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Baylin Technologies Announces 2013 Fourth Quarter and Year-End Financial Results

TORONTO, ON -- (Marketwired) -- 03/14/14 -- 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 12 months ended December 31, 2013. All figures are stated in United States dollars unless otherwise noted.

Fiscal Year 2013 Highlights

  • Revenue increased by 16.5% to $80.1 million from $68.7 million in 2012.
  • Antennas shipped increased by 16.3% to 200 million units from 172 million units in 2012.
  • Gross profit increased by 10.0% to $25.2 million from $22.9 million in 2012.
  • Adjusted EBITDA from continuing operations increased by 25.5% to $10.8 million from $8.6 million in 2012.
  • The Company completed its initial public offering ("IPO") in November 2013, raising gross proceeds of $47 million.
  • Total cash and cash equivalents were $45.1 million at December 31, 2013, compared to $7.0 million at December 31, 2012, with the increase principally the result of proceeds from the Company's IPO.

"It was a successful year overall for Baylin, highlighted by solid year-over-year revenue and Adjusted EBITDA growth and the completion of our IPO in November," said Ephraim Ulmer, President and Chief Executive Officer, Baylin. "We now have a strong balance sheet and the resources to expand our customer base and diversify our revenue. The underlying trends in our markets -- specifically the rapid growth in mobile data traffic and devices -- are driving demand for sophisticated, highly engineered antenna systems. While near-term sales will be affected by lower allocations on a key product platform, with our 35-year track record of innovation we are well positioned to capitalize on market growth over the long term. In addition to our expansion in Vietnam, we are focused on leveraging our investment in LTE antenna solutions to win new mobile OEM customers. Based on the strong early results in wireless infrastructure, we are also investing to expand this segment of our business."

Selected Financial Information
(In thousands of United States dollars except per share amounts)

               ----------------------------   ----------------------------
                 Three Months Ended Dec 31          Year Ended Dec 31
               ----------------------------   ----------------------------
                                        %                              %
                  2013       2012    Change      2013       2012    Change
               ---------- ---------- ------   ---------- ---------- ------
Revenue            14,264     20,369    (30%)     80,071     68,709     17%
Gross profit        3,143      6,789    (54%)     25,217     22,924     10%
R&D                 2,093      1,786   17.2        7,392      6,588     12%
 expenses             702      2,834    (75%)     14,379      9,874     32%
 EBITDA(1)           (278)     2,499   (111%)     10,822      8,623     26%
Net income            359      1,748    (79%)        829      1,376    (40%)
Net income per
  Basic              0.02       0.16    (88%)       0.07       0.13    (46%)
  Diluted            0.02       0.16    (88%)       0.07       0.13    (46%)
               ---------- ---------- ------   ---------- ---------- ------

Issued and
   shares      18,733,918 11,283,343     66%  18,733,918 11,283,343     66%
               ---------- ---------- ------   ---------- ---------- ------

The Company's complete financial statements and Management's Discussion & Analysis for 2013 are available at and

Financial Summary

Full Year
Revenue for 2013 was $80.1 million, up from 2012 revenue of $68.7 million. The year-over-year increase of 16% reflects new project wins and an increase in market share with key customers. During 2013, one of the Company's key customers launched new products incorporating the Company's antennas, which was the main reason for the revenue increase. Overall, the Company sold approximately 200 million antennas in 2013, compared to approximately 172 million antennas in 2012.

Gross profit for 2013 was $25.2 million (31.5% of revenue), compared with $22.9 million (33.4% of revenue) in 2012. The increase in gross profit dollars was the result of higher sales volumes. The decrease in gross profit percentage reflects the change in product mix resulting in higher subcontracting costs, as well as a reduction in average selling prices in late 2013, which is typical within the industry following the initial launch of new products.

Research and development ("R&D") expenses increased by 12.2% in 2013, driven principally by continued investment in new technologies and product designs, an increase in costs for patent registrations and maintenance, and non-recurring, non-cash share-based compensation to the Company's Chief Technical Officer, which occurred prior to the completion of the Company's IPO.

General and administrative ("G&A") expenses for 2013 increased by $4.3 million over 2012. These expenses for 2013 include $6.1 million in non-recurring, non-cash share-based compensation costs that occurred prior to the Company's IPO, as well as the extinguishment of the annuity liability for the Company's former founder, which was a $2.0 million non-cash item.

Adjusted EBITDA(1) for 2013 increased by 25.5% to $10.8 million, compared with adjusted EBITDA(1) of $8.6 million in 2012. Net income for 2013 was $0.8 million, compared with $1.4 million in 2012. Net income for 2013 was affected mainly by the non-cash transactions referred to above.

Fourth Quarter
Revenue for Q4 2013 was $14.3 million, compared with $20.4 million in Q4 2012. The year-over-year decrease largely reflects the timing of customer product launches and end consumer demand in the mobile handset business, which have historically been the major factors driving the quarterly fluctuations in the Company's revenue. New product launches can significantly impact the level of net sales in any particular quarter.

Adjusted EBITDA(1) for Q4 2013 was $(0.3) million, compared with adjusted EBITDA(1) of $2.5 million for Q4 2012, reflecting lower sales and gross profit levels in Q4 2013.

As at December 31, 2013, the Company had cash and cash equivalents totaling $45.1 million. In Q4 2013, the Company completed its IPO and raised gross proceeds of $47 million. The IPO significantly improved the Company's liquidity and enabled it to expand and execute key growth strategies.


The antenna industry has grown, and is expected to continue to grow, with the proliferation of mobile devices and the exponential growth in mobile data traffic. These trends place new demands on designers and manufacturers of mobile devices and have resulted in a need for increasingly complex, innovative and highly engineered antenna solutions, specifically for LTE devices. The current trends in wireless communication, coupled with Baylin's stable financial position and 35-year history as an innovative antenna supplier, position the Company for long-term growth. Going forward, the Company plans to continue to grow and diversify its customer base by strengthening its product portfolios and particularly expanding the wireless infrastructure offering.

In the near term, the Company expects revenue in the first half of 2014 to be affected by a lower-than-expected allocation on a major product launch from its largest customer. The Company maintains a close relationship with this customer and supplies multiple devices and platforms. To offset the short-term impact from this platform, management is highly focused on growing and diversifying its customer base. The Company's strategic priorities for 2014 include continuing to secure significant contracts with the leading OEMs in the mobile sector, investing in advanced research and development, new product introductions, and continued enhancement of existing product lines. In addition to its organic growth initiatives, Baylin will pursue strategic acquisitions to accelerate growth and diversify its business, with a focus on the wireless infrastructure segment.

Conference Call

Baylin will hold a conference call to discuss its 2013 fourth quarter and year-end financial results today, March 14, 2014, at 8:30 a.m. (EDT). The call will be hosted by Ephraim Ulmer, President & CEO, and Yuval Katzir, CFO. All interested parties are invited to participate.

(647) 427-7450
(888) 231-8191

Conference ID #

416-849-0833 or 1-855-859-2056
Available until 12:00 midnight (EDT) Friday, March 21, 2014
Reference number: 8941629

Webcast will be archived for one year

(1) Non-IFRS Measures

Baylin uses EBITDA from continuing operations and Adjusted EBITDA from continuing operations to measure its strength and our future ability to generate and sustain earnings. EBITDA from continuing operations refers to earnings before interest (finance expenses, net), taxes, depreciation, and amortization and discontinued operations. Adjusted EBITDA from continuing operations refers to EBITDA from continuing operations 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. We do not believe these items reflect the underlying performance of our business. EBITDA from continuing operations and Adjusted EBITDA from continuing operations are non-IFRS performance measures. We believe that, in addition to net earnings, EBITDA from continuing operations and Adjusted EBITDA from continuing operations 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

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.

U.S. dollars in thousands

                                                          December 31,
                                                        2013        2012
                                                    ----------- ------------

  Cash and cash equivalents                         $    45,058 $      6,997
  Trade receivables, net                                  8,905       14,247
  Other accounts receivable                               1,895        1,318
  Loan to related party                                       -          150
  Inventories                                             5,493        5,195
                                                    ----------- ------------

                                                         61,351       27,907
                                                    ----------- ------------
  Property, plant and equipment                          21,420       13,680
  Lease deposits                                          1,033          563
  Loan to related party                                       -        1,521
  Deferred taxes                                            921          530
                                                    ----------- ------------

                                                         23,374       16,294
                                                    ----------- ------------

                                                    $    84,725 $     44,201
                                                    =========== ============

U.S. dollars in thousands
                                                       December 31,
                                                    2013           2012
                                               -------------  -------------

  Credit from banks and others                 $       6,685  $      12,859
  Trade payables                                       9,479         11,644
  Other accounts payable                               3,462          2,342
  Convertible loans from shareholder                       -            400
  Income tax payable                                     356            646
                                               -------------  -------------

                                                      19,982         27,891
  Loans from banks                                     1,630             28
  Long-term loans from shareholder                         -          3,293
  Finance lease liabilities                            1,661            178
  Employee benefit liabilities, net                    1,358          1,290
  Deferred taxes                                         500            200
  Other long-term liabilities                              -          1,759
                                               -------------  -------------

                                                       5,149          6,748

TOTAL LIABILITIES:                                    25,131         34,639
                                               -------------  -------------

  Share capital and premium                           80,766         33,235
  Foreign currency translation reserve                 3,672          3,193
  Capital reserve from transactions with non-
   controlling interests                                 101            101
  Share-based payment reserve                            620              -
  Accumulated deficit                                (25,565)       (26,967)
                                               -------------  -------------

 Total equity                                         59,594          9,562
                                               -------------  -------------

                                               $      84,725  $      44,201
                                               =============  =============

U.S. dollars in thousands, except share data
                                                  Year ended December 31,
                                                    2013           2012
                                               -------------  -------------

Revenues                                       $      80,071  $      68,709

Cost of revenues                                      54,854         45,785
                                               -------------  -------------

Gross profit                                          25,217         22,924

Operating expenses:
Selling and marketing expenses                         2,760          2,644
Research and development expenses                      7,392          6,588
General and administrative expenses                   11,657          7,320
Other income, net                                        (38)           (90)
                                               -------------  -------------

                                                      21,771         16,462
                                               -------------  -------------

Operating income                                       3,446          6,462

Finance income                                           203             44
Finance expense                                       (1,759)        (1,436)
                                               -------------  -------------

Income before income taxes                             1,890          5,070
Income taxes                                          (1,061)          (557)
                                               -------------  -------------

Income from continuing operations                        829          4,513
Loss from discontinued operations, net                     -         (3,137)
                                               -------------  -------------

Net income                                               829          1,376
                                               -------------  -------------

Other comprehensive income (loss) (net of tax

Amounts not to be reclassified subsequently to
 profit or loss:
Remeasurement loss from defined benefit plans            (36)          (248)
                                               -------------  -------------

Total                                                    (36)          (248)
                                               -------------  -------------

Amounts to be reclassified to profit or loss
 under specific conditions:
Adjustments arising from translation of
 foreign operations                                      479            285
Reclassification to profit or loss upon sale
 of foreign operation                                      -            (30)
                                               -------------  -------------

Total                                                    479            255
                                               -------------  -------------

Total other comprehensive income                         443              7
                                               -------------  -------------

Total comprehensive income                     $       1,272  $       1,383
                                               =============  =============

U.S. dollars in thousands
                                                 Year ended December 31,
                                                   2013            2012
                                              --------------  -------------
Cash flows from operating activities:

Net income from continuing operations         $          829  $       4,513
                                              --------------  -------------

Adjustments to reconcile net income to net
 cash provided by (used in) operating

Adjustments to the profit or loss items:

Share-based payment                                    6,602              -
Extinguishment of other long-term liabilities         (2,030)             -
Depreciation and amortization                          2,709          2,161
Finance expense, net                                   1,556          1,392
Loss from sale of property, plant and
 equipment                                                95              -
Income taxes                                           1,061            557
Change in employee benefit liabilities, net               16            (19)
                                              --------------  -------------

                                                      10,009          4,091
                                              --------------  -------------
Changes in asset and liability items:

Decrease (increase) in trade receivables               5,513         (3,263)
Increase in other accounts receivable                   (309)          (257)
Increase in inventories                                 (152)        (1,405)
Increase (decrease) in trade payables                 (2,369)         4,000
Increase (decrease) in other accounts payable          1,062           (220)
                                              --------------  -------------

                                                       3,745         (1,145)
                                              --------------  -------------
Cash paid and received during the year for:

Interest paid                                         (1,125)        (1,170)
Interest received                                         45             10
Taxes paid                                            (1,558)          (720)
                                              --------------  -------------

                                                      (2,638)        (1,880)
                                              --------------  -------------

Net cash provided by operating activities
 from continuing operations                           11,945          5,579
Net cash used in operating activities from
 discontinued operations                                   -         (2,342)
                                              --------------  -------------

                                              $       11,945  $       3,237
                                              --------------  -------------

U.S. dollars in thousands
                                                 Year ended December 31,
                                                  2013            2012
                                             --------------  --------------
Cash flows from investing activities:

Purchase of property, plant and equipment    $       (6,130) $       (1,498)
Rental lease deposits                                  (541)              -
Proceeds from sale of property, plant and
 equipment                                              197              36
Collection of long-term loans                         2,280             234
                                             --------------  --------------

Net cash used in investing activities from
 continuing operations                               (4,194)         (1,228)
Net cash provided by investing activities
 from discontinued operations                             -             330
                                             --------------  --------------

                                                     (4,194)           (898)
                                             --------------  --------------
Cash flows from financing activities:

Issuance of share capital, net                       41,202             490
Receipt of long-term loans from banks                 3,230               -
Receipt of long-term loan from shareholder                -           1,370
Repayment of long-term loans from
 shareholders                                        (5,275)           (836)
Repayment of other long-term liabilities               (142)           (127)
Repayment of finance lease liabilities               (1,246)              -
Repayment of long-term loans                           (400)              -
Receipt (repayment) of short-term credit
 from banks and others, net                          (6,891)          1,200
                                             --------------  --------------

Net cash provided by financing activities
 from continuing operations                          30,478           2,097
Net cash used in financing activities from
 discontinued operations                                  -            (890)
                                             --------------  --------------

                                                     30,478           1,207

Exchange differences on balances of cash and
 cash equivalents                                      (168)            149
                                             --------------  --------------

Increase in cash and cash equivalents                38,061           3,695
Cash and cash equivalents at the beginning
 of the year                                          6,997           3,302
                                             --------------  --------------

Cash and cash equivalents at the end of the
 year                                        $       45,058  $        6,997
                                             ==============  ==============

For further information, please contact:
Investor relations:
Conrad Seguin
TMX Equicom
T: (416) 815-0700 ext. 251
Email Contact

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