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KVH Industries

April 19, 2007: KVH Industries, Inc., (Nasdaq: KVHI) reported quarterly revenue $20.4 million, slightly above the $20.3 million Q1/06 level. Despite the growth in revenue, the company's income was just at break even point reflecting the transition the company is making into broader, system-wide product lines. Defense-related sales, including those for KVH’s TACNAV military navigation systems and fiber optic gyro (FOG) solutions, were approximately $4.3 million, down 27% on a year-over-year basis.

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"We continued to build our long-term military business with a major increase in the value of our multi-year contracts,” said Martin Kits van Heyningen, KVH’s president and chief executive officer. “Sales of our fiber optic gyro products remained very strong, up 53% compared to the same period last year, though overall, our defense-related sales were down significantly due to an anticipated decline in TACNAV navigation system sales on a year-over-year basis.

In the last 90 days, however, we have added more than $20 million in new TACNAV contracts along with approximately $3 million in FOG contracts that will contribute to our revenue stream in 2007 and later years,” he concluded. Patrick Spratt, KVH’s chief financial officer indicated that the company's rebuilding its military navigation backlog and introduction of new products contributed to achieving only a modest level of profit. "Gross margin was impacted by new product start-up expenses, some product mix changes within the quarter, and the conversion to more advanced component technology - these factors are mostly specific to the first quarter" Said Spratt, indicating that a healthy improvement in gross margin is expected for the second quarter this year. "We believe that we have strengthened our position in our markets and anticipate improvement in net profit in the quarters ahead."

 


 

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