KVH Industries, Inc., (Nasdaq: KVHI): -- Record Quarterly Revenue
of $22.0 Million, Up 17% Year over Year -- $0.11 EPS and Record Net
Income of $1.7 Million KVH Industries, Inc., (Nasdaq: KVHI) today
reported its results for the second quarter ended June 30, 2006.
Revenue for the quarter was $22.0 million, up 17% from $18.8
million for the second quarter ended June 30, 2005. Net income for
the quarter was $1.7 million, or $0.11 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. 123R, "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
$1.0 million, or $0.06 per diluted share. For the six months ended
June 30, 2006, revenue increased 15% to $42.3 million from $36.7
million for the six months ended June 30, 2005. KVH reported net
income of $2.9 million or $0.20 per diluted share for the 2006
period, versus net income of $1.3 million or $0.09 per diluted
share in the year ago period. Net income for the 2006 period
included a stock-based compensation charge of approximately $0.5
million, or $0.03 per diluted share. "Building on our successful
start to the year, the second quarter was highlighted by record
revenue, strong earnings growth, and increasing demand for our new
products," said Martin Kits van Heyningen, KVH's president and
chief executive officer. "Our maritime TracVision(R) M3 satellite
TV system is generating new sales within the smaller boat market
segment, complementing the continued demand for our established,
larger products. Our revamped TracVision R-series, including the
new flagship TracVision R6, is gaining momentum with recreational
vehicle manufacturers and consumers. As a result we achieved
year-over-year sales growth in this market a full quarter earlier
than anticipated. Our defense business also grew on a
year-over-year basis, driven by sales of our fiber optic gyro (FOG)
products, which topped $2.0 million in quarterly product sales for
the first time." In the second quarter of 2006, mobile
communication revenue was $16.8 million, up 22% on a year-over-year
basis. Defense-related sales, including those for KVH's TACNAV(R)
military navigation systems and FOG solutions, were approximately
$5.2 million, up 3% on a year-over-year basis. Commenting on the
company's financial results, Pat Spratt, KVH's chief financial
officer, remarked, "Our second quarter results exceeded both our
top and bottom line expectations, in part due to the resurgence in
our sales to the RV marketplace and the level of demand in the
worldwide marine market for our mobile communication products and
services. Income from operations increased 46% compared to last
year, and our operating margin improved to 6.4%. We are encouraged
by the recent performance in the majority of our businesses. Based
on the general business strength that we have seen to date, we are
raising our guidance for revenue and earnings. We anticipate that
year-over-year revenue growth will be in the range of 12% - 15% for
the third quarter and for the full year. We expect that EPS will be
approximately $0.05 in the third quarter. This projection includes
approximately $0.02 per share of stock option expenses. We expect
that EPS for the year will be in the range of $0.30 - $0.33,
considerably above our prior guidance of $0.24. This projection
includes approximately $0.06 - $0.07 per share of stock option
expenses. This 2006 guidance assumes a sequential decline in marine
sales for the second half of the year compared to the first half,
in line with historical seasonal patterns, and a continuation of
the current quarterly level of tactical navigation sales for the
remainder of the year." Recent Operational Highlights: -- July 19,
2006 - KVH announced that Sea Ray, a major manufacturer of inboard
recreational powerboats, is adding the TracVision M3 as an option
on new vessels 29-44 feet in length. Sea Ray will continue to offer
the TracVision 4-HP on vessels 45 feet and longer. -- June 26, 2006
- Teton Homes announced that it selected the TracVision R4
stationary automatic satellite TV system for use on its 2007 model
year 5th wheel campers. -- May 18, 2006 - KVH expanded the
distribution of its consumer products into Asia with the selection
of Eletek Technology of China and Hong Kong and Can Traders of
Singapore as new regional distributors. This expansion builds on
the success of KVH's existing marine satellite TV and communication
sales and regional distribution networks in North America, Europe,
the Middle East, Australia, and New Zealand. KVH is webcasting its
second 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 goals for 2006, 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: 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 toward our mobile
communication products; the impact of increases in fuel prices on
the sale and use of motor vehicles and marine vessels; 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; 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 May 9, 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, and TACNAV are registered 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 Six
Months Ended Ended June 30, June 30, -----------------
----------------- 2006 2005 2006 2005 -------- -------- --------
-------- Net sales $21,968 $18,807 $42,257 $36,700 Cost of goods
sold 13,373 11,029 24,842 21,812 -------- -------- --------
-------- Gross profit 8,595 7,778 17,415 14,888 Operating expenses:
Research and development 1,973 1,978 4,142 3,876 Sales and
marketing 3,428 3,347 7,273 6,970 General and administrative 1,790
1,493 3,685 2,766 -------- -------- -------- -------- Income from
operations 1,404 960 2,315 1,276 Other income, net 511 68 943 210
Income tax expense (229) (76) (318) (233) -------- --------
-------- -------- Net income $ 1,686 $ 952 $ 2,940 $ 1,253 ========
======== ======== ======== Net income per common share Basic $ 0.11
$ 0.07 $ 0.20 $ 0.09 ======== ======== ======== ======== Diluted $
0.11 $ 0.06 $ 0.20 $ 0.09 ======== ======== ======== ========
Weighted average common shares outstanding Basic 14,773 14,549
14,729 14,535 ======== ======== ======== ======== Diluted 14,893
14,658 14,860 14,662 ======== ======== ======== ======== KVH
INDUSTRIES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands, unaudited) June December 30, 31, 2006 2005
-------- -------- ASSETS Cash, cash equivalents and marketable
securities $53,956 $50,090 Accounts receivable, net 11,395 12,283
Inventories 7,435 6,564 Other assets 972 1,233 -------- --------
Total current assets 73,758 70,170 Property and equipment, net
9,627 8,663 Deferred income taxes 3,334 3,334 Other non-current
assets 91 163 -------- -------- Total assets $86,810 $82,330
======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts
payable and accrued expenses $ 8,321 $ 8,442 Current portion of
long-term debt 119 115 -------- -------- Total current liabilities
8,440 8,557 Deferred revenue 252 128 Long-term debt, excluding
current portion 2,221 2,282 Stockholders' equity 75,897 71,363
-------- -------- Total liabilities and stockholders' equity
$86,810 $82,330 ======== ======== *T
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