BK Technologies Corp (BKTI) Q2 2025 Earnings Call Highlights: Revenue Growth and Margin ...

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Release Date: August 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
BK Technologies Corp (BKTI) reported a 4.5% increase in second-quarter revenue to $21.2 million, aligning with their targeted single-digit growth for 2025.
Gross margin improved significantly to 47.4% from 37.3% in the same quarter of the previous year, driven by a favorable sales mix and cost reduction initiatives.
The company launched Relay 1, a portable repeater kit, and received a purchase order from Larimer County Sheriff's Office, indicating strong market acceptance.
BK Technologies Corp (BKTI) received substantial federal orders, including a $12.9 million order from the USDA Forest Service, highlighting their strong position in the federal communications market.
The company raised its full-year gross margin target to 47% and increased its GAAP EPS target to $3.15, reflecting confidence in their business trajectory and improved operating models.
Negative Points
Selling, general, and administrative expenses increased slightly to $6 million, reflecting strategic investments in engineering and product development.
Engineering and product development expenses rose to 10.9% of sales, primarily due to non-capitalizable development costs for new products.
Sales and marketing expenses increased to 9.2% of sales, driven by the addition of new sales personnel and increased trade show participation.
The backlog at the end of Q2 was lower than anticipated at $16 million, partly due to the timing of federal orders.
The company remains cautious about potential changes in tariff policies, which could impact future financial performance.
Q & A Highlights
Warning! GuruFocus has detected 6 Warning Signs with BKTI.
Q: Can you elaborate on the factors driving the improved gross margin outlook? A: (Scott Mellinger, CFO) The improved gross margin is primarily driven by a more favorable tariff environment and a shift towards higher-margin products. Additionally, cost savings from outsourcing production to East-West Manufacturing have significantly contributed to this improvement.
Q: How is the BKR 9,000 performing in terms of sales, and what is the sales cycle like? A: (John Suzuki, CEO) We expect to ship 2 to 3 times more BKR 9,000 radios this year compared to last year. The sales cycle for the BKR 9,000 can vary; for larger customers, it can take up to 18 months, while smaller customers might take around 6 months to make a purchase decision.
Q: What is the current backlog, and how does it compare to expectations? A: (Scott Mellinger, CFO) The backlog at the end of Q2 was approximately $16 million, which was slightly lower than anticipated due to federal orders received early in July. Considering these orders, the backlog is reasonable.
Q: Can you provide an update on the development of the BKR 9,500 and its market potential? A: (John Suzuki, CEO) The BKR 9,500 development is on track, and we expect to start recognizing revenue from it in 2027. The market for mobile radios like the BKR 9,500 is substantial, representing about 35-40% of the $2.3 billion U.S. device market.
Q: How do you view the impact of tariffs on your financial guidance? A: (Scott Mellinger, CFO) While the tariff situation is not ideal, we believe it is mostly behind us for this year. Our products produced in Mexico and Canada are coming in tariff-free under USMCA, which gives us confidence in our gross margin guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.