MIDDLETOWN – KVH Industries Inc. (Nasdaq: KVHI) today said its first-quarter profit declined to $57,000 from the year-ago $1.3 million, while per-share profit was negligible in the quarter ended March 31 compared with 8 cents per diluted share in the year-ago quarter.
Revenue edged up to a record $20.4 million in the first quarter from the year-ago $20.3 million. Mobile-communication revenue increased 12 percent to $16.1 million. Defense-related sales declined 27 percent to $4.3 million.
“The first quarter was generally in line with our expectations,” said KVH President and CEO Martin Kits van Heyningen. “We introduced a number of new products to strengthen our position in the marine market. In addition, we continued to build our long-term military business with a major increase in the value of our multi-year contracts,” including nearly $23 million in contracts for TacNav and fiber-optic gyro (FOG) navigation systems and components in the past 90 days.
Other first-quarter highlights included the expansion of its TracVision mobile satellite offerings, with the M2, M3 ST, M3 DX, M5, M7 and M9 systems for small and mid-sized boats; the selection of ASA Electronics as the U.S. distributor for KVH’s TracVision A7 and TracNet 100 products for limos, conversion vans, buses and commercial vehicles; and the addition of the Lazydays RV Supercenter in Florida to KVH’s dealer network.
“I am optimistic that our North American marine sales will improve on a year-over-year basis as a result of a gradually strengthening marine marketplace as well as the new TracVision M-series product line that we introduced in the first quarter,” Kits van Heyningen said.
Patrick Spratt, KVH's chief financial officer, added: “We expected the first quarter would be one of transition due to the softness in the North American marine market and the fact that we are rebuilding our military navigation backlog. These factors, along with the introduction of a number of new products, contributed to achievement of only a modest level of profit. Gross margin was impacted by new product start-up expenses, some product mix changes within the quarter, and the conversion to more advanced component technology.
“We believe that these factors are mostly specific to the first quarter, and we anticipate a healthy improvement in gross margin in the second quarter. … We remain confident in our original revenue guidance that full year growth in 2007 will be in the range of 10 percent to 17 percent,” compared to 2006.
KVH Industries Inc. (Nasdaq: KVHI) is a maker of live mobile media systems and of navigation and guidance systems for defense and civilian use. Additional information is available at www.kvh.com.
