Company Overview - BK Technologies Corp. (BKTI) designs and manufactures mission-critical communications equipment primarily for government and public safety applications [1] - The company has a Software-as-a-Service (SaaS) division that develops public safety smartphone applications, including BKRplay and InteropONE [2] Product and Market Performance - The BKR 9000 multiband radio is driving growth through adoption by federal, state, and local agencies, leveraging competitive pricing as a unified platform replacement for legacy systems [4] - Gross Margin in Q2 expanded sharply to 47.4% from 37.3% in the prior year, driven by a favorable product mix and efficiencies from outsourced manufacturing [5] - The company achieved a 77.5% year-over-year improvement in adjusted EBITDA, indicating strong financial performance [5] Valuation Metrics - The stock is currently trading at 3.1X trailing 12-month EV/Sales, compared to 3.9X for the Zacks sub-industry and 7.5X for the Zacks sector [6] - The stock is trading at 18.2X trailing 12-month EV/EBITDA, which is lower than the Zacks sub-industry average of 29.6X [6] Historical Stock Performance - Over the past five years, the stock has traded as high as 3.3X and as low as 0.4X, with a five-year median of 0.8X [6] - In the past year, the stock has traded as high as 19.1X and as low as 7.6X, with a one-year median of 12.4X [7]

Core Insights - BK Technologies Corporation (BKTI) shares have increased by 50.3% since the earnings report for the quarter ended June 30, 2025, significantly outperforming the S&P 500 Index, which saw a 0.2% loss during the same period [1] - Over the past month, BKTI's stock rose by 61.8%, compared to a 2.5% increase in the S&P 500 [1] Revenue and Earnings Performance - BKTI reported second-quarter 2025 revenues of $21.2 million, a 4.5% increase from $20.3 million in the same quarter last year [2] - Gross margin improved to 47.4% from 37.3% year-over-year, attributed to a favorable product mix and efficiencies from outsourced manufacturing [2] - Net income surged by 124.8% to $3.7 million, or $0.96 per diluted share, compared to $1.7 million, or $0.47 per diluted share, in Q2 2024 [2] - Adjusted EPS rose to $1.30 from $0.55, reflecting a 136.4% year-over-year increase [2] - Operating income increased by 97.4% to $3.9 million, raising the operating margin to 18.9% from 10% last year [2] Segment Performance - The Land Mobile Radio (LMR) unit continued to show steady revenue growth, driven by strong demand for BKR Series radios [3] Key Business Metrics - Adjusted EBITDA for the quarter was $4.4 million, a 77.5% increase from $2.5 million a year earlier, achieving an EBITDA margin above 20% for the first time [4] - For the first half of 2025, revenues rose 4.5% to $40.2 million from $38.5 million, with gross margin improving to 47.2% from 35.9% [4] - Net income for the half-year surged 150.4% to $5.9 million from $2.3 million, and diluted EPS rose to $1.51 from $0.66 [4] Balance Sheet and Cash Position - Working capital increased to $28.9 million as of June 30, 2025, from $23 million at year-end 2024 [5] - Cash and equivalents grew to $11.9 million from $7.1 million over the same period [5] - The company reported no debt, indicating improved balance sheet flexibility [5] Management Commentary - CEO John Suzuki attributed margin expansion to strong operational execution and noted growing momentum from federal customers [6] - Multiple purchase orders from the USDA Forest Service totaling $12.9 million were received just after the quarter-end, setting a positive outlook for the second half [6] - The launch of RelayONE, a portable repeater kit, was highlighted, with the first order placed by the Larimer County Sheriff's Office in Colorado [6] - Continued adoption of the BKR 9000 multiband radio, which has higher margins than single-band offerings, was also emphasized [6] Factors Influencing Performance - Gross margin gains were driven by a favorable shift towards higher-margin radios, operational efficiencies, and the transition of manufacturing to East West Manufacturing [7] - Clarity on tariffs under the USMCA trade agreement alleviated earlier cost uncertainties, allowing for raised margin expectations [7] - Demand for BKR radios from state and local markets continued to expand, with delayed federal orders resuming robustly in July [7] Guidance - BK Technologies raised its full-year 2025 GAAP EPS target to $3.15 from $2.40 and its non-GAAP adjusted EPS target to $3.80 from $2.80 [8] - The company expects revenue growth at the high end of its single-digit range and gross margins above 47%, an improvement from earlier guidance of above 42% [8] - Management reiterated investment priorities in sales, marketing, and R&D to drive adoption of the BKR 9000 and advance development of the next-generation BKR 9500 mobile radio, expected to generate revenues in 2027 [8] Other Developments - BK Technologies expanded its product portfolio with the introduction of RelayONE, enhancing its suite of interoperable solutions under the BK ONE brand [9] - The company secured substantial follow-on orders from the USDA Forest Service after the quarter-end, marking the largest single purchase of its BKR 5000 radios since launch [9] - These developments reinforce the strategy to diversify revenue streams and capture additional market share across traditional LMR and emerging solutions markets [9]

Financial Data and Key Metrics Changes - Second quarter revenue increased by 4.5% to $21.2 million compared to $20.3 million in 2024, with sequential growth of 11.1% from $19.1 million in the previous quarter [7][15] - Gross margin improved significantly to 47.4% from 37.3% in 2024, reflecting better sales mix and cost reduction initiatives [8][15] - Fully diluted GAAP EPS was $0.96 compared to $0.47 in 2024, while non-GAAP adjusted EPS was $1.3 compared to $0.55 in the prior year [8][17] - Non-GAAP adjusted EBITDA was $4.4 million, a significant increase from $2.5 million in 2024, with an adjusted EBITDA margin of 20.7% [18] Business Line Data and Key Metrics Changes - The BKR product line is performing well, with strong market reception and revenue growth driven by federal orders [7][12] - The launch of Relay One, a portable repeater kit, is expected to enhance interoperability among public safety radios, with initial orders received from Larimer County Sheriff's Office [8][9] Market Data and Key Metrics Changes - Federal order activity increased significantly in July, with total orders from various government agencies amounting to $17.8 million for the month [10][12] - The company anticipates continued strong demand for its VKR series radios, particularly as wildland fire activity intensifies [12] Company Strategy and Development Direction - The company is committed to investing in sales and marketing to expand the adoption of the BKR 9,000 multiband radio, which has a higher price point and better margins [24] - Development of the next-generation BKR 9,500 mobile radio is progressing well, with expected revenue recognition in 2027 [25] - The company aims to build R&D and engineering capabilities to strengthen its software offerings and position itself as a leader in public safety communications [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit revenue growth for 2025, raising the full-year GAAP EPS target to $3.15 from $2.4 [22][23] - The tariff environment is stabilizing, contributing to improved gross margin expectations [22][44] - Management remains optimistic about the company's growth potential and the opportunities ahead [48] Other Important Information - The company reported cash and cash equivalents of $11.9 million and no debt as of June 30, 2025, with working capital improving to $28.9 million [20] - Shareholders' equity increased to $36.8 million compared to $29.8 million at the end of 2024 [20] Q&A Session Summary Question: What is driving the lift in gross margin outlook? - Management indicated that the primary driver is improved tariff expectations and a shift to higher-margin products, along with cost savings from outsourcing production [27][28] Question: How is the BKR 9,000 tracking? - The company expects to ship two to three times more radios than last year, indicating strong growth [29] Question: What was the backlog number exiting Q2? - The backlog was approximately $16 million, slightly lower than anticipated due to federal orders received in July [30] Question: What is the progress on the Interop One and the 9,500 development? - The Interop One tethering is still in development, while the 9,500 is on track for revenue recognition in 2027 [34][39] Question: How does the revenue guidance relate to federal orders? - Management noted that federal orders are flowing as expected, contributing to the high-end revenue guidance [41] Question: What is the size of the addressable market for the 9,500? - The US device market for handhelds and mobiles is approximately $2.3 billion, with a significant portion available for the 9,500 mobile radio [71] Question: Will customers likely buy both the 9,000 and 9,500 together? - Customers may buy both, as the devices operate similarly, creating a seamless user experience [75]

Financial Performance - Revenue increased by 4.5% to $21.2 million in the second quarter of 2025, aligning with the company's single-digit revenue growth target for FY2025[10] - Gross margin improved significantly to 47.4% in 2Q25, compared to 37.3% in 2Q24[10] - Fully diluted GAAP EPS reached $0.96 in 2Q25, a notable increase from $0.47 in 2Q24[10] - Fully diluted non-GAAP adjusted EPS was $1.30 in 2Q25, compared to $0.55 in 2Q24[10] - The company is increasing its full-year margin target to 47+% from a previous target of 42+%[13] - Adjusted EBITDA for 2Q25 was $4.417 million, compared to $2.489 million in 2Q24[17] Product and Orders - The company launched and received a purchase order for RelayONE, a rapid deployment portable repeater kit[10] - Following the close of 2Q25, the company received several purchase orders from the USDA Forest Service totaling $12.9 million[10] Financial Position and Outlook - The company has updated its FY2025 financial targets, expecting single-digit revenue growth at the high end of the range and GAAP diluted EPS of $3.15[29] - The company anticipates non-GAAP diluted adjusted EPS of $3.80 for FY2025[29] - Cash and cash equivalents increased from $7.1 million to $11.9 million[24] - Shareholders' equity increased from $29.8 million to $36.8 million[25]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) The company presents its unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025, showing significant improvement in net income and gross margin driven by higher sales and better cost management [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$60.4 million** from **$51.5 million** at year-end 2024, with total stockholders' equity growing significantly to **$36.8 million** from **$29.8 million** | Balance Sheet Items (In thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $11,853 | $7,075 | | Trade accounts receivable, net | $11,542 | $7,349 | | Inventories, net | $17,167 | $17,636 | | Total current assets | $44,833 | $36,941 | | **Total Assets** | **$60,426** | **$51,499** | | **Current Liabilities** | | | | Accounts payable | $9,835 | $6,327 | | Total current liabilities | $15,920 | $13,974 | | **Total Liabilities** | **$23,663** | **$21,668** | | **Total Stockholders' Equity** | **$36,763** | **$29,831** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, sales increased to **$21.2 million** from **$20.3 million** year-over-year, with gross margin improving to **47.4%** from **37.3%**, leading to net income more than doubling to **$3.7 million** or **$0.96 per diluted share** | Income Statement (In thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales, net | $21,165 | $20,254 | $40,219 | $38,485 | | Gross margin | $10,035 | $7,547 | $18,985 | $13,835 | | Operating income | $3,997 | $2,025 | $6,913 | $3,008 | | Net income | $3,741 | $1,664 | $5,873 | $2,345 | | Net income per share-diluted | $0.96 | $0.47 | $1.51 | $0.66 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$6.0 million** for the first six months of 2025, contributing to a rise in cash and cash equivalents to **$11.9 million** | Cash Flow (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,002 | $3,311 | | Net cash used in investing activities | ($1,465) | ($848) | | Net cash provided by (used in) financing activities | $241 | ($2,938) | | **Net change in cash and cash equivalents** | **$4,778** | **($475)** | | **Cash and cash equivalents, end of period** | **$11,853** | **$2,981** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the expansion of the BK ONE Solutions business, a new **$6 million** credit facility, customer concentration, and subsequent events including stock option grants - The company is expanding its Solutions business unit under the new brand, BK ONE, which includes SaaS solutions like InteropONE and other future software and hardware applications[37](index=37&type=chunk) - Sales to U.S. government agencies were **11.5%** of total net sales for the first six months of 2025, down from **41.5%** in the same period last year, while two commercial customers accounted for **26.6%** of net sales in the first half of 2025[62](index=62&type=chunk) - The company entered into a new one-year revolving line of credit for up to **$6 million** with Fifth Third Bank in October 2024, with no borrowings under this facility as of June 30, 2025[38](index=38&type=chunk)[64](index=64&type=chunk) - Subsequent to the quarter end, the company granted performance-based stock options for executives and issued shares related to RSU grants upon achieving revenue milestones for the BKR9000 radio[75](index=75&type=chunk)[76](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q2 2025 financial results, highlighting a **4.5%** YoY sales increase to **$21.2 million**, significant gross margin improvement to **47.4%**, and nearly doubled operating income, alongside improved liquidity and an undrawn **$6.0 million** credit facility [Executive Summary](index=21&type=section&id=Executive%20Summary) Q2 2025 sales rose **4.5%** YoY to **$21.2 million**, driven by BKR series radio shipments, with gross margin expanding significantly to **47.4%** and net income increasing substantially to **$3.7 million** or **$0.96 per diluted share** - The backlog of unshipped customer orders was approximately **$16.0 million** as of June 30, 2025, compared to **$21.8 million** as of December 31, 2024[89](index=89&type=chunk) | Key Metrics (Q2 2025 vs Q2 2024) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | ~$21.2M | ~$20.3M | +4.5% | | Gross Profit Margin | 47.4% | 37.3% | +10.1 ppt | | Operating Income | ~$4.0M | ~$2.0M | +100% | | Net Income | ~$3.7M | ~$1.7M | +118% | | Diluted EPS | $0.96 | $0.47 | +104% | [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Net sales for Q2 2025 increased by **4.5%** to **$21.2 million** due to strong BKR series radio sales, while gross profit margin rose to **47.4%** reflecting favorable product mix and manufacturing cost improvements, leading to doubled operating income - The increase in gross profit margins for Q2 and H1 2025 was attributed to a better radio product and accessories sales mix and material cost improvements from transitioning manufacturing to East West Manufacturing, LLC[108](index=108&type=chunk) - SG&A expenses increased by **11.5%** for the six-month period, primarily due to higher engineering and product development costs for the BKR multi-band mobile radio and increased marketing and selling expenses[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity strengthened with cash and cash equivalents reaching **$11.9 million** at June 30, 2025, driven by **$6.0 million** in net cash from operations for the first six months, and an undrawn **$6 million** revolving credit facility - Net cash provided by operating activities totaled approximately **$6.0 million** for the first six months of 2025, compared to **$3.3 million** for the same period in 2024[123](index=123&type=chunk) - The company's cash and cash equivalents balance was approximately **$11.9 million** on June 30, 2025[127](index=127&type=chunk) - A Revolving Loan Commitment with Fifth Third Bank provides for a one-year, **$6 million** line of credit (expandable to **$10 million**), which was unused as of the report date[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a "smaller reporting company," the company is not required to provide disclosure under this item - As a "smaller reporting company," the Company is not required to include disclosures about market risk[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to an un-remediated material weakness in internal control over the income tax provision - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective as of the end of the reporting period[135](index=135&type=chunk) - The ineffectiveness is due to a material weakness in internal control related to the proper design and implementation of controls over the income tax provision[136](index=136&type=chunk) - Management has engaged in implementing a remediation plan, including using third-party assistance and enhancing review processes for complex accounting transactions[138](index=138&type=chunk)[139](index=139&type=chunk) PART II - OTHER INFORMATION [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20RISK%20FACTORS) The company highlights a new risk concerning potential adverse effects of changes in U.S. trade policy, including tariffs, which could increase costs, impact the supply chain, and reduce demand due to reliance on foreign electronic components - A specific risk factor has been added regarding changes in U.S. trade policy and tariffs, which could materially affect the business due to its reliance on electronic components from foreign sources[146](index=146&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the issuance of **89,248** common shares via cashless warrant exercise on May 2, 2025, and confirms no shares were repurchased under the **$5 million** share repurchase program during Q2 2025 - On May 2, 2025, the Company issued **89,248** shares of common stock upon the cashless exercise of a warrant[148](index=148&type=chunk) - No shares were repurchased during the second quarter of 2025 under the company's **$5 million** share repurchase program authorized in December 2021[148](index=148&type=chunk)[150](index=150&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20EXHIBITS) This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, incentive compensation plans, employment agreement amendments, and CEO/CFO certifications - The report includes exhibits such as the 2025 Incentive Compensation Plan, Employee Stock Purchase Plan, amendments to executive employment agreements, and CEO/CFO certifications[155](index=155&type=chunk)

[Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) This section provides an overview of the company's strong Q2 2025 performance, including CEO commentary and key financial highlights [CEO Commentary and Business Update](index=1&type=section&id=CEO%20Commentary%20and%20Business%20Update) The CEO highlighted strong Q2 2025 operational execution, achieving higher-than-expected gross margins and improved profitability - Delivered strong operational performance in Q2 2025, with gross margins reaching **47.4%**[3](index=3&type=chunk) - Federal order activity increased significantly after the quarter, highlighted by **$12.9 million** in purchase orders from the USDA Forest Service, suggesting a strong outlook for the second half of the year[3](index=3&type=chunk)[5](index=5&type=chunk) - Launched RelayONE, a new rapid deployment portable repeater kit, and received the first purchase order from the Latimer County Sheriff's Office in Colorado[3](index=3&type=chunk) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) BK Technologies reported strong Q2 2025 financial results, with revenue at **$21.2 million** and gross margin significantly improving to **47.4%** Q2 2025 Key Financial Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $21.2 million | $20.3 million | | Gross Margin | 47.4% | 37.3% | | GAAP Diluted EPS | $0.96 | $0.47 | | Non-GAAP Adj. Diluted EPS | $1.30 | $0.55 | [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section analyzes the company's Q2 and first-half 2025 financial performance, including balance sheet insights [Second Quarter 2025 Financial Review](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Review) Q2 2025 revenue increased **4.5%** to **$21.2 million**, with gross margin expanding to **47.4%** Q2 2025 vs. Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $21.2M | $20.3M | +4.5% | | Gross Margin | 47.4% | 37.3% | +10.1 p.p. | | Operating Income | $4.0M | $2.0M | +100% | | Net Income | $3.7M | $1.7M | +117.6% | - The improvement in gross margin was driven by a favorable product mix and ongoing cost savings from operational efficiencies and outsourced manufacturing[7](index=7&type=chunk) - Selling, General & Administrative (SG&A) expenses rose to **$6.0 million** from **$5.5 million** year-over-year, reflecting continued investments in sales, marketing, and engineering[8](index=8&type=chunk) [Six Months 2025 Financial Review](index=3&type=section&id=Six%20Months%202025%20Financial%20Review) First-half 2025 revenue grew **4.5%** to **$40.2 million**, with gross margin improving to **47.2%** First Half 2025 vs. First Half 2024 Performance | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $40.2M | $38.5M | +4.5% | | Gross Margin | 47.2% | 35.9% | +11.3 p.p. | | Operating Income | $6.9M | $3.0M | +130% | | Net Income | $5.9M | $2.3M | +157.4% | [Balance Sheet and Working Capital](index=3&type=section&id=Balance%20Sheet%20and%20Working%20Capital) As of June 30, 2025, working capital increased to **$28.9 million**, driven by higher cash and receivables - Working capital totaled approximately **$28.9 million** at June 30, 2025, an increase from **$23.0 million** at December 31, 2024[11](index=11&type=chunk) - Cash, cash equivalents, and trade receivables grew to **$23.4 million**, up from **$14.4 million** at the end of 2024[11](index=11&type=chunk) Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,853 | $7,075 | | Total current assets | $44,833 | $36,941 | | Total liabilities | $23,663 | $21,668 | | Total stockholders' equity | $36,763 | $29,831 | [Full Year 2025 Outlook](index=2&type=section&id=Full%20Year%202025%20Outlook) BK Technologies has raised its full-year 2025 financial guidance due to strong year-to-date performance and robust demand Updated Full Year 2025 Guidance | Metric | New Guidance | Prior Guidance | | :--- | :--- | :--- | | Revenue Growth | High single digits | Single-digit growth | | Gross Margin | > 47% | > 42% | | GAAP Diluted EPS | $3.15 | $2.40 | | Non-GAAP Adj. Diluted EPS | $3.80 | $2.80 | - The upward revision is attributed to strong demand, leverage in the business model, and confidence in sustaining higher performance levels[6](index=6&type=chunk) [Appendix](index=5&type=section&id=Appendix) This section provides supplementary information, including non-GAAP financial measures and detailed financial statements [Use of Non-GAAP Measures](index=5&type=section&id=Use%20of%20Non-GAAP%20Measures) The company uses non-GAAP financial measures to supplement GAAP statements, offering clearer insight into core operational performance - Adjusted EBITDA is used to help investors understand operational factors by excluding interest, taxes, depreciation, amortization, stock-based compensation, and other infrequent charges[21](index=21&type=chunk) - Adjusted EPS adjusts GAAP EPS for items that management does not see as reflective of core operating performance, such as stock-based compensation and one-time charges related to manufacturing transition and tax provisions[22](index=22&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) This section provides unaudited condensed consolidated financial statements for Q2 and H1 2025, including key financial statements and non-GAAP reconciliations [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 income statement shows net sales of **$21.2 million** and net income of **$3.7 million** Q2 & H1 2025 Income Statement Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales, net | $21,165 | $20,254 | $40,219 | $38,485 | | Operating income | $3,997 | $2,025 | $6,913 | $3,008 | | Net income | $3,741 | $1,664 | $5,873 | $2,345 | | Diluted EPS | $0.96 | $0.47 | $1.51 | $0.66 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the balance sheet indicates total assets of **$60.4 million** Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $44,833 | $36,941 | | Total assets | $60,426 | $51,499 | | Total liabilities | $23,663 | $21,668 | | Total stockholders' equity | $36,763 | $29,831 | [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This table reconciles GAAP Net Income to non-GAAP Adjusted EBITDA and Adjusted Earnings for Q2 2025 Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $3,741 | $1,664 | | Adjusted EBITDA (Non-GAAP) | $4,417 | $2,489 | | Adjusted Earnings (Non-GAAP) | $5,055 | $1,974 | | Adjusted EPS - diluted (Non-GAAP) | $1.30 | $0.55 |

Core Viewpoint - The article discusses the volatile market conditions in 2025, highlighting the performance of top stock picks and the impact of tariffs and geopolitical events on market dynamics [7][9][19]. Market Overview - The US equity market experienced significant fluctuations due to tariff announcements, leading to a major correction in April 2025, with the S&P 500 dropping approximately 15% from its 52-week high [9][10]. - A barbell investment approach was recommended to diversify portfolios during market corrections, focusing on stocks with strong fundamentals and good dividend yields [10][13]. Stock Performance - The top 10 stocks recommended at the beginning of 2025 saw a performance swing from over 20% gains to below 20%, reflecting a nearly 40% change during the volatile period [15][16]. - By mid-2025, many of these stocks rebounded as fear subsided and investors returned to fundamentals [16]. Economic Indicators - Inflation rates showed a surprising decrease, with core CPI at 0.1% for May, and there is speculation about potential interest rate cuts by the Federal Reserve in September [22][23]. - The recession risk appears less severe than previously anticipated, with GDP growth projected to exceed 2% annualized after a decline in Q1 [23][31]. Top Stock Picks - **Barclays (NYSE: BCS)**: A diversified bank with a market cap of $62 billion, ranked 12 out of 691 in financial institutions, offering a dividend yield of 2.47% and a forward EPS growth rate of 28% [80][81]. - **Prudential (NYSE: PUK)**: Based in Hong Kong, this insurance company ranks 1 out of 19 in its industry, with a forward dividend yield of 1.89% and a long-term EPS growth rate of 17% [86][89]. - **FinVolution (NYSE: FINV)**: A fintech company with a market cap of $2.2 billion, ranking 7 out of 691 in financials, showing a 255% operating cash flow growth rate [93][94]. - **Power Solutions International (NASDAQ: PSIX)**: A small-cap company with a market cap of $1.23 billion, ranked number one in the industrials sector, with a one-year return of 835% [97][99]. - **New Gold (NYSE: NGD)**: Focused on gold, silver, and copper exploration, with an operating cash flow growth rate of 56% [107][110]. - **Gold Fields Limited (NYSE: GFI)**: A diversified mining company with a 37% EPS forward long-term growth rate, ranking 5 in the materials sector [111][113]. Investment Strategies - The article emphasizes a data-driven approach to stock selection, utilizing a GARP (Growth at a Reasonable Price) strategy that combines growth, value, profitability, and momentum metrics [40][42]. - The new PRO Quant Portfolio offers a higher frequency of stock ideas, designed for active investors, with a focus on global stocks across various market caps [59][64].

Core Insights - BK Technologies is transitioning from a manufacturer of rugged two-way radios to a provider of full-spectrum communications ecosystems, positioning the company uniquely in the market [1] Company Overview - The company is based in Florida and trades on the NYSE under the ticker BKTI [1] - The focus is primarily on small- to mid-cap companies, which are often overlooked by investors, while also occasionally analyzing large-cap companies for broader market context [1]

Core Viewpoint - BK Technologies Corporation (BKTI) demonstrated strong financial performance in Q1 2025, with significant improvements in profitability and margins, although its stock performance lagged behind the S&P 500 index during the same period [1][2][4]. Financial Performance - Revenues increased by 4.5% year over year to $19.1 million from $18.2 million [2] - Diluted earnings per share (EPS) surged 189.5% to $0.55 from $0.19 [2] - Non-GAAP adjusted diluted EPS rose 126.7% to $0.68 from $0.30 [2] - Operating income increased to $2.9 million from $0.9 million [3] - Net income rose to $2.1 million from $0.7 million [3] - Adjusted EBITDA climbed 128.8% to $3.2 million from $1.4 million [4] Margin and Cost Structure - Gross margin expanded to 47% from 34.5%, attributed to a favorable product mix and transition to contract manufacturing [3][10] - Selling, general, and administrative expenses rose 13.7% to $6 million from $5.3 million, but this was offset by higher revenue [11] Business Metrics - The order backlog was $18.8 million at the end of March 2025, slightly down from $19 million a year ago [4] - Working capital increased to $24.6 million from $23 million at year-end 2024 [5] - Cash position grew to $8.9 million from $7.1 million at the end of December 2024 [5] - Total shareholders' equity rose from $29.8 million to $32.4 million [5] Product Performance - Revenue growth was driven by demand for the BKR Series radios, particularly the BKR 9000 multiband radio [6] - The BKR 9000's higher average selling price is expected to support future margin and revenue expansion [6] Management Insights - CEO John Suzuki highlighted operational and strategic progress, attributing gross margin improvement to a favorable sales mix and cost-reduction initiatives [7] - Management noted increased federal order activity following the resolution of a delayed continuing resolution [8] - Seasonal factors typically lead to softer performance in the first and fourth quarters [9] Future Guidance - BK Technologies reaffirmed full-year 2025 targets of GAAP diluted EPS exceeding $2.40 and non-GAAP adjusted diluted EPS above $2.80 [12] - The company expects single-digit revenue growth and aims for gross margins of at least 42% [12] - Plans to invest in sales and marketing to accelerate BKR 9000 adoption and enhance software capabilities through R&D [13] Other Developments - No acquisitions or major restructuring activities were reported, but the company emphasized a strengthened balance sheet [14] - BKTI ended the quarter with $24.6 million in working capital and reported no outstanding debt [14]

Financial Data and Key Metrics Changes - First quarter revenue was $19.1 million, representing a 4.5% increase year-over-year and a 6.3% sequential increase from $17.9 million in the fourth quarter of 2024 [14] - Gross profit margin improved to 47% from 34.5% in the first quarter of 2024 and increased from 41.2% in the fourth quarter of 2024 [14] - Net income for the first quarter was $2.1 million or $0.55 per diluted share, compared to $681,000 or $0.19 per diluted share in the same period last year [7][15] - Non-GAAP adjusted earnings were $2.6 million or $0.68 per diluted share, up from $1.1 million or $0.30 per diluted share in the first quarter of 2024 [7][15] - Backlog as of March 31, 2025, was $18.8 million, slightly down from $19 million at the end of the first quarter of 2024 [8] Business Line Data and Key Metrics Changes - The BKR 5000 single band radio maintained strong demand, while the BKR 9000 multiband radio is gaining traction in the market [12] - The company expects revenue and gross margin to expand as the BKR 9000 becomes a larger contributor to overall revenues [12] Market Data and Key Metrics Changes - Federal orders were light in the first quarter due to delays in passing the continuing resolution to fund the government [13] - The company noted that approximately 95% of product revenue comes from finished goods manufactured in the USA, Mexico, and Vietnam, with minimal exposure to China [9][10] Company Strategy and Development Direction - The company is focused on enhancing profitability through a shift to a higher margin product mix and cost reduction strategies [7][8] - The 2025 targets include single-digit full-year revenue growth and a gross margin of at least 42% [18] - Continued investment in sales and marketing efforts for the BKR 9000 is planned to increase market visibility [19] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the company's position for long-term profitable growth despite uncertainties in the macroeconomic environment [18] - The company is closely monitoring tariff situations that could impact gross margins [9][11] Other Important Information - The company reported a strong balance sheet with approximately $8.9 million in cash and cash equivalents and no debt as of March 31, 2025 [16] - SG&A expenses increased to approximately $6 million from $5.3 million in the same quarter last year, reflecting investments in marketing and new product development [14][15] Q&A Session Summary Question: Was Q1 impacted by any pull in orders? - Management indicated that Q1 was not impacted by pull-in orders, and federal orders were delayed due to the continuing resolution [23][24] Question: What are the expectations for gross margins in Q2? - Management expects gross margins to remain above 42%, despite some tariffs impacting costs [25][26] Question: Will revenue from the BKR 9000 increase sequentially? - Management confirmed that revenue from the BKR 9000 is expected to increase sequentially throughout the year [38][39] Question: How does the continuing resolution affect seasonality? - Management noted that while funding has been approved, there are delays due to personnel changes, making the timeline for orders uncertain [35][36] Question: What is the outlook for SG&A expenses? - Management indicated that SG&A costs are relatively fixed, but investments in marketing and new product development will lead to some incremental costs [46][47]