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KVH Industries, Inc. (KVHI)
Q4 2013 Earnings Conference Call
February 20, 2014 10:30 a.m. ET
Martin A. Kits van Heyningen – President, CEO and Chairman
Peter Rendall – CFO
Chris Quilty - Raymond James & Associates, Inc.
Rich Valera – Needham & Company Inc.
Anya Shelekhin – Sidoti & Company
Good day everyone and welcome to the KVH Fourth Quarter and Year End 2013 Earnings Conference Call. Today’s call is being recorded.
At this time, I would like to turn the conference over to Peter Rendall, Chief Financial Officer. Please go ahead, sir.
Previous Statements by KVHI
» KVH Industries, Inc. Discusses Q4 2013 Results (Webcast)
» KVH Industries' CEO Discusses Q3 2013 Results - Earnings Call Transcript
» KVH Industries, Inc. Discusses Q3 2013 Results (Webcast)
» KVH Industries' CEO Discusses Q2 2013 Results - Earnings Call Transcript
This call is being simulcast on the Internet, and will be archived on our website for future reference. If you are listening via the web, feel free to submit questions to firstname.lastname@example.org, and we will answer them following this call.
This conference call will contain certain forward-looking statements that involve risk and uncertainty. For example, statements regarding financial and product development goals are forward-looking. The Company’s future results may differ materially from the projections described in today’s discussion.
Factors that might cause these differences include, but are not limited to those mentioned in today’s call and risk factors described in our most recent Form 10-Q, filed with the SEC on November 9, 2013. The Company’s SEC filings are directly available from us, from the SEC, or from the Investor Information section of our website.
And at this time, I would turn it over to Martin for today’s discussion of results. Martin?
Martin A. Kits van Heyningen
Thank you, Peter, and good morning everyone and thank you for joining us today. Of our disappointing FOG sales in Q4 caused us therefore overall result in the quarter. On a full year basis was another good year for us. As we continue to grow, improve our profitability and strengthen our competitive position with a broad range of new products and services. I’m happy to report that both our mobile broadband and guidance and stabilization businesses performed well in 2013 and we’ve a number of new initiatives underway that will create exciting new growth opportunities in the years ahead.
For the full year 2013, our annual revenues topped a $162 million which is a new record, was up 18% over 2012. And our earnings per share were $0.30, the year-over-year increase of 26%. Our annual revenue growth was driven by mobile broadband sales of $108 million that’s up 22% from 2012. This growth was in turn driven by strong 36% increase in Maritime VSAT airtime sale.
In our marine satellite TV business revenues were up marginally to $16 million for the year, the important leisure markets for our satellite TV business seem to be rebounding somewhat the Americas where we saw a 10% increase year-over-year, but are still lagging in Europe where our marine satellite TV sales were actually down 10%.
Our guidance and stabilization business also grew in 2013 to $54 million, a 12% increase over 2012. We successfully completed hardware deliveries on the largest order in the company’s history for TACNAV tactical navigation system during the year and nearly finished installing over a 1,000 systems in vehicles using our new facility in Saudi Arabia. The sale and associated engineering support generated nearly $20 million in revenues during the year.
Our 2013, fiber optic gyro sales grew to $24.5 million which was up about 5% year-over-year. The new 1750 IMU was being well received and has been designed into many of the product type, military robots, soft driving cars and stabilized optical devices on drones that you might have read about recently in the news.
During the fourth quarter our mobile broadband revenues increased 35% year-over-year to $29 million, this includes $12.5 million of mini-VSAT Broadband airtime revenue which on an annualized basis now represents more than $50 million in revenues. With contracts typically range from one to three years, airtime revenues continue to grow at a fairly predictable rate as we add subscribers to the network. We also had solid unit bookings in the quarter and even carried backlog into 2014 which is unusual.
Our guidance and stabilization revenues were $9.9 million in Q4 down 45% year-over-year. A significant part of this decline was anticipated due to the completion of our record TACNAV contract in Saudi Arabia. Our military navigation sales for the fourth quarter were $2.2 million and this down 76% from Q4 of 2012.
Our fiber optic gyro sale totaled $4.6 million for the quarter down 39% from Q4 in 2012. This was far below our internal expectations. As we reported on previous calls, our fiber optic gyro sales were often used as subsystems and other manufacturer’s final products as we don’t always have good visibility of all the factors that drive demand for their products and ultimately for our FOG sales. This past quarter one of our major OEMs with long term contract unexpectedly delayed shipments on their fourth quarter forecast producing their fairly steady quarterly volume more than 85%. This unforeseen delay combined with already adverse effect of anticipated demand for military systems that use our fiber optic drivers as components resulted in significant drop in revenues.