- Revenue increased $3.8
million over Q3 2023.
- Gross profit increased $2.9
million over Q3 2023.
- Adjusted EBITDA(2) increased $1.7 million over Q3 2023.
- Gross margin of 46.1%, an increase of 17.6% over Q3 2023
and 10.0% over Q2 2024.
Investor Conference Call on November 7, 2024 at 8:00
a.m. ET
TORONTO, Nov. 6, 2024
/CNW/ - Baylin Technologies Inc. (TSX: BYL) (the "Company" or
"Baylin"), 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, today announced its financial results for the three and
nine months ended September 30, 2024. All amounts are stated
in Canadian dollars unless otherwise indicated.
THIRD QUARTER SUMMARY
Continuing Operations
- Revenue of $20.7 million in the
third quarter of 2024, an increase of $3.8
million or 22.8% compared to the third quarter of 2023. The
increase in revenue was primarily due to overall sales volume
increase in the Embedded Antenna and Wireless Infrastructure
business lines compared to the prior year period.
- Gross profit of $9.5 million in
the third quarter of 2024, an increase of $2.9 million or 44.4% compared to the third
quarter of 2023. This also represents an increase of $0.3 million compared to the second quarter of
2024.
- Gross margin of 46.1% in the third quarter of 2024 compared to
39.2% in the third quarter of 2023 and 41.9% in the second quarter
of 2024. Compared to the prior year period, the higher gross margin
in the third quarter of 2024 was primarily due to improved product
mix.
- Adjusted EBITDA of $0.9 million
in the third quarter of 2024, an increase of $1.7 million compared to negative $0.8 million in the third quarter of 2023. The
increase in Adjusted EBITDA in the third quarter of 2024 was mainly
due to combination of stronger revenue and higher gross margins
discussed above.
- Net loss of $1.4 million in the
third quarter of 2024 compared to a net loss of $2.4 million in the third quarter of 2023. On a
per share basis, a net loss of $0.01
per share in the third quarter of 2024 compared to a net loss of
$0.03 per share in the third quarter
of 2023.
- Net debt(3) of $15.0
million at September 30, 2024,
a decrease of $1.6 million from
June 30, 2024 as a result of working
capital inflows but an increase of $2.2
million from December 31,
2023, mainly due to the use of cash to fund interest
payments.
- Backlog(4) of $30.2
million at September 30, 2024.
Backlog increased to $31.9 million at
October 31, 2024 as a result of an
increase in new order intake across all the three business lines at
the start of the fourth quarter of 2024.
Discontinued Operations (representing the Mobile and Network
business line)
- Adjusted EBITDA from discontinued operations of negative
$0.7 million in the third quarter of
2024 compared to close to $nil in the third quarter of 2023. The
increased loss in Adjusted EBITDA from discontinued operations in
the third quarter of 2024 was primarily due to a combination of
softer sales and lower gross margins in the M&N business line
compared to the prior year period.
- Net loss from discontinued operations of $0.9 million in the third quarter of 2024
compared to a net loss of $1.0
million in the third quarter of 2023. The net loss from
discontinued operations in the third quarter of 2024 was mainly due
to an operating loss of $1.0 million.
On a per share basis, a net loss of $0.01 per share in the third quarter of 2024,
which remained consistent with the prior year period.
RECENT DEVELOPMENTS
Products
The Company continues to see strong demand for its products.
Wireless Infrastructure, part of the Galtronics business line,
had several notable successes, including:
- the placement of more than 400 DAS and stadium antennas and
multibeam antennas as part of upgrades to The University of Alabama's 100,000 capacity
Bryant-Denny Stadium; and
- the placement of multibeam antennas in Rogers Stadium in
Toronto and BC Place in
Vancouver, where they will provide
coverage for several upcoming high-profile events, including
Taylor Swift concerts in
Toronto and Vancouver in November and December.
These antennas have the capacity to handle high capacity, high
speed data in dense customer environments, elevating the customer
experience by providing them with the ability to stay connected
during events through social media and to stream video of the
event.
The Satcom business line's high power amplifier systems were
chosen for use in a variety of challenging environments, including
to support:
- a major Sports and Entertainment Satellite Broadcaster and
Service Provider and its communications network;
- a cislunar communications network as part of NASA's Artemis
Moon Exploration Program; and
- radar surveillance as part of the North Warning System, a joint
Canadian and United States
early-warning radar system for the atmospheric air defence of
North America that stretches
across the Arctic from the western part of Yukon to the southern coast of Labrador.
These orders reflect the sophisticated nature and reliability of
Satcom's amplifiers.
Sale of the Mobile and Network Business
On July 9, 2024, the Company
announced that it had entered into an agreement with a Korean
strategic acquirer under which the Company agreed to sell
Galtronics Korea Co., Ltd. ("GTK") and Galtronics Vietnam Company
Limited ("GTV"). On July 30, 2024,
the Company completed the sale of GTK and recognized a gain on sale
of non-current assets of $0.9
million. Subject to receipt of required regulatory
approvals, the Company now expects to complete the sale of GTV
during the fourth quarter of 2024.
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,
|
|
2024
|
|
2023
|
Change
|
Change
|
2024
|
2023
|
Change
|
Change
|
|
$
|
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|
Profit and
Loss
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
20,709
|
|
16,860
|
3,849
|
22.8 %
|
62,797
|
56,912
|
5,885
|
10.3 %
|
|
Gross profit
|
9,542
|
|
6,607
|
2,935
|
44.4 %
|
26,502
|
22,717
|
3,785
|
16.7 %
|
|
Gross margin
|
46.1 %
|
|
39.2 %
|
6.9
pp
|
17.6 %
|
42.2 %
|
39.9 %
|
2.3
pp
|
5.8 %
|
|
Net loss from
continuing operations
|
(1,414)
|
|
(2,352)
|
938
|
(39.9 %)
|
(3,518)
|
(1,270)
|
(2,248)
|
> 100.0%
|
|
Net loss from
discontinued operations
|
(857)
|
|
(1,012)
|
155
|
(15.3 %)
|
(3,100)
|
(4,503)
|
1,403
|
(31.2 %)
|
|
Net
loss
|
(2,271)
|
|
(3,364)
|
1,093
|
(32.5 %)
|
(6,618)
|
(5,773)
|
(845)
|
14.6 %
|
|
Basic and diluted
net loss per share
from continuing operations
|
($0.01)
|
|
($0.03)
|
$0.02
|
(66.7 %)
|
($0.03)
|
($0.01)
|
($0.02)
|
> 100.0%
|
|
Basic and diluted net
loss per share from
discontinued operations
|
($0.01)
|
|
($0.01)
|
$0.00
|
0.0 %
|
($0.02)
|
($0.06)
|
$0.04
|
(66.7 %)
|
|
Basic and diluted
net loss per share
|
($0.02)
|
|
($0.04)
|
$0.02
|
(50.0 %)
|
($0.05)
|
($0.07)
|
$0.02
|
(28.6 %)
|
|
EBITDA from
continuing operations
|
1,109
|
|
(1,434)
|
2,543
|
N/A
|
1,952
|
2,987
|
(1,035)
|
(34.7 %)
|
|
EBITDA from
discontinued operations
|
(659)
|
|
(10)
|
(649)
|
> 100.0%
|
(958)
|
(1,700)
|
742
|
(43.6 %)
|
|
EBITDA(1)
|
450
|
|
(1,444)
|
1,894
|
N/A
|
994
|
1,287
|
(293)
|
(22.8 %)
|
|
Adjusted EBITDA from
continuing operations
|
857
|
|
(779)
|
1,636
|
N/A
|
3,590
|
1,856
|
1,734
|
93.4 %
|
|
Adjusted EBITDA from
discontinued operations
|
(659)
|
|
(10)
|
(649)
|
> 100.0%
|
(1,282)
|
(1,686)
|
404
|
(24.0 %)
|
|
Adjusted
EBITDA(2)
|
198
|
|
(789)
|
987
|
N/A
|
2,308
|
170
|
2,138
|
> 100.0%
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
As at
|
|
|
As at
|
As at
|
|
|
|
September
30,
2024
|
|
September
30,
2023
|
Change
|
Change
|
September
30,
2024
|
December
31,
2023
|
Change
|
Change
|
|
$
|
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|
Balance Sheet and
Other *
|
|
|
|
|
|
|
|
|
|
|
Current assets -
Continuing operations
|
36,478
|
|
48,695
|
N/A
|
N/A
|
36,478
|
35,346
|
1,132
|
3.2 %
|
|
Current assets - Assets
held for sale
|
7,069
|
|
-
|
N/A
|
N/A
|
7,069
|
7,885
|
(816)
|
(10.3 %)
|
|
Total current
assets
|
43,547
|
|
48,695
|
N/A
|
N/A
|
43,547
|
43,231
|
316
|
0.7 %
|
|
Total
assets
|
58,454
|
|
68,959
|
(10,505)
|
(15.2 %)
|
58,454
|
59,710
|
(1,256)
|
(2.1 %)
|
|
Current liabilities
- Continuing
operations
|
41,769
|
|
64,976
|
N/A
|
N/A
|
41,769
|
38,955
|
2,814
|
7.2 %
|
|
Current liabilities -
Liabilities related to
assets held for sale
|
8,999
|
|
-
|
N/A
|
N/A
|
8,999
|
8,854
|
145
|
1.6 %
|
|
Total current
liabilities
|
50,768
|
|
64,976
|
N/A
|
N/A
|
50,768
|
47,809
|
2,959
|
6.2 %
|
|
Total
liabilities
|
63,796
|
|
73,850
|
(10,054)
|
(13.6 %)
|
63,796
|
59,746
|
4,050
|
6.8 %
|
|
Net debt(3) from continuing
operations
|
15,034
|
|
26,935
|
(11,901)
|
(44.2 %)
|
15,034
|
12,787
|
2,247
|
17.6 %
|
|
Backlog(4) from continuing
operations
|
30,227
|
|
30,659
|
(432)
|
(1.4 %)
|
30,227
|
31,156
|
(929)
|
(3.0 %)
|
|
Notes:
|
|
(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)
post business 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 acquisition; e) impairment of
fixed and intangible assets (including goodwill) following
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; h) M&A expenses;
and, i) 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.
|
|
|
|
|
*
|
Balance Sheet as at
September 30, 2024 and December 31, 2023 reflects the
reclassification of all assets and liabilities of the M&N
business line into "Assets held for sale" and "Liabilities related
to assets held for sale", respectively. Such assets and liabilities
are classified as current. Balance Sheet as at September 30, 2023
does not reflect such reclassification, which makes the comparison
against the current quarter-end results not applicable (except for
"Total assets" and "Total liabilities").
|
A copy of the Company's unaudited interim condensed consolidated
financial statements for the three and nine months ended
September 30, 2024 and corresponding management's discussion
and analysis (the "MD&A") are available under the Company's
profile on SEDAR+ at www.sedarplus.ca.
OUTLOOK
The Company enjoyed a strong third quarter, although financial
performance was impacted by seasonal factors, resulting in lower
revenue and Adjusted EBITDA but higher gross profit and margin
compared to the second quarter. Despite lower interest rates, the
macroeconomic environment remains a concern, which could still
impact order volumes and revenue. Nevertheless, we expect the
results from our continuing operations to remain positive in the
fourth quarter and our full year results to show a significant
improvement over 2023. We continue to prioritize product mix,
emphasizing products that generate higher margins and gross profit,
with a view to growing Adjusted EBITDA and our cash flows while
reducing the overall debt.
Embedded Antenna Business Line
The Embedded Antenna business line had a strong third quarter of
2024, although at levels slightly below those of a very strong
second quarter. Demand for a new public safety product launched in
the fourth quarter of 2023 has exceeded expectations in 2024. We
expect the Embedded Antenna business line will continue to perform
in line with expectations for the remainder of 2024, reflecting
expected seasonally affected lower sales in the fourth quarter. The
number of active bids for new projects remains at a very strong
level for the business.
Wireless Infrastructure Business Line
The Wireless Infrastructure business line also had a strong
third quarter, with continuing sales of its higher margin multibeam
and innovative small cell antennas and further stadium deployments.
However, revenue was lower than the second quarter due to normal
seasonal factors, which will also affect sales in the fourth
quarter. We are leveraging the competitive advantages that these
products afford to open up new global opportunities to drive sales
with wireless carriers and third-party operators who operate
wireless mobile networks for their customers. We are continuing to
expand into new markets, particularly in areas in Europe, where we have not previously had
sales. Although there remains a risk of spending cutbacks by
carriers, we expect to see further spending on small cells
continue, which will drive further sales volumes for the business.
Based on our current assessment, we expect the full-year results to
reflect a marked improvement over 2023, despite likely lower
revenue in the second half of 2024 compared to the first six
months.
Satcom Business Line
The Satcom business line continues to see consistent demand for
its products, supported by strong capital spending by its
customers, particularly for high powered amplifiers used in
military, government, and broadcast applications.
Major programmatic opportunities continue to be resilient,
particularly for high powered amplifiers, although awards remain
lumpy. We continue to see softness in the commercial lower power
market, particularly in the maritime and airplane sectors, but
broadcast applications remain solid. Given our focus on higher
power opportunities, we expect the business to continue to
demonstrate resiliency for the remainder of 2024. Our Genesis and
Summit lines of solid-state power amplifiers are generating sales
from clients due to the improvements in performance, monitoring,
and failover they provide over our older technology and products of
our competitors. Importantly, these new amplifiers are consistent
in architecture, meaning they will allow the business to simplify
supply chain requirements over time and thereby improve
efficiencies in manufacturing.
We continue to see opportunities for military and other
government-related uses as many western countries continue to
maintain high levels of defence and scientific spending. Given the
technology upgrades within our product portfolio, we expect to
continue our strong sales volumes while we work to improve our
overall margin attainment.
Overall, we expect revenue and gross profit in 2024 will be
stronger than 2023. The Satcom business line continues to
demonstrate a strong order book with improving margins. Improving
production efficiencies in our facilities in order to address the
backlog and improve overall revenue attainment remains an important
priority, particularly in our Kirkland,
Quebec facility.
Mobile and Network (formerly, Asia Pacific) Business Line
The M&N business line continues to face significant
challenges. The third quarter of 2024 saw a further reduction in
revenue over the second quarter as a result of continuing lower
sales volumes.
In July 2024, the Company
announced that it had reached agreement to sell the M&N
business (see "Recent Developments - Sale of the Mobile and Network
Business").
INVESTOR CONFERENCE CALL
Baylin will hold a conference call on Thursday, November 7, 2024 at 8:00 a.m. (ET) to discuss its financial results
for the three and nine months ended September 30, 2024. The
conference call will be hosted by Leighton
Carroll, Chief Executive Officer, and Dan Nohdomi, Chief Financial Officer. All
interested parties are invited to participate using the dial-in
details provided below.
|
Date:
|
November 7,
2024
|
|
Time:
|
8:00 a.m.
(ET)
|
|
Dial-in
Number:
|
(+1) 800-836-8184 or
(+1) 289-819-1350
|
|
Conference
ID#:
|
69128
|
|
Rapid
Connect:
|
To join the conference
call by phone, please use the following URL to easily register and
be connected into the conference call automatically:
https://emportal.ink/3YeeWPL
|
|
Webcast:
|
This call is on webcast
and can be accessed at:
https://app.webinar.net/zRnWDLXDywX
|
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 outlook for our business generally and
each of our business lines in particular, including our
expectations for future financial performance, the effect of the
macro-economic environment on our business, higher interest rates,
and other disruptions to our financial performance, and the
expected timing of completion of the sale of M&N.
Forward-looking 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 the 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.sedarplus.ca. 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 statement.
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.