Fourth quarter revenue of $21.2 million with net profit of $0.3
million or $0.02 per share MIDDLETOWN, R.I., Feb. 5
/PRNewswire-FirstCall/ -- KVH Industries, Inc., (NASDAQ:KVHI) today
reported financial results for the fourth quarter and full year
ended December 31, 2008. Revenue for the fourth quarter of 2008 was
$21.2 million, up 8% from the quarter ended December 31, 2007. Net
income for the period was $0.3 million, or $0.02 per diluted share.
During the same period last year the company reported net income of
$1.0 million or $0.06 on a per diluted share basis. For the year
ended December 31, 2008, revenue was $82.4 million, up 2% compared
to $80.9 million for the year ended December 31, 2007. KVH reported
net income of $3.1 million or $0.21 on a per diluted share basis
for 2008, versus net income of $2.5 million or $0.17 on a per
diluted share basis for 2007. "While the economic situation is a
serious challenge for all companies, our innovative strategic plan
and diversified business model are generating revenue from
satellite communications on land, sea, and air, as well as growth
from our defense and commercial businesses. I am confident in our
ability to continue to grow the company in spite of the current
recession while strengthening our strategic position for the long
term," said Martin Kits van Heyningen, KVH's chief executive
officer. "At the start of the year, we identified two key strategic
growth opportunities -- the expansion of our mini-VSAT
Broadband(sm) airtime service and the use of our fiber optic gyros
in remote weapon stations. While our short-term financial
expectations evolved over the course of the year in response to the
recession, we maintained our focus on these strategic initiatives.
Our investment is paying off as both played critical roles in
helping us strengthen the top and bottom line in 2008 as well as
positioning us for the future." In the fourth quarter of 2008,
mobile communications revenue from products and services was $11.1
million, down 21% on a year-over-year basis, primarily due to
declines in the land market. Mr. Kits van Heyningen commented, "Our
land mobile business, especially sales to the recreational vehicle
market, remains a challenge as fourth quarter revenue from products
and services declined 59% versus the same period last year. At this
point, sales from products and services in our land business
represent less than 10% of our total revenue. "Within our marine
business, the market weakness we saw at the end of the third
quarter of 2008 in the leisure market carried over into the fourth
quarter and worsened, affecting our sales both in Europe and
domestically. However, sales of our TracPhone(R) V7 and mini-VSAT
airtime service helped to offset much of that weakness resulting in
only a 2% decline in revenue from marine products and services
compared to the fourth quarter of 2007. Interest in our mini-VSAT
Broadband solution continues to grow, especially within the
commercial maritime market where ship operators are now looking for
cost savings and cost effectiveness in an increasingly competitive
market. With the TracPhone V7 and mini-VSAT Broadband service,
we're able to offer lower costs for hardware, installation, and
airtime service compared to other products, along with an expanding
coverage area that now includes the northern Pacific Ocean." KVH's
defense-related guidance and stabilization revenue from KVH's fiber
optic gyro solutions, TACNAV(R) military navigation systems, and
related services were approximately $10.1 million in the fourth
quarter of 2008, up 79% on a year-over-year basis. "We enjoyed an
excellent quarter in our guidance and stabilization business,
spurred by a record quarter for fiber optic gyro sales. This was
the result of our successful qualification of the DSP-3100 gyro and
the start of shipments to Kongsberg Defence & Aerospace for its
family of Protector remote weapon stations," concluded Mr. Kits van
Heyningen. Commenting on the company's financial results, Patrick
Spratt, KVH's chief financial officer, said, "Although our full
year revenue increased only 2% compared to fiscal year 2007, our
net income grew 22% over the same period, the result of our
effective operational and cost management efforts. Our balance
sheet remains solid and we have continued our investment in
infrastructure to support the rollout of the mini-VSAT Broadband
global network. During this difficult economic time, we will be
diligent managing cash to maintain our financial strength and the
flexibility to carry out our business initiatives." "Looking ahead
for 2009, assuming the macro-economic conditions get no worse, we
believe that revenue will grow about 10% for the year, driven by
the growth of our mini-VSAT Broadband and fiber optic gyro
businesses as well as the initial shipments of our new satellite
antenna system for LiveTV aeronautical installations. As we all
know, this is a very difficult environment in which to project
performance as conditions are so poor and so volatile that there is
a very low level of consumer and commercial confidence. We will
continue to be cautious about the outlook for our core businesses
while being opportunistic with respect to our new market growth
initiatives. "For the first quarter, we expect that sales will be
down compared to last year's first quarter, when sales of land
products were still relatively robust, and that we will show a
modest loss." Commenting on the company's plans going forward, Mr.
Spratt said, "We will continue to invest in the worldwide rollout
of our mini-VSAT Broadband network along with the development of
new products for our marine and fiber optic gyro businesses. These
investments, coupled with the anticipated continuing slide in
consumer sales, will put substantial pressure on margins. Until the
general economy improves, we will strive to manage operations to
deliver bottom line results that are around breakeven. Our primary
financial objectives for the next several quarters are to manage
operations to mitigate the negative impact of poor economic
conditions, and maintain a strong cash position, so we will be an
even stronger company when the economic conditions do improve."
Recent Operational Highlights: -- On January 26, 2009, KVH
announced that it had signed a new global distribution agreement
with Thrane & Thrane for KVH's TracPhone V7 satellite
communication system and mini-VSAT Broadband service. Under the
terms of the agreement, Thrane & Thrane will private label the
TracPhone V7 under its SAILOR(R) brand while reselling KVH's
airtime service. -- On January 21, 2009, the northern Pacific Ocean
Region for the mini-VSAT Broadband airtime service officially went
live in support of commercial, leisure, and government vessels
equipped with KVH's TracPhone V7 satellite communication system. --
On January 9, 2009, KVH introduced a variant of its 14.5-inch
diameter TracVision M2 satellite TV system for use in Europe. -- On
December 23, 2008, KVH received a $3.5 million order from an
undisclosed manufacturer for fiber optic gyros for use in remote
weapon stations. -- On October 30, 2008, Kongsberg Defence &
Aerospace gave KVH approval to begin shipping its DSP-3100 fiber
optic gyros for use in Kongsberg's family of Protector remote
weapon stations. -- On October 30, 2008, KVH unveiled its new,
ultra-compact TracVision M1 satellite TV system for use in North
America. This 12.5-inch diameter, 7.5-pound system is the smallest
and lightest in-motion satellite TV antenna available for boats.
KVH is webcasting its fourth 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, Inc., is a leading
manufacturer of systems to provide mobile access to satellite TV,
communication, and high-speed Internet, as well as navigation,
pointing, and guidance solutions for 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 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 the worsening
recession, such as availability of consumer credit, increases in
fuel prices, on the sale and use of motor vehicles and marine
vessels; 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; future
decisions about the expected profitability of additional satellite
regions; 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 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 November 5, 2008. 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 Year Ended December
31, December 31, 2008 2007 2008 2007 ------- ------- -------
------- Sales: Product sales $17,207 $18,165 $69,941 $73,533
Non-product sales 4,009 1,540 12,463 7,382 ------- ------- -------
------- Total sales 21,216 19,705 82,404 80,915 ------- -------
------- ------- Costs and expenses: Cost of product sales 10,798
10,934 42,551 44,892 Cost of non-product sales 2,238 750 6,131
3,557 Research and development 1,851 2,279 7,655 9,265 Sales,
marketing and support 4,331 4,078 16,162 15,402 General and
administrative 1,755 1,438 7,035 7,538 ------- ------- -------
------- Total costs and expense 20,973 19,479 79,534 80,654 -------
------- ------- ------- Income from operations 243 226 2,870 261
Interest income 183 631 1,220 2,715 Interest expense 35 27 153 156
Other income (expense), net 5 (62) (231) (77) ------- -------
------- ------- Income before income tax expense 396 768 3,706
2,743 Income tax expense (benefit) 90 (194) 648 244 ------- -------
------- ------- Net income $306 $962 $3,058 $2,499 ======= =======
======= ======= Net income per common share: Basic and diluted
$0.02 $0.06 $0.21 $0.17 ======= ======= ======= ======= Weighted
average number of common shares outstanding: Basic 14,111 14,928
14,373 14,964 ======= ======= ======= ======= Diluted 14,115 14,932
14,377 14,983 ======= ======= ======= ======= KVH Industries, Inc.
and Subsidiary CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands,
unaudited) December 31, December 31, 2008 2007 ------------
------------ ASSETS Cash, cash equivalents and marketable
securities $42,660 $53,305 Accounts receivable, net 13,960 12,826
Inventories 15,484 9,313 Other current assets 807 1,017
------------ ------------ Total current assets 72,911 76,461
------------ ------------ Property and equipment, net 13,286 11,739
Deferred income taxes 3,334 3,334 Other non-current assets 4,226 36
------------ ------------ Total assets $93,757 $91,570 ============
============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable
and accrued expenses $12,662 $8,633 Current portion of long-term
debt 2,026 132 ------------ ------------ Total current liabilities
14,688 8,765 ------------ ------------ Deferred revenue - 9
Long-term debt, excluding current portion - 2,026 Stockholders'
equity 79,069 80,770 ------------ ------------ Total liabilities
and stockholders' equity $93,757 $91,570 ============ ============
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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