KVHI - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to the Q2 2024 KVH Industries, Inc. Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question transaction. Instructions]. [Operator the recorded. advised, is conference be being Please I to CFO, our like to Anthony call over turn the first would now Pike. speaker for today,

Anthony Pike

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

Bruun. Joining me the is call company's Chief on the Executive Officer, Brent

numbers, Before few standard into the a get I statements.

copy to Firstly, would of recording would if a the you both listen like or if you call, on like release today's the are to available listening to free to and conference certain our our a are ir@kvh.com. submit feel cause or statements no And earnings materially of if be via you Further, actual statements. will results please questions web, contain will of to update to call undertake those revise statements. this We that any these uncertainties these expressed differ obligation in may numerous forward-looking assumptions from that subject to website.

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

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

second to the over walk you Brent. quarter, of through I'll to the turn our Now, highlights call

Brent Bruun

everyone. and Anthony, you, Thank morning, good

results. high-level a with Let me begin our of overview

was XXXX. the revenue $XX.X down million, Second from of $X.X second quarter quarter million airtime

subscriber quarter. a the response VSAT corresponding last in revenue aggressive slightly year a emergence the ago. continues shift undergo we we line in In base. revenue. the taken the realities, from to to by in This VSAT market was decrease These results due roughly The with a significant the to product maritime gross due margins changes new quarter expectations this continuing provided year future. sales declined the decline service reposition networks. company our As million, for anticipated, are the $XX.X Total NGSO was steps have to airtime XX% for to driven industry airtime and of

We are encouraging seeing already results.

Many the in gateway. quarter. awaiting our growth. activation. record Historically, shipments substantially service CommBox first and for have We now We previous increase number the consecutive reorganization quarter Edge reversing with airtime experienced second quarter, now believe annualized in antennas installed quarter product we communication meet count the second of now right our expected slight sized our in result in and second savings completed goals is resources achieved to have our move decline the shipments are strong a we indicator the shipped we the subscription that leading of future subscribers operating efforts as of The been we expense $X a a We subscriber million. appropriately vessel increased reorganization for to approximately quarter, forward. being are and of shipments and in

flexibility new data more data of period in data Additionally, Under to a made custom at selling Starlink. This be plans. a over distribution we and offers signed bulk a arrangement large X us prepayment a developing agreement, agreement of for block this rates. favorable year used we with than increased

to operators fact, and a options morning, boaters for custom As we select offer fleet a most number data this budget. of suitable for of plan vessel the which plans, each matter Starlink and new introduced

Starlink service as global vessel offering. vessel-based Starlink for now outstanding is over our voice worldwide. many multi-multichannel leisure with subscribers local and part offers connections IP telephone an value-added that voice our communications Additionally, exciting expanded lines equipped X commercial numbers. and provide our portfolio as we include have can services We of to using XX any virtual

be We data connectivity, gateway live other our VSAT, Communications able custom airtime around service, CommBox and are and world. Edge the pleased support global XX/X to hybrid plans services, offer to for LEO and always-on such valuable as XXX the supporting technical customers

Our quality the growing support. our and is service breadth in The connectivity the solutions integrated of customers result appreciate our history. and fastest

Starlink the and more new the year. activated of terminals have We than start customers X,XXX since for existing new

enhancements. are with new We and forward also product moving other service

crew anticipated new service enhanced ways we the news the with crew options. same later and Link we to to content the bring of to quarter, Edge cybersecurity onboard entertainment web addition service. using Internet coming expanding this rollout plan capabilities In KVH one the months will and be At time, the of CommBox offer in to

Our business changing have Stand-alone subscriptions is faster we anticipated, declined and steps rapidly. adjust our model. than have VSAT have to nimble but industry service taken been

indicates are We recognize leisure boaters for of our seeing the approach. VSAT, managers hybrid fleet deployments, continued those which that churn commercial solutions hybrid in LEO, and growth and value reduced

are We third continues. in and this hopeful that growth trend quarter subscriber anticipating the are

achieving that Anthony and I'd the now on look CFO, path, like at and we'll right airtime our are our a goals it financial for on emerge numbers. for we built to provider support. hand on global way and to to to superior and view solutions the XXXX, back on our operational We world-class our strategic, Pike are service and orientation believe

Anthony Pike

Brent. Thanks,

on note clearly either will the As similar a that the I reminder, to data. in information will data call I or focus is would in not our are comments for clarifies I release restate our XX-Q. like my earnings described that published QX, that elaborates to on

is our reported gross respect release, quarter the margin, XX.X%, not results, our XX.X%. airtime earnings of was prior which financial compared down gross to quarter So, in margin to second with

time total larger prior airtime to our become as calls, of As noted over during revenue. LEO we expect services margins a compress percentage airtime slightly do

a just are Total vessels, $X.X portion vessels our in severance negative QX at included the million with X,XXX, service quarter. from of gross wind VSAT primarily approximately related decline manufacturing was end were employee costs to this is margin of our below the QX where However, significant gross X% in subscribing million product churn profit fixed. associated prior reorganization down. by traditional $X.X airtime of QX the from which driven up Reported and of charges, this

February related transformation XX. to million were and was of down product QX a $X.X charges, employee negative year. of the severance from gross compared these The million $X.X quarter. operating X% prior in excluding $X manufacturing QX rig announced million Excluding as the expenses, last million profit wind-down of expenses includes charges on million around charges, positive to QX initiatives a operating $X.X $XX.X or

X.X the will of million $X.X around reduce and generate annualized this expenses. of performed savings we product in employee will mentioned restructure benefit million have around profit, costs, will previously, gross As $X.X operating million GBP

and for million. quarter expenditures adjusted that. million, Our with were the quarter $X negative $X.X less was for X. million EBITDA of adjusted adjusted release a of a CapEx $X.X and million, CapEx EBITDA million, $X.X Capital our the quarter to This was prior the earnings EBITDA reconciliation of usual so in $X.X has compares less

on our million was XX. and a Our of to ending related to announced pool down of to agreement, data was the this we from approximately beginning the June payment which cash due $XX.X quarter, styling $XX balance million

the are adjusted approximately that be XXXX we in and to in that this over for we revenue revenue range expect million now to of for I and Operator? XXX in turn the $X what from the will XXXX This our XXX for be adjusted EBITDA call, call will million. call. range EBITDA XXXX approximately in morning's the disclosed our the will of expectations open million, the our our Our line concludes operator portion million of $XX unchanged to prepared QX Q&A remarks, in and to

Operator

question-and-answer [Operator we Instructions]. At conduct will this Thank session. a you. time,

question first comes Quilty from of Space. of Quilty Chris Our the line

Christopher Quilty

But $X just I I annualized cost with mentioned to the Brent, Anthony savings. in you of the script, affirmed start $X a somewhere million that in wanted cost million heard savings. clarification.

Brent Bruun

Yes, for expense. Chris. That was operating

So, million discussed. to $X Anthony $X.X that correlates I expense, was referring which million of the operating approximately

Christopher Quilty

you. Got

you in say, a that existing the swapping product customer of or what Second seeing question, in I would with seeing customers And I think for you're of adding TracVision generally they sort bundling. for, past, terms are just new vessels. Are on? mentioned commercial? Or more Starlink you're on in those bringing and generally class other you're with Are leisure them -- any Does to new it of tend seeing? where you're side, subscribers the Starlink you are to one Starlink. they're trends on simply be

Brent Bruun

bit a of quite seeing we're Well, everything, frankly.

So few you as asked question. one embedded as into far a long questions --

to yachts terminal their as lower previously would -- Starlink the leisure midrange, customers swapped as used out they're adds, far and of As be as maritime, the a tend those have existing In adding Starlink It larger market. to the the and commercial some existing XX-centimeter. end VSAT. our far have

also sold into far both we've product Starlink other our well Starlinks, a sold CommBox have VSAT along number services. providing of as the few arena, value-added quite variety new of stand-alone As with as a merchant as a we and sales, marine but

Christopher Quilty

little this stand-alone Got Starlink you. lost Right -- thought. now, than I as lower the tends on a of on far seeing we've shifts? from my bit ARPU in -- Sorry, train as The what what mix early. And Starlink terms a trends a VSAT are ARPU Yes. be of it's you to bit a as experienced stand-alone a

we've they much and could actually bit the As details very combination than and far Anthony, what you line a Starlink historically. seen provide. But as can VSAT, more more of there's that the -- in it's

Anthony Pike

guess, flat, overall portion still is Yes. a overall fairly mean, still I that's small business. a I of but ARPU relatively our is Starlink,

Christopher Quilty

market? impact what at the that dislocation And having negative? are Got Is quite sales, positive I either on world, a you. seeing there's just of end any terms in or Maritime. mean, of you bit especially in

Brent Bruun

mean end you do by what sorry, market? I'm

Christopher Quilty

and times okay, good shipping overall industry. at At had the -- probably that. about speaking Well, logistics we've

Brent Bruun

Yes.

communications an previously signing haven't moving with vessels a market seen impact the or other Starlink. that but impact have seen for communications were much forward an up We of we are VSAT dynamics, from not

would a connectivity. to of lot those lower fishing those seeing the have opening up that fishing communication is opening up. market There's lake would -- a of variety always there commercial. at Starlink well. size midsize the leisure market, commercial And lake of end and won't different most both as a and out We're include larger VSAT. So ones larger And of vessels in

in anticipate particular around the marine. world, offerings introduce with also market We service we the up as further XG opening

Christopher Quilty

OneWeb And yet? up that running and is service,

Brent Bruun

No. We're have launched. an now, date. we later has it not not testing We're this but quarter, anticipating do but exact right been it

Christopher Quilty

to customers find service far, Starlink, that They reasons? latitude. need so it or comparable And they purchasing are a different high for

Brent Bruun

yet. We launched it haven't

we're it seems a couple on well. testing just vessels work to So, of and

Christopher Quilty

look looks had expected, at I sort Is terms than the type better out should it burns the down as in recent to the better of like product of teens and manufacturing, And the margins trends. of it wind assume margins certainly through? negative came fair gross we than

Anthony Pike

we the yes, So, in -- the talk us significantly factory. restructures helping

third We and expect cost million labor the additional X.X of savings maybe the side. on quarter sales in

will things. we out, that absorbing our But we So, also, obviously, successfully. help build continue as are costs much more to

margins and positive So, will to that yes, on trend we hope the product anticipate do the continue.

Christopher Quilty

you're bandwidth on the And your Okay. that down? side, comfortable as GEO with draws managing service

Brent Bruun

Yes.

some for we installed network have We appropriately base as move our bandwidth to flexibility now, the right have sized forward. and reduce we

Christopher Quilty

And you're in seeing Starlink, the out there question. final competitively Anything market? beyond

Brent Bruun

think beyond come say you're be the would NGSO other I or Solutions, you Starlink, to next one talking big Kuiper. LEO When about

delayed. seems get to have big take would place, Amazon I that just behind And about here, I and would XXXX be then be you We Telesat the timeframe. the bit Lightpeed would OneWeb, there, Kuiper. have in think and that's that a believe next move is from But to

Operator

does I further conclude showing your Thank no time. question. today's am This at questions grant. you for this

now You disconnect. may

Brent Bruun

very you Have everyone. Thank good much. Okay. a day,

KVH Industries (KVHI) 1 Aug 242024 Q2 Earnings call transcript