BKTI

Good morning, ladies and gentlemen, welcome to the BK Technologies Corporation conference call for the first quarter of 2026. This call is being recorded. All participants have been placed on a listen-only mode, following management's remarks, the call will be opened for questions. There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast. At this time, it is my pleasure to turn the floor over to your host for today, Corbin Woodhull of Hayden IR. Corbin, please go ahead.

Thank you, Jenny. Good morning, and welcome to our conference call to discuss BK Technologies results for the first quarter of 2026. On the call today are John Suzuki, Chief Executive Officer, and Scott Malmanger, Chief Financial Officer. Before we begin, I will take a moment to read the safe harbor statement. Statements made during this conference call and presented in this presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to projections or statements of future goals and targets regarding the company's revenue and profits. These statements are subject to known and unknown risk factors.

The company's actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements, and some of the factors and risks that could cause or contribute to such material differences have been described in this morning's press release and in BK's filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings that are believed to be accurate as of today, and we do not undertake any duty to update such forward-looking statements. With that, I will now turn the call over to John Suzuki, CEO of BK Technologies. John, please go ahead.

Thank you, Corbin. Good morning, everyone, and thank you for joining us for our first quarter of 2026 conference call. I'll start by reviewing our operational and financial performance and then turn it over to our Chief Financial Officer, Scott Malmanger, for a deeper dive into our financial results for the quarter. Following a discussion of the financial results, I will provide our fiscal year 2026 outlook and outline the strategic priorities of our roadmap. We will conclude by opening the call for a brief Q&A.

Our first quarter performance represents a strong beginning to 2026 and a successful start to our Vision 2030 mission. Revenue growth, margin expansion, and a record cash balance all underscore the strength of our operating model and the benefits of the investments we have made in our products and solutions. We continue to experience robust demand for our BKR Series radios, particularly our multiband BKR 9000, with an increasing favorable product mix contributing to consistent margin expansion and stronger profitability.

First quarter 2026 revenue increased 11.8% year-over-year to $21.3 million and expanded further by 14% on a trailing 12-month basis. This growth trajectory reflects the continued momentum across our core public safety communication business, especially federal, state, and local agency demand for our BKR Series radios and growing adoption of our BK ONE solutions. Leveraging the powerful combination of top-line growth, favorable product mix, and targeted investment behind new products and solutions, we delivered a 24% increase in adjusted EBITDA with a 180 basis point margin expansion to 18.7%.

Our profit trajectory continues to advance, reaching non-GAAP, fully diluted, adjusted EPS of $0.88, a healthy increase compared to the $0.62 in the year-ago quarter. Just as importantly, benefiting from the inherent operating leverage within our business model after tax, free cash flow outpaced revenue growth, increasing by 44% year-over-year to $4.1 million. This led to a record cash balance of $29 million at quarter end, which gives us the flexibility to continue investing for growth while maintaining disciplined capital allocation strategy.

Our Vision 2030 roadmap is built around two important market transitions: the shift from single-band to multiband and the evolution of in-vehicle to on-person broadband solutions. We have successfully designed our strategy around those two transitions and believe we are well-positioned to capture a meaningful portion of these substantial opportunities through the expanding installer base of our BKR Series radios and BK ONE solutions platform.

The BKR 5000 single-band radio continues to play an instrumental role in developing a natural upgrade path to the BKR 9000 multiband radio, positioning us to benefit from the replacement cycles. Having first entered into the market in late 2020, we have already shipped over 95,000 BKR 5000s. During Q1 2026, we were awarded a new order from the Minnesota Department of Natural Resources for 500 BKR 9000 radios, demonstrating the market's acceptance and accelerating customer adoption of our multiband radio.

In April, we debuted the BKR 9500 multiband mobile radio at FDIC International in Indianapolis, Indiana. The product received an overwhelmingly positive reception, generating strong customer engagement and meaningful interaction throughout the event. Additionally, in April, we booked our first BKR 9500 order from a large existing BK customer located in the Southwest. The public safety agency has been a long-term BK customer with a fleet of radios that include the BKR 5000, the BKR 9000, and the KNG single-band mobile.

The new order for the BKR 9500 multiband mobile is the logical next step as the customer continues to modernize their fleet of radios. Dealer training and customer contract updates to reflect the BKR 9500 inclusion are ongoing as we remain on pace for FCC approval in the second half of 2026, with shipments in the first half of 2027. This early traction reinforces our belief that the BKR 9500 will be an important part of our long-term growth strategy. With that, I'll turn over to Scott Malmanger, our CFO, to give a more detailed overview of our first quarter financial performance. Go ahead, Scott.

Thank you, John. Sales for the first quarter totaled $21.3 million, an increase of 11.8% compared with $19.1 million in the first quarter of 2025. Growth in the quarter was attributable to broad-based gains across federal, state, and local agencies. Gross profit margin in the first quarter was 51.8% compared with 47% in the first quarter of 2025, reflecting favorable product mix and continued robust adoption of our higher-margin BKR 9000. Selling, general, and administrative expenses for the first quarter increased to $7.7 million compared to $6.0 million in the same quarter last year.

SG&A expense for the quarter includes non-cash stock-based compensation expense of approximately $400,000. This increase reflects higher engineering costs associated with new product and solution development, as well as continued investment in innovation, both of which align with our investment strategy to drive sustainable growth. Operating income was $3.3 million in the first quarter of 2026, with a stable year-over-year operating margin of 15.4%.

We delivered GAAP net income of $2.8 million or GAAP EPS of $0.74 per basic and $0.69 per diluted share, compared with net income of $2.1 million or $0.60 per basic and $0.55 per diluted share in the prior year period. The company's effective tax rate for the first quarter of 2026 was 20%. As we look forward to the remainder of 2026, our estimated tax rate of 26% compares with 16% for the full year of 2025, with the higher rate reflecting the normalization of our tax profile and profitability increases. The diluted EPS impact of a higher effective tax rate is estimated to be approximately $0.44 per share in 2026.

Turning to slide six, we have delivered noticeable improvement in our profit trajectory dating back to the first quarter of 2024. For the first quarter of 2026, we reported non-GAAP adjusted EBITDA of $4 million with an adjusted EBITDA margin of 18.7%, representing a material increase compared to the $3.2 million and 16.9% in the first quarter of 2025. Non-GAAP adjusted earnings, which adds back non-cash stock-based compensation expenses and non-cash income tax provision expense, was $3.5 million, or $0.94 per basic and $0.88 per diluted share. This compares to adjusted earnings of $2.4 million or $0.67 per basic and $0.62 per diluted share in the first quarter of 2025.

All in, our profitability trend has been strong, and we anticipate this trajectory will continue as product mix shifts and the BKR Series platform scales and the BK ONE solutions ramp. Turning to cash generation and capital efficiency, we continued to deliver strong results. In the first quarter of 2026, we generated after-tax free cash flow of $4.1 million, underscoring the consistency and resilience of our cash engine even as we continue to invest for growth.

That performance reflects the disciplined way we manage the business while still maintaining strong cash conversion. That is reflected in our return on invested capital progression. After recovering meaningfully over the last several years, return on invested capital remained north of 20% in 2024 and 2025, reaching 24.7% in the first quarter of 2026 on a trailing 12-month basis. Turning to the balance sheet, we ended the first quarter of 2026 with another record cash balance and debt-free balance sheet, underscoring the strong cash-generating capability of the business.

At March 31st, 2026, we had $29 million in cash, a healthy improvement over the $22.8 million as of the end of 2025, as well as no debt. The company, as a part of its capital allocation plan, established a Rule 10b5-1 non-discretionary stock repurchase program in September 2025. During the first quarter, the company repurchased approximately 3,000 shares of its common stock as per the conditions of the plan. Working capital improved to $41.3 million at March 31st, 2026, compared with $37.3 million at December 31st, 2025.

Shareholders' equity increased to $47.7 million, compared with $44.7 million at December 31st, 2025. Taken together, our ability to consistently generate cash gives us important financial flexibility. It allows us to reinvest in the business, evaluate strategic opportunities, and return capital to shareholders when appropriate. I will now turn the call back over to John, who will provide our 2026 outlook and strategic priorities.

Thanks, Scott. We continue to believe our strategy is working, and this quarter reinforced that view. Accordingly, we are reiterating the following full year 2026 guidance: revenue of at least $90 million, full year gross margin of 50% or greater, full year GAAP EPS of $3.15, and full year non-GAAP adjusted EPS of $3.55. These targets reflect our current expectations for continued revenue growth, further margin expansion, and operating leverage. Overall, we remain disciplined in balancing strategic investment with profitability and cash generation.

A key point is that our capital deployment remains focused on the best long-term use of cash. In the near term, that means reinvesting in engineering, software, and product development to support the roadmap we outlined at Investor Day. We believe that this is the most effective way to create shareholder value, particularly as we accelerate the execution of our Vision 2030 goals. With that, we can now open the call for questions. Jenny?

Thank you very much. This time we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. And for anyone using speaker equipment, it might be necessary to pick up your handset, before you press the keys. Please [inaudible] for questions. Thank you. Our first question is coming from Jaeson Schmidt of Lake Street. Jaeson, your line is live.

Hey, guys. Thanks for taking my questions. John, I know you don't like giving out kind of specific numbers on the 9000 or any metrics around there, but just curious if you're primarily seeing momentum from existing customers expanding or if this is coming from new customers.

Jaeson, thanks for the question, and good morning to you, sir. You know, it's really coming from both, right? You know, the example that I used with Minnesota, they're an existing customer. They purchased the BKR 5000 initially when it first came out, and now they've made a pretty substantial volume order for the 9000. That's what we're seeing across the board for our existing customers. They will start off with the 5000.

They'll test out the 9000, and a large number of them seem to be moving, at least some of the state agencies are moving to the multiband radio, which allows them to use the radio not only for their wildland fire mission, but also to interoperate on their statewide radio systems, which is a different frequency band. In terms of new customers, I would say the volume is lower because they're still in that test and evaluation phase for the 9000, but we see that as those radios are deployed, as they prove themselves in the field, we are seeing larger add-on volume orders from these new customers. I would say it's definitely from both.

Okay. That's helpful. Just curious if you can expand more on sort of the BKR 9500 reception and just thinking about kind of what that customer engagement pipeline or conversation pipeline is currently and how you expect that to progress throughout the year.

Well, I expect that the adoption rate will be faster than the BKR 9000 because the customers who bought the BKR 9000 are also interested in the BKR 9500. You know, we've already received orders for the BKR 9500. We just launched it. We started to receive orders. Our forecast out for the year is on track with what our expectations were when we set the program. The customer reception on that is very positive. They're very excited about the new product and, you know, I think that activity is gonna be, is gonna continue on pace as expected through the balance of the year. I believe the adoption rate will be actually faster than what we saw in the BKR 9000.

Okay, that's helpful. Last one from me, and I'll pass the mic. A really strong gross margin. Obviously, mix was a large driver there. Should we think that you can build upon this level throughout the year?

I'm not gonna comment beyond my guidance, Jaeson. I don't think that's appropriate at this point. You know, our goal is to be 50%+. Clearly, we surpassed that in the first quarter. Our long-term goal is to get to 60%. You know, the path to get there is not gonna be as linear as the last five years just because we're talking about a 10% increase over the next few years. Our expectation is that we are gonna be above 50% again for the full year.

Okay. Understood. Thanks a lot, guys.

Thank you, Jaeson.

Thank you very much. Our next question is coming from Robert Van Voorhis of Vanatoc Capital Management. Robert, your line is live.

Hey, good morning, guys. Thanks for taking my question. My question is really just on expenses, and maybe it's more appropriate for Scott. I know we talked about shifting some of the 9500 development expenses to being expensed on the income statement now. Any idea how much those were in Q1? I think for the full year, we're expecting $2 million or something like that. Is that roughly right?

I would explain it this way. I think you are correct that, you know, our increases in SG&A reflect our deliberate strategic investment in engineering and product development. The exact amounts vary from quarter-to-quarter because the development cycle for prototypes and other expenses vary. You know, we've got to get FCC approval and those sorts of things so those costs aren't really linear. They're based on, you know, when the event occurs so that's the way I would describe it. I would say, yes, overall, you are correct that the increases are primarily for our product and software development, software engineering development.

Got it. I suppose maybe just to follow on, and maybe this is too much detail and you guys don't really want to comment, is the right way to think about this year, just sort of annualizing Q1 SG&A, or is that maybe that's just too much detail to ask for?

It's a little bit more detail than I'm comfortable to give at this point.

Okay.

You know, we are focused on the correct investments for long-term strategic, you know, growth. I would describe it that way. The software element is the area that we're gonna see, you know, more consistent cost, where the hardware and product development is gonna be a little bit more lumpy. That's the way I would describe it.

Got it. Okay, thanks. That's it for me.

Thank you very much. Just a reminder there, if there are any remaining questions, you can still join the queue by pressing star one on your phone keypad now. Okay, I'm not seeing any further questions in the queue at this time. John and Scott, would you like to make any closing remarks?

Thank you, Jenny. Thank you all for participating in today's call. In closing, we remain intensely focused on building a scalable communications platform capable of delivering sustained revenue growth, expanding earnings, and strong free cash flow generation while supporting the mission-critical needs of our first responders nationwide. We appreciate your support and are confident in our strategy, our team, and our ability to successfully deliver on our objectives aimed at creating long-term value for our shareholders. We look forward to speaking to you again on our next quarterly earnings call. All the best to all of you, and have a great day.

Thank you very much. This concludes today's call. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to BK Technologies Corporation Conference Call for 2025. This call is being recorded. All participants have been placed on a listen-only mode, and following management's remarks, the call will be opened for questions. There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast. At this time, it is my pleasure to turn the floor over to your host for today, Brett Maas of Hayden Investor Relations. Brett, please go ahead.

Thank you, operator. Good morning, and welcome to our conference call to discuss BK Technologies Corporation results for the fourth quarter and full year 2025. On the call today are John M. Suzuki, Chief Executive Officer, and Scott A. Malmanger, Chief Financial Officer. Please take a moment to read the safe harbor statements. Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenue and profits. These statements are subject to known and unknown risks and factors. The company's actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements, and some of the factors and risks that could contribute to such material differences have been described in this morning's press release and in BK Technologies Corporation filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings that are believed to be accurate as of today, and we do not undertake any duty to update such forward-looking statements. With that out of the way, I will now turn the call over to John M. Suzuki, CEO of BK Technologies Corporation. Go ahead, John.

Thank you, Brett. Good morning, everyone, and thank you for joining us on our fourth quarter and fiscal year 2025 conference call. I will start by reviewing our operational and financial performance and then turn it over to our Chief Financial Officer, Scott A. Malmanger, for a deeper dive into our financial results for the fourth quarter and fiscal year 2025. Following the discussion of our financial results, I will provide an outlook for our fiscal year 2026 and introduce the core objectives of Vision 2030. We will conclude by opening the call for a brief Q&A. The fourth quarter capped off an excellent year for the business, marked by substantial achievements and the successful execution of our Vision 2025 objectives. We delivered results ahead of annual guidance by all measures, including revenue growth, margin expansion, and increased profitability. Our results underscore the strength of our product portfolio and accelerated customer adoption of our solutions in the public safety communications market. Our business performed strongly in 2025, with revenue of $21,500,000, increasing 20% year over year, which is the second consecutive quarter of 20%+ top line growth. Revenue growth was driven primarily by robust state and local agency order volumes, including increased purchase volumes of our BKR Series radios by agencies within our core Tier 2 and Tier 3 target markets. As a reflection of favorable product mix and continued wider-scale adoption of our BKR 9,000, gross margin increased by over 900 basis points in 2025, a material expansion to 50.4% compared to 41.2% in the year-ago quarter. This powerful combination of revenue growth, gross margin expansion, and diligent cost management resulted in a 78% year-over-year increase in adjusted EBITDA, reaching $4,700,000 in 2025. For the third consecutive quarter, we delivered adjusted EBITDA margin north of 20%, expanding to 22% in 2025 from 14.9% in the year-ago period. Profitability continued to advance in 2025, with non-GAAP fully diluted adjusted EPS reaching $1.17, up from $0.61 in 2024. As a result of the strong performance, we closed 2025 with a record cash position of $22,800,000, a significant increase from $7,100,000 at year-end 2024. Our financial strength gives us the flexibility to invest strategically in innovation and commercial expansion, supporting opportunities to capture market share and unlock long-term value creation. Currently, our disciplined capital allocation strategy and inherent operating leverage are driving improving returns, with return on invested capital of over 20% for the second consecutive year. We delivered sustained gross margin improvements during the 2025 period and successfully navigated substantial industry-wide headwinds, starting with the supply chain disruptions in 2022. At that point, we implemented meticulous cost management initiatives, followed by securing a strategic partnership with East West for outsourced manufacturing, which significantly improved supply chain resilience while reducing manufacturing complexity. Stepping into 2025, gross margins steadily expanded throughout the year, supported by firm customer adoption of our high-margin BKR 9,000 multiband radio and resulting favorable product mix. For the full year 2025, gross margin expanded by over 1,000 basis points to 48.8%, comfortably above our 47% target. Gross margins improved from 19.3% in 2022 to 48.8% in four years, a trajectory that is the result of growing customer adoption, disciplined cost management, optimized supply chain, and the successful repositioning of our manufacturing and sourcing footprint. These structural advantages provide us with the ability to invest in long-term growth. To expand on the positive impact from the BKR 9,000, our multiband radios continued to attract agencies for their unmatched combination of performance, interoperability, affordability, and ergonomics. BKR Series radios fueled solid revenue growth into 2025, leading to full-year revenue growth of 12.5%, exceeding our guidance range of high single digits. While fourth quarter revenue declined sequentially from the third quarter due to normal ordering patterns among public safety agencies, it still represented our strongest fourth quarter on record. As I discussed in our third quarter conference call, we shipped 2.5 times the number of BKR 9,000 multiband radios in 2025 than we did in 2024. This continued sales ramp was driven by expanded agency deployments and recurring replacement cycles. This higher-margin mix, in tandem with operating leverage, resulted in a 91% year-over-year increase in operating income for 2025, which outpaced revenue growth. This momentum, coupled with the upcoming launch of the BKR 9,500 radio, positions us with a strong growth lever as we commence our Vision 2030 road map. As we close Vision 2025 and enter Vision 2030, our competitive positioning has never been stronger. Our results validate the strength of our product portfolio, the accelerating adoption of our solutions across public safety communications, and the team's successful execution of our strategic priorities. With that, I will now turn it over to Scott A. Malmanger, our CFO, to give a more detailed overview of our fourth quarter and full year 2025 financial performance. Go ahead, Scott. Thank you.

Thank you, John. Sales for the fourth quarter totaled $21,500,000, an increase of 20% compared with $17,900,000 in 2024. For full year 2025, sales expanded by 12.5% to $86,100,000, growing ahead of the high single-digit guidance. Gross margin in the fourth quarter was 50.4% compared with 41.2% in 2024, reflecting favorable product mix and continued robust adoption of the higher-margin BKR 9,000. For the year, gross margin expanded by 1,086 basis points from 37.9% to 48.8%, exceeding our guidance of more than 47%. Selling, general, and administrative expenses for the fourth quarter increased to $6,600,000 compared to $5,200,000 in the same quarter last year. SG&A expense for the quarter includes non-cash stock-based compensation expense of approximately $500,000. For the full year 2025, SG&A increased 23% to $26,000,000, primarily driven by marketing and promotion costs for the BKR 9,000 and non-cash RSU compensation expenses within our software engineering team, both of which align with our previously communicated investment strategy to drive sustainable growth. Operating income was $4,200,000 in the fourth quarter 2025, with operating margin expansion from 12.3% in the year-ago quarter to 19.7%. For the full year, operating income more than doubled to $16,000,000 from $7,800,000, with operating margin expanding by over 830 basis points from 10.2% in 2024 to 18.6% for full year 2025. For 2025, the company delivered GAAP net income of $4,200,000, or GAAP EPS of $1.12 per basic and $1.05 per diluted share, compared with net income of $3,700,000, or $1.03 per basic and $0.93 per diluted share, in the prior-year period. For the full year 2025, GAAP net income reached $13,500,000, or $3.69 per basic and $3.44 per diluted share, comfortably above the $3.15 per diluted share guidance. This compares to $8,400,000, or $2.35 per basic and $2.25 per diluted share, in 2024. Net income of $13,500,000 for the full year 2025 includes the impact of tax credits for the remediation of the uncertain tax position recorded in the 2024 financial results. The company's effective tax rate for 2025 was percent compared to an estimated rate of 25% as we look forward to 2026. The higher tax rate reflects the normalization of our tax profile and profitability increases. The impact of our higher tax rate on 2026 fully diluted EPS is estimated to be approximately $0.55 per share. Non-GAAP adjusted earnings, which add back net realized and unrealized loss on investments, non-cash stock-based compensation expenses, non-cash income tax provision expense, and severance expenses, were $4,700,000, or $1.24 per basic share and $1.17 per diluted share, in 2025. This compares to adjusted earnings of $2,400,000, or $0.67 per basic and $0.61 per diluted share, in 2024. For the full year, non-GAAP adjusted earnings reached $17,000,000, or $4.63 per basic and $4.32 per diluted share, exceeding our guidance of $3.80. This compares to full year 2024 non-GAAP adjusted earnings of $6,800,000, or $1.92 per basic and $1.84 per diluted share. We reported non-GAAP adjusted EBITDA of $4,700,000 with adjusted EBITDA margin of 22% in 2025, representing a material increase compared to $2,700,000 and 14.9% in 2024. This marks our third consecutive quarter of adjusted EBITDA margin above 20%. For full year 2025, adjusted EBITDA reached $17,600,000 with adjusted EBITDA margin of 20.5%, a significant expansion from $9,600,000 and 12.5% in 2024. Turning to Slide 7, we have delivered noticeable improvement in our profit trajectory dating back to 2024. Although we have achieved continuous profitability increases overall, we did recognize a slight decrease in non-GAAP adjusted earnings on a sequential basis from the third quarter to 2025, which was related to a non-cash provision for income taxes of approximately $932,000 in 2025. This is associated with a year-to-date R&D tax credit adjustment stemming from the “Big Beautiful Bill” signed in July. Our profitability trend has been strong, and we anticipate this trajectory will continue as product mix shifts and we increase BKR 9,000 sales. Turning to the balance sheet, we ended 2025 with a record cash balance and debt-free balance sheet, underscoring the strong cash-generating capability of the business. At 12/31/2025, we had $22,800,000 in cash on the balance sheet, a significant improvement over the $7,100,000 as of 12/31/2024, as well as no debt. The company, as part of its capital allocation plan, established a Rule 10b5-1 nondiscretionary stock repurchase program in September. During the quarter, the company repurchased approximately 19,000 shares of its common stock as per the conditions of the plan. Working capital improved to $37,300,000 at 12/31/2025, compared with $23,000,000 at 12/31/2024. Shareholders' equity increased to $44,700,000 compared with $29,800,000 at 12/31/2024. To conclude, the strength of our business model and disciplined execution by our team enabled us to deliver on our Vision 2025 objectives and successfully navigate industry-wide challenges. We remain confident that our positioning will enable us to accomplish our Vision 2030 objectives, with our guiding principles being to surpass customer expectations and create and advance value for our shareholders. I will now turn the call back over to John, who will provide our 2026 outlook and Vision 2030 goals. Thanks, Scott.

We closed Vision 2025 in a strong financial position and are poised to carry forward the momentum into 2026 and beyond. Accordingly, we are introducing the following full-year 2026 guidance: revenue of at least $90,000,000; full-year gross margin of 50% or greater; full-year GAAP EPS of $3.15; and full-year non-GAAP adjusted EPS of $3.55. These targets reflect our current expectations for continued revenue growth, further margin expansion, and operating leverage, particularly on the SG&A line. However, the above guidance also includes the impact of the estimated income taxes described earlier that we believe we will encounter in 2026. We believe there is upside, and we will adjust guidance as we execute our growth plan. In addition, we continue to make meaningful progress on the development of our soon-to-be-launched 9,500 multiband mobile radio, a companion radio to the 9,000, which is on track now for shipping in 2027. Initial customer validation has been strong, with agencies preferring to buy both handheld and in-vehicle devices from the same manufacturer for seamless interoperability. The 9,500 represents a significant opportunity to deepen existing agency relationships and expand our customer base. As we reviewed the remaining development work for the BKR 9,500 multiband radio, we made the decision to expense future development costs rather than capitalize them. While this reduces reported EPS by approximately $0.50 in 2026, we believe this more conservative accounting treatment better reflects the economics of our R&D investments and strengthens the transparency of our financial reporting. Turning to Vision 2025 and Vision 2030, Vision 2025 was drafted shortly after I arrived in July 2021. Our base year was 2020, and we set a goal to more than double our revenues, increase our gross margins, and dramatically improve our EBITDA to 20% from 3.5%. We did not know within six months we would be at the start of a global supply chain crisis that dropped our gross margins down to 14%. What was perhaps worse, our new flagship BKR 9,000 multiband handheld radio would take another 18 months to be released. Despite these challenges, the team battled back and ended 2025 with results just shy of doubling our revenue while achieving the 50% gross margin target in the fourth quarter. This resulted in a full-year adjusted EBITDA margin of 20.5%, exceeding our 2025 Vision target of 20%. As we look forward to 2030, we have set new targets. Our goals for Vision 2030 include the following: increase our market share and double our revenue to $170,000,000; deliver continued gross margin expansion to 60%; achieve adjusted EBITDA margin of 35%; triple our earnings per share to $13; and flow through to free cash flow generation of over $55,000,000. Year one of Vision 2030 is 2026. We have reiterated our strategic focus on extending our reach beyond wildland fire into structured fire, law enforcement, and everyday mission-critical communications, as we expand our addressable market meaningfully. Our Vision 2030 targets are driven by three primary levers: expanding our installed base of BKR 9,000 radios; the introduction of the BKR 9,500 mobile platform; and continued margin leverage as our manufacturing model scales. Next month at our Investor Day, we will provide a comprehensive deep dive into our Vision 2030 initiatives, including a roadmap for our product innovation, channel expansion, and capital allocation, among other playbook objectives. The event will be held virtually on April 2. Registration details will become available shortly, and we hope you can attend. Before we begin the Q&A, I would also like to mention that Scott and I will be attending the 38th Annual Roth Conference on March at the Ritz-Carlton in Dana Point, California. We encourage you to contact your Roth representative to register. With that, we will now open for questions. Jenny? Thank you very much.

At this time, we will begin polling for questions. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Our first question is coming from Jason Schmidt of Lake Street Capital. Jason, your line is live.

Hey, thanks for taking my questions. John, I know you do not want to give specific details on the 9,000 for competitive reasons, which is understandable. But just curious if you could provide some color on what you are seeing from sort of sales cycle length, if you are seeing any sort of significant pushback from customers. And I guess, relatedly, with the traction you saw in 2025, was most of that coming from initial orders or expanding orders at existing customers?

Jason, thanks for joining us this morning, and thank you for the question. The expansion on the 9,000 is definitely coming from new orders. A lot of our customers are coming from the fire side, with some in the law enforcement side. The anecdotal feedback that we receive from our customers who test the radios and have made purchases is that it is a quality radio that performs well. They really like the ergonomics. And the ones that have received their radios, the feedback has been very positive. So no pushback to date.

Okay. That is great to hear. And on the 2030 Vision, I want to dig in a little bit to some of those metrics. Obviously, a significant ramp is expected on the top line. Not looking for a specific breakout, but at a high level, how much should we think about sort of that 9,500 being a driver? Or can you get there with just continued penetration of the 9,000?

So I think in general, the expectation is that for every two handheld radios that are sold in the marketplace, one in-vehicle mobile radio would be sold. That is just kind of a general rule of thumb in our industry. So we expect the same ratio between the BKR 9,000 and the BKR 9,500. We do believe that come 2030, a substantial amount of that revenue will come from the 9,500, but even more, again, from the 9,000.

Okay. That makes sense. And then just the last one from me, and I will jump back into the queue. Sticking with some of these 2030 Vision metrics, free cash flow generation is expected to be significant. How should investors think about sort of capital plans going forward?

I think the first and foremost priority is investing in ourselves and in our portfolio. We do believe that we are just starting to penetrate this market on a wider scale, and that there is a huge runway for our solutions. So the funding will always be prioritized towards our core portfolio and building on that portfolio, especially as we look towards the solution side, which should drive further adoption of our BKR Series radios. After that, we are looking at different acquisitions. Those acquisitions would be tailored around, again, our core solution offering. Anything that could drive further adoption of our radios would be top of mind for an acquisition. And then lastly, in terms of priorities, it would be returning the money to the shareholders if we at that time could not find better alternatives, or in the case we did in the fourth quarter, where we felt that our share price was undervalued, we purchased shares back. So that would be the priority. We will talk about that more on our 2030 Vision call coming up, and I will expand on our capital allocation priorities at that time.

Sounds good. Thanks a lot, guys.

Thank you, Jason.

Thank you very much. Just a reminder, if anyone has any questions, you can still join the queue by pressing star 1 on your phone keypad now. The next question is coming from Robert Van Voorhis of Vanatoc Capital Management. Robert, your line is live.

Hey, good morning, guys. Great quarter and good execution from the team. I just have a couple quick questions. My first is on the R&D development expense for the 9,500, and I understand it is somewhere around $2,000,000. Does that expense essentially go away once the 9,500 is released, or is it sort of run-rated at a higher rate to sustain the 9,500?

Yeah. Our expectation is that we are going to continue to invest in our core products, so we do not expect our engineering expense to go down over time. That being said, less of that investment is going to be in the sustainment of the 9,500 versus the development. But we are planning to continue the roadmap and continue our investment in engineering.

Okay. That makes sense. And then my second question, and maybe this is more suited for the call you guys have coming up, but, John, just long term, in terms of pricing strategy, I understand this industry has quite a lot of pricing power. There is a lot of brand loyalty. What is the pricing strategy long term here? Is it low single-digit increases over time? How do you guys think about that?

That is an excellent question, Robert. In the context of where we are today, we have 3%–3.5% market share, so I would say very modest at best. We also think that we can at least get to a 10% market share with our current plan and our marketing strategy. My goal right now is to garner as much market share as I can, and at the point at which we feel that the incremental increase in market share is less than what we could achieve through a price increase, at that point we would start raising prices. That being said, we did have some price increases last year that were related to the administration's tariffs. If we have a disruption in our cost structure, then, of course, we are going to pass that on to our customers, just like all our competitors did in our industry. If I look at the trade-off between the opportunity for us to gain market share, once you gain these customers, the stickiness is there. I think the priority really is to get as much market share as we can, and then at some point, we will be shifting to continued improved profitability through sustained price increases over time.

Okay. That makes total sense. Very rational. My last quick question, if I could just get one more, is maybe more suited for Scott. On Slide 10, the target 2026 diluted GAAP EPS number is $3.50 versus, I think, the diluted GAAP EPS number that you guys gave in the outlook was $3.15 for this year. How should we look at the difference between those two? What really is the difference?

It should be $3.15.

Apologies, Robert, we did catch that, but, obviously, version control caught us on that. We will get that updated.

Yeah, GAAP diluted EPS is $3.15. The non-GAAP diluted is $3.55.

Okay. Thank you. That is it for me. Appreciate it.

Thank you very much. We appear to have reached the end of our question and answer session. John and Scott, would you like to make any closing remarks?

Thank you, Jenny. Thank you all for participating in today's call. We are confident the foundation we have built, anchored by continuous revenue and profit growth, a strong debt-free balance sheet, and an increasing free cash flow trajectory, positions us to deliver long-term value creation for both our customers and shareholders. We look forward to speaking to you again at our upcoming Investor Day next month. All the best to all of you, and have a great day.

This concludes today's call. You may now disconnect.