KVHI Conference Call summary|
New strategy implemented in FY 98 – cost efficient re-focus on growth. Faster product development due to re-engineering. Short term financial pain is the result of long term strategy and short term decline in military orders.
R & D investment allowed product development time to be cut in half. Six new products provided 50% of 98 revenues. More new products to be introduced in 99.
Tracvision LM – for land mobile market. Developed on schedule and under budget. Began shipping 2/99. Initial sales far exceeding expectations. Targets RV, SUV, buses, etc. 40% cheaper than only other competing product.
Tracvision III – marine antenna that allows simultaneous reception of TV and data. See opportunity to work with companies like Teledesic and Skybridge in development of the end user antenna system for low orbit satellite reception.
TACNAV Lite – received a $5 mm upgrade to light military vehicles. Sees opportunity in precision navigation for military support vehicles. Developed in 6 months. Being tested in Taskforce 21 (Digital Battlefield)
TFOG Navigator .. received 750K development grant. No GPS jamming, ideal for heavy armored vehicles. Quantum leap in targeting accuracy.
The core satellite business is already growing rapidly. This is the basis for solid operating results going forward. Previously, growth was masked by declining military and OEM sales. This year they expect to see the full benefit of marketing and product development investment.
Able to supply military with tactical navigation systems for all land based applications.
New technology revolutionizes core navigation business – in demand from major OEM customers for various applications.
$3mm mortgage financing @ 7%.. also, $1mm in cash on hand – enough for all of 99. Cost of goods should decline, but sales and marketing expenses should increase. No significant revenues from FOG products for next 9-12 months. (Q & A they indicate they are being very conservative on their estimates for FOG products to make their plan easily achievable).
Q & A: Tracvision LM market. Suburbans and minivans showing interest in backseat video. Market is larger than marine market and initial reaction is greater than anticipated. Profit margin is “rich”.
They expect rising sales and decreasing costs. 15-25% sales growth. Expenses this Q were a result of reduction in revenue coupled with a $1.5mm fixed manufacturing cost related to FOG start-up (Illinios). Increased R & D .. 50% of new products due to R & D. Plan to be profitable by the end of 99, but it depends on FOG sales.
Have received orders from coach manufacturers for LM, happy with the results of beta testing. All sales so far are in the after-market. No Big 3 SUV testing at this time. Flat panel development is enabling technology for the passenger video market.
Only two persons asked questions on the call. Not included is information available in the earnings PR...