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Technology Stocks : KVH Industries, Inc.
KVHI 10.800.0%Apr 18 8:00 PM EDTNews

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To: awecr2 who wrote (6941)11/2/2017 9:18:50 AM
From: WalterP   of 6978
 
KVH Industries Reports Third Quarter 2017 Results
By GlobeNewswire, November 02, 2017, 07:00:00 AM EDT

MIDDLETOWN, R.I., Nov. 02, 2017 (GLOBE NEWSWIRE) -- KVH Industries, Inc., (Nasdaq: KVHI) reported financial results for the quarter ended September 30, 2017 today. The company will hold a conference call to discuss these results at 9:00 a.m. ET today, which can be accessed at investors.kvh.com. Following the call, a replay of the webcast will be available through the company's website.



Third Quarter 2017 Highlights

Revenue for the third quarter of 2017 was $40.4 million, a decrease of 12% from $45.8 million in the third quarter of 2016.

Strong inertial measurement unit (IMU) sales drove fiber optic gyro (FOG) product revenue higher by 25% and contracted engineering service revenue doubled in the third quarter of 2017 compared to the third quarter of 2016.

mini-VSAT Broadband Airtime revenue grew $0.3 million, or 2%, compared to the third quarter of 2016.

AgilePlans by KVH, our new Connectivity as a Service Program for the commercial maritime sector, increased to 45% of total commercial VSAT shipments.

Net loss in the third quarter of 2017 was $2.4 million, or $0.15 per share, compared to net income of $2.9 million, or $0.18 per share, in the third quarter of 2016.

Non-GAAP net income in the third quarter of 2017 was $0.3 million, or $0.02 per share, compared to $4.3 million, or $0.27 per share in the third quarter of 2016.

Non-GAAP adjusted EBITDA in the third quarter of 2017 was $1.6 million compared to $6.7 million in the third quarter of 2016.


Significant progress has been made in the development of a photonic chip that will be a key component in the Company's development of a new, low cost FOG for the self-driving automobile market.Commenting on the quarter, Martin Kits van Heyningen, KVH's Chief Executive Officer, said "Our Airtime service revenues continue to grow, even in a quarter where severe weather impacted network usage by our subscribers. The three major hurricanes in the Americas this quarter also affected sales of our VSAT and TV products in Florida, the Gulf of Mexico, and the Caribbean. We are pleased with both the initial acceptance and the potential of our AgilePlans, which represented 45% of our commercial VSAT shipments this quarter while the pipeline continued to grow. While our confidence in our TACNAV business remains high, we have removed the large international orders from our Q4 guidance since we expect to receive these orders too late in the quarter for meaningful revenue shipments. Looking forward, we are excited about the impact that our new TracPhone V7-HTS product and high-speed network will have on our airtime business. This new satellite communication solution, which we introduced on Tuesday, is the most significant new product for KVH in many years. With more than triple the data speeds and better global coverage than today's product, we expect this to significantly improve our competitive position in most of our maritime markets."

The company operates in two segments, mobile connectivity and inertial navigation. Net sales for the mobile connectivity segment in the third quarter of 2017 decreased $3.7 million, or 10%, as compared to the third quarter of 2016 due to lower mini-VSAT Broadband product sales due in part to the fact that, under our AgilePlans program, we do not recognize revenue from products upon delivery to customers, as well as the impact of very severe weather in the Americas region this quarter. Net sales for our inertial navigation segment in the third quarter of 2017 decreased $1.7 million, or 18%, compared to the third quarter of 2016, driven by a $3.0 million decrease in TACNAV sales, due to a large order that occurred in the third quarter of 2016. This decrease was partially offset by an increase in FOG product sales and contracted engineering services.

Financial Highlights(in millions, except per share data)


Three Months Ended

September 30,
Nine Months Ended

September 30,
2017 2016 2017 2016
GAAP Results
Revenue $40.4 $45.8 $121.1 $132.2
Net (loss) income $(2.4) $2.9 $(9.3) $(0.7)
Net (loss) income per share $(0.15) $0.18 $(0.57) $(0.05)
Non-GAAP Results
Net income (loss) $0.3 $4.3 $(0.6) $4.9
Net income (loss) per share $0.02 $0.27 $(0.04) $0.31
Adjusted EBITDA $1.6 $6.7 $2.9 $11.2


Third Quarter Financial Summary

Revenue was $40.4 million for the third quarter of 2017, a decrease of 12% compared to the third quarter of 2016.

Product revenues for the third quarter of 2017 were $14.1 million, 26% lower than the prior year quarter, due to a decrease in mobile connectivity product sales of $2.9 million and a $2.0 million decrease in our inertial navigation product sales. Mobile connectivity product sales decreased primarily due to a $2.3 million decrease in marine product sales and a $0.6 million decrease in land product sales. The decrease was partly due to the timing of a particularly large order received in the prior year quarter, as well as the impact of the new AgilePlans subscription service. Inertial navigation product sales decreased due to a $3.0 million decrease in TACNAV sales, due to a large order that occurred in the prior year quarter. This was partially offset by a $1.0 million increase in FOG product sales.

Service revenues for the third quarter were $26.3 million, a decrease of 2% compared to the prior year quarter. Airtime service revenues, which include mini-VSAT Broadband airtime revenues, increased 2%. Content and training revenues, which include our entertainment, eLearning, and safety content decreased by 10%, primarily due to a decrease in fleet subscribers and a large film contract that occurred in the third quarter of 2016. Our engineering service revenues in the third quarter of 2017 increased by $0.4 million compared to the third quarter of 2016 as a result of a substantial contract that began in the first quarter of 2017 and was completed in the third quarter of 2017.

Our operating expenses increased $1.0 million year-over-year to $19.3 million.

Nine Months Ended September 30 Financial Summary

Revenue was $121.1 million for the nine months ended September 30, 2017, a decrease of 8%, compared to the nine months ended September 30, 2016. The British Pound negatively impacted consolidated revenue in 2017 by $1.9 million, or 2%.

Product revenues for the nine months ended September 30, 2017 were $43.3 million, which was 21% lower than the comparable period last year, due to a decrease in mobile connectivity product sales of $6.6 million and a $4.6 million decrease in our inertial navigation product sales. Mobile connectivity product sales decreased primarily due to the decrease in the third quarter described above. Inertial navigation product sales decreased due to a $6.5 million decrease in TACNAV sales, due to a large order that shipped in the second and third quarter of 2016, which was partially offset by a $1.9 million increase in FOG product sales in the current period.

Service revenues for the nine months ended September 30, 2017 were $77.8 million, which was approximately 1% higher than the comparable period last year. Airtime service revenues, which include mini-VSAT Broadband airtime revenues, increased 5%. Content and training revenues, which include our entertainment, eLearning, and safety content, decreased by 11%. Weakness in the British Pound negatively impacted content and training revenues by $1.9 million, or 7%. Our engineering service revenues in the nine months ended September 30, 2017 increased by $1.5 million compared to the nine months ended September 30, 2016 as a result of a substantial contract that began in the first quarter of 2017 and was completed in the third quarter of 2017.

Our operating expenses increased $0.8 million year-over-year to $59.6 million.

Fourth Quarter 2017 and Full Year 2017 Outlook

2017 will be an important year due to the strategic investments in key initiatives that we believe have the potential to result in significant revenue growth in 2018 and beyond. We have reduced our revenue and earnings outlook for the remainder of 2017 as we have not yet received the anticipated international TACNAV orders and due to the lower third quarter VSAT bookings in the Mobile Connectivity segment, which will lower the growth rate for fourth quarter airtime revenues. Our guidance for the fourth quarter of 2017 is as follows:


(in millions, except per share data) Expected Range for the

Fourth Quarter
Expected Range for the

Full Year
From To From To
Revenue $39.0 $42.0 $160.0 $163.0
GAAP EPS $(0.24) $(0.18) $(0.81) $(0.75)
Non-GAAP EPS $0.02 $0.06 $(0.02) $0.02
Non-GAAP Adjusted EBITDA $1.1 $2.1 $4.0 $5.0


Other Recent Announcements

KVH Launches New High-speed Maritime Network on Intelsat EpicNG Satellites

New KVH TracPhone V7-HTS System Delivers Maritime Broadband at Triple Previous Speeds for a New Era of Digital Life at Sea

KVH and Ocean Exploration Trust Announce Partnership Enabling Nautilus Research Crew to have Internet and Daily News Content at Sea

National Marine Electronics Association Recognizes KVH Marine Satellite Systems with 2017 Product Excellence Awards

Moving Map Display for Military Vehicles Provides Critical Navigation Information on Touchscreen

KVH Introduces Videotel Performance Manager, a Breakthrough Solution for Maritime TrainingPlease review the corresponding press releases for more details regarding these developments.
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