|
|
$
|
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
Profit and
Loss
|
|
|
|
|
|
|
|
|
|
Revenue
|
29,967
|
|
30,216
|
(249)
|
(0.8 %)
|
91,075
|
75,298
|
15,777
|
21.0 %
|
Gross
profit
|
7,902
|
|
6,282
|
1,620
|
25.8 %
|
24,973
|
6,330
|
18,643
|
> 100.0%
|
Gross
margin
|
26.4 %
|
|
20.8 %
|
5.6 %
|
N/A
|
27.4 %
|
8.4 %
|
19.0 %
|
N/A
|
Net loss
|
(4,861)
|
|
(4,898)
|
37
|
(0.8 %)
|
(12,242)
|
(47,295)
|
35,053
|
(74.1 %)
|
Basic and diluted net
loss per share
|
($0.06)
|
|
($0.07)
|
$0.01
|
(14.3 %)
|
($0.15)
|
($0.84)
|
$0.69
|
(82.1 %)
|
EBITDA(1)
|
(679)
|
|
(1,222)
|
543
|
(44.4 %)
|
(1,471)
|
(33,825)
|
32,354
|
(95.7 %)
|
Adjusted
EBITDA(2)
|
92
|
|
(682)
|
774
|
N/A
|
639
|
(15,660)
|
16,299
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
As at
|
|
|
As at
|
As at
|
|
|
|
September
30, 2022
|
|
September
30, 2021
|
Change
|
Change
|
September
30, 2022
|
December
31, 2021
|
Change
|
Change
|
|
$
|
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
Balance Sheet and
Other
|
|
|
|
|
|
|
|
|
|
Current
assets
|
54,744
|
|
57,104
|
(2,360)
|
(4.1 %)
|
54,744
|
61,086
|
(6,342)
|
(10.4 %)
|
Total
assets
|
80,811
|
|
110,166
|
(29,355)
|
(26.6 %)
|
80,811
|
93,033
|
(12,222)
|
(13.1 %)
|
Current
liabilities
|
62,857
|
|
45,745
|
17,112
|
37.4 %
|
62,857
|
61,852
|
1,005
|
1.6 %
|
Non-current
liabilities
|
17,305
|
|
36,903
|
(19,598)
|
(53.1 %)
|
17,305
|
19,400
|
(2,095)
|
(10.8 %)
|
Total
liabilities
|
80,162
|
|
82,648
|
(2,486)
|
(3.0 %)
|
80,162
|
81,252
|
(1,090)
|
(1.3 %)
|
Net
debt(3)
|
21,513
|
|
15,243
|
6,270
|
41.1 %
|
21,513
|
12,295
|
9,218
|
75.0 %
|
Backlog(4)
|
37,406
|
|
29,393
|
8,013
|
27.3 %
|
37,406
|
36,444
|
962
|
2.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See "Non-IFRS
Measures". EBITDA refers to operating income (loss) plus
depreciation and amortization.
|
(2) See "Non-IFRS
Measures". Adjusted EBITDA refers to EBITDA plus the sum of: a)
acquisition expenses; b) fair value step-up of inventory acquired
as part of an acquisition; c) expenses for litigation relating to
acquisition agreements; d) expenses relating to planned
restructuring following an acquisition; e) impairment of fixed and
intangible assets (including goodwill) following an acquisition; f)
expenses to permanently close or relocate a facility, shut down a
line of business, eliminate positions; g) expenses related to
corporate re-organization; and, h) non-cash
compensation.
|
(3) See "Non-IFRS
Measures". Net debt refers to total bank indebtedness less cash and
cash equivalents.
|
(4) See "Non-IFRS
Measures". Backlog refers to the value of unfulfilled purchase
orders placed by customers.
|
A copy of the Company's unaudited interim condensed consolidated
financial statements for the three and nine months ended
September 30, 2022 and corresponding management's
discussion and analysis (the "MD&A") are available under the
Company's SEDAR profile on www.sedar.com.
OUTLOOK
Despite continuing supply chain constraints, the Company
achieved a fourth consecutive quarter of positive Adjusted EBITDA
and gross margins improved in the third quarter of 2022 compared to
the prior year period. Nevertheless, challenges brought about by
COVID lockdowns in China, material
shortages and increased material costs due to supply chain
disruptions, and chipset shortages have caused delays in both the
production and the delivery of our products and are causing
push-outs of some orders from our customers. We had expected that
these disruptions would begin to ease over the second half of 2022,
but now anticipate that they will continue at least until the end
of the year and likely into the first quarter of 2023. The ongoing
war in Ukraine and the risk of
additional COVID lockdowns in China could continue to exacerbate the supply
chain disruptions. As a result of these continuing challenges, we
now expect the fourth quarter of 2022 to continue to see challenges
in further revenue and Adjusted EBITDA growth.
Asia Pacific Business Line
Revenue in the third quarter of 2022 was adversely affected by
across-the-board production volume reductions at Asia Pacific's largest customer, due in part
to worsening global economic conditions and softening in consumer
spending. Management of the Asia
Pacific business line was able to limit the effect of lower
revenue by proactively managing operating costs. We are continuing
to conduct reviews of Asia
Pacific's product portfolio to improve its product mix. The
goal of these reviews is to improve the contribution margin of this
business line, even if it means foregoing additional revenue. We
expect revenue and Adjusted EBITDA for the fourth quarter of 2022
will be comparable to the third quarter.
Embedded Antenna Business Line
The Embedded Antenna business line continued to show
considerable strength in the third quarter of 2022, with growth in
both revenue and volumes, due in part to demand from new customers
for home networking products, as well as stronger Adjusted EBITDA
and higher gross margins over the second quarter of 2022. This
continues the improvement in financial performance of this business
line over the past 12 months, despite intermittent COVID lockdowns
in China and global chipset
shortages which have impacted customers' build schedules and
forecasts. We expect the fourth quarter of 2022 to be modestly
lower than the third quarter in volumes and Adjusted EBITDA, which
is in line with the seasonality of the business, albeit with
continuing profitability.
Wireless Infrastructure Business Line
The Wireless Infrastructure business line had a weaker third
quarter of 2022 in both revenue and Adjusted EBITDA. Historically,
sales in September and October tend to be lower than other parts of
the year. We expect that DAS deployments will strengthen,
particularly for use in stadiums and in in-building wireless in the
remainder of the year and into 2023. We expect the new multibeam
BSAs and innovative small cell antennas from Galtronics will open
up new opportunities to drive sales with wireless carriers;
however, we expect the fourth quarter of 2022 to be modestly lower
than the third quarter before returning to more normal levels in
the first quarter of 2023.
Satcom Business Line
The commercial side of the Satcom business line continues to
demonstrate consistent demand with capital spending by our
customers continuing the momentum seen in the first quarter of
2022. Given the capital build cycles of satellite operators and
others in the Satcom ecosystem, we continue to expect the benefit
to this business line for the remainder of the year. We expect our
new Genesis line of solid-state power amplifiers will generate
significant interest from commercial clients, particularly those in
the aviation and maritime industries.
Sales for military and other government-related uses, which
represents the balance of the Satcom business line, will continue
and potentially increase in the fourth quarter of 2022, as many
western countries have dramatically increased their defense
spending. We recently completed multiple technology upgrades within
our product portfolio, which are expected to generate additional
sales.
Overall, we expect revenue and Adjusted EBITDA of the Satcom
business line to improve in the fourth quarter of 2022 compared to
each of the first three quarters of the year. The Satcom business
line continues to demonstrate a strong order book but continues to
face supply chain constraints, chipset shortages and component
delays. We continue to take steps to improve production
efficiencies in our facilities in order to address the backlog and
improve overall revenue attainment.
INVESTOR CONFERENCE CALL
Baylin will hold a conference call on November 10, 2022 at 8:00
a.m. (ET) to discuss its financial results for the three and
nine months ended September 30, 2022. The call will be hosted
by Leighton Carroll, Chief Executive
Officer, Dan Nohdomi, 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 10, 2022
Time:
8:00 a.m.
(ET)
Dial-in
Number:
888-664-6392 or 416-764-8659
Conference
ID#:
34345514
Webcast:
https://app.webinar.net/nBOGkOzXMVP
FORWARD-LOOKING INFORMATION AND STATEMENTS
This press release includes forward-looking information and
forward-looking statements (together, "forward-looking statements")
within the meaning of applicable securities laws.
Forward-looking statements are not statements of historical
fact. Rather, forward-looking statements are disclosure
regarding conditions, developments, events or financial performance
that we expect or anticipate may or will occur in the future
including, among other things, information or statements concerning
our objectives and strategies to achieve those objectives,
statements with respect to management's beliefs, estimates,
intentions and plans, and statements concerning anticipated future
circumstances, events, expectations, operations, performance or
results. Forward-looking statements can be identified generally by
the use of forward-looking terminology, such as "anticipate",
"believe", "could", "should", "would", "estimate", "expect",
"forecast", "indicate", "intend", "likely", "may", "outlook",
"plan", "potential", "project", "seek", "target", "trend" or "will"
or the negative or other variations of these words or other
comparable words or phrases and is intended to identify
forward-looking statements, although not all forward-looking
statements contain these words.
The forward-looking statements in this press release include
statements concerning the continuing effect of the COVID-19
pandemic on our business, the outlook for our business lines,
including the effect of increased material costs and supply chain
and other disruptions on their financial performance and the growth
in our backlog. Forward-looking information and statements are
based on certain assumptions and estimates made by us in light of
the experience and perception of historical trends, current
conditions, expected future developments, including projected
growth in sales of passive and active radio frequency and satellite
communications products, and supporting services, and other factors
we believe are appropriate and reasonable in the circumstances, but
there can be no assurance that such assumptions and estimates will
prove to be correct.
Many factors could cause our actual results, level of activity,
performance or achievements or future events or developments to
differ materially from those expressed or implied by the
forward-looking statements, including the risk factors discussed in
the Company's most recent Annual Information Form, which is
available under the Company's profile on SEDAR at www.sedar.com.
All the forward-looking statements made in this press release are
qualified by these cautionary statements and other cautionary
statements or factors in this press release. There can be no
assurance that the actual results or developments will be realized
or, even if substantially realized, 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 any forward-looking statements.
NON-IFRS MEASURES
This press release includes a number of measures that are not
prescribed by International Financial Reporting Standards ("IFRS")
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
business activities. While management of the Company believes that
non-IFRS measures provide 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 IFRS. See "Non-IFRS Measures" on page 3 of the
MD&A for further information.
ABOUT BAYLIN
Baylin Technologies Inc. is a diversified global wireless
technology company. Baylin focuses on the research, design,
development, manufacture, and sale of passive and active radio
frequency products, satellite communications products, and
supporting services.
For further information, please visit www.baylintech.com.
SOURCE Baylin Technologies Inc.