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BK Technologies Corp (BKTI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered a clean beat with revenue of $21.2M (+4.5% y/y) and non-GAAP diluted adjusted EPS of $1.30, supported by a sharp gross margin step-up to 47.4% from 37.3% in Q2’24, reflecting favorable mix and savings from outsourced manufacturing .
  • Versus S&P Global consensus, BKTI beat on revenue ($21.17M vs $19.70M*) and on EPS ($1.30 vs $0.51*), with GAAP diluted EPS at $0.96 .
  • Management raised FY25 outlook: revenue growth to high single digits (from single-digit), gross margin >47% (from >42%), GAAP EPS to $3.15 (from $2.40), and non-GAAP adjusted EPS to $3.80 (from $2.80), citing strong demand and leverage in the model .
  • Subsequent to quarter-end, the company announced $12.9M of USDA Forest Service purchase orders, bolstering 2H visibility; this and the increased guidance are the primary stock catalysts from the print .

Values retrieved from S&P Global*

What Went Well and What Went Wrong

What Went Well

  • Margin execution: “higher than expected gross margins of 47.4%” driven by favorable mix and efficiencies from outsourced radio manufacturing .
  • Profitability inflection: Operating income doubled to $4.0M (vs. $2.0M in Q2’24); GAAP diluted EPS rose to $0.96 (vs. $0.47), and non-GAAP diluted adjusted EPS to $1.30 (vs. $0.55) .
  • Demand momentum and pipeline: $12.9M of USDA Forest Service orders after quarter-end and initial RelayONE order; CEO: these “set the stage for a strong second half” and reflect momentum with federal customers for BKR Series radios .

What Went Wrong

  • SG&A inflation: SG&A rose to $6.0M (from $5.5M in Q2’24) as BKTI invested in sales, marketing, and engineering .
  • Tariff overhang: Management has noted tariff exposure on some non-USMCA supply lines (e.g., Vietnam) and is actively shifting to mitigate risks; Q1 call flagged potential tariff headwinds entering Q2 .
  • Federal order timing: While activity surged post-quarter, management previously cited timing uncertainty tied to government processes and personnel changes, which can delay order flow .

Financial Results

Core P&L Comparison

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$20.254 $19.054 $21.165
Gross Margin %37.3% 47.0% 47.4%
Operating Income ($USD Millions)$2.025 $2.916 $3.997
GAAP Diluted EPS ($)$0.47 $0.55 $0.96
Non-GAAP Adjusted Diluted EPS ($)$0.55 $0.68 $1.30
  • YoY: Revenue +4.5% and gross margin +1,010 bps (37.3% → 47.4%), driving EPS expansion; per press release .
  • QoQ: Revenue grew from $19.1M in Q1 to $21.2M in Q2 as seasonal federal demand began to normalize .

KPIs and Operating Expenses

KPI / ExpenseQ2 2024Q1 2025Q2 2025
SG&A ($USD Millions)$5.522 $6.034 $6.038
Adjusted EBITDA ($USD Millions)$2.489 $3.226 $4.417
  • Balance sheet highlights: Working capital increased to ~$28.9M at 6/30/25 (cash, cash equivalents, and trade receivables $23.4M) from ~$23.0M at 12/31/24 ($14.4M cash/receivables) .

Q2 2025 vs S&P Global Consensus

MetricConsensus*ActualSurprise*
Revenue ($USD Millions)$19.70*$21.165 +$1.47*
EPS (Adjusted, Diluted) ($)$0.51*$1.30 +$0.79*

Values retrieved from S&P Global*

Note: S&P Global’s “Primary EPS” aligns with non-GAAP adjusted EPS presentation; BKTI reported non-GAAP diluted adjusted EPS of $1.30 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue GrowthFY 2025Single-digit growth High single-digit growth Raised
Gross Margin %FY 2025≥42% >47% Raised
GAAP Diluted EPS ($)FY 2025>$2.40 $3.15 Raised
Non-GAAP Adjusted Diluted EPS ($)FY 2025>$2.80 $3.80 Raised

Management cited strengthening demand, operating leverage, and higher gross margins as drivers of the upward revisions .

Earnings Call Themes & Trends

TopicQ4 2024 (Prev-2)Q1 2025 (Prev-1)Q2 2025 (Current)Trend
Gross Margin TrajectorySequential expansion; FY24 gross margin 37.9% 47.0% in Q1; target ≥42% for FY25 47.4% in Q2; FY25 target now >47% Improving
Product Mix (BKR 9000)Strong acceptance; drives margin/profitability BKR 9000 revenue rising; 2–3x 2024 expected in 2025 Momentum reaffirmed; federal demand robust Positive
Federal Orders & SeasonalityBacklog $21.8M YE; seasonal Q2–Q3 strength CR delayed Q1 federal orders; timing uncertainty $12.9M USDA orders post-Q2; sets up strong 2H Improving
Tariffs / Supply ChainManufacturing transition supports margins Mixed tariff outlook; USMCA favorable, Vietnam tariffs Noted efficiencies; margin >47% target despite tariffs Managed risk
Outsourced Manufacturing (East West)Transition cited in margin gains Key driver of margin and operating leverage Ongoing benefits to mix and cost Positive
Solutions / BK ONESolutions unit launch planned; expanding beyond radios RelayONE demand emerging RelayONE purchase order and initial launch Building

Management Commentary

  • CEO (Q2): “We delivered strong operational execution… higher than expected gross margins of 47.4%… Federal order activity surged… totaling $12.9 million, which we believe sets the stage for a strong second half.”
  • CEO (Q2): “We now expect… full year revenue growth in the high single digits with gross margin greater than 47%… raising… GAAP diluted EPS target to $3.15… and non-GAAP diluted adjusted EPS to $3.80…”
  • CEO (Q1): “Our first quarter… delivered significantly improved gross margin of 47%… result of product sales mix and… transition to a contract manufacturing model.”
  • CFO (Q1): “We reported non-GAAP adjusted EBITDA of $3.2 million in the first quarter of 2025 compared with… $1.4 million in the first quarter of 2024.”

Q&A Highlights

  • Note: A Q2 2025 earnings call was scheduled, but the transcript was not available at time of analysis .
  • Context from Q1 Q&A:
    • Tariffs and pricing: Expect gross margin above 42% despite Vietnam tariffs; USMCA flows remained tariff-free in Q2; pricing actions in place .
    • BKR 9000 momentum: Management expects BKR 9000 revenue to be 2–3x 2024 in 2025, supporting mix and margin .
    • Federal timing: CR passage restored funding, but agency staffing changes could delay order timing; orders must be placed by Sept 30 with delivery schedules negotiated thereafter .

Estimates Context

  • S&P Global consensus for Q2 2025: Revenue $19.70M*, EPS (Adjusted/Diluted) $0.51*; BKTI reported $21.165M and $1.30, respectively, implying sizable beat on both metrics. FY25 guidance raises suggest Street estimates (revenue, margin, EPS) likely need to move higher to align with >47% gross margin and increased EPS targets .

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Margin-led upside: 47.4% gross margin and >47% FY25 target indicate sustained structural improvement from mix (BKR 9000) and East West manufacturing efficiencies .
  • Guidance reset higher: GAAP EPS to $3.15 and non-GAAP to $3.80 with high-single-digit revenue growth materially raises earnings power expectations for 2H25 .
  • Demand visibility: $12.9M of USDA Forest Service orders post-quarter plus seasonal federal spending should support Q3/Q4, reducing timing risk flagged earlier in the year .
  • Non-GAAP additions matter: Adjusted EPS adds back stock comp ($0.425M), non-cash deferred tax provision ($0.889M), and other items; track durability of these adjustments as valuation hinges on core earnings quality .
  • Watch tariffs and mix: Vietnam-related tariffs remain a headwind; continued BKR 9000 adoption and potential pricing can offset. Monitoring supply-chain shifts (e.g., Taiwan) remains key .
  • Operating leverage: SG&A is relatively fixed near-term per management; revenue scale should continue to expand adjusted EBITDA and EPS if demand persists .
  • Tactical: Near-term catalysts include federal order flow, margin delivery vs >47% bar, and execution on BK ONE/RelayONE; any signs of backlog growth or further order wins could extend multiple expansion .

Appendix: Additional Data

  • Income statement detail and reconciliations for Q2 include Operating Income $3.997M, GAAP diluted EPS $0.96; Adjusted EBITDA $4.417M; Adjusted diluted EPS $1.30 .
  • Balance sheet at 6/30/25: Cash & equivalents $11.853M; Trade receivables $11.542M; Inventories $17.167M; Total equity $36.763M .

Citations:

  • Q2 2025 8-K and press release:
  • Q1 2025 8-K and call:
  • Q4 2024 8-K:

Values retrieved from S&P Global*