BKTI - Earnings call transcript Q1 2024 | BK Technologies Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference Call for the First Quarter 2024. This call is being recorded. All participants have been placed on a listen-only mode and following management's remarks, the call will be opened for questions. There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast. At this time, it is my pleasure to turn the floor over to your host for today, John Nesbett of IMS Investor Relations.

John Nesbett

are Financial Chief Officer. today Scott Officer; call Chief Malmanger, the John Executive Suzuki, and On I'll safe harbor a statement. take moment to read the presentation this presented on Statements call facts that the historical statements. during based are forward-looking made are not conference in and not are the of regarding to, projections revenue and profits. but future include, or and goals statements limited Such targets company's statements These statements are subject to known and unknown risk factors. and implied some actual differ or such materially release expressed this the factors or with may of cause performance and from U.S. morning's filings statements achievements by that or results, forward-looking contribute The material company's been these could differences press risks the described BK's those to and have in Securities and Exchange Commission. and are understandings any information and undertake based forward-looking to duty that to statements update be on do of we such not believed These today, statements. are accurate as the Technologies. BK I'll CEO to over turn Suzuki, John of call

John Suzuki

to the Scott opening into results start results. by I'll up turn some and I'll reviewing We'll brief for our by the over Q&A.. financial Chief our highlights operations deeper a quarter conclude dive then for our a our of Financial during financial of call it Malmanger, Officer,

of you in critical now Technologies industry, is know, a the and technology multi-band developing leader single BK communications radios. most As

strides our our which has recent We enhancing been and have radio made driving financial great expanding product portfolio, performance.

connectivity, combine Our relatively seamless new first and mobile the radios land developing that LTE, SaaS longer-term with smartphones solutions our more division create making represents responder, next-generation XG to vision, productive. safer

first into dive our let's results. quarter Now

start Our first provided to XXXX. strong a quarter

with the have date to success are we executing do, achieving a still our reflects work of strategy. our to While we lot performance

our per quarter earnings consecutive improving share First of third quarter $X.XX profitability. of represents XXXX

quarter XX.X% quarter to margin gross the first XXXX. XX.X% improved Our compared of the with in in

as expect historical return to levels continue percent. our year the we improving gross margin to of throughout XX-plus margin We

Department XXXX strong activity Service also from X,XXX radios. the primarily We're the order the demand BKR single-band by Our population quarter, with The for market and these appeal orders Agriculture gain Tier the and enjoyed in acceptance driven Boulder Forest demonstrates the Forestry USDA BKR XXX,XXX recognition Boulder XXXX of Arkansas to continues and radio to and residents by the II Colorado. that order County, Division ability a from XXXX's larger markets. as especially total county order by with is encouraged over from penetrate from

backlog million as total of XX, to Our million. of XXXX December backlog increased $XX with compared XXXX, ending March has the $XX

Juarez, to East development quarter. we second first multiband the Manufacturer. Located transfer for is quarter, successfully the in markets. which East manufacturing During BKR portable radio radios fully West for in BKR production the operational radio, XXXX XXXX multimillion West the A the Mexico, XXXX of the currently a our companion program radio. mobile and first shipment BKR in we to further completed is multi-band launched the partner, quarter, XXXX expect production we Also addressable will the our dollar mobile BKR penetrate line

reduction our higher-margin continue for drive to Our profitability a product business. mix to higher-priced, enhanced cost our with shift combined initiatives

we of of graph, first compared of impact XX.X% demonstrating improved share efficiency third earnings the gross XXXX. the since to the the XXXX. our have of in see delivered the initiatives.In year-over-year, the quarter of we revenue XX.X% can time, you As first consistent largely same quarter margins quarter achieved consistently stayed At per XXXX, in

reduce management of will and believe improvement outsourcing key margin we our supply end going product both which be driver chain our incremental and manufacturing, a our costs. expenses production will simplify the As of mentioned, forward

A initiatives to to key those higher mix and going and margin expect will rates continue ongoing We contract grow with coupled us product this allow XXXX rates manufacturing, the shift historical forward. reduction achieve to in margin an of recap, East asset-light radio to exclusive focus contract manufacturer last an our the Manufacturing with we West and announced year, manufacturer, become major recent model. our agreement existing to initiative line. To product shift been our cost has

As line currently East the the Mexico facility operational manufacturing of Juarez, fully quarter. and in radios is quarter, shipment the at the is first West the BKR end for production of XXXX second in

radios is transfer production Our and end of West, or and East West early BK BKR of comprised team the XXXX with migrating Mobile by the commence the to KNG QX. expected employees production of currently Series East QX portable to

line we and development today, significantly a product The three we that a new XXXX established among our in customers. first as ensure you XXXX its May of launch I excited work reduction been in Phase public a of their thought that news, in and June in higher-priced these to minute high propelling I multiband of forward. do production new this employees. the of Our responder quarter the to BKR Series point, BKR a our evolution third going and who and met announce radio a addressable a years activities, safety BKR through production take market product we XXXX, local has and quick company Since premier our thank after state in At radio for shipment BKR BKR would a XXXX manufacturing record to review expands are completed. strategy goals. notice moment X has radio the radio, XXXX. single-brand Series, our ceased to Melbourne would take Melbourne BKR a market XXXX. employees staff the to radio to was which commenced to first XXXX I revenue all agencies, has itself XXXX like the higher-margin program period launched is to have Thank federal, about In of

to safety development whether mobile in their As vehicle. and the the BKR responder a launch in radio in gain technology which companion the radio. traction, remain another multiband multiband portable responders. continues is are the BKR the to investing first dispatch, towards XXXX the trend multiband Installed XXXX to XXXX public outside radio, we XXXX, multiband vehicles, BKR XXXX can first in carried or with contact by both is With constant program

better the expect XXXX to BK work including project older installed will multi-band cars, Leveraging to product that first enhancing. a engineering ambulances. As XXXX state-of-the-art keep tandem and mobile cycle, expense development dollar capabilities, the part connected, This police vehicles, replace XXXX the in of the multimillion and currently BKR capitalized the with first-responder significantly responders the XXXX the fire radios in engines will normal with costs be we being will replacement multiyear, revenue. anticipated single-band align

start We expect to to offering this revenue XXXX. see in from

our Prior to design BKR BKR innovative market. strong our the has of the band BKR into development dramatically of addressable To approximately the multi-band the XXXX single introduction traction expansion market strategic was Our portable with and $XXX expanding The date, with XXXX, million. our radio enjoyed first multi-band in BKR the military, products market other is addressable EMS, utility XXXX billion with addressed market, responder includes wild and companion public base $X.X the historically land customer service customers. and market the customers. approximately fire, which wider structured share XXXX gaining fire and and police, vertical is XXXX

right market to to believe BKR portable the mobile seeing interest at multiband be higher price company continue we the point a drive we and that success were that received Given and will well bundled the for even XXXX, offering the revenue early and goals.

LTE business place business, new business to adopting heading of to connect to committed applications significant technology. is forefront our leveraging this see unit long-term whole and growth as believe SaaS that a radios, towards SaaS we more with In vehicles our we across develop industry addition LMR their SaaS-based of solutions, growing radio the the We opportunity XG us the as responders core our first a We're market. smartphones. at that

emergency on-demand talk matter the first in and USPTO, for patent differentiator responder We smartphone Trade is with today pending for service. Push-To-Talk minutes. one are excited we enables SaaS InteropONE, groups patent This InteropONE user recently create Over of United which Patent a States of innovative Cellular to that our Office, to key patent any a technologies. a approval USPTO hoc announce feature, protects This BK's received ad from three

feature, XXXX The the feature XXXX. IntelliPTT Chief go application our patent towards feature call BKR development be will XXXX. optional turn Communications financial Over BKR in the the clearly enabling over BKR BKR will commercialization, for deeper capabilities paid experience the our enhanced in I IntelliPTT an Scott XXXX Florida. and quarter. while accessed Push-To-Talk at driving the the our given We and International customers also service for indicated Expo through radio Feedback broadband both is over the from on to a recently user Malmanger, The technology, results XXXX Officer, the show to the Financial interest continues XXXX BKR is the pending IntelliPTT both when as approval. software InteropONE feature now Wireless showcased patent-pending XXXX Orlando, IntelliPTT the offered is

Scott Malmanger

in share net quarter XX.X%, first increased compared We first $XXX,XXX year. the last million for quarter to for in $X.X XX.X% expenses of totaled per net of the $XX.X last plus margin quarter. administrative XX% and operating with by the an recorded quarter totaled first Selling for compared the $X.XX quarter first to the a with nearing million for the year, of share with in quarter million diluted $XXX,XXX and levels million of XXXX was income return basic prior Sales diluted to John for first year. stated, basic as quarter million year last first is a or with but quarter the $XX.X historical compared margin Operating compared XX% and same period. Gross in revenue million general totaled loss income sequentially SG&A loss of fourth approximately of in the or $X.X $X.X compared or the profit compared $X.XX $XX.X approximately same of per year. last $XXX,XXX quarter the

as margin. basic realized of severance EPS, $X.XX unrealized stock-based with $XXX,XXX net in gain reported quarter first share first an of per with of We XXXX. to investments, back first the and $XXX,XXX profitability compensation of and quarter we adjusted of or basic loss compared EBITDA and expenses our loss reduce was $X.X $X.X improve or in EBITDA expect costs which million million We in and million Non-GAAP per enhanced diluted on expenses gross loss adds of a and the and continue adjusted share the compared diluted $XX $X.XX XXXX. adjusted quarter

cash of debt. have long-term As million and we cash $X.X approximately of XX, no and March equivalents XXXX,

generated provides Additionally, with John. radio turn as and the we believe cash to March credit us current we XX, working the availability will our We millionâ€“$XX.X inventory to with borrowing that combined I over began grow at East our under anticipated sales capital to we need now recorded reduction production of by an business. position, million that $X.X XXXX. transferring back facility West, our activities our primarily call cash

John Suzuki

adoption II QX, in to radios meet off. of successful engineering has that public is Boulder the pay and market that has feedback XXXX been Early XXXX. and we're believe system. our investment only a BKR positive, various develop certified strong not on made can Colorado. core we've County, Series can fire wildlandfire, early, has land be demonstrated and Tier market The III we BKR develop market city like XXXX radio BK BKR and With still radio market both shown on made BKR that appeals the the targets for is Tier the starting for initial win in progress share. It's but we to county and orders appealing for been our for to that PXX regional, The market stated beyond safety the but track radio XXXX this the it radio wild to counties states,

XXXX Our to BKR the position radio is introduce it's cycles. for for XXXX customers to current goal new many upcoming and radio the upgrade to

our improvement that margin price, achieve XXXX. As we higher our as move to mix previously and margin a manufacturing product allow to stated, through we will higher shift contract us to believe transition incremental

per quarters Lastly, previously in full wildland of year. season second remain the confident with our of stronger stated and $X.XX for To share the and fire historically target in our full ahead more our swing we brand, how are with product trusted remarks, third us, Starting value close to line market like and the BKR stakeholders. Series BK create are I my continuing expanding would summarize for prepared we penetration. our we to

We to next-generation our capabilities addressable market. are expand total SaaS developing

can we best, public call Lastly, on communication we safety so focus and to questions. now innovative develop we are we can open model, Operator, an transitioning solutions. what BK do market the for asset-light better

Operator

from coming is Advisors. question first Your Capital Instructions] Sigma [Operator Sigman of Jeff

Jeff Sigman

Can about BKR the bit you synergies between radio? the talk radio more a XXXX XXXX BKR little and mobile portable

John Suzuki

that or what to it make between They responder switch The vehicle and portable in radio radio is personal from key radio typically it, vehicle. we To is user the mobile his would from that, of operating usually to power forth. using is it radio. that The We essence, he portable radio. radio the difference, the when for he's radio. The radio. the possible, call why they radio X,XXX and back companion out vehicles. run a accessing operating experience are vehicle, easier installed switches radio or try in and something that or a from his the higher a in the This seamless go is synergy the in It's is are X,XXX two That's responder the first similar portable responders when how used, I he's for a he that carry. the say, over is interface, handheld they to vehicles. gets call that to that's it's mirrors officer the other the each Then makes first the his the his vehicle, radio, now police officer on and extent first a radio. would

Of user. there's benefits for simplifying the course, training in

Operator

Aaron coming Martin Investment is question next Partners. from Aigh Your of

Aaron Martin

on primarily it's $XXX,XXX. line COGS? Just that manufacturing down line the items? the assume severance Was I was the transition. employees lower from a on question Or of recognized that the in

Scott Malmanger

in that the as we're other expense. the recognized was We to transition. COGS costs due portion did severance a recognizing The corporate SG&A have

Aaron Martin

quantify went onetime you that those into Can items COGS?

Scott Malmanger

stuff were performance as and the associated a that expense. or productivity recorded with production, COGS they some were why and that's There bonuses were

Aaron Martin

basis us resources be on really there. investment Give a Then on the to you more need around won't on I expenses Do it's your understand some OpEx. the get it the like the OpEx going XXXX, that? capitalized a On for engineering Are team? this into existing to utilize honestly new able there, annual strong basis, quarterly line, go development? what's you for color to cash

John Suzuki

our using when bring a necessary resources or current on are We're we'll some to a on have mobile, unique certainly development on them decision on whether bring that those staff are contract. we There and we'll nuances and team. in make

engineers will be going the In the our of we is total The in transition spend money on to the spend, of time that spend this do engineering year consistent spending. to that terms for production. terms of that year as not they're and be planning amount spend We're last priorities we're money. to on the can seeing our more X,XXX dependent maintaining

done For the production engineers, time their requires and the maintaining key thing, our and obviously, is to and get levels. efforts the on transition that successful

third that development. The to after XXXX priority is time the dedicating

continues time and As new the product that allocated to the we year, through more more to expect being transition see development.

Aaron Martin

an investment. of time By that additional and is require allocation site some large, for this items will

pretty you sheet is elevated? to On the what continue inventory get still we of be inventory level transition, to it's as your for you line, think do this guys balance because on appropriate the having to

Scott Malmanger

to transition raw inventory Aaron, and of of our we production material products continue our again, see inventory. some time some we will We lead raw long have legacy more of improvement over. Once for the as also quarter-over-quarter

to through continue the year. will improvement We see

John Suzuki

material. very I that elevated We're end year. said think is down XX% very to personal down we'll starting past That's number. don't by the I in to still we've to the the move feasible think my Aaron we're the a goal now XX%. of get get because

will but the I year. Going the teens million, be hit probably you'll for the by the million sure through year. end that, by of throughout $XX end. Whether the in won't drop $XX we hit see that It

if level very company's is are, getting at is, down I our perspective that look what goal achievable. a to volumes Our and from

Aaron Martin

the out to bit that measure. gears to InteropONE? a you progress metrics Can measuring of trial terms or about be talking talk specifics you're how little of in InteropONE. number agencies Switching we users there, in should we How many can your some departments,

John Suzuki

A of an just trials a agencies. of give state, converting idea. those traction into people Well, we're to AT&T terms going there. in the hundreds, in trials, slow in these with terms that's of the you suppliers crosses from to process. a federal, orders, actual lot is, It it's very The use guys, the finding we're field field is other those What or those that from Communications thought they out services already for. degree or service to finding users are it they not have Motorola either we're using trialing local were

approach their to service. Now a current they the service That eight we've adoption talk to a market to patent are avenues ability see we which looking with we at, our look market. the converting it's a create on this maybe need that's The in us how struggling the is our other hard got have and terms just start to these even Everyone seeing demonstrated in it we on extra service different discussions great market different forward. though seems but take to go be at on. it for different as demand, There who the start to the that with may of We'll clearly those bit groups the rates. a than that technology. might people them. other hoc maker be Aaron, be some drag those market services we say that they're a that of, can to the in to is ad we thing and about partner on we're going value Maybe

Aaron Martin

in of is a BKR out those with the past different say XXXX What profile terms the Then playing BKR XXXX about we've customers? in can having than interest customer about think that InteropONE the talked XXXX I that? customer. you

John Suzuki

The InteropONE looking type go at that are service and customers The together. yes. together. that is Short answer go XXXX the

Aaron Martin

correct? showing not only conversions, field really much so up in still in trials, That's

John Suzuki

them XXXX, tethering traction sales. In We're more you that's have this not smartphone not then can at idea. cost really service XXXX. look buy much not advance devices. today. it, it. demonstrated is the They something so service, getting and They be today, their with InteropONE They if the the on are yet. commercial We've waiting that the the true. capability, IntelliPTT. would would have that you the for service at It's The really What InteropONE. customers to another the a mind, service. much. Because For InteropONE using potentially that for do it's two point that like XXXX It's

these products together concept I and I this With and That when the field cellular that XXXX, devices looking in two I that talk so now using how on the they get very for work. test system so link IntelliPTT, to actually operate use the system of can private see attractive change these can or access InteropONE. us types together through can the tether knob can and I'm my radio to to users. these They're would is groups forward operationally the a

Operator

from Instructions] Old question next coming is [Operator Meadow Long Jon from Our Investors.

Jon Old

I on the with of Just profile In products introduction your the going and the other two size revenue opportunity margin. see what that they plus. December, a change forward? to these wondering margin of do normalized and of the remarks a margin follow-up the just I would said the a XXXX. bring of quick margin question you've XX% you as to just profile. could I'm be, you past, the you once profile Then said XXXX think revenue XX% relative market and rising with that if recall, gross number In as used and in you

John Suzuki

me can chime that then Let in. and try Scott and parse

changed. and margins that hasn't historical Our XX%â€“XX%, are

we be get XXs XXXX forward, see we the XXXX. you're plus prevalent, as in because the do driven expect said higher to as think product the overshooting and of the the script, will right, becomes into go that by we XX% primarily I margin we more mix mix and ourselves do that

try plus. high really XX% It that be In product profile, which least terms would greater XX%â€“XX%. talk the, be I XXXX, still would as today, that than That too to not definitely the to but a is XXXX, XX% portfolio. come current of margin plus. than it'd It may compares the or the think may early would better in it's but substantially as position or it be we at that to our XX% say, XXXX about

Jon Old

general other the about sizing market that of the two? contribution, How revenue versus just

John Suzuki

I'm defer little going a closer, to get when we bit that Jon.

which include our product. does have this not We XXXX, goal for

I better are shape in think be view once next you set XOXX. to goals forward get on a we'll of that, we what give a our for, say,

Operator

from coming is private a Brian question next who's Weaver Your investor.

Brian Weaver

little expect the in give any factored you quarter? bit substantial into the last drop for transition? SG&A into color Could Do changes through SG&A to you consistent a of year-over-year what your

Scott Malmanger

XXXX. and nature incurred believe onetime the company the the again the costs ATM, We stock nonrecurring reverse Basically, the happen first with XXXX those the introduction product associated in in of not will split quarter costs with and associated XXXX. BKR costs in are of

delta think between pretty I that year and this last much the explains items. year, nonrecurring

Operator

Well, have the will over to session. our for remarks. turn I reached we end John now appear of call to the closing question-and-answer back

John Suzuki

for participating We report when All Thank Thank with Jenny. and again a all day. you you, all of you forward to the great look speaking to QX. best in today's we have you, our call.

Operator

very much. call. This Thank does today's conclude conference you

participation. at day. You a your lines your phone have Thank you and for time, may wonderful disconnect this

BK Technologies (BKTI) 9 May 242024 Q1 Earnings call transcript