KVH Industries (NASDAQ:KVHI)
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KVH Industries, Inc., (Nasdaq: KVHI) today reported its results for the
third quarter ended September 30, 2006. Revenue for the quarter was
$19.3 million, up 15% from $16.7 million for the third quarter ended
September 30, 2005. Net income for the quarter was $0.6 million, or
$0.04 per diluted share. Net income for the quarter included a non-cash
charge of approximately $0.4 million, or $0.02 per diluted share,
related to the company’s adoption of SFAS No.
123(R), “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 $0.7 million, or $0.05 per diluted share.
For the nine months ended September 30, 2006, revenue was $61.5 million,
up 15% from $53.4 million for the nine months ended September 30, 2005.
KVH reported net income of $3.6 million or $0.24 per diluted share for
the 2006 period, versus net income of $1.9 million or $0.13 per diluted
share in the year ago period. Net income for the 2006 period included a
stock-based compensation charge under SFAS No. 123(R) of approximately
$0.8 million, or $0.06 per diluted share.
“Maintaining our momentum from the first six
months, we increased sales in each of our major business areas, achieved
strong revenue growth, and sustained profitability during the third
quarter,” said Martin Kits van Heyningen, KVH’s
president and chief executive officer. “We are
now seeing the benefits of the product line overhaul that we launched a
year ago. Demand for our maritime TracVision M3 satellite TV system
remains strong, generating incremental sales in support of our
established, larger antennas. We saw our second consecutive quarter of
year-over-year sales growth in the recreational vehicle market, driven
by our new TracVision®
R-series systems. Our defense business grew on a year-over-year basis,
led by record sales of our fiber optic gyro (FOG) products. At the same
time, we continued our new product development efforts. During the third
quarter, we began shipping our TracNet™
100 mobile Internet system as well as the new TracVision A7, which
brings national and local channels from DIRECTV to automobiles. In
addition, we unveiled our new military convoy communication system,
demonstrating it for the first time at a military trade show in early
October. We also actively pursued an acquisition opportunity, but we
ultimately terminated the process. This effort caused us to incur
approximately $0.3 million, or $0.02 per share in extraordinary expenses
during the period.”
In the third quarter of 2006, mobile communication revenue was $12.9
million, up 18% on a year-over-year basis. Defense-related sales,
including those for KVH’s TACNAV®
military navigation systems and FOG solutions, were approximately $6.4
million, up 10% on a year-over-year basis.
Commenting on the company’s financial results
and expectations for the remainder of the year, Pat Spratt, KVH’s
chief financial officer, remarked, “Based on
our performance to date and expectations for the fourth quarter, we
anticipate that revenue for the year will be in the range of $80 - $81
million, up approximately 13% year-over-year, and in line with previous
guidance. Adjusting our previous bottom line guidance for the effect of
the merger and acquisition activity during the third quarter, we now
expect GAAP EPS of $0.29. This full year projection also includes
approximately $0.07 per share of stock option expenses. We expect that
EPS for the fourth quarter will be approximately $0.05, including
approximately $0.02 per share of stock option expenses. This 2006
guidance assumes a sequential decline in tactical navigation sales,
coupled with solid fourth quarter year over year growth for mobile
communications and fiber optic gyro products.”
Recent Operational Highlights:
• October 9, 2006 –
During the conference of the Association of the U.S. Army, KVH showed
its new intra-convoy communication system, which is being developed
under the auspices of a U.S. Army development contract. The intra-convoy
communication system has since entered formal testing and evaluation by
the U.S. Army.
• August 23, 2006 –
KVH introduced and began shipping its new TracVision A7 automotive
satellite TV system. With integrated GPS and a new mobile receiver
developed in cooperation with DIRECTV, the TracVision A7 is the first
mobile satellite TV system capable of receiving local channels in
addition to national programming.
• August 22, 2006 –
KVH began shipping the TracNet 100 mobile Internet system with MSN®
TV service to marine, RV, and automotive retailers nationwide.
KVH is webcasting its third 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;
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; 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
third-party satellite networks for programming and satellite services;
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
August 9, 2006. 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, TracVision, TracNet, and TACNAV are official trademarks of KVH
Industries, Inc. All 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
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
Net sales
$
19,291
$
16,742
$
61,548
$
53,442
Cost of goods sold
11,717
9,642
36,559
31,454
Gross Profit
7,574
7,100
24,989
21,988
Operating expenses:
Research and development
1,627
1,783
5,770
5,659
Sales and marketing
3,441
3,377
10,714
10,347
General and administrative
2,447
1,556
6,132
4,322
Income from operations
59
384
2,373
1,660
Other income, net
599
303
1,542
513
Income tax expense
(32)
(13)
(349)
(246)
Net income
$
626
$
674
$
3,566
$
1,927
Net income per common share
Basic and diluted
$
0.04
$
0.05
$
0.24
$
0.13
Weighted average common shares outstanding
Basic
14,827
14,596
14,762
14,555
Diluted
14,937
14,765
14,884
14,740
KVH INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
September 30,
December 31,
2006
2005
ASSETS
Cash, cash equivalents and marketable securities
$
54,681
$
50,090
Accounts receivable, net
10,585
12,283
Inventories
8,134
6,564
Other assets
1,354
1,233
Total current assets
74,754
70,170
Property and equipment, net
9,658
8,663
Deferred income taxes
3,334
3,334
Other non-current assets
91
163
Total assets
$
87,837
$
82,330
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses
$
8,107
$
8,442
Current portion of long-term debt
120
115
Total current liabilities
8,227
8,557
Deferred revenue
104
128
Long-term debt, excluding current portion
2,190
2,282
Stockholders' equity
77,316
71,363
Total liabilities and stockholders' equity
$
87,837
$
82,330
KVH Industries, Inc., (Nasdaq: KVHI) today reported its results
for the third quarter ended September 30, 2006. Revenue for the
quarter was $19.3 million, up 15% from $16.7 million for the third
quarter ended September 30, 2005. Net income for the quarter was $0.6
million, or $0.04 per diluted share. Net income for the quarter
included a non-cash charge of approximately $0.4 million, or $0.02 per
diluted share, related to the company's adoption of SFAS No. 123(R),
"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 $0.7 million, or $0.05 per diluted
share.
For the nine months ended September 30, 2006, revenue was $61.5
million, up 15% from $53.4 million for the nine months ended September
30, 2005. KVH reported net income of $3.6 million or $0.24 per diluted
share for the 2006 period, versus net income of $1.9 million or $0.13
per diluted share in the year ago period. Net income for the 2006
period included a stock-based compensation charge under SFAS No.
123(R) of approximately $0.8 million, or $0.06 per diluted share.
"Maintaining our momentum from the first six months, we increased
sales in each of our major business areas, achieved strong revenue
growth, and sustained profitability during the third quarter," said
Martin Kits van Heyningen, KVH's president and chief executive
officer. "We are now seeing the benefits of the product line overhaul
that we launched a year ago. Demand for our maritime TracVision M3
satellite TV system remains strong, generating incremental sales in
support of our established, larger antennas. We saw our second
consecutive quarter of year-over-year sales growth in the recreational
vehicle market, driven by our new TracVision(R) R-series systems. Our
defense business grew on a year-over-year basis, led by record sales
of our fiber optic gyro (FOG) products. At the same time, we continued
our new product development efforts. During the third quarter, we
began shipping our TracNet(TM) 100 mobile Internet system as well as
the new TracVision A7, which brings national and local channels from
DIRECTV to automobiles. In addition, we unveiled our new military
convoy communication system, demonstrating it for the first time at a
military trade show in early October. We also actively pursued an
acquisition opportunity, but we ultimately terminated the process.
This effort caused us to incur approximately $0.3 million, or $0.02
per share in extraordinary expenses during the period."
In the third quarter of 2006, mobile communication revenue was
$12.9 million, up 18% on a year-over-year basis. Defense-related
sales, including those for KVH's TACNAV(R) military navigation systems
and FOG solutions, were approximately $6.4 million, up 10% on a
year-over-year basis.
Commenting on the company's financial results and expectations for
the remainder of the year, Pat Spratt, KVH's chief financial officer,
remarked, "Based on our performance to date and expectations for the
fourth quarter, we anticipate that revenue for the year will be in the
range of $80 - $81 million, up approximately 13% year-over-year, and
in line with previous guidance. Adjusting our previous bottom line
guidance for the effect of the merger and acquisition activity during
the third quarter, we now expect GAAP EPS of $0.29. This full year
projection also includes approximately $0.07 per share of stock option
expenses. We expect that EPS for the fourth quarter will be
approximately $0.05, including approximately $0.02 per share of stock
option expenses. This 2006 guidance assumes a sequential decline in
tactical navigation sales, coupled with solid fourth quarter year over
year growth for mobile communications and fiber optic gyro products."
Recent Operational Highlights:
-- October 9, 2006 - During the conference of the Association of
the U.S. Army, KVH showed its new intra-convoy communication system,
which is being developed under the auspices of a U.S. Army development
contract. The intra-convoy communication system has since entered
formal testing and evaluation by the U.S. Army.
-- August 23, 2006 - KVH introduced and began shipping its new
TracVision A7 automotive satellite TV system. With integrated GPS and
a new mobile receiver developed in cooperation with DIRECTV, the
TracVision A7 is the first mobile satellite TV system capable of
receiving local channels in addition to national programming.
-- August 22, 2006 - KVH began shipping the TracNet 100 mobile
Internet system with MSN(R) TV service to marine, RV, and automotive
retailers nationwide.
KVH is webcasting its third 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; 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;
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 third-party satellite networks for programming and
satellite services; 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 August 9, 2006. 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, TracVision, TracNet, and TACNAV are official trademarks of
KVH Industries, Inc. All other trademarks are the property of their
respective companies.
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*T
KVH INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2006 2005 2006 2005
--------- -------- -------- --------
Net sales $ 19,291 $16,742 $61,548 $53,442
Cost of goods sold 11,717 9,642 36,559 31,454
--------- -------- -------- --------
Gross Profit 7,574 7,100 24,989 21,988
Operating expenses:
Research and development 1,627 1,783 5,770 5,659
Sales and marketing 3,441 3,377 10,714 10,347
General and administrative 2,447 1,556 6,132 4,322
--------- -------- -------- --------
Income from operations 59 384 2,373 1,660
Other income, net 599 303 1,542 513
Income tax expense (32) (13) (349) (246)
--------- -------- -------- --------
Net income $ 626 $ 674 $ 3,566 $ 1,927
========= ======== ======== ========
Net income per common share
Basic and diluted $ 0.04 $ 0.05 $ 0.24 $ 0.13
========= ======== ======== ========
Weighted average common shares
outstanding
Basic 14,827 14,596 14,762 14,555
========= ======== ======== ========
Diluted 14,937 14,765 14,884 14,740
========= ======== ======== ========
*T
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KVH INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
September 30, December 31,
2006 2005
---------------- ----------------
ASSETS
Cash, cash equivalents and
marketable securities $ 54,681 $ 50,090
Accounts receivable, net 10,585 12,283
Inventories 8,134 6,564
Other assets 1,354 1,233
-------------- -------------
Total current assets 74,754 70,170
Property and equipment, net 9,658 8,663
Deferred income taxes 3,334 3,334
Other non-current assets 91 163
---------------- ----------------
Total assets $ 87,837 $ 82,330
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
expenses $ 8,107 $ 8,442
Current portion of long-term
debt 120 115
-------------- -------------
Total current
liabilities 8,227 8,557
Deferred revenue 104 128
Long-term debt, excluding
current portion 2,190 2,282
Stockholders' equity 77,316 71,363
---------------- ----------------
Total liabilities and
stockholders' equity $ 87,837 $ 82,330
================ ================
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