BK Technologies (BKTI) reported a positive start to 2025, with a 4.5% year-over-year increase in revenue for the first quarter, reaching $19.1 million. The company also achieved a net income of $2.1 million, translating to $0.55 per diluted share. Following the earnings release, BK Technologies’ stock price increased by 1.53%, closing at $45.67. The impressive performance extends beyond quarterly results, with InvestingPro data showing a remarkable 252% return over the past year. The company’s strong financial performance, coupled with strategic operational changes, contributed to investor optimism. According to InvestingPro analysis, the stock is currently trading near its 52-week high of $48.43.
Key Takeaways
- BK Technologies’ Q1 2025 revenue increased by 4.5% year-over-year.
- The company reported its seventh consecutive quarter of profitability.
- Gross profit margin improved significantly to 47%.
- Stock price rose by 1.53% following the earnings announcement.
- Continued strong demand for BKR 5000 and BKR 9000 radios.
Company Performance
BK Technologies demonstrated robust performance in Q1 2025, marking its seventh consecutive quarter of profitability. The company continues to benefit from its strategic focus on high-margin products and operational efficiency, reflected in its strong return on equity of 33%. InvestingPro analysis reveals an impressive financial health score of 3.53 (rated as "GREAT"), with particularly strong momentum and growth metrics. The transition to contract manufacturing and a higher-margin product mix has supported this growth. The strong demand for its BKR 5000 and BKR 9000 radios has also been a key driver.
Financial Highlights
- Revenue: $19.1 million, up 4.5% year-over-year
- Gross Profit Margin: 47%, compared to 34.5% in Q1 2024
- Net Income: $2.1 million ($0.55 per diluted share)
- Non-GAAP Adjusted Earnings: $2.6 million ($0.68 per diluted share)
- Cash and Cash Equivalents: $8.9 million
- No debt, with a working capital of $24.6 million
Outlook & Guidance
BK Technologies has set ambitious targets for 2025. The company anticipates single-digit full-year revenue growth and aims to maintain a gross margin of at least 42%. It projects a GAAP diluted EPS of over $2.40 and a non-GAAP diluted adjusted EPS exceeding $2.80. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels, trading at a P/E ratio of 16.47. The company is also preparing for potential tariff impacts on products manufactured in Mexico, Vietnam, and China, which could affect its EPS targets. InvestingPro subscribers have access to 11 additional key insights about BKTI, including detailed valuation metrics and growth projections.
Executive Commentary
John Suzuki, CEO of BK Technologies, expressed confidence in the company’s growth trajectory, stating, "We remain confident that we’re well positioned for continued long-term profitable growth." He highlighted the strategic opportunities presented by the BKR 9000 radio, which significantly expands the company’s target market verticals.
Risks and Challenges
- Potential tariffs on products from Mexico, Vietnam, and China could impact profitability.
- Seasonal variations may affect revenue, with Q1 and Q4 typically being lower.
- Delays in federal orders due to ongoing resolutions could pose challenges.
- Navigating changes in Department of Defense personnel is crucial for maintaining contracts.
Q&A
During the earnings call, analysts inquired about the sequential growth of BKR 9000 revenue, which the company confirmed to be on track for a 2-3x increase compared to 2024. Discussions also covered the company’s tax liability and cash tax expectations, reflecting its improved profitability.
Full transcript - BK Technologies Inc (BKTI) Q1 2025:
Conference Operator: Good morning, ladies and gentlemen, and welcome to the BKTI First Quarter twenty twenty five Earnings Call. 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. 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, Jen Belladeau of IMS Investor Relations. Please go ahead.
Jen Belladeau, Investor Relations, IMS Investor Relations: Thank you. Good morning, and welcome to our conference call to discuss BK Technologies results for first quarter twenty twenty five. On the call today are John Suzuki, Chief Executive Officer and Scott Mallanger, Chief Financial Officer. I’ll take a moment to read the Safe Harbor statements. Statements made during this conference call and presented in the presentation that are not based on historical facts are 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. 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 U. S. 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. With that out of the way, I’ll turn the call over to John Suzuki, CEO of VK Technologies. Please go ahead, John.
John Suzuki, Chief Executive Officer, BK Technologies: Thank you, Jen. Thank you, everyone, for joining today. I’ll start by reviewing some of the highlights of our operations and financial results during the first quarter, and then I’ll turn it over to our Chief Financial Officer, Scott Malmandre for a deeper dive into our financial results. We’ll conclude by opening the call for a brief Q and A. Our first quarter continued the momentum we built throughout last year, giving us a strong start to 2025.
First quarter revenue of 19,100,000.0 increased both year over year and sequentially, and we delivered significantly improved gross margin of 47 percent. Our ability to drive enhanced gross margin is a direct result of our ongoing shift to higher margin product mix, our successful transition to a contract manufacturing model and our partner East West Manufacturing and our ability to achieve continued operating expense reductions across the organization. We continued our path of delivering enhanced profitability, achieving net income of $2,100,000 or $0.55 per diluted share in the first quarter compared to a net income of $681,000 or $0.19 per diluted share in the first quarter of twenty twenty four. Non GAAP adjusted earnings were $2,600,000 or $0.68 per diluted share in the quarter compared to $1,100,000 or $0.30 per diluted share in the same period of last year. With our performance in the first quarter of twenty twenty five, we achieved our seventh consecutive quarter of profitability.
And finally, backlog at 03/31/2025 was $18,800,000 compared to $19,000,000 at the close of the first quarter in twenty twenty four. As I mentioned a moment ago, we have been intently focused on improving gross margin by delivering excellent operational execution, facilitating the shift in our product mix toward the higher margin BKR 9,000 and implementing cost reduction strategies, including the successful transition of our manufacturing operations to East West. Slide four demonstrates the steady progress we have made with these initiatives, which have resulted in our ability to report consistently improving gross margin. In 2024, our full year gross margin of 37.9% comfortably exceeded the target gross margin range of 35%. For full year 2025, we increased our target gross margin to 42% or greater and at 47% for the first quarter, we’re off to a good start.
I do want to take a minute to address the uncertain macroeconomic environment. In terms of tariffs, our gross margin target for 2025 included assumptions about tariffs and their potential financial impact. And as such, we, like many other companies, are monitoring the situation closely. About 95% of our product revenue comes from finished good products that are manufactured in The USA, Mexico and Vietnam. During the first quarter, BK products produced in Mexico entered The US tariff free under USMCA and continued tariff free during the ninety day pause period.
If a trade deal with Mexico is not achieved during this pause period, we may be subject to a 25% tariff starting in the third quarter. Also, during the first quarter of twenty twenty five, our products produced in Vietnam were tariff free, but have since been hit with a 10% tariff during the second quarter, which may rise to 46% if the trade deal is not reached with Vietnam. Less than 5% of our product revenue comes from finished good products manufactured in China. Shortly after the new 145% tariff announced on April 9, we halted all volume shipments from China and started to transfer project to move most of the production to Taiwan by July 2025, reducing our China finished good product exposure to less than 1% of revenue. It is slightly more expensive to manufacture in Taiwan, and Taiwan is subject to the minimum 10% tariff.
But economically and politically, Taiwan is more favorable than remaining in China. Our supply chain, like that of all our competitors, is global with parts manufactured and assembled in numerous countries around the world. So we’re not alone in having to contend with increased supplier costs should tariffs increase further. We will of course be watching the tariff activity closely, especially as we near the end of the designated tariff pause on July 9. In this uncertain landscape, we remain focused on controlling the elements of our business that we can control, most importantly, making sure that we deliver quality radios to our customers on the front lines of emergency service and law enforcement response, while also delivering profitability to our shareholders.
On slide five, you can see how growing marketplace recognition and demand for our radios has resulted in solid revenue performance over the last several quarters. Our BKR five thousand single band radio has maintained strong demand as our BKR nine thousand multiband gains traction in the market. The multiband capabilities of the 9,000 command a higher price point and we expect to see revenue and gross margin expand comparably as the 9,000 becomes a larger contributor to our overall revenues. Of note on this slide, as you can see, our first and fourth quarter revenues are historically a bit lower than the second and third quarter of any given year. This is largely because of seasonality.
The second and third quarters occurred during peak wildland fire season and the fourth quarter is largely dormant in terms of government spending because of the federal fiscal year closes on September 30. During the first quarter of twenty twenty five, we saw continued demand for our BTR series radios from state and local government customers. Federal orders were light in the quarter as Congress was delayed in passing the continuing resolution to fund the government through 2025. The CR was eventually signed and we are beginning to see increased orders from federal customers. Now I’ll turn it over to Scott Malmanager, CFO to give a more detailed overview of our first quarter financial performance.
Scott?
Scott Malmanager, Chief Financial Officer, BK Technologies: Thanks, John. Sales for the first quarter totaled $19,100,000 an increase of 4.5% compared with $18,200,000 for the same quarter last year. Sequentially, revenues increased 6.3% compared to the revenues of $17,900,000 in the fourth quarter of twenty twenty four. Gross profit margin in the first quarter was 47% compared with 34.5% in the first quarter of twenty twenty four and improved sequentially from 41.2% in the fourth quarter of twenty twenty four. Selling, general and administrative expenses, or SG and A, for the first quarter totaled approximately 6,000,000 compared to $5,300,000 for the same quarter last year.
Operating income totaled $2,900,000 compared with an operating income of $983,000 in the first quarter of twenty twenty four. The company achieved net income of $2,100,000 or GAAP EPS of $0.60 per basic and $0.55 per diluted share in the first quarter of twenty twenty five compared with a net income of $681,000 or $0.19 per basic and diluted share in the prior year period. Non GAAP adjusted earnings, which adds back net realized and unrealized gain or loss on investments, stock based compensation expenses, non cash income tax provisions and severance expenses, was $2,600,000 or $0.74 per basic share and $0.68 per diluted share in first quarter of twenty twenty five. This is compared with adjusted earnings of $1,100,000 or $0.30 per basic and diluted share in the first quarter of twenty twenty four. We reported non GAAP adjusted EBITDA of $3,200,000 in the first quarter of twenty twenty five compared with non GAAP adjusted EBITDA of $1,400,000 in the first quarter of twenty twenty four.
Slide seven illustrates how our success driving margin improvement has favorably impacted adjusted EBITDA and net income growth dating back to the fourth quarter of fiscal year twenty twenty three. Here you can clearly see how our revenue shift towards the $9,000 combined with our outsourced manufacturing model and our cost reduction efforts have driven steadily enhanced profitability, and we expect to achieve continued profitability moving forward. Our balance sheet remains strong with approximately $8,900,000 of cash and cash equivalents and no debt as of 03/31/2025. Working capital improved to approximately $24,600,000 at 03/31/2025, compared with $23,000,000 at 12/31/2024. Shareholders’ equity increased to $32,400,000 compared with $29,800,000 at 12/31/2024.
I will now turn the call back over to John.
John Suzuki, Chief Executive Officer, BK Technologies: Thanks, Scott. We’re pleased with the strong start we’ve achieved in the first quarter, and we remain focused on the task at hand, getting our radios into the hands of first responders and public safety personnel. The economic landscape has been uncertain and we’re looking forward to receiving some clarity around the tariff situation. Regardless, we remain confident that we’re well positioned for continued long term profitable growth. With our current visibility, we are maintaining our previously stated 2025 targets of single digit full year revenue growth with gross margin of at least 42%.
We are also holding to our 2025 full year GAAP diluted EPS target to be in excess of $2.4 and 2025 full year non GAAP diluted adjusted EPS in excess of $2.8 Please keep in mind that these targets reflect the current uncertainty around tariffs. As the tariff situation becomes clearer, there is a possibility that we will revisit and upwardly revise our EPS targets. As we move through the balance of 2025, we will continue to invest in our sales and marketing efforts to heighten the marketplace visibility of our multiband BKR9000. The capabilities of this radio significantly expands our target verticals, providing a substantial opportunity for our continued profitable growth. Likewise, we are committed to furthering our R and D capabilities, particularly related to strengthening our BK1 offerings.
Just after the close of our first quarter, we announced an order for our rebranded RelayOne Portable Repeater Kit, which is a nice endorsement of demand for our BK1 solutions. Development of our next generation BKR 9,500 mobile radio remains on track. As we mentioned before, the BKR 9,500, which is expected to launch in 2027, is designed for installation in first responder vehicles and will be will be marketed as the companion radio to the BKR 9,000 multiband portable radio. We’re excited about the opportunities we’re seeing in increased marketplace presence. We’re focused on capitalizing on the interest in and demand we’re seeing for our BKR series radios, with a particular focus on expanding adoption of our BKR 9,000 multiband radio.
We believe we’re well positioned to capture new customers and address new market verticals as we pursue continued profitable growth and enhance shareholder value. With that, we can now open the call for questions. Jen?
Conference Operator: Thank you very much. At this time, we will be conducting our question and answer session. Session. You. Your first question is coming from Jason Schmidt of Lake Street Capital.
Jason, your line is live.
Jason Schmidt, Analyst, Lake Street Capital: Hey, guys. Thanks for taking my questions and congrats on the strong results. Just looking at those Q1 results, I know you noted that Q1 tends to be seasonally weak. Do you think it was impacted by any pull in orders into Q1?
John Suzuki, Chief Executive Officer, BK Technologies: No. Morning, Jason. Had to think about that for a second. No. I I I don’t believe so.
In fact, we probably would have done a little bit better had the federal orders had had followed more of historical nature where we would have seen some more orders in the first quarter. But as I mentioned on the scripted portion of the call, the federal orders were delayed in Q1 because of the continuing resolution.
Jason Schmidt, Analyst, Lake Street Capital: Got you. That’s helpful. And then gross margin, obviously, really strong in Q1, understanding sort of this 10% baseline tariff goes into effect Q2, but you also are implementing a price increase. So just trying to reconcile all these puts and takes. I mean, from that 47% level, I assume a step back here, but where do you think gross margins sort of stabilizes here in Q2?
John Suzuki, Chief Executive Officer, BK Technologies: So good question, Jason. I think on our last call, had said that we felt that we would be hit with tariffs out of Mexico, for example, in the second quarter. That hasn’t materialized at least as of today. And the indication from the administration is that they’re going to continue with the zero tariff policy for products coming in under USMCA for the balance of the second quarter. So that’s very positive.
Given that we definitely believe that we will be above 42%. We are experiencing some tariffs, which did hit us in Q2 from products coming in from Vietnam.
Jason Schmidt, Analyst, Lake Street Capital: Okay, perfect. And then last one for me and I’ll jump back into queue. I know you don’t want to disclose the exact amount from the BKR9000, but just curious at a high level if revenue was up sequentially in Q1 for that device?
John Suzuki, Chief Executive Officer, BK Technologies: I’m sorry, Jason, I didn’t understand the question.
Jason Schmidt, Analyst, Lake Street Capital: Yes. Just for the BKR 9,000 device, revenue from that radio, was it up sequentially in Q1?
John Suzuki, Chief Executive Officer, BK Technologies: Yes.
Jason Schmidt, Analyst, Lake Street Capital: Okay. Perfect. That’s it for me. Thanks a lot, guys.
John Suzuki, Chief Executive Officer, BK Technologies: Thank you, Jason.
Conference Operator: Thanks very much. Your next question is coming from Aaron Martin of AIGH Investment Partners. Aaron, your line is live.
Aaron Martin, Analyst, AIGH Investment Partners: Hi. Good morning. Congratulations on a very strong quarter. Thanks for the reminder on the seasonality. With the late continuing resolution, do you think that affects seasonality this year?
Obviously, q one with a higher concentration of commercial customers versus government than typical. And, you know, we’re gonna see the same typical seasonality or maybe just be a con condensed timeline because everything for the government side has to go out in q two q three. What are your thoughts around that around now?
John Suzuki, Chief Executive Officer, BK Technologies: Yeah. Thanks for the, the question, Aaron. So what I can tell you is the continuing resolution did pass in in mid March. What I can tell you is our key customers did receive funding for the projects that we were working with them on and that they’re submitting those to contract it. So those are all positive things.
We are impacted, we are seeing some impacts from Doge mostly in delays, and some people leaving, right? Some of our key contacts have either been terminated or accepted early retirement. So that has created some delays in getting things put through. In terms of the timing of getting the orders processed in the environment that we’re at, that’s the big question mark. It’s unclear to me, you know, today, whether or not we’ll see those orders come through in the normal timeline.
And as you mentioned, those orders need to be placed by September 30, the latest, or else they lose that funding. So at this point, all I can say is
Aaron Martin, Analyst, AIGH Investment Partners: that Do you need to deliver by December 30? So those orders need to be placed by September 30?
John Suzuki, Chief Executive Officer, BK Technologies: The orders need to be placed and deliveries are negotiated. So, it could be we could receive all the orders on September 30. And then we would negotiate a delivery schedule, starting October 1 for those radios. So that’s that’s kind of where we are, Aaron, is is again, the funding has been approved. They’re pushing projects forward.
All that’s positive. But this year is just different with the Doge impact.
Aaron Martin, Analyst, AIGH Investment Partners: And following up on Jason’s question, nice to see the 9,000 up sequentially. Do you expect to see that as we transition towards the 9,000 throughout the year, we expect 9,000 to be sequentially up every quarter, I guess, the sites for q four with the seasonality.
John Suzuki, Chief Executive Officer, BK Technologies: So the short answer is yes. I do see that our revenue will increase in the 9,000 quarter over quarter. Just to put a little bit more color and perspective in it, we’re expecting that the 9,000 revenue will be somewhere between 2 or three times higher than what it was in ’24.
Aaron Martin, Analyst, AIGH Investment Partners: Okay, great. And for Scott, can you talk a little bit about the deferred tax asset, the uncertainty, think at a $1,400,000 long term uncertain tax liability, which was a release of the tax asset. And how much of your taxes right now are cash taxes? And how long can that last now that we’re, you know, generating significant operating income?
Scott Malmanager, Chief Financial Officer, BK Technologies: Yeah, we pretty much utilized most of our deferred tax assets at this point. There’s always some timing differences for some of the R and D efforts and that sort of thing. So it’s not exact, but we pretty much utilized what we can for the deferred tax assets. Now we did have that uncertain tax provision and it’s got to do with some of the R and D credits and stuff that we had historically. So, you know, that will work off in the future and we’ll see how it goes from there.
But you’re exactly right. With the profitability that we’re achieving now, we will be in a position to continue to pay taxes. And your guess is probably as good as mine, but some place in the 20% to mid-twenty percent range for federal and state taxes.
Aaron Martin, Analyst, AIGH Investment Partners: Got it. But so just I think you get $270,000 of p and l taxes this quarter. How much of that was cash? Was that basically all cash?
Scott Malmanager, Chief Financial Officer, BK Technologies: Yes. Okay. Significant portion was cash. That is correct.
Aaron Martin, Analyst, AIGH Investment Partners: Okay. Thanks a lot.
Conference Operator: Thank you very much. Our next question is coming from Robert Van Voorhees of Zenitok Capital. Robert, your line is live.
Robert Van Voorhees, Analyst, Zenitok Capital: Hey, good morning guys. Great quarter. I just had a hopefully quick question just on SG and A. Obviously, it jumped up just as a result of the investments we’re making, which are probably good things to do long term. But I would just like to ask, what do you guys think Where do you really want SG and A sort of over the long term?
Is it do you want as a percent of revenue maybe closer to what it was last year? Or do you expect it to grow as we try to get to 9,000 more enhanced of the customers? Or where do we really want SG and A over time?
Scott Malmanager, Chief Financial Officer, BK Technologies: That’s an excellent question. Thanks for the question. The way I look at it is our SG and A costs are, you know, the structure is relatively fixed for the vast majority of our SG and A expenses. Now, we did indicate on the fourth quarter call that in 2025 that we’re going to do some more investments in marketing initiatives, specifically around the BKR product line. And then we also have the new product development.
Now we can capitalize a portion of the new product development costs for the mobile radio, but not all costs. According to generally accepted accounting principles, there are certain materials and prototypes and all that kind of stuff that you can’t capitalize. So we are going to see incremental costs there. But I’d say it’s going to be rather lumpy quarter to quarter. But in the long run I think we’re going to see operating leverage with more or less a fixed SG and A structure.
Robert Van Voorhees, Analyst, Zenitok Capital: Got it. And can you maybe this is too detailed to comment on, but what how much, of SG and A is just related to strictly new product development? So I know we can’t capitalize all of the expenses with the $9,500 but can you comment how much is just strictly, being expensed on the income statement related to that?
Scott Malmanager, Chief Financial Officer, BK Technologies: You can look in the Q and it provides what we’ve got for basically the engineering. Now we don’t break out what it is for sustainment of existing products and new product development. But, yeah, I would say that’s probably the best source. We don’t disclose any more detail than that.
Robert Van Voorhees, Analyst, Zenitok Capital: Okay, got it. That’s it for me. Thanks.
Conference Operator: Thank you very much. While we appear to have reached the end of our question and answer session, I will now hand back over to John for any further remarks.
John Suzuki, Chief Executive Officer, BK Technologies: Thank you, Jen. Thank you all for participating in today’s call. We look forward to speaking with you again when we report our second quarter results. All the best to all of you and have a great day.
Conference Operator: Conference. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.