KVH expects continued pressure on leisure marine revenues

MIDDLETOWN, R.I. – Revenue at KVH Industries, Inc., (Nasdaq: KVHI) for the second quarter ended June 30 was $21.9 million, down 2 percent from the same quarter of the prior year, due in part to a decline in sales to the leisure marine market, the company reported in a statement today.

In the second quarter of 2009, mobile communications revenue from marine, land, and aeronautical products and services was $12.5 million, down 31 percent on a year-over-year basis.

Net income for the period was $0.2 million, or $0.01 per diluted share, compared to net income of $2.0 million or $0.14 on a per diluted share basis during the same period last year.

For the six months ended June 30, revenue was $40.1 million, down 12 percent compared to $45.4 million for the six months ended June 30, 2008. KVH reported a net loss of $2.4 million or $0.17 on a per share basis for the first six months of 2009. During the same period last year, the company reported net income of $3.6 million or $0.24 on a per diluted share basis.

“We set a series of aggressive goals for our business with the aim of achieving a strong sequential improvement in our results for the second quarter,” said Martin Kits van Heyningen, KVH’s chief executive officer. “I’m pleased to say that we met and exceeded many of those goals. Despite the continuing economic volatility, our strategic growth drivers gained ground and helped set us on a course for what I believe will be long-term success.

“For example, we achieved our third consecutive record quarter for fiber optic gyro sales. We also took major steps in the expansion of our maritime broadband network while, at the same time, the revenue contribution from our broadband airtime services continued to grow. Together, these strategic initiatives helped counterbalance the continuing pressure that the economic environment put on sales of our satellite products, especially to the consumer markets.”

KVH expects that “continuing tough economic conditions as well as historical seasonality factors will put pressure on sales to the consumer and leisure marine and land markets” during the third quarter, according to Patrick Spratt, KVH’s chief financial officer. However, the company expects “sequential increases for our mini-VSAT Broadband offering, for our aeronautical satellite TV antenna, and to a modest extent for our fiber optic gyroscopes” to help it deliver total sales in the third quarter that are about equal to the second quarter, followed by a sequential increase in the fourth quarter, he added.

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