BK Technologies (BKTI) 3 Nov 222022 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference Call for the Third Quarter 2022. This call is being recorded. [Operator Instructions].

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.

is host to of for Relations. it over the IMS time, your to today, this my turn pleasure floor Investor At John Nesbett go Please ahead.

discuss to Thank XXXX. quarter conference and Good results welcome you. call the morning, to BK third Technologies for our

Financial today the Chief safe I'll On harbor Scott the Executive and moment John statement. are call take Chief a Suzuki, Officer; Malmanger, Officer. read to

those forward-looking on future statements. and in during statements regarding unknown the or forward-looking these and These factors the statements presentation historical this implied results, profits. facts The not are statements statements. targets made are or and risks. from Statements but known presented actual company's based to may Such expressed projections company's and include, not goals achievements and performance conference by are revenue that to, or call subject limited materially and differ of

that material this or release U.S. some and cause filings with Exchange contribute of Securities in described could been the and such risks Commission. to morning's the have BK factors the and And press differences

information understandings These duty based on update any not and statements. be we of and statements do undertake to that are forward-looking to such accurate are as believed today,

Okay.

of the to call I will now turn Go John BK Suzuki, ahead, over CEO Technologies. John.

Financial by today. Thank I'll Malmanger a opening Then Scott quarter. financials. some of to you, turn operations conclude our dive Q&A. by Officer, start results deeper call it joining everyone, the Chief up during the for our and for We'll reviewing I'll for brief highlights financial into of over the a our

in and the consecutive of which surpasses driven the by $XX.X represents activity booking bookings our we record quarter, the X That XXXX, resulted of million year in which delays last shipment Ian, And of bookings performance quarter, bookings. during impacted which Hurricane for achieving million, quarter. record detail later. in third a year-to-date, was the said, This and bit top months significant XXXX BKR our $XX delivery week our a XXXX line saw which bookings. I'll first We caused full by recorded

We BKR XXXX device. continue our to launch of progress the make next-generation towards multi-band

we are some Nonetheless, XXXX. maintained During during date of addressed. our to build we and which our issues quarter, completed the of second fourth encountered being targeted product have the the launch manufacturing occur quarter

We believe market several will addressable provide potential, new capabilities expanded its verticals. this product this larger. exponentially With has tremendous opportunities be multi-band in market exposure, our because potential will

has first as Push-to-Talk game-changing or the service, business in Finally, February, SaaS a and launched sector. our responders last InteropONE. new Service our A service SaaS first interoperability to Software which developed which safety new universal enables launched unit, public cellular over

traction BKR strong XXXX radio marketplace. the Our see in continues to

XXXX in demand and third and existing upgrade of As the in recognize I product. of achieved and durability fleets, $XX million bookings value they record just XXXX, the for first bookings BKR customers the months, their of high almost X quarter $XX in million this performance, we mentioned, driving our strong as new radio

added a we production our Melbourne, As increasing facility, discussed Florida second significantly demand, to capabilities. meet in quarter, in line last this the our manufacturing

of our to the fulfill quarter we the backlog million With third the large in as the our close compared orders in an improved production believe $XX supply quarter. during second well positioned line chain before are now constraints, second XXXX. radio and With to today, of easing a visibility portion we

margin performance. Looking at

to started saw to gross return During as historical materials the margins for third and quarter, we freight improved levels. costs

have in pressure to chain. remains, some While and we see more the supply component easing begun availability an

levels by return more developments, historical expect we to to positive As a result of XXXX. December these margins

we're continuing to seeing improves are for positioned our demand that well we availability to backlog the believe work we through products. and production material our while As growing rates increase, meet

employees many in facility we are over our that last As September, Melbourne Ian came our directly of week through passed grateful facility. And you our of storm unharmed. and largely know, the Hurricane the

were delaying However, operations for production. days, halted X

throughout deliveries impacted our temporarily to week, was and transportation shipments to receipt factory of suspending our the customers. Regional

as expected radio As October. recognized we a to result, can as in see, X some quarter. in see revenue. the XXXX. quarter Radio And slipped fourth first second realize third into as can our deliveries metric next are you they quarter as revenue delivery are slide, radio the us shifted that third weeks numbers to we forecasting compared when key deliveries a the despite was be growth the in slightly of quarter of the in for the you represent And on heightened production, significant

on QX shipments picture As the our was what mentioned, I of graph full this don't give just accomplished.

shut to ability Hurricane Ian transportation, limiting down customers' receive our record delivery. radios ship As and our region-wide ability to and

we in the customers, point as has here. don't recognize shipped which received, resulted delivery illustrated For shortfall has until confirmed been a radio it

of the With X,XXX radio month shipments October, during units. production ramped reached up

our on this in through we XX,XXX production and XX,XXX expect we Year-to-date, of we we production radios. delivery our at projection XXXX. for least least we reiterate will to through XX,XXX additional XX, through year. anticipate continue for a full continue a radios QX. the of bookings of QX believe September the this, expect heightened first backlog, XX,XXX Based record will balance QX to We activity minimum in XXXX. And that track momentum radios radios ship for significantly targeting this capabilities, minimum of deliver on rate almost we XXXX. at and we're delivered the And With elevated shipment we're half

Shifting now development our pipeline. product to

product. our we're issues confident August, customers. across make take key channel BKR orders In those XXXX advancing started end to September, preproduction manufacturing and multi-band our of to and from second our run. in continue we dealer targeting completed great year XXXX as came But we addressing In we remain new progress an We some launch.

receive and testing weeks for FCC authorized to certification. And FCC are submit X shipment. commence certification. Typically, we to once received, and radios it test, building to XX file takes we're Currently, to

LTE cellular cellular business. I LTE have moment rolling each connect address been company vehicles. year new their started for to back been agencies public as the take want embracing to XXXX, spend market to a method XXXX. be is broadband safety out in opportunity of the service public Since service our amount has and billion globally projected growing The safety rapidly to a $XX.X in SaaS

responders first network exits on responders, them smartphone and the expanding By growth BK technology public business new innovative them to smartphones, unit believe leveraging connected which effective. is any will thereby area, vehicle, next SaaS first smartphone the applications and their environment. connecting communications focused keep their advancements is platform virtually we through in safety safer as LTE make XG the more

safety times efficiency and revolutionize and that our execution are and public potential communications an in awareness to believe which the patent-pending has everything. We situational maximizes response industry safety promotes technology where

address reliably different service who using agencies our immediately a only services. carriers. is is launched solutions new variety group first And was is The we wide to communications. efficiently, at and responders which InteropONE, developed the different an public InteropONE. offerings through universal, connect cellphone that developing new SaaS of on-demand, unit as can public service, interoperable October, challenges. range SaaS several our our Push-to-Talk was that a over can BK first smartphone situation Our cellular enables application safety BKRplay from arrive BKRplay. include which a service offering now safety in of emergency app, And smartphone deliver

will BKRplay experience features In enhance of plan responder sales first new tether of that the offering radios. radio user to XXXX, incremental BKR we Series launch the to BKRplay by an our anticipate services. experience, Series drive smartphone that BKR will the enhanced with We

Our BKRplay, Google in and Store the stores. is be smartphone now available Apple application, soon app in available the will

was the platform, all technology was expected in interoperable delivered could introduced, first believed the public LTE highest communications deliver community grail responders. LTE Push-to-Talk of to service be the first form. communications to Universal safety which this When holy group that LTE

the agencies while providers segmenting smartphone comes carrier However, into regardless direction, group, has to difficult. enables This of when silos. responders any competing service between which has made may user gone in to text the provider, opposite talk LTE very cellular service, other user use first any Push-to-Talk practice interoperability it industry to smartphone isolated and

group in of Push-to-Talk that group InteropONE, smartphone breaks to can or communications X is universal above less. can establish of invite No because and Imagine one unique public the communications. capability it an talk Push-to-Talk if this It agency, you delivers communications user paradigm. safety would services prime other AT&T have as level comes customer when now. as choice you customers. with service No expect InteropONE AT&T choice that group no only on all other sets and you communications. it With a were InteropONE individual this subscriber Push-to-talk promise a interoperable an any consumer. But to until minutes

between cellular million and are public in approach. competes InteropONE main today. different these takes subscribers the are providers. public over There U.S. X.X their distributed service a service each cellular Currently, to other agency the provider over-the-top Each service about build to win subscriber carriers base. Push-to-Talk service subscribers

X.X% Our prime least our subscribers public With goal be is to view current service XX,XXX U.S., in at per to or agencies opportunity of agency. get market one XX,XXX just subscriber over base. subscriber the the we

market safety million a be public model, this smartphone group feedback InteropONE comments: together to be pay-as-you-go per summarized BK new to is $X,XXX and can between other that calling is large subscriber in Push-to-talk revenue at can on the First, believe bring unique $X,XXX which competing InteropONE, average launching Since capture. today market, service demand novel. million could for positioned creates billing This We to X $XXX communications. No users pays party the annually. $XX

response can Second, well emergency the first lives be to pay-as-you-go improves If responder billing saved. InteropONE model response. maps times,

is expense the justified. So

between calls communications. Lastly, bill potential payment very agency for removed. interoperable assistance simple with billing model, is for responding for party on-scene model. agencies The the that pays disputes a It's pays calling the the

to to will the Chief this like operating and Financial Officer, our turn I'd At review Scott? Scott who point, financial highlights. Malmanger over

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

quarter. mentioned, and deliveries million Ian Hurricane approximately quarter the $X.X an shifting fourth John revenue in resulted in shipments the the impacted quarter As from to third in

profit of compared the of as last increases to related compared sales freight Importantly, to percentage primarily quarter bookings quarter year. received to third This first Gross of margins for in record have a constraints as chain million, supply cost and of and $XX a XX% $XX to material months the of third quarter XXXX. in third due X million the was were reached bookings XXXX. in XX% quarter third we the

easing margin continue to by begun historical the will we we're supply end have to of sequential the in levels an see We approaching optimistic year. see and constraints, chain improvement the

$X.X approximately Operating million totaled compared quarter $X.X last third the quarter an same for the with the SG&A million last or $X.X quarter million loss $XXX,XXX year. of for of year. expenses administrative operating and loss totaled third with general Selling, for about compared

recognized the in In $X.X about the an $XX,XXX realized of and million unrealized quarter, our compared the quarter gain unrealized investment of we Group FG XXXX. Financial in the third of noncash loss to on approximately

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

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

Scott. Thanks,

market multiband the impending of of BKR appeal the and XXXX, tremendous the of BKR XXXX our InteropONE With the launch radio. launch

As lot to XXXX about. excited and look forward, BK has to a we be through close move

And revenues our XXXX. exceeding in We drive enhanced products anticipate the manufacturing will $XXX that we in million help our Melbourne continue to annual capabilities the by target margins higher our business. new of and achievement

will that, questions. floor question-and-answer move the now Operator, to the we conference. open of With now the are to for ready portion we

Instructions]. [Operator

is question from Partners. first Lewis coming Your Zach with

Q Analyst - Unidentified

help off, in backlog translates us can First fourth you understand revenue to how quarter? the

question, for Zach. Thanks the

answer best way. question I think this the that is way to

it number X that of number and but months a divide by you the around use. per number other If you fair radios bit, factors shipped, there revenue can $X,XXX at our is move a get look and to about radio. the mix is Obviously, that revenue

by it the get expect the low can in can quarter take and radios reasonably in to realize revenue that that we number we quarter. of the fourth that the XX,XXX You multiply then end the and ship fourth

can it good very see, can a you quarter. potentially As be

then one more. just And

understand about you strong should $XX help we that You us realize disclosed you million. a backlog think of when backlog? Can how

this Zach. John, So is

times, to half burn Scott mentioned, first ship over rate backlog in to as we're think, of The keep fourth to current I planning and radios through lead We So XXXX. plan days. XX down XX,XXX the back normal production which was our right, get goal that quarter. to is the

to the anticipate as this half shelf demand. and QX that get we'll QX of We through to like we I'd rate elevated QX to a respond XXXX. radios on In point into fact, have certainly maintain actually or first where customer I move to the and

Brett next Reiss Montgomery Your question is coming Janney from with Scott.

guidance know margins. you Scott. don't I December by But margins John, would on you John, earnings margins. thought XXXX give did approach your and historic say

quarter, the or the that were year, heading is where this last the So comparing -- XX%. aspirational? to Or last in Is it was more margins that -- fourth it XX% margins are quarter? quarter

in actions I September think the We've in things talking seeing, now it's to mitigation of doing what are and most the place that right? supply and No, we've been for year. been had also started about chain October. through we mitigate we're pressure about So production Those going been talking that. with the

historic statement were we was December our levels that at by year. believe I going of be this to So

So we hold by that.

look on the for margins average, it did was gross think, line. you I mid-XXs in if we what 'XX, at So in

of on basis, kind a December the go-forward end that different. the year. obviously, we you where to then that's over that's and But expect that's year, be the frame. we So we'll And believe over blend quarter time where at a when

Okay.

any looking higher-margin margins that it once XXXX, in possible? include if your looking we when revenue going more mix upward the Could XXX points? raise becomes your give into revenue basis are at? meaningful of that, points, radio, basis of you pull is gravitational Can the Now what XXX to mix, margins sense us X,XXX

all are ours we I more of still focus portfolio that what of that current because we to that drive have on think will improve certainly the say So statements profitability. margins. So will our right? we correct, is And because is the have your a fastest runway volumes

still December. improve to we see upon would in runway So to what expect there's

So I'll make first statement. that

higher as it the the between the of is margins. statement the the balance small going volume to relates revenue X,XXX substantially much of the portfolio to it 'XX, XXXX, But The second with current does command our mix the X,XXX and be to percentage compared portfolio.

even higher going than So in a tonnage lot significant doing that I'm be 'XX. current the amount high pretty X,XXX, just very at of is in a in margin, or the coming we're to though margin our portfolio

think to, as I X,XXXs a becomes seeing the impact impact, of in closer. 'XX margin start mix of more X,XXXs you'll from a say, margin

chance lot interesting And since more the story is research expanded getting coverage a shops? by any and other exciting, for

thing lot we that's what a desire. clearly, story had got I interest we company. mean, we're inflection you're tell radios We're lot that million, And our of that think that October, I the now up. fact ramped a fact the Yes. We've in in certainly in outreach. that tells I the believe at seeing point. mean, backlog production our an doing up, the a $XX story we I ramped X,XXX with this is is out

get I can And and coverage. think so and we'll think, execution more see, I some story that they that interest actual more with and visibly more

queue this any to turn now to I be time. over back closing management the floor further like appear in for would remarks. to There questions at no

with all to participating look you when have XXXX. Thank great and March results report and again All day. in We you, for XXXX to forward the of you our best call. all today's a QX in we year-end speaking of

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

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