BK Technologies(BKTI) - 2020 Q3 - Quarterly Report

Sales Performance - Sales for Q3 2020 increased by 8.1% to approximately $12.8 million compared to $11.8 million in Q3 2019[105] - For the nine months ended September 30, 2020, sales increased by 2.6% to approximately $33.6 million compared to $32.7 million in the same period last year[105] - For the third quarter ended September 30, 2020, net sales increased 8.1% to approximately $12.8 million, compared to approximately $11.8 million for the same quarter last year[114] Income and Profitability - Operating income for Q3 2020 increased by 253.2% to approximately $1.0 million compared to approximately $0.3 million in Q3 2019[108] - Net income for Q3 2020 increased by 184.5% to approximately $678,000 ($0.05 per share) compared to approximately $238,000 ($0.02 per share) in Q3 2019[110] - Operating income for the third quarter increased approximately $747,000 (253.2%) to approximately $1.0 million (8.2% of sales), compared to $295,000 (2.5% of sales) for the same quarter last year[129] Expenses Management - Selling, general and administrative expenses decreased by 13.6% to approximately $4.2 million in Q3 2020 compared to approximately $4.8 million in Q3 2019[107] - SG&A expenses for the third quarter decreased by $653,000, or 13.6%, to approximately $4.2 million (32.6% of sales), compared to approximately $4.8 million (40.8% of sales) for the same quarter last year[125] - Engineering and product development expenses for the third quarter decreased $359,000, or 15.1%, to approximately $2.0 million (15.8% of sales), compared to approximately $2.4 million (20.1% of sales) for the same quarter last year[126] Cash Flow and Working Capital - Inventory was reduced by over $5.0 million, or 37.6%, from the start of the year, contributing to positive cash flow from operations[103] - Net cash provided by operating activities for the nine months ended September 30, 2020, totaled approximately $3.5 million, compared to cash used in operating activities of approximately $1.0 million for the same period last year[139] - As of September 30, 2020, working capital totaled approximately $14.4 million, with approximately $12.2 million in cash, cash equivalents, and trade receivables[111] Workforce and Costs - The company implemented workforce reductions of approximately 18% in May 2020, incurring severance costs of approximately $221,000[101] - The company incurred approximately $221,000 in severance costs related to workforce reductions recognized in Q2 2020[146] Investments and Financing - An unrealized loss of approximately $291,000 was recognized on the investment in 1347 Property Insurance Holdings, Inc. for Q3 2020[109] - Cash used in investing activities for the nine months ended September 30, 2020, totaled approximately $742,000, compared to approximately $2.3 million for the same period last year[141] - The company received $2.2 million under the PPP, which was fully repaid within the same period[144] - The company has a $5.0 million Credit Agreement with JPMC, with no borrowings outstanding as of September 30, 2020, and approximately $2.8 million available for borrowing[151] - The Master Loan Agreement for $425,000 to finance manufacturing equipment has a term of five years and bears a fixed interest rate of 5.11%[152] Product Development and Market Focus - The company launched the BKR 5000, the first model in the new BKR Series of APCO Project 25 land mobile radio products during the third quarter[116] - The company reorganized its sales resources to better focus on target markets, enhancing its sales funnel for potential new customers in federal, state, and local public safety agencies[117] Stock and Capital Management - The company used approximately $1.1 million in financing activities, including $752,000 in dividends and $269,000 in stock repurchases[143] - The company’s stock repurchase program was terminated in April 2020 and was not renewed[143] - The Credit Agreement requires the company to maintain a tangible net worth of at least $20.0 million at any fiscal quarter end[149] - The company may engage in public or private offerings of equity or debt securities to increase capital resources, depending on market conditions[154]