U.S. Markets closed

Edited Transcript of BYL.TO earnings conference call or presentation 14-May-19 12:00pm GMT

Q1 2019 Baylin Technologies Inc Earnings Call

TORONTO May 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Baylin Technologies Inc earnings conference call or presentation Tuesday, May 14, 2019 at 12:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Michael A. Wolfe

Baylin Technologies Inc. - CFO

* Randy L. Dewey

Baylin Technologies Inc. - President, CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Andrew Brice McGee

National Bank Financial, Inc., Research Division - Associate

* Bill Zhang

Raymond James & Associates, Inc., Research Division - Analyst

* Gavin Fairweather

Cormark Securities Inc., Research Division - Analyst of Institutional Equity Research

* Kevin Krishnaratne

Paradigm Capital Inc., Research Division - Analyst of Technology

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Baylin Technologies Inc. First Quarter Results Conference Call. (Operator Instructions)

Thank you. I'll now turn the call over to Randy Dewey, President and CEO of Baylin Technologies. Please go ahead.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [2]

--------------------------------------------------------------------------------

Thank you, operator. Hello and welcome, everyone. Thank you for joining us this morning for our First Quarter 2019 Earnings Call for Baylin Technologies. Joining me is our Chief Financial Officer, Mr. Michael Wolfe. We'll both be available for questions at the end of the presentation.

So before we begin, let me make it clear that our comments today will include statements and answers to questions that could imply future events, such as our 2019 prospects and financial performance and could include the use of non-GAAP and non-IFRS measures. So it is obvious these subjects are subject to risk, uncertainties and assumptions. Accordingly, actual performance could differ materially from statements made today so do not place undue reliance upon them. We also disclaim our obligation to update forward-looking statements except as required by law. I ask that you read our legal disclaimer and refer you to the risk and assumptions outlined in our public disclosures, in particular the section outlined forward-looking statements and risk factors in our annual information form for the year ending December 31, 2018, and our filings which are available on SEDAR.

Q1 results were released after market yesterday. The press release, unaudited interim financial statements as well as the MD&A are available on SEDAR as well as on our website at baylintech.com.

In Q1, revenue grew to $39 million in the first quarter of 2019, an increase of $9.6 million or 33% over the first quarter of 2018. The increase is primarily due to strong revenue from Asia Pacific; Embedded Antennas; as well as Advantech Wireless products combined with the revenue from Alga Microwave, which we acquired in July 2018.

Revenue from Asia Pacific products increased by 33%. Revenue from Embedded products increased by 13% and revenue from Advantech products increased by 36% compared to the first quarter in 2018. These increases were slightly offset by a 6% decrease in Wireless Infrastructure revenue, which was impacted by a U.S. carrier delay in the approval of one of our small cell products. Asia Pacific's revenue in Q1 continue to be positively impacted by successful product launches by our major Asia Pacific customer. Advantech's revenue increased significantly in Q1 compared to the first quarter in 2018 despite the ongoing disruption in January due to the move from Advantech Wireless' previous facility to the Alga facility.

Gross margins were 36.7% in the quarter, which is slightly higher than the prior year. However, it was somewhat lower than we were targeting due to the sales mix. Asia Pacific revenue was higher in percentage of total revenue compared to previous quarters and the move of Advantech Wireless' operation into Alga Microwave caused some disruption, which did pull down the margin slightly.

Adjusted EBITDA in Q1 was $3.5 million compared to $1.4 million in the prior year. Adjusted EBITDA as a percentage of revenue increased to 9% -- sorry, increased to 9% in Q1 from 4.9% in the first quarter of 2018. This improvement was despite the items that negatively impacted gross margin in the quarter that I just noted.

I'd like to turn the call over to Michael to provide you with a little bit more detail on our financial results. Michael?

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [3]

--------------------------------------------------------------------------------

Thanks, Randy. As Randy discussed, we are pleased with first quarter financial performance. Trailing 12-month revenue has increased to $145.8 million as of March 31, 2019, as a result of organic growth and the acquisitions completed in 2018. Trailing 12-month adjusted EBITDA has increased to $17.4 million as at March 31, 2019. These trailing 12-month figures do not include annualization of Alga's financial results which was acquired in July of 2018.

In January 2018, in connection with the acquisition of Advantech Wireless, we entered into a $33 million term loan with Crown Capital. As a result of the company's strong 2018 financial performance, we were able to complete a refinancing of the Crown Capital loan. In March, we entered into a credit agreement with RBC and HSBC, establishing a revolving credit facility up to $20 million and a USD 21 million term loan. We used the term loan advance and a portion of the revolving credit facility to repay Crown Capital.

Repayment of the Crown loan resulted in a prepayment penalty of $990,000 and the write-off of unamortized debt issuance costs in the amount of $2.8 million. Both of these onetime expenses were included in finance expense in the first quarter. Interest rate on the revolver and term loan is currently 5%. The interest rate on the Crown loan was 9%. In the first year subsequent to the refinancing, we expect to lower our interest expense by approximately $1.3 million. This is primarily due to the lower interest rate but also in part due to the quarterly principal repayments, which will decrease the term loan balance during the year.

At March 31, 2019, we had a cash balance of $12.4 million. During the quarter, noncash working capital increased by $8.5 million primarily due to an increase in Asia Pacific and Advantech's accounts receivables due to higher sales in the latter part of the quarter. Other uses of cash in the quarter included an earnout payment to the vendors of Alga Microwave and capital expenditures of $1.8 million primarily relating to the Alga facility renovations and upgrades and capacity expansion at our Vietnam facility. At March 31, 2019, we had access to approximately $25.5 million of revolving credit facilities, of which $6.74 million was utilized. In total, we currently have outstanding short-term -- short- and long-term debt in the amount of $51.6 million.

At March 31, 2019, our net debt to trailing 12-month adjusted EBITDA annualized for the Alga acquisition was approximately 2.1:1. While we believe this is a conservative amount of debt relative to our cash flow from operations, we expect the leverage ratio to decline as operating cash flow increases going forward and the term loan principal payments are made.

The net loss for the first quarter of $5.9 million included the prepayment fee, write-off of deferred financing charges, other nonrecurring expenses and amortization of intangibles. Excluding these items, the net loss was $0.3 million.

A new accounting standard for leases became effective January 1. The new standard requires lessees to recognize lease contracts that were previously recorded as operating leases on the balance sheet, resulting in a right of use asset and corresponding lease liability. As of March 31, 2019, the right of use asset was $3.9 million and the lease liability was $4.3 million.

I'll now turn the call back to Randy for his concluding remarks.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [4]

--------------------------------------------------------------------------------

We are pleased with the Asia Pacific revenue growth in the quarter, especially in light of the revenue decline in 2018 compared to 2017. The momentum that started in Q4 has carried over into Q1 and we expect it to continue through Q2 and Q3 this year.

We're also pleased at the progress that has occurred at Advantech Wireless since the acquisition in January 2018. During the first few months of owning Advantech Wireless, a considerable amount of time was spent separating the divisions we acquired from the division that the owner continued to own and operate. While the divisions had distinctly different product lines at the time of the acquisition, the manufacturing, sales, IT, accounting functions were fully integrated. Advantech Wireless' President, John Restivo; and the Vice President of Global sales, Tony Radford; along with the rest of the management team, have made significant operational improvements and we can expect to continue to realize the financial benefits during the remainder of the year.

Since the acquisition in July of last year, Alga Microwave with Michael Perelshtein's leadership continues to perform as we expected. Michael was instrumental in getting the renovation at the Alga facility completed in a very short period of time to accommodate the move of Advantech and has been a key contributor to the operational improvements at Advantech as well. We are holding our Annual General Meeting today at 11:00 a.m. and hope to see you there.

That concludes my formal remarks. And with that, operator, I'd like to open up the call for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question comes from the line of Kevin Krishnaratne from Paradigm Capital.

--------------------------------------------------------------------------------

Kevin Krishnaratne, Paradigm Capital Inc., Research Division - Analyst of Technology [2]

--------------------------------------------------------------------------------

First a question, Randy, just on mobile. If you don't mind, digging a little bit deeper. I know you mentioned strength from a particular large Asian vendor in the quarter. In some of the previous quarters, you'd seen some strength from smaller Chinese and Indian vendors, I believe. So I just -- I want to get your thoughts on, you mentioned accelerating growth in Q2, Q3, just if you could talk about the mix and the type of vendors and any commentary you could provide with regards to that segment.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

So if you look at the -- what I mentioned in the call, we had 6% decrease in the Wireless Infrastructure but that decrease was fully made up because we hit the revenue expectation, and that came from mobile. So there was strength from a major product launch in Q1 that really shored up some of the revenue challenge that we had as a result of the one division being a little softer. So -- but of course, as you know, the mix also affects margin, which is why we were slightly soft on EBITDA than anticipated. So -- but that comes as a result of the -- having a little larger mobile concentration than originally anticipated.

--------------------------------------------------------------------------------

Kevin Krishnaratne, Paradigm Capital Inc., Research Division - Analyst of Technology [4]

--------------------------------------------------------------------------------

Right. But as you look into Q2 and coming quarters, are you seeing interest from a growing mix of vendors?

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [5]

--------------------------------------------------------------------------------

Yes. We continue to add customers quarter-over-quarter. I think the last presentation that we have posted on our website, we're topping 800 customers now on our way to 900 customers. So what we're seeing, from the diversification of our revenues, also coming out a very significant diversification of our customer base. So the types of products and the types of diversification we have today is vastly different than where we were several years ago, of course. And it's certainly proven out into the finances, which I think is one of the real positive notes of the quarters that you could see. Even though we were softer in one division, we were stronger in another division. And having that diversification of customers and diversification of product line is -- plays out to be helpful when you have the various ebbs and flows in business, obviously.

--------------------------------------------------------------------------------

Kevin Krishnaratne, Paradigm Capital Inc., Research Division - Analyst of Technology [6]

--------------------------------------------------------------------------------

Great. And so second to that, on the other segment, on infrastructure which did see some softness. In the MD&A, you mentioned there was a delay related to an approval that had since been received in Q2. Does that revenue get booked in Q2? How do we think about how that revenue shakes out versus the balance of the year?

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [7]

--------------------------------------------------------------------------------

So it did get fully approved, and that we were certainly thankful for. It was a lot -- it was like 4.5 months slower than anticipated. So -- but once it was approved, then we started to see the engineering related to that product rollout, so it was a couple of weeks before we ended up seeing the purchase orders. So it had an impact, a slight impact in Q2 just because it came -- the orders came closer to halfway through the quarter than at the beginning of the quarter. So -- but we're not concerned about the consensus on their infrastructure group for the year. But any shortfalls, the 6% in Q1, will be made up more specifically in the second half of the year as opposed to in Q2.

--------------------------------------------------------------------------------

Kevin Krishnaratne, Paradigm Capital Inc., Research Division - Analyst of Technology [8]

--------------------------------------------------------------------------------

Okay. And just -- is that related to small cell or base station? How do we think about what that -- what it related to?

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [9]

--------------------------------------------------------------------------------

Yes, small cell for sure. And base station, we have launched products. We are working through certain homologation efforts and getting approval for our reps. So there are still some technical aspects to our base station product line that are working through some of the final stages of approval. Very confident that's going to move through. We've seen some good progress on that front. We have other products. Lots of base station antennas are being developed right now. Once that rep is finally approved, then we'll see a much more diversified rollout there. So -- but we expect that more towards Q3, and that hasn't been something that we had -- that is in the numbers that are in the consensus. Most everything is related to DAS, small cell and some of the in-building to our DAS product line, not the base station. So base station for me is sort of upside to that. If we can get that all accomplished by Q3, which is where we're looking, that should be a positive for us from a momentum perspective.

--------------------------------------------------------------------------------

Kevin Krishnaratne, Paradigm Capital Inc., Research Division - Analyst of Technology [10]

--------------------------------------------------------------------------------

Okay. Randy, one last one from me, just a clarification. With regards to the gross margin impact due to the overtime, can we take the add-back to the EBITDA, the $485,000, is that fully related to the -- what we'd see in the gross margin impact?

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [11]

--------------------------------------------------------------------------------

Michael?

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [12]

--------------------------------------------------------------------------------

Those adjustments were unrelated to the ones Randy's just been talking about. So that wasn't the reason for the lower gross margin in the period. Those adjustments all hit the G&A line, not cost of goods sale -- not cost of goods sold.

--------------------------------------------------------------------------------

Kevin Krishnaratne, Paradigm Capital Inc., Research Division - Analyst of Technology [13]

--------------------------------------------------------------------------------

Okay. So what would have been the gross margin impact related to the overtime?

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [14]

--------------------------------------------------------------------------------

Well, for the sales mix and the disruption at Advantech, I think without that, we would be closer to the margin that we had in 2018. So high [30s], 37%, 38%.

--------------------------------------------------------------------------------

Operator [15]

--------------------------------------------------------------------------------

Our next question comes from the line of Gavin Fairweather from Cormark.

--------------------------------------------------------------------------------

Gavin Fairweather, Cormark Securities Inc., Research Division - Analyst of Institutional Equity Research [16]

--------------------------------------------------------------------------------

Just wanted to start out on the cost savings. I know that you've consolidated your facilities, I guess, late in December. Curious how much of your target has been realized there and is visible on the Q1 numbers.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [17]

--------------------------------------------------------------------------------

So the integration certainly was completed, and the physical move was accomplished in the time line that we had in front of us, which was pretty aggressive time line. I would say 50% of our synergy target has been realized. But as you know, certain things take time, like certain leases expire for facilities that we do not occupy anymore. So through the course of 2019, we anticipate to realize the items that were related to dis-synergies. The full impact of the financial improvement, we would expect that in 2020. But you're going to get certainly portions of that through -- being realized in the quarters. I would say it's smaller in Q1, the amount, just because of the -- a lot of stuff would be starting to show up more in Q2 and 3 and 4. And then of course the full year of 2020 is what we anticipate would be the brunt of the synergies and the financial impact would be realized.

--------------------------------------------------------------------------------

Gavin Fairweather, Cormark Securities Inc., Research Division - Analyst of Institutional Equity Research [18]

--------------------------------------------------------------------------------

Okay. That's helpful. And then within the satellite division, I know on the last call, you -- we kind of chatted about some supply chain issues that at the time I think were in the process of normalizing. Just wanted to get an update on that and whether that supply chain is fully back to normal now.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [19]

--------------------------------------------------------------------------------

Yes. And that cleared through Q1. It certainly was still present as the year crossed, but by the time we got through -- halfway through February, we had seen a lot more of those -- that product, that raw material come through. And then -- and now the supplier's in a much better position. So we're not plagued with that issue. The only thing we're plagued with is the back orders related to that issue, and that was -- that kind of compiled over Q3 into Q4. And it's great in the sense that we have a very strong and healthy backlog. It was unfortunate that we couldn't have cleared that backlog and had a better book-to-bill rate than we experienced in 2018. But now that, that issue is resolved and the move is resolved, we're seeing a lot better throughput and book-to-bill rates out of Advantech and Alga today on...

--------------------------------------------------------------------------------

Gavin Fairweather, Cormark Securities Inc., Research Division - Analyst of Institutional Equity Research [20]

--------------------------------------------------------------------------------

Of course it happened at the same time as you were moving, right?

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [21]

--------------------------------------------------------------------------------

Yes, that's right. Yes. We got a [double-whammy] there.

--------------------------------------------------------------------------------

Gavin Fairweather, Cormark Securities Inc., Research Division - Analyst of Institutional Equity Research [22]

--------------------------------------------------------------------------------

And then maybe just one last one for Michael. From reading through your disclosures on IFRS 16, am I reading correctly, it's about a $1 million impact on the EBITDA line? Is that roughly the quantum there? Or...

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [23]

--------------------------------------------------------------------------------

No. I...

--------------------------------------------------------------------------------

Gavin Fairweather, Cormark Securities Inc., Research Division - Analyst of Institutional Equity Research [24]

--------------------------------------------------------------------------------

Just on the lease expenses.

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [25]

--------------------------------------------------------------------------------

More -- a little under $300,000, $280,000.

--------------------------------------------------------------------------------

Gavin Fairweather, Cormark Securities Inc., Research Division - Analyst of Institutional Equity Research [26]

--------------------------------------------------------------------------------

In a quarter or for the full year?

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [27]

--------------------------------------------------------------------------------

For the quarter, yes.

--------------------------------------------------------------------------------

Operator [28]

--------------------------------------------------------------------------------

Our next question comes from the line of Andrew McGee from National Bank.

--------------------------------------------------------------------------------

Andrew Brice McGee, National Bank Financial, Inc., Research Division - Associate [29]

--------------------------------------------------------------------------------

Just wanted to dig a little bit more on to the nonmobile side and actually more specifically on carrier spending. As we think about small cells and base stations alongside some of these mergers that are happening in the U.S., I'm hoping that you can provide a little visibility into how your backlog is forming. And possibly -- I know it's hard to pin, but at what point this year you think that maybe you'll see an inflection point in the growth rates?

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [30]

--------------------------------------------------------------------------------

So great question. Obviously, T-Mobile and Sprint merging, and that's been a bit delayed. And you've got 2 carriers that are sitting on ice waiting for final approval. AT&T had announced that this year was the year of small cell. There's obviously -- Verizon's got a pretty aggressive plan for small cell buildouts. So the carriers are each and individually challenged with various -- not setbacks, but various delays, and in certain areas, various accelerations. So we -- because we are diversified in the sense that we deal with all the carriers in North America, where some are strong and others are weaker in the proliferation of the buildout of their network, we certainly feel those ebbs and flows at times.

However, that being said, small cell was a little slower out of the gate, and you can see that certainly in what we talked about earlier on the call. But we're seeing that the momentum for that has turned as the beginning of May, so to speak. So I think you'll start to see really more the -- if you're looking for an inflection point, the inflection point's probably more like Q3, not necessarily Q2. Though we have a strong enough backlog that I'm not worried about some consensus numbers for the infrastructure group for Q2 and certainly the overall of the company. So -- but if you're asking specifically about infrastructure, I would say Q3 is more of your inflection point.

--------------------------------------------------------------------------------

Andrew Brice McGee, National Bank Financial, Inc., Research Division - Associate [31]

--------------------------------------------------------------------------------

Okay. And maybe just digging a little bit more on your backlog. I know you guys don't disclose that number, but would you be able to help in terms of giving us a sense on the order of magnitude and how much that might have built in the last year, over the last few quarters? Is it up double-digit percent? Is it up significantly more than that? Just any kind of comments on that would be helpful.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [32]

--------------------------------------------------------------------------------

Certainly double digits. I would -- from this time last year to this time this year, it's definitely up double digits. Certainly be the lower side of double digits than the higher side of double digits but it is up double digits for sure. If you think about it, I think we mentioned on the previous call that we had launched more products in 2018 than any year prior. And in fact, if you were to take in infrastructure the previous 5 years, we hadn't launched as many products as we did in 2018. So we have a much broader and deeper and stronger product offering today than we did 12 months ago and there's demand behind each one of those products. So we are definitely up as it relates to the back order. Are we subject to certain delays when it comes to certain products? Yes. Sure. That happens at times, but we're not overly concerned about it on a full year trajectory.

--------------------------------------------------------------------------------

Andrew Brice McGee, National Bank Financial, Inc., Research Division - Associate [33]

--------------------------------------------------------------------------------

Okay. Great. And then maybe just one for Michael. Now that the facility consolidation is pretty much complete, what do you expect the normalized OpEx level to look like? And should we expect to see maybe a build in investments here as we look throughout the year? Or should it be a walk down as you realize synergies?

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [34]

--------------------------------------------------------------------------------

I think Q1 is probably a fairly good run rate for the year in terms of total OpEx. And over time, we expect that to decrease as a percentage of revenue. Not in absolute dollars necessarily, but in -- as a percentage of revenue. And we will get some of that pickup in G&A this year from continued synergies that we're going to realize. But I would say Q1, again, is probably a good run rate.

--------------------------------------------------------------------------------

Andrew Brice McGee, National Bank Financial, Inc., Research Division - Associate [35]

--------------------------------------------------------------------------------

Okay. Great. And then just my last question here. You've restructured your Crown debt to more traditional financing rates, which is great. I'm wondering, Randy, if you have any thoughts on any future M&A now that you could potentially look at more attractive accretion levels.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [36]

--------------------------------------------------------------------------------

So we've certainly been on record that M&A is definitely part of our strategy, the inorganic aspect of it. I think we mentioned on the previous couple of quarters that we wanted to digest what we had accomplished in 2018, and I think you've heard the sentiment on the call that we feel like the integration is complete. There's still lots of things to do, but we're over the lion's share certainly of those efforts. And so yes, our attention has turned to other opportunities. And of course, once you do acquisitions and you're on record, your inbound calls start to go up, no doubt. So we've certainly been fielding opportunities.

But I think we've demonstrated historically a level of patience. We're not just acquiring for the sake of acquiring. We want to acquire in areas that are important to the company, important to the foundation of Baylin. So we will continue to be patient yet very -- high degree of scrutiny on these acquisitions and these opportunities. They have to be accretive and they have to be important to the future of Baylin and certainly fundamentally sound as it relates to -- continue to strengthen our core of our company. So yes, we are thinking about that. We are turning our attention towards that in 2019.

--------------------------------------------------------------------------------

Operator [37]

--------------------------------------------------------------------------------

(Operator Instructions) Your next question comes from Bill Zhang from Raymond James.

--------------------------------------------------------------------------------

Bill Zhang, Raymond James & Associates, Inc., Research Division - Analyst [38]

--------------------------------------------------------------------------------

Just one question for me. Do you guys expect free cash flow to be positive in each of the next 3 quarters? Or can we expect some more onetime cash expenses? Maybe a little color on that.

--------------------------------------------------------------------------------

Michael A. Wolfe, Baylin Technologies Inc. - CFO [39]

--------------------------------------------------------------------------------

It's always difficult to figure out exactly the working -- nonworking capital changes between quarters, especially when -- at the end of any particular quarter. But that will really depend on the sales volumes and how that -- the mix is between the different quarters. But it is the target to be cash flow positive in the next 3 quarters, yes.

--------------------------------------------------------------------------------

Operator [40]

--------------------------------------------------------------------------------

(Operator Instructions) I have no further questions. I turn the call back over to the presenters for closing remarks.

--------------------------------------------------------------------------------

Randy L. Dewey, Baylin Technologies Inc. - President, CEO & Director [41]

--------------------------------------------------------------------------------

So in closing, there's 3 -- for me, 3 key takeaways for this quarter that I'd like to certainly leave with the participants on the call. And the first is that what you're seeing, I think, in the press releases that we've issued and the financial results that you've seen in Q1 here, is that there's continued momentum that is carried on from 2018 into 2019, and we're certainly bullish on the trajectory for sure. The second was that the acquisitions, they've been integrated and the synergies continue to be realized and there's more to come. And third is that the RBC and HSBC, getting a Tier 1 bank and the type of credibility that comes with that to take out the loan that we had, and the support from them has been exceptional. I think obviously having a 5% interest rate and good term loan and a line of credit and very diversified instruments that they've offered us certainly is just a good demonstration of the support from the Canadian banks, and we're pretty -- very appreciative of that.

So thank you for all your support and the questions and the participation on the call today. Thank you very much, everyone.

--------------------------------------------------------------------------------

Operator [42]

--------------------------------------------------------------------------------

This concludes today's conference call. You may now disconnect.