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MIDDLETOWN – KVH Industries Inc. said today it managed to eke out a profit in the second quarter, bucking Wall Street analysts who had forecast a larger sales decline and a net loss at the satellite technology firm.
KVH (Nasdaq: KVHI) posted a net profit of $191,000, or 1 cent per diluted share, in the three months that ended June 30, compared with a net profit of $1.98 million, or 14 cents per diluted share, in the same period a year earlier. Revenue slipped just 2 percent to $21.9 million from year-ago sales of $22.3 million.
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The results were significantly better than Wall Street had expected. The consensus forecast for KVH among analysts polled by Thomson Reuters had been a loss of 6 cents per diluted share on revenue of $19.7 million.
“We set a series of aggressive goals for our business with the aim of achieving a strong sequential improvement in our results for the second quarter,” Martin Kits van Heyningen, KVH’s founder and CEO, said in a statement. “I’m pleased to say that we met and exceeded many of those goals.”
“Despite the continuing economic volatility, our strategic growth drivers gained ground and helped set us on a course for what I believe will be long-term success,” he added.
During the second quarter, Kits van Heyningen said the company set a third consecutive quarterly record for sales of its fiber-optic gyros and expanded its maritime broadband network. “Together, these strategic initiatives helped counterbalance the continuing pressure that the economic environment put on sales of our satellite products, especially to the consumer markets,” he said.
Quarterly revenue from marine, land and aeronautical products and services dropped 31 percent year-over-year in the second quarter to $12.5 million, although Kits van Heyningen emphasized that the company’s “TracPhone V7 and mini-VSAT Broadband initiative continued to make significant strides.”
Kits van Heyningen also said the company is now “turning our eyes toward continued [broadband maritime] network expansion in the Atlantic as well as Africa, especially in support of the oil fields off [its] western coast.”
KVH’s defense sales, a growing category for the company in recent years, increased 130 percent compared with a year earlier to roughly $9.3 million, as sales of the high-margin fiber-optic gyro provided another significant boost to revenue.
KVH said total sales were down 12 percent to $40.1 million in the first six months of this year compared with 2008. The company posted a net loss of $2.4 million, or 17 cents per diluted share, for the first half of this year, compared with net income of $3.6 million, or 24 cents per diluted share, a year earlier.
Patrick Spratt, KVH’s chief financial officer, said the company was working to reduce inventory levels and increase cash on hand.
“Looking ahead to the third quarter, we expect that the continuing tough economic conditions as well as historical seasonality factors will put pressure on sales to the consumer and leisure marine and land markets,” Spratt said. He predicted that sales would be flat from the second quarter to the third but higher in the fourth quarter.
Although he did not offer new earnings guidance, Spratt said the company generally expects to post “a modest loss” in the third quarter followed by “a modest profit” in the fourth.
In 2008, KVH posted an annual profit of nearly $3.1 million, up 22 percent from the previous year, on sales that grew 1.8 percent to $82.4 million.
KVH Industries Inc. (Nasdaq: KVHI) makes live mobile media systems and navigation and guidance systems for defense and civilian use. Additional information about the company is available at KVH.com.
