KVH Industries, Inc., (Nasdaq: KVHI) -- Record Quarterly Revenue of
$20.3 Million, Up 13% Year over Year -- Net Income of $1.3 Million
and $0.08 Per Diluted Share KVH Industries, Inc., (Nasdaq: KVHI), a
leading provider of mobile communication products and
defense-related navigation and guidance systems, today reported its
results for the first quarter ended March 31, 2006. Revenue for the
quarter was $20.3 million, up 13% from $17.9 million for the first
quarter ended March 31, 2005. Net income for the quarter was $1.3
million, or $0.08 per diluted share. Net income for the quarter
included a non-cash charge of approximately $0.2 million, or $0.02
per diluted share, related to the company's adoption of SFAS No.
123(R), "Share Based Payment," which requires the expensing of
stock options and other equity compensation. During the same period
last year the company reported net income of $0.3 million, or $0.02
per diluted share. "The first quarter was an outstanding start to
the year, highlighted by record revenue, strong earnings growth,
and a positive reception to our new products," said Martin Kits van
Heyningen, KVH's president and chief executive officer. "Our new
maritime TracVision(R) M3 satellite TV system is spurring growth in
a previously untapped segment of a well-established market, while
recreational vehicle manufacturers and consumers are beginning to
enthusiastically adopt our new TracVision R-series of antenna
systems. I believe that we will see continuing benefits from our
new RV satellite TV product family in the coming months, including
the potential resumption of sales growth in the recreational
vehicle market by the second half of the year. Once again, our
defense business was a strong contributor to our results thanks to
a solid foundation of tactical navigation sales as well as fiber
optic gyro production in support of the U.S. Navy's MK54 torpedo
program and the U.S. Army's stabilized remotely operated weapon
system." In the first quarter of 2006, defense-related sales,
including those for KVH's TACNAV(R) military navigation systems and
fiber optic gyro (FOG) solutions, were approximately $6 million, up
57% on a year-over-year basis, while mobile communication revenue
was $14.3 million, up 2% on a year-over-year basis. Commenting on
the company's financial results, Pat Spratt, KVH's chief financial
officer, remarked, "Our first quarter exceeded our expectations and
sustained our positive earnings trend. With our first quarter
product mix weighted favorably toward relatively higher margin
defense and marine products, gross margin was 43% and we saw a 24%
year-over-year increase in gross profit. Looking ahead, we expect
Q2 revenue to be up sequentially and up approximately 10%-12% over
the second quarter last year. On a sequential basis, we expect that
earnings per share could be modestly below the first quarter
result. This guidance assumes a sequential decline in defense
sales. Although we see strengthening mobile communication sales, we
have yet to receive purchase orders on certain military programs so
we are not changing our full-year revenue and earnings estimates at
this time. Our earnings guidance for the year remains unchanged at
approximately $0.24, including an estimated $0.06-$0.07 impact of
non-cash stock-based compensation." Recent Operational Highlights:
-- April 19, 2006 - Fleetwood Enterprises, the nation's leading
manufacturer of recreational vehicles, selected KVH and its
TracVision R-series as its sole source for satellite TV systems for
Fleetwood's 2007 model year motor homes. -- March 31, 2006 - KVH
ships the first TracVision R6 satellite TV systems, the company's
new flagship product for the recreational vehicle industry, to U.S.
retailers. -- March 30, 2006 - KVH was named a winner of the 2006
NorthFace ScoreBoard Award for Customer Satisfaction based on
direct feedback from customers and recognizing achievements in the
areas of technical support, field service, sales process, customer
service, product quality, account management, and training. --
March 20, 2006 - Time Magazine named the TracNet(TM) 100 to its
2006 "Must Have" Technology list. -- During the first quarter, KVH
and Microsoft announced their intentions to offer variants of the
TracNet 100 Mobile Satellite TV Receiver with MSN TV Service to the
marine and recreational vehicle markets later in 2006. KVH is
webcasting its first quarter conference call live at 10:30 a.m.
Eastern time today through the company's website. The conference
call can be accessed via the company's website at
http://investors.kvh.com. The audio archive and an MP3 podcast will
also be available on the company website within three hours of the
completion of the call. About KVH Industries, Inc. KVH Industries,
Inc., is a premier manufacturer of systems to provide access to
live mobile media ranging from satellite TV to telephone and
high-speed Internet for vehicles and vessels as well as a leading
source of navigation, pointing, and guidance solutions for
maritime, defense, and commercial applications. The company's
products are based on its proprietary mobile satellite antenna and
fiber optic technologies. An ISO 9001-certified company, KVH is
based in Middletown, Rhode Island. For more information, visit
http://www.kvh.com. This press release contains forward-looking
statements that involve risks and uncertainties. For example,
forward-looking statements include statements regarding our
financial and product development goals for 2006, anticipated
revenue growth, anticipated profitability, anticipated orders for
our mobile communication and military products, and anticipated
improvements in our product margins and competitive position. The
actual results we achieve could differ materially from the
statements made in this press release. Factors that might cause
these differences include, but are not limited to: seasonal
declines in demand for our mobile communication and television
products; changes in customer response to new product
introductions; the unpredictability of purchasing schedules and
priorities of the relatively small number of customers for our
defense products; the risk of order cancellations or unexercised
options, particularly for longer-term defense orders; potential
reductions in our overall gross margins in the event of a general
shift in product mix more strongly toward our mobile communication
products; our dependence on sole, limited source, or foreign
suppliers; our dependence on third-party satellite networks for
programming and satellite services; the unpredictability of the
emerging market, as well as consumer and automotive manufacturer
demand, for mobile communication products in automobiles; the
emergence of alternative technology that may compete with or
displace wireless mobile Internet services with regard to range and
cost; the impact of increases in fuel prices on the sale and use of
motor vehicles and marine vessels; poor or delayed research and
development results; currency fluctuations, export restrictions,
delays in procuring export licenses, and other international risks;
potential product liability claims; the difficulty in protecting
our proprietary technology; potential claims of intellectual
property infringement; expenses associated with corporate
governance requirements; and changes in our equity compensation
practices, including the impact of fluctuations in our stock price.
These and other factors are discussed in more detail in our Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on March 16, 2006. Copies are available through our
Investor Relations department and website,
http://investors.kvh.com. We assume no obligation to update our
forward-looking statements to reflect new information and
developments. KVH, TracVision, TracNet, and TACNAV are trademarks
of KVH Industries, Inc. All other trademarks are the property of
their respective companies. -0- *T KVH INDUSTRIES, INC. AND
SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share amounts, unaudited) Three Months Ended
March 31, ----------------- 2006 2005 -------- -------- Net sales
$20,289 $17,893 Cost of sales 11,469 10,782 -------- -------- Gross
profit 8,820 7,111 Operating expenses: Sales and marketing 3,845
3,623 Research and development 2,170 1,898 General and
administrative 1,895 1,273 -------- -------- Income from operations
910 317 Other income, net 433 141 Income tax expense 89 157
-------- -------- Net income $ 1,254 $ 301 ======== ======== Net
income per common share Basic $ 0.09 $ 0.02 ======== ========
Diluted $ 0.08 $ 0.02 ======== ======== Weighted average of common
shares outstanding Basic 14,685 14,520 ======== ======== Diluted
14,827 14,668 ======== ======== KVH INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, unaudited)
March December 31, 31, 2006 2005 -------- -------- ASSETS Cash,
cash equivalents and marketable securities $50,259 $50,090 Accounts
receivable, net 11,693 12,283 Inventories 7,603 6,564 Other assets
858 1,233 -------- -------- Total current assets 70,413 70,170
Property and equipment, net 9,188 8,663 Deferred income taxes 3,334
3,334 Other non-current assets 124 163 -------- -------- Total
assets $83,059 $82,330 ======== ======== LIABILITIES AND
STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 6,888
$ 8,442 Current portion of long-term debt 117 115 -------- --------
Total current liabilities 7,005 8,557 Deferred revenue 199 128
Long-term debt, excluding current portion 2,252 2,282 Stockholders'
equity 73,603 71,363 -------- -------- Total liabilities and
stockholders' equity $83,059 $82,330 ======== ======== *T
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