KVH Industries, Inc. (Nasdaq: KVHI), reported financial results for
the quarter ended September 30, 2023 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.
Third Quarter
2023 Highlights
- Total revenues from continuing
operations in the third quarter of 2023 were $33.5 million, down 5%
from $35.2 million in the third quarter of 2022.
- VSAT airtime revenue increased
$0.7 million, to $27.4 million, or 3%, in the third
quarter of 2023 compared to the third quarter of 2022.
- Aggregate non-cash impairment
charges of $6.0 million were taken against goodwill and
long-lived assets for the KVH Media Group reporting unit and the
Mobile Broadband reporting unit.
- Including the $6.0 million of
impairment charges, net loss from continuing operations in the
third quarter of 2023 was $4.2 million, or $0.22 per share,
compared to net loss from continuing operations of
$0.1 million, or $0.01 per share, in the third quarter of
2022. Excluding the $6.0 million impairment charge, net income
from continuing operations would have been $1.8 million instead of
a net loss of $4.2 million.
- Non-GAAP adjusted EBITDA from
continuing operations, which has been adjusted to exclude the
$6.0 million of impairment charges, was $4.5 million,
compared to $3.9 million in the third quarter of 2022.
Commenting on the company’s third quarter
results, Brent C. Bruun, KVH Chief Executive Officer, said, “Our
new relationship as a Starlink reseller and recently announced
exclusive maritime agreement with Kognitive Networks are
significant developments in KVH’s strategic evolution into a
multi-orbit, multi-channel integrated solution provider. Adding
Starlink technology and service to our portfolio illustrates our
drive to be more flexible and versatile through a constellation-
and hardware-agnostic approach to maritime connectivity. At the
same time, we expect that Kognitive’s enterprise-grade network and
bandwidth management tools will become integral components within
our mobile communication service offerings. I believe these
developments will help us to deliver the integrated network
connectivity that commercial and leisure vessels, owners, and crew
desire.”
Financial Highlights - From Continuing
Operations (in millions, except per share data)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
GAAP
Results |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
33.5 |
|
|
$ |
35.2 |
|
|
$ |
101.4 |
|
|
$ |
102.9 |
|
Loss from operations |
|
$ |
(5.0 |
) |
|
$ |
(1.0 |
) |
|
$ |
(5.3 |
) |
|
$ |
(6.3 |
) |
Net loss |
|
$ |
(4.2 |
) |
|
$ |
(0.1 |
) |
|
$ |
(3.3 |
) |
|
$ |
(4.6 |
) |
Net loss per share |
|
$ |
(0.22 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted
EBITDA |
|
$ |
4.5 |
|
|
$ |
3.9 |
|
|
$ |
12.0 |
|
|
$ |
8.9 |
|
Results from continuing operations exclude prior
year amounts associated with the divested inertial navigation
segment. Inertial navigation is treated as discontinued operations.
For more information regarding our non-GAAP adjusted EBITDA, see
the tables at the end of this release.
Third Quarter Financial
Summary
Revenue was $33.5 million for the third
quarter of 2023, a decrease of 5% compared to $35.2 million in
the third quarter of 2022.
Service revenues for the third quarter were
$29.4 million, an increase of $0.9 million. The increase
in service sales was primarily due to a $0.7 million increase
in our VSAT service sales.
Product revenues for the third quarter were
$4.2 million, a decrease of 37%. The decrease in product sales
was primarily due to a $1.9 million decrease in TracVision product
sales and a $1.1 million decrease in VSAT broadband product sales,
partially offset by a $0.6 million increase in Starlink product
sales.
Primarily as a result of the impairment charges
for our Mobile Broadband reporting unit and our KVH Media Group
reporting unit of $6.0 million, our operating expenses
increased $3.6 million to $17.6 million compared to
$14.0 million for the third quarter of 2022. This increase was
partially offset by a $1.2 million decrease in general and
administrative costs, a $0.9 million reduction in sales, marketing
and support costs, and a $0.3 million decrease in research and
development costs.
The $6.0 million impairment charge was
driven by the significant decline in our stock price that followed
the August 9, 2023 announcement of our financial results for the
second quarter of 2023. In that announcement, in light of the
changing market and competitive environments at that time, we
reduced our guidance for anticipated revenue and non-GAAP adjusted
EBITDA for 2023. As a result of the subsequent decline in our stock
price, the aggregate market value of our outstanding equity fell
below the aggregate book value of our net assets by more than the
value of our goodwill. Under applicable accounting rules, this
circumstance required us to evaluate our goodwill and long-lived
assets for impairment. Given the significance of the decline in the
market value of our outstanding equity and the uncertain impact of
ongoing competition, we concluded that we should write off all our
goodwill as well as approximately $0.7 million of long-lived assets
in our media business.
Nine Months Ended
September 30 Financial
Summary
Revenue was $101.4 million for the nine
months ended September 30, 2023, a decrease of 1% compared to
$102.9 million for the nine months ended September 30,
2022.
Service revenues for the nine months ended
September 30, 2023 were $86.9 million, an increase of 5%
compared to the nine months ended September 30, 2022. The increase
in service sales was primarily due to a $4.9 million increase in
our VSAT broadband service sales, partially offset by a $0.9
million decrease in our content service sales, primarily driven by
the sale of a subsidiary in April 2022.
Product revenues for the nine months ended
September 30, 2023 were $14.5 million, a decrease of 27%
compared to the nine months ended September 30, 2022. The decrease
in product sales was primarily driven by a $3.9 million decrease in
TracVision product sales and a $2.4 million decrease in VSAT
broadband product sales, partially offset by a $0.9 million
increase in Starlink product sales.
Our operating expenses decreased
$4.1 million to $42.2 million in the nine months ended
September 30, 2023, compared to $46.3 million in the nine
months ended September 30, 2022. This decrease resulted primarily
from a $7.2 million decrease in salaries, benefits and taxes (which
includes consideration of prior period costs associated with the
March 2022 reduction in workforce and expenses related to the
separation and retirement of the former Chief Executive Officer), a
$0.7 million reimbursement by EMCORE for expenses incurred under
the Transition Service Agreement relating to the sale of the
Inertial Navigation business in 2022, a $0.6 million decrease in
recruiting and relocation expense, a $0.6 million decrease in bad
debt expense, a $0.5 million decrease in depreciation and
amortization expense, a $0.4 million decrease in expensed
materials, a $0.4 million decrease in warranty expense and a $0.3
million decrease in external commission expense. These items were
partially offset by the impairment charges for our Mobile Broadband
reporting unit and our KVH Media Group reporting unit of
$6.0 million, a $0.4 million increase in professional fees, a
$0.3 million increase in facilities expense and a $0.3 million
increase in travel expense. Excluding the $6.0 million
impairment charge, the decrease in operating expenses would have
been $10.1 million instead of $4.1 million for the first nine
months of 2023 versus 2022.
Other Recent Announcements
- October 30, 2023
– KVH and Kognitive Networks Sign Exclusive Maritime Agreement
- September 26,
2023 – KVH TracNet Hybrid Communications and TracVision Satellite
TV Honored by National Marine Electronics Association
- September 6,
2023 – KVH Enhances Maritime Hybrid Communication Solutions with
Starlink
- August 17, 2023 – KVH and Intelsat
Reaffirm Satellite Partnership with Three-year Renewal
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 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) from continuing operations before, as applicable,
interest income, net, income tax expense (benefit), depreciation,
amortization, stock-based compensation expense, goodwill impairment
charge, long-lived assets impairment charge, employee termination
and other variable costs, executive separation costs,
transaction-related and other variable legal and advisory fees,
irregular inventory reserve, gains and losses on sale of
subsidiaries, 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 maritime VSAT delivered via the KVH ONE
network. The company, founded in 1982, is based in Middletown, RI,
with research, development, and manufacturing operations in
Middletown, RI, and more than a dozen offices around the globe. KVH
provides connectivity solutions for commercial maritime, leisure
marine, military/government, and land mobile applications on
vessels and vehicles, including the TracNet, TracPhone, and
TracVision product lines, the KVH ONE OpenNet Program for non-KVH
antennas, AgilePlans Connectivity as a Service (CaaS), and the KVH
Link crew wellbeing content service.
This press release contains forward-looking
statements that involve risks and uncertainties. For example,
forward-looking statements include statements regarding the
anticipated benefits of our new initiatives, our investment plans,
our development goals, and the potential 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: increased competition, including
competition from lower-cost providers and low earth orbit satellite
systems, particularly in the global leisure market; the risk that
our new OpenNet program will lead to further reductions in sales of
our satellite products; the risk that our reseller arrangement with
Starlink will not provide material benefits; 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 inflation, particularly with respect to fuel costs, and
fears of recession; the uncertain impact of the wars in Ukraine and
the Middle East; unanticipated changes or disruptions in our
markets; 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 risk that declining sales of the TracNet
H-series and TracPhone V-HTS series products and related services
will reduce airtime gross margins; the risk that reduced product
sales will continue to erode product gross margins and lead to
increased losses; 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 Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on August 9,
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, KVH ONE, TracPhone, TracVision, AgilePlans, and TracNet. Other
trademarks are the property of their respective companies.
KVH INDUSTRIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share amounts,
unaudited) |
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Sales: |
|
|
|
|
|
|
|
|
Product |
|
$ |
4,152 |
|
|
$ |
6,625 |
|
|
$ |
14,526 |
|
|
$ |
19,808 |
|
Service |
|
|
29,397 |
|
|
|
28,544 |
|
|
|
86,883 |
|
|
|
83,065 |
|
Net sales |
|
|
33,549 |
|
|
|
35,169 |
|
|
|
101,409 |
|
|
|
102,873 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Costs of product sales |
|
|
4,729 |
|
|
|
6,747 |
|
|
|
16,596 |
|
|
|
17,363 |
|
Costs of service sales |
|
|
16,238 |
|
|
|
15,379 |
|
|
|
47,848 |
|
|
|
45,505 |
|
Research and development |
|
|
2,398 |
|
|
|
2,745 |
|
|
|
7,379 |
|
|
|
8,380 |
|
Sales, marketing and support |
|
|
4,854 |
|
|
|
5,710 |
|
|
|
15,708 |
|
|
|
18,355 |
|
General and administrative |
|
|
4,367 |
|
|
|
5,559 |
|
|
|
13,139 |
|
|
|
19,532 |
|
Goodwill impairment charge |
|
|
5,333 |
|
|
|
— |
|
|
|
5,333 |
|
|
|
— |
|
Long-lived assets impairment charge |
|
|
657 |
|
|
|
— |
|
|
|
657 |
|
|
|
— |
|
Total costs and expenses |
|
|
38,576 |
|
|
|
36,140 |
|
|
|
106,660 |
|
|
|
109,135 |
|
Loss from operations |
|
|
(5,027 |
) |
|
|
(971 |
) |
|
|
(5,251 |
) |
|
|
(6,262 |
) |
Interest income |
|
|
997 |
|
|
|
389 |
|
|
|
2,660 |
|
|
|
798 |
|
Interest expense |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
3 |
|
Other (expense) income, net |
|
|
(121 |
) |
|
|
569 |
|
|
|
(583 |
) |
|
|
1,561 |
|
Loss from continuing operations before income tax expense |
|
|
(4,151 |
) |
|
|
(14 |
) |
|
|
(3,174 |
) |
|
|
(3,906 |
) |
Income tax expense from
continuing operations |
|
|
95 |
|
|
|
81 |
|
|
|
159 |
|
|
|
645 |
|
Net loss from continuing operations |
|
$ |
(4,246 |
) |
|
$ |
(95 |
) |
|
$ |
(3,333 |
) |
|
$ |
(4,551 |
) |
Net income from discontinued
operations, net of tax |
|
|
— |
|
|
|
29,741 |
|
|
|
— |
|
|
|
28,061 |
|
Net (loss) income |
|
$ |
(4,246 |
) |
|
$ |
29,646 |
|
|
$ |
(3,333 |
) |
|
$ |
23,510 |
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations per common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.22 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.25 |
) |
Diluted |
|
$ |
(0.22 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
|
|
|
|
|
Net income from
discontinued operations per common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
1.59 |
|
|
$ |
0.00 |
|
|
$ |
1.51 |
|
Diluted |
|
$ |
0.00 |
|
|
$ |
1.59 |
|
|
$ |
0.00 |
|
|
$ |
1.51 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.22 |
) |
|
$ |
1.58 |
|
|
$ |
(0.17 |
) |
|
$ |
1.27 |
|
Diluted |
|
$ |
(0.22 |
) |
|
$ |
1.58 |
|
|
$ |
(0.17 |
) |
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
19,231 |
|
|
|
18,706 |
|
|
|
19,090 |
|
|
|
18,574 |
|
Diluted |
|
|
19,231 |
|
|
|
18,706 |
|
|
|
19,090 |
|
|
|
18,574 |
|
KVH INDUSTRIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, unaudited) |
|
|
|
September 30,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
|
Cash, cash equivalents and marketable securities |
|
$ |
69,194 |
|
$ |
76,736 |
|
Accounts receivable, net |
|
|
28,190 |
|
|
27,427 |
|
Inventories, net |
|
|
26,423 |
|
|
22,730 |
|
Other current assets and contract assets |
|
|
5,747 |
|
|
4,310 |
|
Total current assets |
|
|
129,554 |
|
|
131,203 |
|
Property and equipment, net |
|
|
49,407 |
|
|
53,118 |
|
Goodwill |
|
|
— |
|
|
5,308 |
|
Intangible assets, net |
|
|
— |
|
|
404 |
|
Right of use assets |
|
|
1,191 |
|
|
2,168 |
|
Other non-current assets and contract assets |
|
|
6,542 |
|
|
8,070 |
|
Non-current deferred income taxes |
|
|
258 |
|
|
259 |
|
Total assets |
|
$ |
186,952 |
|
$ |
200,530 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
21,524 |
|
|
34,228 |
|
Contract liabilities |
|
|
3,268 |
|
|
3,108 |
|
Current operating lease liability |
|
|
921 |
|
|
1,532 |
|
Total current liabilities |
|
|
25,713 |
|
|
38,868 |
|
Long-term operating lease liability |
|
|
272 |
|
|
636 |
|
Long-term contract liabilities |
|
|
3,905 |
|
|
4,315 |
|
Non-current deferred tax liability |
|
|
55 |
|
|
55 |
|
Stockholders’ equity |
|
|
157,007 |
|
|
156,656 |
|
Total liabilities and stockholders’ equity |
|
$ |
186,952 |
|
$ |
200,530 |
|
KVH INDUSTRIES, INC. AND
SUBSIDIARIESRECONCILIATION OF GAAP NET (LOSS)
INCOME FROM CONTINUING OPERATIONS TO
NON-GAAPEBITDA AND NON-GAAP ADJUSTED EBITDA FROM
CONTINUING OPERATIONS(in thousands,
unaudited) |
|
|
|
Three months endedSeptember 30, |
|
Nine months endedSeptember 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net (loss) income from
continuing operations - GAAP |
|
$ |
(4,246 |
) |
|
$ |
(95 |
) |
|
$ |
(3,333 |
) |
|
$ |
(4,551 |
) |
Income tax expense |
|
|
95 |
|
|
|
81 |
|
|
|
159 |
|
|
|
645 |
|
Interest income, net |
|
|
(997 |
) |
|
|
(388 |
) |
|
|
(2,660 |
) |
|
|
(795 |
) |
Depreciation and amortization |
|
|
3,199 |
|
|
|
3,373 |
|
|
|
10,119 |
|
|
|
10,000 |
|
Non-GAAP EBITDA from
continuing operations |
|
|
(1,949 |
) |
|
|
2,971 |
|
|
|
4,285 |
|
|
|
5,299 |
|
Stock-based compensation expense |
|
|
559 |
|
|
|
872 |
|
|
|
1,433 |
|
|
|
2,220 |
|
Goodwill impairment charge |
|
|
5,333 |
|
|
|
— |
|
|
|
5,333 |
|
|
|
— |
|
Long-lived assets impairment charge |
|
|
657 |
|
|
|
— |
|
|
|
657 |
|
|
|
— |
|
Employee termination and other variable costs |
|
|
— |
|
|
|
458 |
|
|
|
— |
|
|
|
1,993 |
|
Executive separation costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
539 |
|
Transaction-related and other variable legal and advisory fees |
|
|
— |
|
|
|
— |
|
|
|
234 |
|
|
|
484 |
|
Irregular inventory reserve |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Gain on sale of a subsidiary |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(631 |
) |
Foreign exchange transaction (gain) loss |
|
|
(92 |
) |
|
|
(450 |
) |
|
|
18 |
|
|
|
(1,009 |
) |
Non-GAAP adjusted
EBITDA from continuing operations |
|
$ |
4,508 |
|
|
$ |
3,851 |
|
|
$ |
11,960 |
|
|
$ |
8,895 |
|
|
|
|
|
|
|
|
|
|
Contact: |
KVH Industries, Inc.Roger Kuebel401-608-8945rkuebel@kvh.com |
KVH Industries (NASDAQ:KVHI)
Gráfica de Acción Histórica
De Oct 2024 a Nov 2024
KVH Industries (NASDAQ:KVHI)
Gráfica de Acción Histórica
De Nov 2023 a Nov 2024