KVH Industries, Inc., (Nasdaq: KVHI), reported financial results
for the quarter ended March 31, 2023 today. The company will
hold a conference call to discuss these results at 5:30 p.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.
First Quarter
2023 Highlights
- Total revenues from continuing operations in the first quarter
of 2023 were $33.7 million, up 2% from $33.2 million in the first
quarter of 2022.
- Our VSAT airtime revenue increased
$3.0 million, to $27.0 million, or 13%, in the first
quarter of 2023 compared to the first quarter of 2022, partially
due to a 13% increase in total subscribers.
- Net loss from continuing operations
in the first quarter of 2023 was $12 thousand, or less than
one cent per share, compared to net loss from continuing operations
of $4.3 million, or $0.23 per share, in the first quarter of
2022.
- Non-GAAP adjusted EBITDA from
continuing operations was $3.3 million in the first quarter of
2023, compared to $1.8 million in the first quarter of
2022.
Commenting on the quarter, Brent C. Bruun,
President and Chief Executive Officer, stated, “We built upon our
recent financial and operational improvements to record a very
solid first quarter. We sustained our strong growth in airtime
revenue, which grew over 12% for the second consecutive quarter. We
also maintained our excellent airtime gross margin and reached
7,000 airtime subscribers. We remain focused on opportunities to
expand our subscriber base and airtime revenue substantially,
through both our hybrid H-series antennas, as well as a new
initiative to open our global HTS network and value-added services
to non-KVH antennas for the first time. With our strong balance
sheet, no debt, and growing airtime, I believe we are
well-positioned to attain sustained revenue growth and
profitability through innovation, a commitment to superior service,
and a focus on strategic and wise investment.”
Financial
Highlights - From Continuing Operations (in millions,
except per share data) |
|
|
Three Months Ended |
|
|
March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
GAAP
Results |
|
|
|
|
Revenue |
|
$ |
33.7 |
|
|
$ |
33.2 |
|
Loss from operations |
|
$ |
(0.5 |
) |
|
$ |
(4.2 |
) |
Net loss income |
|
$ |
— |
|
|
$ |
(4.3 |
) |
Net loss income per share |
|
$ |
— |
|
|
$ |
(0.23 |
) |
|
|
|
|
|
Non-GAAP Adjusted
EBITDA |
|
$ |
3.3 |
|
|
$ |
1.8 |
|
|
|
|
|
|
|
|
|
|
For more information regarding our non-GAAP
adjusted EBITDA, see the tables at the end of this release.
First Quarter Financial
Summary
Revenue was $33.7 million for the first
quarter of 2023, an increase of 2% compared to $33.2 million
in the first quarter of 2022.
Product revenues for the first quarter of 2023
were $4.9 million, a decrease of 25%. The decrease in product
sales was primarily due to a $1.5 million decrease in VSAT product
sales.
Service revenues for the first quarter of 2023
were $28.7 million, an increase of $2.2 million. The
increase in service sales was primarily due to a $3.0 million
increase in our VSAT service sales, partially offset by a $0.8
million decrease in our content service sales, primarily driven by
the sale of a subsidiary in April 2022.
Our operating expenses decreased $4.1 million to
$12.9 million for the first quarter of 2023 compared to
$17.1 million for the first quarter of 2022. This decrease was
due to a $2.4 million decrease in general and administrative costs,
a $1.3 million reduction in sales, marketing and support costs, and
a $0.4 million decrease in research and development costs. These
reductions were primarily due to the restructuring actions taken in
March 2022.
Other Recent Announcements
- March 8, 2023 – KVH TracNet wins Editors’ Choice in
Third-annual Best Elex Awards
- February 23, 2023 – KVH TracNet recognized with the 2023
SMART4SEA Connectivity Award
- February 13, 2023 – KVH’s New Crew Internet Service Offers
Vital Connectivity to Mariners and Enables Vessel Traffic
Allocation
- February 10, 2023 – KVH Supports Seafarers with Free VoIP Calls
to Turkey and Syria
- February 3, 2023 – KVH Industries Announces Support Agreement
with Black Diamond Capital Management
- January 19, 2023 – KVH Introduces New Enterprise-grade
Cybersecurity and Email Services for Mariners
Conference Call Details
KVH Industries will host a conference call today
at 5:30 p.m. ET 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 will be available on the
company website within three hours of the completion of the
call.
Non-GAAP Financial Measures
This release provides non-GAAP financial
information as a supplement to our condensed consolidated financial
statements, which are prepared in accordance with generally
accepted accounting principles (“GAAP”). Management uses these
non-GAAP financial measures internally in analyzing financial
results to assess operational performance. The presentation of this
financial information is not intended to be considered in isolation
or as a substitute for the financial information prepared in
accordance with GAAP. The non-GAAP financial measures used in this
press release adjust for specified items that can be highly
variable or difficult to predict. Management generally uses these
non-GAAP financial measures to facilitate financial and operational
decision-making, including evaluation of our historical operating
results and comparison to competitors’ operating results. These
non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with GAAP results and
the reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting our business.
Some limitations of non-GAAP adjusted EBITDA,
include the following: non-GAAP adjusted EBITDA represents net
income (loss) before, as applicable, interest income, net, income
tax expense (benefit), depreciation, amortization, stock-based
compensation expense, goodwill impairment charges, intangible asset
impairment charge, CEO separation costs, transaction-related and
other variable legal and advisory fees, obsolete inventory
recovery, gains and losses on sale of subsidiaries, foreign
exchange transaction gains and losses, and income from loan
forgiveness.
Other companies, including companies in KVH’s
industry, may calculate these non-GAAP financial measures
differently or not at all, which will reduce their usefulness as a
comparative measure.
Because non-GAAP financial measures exclude the
effect of items that increase or decrease our reported results of
operations, management strongly encourages investors to review our
consolidated financial statements and publicly filed reports in
their entirety. Reconciliations of the non-GAAP financial measures
to the most directly comparable GAAP financial measures are
included in the tables accompanying this release.
About KVH Industries, Inc.
KVH Industries, Inc., is a global leader in
mobile connectivity systems, with innovative technology designed to
enable a mobile world. A market leader in maritime VSAT, KVH
designs, manufactures, and provides connectivity and content
services globally. Founded in 1982, the company has more than a
dozen offices around the globe with research, development, and
manufacturing operations based in Middletown, RI.
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, the success of our new
initiatives, our investment plans, our development goals, our
anticipated revenue and earnings, and the impact of our future
initiatives on revenue, competitive positioning, profitability, and
orders. Actual results could differ materially from the results
projected in or implied by the forward-looking statements made in
this press release. Factors that might cause these differences
include, but are not limited to: uncertainty regarding customer
responses to new product and service introductions; challenges and
potential additional expenses in retaining our employees,
particularly in the current competitive labor market characterized
by rising wages; uncertainties created by our new business
strategy, which may impact customer recruitment and retention; the
uncertain impact of ongoing disruptions in our supply chain and
associated increases in our costs; the uncertain impact of rising
inflation, particularly with respect to fuel costs, and fears of
recession; the uncertain impact of the war in Ukraine;
unanticipated changes or disruptions in our markets; increased
competition, including as a result of industry consolidation and
from companies offering networks with greater communication
security options or other advantages; technological breakthroughs
by competitors; changes in customer priorities or preferences;
potential customer terminations; unanticipated liabilities; the
potential that competitors will design around or invalidate our
intellectual property rights; a history of losses; continued
fluctuations in quarterly results; the uncertain impact of federal
budget deficits, Congressional deadlock and the federal debt
ceiling; the uncertain impact of changes in trade policy, including
actual and potential new or higher tariffs and trade barriers, as
well as trade wars with other countries; unanticipated obstacles in
our product and service development, cost engineering and
manufacturing efforts; adverse impacts of currency fluctuations;
our ability to successfully commercialize our new initiatives
without unanticipated additional expenses or delays; potential
reduced sales to companies in or dependent upon the turbulent oil
and gas industry; the impact of extended economic weakness on the
sale and use of marine vessels and recreational vehicles; the
potential inability to increase or maintain our market share in the
market for airtime services; the need to increase sales of the
TracNet H-series and TracPhone V-HTS series products and related
services to maintain and improve airtime gross margins; the need
for, or delays in, qualification of products to customer or
regulatory standards; potential declines or changes in customer
demand, due to economic, weather-related, seasonal, and other
factors, particularly with respect to the TracNet H-series and
TracPhone V-HTS series, including with respect to new pricing
models; increased price and service competition in the mobile
connectivity market; exposure for potential intellectual property
infringement; changes in tax and accounting requirements or
assessments; and 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 March 16,
2023. Copies are available through our Investor Relations
department and website, 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 but not limited to the following marks:
KVH, TracPhone, and TracNet. Other trademarks are the property of
their respective companies.
|
|
|
KVH INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share amounts,
unaudited) |
|
|
|
|
|
Three months ended March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Sales: |
|
|
|
|
Product |
|
$ |
4,949 |
|
|
$ |
6,563 |
|
Service |
|
|
28,740 |
|
|
|
26,588 |
|
Net sales |
|
|
33,689 |
|
|
|
33,151 |
|
Costs and
expenses: |
|
|
|
|
Costs of product sales |
|
|
5,234 |
|
|
|
5,418 |
|
Costs of service sales |
|
|
16,076 |
|
|
|
14,926 |
|
Research and development |
|
|
2,565 |
|
|
|
3,011 |
|
Sales, marketing and support |
|
|
5,712 |
|
|
|
6,969 |
|
General and administrative |
|
|
4,650 |
|
|
|
7,075 |
|
Total costs and expenses |
|
|
34,237 |
|
|
|
37,399 |
|
Loss from operations |
|
|
(548 |
) |
|
|
(4,248 |
) |
Interest income |
|
|
778 |
|
|
|
208 |
|
Interest expense |
|
|
— |
|
|
|
1 |
|
Other (expense) income, net |
|
|
(224 |
) |
|
|
103 |
|
Income (loss) from continuing operations before income tax
expense |
|
|
6 |
|
|
|
(3,938 |
) |
Income tax expense from
continuing operations |
|
|
18 |
|
|
|
329 |
|
Net loss from continuing operations |
|
$ |
(12 |
) |
|
$ |
(4,267 |
) |
Net loss from discontinued
operations, net of tax |
|
|
— |
|
|
|
(425 |
) |
Net loss |
|
$ |
(12 |
) |
|
$ |
(4,692 |
) |
|
|
|
|
|
Net loss from
continuing operations per common share |
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
(0.23 |
) |
Diluted |
|
$ |
0.00 |
|
|
$ |
(0.23 |
) |
|
|
|
|
|
Net loss from
discontinued operations per common share |
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
(0.02 |
) |
Diluted |
|
$ |
0.00 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
Net loss per common
share |
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
(0.25 |
) |
Diluted |
|
$ |
0.00 |
|
|
$ |
(0.25 |
) |
|
|
|
|
|
Weighted average
number of common shares outstanding: |
|
|
|
|
Basic |
|
|
18,882 |
|
|
|
18,449 |
|
Diluted |
|
|
18,882 |
|
|
|
18,449 |
|
|
|
|
|
|
|
|
|
|
KVH INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(in thousands, unaudited) |
|
|
|
|
|
|
|
March 31,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
|
Cash, cash equivalents and marketable securities |
|
$ |
68,655 |
|
$ |
76,736 |
Accounts receivable, net |
|
|
26,383 |
|
|
27,427 |
Inventories, net |
|
|
23,886 |
|
|
22,730 |
Other current assets and contract assets |
|
|
4,465 |
|
|
4,310 |
Total current assets |
|
|
123,389 |
|
|
131,203 |
Property and equipment, net |
|
|
51,792 |
|
|
53,118 |
Goodwill |
|
|
5,329 |
|
|
5,308 |
Intangible assets, net |
|
|
325 |
|
|
404 |
Right of use assets |
|
|
1,780 |
|
|
2,168 |
Other non-current assets and contract assets |
|
|
7,792 |
|
|
8,070 |
Non-current deferred income taxes |
|
|
259 |
|
|
259 |
Total assets |
|
|
190,666 |
|
|
200,530 |
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
22,698 |
|
|
34,228 |
Contract liabilities |
|
|
3,684 |
|
|
3,108 |
Current operating lease liability |
|
|
1,393 |
|
|
1,532 |
Total current liabilities |
|
|
27,775 |
|
|
38,868 |
Other long-term liabilities |
|
|
— |
|
|
— |
Long-term operating lease liability |
|
|
376 |
|
|
636 |
Long-term contract liabilities |
|
|
4,667 |
|
|
4,315 |
Non-current deferred tax liability |
|
|
56 |
|
|
55 |
Stockholders’ equity |
|
|
157,792 |
|
|
156,656 |
Total liabilities and stockholders’ equity |
|
$ |
190,666 |
|
$ |
200,530 |
|
|
|
|
|
|
|
KVH INDUSTRIES, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP NET (LOSS) INCOME FROM CONTINUING
OPERATIONS TO NON-GAAP |
EBITDA AND NON-GAAP ADJUSTED EBITDA FROM CONTINUING
OPERATIONS |
(in thousands, unaudited) |
|
|
|
Three months ended March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Net loss from
continuing operations - GAAP |
|
$ |
(12 |
) |
|
$ |
(4,267 |
) |
Income tax expense |
|
|
18 |
|
|
|
329 |
|
Interest income, net |
|
|
(778 |
) |
|
|
(207 |
) |
Depreciation and amortization |
|
|
3,461 |
|
|
|
3,259 |
|
Non-GAAP EBITDA from
continuing operations |
|
|
2,689 |
|
|
|
(886 |
) |
Stock-based compensation expense |
|
|
296 |
|
|
|
734 |
|
Employee termination and other non-recurring costs |
|
|
— |
|
|
|
1,356 |
|
CEO separation costs |
|
|
— |
|
|
|
539 |
|
Transaction-related and other variable legal and advisory fees |
|
|
234 |
|
|
|
327 |
|
Foreign exchange transaction (gain) loss |
|
|
54 |
|
|
|
(275 |
) |
Non-GAAP adjusted
EBITDA from continuing operations |
|
$ |
3,273 |
|
|
$ |
1,795 |
|
|
|
|
|
|
Contact: |
|
KVH Industries, Inc.Roger Kuebel401-608-8945rkuebel@kvh.com |
|
FTI ConsultingChristine Mohrmann212-850-5600 |
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