Baylin Technologies Announces 2014 Fourth Quarter and Year-end Financial Results

TORONTO, March 20, 2015 /CNW/ - Baylin Technologies Inc. (TSX: BYL), a global provider of innovative antenna solutions for the broadband, mobile and wireless infrastructure markets, today announced its financial results for the three and 12 months ended December 31, 2014. All figures are stated in United States dollars unless otherwise noted.

Fiscal Q4 2014 Highlights

Revenues were $9.4 million, compared to $14.3 million in Q4 2013.
Gross profit was $1.3 million, compared to $3.2 million in Q4 2013.
Adjusted EBITDA was $(3.0) million, compared to $(0.3) in Q4 2013.

Fiscal Year 2014 Highlights

Revenues were $44.9 million, compared to $80.1 million in 2013.
Gross profit was $9.0 million, compared to $25.5 million in 2013.
Adjusted EBITDA was $(8.6) million, compared to $10.8 million 2013.
Total cash and cash equivalents were $23.7 million at December 31, 2014.
The Company strengthened senior management team with the addition of Mike Moon as Executive Vice-President, Mobile Business and Ray Hild as North American Vice President – Infrastructure Sales.
The Company opened its new manufacturing facility in Vietnam, and subsequent to the quarter it passed the Samsung Manufacturing Process Audit.

"In fiscal 2014, we saw our infrastructure and broadband product line sales track ahead of our expectations, which helped partially offset the expected reduction in sales across our mobile product line," said Ephraim Ulmer, President and Chief Executive Officer, Baylin. "Our innovative infrastructure products continue to be installed in a number of prestigious venues. Our Broadband product line is performing well, and we are currently working on a large project for a Tier-1 North American telecom provider. The mobile product line will now benefit from our new state-of-the-art Vietnam manufacturing plant which provides customer proximity and will optimize the supply chain. With the Vietnam facility coming on-line, we have evaluated our cost structure in recent months and taken steps to optimize it for current market conditions/realities, while not impacting our ability to deliver innovative products to the market. We expect that we will see bottom line improvements and growth across all three of our product lines in 2015. "

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



		Three Months Ended Dec 31			Year Ended Dec 31

		2014	2013	% Change	2014	2013	% Change
Revenue		9,440	14,264	(34%)	44,870	80,071	(44%)
Gross profit		1,261	3,197	(61%)	9,002	25,461	(65%)
R&D		2,159	2,118	2%	7,793	7,506	4%
Operating expenses		3,254	631	416%	13,181	14,509	(9%)
Adjusted EBITDA¹		(2,957)	(278)	964%	(8,646)	10,822	(180%)
Net income (loss)		(4,946)	358	(1,482%)	(14,068)	829	(1,797%)
Net income (loss) per share
	Basic	(0.26)	0.02	(1,400%)	(0.75)	0.07	(1,171%)
	Diluted	(0.26)	0.02	(1,400%)	(0.75)	0.07	(1,171%)

Issued and outstanding
Common shares		18,733,919	18,733,919	0%	18,733,919	18,733,919	0%

The Company's complete financial statements and Management's Discussion & Analysis for the year ended December 31, 2014 are available at baylintech.com/investor-relations/ and www.sedar.com/.

Financial Summary

Revenues
Revenues for Q4 2014 were $9.4 million, compared with $14.3 million in Q4 2013. Revenues for fiscal 2014 were $44.9 million, compared to fiscal 2013 revenues of $80.1 million.

The year-over-year decrease was as a result of a previously disclosed substantial reduction in orders from a key mobile customer. This was the main factor in the year-over-year decreases in revenues, gross profit and adjusted EBITDA. The reduction in revenues from this one customer was offset, in part, by strong sales of new antennas in our broadband and infrastructure products.

Gross Profit
Gross profit for Q4 2014 was $1.3 million (13.4% of revenues), compared with $3.2 million (22.4% of revenues) in Q4 2013. Gross profit for fiscal 2014 was $9.0 million (20.1% of revenues), compared with $25.5 million (31.8% of revenues) in fiscal 2013.

Research and Development
Research and development ("R&D") costs were $2.2 million in Q4 2014, compared to $2.1 million in Q4 2013. For fiscal 2014, R&D costs were $7.8 million compared to $7.5 million in fiscal 2013. The increase in R&D costs is driven by continued investment in new technologies and product designs, as well as an increase in costs for patent registrations and maintenance.

Sales and Marketing
Sales and marketing costs were $1.0 million for Q4 2014, compared with $0.8 million in Q4 2013. For fiscal 2014, sales and marketing costs were $4.0 million compared with $2.8 million in fiscal 2013. The increase is due to greater trade show participation and recruitment of new sales and marketing employees, which are aimed at generating increased support for the continued growth in sales momentum and greater brand awareness.

General and Administrative
General and administrative ("G&A") costs were $2.3 million for Q4 2014, compared to $(0.2) million for Q4 2013.There was a gain in Q4 2013 as a result of the non-cash extinguishment of an annuity liability of $2.0 for the Company's former founder. For fiscal 2014, G&A costs were $9.2 million compared to $11.7 million in fiscal 2013. G&A expenses in fiscal 2014 decreased by 21.7% as compared to fiscal 2013, mainly as a result of a $6.1 million non-recurring, non-cash, share-based compensation expense that occurred prior to the Company's IPO and recognized in 2013 and the extinguishment of a $2.0 million non-cash expense annuity liability to the Company's former founder.

Adjusted EBITDA
Adjusted EBITDA¹ for the three months ended December 31, 2014 was $(3.0) million compared to $(0.3) million for the same period last year. For fiscal 2014, adjusted EBITDA¹ was $(8.6) million compared to $10.8 million for fiscal 2013.

Net Income (Loss)
Net loss in Q4 2014 was $4.9 million, or $0.26 loss per common share, compared to net income of $0.4 million, or $0.02 earnings per common share, for the same period in the previous year. In fiscal 2014, net loss was $14.1 million, or $0.75 loss per share compared to net income of $0.8 million or $0.07 earnings per share in fiscal 2013. Net loss for 2014 was a flow-through effect from the decrease in revenues during the year.

Liquidity
As at December 31, 2014, the Company had cash and cash equivalents totaling $23.7 million and working capital of $20.7 million.

Conference Call

Baylin will hold a conference call to discuss its 2014 fourth quarter and year-end financial results today, March 20, 2015, at 8:00 a.m. (EDT). The call will be hosted by Ephraim Ulmer, President & CEO, and Yuval Katzir, CFO. All interested parties are invited to participate.

DIAL IN NUMBER:	(647) 427-7450 (888) 231-8191

Conference ID #	94970080

TAPED REPLAY:	416-849-0833 or 1-855-859-2056 Available until 12:00 midnight (EDT) Friday, March 27, 2015 Reference number: 94970080

LIVE WEBCAST:	http://bit.ly/1EsXM10 Webcast will be archived for one year

(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 and discontinued operations. 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. We do not believe these items reflect the underlying performance of our business. EBITDA and Adjusted EBITDA are non-IFRS performance measures. We believe 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 37 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.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands

			December 31,
			2014		2013
ASSETS

	CURRENT ASSETS:
		Cash and cash equivalents	$	23,747	$	45,058
		Trade receivables, net	6,441		8,905
		Other accounts receivable	2,154		1,895
		Inventories	7,237		5,493

			39,579		61,351
	NON-CURRENT ASSETS:
		Property, plant and equipment	25,152		21,420
		Lease deposits	866		1,033
		Deferred taxes	934		921

			26,952		23,374

			$	66,531	$	84,725

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands

			December 31,
			2014		2013
LIABILITIES AND EQUITY

	CURRENT LIABILITIES:
		Credit from banks and others	$	8,859	$	6,685
		Trade payables	6,514		9,479
		Other accounts payable	3,222		3,462
		Income tax payable	315		356

			18,910		19,982
	NON-CURRENT LIABILITIES:
		Loans from banks	430		1,630
		Finance lease liabilities	212		1,661
		Employee benefit liabilities, net	1,110		1,358
		Deferred taxes	344		500

			2,096		5,149

	TOTAL LIABILITIES:		21,006		25,131

	EQUITY
		Share capital and premium	80,530		80,766
		Foreign currency translation reserve	3,688		3,672
		Capital reserve from transactions with non-controlling interests	101		101
		Share-based payment reserve	866		620
		Accumulated deficit	(39,660)		(25,565)

	Total equity		45,525		59,594

			$	66,531	$	84,725

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
U.S. dollars in thousands, except share data

	Year ended December 31,
	2014		2013

Revenues	$	44,870	$	80,071

Cost of revenues	35,868		54,610


Gross profit	9,002		25,461

Operating expenses:
Selling and marketing expenses	3,977		2,760
Research and development expenses	7,793		7,506
General and administrative expenses	9,212		11,787
Other income, net	(8)		(38)

	20,974		22,015

Operating income (loss)	(11,972)		3,446

Finance income	1,199		203
Finance expense	(3,260)		(1,759)

Income (loss) before income taxes	(14,033)		1,890
Income taxes	(35)		(1,061)

Net income (loss)	(14,068)		829

Other comprehensive income (loss) (net of tax effect):

Amounts not to be reclassified subsequently to profit or loss:
Re-measurement loss from defined benefit plans	(27)		(36)

Amounts to be reclassified to profit or loss under specific conditions:
Adjustments arising from translation of foreign operations	16		479

Total other comprehensive income (loss)	(11)		443

Total comprehensive income (loss)	$	(14,079)	$	1,272

Basic and diluted earnings (loss) per share (in US dollars)	$	(0.75)	$	0.07

CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

	Year ended December 31,
	2014		2013
Cash flows from operating activities:

Net income (loss)	$	(14,068)	$	829

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

Adjustments to the profit or loss items:

Share-based payment	246		6,602
Extinguishment of other long-term liabilities	-		(2,030)
Depreciation and amortization	3,124		2,709
Finance expense, net	2,061		1,556
Loss (gain) from sale of property, plant and equipment	(8)		95
Income taxes	35		1,061
Change in employee benefit liabilities, net	(238)		16

	5,220		10,009
Changes in asset and liability items:

Decrease in trade receivables	2,415		5,513
Increase in other accounts receivable	(517)		(309)
Increase in inventories	(1,760)		(152)
Decrease in trade payables	(2,910)		(2,369)
Increase (decrease) in other accounts payable	(200)		1,062

	(2,972)		3,745
Cash paid and received during the year for:

Interest paid	(478)		(1,125)
Interest received	335		45
Taxes paid	(139)		(1,558)

	(282)		(2,638)

Net cash provided by (used in) operating activities	$	(12,102)	$	11,945

CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

	Year ended December 31,
	2014		2013
Cash flows from investing activities:

Purchase of property, plant and equipment	$	(7,066)	$	(6,130)
Rental lease proceeds (deposits)	42		(541)
Proceeds from sale of property, plant and equipment	17		197
Collection of long-term loans	-		2,280

Net cash used in investing activities	(7,007)		(4,194)

Cash flows from financing activities:

Issuance of share capital, net	-		41,202
Receipt of long-term loans from banks	-		3,230
Repayment of long-term loans from shareholders	-		(5,275)
Repayment of other long-term liabilities	-		(142)
Repayment of finance lease liabilities	(1,475)		(1,246)
Repayment of long-term loans from banks	(1,200)		(400)
Receipt (repayment) of short-term credit from banks and others, net	1,982		(6,891)

Net cash provided by (used in) financing activities	(693)		30,478


Exchange differences on balances of cash and cash equivalents	(1,509)		(168)

Increase (decrease) in cash and cash equivalents	(21,311)		38,061
Cash and cash equivalents at the beginning of the year	45,058		6,997

Cash and cash equivalents at the end of the year	$	23,747	$	45,058