BK Technologies Corporation

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation conference call for the third quarter 2021. This call is being recorded. All participants have been placed in a listen-only mode. Following management's remarks, the call will be opened to questions. Before turning the call over to our Chief Executive Officer, Mr. John Suzuki, for opening remarks, I will provide the following Safe Harbor Statements. Statements made during this conference call that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenue and profits. These statements are subject to known and unknown factors and risks. The company's actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements, and some of the factors and risks that could cause or contribute to such material differences have been described in yesterday's press release, and the BK's filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings that are believed to be accurate as of today, and we do not undertake any duty to update such forward-looking statements. I will now turn the call over to John Suzuki, CEO of BK Technologies. Mr. Suzuki, you may begin.

Thanks, everyone, for joining today. I'd like to start by reviewing some highlights of our operations and financial results during the quarter. Then I'll turn it over to Tim Vitou, BK's president, and then to our executive vice president and chief financial officer, Bill Kelly, to dive deeper into our financial results. We'll conclude by opening up the call for a brief Q&A. During Q3, we saw strong demand and order activity for our portable communications technology, particularly the BKR5000. The product is gaining excellent traction in the marketplace as new and existing customers at the state and federal levels look to modernize their radio fleets. Unfortunately, this better than expected demand was not fully reflected in our results for the quarter. The supply chain challenges that we and many other companies are contending with has extended our product delivery schedules. That said, the strong demand we're seeing has resulted in BK exiting the third quarter with the highest backlog in five years. more than double the 5.9 million reported backlog at the end of 2020. This backlog sets us up well for what is typically a seasonally slow fourth quarter and provides momentum as we move into 2022. As you would expect, the supply chain challenges also impacted our gross margins. As we saw increased material and freight costs, we're hopeful that the extra costs will return to more normal levels later in 2022 as we optimize and normalize our supply chain. As we continue to scale our business and as customers continue to upgrade to BKR series products, we believe the company is well positioned to see margin improvement. We have taken multiple initiatives to deal with the supply chain challenges. Of note, we recently announced the appointment of Sean Conroy as Director of Supply Chain. Sean brings 20 years of supply chain management expertise, and he is already doing a great job leading the charge to minimize short-term supply chain disruptions, maximize our efficiency, and convert customer orders to shipments. Second, we've strategically increased our inventory levels to ensure we have certain components on hand when we need them. We expect inventory to return to normal levels as our supply chains stabilize. It is our priority that our customers who have come to rely on our mission-critical technology receive their orders in a timely fashion. Finally, I'd like to address the status of the BKR 9000. We were originally shooting to get the product launched this year. When moving into the manufacturing phase, it became apparent that additional development time was necessary. It is essential for us to get this product right for our customers. Hence, I don't want to provide a specific date as to when we will launch the product. But rest assured, it is a priority to get the best product launched when it is ready for the market. From a financial performance standpoint, with our existing products exceeding expectations, rest assured that we have plenty of horsepower to drive growth and our salespeople are more than busy as we head into 2022. To conclude my remarks, I'd like to reiterate how impressed and encouraged I am by the dedication and hard work of our team. With our product portfolio today, we are in a strong position to continue winning new contracts and customers. We also have a solid balance sheet and the financial flexibility to explore acquisition opportunities that will complement our growth as we continue scaling BK Technologies to be a leader in the communication industry. At this point, I'd like to pass the call to Tim Vitou, our president, to highlight some of the customer traction we've seen for the BKR5000 since we last spoke. Tim?

Thank you, John, and good morning, everyone. The BK5000 is being very well received in the market. We continue to win contracts and orders across the country, including the following. In August, we received a $2.5 million purchase order from the USDA Forest Service for the BKR5000. As part of the five-year blanket purchase agreement with the USDA, we announced back in May of 2021. We also received a purchase order for the BKR-5000 from the National Interagency Fire Center, better known as NPSI, and their radio cache for the BKR-5000 for their wildland management program. In September, we received purchase orders for the BKR-5000 from Grand Teton National Park in Wyoming. and the Mississippi Forestry Commission, and a selection for purchase from the Arizona Department of Forestry and Fire Management. Also in September, the BKR 5000 was selected for purchase by our longtime customer, the Nevada Bureau of Land Management, as it conducts a lifecycle replacement program for its fire and land management portable communications technology. In October, the BKR-5000 was selected for purchase and deployment by the U.S. Army at Camp Arifjan in Arifjan, Kuwait. Additionally, the BKR-5000 was selected for the Helena, Montana Fire Department as part of its life cycle replacement program for the aging radios in its wildland fire radio fleet. These continued selections, upgrades, and orders represent the confidence that both our new and existing customers have in our products. As you know, many of our customers are frontline workers and first responders operating with zero margin for error. And they choose our best-in-class, state-of-the-art portable communications technologies to maintain this standard in life-threatening situations. We take great pride in that, and we look forward to getting our products in the hands of more of these heroes. I'll now turn the call over to Bill Kelly, our Executive Vice President and Chief Financial Officer, who will review the financial and operating highlights. Bill.