Baylin Technologies (TSE:BYL) more than doubled third-quarter revenue after adding a full quarter of results from its Kaelus acquisition, but weaker wireless infrastructure demand and lower gross margins led the company to withdraw its 2026 outlook and seek a waiver from its lender.
The company reported revenue of CAD 35.3 million, up from CAD 16.8 million a year earlier, while its net loss narrowed to CAD 0.7 million from CAD 1.1 million. Adjusted EBITDA rose to CAD 0.7 million from CAD 0.6 million, marking its 11th consecutive quarter of positive adjusted EBITDA.
Chief Executive Officer Leighton Carroll said customers, particularly in Wireless Infrastructure, had deferred network deployments and orders into 2027. Baylin withdrew the financial outlook it issued in August and did not provide a replacement.
Margins and covenant pressure
Gross margin fell to 34.6% from 43.4% a year earlier and 47.1% in the second quarter. Carroll attributed much of the decline to product mix, including the addition of Kaelus, whose historical margins were lower than those of Baylin’s existing businesses, and greater demand for lower-margin in-building wireless products.
Although the company also cited higher component and logistics costs, Carroll told an analyst that component pricing was a relatively small part of the gross margin decline. In some cases, he said, higher component costs had affected demand by making customers’ own purchases more expensive.
Baylin missed the minimum adjusted EBITDA covenant for the second and third quarters combined and obtained a waiver from lender SAF. Chief Financial Officer Cliff Gary said the company’s financial statements disclosed a material uncertainty related to going concern, reflecting the covenant matter and the need for a longer-term agreement with the lender.
The credit amendment required Baylin to repay CAD 4 million of principal from a blocked account and deposit another CAD 2 million into that account. It lowered the minimum liquidity requirement to CAD 4 million from CAD 8 million, with the blocked account balance now counting toward that requirement. The interest rate increases by 1.5 percentage points until the senior leverage ratio, calculated on a last-quarter annualized basis, falls below 3.5 to 1.
Gary said the existing covenants, including the fourth-quarter tests, remain in place. Carroll said the repayment and deposit were completed after quarter-end, earlier in the week of the call. If fourth-quarter conditions in North America resemble those of the third quarter, he said Baylin expects it will need to negotiate a revised structure with SAF.
Carroll also said certain payments to Kaelus’s former shareholders, including one scheduled for November 15, were restricted under the credit facility. Baylin owns Kaelus and remains obligated to pay the former shareholders, he said, adding that the company was working with the parties involved but had not reached a final resolution.
Wireless delays and Satcom backlog
Carroll said North American carriers had redirected capital toward fiber supporting artificial intelligence data center buildouts, delaying spending on wireless infrastructure. Baylin expects fourth-quarter Wireless Infrastructure volumes to remain below historical levels and the full year to be softer than 2025.
The CEO expects carriers to resume spending in 2027, though he cautioned that next year would not necessarily resemble 2024 or 2025. He said the company has identified projects for which its products were designed in but that have been deferred.
Custom Antenna Solutions was also softer than a year earlier, as some customers delayed orders because of chipset availability and higher component costs. Baylin expects fourth-quarter revenue in that business to be comparable to the third quarter and full-year revenue to be similar to 2025.
In Satcom, Carroll said backlog increased significantly in late second quarter and into the third, supported by multimillion-dollar orders for Genesis amplifiers across broadcast, government and defense applications. He expects the fourth-quarter outlook to be more favorable, although full-year Satcom results are expected to remain below 2025.
Companywide backlog ended the quarter at CAD 50.9 million, approximately 2.5 times its level at the start of the year. It declined from the second quarter as Baylin shipped orders and Wireless Infrastructure order intake slowed.
Kaelus integration and margin plans
Carroll said Baylin is pursuing a margin improvement program at Kaelus, including evaluating whether to bring some contract manufacturing in-house, reviewing product designs and broadening the customer base. He also identified improved Satcom margins and a recovery in higher-margin Wireless Infrastructure sales as potential contributors to profitability.
For the first nine months of 2026, revenue increased 26.4% to CAD 73.4 million, while adjusted EBITDA fell to CAD 3.8 million from CAD 4.7 million. Net debt was CAD 12.7 million at the end of September, compared with CAD 12.4 million at the end of 2025.
Asked whether the combined business could still reach an adjusted EBITDA margin of approximately 10% over the medium term, Carroll said his view had not changed. He characterized that as achievable at a fuller operating run rate, while acknowledging the work needed to improve margins and financing.
About Baylin Technologies (TSE:BYL)
Baylin is a leading diversified global wireless technology company focused on cellular radio frequency products, custom antenna solutions, satellite communications products, and supporting services.
