KVH Industries Q1 2010 Results
KVH Industries, Inc., (NASDAQ:KVHI) reported financial results for the first quarter ended March 31, 2010. Revenue for the first quarter of 2010 was $28.0 million, up 53% from the quarter ended March 31, 2009. Net income for the period was $2.1 million, or $0.14 per diluted share. During the same period last year the company reported a net loss of $2.6 million or $0.18 per diluted share, on revenues of $18.3 million.
"I am very pleased with our performance during the first quarter as we set new records for quarterly revenue and net income. These results were driven by strong contributions from our strategic initiatives in fiber optic gyros (FOGs) and global satellite communications," said Martin Kits van Heyningen, KVH's chief executive officer. "We continue to gain momentum in our mini-VSAT Broadband(SM) business as we build credibility with the speed and performance of our network. More customers are adopting this exciting new technology as we expand our network both geographically and in terms of capacity."
KVH's defense-related guidance and stabilization revenue from the company's fiber optic gyro solutions, TACNAV military navigation systems, and related services was approximately $11.9 million in the first quarter of 2010, up 65% on a year-over-year basis. "With sales of roughly $9.3 million, a 95% increase from the same period last year, our fiber optic gyro business was a major contributor to the first quarter's strong year-over-year growth. We also continued to win business, including a new $3.1 million order for FOGs to be used in remote weapon stations. In recent weeks, we also strengthened our product portfolio for commercial applications such as terrestrial surveying and autonomous vehicles with the introduction of our new FOG-based CG-5100 inertial measurement unit," said Kits van Heyningen.
In the first quarter of 2010, mobile communications revenue from marine, land, and aeronautical products and services was $16.1 million, up 45% on a year-over-year basis. Mr. Kits van Heyningen commented, "Our mobile satellite business grew in large part due to on the continued strength of our maritime satellite communications where mini-VSAT Broadband airtime revenue was up very strongly year over year. In addition, we benefited from $3.0 million in shipments of our aviation satellite TV system for commercial airliners.
"We continued to make major progress in expanding and enhancing our global satellite communications network. We recently doubled our capacity in the northern Pacific Ocean, opened our office in Singapore, and signed a new distribution agreement with Japan Radio Company to support TracPhone® V7 sales in the Japanese market. Last week, we incorporated a subsidiary in Brazil, completing a critical step in our plans to bring mini-VSAT Broadband service to the offshore oil and gas industry in the region this summer. Most importantly, we activated our service in the Indian Ocean along with Guam and the region to the north of Australia. I am proud to say that KVH now offers the only multi-megabit broadband service for ships and planes that encircles the globe."
Speaking about the company's financial results, Patrick Spratt, KVH's chief financial officer, said, "Our first quarter performance was very strong. Sales in each business area were generally in line with, or above, our expectations. Our strong gross profit reflected the benefit of overall production efficiencies and the timing of investments for the mini-VSAT network. The balance sheet remained strong with the cash, cash equivalents, and marketable securities position exceeding our fourth quarter 2009 level. Our profit generation and the timing of accounts payable contributed to generating more cash than previously anticipated.
"Market visibility is only slightly improved, so we are still cautious with regard to our expectations for future periods. In the second quarter, we expect revenues to be up about 25% compared to the second quarter of last year or nearly equal to this year's first quarter revenue level. Bottom line results for the second quarter are expected to be in the range of $0.06 to $0.10 per diluted share, reflecting an increase for investments in the mini-VSAT network as we enter the final stages of the global rollout as well as a potential increase in our tax rate from the mid-teens to approximately 30%.
"We continue to believe that 2010 will be a year of strong top line growth while also establishing a trend line of improving profit performance within the context of normal leisure market seasonality. As we move through the second half of the year we expect to be in a position to more fully leverage the mini-VSAT infrastructure on a global basis."