KVH Industries, Inc., (Nasdaq:KVHI) today reported financial
results for the quarter ended March 31, 2011. Revenue for the first
quarter of 2011 was $24.4 million, down 13% from the quarter ended
March 31, 2010. Net loss for the period was $1.5 million or $0.10
per share. During the same period last year the company reported
net income of $2.1 million or $0.14 per diluted share, on revenues
of $28.0 million.
"The first quarter was marked by solid progress in our VSAT and
fiber optic gyro (FOG) businesses as well as some
greater-than-anticipated challenges in our leisure markets," said
Martin Kits van Heyningen, KVH's chief executive officer. "As
expected, sales of our mini-VSAT Broadbandsm-compatible hardware
and airtime activations increased significantly on both a
year-over-year and sequential basis. Commercial sales of our FOGs
increased as expected for the quarter and we also received new
defense-related orders. However, satellite TV system sales to the
leisure marine and recreational vehicle (RV) markets were far
weaker than expected due to rising fuel prices and a decline in new
boat sales.
"We were very pleased with our VSAT sales for the quarter which
grew approximately 59% year over year for product and service
revenue, including the benefit of CommBox™ sales by our new Norway
subsidiary. In addition, we won our largest-ever commercial marine
contract to provide our fully integrated, mini-VSAT Broadband
satellite communication solution for the more than 125 vessels in
the Vroon B.V. fleet. We also expanded our affordable broadband
service offerings to a wider audience of vessels with the
announcement of the TracPhone® V3, the world's smallest maritime
VSAT system. This exciting new product just received full license
authority from the FCC and began shipping this week. It offers
commercial fleets and leisure boaters an outstanding new option for
an ultra-compact satellite communication solution that is far more
affordable and faster than L-band services."
In the first quarter of 2011, mobile communications revenue was
$15.7 million, down 2% on a year-over-year basis. Unlike the first
quarter of 2010, there were no production shipments of KVH's
aeronautical TV antenna to LiveTV in the first quarter of 2011.
Excluding the LiveTV year-over-year impact, mobile communications
revenue from marine and land products and services was up 20% on a
year-over-year basis on the strength of KVH's mini-VSAT Broadband
hardware, airtime, and network management products.
"The status of our aeronautical satellite TV business is in flux
at this time as LiveTV asked us to postpone deliveries again under
our contract," commented Mr. Kits van Heyningen. "Unfortunately we
were unable to reach agreement on delivery dates and, as a result,
we believe that the contract has been terminated. LiveTV disputes
our interpretation and we are continuing to negotiate regarding the
contract and the placement of orders. However, we cannot be certain
that our negotiations will lead to new orders."
KVH's guidance and stabilization revenue from the company's FOG
solutions, TACNAV® military navigation systems, and related
services was approximately $8.7 million in the first quarter of
2011, down 27% on a year-over-year basis. "As expected, our
defense-related FOG sales have been slowed as the industry awaits
updates on the U.S. Army's plans for its next procurement of remote
weapon systems (RWS) under the Common Remotely Operated Weapon
Station (CROWS) program. In the interim, the Army continues to fill
its immediate RWS requirements through extensions to the current
contract, which led to a $2.7 million FOG order that we received in
late March. Fiber optic gyro sales to commercial and non-CROWS
defense applications were up more than 80% year over year. We also
received a new $3.7 million TACNAV order from an international
customer, which we expect to ship during the second quarter," said
Mr. Kits van Heyningen.
Addressing the company's financial results, Patrick Spratt,
KVH's chief financial officer, said, "The first quarter results
were at the low end of our expectations for the top and bottom
lines, due primarily to a shortfall in sales to leisure satellite
TV markets. Sales of our mini-VSAT Broadband products and services
and our FOG products were in line with our expectations. Gross
margin for the quarter was a bit better than expected, but this
positive variance did not completely offset the impact of the low
sales level into the leisure markets. In addition, the tax benefit
associated with the quarterly loss was much less than our
expectation. As a result, the net loss was about $0.02 per share
more than we expected.
"Looking ahead, we are now making two adjustments to our
guidance for the year. The first is to lower expectations for the
leisure satellite TV markets. Based on the first quarter results,
and renewed weakness in general consumer confidence, we feel we
must take a more cautious outlook with regard to these markets. In
addition, it now appears unlikely that we will ship any
aeronautical TV antenna systems to LiveTV later in the year due to
the current contractual issues. The combination of these two
factors is expected to have a meaningful effect on the full year
outlook. For the second quarter we expect revenues to be in the
range of $30.0 to $32.0 million and we expect to return to
profitability with earnings in the $0.01 to $0.06 per share range.
We believe that the strategic growth drivers in our VSAT and FOG
businesses are healthy and on track, but the reductions in the
consumer marine and RV businesses and sales to LiveTV will likely
result in top line revenue growth for the year of 8% to 13%, versus
our original guidance of 15% to 20%. This lower expectation for
revenue drives a much lower expectation for full year profit.
Including the results from the first quarter, we now expect
operating profit for the year to be about 10% below last year.
However, we continue to expect to achieve strengthening revenue
growth and profit margins as we move through the year, and we are
confident in the on-going developments in our VSAT and FOG
strategic growth businesses."
Mr. Kits van Heyningen concluded, "The weakness in the consumer
satellite TV markets is not slowing the strong growth in our VSAT
business. Although our near-term expectations have been lowered,
this does not change our long-term outlook. We expect that the
leisure markets will recover eventually and that our FOG business
will resume its top line growth as the RWS business returns to
previous levels. Our strategic VSAT and commercial FOG businesses
are advancing as expected and they will drive our growth. As a
result, we are still confident in our ability to achieve our goal
of annual revenue of $300 million and operating margin of 15%
within 5 years."
Recent Operational Highlights:
- On April 27, 2011, KVH announced that its TracPhone V3 SATCOM
system had received full license authority from the FCC and that
the first unit had been shipped.
- On April 21, 2011, KVH announced that Raytheon Integrated
Defense Systems had honored KVH with its Five Star Supplier
Excellence Award, citing KVH's 100% quality and 100% on-time
delivery of fiber optic gyro sensors and inertial measurement
units.
- On April 18, 2011, KVH announced that it had received an order
valued at more than $3.7 million for its TACNAV tactical navigation
systems to be used to upgrade light armored vehicles fielded by an
international customer.
- On April 6, 2011, KVH expanded its reach in Brazil to support
new business with the company's fully licensed mini-VSAT Broadband
service, a new Brazilian subsidiary, and in-country partners.
- On March 29, 2011, KVH received a $2.7 million order for FOGs
to use in remote weapon systems.
- On March 4, 2011, Vroon B.V. selected KVH's TracPhone V7 and
mini-VSAT Broadband service for the more than 125 vessels in its
commercial fleet. KVH will be supplying the Vroon fleet with a
comprehensive marine SATCOM solution that includes TracPhone
systems, broadband airtime, CommBox network management tools, crew
calling, and GSM cell phone service at sea.
- On February 28, 2011, KVH announced that Sea Ray, one of the
world's premier manufacturers of pleasure boats 17 to 60 feet, had
named KVH its exclusive satellite antenna partner for the next
three years.
- On February 17, 2011, KVH introduced the TracPhone V3, the
world's smallest and most affordable maritime VSAT system.
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 and listeners are welcome to submit
questions pertaining to the earnings release and conference call to
ir@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 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 Illinois, Denmark, Norway, and Singapore.
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 and increasing 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; the need for or delays in qualification of products to
customer or regulatory standards; 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,
including possible order cancellations; potential reductions in our
overall gross margins in the event of a shift in product mix;
uncertainties regarding our ongoing relationship with LiveTV; the
challenges and potential near-term costs associated with the
acquisition and integration of a new company; and currency
fluctuations, export restrictions, delays in procuring export
licenses, and other international risks. 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 14,
2011. 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, Tri-Americas, CommBox, 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 Subsidiaries |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(in
thousands, except per share amounts, unaudited) |
|
|
Three Months
Ended |
|
March
31, |
|
2011 |
2010 |
Sales: |
|
|
Product |
$ 18,884 |
$ 24,034 |
Service |
5,525 |
3,948 |
Net sales |
24,409 |
27,982 |
|
|
|
Costs and expenses: |
|
|
Costs of product sales |
10,529 |
13,122 |
Costs of service sales |
4,802 |
3,056 |
Research and development |
2,974 |
2,583 |
Sales, marketing and
support |
5,200 |
4,498 |
General and
administrative |
2,927 |
2,364 |
Total costs and
expenses |
26,432 |
25,623 |
|
|
|
(Loss) income from
operations |
(2,023) |
2,359 |
|
|
|
Interest income |
66 |
91 |
Interest expense |
56 |
23 |
Other income, net |
14 |
30 |
|
|
|
(Loss) income before
income tax benefit (expense) |
(1,999) |
2,457 |
Income tax benefit
(expense) |
465 |
(391) |
Net (loss)
income |
$ (1,534) |
$ 2,066 |
|
|
|
Net (loss) income per common
share: |
|
|
Basic |
$ (0.10) |
$ 0.15 |
Diluted |
$ (0.10) |
$ 0.14 |
|
|
|
Weighted average number of common
shares outstanding: |
|
|
Basic |
14,748 |
14,222 |
Diluted |
14,748 |
14,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KVH Industries,
Inc. and Subsidiaries |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(in thousands,
unaudited) |
|
|
|
|
March 31, |
December 31, |
|
2011 |
2010 |
ASSETS |
|
|
|
|
|
Cash, cash equivalents and
marketable securities |
$ 35,404 |
$ 37,307 |
Accounts receivable, net |
18,031 |
18,770 |
Inventories |
17,106 |
14,765 |
Deferred income taxes |
1,433 |
944 |
Other current assets |
2,742 |
2,734 |
Total current
assets |
74,716 |
74,520 |
|
|
|
Property and equipment,
net |
22,829 |
23,044 |
Deferred income taxes |
5,001 |
4,982 |
Goodwill |
4,744 |
4,517 |
Intangible assets, net |
2,308 |
2,272 |
Other non-current assets |
5,929 |
5,863 |
|
|
|
Total
assets |
$ 115,527 |
$ 115,198 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Accounts payable and accrued
expenses |
13,581 |
12,814 |
Deferred revenue |
720 |
1,011 |
Current portion of long-term
debt |
126 |
124 |
Total current
liabilities |
14,427 |
13,949 |
|
|
|
Other long-term
liabilities |
1,258 |
1,262 |
Long-term debt, excluding
current portion |
3,652 |
3,684 |
Stockholders' equity |
96,190 |
96,303 |
|
|
|
Total liabilities and
stockholders' equity |
$ 115,527 |
$ 115,198 |
CONTACT: Patrick Spratt
KVH Industries
401-847-3327
pspratt@kvh.com
Christine Mohrmann
Financial Dynamics
212-850-5600
KVH Industries (NASDAQ:KVHI)
Historical Stock Chart
From Jun 2024 to Jul 2024
KVH Industries (NASDAQ:KVHI)
Historical Stock Chart
From Jul 2023 to Jul 2024