BK Technologies(BKTI) - 2023 Q4 - Annual Results

Financial Highlights BK Technologies reported a strong fiscal year 2023, with a 45% increase in full-year revenue to $74.1 million and a 37% increase in radio shipments, achieving Q4 profitability with an EPS of $0.08 and targeting over $1.50 EPS for 2024 Full Year 2023 Performance | Metric | Full Year 2023 | Change vs. 2022 | | :--- | :--- | :--- | | Revenue | $74.1 million | 45% Increase | | Radio Shipments | 34,500 units | 37% Increase | Q4 2023 Earnings Per Share | Metric | Q4 2023 | | :--- | :--- | | EPS | $0.08 | - The company is targeting a full-year 2024 Earnings Per Share (EPS) in excess of $1.50[18] Management Commentary and Strategic Outlook The CEO highlighted 2023 as a strong year with significant revenue growth and margin improvement, strategically partnering with East West Manufacturing for production outsourcing and focusing on 2024 margin expansion and BKR9000 market establishment - The company expanded its relationship with East West Manufacturing to become the primary manufacturer of its radio product line, aiming to improve long-term gross margins by simplifying supply chain management and reducing production costs[31] - East West Manufacturing made a $2 million strategic investment in BK Technologies, with proceeds used to pay down accounts payable and the credit facility[31] - The 2024 outlook is optimistic, with expectations for expanding gross margins, lower operating costs, and significantly improved profitability, focusing on establishing the BKR9000 as a premier multiband radio[18] Fourth Quarter 2023 Financial Review Q4 2023 revenue decreased 20% to $16.3 million from a record Q4 2022, yet gross margin significantly improved to 35.1%, leading to profitability with $0.4 million operating income and $0.29 million net income, and Adjusted EBITDA more than doubled to $0.89 million Q4 2023 Key Financial Metrics | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | | :--- | :--- | :--- | | Revenue | $16,300 | $20,300 | | Gross Profit Margin | 35.1% | 21.7% | | Operating Income (Loss) | $400 | ($1,600) | | Net Income (Loss) | $290 | ($961) | | EPS | $0.08 | ($0.28) | - The year-over-year revenue decrease is attributed to record radio shipments in Q4 2022, which occurred after improved component availability allowed the company to clear a significant backlog[2] - Gross margin improvement was driven by lower material costs and successful production cost reduction initiatives implemented during 2023[2] Non-GAAP Adjusted EBITDA | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | | :--- | :--- | :--- | | Non-GAAP Adjusted EBITDA | $892 | $436 | Full Year 2023 Financial Review Full year 2023 revenue grew 45% to $74.1 million, with gross margin improving to 30.0%, significantly reducing operating loss to ($0.78 million) and net loss to ($2.2 million), while Non-GAAP Adjusted EBITDA turned positive at $0.13 million Full Year 2023 Key Financial Metrics | Metric | Full Year 2023 (in thousands) | Full Year 2022 (in thousands) | | :--- | :--- | :--- | | Revenue | $74,100 | $51,000 | | Gross Profit Margin | 30.0% | 19.3% | | Operating Loss | ($777) | ($11,100) | | Net Loss | ($2,200) | ($11,600) | | EPS | ($0.65) | ($3.44) | - The improvement in full-year gross margin was primarily related to decreased material, component, and freight costs due to improving supply chain factors[33] Non-GAAP Adjusted EBITDA | Metric | Full Year 2023 (in thousands) | Full Year 2022 (in thousands) | | :--- | :--- | :--- | | Non-GAAP Adjusted EBITDA | $130 | ($9,100) | - Working capital increased to approximately $16.8 million at year-end 2023, compared to $13.2 million at year-end 2022[5] Financial Statements This section presents the company's condensed consolidated statements of operations and balance sheets, along with reconciliations of non-GAAP financial measures for both quarterly and annual periods Condensed Consolidated Statements of Operations The statement of operations for the year ended December 31, 2023, shows a 45% increase in net sales to $74.1 million and a significant reduction in net loss to ($2.2 million), achieving Q4 net income of $290 thousand Condensed Consolidated Statements of Operations | (In thousands, except per share data) | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Twelve Months Ended Dec 31, 2023 | Twelve Months Ended Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Sales, net | $16,309 | $20,339 | $74,094 | $50,951 | | Cost of products | $10,577 | $15,932 | $51,858 | $41,107 | | SG&A expenses | $5,332 | $5,973 | $23,013 | $20,925 | | Operating income (loss) | $400 | ($1,566) | ($777) | ($11,081) | | Net income (loss) | $290 | ($961) | ($2,230) | ($11,633) | | Net income (loss) per share | $0.08 | ($0.28) | ($0.65) | ($3.44) | Condensed Consolidated Balance Sheets As of December 31, 2023, BK Technologies reported total assets of $49.4 million, with current assets at $37.2 million, including $24.0 million in inventories, and total liabilities of $28.1 million Condensed Consolidated Balance Sheets | (In thousands) | Dec 31, 2023 | | :--- | :--- | | Total current assets | $37,202 | | Cash and cash equivalents | $3,456 | | Inventories, net | $23,952 | | Total assets | $49,408 | | Total current liabilities | $20,418 | | Total liabilities | $28,097 | | Total stockholders' equity | $21,311 | | Total liabilities and stockholders' equity | $49,408 | Reconciliation of Non-GAAP Financial Measures The company reconciled GAAP Net Income to non-GAAP Adjusted EBITDA and Adjusted EPS, with full-year 2023 Adjusted EBITDA at $130 thousand and Q4 2023 Adjusted EBITDA at $892 thousand, reflecting a significant turnaround Reconciliation to Adjusted EBITDA (In thousands) | Reconciliation to Adjusted EBITDA (In thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income/(Loss) | $290 | ($961) | ($2,230) | ($11,633) | | EBITDA | $848 | ($525) | $34 | ($10,066) | | Adjusted EBITDA | $892 | $436 | $130 | ($9,052) | Reconciliation to Adjusted EPS (In thousands, except per share data) | Reconciliation to Adjusted EPS | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income/(Loss) | $290 | ($961) | ($2,230) | ($11,633) | | Adjusted Earnings (Loss) (non-GAAP) | $650 | ($603) | ($52) | ($9,631) | | Adjusted EPS - diluted | $0.19 | ($0.18) | ($0.02) | ($2.85) |