-- Third quarter revenue up 44% from prior year with revenue of
$22.6 million and net income of $0.4 million or $0.03 per diluted
share -- Quarterly fiber optic gyro revenues totaled almost $8
million --Quarterly airtime revenues exceeded $3 million
MIDDLETOWN, R.I., Oct. 22 /PRNewswire-FirstCall/ -- KVH Industries,
Inc., (NASDAQ:KVHI) today reported financial results for the third
quarter ended September 30, 2009. Revenue for the third quarter of
2009 was $22.6 million, up 44% from the quarter ended September 30,
2008. Net income for the period was $0.4 million, or $0.03 per
diluted share. During the same period last year the company
reported a net loss of $0.8 million or $0.06 on a per share basis.
For the nine months ended September 30, 2009, revenue was $62.8
million, up 3% compared to $61.2 million for the nine months ended
September 30, 2008. KVH reported a net loss of $2.0 million or
$0.14 on a per share basis for the first nine months of 2009.
During the same period last year, the company reported net income
of $2.8 million or $0.19 on a per diluted share basis. "In the
third quarter, we enjoyed growth on the top and bottom lines that
exceeded our expectations," said Martin Kits van Heyningen, KVH's
chief executive officer. "We are realizing the benefits from our
strategic growth plans that focused on fiber optic gyros and
maritime communications, which enabled us to post solid growth
despite the larger economic challenges. We are confident in the
strength of our competitive position and optimistic that we've
positioned the company well for the future." KVH's defense-related
guidance and stabilization revenue from KVH's fiber optic gyro
solutions, TACNAV® military navigation systems, and related
services was approximately $10.6 million in the third quarter of
2009, up 206% on a year-over-year basis. "Both elements of our
guidance and stabilization business were key contributors in the
third quarter. Revenue from tactical navigation product sales was
up 28% year over year and our fiber optic gyro business posted an
impressive 767% increase year over year and an 11% sequential
increase in sales over our record second quarter of this year. At
the same time, we continued to bring in new business for the fourth
quarter and beyond, including $3.8 million in new FOG orders to
support remote weapon stations and $2.0 million in new military
orders for our TACNAV displays and components," said Mr. Kits van
Heyningen. In the third quarter of 2009, mobile communications
revenue from marine, land, and aeronautical products and services
was $12.0 million, down 2% on a year-over-year basis. Mr. Kits van
Heyningen commented, "In the mobile satellite business, the
economic challenges remain, especially in our leisure satellite TV
markets. However, the declines appeared to moderate in the third
quarter. Largely overcoming those declines was the continued growth
of our TracPhone® V7 and the mini-VSAT Broadband(SM) service. Our
success in the VSAT market continued, with mini-VSAT product and
airtime revenue growing strongly year over year. Total airtime
services revenue for mini-VSAT and Inmarsat combined exceeded $3.0
million in the quarter, with mini-VSAT showing continued growth,
offsetting a seasonal sequential decline in Inmarsat airtime.
"During the third quarter, we made significant progress in the
rollout of our satellite communication network, with the activation
of the mini-VSAT Broadband service in the Asia-Pacific region,
Australia, and New Zealand. We also expanded our existing Atlantic
Ocean coverage area south to Brazil and signed a contract to add
service for Africa by the end of this year. We won several major
new commercial customers and added new capabilities to our product
offering to increase its appeal. Looking ahead, we plan to launch a
major new satellite television product at the Ft. Lauderdale
International Boat Show next week. We are also working to achieve
our goal of activating mini-VSAT Broadband service for the Indian
Ocean and Africa by the end of the year as well as pursuing service
contracts for South America, which is the only region remaining in
our rollout of the worldwide mini-VSAT Broadband service,"
concluded Mr. Kits van Heyningen. Speaking about the company's
financial results, Patrick Spratt, KVH's chief financial officer,
said, "The diversity of our revenue sources is providing a solid
foundation for growth even in the face of ongoing economic
challenges. Strong sales of relatively higher margin guidance,
stabilization, and tactical navigation products helped us achieve
better-than-anticipated results on both the top and the bottom
line. Gross margin was better than expected at more than 39%,
reflecting the higher sales volume, favorable product mix, and
improved capacity utilization. Partially offsetting these factors
was a modest sequential decline in service gross margin due to our
continued build-out of the mini-VSAT Broadband network
infrastructure. Cash, cash equivalents, and marketable securities
declined sequentially by approximately $0.7 million from the prior
quarter. Inventory levels increased sequentially from the second
quarter by about $1 million as we staged materials for new products
and demand expectations. "Although visibility is improving, we
still see uncertainties in our markets overall. But in general, for
the fourth quarter, we expect that revenue will grow 18% to 24%
year over year. We expect that this increase will be driven by
sequential growth in sales of mini-VSAT Broadband products and
services, fiber optic gyros, tactical navigation products, and our
new aeronautical antenna system. We anticipate seasonal declines
and continued weakness in consumer satellite communications
businesses. During the quarter we will continue the aggressive
investment in our mini-VSAT Broadband infrastructure and we expect
to initiate new additions to fiber optic gyro production capacity.
We expect to achieve a net profit of between $0.02 to $0.07 per
share for the fourth quarter." Recent Operational Highlights: -- On
October 7, 2009, KVH and On-Waves announced that they signed an
agreement to collaborate to offer maritime cell phone service via
KVH's mini-VSAT Broadband network and On-Waves' picocell
technology. -- On October 5, 2009, KVH announced that it had signed
a contract to support mini-VSAT Broadband coverage for Internet and
voice service for Africa. -- On October 2, 2009, KVH announced that
it had received $2 million in new military systems orders,
including TACNAV tactical navigation system components and its
Universal Multilingual Display. -- On September 24, 2009, KVH
announced that it had received a $2.1 million order for fiber optic
gyros for remote weapon stations. -- On September 16, 2009, KVH
expanded Atlantic Ocean Coverage for mini-VSAT Broadband Service to
provide service into Greenland and northern Europe and as far south
as the horn of Brazil. -- In August 2009, mini-VSAT Broadband
service went live in Asia-Pacific waters as well as for Australia
and New Zealand. -- On August 5, 2009, KVH announced that it had
received a $1.7 million fiber optic gyro order for use in remote
weapon stations. -- During the third quarter, KVH won several new
commercial shipping customers for its TracPhone V7 and mini-VSAT
Broadband service, including Clipper Tankers, which is adding the
KVH solution to 22 vessels in its fleet, and M. H. Simonsen ApS,
which is adding the TracPhone V7 to a number of its tankers. KVH is
webcasting its third 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/ and listeners are welcome to submit
questions pertaining to the earnings release and conference call to
. 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
(http://www.kvh.com/) is a leading manufacturer of solutions that
provide global high-speed Internet, television and voice services
via satellite to mobile users at sea, on land, and in the air. KVH
is also a premier manufacturer of high performance sensors and
integrated inertial systems for defense and commercial guidance and
stabilization applications. The company is based in Middletown, RI,
with facilities in Tinley Park, IL, and Kokkedal, Denmark. This
press release contains forward-looking statements that involve
risks and uncertainties. For example, forward-looking statements
include statements regarding our financial goals for future
periods, anticipated revenue growth, anticipated profitability,
anticipated orders for our mobile communication and military
products, and anticipated improvements in our 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: the impact of
extended economic weakness, such as availability of consumer credit
and increases in fuel prices, on the sale and use of motor vehicles
and marine vessels; the need to increase sales of the TracPhone V7
and related services to improve airtime gross margins; delays or an
inability to expand coverage of the mini-VSAT Broadband service to
new regions; the potential inability to secure adequate Ku-band
satellite capacity or the licenses necessary for any expansion of
the mini-VSAT Broadband network; risks associated with the delivery
or performance of critical hardware; the need for qualification of
products to customer or regulatory standards; delays in customers'
qualification processes for our products or other delays in
shipping; the risk that we may not receive expected orders;
competitors' products and services; unanticipated declines or
changes in customer demand, due to economic, seasonal and other
factors, particularly with respect to the TracPhone V7; the
unpredictability of military budget priorities as well as the order
timing, purchasing schedules and priorities for our defense
products; order cancellations or unexercised options, particularly
for longer-term defense orders; potential reductions in our overall
gross margins in the event of a shift in product mix; weakened
consumer demand for our products and services, especially at the
more price sensitive low end of our product offerings; changes in
interest rates; our dependence on third-party satellite networks
for programming and satellite services; delays in delivery arising
from supplier production constraints; 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
Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on August 6, 2009. Copies are available through
our Investor Relations department and website,
http://investors.kvh.com/. We do not assume any obligation to
update our forward-looking statements to reflect new information
and developments. KVH Industries, Inc., has used, registered, or
applied to register its trademarks in the USA and other countries
around the world, including the following marks: KVH, KVH logo,
Azimuth, TracVision, TracPhone, TACNAV, DataScope and the DataScope
logo, Sailcomp, mini-VSAT Broadband and the mini-VSAT Broadband
logo, and the banded, dome-shaped housing of its satellite
antennas. Other trademarks are the property of their respective
companies. KVH Industries, Inc. and Subsidiary CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share amounts, unaudited)
--------------------------------------------------- Three Months
Ended Nine Months Ended September 30, September 30, 2009 2008 2009
2008 ---- ---- ---- ---- Sales: Product $18,620 $12,325 $52,314
$52,734 Service 4,023 3,415 10,461 8,454 ----- ----- ------ -----
Net sales 22,643 15,740 62,775 61,188 ------ ------ ------ ------
Costs and expenses: Costs of product sales 10,663 7,693 33,139
31,754 Costs of service sales 3,044 1,571 7,422 3,893 Research and
development 2,292 1,813 6,265 5,804 Sales, marketing and support
4,241 3,573 12,370 11,830 General and administrative 1,943 1,992
5,723 5,280 ----- ----- ----- ----- Total costs and expenses 22,183
16,642 64,919 58,561 ------ ------ ------ ------ Income (loss) from
operations 460 (902) (2,144) 2,627 Interest income 74 278 279 1,037
Interest expense 26 36 63 118 Other expense, net 29 42 21 236 ---
---- ------ ----- Income (loss) before income tax expense 479 (702)
(1,949) 3,310 Income tax expense 94 110 30 558 -- --- -- --- Net
income (loss) $385 $(812) $(1,979) $2,752 ==== ===== ======= ======
Net income (loss) per common share: Basic and diluted $0.03 $(0.06)
$(0.14) $0.19 ===== ====== ====== ===== Weighted average number of
common shares outstanding: Basic 13,978 14,251 13,981 14,461 ======
====== ====== ====== Diluted 14,241 14,251 13,981 14,474 ======
====== ====== ====== KVH Industries, Inc. and Subsidiary CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands, unaudited)
------------------------- September December 30, 31, 2009 2008 ----
---- ASSETS Cash, cash equivalents and marketable securities
$41,503 $42,660 Accounts receivable, net 12,342 13,960 Inventories
14,762 15,484 Other current assets 1,380 807 ----- --- Total
current assets 69,987 72,911 ------ ------ Property and equipment,
net 15,564 13,286 Deferred income taxes 3,334 3,334 Other
non-current assets 5,913 4,226 ----- ----- Total assets $94,798
$93,757 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $12,991 $12,662 Current
portion of long-term debt 116 2,026 --- ----- Total current
liabilities 13,107 14,688 ------ ------ Other long-term liabilities
82 - Long-term debt, excluding current portion 3,837 -
Stockholders' equity 77,772 79,069 ------ ------ Total liabilities
and stockholders' equity $94,798 $93,757 ======= =======
DATASOURCE: KVH Industries, Inc. CONTACT: Patrick Spratt of KVH
Industries, +1-401-847-3327; or Christine Mohrmann of Financial
Dynamics, +1-212-850-5600 Web Site: http://www.kvh.com/
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