KVH Industries Reports First Quarter 2013 Results

KVH Industries Reports First Quarter 2013 Results

  *EPS $0.13; Record quarterly revenue of $39.9 million
  *mini-VSAT Broadband Q1 airtime revenue up 42% year-over-year
  *Guidance & Stabilization Q1 revenue up 189% year-over-year

MIDDLETOWN, R.I., May 3, 2013 (GLOBE NEWSWIRE) -- KVH Industries, Inc.,
(Nasdaq:KVHI) today reported financial results for the first quarter ended
March 31, 2013. Revenue for the first quarter of 2013 was $39.9 million, up
49% from the quarter ended March 31, 2012. Diluted earnings per share for the
quarter totaled $0.13 on net income of $2.0 million. During the same period
last year the company reported a net loss of $1.4 million or $(0.09) per share
on revenues of $26.7 million.

"Our third sequential record revenue quarter reflects continued growth from
both our broadband communications and guidance and stabilization businesses,"
said Martin Kits van Heyningen, KVH's chief executive officer."Our TACNAV and
FOG product lines generated solid results in the first quarter of 2013, with
year-over-year growth of 586% and 93%, respectively.On the marine side, our
VSAT airtime business continues to grow rapidly with revenues in the first
quarter increasing 42% compared to the same quarter last year."

KVH's mobile communications revenue, including satellite television products,
was $22.9 million for the first quarter of 2013, a 10% increase
year-over-year.Combined, in the first quarter, mini-VSAT Broadband airtime
and TracPhone product revenues amounted to $14.8 million, up 16% compared to
the same period last year.

Mr. Kits van Heyningen commented, "Overall, our marine business continues to
grow.However, our marine leisure business in Europe and North America was
impacted by an unusually cold spring which hopefully has merely delayed
purchases into the next quarter.In Europe, our commercial marine business was
also impacted by the continuing economic conditions, particularly in southern

KVH's guidance and stabilization revenue, which relates to our fiber optic
gyro (FOG) solutions, TACNAV military navigation systems and related services,
was $17.0 million in the first quarter of 2013, up 189% year-over-year.Sales
of TACNAV and related services for the previously announced Saudi Arabian
National Guard contract were approximately $8.9 million, consisting of product
sales, construction services for an installation facility, and project
management services.During the first quarter, sales of our FOGs were up 93%,
at $5.9 million, compared to the same period last year.

Speaking about the company's financial results, Peter Rendall, KVH's chief
financial officer, said, "We are pleased with the financial performance of
both the mobile communications and guidance and stabilization businesses.Our
gross margin for the first quarter was 39.5%, which showed an improvement of
230 basis points over the first quarter last year. This was largely the
result of very strong shipments of our military tactical navigation products,
and also reflects ongoing improvements in our overall manufacturing

"Our mini-VSAT Broadband airtime service revenues for the quarter continued to
demonstrate the leverage of our model and were close to $10 million, despite
temporary seasonal service suspensions.Compared to the same period last year,
gross profit amounts in the first quarter of 2013 from our mini-VSAT Broadband
airtime were approximately 63% higher in the current first quarter, while the
gross margin percentage increased from 28% to 32%.Operating expenses were
higher than the first quarter of 2012 largely due to sales-related costs
associated with the relatively large TACNAV shipments in the first quarter of

"Our expectation for the remainder of 2013 includes an expectation that our
mini-VSAT Broadband business will show strong year-over-year growth.Although
we have seen the first hint of a slowdown in future U.S. defense sales
resulting from the implementation of sequestration measures, our FOG business
is expected to benefit from new commercial applications throughout the rest of
the year. In fact, for the first time, our sales of FOGs to commercial
customers exceeded 50% of our total FOG revenues during the first quarter.
Our guidance and stabilization backlog grew by approximately $5 million
during the quarter and amounted to $38 million at March 31, 2013.We remain
cautious with respect to expectations for growth in leisure markets, due to
ongoing challenges in global economies. We also have factored in the
anticipated decline in TACNAV product sales in the second half of 2013 as
hardware shipments under the Saudi Arabian National Guard program come to an
end.With this context, we continue to hold our guidance for 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 annual
effective tax rate will be 35% or higher, subject to the effect of unforeseen
discrete items, resulting in a 39% tax rate for the remaining nine months of
the year.The net result is that we are holding to our previous EPS guidance
for the full year, which we expect to be in the range of $0.37 to $0.48 per
diluted share."

"For the second quarter of 2013, we expect revenue to be in the range of $39.5
million to $41.5 million, up 23% to 30% compared to the second quarter last
year and expect both our mini-VSAT Broadband and guidance and stabilization
businesses 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 $0.08 to $0.12 per diluted share compared to a net
income per diluted share of $0.03 in the second quarter of 2012."

Mr. Kits van Heyningen concluded, "We are very pleased with our overall
progress so far this year and feel that we are on the path toward achieving
our longer-term strategic objectives. During the quarter, we continued with a
significant upgrade to the capacity of our network by deploying new modulation
technology. By enhancing the efficiency of our network, we effectively more
than doubled our data-carrying capacity, putting us in a good position to
capture additional market share."

"In addition, 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 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:

04/23/2013 KVH's TracPhone V3-IP and mini-VSAT Broadband Service Bring
Reliable Communications to Well Sites

04/07/2013 KVH TracPhone V3-IP Goes Fully Global with Integrated Iridium
OpenPort Broadband Service

04/07/2013 KVH Introduces New TracPhone V3-IP for mini-VSAT Broadband

04/03/2013 KVH More Than Doubles mini-VSAT Broadband Network Capacity in
Brazil and Africa

02/07/2013 KVH Ships 3,000th TracPhone System for mini-VSAT Broadband

02/04/2013 KVH TracVision R1 Sets New Standard for Mobile Satellite TV

01/15/2013 KVH Receives $7.2 Million in Orders for Military Navigation

Please review the corresponding press releases for more details regarding
these developments.

KVH is webcasting its first quarter 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, 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, Singapore, and

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 V-series products
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
V-series products; potential declines in military sales, including to foreign
customers, such as the anticipated decline in sales of TACNAV to the Saudi
Arabian National Guard; 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, including the effects of
sequestration; 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 April 2, 2013.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, 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.

(in thousands, except per share amounts, unaudited)

                                                     Three Months Ended
                                                     March 31,
                                                     2013     2012
Product                                              $25,216  $17,083
Service                                               14,711   9,645
Net sales                                             39,927   26,728
Costs and expenses:                                           
Costs of product sales                                13,909   10,983
Costs of service sales                                10,249   5,802
Research and development                              2,950    3,141
Sales, marketing and support                          6,943    5,332
General and administrative                           3,374   2,947
Total costs and expenses                              37,425  28,205
Income (loss) from operations                         2,502    (1,477)
Interest income                                       168      103
Interest expense                                      76       82
Other income, net                                     24      37
Income (loss) before income tax expense (benefit )    2,618    (1,419)
Income tax expense (benefit)                          655     (44)
Net income (loss)                                     $1,963  $(1,375)
Net income (loss) per common share:                           
Basic and diluted                                     $0.13    $(0.09)
Weighted average number of common shares outstanding:         
Basic                                                 14,989   14,605
Diluted                                               15,219   14,605

(in thousands, unaudited)
                                                March 31, December 31,
                                                2013      2012
Cash, cash equivalents and marketable securities $44,845   $38,285
Accounts receivable, net                         29,392   27,654
Inventories                                      16,918   16,203
Deferred income taxes                            824      1,146
Other current assets                             4,071    3,264
                                                96,050   86,552
Property and equipment, net                      35,912    36,733
Deferred income taxes                            3,153     3,524
Goodwill                                         4,527     4,712
Intangible assets, net                           1,524     1,684
Other non-current assets                         4,137     4,363
                                                $145,303  $137,568
Accounts payable and accrued expenses            $18,065   $19,280
Deferred revenue                                 2,074     1,892
Current portion of long-term debt                1,098     138
                                                21,237    21,310
Other long-term liabilities                      1,309     140
Long-term debt, excluding current portion        7,009     3,414
Line of credit                                   7,000     7,000
Stockholders' equity                             108,748   105,704
                                                $145,303  $137,568

Net Loss Excluding Income Tax Expense from Tax Shortfalls Associated
with Stock Options and Restricted Stock Awards
(in thousands, unaudited)
                                                   Three Months
                                                   March 31, 2012
Net loss - GAAP                                     $(1,375)
Income tax expense from tax shortfalls associated   382
with stock options and restricted stock awards
Net loss - Adjusted                                 $(993)
Net loss per common share - Adjusted:               
Basic and diluted                                   $(0.07)
Adjusted net loss excluding the income tax expense from tax shortfalls
associated with stock options and restricted stock awards for the three
months ended March 31, 2012 is presented in the table above. This is a
non-GAAP financial measure and should not be considered a replacement for
GAAP results. We believe the adjusted information is useful to investors
because it is reflective of underlying operational trends, as it excludes    
significant non-recurring or otherwise unusual transactions as described
above. Our criteria for adjusted net loss may differ from models used by
other companies and should not be considered as an alternative to net loss
prepared in accordance with US GAAP as an indicator of our operating

CONTACT: KVH Industries, Inc.
         Peter Rendall
         FTI Consulting
         Christine Mohrmann

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