MIDDLETOWN, R.I., Oct. 29, 2020 (GLOBE NEWSWIRE) -- KVH Industries, Inc., (Nasdaq: KVHI), reported financial results for the quarter ended September 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.

Third Quarter 2020 Highlights

• Total revenues from continuing operations increased by 5% in the third quarter of 2020 to $41.1 million from $39.3 million in the third quarter of 2019.
• Revenues for AgilePlans, our Connectivity as a Service program for the commercial maritime sector, were up more than 55% compared to the third quarter of 2019.
• AgilePlans amounted to 78% of total commercial maritime mini-VSAT Broadband shipments, and 64% of the total mini-VSAT Broadband shipments for the quarter. AgilePlans now represent 35% of our mini-VSAT Broadband subscriber base.
• Our mini-VSAT Broadband airtime revenue increased $1.8 million, to $21.7 million, or 9%, in the third quarter of 2020 compared to the third quarter of 2019, driven primarily by a 4% increase in subscribers as well as by a $0.9 million one-time amount relating to a favorable resolution of a contractual matter with a particular customer.
• Fiber optic gyro (FOG) product and OEM product sales increased $1.5 million, or 24%, in the third quarter of 2020 compared to the third quarter of 2019, and TACNAV product sales increased $1.2 million in the third quarter of 2020 compared to the third quarter of 2019.
• Net loss from continuing operations in the third quarter of 2020 was $0.5 million, or $0.03 per share, compared to a net loss of $3.3 million, or $0.19 per share, in the third quarter of 2019.
• Non-GAAP net income from continuing operations in the third quarter of 2020 was $1.1 million, or $0.06 per share, compared to a net loss of $2.2 million, or $0.12 per share, in the third quarter of 2019.
• Non-GAAP adjusted EBITDA from continuing operations in the third quarter of 2020 was $3.4 million, compared to a loss of $1.2 million in the third quarter of 2019.

Commenting on the quarter, Martin Kits van Heyningen, KVH’s chief executive officer, said “We are very pleased with the progress we made this quarter on all fronts. Notwithstanding the on-going impact of COVID-19, our financial results reflect one of the strongest third quarter reporting periods we have seen in several years. Sales grew by 5%, as did our VSAT shipments, our gross margins expanded significantly, our operating expenses continue to be in check, and our EBITDA increased by $4.6 million. I feel confident in saying that the decisive actions we took at the beginning of the pandemic have helped us to withstand, so far, the uncertainty posed by this global economic situation. Of course, the pandemic is far from over and we continue to remain vigilant and prepared for a range of macroeconomic scenarios.

“In addition to our robust financial results, we also made solid progress in advancing our strategic initiatives. We are in the process of rolling the PIC technology across our entire line of FOG products. Our creative promotional activities for AgilePlans are driving higher year over year VSAT shipments. And, we continue to invest in and develop our KVH Watch product suite in response to the increasing demand for IoT solutions.”

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 third quarter of 2020, net sales for the mobile connectivity segment decreased by $0.3 million compared to the third quarter of 2019. mini-VSAT Broadband airtime revenue increased by $1.8 million. The increase was offset primarily due to a $0.9 million decrease in our content service sales, a $0.5 million decrease in TracVision product sales and a $0.2 million decrease in land mobile product sales. In the third quarter of 2020, net sales for our inertial navigation segment increased by $2.1 million, or 27%, compared to the third quarter of 2019. Inertial navigation sales increased primarily due to a $1.5 million increase in FOG and OEM product sales and a $1.2 million increase in TACNAV product sales. These increases were offset in part by a $0.6 million decrease in contracted engineering revenue.

Third Quarter Financial Summary

Revenue was $41.1 million for the third quarter of 2020, an increase of 5% compared to $39.3 million in the third quarter of 2019.

Product revenues for the third quarter of 2020 were $16.7 million, an increase of 12% compared to the prior year quarter due to a $2.7 million increase in inertial navigation product sales, partially offset by a $0.9 million decrease in mobile connectivity product sales. Inertial navigation product sales increased primarily as a result of a $1.5 million increase in FOG and OEM product sales and a $1.2 million increase in TACNAV product sales. The decrease in mobile connectivity product sales was primarily due to a $0.5 million decrease in TracVision product sales and a $0.2 million decrease in land mobile product sales. The decrease in TracVision and land mobile product sales was primarily due to a decline in leisure sales.

Service revenues were $24.5 million for both the third quarter of 2020 and the third quarter of 2019, primarily due to a $0.6 million increase in mobile connectivity service sales, offset by a $0.6 million decrease in inertial navigation service sales. Mobile connectivity service sales increased primarily due to a $1.8 million increase in our mini-VSAT Broadband service sales, which resulted in part from a 4% increase in subscribers, primarily as a result of AgilePlans, and a $0.9 million one-time amount relating to a favorable resolution of a contractual matter with a particular customer. Partially offsetting this increase was a $0.9 million decrease in our content service sales. Inertial navigation service sales decreased primarily due to lower contract engineering service revenue.

Our operating expenses decreased $2.0 million to $16.3 million for the third quarter of 2020 compared to $18.3 million for the third quarter of 2019. This decrease resulted primarily from a decrease in salaries and employee benefits, as well as lower travel and entertainment expenses.

Nine Months Ended September 30 Financial Summary

Revenue was $114.6 million for the nine months ended September 30, 2020, a decrease of 1% compared to $115.4 million for the nine months ended September 30, 2019.

Product revenues for the nine months ended September 30, 2020 were $43.7 million, an increase of 1% compared to the nine months ended September 30, 2019 primarily due to an increase of $4.0 million in inertial navigation product sales, partially offset by a decrease in mobile connectivity product sales of $3.5 million. The increase in inertial navigation product sales was due to a $2.4 million increase in TACNAV product sales and a $1.6 million increase in FOG and OEM product sales. The decrease in mobile connectivity product sales was due to a $2.9 million decrease in marine mobile connectivity product sales, which was primarily driven by a decrease in TracVision product sales. In addition, there was a $0.6 million decrease in land mobile product sales. The decrease in TracVision and land mobile product sales was primarily due to a decline in leisure sales.

Service revenues for the nine months ended September 30, 2020 were $70.9 million, a decrease of 2% compared to the nine months ended September 30, 2019 primarily due to a decrease of $2.3 million in inertial navigation service sales, partially offset by an increase in mobile connectivity service sales of $1.0 million. The decrease in inertial navigation service sales was due to a decrease in our contract engineering service revenue. The increase in mobile connectivity service sales was primarily due to a $3.8 million increase in our mini-VSAT Broadband service sales, which resulted in part from a 4% increase in subscribers, primarily as a result of AgilePlans, and a $0.9 million one-time amount relating to a favorable resolution of a contractual matter with a particular customer. Partially offsetting this increase was a $1.9 million decrease in content service sales and a $0.6 million decrease in our contract engineering service revenue.

Our operating expenses decreased $3.5 million to $52.1 million in the nine months ended September 30, 2020 compared to $55.7 million in the nine months ended September 30, 2019. This decrease resulted primarily from a decrease in salaries and employee benefits, lower travel expenses and lower warranty expense, partially offset by an increase in bad debt expense.

Other Recent Announcements

• KVH Industries Announces CFO Transition: Donald W. Reilly to Retire; Brent Bruun Named Interim CFO/COO.
• KVH Expands Award-winning TracVision Series with 1-meter Global Marine Satellite TV Antenna for Entertainment at Sea.
• KVH YOURlink Helps Ship Operator Communicate with Crew During COVID-19.
• National Marine Electronics Association Honors Three KVH Marine Systems with 2020 Product of Excellence Awards.

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.