- Record Quarterly Revenue of $32M
- Mini-VSAT Broadband Airtime Revenue Up 68% Year Over
Year
- Record Bookings for Guidance & Stabilization
Products and Services
KVH Industries, Inc., (Nasdaq:KVHI) today reported financial
results for the second quarter ended June 30, 2012. Revenue for the
quarter was $32.0 million, up approximately 5% compared to the
quarter ended June 30, 2011. Net income for the period was $0.5
million, or $0.03 per diluted share. During the same period last
year the company reported net income of $0.2 million, or $0.01 per
diluted share, on revenues of $30.6 million.
For the six months ended June 30, 2012, revenue was $58.7
million, up 7% compared to $55.0 million for the six months ended
June 30, 2011. KVH reported a net loss of $0.9 million, or $0.06 on
a per share basis, for the first six months of 2012. During the
same period last year, the company reported a net loss of $1.3
million, or $0.09 on a per share basis.
"Our results this quarter reflect the benefit that comes from
our diversity of offerings and the increasing strength of our
broadband communications business," said Martin Kits van Heyningen,
KVH's chief executive officer. "Airtime revenue from the mini-VSAT
Broadbandsm business grew 68% compared to the second quarter last
year. This is a testament to the robustness of our global broadband
network as the number of active accounts continues to grow at a
strong rate."
"During the quarter we also achieved record bookings for our
guidance and stabilization business, which included our largest
TACNAV® order ever, for $35.6 million of products and services for
the Saudi Arabian National Guard," continued Mr. Kits van
Heyningen. "Our backlog for guidance and stabilization is currently
three times our historical levels. We're very pleased with our
recent bookings success for these products and services and there
are several other opportunities that we continue to pursue."
In the second quarter of 2012, total mobile communications
revenue was approximately $24.0 million, up 26% on a year-over-year
basis. Maritime satellite TV sales increased 13% year over year,
largely reflecting the positive market acceptance of our new
TracVision® HD11 system.
KVH's guidance and stabilization revenue from the company's FOG
solutions, TACNAV military navigation systems, and related services
was approximately $8.0 million in the second quarter of 2012, down
31% on a year-over-year basis due to a strong comparative quarter
in 2011 when another large foreign military TACNAV order was
shipped. Sales of FOG products rebounded nicely from a very weak
first quarter.
"We're getting positive OEM customer feedback for our new,
small, high performance DSP-1750 fiber optic gyro and believe we
will soon receive some meaningful production orders for this
exciting new product," said Mr. Kits van Heyningen. "Customers with
applications in stabilized optics and autonomous vehicles are
completing their final testing and have indicated that they intend
to place orders that should result in additional sales in coming
months. We have also had a very positive initial response to our
new Series 1750 IMU that was launched simultaneously at trade shows
in Europe and the United States in the beginning of June, and we've
received a number of orders for trial units to support customer
application integration testing."
Addressing the company's financial results, Patrick Spratt,
KVH's chief financial officer, said, "The second quarter revenue
and earnings per share were in line with our expectations. Gross
margin for the quarter improved sequentially to approximately 39%,
reflecting product volume increases and the increasing airtime
margins from the mini-VSAT Broadbandsm service. The mix of FOG
revenue was weighted toward relatively lower margin products, which
somewhat dampened overall product gross margin."
Looking ahead, Mr. Spratt said, "We expect the mini-VSAT
broadband business to continue to show solid growth. Our FOG
business is showing signs of regaining momentum and we expect that
our FOG product sales will show sequential and year-over-year
growth during the second half of the year. We expect that initial
TACNAV product shipments for the Saudi Arabian National Guard order
could begin during the latter part of the third quarter.
Contractually we are committed to ship a large quantity of these
systems before the end of the fourth quarter, so the challenge we
have in forecasting as it relates to this order is largely the
timing of quantities between the two quarters. As a consequence, we
expect that the second half of 2012 will reflect very strong
results, and we are raising our fiscal year guidance. We now expect
revenue for the year to be in the range of $130 million to $137
million, and EPS for the year to be in the range of $0.22 to $0.32
per diluted share. For the third quarter, the guidance range is
purposely wide since the initial delivery schedule for the TACNAV
units for Saudi Arabia is still being developed. For the third
quarter, we expect total revenue to be in the range of $32 million
to $37 million, and EPS to be in the range of $0.07 to $0.16 per
share."
Mr. Kits van Heyningen concluded, "We feel KVH is well
positioned for continued growth. We've now shipped approximately
2500 TracPhone® V-series systems and our leadership position in the
maritime VSAT market puts us in an excellent position to
effectively compete for sales in this substantial and growing
market. In addition, our new fiber optic gyro product line is
winning customer acceptance that should result in solid orders in
the months ahead and we now have a solid foundation of TACNAV
orders which provide a good base of business spanning multiple
quarters."
Recent Operational Highlights:
- June 28, 2012: The shipping company NYK selects KVH mini-VSAT
Broadband for its containerships to support an initiative to share
information between ship and shore for the innovative NYK IBIS
project, an effort to reduce greenhouse gas emissions on ships to
meet new global regulations.
- June 25, 2012: KVH appoints Andesat as mini-VSAT Broadband
reseller in South America, supporting efforts to bring mini-VSAT
Broadband to fishing and oil and gas vessels throughout the South
American region.
- June 19, 2012: KVH wins a $2.8 million U.S. Army contract with
an initial $1.3 million order for TACNAV Universal Multilingual
Displays, which will be deployed as durable, all-weather Gunners'
Displays on the M119 howitzer.
- June 7, 2012: KVH wins a record $35.6 million order for TACNAV
navigation systems and associated installation services to help
modernize equipment for the Saudi Arabian National Guard,
reaffirming KVH's leadership position in fielding battle-proven,
high-performance navigational systems.
- June 6, 2012: The new KVH Series 1750 IMU was launched at trade
shows in Europe and the U.S. offering breakthrough performance in
an ultra compact form factor.
- June 5, 2012: KVH appoints leading MSS service provider and
Inmarsat distribution partner MVS Group as a service provider for
mini-VSAT Broadband service and TracPhone V-series onboard
terminals.
- June 4, 2012: KVH appoints leading MSS service provider Tesacom
as a KVH mini-VSAT Broadband service provider in South
America.
- May 16, 2012: Northern Sky Research (NSR) market research study
confirms Euroconsult report that KVH is the most widely used
maritime VSAT service.
- April 3, 2012: Satellite industry specialist Euroconsult
published a report that concluded KVH's mini-VSAT Broadband service
was the maritime VSAT service market share leader with 16% of all
activated terminals at the end of 2011, more than 20% higher than
the next closest competitor.
KVH is webcasting its second quarter conference call live at
10:30 a.m. Eastern time today. 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, growth in market share,
anticipated profitability, anticipated orders for our mobile
communications and guidance and stabilization 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 continued high fuel prices on the sale and use of
marine vessels; the need to increase sales of the TracPhone V7 and
TracPhone V3 and related services to improve airtime gross margins;
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 and V3; potential declines in
military sales, including to foreign customers; expenses associated
with the launch of our new TracPhone V11 and global C-band airtime
service; the unpredictability of defense 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; 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 8, 2012. 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, E•Core, 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 |
Six Months
Ended |
|
June
30, |
June
30, |
|
2012 |
2011 |
2012 |
2011 |
Sales: |
|
|
|
|
Product |
$ 21,041 |
$ 24,331 |
$ 38,124 |
$ 43,215 |
Service |
10,978 |
6,241 |
20,623 |
11,766 |
Net
sales |
32,019 |
30,572 |
58,747 |
54,981 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Costs of product sales |
12,746 |
13,482 |
23,729 |
24,010 |
Costs of service sales |
6,822 |
5,095 |
12,624 |
9,897 |
Research and development |
3,059 |
2,878 |
6,199 |
5,853 |
Sales, marketing and support |
5,547 |
5,976 |
10,879 |
11,175 |
General and administrative |
2,918 |
2,550 |
5,866 |
5,477 |
Total
costs and expenses |
31,092 |
29,981 |
59,297 |
56,412 |
|
|
|
|
|
Income (loss) from operations |
927 |
591 |
(550) |
(1,431) |
|
|
|
|
|
Interest income |
109 |
67 |
212 |
132 |
Interest expense |
85 |
57 |
167 |
113 |
Other
income, net |
39 |
1 |
76 |
15 |
|
|
|
|
|
Income (loss) before income tax benefit |
990 |
602 |
(429) |
(1,397) |
Income tax (expense) benefit |
(537) |
(412) |
(493) |
53 |
Net
income (loss) |
$ 453 |
$ 190 |
$ (922) |
$ (1,344) |
|
|
|
|
|
Net income (loss) per common
share: |
|
|
|
|
Basic |
$ 0.03 |
$ 0.01 |
$ (0.06) |
$ (0.09) |
Diluted |
$ 0.03 |
$ 0.01 |
$ (0.06) |
$ (0.09) |
|
|
|
|
|
Weighted average number of common
shares outstanding: |
|
|
|
|
Basic |
14,776 |
14,901 |
14,691 |
14,825 |
Diluted |
14,887 |
15,200 |
14,691 |
14,825 |
|
|
|
|
|
|
|
|
KVH Industries, Inc.
and Subsidiaries |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(in thousands,
unaudited) |
|
|
|
|
June 30, |
December 31, |
|
2012 |
2011 |
ASSETS |
|
|
|
|
|
Cash, cash equivalents and marketable
securities |
$ 31,024 |
$ 30,570 |
Accounts receivable, net |
22,264 |
25,959 |
Inventories |
17,159 |
18,615 |
Deferred income taxes |
1,033 |
1,281 |
Other current assets |
2,942 |
2,552 |
Total
current assets |
74,422 |
78,977 |
|
|
|
Property and equipment, net |
36,507 |
34,010 |
Deferred income taxes |
5,403 |
5,405 |
Goodwill |
4,426 |
4,426 |
Intangible assets, net |
1,736 |
1,903 |
Other non-current assets |
4,170 |
3,835 |
|
|
|
Total
assets |
$ 126,664 |
$ 128,556 |
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
Accounts payable and accrued
expenses |
$ 15,315 |
$ 16,385 |
Deferred revenue |
2,662 |
2,684 |
Current portion of long-term debt |
134 |
131 |
Total
current liabilities |
18,111 |
19,200 |
|
|
|
Other long-term liabilities |
128 |
135 |
Long-term debt, excluding current
portion |
3,485 |
3,553 |
Line of credit |
7,000 |
9,000 |
Stockholders' equity |
97,940 |
96,668 |
|
|
|
Total
liabilities and stockholders' equity |
$ 126,664 |
$ 128,556 |
|
|
|
CONTACT: Patrick Spratt
KVH Industries
401-847-3327
pspratt@kvh.com
Christine Mohrmann
Financial Dynamics
212-850-5600
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