MIDDLETOWN, R,I. — KVH Industries, Inc., (Nasdaq: KVHI), a provider of mobile satellite communications products and defense-related navigation and guidance systems, saw its net sales increase during the second quarter ended June 30, due in part to growth in its marine business.
Second quarter sales of the company's mobile satellite communications products increased 10 percent compared to the second quarter of 2004. Year-to-date, mobile satellite communications revenue was up 4 percent, compared to the first six months of 2004.
"Strong marine sales led the way with a 15% increase over last year's second quarter, thanks to growth in both our North American and European sales," said Martin Kits van Heyningen, KVH's president and chief executive officer
Revenue for the second quarter was $18.8 million, up 29 percent from $14.5 million for the second quarter ended June 30, 2004. Net income for the period was $1.0 million, or $0.06 per diluted share compared to a net loss of ($4.9) million, or ($0.34) per share, during the same period last year.
For the six months ended June 30, revenue increased 13 percent to $36.7 million from $32.5 million for the six months ended June 30, 2004. KVH reported net income of $1.3 million or $0.09 per diluted share for the 2005 period, versus a net loss of ($4.8) million or ($0.35) per share in the year ago period.
For the second quarter of 2005, gross margin was 41 percent, reflecting an almost 2-percentage point improvement on a sequential basis and a 26-percentage point improvement on a year-over-year basis, according to KVH.
Operating margin improved more than 3 percentage points, or more than $640,000, compared to the first quarter of 2005, and asset management continued to improve, led by accounts receivable days sales outstanding at 50, a decline of 6 days from the first quarter and 8 days from the prior year. Inventory turns remained steady at 5.4 on an annualized basis. These factors contributed to strong second quarter positive cash flow from operations at $2.3 million, the company reported.
"We expect that revenue will continue to show year-over-year growth though we do anticipate a sequential decline as a result of the seasonal slow-down historically experienced in the marine market during the second half of the year,” said Pat Spratt, chief financial officer. “We do expect to achieve profitable results for the third quarter, although the sequential decline in revenue will likely cause net earnings to be below that of the second quarter."
"We are seeing the benefits of the successful implementation of our operational plan together with the introduction of some new products in the marine market," concluded Kits van Heyningen. "I am extremely pleased with our results for the second quarter as well as the first half of the year."
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