KVHI - Earnings call 3 2023 | KVH Industries, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q3 2023 KVH Industries, Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Roger Kuebel, Chief Financial Officer. ahead. go Please

Roger Kuebel

this Good us Operator. which and you published thank included Thank for morning, KVH joining earlier we release today the results, Industries' for in you, earnings everyone, morning. third are quarter

Joining Officer, Operating Bruun, Executive company's Brent the me Balog. and call on Bob the Chief are Officer, Chief

the dive Before in, we usual announcements.

our you or recording like on would to a if of be would call, website. to a will of copy like if you First, the release both today's earnings listen available

are this contain you subject ir@kvh.com. any obligation no statements these free to uncertainties the to submit feel or materially of update results If these to statements. actual and are differ listening in web, statements. conference that from via We questions that our expressed revise may to assumptions undertake to certain Further, numerous will cause call forward-looking those

is discuss also EBITDA, adjusted will We non-GAAP which financial measure. a

in later from a in heading The filings We of release to our definition find press statements made the specifically as this SEC numbers. GAAP our comparable in filings, Form as XX-K, which measure those well file encourage and the to Form cautionary other was company's Factors under our the directly XX-Q, Investor which our You'll Information are plan website. of to on Risk available March review SEC we a filed you XXXX XX today. section reconciliation

I call will Now to the quarter, walk you turn third highlights through to our Brent. the over of

Brent Bruun

Thank you, Roger. Good everyone. morning,

debt-free products XXXX and last base slight high rightsized maintained X,XXX vessels, most X,XXX a sheet. services, on X.X vessels, in roughly our year-over-year, subscriber airtime to by airtime dip more We our efforts and our last quarter. successful a KVH all-time staff Let we years. from mobile exclusively sales our me our we hit subscriber than on at X% grew grew to start businesses, nonstrategic over by the connectivity focus right base In thanks is and track, saying maintained recent quarter, divested the balance our the

with than year-over-year it content pleased competing due are lower data growth, we to a bit is services. quarters Although streaming modest increased demand and for past

focused the we with won TV to We VSAT then we space positioning X with a due our Ever entered receive-only have now on terminals rapidly KVH and since differentiators. satellite antennas marketplace. competitors maritime changing against are and within key our traditional network,

proprietary terminals; our network. our First, second, VSAT geosynchronous

global Third, our CommBox and service network integrated fourth, outstanding support. management tools; our and

We agnostic that from and terminals, require with as This multi-network with integrated has multiple communication and However, manufacturers. permits ongoing as hardware approach includes as solutions options. are A continue cellular communication our connectivity well global solutions network provider. other cellular, positioned maintain evolution emerging a leadership competitive to and the and integrate speeds, VSAT believe market and LEO, we lower new integration services. role an us terminals strategic that highly VSAT approach other evolution includes rates, faster mobile we WiFi, cost our changed terminal data our our to Starlink of

bandwidth versified have to that cybersecurity strategic major X tools to and made management In value-added our Our seamless critical And capabilities. course, future with we service months, delivers services. approach support network our recent moves management growth. and of along global

position our to agreement strengthened we into a multichannel we be First, provider an as entered multi-orbit, integrated reseller. solutions a when Starlink

hybrid both and and TracPhone our as as a with OpenNet Starlink standalone offering companion now a terminals. TracNet, are We solution

with technical solution. and to terminals the services commercial We a through deploy and the XX/X providing boatbuilders customers, KVH part working boaters, are leisure of Starlink service support activating group, KVH's airtime Starlink as live comprehensive

and leisure LTE, bandwidth crew, the Starlink I sophisticated CommBox operations, management aboard giving as distribution KVH solutions. this integrate to owners, technology service for and channels management ONE maritime network technology suite shipboard The network includes portfolio, management their communication tools. KVH's This expands integral of into multichannel us hybrid deliver Fortinet. guests and vessels agreement network XG, entered to We such firewall and multi-orbit, from us our Kognitive commercial with seamlessly to Networks, agreement managed we bandwidth of our services management network. debt VSAT, and and can and Cognitive access dynamic enables bandwidth also will be over communication which Second, exclusive new WiFi. already global an suite believe

our moves strategic for strategic We are their and excited direction. long-term by these X implication

Our Starlink how mobile we market. examples the are our will within to with and of arrangements connectivity position Kognitive continue Networks expand

while to our leverage will distribution we continued -- AgilePlans will terminals, ahead, on flow. reduce and strong to channel our looking channel while focus pool leverage me, going cash our forward Looking large our on our distribution continue on AgilePlans we of which support strong continue drawing large drawing ahead, CapEx us help excuse pool of free will

competitive plan to our adapt where I'll improve for we profitability turn environment also context by continue results. efforts operations to adjusting our now it changing regarding over We to to to the can. Roger our some

Roger Kuebel

Brent. Thanks,

note Therefore, my would in change to is clearly earnings in not XX.X%, restate from of continuing prior operations which our August otherwise, year respect will data. release, XX-Q. our in data last not or was margin, out XX.X% or that earnings published on which release the my I'll specifically focus described is on information the exclude our last we calls, from that a airtime I elaborates comments sold in gross down in stated called clarifies the that last either inertial with year. that of business like relate I to First, navigation results comments unless Also, QX the to year.

about expectation not from changed. high a of near-term subscribers X% Total were still of above factors is XXs, our However, last up of which due year. QX number has to

of year, And negative expenses, subs driver charge, unit MD&A the slowed has $XXX,XXX. profit QX. last of growth the about were excluding of were volumes. from of end describes the basically was Operating the Product impairment million. However, XX-Q margin and change gross the from primary low the QX was our $XX.X QX by while ending section flat negative

seasonally and that also have tick we up quarter some will in as key expect several we the higher normal positions, QX. We OpEx fourth in filled

As continue is normal $XX $XXX,XXX the be of million we to The charge the write-off Media and Group XX-Q. remaining within in million. approximately goodwill This of our run such, represents the impairment a company's detail quarterly between well $X approximately all footnotes rate million $XX.X charge of to as as in assets. described expect

assets. noncash driven below August However, when the event equity price our clarify, fell a decline it value net market value of just our to by in was book of the in stock and was the our

was was positive reconciliation and million, release earnings expenditures were a $X.X that. adjusted for Capital and million. Our over quarter has usual our million, by the $X EBITDA adjusted quarter $X.X positive CapEx EBITDA for less so of the the

Our of balance was quarter. ending $XX down million $X.X cash the from of million beginning the

and $XX was decrease income. those, guidance have full are adjusted our increases of to that our than million. our million the the months year, so by inventory prepaids, -- was range that cash decrease due of million our increasing With balance respect would to interest to amount in million, was we that However, without to for $XX $XX been new up more end given EBITDA $XX giving of a the low $XX X the from first million,

to For $XXX line will I to of prepared operator over our are million. remarks, now This to we the and concludes to call. narrowing Q&A this the total million revenue, call open also turn portion morning's for range the $XXX the the Operator?

Operator

Space. Instructions] of Quilty Our first question Quilty line from the [Operator comes of Chris

Chris Quilty

Starlink. follow I little a up on wanted bit to

associated now plan to your is us, And number originally, mean like questions. when only you're with sell think I hardware One, with suite. was the at VSAT bundle Two just only I you the that two, Starlink you of what that sort selling it's that. really KVH individually. margin, It basically can so drove no that sold sounds that remind change? services

are to If actually wrap Starlink it? you you're in able services with some alone, selling

Brent Bruun

morning, activations the on your do components the marine yes, To a having aren't particular solution requirement sell we the tight. question, part as service it other leisure Leisure a the along to leisure other that longer been our that with options. regards majority bundled your we add Good have standalone rather there the marine. few standalone We answer length VSAT. of We question, users as installation, In such do included to have provide a of marine. necessarily aren't been Chris. a are for margins first type And onboard. in cable second and services as other focused was and felt value-added of

Chris Quilty

Or do Do Got you. not The Starlink question those having Starlink not is Or doing since a about subs count it And they something service guess really there as seasonal? revenue? flat, I treat on subs. the total? you a the your subs count for just how impact? you're is they year-over-year

Roger Kuebel

not the arrangement they're factor a third into point, our overall with the September. terminals at as as those end of are Starlink entered quarter Starlink sub not this to In We regard results, in included subs. far just At count.

those As very break well we may out separately. we go forward,

crossed really that haven't We bridge yet.

Chris Quilty

sort of know just background Clearly, can and press but us in Does suites. the what it of the up an to but Starlink lot this hugely competitors And I you like had the something relative nothing, competitors with to par these bit you. on market. little maybe decision Kognitive, you relationship, that you to where up your that get Got I how it's both you other you the that bringing exclusive? players read, is have which Or larger incremental? can offers is to do of positions -- exclusive, give release, are? almost a you feel a gave do

Brent Bruun

definitely that to to activities a both I communication multichannel need tremendous of actually. number multiple our functionality to types important with network. think regards competitors' you bonding, do that bit can a do where advantage take channels which of is bringing of it also multi-orbit channel on we us different channels approach incremental They in have VSATs. onboard with we're couldn't And our a so approach going the such the a is incredibly core join It enables seamless we can of vessel. as to onboard CommBox it's

what We with software it But manufacturer, a than we from previously enables own of more made into our have another provided embedded us are our embedded provide CommBox our services. design. technology bandwidth VSATs, onboard we our CommBox actually terminal that bringing have to advanced tools when have suite management on VSAT

Chris Quilty

together And how did you. there, the them? you Got relationship come with

Brent Bruun

them natural industry a progression. the It's there satellite It maritime. just I'm been over selling nod a standalone Bob I've Gogo. to time, market network about in talking customers was wants working regard airtime add terminals. in our customers, to Balog that something. to migrated some with been to competing -- at just into in we were the for quite prime some They've with familiar

Robert Balog

Kognitive into about getting and decent layered had it's really Yes. they're management think an you course provides CommBox channel far next for of different we've channel had keeps important you're a WAN the now sort Series upgrade H And and switch shared network experience of sort the crew of easy it larger to Networks' And your up way application. the also they're turn experience tiers and you getting value-added on and let kind always the that for that connected, usage you really give that, the other, of What filtering we're do built-in that on one the want stays bonding, Chris, one monitoring, got a state goes. stuff Really not a services on to throw the and can functionality. much you multiple, really of years, in stuff in you're super example sure step it way like They specific multiple going things a all just the the to really you're to There's allow several data customers data to ships looking Starlink device layer doing offering. is allows blockage down exactly a the the was We that do too us member we've is, tiered When it as things, as channels. you've strong when what devices where for levels on boat, between And the of keeps what us to to does they're switch off on user the level. in provide to online. offering. say automatically or It where it is of seamless. to terminals using make is application up performance. balancing. switching that performance, generation all of providing

Chris Quilty

in for on strategic several to engaging are profitability? run do on business you Or the negative around mean, gear what sort a good of Do now. Switching manufacturing review hardware? margins back forward see quarters the you the hardware, path should detail. we've Great. side That's some I getting of with to you

Brent Bruun

It's next step I process issue. think would just it's of complicated something evaluating of we've say sort a the been right we're evaluating. in I is. somewhat what the

Chris Quilty

Fair guidance. forward enough. the And I missed on

think $XX to EBITDA? I Did million gave you revenue give million. $XX of you

Roger Kuebel

EBITDA, Yes. to $XX we're million million $XX it $XX million. -- moving was million $XX it to adjusted million, $XX to

Chris Quilty

using Great. final Do a the servicing now regard you as KVH putting, And a hardware? competitors' cases, be that large CapEx component for guess I to that here I at me, forgive was to you're, question ONE with forget historically expect you're you. AgilePlans, that where big

Roger Kuebel

be off We'll amount on CapEx of the AgilePlans. the backing in

hardware is just as using indicated. reasons the One of you competitors'

here years. in XX for we've almost the Secondly, place program had

churn, Of do just which course, a of normal bit we in we've the had course.

assets refurbish and we a redeploy. We of have pool that

the the activating many that Agile The to time. CapEx CapEx all far is a concerned, ago, it years go-forward basis. customers X unit have years X for goes we're answer every The or could the on going door, is we're reducing be as -- CapEx been As spent ago. that new unit out

Chris Quilty

I seen to through all? spike mean, without change have in Has started And impact at COVID churn? you Starlink that any made big the in a you churn. the it

Roger Kuebel

leisure had We've in uptick in an marine. particular churn with

selling original that's where seen Going a back the to most. your Starlink standalone we've on question basis, about

Chris Quilty

come good Starlink in XXX% on Are orbit, rolling And X mean you've is good has you. I know you more still day. position? Got KU-based? than still every capacity of in route a for do what you still software-defined to but And good I capacity online capacity? obviously Intelsat -- satellites satellite Are you're on and got you terms that

Brent Bruun

to regard a We're capacity. in fine position satellite in the

Chris Quilty

I final before. I know Great. And question, said that

Brent Bruun

question. final the have already You

Chris Quilty

know. know, I I

A right? competitor you you competitor? on, terminals, just switch when those to subs, the If show up swath With bring those as regular a

Brent Bruun

Yes.

Chris Quilty

was you have think was that And to I any know and had tooling Are pickups? program up. just -- it launched quarter, I Okay. recently, starting just you see last

Brent Bruun

amount. small A

Chris Quilty

quarter. color, appreciate good. Okay, the very and guys, Well, all good

Operator

& Our Needham comes Company. the from of Koontz line next Ryan question of

Ryan Koontz

but Starlink direct? get Thanks. support customers you just Most on -- of my have maybe questions like a on your Starlink the here, side up been there are role following sounds it taking answered with that model, the can't proactive

Brent Bruun

component as Yes. We're providing we XX/X is Starlink that provide. we live technical support of always support that have. for another just --

Ryan Koontz

can it. the color markets Got is in more And relationship, terms company the share Kognitive position on Any any they can helpful. in this on their what other about the provide company serve? market, you of Thanks. you

Brent Bruun

in But we beyond of I expand not maritime company. the know to they other maritime the into I'm really would inroads and I most into behalf think like on to enterprise solutions. industry. a fixed speak position made their

Ryan Koontz

terms of terms And line the any on in going winter it. your here? there of the forward, consider right. revenue seasonality should the All seasonality we into changes in Got looking traditional

Brent Bruun

to that as -- the past, again well the I we've we in as fourth mean expect the experienced quarter, this quarter experience seasonality don't quarter. first we see

Operator

no the you Thank may in program, I'm session. you. conference. This This like conclude today's to further questions. for your thank does you question-and-answer participation does I'd disconnect. now conclude and the seeing

Brent Bruun

Thanks, everyone.

Roger Kuebel

much. very you Thank

KVH Industries (KVHI) 9 Nov 232023 Q3 Earnings call transcript