Baylin Technologies (TSE:BYL) reported lower first-quarter revenue and earnings, citing softer demand in its Satcom business and, to a lesser extent, wireless infrastructure, while management said it remains focused on closing its planned acquisition of Kaelus AB.
Chief Executive Officer Leighton Carroll said the company is continuing to work with a prospective lender and Kaelus shareholders to finalize credit and other agreements needed to complete the transaction. Baylin is targeting completion by the end of the second quarter, subject to the terms of those agreements.
Revenue Falls as Satcom Demand Weakens
Baylin reported first-quarter revenue of CAD 16.1 million, down from CAD 18.9 million a year earlier. Carroll said the decline reflected “softer market conditions with lower sales volumes,” primarily in Satcom and to a lesser extent in wireless infrastructure.
Gross profit was CAD 6.7 million, compared with CAD 8.0 million in the prior-year quarter. Gross margin was 41.5%, down slightly from 42.4% a year earlier. Management said the impact of lower revenue was partially offset by a more favorable mix in custom antenna solutions and improved Satcom gross margins.
Chief Financial Officer Cliff Gary said operating expenses decreased year over year. Selling and marketing expenses were CAD 1.6 million, down from CAD 1.8 million, mainly because of lower commissions and incentive accruals tied to the revenue decline. Research and development expense was CAD 2.9 million, compared with CAD 3.1 million, primarily reflecting lower payroll from reduced Satcom engineering headcount. General and administrative expenses fell to CAD 3.6 million from CAD 4.2 million, mainly due to lower compensation accruals.
The company posted an operating loss of CAD 1.5 million, compared with an operating loss of CAD 1.1 million a year earlier. Net loss was CAD 2.3 million, compared with a net loss of CAD 2.0 million in the first quarter of 2025. EBITDA was negative CAD 0.5 million, comparable to the prior year, while adjusted EBITDA was CAD 0.1 million, down from CAD 0.7 million.
Carroll noted that the company delivered its ninth consecutive quarter of positive adjusted EBITDA, despite lower revenue.
Kaelus Deal Seen as Strategic Expansion
Carroll said Kaelus has a radio frequency portfolio that is “completely complementary” to Baylin’s infrastructure unit, with potential applicability in its custom antenna unit as well. He said the combination would enhance engineering scale, diversify the manufacturing footprint and add RF technologies including synchronization, filter and anti-jamming solutions.
From a commercial standpoint, Carroll said the transaction is expected to create cross-selling opportunities across both customer bases, strengthen relationships with Tier 1 carriers globally and position the combined company as a more comprehensive provider for wireless infrastructure.
“It actually sets us up to be a really good alternative to some of the big boys, which is an important strategic rationale for us,” Carroll said.
Wireless Infrastructure Outlook Remains Positive
Baylin said its wireless infrastructure business delivered softer results compared with the prior quarter, but management maintained a positive outlook. Carroll said the company expects stronger sales of its multibeam small-cell products and increased stadium deployments beginning in the second quarter and continuing through the rest of 2026.
Carroll said Baylin recently sold multibeam products to Deutsche Telekom, Vodafone UK, SFR and Orange, continuing its expansion into Europe. He added that Baylin is also focused on deeper penetration in Canada, where it sees “additional meaningful opportunities” with major carriers.
The company is also commercializing a new derivative of its multibeam antenna, with several carriers requesting trials. Carroll said Baylin still expects wireless infrastructure’s 2026 revenue, gross profit and adjusted EBITDA to be comparable with 2025, which he described as a very strong year for the business.
During the question-and-answer session, Daniel Rosenberg of Paradigm Capital asked about visibility and telecom spending trends. Carroll said Baylin has diversified beyond its previous reliance on specific U.S. carriers, expanding sales across multiple carriers, third-party operators, system integrators and private 5G opportunities.
He said January and February were slower, partly because some carriers started the year slowly, but added that products are selling across a broader set of customers. Carroll cited a multi-phase small-cell upgrade in Manhattan from a third-party operator as an example of future demand, noting that Baylin has received only the first purchase order so far.
Custom Antennas Improve; Satcom Faces Slower Order Conversion
Carroll said custom antennas performed at “reasonable levels” in the quarter. Revenue was largely consistent with the prior-year period, while improved gross margins and operational efficiencies supported stronger adjusted EBITDA. He said Baylin expects demand to recover further in the second quarter and expects full-year 2026 revenue in custom antennas to be stronger than in 2025.
He also said active bids for new projects remain near record levels. Carroll noted that Baylin has been asked to perform retrofit projects after an end customer determined a competitor’s product performance was not meeting its needs.
Satcom remained the company’s more challenged business in the quarter. Carroll said results were affected by reduced demand for specialized custom-engineered products such as high-power amplifiers. While Satcom backlog increased during the quarter, he said it remains lower than management would like, and conversion of opportunities into orders has been slow.
Carroll pointed to geopolitical dynamics and defense-related opportunities, saying government purchasing decisions and purchase order releases tend to move slowly. He said Baylin expects Satcom’s 2026 financial performance to be weaker than in 2025 and has taken steps to align costs with current volumes. In May, Baylin placed 19 employees on temporary layoff, with parts of the remaining workforce participating in a federal work-share program that reduces regular working hours.
Asked by Rosenberg about the longer-term Satcom product portfolio, Carroll said newer products such as Genesis and Summit III use a common component architecture intended to simplify supply chains, reduce costs and improve margins. He said those products began gaining traction with customers last year and are now seeing repeat orders.
Liquidity, Debt and Cost Pressures
Baylin’s backlog was CAD 22.9 million at March 31, up from CAD 20.4 million at Dec. 31, 2025. Backlog stood at CAD 21.9 million at April 30. Carroll said the company continues to face macroeconomic and geopolitical uncertainty, including tariffs, transportation costs and raw material prices.
Gary said net debt was CAD 12.1 million at March 31, down about CAD 0.3 million from year-end, largely due to cash generated from positive working capital movements during the quarter. Baylin’s existing revolving credit facility matures at the end of May 2026, and the company is working with a prospective lender to replace the facility concurrent with the Kaelus acquisition closing.
The company’s 8.5% convertible unsecured debentures mature on June 30, 2026. Gary said Baylin intends to repay the CAD 5.1 million outstanding principal in common shares rather than cash, using its right to do so at 95% of the current market price.
On tariffs and transportation costs, Carroll said Baylin is confident in its tariff mitigation strategies. He also said metals prices remain elevated, requiring the company to work on supplier pricing, operating efficiencies and cost reductions.
“It’s our job to manage our cost structure and still drive to profitability,” Carroll said.
In closing remarks, Carroll said the quarter was “not the quarter that I necessarily wanted,” but said he was encouraged by elevated backlog, infrastructure momentum and the Satcom pipeline, while reiterating enthusiasm for completing the Kaelus combination.
About Baylin Technologies (TSE:BYL)
Baylin Technologies Inc is a diversified wireless technology management company. It focuses on the research, design, development, manufacturing, and sales of passive and active radio frequency and terrestrial microwave products and services.
