Investor Conference Call on March 9, 2023 at 8:00 a.m.
ET
TORONTO, March 8,
2023 /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 twelve months ended December 31, 2022. All amounts
are stated in Canadian dollars unless otherwise indicated.
FISCAL YEAR SUMMARY
- Revenue of $120.9 million in
fiscal 2022, an increase of $18.4
million or 17.9% compared to fiscal 2021. The increase
was primarily due to stronger sales across all the North American
business lines in fiscal 2022 despite continuing supply chain
disruptions, chipset shortages and the COVID-19 pandemic, which
also negatively impacted revenue in the prior fiscal year.
- Gross profit of $32.9 million
in fiscal 2022, an increase of $17.8
million or 117.8% compared to $15.1
million in fiscal 2021. Gross margin was 27.2% in fiscal
2022 compared to 14.7% in fiscal 2021. The improved 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. In fiscal 2022 the improvement was mainly
generated by: (i) strong revenue recovery in the Embedded Antenna
business line; (ii) operating and financial efficiencies in the
Asia Pacific business line; and,
(iii) consistent growth in the Wireless Infrastructure and Satcom
business lines.
- Adjusted EBITDA(2) of $1.2
million in fiscal 2022, an
increase of $16.0 million
compared to negative $14.8
million in fiscal 2021. The increase in Adjusted EBITDA
was mainly due to the overall increase in revenue and gross profit
discussed above, partially offset by an increase of $1.3 million in operating expenses (excluding
non-current asset impairment) compared to the prior fiscal
year.
- Backlog(4) was $38.1
million at December 31, 2022,
an increase of $1.6 million compared
to the backlog at December 31, 2021.
The increase was mainly attributable to a higher level of backlog
in the Satcom and Wireless Infrastructure business lines as a
result of improved marketing, business development and sales
activities.
- Net loss of $16.9 million in
fiscal 2022 compared to a net loss of $67.4
million in fiscal 2021. The net loss in fiscal 2022 was
primarily due to an operating loss of $12.4
million, interest expenses and other finance expenses. The
net loss in fiscal 2021 included non-current asset impairments of
$26.0 million and a $7.1 million reduction in the carrying value of
deferred tax assets. On a per share basis, a net loss of
$0.21 per share in fiscal 2022
compared to a net loss of $1.09 per
share in fiscal 2021.
- Net debt(3) was $21.4
million at December 31, 2022,
an increase of $9.1 million compared
to the net debt at December 31, 2021,
mainly due to an increase in non-cash working capital, capital
expenditures and interest payments.
FOURTH QUARTER SUMMARY
- Revenue of $29.8 million in the
fourth quarter of 2022, an increase of $2.6
million or 9.5% compared to the fourth quarter of 2021. The
increase was mainly due to stronger sales in the Embedded Antenna
business line, which was attributable to increased demand from new
customers for home networking products.
- Gross profit of $7.9 million in
the fourth quarter of 2022, a decrease of $0.9 million compared to the fourth quarter of
2021. Gross margin was 26.7% in the fourth quarter of 2022 compared
to 32.3% in the fourth quarter of 2021. The higher gross margin in
the fourth quarter of 2021 was primarily due to the impact of an
inventory provision release of $1.6
million in the Satcom business line.
- Adjusted EBITDA of $0.6 million
in the fourth quarter of 2022, the fifth consecutive quarter of
positive Adjusted EBITDA. Adjusted EBITDA was a decrease of
$0.3 million compared to the fourth
quarter of 2021. The decrease in Adjusted EBITDA was mainly due to
the decrease in gross profit discussed above, partially offset by a
decrease of $0.7 million in operating
expenses (excluding non-current asset impairment) compared to the
prior year period.
- Net loss of $4.6 million in the
fourth quarter of 2022 compared to a net loss of $20.1 million in the fourth quarter of 2021. The
net loss in the fourth quarter of 2022 was primarily due to an
operating loss of $3.0 million,
interest expenses as well as income tax expenses. The net loss in
the fourth quarter of 2021 included a non-current asset impairment
provision of $10.1 million. On a per
share basis, a net loss of $0.06 per
share in the fourth quarter of 2022 compared to a net loss of
$0.26 per share in the fourth quarter
of 2021.
RECENT DEVELOPMENTS
Product Sales
Both Galtronics and Satcom received significant order for new
products.
In early January 2023, Galtronics
received orders for over $1 million
for its innovative multibeam antenna on behalf of a major North
American carrier. These orders followed the announcement in
September 2022 that Galtronics had
expanded its multibeam antenna portfolio with the addition of three
new products. The new products all use patent pending beam-tracking
stability technology, which makes them ideal solutions for stadium,
venue, and special event deployments. Galtronics expects that the
demand for mobile bandwidth will continue to grow as the need for
high speed, high-density, ultra-fast cellular connections at
stadiums, venues, airports, and other high traffic locations will
only increase over time.
In late November 2022, Satcom
received combined orders for its Summit II power amplifier systems
of approximately $6.7 million, one
for a large-scale western government program and the other for a
deep space communication application for a European client. The
Summit II system is a precursor to Summit III, a new solid-state
power amplifier platform ("SSPA") for satellite communications
called Genesis. 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.
Vietnam MMU Facility
On February 28, 2023, the Company
announced that its Vietnamese subsidiary, Galtronics Vietnam Dai
Dong Co., Ltd. ("GTD"), had completed the transfer of the lease of
its MMU facility in Vietnam to a
third party, which has assumed responsibility for GTD's obligations
under the lease. The facility was originally intended to be an MMU
antenna contract manufacturing facility, but never became
operational, in part due to the COVID-19 pandemic. The original
term of the lease ran until May 29,
2029. The rental and related costs associated with the lease
over its remaining term were expected to total approximately
$2.7 million. The transfer of the
lease substantially completes the liquidation of GTD's assets other
than a test chamber for which we continue to conduct a sales
process.
SELECTED FINANCIAL INFORMATION
The table below discloses selected financial information for the
periods indicated.
(in $000's except
per share amounts)
|
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
|
2022
|
|
2021
|
Change
|
Change
|
2022
|
2021
|
Change
|
Change
|
|
$
|
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
Profit and
Loss
|
|
|
|
|
|
|
|
|
|
Revenue
|
29,785
|
|
27,196
|
2,589
|
9.5 %
|
120,860
|
102,494
|
18,366
|
17.9 %
|
Gross
profit
|
7,938
|
|
8,782
|
(844)
|
(9.6 %)
|
32,911
|
15,112
|
17,799
|
> 100.0%
|
Gross
margin
|
26.7 %
|
|
32.3 %
|
(5.6 %)
|
N/A
|
27.2 %
|
14.7 %
|
12.5 %
|
N/A
|
Net loss
|
(4,635)
|
|
(20,125)
|
15,490
|
(77.0 %)
|
(16,877)
|
(67,420)
|
50,543
|
(75.0 %)
|
Basic and diluted net
loss per share
|
($0.06)
|
|
($0.26)
|
$0.20
|
(76.9 %)
|
($0.21)
|
($1.09)
|
$0.88
|
(80.7 %)
|
EBITDA(1)
|
(504)
|
|
(10,050)
|
9,546
|
(95.0 %)
|
(1,975)
|
(43,875)
|
41,900
|
(95.5 %)
|
Adjusted
EBITDA(2)
|
606
|
|
864
|
(258)
|
(29.9 %)
|
1,245
|
(14,796)
|
16,041
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
As at
|
|
|
As at
|
As at
|
|
|
|
December
31,
2022
|
|
December
31,
2021
|
Change
|
Change
|
December
31,
2022
|
December
31,
2021
|
Change
|
Change
|
|
$
|
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
Balance Sheet and
Other
|
|
|
|
|
|
|
|
|
|
Current
assets
|
50,453
|
|
61,086
|
(10,633)
|
(17.4 %)
|
50,453
|
61,086
|
(10,633)
|
(17.4 %)
|
Total
assets
|
74,384
|
|
93,033
|
(18,649)
|
(20.0 %)
|
74,384
|
93,033
|
(18,649)
|
(20.0 %)
|
Current
liabilities
|
60,801
|
|
61,852
|
(1,051)
|
(1.7 %)
|
65,505
|
66,711
|
(1,206)
|
(1.8 %)
|
Non-current
liabilities
|
16,843
|
|
19,400
|
(2,557)
|
(13.2 %)
|
12,139
|
14,541
|
(2,402)
|
(16.5 %)
|
Total
liabilities
|
77,644
|
|
81,252
|
(3,608)
|
(4.4 %)
|
77,644
|
81,252
|
(3,608)
|
(4.4 %)
|
Net
debt(3)
|
21,437
|
|
12,295
|
9,142
|
74.4 %
|
21,437
|
12,295
|
9,142
|
74.4 %
|
Backlog(4)
|
38,067
|
|
36,444
|
1,623
|
4.5 %
|
38,067
|
36,444
|
1,623
|
4.5 %
|
|
|
(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 consolidated
financial statements for the three and twelve months ended
December 31,
2022 and corresponding management's
discussion and analysis (the "MD&A") are available under the
Company's SEDAR profile on www.sedar.com.
OUTLOOK
The Company has now achieved five consecutive quarters of
positive Adjusted EBITDA and consistently higher quarter over
quarter gross margins in fiscal 2022 compared to fiscal 2021 other
than in the fourth quarter of 2022. Nevertheless, the Company
continues to face challenges brought about by macroeconomic
environment, shortages in materials and increased material costs
due to supply chain challenges and chipset shortages. These factors
are expected to continue to cause delays in both the production and
the delivery of our products as well as push-outs of orders from
customers. We had expected that these disruptions would begin to
ease over the second half of 2022, but now anticipate that they
will continue into the first half of 2023. The ongoing war in
Ukraine could continue to
exacerbate supply chain disruptions. As a result of these
continuing challenges, we expect 2023 to be somewhat consistent
with 2022 results for revenue and Adjusted EBITDA in spite of the
growth in the Company's backlog of purchase orders and improving
margins.
Embedded Antenna Business Line
The Embedded Antenna business line had a very strong year in
2022 in which it made a significant contribution to the overall
business and recorded record-high revenue and operating profit. We
expect this business line will continue to perform strongly in 2023
although at a slightly reduced level from 2022. The results in 2022
were affected by customers pre-purchasing products to build a
supply of stock in order to avoid supply chain disruptions. This is
not expected to be repeated in 2023, reflecting more normalized
purchasing patterns. We expect the home networking, public safety
and automotive markets to remain resilient despite the economic
slowdown and inflationary pressures.
Wireless Infrastructure Business Line
The Wireless Infrastructure business line is expected to
continue to perform strongly in 2023 with improvements in both
revenue and Adjusted EBITDA compared to 2022. We expect that DAS
deployments will strengthen, particularly for use in stadiums and
other venues requiring in-building wireless, and we expect that our
new multibeam and innovative small cell antennas will open up new
opportunities to drive sales with wireless carriers and third party
operators who operate wireless mobile networks for their
customers.
Asia Pacific Business Line
We expect 2023 will be extremely challenging for the
Asia Pacific business line due to
significant production volume reductions at its principal
customer. Those reductions reflect a contraction in this
customer's smartphone market in 2023, due in part to global
economic slowdown and continuing inflation, as well as competitive
pressures faced by the customer. Although the Asia Pacific business line expects to benefit
from several new programs in 2023, those programs are not expected
to generate any meaningful revenue until the second half of 2023.
In the meantime, management is looking to reduce or eliminate
operating and other costs, evaluating strategic alternatives, and
working on potential financial support for the business in
South Korea.
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 fourth quarter of
2022. Given the capital build cycles of satellite operators and
others in the Satcom ecosystem, we expect this will continue to
benefit the business in 2023. We expect that 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 first half of 2023, as many western
countries have dramatically increased their defence spending. We
have recently completed multiple technology upgrades within our
product portfolio, which are expected to generate additional
sales.
Overall, we expect revenue and Adjusted EBITDA in the first half
of 2023 will be stronger than the second half of 2022. The Satcom
business line continues to demonstrate a strong order book with
improving margins, but production continues to be affected by
supply chain constraints, chipset shortages and component delays.
In particular, there is currently an acute shortage of field-effect
transistors, an electronic component used to boost signals in
amplifier products. The continued lack of availability of these
transistors could have a material adverse impact on production and
financial performance. In the meantime, 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 March 9, 2023 at 8:00 a.m.
(ET) to discuss its financial results for the three and
twelve months ended December 31, 2022. The conference 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:
|
March 9,
2023
|
Time:
|
8:00 a.m.
(ET)
|
Dial-in
Number:
|
888-390-0608 or
416-764-8630
|
Conference
ID#:
|
26221978
|
Webcast:
|
https://app.webinar.net/M6RglbePNVr
|
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. For further information, see "Non-IFRS
Measures" on page 3 of the MD&A.
ABOUT BAYLIN
Baylin Technologies Inc. is a diversified global wireless
technology company focused 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.