KVHI - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day. And welcome to the KVH Industries, Inc. Fourth Quarter and Year-End 2019 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn today's conference over to Mr. Officer. Financial Chief Reilly, Don Please go sir. ahead,

Don Reilly

full Thank today to operator. our for quarter Good quarter morning, us joining guidance and first XXXX for Thanks the discuss and everyone. results you, year. KVH fourth Industries’

All published morning. we earnings this is of included which the release in

department. Executive Officer. Web With on Relations This our is on our Chief earnings and is Brent also Bruun, Investor Van Heyningen, Martin release me and Kits our site from call Company's this Officer Chief Operating available

If listen a today's replay you to call, you on site. of would a recording like to Web can webcast access our

are the submit you feel questions free If to listening via to ir@kvh.com. Web,

differ This We any many conference uncertainties our forward-looking to that no forward-looking statements will to expressed certain cause obligation revise assumptions from these in that materially are undertake update those statements. and statements. contain subject or may to results call actual

is as and specifically XXXX of quarter Form from statements the XXst these our of find Web We in We our our will under you Form section GAAP cautionary comparable to heading and our also encourage third the release, filings, on later site. October XX-K, filings SEC will Risk in XX-Q today in file available directly those as measures, measures. discuss Factors you expected non-GAAP review measures these which and measures financial to well SEC the to reconciliations made definitions certain press our company's Investor Information non-GAAP of

over Martin. I At like call would this to to the turn time,

Martin Kits Van Heyningen

core guidance. momentum going believe report positive forward. value and to you our and is us good I'm joining shareholder into momentum business, that will We happy earnings reflected this seeing Don, enhanced revenue everyone. in we're this Thank continued XXXX and that translate for Thanks, morning in our today.

Looking of plan productive tangible strategic on initiatives. on core we strategic several progress a had our and we delivered quarter and at very our business as expectations, made QX,

while guidance. our quarter line a was in versus $XX.X were million, increase results Total adjusted with X% was year, the $XXX,XXX. revenue quarterly Our our last EBITDA for of QX

year, full a $XXX million, increase XXXX. the For was compared total to revenue X%

outlined well a I'd million profitable In as of authorized key as established drivers we of update as for We common growth. each to the in the like entered repurchased for you long-term to strategic addition, next the ahead initiatives, we having XXXX these in provide quarter. stock start the initiatives several steps $X.X part at XXXX. that as buyback look them with on progress stock

business, Airtime in connectivity accelerate achieve our up subscriber results to X% $XX to we to In continue excellent million. our efforts growth. mobile revenues were year-over-year

we quarter subscriber addition, also saw with up growth active versus QX in airtime double-digit of of last In subscribers year. another QX XX%

the ongoing subscriber The Our launch those conversion Thanks migration the with to than after HTS subscribers continue we effort, network airtime on That's accomplishment our will now margins of more kicked in network users on off the original our the our the to HTS a have just two big grow network. to base. original year-over-year to XXXX HTS we on in margins. improve part network daily of our from which business years network. continue

data operational migration delivers which are customer transition. benefits more At from invest speeds, realizing same higher geographic effort, we this to continue both a from time, affordable coverage. and this We in perspective, better the and financial

XXXX. broadband AgilePlans sequential mini growth new airtime driver AgilePlans QX in of revenue X% as quarter. compared for major AgilePlans a XX% subscribers and year. up QX We're was XX% also were growth. the achieving subscriber, remains compared service to XX% up VSAT consistent commercial, versus AgilePlans revenues to last Our QX revenue of during represented and

XXXX, in the major is positive service fourth cash launched AgilePlans milestone. became during the which AgilePlans Satcom quarter, market. commercial upended expected, When we maritime flow As we

For receive subscription no with single service, costs hardware, CapEx, the installation, no long-term no crew Satcom airtime could or and and fleets with maintenance a solution all complete advanced monthly for commitment. first a entertainment, time, deploy operational content,

meet of However, needs everyone in the the doesn't AgilePlans market.

require need no have for fleets data global need coverage speeds, don't size. their Some or vessel to antenna a as limited smaller a budget. may much such high or Others have due or

sight extension vessels than XXX,XXX vast unserved vessels there of of example, For week, the once these majority this operating out than We XX segment of for no are to AgilePlans portfolio so today. earlier wanted change our more we currently AgilePlans a that Regional, longer of commercial The an connectivity of fishing land. have and meters introduce market.

as a product is but HTS maintenance $XXX. antenna, also upfront similar VX to smallest is it TracPhone the and includes regional AgilePlans antenna connectivity-as-a-service our product, package available no our are inch no There as or XX system. starting this low costs, existing benefits all-inclusive a fees with subscription installation monthly and AgilePlans global with

our In performance. welfare launched commercial digital operations addresses data Link, providing two maritime we delivering needs content entertainment and optimize also that improve new addition to service Regional, to crew AgilePlans KVH and pressing industry; to in content news vessel

modem. seafarers. Netflix-style our specifically service we've earlier offering, does curated Essentially, Link the the news, store require with our built with We content not karaoke, designed patented podcast, media and user sports, viral in of for a movies, population IP-MobileCast natives a KVH on videos, for experience a crew digital our created Link new now delivery. content timely broad interface fully content technology out providing sleek all the selection and We of licensed Unlike that's trending and our stream TV, server. of provides KVH in for past international popular mind. music, integrated content directly

help to an fleets improve among address unmet need commercial Our goals them Links retention for morale. and crew and KVH are

AgilePlans airtime while KVH more see incremental our maritime and to making also We and our likely opportunity even other Link less as churn. commercial to generate customers, customers ARPU simultaneously services among appealing an

also in infrastructure, through well as we're mobile focusing digitization in the back to improve connectivity, as our systems, office on profitability of of business scale As the we driving our continue improvements our efficiency. and to our grow

market. into announce initiative Another Digital. were strategic vessel working IoT our on active pleased research Kongsberg the maritime in major first We very IoT an the recent is ongoing with to collaboration of maritime Echo, joint system Simrad installation the push

in remote of made high service transfer, significant to differentiator and key resources that's satellite demand the data progress Watch, a also our for enables for optimized of suite on We access support feature intervention onshore experts. and and KVH speed sessions that

deploying in our customers. with we've as key units partners, successfully Looking IoT set of at maritime resources on our pilot as business expanding infrastructure development so already XXXX, focusing added and IoT are far efforts well

and QX to pleased for TACNAV turning it's both growth that our from with U. important was XXXX. military was an on Navigation up our important S. for Inertial customers now business. XXX% orders versus and returned revenue to the Moving well. that's international I'm markets business. point for over This of million, to quarter, We’ve $X.X report million $X.X TACNAV as

Now we’ll that XXXX, these customer, these of same aren't pursuing some contracts are very end the be the TACNAV which for but important a in sign. is

Army's continue and the continuing to XXXX. and be U. S. which timing assured testing, be navigation We position throughout an will participant evaluation active in also

fiber military Martin after selected next applications. and gives quarters our that FOG which the value technology fiber a Within the reinforces program. program opportunity for optic split IRSTXX of S. to the system, of sign F/A-XX sales success relatively fiber are patented military particularly an the to the the Navy Lockheed Boeing sensor several of us of aircraft. our revenue. into generation also quarter-over-quarter, gyro an commercial We're performance contribute excited optic our combat Nav the the flat market, were of It us and among encouraging U. were gyro and to Inertial integrating But sensor deliver gyro. X% multi-axis Sales products important this both optic proven

PIC of finally, And progress gen-X met development the Technology. chip the productization in Integrated made Photonic performance We chip the of and tremendous photonic we've our engineering itself. our initial targets with or completed we've price and Chip,

reliability before move our the and our ahead technology shift end remainder Thanks into pursue will in IMUs this of Technology of the We of to throughout and better to with opportunities with think be autonomous of from even an to position enhanced believe this XXXX. the cars. we integration expect chip product market. technology, the autonomous the anticipated We for existing we quarter, the performance resulting photonic lines essential PIC then technology benefits first be existing we'll current will inside PIC the

land, While and sea opportunity all area construction the like use our represent technology. on drones, Applications to poised are large mining opportunities automotive air. and a market autonomous and develops, there's people that trucks, of everything, movers, in equipment, exciting growing already the

few a car driverless revenues the also is quickly which believe still they'll timing to out. the We our mass more that market, for production contribute than years

our So these on commercializing in into highly developing We chip the foundation with and strategic earnings investing new a plan. and earnings value shareholder our we're we in in translate and revenue plans, inertial forward. XXXX Watch. three and in meaningful We're enhanced more entered navigation growth strong even agile are KVH strategy going backlog confident for against launching and solid which we conclusion, markets, focused initiatives, this product a photonic the in creating revenue remain will IoT and growth our accelerating our believe year future, executing and

Don for the over Don? like I'd to turn now So to call back the numbers.

Don Reilly

Martin. you, Thank

concluded We Videotel the the our reflected disposition you disposition that that our criteria in a in way met the As release today. later second file it of Videotel and concluded which and in discontinued XX-K, of XXXX. we'll know, the quarter we have operation we earnings

development of buyback [Technical this part to the working expected $X.X the of we’ve of Difficulty]. proceeds our In as capital common million in Also Videotel the and adjustment we program. XXX,XXX as million significant sale our quarter, quarter of transaction, share finalized the fourth million repurchase $X for in or about by shares for the fourth which our the stock a was we accounted reduced $XX.X as from

revenue under of year. the just XX% in $X.X Navigation fourth about million from $XXX,XXX Product Connectivity increased year $XX.X about $XX.X our quarter Martin our Inertial of revenue came revenue fourth quarter or million within just the for $XX.X As about the quarter our quarter. fourth which from million to million from in of in $X compares fourth recorded prior fourth was This earlier, prior the an was range. the million, and XXXX. increase mentioned at increase $XX.X guidance our million, Mobile segment Revenue quarter

Connectivity just $X.X segment, prior million By year about about and returned revenues segment our fourth in Navigation Navigation Within our product over Mobile slightly or growing X% Inertial business this in segment, growth quarter XX% X%. quarter. in our the FOG Inertial increased to revenue is our with very approximately our segment, decreased or compared $XXX,XXX

quarter. said, million While or TACNAV as compared Martin the just XXXX by $X under sales comparable XXX%, to increased

in segment, was growing approximately Conductivity airtime million, the Mobile from the in $XXX,XXX was to of and decrease prior fourth by sales the revenue demand our product year. in $XX.X $XXX,XXX primarily $XX.X X% quarter from decrease our successful year million sales quarter $XXX,XXX continuing in primarily of revenue for In marine fourth just sales. AgilePlans our driven quarter Mini increased about VSAT of land an prior million, our or $XX program network. X% product broadband over the product and for by the decrease increase driven HTS sales fourth Service

VSAT the total of XX% our this shipments and XX% commercial with our approximated of shipments shipments program connection in quarter. AgilePlans unit

last perspective, XX.X%. compared fourth to XX.X%, percentage gross points, our about segment year. of to XX.X% consolidated Mobile increased X X.X margin as margin fourth our quarter, percentage margin the gross quarter a From with increased Connectivity profit while about gross points Navigation Inertial was down our XX.X% in For

from key quarter fourth the our VSAT $XX.X subscriber service-related Operating costs million were part year, base. in prior our strategic expenses connection up initiatives, well in of the with as for investment in in reflecting as XX% $XX.X quarter ongoing the higher growing million,

of recorded For million quarter, and the revenue, of from in quarter operations resulted loss changes $X.X a of these expenses, fourth XXXX. compared in fourth to million the operating margins loss $X.X in the

of quarter of loss for $XXX,XXX compared last segment Our loss had $X.X the profit Connectivity an fourth billion the million generated profit $X Navigation of an an Inertial in segment XXXX, $X.X year. to while to an our operating of quarter Mobile of compared operating operating operating million

million. unallocated increased loss Our $X.X

$X.XX compared loss of million period net net For net year. the last million compared a in net of with of quarter same same per recorded as fourth the fourth was $X.X for last $X.XX loss quarter, EPS loss our of share $X.X year. the share a loss the in was per period with a

fees, non-recurring exchange and employee expense, excludes other transaction the stock-based effect costs, valuation adjustments, nonrecurring compensation tax had On year. and tax $X.X reserves and a foreign a amortization loss and the nonrecurring net changes inventory non-GAAP of of basis, costs, termination intangibles, charges, net tax losses, million which with gains transaction-related including $XXX,XXX and certain of other discrete allowance a loss foregoing in compared of our last we other

compared EPS year. Non-GAAP the per $X.XX negative $X.XX with for last fourth negative share per quarter share was

adjusted was last approximately in year. Our $X $XXX,XXX for EBITDA quarter the recorded the of fourth with compared quarter million

For to our non-GAAP please earlier measures, refer earnings morning. a that complete reconciliation our published of was release this

From operations perspective, quarter of compared increase in expenditures million used were $X.X an a million continuing of quarter. Capital cash was XXXX. operations for net fourth $X.X to the $X the million,

Of December $XX end Total delivered $X.X in million. total our balance approximately backlog was in Backlog $XX.X comprised is Conductivity. million $XX.X Navigation million approximately the Inertial to of and for $XX at Navigation Mobile approximated of million. XXXX products the scheduled Our the million $XX.X cash amount, million. Inertial ending XXXX at of was backlog in end services be and

With outlook for year to that, of turn full I'll the now quarter our first XXXX. and

EBITDA quarter in the range $XX and EPS of Non-GAAP Our million between range share. to Revenue guidance to of EPS negative negative negative negative and $X.XX in is the be is for share to per of follows. is $X and estimated $X.XX $X.XX million negative is adjusted range in as be GAAP $X.XX expected be million per $X to be to the to $XX million. to expected the first negative

to our is revenue $XXX $XXX full million. million guidance year, the For

and Martin we be beyond. guidance for Our continued and to discussed, year investment to is to $X GAAP EBITDA no This range non-GAAP that per growth full growth revenue are is our the foreign adjusted and of exchange XXXX expected and share, negative our is prepare reflects are contributing $X.XX in the continued $X.XX share, for rates. does to $X.XX in and negative guy strategic be range estimating $X EPS initiatives there'll our from negative $X.XX assume in us for EPS expectations the key from earnings million. XXXX million to will which well changes significant This currency per

$XX in expenditures be the expect we $XX million. capital XXXX, For of our will to range million

of concludes And prepared remarks. morning's open turn line call. this to the the This operator Q&A our over call I'll to the the Operator? portion for

Operator

will Needham question first Rich Our from Valera Instructions] [Operator with Company. be &

Rich Valera

you when start shipping commercialization could about actually you with your product think initiative, on question A PIC you'll just wondering of the commercial if talk inside it.

Martin Kits Van Heyningen

weeks, that the is the quarter. expectation before Our so will happen in a few end current of

to start this everything our product which it year. we'll ripple So entire of in, products is our or IMUs, the to line, it and through by goal it end our end is in have high put will and

Rich Valera

that’s we recent And new do the the we decent that's and a grew going then of looked on think decel like airtime pretty X% which the you but reaccelerate to is or of expect from forward? there revenue, a had do aware year-over-year, growth airtime to unit going rates. be it revenue Anything bit rate,

Martin Kits Van Heyningen

the suspend same less in number, with of in fishing we of leisure service seasonal there which suspensions, for they pay some a had we using month big their is disappointed hundred we the the but suspensions, suspend the months. if a seasonal they still thought. couple per came and the not were than growth are only for market and where is on in boat, if voice Alaska, And couple and reason airtime bit somebody it's they commercial thousand So more little subscriber

driver, back before. was January. in during, was start year the number ARPU allowed And not because seen, permanently. that drops we've to suspend come down those that higher primary that to already you're than And so So the the

quarter. was from going that big expectation difference So into our the the

Rich Valera

variance range, And you're And XX the assuming then guidance sort shipments. this the in backlog million you about potential variance year. at to to the of big mean looking as of broad the question year due of in guidance on business is international range inertial your that that primarily I'm it's due and ship kind something have I your

sort there's get the of end. ship or needs low of So a high kind just a be book to done range and end that to there, to seems even of of lot like obviously

wanted to get what as a to whole inertial just up and upside this drivers kind some drives are that thoughts to of high-end, So visibility your year potential sort the you on there? of of what the

Martin Kits Van Heyningen

house. So where primarily of side seeing the is the TACNAV significant we growth this year in

coming we increase, QX, that see to in years, of started to So orders the in East significant year. we've Middle we expect so big that saw hadn't this now be we out seen

we and to have five programs of four portion budget of our internal that fair there some TACNAV, in major our and a book are expect guidance year, or in we those ship. So amount will this

with change in it's we consistent that's just this from And but QX. year, saw a what

that for And backlog already TACNAV some of we have is for XXXX.

baked TACNAV big type optimistic the so very last growth here. year, we're growth, really mid about numbers not to thing. on So to And into compared guidance is reasonable business but some our FOG high-single-digit

Rich Valera

And what drives that?

Martin Kits Van Heyningen

Well, like to of will over photonic that Inertial and year, number head, this And backlog much for to the fairly And into it's than was don't larger just and my standard we into chip, technology, the offer top is saw chip carrying. new convert some have the but compared advantage we'll it get with that. of a what nice some is consistent last we in take XXXX. the backlog Nav we more off products be that the around better we're we QX lot I of going new that think to specifically and then we photonic launching the get some marketing that performance products as expect and launch, things buzz as

Operator

from question with Our Raymond James. be Prentiss will Rick next

Rich Prentiss

those with guidance. questions, follow-up start I some of I’ll want to

the you've your all market. is corona impacting if stock far then at components, guidance? and first it as demand virus obviously, in is it How markets First, how the also of as supply reflected affecting maybe your

Martin Kits Van Heyningen

kind this we're long won't So in of the run, assuming be an that issue.

the knows. of in QX. done we lot most come So there nobody are, China. don't buy -- significant we chain. of Circuit some exposure don't think QX in made any matter. supply boards Taiwan, we analysis the have material being see don't Mexico impact of even a are are China a perspective, but we've feel our boards is obviously, obviously, where would though From supply that of so components We fabbed aren't circuit in out or in for but the raw stuff for some does boards We

matter But we're at shape in QX. issues If then think out if the boards any we aware or for this more generalized don't good it's that China, long then fabricated. or immediate problem of. pretty because doesn't level, drags on are really for We the chips, capacitors are where resistors, a think I'm your secondary I it of major have coming

on pretty So we good. supply feel side,

cancellations side, the like any we we seen that. anything think haven't On demand immediate or order

We which to rescheduled in one thing cancelled, of our two Singapore the the I got shows have major bad is fall, three run, trade for or long seen a believe.

So that's not good.

far, impact. so But immediate haven't seen any we

I raw think to by Asia going China sea. shipping time, general, travel in or going ships and materials of out be out, on periods and long for if extend this coming in exposure the would products in were finished side, the of

into we've far, got baked But risks of us that's we guidance. anything beyond are to going our what kinds so at. see we're that looking So those don't the impact

Rich Prentiss

your TACNAV we've put in for large possibility large of baked XXXX? on in customer, thoughts hanging while that orders around hoop that was but your the the said guidance those international… actuals end XXXX? same guidance, quarter a the a into are speaking think been from international I fourth for it haven't What that of Is that, had shipping we've And Is that but still in. you

Martin Kits Van Heyningen

confidence and programs guidance Yes, level and ship book as that expect least a that to to mentioned, we at going of our will that's to major in I have one that we now have we or assume and this XXXX expect pretty we high start four of those five year have, happen. we

Rich Prentiss

happen to then the And then on implies of later. then, a same you first quarter guidance to kind cost slow maybe start the and have revenues year going the

what versus the the towards which what's cause thought to low would head pretty would end historical levels? XQ as as So guidance, of be far low

Martin Kits Van Heyningen

for the business I economic push think, general virus other the behaving things corona people the push be that just end. normally -- low it would macro us due end sure. In would to words, not to would to us low

I mentioned, as But a haven't yet. we possibility. seen that think it's I

Rich Prentiss

are And switch showing pretty two is the seeing on here so promote initiative sitting other the subscriber through on line Agile of incenting of it private? growth. it? you just almost to Inmarsat questioning having pushback side maybe then gears And for as months as further, gone dealers quarter. leap to we're it far then with good What's things, any we're accelerate Is day, even the or

Martin Kits Van Heyningen

two there's regional, fleet new we're end type incentive market point, specifically. size, things AgilePlans served. convert this whole L-Band of it's market think new Well, currently that think isn't blue we like service we who doing. we're then that customers, providers being One we've new sort price a a launched to also giving is ocean And which broadband is the customers

Rich Prentiss

the about, promotions of you okay. talking part That’s were

Martin Kits Van Heyningen

So is offering. product a new this

AgilePlans offered never we've clear, be to with before. the VX Just

and kind work of new -- never we've the is into this So boat offered fishing it market.

push. big a that's So

Rich Prentiss

about and the in So should we pricing think we the of the about that, as one low subscribers happen should relative might given or as about be $XXX about average might $XXX. kind what's regional of contribution going talk Agile what modeling think the How plan we Agile as to be? of as range to how you think that

Martin Kits Van Heyningen

had hardware sales. we little days the a revenue like It's old bit when

So to mix. by impacted get you would start

and $XX,XXX, the back ago two look was with was a price. VX it big VX was So VX, we in and $XX,XXX at years difference VXX, $XX,XXX. when VXX

expect for a will to but think the ARPU, coming I be is So ARPU, end weighted-average incremental ARPU it majority impact we're VXs. But will the mean, a at from We that's going right, average to VX. up we market include not with we it that in all. currently which still you're VXXsa be and

Rich Prentiss

a lower its lot of ARPU, volume the be higher will So net-net… but the

Martin Kits Van Heyningen

APRU, incremental expect terms a the because so small this usage. HTS Agile of VX regional, cannibalize small around we is the it's structured in the also to vessels antenna So existing and don't programs, and it's pricing

a going a So it's even are Agile VX, if you or cheaper plans or higher to the data overages medium user, cheaper user to be you're the program. really get on -- the you because VX the for are

Rich Prentiss

It like Where as ARPU new how really should X,XXX, And X,XXX? market Agile without at, is at ARPU segment them? and should think historically that we thinking that wireless trending a we with different well. we average be trending of looking of postpaid for X,XXX, dynamics it's kind prepaid average about are out

Martin Kits Van Heyningen

it’ll it's the think in range. be X,XXX trending still I towards X,XXX

is. as marches VX depends how a successful days think it time We just few I program So on launched this ago.

by So $XXX. probably or if shipments the ARPU it annual becomes XX% mathematically that drop would XX% then the of

Operator

Horn be Our B. Van will next Chris from Riley question from FBR.

Chris Van Horn

win with So the I to want focus Lockheed. on

little about where certainly the could these a maybe up opens And award. the into? applications aircraft history you is see are question Just go bit other devices there of that

Martin Kits Van Heyningen

out they did some which we wanted buying to standard So to them, it then and started development customize, our so we're product work then do. for continuing custom as

aircraft they for. very and that product received in suited feel their other is for going programs initial have we're types orders yes that of well the so But her limited on that we -- that So XXXX. product other answer we the is

a could this think new for that So nice be us. market we

Chris Van Horn

you same Anything bid. program, And I then imagine why just your at was on a product it over as out that jumped that someone else’s? competitive

Martin Kits Van Heyningen

our it this performance enough product good of initially application. for think military the was I was Well, standard

involve making build package hardening that and improvement, well product have. customize, they So ability as lot this incremental to product to of into our tight very as exactly it a the it

the performance to I So the their for space. it customize difference, and ability probably that's think

Chris Van Horn

cited during we systems the quarter. that that? And is other Is do OpEx about think infrastructure, that how increase or that people, mainly you

Martin Kits Van Heyningen

costs. related Mostly people

Chris Van Horn

on some KVH had the that then any the And just mentioned color updated I'm you Watch. pipeline, looks? timing on you how curious or

Martin Kits Van Heyningen

a Parts of still that's again, being are think I product. Yes, new brand developed. that

business we're development. doing So

be good Now, here feedback, next pilot we've rolling more in we’ll gotten really some the months. stuff encouraging some out couple

So the reaction very good. I has initial think been

I huge guidance a hopes into really have opportunity, have for very a introductory feedback. year. value and something But think got XXXX, proposition -- nothing of that revenue it going as market baked we our for high a so for the here some getting sort don't of We we see we've our it's significant. And this we lot we what forward. big is that very baked yet, it's think into not think interesting guidance we're good and that the

Chris Van Horn

you And then usage? at continue How about look sight buybacks? cash. to your think on kind last in for that the Do line? me M&A you Is of cash

Martin Kits Van Heyningen

that money we'd first opportunities $XX that's we're the million, feel could successful was opportunities did It's our training so I for we it that that. putting mean, sell We really which mentioned the we and to we that have growth just We here. are invest very us. good foremost. so specifically, a -- I strategic do probably should where have so have exit these the And business in this did in organic cash for script internal the Videotel. we

But you're probably right. mean, to have look M&A sufficient I that we do at some capital address activity. and

we always there's we and but anything that immediately feel need don't that to nothing we our complete So there's imminent look strategy.

-- have be where areas would we're are be to be were have to think close do our, we we focused that something, pretty the to stuff, so with it the we what and on. to very if comfortable it developing we're already So were

Operator

Quilty from Quilty be Chris Our from Analytics. question next will

Chris Quilty

us you Can a out? some give year. activity with Don, of the you expect on Thanks, finish of SG&A promotion this to going where sense

Don Reilly

million. of more be Well, higher ended 'XX million so $XX idea, I’ll will or me SG&A XXXX. we $XX.X significantly you total with expenses less give operating an fairly in

will million, in grow -- maybe say $XX XX So purposes. it'll grow modeling that to for

Chris Quilty

And programs? is the just be of due or spending to in there will any seasonality to shows certain that ramping trade that the higher quarters the

Don Reilly

growing I'd say consistently be quarter. it'll fairly every

Chris Quilty

us a growing gave $XX CapEx. is How it you capitalizing? And that million million along to of customer you're much Is portion… equipment for significant that that, with $XX

Don Reilly

Agile. million $XX for be Approximately will

Chris Quilty

steep chunk. seasonality steeper touched larger? of hit Can more versus that little Big again, give expect And think I and than into to on drop where you area already a you I seemed revenue have the a in on bit Is you QX there's drop, normal you be QX. particular probably touched us to the service? there QX fairly of But think as the we Rich to this, there a look going QX. breakdown a hardware

Martin Kits Van Heyningen

Yes, that's TACNAV primarily.

we longstanding So in guidance. backlog put we have policy quarter, current it the is don't don't our in orders if for TACNAV

So drop Inertial the the business to growing on revenues should from as grow. QX side. QX Nav continue we The to be The VSAT well. is to service expect big

Chris Quilty

TACNAV on year year full just is Is the of that anything and… there this is could another in the A-PNT testing contribute here activity, And side. or this

Martin Kits Van Heyningen

that mentioned, No, A-PNT U. there four is are for specifically I programs five one S. of those or for the

this revenue do we So from that year. expect

Chris Quilty

What product least at have that most you vessels Regional mentioned if to the do in many that have of KVH assume a with of this that had you no they've connectivity. some you challenge have market or And and terms products talk acknowledgment on also Is brand these like the and them? the reaching side fair is never channel DTH before? when AgilePlans it these opportunity about of presence

Martin Kits Van Heyningen

popular lines like So amongst we types all products, are TracVision very of our other do that product boats. have

might And connectivity like satellite think have when brand I have we presence. they of I have say connectivity, phone, them mean I Internet they these fishing iridium regular a in a example, they when is don't commercial the also sense do they're like have an about are do don't something lot And there's have connectivity. no phone, product. these as onboard but lot A So the of that an -- international. we handheld talk or unserved that

there's market where So Vietnam of boats. like countries mean very and fishing lot large opportunities there's a I and Tennessee the in Indonesia,

or U. So it's S. type Alaska not just markets.

Chris Quilty

name addresses it, a presumably which the And you but any had had, I that had range same introduced forget product, the success? cellular of opportunity. Has extender you

Martin Kits Van Heyningen

And product. talking more the market, of the the from works range XX extender tower. at that's targeted haven't but maximum leisure we distance very a Well, well, commercial you're about of miles still

for Agile offshore. or XX the both XX So to further go than is opportunity miles

Chris Quilty

there area working the still the everything ways PIC you pivot out, most you this and opportunities the any tangible OEMs the mentioned are is update the questioning the autonomous, there. And progress ongoing you can of new terms but for what of final in of know year? then on a that's number that and product, you're of automotive over And that with

Martin Kits Van Heyningen

recently the order million had first. tangible, an The a program. start me just question let Well, from customer last $X drone we as example, with a for most

top So that was of of mind. very recent

vehicle As as far that in we Investor year, Last on. the maybe discussed our we're automotive, autonomous we XX platforms different had probably Day.

as test probably were those we're as Now third of OEMs and being platform to a on startup XX referencing, more probably used XX. real us using of primary solution. s this Maybe a inertial companies or XX the major

Chris Quilty

not platform, products legacy new that tech? using the they're for But test

Martin Kits Van Heyningen

yes. Absolutely,

chip and photonic new evaluation, the received the they're have ones today standard is product, but ones the bigger the based of testing already for using today's some product. version that So

ones with end of PIC month. the it at -- shipping the this March the new we'll in in of, during next year, So start March

Operator

Thank you. at the further time. questions showing this I'm

Martin Kits Van Heyningen

great. That's

I and your Thanks always, investors Don free follow-up reach any available feel have to As questions, are who for time. for out.

Operator

ladies today's teleconference. and you, Thank concludes gentlemen. This

disconnect. now may You

KVH Industries (KVHI) 2 Mar 202019 Q4 Earnings call transcript