KVH Industries Reports Fourth Quarter and Full Year 2020 Results

Middletown, R.I., March 2, 2021—KVH Industries, Inc., (Nasdaq: KVHI), a leading provider of innovative, technologydriven connectivity and navigation solutions, today reported financial results for the fourth quarter and full year ended December 31, 2020. Highlights of the results for the fourth quarter include:

• Total revenues from continuing operations increased by 4% year-over-year to US$ 44.1 million.

• Revenues for AgilePlans, our all-inclusive Connectivity as a Service program for the commercial maritime sector, were up more than 53% compared to the fourth quarter of 2019.

• AgilePlans amounted to 73% of total commercial maritime mini-VSAT Broadband shipments, and 58% of the total mini-VSAT Broadband shipments for the quarter. AgilePlans now represent 38% of our mini-VSAT Broadband subscriber base.

• Mini-VSAT Broadband airtime revenue increased US$ 1.2 million to US$ 20.3 million, or 6% year-over-year, driven primarily by a 4% increase in subscribers.

• TACNAV product sales increased US$ 3.7 million to US$ 7.2 million in the fourth quarter of 2020 compared to the fourth quarter of 2019, and fiber optic gyro (FOG) product and OEM product sales decreased US$ 1.3 million, or 17%, in the fourth quarter of 2020 compared to the fourth quarter of 2019.

•The company recorded an aggregate impairment charge of US$ 10.5 million to goodwill and intangible assets for our KVH Media Group reporting unit, which has been particularly impacted due to the global reduction in travel resulting from the pandemic.

• Taking into account the impact of this US$ 10.5 million goodwill and intangible asset impairment charge, net loss from continuing operations in the fourth quarter of 2020 was US$ 11.6 million, or $0.65 per share, compared to a net loss of US$ 2.9 million, or $0.17 per share, in the fourth quarter of 2019.

• Non-GAAP net income from continuing operations in the fourth quarter of 2020 was US$ 1.3 million, or $0.07 per share, compared to a net loss of $0.5 million, or $0.03 per share, in the fourth quarter of 2019.

• Non-GAAP adjusted EBITDA from continuing operations in the fourth quarter of 2020 was US$ 3.5 million, compared to $0.7 million in the fourth quarter of 2019.

Commenting on the quarter, Martin Kits van Heyningen, KVH’s chief executive officer, said “Like many businesses around the world, we continued to face challenges from the pandemic, but ended our year positively, reporting overall revenue growth and an increase in adjusted EBITDA for the fourth quarter. I am proud of our team’s ability to continue to deliver value for our kvh.com 2 customers. Our revenues grew 4%, despite the headwinds related to the pandemic, particularly in our Media group as a result of the ongoing shutdown of cruise ship operations, and our adjusted EBITDA increased to US$ 3.5 million. Our continued focus on cost containment, combined with healthy TACNAV revenues and temporary savings from pandemic-related restrictions, allowed us to report one of the strongest fourth quarter results from continuing operations in the past five years. For the full year, although we reported an increase in GAAP net loss of US$ 5.9 million, which was largely attributable to the $10.5 million non-cash impairment charge, we reported an increase in adjusted EBITDA of more than US$ 7.0 million compared to last year. Against the backdrop of global economic uncertainty, we are pleased with our overall financial results for the year and with the positive momentum we are carrying into the first quarter of 2021. 

For the full-year ended December 31, 2020 revenue was US$ 158.7 million for the year ended December 31, 2020, an increase of 1% compared to US$ 157.9 million for the year ended December 31, 2019.

Product revenues for the year were US$ 64.6 million, an increase of 4% compared to the year ended December 31, 2019, which resulted primarily from an increase of US$ 6.5 million in inertial navigation product sales, partially offset by a decrease in mobile connectivity product sales of US$ 3.8 million. The increase in inertial navigation product sales was due to a US$ 6.1 million increase in TACNAV product sales and a $0.3 million increase in FOG and OEM product sales. The decrease in mobile connectivity product sales was due to a US$ 3.0 million decrease in marine mobile connectivity product sales, which was primarily driven by a decrease in TracVision product sales. In addition, there was a US$ 0.8 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 year ended December 31, 2020 were US$ 94.1 million, a decrease of 2% compared to the year ended December 31, 2019 primarily due to a decrease of US$ 3.1 million in inertial navigation service sales, partially offset by an increase in mobile connectivity service sales of US$ 1.2 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 US$ 5.0 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 US$ 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 US$ 2.7 million decrease in content service sales, a US$ 0.7 million decrease in our contract engineering service revenue and a US$ 0.4 million decrease in service repair revenue.

Primarily as a result of the impairment charges for the KVH Media business unit of US$ 10.5 million, our operating expenses increased US$ 5.7 million to US$ 80.5 million in the year ended December 31, 2020 compared to US$ 74.8 million in the year ended December 31, 2019. This increase was partially offset by a US$ 1.6 million decrease in travel expense, a US$ 1.1 million decrease in warranty expense, a US$ 1.0 million decrease in marketing expense and a US$ 0.9 million decrease in salaries and employee benefits. A portion of these cost savings were attributable to pandemic-related travel restrictions and other measures, and the company expectsthat these expenses will begin to normalize as the pandemic recovery progresses.