MIDDLETOWN – For the year ended Dec. 31, KVH Industries Inc. (Nasdaq: KVHI) today reported its profit fell 32.0 percent to $2.50 million, from the year-ago $3.67 million, on revenue that grew 2.5 percent to $80.91 million. Profit per diluted share fell to 17 cents last year from 25 cents per share in 2006.
For the fourth quarter, however, KVH posted a profit of $1.0 million – or 10 times the year-ago period’s $100,000 – erasing the third quarter’s $20,000 loss.
“We closed out 2007 on a very strong note, with increasing sales and profits,” CEO Martin Kits van Heyningen said in a statement today. “These improvements are the result of the hard work we put in over the course of the year, including a complete update to our mobile satellite product line and the launch of two new maritime communication solutions.”
On a per-share basis, fourth-quarter profit increased six-fold to 6 cents per diluted share. Meanwhile, fourth-quarter revenue increased 13.0 percent year-over-year – and 11.9 percent compared with the third quarter – to $19.70 million.
Those results exceeded the predictions in the company’s third-quarter report, which called for fourth-quarter revenue of $19 million and earnings of 4 cents per share. READ MORE
“The fourth quarter exceeded our expectations for both the top and bottom lines due in part to solid sales of relatively higher-margin defense products,” said Patrick Spratt, KVH’s chief financial officer. “Gross margin was above expectations, at almost 41 percent, and we kept operating expenses in check.” Also helpful, he said, was that, “for the first time in two years, we did not incur any patent litigation expenses, following the favorable resolution of that issue in August.”
Mobile communications revenue rose 16 percent compared with a year ago to $14.1 million, led by boating industry sales. Meanwhile, defense-related sales, including the company’s fiber-optic gyro guidance units and TacNav military navigation systems, rose 7 percent to $5.6 million, KVH said.
Within the mobile communications segment, “marine revenue rose 35 percent over the same quarter last year, propelled by a 56-percent increase in international sales and by initial shipments of our new TracPhone(R) V7,” Kits van Heyningen said. “We are currently supporting broadband connections throughout Europe, the North Atlantic, and the Americas and are moving ahead with plans to expand the mini-VSAT Broadband coverage area significantly in 2008 and 2009. Our goal is to ultimately support vessels in the Pacific Ocean; throughout Asia; the Indian Ocean including shipping routes to the Gulf; and the Middle East.
“Within the land mobile market, quarterly revenue was down 10 percent, due primarily to a year-over-year decline in sales to the automotive market,” he said. “We are taking steps to strengthen our land sales channel, most notably with the recent addition of Coast Distribution, which offers a new channel into the RV marketplace both in the United States and Canada.”
In the defense segment, he said, “fourth-quarter sales were strong thanks to solid TACNAV(R) sales and increased shipments of our TG-6000 inertial measurement unit.
“We continue to aggressively pursue the opportunity to supply fiber optic gyros (FOGs) for stabilized remote weapons programs and are expanding our production capacity in preparation for increasing demand,” Kits van Heyningen said.
Going forward, Spratt said, “we believe 2008 will be a year of solid growth for revenue and earnings. We expect that first-quarter revenue will be in the range of $23 to $25 million, up 13 percent to 23 percent year-over-year. This sales level should yield earnings for the quarter in the range of 8 cents to 12 cents per share, compared to a breakeven result for the prior year.
“For the full year, we expect that revenue will grow in the range of 14 percent to 20 percent, compared to fiscal year 2007,” and predict earnings per diluted share of 36 to 44 cents.
“The full-year guidance is based on several key assumptions,” Spratt said, including “the expectation that we will win additional meaningful orders for our fiber-optic gyros, in support of remote weapons station applications, and that our new mini-VSAT product and service offering will be widely accepted in leisure and commercial markets."
KVH Industries Inc. (Nasdaq: KVHI) is a manufacturer of live mobile media systems for use on land and sea, as well as navigation and guidance systems for defense and civilian use. Information on KVH’s military navigation, stabilization and guidance systems is available at www.tacnav.com; information about KVH and its other products is available at www.kvh.com.
