Investor Conference Call on May 12, 2022 at 8:00 a.m.
ET
TORONTO, May 11, 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 months ended March 31, 2022. All amounts
are stated in Canadian dollars unless otherwise indicated.
FIRST QUARTER SUMMARY
- Revenue of $31.0 million in
the first quarter of 2022, an increase of $7.5 million or 32.0% compared to the first
quarter of 2021. The increase was primarily due to stronger
sales across all the business lines despite chipset shortages and
supply chain issues which continue to affect the Company. Revenue
in the first quarter of 2021 was negatively impacted by the
COVID-19 pandemic, supply chain disruptions, and chipset
shortages.
- Gross profit of $8.1 million
in the first quarter of 2022, an increase of $4.5 million or 124.0% compared to the first
quarter of 2021. Gross margin was 26.0% in the first quarter of
2022 compared to 15.3% in the first quarter of 2021. Gross margin
was mainly impacted by improved product mix attributable to both
changes in pricing strategy as well as a data driven focus on
contribution margin at the business line level. The increase in
gross margin in the first quarter of 2022 included improved gross
margins generated by: (i) the Asia
Pacific business line including positive gross margin earned
on the consumer facing product, which had earned a negative margin
in the prior year period; (ii) the Satcom business line due to
strong revenue recovery compared to the prior year period; and,
(iii) growth in the Embedded Antenna business line.
- Adjusted EBITDA(2) of $0.2
million in the first quarter of 2022, the second consecutive
quarter of positive Adjusted EBITDA. Adjusted EBITDA in the
first quarter of 2022 was an increase of $2.5 million compared to the first quarter of
2021. The increase in Adjusted EBITDA was primarily due to the
overall increase in revenue and gross profit discussed above,
partially offset by higher operating expenses. $1.9 million in government COVID-19 stimulus was
received in the first quarter of 2021 and was accounted for as a
reduction to cost of sales and operating expenses in that quarter.
No funds were received in the first quarter of 2022, thereby
showing a higher level of expenses on a relative basis.
- Backlog(3) was $39.0
million at April 30, 2022 and
$38.2 million at March 31, 2022 due to higher levels of backlog in
the Satcom and Infrastructure business lines. Backlog at
March 31, 2022 increased by
$17.7 million or 86.2% from
March 31, 2021 as a result of
improved marketing, business development and sales activities.
- Net loss of $3.1 million in the
first quarter of 2022 compared to net loss of $8.5 million in the first quarter of 2021. The
net loss in the first quarter of 2022 was primarily due to an
operating loss partially offset by an income tax recovery. On a per
share basis, there was a net loss of $0.04 per share in the first quarter of 2022
compared to a net loss of $0.17 per
share in the first quarter of 2021.
- Net cash was $2.3 million as at
March 31, 2022, a decrease of
$6.6 million from December 31, 2021, primarily due to an increase
in non-cash working capital, an operating loss and principal and
interest payments.
RECENT DEVELOPMENTS
o Product Development
During 2022 to date, we have made the following important
announcements.
Galtronics USA
- achieved full approval by a Tier 1 North American carrier to
sell its DAS, in-building, stadium and venue infrastructure
products throughout the United
States; Galtronics USA is
now fully approved by all three of the largest US carriers for
in-building installations;
- received a substantial purchase order (over $0.7 million) from a US carrier for its macro
antennas to be used in the carrier's LTE upgrade; these antennas
are a comparatively lightweight solution that can support growing
capacity and throughput requirements; and,
- received the first in a series of expected purchase orders from
a Smart City Solutions Provider, which has partnered with a Tier 1
US carrier to deploy our small cell antennas on streetlights to
help accelerate the carrier's 5G roll-out across the United States.
Satcom
- awarded a multi-year contract to supply SSPA (Solid State Power
Amplifiers) systems to a US-based sports video broadcast company,
which will be integrated into a fleet of hundreds of mobile
satellite communication trucks for the purpose of broadcasting live
sporting events;
- awarded a multi-year contract from a major Latin American
customer to supply SSPAs for a military RADAR system; and,
- received a substantial order from a major telecom operator for
over 100 SSPA systems and over 100 frequency converters for a
network that provides communication links between schools, post
offices and other US state government facilities, many of which are
in the rural United States.
o Credit Facility
In March 2022, the Company and its
lenders (Royal Bank of Canada and
HSBC Bank Canada) agreed to amend the Credit Agreement to extend
the maturity date of the credit facilities from March 29, 2022 to September 30, 2022. This will provide the Company
with additional time either to renew the existing credit facilities
when they mature or to find alternative credit facilities. The
Company is currently in discussions with several prospective
lenders and advisors for that purpose.
o MMU Facility
In March 2022, we announced that,
as a result of the assessment of the long-term options for our
massive multiple input multiple output product ("MMU") facility in
Vietnam, we determined to
liquidate the assets of the facility and apply the sales proceeds
in repayment of the Vietnam Loan. We are continuing to seek buyers
for the equipment and tenants for the facility.
SELECTED FINANCIAL INFORMATION
The table below discloses selected financial information for the
three months ended March 31, 2022 compared to the prior year
period.
(in $000's except
per share amounts)
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
Change
|
Change
|
|
$
|
|
$
|
$
|
%
|
Revenue
|
30,974
|
|
23,460
|
7,514
|
32.0%
|
Gross profit
|
8,056
|
|
3,597
|
4,459
|
124.0%
|
Loss before income
taxes
|
(3,877)
|
|
(8,444)
|
4,567
|
(54.1%)
|
Income tax expense
(recovery)
|
(804)
|
|
18
|
(822)
|
(4566.7%)
|
Net loss
|
(3,073)
|
|
(8,462)
|
5,389
|
(63.7%)
|
Basic and diluted net
loss per share
|
($0.04)
|
|
($0.17)
|
$0.13
|
(76.5%)
|
EBITDA(1)
|
(246)
|
|
(2,716)
|
2,470
|
(90.9%)
|
Adjusted
EBITDA(2)
|
224
|
|
(2,257)
|
2,481
|
(109.9%)
|
Current
assets
|
60,713
|
|
61,261
|
(548)
|
(0.9%)
|
Total assets
|
89,993
|
|
133,629
|
(43,636)
|
(32.7%)
|
Current
liabilities
|
63,225
|
|
55,647
|
7,578
|
13.6%
|
Non-current
liabilities
|
17,921
|
|
34,346
|
(16,425)
|
(47.8%)
|
Total
liabilities
|
81,146
|
|
89,993
|
(8,847)
|
(9.8%)
|
Backlog(3)
|
38,216
|
|
20,529
|
17,687
|
86.2%
|
(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". 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 months ended March 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
Despite our improved financial performance in the first quarter
of 2022, the Company's business continues to face challenges
brought about by the COVID-19 pandemic, in particular material
shortages and increased material costs due to supply chain
disruptions, which are causing delays in both productions and
deliveries of our products as well as push-outs of orders from our
customers. Although we expect these disruptions will begin to ease
over the second half of 2022, the possibility remains that the
ongoing war in Ukraine and
COVID-related lockdowns in China
could exacerbate supply chain disruptions in the near term. Despite
these continuing challenges, we continue to expect that 2022 will
show improvements in both revenue and Adjusted EBITDA over
2021.
We continue to monitor the war in Ukraine and its effect on our business.
Although our direct exposure to customers in Russia and Ukraine is minimal, the conflict there may
indirectly impact our business given the sanctions imposed on
Russia, particularly in terms of
supply chain and commodity prices. While it is difficult to
definitively quantify the impact these sanctions will have on our
business, thus far the impacts have been manageable.
Asia Pacific Business Line
We are continuing with our plan to conduct a review of
Asia Pacific's product portfolio
with a view to right-sizing its product mix. This product
rationalization is intended to improve the contribution margin of
this business line, even if it is at the expense of foregoing
additional revenue. Nevertheless, we do expect stronger revenue
growth over 2021.
Embedded Antenna Business Line
We expect the Embedded Antenna business line will continue to
show considerable strength into the third quarter of 2022, with
growth in both revenue and volume, due in part to demand from new
customers for home networking products. This continues the increase
in revenue and volume from the second half of 2021 and the first
quarter of 2022, despite the global chipset shortages which
impacted customers' build schedules and forecasts. The Embedded
Antenna business line continues to demonstrate a strong order book
despite the supply chain challenges, although some of the strength
may reflect pre-purchases by customers to build a supply of
stock.
Wireless Infrastructure Business Line
The Wireless Infrastructure business line has achieved a
historically high level of backlog as at April 30, 2022, which is expected to contribute
to stronger revenue in the first half of 2022 compared to the first
half of 2021. We expect that DAS deployments will strengthen,
particularly for use in stadiums and as people return to working in
offices, throughout 2022. New Multibeam BSAs and new innovative
small cell antennas from Galtronics will come to market in the
second half of 2022, opening new opportunities to drive sales with
wireless carriers.
Satcom Business Line
The commercial side of the Satcom business line has shown clear
signs of recovery with capital spending by our commercial customers
continuing the momentum seen in the fourth quarter of 2021. The
C-band spectrum auction in the United
States is starting to open up opportunities with satellite
operators as they receive first incentive payments tied to the
clearing of C-Band spectrum. Given the capital build cycles of
these operators and others in the Satcom ecosystem, we continue to
expect the benefit to the Satcom business line from the build-out
of the related C-band infrastructure to begin in the second half of
2022.
We expect sales for military and other government-related uses,
which represents the balance of Satcom business, to continue and
potentially increase in late 2022 as many western countries have
dramatically increased defense spending. Moreover, we expect to
launch multiple technology upgrades within our product portfolio
over the course of the calendar year.
Overall, we expect revenue of the Satcom business line to be
stronger in 2022 as certain industries make investments in
technology upgrades needed for enhancing remote broadband
capabilities. The Satcom business line continues to show a strong
and growing order book but continues to face supply chain
constraints, chipset shortages, and component delays.
INVESTOR CONFERENCE CALL
Baylin will hold a conference call on May
12, 2022 at 8:00 a.m. (ET) to
discuss its financial results for the three months ended
March 31, 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:
|
May 12, 2022
|
Time:
|
8:00 a.m.
(ET)
|
Dial-in
Number:
|
888-664-6392 or
416-764-8659
|
Conference
ID#:
|
83644709
|
|
Webcast: https://produceredition.webcasts.com/starthere.jsp?ei=1527774&tp_key=2ff35b22b8
|
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 supply chain and other disruptions and the
growth in our backlog, the refinancing of our credit facilities and
the closure of our MMU facility in Vietnam. 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 2 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.
SOURCE Baylin Technologies Inc.