BK Technologies (BKTI) 12 Aug 212021 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference Call for the second quarter 2021. This call is being recorded. [Operator Instructions] Before turning the call over to our Chief Executive Officer, Mr. John Suzuki for opening remarks, I will provide the following safe harbor statement.

Statements made during this conference call that are not based on historical facts are forward-looking statements. are and to, revenue targets but of or and include, goals future regarding statements not projections limited statements profits. Such the company's and are statements subject known unknown These to factors and risks. with in implied in achievements actual company's materially U.S. expressed have statements the and the results, differences some and risks BK's cause described by The to may that such forward-looking these material yesterday's could performance from and differ those of filings press factors release and or or been contribute Securities and Exchange Commission. statements based on information we These to duty statements. understandings be undertake and forward-looking to not and today, believed are that update such accurate are as do any of

I BK now Suzuki, the Suzuki, John to CEO Technologies. will of call you turn over Mr. may begin.

everyone, thanks, today. you, Dagma, for and joining Thank

you very As know, BK I joined recently. most of

you I've future a look with with and, spoken date. speaking to already others, forward Some I at of

with start what I take address wanted I to Before moment to opening a my Technologies. me to attracted remarks, BK

on I and in Technologies manufacturing and have considerable know, looking I but approach With a in Johnson the at my focus pass such tremendous companies with not when As experience up. positions world-class but it I on revamping the kept industry, E.F. engineering operations. this and to BK most they Ericsson made building background was job, as the years, in recently their X with I have the tabs could team for progress the and not of previous you and -- the past have Motorola. as CEO a opportunity, industry,

developed the includes our methodically as some coming with XXXX, and our that best team in product long BK relates has product. I've already Sawgrass, ripe what have I'm holds, foundation a launch since solid for sector a XXXX. future some for industry has will I BK The this and growth. them board. about talent at Florida a the soon like Center and BKR excited cutting-edge to time the planned, thought the of on spent it time was particularly a Technology for built

The BK team's is mission two-pronged.

build First, public second, Motorola. the best safety, from to communication multi-band and market take for share to market; the device

with XXXX shape in we're BKR to both -- achieve on that XXXX, I fronts. of think, think the success BKR I good these

the capabilities Additionally, for I our makes the here a It it industries like serve. we and better resonates the and product, that and fact customers design engineering U.S. with particularly are in that partners, in

a relatively Technologies, larger potential raise great the most today, both much while through things the business, Board there longer-term to and have this to small confident organic I'm joined valuable company BK and growth energized more strategy. of a making that reflection ahead. recent Finally, is is and is are I'm capital BK committed The acquisitions.

We'll financial a let deeper of our Then me opening it introduction, quarter. that dive Officer, call to Financial Tim our With Kelly, to of Vice Chief the then over by results. and review I'll turn Q&A. operating highlights Bill our conclude activity results Vitou, -- operation President; some into and and the the financial BK's President for Executive up to during brief

Beginning the with in last second million quarter came QX to compared in $X.X year. our at $XX.X financial million results. of revenue

increases This well the quarter the second XXXX. margins of were as primarily as freight material Our of quarter due gross manufacturing. is gross for for the our in ramp-up internal cost below margins second and slightly to

see to well in supply with we to growth that these through XXXX company business. positioned We margin normal the scale but XXXX, we believe as demands. up levels catch continue more the expect recent continue chains will as In costs is extra to return our short,

rest is traction have The of XXXX this The this I BKR tenure the to potentially the of short team company my new existing transformative to executive years year, impressed past over with business. X on and the transform at the the is during marketplace XXXX, that with done have customers. end Tim seeing been very which thing job One the launch and excellent in track the is the to business. by BKR we are that

The right the our BKR we now, our expand of to the with of approximately products, billion we existing can addressable the after of to $X.X us significantly approximately positions XX% XXXX addressable of As market. BK go believe XX% capabilities reach market. multiband

been with our this is business existing with customers, expanding customers, past. much we anticipate with business opportunity able not we to addition in of do the In to whom have brand-new with

our superior to alone let market annual bring us $XXX very in the plus product that share to to has penetration is an has million market share. that increase and potential market have single-digit be our in points, to is If competition, estimate low percentage then at revenue. what today, this over Looking achievable. few even comparable, a We just the project Motorola we we market share and XX% of

Now exciting the I'd like developments closed aggregate proceeds $XX.X this offering an past of We a quarter. to of from gross million. review for number public

in discussed capital to public strategic initiatives, support to safety bolstered growth the it growth organic earlier, the provides this sheet be I acquisitions raise additional investment or balance As significantly market. company our grow in with share

Technology in of XX the company. since General both the Chairman of a and General sector. Major Board experience, brings member of XXXX, Board of the of years Gray January military of Directors was private leadership named retired July, BK Payne In the Payne, over

of the as Chairman Given value. his having to has pedigree a Major we background and retired General customers proven already of serve, be

our the call traction BKR XXXX for to Tim? seen the like I'd to we've customer since spoke. highlight President, last we to At of some this the Vitou, Tim point, pass

and Thank you, morning, good everyone. John,

very well in received The market. is XXXX being BKR the

country, In selected a by $XX and and million. Service continue We Forest May extends Washington and contracts X-year the Fish from Department XXXX, in including We District the the USDA Wildlife. Rescue Boardman, to X-year blanket across through the over awarded XXXX of win BKR was Boardman and May, following: of that the Fire X, were the a period procurements maximum also agreement purchase establishes Oregon

purchase $X.X Department under Fire Division In of received upgraded Bay Forestry, million Just the Portland days the Natural the to announced Rescue, of all the and Illinois and agreement. of Division Montana order a Oregon Resources, few and District the or Forestry, selected Nevada Depot of ago, this a Fire we June, XXXX. BKR Department Forestry

XXXX of approximately continued the BKR chose to July, Tennessee Valley as across Fire also at the Rescue Authority, deployment We've at land Redmond we Mexico total XXXX Management U.S. Interior and the Far department managing them Rescue South the received for Land the the the to of acres and level, million the purchase In in XXX win Department BKR Chaparral, and the state orders U.S. Bureau in of and Oregon. Fire New orders federal in assist for from and

most standard. these and of with they our XXXX To our represent state operating from error, frontline and are responders top zero off maintain and product an our awards, the significant communication a for product orders first workers These continue to order parks. the BKR Florida this margin vote portable divisions best-in-class, select in quarter, technology confidence for as we state-of-the-art received upgrades of to

life the pride all in to seen BK Unfortunately, take products forward lines more of products only front disasters death they provides situations. and great people with can as getting over the the of on and We common are natural few these that that past on the more these we've hands look getting our in years. depend heroes. in

highlights. the operating Financial will Officer, Bill? turn review and Bill now Vice who I'll President call over the our financial Kelly, Executive to and Chief

Tim. Thanks,

is Following and our results a periods summary XX, the of for June financial XXXX. operating ending

through within supply million customer our $XX.X for approximately and to million will totaled times ability which the impacted year. end the quarter likely of into we Throughout year. compared lead second manufacture material the shortages QX, with and quarter for chain, factors these convert the last anticipate shipments. that same Sales We $X.X orders experienced extended our persist

as percentage margins compared sales of year. in a the were with profit the quarter XX.X% second for quarter last second XX.X% Gross

as we John improve internal refine anticipate and to as is our due improve we the should this for ramp-up as cost primarily moving mentioned material increases our forward. previously, which manufacturing processes As of freight and well

for with of or quarter $X.X well general same for is the year. as XX.X% to the commissions. as sales, increased of administrative increase second sales development million, the or last quarter compared or This XX.X% expenses, Selling, million, related SG&A, expenses timing and product sales, $X.X totaled approximately of

We $XXX,XXX of Group, loss recognized year. gain Financial in second $X.X an unrealized million our FG, on unrealized compared an last quarter the for investment with of

or last XXXX totaled basic $X.XX a of approximately quarter $X.X per million, and the per $X.XX quarter second approximately compared same with the diluted basic for per for $XXX,XXX, or share, year. of net and $X.XX loss share, income diluted net Our

working $XX.X included million which and XX, million receivables. cash comprised XXXX, capital million trade capital working compares XXXX of trade This $XX.X at cash, $XX.X June approximately and totaling of which totaled year-end, of million, with receivables. equivalents $XX.X cash cash, equivalents is of As

Our paid capital dividends program has just ago. last August XX return being quarterly on with the few consecutive a paid days X,

or now remarks. a I'll do everyone question-and-answer move the the basis. to that provide on quarterly We'll remind operational concludes of on my or annual financial guidance call. not That portion we conference guidance

the open ready now for we're floor Dagma, questions. to

Bellinger [Operator ]. from first [ Instructions] Our ] [ with Walter question comes Capital Lonetown

that a that provide expect you XXXX more verticals will market the around you Could up? color little open

X the Tim, buckets being major Walter. for operation of President. us. is is This Sure, XXXX The for big targeted

is safety public the which enforcement mind. market, is year. structure year. those the million and law $XXX verticals million law The includes is the the a in XXXX a over vertical, vertical. specifically first enforcement over $XXX The fire with Structure fire And designed being is

city The kind that the It a sewer, we've in the in like arena. been attractive side, then will would also minor even be very we bus marketplace the water, is road for can in DOD. major us. or before city. any public lines, that That in also management have transportation, EMS federal the And vertical XXXX of waste one the departments, attract customers be services the

of the Specifically, a DHS as for -- DOG to will other agencies. us Army well as DOJ attractive some the and be market enter very

markets these XXXX of can where the All are play. exactly

[ question next ]. Mangan Kevin Our Instructions] [Operator comes from

the on great Congratulations quarter.

kind and issues? Just being increased kind able these in question of costs. through able counter to materials Are these prices on the to quick in to some contracted of increase of of pass contracts? terms chain are supply a cost long-term you Or of

our prices. of and some the these So between have them, I have vehicles, and -- our where do that sales. those are majority customers would use the customers as some other purchasing long-term contracts X we be of stated of say of would contracts, locked-in

So us those reducing, areas are the difficult where had to pricing that. those little we have been at look where more contracts. the could cases, because we In for increase past, we've of we it's other bit in a that been discounting and doing probably

Montgomery. Janney with Reiss Brett from comes question next Our

Can me? you hear

Yes. can. We

contract I Great, these great. assume or funding that bodies order sometimes is for the place. can an us When you quasi-governmental announce the bodies, with awards issue? be Or in consummate governmental to

It out, that. Thanks in particular question, It Service, we a exceed It BPA, purchase the every quite the Brett. X This will for is varies They typically example, stretch budget year. Tim. varies, announced year $XX agreement, they to will frankly. the for with Forest years. million. can't have toward the blanket every this case, When apply

Sometimes years increase we've been seen, year-to-year budget the we over here, see sometimes it and from I've decrease. the XX

varies. really it So

kind Therefore, funding is contract. show the X, years, So already there place. that regular the over they BPA. funding contract of that X is is in sales a that typically On or for issue X to going rarely

So both. we have

Great. describe by series go of tweaks is Great. before to good an can from XXXX happen for and Could the have accepted to point customers orders? view be engineering you what

John is Suzuki. this Brett,

would lot recently, a with first, groups XX engineering engineering pleasure the the week worked of I've the say I've Johnson, some and of in of to one in time I've And that met I had ever E.F. with. Harris teams spending more industry I with say this over obviously, I been engineering that team. Sawgrass Motorola. So most is the impressive with with and want years. last

development as we the of that is would a from terms I the critical they into mean, go have, manufacturing. period this I In challenges say

the focused, extremely is is I couple the key part think of this development. the months, a of team over next and

new expect. issues. It's those In I didn't development see process designing through there's addressing a the are things radio the that terms of and -- there's we of would team individuals, say, the you normal normally that nothing would

product launched So other believe to on end than of -- we still that track are this the we year. I get that, at this

was Okay. final closing management the And back remarks. turn over I'll question. that for it to

QX with to you We the results great Thank you, XXXX and day. thank on XXXX. you, in All best everyone, forward have participating a again speaking report and Dagma, today's to our you, and of in for call. look September

concludes your This today's participation. We for thank you Thank conference call. you.

lines You have and at may day. your disconnect a time, this great