A presentation by Leighton Carroll, the CEO of Baylin Technologies, during the Small Cap Growth Confence of Virtual Investor Conferences. In the video presentation, Leighton Carroll outlines the company’s operations, market positioning, and growth strategies within the telecommunications and satellite communications sectors. (Full Transcript below.)
- Trades on OTCQB venture market under the symbol BYLTF
- On the TSX under the symbol BYL
Video Presentation
Transcript
Hello and welcome to Virtual Investor Conferences. On behalf of OTC Markets, we’re very pleased you joined us for our Small Cap Growth Conference. Our next presentation is from Baylin Technologies. Please note you may submit questions for the presenter in the box to the left of the slides, and you also may view company’s availability for one-on-one meetings by clicking Book Meeting in the top toolbar.
At this point, I’m very pleased to welcome Leighton Carroll. He’s the Chief Executive Officer at Baylin Technologies, which trades on the OTCQB venture market under the symbol BYLTF, and on the TSX under the symbol BYL. Welcome, Leighton.
Leighton Carroll, Chief Executive Officer, Baylin Technologies
Thanks for having me. All right guys. Appreciate the time. I appreciate everyone who’s here to learn about us.
I’m going to walk through some slides, point some stuff out toward the end of this. There will obviously be Q&A. Would love to answer questions. Actually pretty excited about the company and what we’re doing. We’re a unique company and probably better to let me just go ahead and explain it.
Baylin, it’s been around, through a predecessor businesses for over 40 years. We work in three kinds of key verticals, and all of our products are built and effectively predicated on RF engineering capabilities that we have. So we do three things. We do satellite connectivity, wireless infrastructure, and embedded antennas.
And I realize this is a bit of an eye chart, so it’s maybe it’s best that I just walk through each.
So when I talk about satellite communications. There’s a lot of stuff going on in the market right now, but we’ve chosen to play in a very particular segment of that market and that’s actually important, right?
So let me explain this. First of all, we don’t put things in space. We don’t make satellite dishes. We focus on high-powered gear that effectively makes that work. The easiest way to explain this to people is if you like football, if you like golf, when you see the Super Bowl, when you see the Master’s Golf tournament on TV, and many more, those broadcasts you watch are actually powered by our gear. We do a lot of work with the US government, with NATO governments. And by the way, that’s interesting because, I think most people know who Starlink is. I think we all know who Elon Musk is. Starlink is great technology, and we saw that coming, and it was going to disintermediate certain segments of the market by focusing on high power. We’re playing in spaces where Starlink really isn’t ever going to play. And I’ll give you an easy example. So when I talk about NATO government work, what you what you see here, and I just threw a pointer on it, that is a huge amplifier system.
The two systems here and here. That represents effectively about a $2 million purchase order. Why is that interesting? This is for a US DOD application. We work with large defense contractors. This is part of a larger system. And while that’s interesting, what’s perhaps more interesting is that’s one system.
There are 15 to 18 more of those because, like many of these large programmatic opportunities, that is a multi-year, by the way, multi-purchase-order opportunity for us where once you’re in and as the standard—you are the standard for what they will do next for that technology. It’s a cool place to be.
We have several things like that, and then we obviously do a lot of what I would call the normal base hits that you do in any business. So when I look at a system like that, yes, we have purchase orders in right now. We are working on delivery of another system right now for that. And there are many more coming, and we don’t have those purchase orders, but we know it’s part of a large multi-year program.
So that’s a little bit about our satellite technology business. Without giving you all the details about the exact things of what we do, we’re happy to talk about that, of course, but we are a neat business, and we feel that we’re in a very good place with how we’ve chosen to position ourselves.
By the way, maybe one other important fact about this business: If you look at the markets and where it’s been, Starlink has disintermediated the bottom. You’ve got Project Kaiper, Blue Origin, which is Amazon getting ready to come in. Those are playing in different segments, but there are other people who do higher power levels.
As you go up to higher power levels, it really thins out, which means the competitive dynamic changes. It allows you to maintain pretty reasonable margin profiles and build actual competitive differentiation, which is something I think about all the time. All right. Going to the next slide. Wireless infrastructure: so the easiest way to say it is we sell antennas specifically to wireless carriers, 3POs, and systems integrators who work in the wireless space.
And, a way to frame this, so I’ve just had my fourth year anniversary with the company. When I joined the business, I felt like we were trying to be “me too.” And competitive advantage does not come from “me too.” You have to have competitive differentiation that matters. So what matters? And we chose to focus on particular use cases and particular capabilities that would matter to those end customers, and in places where we could get our own patent book and have unique competitive advantage. So let me just talk really quickly. I’m going to start here with this guy, which is the world’s thinnest antenna, right? So I actually have one, hopefully you guys can see this. So this is, yeah, it looks like a Frisbee.
That’s not what’s interesting about this. As I turn it this way, hopefully you guys can see that. This thing is hotel room card key thin. Why does that matter? If you go to some of the related properties in New York class A office space, they don’t want salad bowls on their ceiling. If you go to MGM casinos worldwide, they care about the aesthetic.
Those are paintable. Scannable, by the way, very patented. And they work fantastic. We’ve sold thousands. This. It looks like a stick. Why is that important? If you look at this picture, and you’re looking at the Empire State Building and a light pole outside it, what do you see?
You see a light pole with a stick on it. Why does that matter? On the strength of this product and the strength of our carrier relationships with AT&T, T-Mobile, and Verizon as an example, Crown Castle awarded us all five boroughs of the city exclusively for small cell by focusing on having high quality RF product where aesthetic matters.
That has driven a lot of sales for us, and by the way, it has allowed us to expand this product. It is actually very important for us and has been a big reason for our growth. And I’m going to come back to what we’ve been up to here in a bit. That’s called a multi-beam. So when I joined the company, we were just getting our first one out.
We now are well north of 30 of these and are considered the leader in this product. There was a legacy technology that did multi-beam, and I can explain the technology behind this, but that handled high density, high traffic. And they really dominated the market. There were only a few problems with it.
They basically look like big globes. They’re insanely heavy. They were insanely expensive. And by the way, long lead times, we have patented panel-based technology that has allowed us to effectively start to disintermediate that legacy. They cost less, they weigh half, and they cost less in a material way.
And by the way, they work fantastically well. So as an example, we never sold into Europe in this business line. We now work with Vodafone, Telecom Italia, several other operators in Europe. We have trials with two more major European carriers. And this is an example. You can’t see this ring here, but this is 80-something-thousand people at a Harry Styles concert in Europe. The wireless carrier liked this technology so much, they actually put their logos on the antennas. So the fans who were going to this could see if they had good coverage, they knew why, they could see the product, see the logo.
This is on a Verizon site. This is in an NBA arena. This product has been a huge growth engine for us. And by the way, super patented. And so by building a unique book of patents and technology and focusing on competitive differentiation, it’s allowed us to grow. And then finally, we have always been really strong in stadium antennas.
I’ll give you examples. You can obviously Arrowhead, AT&T, and Verizon just completed a major upgrade at Bryant–Denny, University of Alabama Football. It’s all our gear. A neat place to be known. Obviously these are competitive markets. There are lots of businesses in this space. But I’m going to talk about our growth in each of the businesses in a second, from 24 over 23, and it will explain why some of the strategic points I’m laying out for you and why, where we’ve chosen to play versus chosen not to play has actually been very critical in achieving that growth.
Our final of the three business lines is our embedded line. And the way to explain this is if you want cheap antennas for some IOT application, there are plenty out there. You can go to Quectel, you can go to fiber on both the Chinese guys, and they have off the shelf antennas that engineers can just stuff in.
When customers care about the RF quality of what they give their end customers, they come to us because we engineer antenna solutions that we then manufacture that are embedded into other people’s products. We do a lot in home automation, WiFi, and I’m going to show you our customer list. You’ll connect some of the dots here.
This one is actually a really neat success story for us. So that is a body armor camera. Think police officers and first responders from a company called Axon, formerly called TASER. That’s critical communication that when a police officer or officers are turning on their body armor camera in a critical incident, it has to work.
And by the way, not just work and store it locally, it has to get up, get stored in the cloud, and back to the command center so they can see what’s going on. They chose us for the antennas to make the wireless connectivity work. We launched that in Q4 of 23, and it has just been a great product both for us and for Axon.
But that’s a really crystal example of when we get chosen and why we matter in this space. It’s great to talk about all of this. If all of this stuff I was saying wasn’t real, I don’t think our customer role would look like this. You can see the level of customers we work with.
And by the way, on this four-year journey, since I’ve been in the company, this has clearly expanded. And it’s one thing that I’m very proud of what the team has done. I’m very proud of the change in our go-to market. And you can see how there’s been growth.
To frame this 23 versus 24 to the good full year views, 23 was a bit of a challenging year, particularly for wireless infrastructure and for embedded wireless infrastructure. Wireless carriers have spent a lot in the prior years getting C-band deployed. T-Mobile was having a Sprint integration, we were barely active in Europe.
As we got to 24 for wireless infrastructure, 2024 is widely considered the lowest capital spend year in the last six, and I would argue dollar adjusted in the last 10, for wireless infrastructure. Sounds like a terrible year. It was for a lot of people in the industry. Our infrastructure unit grew 40% last year. Over 2023, the embedded unit saw inventory, builds, a bunch of stuff going on, and at the end of 23 had lower volumes.
We actually expected that to continue in 24. The opposite happened because of the diversity of our products, several of our products being successful. That business grew 23% year over year and satellites, even with Starlink coming into the market, and Starlink disintermediated the maritime and aviation space very clearly.
Our business was flat year over year, and I’m actually very proud of the team for being able to get that result. Talking about where we’re going. So one is new markets, and this is an easy one both within the embedded organization and within the infrastructure organization. We are looking to expand and do more in Europe, and we are already getting a good reasonable amount of traction in that.
And by the way, that’s obviously going into organic growth and margin expansion. Part of the journey that we’ve been on since I’ve been here is to improve the margin structure of the business. And by the way, you can only do that if you’re operationally efficient. You have good control and use of your data, but you’ve also focused on, for us in particular as an OEM, use cases that matter to customers where you can drive that competitive differentiation.
Our margins have expanded pretty dramatically. When I got here, we were probably running around 15, 16% all in. We closed 24 at about 42% and trending a bit higher. By the way, one thing to talk about is tariffs. We’ve actually done a really good job managing that. And I can talk about that all day.
I know more about tariffs than I ever wanted to at this point. Inorganic growth is a big deal. A couple things. Just by the way of background, I used to run the merger integration team for AT&T Mobility. I’ve been in the middle market since 2014, have bought and sold several companies, and also have worked successfully in the PE world, having a successful exit for the PI workforce, selling to a strategic.
We look at, are there ways to further diversify our revenue, diversify our customer base, diversify geography through M&A. The trick in that is it’s great to talk about, to get it right. You have to be highly selective and be patient. And for me in particular, I tend to be very selective. I’m only going do something if I think it’s going be material, help the business, and grow shareholder value. If it’s not doing that, it’s not worth the time, and we have other things we have to do with respect to new product innovation. There’s a lot going on in this space. So both within the satellite business and within the infrastructure businesses we have launched and are continuing to launch new products in infrastructure.
We have a new derivative technology of our multi-beam. It’s neat. It’s not going to be commercial until more the second half of this year, we’ll have our first unit out as we explain that technology to wireless carriers. We had seven tier one carriers. So there are only three in the US and three in Canada.
So we’re past that. And by the way, one of the US isn’t there yet. So you get a sense that as we have talked to people who get this new technology and what it can do for them. And literally, obviously we have to get the mechanics right. We have to get the commercials right. It is a good use case for our technology.
That is a unique opportunity. By the way, patents have already started to be filed, planning to commercialize later this year. Really, that’s going to be a 26/27 growth story. Within the satellite business, it’s been a lot about product renewal, removing legacy product, getting to a simpler, more modular architecture, which by the way is important to me.
It helps improve and defend our competitive differentiation, but it’ll also simplify our supply chain and over the long haul, improve profitability. Finally, new logo expansion is going to continue to be a big thing for us, and we’re seeing further opportunities in that space.
We have a management team. There’s a lot of gray hair. It’s probably a big surprise. And we have a board of directors. Obviously you guys will see this. Lots of people with lots of great experience and more gray hair. Good people though. I like our board, and I like the leadership team, honestly.
And then maybe the final thing to wrap up is our shares outstanding. This is where we are. And by the way, the plan is not to be here. It has been a journey: when we started, when I started, the company was upside down in terms of its operating profitability, its operating EBITDA, and it had a great deal of debt. Over these four years, we have returned the company to driving growth, having off upside, actually generating cash flow, positive operating in EBITDA.
And by the way, we’ve cut the debt in half. More work to do there. But it’s been a good journey, and I feel solid about where we’re going. So with that, I probably used up a lot of time going through a bunch of stuff. Look, at the end of the day, I like our company. I think it’s pretty cool. And there are a bunch of questions that have come in.
So I’m going to come through and bang out some of these and give you guys a sense of them. One, what is the addressable market for infrastructure and what is Baylin’s market share? It’s a tough question to ask because a lot of the data in terms of total wireless spend covers everything. To give you a sense, we compete with CommScope, which is now called Andrew, underneath Amphenol.
Since that acquisition, we see Ericsson, we see Nokia, we see JMA, and then there’s a highly fragmented market of a lot of smaller guys. Total market share, I would argue we’re still on the small side, but I think there are really two of us in the multi-beam space. And by the way, there’s a lot more spending there. So I know I’m not giving it the crispest answer.
It’s because a lot of the data is noisy and then you throw in geography. Within North America. I think we’re well respected in taking share. Within Europe, we’re nascent, and if you look at just the antenna spend between those two markets, we’re into the low billions of dollars on an annual basis that would be spent in this space.
And we’re growing and see further upside. Can you provide some more color around the strength of the IP portfolio? So the IP portfolio for us, we really focused on a handful of key things, and it’s allowed us to be differentiated. So we have multiple patents granted, we have multiple patents underway. And when I talk about patents, I talk about there’s your core patent set, which is how you do what you do. But we knew we caught the tiger by the tail, so to speak, on the multibeams. We put defensive patents in place. How do we build a moat? And we talk about that internally.
It’s not just about having the patents on what you do, but how do you build a moat so that your competitors can’t do what you do. And within multibeams, I feel pretty good about that. The legacy company is trying to drop prices to figure out how to compete with us. But we are taking share and feel pretty good about it.
And by the way, just to frame this, our multibeams are approved at Rogers, AT&T, Verizon, T-Mobile, and obviously now in Europe with more trials coming. That’s based on having this IP portfolio, not just having product, but knowing that other people aren’t going to be able to replicate that—that sets us up for future success.
Providing 2025 revenue projections and what is the path to profitability? So this one’s a little bit funky to answer because my board has had a longstanding policy. They don’t like giving forward looking projections. I would, every time I do a quarterly call, I will always talk about the business environment, where we’re going. We feel like this year is going to rhyme with last year.
I feel good about the first half of the year, second half of the year, and dealing with tariffs and some of the uncertainty with the current geopolitical situation is something that we look at regularly, and it has certainly caused challenges for us even in the first half of the year.
Certainly tariffs kept a lot of us up at night, particularly in April. Feel like the business has been very resilient. We’re actually, I’d like to think that we’re pretty smart in how we’ve handled tariffs, meaning in certain cases we’re able to pass on pricing. In other cases, we’ve been very successful at mitigating the impact of tariffs.
And continuing to drive profitability, our product mix has helped. In terms of timeline to overall profitability from a cashflow perspective, we’re running along fine. From an overall profitability perspective, we’re on the cusp. And really, by the way, that’s not good enough. It’s world’s better than where we were.
But from an adjusted net income perspective, we’re right there. And with additional growth, I feel pretty good about where this business is going.
Competitive environment for the three divisions, how do you differentiate? Within wireless infrastructure, it’s really been around choosing where we play and driving real competitive advantage.
And we’re a Canadian company, so to use the Wayne Gretzky saw, we try to skate to where the puck’s going and get there before our competition with really unique technology. And so far, knock on wood, we’ve been doing that. We could expand into other product areas, but we’ve been very cognizant of how do we control costs, how are we efficient on our R&D?
And is it going to be of real value? Not just having a huge addressable market, but actually driving growth in real profitability and margin defense, or in some cases, margin expansion. Within the embedded space, we are known for delivering high quality RF. There are a lot of guys who are in that space who do fast and cheap.
Fast and cheap is great for certain applications, but if you’re AT&T and you care about the wireless experience inside a small business, inside a home for the equipment that’s sold there, if you are NETGEAR and you have high-end RF equipment, you need to make sure that it’s really quality.
If you’re Axon and it has to work, you don’t use those guys. You typically will come to us. There are a handful of other competitors. Airgain is an easy one to point to. They are traded on NASDAQ. We do see a handful of other people, but we feel like we’re in a really decent place for our business and are looking for this business to continue to grow.
One thing I should maybe say is that historically this business has grown very linearly. It is a programmatic business. When we win a project like with Axon, that’ll run for three years, guess what? Then the next one comes out, and we’re in on that and it continues. So you get the sense here.
So if RF matters, that’s our competitive differentiation in how we play there. That’s less product off the shelf and more custom engineering of product we then manufacture that is embedded. Within the satellite communication space. We compete, there’s a handful of people. Teledyne Paradise is an easy example.
Lots of guys who try to get into this space. As you go into lower power levels, there’s more competition as you go into higher power levels; it really thins up and that’s where you see three or four of us at a time. And then in things, for example, what we do with NASA, the NASA Artemis lunar space mission, when those modules go out towards the moon, the communication from the earth is powered by us. That’s in very unique frequency bands. We are leading in that space because of the power in this particular frequency. I know that’s a little bit of an obtuse, technical way to explain it, but we compete in unique places that matter, which will have recurring spending for us.
And we can have a good defensible margin profile. So that’s how we think about the satellite space.
How much converts are left outstanding? I’m assuming these are the convertible to ventures. That is what the question is asking about. It’s a tick over 5 million. They are actually at a pretty reasonable interest rate for us.
And so far, there was an extension done a few years back that I actually was involved in. Most of the people in those ventures see that as an income instrument as opposed to a conversion instrument. That’s at least been my impression. We’ll assess those when they come up for potential conversion or extension at that point.
But from an overall capital structure perspective, that’s probably the lowest guy on the totem pole because we’re servicing it. And those guys are pretty happy guys. I think we’re about at the top of the time. I got through a bunch of questions. Really appreciate the time with you guys.
Obviously, hopefully you know that I have a passion for our business. Personally, I love what I do, and I’ve got really smart people who work for us, and we’ve done a lot of good things and appreciate you taking the time to listen to our story.
