BK Technologies, Inc. (NYSE MKT:BKTI) Q3 2019 Earnings Conference Call - Final Transcript
Nov 07, 2019 • 09:00 am ET
Good day, ladies and gentlemen, and welcome to BK Technologies Corporation Conference Call for the Third Quarter ended September 30, 2019. This call is being recorded. [Operator Instructions]
Before turning the call over to Mr. Vitou for opening remarks, I will provide the following Safe Harbor statement. Statements made during this conference call that are not based on historical facts are forward-looking statements. 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 and some of the factors and risks that could cause or contribute to such material differences have been described in yesterday's press release and BK's filings with the SEC. These statements are based on information and understandings that are believed to be accurate as of today, November 7, 2019. And we do not undertake any duty to update forward-looking statements.
I will now turn the call over to Mr. Timothy Vitou, President of BK Technologies. Mr. Vitou, you may begin.
Timothy A. Vitou
Thank you, Julia, and good morning, everyone. Welcome to the BK Technologies investor conference call for the third quarter and nine months ended September 30, 2019.
I'll provide some comments about the business before Bill takes us through the financial and operating results. Our third quarter this year included a mix of financial and operating results, combined with progress on important strategic initiatives that are intended to enhance our competitive position and growth prospects for the future.
Sales for Q3 were driven primarily from our stronghold in legacy customers, as evidenced by orders from the US Forest Service, that were previously announced in July. Also, the TSA exercise, the fourth, one-year option extending their contract with BK to September 2020. The option provides for the purchase of up to $2 million of our products. Upon exercising their option, TSA also placed a firm delivery order for equipment and services totaling approximately $1.8 million, of which approximately $200,000 was fulfilled in September. The remainder is anticipated to be fulfilled during the fourth quarter this year.
Orders for state and local markets and the international customers in Q3 were soft in comparison to last year's Q3 when we close substantial orders from public safety agencies in the State of California and in Canada. Consequently, total sales for Q3 declined relative to Q3 last year.
Gross profit margins increased for the second consecutive quarter, following the first quarter that was negatively impacted by the federal government shutdown. This increase was reflecting improvements in sales mix, prices and product costs.
Operating expenses are above last year's levels due to engineering and product development initiatives. However, they decreased 23% from the immediately preceding quarter.
As I've mentioned on recent calls, we have been working on several new product development programs that are vital to moving us forward toward achieving the Company's strategic goals and objectives. Reflecting the importance and high priority of these efforts, I'm pleased and excited to report that just last