BK Technologies (BKTI) 16 Mar 232022 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference Call for the Fourth Quarter and Year-end 2022. This call is being recorded. [Operator Instructions]. There is a slide presentation that 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 statement. safe for Suzuki, I the will harbor John forward-looking made and based are are call this on in facts Statements conference that presented during the presentation historical statements. not not limited statements future and regarding targets but profits. Such company's and to, goals revenue include, the or statements projections of are

or and are or materially differ achievements known and implied these The statements. unknown expressed forward-looking by statements These to company's risks. may from factors subject actual performance those results,

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

undertake are accurate Suzuki, update you such any believed on based now may understandings and forward-looking to statements. statements I as that the John and be today, Mr. to will call over are Technologies. Suzuki, begin. not duty These of turn CEO to information do BK of we

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

fully mitigated XX,XXX we quarter XX,XXX manufacturing bringing with have faced radios line Turning chain exciting our to the fourth the In that supply expectations. largely shipped in we is Slide disclosed and shipments X. challenging caps to in yet a QX year Technologies. off issues capacity expanded quarter, The our been year operational. for The the for QX previously and BK

our XXXX that our has marketplace, in a product. The the the love been bottom line customers success BKR is and

our radio. product hands. bring made recently technology is and product submitted to the December, that look multiband forward FCC certification excited the We our we launch this to we this to Second, We're XXXX shortly. customers' and receive considerable FCC progress it in expectation getting will our to the BKR of towards have market into

multi-band markets. With this will XXXX exponentially opportunities will BKR potential that be in as larger. provide The capabilities expanded our market addressable exposure, several new

October in that responders. what over universal is we technologies It in push-to-talk an the interoperability filling service, enables unit InteropONE, a our providers deliver to first group our launched is first product a Finally, is different dire XXXX, which communications believe innovative cellular business need SaaS for between and service industry. on-demand service, new

large our in X started market. state local from order with a safety trials first recently Field federal, public a and agency received have and top agencies, we metropolitan U.S.

Turning to Slide X.

continues the double Our we quarter. in strong the BKR amount XX,XXX quarter, shipped XXXX the record marketplace. the units, radio a shipped In traction more in to see third than

recognize of fleets, their performance, value and BKR As they the demand durability customers XXXX, radio new our existing upgrade this driving product. strong and high for

growing of shipments. to the this much material related easing shortages cleared for and to addition of supply fourth In demand, constraints the chain time quarter being in increase was

the our product manufacturing the line we and us Melbourne, Florida more capacity second get added at significantly increasing During XXXX, door our quarter. allowing production out a to facility, fourth in

Slide to Turning X.

to radio positioned shipment this our of on and would meet of If the We to we targeting the units coupled XX% radio compared that strong Based to momentum, XXXX. are bookings growth. growth we XX% XXXX. entering continue very to XXXX target, in launch, unit to with are BKR drive well backlog XX,XXX XXXX represent XX,XXX shipment pending

X. Slide to turning Now

to point than demand are the the exciting this are the a for taken very hoped we in little We of a BKR product. has pent-up the launch close at point starting XXXX. pending longer in very It bit but fulfilling

FCC testing we finally, shipping. certification and we turn and from XXXX, the receive December manufacturing we our to to attention certification, for FCC transition completing receive shortly. to development delivered and the Once expect radios In certification will we

our rugged of importance areas, product conducting particularly reliability on been situations, of to the and activities, In and As paramount part our extensive pre-launch we've our is testing the durability remote durability. customers. in products emergency

can market. you of one between see XXXX over for stop working. the is the market driving As the truck a the slide, the responder pictures even right in it BK from device first the a designing This on difference fire versus not retail with XX-ton side just could

of market we the accounting appraised We're the XXXX interest of BKR move to pre-orders line. with progress keeping finish look seeing first forward for for the to months as continue production. We a great already to our X you deal of closer

X. additional to service believe launched that more October responders enables the user drive the only ultimately market to InteropONE, services, InteropONE XXXX, a talk Slide safety within We BKR POC SaaS on-demand first communications our Series between business will creation the address for Turning will tremendous blueprint a groups. audience demand interoperability our a BKR radios. of of In market which through public our broader serve and opportunity has Play development as for market

various market Security, Department Homeland safety around agencies and USDA Many million. is under trials public market this massive. $XXX InteropONE federal of of is We The And Interior. Department market of field assumes single-digit a penetration. Justice, for believe the the addressable are underway Department low alone with

public first U.S. our a from agency received safety purchase top market. order metropolitan recently large for a service in we X Importantly,

by to first that has first minutes. many technology come. in are our confident all will close patent InteropONE of together responders this We enabling communications be the pending current in to gap communicate interoperability potential the to safety believe the We that public

InteropONE times, lives improve awareness if response be can saved. an everything, situation where first times industry can responder are and response In

the suspend this wanted morning's Scott call our to our Chief Before in I over decision I release Officer, dividend. turn address Financial as to the press announced Malmanger, to

our capital that to us of and shareholder of generate in invest will While to this heightened the the of marketing long some products you, services returns growth, this development our we disappoint higher that and at believe enable might ability in understand term. we decision our time

focused just BKR these the XXXX, opportunities future I the interest along finished and the are XXXX the opportunities, seeing with on BKR associated InteropONE. and significant of to our continued we're on capitalize As company with detailing, positioning best we success market in

to will over Now call financial review the Scott and the Scott? I'll who turn operating highlights.

million the received Thank XXXX. $XX.X bookings our quarter XX, approximately results $XX bookings you, full the John. the The following last compared fourth ending is Sales period million quarter year. with of summary year financial operating Fourth December and for company were million and the same a of the totaled for for $X.X $XX.X quarter for million XXXX.

cost as to in last increases product fourth the material margins the XX% year. freight were sales our for BKR costs compared percentage as components related a in with XX% in profit a well decrease quarter certain of line. primarily profit in of The margins gross Gross fourth $XXX,XXX as and onetime quarter inventory reflect adjustment

Selling, million general or for same SG&A fourth the approximately the for totaled year. expenses, compared quarter quarter with and administrative last $X.X $X million

Specifically, design radio. the XXXX new product onetime included fourth of final quarter not BKR of that the in for engineering a the XXXX development included were of expenses write-off components $XXX,XXX for

in we last operating of loss last fourth with $XXX,XXX realized Operating year. investments compared XXXX, and recognized an the gain same of quarter the year. $X.X with the of $XXX,XXX an income million unrealized In $XXX,XXX net on unrealized quarter loss of quarter totaled the fourth compared our for

$XXX,XXX period. net loss the XXXX or loss in We share compared $XXX,XXX recorded per per share basic the a with diluted in net $X.XX year prior or fourth diluted $X.XX and of and a quarter of basic

$XX,XXX inventory or onetime per mentioned an previously the product write-off, adjustment for adjusted adjusting breakeven component earnings recorded we However, loss and net share. of new adjusted

finally, From under we cash with cash borrowing sales cash the that of we our anticipated generated a approximately primarily liquidity standpoint, and to in our grow credit XXXX, that working And by believe provides our million equivalents current $X.X need debt. XX, and facility only combined capital radio we and business. $XXX,XXX long-term as position, December availability with us have cash of

our we XXXX launch the John. returns. the As will allocation BKR believe the to of press the in on release, to call prioritize will organic our XXXX, long-term back now order have turn BKR which in and we division, higher shareholder also specifically the suspended generate dividend over announced SaaS growth, we I capital

Slide X, lay we our out for On XXXX. focus Scott. you, Thank

focused are efficiency. maximizing we on production First,

produce to Our year. XX,XXX capacity per set radios to is quarter the full up or for XX,XXX

X,XXX XX,XXX per full year. production to the XX,XXX quarter to radios of We of for are radios and shipment targeting the XX,XXX

Second, we improvement. are margin gross focused on driving

improvement gross XX% are the will be margin XXXX. We targeting the improvement product achieving margin throughout This by cost driven incremental a full year. year for of

establish and want the to beachheads public BKR InteropONE. XXXX large local markets the Third, and safety federal, state in multi-band portable radio for we

reaching reiterate our we Our million last by slide, longer-term Slide in $XXX revenue XXXX. of goal XX,

in leader a creating and industry. growth our public in investing are We the safety

expand as once is XXXX be new target Our customers the launched, by will BKR as Likewise, XXXX widely well considerably markets. customers. our BKR adopted will existing --

Finally, business reoccurring need with our has over and solves the business opportunity is division in This adds a traction new SaaS new for revenue new us launch deliver and the safety of industry the establishing unit verticals public to high-margin InteropONE. time.

turn over the I'll the call that, questions. With to for operator

Instructions]. [Operator

Tree Capital. from question first for is at Your today coming Land

anticipated a about more you XXXX? the profile bit the versus Could margin the little for talk XXXX

to XXXX From for you the the manufacture the than Xx price marginally a price of BKR . approximately selling XXXX more average Basically, question, the selling only the is perspective, Thank expensive XXXX. Yes. BKR BKR BKR is the of XXXX. the cost

still are We XXXX. margins for BKR improve to working also the

coming Your Galloway Galloway at from next today question Capital. from Bruce is

margins cost behind in margins where shipping were in first were snags going and third elaborate the they and had You why quarter mentioned XX% quarter and and going Can the you be quarter pressures forward. and pressures to they're supply improving talk and in about chain the the this you. were that

is Sure. This Scott.

I we higher basically still inventory that was think that off there, had the thing cost was burning primary inventory.

see QX the XXXX. year the to and in will and we the for improved planning believe at returning to throughout XX% year for historical margins margin are quarter, expecting forward, to improvement the be are full path we levels first Going that plus we on

the net $X.X million that write-down of developmental Why versus I address cost million. was XXXX? Also, normalized SG&A, could you still, of the Was the the $XXX,XXX SG&A it high? of think, $X.X because was the

there we costs the other SaaS for Yes, development the And also of costs increases. and XXXX. business to public cost reporting had were related development then the

Suzuki. Bruce. part John certification, is So This it was of the

for was to which the had expensive. we XXXX, pay is element pretty certification Another for

[Operator Instructions].

coming Your at next question today . is from for

the does that Great then with incremental have to These ability prices. price? to revenue all we're What you But margin. your about them and raise contracts signed disappointed no yes, quarter. fulfill about say gross just

Yes.

the I appreciate Bill. call. This appreciate So John question, the is Suzuki,

you the if not only to radios, a some amount to part we ability radios raise some gives created, sort is In do do side, starting we time sold of government yes. certainly most backlog raise our all, was government level of the under at we But certain And early of contract, So the in XXXX, did I there of of will prices. remind which continue to you, if and opportunistically throughout that prices, which XXXX. are XXXX. the have

a a took that of part So of backlog the through in we're lot still with early pricing place of that working lot XXXX.

as the will the winds this set -- of half come into improvement the of prices down the at that the we year created end new we year, that So the year. that were expecting and in second higher last margin orders to we're part of half this latter of year see backlog the that and expect from the that in

burned Cash a the reassuring. you cash flow, like quarter? That's fourth it Okay. little looks in

Yes.

Okay. situation cash And QX, like look there? what's the

I it credit. raise answer we capital this $XX to need not do line to million would way, I the Well, of think due

that for $XXX line the reach the XXXX for in place have target to we XXXX. million plans will our basically growth So revenue sustain

put that's million of credit the why November. So place we new $XX for line in in

got, you've million that? what, on $X And drawn

Yes.

We've plenty of availability got left.

Okay.

question. Another

the first until So XXXX, FCC authorization? get you all, can't the commence of sales of these

actual it, just taking shipping correct. the Yes, pre-orders. of we're That's

how this Okay. going an Do year? for going How sell sell? you're have you're to estimate to you much X,XXX many

because competitors market I this we margin taking down would the gross we The at to before really radio. margin. start units competitive point, I do. you from our get understand. margin this that better improvement advertising significantly level the break hope the our Bill, We're has you And place in of success marketplace. XXXX in XXXX will see going specifically not want reasons, our growth product we're share beachheads and a that the to success is for our or say revenue in having with We

and you see impact that So in the improvement. revenue margin will of our our growth gross

it people the all Okay. exciting app me, Last to InteropONE, have Great. for for the of question work. very have product. the to Do

Yes, excellent question, Bill.

days, minutes. new innovative and not I the it's over market not anyone them your and is communication may the has a think be faces concept. to challenges, bring the Nexttel have of talk as person not same be concept. their on that's one application I on is around may they think, And into cellular play the Push-to-talk most InteropONE not since It's new about may not matter of been subscriber are, of safety that that What's that that's the take BKR InteropONE today. smartphone the in a public may a new or a or likely ability carrier do a just group phone. you so

message to that way that the smartphone. InteropONE so And works is can a send we text

And send talk group or will InteropONE. you either send the Google can message you the Store Apple a message can to store, to a If someone, the in text in Basically, you participate text application phone, talk your download the provisioned already installed the group it then your of at you'll once the user. phone that application on with then -- you've host is time. the

there is industry. the that on talk POC that's feature that the a on when So to. slows lots communication all who process the down And technology that excited customers place, other in about. group. that patent-pending the they put they don't the whole That's message feature always need to we of other you matter they in that which get they they on cases go text get field, of are don't you your and from can common actually to when have when the imagine, times. the a you're when response providers is field to And know talk our platform, minutes talking X the Because takes are unique

platform times. is quickly these communication response can you improve that their InteropONE and very people designed so together provide link that to

for or they within have But pay period? the app it to have that

No.

will the The So appropriate their store, message text free. they link, automatically to will free. which is application link the send them for download

when already can In sends with comes you application, that when with an download group InteropONE fact, when download up or it today. is download they provisioned agency, and application, host already groups when the the the difference established. that The open it subscriber a link, communication a path you you talk

a blank from be were app. you website it download If to the today, would it basically

it. So be able you access wouldn't to

just on your phone. can You it download

the key So that's difference.

paying raised The for is other point you it.

I nothing pay set for right? So pay is pays. The way as model agency service. I host The a guest download user, up the the nothing, free. is is that the

party for who nothing. When it's that days call, So using long This calling for a pays the The person long pays made person old exactly the like the in call made the model receives distance. for I we're call distance of who the the InteropONE. same long-distance fees. is pays it's

-- the It's your you that's host another requesting be on therefore, pays there's help, they the for that And the safety customers temporary I'll that's host the people who the subscription because assistance. the public on They're it no should agree agency the agency asking that's who pays for pay. your participation tell -- need that InteropONE. disputing another really feature like should and they that and

Interesting. Interesting. Yes.

Well, of near luck. forward Okay. some in best great. to profits Listen, Look the here future.

Bill. a Have Appreciate you, good it. Thank day.

closing and the the turn question-and-answer have remarks. call over session, to for of end reached We I John will now the

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

at your you for and Thank lines disconnect time. concludes may This participation. this today's conference, your you