Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BK Technologies Corp (BKTI, Financial) reported a strong start to 2025 with first-quarter revenue of $19.1 million, marking an increase both year over year and sequentially.
- The company achieved a significantly improved gross margin of 47%, driven by a shift to higher margin product mix and successful transition to a contract manufacturing model.
- BK Technologies Corp (BKTI) reported a net income of $2.1 million or $0.55 per diluted share, compared to $681,000 or $0.19 per diluted share in the first quarter of 2024.
- The company achieved its seventh consecutive quarter of profitability, with non-GAAP adjusted earnings of $2.6 million or $0.68 per diluted share.
- BK Technologies Corp (BKTI) maintained a strong balance sheet with approximately $8.9 million of cash and cash equivalents and no debt as of March 31, 2025.
Negative Points
- The uncertain macroeconomic environment, particularly regarding tariffs, poses potential risks to BK Technologies Corp (BKTI)'s financial performance.
- Products produced in Vietnam are now subject to a 10% tariff, which may rise to 46% if a trade deal is not reached, impacting cost structures.
- Less than 5% of product revenue comes from China, but a new 145% tariff has led to halted shipments and a costly transfer of production to Taiwan.
- Federal orders were light in the first quarter due to delays in Congress passing the continuing resolution to fund the government through 2025.
- Selling, general, and administrative expenses increased to approximately $6 million, up from $5.3 million in the same quarter last year, impacting operating income.
Q & A Highlights
Q: Do you think the first quarter results were impacted by any pull in orders?
A: No, I don't believe so. In fact, we might have done better if federal orders had followed historical patterns. The delay was due to the continuing resolution.
Q: With the 10% baseline tariff going into effect in Q2, where do you think gross margins will stabilize?
A: We believe we will be above 42% for Q2. We are experiencing some tariffs from products coming in from Vietnam, but the zero tariff policy for products under USMCA remains for the second quarter.
Q: Was revenue from the BKR 9,000 device up sequentially in Q1?
A: Yes, revenue from the BKR 9,000 was up sequentially in Q1.
Q: How does the late continuing resolution affect seasonality this year?
A: The resolution passed in mid-March, and key customers received funding for projects. However, there are delays due to personnel changes. Orders need to be placed by September 30th, and deliveries are negotiated.
Q: What are your expectations for the BKR 9,000 revenue throughout the year?
A: We expect the BKR 9,000 revenue to increase quarter over quarter, potentially reaching 2 to 3 times higher than in 2024.
Q: Can you discuss the deferred tax asset and how much of your taxes are cash taxes?
A: We have utilized most of our deferred tax assets. With our current profitability, we will continue to pay taxes, likely in the 20% to mid-20% range for federal and state taxes.
Q: What are your long-term expectations for SG&A expenses?
A: SG&A costs are relatively fixed, but we are investing in marketing and new product development. Over time, we expect to see operating leverage with a more or less fixed SG&A structure.
Q: How much of SG&A is related to new product development?
A: We don't break out specific amounts for new product development versus existing products, but our filings provide details on engineering expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
