KVH Industries reports marine revenue down slightly

MIDDLETOWN, R.I. – Despite a worsening of recreational marine market weakness in the fourth quarter, KVH Industries, Inc., (Nasdaq: KVHI – News) saw only a 2-percent decline in revenue from marine products and services, compared to the fourth quarter of 2007, it reported in a recent statement.

“Interest in our mini-VSAT Broadband solution continues to grow, especially within the commercial maritime market where ship operators are now looking for cost savings and cost effectiveness in an increasingly competitive market,” explained Martin Kits van Heyningen, KVH’s chief executive officer. “With the TracPhone V7 and mini-VSAT Broadband service, we’re able to offer lower costs for hardware, installation, and airtime service compared to other products, along with an expanding coverage area that now includes the northern Pacific Ocean.”

Total revenue up 8 percent

Total company revenue for the fourth quarter of 2008 was $21.2 million, up 8 percent from the quarter ended Dec. 31, 2007. Net income for the period was $0.3 million. During the same period last year, the company reported net income of $1.0 million.

For the year ended Dec. 31, 2008, revenue was $82.4 million, up 2 percent compared to $80.9 million for the year ended Dec. 31, 2007. KVH reported net income of $3.1 million for 2008, versus net income of $2.5 million for 2007.

“While the economic situation is a serious challenge for all companies, our innovative strategic plan and diversified business model are generating revenue from satellite communications on land, sea, and air, as well as growth from our defense and commercial businesses. I am confident in our ability to continue to grow the company in spite of the current recession while strengthening our strategic position for the long term,” said Kits van Heyningen.

Commenting on the company’s financial results, Patrick Spratt, KVH’s chief financial officer, said, “Although our full year revenue increased only 2 percent compared to fiscal year 2007, our net income grew 22 percent over the same period, the result of our effective operational and cost management efforts. Our balance sheet remains solid and we have continued our investment in infrastructure to support the rollout of the mini-VSAT Broadband global network. During this difficult economic time, we will be diligent managing cash to maintain our financial strength and the flexibility to carry out our business initiatives.”

“Looking ahead for 2009, assuming the macro-economic conditions get no worse, we believe that revenue will grow about 10 percent for the year, driven by the growth of our mini-VSAT Broadband and fiber optic gyro businesses as well as the initial shipments of our new satellite antenna system for LiveTV aeronautical installations. As we all know, this is a very difficult environment in which to project performance as conditions are so poor and so volatile that there is a very low level of consumer and commercial confidence. We will continue to be cautious about the outlook for our core businesses while being opportunistic with respect to our new market growth initiatives.

“For the first quarter, we expect that sales will be down compared to last year’s first quarter, when sales of land products were still relatively robust, and that we will show a modest loss.”

Commenting on the company’s plans going forward, Spratt said, “We will continue to invest in the worldwide rollout of our mini-VSAT Broadband network along with the development of new products for our marine and fiber optic gyro businesses. These investments, coupled with the anticipated continuing slide in consumer sales, will put substantial pressure on margins. Until the general economy improves, we will strive to manage operations to deliver bottom line results that are around breakeven. Our primary financial objectives for the next several quarters are to manage operations to mitigate the negative impact of poor economic conditions, and maintain a strong cash position, so we will be an even stronger company when the economic conditions do improve.”

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