MIDDLETOWN – KVH Industries’ third-quarter profit rose to $637,000, or $0.04 per diluted share, compared with $385,000 for the same period a year earlier, thanks primarily to the company’s business in global satellite communications and fiber optic gyros.
The company noted on Monday that transaction costs associated with the acquisition of Virtek Communications and a change to the deferred income tax valuation allowance played an important part in the quarterly results and the adjusted income excluding those factors was $1.6 million, or $0.11 per diluted share.
Revenue was $27.76 million for the third quarter, up 23 percent from the quarter ended Sept. 30, 2009.
“The fourth quarter will be more challenging that we had anticipated a few months ago, yet it also holds great promise,” said Patrick Spratt, KVH chief financial officer. “Our fiber optic gyro (FOG) business is expected to be roughly flat year-over-year, due to an approximate $5.5 million reduction in sales related to remote weapon systems produced by our primary customer in this market.”
KVH projected fourth-quarter revenue to be in the range of $26.5 million to $28.5 million and earnings to come in between $0.02 and $0.06 per share, bringing full-year revenue estimates to between $111.7 million to $113.7 million.
The FOG business had about $10.5 million in product sales in the three months ended Sept. 30; the company said it continued to diversity the business’ revenue stream.
“We made progress … toward achieving our goal of a healthy balance within our FOG business, reflecting a split among remote weapon systems, inertial navigation applications, and a wide range of commercial uses,” said Martin Kits van Heyningen, CEO.
KVH said guidance and stabilization revenue from the FOG business, Tacnav military navigation systems and related services was $12.4 million in the third quarter, up 17 percent year-over-year. The company noted that it booked a record tactical navigation order, $13 million contract, during the quarter that will begin to generate revenue in early 2011.
“Despite what we expect to be a temporary decline in FOG orders from our primary remote weapon systems customer, it’s clear that our strategy of diversification is working,” said Kits van Heyningen, noting he is “satisfied” with the overall market position for 2011.
For the nine months ended Sept. 30 revenue was $85.24 million, up 36 percent for the same period a year earlier. The company’s profit stood at $8 million, compared to a loss of $1.98 million as seen in the first nine months of 2009.
Excluding the Virtek Communications acquisition and tax valuation change, net income was $5 million for the period, KVH Industries said.
As of Sept. 30, 2009, cash, cash equivalents and marketable securities stood at $37.26 million, down from $41.30 million as of Dec. 31, 2009; Spratt noted that the decline reflects the purchase of a manufacturing facility in Tinley Park, Ill.
Deferred income taxes for the nine months ended Sept. 30, which did not appear on the company’s balance sheet as of Dec. 31, 2009, were registered at $1.09 million. Also appearing on the balance sheet as of Sept. 30 were intangible assets increasing to $6.43 million from nothing at the end of 2009.
Total current liabilities for the telecommunications provider stood at $16.22 million, up from $11.44 million a year earlier.
In separate news, KVH Industries also announced Monday a new $1.1 million contract for fiber optic gyros for the Javelin Basic Skills Trainer, used to train U.S. Army soldiers to operate the Javelin anti-tank missile system.
For more information, visit KVH Industries’ website.
