BK Technologies (BKTI) Q3 2026 Earnings Call Transcript

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DATE

Thu, Nov. 12, 2026

CALL PARTICIPANTS

• Chief Executive Officer - John Suzuki
• Chief Financial Officer - Scott A. Malmanger
• Hayden Investor Relations - Timothy Woodhull

TAKEAWAYS

• Revenue -- $25.3 million, representing 3.6% growth driven by increased federal order volumes.
• Gross Margin -- 50.7%, reflecting a favorable product mix and continued adoption of the BKR 5000 and BKR 9000 series.
• GAAP Net Income -- $3.7 million, an increase of 9% that outpaced revenue growth.
• GAAP EPS -- $0.93 per diluted share, compared with $0.87 per diluted share in the third quarter of 2025.
• Non-GAAP Adjusted EPS -- $1.16 per diluted share, representing a decline from $1.24 per diluted share in the prior year period.
• After-tax Free Cash Flow -- $18.9 million on a trailing 12-month basis, representing a 25% year-over-year increase.
• Cash Balance -- $29.2 million at quarter-end, an increase from $22.8 million as of Dec. 31, 2025.
• Share Repurchase Authorization -- $10 million, following a $5 million increase authorized by the Board of Directors on Nov. 11.
• Tango Tango Strategic Investment -- $3 million, structured as a five-year convertible note bearing 12.5% annual interest.
• Federal Revenue Contribution -- Over 60% of total third-quarter revenue, with the U.S. Forest Service acting as the largest federal customer.
• BKR 5000 Orange Shipments -- 3,000 units delivered to the U.S. Forest Service to serve as their new standard radio.
• Operating Income -- $4.4 million, with an operating margin of 17.5% compared to 19.8% in the prior year third quarter.
• SG&A Expenses -- $8.4 million, compared to $7.3 million last year, reflecting planned hardware investments in the BKR 9500.
• Return on Invested Capital -- 39.5% for the quarter on a trailing 12-month basis.
• Working Capital -- $48.8 million as of Sept. 30, 2026, an increase from $37.3 million at the end of 2025.
• Full-year 2026 Revenue Guidance -- $85 million, revised downward to reflect the impact of production disruptions following a facility roof collapse.
• Full-year 2026 GAAP EPS Guidance -- $2.40 per diluted share, which excludes potential insurance recoveries or tariff refunds.
• Full-year 2026 Non-GAAP Adjusted EPS Guidance -- $3.15 per diluted share.
• BKR 9500 Mass Production -- Scheduled for March 2027, with FCC certification expected by the end of 2026.
• Distribution Facility Footprint -- 5,000 square feet for the new El Paso facility, which began shipping to customers during the quarter.
• Headquarters Footprint Reduction -- 42%, with the company planning to decrease its leased area from 54,000 to 31,500 square feet in Feb. 2027.
• Income Tax Rate -- 20% for the third quarter, down from 30% in the prior year due to research and development tax credits.
• Inventory Materials -- Secured materials for the first 2,000 BKR 9500 radios, currently stored at the Melbourne distribution center.
• Customer Delivery Lead Times -- Reduced to two to four days for western customers and three to five days for eastern customers.

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RISKS

• Suzuki stated, "This slight downward revision reflects the impact of the lower fourth quarter BKR 9000 shipments due to the production disruption," referring to the partial roof collapse on Oct. 8.
• Suzuki noted that the Oct. 8 severe thunderstorm "directly over our IT server room, and took down key business systems, including our customer support lines," necessitating an emergency recovery plan.

SUMMARY

BK Technologies Corporation (NYSEMKT:BKTI) reported record third-quarter revenue and gross margins exceeding 50%, driven primarily by strong federal demand and the adoption of specialized radio units by the U.S. Forest Service. Management reported that a partial roof collapse at its West Melbourne headquarters on Oct. 8 caused a temporary disruption in BKR 9000 production, leading to a downward revision of full-year revenue guidance to $85 million. Despite this event, the company stated that affected orders have been postponed to early 2027 rather than being canceled. The company also highlighted its strategic transition toward becoming a public safety technology provider through a $3 million investment in Tango Tango and the expansion of its distribution footprint to Texas. BK Technologies maintained a debt-free balance sheet with $29.2 million in cash and increased its share repurchase authorization to $10 million.

• CEO Suzuki stated, "Federal demand was the key growth driver for the quarter," with over 60% of revenue originating from government contracts.
• The company launched a new 5,000-square-foot distribution facility in El Paso, Texas, which allows for same-day processing and shipping of radios produced in Mexico.
• Management expects BKR 9000 production to return to pre-October levels during the first quarter of 2027 as headquarters repairs continue.
• The investment in Tango Tango provides a board observer right and access to a sales channel of over 1,500 safety agencies for BK Technologies radios.
• Suzuki indicated that mass production of the BKR 9500 in-vehicle multiband radio is planned for March 2027, with field validation currently underway.
• Management plans to reduce its Melbourne headquarters leased footprint by 42% starting in Feb. 2027 to improve cost management and operational efficiency.

INDUSTRY GLOSSARY

• BKR Series: A product line of high-specification land mobile radios designed for public safety and government agencies.
• BKR 5000 Orange: A specialized variant of the company's single-band handheld radio developed exclusively for the U.S. Forest Service.
• BKR 9000: The company's multiband handheld radio platform for mission-critical communications.
• BKR 9500: A next-generation in-vehicle multiband radio currently in the development and testing phase.
• Interop 1: A software solution designed to provide seamless connectivity and interoperability between land mobile radios and broadband networks.
• LMR: Land Mobile Radio, a wireless communication system used by terrestrial users in vehicles or on foot.
• P-25: Project 25, a set of digital communication standards for North American public safety professionals.
• PIK Interest: Paid-in-kind interest, a type of interest that is added to the principal balance of a loan rather than being paid in cash.

Full Conference Call Transcript

Operator: Good morning, ladies and gentlemen. And welcome to the BK Technologies Corporation conference call for the third 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 open 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 Investor Relations. Corbin, please go ahead.

Timothy Woodhull: Thank you, Tom. Good morning, and welcome to the conference call to discuss BK Technologies results for the third quarter of 2026. On the call today are John Suzuki, Chief Executive Officer and Scott A. Malmanger, chief financial officer. Before we begin, I will take a moment to read the safe harbor statements. 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 factors and risks.

The company's actual results, performance or achievements may differ materially from those expressed or implied by these forward looking statements. 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 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 turn the call over to John Suzuki, CEO of BK Technologies.

Operator: John, please go ahead.

John Suzuki: Thank you, Corbin. Morning, everyone, and thank you for joining us on our third quarter of 2026 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 quarter. Following a discussion of the financial results I will provide a fiscal year 26 outlook and provide the strategic priorities for our road map. We will conclude by opening the call for a brief Q&A. Our third quarter results underscore the resilience of our business and our ability to consistently deliver profitable growth.

Strong federal demand drove third quarter revenue of $25.3 million and a gross margin above 50%. Net income increased 9% outpacing revenue growth. We generated $18.9 million of after tax free cash flow over the trailing 12 months. Up 25% year over year. And ended the quarter with $29.2 million in cash and a debt free balance sheet. Our growing cash position strengthens our balance sheet. Positions us to drive growth and provides flexibility to continue investing in the products and solutions our customers most value. Collectively, this performance underscores the operating leverage in our business model.

Subsequent to the quarter end on November 11, our Board of Directors authorized an increase of $5 million to the company's existing share repurchase program bringing the total amount of authorized repurchases up to $10 million This increase underscores the board's confidence in our strategy and outlook. And reflects our commitment to disciplined capital allocation approach that balances investment in the business and returning capital to shareholders. Our strong financial position also provides flexibility to pursue strategic opportunities that complement our strategic growth. Initiatives. During the quarter, we expanded our partnership with Tango, a provider of mission critical communication software with a $3 million strategic investment that we believe creates opportunities for incremental business and long term growth.

We take a disciplined and opportunistic approach when identifying partnerships that can generate attractive financial returns and drive incremental business for BK. And this investment fits cleanly in that strategy. We structured the investment as a 5-year convertible note bearing 12.5% p.i.k. interest annually, with the potential to convert the investment into equity in Tango and benefit from its future appreciation. Importantly, this is not a passive financial investment. BK has secured a board observer right providing direct visibility into Tango strategy, performance, and growth initiatives. We intend to be an active strategic partner working with Tango's leadership to pursue commercial opportunities accelerate product integration, and create value for both companies.

This combination of financial participation and strategic collaboration positions BK to benefit from Tango's growth strengthening our competitive position. The investment supports 3 specific goals that are driving the public safety communications market. It enhances our software stack We gain exposure to well established software solutions instead of internally building a competing platform. It adds value to our radio franchise, as Tango's customer base of over 1.5 thousand safety agencies, roughly 1 thousand of which are in the Tier 3 segment, This becomes a new sales channel for BK radios. In tandem, deeper software integration makes our radios more valuable. And it strengthens our position on interoperability.

By integrating Interop 1 with Tango, we have another proof point that BK radios function seamlessly across platforms in mission critical environments. That helps us in discussions with other software providers looking for open communications ecosystems. We believe the commercial opportunity is just as compelling as the financial investment. This is another step in our evolution from a radio manufacturer to a public safety technology company. In line with our vision 30 objectives. More broadly, we remain focused on deploying capital in ways that create long term value for our shareholders. Whether through strategic investments in our business or returning capital directly to share shareholders.

Our growth continues to be driven by an expanding BKR series footprint across public safety agencies. And our Vision 2,030 strategy is focused on 2 structural market transitions that we believe will define the industry in the years to come. This includes the shift from single band to multiband, and the evolution from any vehicle to on person broadband. Federal demand was the key growth driver for the quarter. Over 60% of third quarter revenue came from the U. S. Government. The U. S. Forest Service was the largest federal customer with significant orders for both the BKR 5 thousand handheld radios and our KNG mobile radios.

I want to take a moment to discuss the 4 service deliveries because it shows how we win. During the quarter, we shipped 3 thousand of our new BKR 5 thousand orange radios. Historically, the forest service bought our standard black BKR 5 thousand. They informed us that they were losing radios after fire incidents, as radios were getting shared they had a tendency to get mixed up with other agencies' BKR 5 thousand fleets. They requested a radio in a distinctive color that is easy to find if dropped or misplaced in the field. Reserved exclusively for the forest service, the BKR 5 thousand orange is our answer. And it is now their standard radio.

Our leadership in Wildland Fire was built this way. We listen to our customers and solve their real operational problems. We are taking the same customer focused approach to the broader public safety market with our multiband BTR series radios. Turning to the BKR 9.5 thousand. Product validation is progressing across key areas despite the disruption caused by the October 8 roof collapse at our West Melbourne facility. FCC testing is nearing completion, and we expect to receive FCC certification by year end. Our software engineering team continues to test the BKR 9.5 thousand software identifying and resolving issues. As part of the normal development process for a new radio platform.

Meanwhile, field engineering team is validating the BKR 9.5 thousand on live customer systems. Performance to date has been excellent. Several BKR 9.5 thousand radios are also undergoing accelerated life testing including testing to destruction in our engineering lab, and initial results are positive. In parallel, the supply chain is securing the materials needed to build the first 2,000 radios. A substantial portion of these materials have already been received and are safely stored at our Melbourne distribution center. We plan to begin mass production by March 2027.

We also brought a new distribution center online during the quarter, with the signing of a lease with East West Manufacturing for a 5 thousand-square-foot BK distribution facility at their facility in El Paso. Texas. It was set up, staffed, and shipping to customers within the third quarter. The move brings us closer to most of our customers. While expediting manufacturing lead times and lowering transportation costs. For context, in the final days of the third quarter, radios produced at East West Juarez, Mexico facility were trucked over the US border to El Paso, Texas in the morning turned over to BK, and shipped back out by noon for same day delivery to our customers.

While this was an exceptional case, we do expect to be able to deliver to our Western customers in 2 to 4 days and Eastern customers in 3 to 5 days which is a substantial improvement over the current 7- to 10-day round-trip lead time through our Melbourne distribution center. This is also part of our broader effort to streamline operations and maintain a lean, efficient cost structure. Well before the October weather events, we had committed to reducing our leased footprint at our Melbourne headquarters by 42%. From 54 thousand to 31.5 thousand square feet beginning in February 2027.

This planned consolidation reflects our continued focus on operational efficiency, disciplined cost management, and maximizing the profitability of our business as we grow. With that, I will turn it over to Scott Malmager, our CFO, to give more detailed overview of our third quarter financial performance. Go ahead, Scott.

Scott A. Malmanger: Thank you, John. Sales for the third quarter totaled $25.3 million an increase of 3.6% compared with $24.4 million in the third quarter of 2025. Growth in the quarter was attributable to federal order volumes impacted by budget cycles around the September 30 government fiscal year end. Gross profit margin in the third quarter was 50.7% compared with 49.9% in the third quarter of 2025 reflecting favorable product mix and continued robust adoption of the 5 thousand single band and our higher margin 9 thousand multiband products. Selling general and administrative expenses for the third quarter increased to $8.4 million compared to $7.3 million in the same quarter last year.

The increase in SG&A reflects planned hardware investments in the BKR 9.5 thousand and software costs associated with new product and software solutions development. This is in alignment with our vision 2030 investment strategy. Aimed at accelerating revenue and margin growth. Operating income was $4.4 million in the third quarter of 2026, with operating margin of 17.5% expanding sequentially from 16.4% although declining from 19.8% in the prior year third quarter. On higher research and development investments. We delivered GAAP net income of $3.7 million or GAAP EPS of $0.93 per share per diluted share compared with net income of $3.4 million or $0.87 per diluted share in the prior year period.

Income tax provisions declined by $527 thousand versus the year ago quarter which reflects an estimated rate of approximately 30% during the third quarter of 2025 compared to an estimated rate of 20% for the third quarter of 2026. Going forward, our estimated normalized federal tax rate will be in the range of 23% to 26% that will depend on the impact of increased R&D tax credits compared with 16% for the full year of 2025. Turning to slide 6. Our non GAAP profit trajectory has continued each quarter since the third quarter of 2023.

For the third quarter of 2026, we reported non GAAP adjusted EBITDA of $5.2 million with adjusted EBITDA margin of 20.5% which compares to $5.3 million in 21.5% in the third quarter of 2025. Non GAAP adjusted earnings which adds back noncash stock based compensation expenses and noncash income tax provision expense was $4.7 million or $1.16 per diluted share. This compares to adjusted earnings of $4.9 million or $1.24 per diluted share in the third quarter of 2025. Taken together, our profitability has trended strongly and we believe we are well positioned to sustain that trajectory. Turning to cash generation and capital efficiency. We continue to deliver strong results.

In the third quarter of 2026, we generated after tax free cash flow of $5.2 million and on a trailing 12 month basis, after tax free cash flow reached $18.9 million with a 25% year over year increase outpacing the 11% revenue growth. After tax free cash flow is a non GAAP measure that we believe provides useful insight into the company's ability to generate cash after accounting for taxes. This performance underscores the resilience of our cash generation even as we continued to invest for growth. As in prior quarters, we remain disciplined in how we manage the business which continues to drive strong cash conversion.

Our focus on capital efficiency is steadfast, as evidenced by our return on invested capital of 39.5% for the third quarter of 2026 on a trailing 12 month basis. Return on invested capital has remained comfortably above 30% after recovering meaningfully over the last several years and reflects our disciplined cost management. Turning to the balance sheet. We ended the third quarter of 2026 with a strong balance sheet including $29.2 million in cash, and cash equivalents up from $22.8 million at year-end 2025 and no debt. In addition, we hold a $3 million strategic investment in Tango through a 5-year convertible note bearing 12.5% annual PIC interest.

Together, these assets underscore our financial strength and provide meaningful flexibility to invest in growth and return on capital to shareholders. The company, as a part of its capital allocation plan, established a Rule 10b5-1 nondiscretionary stock repurchase program in September 2025. During the third quarter of 2026, the company completed no repurchases of its common stock as per the conditions of the plan. Subsequent to quarter end, the company completed an additional repurchase under the program. Also subsequent to the quarter end, on November 11, our Board of Directors authorized an increase of $5 million to our existing share repurchase program.

BK's total repurchase program authorization is now $10 million with approximately $8.4 million remaining available for future repurchases $3.4 million of which is reserved for the 10b5-1 plan. Working capital improved to $48.8 million as of September 30, 2026, compared with $37.3 million as of December 31, 2025. Shareholders' equity increased to $56.3 million compared with $44.7 million on December 31, 2025. In closing, our strong cash generation gives us substantial financial flexibility to invest in the business pursue strategic opportunities, and return capital to shareholders. I will now turn the call back over to John, who will provide our 2026 outlook and strategic priorities.

John Suzuki: Thank you, Scott. Subsequent to the quarter end, on October 8, we experienced a partial roof collapse at our West Melbourne, Florida headquarters. During a severe thunderstorm. The partial collapse occurred after business hours, and, thankfully, no employees were injured. The collapse was directly over our IT server room, and took down key business systems, including our customer support lines. Our team was on-site within minutes. And we activated our emergency recovery plan within the first hour. About 90% of the 2nd Floor where our headquarter staff work was saturated or moderately affected by water. About 75% of the 1st Floor was also affected, including production, customer service, and engineering. The recovery moved quickly.

Within 24 hours, IT has restored our basic business systems, including customer phone support. We moved the customer service repair and the 9 thousand production line into our adjacent distribution building which was not affected. We quarantined any suspect equipment and material and expedited replacements. Both operations are back up and running, Our S&T area and engineering accelerated life test lab were not affected and are operating again. Both are critical to the 9.5 thousand production readiness. The timing and our footprint helped. Most of our production had already moved to East West, so less production was exposed. Our El Jason move freed up space in our distribution building.

And because the event happened early in the quarter, we have had time. We have had more time to recover. As of this morning, November 12, roof repairs are underway. We expect to move customer service repair and the BKR 9 thousand production back into the headquarters by mid January. With the 2nd Floor staff is expected to return in the February to March 2027 time frame. Turning to our outlook for the full year 2026. We now expect revenue of $85 million This slight downward revision reflects the impact of the lower fourth quarter BKR 9 thousand shipments due to the production disruption.

We expect BKR 9 thousand output to return to pre-October 8 levels during the first quarter of 2027. And the affected orders to ship as production recovers. We continue to expect gross margin of 50% or better for the full year. GAAP EPS is expected to be $2.40 per diluted share and non GAAP adjusted EPS is expected to be $3.15 per diluted share Our revised EPS guidance does not take into account the receipt of potential recoveries under our business interruption insurance as well as potential refunds on tariffs we previously paid.

The amount and timing of those recoveries are not yet known, including whether they will be recognized in 2026 or 2027, and we will update the market as we have more clarity on these items. Consistent with our practice in prior years, we expect to provide full year 2027 financial guidance during our fourth quarter earnings call in March. Based on what we know today, do not expect the October 8 event to materially affect our anticipated financial performance in 2027. Importantly, the affected BKR 9 thousand orders have been deferred not lost. Expect to fulfill them as production returns to normal during the first quarter.

Development of the BKR 9.5 thousand also remains on track, with mass production planned for March 2027. While this incident was disruptive to our business, we remain confident in our ability to execute our long term strategy. No 1 can predict when adversity will strike and what matters most is how we respond. I am incredibly proud of our Melbourne team who showed that we can rise to the occasion when it counts. We are grateful for all the support we have received from the city of West Melbourne, our landlord, and especially our employees partners, and customers. At this time, I will return the call to Tom for Q&A. Tom?

Operator: Thank you. At this time, we will begin polling for questions. The floor is now open. And if you wish to join the queue to ask a question at this time, please press 1 on your telephone keypad. We do ask if listening on speakerphone this morning that you pick up your handset while asking your questions to provide optimal sound quality. Once again, please press 1 on your keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we poll for questions. And your first question this morning is coming from Jason Schmidt from Lake Street Capital. Jason, your line is live. Please go ahead.

Jason Schmidt: Hey, guys. Thanks for taking my questions. John, just want to clarify some of your comments to make sure I heard correctly that the 9 thousand orders that have essentially been pushed out in Q4, is there any risk that those could get canceled?

John Suzuki: Thanks for the question, Jason. So the sales team is working proactively with our customers. And we are rescheduling those orders. And to date, we have had no order cancellations. So the orders, appear to be secure.

Jason Schmidt: Okay. No. That. that is great to hear. And then regarding the USFS order and those 3 thousand units, is this a 1-time buy? Or would you expect additional follow on orders going forward?

John Suzuki: Yes. So part of the U.S. Forest Service, we are the primary radio supplier to US forestry. To put that in context, they have about 80 thousand radios fielded, majority of which are BK radios. So each year, as part of their product replacement cycle program, they purchase they purchase radios every year. This year, this is a program that we have been talking to the customer for a period of time. Where they were basically, there was some level of shrinkage of getting radios returned after each fire incident, which, you know, creates more burden on them, to life cycle out the older radios because the fleet actually gets smaller after every fire incident.

And so, the solution was really to put in place a distinctive color that was unique to the Forest Service because when you get on these fire scenes, you have several different agencies both state, local, and federal. And they are all using the BKR5 thousand radio. And they are all typically black color. So it is easy to get these radios mixed up. Especially if they are loaned out to different agencies. Sometimes it is just difficult to get it back. Long story short, having a unique color for the U.S. Forest Service, it is much easier for them to be able to reclaim 100% of those radios at the end of the end of the incident.

And then they can just focus on the lifecycle replacement of radios that truly need to be replaced. Because of age. So it is an ongoing program. They spend money with us every year, thankfully. But this is, you know, 1 thing that we worked on together, which I believe brings us closer to our to our key customer, the US forestry.

Jason Schmidt: Gotcha. And then just last 1 for me, and I will jump back into queue. Sticking with that 5 thousand orange, given the customization, do you see any sort of ASP premium, or is it in line with the broader portfolio?

John Suzuki: Yes. I am not gonna comment on pricing to the Forest Service. What I can say, Jason, is the customer sees real value in this. And is very appreciative of the work that we have done.

Jason Schmidt: Okay. Perfect. Thanks a lot, guys.

Operator: Thank you. And as a reminder, if you wish to join the queue to ask a question at this time, please press 1. Your telephone keypad. Once again, that will be 1 if you wish to join the queue to ask a question. Your next question is coming from Robert Voorhis from Vanatoc Capital. Robert, your line is live. Please go ahead.

Robert Voorhis: Hey. Good morning, guys. Thanks for, taking the questions. Just a couple. First is just on the revised guidance, and I understand why that is happening. It makes sense. But just a question on the remediation costs and the roof costs, are those backed out from the EPS numbers or not?

Scott A. Malmanger: No. They are not backed out.

Robert Voorhis: Okay. So then that may. Maybe leads me to my second question. You know how much potentially that cost is?

Scott A. Malmanger: it is hard to determine at this time. We have got, proper insurance coverage. Including business interruption insurance. But we have not had time to gather all the information necessary to really disclose an estimate of what that amount will be.

Robert Voorhis: that is fine. And then my other question is more just on general state and local trends. And I know in the MD&A and as you guys have talked about, the state and local orders have been stronger this year versus last year. Though because we have had such a concentration in revenue from federal customers this year, it looks like state and local on a revenue basis. On a recognized revenue basis is down versus last year. So I was just wondering, can you explain the discrepancy? And do you expect that to sort of change as orders are fulfilled?

John Suzuki: Yeah. Thanks, Robert. it is actually the lumpiness in the federal orders Right? So if I look at last year, we had a very strong orders here. From federal, and some of those orders were shipped in the first quarter. You go back to our first quarter revenue, I think it was almost 40% federal. Those were derived from orders that were received in the previous year. So you have to really parse the federal orders out of the total orders, because it is lumpy from year to year. It does not really change over a 5-year period. You know, it is pretty much stable. it is just how that how the money is allocated from year to year.

If you look at the core state-and-local business over the last 5 years, that is where all the growth has really come from. And that continues in this year.

Robert Voorhis: Yeah. Got it. So I do just have 1 more question. I apologize for the long list here. But I noticed in the I think it is the non GAAP numbers that we are talking about. there is a line that says nonrecurring new product introduction inventory write offs.

Analyst: I am assuming that is relating to the 9.5 thousand but can you just explain sort of why that is nonrecurring and what that is?

Scott A. Malmanger: Basically, it relates to the testing and manufacturing efforts that we are doing now. We are preparing for manufacturing of the 9.5 thousand. Yeah.

John Suzuki: So, Robert, this is John. So when we do our final testing on these products, we build up radios for our engineering tests, for customer tests, and then destructive tests. All those radios are basically trashed at the end of the cycle. Right. They are expensed in the period.

Robert Voorhis: Okay. Yep. No. That makes sense. Alright. Thanks, guys.

Operator: Thank you. Thank you. There are no further questions at this time. John and Scott, would you like to make any closing remarks?

John Suzuki: Thanks, Tom. I appreciate it. I want to thank the team for their strong execution this quarter. Our public safety customers for the trust they place in us every day. With a strengthening balance sheet, expanding opportunities in software and services, and a product road map aligned with the market's evolving needs we believe BK Technologies is well positioned for continued success. I look forward to speaking with you again on our next earnings call conference call. All the best to all of you, and have a great day. Thank you.

Operator: This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.

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