TORONTO, ON -- (Marketwired) -- 11/06/14 -- 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
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2014 2013 % Change 2014 2013 % Change
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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
EBITDA(1) (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)
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Issued and
outstanding
Common
shares 18,733,918 N/A 18,733,918 N/A
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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
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48,949 61,351
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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
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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
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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
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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 Three months ended
September 30, 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
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For further information, please contact:
Investor Relations
Conrad Seguin
TMX Equicom
T: 416.815.0700 x 251
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