BK Technologies Announces Fourth Quarter and Year End 2023 Results - Reports Strong 2023

BK Technologies Corporation (NYSE American: BKTI) (the “Company,” “BK Technologies”), announced financial and operating results for the fourth quarter and year ended December 31, 2023. The Company will host a conference call today, March 14, 2024, at 9:00 a.m. Eastern Time.

John Suzuki, CEO of BK Technologies commented, “2023 was a strong year for BK Technologies, highlighted by both revenue growth and gross margin improvement. We shipped 34,500 radios in fiscal 2023, an increase of 37% compared to fiscal 2022, as existing and new customers conducted lifecycle upgrades to their portable communications technology. We recognized a 45% increase in full year revenue compared to the prior year, achieved our sixth consecutive quarter of gross margin improvement and our second consecutive quarter of profitability.

“In the fourth quarter, we expanded our existing relationship with East West Manufacturing to make them the primary manufacturer of BK Technologies’ radio product line,” Mr. Suzuki continued. “We believe that outsourcing our manufacturing and transitioning to a more asset light model will improve our gross margins in the long term by simplifying our supply chain management and reducing production expenses and end-product costs. The transition to contract manufacturing is well underway and will take place in stages with no anticipation of meaningful interruptions in production or shipping. As previously stated, East West made a $2 million investment in BK Technologies that consisted of the purchase of 77,520 shares of Common Stock at $12.90 per share, plus warrants to purchase 135,500 shares of the Company’s Common Stock at an exercise price of $15.00 per share. The proceeds from the East West investment have been allocated toward paying down our accounts payable and line of credit.

Mr. Suzuki concluded, “We’re optimistic about the upcoming year which should be characterized by expanding gross margins, lower operating costs, and significantly improved profitability. With our visibility today, we believe we are on track to exceed earnings per share of $1.50 for full year 2024. In addition, we expect to see improved working capital as we transition our manufacturing and reduce inventory levels. Overall, we anticipate that 2024 will demonstrate continued profitability as we focus our efforts to establish the BKR9000 as a premier multiband radio in the market to drive additional revenue growth in the coming years.”

Fourth Quarter 2023 Financial Review
Revenue decreased 20% to $16.3 million, compared with $20.3 million for the fourth quarter of 2022 primarily due to record radio unit shipments in the fourth quarter of 2022, as a result of improved electronic component availability allowing the Company to work through significant backlog. Gross profit margin was 35.1% compared to 21.7% for the same quarter of last year, reflecting the improvement of material costs previously impacted by supply chain disruptions in 2022 and successful production cost reduction initiatives implemented throughout 2023.

Selling, General & Administrative expenses totaled $5.3 million, compared with $6.0 million for the fourth quarter of last year.

Operating income totaled $400,000 compared with operating loss of ($1.6 million) for the fourth quarter of last year.

BK Technologies recorded net income of $290,000 or $0.08 per basic and diluted share, compared with a net loss of ($961,000) or ($0.28) per basic and diluted share, for the fourth quarter of last year.

Non-GAAP Adjusted EBITDA for the fourth quarter of 2023 was $892,000, compared with a non-GAAP Adjusted EBITDA1 of $436,000 in the fourth quarter of 2022.

Full Year 2023 Financial Review

Revenue increased 45% to $74.1 million, compared with $51.0 million for the full year of 2022. Gross profit margin was 30.0% compared to 19.3% for the full year of 2022, primarily related to decreased material, component, and freight costs due to improving supply chain factors.

Selling, General & Administrative expenses totaled $23.0 million, compared with $20.9 million for the full year of 2022.

Operating loss totaled ($777,000) compared with an operating loss of ($11.1 million) for the full year of 2022.

BK Technologies recorded a net loss of ($2.2 million) or ($0.65) per basic and diluted share, compared with a net loss of ($11.6 million) or ($3.44) per basic and diluted share for the full year of 2022. In the full year 2023, the Company recognized an unrealized loss of ($740,000) on its investment in FG Financial Holdings, LLC, compared to a loss on investments of ($313,000) in the full year of 2022.

Non-GAAP Adjusted EBITDA for the full year of 2023 was $130,000, compared with a non-GAAP Adjusted EBITDA2 loss of ($9.1 million) in the full year of 2022.

Working capital totaled approximately $16.8 million, primarily comprised of cash, cash equivalents, trade receivables and inventories. This compares with the working capital at year-end of 2022 of approximately $13.2 million, of which $12.5 million was comprised of cash, cash equivalents and trade receivables.

Conference Call and Webcast

BK Technologies will host a conference call and webcast for investors today, March 14, 2024, at 9:00 a.m. Eastern Time.

Shareholders and interested parties may participate in the conference call by dialing (888) 506-0062 and international participants should dial (973) 528-0011 and use access code: 188499. The call and the accompanying slide deck will also be webcast at:
https://www.webcaster4.com/Webcast/Page/2208/49888

An online archive of the webcast will be available on the Company’s website for thirty (30) days following the call at www.bktechnologies.com. A replay of the conference call will be available one hour after completion of the call until March 21, 2024, by dialing (877) 481-4010 and international participants should dial (919) 882-2331. All callers must use passcode 49888 to access the replay.

Use of Non-GAAP Measures

BK Technologies prepares its consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses non-GAAP financial measures. Management believes the non-GAAP financial measures discussed in this release are important to the reader of the Consolidated Financial Statements. The Company has provided the non-GAAP financial information presented in the press release, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the press release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the press release. The non-GAAP financial measures in the press release may differ from similar measures used by other companies.

Adjusted Earnings Before Interest Taxes Depreciation and Amortization (Adjusted EBITDA). Adjusted EBITDA is considered a non-GAAP financial measure under the SEC’s rules because it excludes certain amounts included in net income provided in the statement of operations attributable to the Company calculated in accordance with GAAP, the most directly comparable financial measure calculated in accordance with GAAP. Management believes Adjusted EBITDA can help the investors better understand operational factors associated with the Company’s financial performance because it excludes the following from consideration: interest, taxes, depreciation and amortization, and infrequent or unusual losses or gains (i.e., non-recurring and incremental restructuring charges that are not expected to be routinely incurred year over year because of the Company’s strategy and operating experience. See Reconciliation to GAAP below for calculation methodology and details regarding Adjusted EBITDA.

Adjusted earnings per share (Adjusted EPS). Adjusted EPS is considered a non-GAAP financial measure under the SEC’s rules because it excludes certain amounts included in the basic and diluted earnings per share attributable to the Company calculated in accordance with GAAP (EPS), the most directly comparable financial measure calculated in accordance with GAAP. Adjusted EPS is a non-GAAP financial measure that adjusts GAAP EPS for expense items that are typically strategic in nature or that management otherwise does not view as reflecting the operating performance of the company. Management believes Adjusted EPS can help the reader better understand the operating performance of the core businesses and their ability to generate earnings. The Company has developed and introduced the BKR product line, that has resulted in one-time, non-cash adjustments to inventory and adjustments related to new product development raw materials for the BKR product line during the 4Q 2022. Management believes that these one-time charges do not reflect the operational profitability of the business for the 4Q and full year 2022. See Reconciliation to GAAP below for calculation methodology and details regarding Adjusted EPS.