MIDDLETOWN – For the quarter ended Sept. 30, KVH Industries Inc. (Nasdaq: KVHI) today posted a loss of $20,000, compared with a profit of $626,000 or 4 cents per share in the third quarter of 2006.
“Overall, our net results exceeded our expectations for what we knew would be a challenging quarter,” CEO Martin Kits van Heyningen said in a statement this morning. “Despite the previously announced delays in defense-related orders, strong operational performance allowed us to beat our bottom-line expectations.”
Revenue fell 9 percent from a year ago, to $17.6 million in the third quarter, as mobile communications revenue rose 1 percent to $13.0 million but defense-related sales fell 29 percent to $4.5 million.
In the military division, Kits van Heyningen said, sales of military navigation systems fell 41 percent, “while fiber-optic gyro sales were down 21 percent versus the third quarter of 2006.”
But sales of civilian products remained strong, he said. “Solid international business helped drive our marine sales up 5 percent over the same quarter last year. Within the land mobile market, quarterly revenue was down 6 percent, with growth in the recreational vehicle market offset by a year-over-year decline in sales to the automotive market.”
For the first nine months of the year, KVH posted a year-to-date profit of $1.5 million or 10 cents per diluted share, down from the year-ago period’s $3.6 million or 24 cents per share, on revenue that dipped slightly to $61.2 million from $61.5 million in the first nine months of 2006.
“Despite lower-than- anticipated revenues, our bottom line was stronger than we initially expected, thanks to improved operational execution with regard to our efficiency and cost improvement efforts,” Patrick Spratt, KVH’s chief financial officer, said in a statement. “ Gross margin was 40%, which was better than anticipated, and we kept operating expenses in check.
“While operating expenses were affected by the costs associated with the final resolution of the patent litigation,” he added, “we are very pleased that this issue has now been resolved in our favor. [And] our total cash balance increased sequentially by roughly $2 million, driven by effective collections of accounts receivable.”
In the fourth quarter, Spratt said, “We expect a return to positive top-line growth compared to the prior year, primarily driven by solid growth in mobile communications sales, especially in our maritime markets. The fourth quarter will also be our first quarter of TracPhone V7 shipments, although we may be somewhat volume constrained by our modem supplier as production ramps during the quarter. We do not anticipate any sales in the fourth quarter related to stabilized remote weapon programs.
“Given this visibility, we expect that the revenue for the fourth quarter to be approximately $19 million and earnings to be approximately 4 cents per share vs. $17.4 million and 1 cent per share in the fourth quarter of 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. An ISO 9001-certified company with $72.3 million in revenue in 2005, KVH is based in Middletown. Additional information is available at www.kvh.com.
