Bk Technologies Q2 Earnings Call Highlights

Key Points

• Second-quarter revenue increased 10.6% to $23.4 million, while gross margin expanded to 51.9% due to favorable product mix and stronger adoption of the higher-margin BKR 9000. Net income declined to $3.2 million primarily because of a higher tax provision and increased development spending.
• BK Technologies continued advancing its multiband and software strategy: the BKR 9500 has received orders for more than 200 radios, with deliveries expected in the first half of 2027, while BKRplay broader beta testing is planned through 2026. A Tango Tango licensing agreement expands potential reach to more than 1,500 public-safety agencies and 35,000 users.
• Full-year 2026 guidance was reaffirmed, including revenue of at least $90 million, gross margin of 50% or more, GAAP EPS of $3.15 and adjusted EPS of $3.55. The company generated $4.6 million in quarterly free cash flow and ended the period with $29.9 million in cash and no debt.

Bk Technologies NYSEAMERICAN: BKTI reported higher second-quarter revenue and expanded gross margin as demand increased for its BKR series radios, particularly the BKR 9000 handheld multiband model, while the company continued investing in product and software development.

Second-quarter revenue rose 10.6% to $23.4 million from $21.2 million in the prior-year period. Gross margin expanded 445 basis points to 51.9%, compared with 47.4% a year earlier, which Chief Financial Officer Scott Malmanger attributed to favorable product mix and continued adoption of the higher-margin BKR 9000.

“Growth in the quarter was attributable to broad-based gains across state and local agencies,” Malmanger said.

Profitability and Cash Generation

GAAP net income was $3.2 million, or $0.79 per diluted share, compared with $3.7 million, or $0.96 per diluted share, in the second quarter of 2025. Pre-tax income remained stable year over year at $4 million, according to President and Chief Executive Officer John Suzuki.

Suzuki said the reduction in net income primarily reflected a $560,000 year-over-year increase in the company’s income-tax provision, rather than weakness in its underlying operations. The company’s effective tax rate was approximately 21% during the quarter. Malmanger said BK Technologies estimates a 26% tax rate for full-year 2026, compared with 16% for 2025, reflecting normalization of its tax profile and higher profitability.

Selling, general and administrative expenses increased to $8.3 million from $6 million a year earlier. The increase included higher engineering costs for new product and solution development, as well as approximately $512,000 in non-cash stock-based compensation expense.

Operating income totaled $3.8 million, producing a 16.4% operating margin. The margin increased sequentially from 15.4% but declined from 18.9% in the prior-year quarter as the company raised research and development investments.

On a non-GAAP basis, adjusted EBITDA was $4.5 million, or 19.4% of revenue, compared with $4.4 million, or 20.9% of revenue, a year earlier. Adjusted earnings were $4.1 million, or $1.01 per diluted share, versus $5.1 million, or $1.30 per diluted share, in the prior-year period.

The company generated $4.6 million in after-tax free cash flow during the quarter. Trailing 12-month after-tax free cash flow reached $19 million, up 49% year over year.

BK Technologies ended June 30 with $29.9 million in cash and no debt, compared with $22.8 million in cash at the end of 2025. Working capital increased to $46.1 million from $37.3 million, while shareholders’ equity rose to $52 million from $44.7 million. The company made no share repurchases in the second quarter under its Rule 10b5-1 non-discretionary repurchase program.

Product Development and Software Strategy

Suzuki said the company’s strategy centers on the transition from single-band to multiband public-safety radios and on expanding connectivity beyond vehicles through broadband-enabled, on-person solutions.

The company introduced its BKR 9500 multiband in-vehicle radio publicly in April and has since received purchase orders for more than 200 radios from a range of customers. Suzuki said the orders were placed before customers had seen the radios in person. The 9500 was submitted for Federal Communications Commission testing, with approval expected in early 2027. BK Technologies expects to begin customer deliveries in the first half of 2027, following manufacturing transition work, accelerated-life testing and customer field testing.

During the question-and-answer session, Suzuki said feedback on the 9500 has remained positive. At the APCO public-safety communications conference, customers who viewed the product’s internal construction commented favorably on how it was built, he said.

The company also completed initial customer beta testing for BKRplay, its patent-pending solution designed to tether BKR series radios to smartphones. Suzuki said customer feedback was positive regarding switching between land mobile radio and InteropONE cellular communications modes, as well as Bluetooth reliability. Broader beta testing is planned through the remainder of 2026, with general availability targeted for January 2027.

Separately, BK Technologies announced a licensing agreement with Tango Tango that extends its InteropONE technology to Tango Tango’s push-to-talk-over-cellular network. Suzuki said the agreement expands the company’s reach to more than 1,500 public-safety agencies and over 35,000 active users, while creating a potential source of recurring licensing fees over time.

2026 Outlook Reaffirmed

BK Technologies reiterated its full-year 2026 guidance, including:

• Revenue of at least $90 million;
• Gross margin of 50% or greater;
• GAAP earnings per share of $3.15; and
• Non-GAAP adjusted earnings per share of $3.55.

Suzuki said the company intends to continue directing capital toward engineering, software and product development to support its Vision 2030 roadmap, while balancing those investments with profitability and cash generation.

Addressing backlog, Suzuki said it has become less predictive of near-term revenue because the company’s supply chain can fulfill many device orders quickly. Larger orders, including potential orders from the U.S. Forest Service near the end of that agency’s fiscal year, can remain in backlog for several months or quarters and may create periodic increases in the metric.

About Bk Technologies (NYSEAMERICAN:BKTI)

BK Technologies Corporation is a designer and manufacturer of professional two-way radio communications equipment and systems. The company's product portfolio includes portable radios, mobile radios, repeater and dispatch consoles, antennas and related accessories. BK Technologies serves a broad range of end markets that require reliable voice and data communications, including public safety agencies, government entities, utilities, transportation, oil and gas, mining and commercial applications.

BK Technologies offers both analog and digital radio platforms, supporting industry standards such as Project 25 (P25) for mission-critical communications.

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