BK Technologies Corporation

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation conference call for the second quarter of 2024. This call is being recorded. All participants have been placed on a listen-only mode. Following management's remarks, the call will be open 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 Nesbitt of IMS Investor Relations. Please go ahead.

Thank you. Good morning and welcome to our conference call to discuss BTEC Technologies results for the second quarter of 2024. On the call today are John Suzuki, Chief Executive Officer, and Scott Malmanger, Chief Financial Officer. I'll take a moment to read the Safe Harbor Statement. Statements made during this conference call and presented in the presentation that are based on historical facts are forward-looking statements. Such statements include but are not limited to projections or statements of future goals, targets, 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 this morning's press release and in BK's filings with the 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. Okay, I'm going to turn the call over to John Suzuki, CEO of BK Technologies. Please go ahead, John.

Thank you, John. Thank you, everyone, for joining today. I'll start by reviewing some of the highlights of our operations and financial results during the quarter, then I'll turn it over to our Chief Financial Officer, Scott Malmanger, for a deeper dive into our financial results. will conclude by opening the call for a brief Q&A. Our second quarter results reflect strong operational progress demonstrated by record new order activity, revenue growth, improved gross margins, and lower operating expenses. All help to drive our fourth consecutive quarter of profitability with gap net income of $1.7 million or 47 cents per share, and non-GAAP earnings of 55 cents per diluted share. The transition of our product lines to east-west manufacturing continues with the BQR 5000 and KNG mobile lines now fully transferred, and the transition of our BQR 9000 product line expected to be complete by the end of Q3. As a result of our outsourcing activities to date, we started to realize lower manufacturing costs in the second quarter, and we anticipate additional cost savings once the transition is fully complete. The BKR 9000 continued to gain traction in the market this quarter, especially among our wildland fire customer base. Customers that already use our KNG or BKR 5000 radios recognize the benefits of a multiband BKR 9000, with many beginning to integrate the new radio into their fleets and utilize its multiband capabilities in their broader missions. We received several purchase orders for both the BKR 5000 and 9000 in the second quarter from state and local agencies, including the California Department of Forestry and Fire Protection, or CAL FIRE, totaling $15 million, as well as $1.1 million order from the Mississippi Forestry Commission. Slide four. Second quarter gross margins improved to 37.3%, surpassing our target margin levels of 35%. Our cost reduction initiatives have been a key driver of this recent improvement, spearheaded by the transition of our manufacturing to east-west. which has allowed us to realize lower product costs. We expect gross margins to continue to improve through 2024 and 2025 as we work towards achieving gross margins of 50%. As you can see in the graph on slide five, we've achieved improved earnings per share each quarter since the second quarter of 2023, as well as four consecutive quarters of profitability. In the second quarter, we achieved net income of $1.7 million compared to a net income loss of $1.3 million in the second quarter of 2023. As a result of our ongoing cost reduction initiatives and shifting product mix that includes the higher margin BKR 9000 multiband radio, we've been able to derive enhanced profitability and revenue over the past several quarters. We're encouraged by our improved performance and we believe we are well positioned for continued improvement as we target full year 2024 GAAP earnings per share in excess of $1.50 or non-GAAP adjusted EPS in excess of $1.77. Slide six. Our BKR 5000 and BKR 9000 radios throw record new order booking activity in the second quarter. As I mentioned a moment ago, CAL FIRE, a long-standing customer of BK Technologies, placed purchase orders in the quarter totaling over $15 million for our KNG mobile radio, BKR 5000 portable radio, and BKR 9000 multiband portable radio. Additionally, we received orders from the Bureau of Land Management and the Portland Oregon Fire and Rescue demonstrating the BQR series radios popularity among federal, state, and local agencies as wildland fire activity increases demand for reliable communications technology. We're very pleased with the traction that the multiband BQR 9000 has been gaining in the market, both with our existing customers and new ones that are recognizing the value multiband capabilities can add to their fleet. In the second quarter, we also received purchase orders for the BKR 9000 from the Mississippi Forestry Commission, the City of Ventura, California Fire Department, and the California Department of Parks and Recreation. Overall, market interest in our BKR series radios is increasing. Our radios serve as a critical communications equipment particularly for first responders in rugged and remote terrains. Right now, over 6,500 firefighters and support staff are fighting one of California's largest wildfires on record, the Park Fire, which has burned over 400,000 acres and is only 34% contained. And our radios are on the front line with the first responders. Fires like these are becoming more and more prevalent throughout the United States, quadrupling in frequency in the last 30 years, and we anticipate that demand from agencies tasked with fighting these fires will continue to increase as a result. Slide seven. Our transition to east-west manufacturing and adoption of an asset-light model for our business is going well. I'm pleased to report that the majority of the BKR 5000 radios shipped in the quarter were manufactured by EastWest. Also during the second quarter, we transferred our K&G mobiles to the EastWest manufacturing facility in Juarez, Mexico. Our focus is now on the transfer of the BKR 9000 production by the end of the third quarter, at which point all manufacturing will reside at EastWest. The asset-light model is a key focus and major initiative for our business and has already resulted in lower inventory and lower product costs with a positive impact on our margin performance. Additionally, the outsourced manufacturing model allows us to focus our internal resources on product development, engineering, and marketing of our products. I will now turn the call over to our Chief Financial Officer, Scott Malmanger, to go over our financial results for the quarter. Scott?