KVH Industries(US:KVHI)2022-05-14 17:45Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $41.1 million, a 3% decrease from $42.3 million in Q1 2021, primarily due to the absence of a large TACNAV order [9][33] - Net loss for Q1 2022 was $4.7 million, or $0.25 per share, compared to a net loss of $4.0 million, or $0.22 per share, in the same quarter last year [10][47] - Adjusted EBITDA for Q1 2022 was $1.9 million, an increase of $800,000 from $1.1 million in Q1 2021 [10][48] Business Line Data and Key Metrics Changes - Mobile connectivity revenue increased by $2.6 million, with airtime revenue rising to $24 million, a 12% increase year-over-year [20][38] - Inertial navigation revenue decreased by $3.8 million year-over-year, with TACNAV sales dropping from $4.5 million in Q1 2021 to $700,000 in Q1 2022 [27][41] - AgilePlans revenue increased by approximately 48% year-over-year, indicating strong growth in the commercial market [24] Market Data and Key Metrics Changes - The mobile connectivity segment's gross margin improved to 39%, up 4 percentage points from the previous year [36] - Airtime gross margin increased to 41%, up 7 percentage points from a year ago, attributed to the shutdown of the legacy network [40] - The company entered Q2 with a $25 million backlog across mobile connectivity and inertial navigation businesses due to supply chain issues [11][28] Company Strategy and Development Direction - The company is focusing on core businesses and has refined its strategic goals for 2022 to drive profitability and shareholder value [14] - A recent divestiture of the retail radio business provided a $2.5 million cash benefit, aligning with the strategy to focus on core operations [15][50] - The company is committed to evaluating product prices and has implemented price increases in response to rising costs [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but expressed confidence in strong demand in core markets [11][19] - The restructuring efforts are expected to yield benefits by Q3 2022, with a focus on aligning operations with revenue expectations [12][19] - The company anticipates consolidated annual revenue growth between 2% and 5% and adjusted EBITDA between $11 million and $15 million, assuming supply chain issues do not worsen [51] Other Important Information - The company reported a backlog of $20 million for inertial sensors due to supply chain disruptions [28] - The first anniversary of the TracPhone V30 terminal was celebrated, marking it as the most successful VSAT product in company history [23] Q&A Session Summary Question: Clarification on the radio business sale - The net proceeds from the sale of the radio business were $2.5 million, not $25 million as initially misstated [52][53] Question: Evaluation of non-core asset sales - The company is continuously evaluating opportunities to enhance shareholder value but currently has no specific non-core assets targeted for sale [54][56] Question: Impact of recession on business performance - The airtime business model is based on recurring revenue, which has shown resilience during past economic downturns, although leisure hardware sales may be impacted [60][61] Question: Equipment margins outlook - Supply chain challenges have led to increased costs, prompting price increases, but the company expects continued pressure on equipment margins [62][64] Question: Update on CEO search - The board is actively continuing the search for a new CEO, working with an external recruiting firm [70] Question: Overview of the shipping market - The maritime industry faces challenges, but demand for communication services remains strong despite higher fuel costs [72][74] Question: Update on KVH Watch integration - KVH Watch will be integrated with core products, with further updates expected in Q2 2022 [80] Question: Autonomous trucking customer adoption timeline - Significant uptake in autonomous trucking is not expected until late 2023 [82]