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Baylin Technologies Announces First Quarter 2014 Results

TORONTO, ON -- (Marketwired) -- 05/15/14 -- 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 March 31, 2014. All figures are stated in United States dollars unless otherwise noted.

First Quarter 2014 Highlights

  • Revenue was $11.3 million in Q1 2014 compared to $17.7 million in Q1 2013
  • Gross profit for Q1 2014 was $2.5 million, compared to $5.9 million for Q1 2013
  • Adjusted EBITDA in Q1 2014 was $(1.8) million as compared to 2.4 million for Q1 2013
  • Total cash and cash equivalents were $36.8 million at March 31, 2014

"As we communicated in our last quarterly conference call, our first quarter revenues saw a decrease, mainly as a result of lower sales with our key mobile customer," said Ephraim Ulmer, President and CEO. "We continue to market our innovative patented new LTE antenna technology for mobile and broadband, and the interest from large handset manufacturers has been very positive. We expect this interest to translate into new customer wins in the coming quarters. As part of our diversification strategy, we have also made great strides growing our infrastructure business. Major wireless carriers worldwide, including North America, have already approved our technology for use in their in-building deployments. In the first quarter we saw our revenue for this segment exceed half of the entire revenue reported for this segment in 2013."


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

                                            --------------------------------
                                                Three Months Ended Mar 31

                                            --------------------------------
                                               2014       2013     % Change
----------------------------------------------------------------------------
Revenue                                       11,251     17,695     (36.4)
Gross profit                                   2,525      5,886     (57.1)
R&D                                            1,832      1,694       8.1
Operating expenses                             3,154      2,337      35.0
Operating income (loss)                       (2,461)     1,855     (232.7)
Adjusted EBITDA(1)                            (1,767)     2,358     (174.9)
Net income (Loss)                             (3,850)     1,352     (384.8)
Net income (loss) per share
  Basic and Diluted                           (0.21)      0.12      (275.0)
----------------------------------------------------------------------------

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

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

The Company's complete financial statements and Management's Discussion & Analysis for Q1 2014 are available at baylintech.com/investor-relations/ and www.sedar.com/.

Financial Summary

First Quarter

Revenue for Q1 2014 was $11.3 million, a decrease of 36.4% from Q1 2013 revenue of $17.7 million. The quarter-over-quarter change was driven primarily by a decrease in customer orders over the period.

Gross profit for Q1 2014 was $2.5 million, yielding a gross margin of 22.4%, as compared to Q1 2013 gross profit of $5.9 million and gross margin of 33.3%. The quarter-over-quarter decrease in gross margin was the result of a difference in product mix coupled with a decreased allocation in the number of new projects during Q1 2014.

Research and Development ("R&D") expenses for Q1 2014 were $1.8 million, an 8.1% increase over $1.7 million in Q1 2013. The increase was a result of the additional costs incurred for patent registrations and maintenance.

General and Administrative ("G&A") expenses for Q1 2014 were $2.1 million, a $0.3 million increase compared to $1.8 million for Q1 2013. The increase in G&A expenses were related to payroll expenses as a result of additional managers being hired at the end of 2013.

Sales and Marketing expenses for Q1 2014 were $1.1 million, a 111.6% increase compared to $0.5 million in Q1 2013. The increased expense was the result of additional new business development activity.

Financial expenses increased during Q1 2014 mainly due to the currency exchange rate fluctuation of the CAD versus our operating currency, the USD, as it impacts the carrying value of the Company's cash and cash equivalents balance.

Overall, the Q1 2014 loss was mainly due to a $2.5 million operating loss and $1.3 million in financial expenses attributed to foreign exchange losses due to the depreciation of the CAD

As at March 31, 2014, Baylin had working capital of $36.7 million, compared with $41.4 million at December 31, 2013. As at March 31, 2014 there were 18.7 million common shares outstanding.

Q1 2014 CONFERENCE CALL

WHEN: Thursday, May 15, 2014 at 12:30PM EDT

CONFERENCE CALL/WEBCAST: You can join the call by dialing 647-427-7450 or 1-888-231-8191 and referencing conference ID: 42088044. A live audio webcast will be available through http://bit.ly/1mleunE. An archived replay of the webcast will be available for 365 days.

(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 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

                                                  March 31,    December 31,
                                                    2014           2013
                                               -------------- --------------
                                                  Unaudited       Audited
                                               -------------- --------------
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                    $       36,810 $       45,058
  Trade receivables, net                                7,232          8,905
  Other accounts receivable                             1,472          1,895
  Inventories                                           5,758          5,493
                                               -------------- --------------

                                                       51,272         61,351
                                               -------------- --------------

NON-CURRENT ASSETS:
  Property, plant and equipment                        21,390         21,420
  Lease deposits                                        1,025          1,033
  Deferred taxes                                          949            921
                                               -------------- --------------

                                                       23,364         23,374
                                               -------------- --------------

                                               $       74,636 $       84,725
                                               ============== ==============



                                                 March 31,    December 31,
                                                   2014           2013
                                              -------------- --------------
                                                 Unaudited       Audited
                                              -------------- --------------
LIABILITIES AND EQUITY

CURRENT LIABILITIES:
  Credit from banks and others                $        3,766 $        6,685
  Trade payables                                       7,737          9,479
  Other accounts payable                               2,710          3,462
  Income tax payable                                     330            356
                                              -------------- --------------

                                                      14,543         19,982
                                              -------------- --------------

NON-CURRENT LIABILITIES:
  Loans from banks                                     1,330          1,630
  Finance lease liabilities                            1,278          1,661
  Employee benefit liabilities                         1,408          1,358
  Deferred taxes                                         500            500
                                              -------------- --------------

                                                       4,516          5,149
                                              -------------- --------------

TOTAL LIABILITIES:                                    19,059         25,131
                                              -------------- --------------

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE
 COMPANY:
  Share capital and premium                           80,766         80,766
  Foreign currency translation reserve                 3,448          3,672
  Capital reserve from transactions with non-
   controlling interests                                 101            101
  Share-based payment reserve                            677            620
  Accumulated deficit                                (29,415)       (25,565)
                                              -------------- --------------

  Total equity                                        55,577         59,594
                                              -------------- --------------

                                              $       74,636 $       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

                                                   Three months ended
                                                        March 31,
                                             ------------------------------
                                                  2014            2013
                                             --------------  --------------

Revenues                                     $       11,251  $       17,695

Cost of revenues                                      8,726          11,809
                                             --------------  --------------

Gross profit                                          2,525           5,886

Operating expenses:
Selling and marketing expenses                        1,073             507
Research and development expenses                     1,832           1,694
General and administrative expenses                   2,081           1,802
Other expenses, net                                       -              28
                                             --------------  --------------

                                                      4,986           4,031
                                             --------------  --------------

Operating income (loss)                              (2,461)          1,855

Finance income                                          168              36
Finance expense                                      (1,499)           (299)
                                             --------------  --------------

Income (loss) before income taxes                    (3,792)          1,592
Income tax                                              (58)           (240)
                                             --------------  --------------

Net income (loss)                                    (3,850)          1,352
                                             --------------  --------------

Other comprehensive income (loss):

Amounts to be reclassified to profit or loss
 under specific conditions:
Adjustments arising from translating
 financial statements of foreign operations            (224)             (7)
                                             --------------  --------------

Total other comprehensive loss                         (224)             (7)

Total comprehensive income (loss)            $       (4,074) $        1,345
                                             ==============  ==============

Basic and diluted earnings (loss) per share
 (in US dollars)                             $        (0.21) $         0.12
                                             ==============  ==============



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

                                                   Three months ended
                                                        March 31,
                                             ------------------------------
                                                  2014            2013
                                             --------------  --------------
Cash flows from operating activities:

Net income (loss)                            $       (3,850) $        1,352
                                             --------------  --------------

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

Adjustments to the profit or loss items:

Share-based compensation                                 57               -
Depreciation of property, plant and
 equipment                                              694             503
Finance expense, net                                  1,331             263
Income tax                                               58             240
Change in employee benefit liabilities, net              64              98
                                             --------------  --------------

                                                      2,204           1,104
                                             --------------  --------------
Changes in asset and liability items:

Decrease in trade receivables                         1,614           2,217
Decrease (increase) in other accounts
 receivable                                             387          (1,937)
Decrease (increase) in inventories                     (312)            301
Decrease in trade payable                            (1,661)         (2,591)
Decrease in other accounts payable                     (737)           (263)
                                             --------------  --------------

                                                       (709)         (2,273)
                                             --------------  --------------
Cash paid and received during the period
 for:

Interest paid                                          (126)           (215)
Interest received                                       117               -
Taxes paid                                              (66)           (162)
                                             --------------  --------------

                                                        (75)           (377)
                                             --------------  --------------

Net cash used in operating activities        $       (2,430) $         (194)
                                             --------------  --------------

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

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