KVH Industries, Inc. (KVHI)
Q1 2010 Earnings Call Transcript
April 22, 2010 10:30 am ET
Pat Spratt – CFO
Martin Kits Van Heyningen – Chairman, President and CEO
Hamed Khorsand – BWS Financial
Chris Quilty – Raymond James
Rich Valera – Needham & Company
Aaron Edelheit – Sabre Value
Jim Roumell – Roumell Asset Management
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Good day everyone, and welcome to the KVH Industries first quarter 2010 conference call. Today’s call is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Mr. Patrick Spratt, Chief Financial Officer. Please go ahead sir.
Good morning, everyone. I am Pat Spratt, Chief Financial Officer of KVH Industries and with me is; Martin Kits Van Heyningen, Chief Executive Officer.
This call will address the first quarter earnings release that we issued earlier today. Copies of the release are available on our website and are also from our Investor Relations department. This call is being simulcast on the internet, and will be archived on our website for future reference.
If you are listening via the web, feel free to submit questions to IR@KVH.com and we’ll be answered them following this call.
This conference call will contain certain forward-looking statements that involve risks and uncertainties. For example, statements regarding financial and product development goals are forward-looking. The company’s future results may differ materially from the projections described in today’s discussion.
Factors that might cause these differences include, but are not limited to, those mentioned in today’s call and risk factors described in our yearly report on Form 10K filed with the SEC on March 9th, 2010. The company’s SEC filings are directly available from us, from the SEC, or from the investor information section of our website.
Now, I’d like to turn the call over to Martin to begin today’s discussion of results. Martin?
Martin Kits van Heyningen
Thanks Pat, and thank you all for joining us today. This is an outstanding quarter for KVH not only it did exceed our expectations but we also set new records for quarterly revenue and for net income.
On the top-line we recorded $28.0 million in sale surpassing our previous record that just last quarter year-over-year up 53% increase in revenue. In addition we recorded net profit of $2.1 million also a record result that equates our earnings of $0.14 per share but also a $0.32 or $4.6 million improvement over our first quarter results of last year. These results are due to strong contributions from our strategic initiatives in fiber optic gyros and global satellite communications.
We continue to gain momentum in our mini-VSAT business as we build credibility with the speed and reliability of our now global mini-VSAT network. This is helping us renew account and as more people take advantage of our exciting new technology which is starting to reach critical mass in improvement commercial markets.
In our guidance and stabilization business revenue was up 65% from the first quarter of 2009. Sales of fiber optic gyros were roughly equal the record level achieved in Q4 of last year and up 95% from Q1 of last year. At the same time our established defense business continues their steady contribution. As you may recall KVH is pursuing a large TACNAV opportunity for land vehicle navigation and looks like that contract could happen soon. It has a potential that worth more than $13 million.
We’ve already started work on the engineering development portion of this program looking under a letter of contract authorization. We hope to receive a formal production contract within the next three or six months.
In our FOG business we continue to run factory very efficiently even as we shipped product to our existing Kongsberg remote weapon station FOG contracts, to support this contract we continue to lend new fiber optic gyro business like the $3.1 million what are we announcing in February. We have a solid backlog going in Q2 and we’re optimistic that recently announced remote weapon station awards to Kongsberg could lead to additional orders for KVH. Part of our strategy with our fiber optic business is to continue to diversify both in terms of new military customers and in terms of new commercial products.
Towards that end we just strengthened our product portfolio for the commercial market with the introduction of our new CG5100 inertial measurement unit. Through seamless integration of three precision FOGs and three MEMS accelerometers the 5100 offers a ground breaking low cost solution for inertial measurement within a single compact enclosure. The six-axis 5100 is targeted at a number of applications like precision terrestrial surveying, navigation and GPS augmentation for broader way of commercial application.
For example the 5100 is perfect, a perfect solutions for autonomous vehicle that need high quality sensors as well as the reliable backup with GPS is interrupted or unavailable. New products like the CG5100 IMU and our miniature single-axis DSP5100 FOG are opening new markets and opportunities for us performing the cornerstone of our ongoing effort steadily expand the breadth of our FOG business to include a wider spectrum of applications in market.
Moving onto our mobile satellite business revenue was up 45% year-over-year in large part due to on the continued strength of our maritime satellite communications product where mini-VSAT was up very strongly year-over-year. We also enjoy the benefit of $3.0 million in shipments of our new aviation satellite TV system for commercial airliners.