KVH Industries, Inc., (Nasdaq: KVHI) will host a call at 9:00 a.m.
ET on Thursday, May 16, 2019 to discuss the sale of its Videotel
Training Business. In addition, the call will include a discussion
of the impact on the previously published revenue and earnings
guidance for the Company’s second quarter and full year of 2019.
The call will be hosted by Mr. Martin Kits van Heyningen, chief
executive officer, Mr. Donald Reilly, chief financial officer, and
Mr. Brent Bruun, chief operating officer.
Updated Second Quarter and Full Year 2019
Outlook
The guidance in the following tables has been
updated to reflect the sale of Videotel on May 13, 2019. Apart from
this sale, this guidance is unchanged from the guidance published
earlier in May. The updated guidance includes a preliminary
estimate of the gain, including an estimate of the tax expense
associated with the gain, that will be recorded on the sale of
Videotel. The actual gain that will be recorded, including the tax
impact, may be significantly different than this estimate once
actual costs associated with the sale are known and the analysis of
the tax impact is complete. This updated guidance does not
take into account our anticipated use of proceeds, including the
anticipated repayment of all of our term loans and all or a
substantial portion of our revolving loans, or the resulting impact
on our anticipated net interest expense.
(in millions, except per
share data) |
|
Second Quarter |
|
Full Year |
|
|
From |
|
To |
|
From |
|
To |
Revenue |
|
$ |
40.0 |
|
|
$ |
41.5 |
|
|
$ |
169.0 |
|
|
$ |
182.0 |
|
GAAP EPS |
|
$ |
2.08 |
|
|
$ |
2.11 |
|
|
$ |
1.66 |
|
|
$ |
1.94 |
|
Non-GAAP EPS |
|
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.05 |
) |
Non-GAAP Adjusted EBITDA |
|
$ |
1.0 |
|
|
$ |
1.8 |
|
|
$ |
5.0 |
|
|
$ |
10.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call Details
A live broadcast of the call will be available
online at investors.kvh.com. In addition, an audio replay of the
conference call will be available on the website for two weeks. To
listen to the replay, visit investors.kvh.com starting two hours
following the conclusion of the call. Investors who wish to submit
questions during or following the call may do so to IR@kvh.com.
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 expense, employee
termination and other non-recurring costs, transaction-related
legal fees, foreign exchange transaction gains and losses, the tax
effect of the foregoing and certain discrete tax charges, including
changes in our valuation allowance and other tax adjustments.
- 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, transaction-related legal fees, and
foreign exchange transaction gains and losses.
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, 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, government shutdowns and
Congressional deadlock; the uncertain impact of changes in trade
policy, including actual and potential new or higher tariffs and
trade barriers, as well as 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 and new initiatives; 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-K filed with the Securities and Exchange Commission on
March 1, 2019. 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
SUBSIDIARIESNON-GAAP EPS
GUIDANCE(unaudited)
|
|
Second QuarterFiscal 2019 (Projected) |
|
Full
YearFiscal 2019 (Projected) |
Net income per common share |
|
$2.08 - $2.11 |
|
$1.66 - $1.94 |
|
|
|
|
|
Estimated gain on sale of
Videotel and impact of proceeds |
|
($2.27) |
|
($2.33) |
Estimated amortization of
intangibles (a) |
|
$0.03 |
|
$0.11 |
Estimated stock-based
compensation expense |
|
$0.06 |
|
$0.20 |
Estimated tax effect |
|
$(0.02) |
|
$(0.07) |
Change in valuation allowance
(b) |
|
$0.07 - $0.05 |
|
$0.20 - $0.10 |
|
|
|
|
|
Non-GAAP net loss per common
share (c) |
|
$(0.05) - $(0.04) |
|
$(0.23) - $(0.05) |
(a) |
Includes amortization of intangible assets resulting
from acquisitions. |
(b) |
Represents incremental forecasted valuation allowance
that we expect to record against additional deferred tax assets
expected to be generated in 2019. |
(c) |
Assumes no significant change in realized and
unrealized foreign exchange transaction gains and losses. |
|
|
KVH INDUSTRIES, INC. AND
SUBSIDIARIESNON-GAAP ADJUSTED EBITDA
GUIDANCE(in millions, unaudited)
|
|
Second Quarter
Fiscal 2019 (Projected) |
|
Full
YearFiscal 2019 (Projected) |
GAAP net income |
|
$36.0- $36.8 |
|
$28.8 - $33.8 |
|
|
|
|
|
Estimated gain on sale of
Videotel and impact of proceeds |
|
($39.6) |
|
($40.7) |
Estimated income tax
provision |
|
$0.2 |
|
$0.0 |
Estimated interest expense,
net |
|
$0.2 |
|
$0.7 |
Estimated depreciation and
amortization (a) |
|
$3.1 |
|
$12.6 |
Estimated stock-based
compensation expense |
|
$1.1 |
|
$3.6 |
|
|
|
|
|
Non-GAAP adjusted
EBITDA(b) |
|
$1.0 - $1.8 |
|
$5.0 - $10.0 |
(a) |
Reflects
amortization of intangible assets resulting from acquisitions and
depreciation of fixed assets. |
(b) |
Assumes no significant change in realized and
unrealized foreign exchange transaction gains and losses. |
|
|
|
|
|
Contact: |
KVH Industries, Inc. |
FTI Consulting |
|
Brent Bruun |
Christine Mohrmann |
|
401-845-8194 |
212-850-5600 |
|
bbruun@kvh.com |
|
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