KVH Industries Reports First Quarter 2021 Results
KVH Industries reported a 16% revenue increase in Q1 2021, reaching $42.3 million compared to Q1 2020's $36.6 million. The rise was bolstered by a 48% jump in revenues from AgilePlans, which now accounts for 41% of mini-VSAT Broadband subscribers. Net loss improved to $4.0 million, or $0.22 per share, from $6.2 million in the prior year. Non-GAAP adjusted EBITDA was positive at $1.1 million. The company anticipates full-year revenue growth in the mid-to-high single digits if customer activity normalizes.
- Q1 2021 revenue increased by 16% to $42.3 million from $36.6 million in Q1 2020.
- AgilePlans revenue surged over 48%, representing 84% of commercial maritime mini-VSAT Broadband shipments.
- Improved net loss of $4.0 million, a $2.2 million reduction from Q1 2020.
- Non-GAAP adjusted EBITDA rose to $1.1 million, a significant improvement from negative $3.7 million in Q1 2020.
- Inertial navigation product sales increased by 54%, driven by a $4.2 million rise in TACNAV product sales.
- Despite improved performance, the company still reported a net loss of $4.0 million.
- Decrease in content service sales by $0.9 million impacted overall revenues.
MIDDLETOWN, R.I., May 05, 2021 (GLOBE NEWSWIRE) -- KVH Industries, Inc., (Nasdaq: KVHI), reported financial results for the quarter ended March 31, 2021 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.
First Quarter 2021 Highlights
- Total revenues increased by
16% in the first quarter of 2021 to$42.3 million from$36.6 million in the first quarter of 2020. - Revenues for AgilePlans, our Connectivity as a Service program for the commercial maritime sector, were up more than
48% compared to the first quarter of 2020. - AgilePlans amounted to
84% of total commercial maritime mini-VSAT Broadband shipments, and67% of the total mini-VSAT Broadband shipments for the quarter. AgilePlans now represent41% of our mini-VSAT Broadband subscriber base. - Our mini-VSAT Broadband airtime revenue increased
$2.2 million , to$21.4 million , or11% , in the first quarter of 2021 compared to the first quarter of 2020, driven primarily by a7% increase in subscribers. - TACNAV product sales increased
$4.2 million in the first quarter of 2021 compared to the first quarter of 2020, and fiber optic gyro (FOG) product and OEM product sales increased$0.9 million , or16% , in the first quarter of 2021 compared to the first quarter of 2020. - Net loss in the first quarter of 2021 was
$4.0 million , or$0.22 per share, compared to a net loss of$6.2 million , or$0.35 per share, in the first quarter of 2020. - Non-GAAP net loss in the first quarter of 2021 was
$0.9 million , or$0.05 per share, compared to a non-GAAP net loss of$4.3 million , or$0.25 per share, in the first quarter of 2020. - Non-GAAP adjusted EBITDA in the first quarter of 2021 was
$1.1 million , compared to a negative$3.7 million in the first quarter of 2020.
Commenting on the quarter, Martin Kits van Heyningen, KVH’s chief executive officer, said, “Despite continuing pandemic-related headwinds, KVH recorded a strong first quarter, with total revenue up
“In the inertial navigation segment, we successfully completed a large tactical navigation order that we had announced in the second quarter of last year, which increased TACNAV revenue in the first quarter by
The company operates in two segments, mobile connectivity and inertial navigation. In the first quarter of 2021, net sales for the mobile connectivity segment increased by
Financial Highlights - From Continuing Operations (in millions, except per share data)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2021 | 2020 | |||||||
| GAAP Results | ||||||||
| Revenue | $ | 42.3 | $ | 36.6 | ||||
| Net loss | $ | (4.0 | ) | $ | (6.2 | ) | ||
| Net loss per share | $ | (0.22 | ) | $ | (0.35 | ) | ||
| Non-GAAP Results | ||||||||
| Net loss | $ | (0.9 | ) | $ | (4.3 | ) | ||
| Net loss per share | $ | (0.05 | ) | $ | (0.25 | ) | ||
| Adjusted EBITDA | $ | 1.1 | $ | (3.7 | ) | |||
For more information regarding our non-GAAP financial measures, see the tables at the end of this release.
First Quarter Financial Summary
Revenue was
Product revenues for the first quarter of 2021 were
Service revenues for the first quarter of 2021 were
Our operating expenses decreased
Other Recent Announcements
- KVH Introduces P-series IMUs with PIC Technology and New Accelerometer
- KVH Offers High Performance Ultra-Compact Ku-band V30 VSAT Antenna
- KVH Offers TACNAV 3D with Photonic Integrated Chip Technology
- KVH Industries Names Roger A. Kuebel as New CFO
Please review the corresponding press releases for more details regarding these developments.
Conference Call Details
KVH Industries will host a conference call today at 9:00 a.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, which may include constant-currency revenue, non-GAAP net income (loss), non-GAAP diluted EPS, and non-GAAP adjusted EBITDA, 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. Constant-currency revenue is calculated on the basis of local currency results, using foreign currency exchange rates applicable to the earlier comparative period, and management believes that presenting information on a constant-currency basis helps management and investors to isolate the impact of changes in those rates from other factors. 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, comparison to competitors’ operating results, and determination of management incentive compensation. 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 net income (loss), non-GAAP diluted EPS, and non-GAAP adjusted EBITDA, include the following:
- Non-GAAP net income (loss) and diluted EPS exclude, as applicable, amortization of intangibles, stock-based compensation expense, goodwill impairment charge, intangible asset impairment charge, transaction-related and other variable irregular legal and advisory fees, variable inventory reserves, other variable costs, foreign exchange transaction gains and losses, the tax effect of the foregoing and certain discrete tax charges, including changes in our valuation allowance and other tax adjustments.
- Non-GAAP adjusted EBITDA represents net income (loss) before, as applicable, interest income, net, income taxes, depreciation, amortization, stock-based compensation expense, goodwill impairment charge, intangible asset impairment charge, transaction-related and other variable legal and advisory fees, variable inventory reserves, other variable costs and foreign exchange transaction gains and losses.
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 and inertial navigation 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. KVH is also a premier manufacturer of high-performance sensors and integrated inertial systems for defense and commercial applications. Founded in 1982, the company is based in Middletown, RI, with research, development, and manufacturing operations in Middletown, RI, and Tinley Park, IL, and more than a dozen offices around the globe.
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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 product 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: the adverse impact of the COVID-19 pandemic, as well as governmental, business and other responses thereto and any resulting economic slowdown, on our revenues, results of operations and financial condition, which could continue to be material (particularly for our media and other travel-related businesses); adverse changes in our business, prospects, financial condition or results of operations that may necessitate staffing or compensation reductions beyond those contemplated by the loan forgiveness provisions of the paycheck protection program (PPP), as a result of which we may not be entitled to any forgiveness; possible SBA determination that all or a portion of our PPP loan is not eligible for forgiveness; unanticipated changes or disruptions in our markets; increased competition, including as a result of industry consolidation; 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 and expectation of continuing losses as we increase investments in various initiatives; continued fluctuations in quarterly results; the uncertain duration of the initial adverse impact on our overall revenues of our AgilePlans and KVH Watch, under which we recognize no revenue for product sales, either at the time of shipment or over the contract term; potential delays in the development of a market for our IoT services; the need to develop an ecosystem of applications for our new IoT services; higher costs arising from maintaining both the HTS network and our legacy network; potential challenges or delays in the transition of customers from our legacy network to our HTS network, which could result in a material loss of revenue; costs arising from the termination of our legacy network; the uncertain impact of federal budget deficits, Congressional deadlock and the change in administration; 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 photonic chip and other product and service development, cost engineering and manufacturing efforts; delays in anticipated orders for our products and services, including significant orders for TACNAV products, or the potential failure of such orders to occur; 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; continued substantial fluctuations in military sales, including to foreign customers; the unpredictability of defense budget priorities as well as the order timing, purchasing schedules, and priorities for defense products, including possible order cancellations; the uncertain impact of potential budget cuts by government customers; 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 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 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 3, 2021. Copies are available through our Investor Relations department and website, http://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, TACNAV, KVH Watch, mini-VSAT Broadband, and AgilePlans. 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, | ||||||||
| 2021 | 2020 | |||||||
| Sales: | ||||||||
| Product | $ | 18,432 | $ | 13,094 | ||||
| Service | 23,860 | 23,474 | ||||||
| Net sales | 42,292 | 36,568 | ||||||
| Costs and expenses: | ||||||||
| Costs of product sales | 11,220 | 9,636 | ||||||
| Costs of service sales | 15,423 | 15,195 | ||||||
| Research and development | 4,567 | 4,287 | ||||||
| Sales, marketing and support | 7,546 | 8,700 | ||||||
| General and administrative | 7,143 | 6,398 | ||||||
| Total costs and expenses | 45,899 | 44,216 | ||||||
| Loss from operations | (3,607 | ) | (7,648 | ) | ||||
| Interest income | 233 | 313 | ||||||
| Interest expense | 18 | 4 | ||||||
| Other (expense) income, net | (789 | ) | 1,502 | |||||
| Loss before income tax (benefit) expense | (4,181 | ) | (5,837 | ) | ||||
| Income tax (benefit) expense | (153 | ) | 377 | |||||
| Net loss | $ | (4,028 | ) | $ | (6,214 | ) | ||
| Net loss per common share: | ||||||||
| Basic and diluted | $ | (0.22 | ) | $ | (0.35 | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and diluted | 17,938 | 17,529 | ||||||
KVH INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
| March 31, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Cash, cash equivalents and marketable securities | $ | 39,112 | $ | 37,719 | ||||
| Accounts receivable, net | 30,033 | 33,687 | ||||||
| Inventories, net | 22,773 | 24,674 | ||||||
| Other current assets and contract assets | 5,718 | 4,980 | ||||||
| Total current assets | 97,636 | 101,060 | ||||||
| Property and equipment, net | 57,111 | 56,273 | ||||||
| Goodwill | 6,611 | 6,592 | ||||||
| Intangible assets, net | 2,011 | 2,254 | ||||||
| Right of use assets | 5,346 | 6,893 | ||||||
| Other non-current assets and contract assets | 9,505 | 10,446 | ||||||
| Non-current deferred income taxes | 35 | 73 | ||||||
| Total assets | $ | 178,255 | $ | 183,591 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expenses | $ | 26,143 | $ | 27,525 | ||||
| Contract liabilities | 4,531 | 4,445 | ||||||
| Current portion of long-term debt | 6,152 | 4,992 | ||||||
| Current operating lease liability | 2,973 | 3,826 | ||||||
| Total current liabilities | 39,799 | 40,788 | ||||||
| Other long-term liabilities | 227 | 674 | ||||||
| Long-term operating lease liability | 2,500 | 3,204 | ||||||
| Long-term contract liabilities | 4,001 | 4,688 | ||||||
| Non-current deferred tax liability | 384 | 418 | ||||||
| Long-term debt, excluding current portion | 775 | 1,935 | ||||||
| Stockholders’ equity | 130,569 | 131,884 | ||||||
| Total liabilities and stockholders’ equity | $ | 178,255 | $ | 183,591 | ||||
KVH INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS
(in thousands, except per share amounts, unaudited)
| Three months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Net loss - GAAP | $ | (4,028 | ) | $ | (6,214 | ) | ||
| Amortization of intangibles | 276 | 248 | ||||||
| Stock-based compensation expense | 932 | 805 | ||||||
| Transaction-related and other variable legal and advisory fees | 865 | 143 | ||||||
| Foreign exchange transaction loss (gain) | 357 | (1,185 | ) | |||||
| Tax effect on the foregoing | (524 | ) | (13 | ) | ||||
| Change in valuation allowance and other tax adjustments (a) | 1,189 | 1,904 | ||||||
| Net loss - Non-GAAP | $ | (933 | ) | $ | (4,312 | ) | ||
| Net loss per common share - Non-GAAP | ||||||||
| Basic and diluted | $ | (0.05 | ) | $ | (0.25 | ) | ||
| Weighted average number of common shares outstanding | ||||||||
| Basic and diluted | 17,938 | 17,529 | ||||||
(a) Represents a change in the valuation allowance on current year United States net operating losses, research and development tax credits and uncertain tax position adjustments.
KVH INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP EBITDA
AND NON-GAAP ADJUSTED EBITDA
(in thousands, unaudited)
| Three months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| GAAP net loss | $ | (4,028 | ) | $ | (6,214 | ) | ||
| Income tax (benefit) expense | (153 | ) | 377 | |||||
| Interest income, net | (215 | ) | (309 | ) | ||||
| Depreciation and amortization | 3,350 | 2,650 | ||||||
| Non-GAAP EBITDA | (1,046 | ) | (3,496 | ) | ||||
| Stock-based compensation expense | 932 | 805 | ||||||
| Transaction-related and other variable legal and advisory fees | 865 | 143 | ||||||
| Foreign exchange transaction loss (gain) | 357 | (1,185 | ) | |||||
| Non-GAAP adjusted EBITDA | $ | 1,108 | $ | (3,733 | ) | |||
KVH INDUSTRIES, INC. AND SUBSIDIARIES
REVENUE AND OPERATING INCOME (LOSS) BY SEGMENT
(in millions except for percentages, unaudited)
| Segment Net Sales | Three months ended March 31, | |||||||
| 2021 | 2020 | |||||||
| Mobile connectivity sales | ||||||||
| Product | $ | 6.9 | $ | 6.6 | ||||
| Service | 23.6 | 22.3 | ||||||
| Net sales | $ | 30.5 | $ | 28.9 | ||||
| Inertial navigation sales | ||||||||
| Product | $ | 11.5 | $ | 6.5 | ||||
| Service | 0.2 | 1.2 | ||||||
| Net sales | $ | 11.7 | $ | 7.7 | ||||
| Operating (Loss) Income | Three months ended March 31, | |||||||
| 2021 | 2020 | |||||||
| Mobile connectivity | $ | (0.4 | ) | $ | (2.3 | ) | ||
| Inertial navigation | 2.1 | (0.8 | ) | |||||
| 1.7 | (3.1 | ) | ||||||
| Unallocated | (5.3 | ) | (4.5 | ) | ||||
| Loss from operations | $ | (3.6 | ) | $ | (7.6 | ) | ||
| Three months ended March 31, | ||||||
| 2021 | 2020 | |||||
| (percentage of total revenue) | ||||||
| Mobile Connectivity Revenue Components | ||||||
| Product sales | 16 | % | 18 | % | ||
| mini-VSAT Broadband airtime | 51 | % | 53 | % | ||
| Content service | 4 | % | 7 | % | ||
| Inertial Navigation Revenue Components | ||||||
| FOG-based products | 14 | % | 14 | % | ||
| Tactical navigation products | 12 | % | 3 | % | ||
| Contact: | KVH Industries, Inc. Roger Kuebel 401-608-8945 rkuebel@kvh.com | FTI Consulting Christine Mohrmann 212-850-5600 |
FAQ
What were KVHI's financial results for Q1 2021?
How did AgilePlans perform for KVHI in Q1 2021?
What was KVHI's net loss in Q1 2021?
Did KVHI see any changes in adjusted EBITDA for Q1 2021?
What is the outlook for KVHI's revenue for the full year?
