Baylin Technologies to Host Fourth Quarter and Year-End 2015 Investor Conference Call on March 10, 2016

• Revenue in Q4 2015 continued to increase, up 7.3% quarter-over-quarter, and up 37.5% from prior year comparable quarter.
  
  
• Working capital management continued in the fourth quarter. Cash used this quarter was $0.8 million, the lowest in 8 quarters and 100% used to fund growth.
  
  
• Adjusted EBITDA was $(1.5) million, which was $0.2 million higher than Q3 of fiscal 2015 due to significant transitionary costs associated with duplicative functions with the head office move to Toronto, Canada. Our cost reduction and restructuring efforts are making the financial improvements we anticipated.
  
  
• Appointed James Newell as Chief Financial Officer.

TORONTO, March 9, 2016 /CNW/ - Baylin Technologies Inc. (TSX: BYL) (the "Company" or "Baylin"), a global provider of innovative antenna solutions for the networking, mobile and wireless infrastructure markets, today announced its financial results for the three and twelve months ended December 31, 2015. All figures are stated in United States dollars unless otherwise noted.

Fiscal Q4 2015 Highlights

• Revenues improved by 7.3%, to $13.0 million in Q4 2015, from $12.1 million in Q3 2015. The Company's 2015 quarterly Revenues grew at a compound growth of 12.9% quarter-over-quarter.
  
  
• Gross profit improved by 14.6% to $3.1 million in Q4 2015 from $2.7 million in Q3 2015. Gross margin improved by 1.6 percentage points, to 24.1% in Q4 2015, from 22.5% in Q3 2015.
  
  
• Adjusted EBITDA in Q4 2015 was a $1.5 million loss compared to $1.3 million loss in Q3 2015. The results for the three months ended December 31, 2015 included head office transition costs, write-off of fixed assets and other one-time costs in the aggregate amount of $0.5 million. These costs were added back in determining the Adjusted EBITDA.
  
  
• Inventory management continued into Q4 2015 resulting in a decrease during 2015 of $1.1 million to $5.9 million at December 31, 2015, despite Revenues increasing in 2015 from $8.0 million in Q1 to $13.0 million in Q4.
  
  
• The Company decreased its cash use during the three months ended December 31, 2015 to $0.8 million, which was lower than the previous three quarters of 2015.

"The fourth quarter results continued the momentum built in the previous quarters, and was in line with our expectations for the quarter", said Randy Dewey, Vice Chairman, President and Chief Executive Officer. Revenues continued to trend positively in the quarter, making it the fourth quarter of sequential growth in fiscal 2015. As noted at the end of the last quarter, the head office transition was largely completed by the end of the year, and accordingly the associated costs were reduced in the current quarter. Our working capital optimization focus showed continued gains, with inventory declining by a further $0.3 million in the fourth quarter despite higher revenues. These factors lead to using less cash in the quarter at $0.8 million; the lowest in the last 8 quarters."

Mr. Dewey added: "We enter 2016 with most of the turnaround completed, the new management team in place, and strong sales momentum built in the fourth quarter. Our primary focus will remain building a stronger sales culture to fuel continued growth across all three of our product lines and diversifying our customer base. The groundwork for these improvements was accomplished in 2015, and we are excited and confident fiscal 2016 will see continued performance improvement across the business."

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

	Fiscal				Three months ended December 31
	2015	2014			2015	2014
	$	$			$	$
Revenues	43,026	44,870			12,981	9,440
Gross Profit	9,091	9,002			3,122	1,261
R&D	6,474	7,793			1,708	2,159
Operating expenses	14,771	13,181			4,180	3,254
Operating loss	(12,154)	(11,972)			(2,993)	(4,946)
Adjusted EBITDA	(6,928)	(8,646)			(1,477)	(2,957)
Net loss	(14,670)	(14,068)			(3,309)	(4,946)
Basic and diluted loss per share	(0.78)	(0.75)			(0.18)	(0.26)
Issued and outstanding common shares	18,733,919	18,733,919			18,733,919	18,733,919

The Company's complete financial statements and Management's Discussion & Analysis for the three and twelve months ended December 31, 2015 are available at baylintech.com/investor-relations/ and www.sedar.com/.

Financial Summary

Revenues
Revenues increased in the three months ended December 31, 2015 by $3.5 million, or 37.5% from the same period in 2014. The increase was primarily due to the growth in orders from our major customer. Compared to the third quarter of fiscal 2015, Revenues increased by 7.3% in the current quarter.

Gross Profit
Gross profit and gross margin both increased in the fourth quarter of fiscal 2015 from the comparable period in 2014 and the third quarter of 2015. Versus 2014, the increase of 10.7 % percentage points, to 24.1%, was attributable to stable variable contribution margin associated with the increase in Revenues, and stable fixed YOY manufacturing costs. Compared to the third quarter of 2015, gross profit increased by $0.4 million, or a 1.6 percentage point improvement.

Research and Development
R&D expenses for the three months ended December 31, 2015 decreased by 20.9% from the three months ended December 31, 2014. The decrease was attributed mainly to the reduction in patent spending as part of the cost reduction initiatives implemented in fiscal 2015. R&D costs in Q3 2015 were $1.6 million; relatively stable when compared to Q4 2015.

Sales and Marketing
Sales and Marketing expenses increased from the three months ended December 31, 2014 ($1.0 million) to the three months ended December 31, 2015 (totaling $1.4 million) mainly due to higher payroll as a result of new hiring announced in fiscal 2015 to support the growth of our Networking and Wireless Infrastructure BU's. As a percentage of Revenues, these expenses were comparable quarter over quarter. Sales and Marketing increased in the fourth quarter of fiscal 2015 from the third quarter of 2015, by $0.4 million, for the same reasons cited above.

General and Administrative
General and administrative ("G&A") costs increased by 21.5% to $2.7 million in the three months ended December 31, 2015 compared to the same quarter in 2014, however as a percentage of Revenues it declined by 2.7 percentage points to 21.1%. Payroll expenses decreased due to changes in senior management made early in 2015. Other G&A expenses increased primarily as a result of higher professional service fees associated with transitioning the head office to Toronto, Canada and duplicative functions related thereto.

Adjusted EBITDA
Adjusted EBITDA was a loss of $(1.5) million in Q4 2015 and was slightly higher when compared to Q3 2015. There were several expenses that drove a higher Adjusted EBITDA loss in the quarter. As noted above, the migration of the head office from Israel to Toronto, consulting on manufacturing optimization and recruiting of key talent intensified in Q4 2015, leading to duplicative functions and costs.

Net Loss
The Loss for the period reduced from a loss of $4.9 million in the fourth quarter of 2014, to a loss of $3.3 million in the same quarter in 2015. The improvement was the result of the lower EBITDA loss in 2015, as described in the MD&A.

Liquidity
As at December 31, 2015, the Company had cash and cash equivalents totaling $11.4 million. The cash decreased by $0.8 million from Q3 2015 due to the increase in trade receivables of $0.8 million in Q4 because of higher Revenues. The cash burn in Q4 2015 was the lowest in both fiscal 2014 and 2015.

Outlook

Fiscal 2015 was characterized by significant change and transition in response to the significant operating losses and negative cash flow incurred in fiscal 2014 that continued into the first half of fiscal 2015. Additionally, the focus was to lay the foundation for a resumption of growth. These changes included:

• announced a new President and Chief Executive officer and leadership team,
  
  
• implemented significant cost reductions across all the operations in the Company, particularly manufacturing plant optimization, reducing the overall expense run rate by approximately $2.4 million versus fiscal 2014.
  
  
• transitioned the head office to Toronto, Canada, and appointed several experienced executives in head office and North American operations.
  
  
• R&D strategy now clearly articulates short and long term product roll out deliverables. Management anticipates increasing R&D investment in fiscal 2016 thereby creating a strong new product pipeline for launch in 2017 and beyond, thus further diversifying and growing our customer base.

The Board of Directors and Management believe these milestones were successfully achieved by the end of fiscal 2015, though several initiatives will need to be completed in the first quarter of fiscal 2016. The head office transition costs will smooth over the first half of 2016 as all functions are fully transitioned. As these costs are now denominated in Canadian dollars, we expect the overall costs of the Canadian head office to be lower, benefitting from lower Canadian dollar relative to the US dollar.

The benefits of these initiatives were evident in the second half of 2015, where growth was posted in both Revenues and Adjusted EBITDA in comparison to the first two quarters of 2015 as well as the comparable periods in 2014. Additionally, the level of cash used in the second half of fiscal 2015 decreased to $4.9 million, compared to $7.4 million in the first half of 2015.

In addition to the improved financial results in the second half of fiscal 2015, the market position for the company's products were strengthened as a result of the changes made in 2015, evidenced in the fourth quarter of fiscal 2015 by an increase in Request for Designs ("RFD"). Historically, positive market momentum that is generated in the latter part of a fiscal year typically leads to revenues in the first half of the following fiscal year.

U.S.-based telecommunication carriers are predicting growth in network capital spending in 2016 and we believe our wireless Infrastructure products are well positioned to benefit from that occurrence. New Mobile customers announced in 2015 have awarded us several projects that we anticipate will positively impact the first quarter of fiscal 2016. As such, we anticipate revenue growth in our three business units in 2016.

Cost reductions and manufacturing efficiency efforts will continue into 2016 and we expect these improvements will lead to improved gross margins in the second half of fiscal 2016.

The over-arching focus for the Board of Directors and management in fiscal 2016 is to continue the momentum created in the second half of 2015, while prudently managing our liquidity. Exploring new opportunities in the Mobile market, continuing to diversify and expand the Networking customer portfolio, and further expanding the Infrastructure product portfolio will be the primary focus. Also, management will explore opportunities to increase its capital resources and liquidity in light of the anticipated growth and consequential requirement to fund increased working capital levels.

Conference Call

Baylin will hold a conference call to discuss its 2015 fourth quarter and full year financial results on March 10, 2016, at 8:00 a.m. (ET). The call will be hosted by Randy Dewey, Vice-Chairman, President and Chief Executive Officer, James Newell, Chief Financial Officer and Clifford Gary, Corporate Controller and VP Finance. All interested parties are invited to participate. 

DATE:		March 10, 2016
TIME:		8 a.m.
DIAL IN NUMBER:		647-427-7451
		888-231-8192
CONFERENCE ID#:		52509242
WEBCAST DETAILS:		Webcast URL (EN):
	http://event.on24.com/r.htm?e=1137171&s=1&k=511216ACBA37BBF1F122886D57BFB1C2

(1) Non-IFRS Measures

Baylin uses EBITDA and Adjusted EBITDA to measure its financial performance 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 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. Besides 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.

Forward Looking Statements

Certain statements 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 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. Regarding forward-looking statements and information contained, 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 will prove accurate. Forward-looking statements and information 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 those risks identified in Baylin's annual information form dated March 20, 2015 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. 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 because of new information or events after the date except as required by law. All forward-looking statements and information are qualified by this cautionary statement.

About Baylin

Baylin (TSX: BYL" rel="noopener noreferrer" target="_blank">BYL) is a leading global technology company with over 37 years of experience in designing, producing and supplying innovative antennas for the mobile, Networking 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 and leading edge off-the-shelf antenna products.

SOURCE Baylin Technologies Inc.

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