Q2 2024 BK Technologies Corp Earnings Call

August 8, 2024

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference call for the second quarter of 2020 for this call is being recorded all participants have been placed on a listen only mode. Following management's remarks, the call will be opened for questions.

Operator: Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation conference call for the second quarter of 2024. This call is being recorded. All participants have been placed on a listen-only mode.

Unknown Executive: Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation conference call for the second quarter of 2024. This call is being recorded. While participants have been placed on a listen-only mode, following management's remarks, the call will be open for questions.

Operator: Ladies and gentlemen, and welcome to the BK Technologies Corporation conference call for the second quarter of 2024. This call is being recorded. All participants have been placed on a listen-only mode.

Unknown Executive: There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast.

Operator: The slide presentation that accompanies today's remarks, which can be accessed via the webcast.

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

Operator: Following management's remarks, the call will be open to questions. There is 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, Jon Nesbett of IMS Investor Relations. Please go ahead.

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

Unknown Executive: Please go ahead. Thank you.

Jon Nesbett: Thank you good morning, and welcome to our conference call to discuss P. Take technologies' results for the second quarter of 2024 on the call today are Johnson, Ziggy, Chief Executive Officer, and Scott <unk>, Chief Financial Officer, I'll take a momentary the safe Harbor statement statements made during this conference call and presented in the presentation.

John Nesbett: Thank you. Good morning, and welcome to our conference call to discuss BK Technologies' results for the second 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 Statement. Statements made during this conference call and presented in the presentation that are based on historical facts or foreseeing statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenue and profits.

Jon Nesbett: Thank you. Good morning, and welcome to our conference call to discuss BK Technologies' results for the second 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 Statement. Statements made during this conference call and presented in the presentation that are 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.

Jon Nesbett: Thank you. Good morning, and welcome to our conference call to discuss BK Technologies' results for the second 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 Statement. Statements made during this conference call and presented in the presentation that are based on historical facts or foreseeing statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenue and profits.

John Nesbett: Good morning, and welcome to our conference call to discuss BK Technologies results for the second quarter of 2024. On the call today are Jon Suzuki, Chief Executive Officer, and Scott Malmanger, Chief Financial Officer.

Unknown Executive: I'll take a moment to read the Safe Harbor statement. Statements made during this conference call and presented in the presentation that are based on historical facts or forelooking statements. Such statements include, but are not limited to projections or statements of future goals, targets, and targets regarding the company's revenue and profits. These statements are subject to known and non-known factors and risks. The company's actual results, performance or 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 to such material differences have been described in this morning's press release and in BK's followings with the Security and Exchange Commission.

John Nesbett: That are based on historical facts are forward looking statements such statements include but are not limited to projections or statements for future goals targets and targets regarding the companys revenue and profits.

Jon Nesbett: These statements are subject to known and unknown factors and risks. The company's actual results, performance, or 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 to such material differences have been described in this morning's press release and in BK's filings with the 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, I'm going to turn the call over to Jon Suzuki, CEO of BK Technologies. Please go ahead, Jon.

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

John Nesbett: Some of the factors and risks that could cause or contribute to such material differences have been described in this morning's press release.

Speaker Change: Bk's filings with the 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. I will not turn the call over to John Suzuki C. E O BK technologies. Please go ahead John.

Unknown Executive: 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 forelooking statements.

John Nesbett: These statements are subject to known and unknown factors and risks. The company's actual results, performance, or 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 to such material differences have been described in this morning's press release and in BK's filings with the 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, I'm gonna turn the call over to Jon Suzuki, CEO of BK Technologies. Please go ahead, Jon.

Jon Nesbett: These statements are subject to known and unknown factors and risks. The company's actual results, performance, or 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 to such material differences have been described in this morning's press release and in BK's filings with the 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, I'm gonna turn the call over to Jon Suzuki, CEO of BK Technologies. Please go ahead, Jon.

John Nesbett: Okay, I'm not turning the call over to Jon Suzuki, CEO of BK Technologies.

Unknown Executive: Please go ahead, Jon. Thank you, Jon.

Jon Suzuki: Thank you John.

Jon Suzuki: 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 Malmanger, for a deeper dive into our financial results. We'll conclude by opening the call for a brief Q&A. Our second quarter results reflect strong operational progress, demonstrated by record new order activity, revenue growth, improved gross margins, and lower operating expenses. All help to drive our fourth consecutive quarter of profitability with GAAP net income of 1.7 million or 47 cents per share and non-GAAP earnings of 55 cents per diluted share.

John Suzuki: Thank you, everyone, for joining us 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 Malmanger, for a deeper dive into our financial results, and I will conclude by opening the call for a brief Q&A. Our second quarter results reflect strong operational progress, demonstrated by record new order activity, revenue growth, improved gross margins, and lower operating expenses. All of these helped to drive our fourth consecutive quarter of profitability with GAAP net income of $1.7 million, or $0.47 per share, and non-GAAP earnings of $0.55 per diluted share.

John Suzuki: Thank you, everyone, for joining us 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 Malmanger, for a deeper dive into our financial results, and I will conclude by opening the call for a brief Q&A. Our second quarter results reflect strong operational progress, demonstrated by record new order activity, revenue growth, improved gross margins, and lower operating expenses. All of these help to drive our fourth consecutive quarter of profitability with a GAAP net income of $1.7 million, or $0.47 per share, and non-GAAP earnings of $0.55 per diluted share.

Jon Suzuki: Everyone for joining today.

John Suzuki: Our second quarter results reflect strong operational progress, demonstrated by record new order activity, revenue growth, improved gross margins, and lower operating expenses, all helped to drive our fourth consecutive quarter of profitability with gap net income of $1.7 million, or $0.47 per share, and non-GAAP earnings of $0.55 per diluted share. The transition of our product lines to east-west manufacturing continues with the BKR 5000 and K&G mobile lines now fully, and the transition of our BK9000 product line expected to be complete by the end of Q3. As a result of our outsourcing activities to date, we started to realize lower manufacturing costs in the second quarter, and we anticipate additional cost savings once the transition is fully complete.

John Suzuki: The transition of our product lines to east-west manufacturing continues with the BKR 5000 and K&G mobile lines now fully transferred. As a result of our outsourcing activities to date, we started to realize lower manufacturing costs in the second quarter, and we anticipate additional cost savings once the transition is fully complete.

John Suzuki: The transition of our product lines to east-west manufacturing continues with the BKR 5000 and K&G mobile lines now fully completed, and the transition of our BKR 9000 product line expected to be complete by the end of Q3. As a result of our outsourcing activities to date, we started to realize lower manufacturing costs in the second quarter, and we anticipate additional cost savings once the transition is fully complete.

John Suzuki: I'll start by reviewing some of the highlights of our operations and financial results during the quarter.

Speaker Change: I'll turn it over to our Chief Financial Officer, Scott Mair manager for a deeper dive into our financial results will conclude by opening the call for a brief Q&A.

John Suzuki: Our second quarter results strong.

John Suzuki: <unk> strong operational progress demonstrated by record new order activity.

John Suzuki: Revenue growth improved gross margins and lower operating expenses.

John Suzuki: All helped to drive our fourth consecutive quarter of profitability with GAAP net income of one 7 million or <unk> 47.

John Suzuki: Per share.

John Suzuki: non-GAAP earnings of 55 cents per diluted share.

Jon Suzuki: The transition of our product lines to east-west manufacturing continues with the BKR 5000 and K&G mobile lines now fully transferred. And the transition of our BKR 9000 product line is expected to be complete by the end of Q3. As a result of our outsourcing activities to date, we started to realize lower manufacturing costs in the second quarter, and we anticipate additional cost savings once the transition is fully complete. The BKR 9000 continues to gain traction in the market this quarter, especially among our wildlands or our customer base. Customers that already use our K&G or BKR 5000 radios recognize the benefit.

John Suzuki: The transition of our product lines to east West manufacturing.

John Suzuki: Continues with the Big EUR 5000, and J&J mobile lines now fully transferred.

John Suzuki: And that transition of RMB 9000 product line expected to be complete by the end of Q3.

John Suzuki: As a result of our outsourcing activities to date, we started to realize lower manufacturing costs in the second quarter and we anticipate additional cost savings once the transition is fully complete.

Speaker Change: The daycare Nat gas and continued to gain traction in the market this quarter, especially among our wildland fire customer base.

John Suzuki: The BKR 9000 continued to gain traction in the market this quarter, especially among our wildland fire customer base. Customers that already use our KNG or VTR5000 radios recognize the benefit of a multi-band BKR9000, with many beginning to integrate the new radio into their fleet and utilize its multiband capabilities in their broader mission. We received several purchase orders for both the BKR 5000 and 9000 in the second quarter from state and local agencies, including the California Department of Forestry and Fire Protection, or CAL FIRE, totaling $15 million, as well as $1.1 million orders from the Mississippi Forestry Commission. Second quarter gross margins improved to 37.3%, surpassing our target margin levels of 35%.

John Suzuki: The BKR 9000 continued to gain traction in the market this quarter, especially among our wildland fire customer base. Customers that already use our KNG or VTR 5000 radios recognize the benefit of a multiband BKR-9000, with many beginning to integrate the new radio into their fleets and utilize its multiband capabilities in their broader mission. We received several purchase orders for both the BKR 5000 and 9000 in the second quarter from state and local agencies, including the California Department of Forestry and Fire Protection, or CAL FIRE, totaling $15 million, as well as a $1.1 million order from the Mississippi Forestry Commission, by far.

Speaker Change: Customers that already use our K N G. Our <unk> 5000 radios recognize the benefits of our multi band daycare 9000, with many beginning to integrate the new radio into their fleets.

John Suzuki: Customers that already use our KNG or VTR 5000 radios recognize the benefit of the multiband BKR9000, with many beginning to integrate the new radio into their fleets and utilize its multiband capabilities in their broader mission. We received several purchase orders for both the BKR 5000 and 9000 in the second quarter from state and local agencies, including the California Department of Forestry and Fire Protection, or CAL FIRE, totaling $15 million, as well as a $1.1 million order from the Mississippi Forestry Commission, by far.

Jon Suzuki: of the multi-band BKR 9000 with many beginning to integrate the new radio into their fleets and utilize its multi-band capabilities in their broader missions. We received several purchase orders for both the BKR 5000 and 9000 in the second quarter from state and local agencies, including the California Department of Forestry and Fire Protection, or Cal Fire, totaling $15 million, as well as a $1.1 million order from the Mississippi Forestry Commission. 5-4. Second quarter gross margins improved at 37.3%, surpassing our target margin levels of 35%. Our cost reduction initiatives have been a key driver of this recent improvement, spearheaded by the transition of our manufacturing's East West, which has allowed us to realize lower product costs.

John Suzuki: And utilize its multi band capabilities in their broader missions.

John Suzuki: We received several purchase orders for both the <unk> 5009 thousand in the second quarter from state and local agencies, including the California Department of Forestry, and fire protection or Cal fire totaling $15 million.

John Suzuki: As well as $1 1 million dollar order from the Mississippi Forestry Commission.

Speaker Change: Slide four.

Speaker Change: Second quarter gross margins improved to 37, 3%.

John Suzuki: Second quarter gross margins improved at 37.3%, surpassing our target margin levels of 35%. Our cost reduction initiatives have been a key driver of this recent improvement, spearheaded by the transition of our manufacturing to East-West, which has allowed us to realize lower product costs. We expect gross margins to continue to improve through 2024 and 2025 as we work towards achieving gross margins of 50%. As you can see in the graph on slide five.

John Suzuki: Second quarter gross margins improved to 37.3%, surpassing our target margin levels of 35%. Our cost reduction initiatives have been a key driver of this recent improvement, spearheaded by the transition of our manufacturing to East-West, which has allowed us to realize lower product costs. We expect gross margins to continue to improve through 2024 and 2025 as we work towards achieving gross margins of 50%. As you can see in the graph on slide five.

John Suzuki: Surpassing our target margin levels of 35%.

John Suzuki: Our cost reduction initiatives have been a key driver of this recent improvement, spearheaded by the transition of our manufacturing to East-West, which has allowed us to realize lower product costs. We expect gross margins to continue to improve through 2024 and 2025 as we work towards achieving gross margins of 50%, as you can see in the graph on slide 5. We've achieved improved earnings per share each quarter since the second quarter of 2023, as well as four consecutive quarters of profitability.

John Suzuki: Our cost reduction initiatives have been a key driver of this recent improvement.

John Suzuki: Spearheaded by the transition of our manufacturing East West, which has allowed us to realize lower product costs.

Jon Suzuki: We expect gross margins to continue to improve through 2024 and 2025 as we work towards achieving gross margins of 50%. As you can see in the graph on slide 5, we've achieved improved earnings per share each quarter since the second quarter of 2023, as well as four consecutive quarters of profitability. In the second quarter, we achieved net income of $1.7 million compared to a net income loss of $1.3 million in the second quarter of 2023. As a result of our ongoing cost reduction initiatives and shifting product mix that includes the higher margin BKR9000, multi-van radio, we've been able to derive enhanced profitability and revenue over the past several quarters.

John Suzuki: We expect gross margins to continue to improve through 2024, and 2025 as we work towards achieving gross margins of 50%.

John Suzuki: As you can see in the graph on slide five.

John Suzuki: We've achieved improved earnings per share each quarter since the second quarter of 2023, as well as four consecutive quarters of profitability. In the second quarter, we achieved net income of $1.7 million compared to a net income loss of $1.3 million in the second quarter of 2023. As a result of our ongoing cost-reduction initiatives and shifting product mix that includes the higher-margin BKR 9000 multiband radio, we've been able to derive enhanced profitability and revenue over the past several quarters.

John Suzuki: We've achieved improved earnings per share each quarter since the second quarter of 2023, as well as four consecutive quarters of profitability. In the second quarter, we achieved net income of $1.7 million compared to a net income loss of $1.3 million in the second quarter of 2023. As a result of our ongoing cost reduction initiatives and shifting product mix that includes the higher margin BKR9000 multiband radio, we've been able to derive enhanced profitability and revenue over the past several quarters.

John Suzuki: We've achieved improved earnings per share each quarter since the second quarter of 2023.

John Suzuki: As well as four consecutive quarters of profitability.

John Suzuki: In the second quarter, we achieved net income of $1 7 million compared to a net income loss of $1 3 million in the second quarter of 2023.

John Suzuki: In the second quarter, we achieved net income of $1.7 million compared to a net income loss of $1.3 million in the second quarter of 2023. As a result of our ongoing cost reduction initiatives and shifting product mix that includes the higher margin BKR9000 multiband radio, we've been able to derive enhanced profitability and revenue over the past several quarters. We're encouraged by our improved performance, and we believe we are well positioned for continued improvement as we target full-year 2024 GAAP earnings per share in excess of $1.50 or non-GAAP adjusted EPS in excess of $1.77. Slide 6.

John Suzuki: As a result of our ongoing cost reduction initiatives and shifting product mix that includes the higher margin daycare and 9000 multi band radio we've been able to drive enhanced profitability and revenue over the past several quarters.

John Suzuki: Sure.

Jon Suzuki: We're encouraged by our improved performance, and we believe we are well-positioned for continued improvement as we target full year 2024 gap earnings per share in excess of $1.50 or non-gap adjusted EPS in excess of $1.77. Slide 6. Our BKR5000 and BKR9000 radios throw record new order booking activity in the second quarter. As I mentioned a moment ago, Cal Fire, a long-standing customer of BK Technology, purchased place purchase orders in the quarter totaling over $50 million for our K&G mobile radio, BKR5000 portable radio, and BKR9000 multi-van portable radio. Additionally, we received orders from the Bureau of Land Management and the Portland, Oregon, Fire and Rescue, demonstrating the BKR series radios' popularity among federal, state, and local agencies as wild land fire activity increases demand for reliable communications technology.

John Suzuki: We're encouraged by our improved performance and we believe we are well positioned for continued improvement as we target full year 2024, GAAP earnings per share in excess of $1 50, or non-GAAP adjusted EPS in excess of $1 77.

John Suzuki: We're encouraged by our improved performance, and we believe we are well positioned for continued improvement as we target full year 2024 GAAP earnings per share in excess of $1.50 or non-GAAP adjusted EPS in excess of $1.77. Next slide, sir.

John Suzuki: We're encouraged by our improved performance, and we believe we are well positioned for continued improvement as we target full-year 2024 GAAP earnings per share in excess of $1.50 or non-GAAP adjusted EPS in excess of $1.77. Slide 6.

John Suzuki: Slide six.

John Suzuki: <unk> 5000, and daycare and 9000 radios drove record new order booking activity in the second quarter.

John Suzuki: Our BKR-5000 and BKR-9000 radios drove record new order booking activity in the second quarter. BKR-5000 Portable Radio, and BKR-9000 Multivan Portable Radio. Additionally, we received orders from the Bureau of Land Management and the Portland, Oregon Fire and Rescue, demonstrating the BKR-Series radio's popularity among federal, state, and local agencies as wildland fire activity increases demand for reliable communications technology. We're very pleased with the traction that the multiband BKR9000 has been gaining in the market, both with our existing customers and new ones that recognize the value multiband capabilities can add to their fleet

John Suzuki: Our BKR-5000 and BKR-9000 radios drove record new order booking activity in the second quarter. As I mentioned a moment ago, Cal Fire, a longstanding customer of BK Technologies, placed purchase orders in the quarter totaling over $15 million for our K&G Mobile Radio, BKR5000 portable radio, and BKR9000 multiband portable radio. Additionally, we received orders from the Bureau of Land Management and the Portland, Oregon Fire and Rescue, demonstrating the BKR-Series radio's popularity among federal, state, and local agencies as wildland fire activity increases demand for reliable communications technology.

John Suzuki: Our BKR 5000 and BKR 9000 radios drove record new order booking activity in the second quarter. As I mentioned a moment ago, Cal Fire, a longstanding customer of BK Technologies, placed purchase orders in the quarter totaling over $50 million for our K&G mobile radio. BKR5000 Portable Radio and BKR9000 Multivan Portable Radio. Additionally, we received orders from the Bureau of Land Management and the Portland-Oregon Fire and Rescue, demonstrating the BKR-Series radio's popularity among federal, state, and local agencies as Wildland Fire Activity increases demand for reliable communications technology.

John Suzuki: As I mentioned, a moment ago Cal fire, a longstanding customer of BK technologies.

John Suzuki: Purchased.

John Suzuki: Placed purchase orders in the quarter totaling over $15 million for our change in mobile radio.

Speaker Change: <unk> 5000, portable radio and beak here 9000, multi band portable radio.

John Suzuki: Additionally, we received orders from the Bureau of land management in the Portland, Oregon fire and rescue demonstrating the daycare Sirius radios popularity among federal state and local agencies as wildland fire activity increases demand for reliable communications technology.

John Suzuki: We're very pleased with the traction that the multi band beak here 9000 has been gaining in the market, both with our existing customers and new ones.

Jon Suzuki: We're very pleased with the attraction that the multi-van BKR9000 has been gaining in the market, both with our existing customers and new ones. that are recognizing the value multi-band capabilities can add to their fleet. In the second quarter, we also received purchase orders for the BKR 9000 from the Mississippi Forestry Commission, the City of Ventura, California, Fire Department, and the California Department of Parks and Recreation. Overall, market interest in our BKR series radios is increasing. Our radios serve as a critical communications equipment, particularly for first responders in rugged and remote terrains. Right now, over 6,500 firefighters and support staff are fighting one of California's largest wildfires on record, the Park Fire, which has burned over 400,000 acres and is only 34 percent contained, and our radios are on the front line with the first responders.

John Suzuki: We're very pleased with the traction that the multiband BKR9000 has been gaining in the market, both with our existing customers and new ones that recognize the value multiband capabilities can add to their fleet. In the second quarter, we also received purchase orders for the BKR 9000 from the Mississippi Forestry Commission, the City of Ventura, the California Fire Department, and the California Department of Parks and Recreation. Overall, market interest in our BKR series radios is increasing, and they are served as critical communications equipment, particularly for first responders in rugged and remote terrain.

John Suzuki: That are recognizing the value multi band capabilities can add to their fleet.

John Suzuki: In the second quarter. We also received purchase orders for the Big care 9000 from the Mississippi for Ctrip mission.

John Suzuki: In the second quarter, we also received purchase orders for the BKR 9000 from the Mississippi Forestry Commission, the City of Ventura, the California Fire Department, and the California Department of Parks and Recreation. Overall, market interest in our BKR series radios is increasing. Our radios serve as critical communications equipment, particularly for first responders in rugged and remote terrain. Right now, over 6500 firefighters and support staff are fighting one of California's largest wildfires on record.

John Suzuki: The city of Ventura, California Fire Department, and the California Department of Parks and Recreation.

Speaker Change: Overall market interest in our daycare serious radios is increasing.

John Suzuki: Our radio serve as a critical communications equipment, particularly for first responders and rugged and remote trains.

John Suzuki: Our radios serve as critical communications equipment, particularly for first responders in rugged and remote terrain. Right now, over 6500 firefighters and support staff are fighting one of California's largest wildfires on record. The Park Fire, which has burned over 400,000 acres and is only 34% contained, and our radios are on the front line with the first responders. Buyers like these are becoming more and more prevalent throughout the United States, quadrupling in frequency in the last 30 years, and we anticipate that demand from agencies tasked with fighting these fires will continue to increase as a result. Slide seven.

John Suzuki: Right now over 6500 firefighters and support staff.

John Suzuki: Right now, over 6,500 firefighters and support staff are fighting one of California's largest wildfires on record, the Park Fire, which has burned over 400,000 acres and is only 34% contained, and our radios are on the front line with the first responders. Fires like these are becoming more and more prevalent throughout the United States, quadrupling in frequency in the last 30 years, and we anticipate that demand from agencies tasked with fighting these fires will continue to increase as a result. Slide 7.

John Suzuki: Fighting one of California's largest wildfires on record the park fire.

John Suzuki: The Park Fire, which has burned over 400,000 acres and is only 34% contained, and our radios are on the front line with the first responders. Fires like these are becoming more and more prevalent throughout the United States, quadrupling in frequency in the last 30 years, and we anticipate that demand from agencies tasked with fighting these fires will continue to increase as a result. Slide seven.

John Suzuki: Which is bird over 400000 acres and is only 34% contained and our radios are on the frontline with the first responders.

Speaker Change: Buyers like these are becoming more and more prevalent throughout the United States quadrupling in frequency in the last 30 years, and we anticipate that demand from agencies tasked with fighting. These fires will continue to increase as a result.

Jon Suzuki: Fires like these are becoming more and more prevalent throughout the United States, quadrupling in frequency in the last 30 years, and we anticipate that demand from agencies tasked with fighting these fires will continue to increase as a result.

Jon Suzuki: Flight 7: Our transition to East West manufacturing and adoption of an asset light model for our business is going well. I'm pleased to report that the majority of the BKR 5000 radios shipped in the quarter were manufactured by East West. Also during the second quarter, we transferred our K&G mobiles to the East West manufacturing facility in Juarez, Mexico. Our focus is now on the transfer of the BKR 5000 production by the end of the third quarter, at which point all manufacturing will reside at East West. The asset light model is a key focus and major initiative for our business and has already resulted in lower inventory and lower product costs, with a positive impact on our margin performance.

John Suzuki: Slide seven.

Speaker Change: Our transition to east West manufacturing and adoption of an asset light model for our business is going well.

John Suzuki: Our transition to East-West manufacturing and adoption of an asset-light model for our business is going well. I'm pleased to report that the majority of the BeCare 5000 radios shipped in the quarter were manufactured by East-West. Also, during the second quarter, we transferred our K&G mobiles to the East-West Manufacturing Facility in Juarez, Mexico. Our focus is now on the transfer of BK-9000 production by the end of the third quarter, at which point all manufacturing will reside at East-West.

John Suzuki: Our transition to East-West manufacturing and adoption of an asset-light model for our business is going well. I'm pleased to report that the majority of the BeCare 5000 radios shipped in the quarter were manufactured by East-West. Also, during the second quarter, we transferred our K&G mobiles to the East-West Manufacturing Facility in Juarez, Mexico. Our focus is now on the transfer of the BKR 9000 production by the end of the third quarter, at which point all manufacturing will reside at East-West.

John Suzuki: I am pleased to report that the majority of the Big care 5000 radios shipped in the quarter were manufactured by East West.

John Suzuki: Also during the second quarter, we transferred <unk> mobiles, so the east West manufacturing facility in Juarez, Mexico.

John Suzuki: Our focus is now on the transfer of the <unk> 9000 in production by the end of the third quarter at which point all manufacturing will reside at east West.

John Suzuki: The Acid Light model is a key focus and major initiative for our business, and has already resulted in lower inventory and lower product costs, with a positive impact on our margin performance. Additionally, the outsourced manufacturing model allows us to focus our internal resources on product development, engineering, and marketing of our products. I will now turn the call over to our Chief Financial Officer, Scott Malmanger, to go over our financial results for the quarter. Scott?

John Suzuki: The asset light model is a key focus and major initiative for our business and has already resulted in lower inventory and lower product costs with a positive impact on our margin performance.

John Suzuki: The Asset Light model is a key focus and major initiative for our business and has already resulted in lower inventory and lower product costs with a positive impact on our margin performance. Additionally, the outsourced manufacturing model allows us to focus our internal resources on product development, engineering, and marketing of our products.

John Suzuki: The Asset Light model is a key focus and major initiative for our business, and has already resulted in lower inventory and lower product costs, with a positive impact on our margin performance. Additionally, the outsourced manufacturing model allows us to focus our internal resources on product development, engineering, and marketing of our products. I will now turn the call over to our Chief Financial Officer, Scott Malmanger, to go over our financial results for the quarter. Okay, Scott?

Jon Suzuki: Additionally, the outsourced manufacturing model allows us to focus our internal resources on product development, engineering, and marketing of our products.

John Suzuki: Additionally, the outsourced manufacturing model allows us to focus our internal resources and product development engineering and marketing of our products I will now turn the call over to our Chief Financial Officer, Scott now manager to go over our financial results for the quarter.

Scott Malmanger: I will now turn the call over to our Chief Financial Officer, Scott Malmanger, to go over our financial results for the quarter.

Scott Malmanger: Scott? Thank you, John. Sales through the second quarter totals approximately 20.3 million dollars compared to 19 million for the same quarter last year, but increased sequentially by approximately 11%, which is in line with our expectation that 2024 revenue will be consistent with 2023 results. Growth's profit margin in the second quarter was 37.3%, which is John mentioned surpasses our target margin levels of 35% for 2024, and we expect to continue realizing incremental margin improvement as we drive our cost reduction in this. this. Selling, general and administrative expenses are SG&A for the second quarter total of approximately $5.5 million compared to $6 million for the same quarter last year.

John Suzuki: Scott.

John: Thank you John.

Scott Malmanger: Thank you, Jon. Sales for the second quarter totaled approximately $20.3 million compared to $19 million for the same quarter last year, but they increased sequentially by approximately 11%, which is in line with our expectation that 2024 revenue will be consistent with 2023 results. Gross profit margin in the second quarter was 37.3%, which, as John mentioned, surpasses our target margin levels of 35% for 2024. And we expect to continue realizing incremental margin improvement as we drive our cost reduction initiatives.

Scott Malmanger: Selling general and administrative expenses or SG&A for the second quarter totaled approximately $5.5 million compared to $6 million for the same quarter last year. Operating income totaled $2 million compared with an operating loss of $784,000 in the second quarter of 2023. We recorded net income of $1.7 million, or $0.47 per basic and diluted share, in the second quarter of 2024 compared with a net loss of $1.3 million, or $0.39 per basic and diluted share, in the prior year period.

Scott Malmanger: Selling General and administrative expenses were FGNA for the second quarter total of approximately $5.5 million compared to $6 million for the same quarter last year, and operating income was $2 million compared with an operating loss of $784,000 in the second quarter of 2023. We recorded net income of $1.7 million, or 47 cents per basic and diluted share, in the second quarter of 2024, compared with a net loss of $1.3 million, or 39 cents per basic and diluted share, in the prior year period.

Speaker Change: Sales for the second quarter totaled approximately $23 million compared to $19 million for the same quarter last year.

Scott Malmanger: But increased sequentially by approximately and approximately 11% which is in line with our expectation that 2020 for revenue will be consistent with 2023 results.

Scott Malmanger: Gross profit margin in the second quarter was 37, 3%, which as John mentioned surpasses our target margin levels up 35% for 2024.

Scott Malmanger: We expect to continue realizing incremental margin improvement as we drive our cost reduction initiatives.

Scott Malmanger: Okay.

Scott Malmanger: Selling general and administrative expenses or SG&A for the second quarter totaled approximately $5 $5 million compared to $6 million for the same quarter last year.

Scott Malmanger: Operating income totaled $2 million.

Scott Malmanger: Operating income total of $2 million compared with an operating loss of $784,000 in the second quarter of 2023. We recorded net income of $1.7 million or $47 per basic and diluted share in the second quarter of 2024, compared with a net loss of $1.3 million or $39 per basic and diluted share in the prior year period. We reported adjusted EBITDA of $2.5 million in the second quarter of 2024, compared with an adjusted EBITDA loss of $786,000 in the second quarter of 2023. Non-GAAP adjusted net income, which adds back net realized and unrealized gains or losses on investments.

Scott Malmanger: Paired with an operating loss of 807.

Scott Malmanger: 784000 in the second quarter of 2023.

Scott Malmanger: We recorded net income of one 7 million or <unk> 47.

Scott Malmanger: Per basic and diluted share in the second quarter of 2024, compared with a net loss of $1 3 million or <unk> 39 per basic and diluted share in the prior year period.

Scott Malmanger: We reported adjusted EBITDA.

Scott Malmanger: We reported adjusted EBITDA of $2.5 million in the second quarter of 2024, compared with an adjusted EBITDA loss of $786,000 in the second quarter of 2023, non-gap adjusted net income, which adds back net realized and unrealized gain or loss on investment, stock based compensation expenses and severance expenses was $2 million for an adjusted EPS of $56,000, cents per basic share or 55 cents per diluted share compared with a loss of $840,000 or 25 cents per basic and diluted share in the second quarter of 2023. We expect to enhance profitability as we continue to reduce costs and improve our gross margin, and remain confident in our target of full year gap EPS exceeding $1.50, and full year adjusted EPS target exceeding $1.77 per share.

Scott Malmanger: We reported adjusted EBITDA of $2.5 million in the second quarter of 2024, compared with an adjusted EBITDA loss of $786,000 in the second quarter of 2023. Non-gap adjusted net income, which adds back net realized and unrealized gain or loss on investment, stock-based compensation expenses, and severance expenses, was $2 million for an adjusted EPS of $56,000, cents per basic share or $0.55 per diluted We expect to enhance profitability as we continue to reduce costs and improve our gross margin and remain confident in our target of full year gap EPS exceeding $1.50 and full year adjusted EPS target exceeding $1.77 per share.

Scott Malmanger: We reported adjusted EBITDA of $2.5 million in the second quarter of 2024, compared with an adjusted EBITDA loss of $786,000 in the second quarter of 2023. Non-gap adjusted net income, which adds back net realized and unrealized gain or loss on investment, stock-based compensation expenses, and severance expenses, with $2 million for an adjusted EPS of $56,000, cents per basic share or $0.55 per diluted We expect to enhance profitability as we continue to reduce costs and improve our gross margin and remain confident in our target of full year gap EPS exceeding $1.50 and full year adjusted EPS target exceeding $1.77 per share.

Scott Malmanger: $2 $5 million in the second quarter of 'twenty four.

Scott Malmanger: Compared with an adjusted EBITDA loss of 786000 in the second quarter 2023.

Scott Malmanger: non-GAAP adjusted net income, which adds back net realized and unrealized gain or loss on investments.

Scott Malmanger: Sack these compensation expenses and severance expenses was $2 million or an adjusted EPS of $56 per basic share or $0.55 per diluted share compared with a lot of $840,000 or $25 per basic and diluted share in the second quarter of 2023. We expect to enhance profitability as we continue to reduce costs and improve our growth margin and remain confident in our target of full year gap EPS exceeding $1.50 and full year adjusted EPS target exceeding $1.77 per share.

Scott Malmanger: Stock based compensation expenses and severance expenses was $2 million.

Scott Malmanger: Adjusted EPS of <unk> 56.

Scott Malmanger: <unk> per basic share or <unk> 55 per diluted share compared with a lot of $840000 or 25 cents per basic and diluted share in the second quarter 2023.

Scott Malmanger: We expect it.

Scott Malmanger: Enhanced profitability as we continue to reduce cost and improve our gross margin.

Scott Malmanger: And remain confident on our target of full year, GAAP EPS exceeding $1 50.

Scott Malmanger: Full year adjusted EPS.

Scott Malmanger: Aggregate exceeding.

Scott Malmanger: $1 77 per share.

Scott Malmanger: Turning now to the company liquidity, we have been able to significantly enhance our balance sheet through the first six months of the year.

Scott Malmanger: Turning now to the company's liquidity, we have been able to significantly enhance our balance sheet through the first six months of the year. As of June 30th, 2024, we have approximately $3 million of cash and cash equivalents and no long-term debt. Working capital improved to approximately $20.3 million at June 30th, 2024, compared to $16.3 million at December 31st, 2023. Driven by increases in accounts receivable that was somewhat offset by inventory reductions as we continue to transition radial manufacturing lines to East West. With our visibility today, we believe that we are well positioned to continue improving our balance sheet through the balance of 2024.

Scott Malmanger: Turning now to the company's liquidity, we have been able to significantly enhance our balance sheet through the first six months of the year. As of June 30, 2024, we have approximately $3 million of cash and cash equivalents and no long-term debt. Working capital improved to approximately $20.3 million at June 30, 2024, compared to $16.3 million at December 31, 2023, driven by increases in accounts receivable that were somewhat offset by inventory reductions as we continue to transition radio manufacturing lines to east-west.

Scott Malmanger: Turning now to the company's liquidity, we have been able to significantly enhance our balance sheet through the first six months of the year. As of June 30, 2024, we have approximately $3 million of cash and cash equivalents and no long-term debt. Working capital improved to approximately $20.3 million at June 30, 2024 compared to $16.3 million at December 31, 2023, driven by increases in accounts receivable that were somewhat offset by inventory reductions as we continue to transition radio manufacturing lines to east-west.

Scott Malmanger: As of June 32024, we have approximately $3 million of cash and cash equivalents and no long term debt.

Scott Malmanger: Working capital improved to approximately $23 million.

Scott Malmanger: At June 30 of 2024 compared to $16 3 million at December 31, 2023.

Scott Malmanger: Driven by increases in accounts receivable that was somewhat offset by inventory reductions as we continue to transition radio manufacturing lines to east West.

Scott Malmanger: With our visibility today, we believe that we are well positioned to continue improving our balance sheet through the balance of 2024.

Scott Malmanger: With our visibility today, we believe that we are well positioned to continue improving our balance sheet through the balance of 2024. We believe that our current cash position, combined with anticipated cash generated primarily by radio sales and borrowing availability under our credit facility, provides us with the working capital that we need to grow our business.

Scott Malmanger: With our visibility today, we believe that we are well positioned to continue improving our balance sheet through the balance of 2024. We believe that our current cash position combined with anticipated cash generated primarily by radio sales and borrowing availability under our credit facility provides us with the working capital that we need to grow our business. I will now turn the call back over to John.

Scott Malmanger: We believe that our current cash position, combined with anticipated cash generated primarily by radio sales and borrowing availability under our credit facility, provides us with the working capital that we need to grow our business. Business.

Scott Malmanger: We believe that our current cash position combined with anticipated cash generated primarily by radio sales.

Scott Malmanger: And borrowing availability under our credit facility provides us with the working capital that we need to grow our business.

John Suzuki: I will now turn the call back over to John.

Scott Malmanger: I will now turn the call back over to John.

Scott Malmanger: Thank you Scott.

John Suzuki: Thank you, Scott. Launched in the fall of 2020, the BKR 5000 remains a strong and consistent driver for our business. The BKR 9000 launched just one year ago, is proving to be successful with both our wild land fire customers, as well as structure fire, law enforcement, and ambulance services.

Speaker Change: Launched in the fall of 2020, the daycare 5000 remains a strong and consistent driver.

John Suzuki: Launched in the fall of 2020, the BKR 5000 remains a strong and consistent driver for our business. The BK 9000 launched just one year ago, further accelerating market adoption of the BKR 9000 as we lay the groundwork for growth in 2025 and beyond. We're pleased with the progress we're seeing with regard to our margin profile, which continues to improve thanks to our focus on cost reduction and the diversification of our product mix.

John Suzuki: Launched in the fall of 2020, the BKR 5000 remains a strong and consistent driver for our business. The BK 9000 launched just one year ago, proving to be successful with both our wildland fire customers, as well as structure fire, law enforcement, and ambulance services.

John Suzuki: Launched in the fall of 2020, the BKR5000 remains a strong and consistent driver for our business. The BK 9000 launched just one year ago, proving to be successful with both our wildland fire customers, as well as structure fire, law enforcement, and ambulance services.

Speaker Change: For our business. The daycare 90000 launch just one year ago is proving to be successful with both our wildland fire customers as well as structure fire law enforcement and ambulance services.

John Suzuki: We continue to focus on further accelerate market adoption of the BKR 9000 as we lay the groundwork for growth in 2025 and beyond. We're pleased with the progress we're seen with regard to our margin profile, which continues to improve thanks to our focus on cost reduction and the diversification of our product mix. The outsourcing of our manufacturing has also benefited our margin performance over this last quarter, and we expect to see further margin improvement as we move to the balance of the year.

John Suzuki: We continue to focus on further accelerating market adoption of the BCARE 9000 as we lay the groundwork for growth in 2025 and beyond. We're pleased with the progress we're seeing with regard to our margin profile, which continues to improve thanks to our focus on cost reduction and the diversification of our product mix. The outsourcing of our manufacturing has also benefited our margin performance over this last quarter, and we expect to see further margin improvement as we move through the balance of the year.

John Suzuki: We continue to focus on further accelerating market adoption of the BKR 9000 as we lay the groundwork for growth in 2025 and beyond. We're pleased with the progress we're seeing with regard to our margin profile, which continues to improve thanks to our focus on cost reduction and the diversification of our product mix. The outsourcing of our manufacturing has also benefited our margin performance over this last quarter, and we expect to see further margin improvement as we move through the balance of the year.

John Suzuki: We continue to focus on.

John Suzuki: On further accelerating market adoption of the <unk> 9000, as we lay the groundwork for growth in 2025 and beyond.

John Suzuki: We're pleased with the progress we're seeing with regard to our margin profile, which continues to improve thanks to our focus on cost reduction and the diversification of our product mix.

John Suzuki: The outsourcing of our manufacturing has also benefited our margin performance over this last quarter.

John Suzuki: And we expect to see further margin improvement as we move through the balance of the year.

John Suzuki: And finally, the new order activity for both our <unk> 5000, and daycare and 9000 have driven a record breaking first half in terms of new orders booked.

John Suzuki: And finally, the new order activity for both our BKR 5000 and BKR 9000 have driven a record-breaking first half in terms of new orders booked.

John Suzuki: And finally, the new order activity for both our BKR 5000 and BKR 9000 has driven a record-breaking first half in terms of new orders booked. As we move through the balance of the year, we believe that we are well positioned to continue driving improved performance for our shareholders and remain confident in our ability to exceed full year gap EPS of $1.50 and non-gap adjusted EPS of $1.77. With that, I will now open the call for questions. Jon?

John Suzuki: The outsourcing of our manufacturing has also benefited our margin performance over this last quarter, and we expect to see further margin improvement as we move through the balance of the year. And finally, the new order activity for both our BKR 5000 and BKR 9000 has driven a record-breaking first half in terms of new orders booked. As we move through the balance of the year, we believe that we are well positioned to continue driving improved performance for our shareholders and remain confident in our ability to exceed full year gap EPS of $1.50 and non-gap adjusted EPS of $1.77. With that, I will now open the call to questions.

Unknown Executive: Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation conference call for the second quarter of 2024. This call is being recorded. While participants have been placed on a listen only mode, following management's remarks, the call will be open for questions.

John Suzuki: As we move through the balance of the year, we believe that we are well positioned to continue driving and improve performance for our shareholders and remain confident in our ability to exceed full-year gap EPS of $1.50 and non-gap adjusted EPS of $1.77.

John Suzuki: As we move through the balance of the year. We believe that we are well positioned to continue driving improved performance for our shareholders and remain confident in our ability to exceed full year GAAP EPS of $1 50, and non-GAAP adjusted EPS of $1 77.

Unknown Executive: There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast.

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

Unknown Executive: With that, I will now open the call for questions.

John Suzuki: With that I will now open the call for questions.

Unknown Executive: John? Thank you.

John Suzuki: John.

Speaker Change: Thank you.

Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or comment. The first question comes from Brett Reiss with Jani, please proceed.

Unknown Executive: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Operator: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

John Nesbett: I'll take a moment to read the Safe Harbor Statement. Statements made during this conference call and presented in the presentation that are based on historical facts or forelooking statements. Such statements include, but are not limited to projections or statements of future goals, targets, and targets regarding the company's revenue and profits. These statements are subject to known and non-known factors and risks. The company's actual results, performance or 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 to such material differences have been described in this morning's press release and in BK's followings with the Security 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 forelooking statements.

Unknown Executive: Will moment please, while we pull for questions? Once again, please press star one if you have a question or comment.

Operator: Please while we poll for questions.

Operator: Once again, please press star one if you have a question or comment.

Operator: The first question comes from Brett Reiss with Janney. Please proceed.

Brett Reiss: Hi, John Hi, Scott can you guys hear me because I'm working from home.

Brett Reiss: Hi John. Hi Scott. Can you guys hear me? Because I'm working from home.

John Suzuki: Yeah, Brett, good morning. We can hear you.

John Suzuki: Hey, Brett, good morning. We can hear you. Great, great, great.

Speaker Change: Yeah, Hey, Brett Good morning, we can hear you great great great I actually have a question on the the software that you have.

John Suzuki: Hey, Brett, good morning. We can hear you. Great, great, great.

Brett Reiss: Great, great, great. I actually have a question about the software that you have. You know, that helped. Um, um, um, The first responders link your radio systems with their cell phones. You know, in view of the tragedy with the attempted assassination of former President Trump. Unknown Speaker Is your software a solution to, you know, different governmental, you know, bodies on the scene, maybe better coordination to prevent these types of events?

Brett Reiss: Great, great, great. I actually have a question about the software that you have that helps first responders link your radio systems with their cell phones. You know, in view of the tragedy with the attempted assassination of former President Trump, is your software a solution to, you know, different governmental bodies on the scene, having maybe better coordination to prevent these types of events?

Brett Reiss: Great. Great. Great. I

Jon Suzuki: I actually have a question on the software that you have that helps first responders link your radio systems with their cell phone. Do you have the tragedy with the attempted assassination of former President Trump? Is your software a solution to different governmental bodies on scene having maybe better coordination to prevent these kinds of events? Thanks for the question, Brent. I'm sure an answer to that question is yes. Interop 1 was a solution that was envisioned to provide an interoperability solution between different agencies at the local, state, and federal. As you can see what happened at the tragic incidents in Pennsylvania, from the reporting that we've seen today, it appears that the state and local governments had established a unified command center with excellent communications, but the Secret Service had a separate command center and it seems as if they failed to cross-communicate between this.

Brett Reiss: Great, great. I actually have a question about the software that you have that helped. Unknown Speaker, first responders link your radio systems with their cell phones, you know, in view of the tragedy with the attempted assassination of former President Trump. Unknown Speaker Is your software a solution to, you know, different governmental bodies on the scene, having maybe better coordination to prevent these types of events?

Speaker Change: That helps.

Brett Reiss: First responded to link your radio systems with their cell phone.

Speaker Change: You know in view of the AR.

John Nesbett: Okay, I'm not turning the call over to Jon Suzuki, CEO of BK Technologies. Please go ahead, Jon. Thank you, Jon.

Brett Reiss: The tragedy with the attempted assassination of form of President Trump.

Jon Suzuki: 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 Malmanger, for a deeper dive into our financial results. We'll conclude by opening the call for a brief Q&A. Our second quarter results reflect strong operational progress, demonstrated by record new order activity, revenue growth, improved gross margins, and lower operating expenses.

Speaker Change: Is your software solution to them.

Brett Reiss: Different governmental bodies on on scene, having maybe better coordination to prevent these type of events.

Speaker Change: Thanks for the question Brent the short answer to that question is yes.

John Suzuki: Thanks for the question, Brent. The short answer to that question is yes.

John Suzuki: Interop One was a solution that was envisioned to provide an interoperability solution between different agencies at the local, state, and federal levels, as you can see from the tragic incidents in Pennsylvania. Unknown Speaker From the reporting that we've seen to date, it appears that the state and local government had established a unified command center with excellent communications, but the Secret Service had a separate command center, and it seems as if they failed to cross-communicate between them.

Speaker Change: Interop one was a solution that was.

Speaker Change: Envisioned to provide an interoperability solution beats.

Speaker Change: Between different agencies at the local state and federal as you can see what happened.

Jon Suzuki: All help to drive our fourth consecutive quarter of profitability with gap net income of 1.7 million or 47 cents per share and non-gap earnings of 55 cents per diluted share. The transition of our product lines to east-west manufacturing continues with the BKR 5000 and K&G mobile lines now fully transferred. And the transition of our BKR 9000 product line expected to be complete by the end of Q3. As a result of our outsourcing activities to date, we started to realize lower manufacturing costs in the second quarter, and we anticipate additional cost savings once the transition is fully complete.

Speaker Change: The tragic incidents in Pennsylvania.

Speaker Change: From the from the reporting that we've seen to date at.

John Suzuki: It appears that the state and local governments have established that unified command center with excellent communications, but the secret service had a separate command center.

Speaker Change: It seems as if they failed.

Speaker Change: <unk> Cross communicates between this this is not.

Jon Suzuki: This is obviously not a best practice for these types of agencies. Normally, they would do much better in the pre-planet side, and they would establish a common communication platform where all agencies, local, state, and federal can communicate together. Interop 1 was designed really to address this, and it does it in a very simplified manner over cellular, and it allows for these different agencies that don't normally communicate together a mechanism or a communications platform where they can't establish a unified command for communications. So again, the answer is yes; this was the purpose of Interop 1: to provide solutions to these types of events.

John Suzuki: This is obviously not a best practice for these types of agencies. Normally, they would do much better on the pre-planning side, and they would establish a common communication platform where all agencies, local, state, and federal, can communicate together. Interop One was designed really to address this, and it does it in a very simplified manner over cellular. And it allows for these different agencies that don't normally communicate together, a mechanism or a communications platform where they can establish a unified command for communication. So, again, the answer is yes, this was the purpose of Interop 1, to provide solutions to these types of events.

John Suzuki: This is obviously not a best practice for these types of agencies. Normally, they would do much better on the pre-planning side, and they would establish a common communication platform where all agencies, local, state, and federal, can communicate together. Interop One was designed really to address this, and it does it in a very simplified manner over cellular. And it allows for these different agencies that don't normally communicate together, a mechanism or a communications platform where they can establish a unified command for communication. So again, the answer is yes. This is, this is, this was, this was the purpose of Interop One: to provide solutions to these types of events.

Speaker Change: Obviously, not a best practice.

John Suzuki: For these for these for these types of agencies normally they would would do much better in the pre planning side and they would they would establish.

John Suzuki: A common.

John Suzuki: Communication platform, where all agencies local state and federal can communicate together.

Jon Suzuki: The BKR 9000 continues to gain traction in the market this quarter, especially among our wildlands or our customer base. Customers that already use our K&G or BKR 5000 radios recognize the benefit, of the multi-band BKR 9000 with many beginning to integrate the new radio into their fleets and utilize its multi-band capabilities in their broader missions. We received several purchase orders for both the BKR 5000 and 9000 in the second quarter from state and local agencies, including the California Department of Forestry and Fire Protection, or Cal Fire, totaling $15 million, as well as $1.1 million order from the Mississippi Forestry Commission.

John Suzuki: Interrupt one was designed really to address this.

John Suzuki: And it does it in a very simple math simplified manner.

John Suzuki: Over over cellular.

John Suzuki: And it allows for these different agencies that don't normally communicate together.

Speaker Change: <unk> mechanism of our communications platform.

John Suzuki: Where are they can't establish a unified command for communications.

John Suzuki: Again the answer is yes. This is this is this was this was the purpose of Interop one was to provide solutions to these types of events.

Jon Suzuki: John, have you in the light of this tragedy? Have you gotten a greater degree of questions and inquiries, and possibly using the Interop 1? Yes, since that day we've been at two major shows, and what I can say to you is when we are presenting our solution to the various public safety agencies, pretty much everyone commented on the fact that this would have been a useful tool in the case of a situation in Pennsylvania. So that was totally unprompted. I think the markets, the agencies, they get a demonstration of this capability, understand the power of it, and understand the application.

John Suzuki: John.

John Suzuki: John, in the light of this tragedy, have you got a greater degree of questions and inquiries and, possibly, you know, using the interop one?

John Suzuki: John, have you, in the light of this tragedy, gotten a greater degree of questions and inquiries and, possibly, you know, using the interop one?

John Suzuki: Jon, have you, in the light of this tragedy, gotten a greater degree of questions and inquiries and, possibly, you know, using the interop one?

Speaker Change: Have you in the light of this tragedy have you gotten a greater.

John: Degree of quite.

John: Questions and inquiries.

Jon Suzuki: 5-4. Second quarter gross margins improved at 37.3%, surpassing our target margin levels of 35%. Our cost reduction initiatives have been a key driver of this recent improvement, spearheaded by the transition of our manufacturing's East West, which has allowed us to realize lower product costs. We expect gross margins to continue to improve through 2024 and 2025 as we work towards achieving gross margins of 50%. As you can see in the graph on slide 5, we've achieved improved earnings per share each quarter since the second quarter of 2023, as well as four consecutive quarters of profitability.

John: And possibly.

John: Using the Interop one.

John: Yeah since since that day, we've been at the two major shows.

John Suzuki: Yeah, since that day, we've been at two major shows. And what I can say to you is that when we are presenting our solution to the various public safety agencies, Pretty much everyone commented on the fact that this would have been a useful tool in the case and situation in Pennsylvania. So that was totally unprompted. I think the market, the agencies that get a demonstration of this capability, understand the power of it and understand the application. So, you know, again, it's a tragic situation that happened, but certainly it's highlighted the need for a product like Interop One to be generally used amongst the different public safety agencies. Great

John Suzuki: Yeah, since that day, we've been at two major shows. And what I can say to you is, when we are presenting our solution to the various public safety agencies, pretty much everyone has commented on the fact that this would have been a useful tool in the case situation in Pennsylvania. So that was totally unprompted. I think the market, the agencies that get a demonstration of this capability, understand the power of it and understand the application. So, you know, again, it's a tragic situation that happened, but certainly it's highlighted the need for a product like Interop One to be generally used amongst the different public safety agencies.

John Suzuki: And what I can say to you is when we are presenting our solution to the various public safety agencies.

John Suzuki: Much everyone commented on the fact that this would have been a useful.

John Suzuki: Cool.

John Suzuki: In the case a situation in Pennsylvania, so that was totally unprompted.

John Suzuki: The market too.

John Suzuki: Agencies, they get a demonstration of this capability I understand the power of it.

John Suzuki: And understand the application.

John Suzuki: So that you know again, it's a tragic situation that.

Jon Suzuki: So again, it's a tragic situation that happened, but certainly is highlighted the need for a product like Interop 1 to be generally used amongst the different public safety agencies.

Speaker Change: That happened.

Jon Suzuki: In the second quarter, we achieved net income of $1.7 million compared to a net income loss of $1.3 million in the second quarter of 2023. As a result of our ongoing cost reduction initiatives and shifting product mix that includes the higher margin BKR9000, multi-van radio, we've been able to derive enhanced profitability and revenue over the past several quarters. We're encouraged by our improved performance and we believe we are a well-positioned for continued improvement as we target full year 2024 gap earnings per share in excess of $1.50 or non-gap adjusted EPS in excess of $1.77.

John Suzuki: But certainly as highlighted the.

John Suzuki: The need for a product like Interop, one to be generally used amongst the different public safety agencies.

Brett Reiss: Great. Thank you. I'll drop back to you. Enjoy the rest of the summer.

Operator: Great. Thank you. I'll drop back to you. Enjoy the rest of the summer.

Brett Rice: Great. Thank you. I'll drop back to you. Enjoy the rest of the summer. Thank you, Brad.

Speaker Change: Great. Thank you I'll drop back in queue I enjoy the rest of the summer.

Brad: Thank you Brad.

Unknown Executive: Once again, if you have a question or a comment, please indicate so by pressing star one on your touchtone phone.

Speaker Change: Once again, if you have a question or a comment please indicate so by pressing star one on your Touchtone phone. The next question is from Jon old with Longmeadow investors. Please proceed.

Jon Old: Once again, if you have a question or a comment, please indicate so by pressing star one on your touchtone phone. The next question is from John Old with Longmeadow Investors; please proceed.

Operator: Once again, if you have a question or a comment, please indicate so by pressing star one on your touchtone phone. The next question is from John Old with Longmeadow Investors; please proceed.

John Old: The next question is from John Old with Long Meadow Investors. Please proceed.

John Old: John, it's a good morning. Thanks again for it looks like obviously things are improving by the quarter, cash growing, credit facility lower.

John Old: John It's Scott Good morning, Thanks, again for the call and congrats on the great results.

Jon Old: Scott, good morning. Thanks again for the call and congratulations on the great results. Unknown Speaker. Thank you. I appreciate it. It looks like, obviously, things are improving by the quarter, cash growing, and the credit facility being lower. I'm just sort of trying to tease out as you look forward over the next, you know, year or so, sort of priorities for the use of cash and capital allocation, specifically wondering whether a stock buyback program is something that's being considered.

Jon Old: Scott, good morning. Thanks again for the call and congratulations on the great results. Unknown Speaker. Thank you. Thank you. It looks like obviously things are improving by the quarter, cash growing, credit facility decreasing. Just sort of trying to tease out, as you look forward over the next year or so, sort of priorities for the use of cash and capital allocation, specifically wondering whether a stock buyback program is something that's being considered.

Jon Old: Scott, good morning. Thanks again for the call and congratulations on the great results. Um... It looks like obviously things are improving by the quarter, cash growing, and the credit facility being lower. I'm just sort of trying to tease out, as you look forward over the next, you know, year or so, sort of priorities on the use of cash and capital allocations, specifically wondering whether I should be stocked by a bank program, which is something that's being considered given where the stock has been trading. Thank you.

Jon Old:

Jon Old: It looks like obviously things are.

Jon Old: Improving by the quarter.

Jon Old: Cash growing.

Jon Old: Credit facility lower I'm.

Jon Old: And just sort of.

Jon Old: So as you look forward over the next year.

Jon Suzuki: Slide 6. Our BKR5000 and BKR9000 radios throw record new order booking activity in the second quarter. As I mentioned a moment ago, Cal Fire, a long-standing customer of BK technology purchased place purchase orders in the quarter totaling over $50 million for our K&G mobile radio, BKR5000 portable radio and BKR9000 multi-van portable radio. Additionally, we received orders from the Bureau of Land Management and the Portland, Oregon Fire and Rescue demonstrating the BKR series radios popularity among federal, state and local agencies as wild land fire activity increases demand for reliable communications technology.

Jon Old: So.

Speaker Change: Our priority is on <unk>.

Speaker Change: Use of cash and capital allocation, specifically wondering whether.

Speaker Change: Stock buyback program is something that's being considered given where the stock has been trading. Thank you.

Jon Old: Thanks for the thanks for the question John This is John Ziggy.

John Suzuki: Thanks for that. Thanks for the question, John. This is John Suzuki.

John Suzuki: Thanks for that. Thanks for the question, Jon. This is Jon Suzuki.

John Suzuki: This is John Suzuki. So our priority right now is to rebuild our balance sheet, but given the recent decline in our share price, there has been a dialogue at the board level that we should be looking at reactivating our buy back program. So we agree, we feel that the share prices at this level is certainly deserving of consideration for the company to take some of its new cash flow and purchase shares back. We would agree with that. Okay.

John Suzuki: So our priority right now is to rebuild our balance sheet. But given the recent decline in our share price, there has been a dialogue at the board level that we should be looking at reactivating our buyback program. So we agree. We feel that the share price at this level is certainly deserving of consideration for the company to take some of its new cash flow and purchase shares.

John Suzuki: So our priority right now is to rebuild our balance sheet. But given the recent decline in our share price, there has been a dialogue at the board level that we should be looking at reactivating our buyback program. We agree. We feel that the share price at this level is certainly deserving of consideration for the company to take some of its new cash flow and purchase shares back.

Speaker Change: So our priority right now is to rebuild our balance sheet, but given.

John Suzuki: Given the recent decline in our share price there has been a dialogue at the board level that we should be looking at reactivating our buyback program. So we agree we feel that the share prices at this level is certainly deserving of consideration for the company.

John Suzuki: Some of its new cash flow.

Jon Suzuki: We're very pleased with attraction that the multi-van BKR9000 has been gaining in the market, both with our existing customers and new ones, that are recognizing the value multi-band capabilities can add to their fleet. In the second quarter, we also received purchase orders for the BKR 9000 from the Mississippi Forestry Commission, the City of Ventura, California Fire Department, and the California Department of Parks and Recreation. Overall, market interest in our BKR series radios is increasing.

John Suzuki: And purchase our shares back.

Speaker Change: We would agree with that.

John Suzuki: Okay.

John Suzuki: Okay, I should know this, but is there one in place? Or does a new one have to be authorized?

John Suzuki: Okay. I should know this, but is there one in place? Or does no one have to be authorized?

Jon Old: Okay, I should know this, but is there one in place? Or does no one have to be authorized? I should know that, but I don't. I'm sorry.

John Suzuki: I should know this, but is there one in place, or does the new one have to be authorized? I should know that, but I don't. I'm sorry. Yeah. Now that's fair. The authorization we have is a few years old, and we would probably be best for us to reauthorize that if we were going to go ahead and do that. And so that's something that the board will be considering.

Speaker Change: Actually I should know this but is there one in place.

John Suzuki: Or.

Speaker Change: So it doesn't have to be authorized I.

John Suzuki: I should know that, but I don't. I'm sorry. Yeah.

John Suzuki: I should know that, but I don't. I'm sorry. Yeah, that's fair.

John Suzuki: Yeah, that's fair. The authorization we have is a few years old, and it would probably be best for us to reauthorize that if we were going to go ahead and do that. And so that's something that the board will be considering. Okay, great. Thank you very much.

Speaker Change: I should know that but I don't I'm sorry, yeah.

John Suzuki: Slade, Arthur S.: Yeah, that's fair. The authorization we have is a few years old, and we would probably...it would be best for us to reauthorize that if we were going to go ahead and do that. And so that's something that the board will be considering.

John Suzuki: Unknown Speaker Yeah, that's fair. The authorization we have is a few years old, and it would probably be best for us to reauthorize that if we were going to go ahead and do that. And so that's something that the board will be considering.

Speaker Change: That's fair.

Unknown Speaker: The authorization, we have just a few years old and we would probably best it would be best for us to reauthorize that if we were going to go ahead and do that and so that's something that the board will be considering.

John Suzuki: Okay, great. Thank you very much.

John Old: Okay. Great. Thank you very much.

Jon Old: Okay, great. Thank you very much.

Aaron Martin: The next question comes from Aaron Martin with AIGH and Desmond Partners. Please proceed. Hi. Good morning, John Scott. Congratulations on the strong quarter, particularly on the gross margin. And I think this is the first time you've put out there a new target of 50%.

Speaker Change: The next question comes from Aaron Martin with a I G. H investment partners. Please proceed.

Aaron Martin: The next question comes from Aaron Martin with AIGH Investment Partners. Please proceed. Hi, good morning.

Operator: The next question comes from Aaron Martin with AIGH Investment Partners. Please proceed. Hi, good morning.

Aaron Martin: The next question comes from Aaron Martin with AIGH Investment Partners. Please proceed.

Jon Suzuki: Our radios serve as a critical communications equipment, particularly for first responders in rugged and remote terrains. Right now, over 6,500 firefighters and support staff are fighting one of California's largest wildfires on record, the Park Fire, which has burned over 400,000 acres and is only 34 percent contained, and our radios are on the front line with the first responders. Fires like these are becoming more and more prevalent throughout the United States, quadrupling and frequency in the last 30 years, and we anticipate that demand from agencies tasked with fighting these fires will continue to increase as a result.

Aaron Martin: Hi Jon and Scott. Good morning. Congratulations on a strong quarter, particularly the gross margin. And I think this is the first time you've put out there a new target of 50%. Can you, I guess, elaborate on that in terms of, I know you want to be out there to make sure that people realize that just because you passed your 35% target doesn't mean you're done, but, you know, in terms of the trajectory of the gross margin in the shorter term and, you know, maybe the medium term, how we should be thinking about it.

Aaron Martin: Hi, good morning, John and Scott. Congratulations on a strong quarter, particularly on the gross margin. And I think this is the first time you've put out there a new target of 50%. Can you, I guess, elaborate on that in terms of, I know you want to be out there to make sure that people realize that just because they passed their 35% target doesn't mean you're done, but, you know, in terms of the trajectory of the gross margin in the shorter term and, you know, maybe the medium term, how we should be thinking about

Aaron Martin: Hi, Good morning, John and Scott Congratulations on the strong quarter.

Speaker Change: Particularly on the gross margin.

Aaron Martin: This is the first time, you've put out there a new target of 50%.

Aaron Martin: Can you I guess elaborate on that in terms of.

Scott Malmanger: Can you, I guess, elaborate on that in terms of, I know you want to be out there to make sure that people realize that just to pass your 35% target that you're done, but in terms of the trajectory on the gross margin and the shorter term and maybe the medium term, however you should be thinking about it. Thanks for the question, Aaron. So we had actually set a Vision 2025 where we had set some ambitious goals of achieving $100 million in revenue in 50% gross margins. I just wanted to kind of reset that we are still tracking towards that.

Speaker Change: I know you wanted to be out there to make sure people realize it.

Speaker Change: Patrick did a 5% target and you're done.

Speaker Change: The trajectory on the gross margin.

Speaker Change: The shorter term and maybe medium term, we should be thinking about it.

John Suzuki: Thanks for the question, Aaron. So we have actually set a vision for 2025 where we have set some ambitious goals of achieving $100 million in revenue and 50% gross margin. I just wanted to kind of re-state that we are still tracking towards that. Now, whether we're going to achieve 50% gross margin in 2025 for the full year, you know, we'll have to go through our budgeting process, and we'll provide guidance on that in the fourth quarter call, but what I can say to you is that, based on the plan that we have in place, we believe that a gross margin of 50% is achievable for And it's just a matter of getting some of the work completed, and then you'll start seeing those margins on a quarterly basis.

John Suzuki: Thanks for the question, Aaron. So we had actually set a vision in 2025 where we had set some ambitious schools of achieving $100 million in revenue in 50% gross margin. I just wanted to kind of re-step it that we are still tracking towards that. Now, whether we're going to achieve 50% gross margin in 2025 for the full year, you know, we'll have to go through our budgeting process, and we'll provide guidance on that in the fourth quarter call, but what I can say to you, is that based on the plan that we have in place, we believe that a gross margin of 50% is is achievable for this business. And it's just a matter of getting some of the work completed, and then you'll start seeing those margins on a quarterly basis.

Speaker Change: Yeah. Thanks for the question Aaron So.

John Suzuki: Thanks for the question, Aaron. So we have actually set a vision for 2025 where we have set some ambitious goals of achieving $100 million in revenue and 50% gross margin. I just wanted to kind of re-state that we are still tracking towards that. Now, whether we're going to achieve 50% gross margin in 2025 for the full year, you know, we'll have to go through our budgeting process, and we'll provide guidance on that in the fourth quarter call, but what I can say to you is that, based on the plan that we have in place, we believe that a gross margin of 50% is achievable for And then you'll start seeing those margins on a quarterly basis.

John Suzuki: We had actually set a vision 2025, where we had set.

John Suzuki: Some ambitious goals of achieving $100 million in revenue and 50% gross margins.

John Suzuki: I just wanted to kind of reset that that we are still tracking towards that now whether we're going to achieve 50% gross margin in 2025 for the full year.

Jon Suzuki: Flight 7 Our transition to East West manufacturing and adoption of an asset light model for our business is going well. I'm pleased to report that the majority of the BKR 5000 radios shipped in the quarter were manufactured by East West. Also during the second quarter, we transferred our K&G mobiles to the East West manufacturing facility in Juarez, Mexico. Our focus is now on the transfer of the BKR 5000 production by the end of the third quarter, at which point all manufacturing will reside at East West.

Scott Malmanger: Now, whether we're going to achieve 50% gross margin in 2025 for the full year, we'll have to go through our budgeting process, and we'll provide guidance on that in the fourth quarter call. But what I can say to you is that, based on the plan that we have in place, we believe that a gross margin of 50% is achievable for this business. And it's just a matter of getting some of the work completed, and then you'll start seeing those margins on a quarterly basis. That's entirely based upon a hardware business that's even without a software business, so that's including a software.

John Suzuki: We'll have to go through our budgeting process and we will provide guidance on that in the fourth quarter call.

John Suzuki: But what I can say to you.

John Suzuki: Is that based on the plan that we have in place we believe that a gross margin of 50% is is achievable for this business.

John Suzuki: And.

John Suzuki: It's just a matter of getting some of the work completed and then you'll start seeing those margins on a on a quarterly basis.

Jon Suzuki: The asset light model is a key focus and major initiative for our business and has already resulted in lower inventory and lower product costs with a positive impact on our margin performance. Additionally, the outsourced manufacturing model allows us to focus our internal resources on product development, engineering and marketing of our products.

Speaker Change: Got it and then that's entirely based upon our hardware business since even without the software business or that's including the software business.

John Suzuki: And that's entirely based on a hardware business; that's even without a software business, so that's not including a software business.

John Suzuki: Is the software component still relatively small, Aaron? Obviously, it includes it, but it's not a material number when you're dealing with, you know, the type of revenues that we have.

Scott Malmanger: Is the software component still relatively small, Aaron? So obviously it includes it, but it's not a material number when you're dealing with, you know, the type of revenues that we have.

Speaker Change: Is the software component is still relatively small erin so obviously lucid, but it's it's not a material number.

Aaron Martin: Is the software component still relatively small, Aaron? So obviously includes it, but it's not a material number in when you're dealing with, you know, the type of revenues that we have.

John Suzuki: Is the software component still relatively small, Aaron? So obviously it includes it, but it's not a material number when you're dealing with, you know, the type of revenues that we have.

Aaron Martin: When you're dealing with you know the type of revenues that we have.

Scott Malmanger: I will now turn the call over to our chief financial officer, Scott Malmanger, to go over our financial results for the quarter. Scott? Thank you, John. Sales through the second quarter totals approximately 20.3 million dollars compared to 19 million for the same quarter last year, but increased sequentially by approximately 11%, which is in line with our expectation that 2024 revenue will be consistent with 2023 results. Growth's profit margin in the second quarter was 37.3%, which is John mentioned surpasses our target margin levels of 35% for 2024, and we expect to continue realizing incremental margin improvement as we drive our cost reduction in this, this.

John Suzuki: Got it. And then in terms of Interop One and the software business, is it at a point yet where we're seeing cross-selling in terms of driving, you know, the BKR 9000 or the BKR 9000 driving Interop One interest? Can you tell us about that?

John Suzuki: Got it. And then in terms of the Interop One and the software business, is it at a point yet where we're seeing the cross-selling in terms of driving, you know, the PCR 9000 or the PCR 9000 driving Interop One interest? What can you tell us about that?

John Suzuki: Got it. And then in terms of Interop One and the software business, is it at a point yet where we're seeing cross-selling in terms of driving, you know, the PCR 9000 or the PCR 9000 driving Interop One interest? What can you tell us about that?

Scott Malmanger: Got it. And then in terms of the interrupt one in the software business, is it at a point here where we're seeing the cross selling in terms of driving, you know, the bigger 9,000 or the bigger 9,000 driving interrupt one interest? What can you tell us about that? Yeah, I think I mentioned on previous calls, right? Definitely from an interest standpoint, right? Every customer that we talk to with the 9,000 or interrupt one. They go hand in hand together. In terms of actual sales, the key part of that is the tethering capability, which we had anticipated to be complete by now; that's still under development.

Speaker Change: Got it and then in terms of the intra up one in the software business is at a point, yet where we're seeing the cross selling in terms of driving you know.

Speaker Change: <unk> 9000 in order to procure that wasn't driving into F. One interest.

Speaker Change: Tell us about that.

Aaron Martin: Yeah, I think as I've mentioned on previous calls rate definitely from an interest standpoint, right every customer that we talked to you with the 9000 or interrupt one they go hand in hand together in terms of actual sales.

John Suzuki: Yeah, I think I've mentioned on previous calls, right, definitely from an interest standpoint, right? Every customer that we talked to with the 9000 or Interop One, they go hand in hand together. In terms of actual sales, the key part of that is the tethering capability, which we had anticipated to be complete by now, that's still under development. And so until we get that tethering capability where we can connect these devices together seamlessly, and get that into the marketplace, I think it's going to be, you know, customers are just waiting to test that out. And I think once we have that ability, then you'll see the sales pull through either way.

John Suzuki: Yeah, I think I mentioned on previous calls, definitely from an interest standpoint, right? Every customer that we talked to about the 9000 or Interop One, they go hand in hand together. In terms of actual sales, the key part of that is the tethering capability, which we had anticipated to be complete by now, but that's still under development. And so until we get that tethering capability where we can connect these devices together seamlessly and get that into the marketplace, I think it's going to be, you know, customers are just waiting to test that out. And I think once we have that ability, then you'll see the sales pull through either way.

John Suzuki: Yeah, I think I mentioned on previous calls, definitely from an interest standpoint, right? Every customer that we talk to about the 9000 or Interop One, they go hand in hand together. In terms of actual sales, the key part of that is the tethering capability, which we had anticipated to be complete by now, but that's still under development. And so until we get that tethering capability where we can connect these devices together seamlessly and get that into the marketplace, I think it's going to be, you know, customers are just waiting to test that out. And I think once we have that ability, then you'll see the sales pull through either way.

John Suzuki: A key part of that is the tethering capability, which we had anticipated to be complete by now that's still under development and so until we get that to have the right capability, where we can connect these devices together seamlessly and get that out to the marketplace.

Scott Malmanger: And so until we get that tethering capability, where we can connect these devices together seamlessly and get that out into the marketplace, I think it's going to be, you know, customers are just waiting to test that out. And I think once we have that ability, then you'll see the sales pull through either way.

John Suzuki: I think it's gonna be you know customers are just waiting to test that out and I think once we have that ability then you'll see the the sales pull through either way.

Scott Malmanger: Selling general and administrative expenses are SG&A for the second quarter total of approximately $5.5 million compared to $6 million for the same quarter last year. Operating income total of $2 million compared with an operating loss of $784,000 in the second quarter of 2023. We recorded net income of $1.7 million or $47 per basic and diluted share in the second quarter of 2024 compared with a net loss of $1.3 million or $39 per basic and diluted share in the prior year period.

Speaker Change: But what was the bookings number for the quarter.

Scott Malmanger: What was the booking number for the quarter? I'm sorry, Aaron, I missed that question. What was the number for the quarter? I saw the rising backlog. What was the booking number? Yeah, the booking number was. Go ahead, John. Yeah, I was just going to mention the first half was $50 million. I'm not sure what the breakout was; maybe Scott knows, but the first half was $50 million new orders. Bookings. Correct. Second quarter was 28.2 million, and the six months was 50.5. That's correct. Okay, and I know on the revenue number, the 9000 is still a relatively small number.

Aaron Martin: What was the bookings number for the quarter?

John Suzuki: I'm sorry, Aaron; I missed that question.

John Suzuki: I'm sorry, Aaron; I missed you.

Aaron Martin: I'm, sorry, Erinn I missed that question.

Aaron Martin: What was the bookings number for the quarter? I saw the rising backlog. What was the bookings number? Yeah, the bookings number was...

Aaron Martin: What was the Bookings number for the quarter? I saw the rising backlog. What was the bookings number? Yeah, the bookings number was...

Aaron Martin: What was the bookings number for the quarter? I saw the rising backlog. What was the bookings number? Yeah, the bookings number was...

Aaron Martin: What was the.

Aaron Martin: Number for the quarter I saw the rising backlog what was the bookings number.

Aaron Martin: Belvieu.

John: Go ahead John.

John Suzuki: Yeah, I was just going to mention the first half was $50 million. I'm not sure what the breakout was, maybe Scott knows, but the first half was $50 million in new orders and bookings.

John Suzuki: Yeah, I was just going to mention the first half was $59. I'm not sure what the breakout was, maybe Scott knows, but the first half was $50 million in new orders and bookings. Correct.

Aaron Martin: Yeah, I was just going to mention the first half was $50 million.

John Suzuki: I'm not sure what the breakout was maybe Scott knows that the first half was $50 million in new orders.

Scott Malmanger: Bookings correct, Yes, second quarter was $28 2 million and six months was 50.5 that's correct.

Aaron Martin: The second quarter was 28.2 million, and the six months was 50.5. That's correct. Okay.

Unknown Speaker: Unknown Speaker, Unknown Speaker, Unknown Speaker,

John Suzuki: Second quarter was twenty eight point two million, and the six months with fifty point five. That's correct. OK.

John Suzuki: Okay, and I know on the revenue number, the 9,000 is still a relatively small number, but as I look at the bookings, obviously, which is forward-looking, is the 9,000 starting to become more material as a percentage of the bookings? Yeah. Scott Malmanger, Jon Old, John Suzuki, Scott Weis, Scott Malmanger, Aaron Martin, Jeff Sigman, Going back to the tethering capability, do you have an updated timeline on when that's going to be available and complete?

Aaron Martin: Okay, and I know on the revenue number, the 9,000 is still a relatively small number, but as I look at the bookings, obviously, which is forward-looking, is the 9,000 starting to become more material in the percentage of the bookings? Yeah. Yeah. Okay. Going back to the tethering capability, do you have an updated timeline on when that's going to be available and complete?

Speaker Change: Okay, and I know on the on the revenue number. The 9000 is still relatively small number. So let's say you looked at the bookings, obviously, which is a forward looking is it 9000 is starting to become more material in the bookings as a percentage of the bookings.

Aaron Martin: Okay, and I know on the revenue number, the 9,000 is still a relatively small number, but as I look at the bookings, obviously, which is forward-looking, is the 9,000 starting to become more material in the percentage of the bookings? Yeah. The full vast majority of the 5,000? Yes. Okay. Going back to the tethering capability, do you have an updated timeline on when that's going to be available and complete?

Scott Malmanger: So I look at the bookings, obviously, which is forward looking. Is, you know, the 9000 starting to become more material on the booking percentage of the bookings. Yes. It's still a vast majority of the 5,000. Yes.

Scott Malmanger: We reported adjusted EBITDA of $2.5 million in the second quarter of 2024 compared with an adjusted EBITDA loss of $786,000 in the second quarter of 2023. Non-gap adjusted net income which adds back net realized and unrealized gains or loss on investments. Sack these compensation expenses and severance expenses was $2 million or an adjusted EPS of $56 per basic share or $0.55 per diluted share compared with a lot of $840,000 or $25 per basic and diluted share in the second quarter of 2023.

John Suzuki: Yes.

Speaker Change: It's still a vast majority of the 5000, yes.

John Suzuki: Yes.

Scott Malmanger: Okay. Going back to the tethering capability, do you have an updated timeline on when that's going to be available, available and complete. It's development, Aaron. So to be clear, right, we're connecting these two devices, the ability to, right, and it isn't a public city application. And so the thing has to be rock solid and easy to establish. And we're just not there yet. And we're not comfortable yet. Once the team gets to that point, then we will do our field trials, and then we'll be promoting it. The interest level is off the chart. I will say customers really like the approach that we're taking on this.

John Suzuki: Okay.

John Suzuki: Going back to tether in capability.

John Suzuki: Hello.

Speaker Change: Dated timeline of when that's going to be available global and complete.

John Suzuki: It's in development, Aaron. So to be clear, right, we're connecting these two devices via Bluetooth, right? And this is in a public safety application.

John Suzuki: It's development, Aaron. So to be clear, right, we're connecting these two devices via Bluetooth, right? And it is in a public safety application.

Aaron Martin: It's it's it's development Aaron's.

Aaron Martin: So to be clear right. We're connecting these two devices via Bluetooth right and it is in the public safety application.

John Suzuki: And so the thing has to be rock solid and easy to establish. And we're just not there yet. And we're not comfortable yet. Once the team gets to that point, then we will do our field trials, and then we'll be promoting it. The interest level is off the chart. I will say that customers really like the approach that we're taking. We just need to get it to work reliably for public safety.

John Suzuki: And so the thing has to be rock solid and easy to establish. And we're just not there yet. And we're not comfortable yet. Once the team gets to that point, then we will do our field trials, and then we'll be promoting it. The interest level is off the chart. I will say customers really like the approach that we're taking. We just need to get it to work reliably for public safety. Got it.

Speaker Change: And so the thing has to be rock solid and easy to to to establish and and we're just not there yet and.

John Suzuki: We're not comfortable yet.

John Suzuki: Once the team gets to that point, then we will do our field trials and and then you'll be promoting at the interest level is off the charts.

Scott Malmanger: We expect to enhance profitability as we continue to reduce costs and improve our growth margin and remain confident in our target of full year gap EPS exceeding $1.50 and full year adjusted EPS target exceeding $1.77 per share.

John Suzuki: I will say.

John Suzuki: Customers really like the approach that we're taking on this.

Scott Malmanger: We just need to get it to work reliably for public safety.

John Suzuki: We just need to get it to work reliably [laughter] for public safety.

Unknown Speaker: Scott Nesbett, Orin Hirschman, Jon Old, Jon Suzuki, Scott Malmanger, Unknown Attendee, Brett Reiss, Jennifer Belodeau, Aaron Martin, Jeff Sigman, BK Technologies, Scott Reiss, I guess, would we expect another step down in Q3 and then more dramatic afterwards once all manufacturing has been transferred over? Yes, we think about that. You're correct. Okay, congratulations on the progress. Thank you

Aaron Martin: Scott Nesbett, Orin Hirschman, Jon Old, Jon Suzuki, Scott Malmanger, Jon Old, Scott Malmanger, Yes, we think about that. You're correct. Okay, congratulations on the progress. Thank you.

Unknown Executive: Got it.

Aaron Martin: got it jumping around again last quarter. I asked you about inventories about getting it down, and you know, you take it down about another $1 million this quarter with this quarter being the transition of the final step manufacturing to East West. I guess would we expect another step down in Q3 and then more dramatic afterwards once all manufacturing has been transferred over? Yes, we think about that.

Speaker Change: Got it.

Aaron Martin: Jump around again. Last quarter I asked you on the inventory is about getting it down, and you take it down about another million dollars this quarter. With this quarter being the transition of the final step manufacturing to East West. I guess we would expect another step down, Q3, and then more dramatic afterwards once all manufacturing has been transferred over. Yes, we think about that. You're correct.

Speaker Change: Jumping in again last quarter I asked you on the inventories about getting it done and you took it down about another $1 million this quarter.

John Suzuki: You're correct. Okay, congratulations on the progress. Thank you.

Scott Malmanger: Turning now to the company's liquidity, we have been able to significantly enhance our balance sheet through the first six months of the year. As of June 30th, 2024, we have approximately $3 million of cash and cash equivalent and no long-term debt. Working capital improved to approximately $20.3 million at June 30th, 2024 compared to $16.3 million at December 31st, 2023. Driven by increases in accounts receivable that was somewhat offset by inventory reductions as we continue to transition radial manufacturing lines to East West.

John Suzuki: With this quarter being the transition of the final step in manufacturing to east West.

Speaker Change: I guess would you expect another another step down in Q3, and then more dramatic afterwards once all manufacturing we've been transferred over.

Speaker Change: Yes, we think about that.

John Suzuki: You are correct.

Speaker Change: Okay. Congratulations on the progress.

Unknown Executive: Okay, congratulations on the progress. Thank you.

John Suzuki: Thank you. Thank you.

Speaker Change: Thank you we've reached the end of the question and answer session and I will now turn the call over to management for closing remarks.

John Suzuki: Thank you. We have reached the end of the question and answer session, and I will now turn the call over to management for a closing remark.

Operator: Thank you. We have reached the end of the question and answer session, and I will now turn the call over to management for a closing remark.

Operator: Thank you. We have reached the end of the question and answer session, and I will now turn the call over to management for closing remarks.

John Suzuki: We have reached the end of the question-and-answer session, and I will now turn the call over to management for closing remarks. Thank you, Jon. Thank you all for participating in today's call.

John: Thank you John.

Speaker Change: Thank you all for participating in today's call. We look forward to speaking with you again.

John Suzuki: Thank you all for participating in today's call. We look forward to speaking with you again when we report our Q3 results. All the best to all of you, and have a great day.

Unknown Executive: We look forward to speaking with you again when we report our Q3 results. All the best to all of you, and have a great day.

Scott Malmanger: With our visibility today, we believe that we are well positioned to continue improving our balance sheet through the balance of 2024. We believe that our current cash position combined with anticipated cash generated primarily by radio sales and borrowing availability under our credit facility provides us with the working capital that we need to grow our business. Business.

John Suzuki: When we report our Q3 results all the best to all of you and have a great day.

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

Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

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

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

John Nesbett: I will now turn the call back over to John. Thank you, Scott.

Jon Suzuki: Launched in the fall of 2020, the BKR 5000 remains a strong and consistent driver for our business. The BKR 9000 launched just one year ago, is proving to be successful with both our wild land fire customers, as well as structure fire, law enforcement, and ambulance services. We continue to focus on further accelerate market adoption of the BKR 9000 as we lay the groundwork for growth in 2025 and beyond. We're pleased with the progress we're seen with regard to our margin profile, which continues to improve thanks to our focus on cost reduction and the diversification of our product mix.

Jon Suzuki: The outsourcing of our manufacturing has also benefited our margin performance over this last quarter, and we expect to see further margin improvement as we move to the balance of the year. And finally, the new order activity for both our BKR 5000 and BKR 9000 have driven a record-breaking first half in terms of new orders booked. As we move through the balance of the year, we believe that we are well positioned to continue driving and improve performance for our shareholders and remain confident in our ability to exceed full-year gap EPS of $1.50 and non-gap adjusted EPS of $1.77.

John Nesbett: With that, I will now open the call for questions. John? Thank you.

Brett Rice: The first question comes from Brett Rice with Jenny. Please proceed. Hi, John. Hi, Scott. Can you guys hear me? Because I'm working from home. Good morning. We can hear you. Great, great, great. I actually have a question on the software that you have that helps first responders link your radio systems with their cell phone. Do you have the tragedy with the attempted assassination of former President Trump? Is your software a solution to different governmental bodies on scene having maybe better coordination to prevent these kinds of events?

Brett Rice: Thanks for the question, Brent. I'm sure an answer to that question is yes. Interop 1 was a solution that was Envisioned to provide an interoperability solution between different agencies at the local state and federal. As you can see what happened at the tragic incidents in Pennsylvania, from the reporting that we've seen today, it appears that the state and local governments had established a unified command center with excellent communications, but the Secret Service had a separate command center and it seems as if they failed to cross communicate between this.

Brett Rice: This is obviously not a best practice for these types of agencies. Normally they would do much better in the pre-planet side and they would establish a common communication platform where all agencies, local, state, and federal can communicate together. Interop 1 was designed really to address this and it does it in a very simplified manner over cellular and it allows for these different agencies that don't normally communicate together a mechanism or a communications platform where they can't establish a unified command for communications. So again, the answer is yes, this was the purpose of Interop 1 was to provide solutions to these types of events.

Aaron Martin: I'm sorry, Aaron, I miss the-

Jon Suzuki: John, have you in the light of this tragedy? Have you gotten a greater degree of questions and inquiries, and possibly using the Interop 1? Yes, since that day we've been at two major shows and what I can say to you is when we are presenting our solution to the various public safety agencies, pretty much everyone commented on the fact that this would have been a useful tool in the case of a situation in Pennsylvania.

Jon Suzuki: So that was totally unprompted. I think the markets, the agencies, they get a demonstration of this capability, understand the power of it, and understand the application. So again, it's a tragic situation that happened but certainly is highlighted the need for a product like Interop 1 to be generally used amongst the different public safety agencies.

Brett Rice: Great. Thank you. I'll drop back to you. Enjoy the rest of the summer. Thank you, Brad. Once again, if you have a question or a comment, please indicate so by pressing star one on your touchtone phone.

John Old: The next question is from John Old with Long Meadow Investors. Please proceed. John, it's got a good morning. Thanks again for It looks like obviously things are improving by the quarter, cash growing, credit facility lower.

John Suzuki: I'm just sort of trying to tease out as you look forward over the next, you know, year or so, sort of priorities on the use of cash and capital allocations, specifically wondering whether a stock buy back program is something that's being considered, given where the stock has been trading. Thank you. Thanks for that. Thanks for the question, John. This is John Suzuki. So our priority right now is to rebuild our balance sheet, but given the recent decline in our share price, there has been a dialogue at the board level that we should be looking at, reactivating our buy back program.

John Suzuki: So we agree, we feel that the share prices at this level is certainly deserving of consideration for the company to take some of its new cash flow and purchase shares back. We would agree with that. Okay. I should know this, but is there one in place or does the new one have to be authorized? I should know that, but I don't. I'm sorry. Yeah. Now that's fair. The authorization we have is a few years old and we would probably be best for us to reauthorize that if we were going to go ahead and do that. And so that's something that the board will be considering. Okay.

John Old: Great. Thank you very much.

Aaron Martin: The next question comes from Aaron Martin with AIGH and Desmond Partners. Please proceed. Hi.

Jon Suzuki: Good morning, John Scott. Congratulations on the strong quarter, particularly on the gross margin. And I think this is the first time you've put out there a new target of 50%. Can you, I guess, elaborate on that in terms of, I know you want to be out there to make sure that people realize that just to pass your 35% target that you're done, but in terms of the trajectory on the gross margin and the shorter term and maybe the medium term, however you should be thinking about it.

Jon Suzuki: Thanks for the question, Aaron. So we had actually set a vision 2025 where we had set some ambitious goals of achieving $100 million in revenue in 50% gross margins. I just wanted to kind of reset that we are still tracking towards that. Now whether we're going to achieve 50% gross margin in 2025 for the full year, we'll have to go through our budgeting process and we'll provide guidance on that in the fourth quarter call.

Jon Suzuki: But what I can say to you is that based on the plan that we have in place, we believe that a gross margin of 50% is achievable for this business. And it's just a matter of getting some of the work completed and then you'll start seeing those margins on a quarterly basis. That's entirely based upon a hardware business that's even without a software business, so that's including a software. Is the software component still relatively small Aaron?

Jon Suzuki: So obviously it includes it, but it's not a material number when you're dealing with, you know, the type of revenues that we have. Got it. And then in terms of the interrupt one in the software business, is it at a point here where we're seeing the cross selling in terms of driving, you know, the bigger 9,000 or the bigger 9,000 driving interrupt one interest? What can you tell us about that? Yeah, I think I mentioned on previous calls, right?

Jon Suzuki: Definitely from an interest standpoint, right? Every customer that we talk to with the 9,000 or interrupt one. They go hand in hand together. In terms of actual sales, the key part of that is the tethering capability, which we had anticipated to be complete by now, that's still under development. And so until we get that tethering capability, where we can connect these devices together seamlessly and get that out into the marketplace, I think it's going to be, you know, customers are just waiting to test that out.

Jon Suzuki: And I think once we have that ability, then you'll see the sales pull through either way. What was the booking number for the quarter? I'm sorry, Aaron, I missed that question. What was the number for the quarter? I saw the rising backlog. What was the booking number? Yeah, the booking number was, go ahead, John. Yeah, I was just going to mention the first half was $50 million. I'm not sure what the breakout was, maybe Scott knows, but the first half was $50 million new orders.

Jon Suzuki: Bookings. Correct. Second quarter was 28.2 million, and the six months was 50.5. That's correct. Okay, and I know on the revenue number, the 9000 is still relatively small number. So I look at the bookings, obviously, which is forward looking is, you know, the 9000 starting to become more material on the booking percentage of the bookings. Yes. It's still vast majority of the 5,000. Yes. Okay. Going back to the tethering capability, you have an updated timeline on when that's going to be available, available and complete.

Jon Suzuki: It's development, Aaron. So to be clear, right, we're connecting these two devices, the ability to, right, and it isn't a public city application. And so the thing has to be rock solid and easy to establish. And we're just not there yet. And we're not comfortable yet. Once the team gets to that point, then we will do our field trials, and then we'll be promoting it. The interest level is off the chart. I will say customers really like the approach that we're taking on this. We just need to get it to work reliably for public safety. Got it. Jump around again.

Aaron Martin: Last quarter I asked you on the inventory is about getting it down and you take it down about another million dollars this quarter. With this quarter being the in the transition of the final step manufacturing to East West. I guess we would expect another step down, Q3, and then more dramatic afterwards once all manufacturing has been transferred over. Yes, we think about that. You're correct. Okay, congratulations on the progress. Thank you.

John Nesbett: We have reached the end of the question and answer session and I will now turn the call over to management for closing remarks. Thank you, Jon. Thank you all for participating in today's call. We look forward to speaking with you again when we report our Q3 results. All the best to all of you and have a great day. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

Q2 2024 BK Technologies Corp Earnings Call

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