KVH Industries, Inc., (Nasdaq: KVHI) reported financial results for
the quarter ended September 30, 2018 today. The company will hold a
conference call to discuss these results at 10:30 a.m. ET today,
which can be accessed at investors.kvh.com. Following the call, a
replay of the webcast will be available through the company’s
website.
Third Quarter 2018 Highlights
- Shipments of VSAT units increased more than 125% compared to
the third quarter of 2017.
- AgilePlans subscription service, our Connectivity as a Service
Program for the commercial maritime sector, amounted to 64% of
total commercial maritime VSAT shipments, and 54% of the total VSAT
shipments for the quarter. Installations for the quarter increased
27% compared to the second quarter of 2018.
- Fiber optic gyro (FOG) product sales grew 53% compared to the
third quarter of 2017, the seventh consecutive quarter of
double-digit growth.
- Our mini-VSAT Broadband installed base of subscribers increased
9% compared to the third quarter of 2017.
- Total revenue increased in the third quarter of 2018 to $43.5
million from $40.4 million in the third quarter of 2017, driven
primarily by an increase in FOG product sales and an increase in
mini-VSAT Broadband airtime revenue. Revenue increased even though
revenue is not recognized immediately on AgilePlans shipments as
revenues under the AgilePlans program are recognized over
time.
- Net loss in the third quarter of 2018 was $1.2 million, or
$0.07 per share, compared to a net loss of $2.4 million, or $0.15
per share in the third quarter of 2017.
- Non-GAAP net income in the third quarter of 2018 was $0.7
million, or $0.04 per share, compared to $0.4 million, or $0.02 per
share in the third quarter of 2017.
- Non-GAAP adjusted EBITDA in the third quarter of 2018 was $3.2
million, compared to $1.8 million in the third quarter of
2017.
- On October 30, 2018, we amended and restated our existing
credit agreement. As part of the new, three-year agreement, we
repaid approximately $17.0 million of outstanding borrowings,
increased the amounts available under our revolving facility to
$20.0 million, and changed certain covenant requirements to be less
restrictive. At the closing of the transaction, we borrowed $5.0
million under the revolver.
Commenting on the quarter, Martin Kits van
Heyningen, KVH’s chief executive officer, said, “Our third quarter
results reflect a continuation of the strong momentum that drove
the first half of our year. Our VSAT shipments were a third quarter
record for us, growing more than 125% compared to the third quarter
of 2017. Our VSAT shipments through the first nine months of the
year have already surpassed our shipments for all of 2017 by more
than 40%. Our AgilePlans Connectivity as a Service Program was a
significant driver of this growth, but traditional shipments of our
VSAT products increased almost 45% as well. Our airtime subscribers
again grew by 9%. Our pace of AgilePlans installations increased
27% compared to the second quarter of 2018. In our inertial
navigation segment, our FOG revenue increased by over 50% in the
most recent quarter, our seventh consecutive quarter of double
digits growth. The development of our photonic chip-based FOG
continues on track, and we continue to expect to provide test units
to customers by the end of this year.”
The company operates in two segments, mobile
connectivity and inertial navigation. Net sales for the mobile
connectivity segment increased $0.7 million, or 2%, compared to the
third quarter of 2017 due to a $1.1 million increase in our
mini-VSAT Broadband airtime revenue and a $0.5 million increase in
marine mobile connectivity product sales, partially offset by a
$0.9 million decrease in content and training revenue. Net sales
for our inertial navigation segment increased $2.4 million, or 31%,
compared to the third quarter of 2017, due to a $2.7 million
increase in FOG sales and a $0.5 million increase in contracted
engineering service sales, partially offset by a $0.9 million
decrease in TACNAV sales.
Financial Highlights (in millions, except per
share data)
|
|
|
Three Months
EndedSeptember 30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
GAAP Results |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
43.5 |
|
|
$ |
40.4 |
|
|
$ |
127.0 |
|
|
$ |
121.1 |
|
|
Net loss |
|
$ |
(1.2 |
) |
|
$ |
(2.4 |
) |
|
$ |
(6.4 |
) |
|
$ |
(9.3 |
) |
|
Net loss per share |
|
$ |
(0.07 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.57 |
) |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
0.7 |
|
|
$ |
0.4 |
|
|
$ |
0.3 |
|
|
$ |
(0.2 |
) |
|
Net income (loss) per share |
|
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
(0.01 |
) |
|
Adjusted EBITDA |
|
$ |
3.2 |
|
|
$ |
1.8 |
|
|
$ |
7.0 |
|
|
$ |
3.4 |
|
For more information regarding our non-GAAP financial measures,
see the tables at the end of this release.
Third Quarter Financial Summary
Revenue was $43.5 million for the third quarter of 2018, an
increase of 8%, compared to the third quarter of 2017.
Product revenues for the third quarter of $16.3
million were 16% higher than the prior year quarter, due to an
increase in inertial navigation product sales of $1.8 million and a
$0.4 million increase in mobile connectivity product sales. Mobile
connectivity product sales increased primarily due to a $0.5
million increase in marine product sales, partially offset by a
$0.1 million decrease in land mobile product sales. The increase in
marine product sales was due to a $0.2 million increase in
mini-VSAT Broadband product sales and a $0.3 million increase in
marine accessories and LTE product sales. The adoption of ASC 606
negatively impacted marine product sales by $0.4 million. Inertial
navigation product sales increased primarily due to a $2.7 million
increase in FOG product sales, partially offset by a $0.9 million
decrease in TACNAV product sales.
Service revenues for the third quarter were
$27.2 million, an increase of 3% compared to the third quarter of
2017, due to a $0.6 million increase in inertial navigation service
sales and a $0.3 million increase in mobile connectivity service
sales. Airtime service revenues, which include mini-VSAT Broadband
airtime revenues, increased 6% in the third quarter of 2018
compared to the third quarter of 2017 due to a 9% increase in
subscribers. Content and training revenues, which include our
entertainment, eLearning, and safety content, decreased by 12% in
the third quarter of 2018 compared to the third quarter of 2017.
Our engineering service revenues in the third quarter of 2018
increased by $0.5 million compared to the third quarter of 2017 as
a result of a substantial contract which began in the first quarter
of 2018 and was extended through the third quarter.
Our operating expenses remained flat compared to
the third quarter of 2017 at $19.3 million. The key drivers were a
$0.4 million increase in funded engineering expenses, which reduced
research and development expense, and a $0.3 million decrease in
marketing expenses, partially offset by a $0.4 million increase in
salaries, benefits, and taxes, and a $0.3 million increase in bad
debt expense.
Nine Months Ended September 30 Financial
Summary
Revenue was $127.0 million for the nine months
ended September 30, 2018, an increase of 5% compared to the nine
months ended September 30, 2017. Product revenues for the nine
months ended September 30, 2018 were $46.5 million, which was 7%
higher than the nine months ended September 30, 2017 due to a $5.5
million increase in inertial navigation product sales, which was
partially offset by a $2.3 million decrease in mobile connectivity
product sales. Inertial navigation product sales increased
primarily due to a $5.6 million increase in FOG product sales,
partially offset by a $0.1 million decrease in TACNAV product
sales. Mobile connectivity product sales decreased primarily due to
a $1.5 million decrease in marine product sales due partly to the
impact of the AgilePlans subscription service, the adoption of ASC
606, and a $0.8 million decrease in sales of our land mobile
connectivity products.
Service revenues for the nine months ended
September 30, 2018 were $80.5 million, an increase of 3% compared
to the nine months ended September 30, 2017 due to a $1.5 million
increase in inertial navigation service sales and a $1.2 million
increase in mobile connectivity service sales. Airtime service
revenues, which include mini-VSAT Broadband airtime revenues,
increased 5%. Content and training revenues, which include our
entertainment, eLearning, and safety content, in the nine months
ended September 30, 2018 decreased by 6% compared to the nine
months ended September 30, 2017. Our engineering service revenues
in the nine months ended September 30, 2018 increased 48% compared
to the nine months ended September 30, 2017 as a result of a
substantial contract which began in the first quarter of 2018 and
was extended through the third quarter.
Our operating expenses decreased $0.8 million
year-over-year to $58.8 million in the nine months ended September
30, 2018 compared to $59.6 million in the nine months ended
September 30, 2017. The key drivers were a $1.0 million increase in
funded engineering expenses, a $0.5 million decrease in marketing
expenses, and a $0.4 million decrease in outside consulting fees.
These decreases were partially offset by a $0.8 million increase in
warranty expense and $0.2 million increase in bad debt expense.
Fourth Quarter 2018 and Full Year 2018
Outlook
Our guidance for the fourth quarter and full
year of 2018 is below. We expect that our full-year 2018 VSAT
shipments will almost double compared to 2017, largely as a result
of the popularity of our AgilePlans program among our commercial
customers. We have reduced our full year guidance for revenues and
earnings, partly as a result of the continued success of our
AgilePlans program which, to some extent, negatively impacts the
amount of revenues we are able to record in a particular period.
The reduction in our full year revenue and earnings forecast also
reflects lower than expected TACNAV orders, attributable somewhat
to the recent political tensions in certain international markets,
and higher operating expenses associated with the launch of our new
TracPhone V3-HTS antenna along with our continuing investment in
long-term initiatives such as our new photonic chip-based FOG.
|
(in millions, except per share data) |
|
Fourth Quarter |
|
Full Year |
|
|
|
From |
|
To |
|
From |
|
To |
|
Revenue |
|
$ |
44.0 |
|
|
$ |
48.0 |
|
|
$ |
171.0 |
|
|
$ |
175.0 |
|
|
GAAP EPS |
|
$ |
(0.10 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.38 |
) |
|
Non-GAAP EPS |
|
$ |
0.02 |
|
|
$ |
0.09 |
|
|
$ |
0.04 |
|
|
$ |
0.11 |
|
|
Non-GAAP adjusted EBITDA |
|
$ |
3.0 |
|
|
$ |
5.0 |
|
|
$ |
10.0 |
|
|
$ |
12.0 |
|
ASC 606 requires that certain revenues that had
been recognized in prior periods be reversed as of January 1, 2018
and be recognized over time as performance obligations are met,
and, likewise, that certain currently generated revenues that would
have been recognized under previous accounting guidance instead be
deferred and recognized over time as performance obligations are
met. We expect the net impact of this change in accounting
guidance, which is reflected in the above tables, will be as
follows:
|
(in millions, except per share data) |
|
Fourth Quarter |
|
Full Year |
|
Revenue |
|
$ |
(1.0 |
) |
|
$ |
(2.0 |
) |
|
GAAP EPS |
|
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
Non-GAAP EPS |
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
Non-GAAP adjusted EBITDA |
|
$ |
(0.2 |
) |
|
$ |
(0.3 |
) |
Other Recent Announcements
- Singtel, Asia's leading communications technology group,
announced a partnership to provide shipping companies a seamless
broadband service with KVH's mini-VSAT Broadband satellite
connectivity to help accelerate the digital transformation of the
maritime industry across the Asia-Pacific region.
- National Marine Electronics Association (NMEA) recognized KVH
Marine Satellite Systems with 2018 Product Excellence Awards.
- KVH pledged support to Maritime UK's Women in Maritime
campaign, which aims to promote fairness, equality, and inclusion
within the maritime sector.
- KVH Videotel introduced a new training package free to mariners
worldwide, "Seafarers’ Mental Health and Wellbeing".
Please review the corresponding press releases for more details
regarding these developments.
Conference Call Details
KVH Industries will host a conference call today
at 10:30 a.m. ET through the company’s website. The conference call
can be accessed at 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 will be available on the
company website within three hours of the completion of the
call.
Non-GAAP Financial Measures
This release provides non-GAAP financial
information, which may include constant-currency revenue, non-GAAP
net income (loss), non-GAAP diluted EPS, and non-GAAP adjusted
EBITDA, as a supplement to our condensed consolidated financial
statements, which are prepared in accordance with generally
accepted accounting principles (“GAAP”). Management uses these
non-GAAP financial measures internally in analyzing financial
results to assess operational performance. Constant-currency
revenue is calculated on the basis of local currency results, using
foreign currency exchange rates applicable to the earlier
comparative period, and management believes that presenting
information on a constant-currency basis helps management and
investors to isolate the impact of changes in those rates from
other factors. The presentation of this financial information is
not intended to be considered in isolation or as a substitute for
the financial information prepared in accordance with GAAP. The
non-GAAP financial measures used in this press release adjust for
specified items that can be highly variable or difficult to
predict. Management generally uses these non-GAAP financial
measures to facilitate financial and operational decision-making,
including evaluation of our historical operating results,
comparison to competitors’ operating results, and determination of
management incentive compensation. These non-GAAP financial
measures reflect an additional way of viewing aspects of our
operations that, when viewed with GAAP results and the
reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting our business.
Some limitations of non-GAAP net income (loss),
non-GAAP diluted EPS, and non-GAAP adjusted EBITDA include the
following:
- Non-GAAP net income (loss) and diluted EPS exclude amortization
of intangibles, stock-based compensation, employee termination and
other non-recurring costs, foreign exchange transaction gains and
losses, the tax effect of the foregoing and the change in valuation
allowance.
- Non-GAAP adjusted EBITDA represents net income (loss) before
interest income, interest expense, income taxes, depreciation,
amortization, stock-based compensation, employee termination and
other non-recurring costs, and foreign exchange transaction gains
and losses.
These non-GAAP financial measures exclude the
effect of foreign exchange transaction losses, which represents a
change from calculations presented in prior earnings releases. We
decided to exclude foreign exchange transaction losses because we
do not believe such gains or losses are indicative of operating
performance. Other companies, including companies in KVH’s
industry, may calculate these non-GAAP financial measures
differently or not at all, which will reduce their usefulness as a
comparative measure.
Future Non-GAAP Adjustments
Future GAAP diluted EPS may be affected by
changes in ongoing assumptions and judgments, and may also be
affected by non-recurring, unusual or unanticipated charges,
expenses or gains, which are excluded in the calculation of our
non-GAAP diluted EPS guidance as described in this press
release.
Because non-GAAP financial measures exclude the
effect of items that will increase or decrease our reported results
of operations, management strongly encourages investors to review
our consolidated financial statements and publicly filed reports in
their entirety. Reconciliations of the non-GAAP financial measures
to the most directly comparable GAAP financial measures are
included in the tables accompanying this release.
About KVH Industries, Inc.
KVH Industries, Inc. (Nasdaq: KVHI), is a global
leader in mobile connectivity and inertial navigation systems,
innovating to enable a mobile world. The market leader in maritime
VSAT, KVH designs, manufactures, and provides connectivity and
content services globally. KVH is also a premier manufacturer of
high-performance sensors and integrated inertial systems for
defense and commercial applications. Founded in 1982, the company
is based in Middletown, RI, with research, development, and
manufacturing operations in Middletown, RI, and Tinley Park, IL,
and more than a dozen offices around the globe.
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, the success of our new
initiatives, our investment plans, our development goals, our
anticipated revenue and earnings, the anticipated impact of ASC
606, and the impact of our future initiatives on revenue,
competitive positioning, profitability, and product orders. Actual
results could differ materially from the forward-looking statements
made in this press release. Factors that might cause these
differences include, but are not limited to: the uncertain duration
of the initial adverse impact on our overall revenues of our new
AgilePlans, under which we recognize no revenue for product sales,
either at the time of shipment or over the contract term; increased
costs arising from the new HTS network; the impact of recent
changes in revenue recognition and lease accounting standards,
including potential changes in the interpretation of those
standards; the uncertain impact of tax reform and federal budget
deficits; the uncertain impact of changes in trade policy,
including potential tariffs and trade wars with other countries;
unanticipated obstacles in our photonic chip and other product
development efforts; delays in the receipt of anticipated orders
for our products and services, including significant orders for
TACNAV products, or the potential failure of such orders to occur
at all; continued adverse impacts of currency fluctuations,
particularly the British Pound; risks associated with the impact of
Brexit on sales and operations in the U.K. and Europe and on the
overall global economy; our ability to successfully implement our
new initiatives without unanticipated additional expenses;
potential reduced sales to companies in or dependent upon the
turbulent oil and gas industry; continued substantial fluctuations
in military sales, including to foreign customers; the
unpredictability of defense budget priorities as well as the order
timing, purchasing schedules, and priorities for defense products,
including possible order cancellations; the uncertain impact of
potential budget cuts by government customers; the impact of
extended economic weakness on the sale and use of marine vessels
and recreational vehicles; the potential inability to increase or
maintain our market share in the market for airtime services; the
need to increase sales of the TracPhone V-IP and V-HTS series
products and related services to maintain and improve airtime gross
margins; the need for, or delays in, qualification of products to
customer or regulatory standards; potential declines or changes in
customer demand, due to economic, weather-related, seasonal, and
other factors, particularly with respect to the TracPhone V-IP and
V-HTS series, including with respect to new pricing models;
increased price and service competition in the mobile connectivity
market; potential increased expenses associated with investments in
new technology; exposure for potential intellectual property
infringement; potential additional litigation expenses;
fluctuations in interest rates; potential changes in tax and
accounting requirements or assessments, including management’s
assessment of the probability and effect of future events; stock
price volatility; and export restrictions, delays in procuring
export licenses, and other international risks. 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 2, 2018. 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 but not limited to the following marks: KVH,
TracVision, TracPhone, CommBox, TACNAV, IP-MobileCast, Videotel,
mini-VSAT Broadband, NEWSlink, KVH OneCare, and AgilePlans by KVH.
Other trademarks are the property of their respective
companies.
| |
| KVH INDUSTRIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share amounts,
unaudited) |
| |
|
|
|
Three Months
EndedSeptember 30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Sales: |
|
|
|
|
|
|
|
|
|
Product |
|
$ |
16,367 |
|
|
$ |
14,169 |
|
|
$ |
46,521 |
|
|
$ |
43,355 |
|
|
Service |
|
27,150 |
|
|
26,281 |
|
|
80,489 |
|
|
77,755 |
|
|
Net sales |
|
43,517 |
|
|
40,450 |
|
|
127,010 |
|
|
121,110 |
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
| Costs of
product sales |
|
9,767 |
|
|
9,578 |
|
|
28,784 |
|
|
29,412 |
|
| Costs of
service sales |
|
15,376 |
|
|
13,374 |
|
|
44,690 |
|
|
39,736 |
|
| Research
and development |
|
3,789 |
|
|
3,990 |
|
|
11,288 |
|
|
11,698 |
|
| Sales,
marketing and support |
|
8,421 |
|
|
8,234 |
|
|
25,856 |
|
|
25,098 |
|
| General
and administrative |
|
7,084 |
|
|
7,075 |
|
|
21,679 |
|
|
22,805 |
|
| Total costs and expenses |
|
44,437 |
|
|
42,251 |
|
|
132,297 |
|
|
128,749 |
|
| Loss from operations |
|
(920 |
) |
|
(1,801 |
) |
|
(5,287 |
) |
|
(7,639 |
) |
| Interest
income |
|
161 |
|
|
166 |
|
|
464 |
|
|
491 |
|
| Interest
expense |
|
453 |
|
|
379 |
|
|
1,290 |
|
|
1,081 |
|
| Other
income (expense), net |
|
199 |
|
|
(141 |
) |
|
371 |
|
|
(321 |
) |
| Loss before income tax expense |
|
(1,013 |
) |
|
(2,155 |
) |
|
(5,742 |
) |
|
(8,550 |
) |
|
Income tax expense |
|
161 |
|
|
283 |
|
|
668 |
|
|
799 |
|
| Net loss |
|
$ |
(1,174 |
) |
|
$ |
(2,438 |
) |
|
$ |
(6,410 |
) |
|
$ |
(9,349 |
) |
|
Net loss per common share: |
|
|
|
|
|
|
|
|
| Basic and
Diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.57 |
) |
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
| Basic and
Diluted |
|
17,188 |
|
|
16,469 |
|
|
17,025 |
|
|
16,393 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| KVH INDUSTRIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, unaudited) |
| |
|
|
|
|
|
|
|
September 30,2018 |
|
December 31,2017 |
|
ASSETS |
|
|
|
|
| Cash,
cash equivalents and marketable securities |
|
$ |
33,236 |
|
|
$ |
42,915 |
|
| Accounts
receivable, net |
|
28,971 |
|
|
28,316 |
|
|
Inventories |
|
24,676 |
|
|
22,732 |
|
| Other
current assets and contract assets |
|
7,201 |
|
|
3,816 |
|
| Total current assets |
|
94,084 |
|
|
97,779 |
|
| Property
and equipment, net |
|
52,375 |
|
|
43,521 |
|
|
Goodwill |
|
32,848 |
|
|
33,872 |
|
|
Intangible assets, net |
|
11,637 |
|
|
15,120 |
|
| Other
non-current assets and contract assets |
|
13,327 |
|
|
5,927 |
|
|
Non-current deferred income taxes |
|
201 |
|
|
20 |
|
| Total assets |
|
$ |
204,472 |
|
|
$ |
196,239 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| Accounts
payable and accrued expenses |
|
$ |
35,651 |
|
|
$ |
33,948 |
|
| Contract
liabilities |
|
10,770 |
|
|
— |
|
| Deferred
revenue |
|
— |
|
|
6,919 |
|
| Current
portion of long-term debt |
|
22,691 |
|
|
2,482 |
|
| Total current liabilities |
|
69,112 |
|
|
43,349 |
|
| Other
long-term liabilities |
|
2,060 |
|
|
19 |
|
| Long-term
contract liabilities |
|
8,771 |
|
|
— |
|
|
Non-current deferred tax liability |
|
2,547 |
|
|
2,634 |
|
| Long-term
debt, excluding current portion |
|
20,252 |
|
|
44,572 |
|
|
Stockholders’ equity |
|
101,730 |
|
|
105,665 |
|
| Total liabilities and stockholders’
equity |
|
$ |
204,472 |
|
|
$ |
196,239 |
|
| |
|
|
|
|
|
|
|
|
| |
| KVH INDUSTRIES, INC. AND
SUBSIDIARIESRECONCILIATION OF GAAP NET LOSS TO
NON-GAAP NET INCOME (LOSS)(in thousands, except
per share amounts, unaudited) |
| |
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net loss - GAAP |
|
$ |
(1,174 |
) |
|
$ |
(2,438 |
) |
|
$ |
(6,410 |
) |
|
$ |
(9,349 |
) |
| Amortization of intangibles |
|
958 |
|
|
1,096 |
|
|
3,101 |
|
|
3,266 |
|
| Stock-based compensation expense |
|
860 |
|
|
809 |
|
|
2,452 |
|
|
2,621 |
|
| Employee termination and other non-recurring
costs |
|
— |
|
|
— |
|
|
195 |
|
|
— |
|
| Foreign exchange transaction (gain) loss (a) |
|
(141 |
) |
|
192 |
|
|
(258 |
) |
|
482 |
|
| Tax effect on the foregoing |
|
(333 |
) |
|
(527 |
) |
|
(1,088 |
) |
|
(1,630 |
) |
| Change in valuation allowance (b) |
|
514 |
|
|
1,278 |
|
|
2,273 |
|
|
4,401 |
|
|
Net income (loss) - Non-GAAP |
|
$ |
684 |
|
|
$ |
410 |
|
|
$ |
265 |
|
|
$ |
(209 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share -
Non-GAAP: |
|
|
|
|
|
|
|
|
| Basic and Diluted |
|
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
| Basic |
|
17,188 |
|
|
16,469 |
|
|
17,025 |
|
|
16,393 |
|
| Diluted |
|
17,429 |
|
|
16,649 |
|
|
17,282 |
|
|
16,393 |
|
(a) We
changed our definition of non-GAAP net income (loss) and non-GAAP
net income (loss) per common share to exclude the impacts of
realized and unrealized foreign exchange transaction gains and
losses since such gains and losses are not indicative of operating
performance in any particular period. If we had presented non-GAAP
net income (loss) and non-GAAP net income (loss) per common share
consistent with our prior practice, the non-GAAP net income and
non-GAAP net income per common share for the three months ended
September 30, 2018 would have been $0.2 million and $0.01 per
common share, respectively, greater than the amounts reported in
the table, the non-GAAP net income for the three months ended
September 30, 2017 would have been $0.1 million less than the
amounts reported in the table, and there would have been in the
non-GAAP net earnings per common share for the three months ended
September 30, 2017. The non-GAAP net income and non-GAAP net income
per common share for the nine months ended September 30, 2018 would
have been $0.3 million and $0.01 per common share, respectively,
greater than the amounts reported in the table. The non-GAAP net
loss and non-GAAP net loss per common share for the nine months
ended September 30, 2017 would have been $0.4 million and $0.03 per
common share, respectively, greater than the amounts reported in
the table.
(b) Represents an
increase in deferred tax asset valuation allowance on additional
United States net operating losses.
| |
| KVH INDUSTRIES, INC. AND
SUBSIDIARIESRECONCILIATION OF GAAP NET LOSS TO
NON-GAAPEBITDA AND NON-GAAP ADJUSTED
EBITDA(in thousands, unaudited) |
| |
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
GAAP net loss |
|
$ |
(1,174 |
) |
|
$ |
(2,438 |
) |
|
$ |
(6,410 |
) |
|
$ |
(9,349 |
) |
| Income tax expense |
|
161 |
|
|
283 |
|
|
668 |
|
|
799 |
|
| Interest expense, net |
|
292 |
|
|
213 |
|
|
826 |
|
|
590 |
|
| Depreciation and amortization |
|
3,193 |
|
|
2,745 |
|
|
9,481 |
|
|
8,222 |
|
|
Non-GAAP EBITDA |
|
2,472 |
|
|
803 |
|
|
4,565 |
|
|
262 |
|
| Stock-based compensation expense |
|
860 |
|
|
809 |
|
|
2,452 |
|
|
2,621 |
|
| Employee termination and other non-recurring
costs |
|
— |
|
|
— |
|
|
195 |
|
|
— |
|
| Foreign exchange transaction (gain) loss (a) |
|
(141 |
) |
|
192 |
|
|
(258 |
) |
|
482 |
|
|
Non-GAAP adjusted EBITDA |
|
$ |
3,191 |
|
|
$ |
1,804 |
|
|
$ |
6,954 |
|
|
$ |
3,365 |
|
(a) We changed our
definition of non-GAAP adjusted EBITDA to exclude the impacts of
realized and unrealized foreign exchange transaction gains and
losses since such gains and losses are not indicative of operating
performance in any particular period. If we had presented non-GAAP
adjusted EBITDA consistent with our prior practice, non-GAAP
adjusted EBITDA would have been $0.2 million greater and $0.2
million lower, respectively, than the amounts presented in the
table for the three months ended September 30, 2018 and 2017,
respectively. If we had presented non-GAAP adjusted EBITDA
consistent with our prior practice, non-GAAP adjusted EBITDA would
have been $0.3 million greater and $0.5 million lower,
respectively, than the amounts presented in the table for the nine
months ended September 30, 2018 and 2017, respectively.
| |
| KVH INDUSTRIES, INC. AND
SUBSIDIARIESREVENUE AND OPERATING INCOME (LOSS) BY
SEGMENT(in millions except for percentages,
unaudited) |
| |
|
Segment Net Sales |
|
Three Months
EndedSeptember 30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Mobile connectivity sales |
|
|
|
|
|
|
|
|
|
Product |
|
$ |
7.6 |
|
|
$ |
7.2 |
|
|
$ |
23.6 |
|
|
$ |
25.9 |
|
|
Service |
|
25.9 |
|
|
25.6 |
|
|
76.4 |
|
|
75.2 |
|
| Net sales |
|
$ |
33.5 |
|
|
$ |
32.8 |
|
|
$ |
100.0 |
|
|
$ |
101.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Inertial navigation sales |
|
|
|
|
|
|
|
|
|
Product |
|
$ |
8.7 |
|
|
$ |
6.9 |
|
|
$ |
22.9 |
|
|
$ |
17.4 |
|
|
Service |
|
1.3 |
|
|
0.7 |
|
|
4.1 |
|
|
2.6 |
|
| Net sales |
|
$ |
10.0 |
|
|
$ |
7.6 |
|
|
$ |
27.0 |
|
|
$ |
20.0 |
|
|
Operating Income (Loss) |
|
Three Months
EndedSeptember 30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Mobile connectivity |
|
$ |
1.5 |
|
|
$ |
2.0 |
|
|
$ |
3.7 |
|
|
$ |
5.3 |
|
|
Inertial navigation |
|
1.9 |
|
|
0.4 |
|
|
3.8 |
|
|
0.7 |
|
|
|
|
3.4 |
|
|
2.4 |
|
|
7.5 |
|
|
6.0 |
|
|
Unallocated |
|
(4.3 |
) |
|
(4.2 |
) |
|
(12.8 |
) |
|
(13.6 |
) |
| Loss from operations |
|
$ |
(0.9 |
) |
|
$ |
(1.8 |
) |
|
$ |
(5.3 |
) |
|
$ |
(7.6 |
) |
|
|
|
Three Months
EndedSeptember 30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Mobile Connectivity Revenue Components |
|
(percentage of net
sales) |
| Product sales |
|
17 |
% |
|
18 |
% |
|
19 |
% |
|
21 |
% |
| mini-VSAT Broadband airtime |
|
41 |
% |
|
42 |
% |
|
41 |
% |
|
41 |
% |
| Content and training |
|
16 |
% |
|
20 |
% |
|
18 |
% |
|
20 |
% |
|
Inertial Navigation Revenue Components |
|
|
|
|
|
|
|
|
| FOG-based products |
|
18 |
% |
|
13 |
% |
|
16 |
% |
|
12 |
% |
| Tactical navigation products |
|
3 |
% |
|
4 |
% |
|
2 |
% |
|
3 |
% |
| |
| KVH INDUSTRIES, INC. AND
SUBSIDIARIESNON-GAAP EPS
GUIDANCE(unaudited) |
| |
|
|
|
|
|
|
|
Fourth
QuarterFiscal 2018 (Projected) |
|
Full
YearFiscal 2018 (Projected) |
|
Net loss per common share |
|
$(0.10) - $(0.01) |
|
$(0.48) - $(0.38) |
|
|
|
|
|
|
|
Estimated amortization of intangibles (a) |
|
$0.06 |
|
$0.24 |
|
Estimated stock-based compensation expense |
|
$0.05 |
|
$0.20 |
|
Estimated tax effect |
|
$(0.02) |
|
$(0.09) |
| Change in valuation allowance (b) |
|
$0.03 - $ 0.01 |
|
$0.17 - $0.14 |
|
|
|
|
|
|
|
Non-GAAP net income per common share (c) |
|
$0.02 - $0.09 |
|
$0.04 - $0.11 |
- Includes amortization of intangible assets resulting from
acquisitions.
- Represents incremental forecasted valuation allowance that we
expect to record against additional deferred tax assets generated
in 2018.
- Assumes no significant change in realized and unrealized
foreign exchange transactions gains and losses.
| |
| KVH INDUSTRIES, INC. AND
SUBSIDIARIESNON-GAAP ADJUSTED EBITDA
GUIDANCE(in millions, unaudited) |
| |
|
|
|
Fourth Quarter
Fiscal 2018 (Projected) |
|
Full
YearFiscal 2018 (Projected) |
|
GAAP net loss |
|
($2.0) - $0.0 |
|
($8.4) - ($6.4) |
|
|
|
|
|
|
|
Estimated income tax provision |
|
$0.2 |
|
$0.8 |
|
Estimated interest expense, net |
|
$0.2 |
|
$1.1 |
|
Estimated depreciation and amortization (a) |
|
$3.7 |
|
$13.1 |
|
Estimated stock-based compensation expense |
|
$0.9 |
|
$3.4 |
|
|
|
|
|
|
|
Non-GAAP adjusted EBITDA(b) |
|
$3.0 - $5.0 |
|
$10.0 - $12.0 |
- Reflects amortization of intangible assets resulting from
acquisitions and depreciation of fixed assets.
- Assumes no significant change in realized and unrealized
foreign exchange transaction gains and losses.
|
|
|
|
|
|
|
Contact: |
|
KVH
Industries, Inc.Donald W. Reilly401-608-8977dreilly@kvh.com |
|
FTI
ConsultingChristine Mohrmann212-850-5600 |
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