|KVH Indus Sees 3rd Quarter Results Ending String Of Quarterly Losses |
Tuesday October 15, 1:57 pm ET
By Michelle Rama, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- When KVH Industries Inc. (NasdaqNM:KVHI - News) reports its third- quarter results Thursday, the maker of navigation systems and satellite products expects to do something it hasn't done in eight quarters - break even, or perhaps even turn a profit of 1 cent a share.
President and Chief Executive Martin Kits van Heningen told Dow Jones Newswires that all the money spent on research and development is now paying off.
"One of the reasons why we haven't been showing a profit is because we've spent an enormous amount - about 24% of sales - in R&D last year, and 20% this year," van Heningen told Dow Jones Newswires.
The primary beneficiary of KVH's research spending has been its next- generation satellite antenna product, which would provide high-speed Internet access and satellite TV to cars and sports utility vehicles. Van Heningen expects the product to jump-start its communications business by the end of this year.
KVH's goal is to have the satellite antenna become a standard feature in every new vehicle. In recent months, KVH has received orders from several recreational vehicle dealers who will offer TracVision as an option in 2003 motor homes. Fleetwood Enterprises is among them, and KVH said it will soon announce other such contracts soon.
"We've signed up some additional (original equipment manufacturers), and we're waiting to coordinate the announcement with them," van Heningen said.
In June, Featherlite said it would equip all its 2003 Vantare luxury coaches with KVH's satellite high-speed Internet and telephone technology.
The release of KVH's satellite antenna might be a long-awaited turning point for the 200-employee, $70 million market-cap company, which has finished in the red for the past five years.
Overall, van Heningen said, the company has seen a surge in strength from all three of its businesses, namely navigation instruments, communications and fiber products.
Van Heningen said the company sees stronger-than-expected third-quarter revenue, projecting a rise of 50%-60% to about $12 million to $12.5 million from $7.8 million a year ago. For the year, the company now sees revenue growth exceeding 40%, better than its earlier 2002 revenue guidance of 30% to 40% growth.
Van Heningen also is comfortable with the fourth-quarter earnings estimates of Needham analyst Pierre Maccagno, who is the only analyst to follow the company. Maccagno projects fourth-quarter earnings of 2 cents a share on 47% year-over-year revenue growth.
Van Heningen said the company will offer additional guidance in its conference call Thursday.
"Given the uncertainty in the economy, it's difficult to predict (2003 results), but if things continue the way they are, we certainly do expect a profitable year next year," van Heningen said, adding that "we have worked hard to become profitable this year and we intend to stay there."
-By Michelle Rama; Dow Jones Newswires; 201-938-4046 firstname.lastname@example.org