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Baylin Technologies Announces Second Quarter 2014 Results

Companies mentioned in this article: Baylin Technologies Inc.

TORONTO, ON -- (Marketwired) -- 08/13/14 -- 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 months ended June 30, 2014. All figures are stated in United States dollars unless otherwise noted.

Second Quarter 2014 Highlights

  • Revenue was $10.8 million in Q2 2014, compared to $28.1 million for Q2 2013
  • Gross profit for Q2 2014 was $2.0 million, compared to $10.6 million for Q2 2013
  • Adjusted EBITDA in Q2 2014 was $(2.6) million, compared to 6.2 million for Q2 2013
  • Total cash and cash equivalents were $32.8 million at June 30, 2014

"As we communicated at the beginning of the year, our financial results for the first half of 2014 were negatively affected by our mobile business," said Ephraim Ulmer, President and CEO. "However, as a result of the industry moving away from IMA antenna technology and back towards LDS antenna technology, our Vietnam expansion and our new 4GA LTE antenna technology, we are confident that our mobile business will see a turnaround late this year and into 2015. Our infrastructure antenna business continues to grow strongly, providing revenue diversification. The revenues year to date in infrastructure are greater than the total revenues we reported in 2013. Our focus going forward is to secure contracts from mobile OEMs and to continue building on the momentum in our infrastructure business."



Selected Financial Information
(In thousands of United States dollars except per share amounts)
               ------------------------------------------------------------
                 Three Months Ended June 30      Six Months Ended June 30
               -------------------------------------------------------------
                  2014       2013   % Change     2014       2013   % Change
               -------------------------------------------------------------
Revenue            10,748    28,158    (61.8)     21,999    45,843    (52.0)
Gross profit        2,023    10,556    (80.8)      4,548    16,442    (72.3)
R&D                 1,782     1,894     (5.9)      3,614     3,588      0.7
Operating
 expenses           3,513     2,999     17.1       6,667     5,336     24.9
Operating
 income (loss)     (3,272)    5,663   (157.8)     (5,733)    7,518   (176.3)
Adjusted
 EBITDA(1)         (2,556)    6,243   (140.9)     (4,323)    8,601   (150.3)
Net income
 (loss)            (2,408)    4,321   (155.7)     (6,258)    5,673   (210.3)
Net income
 (loss) per
 share
  Basic and
   Diluted          (0.13)     0.38   (134.2)      (0.33)     0.50   (166.0)
               -------------------------------------------------------------

Issued and
 outstanding
  Common
   shares      18,733,918       N/A           18,733,918       N/A

               -------------------------------------------------------------

The Company's complete financial statements and Management's Discussion & Analysis for Q2 2014 are available at baylintech.com/investor-relations/ and www.sedar.com/.

Financial Summary

Revenue for Q2 2014 was $10.8 million, a decrease of 61.8% from Q2 2013 revenue of $28.1 million. The year-over-year decrease was as a result of a substantial reduction in orders from a key mobile customer.

Gross profit for Q2 2014 was $2.0 million, yielding a gross margin of 18.8%, as compared to Q2 2013 gross profit of $10.6 million and gross margin of 37.5%. The year-over-year decrease was a result of price reductions for the Company's traditional antenna products.

Research and Development ("R&D") expenses for Q2 2014 were $1.8 million, a 5.9% decrease over $1.9 million in Q2 2013. This reduction was due to a decrease in payrolls during the period.

General and Administrative ("G&A") expenses for Q2 2014 were $2.6 million, a $0.3 million increase compared to $2.3 million for Q2 2013. Professional service costs increased during the period, mainly due to additional compliance and regulatory expenses associated with a public listing.

Sales and Marketing expenses for Q2 2014 were $0.9 million, a 26.5% increase compared to $0.7 million in Q2 2013. The Company saw increased costs as part of its continuing efforts to gain market share and to support its business development activities. Most of the increase was related to trade shows and exhibitions.

The Q2 2014 net loss was mainly due to reduced order volume for the Company's mobile antenna products by one of its key customers.

As at June 30, 2014, Baylin had working capital of $33.2 million, compared with $41.4 million at December 31, 2013.

As at June 30, 2014 there were 18.7 million common shares outstanding.

Q2 2014 CONFERENCE CALL

WHEN: Wednesday, August 13, 2014 at 8:00 AM EDT

CONFERENCE CALL/WEBCAST: You can join the call by dialing 647-427-7450 or 1-888-231-8191 and referencing conference ID: 74678612. A live audio webcast will be available through http://bit.ly/1ni1uC0. An archived replay of the webcast will be available for 365 days.

(1) Non-IFRS Measures

Baylin uses 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. 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.

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

                                                  June 30,     December 31,
                                                    2014           2013
                                               -------------- --------------
                                                  Unaudited       Audited
                                               -------------- --------------
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                    $       32,771 $       45,058
  Trade receivables, net                                7,925          8,905
  Other accounts receivable                             1,684          1,895
  Inventories                                           6,642          5,493
                                               -------------- --------------

                                                       49,022         61,351
                                               -------------- --------------

NON-CURRENT ASSETS:
  Property, plant and equipment                        21,935         21,420
  Lease deposits                                        1,069          1,033
  Deferred taxes                                          952            921
                                               -------------- --------------

                                                       23,956         23,374
                                               -------------- --------------

                                               $       72,978 $       84,725
                                               ============== ==============



INTERIM CONDENSED CONSOLIDATED STATMENTS OF FINANCIAL POSITION
U.S dollars in thousands

                                                June 30,      December 31,
                                                  2014            2013
                                             --------------  --------------
                                                Unaudited        Audited
                                             --------------  --------------
LIABILITIES AND EQUITY

CURRENT LIABILITIES:
  Credit from banks and others               $        4,043  $        6,685
  Trade payables                                      8,730           9,479
  Other accounts payable                              2,728           3,462
  Income tax payable                                    309             356
                                             --------------  --------------

                                                     15,810          19,982
                                             --------------  --------------

NON-CURRENT LIABILITIES:
  Loans from banks                                    1,030           1,630
  Finance lease liabilities                             961           1,661
  Employee benefit liabilities                        1,484           1,358
  Deferred taxes                                        400             500
                                             --------------  --------------

                                                      3,875           5,149
                                             --------------  --------------

TOTAL LIABILITIES:                                   19,685          25,131
                                             --------------  --------------

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE
 COMPANY:
  Share capital and premium                          80,766          80,766
  Foreign currency translation reserve                3,506           3,672
  Capital reserve from transactions with
   non-controlling interests                            101             101
  Share-based payment reserve                           743             620
  Accumulated deficit                               (31,823)        (25,565)
                                             --------------  --------------

  Total equity                                       53,293          59,594
                                             --------------  --------------

                                             $       72,978  $       84,725
                                             ==============  ==============



INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
 COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
U.S dollars in thousands, except per share data

                                   Six months ended     Three months ended
                                       June 30,              June 30,
                                 --------------------  --------------------
                                    2014       2013       2014       2013
                                 ---------  ---------  ---------  ---------

Revenues                         $  21,999  $  45,853  $  10,748  $  28,158

Cost of revenues                    17,451     29,411      8,725     17,602
                                 ---------  ---------  ---------  ---------

Gross profit                         4,548     16,442      2,023     10,556

Operating expenses:
Selling and marketing expenses       1,998      1,238        925        731
Research and development
 expenses                            3,614      3,588      1,782      1,894
General and administrative
 expenses                            4,665      3,955      2,584      2,153
Other expenses, net                      4        143          4        115
                                 ---------  ---------  ---------  ---------

                                    10,281      8,924      5,295      4,893
                                 ---------  ---------  ---------  ---------

Operating income (loss)             (5,733)     7,518     (3,272)     5,663

Finance income                       1,050         54        882         18
Finance expense                     (1,614)      (621)      (115)      (322)
                                 ---------  ---------  ---------  ---------

Income (loss) before income tax     (6,297)     6,951     (2,505)     5,359
Tax benefit (income tax)                39     (1,278)        97     (1,038)
                                 ---------  ---------  ---------  ---------

Net income (loss)                   (6,258)     5,673     (2,408)     4,321
                                 ---------  ---------  ---------  ---------

Other comprehensive income
 (loss):

Amounts to be reclassified to
 profit or loss under specific
 conditions:
Adjustments arising from
 translating financial
 statements of foreign
 operations                           (166)       110         58        117
                                 ---------  ---------  ---------  ---------

Total comprehensive income
 (loss)                          $  (6,424) $   5,783  $  (2,350) $   4,438
                                 =========  =========  =========  =========

Basic and diluted earnings
 (loss) per share (in US
 dollars)                        $   (0.33) $    0.50  $   (0.13) $    0.38
                                 =========  =========  =========  =========



INTERIM CONDENSED CONSOLIDATEDSTATEMENT OF CASH FLOWS (UNAUDITED)
U.S dollars in thousands

                                                         Six months ended
                                                             June 30,
                                                       --------------------
                                                          2014       2013
                                                       ---------  ---------
Cash flows from operating activities:

Net income (loss)                                      $  (6,258) $   5,673
                                                       ---------  ---------

Adjustments to reconcile net income (loss) to net cash
 used in operating activities:

Adjustments to the profit or loss items:

Share-based compensation                                     123          -
Depreciation of property, plant and equipment              1,410      1,083
Finance expense, net                                         564        567
Income tax (tax benefit)                                     (39)     1,278
Loss from sale of property, plant and equipment                4          -
Change in employee benefit liabilities, net                   80        102
                                                       ---------  ---------

                                                           2,142      3,030
                                                       ---------  ---------
Changes in asset and liability items:

Decrease (increase) in trade receivables                     961     (5,062)
Decrease (increase) in other accounts receivable             141     (1,078)
Increase in inventories                                   (1,185)    (1,032)
Decrease (increase) in trade payables                       (706)     3,393
Decrease (increase) in other accounts payable               (725)     1,175
                                                       ---------  ---------

                                                          (1,514)    (2,604)
                                                       ---------  ---------
Cash paid and received during the period for:

Interest paid                                               (224)      (394)
Interest received                                            216          4
Taxes paid                                                   (47)      (951)
                                                       ---------  ---------

                                                             (55)    (1,341)
                                                       ---------  ---------

Net cash provided by (used in) operating activities    $  (5,685) $   4,758
                                                       ---------  ---------



INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
U.S dollars in thousands

                                                       Six months ended
                                                           June 30,
                                                       2014         2013
                                                   -----------  -----------
Cash flows from investing activities:

Purchase of property, plant and equipment          $    (1,946) $    (1,414)
Proceeds from long-term loans to related parties             -        2,209
Proceeds from sale of property, plant and
 equipment                                                  41            -
                                                   -----------  -----------

Net cash provided by (used in) investing
 activities                                             (1,905)         795
                                                   -----------  -----------

Cash flows from financing activities:

Repayment of long-term loan from banks                    (600)           -
Repayment of finance lease liabilities                    (746)           -
Repayment of other long-term liabilities                     -          (72)
Repayment of long-term loans from shareholders               -       (2,389)
Proceeds (Repayment) of short-term credit from
 banks, net                                             (2,698)          79
                                                   -----------  -----------

Net cash used in financing activities                   (4,044)      (2,382)
                                                   -----------  -----------

Exchange differences on balances of cash and cash
 equivalents                                              (653)         (56)
                                                   -----------  -----------

Increase (decrease) in cash and cash equivalents       (12,287)       3,115
Cash and cash equivalents at the beginning of the
 year                                                   45,058        6,997
                                                   -----------  -----------

Cash and cash equivalents at the end of the period $    32,771  $    10,112
                                                   ===========  ===========


Contact:

For further information, please contact:
Investor relations
Conrad Seguin
TMX Equicom
T: 416.815.0700 x 251
Email Contact