- EPS $0.18; Record quarterly revenue of
$39.5M
- mini-VSAT Broadband Q4 airtime revenue up 53%
year-over-year
- Guidance & Stabilization Q4 revenue up 25%
year-over-year
KVH Industries, Inc., (Nasdaq:KVHI) today reported financial
results for the fourth quarter ended December 31, 2012. Revenue for
the fourth quarter of 2012 was $39.5 million, up 24% from the
quarter ended December 31, 2011. Diluted earnings per share for the
quarter totaled $0.18 on net income of $2.8 million. During the
same period last year the company reported net income of $1.6
million or $0.11 per diluted share with revenues of $31.9
million.
For the year ended December 31, 2012, revenue was $137.1
million, up 22% from the $112.5 million reported for the year ended
December 31, 2011. KVH reported net income of $3.6 million or $0.24
on a per diluted share basis for the full year 2012. For the year
ended December 31, 2011, the company reported net income of $0.9
million or $0.06 on a per diluted share basis.
"Our record results this quarter reflect continued growth from
both our broadband communications and guidance and stabilization
businesses," said Martin Kits van Heyningen, KVH's chief executive
officer. "We continue to see solid momentum in our business both in
terms of short-term sales success and an expanding pipeline of
future opportunities. With VSAT airtime revenues in the fourth
quarter increasing 53% compared to the same quarter last year, we
expect to have a higher degree of predictability over a significant
element of our revenues going forward."
KVH's mobile communications revenue, including satellite
television products, was $21.5 million for the fourth quarter of
2012, a 23% increase year-over-year. Combined, mini-VSAT Broadband
airtime and TracPhone® product revenues in the fourth quarter
amounted to $14.5 million, up 33% compared to the same period last
year. Maritime satellite TV sales increased 31% year-over-year,
reflecting the continued market acceptance of our new TracVision®
HD11 system.
KVH's guidance and stabilization revenue, which relates to our
fiber optic gyro (FOG) solutions, TACNAV military navigation
systems, and related services, was $18.0 million in the fourth
quarter of 2012, up 25% year-over-year. During the fourth quarter,
sales of our FOGs were up 48%, at $7.6 million, compared to the
same period last year.
"During 2012, we extended our global maritime VSAT network to
include a unique global C-band overlay to our Ku-band VSAT network,
which delivers global broadband service to vessels wherever they
are likely to travel. We significantly upgraded the capacity of our
network with new modulation technology. And, we upgraded our
onboard hardware adding network management capabilities built right
into our communications solution. With this robust platform in
place, we believe we have created a strong position to capture
market share," explained Mr. Kits van Heyningen. "In addition, our
TACNAV® and FOG product lines generated solid results in 2012, and
heading into 2013, we have $33 million in revenue backlog from
these."
Speaking about the company's financial results, Peter Rendall,
KVH's chief financial officer, said, "With back-to-back record
revenue quarters, we are pleased with the second half financial
performance of both the mobile communications and guidance and
stabilization businesses. Our gross margin for the fourth quarter
was 43%, which showed an improvement of 330 basis points over the
third quarter. This was largely the result of very strong shipments
of our military tactical navigation products, and also reflects
ongoing improvements in our overall manufacturing efficiencies.
"Our mini-VSAT Broadbandsm airtime service gross margin for the
quarter continued to demonstrate the leverage of our model and was
about equal to the prior quarter, despite the normal level of
temporary seasonal service suspensions and the full quarter of
C-band capacity costs. Compared to the same period last year, gross
profit dollars from our mini-VSAT Broadband airtime were
approximately 140% higher in the current fourth quarter, while the
gross margin percentage increased from 19% to 30%. Operating
expenses were higher than previous quarters largely due to
sales-related costs associated with the relatively large TACNAV
shipments in the fourth quarter."
Looking ahead to 2013, Mr. Rendall said, "We intend to continue
to execute our aggressive strategic plans for long-term growth,
with primary emphasis on our mobile broadband products and
services, leisure maritime products, and FOG and TACNAV
products.
"For 2013 planning, we expect our mini-VSAT Broadband business
to show strong year-over-year growth and the FOG business to
benefit from new commercial applications beginning later this year
as well as delivering products under the CROWS III program. We
remain cautious with respect to expectations for growth in leisure
markets, due to ongoing challenges in global economies. We see the
potential for a decline in TACNAV product sales in the second half
of 2013 as hardware shipments under the Saudi Arabia National Guard
program come to an end and we are being cautious with respect to
possible defense budget cuts. With this context, we expect total
top line growth for the year to be in the range of 10% to 17% which
equates to $151 million to $160 million in revenue. We expect to
achieve a full year operating margin in the range of approximately
4% to 8%. We are projecting that our effective tax rate will be 35%
or higher, subject to the effect of unforeseen discrete items.
Accordingly, we expect the full year EPS to be in the range of
$0.37 to $0.48 per diluted share.
"For the first quarter of 2013, we expect revenue to be in the
range of $37 million to $40 million, up 38% to 50% compared to the
first quarter last year and expect both our mini-VSAT Broadband and
guidance and stabilization revenues to achieve strong
year-over-year growth. We expect our operating margin to show
significant improvement year-over-year, and we expect net income in
the range of $0.10 to $0.15 per diluted share compared to a net
loss per share of ($0.09) in the first quarter of 2012."
Mr. Kits van Heyningen concluded, "We are very pleased with our
overall progress last year and feel that we are on the path toward
achieving our longer-term strategic objectives. We plan to
introduce new valued-added services to our mini-VSAT Broadband
customers that we believe will continue to disrupt the maritime
communications market and develop new products that we believe will
drive further demand from the inertial guidance market. With our
current product portfolio and market position, we are also
optimistic that we will be able to leverage our investments to even
greater benefit as the economy continues to recover."
Recent Operational Highlights:
2/7/2013 |
KVH Ships 3,000th TracPhone System for
mini-VSAT Broadband Network |
|
|
1/15/2013 |
KVH Receives $7.2 Million in Orders for
Military Navigation Systems -- TACNAV tactical navigation systems
selected by international customer to provide armored vehicle crews
with improved situational awareness |
|
|
1/9/2013 |
KVH Introduces New Business Class Service for
mini-VSAT Broadband Network -- Major network upgrades, integration
of onboard terminals, and unfettered access to Internet content are
all part of new, faster Unrestricted Rate Plans |
|
|
12/27/2012 |
KVH Doubles Capacity for Caribbean Region of
mini-VSAT Broadband Network |
|
|
11/27/2012 |
KVH Provides 60% More Capacity for EMEA
Region of mini-VSAT Broadband Network |
KVH is webcasting its fourth quarter/year-end conference call
live at 10:30 a.m. Eastern time today 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 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 and on land. 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, Singapore, and
Japan.
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, and our anticipated revenue growth, market share,
competitive positioning, profitability, and product orders. 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 increasing fuel prices on the sale
and use of motor vehicles and marine vessels; the need to increase
sales of the TracPhone V3, V7 and V11 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 V3, V7 and V11; potential declines in military sales,
including to foreign customers; unanticipated 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; the
uncertain impact of potential budget cuts by government customers;
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 Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on November 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 BALANCE SHEETS |
(in thousands,
unaudited) |
|
|
|
|
December 31, |
December 31, |
|
2012 |
2011 |
ASSETS |
|
|
|
|
|
Cash, cash equivalents and
marketable securities |
$ 38,285 |
$ 30,570 |
Accounts receivable, net |
27,654 |
25,959 |
Inventories |
16,203 |
18,615 |
Deferred income taxes |
1,146 |
1,281 |
Other current assets |
3,264 |
2,552 |
Total current
assets |
86,552 |
78,977 |
|
|
|
Property and equipment,
net |
36,733 |
34,010 |
Deferred income taxes |
3,524 |
5,405 |
Goodwill |
4,712 |
4,426 |
Intangible assets, net |
1,684 |
1,903 |
Other non-current assets |
4,363 |
3,835 |
Total assets |
$ 137,568 |
$ 128,556 |
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
Accounts payable and accrued
expenses |
$ 19,280 |
$ 16,385 |
Deferred revenue |
1,892 |
2,684 |
Current portion of long-term
debt |
138 |
131 |
Total current
liabilities |
21,310 |
19,200 |
|
|
|
Other long-term
liabilities |
140 |
135 |
Long-term debt, excluding
current portion |
3,414 |
3,553 |
Line of credit |
7,000 |
9,000 |
Stockholders' equity |
105,704 |
96,668 |
Total liabilities and
stockholders' equity |
$ 137,568 |
$ 128,556 |
|
KVH INDUSTRIES, INC.
AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(in thousands, except
per share amounts, unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December
31, |
December
31, |
|
2012 |
2011 |
2012 |
2011 |
Sales: |
|
|
|
|
Product |
$ 28,024 |
$ 23,933 |
$ 90,677 |
$ 85,136 |
Service |
11,519 |
8,000 |
46,435 |
27,400 |
Net sales |
39,543 |
31,933 |
137,112 |
112,536 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Costs of product sales |
14,749 |
12,843 |
51,775 |
46,598 |
Costs of service sales |
7,704 |
5,609 |
30,363 |
20,970 |
Research and development |
2,999 |
2,903 |
12,147 |
11,548 |
Sales, marketing and
support |
6,830 |
6,683 |
24,069 |
23,473 |
General and
administrative |
3,282 |
2,766 |
12,188 |
10,555 |
Total costs and
expenses |
35,564 |
30,804 |
130,542 |
113,144 |
|
|
|
|
|
Income (loss) from
operations |
3,979 |
1,129 |
6,570 |
(608) |
|
|
|
|
|
Interest
income |
151 |
99 |
510 |
297 |
Interest
expense |
80 |
46 |
323 |
223 |
Other (expense) income,
net |
(13) |
23 |
86 |
910 |
|
|
|
|
|
Income before income
tax (expense) benefit |
4,037 |
1,205 |
6,843 |
376 |
Income tax (expense)
benefit |
(1,280) |
399 |
(3,263) |
484 |
Net
income |
$ 2,757 |
$ 1,604 |
$ 3,580 |
$ 860 |
|
|
|
|
|
Net income per common
share: |
|
|
|
Basic |
$ 0.19 |
$ 0.11 |
$ 0.24 |
$ 0.06 |
Diluted |
$ 0.18 |
$ 0.11 |
$ 0.24 |
$ 0.06 |
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
Basic |
14,879 |
14,545 |
14,777 |
14,768 |
Diluted |
15,088 |
14,697 |
15,019 |
15,072 |
CONTACT: KVH Industries, Inc.
Peter Rendall
401-847-3327
prendall@kvh.com
FTI Consulting
Christine Mohrmann
212-850-5600
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