Investor Conference Call on August 13, 2020 at 8:00
a.m. ET
TORONTO, Aug. 12, 2020 /CNW/ - Baylin Technologies Inc.
(TSX: BYL) (the "Company" or "Baylin"), a leading, diversified,
global wireless technology company focused on research, design,
development, manufacturing and sales of passive and active radio
frequency products and services, today announced its financial
results for the three and six months ended June 30, 2020. All
amounts are stated in Canadian dollars unless otherwise
indicated.
QUARTERLY HIGHLIGHTS
Key highlights for the three months ended June 30, 2020
include the following:
- Challenges related to COVID-19 continued to impact the Company
in the second quarter of 2020, however, as governments continued to
lift restrictions on commercial activity, revenue in the second
quarter of 2020 increased by 13.7% compared to the first quarter of
2020. In addition, expense reductions implemented in March 2020 resulted in an increase in operating
income in the second quarter of 2020 compared to the first quarter
of 2020.
- Revenue was $30.6 million in the
second quarter of 2020, a decrease of $17.2
million or 36.0% compared to the second quarter of 2019.
Similar to the first quarter of 2019, in the second quarter of
2019, Asia Pacific was awarded
several "one-time" platforms from a major customer that were not
expected to be repeated in the second quarter of 2020. Taking that
into consideration, the vast majority of the remaining revenue
shortfall in the second quarter of 2020 was due to the COVID-19
pandemic.
- Gross profit was $9.7 million in
the second quarter of 2020, a decrease of $8.0 million compared to the second quarter of
2019. Gross margin(3) was 31.6% in the second quarter of
2020 compared to 36.9% in the second quarter of 2019. Gross margin
was negatively impacted by the significantly lower sales volumes in
the second quarter of 2020 compared to the prior year period.
Asia Pacific's gross margin was
lower than anticipated as the smartphones that were sold in the
quarter were primarily less expensive models and the antennas in
these models generate a lower gross margin than the flagship
models.
- Adjusted EBITDA(2) was $2.7
million in the second quarter of 2020 compared to
$6.1 million in the second quarter of
2019. The decrease of Adjusted EBITDA was primarily due to the
lower revenue and gross margin somewhat offset by lower operating
expenses.
- Net cash at June 30, 2020
decreased from December 31, 2019 due
to ongoing capital expenditures to complete the new facility in
Vietnam and debt servicing, offset
by a decrease in non-cash working capital.
RECENT DEVELOPMENTS
While the COVID-19 outbreak continues to impact the broader
economy, that has caused some reduced and delayed spending by some
of the Company's customers. However, Asia
Pacific has seen exceptional recovery in product volumes
from the first quarter to the second quarter of 2020 and has
experienced similar momentum in the first half of the third
quarter.
Although we reported the delay in the re-opening of the
Vietnam airport to September 2020, we have re-commenced construction
efforts on our new Massive MIMO factory, and we are back on track
to commence production in the fourth quarter of this year.
As previously reported, the Company's credit agreement with
Royal Bank of Canada and HSBC Bank
Canada (collectively, the "Lenders") was amended. The Company
agreed to and was in compliance with a minimum Adjusted EBITDA
covenant for the trailing twelve months ended June 30, 2020. All other amended financial and
other covenants were met. The Company had the option to defer the
June 30, 2020 principal repayment of
US $750,000 on the term loan and
elected to defer the payment.
SELECTED FINANCIAL INFORMATION
The table below discloses selected financial information for the
periods indicated.
(in $000's except
per share amounts)
|
|
|
|
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2020
|
2019
|
2020
|
2019
|
|
$
|
$
|
$
|
$
|
Revenue
|
30,629
|
47,831
|
57,571
|
86,864
|
Gross
profit
|
9,678
|
17,644
|
18,277
|
31,975
|
Income (loss) before
income taxes
|
(4,090)
|
1,620
|
(7,360)
|
(3,812)
|
Income tax expense
(recovery)
|
617
|
(34)
|
(192)
|
435
|
Net income
(loss)
|
(4,707)
|
1,654
|
(7,168)
|
(4,247)
|
Basic and diluted net
income (loss) per share
|
($0.12)
|
$0.04
|
($0.18)
|
($0.11)
|
EBITDA(1)
|
1,905
|
4,976
|
1,710
|
8,005
|
Adjusted
EBITDA(2) (2019: revised to include
non-cash compensation)
|
2,658
|
6,121
|
3,213
|
10,219
|
Current
assets
|
68,535
|
84,518
|
68,535
|
84,518
|
Total
assets
|
152,011
|
179,103
|
152,011
|
179,103
|
Current
liabilities
|
45,307
|
53,579
|
45,307
|
53,579
|
Non-current
liabilities
|
52,189
|
51,512
|
52,189
|
51,512
|
Total
liabilities
|
97,496
|
105,091
|
97,496
|
105,091
|
|
|
(1)
|
See "Non-GAAP
Measures". EBITDA refers to operating income (loss) plus
depreciation and amortization.
|
(2)
|
See "Non-GAAP
Measures". Adjusted EBITDA refers to EBITDA plus the sum of: a)
acquisition expenses, fair value step up of inventory acquired as
part of an acquisition, expenses for litigation relating to
acquisition agreements, expenses relating to planned restructuring
post an acquisition, impairment on fixed and intangible assets
(including goodwill) post an acquisition; b) expenses to
permanently close/relocate a facility, shut down a line of
business, eliminate positions; c) corporate re-organization
expenses; and, d) non-cash compensation.
|
(3)
|
See "Non-GAAP
Measures". Gross margin refers to gross profit divided by
revenue.
|
A copy of the Company's unaudited interim condensed consolidated
financial statements for the three and six months ended
June 30, 2020 and corresponding management's discussion
and analysis (the "MD&A") are available under the Company's
profile on SEDAR at www.sedar.com.
OUTLOOK
Management continues to monitor the COVID-19 situation closely
and continues to take measures to mitigate the effect of the
outbreak on the Company and its business.
"In the first half of 2020, Asia
Pacific revenue was the most impacted of our product lines
from COVID-19 due to the stark decline in global smartphone sales
as a result of commercial store closures. We have seen significant
improvement as commercial cellular stores began to re-open across
North America and Europe starting in May
2020, and we expect this to continue through the second half
of 2020", stated Randy Dewey,
Baylin's President and Chief Executive Officer.
The Company expects to see a continuing improvement across its
business lines during the remainder of the year as governments
continue to lift restrictions on commercial activities, leading to
higher expected revenue in the second half of 2020 compared to the
first half; however, there remains significant uncertainty how
quickly this will occur for each of the business lines.
INVESTOR CONFERENCE CALL
Baylin will hold a conference call on August 13, 2020 at 8:00
a.m. (ET) to discuss its financial results for the three and
six months ended June 30, 2020. The call will be hosted by
Randy Dewey, President and Chief
Executive Officer and Michael Wolfe,
Chief Financial Officer. All interested parties are invited to
participate using the dial-in details provided below.
Date:
|
August 13,
2020
|
Time:
|
8:00 a.m.
(ET)
|
Dial-in
Number:
|
888-231-8191 or
647-427-7450
|
Conference
ID#:
|
4464778
|
Webcast: https://produceredition.webcasts.com/starthere.jsp?ei=1290181&tp_key=4b3f9fc7f4
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute
"forward-looking information and statements" that involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance, objectives or achievements of the
Company, or industry results, to be materially different from any
future results, performance, objectives or achievements (expressed
or implied) by such forward-looking information or statements.
Forward-looking statements are frequently, but not always,
identified by words such as "expects," "anticipates," "believes,"
"intends," "estimates,", "predicts," "potential," "targeted,"
"plans," "possible" and similar expressions, or statements that
events, conditions or results "will," "may," "could" or "should"
occur or be achieved. The forward-looking statements in this
press release include, but are not limited to, statements regarding
the effect on the Company and its customers and suppliers of the
COVID-19 outbreak in China and
elsewhere, the timing of Massive MIMO antenna production in the
Company's new factory in Vietnam,
expected levels of liquidity for future business and to meet
financial obligations, and other statements regarding the Company's
plans, objectives and expectations. These statements reflect the
Company's current views regarding future events and operating
performance and are based on information currently available to the
Company as of the date of this press release. These forward-looking
statements involve a number of risks, uncertainties and assumptions
and should not be read as guarantees of future performance or
results and will not necessarily be accurate indications of whether
or not such performance or results will be achieved. Those
assumptions and risks include, but are not limited to, the
Company's ability to successfully allocate capital as needed and to
develop new products, as well as the fact that the Company's
results of operations and business outlook are subject to
significant risk, volatility and uncertainty. Additional factors
that could cause actual results, performance or achievements to
differ materially include, but are not limited to, the risk factors
discussed in the Company's Annual Information Form dated
March 11, 2020 which is available
under the Company's profile on SEDAR at www.sedar.com. All of the
forward-looking statements made in this press release are qualified
by these cautionary statements and other cautionary statements or
factors contained herein, and there can be no assurance that the
actual results or developments will be realized or, even if
substantially realized, that they 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 these forward-looking
statements.
NON-GAAP MEASURES
This press release includes a number of measures that are not
prescribed by Canadian generally accepted accounting principles
("GAAP") 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 our business activities. While management of the
Company believes that non-GAAP measures are 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 GAAP. See "Non-GAAP Measures" on
page 2 of the MD&A for further information.
ABOUT BAYLIN
Baylin Technologies Inc. (TSX: BYL) is a leading, diversified,
global wireless technology company. Baylin focuses on research,
design, development, manufacturing and sales of passive and active
radio-frequency products and services. Baylin aspires to meet its
customers' needs and anticipate the direction of the market.
SOURCE Baylin Technologies Inc.