BK Technologies (BKTI) 14 Aug 222022 Q2 Earnings call transcript

Good morning, ladies and gentlemen and welcome to the BK Technologies Corporation Conference Call for the Second Quarter 2022. This call is being recorded. [Operator Instructions] Following management’s remarks, the call will be opened to questions. There is a slide presentation that is accompanies today’s remarks which can be accessed via the webcast.

Before turning the call over to our Chief Executive Officer, Mr. remarks, provide opening Harbor following for statement. Suzuki I the will Safe John this presented forward-looking call that made conference Statements during and based historical are on in facts are statements. not presentation the are not and goals the Such statements regarding include, limited projections of targets profits. or and revenue to company’s future statements but known These to factors risks. and statements are and unknown subject factors could forward-looking The U.S. expressed on those or company’s materially statements some such have differ and from material actual that with release results, this been may performance in and of to contribute described the the by BK’s filing cause morning’s or these risks and achievements differences implied press in Securities and Exchange Commission. do forward-looking understandings statements are of be believed not based statements. duty to we as undertake update to information These any are such and that accurate and on today over I Technologies. of now the will turn John Suzuki, CEO BK to call Mr. may begin. you Suzuki,

the of turn dive Financial the for Malmanger, deeper and into financial Thank some reviewing you for results. Officer, I our during of Then by everyone will our our a Chief operations over start to quarter. joining I highlights Scott today. financial results it will

market $XX as We XXXX. million new has product quarter, our conclude by line growth customers Q&A. strong We increase our quarter by this Booking a reached the the over opening experienced for will Bookings as for BKR call been in continues significant expectations. $XX BKR just revenues and brief to an demand million. the highlighted to up exceed in our embraced existing activity

with quarter during completed our BKR XXXX. the a of build next-generation have multi-band progress XXXX device towards great making manufacturing date of and the targeted launch also launch are We fourth first our

by as will very know, this giving you us the additional believe verticals. to market of we transform it of we about market our for excited addressable size many access As are potential the product

for business will for responders implement of state-of-the-art, launched. new an unit, solution our or With branded subscription-based introduction and smartphone BKRplay. LTE Finally, has BK this strategy aggressive Software-as-a-Service, application SaaS utilizing new the unit, we

the Our BKR the achieved XXXX $XX radio bookings record continues months. second in $XX first million in XXXX in the to of strong of and quarter marketplace. We traction bookings in X see million

million Melbourne, increase back in manufacturing radio XXXX to first portion Our bookings our represent this half fleets. of XXXX. production to in XX% margin Florida large we meet increases of help the the moment half to driven have which by success second believe of bookings line first XXXX, of our To significantly in a capabilities, existing our $XX.X and as will a orders added a a XXXX that I backlog discuss compared upgrade performance. in our our us customers take fulfill want the of facility primarily in demand, we continued half new BKR

are first the short-term for order in news pressure continued in availability. of is the industry quarter, production, half margin quarters. components created our costs our saw across that which an The During remained in issue see secure second shortages. production gross component related and beginning impacted several get over more the to unusual to needed The margins prevalent XXXX. creative had to we We past shortages to spike component we a we good directly

us meet ease, as deliveries. XXXX. to to bookings and positioned represent to in pressure of this metric expect that for to half revenue. realize we we believe back well and deliveries the are We we So subside a demand are they growing when improvement margin pressures considerably the key anticipate Radio as convert

delivered XX,XXX back radios As forecasting and we delivered year. of range first be half numbers just second a And in in you half. see, are delivery can X,XXX We growth over to this half the are we our forecasting the between the in significant of XX,XXX XXXX. units in

We in advancing much year great to as now QX the Shifting as beat also BKR and XXXX units our full now X,XXX to our year are a new product for by making we full XXXX. progress are numbers are multi-band our delivery XXXX product targeting XXXX projecting launch. development pipeline,

can a FCC testing you our the fit see police, such the our manufacturing XXXX are the are adding will radios As to strong compared yield value key round medical life strategy, we share positioned of the fire verticals market. markets, addressable once accelerated we graph specifically product launched. in engineering with we as and of and stronger a be several proposition multiband to believe this manufacturability officially similar The will and certification, teams and accounts take provided, or the performance, a multiband robust results and field emergency in number working product to Currently, complete structural is radio market second and testing. transforms optimizing BKR a services. XXXX With go-to-market

applications We that safety we’re for also the excited opportunities communications public SaaS are very market. seeing with about

using is past SaaS for global exponential decade, poised the connecting vehicle in over the has market devices. cellular first growth, safety public LTE in responders opportunity the wirelessly As been

have is smartphone vehicle leveraging next platform away LTE the they keeps communications from in the environment, responders though, that expand stepped advancements by years we Over first technology XX network. are connected any in whether and to believe the their opportunity their car XG almost the or

or communications efficiency, is and applications We where times situational radio a are but everything. believe industry awareness a convenient, that execution to public through responder response. smartphone also can and maximizing state-of-the-art this communications her this an This opportunity not will in BKR massive reliable connect response creating technology We his just potential faster safer, the contribute the the that opportunity. first and safety has safety that’s developing revolutionize in personal are to by

dedicated the deliver Software-as-a-Service, XG opportunity, of utilizing market. comprehensive we the unit to veteran, Given the the solutions in network. focused the SaaS Teel, on unit solutions will and responders LTE develop by a first industry safety this importance delivering business suite by of March, announced launch SaaS public of Led early James for

scalable platform have applications development, several which as and iOS under Android including BKRplay, the compatible application. smartphone BK’s will serve We smartphone

cellular-based patents for to Push-to-Talk-Over-Cellular related X filed Additionally, smartphone and other we apps.

are currently for of At the to to launch developments. and SaaS over point, Malmanger, and forward look Chief apprised Financial financial would offering turn to this targeting it our future QX who like operating review Scott We our keeping I Scott? a you highlights. will Officer, first

the year. following ending $XX.X totaled is John. period of million operating The million quarter Sales and last same approximately compared second results for the with Thanks, a XX, our financial summary June for quarter XXXX. $XX.X for the

$XX half the of XXXX. a first half Importantly, record bookings compared to reached QX million and bookings increased first XX%

move secondary XX.X% considerable made we half primarily online, to the of due This short-term were spike on momentum component the certain year. of strategic the is had go quarter gross into to last as to margins. the a impact the compared as with parts dramatic percentage margins in back Gross was year. XX.X% to we second our the keep for quarter there short-term sales second profit So a which To decision secure in production market prices. significant a

still contending with are We freight costs. escalated also

half are increased an quarter the the see begin unrealized today, improving as totaled speak SaaS preparing FG gain second increases of pressure recognized margins of second on unrealized costs the of Selling, However, loss with the compared loss Financial compared expenses BKR back was the increase investment the to well million the our and $XXX,XXX primarily administrative to non-cash second we division for ease associated for This of totaled as you for pricing $XXX,XXX of with launch. – with approximately and that will to XXXX. year. for $X.X quarter general quarter, with SG&A loss confident year. in It see we of the for Operating important we as in million due year. million the compared Group same to an XXXX last of quarter launch $X.X or operating quarter the is $X.X million that in $X.X note last we

capital trade $XX.X cash, comprised As million, approximately million $XX.X equivalents which totaled of XXXX, working June of receivables. and is approximately of cash XX,

quarterly shareholders the our to dividends payment my quarter capital under return XXth This remarks. That program. marks of concludes consecutive

Scott. XXXX, new with given are company, XXXX Thanks, establishment am of BKR the the about our energized we particularly of unit. BKR launch traction SaaS and seeing growth business of our I pending opportunities radio front in the multiband the the the

we opportunity $XXX targeting are market As expanded brings unit execute our that significantly XXXX. selling the we exceed our and and product capitalize on business XXXX business the to million by table, SaaS XXXX driving to this

drive for XXXX the we call. to and of we business With should are open margins business. floor both SaaS will the move Importantly, that, in look Operator, to the conference we questions. portion the the higher question-and-answer ready the now as longer-term,

Capital. Bridge do have first a Instructions] Hamden We Lucas questioner, [indiscernible] from [Operator

taking that margin morning. provide back think this will we color see good could in any improvement know and you you around Hey, we Can you I Thanks question. Thanks. of what half for mentioned more the likely expect? the year. my

Sure.

and mentioned, we first in I pressures the XXXX. and half. pressures only created These increased costs back unusual component subsided the have of As already spike in and half pricing in improvement short-term an considerably, have shortages that have are expect product temporary margin

Thank you.

from an Aaron have questioner, Investment Martin, we AIGH additional Partners. And

see this with pricing there you on good believe again the that component out there Do all is pricing. transitory? want on margin morning. all comment really seeing Hi, the ease. quarter. to Congratulations because the and bookings mean I it to your inflation. nice strong on follow-up you’re that the to starting I It’s

not stuff expedite the fees. just about ordering permanent. rush and It’s of and Some is shortages

increase due just down. of coming Some actually cost it back I believe is to don’t that are

it’s really So all are that going down? you seeing back

gross sales. trending that say rates as on as would far I the to back we are historical margin

we I to tell too able will margins. early we’re direction, exactly when trending it’s that in So to be but achieve historic think

brings are understand to otherwise. can the which something more to to long-term of you reasonable you And that gross it And contracts price for these now just based would needs or can’t to waiting right discussed them of with part And of – under your and margin strategy booking in mean be nature strong those there your pricing long-term comes some you’re – But bookings get with is up And than it prices – your are the down. come deliver. environment. prices an of the have be? where where very this current sit some to are down I’ve you contracts upon them customers. environment I before, we I component

on we’ve continued we Suzuki. contracts, This We’ve have raising the thanks. specifically Aaron, prices. note that. you to correct, that we talked prices just again, we John the margin, I are and And if past price increases are more to But have add one continuing for in long-term which government, other we where about would restrictions Yes, are hike that. some federal sure. the the around that raise policy on executed this have do is we Aaron, can. do I can want

parts So reductions supply on part the and how side mentioned, definitely other cost the of we we can looking is product. But the that company take Scott is right? a do increases as activity as taken of our at that have in

back structure faster. we’ve And the pricing in out so take the to actions [Technical between cost going to taken addition, historical cost of our additional levels, stabilizing Difficulty]

when the leg I’ll of pushing then And that is, keep Okay. appropriate, it. you course, third on pricing

Absolutely, you. Thank Aaron.

Thank Okay. you.

the launch We’re months. few XXXX to in looking forward a

Thank you.

questioner, [Operator Partners. have Hirschman Orin Investment next Instructions] AIGH And a we from

Hi.

it’s on works production now you a had QX I’m field getting customers – the sorry testing more follow-up field for test with one QX? last and time ready assuming of matter XXXX started the and in Just XXXX,

the the set production Orin, up. Thanks, question. getting Certainly, for

right, You’re an that’s activity. correct,

the I from still field. both feedback, in manufacturing be work testing we’re the team our in that the done, to needs of think terms from getting that and still

one reasons objective of of the is second dial the which performance assembly why accelerated doing is the radio, the here of radio the the the overall the the we’re fine-tune So fits round to of and in and radio, reliability testing. life of

QX once are press time work So frame. we anticipating release and continue. ongoing that we in will out release, a will that will that, out go completed, as before, And it’s is the press and put I mentioned

this achieving and like frequencies that first the in no go mean like of that, a anymore in around. terms clarification, there Just does issues is we things had

a That’s Orin. correct statement,

in launched We have get fourth high will quarter. confidence that this radio the

very sounds good. Thank you. Okay,

you you like to further closing queue. any finish Sir, there to Do Okay. the questions appears be comments no with? would in have

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

ladies conference This you, conclude Thank gentlemen. and today’s call. does

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