BK Technologies Corporation – Shares of BK Technologies (BKTI) have surged following a strong second-quarter earnings report, gaining 50.3% since the release of results for the quarter ended . This performance sharply contrasts with the S&P 500 Index’s 0.2% loss over the same period and a 61.8% gain over the past month compared to the S&P 500’s 2.5% increase.
The company reported second-quarter revenues of $21.2 million, a 4.5% increase from $20.3 million in the prior-year period. Gross margin expanded significantly to 47.4% from 37.3% in the second quarter of , driven by a favorable product mix and efficiencies from outsourced manufacturing. Net income surged 124.8% to $3.7 million, or $0.96 per diluted share, compared to $1.7 million, or $0.47 per diluted share, in the second quarter of . Adjusted earnings per share (EPS) rose to $1.30 from $0.55, a 136.4% year-over-year increase. Operating income jumped 97.4% to $3.9 million from $2 million, lifting the operating margin to 18.9% from 10% last year.
The Land Mobile Radio (LMR) unit remained the key driver of performance, reporting steady revenue growth supported by strong demand for the BKR Series radios. BK Technologies shipped 8,938 radios in the second quarter, bringing the first-half shipment total to 18,939. The company is maintaining its annual shipment target range of 32,000-36,000 radios, and believes it may reach the high end of that guidance, or even surpass it.
A significant contributor to the positive outlook is the recent Federal Communications Commission (FCC) certification and initial shipments of the BKR 9000 multi-band radio to the U.S. Army in early . The BKR 9000 is positioned as an attractive next-generation portable communications radio due to its enhanced capabilities and cost-effective price point. BK Technologies anticipates the multi-band capabilities will expand its addressable market into new verticals.
Demand for the BKR 5000 radio also remained strong, with the company receiving two large orders totaling over 5,100 radios from the U.S. Forest Service, and a $924,000 purchase order from the Washington State Department of Natural Resources. Both agencies are long-standing customers upgrading their portable communications technology.
As of , the company’s order backlog stood at $24 million.
While the overall financial performance was positive, BK Technologies noted that gross margin performance in the second quarter was disappointing due to delays in implementing cost reduction initiatives. These initiatives have now been launched, and the company anticipates a favorable impact on third-quarter margins. However, the delay means the company no longer expects to meet its full-year gross margin target of 35%.
Adjusted EBITDA for the quarter was $4.4 million, up 77.5% compared to $2.5 million a year earlier, translating to an EBITDA margin above 20% for the first time. For the first six months of , revenues rose 4.5% to $40.2 million from $38.5 million, with gross margin improving to 47.2% from 35.9%. Net income for the half-year surged 150.4% to $5.9 million.
Looking ahead, BK Technologies reiterated its long-term goal of reaching $100 million in revenue by , emphasizing its commitment to profitable growth and establishing itself as a premier communications technology provider for the public safety and critical communications market. The company highlighted the BKR 5000’s proven success and the potential of the newly launched BKR 9000 to significantly expand its target markets and brand recognition.
The company also noted the potential of InteropONE, its interoperability solution, to improve communications between first responders, potentially saving lives. InteropONE is expected to contribute high-margin, recurring revenue as it gains market presence.
