MIDDLETOWN, R.I., July 31, 2020 (GLOBE NEWSWIRE) -- KVH Industries, Inc. (Nasdaq: KVHI) reported financial results for the quarter ended June 30, 2020 today. The company will hold a conference call to discuss these results at 9:00 a.m. ET today, which can be accessed at investors.kvh.com. Following the call, a replay of the webcast will be available through the company’s website.

Second Quarter 2020 Highlights

• Total revenues from continuing operations were $36.9 million compared to $39.7 million in the second quarter of 2019, a 7% decline.
• Revenues for AgilePlans, our Connectivity as a Service program for the commercial maritime sector, were up more than 72% compared to the second quarter of 2019.
• AgilePlans, amounted to 72% of total commercial maritime mini-VSAT Broadband shipments, and 60% of the total mini-VSAT Broadband shipments for the quarter. AgilePlans now represent 32% of our mini-VSAT Broadband subscriber base.
• Our mini-VSAT Broadband airtime revenue increased $1.1 million, to $20.2 million, or 6%, in the second quarter of 2020 compared to the second quarter of 2019, driven primarily by a 6% increase in subscribers and the continuing success of our AgilePlans and HTS airtime services.
• TACNAV product sales increased $0.8 million in the second quarter of 2020 compared to the second quarter of 2019 while fiber optic gyro (FOG) product and OEM sales decreased $0.2 million, or 3% in the second quarter of 2020.
• Net loss from continuing operations in the second quarter of 2020 was $3.6 million, or $0.20 per share, compared to a net loss of $3.3 million, or $0.19 per share, in the second quarter of 2019.
• Non-GAAP net loss from continuing operations in the second quarter of 2020 was $1.6 million, or $0.09 per share, compared to $1.7 million, or $0.10 per share, in the second quarter of 2019.
• Non-GAAP adjusted EBITDA from continuing operations in the second quarter of 2020 was break even, compared to a loss of $0.9 million in the second quarter of 2019.

Commenting on the quarter, Martin Kits van Heyningen, KVH’s chief executive officer, said “We made very good progress on both our core business and strategic initiatives, despite the ongoing financial and other challenges presented by COVID-19. We recently introduced and began shipping the P-1775 inertial measurement unit (IMU), the first of our inertial systems featuring KVH’s new photonic integrated chip (PIC) technology. We also announced that we received a new international military order with a net value of more than $10 million for our TACNAV tactical navigation systems, with all hardware deliveries for the order scheduled to take place in 2020. Our mobile connectivity subscriber base and AgilePlans revenues continued to expand, and our airtime margins improved significantly. In addition, we launched the new Remote Expert Intervention service as part of KVH Watch target the growing demand for IoT solutions.

“As was the case for most companies, we entered the second quarter with significant uncertainty resulting from the unprecedented global pandemic. We are happy to say, however, that while we anticipated and prepared for a range of scenarios, both of our business segments held up well in the face of the global health and economic challenges. Our mini-VSAT Broadband shipments remained strong, our airtime revenue continued to grow, our FOG and TACNAV sales were healthy, our gross margins expanded, and our operating expenses decreased. As a result, we were able to improve our adjusted earnings before interest, taxes, depreciation and amortization. However, the impact of the pandemic on the global economy remains uncertain. Therefore, we continue to proceed very cautiously, monitor the overall health of our business closely, and maintain the cost discipline that we implemented at the end of the first quarter. At the same time, we continue to execute on the strategic initiatives that we expect will be the foundation for our revenue and earnings growth in 2021 and beyond.”

The company has classified the results of the Videotel business sold in 2019 as a discontinued operation and therefore Videotel is excluded from the segment information below.

The company operates in two segments, mobile connectivity and inertial navigation. In the second quarter of 2020, net sales for the mobile connectivity segment decreased by $2.3 million compared to the second quarter of 2019. Mobile connectivity sales decreased primarily due to a $1.5 million decrease in TracVision product sales, a $0.9 million decrease in our content service sales, a $0.5 million decrease in our contract engineering service revenue and a $0.2 million decrease in land mobile product sales. These decreases were offset in part by a $1.1 million increase in mini-VSAT Broadband airtime revenue. In the second quarter of 2020, net sales for our inertial navigation segment decreased by $0.5 million, or 6%, compared to the second quarter of 2019. Inertial navigation service sales decreased primarily due to a $1.1 million decrease in contracted engineering revenue. Partially offsetting this decrease was a $0.6 million increase in inertial navigation product sales, primarily as a result of a $0.8 million increase in TACNAV product sales, partially offset by a $0.2 million decrease in FOG and OEM product sales.

Second Quarter Financial Summary

Revenue was $36.9 million for the second quarter of 2020, a decrease of 7% compared to $39.7 million in the second quarter of 2019.

Product revenues for the second quarter of 2020 were $13.9 million, 8% lower than the prior year quarter due to a $1.9 million decrease in mobile connectivity product sales and a $0.6 million increase in inertial navigation product sales. The decrease in mobile connectivity product sales was primarily due to a $1.5 million decrease in TracVision product sales. Inertial navigation product sales increased $0.6 million, primarily as a result of a $0.8 million increase in TACNAV product sales, partially offset by a $0.2 million decrease in FOG and OEM product sales.

Service revenues for the second quarter of 2020 were $23.0 million, a decrease of 6% compared to the second quarter of 2019, primarily due to a $1.1 million decrease in inertial navigation service sales and a $0.4 million decrease in mobile connectivity service sales. Inertial navigation service sales decreased primarily due to the timing of performance under an engineering and services development contract from a major U.S. defense contractor, which began in the fourth quarter of 2018 and will continue through January 2021. Mobile connectivity service sales decreased primarily due to a $0.9 million decrease in our content service sales and a $0.5 million decrease in our contract engineering service revenue. Partially offsetting these decreases was a $1.1 million increase in our mini-VSAT Broadband service sales, which resulted in part from a 6% increase in subscribers, primarily as a result of AgilePlans.

Our operating expenses decreased $2.0 million to $16.4 million for the second quarter of 2020 compared to $18.4 million for the second quarter of 2019. This decrease resulted primarily from a $0.5 million decrease in warranty expense, a $0.4 million decrease in travel expenses, a $0.4 million decrease in marketing expenses, a $0.4 million decrease in external commissions and a $0.4 million decrease in expensed materials, partially offset by a $0.3 million increase in bad debt expense.

Six Months Ended June 30 Financial Summary

Revenue was $73.5 million for the six months ended June 30, 2020, a decrease of 3% compared to $76.1 million for the six months ended June 30, 2019.

Product revenues for the six months ended June 30, 2020 were $27.0 million, which was 5% lower than the six months ended June 30, 2019 primarily due to a decrease in mobile connectivity product sales of $2.7 million, partially offset by an increase in inertial navigation product sales of $1.3 million. The mobile connectivity product sales decreased due to a $2.3 million decrease in marine mobile connectivity product sales, which was primarily driven by a decrease in TracVision product sales. In addition, there was a $0.4 million decrease in land mobile product sales. Inertial navigation product sales increased primarily due to a $1.2 million increase in TACNAV product sales.

Service revenues for the six months ended June 30, 2020 were $46.5 million, a decrease of 3% compared to the six months ended June 30, 2019 primarily due to a decrease in inertial navigation service sales of $1.6 million, partially offset by an increase in mobile connectivity service sales of $0.4 million. The decrease in inertial navigation service sales was due to the timing of performance under an engineering and services development contract. The increase in mobile connectivity service sales was primarily due to a $2.0 million increase in our mini-VSAT Broadband service sales. Partially offsetting this increase was a $1.0 million decrease in content service sales and a $0.5 million decrease in our contract engineering service revenue.

Our operating expenses decreased $1.5 million to $35.8 million in the six months ended June 30, 2020 compared to $37.3 million in the six months ended June 30, 2019. The key drivers were a $0.6 million decrease in travel expenses, a $0.5 million decrease in warranty expense, a $0.4 million decrease in external commissions, a $0.4 million decrease in marketing expenses and a $0.3 million decrease in consulting fees, partially offset by a $0.6 million increase in bad debt expense.

Other Recent Announcements

• KVH appoints Danelle M. Barrett to the Board of Directors.
• KVH Receives $10 Million Order for TACNAV Tactical Navigation Systems.
• KVH Launches New Inertial Sensor with Photonic Integrated Chip Technology.
• KVH Watch Offers Remote Expert Intervention for Real-time Support at Sea Using High-speed Satellite Connectivity.

Please review the corresponding press releases for more details regarding these developments.

About KVH Industries, Inc.

KVH Industries, Inc., is a global leader in mobile connectivity and inertial navigation systems, innovating to enable a mobile world. The market leader in maritime VSAT, KVH designs, manufactures, and provides connectivity and content services globally. KVH is also a premier manufacturer of high-performance sensors and integrated inertial systems for defense and commercial applications. Founded in 1982, the company is based in Middletown, RI, with research, development, and manufacturing operations in Middletown, RI, and Tinley Park, IL, and more than a dozen offices around the globe.