MIDDLETOWN – Although prospects are brighter for the second quarter, with $6.1 million in new orders announced in the past two days, KVH Industries Inc. (Nasdaq: KVHI) yesterday issued a warning about its first-quarter results.
KVH had expected first-quarter sales would fall about 10 percent compared with the 2008 first quarter, “when sales of land products were still relatively robust,” according to Patrick Spratt, the company’s chief financial officer. The company therefore expected to post “a modest loss” for the period, he wrote in the annual financial report issued Feb. 5. (READ MORE)
But the company this week revised its earnings guidance for the quarter that ended March 31. “Preliminary indications are that the company will report revenue of approximately $18 million for the first quarter of 2009,” KVH said. That represented a 22 percent decline from the $23.1 million it posted for the year-ago period. (READ MORE) “Due to the revenue shortfall, the company’s preliminary estimate is that it will report a loss of roughly 18 cents per share for the first quarter,” compared with the 2008 first quarter’s gain of 11 cents per diluted share, KVH added.
Lower sales of its mobile satellite television and communications products for new leisure vessels and the recreational vehicle market “accounted for the majority of the decline in company revenue,” KVH said. “Illustrating the challenges faced in the leisure market, two leading recreational vehicle manufacturers that sold KVH products as factory-installed options declared bankruptcy during the first quarter,” the company added. But sales of KVH’s TracPhone V7 and mini-VSAT broadband service, as well as sales of its military products “appear to have met the company’s expectations.”
The first quarter saw the expansion of KVH’s mini-VSAT broadband satellite communications service first to the Pacific Ocean region (READ MORE), then to the Persian Gulf. (READ MORE)
It also saw the signing of a distribution agreement for KVH’s TracPhone V7 antenna and mini-VSAT broadband service with satellite equipment specialist Thrane & Thrane (READ MORE), which in February honored the Middletown company as its top partner in the Americas for maritime satellite products.
More recently, the company “received significant orders for its military and commercial products, much of which are expected to begin shipping in the second quarter,” KVH said.
Yesterday, the company announced that its expansion of VSAT service to the Persian Gulf already was paying off, with sales of TracPhone V7 units and broadband service to U.S. government and military installations in the region over the next year expected to top $1 million. And it announced $3.8 million in new orders for its precision fiber-optic gyro (FOG) systems. The total included $2.9 million for KVH’s DSP-3100 FOGs, from a maker of remote weapons stations, and a $900,000 order for its CNS-5000 continuous navigation system for commercial applications.
Today, KVH announced another $1.3 million in new orders for its tactical navigation systems from three international prime contractors. “These new orders are a reflection of the value that our international customers place on our TACNAV systems, which have proven their worth in a wide range of demanding military environments and operational theaters worldwide,” said Dan Conway, vice president of business development. The TacNav shipments are slated to begin in the second quarter and continue through 2010, KVH said.
“Taking these orders into account – along with the company’s prior backlog – the company expects that its second quarter results will be sequentially better than those for the first quarter of 2009. Nevertheless, economic conditions continue to be a significant challenge.”
KVH did not revisit its full-year earnings guidance. In the annual report, Spratt had predicted that “assuming the macroeconomic conditions get no worse … revenue will grow about 10 percent for the year – driven by the growth of our mini-VSAT Broadband and fiber-optic gyro businesses, as well as the initial shipments of our new satellite antenna system for LiveTV aeronautical installations.”
KVH Industries Inc. (Nasdaq: KVHI) – an ISO 9001-certified company – is a maker of live mobile media systems and navigation and guidance systems for defense and civilian use. Information about KVH’s fiber-optic gyro (FOG) systems is available at www.FiberOpticGyro.com, while information about defense navigation and guidance products is available at www.TacNav.com. Additional information about the company is available at www.kvh.com.
