We have Leighton Carroll, the company's CEO. He is going to go through a presentation. Then we will get to some Q&A at the end. If you do have a question, enter it through Zoom and we will get to as many of those as possible. With that, I will hand it off to Leighton.
All right, fantastic. Sorry about being a bit tardy. I had a meeting that went right against this. Had to take a biology break, probably too much information. Baylin, we have been around for 40 years. It is a really interesting company. We do a lot of cool stuff, and I am actually really proud of what we have been through, where we have come, and what we have done recently, and I will walk through that. Baylin, probably the big thing is it has been a bit of a journey. We recently acquired a company called Kaelus, and with the acquisition, not solely because of the acquisition, with the acquisition, we announced record backlog, CAD 61 million in hard purchase orders in-house, solid growth, gross margins, and the opportunity for further growth.
Excuse me. Which I will explain. A little bit about some of the tailwinds to us. Secular demand matters. Particularly for a decent amount of time that I have been running Baylin, we did not have tailwinds. We actually had headwinds, and that has recently changed. If we can drive growth in an environment where the water is going against you, when the tide starts coming in, that sets up good things for us. Wireless CapEx has been certainly depressed for a bit. The problem is data usage continues to grow unabated. With that data growth, it needs additional antennas, additional spectrum. Those are good things for us. Probably not a surprise that defense spending, particularly Western defense spending, has started to really pick up.
The U.S. is certainly continuing to spend, and there has been even more spending, coupled with the fact that Europe is really coming online in a way that is a bit unprecedented. Finally, custom antennas, the wireless enablement of things, that is a durable trend. That is part of our business not going away, and we can continue to see the benefits of that. Then obviously we just did an acquisition. The legacy business did three things. Satellite communications. We do not put things in space. We do not make dishes. We do high-power gear that makes that work. Why does that matter? The NASA Artemis lunar space mission. We have all seen it. The communication from the Earth to the lunar modules was powered by us. That is very unique.
People do not do that. SpaceX, because they are getting into space exploration, have started purchasing from us. SpaceX has been dominant as disintermediated parts of the satellite industry, and yet they are still coming to us because we do what they do not do. That matters. Custom antennas. This is about creating custom-engineered products that are either embedded or a part of other people's products that they sell on to their end consumers. Really good margins, stable growth, kind of floats around 10% a year. Some up, some down, but it continues. You look at our customers, Google, Charter, Netgear, Amazon, and those police officer body armor cameras you see, we're the wireless enablement of them. Why do we get selected? It's not because we're cheap. It's a solution sell.
When it has to work, when the art of quality matters, we get contacted. Finally, if you're familiar with Baylin from back in the day, a big part of our transformation, excuse me, has been wireless infrastructure. When I joined, the entire business was running around the mid to low 20s in gross margin. Wireless infrastructure was by far the smallest of these three businesses, and it was a low 20s margin business. Wireless infrastructure in the lowest CapEx environment, which was 2024. In the last six, it grew 40%. By the way, it's durably running at north of 60% gross margins. How do you do that? We have very differentiated, patented products that matter to customers. We have something called a HyperFlat. It's an in-building wireless antenna. Why does that matter?
It's hotel room card key thin. Works fantastically. They are all over Hilton properties, MGM casinos. Disney has them all over their properties because they want good coverage for their customers, but they also care about the aesthetics. In other words, being a bit smart about where you play has mattered. Multibeams is another great story for us. Multibeam technology, and I can bore you to death with all the technol ogy behind this, but easiest way to explain this to people is have you ever been in a stadium or a music venue and had terrible wireless coverage? Everybody I talk to says yes. We actually have fixed that with this product. The old record that we've had with this for the most amount of data carried was by Rogers in Rogers Centre.
T he old standard back in the day where data usage, text messages was the Super Bowl. It's not anymore. It's Taylor Swift concerts. When Taylor Swift went to Toronto, Rogers carried 30 terabytes of data. I've actually talked to people, and I've had friends who went to the Blue Jays games when they went to the World Series last year. I would tell them that story and they're like, "You're right. I went to the games. I had amazing coverage." Being a bit cheeky, I'm like, "You're welcome. That was our product. That's why you have that. We have solved for that." Well, that's the old record. The new record, Deutsche Telekom. By the way, when I joined this business, our wireless group never sold to Europe. I know it's a bit bananas.
But really never really sold to Europe. Deutsche Telekom, we met with them over a couple of years. We talked about the technology. We gave them datasets. They did a trial in the Hockenheimring at one of those big European music festivals. What does a trial mean? It means they didn't even buy the product. They carried 40 terabytes of data. They got in contact with us after this music festival and said, "We are so happy. We would like to do a press release and mention your company by name." It is actually on our website that this particular business operates under our sub-brand, Galtronics, but they actually talked about the success they had using antennas from Galtronics, a Canadian company. I was super happy.
I did not expect them to produce a YouTube video with high-quality graphics, a speaker interviewing engineers, talking about how successful this was. Vodafone saw this, got in touch with us, and said, "That was really impressive." They are now a customer. We have sold to multiple European customers with this product. You do not go to Europe and start selling because, I do not know, Ericsson, Nokia, PROSE. There is lots of people in Europe who are pretty good at what they do. You have to have something that really works, delivers real value, and that customers see as being solid. By the way, with the margin structures we have developed, we are actually seeing that now. I can keep going.
I am obviously pretty passionate about this, but this business has really grown and has helped us really bring Baylin to where it is today. I would actually argue if we had not done what we have accomplished in our infrastructure line, we would not have had the opportunity to acquire Kaelus. So why did we acquire Kaelus? Kaelus is interesting. I am a former private equity portfolio company CEO, which means I had had beat into my head customer diversity, product and service diversity, geographic diversity, professionalize the business. Pretty simple playbook. Every PE firm uses it. It works. Kaelus does that for us in one step. Kaelus is headquartered in Sweden with operations in Finland, the U.S., Australia, China, and India. Their products have zero overlap.
However, as much as I am excited talking about our infrastructure unit, Kaelus does things in the infrastructure space, but with products that are like this, very complimentary. They also have direct relationships with Ericsson and Nokia, something Baylin has never had, and they are strong in Europe and in particularly Australia. The balance sheets gets way better, and by the way, something I have not mentioned. Over the course of my career, this was my 18th acquisition. We bought them for a 4.6 times multiple, which is a solid multiple. It was not all in cash. The founder of Kaelus and the other major investor were both lovely 80-year-old gentlemen, but they needed to sell. They did not have anybody working in the business who was going to take it over from a generational perspective.
So we structured this where about 62.5% of the purchase price was in cash. The rest was in shares. In fact, the founder of Kaelus wanted the shares. He took kind of a 50/50 split for his remuneration for selling the business because he wanted Baylin shares in his estate for the long term because he believes in the combination. Really, really interesting and hopefully you will understand why there is value there. So what does Kaelus do? If our growth engine inside of Baylin has been our infrastructure division, cell t ower antennas is not something Baylin historically has done. Kaelus has unique technology in this space, particularly beam-through technology that matters to wireless carriers. It allows wireless carriers effectively to stack antennas on a cell tower.
Why does that matter? It reduces rents they are paying to the Crown Castles, American Tower, SBAs of the world. It is patented. There are only 3 companies who do that, Amphenol through their acquisition of CommScope, Huawei, and Kaelus. One thing I know about, particularly North American carriers, and to be true, European carriers, they like supplier diversity. They do not want to ride on one horse. They want to have at least two who they can work off of. Well, if you know anything about North America or Europe, you know Huawei is not selling that technology in North America. Makes sense why we did that. Cell tower synchronization. Everything is data these days. Data requires synchronization.
In other words, the simplest example, if you are in a car and you are driving along a road, you go between cell tower to cell tower to cell tower. Those data packets have to have timing stamp signatures so they can be reassembled. Think about how fast that is. That is key. They are one of two vendors to Nokia and one of three to Ericsson for this product, which means when those big OEMs are selling, there is a very good chance Kaelus is selling. They have also created anti-jamming versions of these products. It was necessitated, unfortunately, out of the war in Ukraine and what is going on with Russia. When there are missile attacks, drone attacks, the amount of RF jamming going on is unprecedented.
The first live-fire trial they had, Nokia had deployed these on behalf of Kyivstar, which is a Ukrainian cell service provider. During a Russian missile attack, the Kyivstar network did not go down. It stayed live. Very solid. Interesting. Note Ericsson has taken this and demoed it to multiple Western European NATO military organizations. Interesting. We actually think that product set has applicability in other markets, and it is something we are going to lean into. As I look at this, the top 2 are their newer techn ologies. Kaelus, their foundation, their base, what they have always been known for is cellular RF conditioning and test and measurement. Those two businesses are not huge growth engines, but they are stable, resilient and extremely well-known, particularly the RF conditioning side.
Good margin profile, stable revenues, pretty reasonable customer diversity. But, by the way, they do not sell in North America hardly at all, and we are one of the better North American providers for the AT&Ts, the Verizons, the T-Mobiles, the Rogers, the Bell Telus, the Crown Castles, SBAs, Boingos, Boldyn. I can keep going. Everybody who my Galtronics infrastructure business sells to in North America buys that stuff. In fact, the same people who we are selling antennas to generally buy the RF conditioning gear. The cross-sell opportunity there is obvious. They do not have small cells, they do not have multibeam, they do not have our in-building and wireless portfolio. We can take that and cross-sell everywhere they are selling.
There is a clear cross-sell opportunity there. Final business, test and measurement. Anytime you are manufacturing wireless gear, anytime you are installing wireless gear, you have to test it, make sure it is working correctly. Are you seeing issues? How do you correct that? How do I know they are good? When we manufacture a product for my infrastructure business, we actually use Kaelus gear in the manufacturing process to test it. When we have a new antenna that we are producing and it needs to come out, for example, to Verizon for certification, that new antenna gets sent to Texas to the Verizon test house where 100% of the gear in it is Kaelus gear. That gives you a sense of this business.
When I do the little finger thing here and explain the zero overlap, it is really zero overlap and it is a very interesting business that adds the geography, it adds product diversity, and it certainly adds customer diversity. This is probably one of the most interesting things is the explosion of backlog, CAD 20.4 million to CAD 61 million is pretty breathtaking. That is not all Kaelus. Kaelus is certainly a healthy part of that. We closed the transaction at the end of May and they represented a good chunk of this, but we also did a bunch of press releases. Our satellite division, absolutely, particularly in May and June, exploded in new sales, which is a good thing.
Again, goes back to the defense thesis and how we have worked on positioning that business. If I look at where we play post-Kaelus, defense and satellite is going to keep going, infrastructure is going to keep going. To be fair, I think particularly in North America, wireless infrastructure is going to be a bit muted, particularly through the back half of 2026, particularly AT&T and Verizon because they have fiber assets have really swung hard towards the hyperscalers and the data centers. Look, you cannot blame them. They are making money, right? The amount of capital being deployed in the data center and hyperscaler space is a bit bananas. The problem with that is that has a limited time span. One of the clear AI use cases is edge computing and wireless connectivity.
If you just look at the data sets and the way that data utilization is continued, and you factor in the amount of data that will continue to grow in its utilization to support AI use cases, it is going to swing back, right? It is actually a pretty straightforward thesis. By the way, this is pretty normal for wireless. Wireless does that as it swings from fiber to wireless and back and forth. That will continue, and at the end of the day, data usage does not stop growing unabated. We feel good about where this is going. The final part of this, and this is part of what we did. The acquisition was a material restructuring of our balance sheet. We were with RBC a long time. We retired that debt.
We have a new term facility, it has not been fully drawn. Our net debt at CAD 11 million is probably the lowest that Baylin has had, in at least the time that I have been here. We had convertible debentures. They have been converted. We had preferred equity that has been largely converted. There is a path to continue to delever the balance sheet. Why invest in Baylin? Backlog is good. I like backlog, and it sets the table for the future. The OEM channels are interesting. We will look to leverage that across the business and across further opportunities, not just what Kaelus brings. Our margins are pretty solid, and I'm proud to say from where we were to where we are now, that is material. The geography is meaningful with new customers.
T here are some nice tailwinds, and the balance sheet is possibly the best it's been since I've been here. That's Baylin, and I appreciate you guys listening to me.
All right. Thanks. Thanks a lot for that, Leighton. Maybe I could just start off with you've had a strong kind of turnaround in the business financially. You've strengthened the business with the acquisition. Why do you think the stock hasn't reflected kind of the change in the business over the last couple of years?
Well, I think it's a fair question. First of all, why do we have so many, many shares is maybe a place to start. Baylin, when I joined, I got brought in to do a bit of a turnaround, and there was a conversation the chairman had with me in May of 2021 before I joined, and he knew that the company needed a lot of work, and it was in a cash burn situation at the time and had a decent amount of debt. He said to me, "Leighton, I need you to come. I need you to fix Baylin. I am going to write checks. You have my commitment." So we did two private placements, and then we did a rights offering.
Coupled with that, when I came in, we ripped a bunch of Band-Aids off and called certain things what they were. We ultimately divested a business that was a terrible business. But as you go through that and you kind of expose what the company actually is, and you bring in a significant amount of capital to both, excuse me, pay down some debt and have the runway to do the turnaround of the business that we went through. It does what? It adds a lot of shares. When you have a lot of shares, it's difficult for the share price to move meaningfully in a material way. Now, it's certainly come up from the low water mark and actually pretty solidly.
I had people who participated in some of those events and said, "I'm so glad I did because that was a great win for me." Now, as we stand here, we just had this transformative acquisition. It just happened, right? Part of the way that I view it is, it is great to talk about your backlog, let me see the performance. It's at least our view, particularly I think on my boards, that as we continue to strengthen with the balance sheet, with everything we just closed in May. Get a good couple quarters under your belt and there's an expectation, particularly on a relative comp level, that we should improve and that the share price should improve.
Perhaps the final point is, at some point in the future, my board has contemplated doing a reverse stock split, just to drive value for investors. A lot of people who do that, when they do that, they're running from something or it's destructive in terms of value. We don't want to do that. We want to do it for the right reasons at the right time, and getting to this kind of structure you're seeing on this screen, starting to set the foundation where we can consider doing it.
Okay. What is the cadence on converting that to revenue? Is that a 12-month backlog, multiyear? How should we think about that CAD 61 million?
If I'm being very specific, it literally varies by business. The custom antenna group will get big chunky POs, and then it just flows through as the customer says, "Hey, I'm placing this order against this PO." My SATCOM business, we have some programs that we get a big, pretty nice PO, CAD 2 million, CAD 3 million, and it may take us CAD 6 million to pump it out. By the way, the flip side of that is the SATCOM business. That same CAD 2 million, CAD 3 purchase order has another three or four behind it because this is part of a multi-phase military program, for example. But we don't have those purchase orders yet, so they're not in the backlog. Whereas Kaelus and the Galtronics infrastructure business, they spin pretty quickly.
We get the backlog in, we move fast. On the balance, that 61, there's some parts that will go into early next year. Certainly, the custom antenna group, of course, will go into next year. The SATCOM business a little bit into next year. The rest, we're going to be moving relatively quickly to produce revenue this year.
Okay. When you look across the business, sounds like satellite has had a little bit of a renaissance here or a pickup in activity. Where do you see the most meaningful opportunities for the company over the next couple of years in terms of driving revenue growth and earnings expansion?
Yeah. Revenue growth, it's going to be a lot cross-sell . The Kaelus guys have now joined us, right? We have a certain philosophy that we run our business with, and I've already told them your two major strategic thrusts out of the gate, margin expansion, customer diversification, A and B. That's before we even talk about cross-selling. The cross-selling stuff is right there and obvious. Now you don't do that overnight. Verizon's the poster child for wanting certifications on everything. There is real opportunity as we get to 2027 to drive growth through cross-selling the Kaelus products into North America, furthering the customer diversification of Kaelus, and working on margin expansion. Margin expansion is not like flip the switch. It takes time, it takes negotiation, in-source, outsource, supply chain work. All of those things need to get done.
Kaelus coming in and giving us that balance and geography with further diversification of customer in the cross-sell, that is clearly going to be growth engine. Number two, honestly, it's SATCOM. In SATCOM, we are seeing it on the defense side. We have a big pipeline. Conversely, we have been, and this is public record stuff, over the past two years, we have really been working on the legacy structure of that satellite business, and there are further steps to come. But we see our satellite business, particularly with the newer product set, it's more modular architecture, simplified supply chain, faster book-to-bill. We see that driving margin there as well. So for me, those are probably the two big legs that we're going to lean in on, assuming we don't do anything else inorganically.
Okay. Just to circle back on the share count comments from earlier. What is the fully diluted share count now after all the conversions of the preferreds and the debt and all that?
I think it's 245 or 247. You'll forgive me for not having it off the top of my head.
Okay. Close enough. All right. We are at the end of our allotted time, so I'll leave it to you, Leighton, if you wanted to wrap it up with any comments, and then we could close the presentation.
Yeah. Look, I will say this. One of the things to think about when you are thinking about a company is does what they do matter, and will more of that happen? We do some cool stuff. These stories I have shared, I am super proud of what it is. This acquisition with the additional four separate discrete product lines in the geography, this leans into a very nice playbook of opportunity for us, and I hope you guys watch us over the next few years and watch us capitalize. I appreciate everyone's time for being here.
All right. Thanks, Leighton. Thanks everyone for listening in, and we look forward to seeing how it all plays out.
Awesome.
All right.
Thank you, guys.
Thanks. Bye.