BK Technologies(BKTI) - 2024 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2024, sales increased approximately 0.5% to approximately $20.2 million, compared to$20.1 million for the prior year period, primarily due to shipments of BKR 5000 radio product sales [84]. - Gross profit margins for the same period were 38.8%, up from 31.9% in the prior year, reflecting improvements in product sales mix and material costs [84]. - Operating income for the three months ended September 30, 2024, was approximately $2.6 million, compared to$0.1 million for the same period last year [84]. - Net income for the three months ended September 30, 2024, totaled approximately $2.4 million ($0.67 per basic and $0.63 per diluted share), compared to$0.1 million ($0.03 per basic and diluted share) for the same period last year [86]. - For Q3 2024, sales increased by 0.5$20.2 million, compared to $20.1 million in Q3 2023 [97]. - Gross profit margin for Q3 2024 was approximately 38.8$2.6 million (12.9% of sales), compared to operating income of approximately $0.6 million (3.0$2.4 million ($0.67 per basic share), compared to net income of approximately$0.1 million ($0.03 per basic share) in Q3 2023 [93]. - For the nine months ended September 30, 2024, sales totaled approximately$58.7 million, a 1.5% increase from $57.8 million in the same period last year [97]. - The gross profit margin for the nine months ended September 30, 2024, was approximately 36.9$4.7 million for the first nine months of 2024, compared to a net loss of approximately $2.5 million for the same period last year [116]. Customer Demand and Orders - Customer demand and new orders for products reached$21.8 million during the three months ended September 30, 2024, compared to $19.6 million for the same period of the prior year [90]. - The backlog of unshipped customer orders was approximately$27.0 million as of September 30, 2024, compared to $16.0 million as of December 31, 2023 [83]. Working Capital and Cash Flow - Working capital as of September 30, 2024, totaled approximately$22.7 million, an increase from $16.8 million at the end of 2023 [87]. - For the nine months ended September 30, 2024, net cash provided by operating activities was approximately$8.2 million, up from $3.9 million for the same period last year [115]. - Cash used in investing activities totaled approximately$0.9 million for the nine months ended September 30, 2024, down from $1.8 million for the same period last year, primarily for the development of the BKR mobile radio product [117]. - Approximately$6.6 million was used in financing activities for the nine months ended September 30, 2024, compared to cash provided by financing activities of approximately $0.1 million for the same period last year [118]. - The cash and cash equivalents balance on September 30, 2024, was approximately$4.2 million, which is expected to meet working capital requirements for the foreseeable future [119]. Expenses and Cost Management - SG&A expenses for Q3 2024 totaled approximately $5.2 million, a decrease of 10.1$5.8 million in Q3 2023 [103]. - Engineering and product development expenses for Q3 2024 were approximately $1.9 million (9.2$2.5 million (12.5% of sales) in Q3 2023 [104]. - The company recognized other expenses, net totaling less than seven thousand dollars for the three months ended September 30, 2024, compared to $0.5 million for the same period last year [85]. Development and Innovation - The SaaS business unit focuses on delivering innovative public safety smartphone applications, with one U.S. patent in force and two pending [81]. - The company began development of the BKR series LMR multi-band mobile radio product in the first quarter of 2024, with development costs to be amortized over periods not exceeding ten years [121]. Accounting and Controls - There were no changes to critical accounting policies during the three months ended September 30, 2024 [122]. - The company evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period [124]. - No changes in internal control over financial reporting materially affected the company during the three months ended September 30, 2024 [125]. Investment Performance - The company recognized a net realized loss of approximately$0.1 million on its investment in FG Holdings, LLC for the nine months ended September 30, 2024 [92]. - Accounts receivable increased by approximately $1.6 million during the nine months ended September 30, 2024, while inventories decreased by approximately$5.3 million [116]. Industry Context - The company operates in a highly competitive industry, with a strong reliance on U.S. Government contracts [73].