BK Technologies Corporation

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

Thank you. Good morning and welcome to our conference call to discuss BK Technologies results for the third 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 statements. Statements made during this conference call and presented in the presentation that are not based on historical facts or 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, and 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 any such material differences to have Differences have been described in this morning's press release and in 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. Okay, and I'll turn the call over to John Suzuki, Chief Executive Officer at 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 Melmanger, for a deeper dive into our financial results. We'll conclude by opening up the call for a brief Q&A. The third quarter of 2024 was highlighted by solid progress and execution on our operational goals. We achieved our fifth consecutive quarter of profitability with GAAP earnings per share of $0.67 and year-to-date earnings per share of $1.33. Given our progress in the quarter, we will be providing updates to our financial targets later in this presentation. Third quarter backlog remains strong at $27 million, supported by solid order activity for our BKR 5000 and BKR 9000 radios from both new and existing customers. looking to upgrade their radio fleets. We also continued our trend of incremental margin improvement with gross margins of 38.8% in the quarter, driven by a combination of strategic cost reduction initiatives and a shift in product mix to include more BKR series radio sales. During the quarter, we completed our manufacturing transition project to east-west manufacturing with the majority of our third quarter revenue generated from products manufactured by EastWest. Additionally, lower product costs related to the transition favorably impacted our gross margin performance, and we expect to see continued margin improvement moving forward as we realize the full savings of the EastWest partnership. We continue to receive strong order activity for our BKR series radios, from both new and existing customers in the quarter. Specifically, the BKR 9000 is receiving substantial interest from state and local agencies, and our order activity has been encouraging. One order in the quarter that I'd like to highlight was received from the Florida Forest Service, a longstanding customer of BK for the BKR 9000 at a total value of 3.3 million. The radios will be used by several different branches throughout the organization, including wildland fire and land management for fighting active fires and facilitating controlled burns, as well as for research to improve biodiversity and ecosystem health. This order demonstrates the versatility of the BCARE 9000 across varying departments and operations and is an example of the increasing demand that we're seeing from from this radio among state and local agencies. Looking at the gross margin, we drove continued improvement in the quarter largely related to our ability to reduce manufacturing expense through the outsourcing of our radio manufacturing to east-west. We expect gross margins to continue to improve through 2024 and 2025 as we work towards achieving gross margins of 50%. As I mentioned earlier, we achieved our fifth consecutive quarter of profitability this quarter with earnings per share of 67 cents, and we have significantly improved our profitability each quarter since the second quarter of 2023. What you'll note here is that while third quarter revenues were consistent with fiscal 2023 levels, the cost saving initiatives and the transition to east-west manufacturing generate an enhanced margin profile and profitability. Given our performance in the quarter and year to date, we have decided to revise our financial targets to better align with our expected results. We are raising our GAAP earnings per share and non-GAAP earnings per share targets for the full year of 2024. We are now targeting full year GAAP EPS to exceed $1.65 per share increased from our previous target of $1.50 per share, and non-GAAP EPS of $1.92 per share, which is an increase over our previous target of $1.77. Order activity has been strong, and we're especially encouraged by the demand we're seeing for the BQR 9000 multiband radio from our existing wildland fire customer base. We received several purchase orders for the BCARE 9000 in the third quarter, including a $3.3 million order from Florida Forestry Service, as I discussed earlier, the Missouri Department of Natural Resources for their wildland fire operations, the Minnesota Department of Natural Resources for their wildland fire operations, and the Gallatin County Sheriff's Department in Montana representing interest for the 9000 from a law enforcement agency in a tier three county. We closed the third quarter with a backlog of 27 million, which was supported in large by the adoption of the BCARE 5000 and 9000 among new and existing customers. We anticipate that most of this backlog will be delivered in the fourth quarter of 2024 and the first quarter of 2025. We completed the transition program with east-west manufacturing in the quarter, a move that's already delivering cost reductions and production efficiencies. As we've mentioned before, our move to east-west is expected to provide continued enhanced gross margins while also allowing us to more closely focus on new product development. We retained a small production team in our facility in Florida for the final assembly and test of the BCARE 9000, as well as to support the production of some of the smaller, low-volume specialty products. A new, streamlined, built-to-order final assembly process for the BCARE 9000 was implemented and is expected to be able to produce up to 20,000 radios per year at full capacity. I will now turn the call over to our Chief Financial Officer, Scott Malmanger, to go over our financial results for the quarter. Scott?