BK Technologies(US:BKTI)2023-11-12 16:30Financial Data and Key Metrics Changes - The company reported a 68% increase in revenue to $20.1 million for the third quarter, compared to $11.9 million in the same quarter last year [4][6] - Year-to-date revenues exceeded $57 million, surpassing the previous full-year record of $51 million achieved in 2022 [6] - Gross profit margin improved to 32% in the third quarter, up from 19% in the same quarter last year [6][67] - The company recorded net income of $90,000 or $0.03 per share, compared to a net loss of $2.4 million or $0.71 per share in the prior-year period [68] Business Line Data and Key Metrics Changes - The company shipped 9,310 radios in the third quarter, bringing the total to 28,249 radios shipped year-to-date [4][5] - The order backlog at the end of the third quarter was $21.8 million [6][90] - The BKR 5000 continues to see strong demand, with significant orders from various agencies, while the BKR 9000 is gaining traction with ongoing field tests [10][24][90] Market Data and Key Metrics Changes - The company is targeting Tier 3 counties in the U.S. for the BKR 9000, with an estimated 750 such counties identified [89] - The public safety market represents a significant opportunity for SaaS solutions, with AT&T reporting 5.3 million connections across 27,000 public safety agencies [26] Company Strategy and Development Direction - The company announced a strategic decision to shift production operations to East West manufacturing to simplify supply chain management and reduce costs [9][28] - The BKR 9000 is positioned to expand market share due to its multiband capabilities and cost-effective pricing [10][24] - The company aims to maximize production efficiency and is on track to meet its annual shipment target of 32,000 to 36,000 radios [95] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market interest in the BKR 9000 and the potential for expanding the customer base [24][95] - The company expects continued gross margin improvement through 2024, driven by cost reduction initiatives and the introduction of higher-margin products [67][30] - Management noted that the transition to East West is expected to occur over six months without disruptions to production schedules [28] Other Important Information - The company has approximately $4.1 million in cash and cash equivalents and no long-term debt, providing a solid liquidity position [25] - The SaaS business unit, InteropONE, has onboarded its first paying subscriber and is expanding its customer base [27][70] Q&A Session Summary Question: Can you break down the sequential improvement in gross margin? - Management indicated that most of the improvement is due to cost reduction efforts rather than revenue mix [11][30] Question: How should we think about backlog going forward? - Management expects backlog to decrease as lead times normalize, but demand for the BKR 5000 and 9000 is growing [17][78] Question: Can you provide an update on the SaaS offering and customer trials? - Management reported about 20 field trials ongoing, with a handful of paying customers [56][57] Question: What are the key clauses in the contract with East West? - Management emphasized the importance of choosing a partner that aligns with the company's size and needs, ensuring attention and support during supply chain challenges [40][41] Question: How do you anticipate the transition from the BKR 5000 to 9000? - Management noted that the BKR 9000 targets a different market and is expected to see gradual adoption similar to the BKR 5000 [75][76]