KVH Industries Reports Fourth Quarter and Full Year 2012 Results

KVH Industries Reports Fourth Quarter and Full Year 2012 Results

  *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

MIDDLETOWN, R.I., Feb. 12, 2013 (GLOBE NEWSWIRE) -- 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 Broadband^sm 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 3,000^th TracPhone System for mini-VSAT Broadband Network
          
           KVH Receives $7.2 Million in Orders for Military Navigation Systems
1/15/2013  -- TACNAV tactical navigation systems selected by international
           customer to provide armored vehicle crews with improved situational
           awareness
          
           KVH Introduces New Business Class Service for mini-VSAT Broadband
1/9/2013   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 CONSOLIDATEDBALANCE 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)     4,037     1,205     6,843     376
benefit
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

KVH Logo
 
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