Kvh Industries, Inc. · NASDAQ:KVHI
Kvh Industries — Investor Presentation (2009)
25 slides from Kvh Industries's investor presentation, 2009
Slide 1: Presentation to Investors
KVH Industries, Inc. PresentationtoInvestors Significant growth opportunities in mobile broadband, guidance & stabilization
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation may include forward-looking statements. Forward- looking statements include our current expectations and predictions of future results or events. These statements are inherently uncertain, and actual results and events could differ materially from our exp
Slide 3: KVH Overview
KVH Overview • Manufacturing solutions that provide global high-speed Internet, television, and voice services via satellite – Serving mobile users at sea, on land, and in the air • Manufacturing high-performance sensors and integrated inertial systems – Defense and commercial guidance & stabilizati
Slide 4: Mobile Satellite TV
Mobile Satellite TV • Leading market share in Marine and Land satellite TV – Leisure, commercial, and government maritime – Recreational vehicles and automobiles • Choice of premier manufacturers – Marine market: SeaRay, Viking, Ferretti, etc. – RV market: Marathon, etc. • Retail and OEM channels –
Slide 5: Entering the Aviation Market
Entering the Aviation Market • $20M, multi-year contract from LiveTV • Next-generation in-flight DIRECTV antenna – Building on KVH’s existing low-profile antenna technology • LiveTV is the world-leading provider of live in-flight entertainment – First to bring live satellite TV to airline passengers
Slide 6: Demand for Broadband at Sea
Demand for Broadband at Sea • Commercial & government vessels need cost effective connectivity – Vessel and fleet management – Cost savings and increased efficiency – Crew communications for morale and retention – Mandatory chart, weather, and software updates • Recreational vessels demand faster co
Slide 7: TracPhone V7 & mini-VSAT
TracPhone V7 & mini-VSAT • KVH integrated broadband solution – An end-to-end maritime satcom system and service for leisure, commercial, and government vessels • Technology breakthrough – Smaller, more affordable hardware that is easier to install • Broadband service over Ku-band satellites • Faster
Slide 8: Smaller Size Opens up New Market
Smaller Size Opens up New Market • Utilizing spread spectrum technology – Military technology enables highest data rates and spectrum efficiency – Able to work with smaller antennas • Easier to install and service – 85% smaller by volume – 75% lighter than standard 1-meter diameter VSAT antennas • P
Slide 9: Improving the User Experience
Improving the User Experience • Customer surveys show 80% of maritime broadband subscribers not satisfied with legacy solutions – Quality of service, level of support, or pricing • TracPhone V7 and mini-VSAT Broadband are designed for maritime use • KVH is sole supplier for hardware and airtime • KV
Slide 10: Mobile Broadband Growth Strategy
Mobile Broadband Growth Strategy • Our approach is to combine the best features of Inmarsat and legacy VSAT to deliver: – Small antenna size – High data rates – Low cost, flat-rate pricing • Focus on Ku-band mini-VSAT Broadband – Large untapped market for VSAT in leisure maritime – Disruptive opport
Slide 11: An End-to-End Solution
An End-to-End Solution © KVH Industries, Inc. www.kvh.com
Slide 12: mini-VSAT Broadband Service
mini-VSAT Broadband Service • Fastest data rates available – up to 2 Mbps download – up to 512 Kbps upload • Fixed-rate monthly pricing and flexible per-megabyte airtime rate plans • Average monthly revenues averaging $1,600 to $2,000 per subscriber • Supports on-board GSM voice, data and text messa
Slide 13: Global Network
Global Network • Global rollout process is underway, expanding mini-VSAT Broadband’s geographic coverage – Seamless roaming from region to region • Recent expansion activities – Asian waters and Indian Ocean – Australia and New Zealand • 10-year agreement with ViaSat – Purchase, installation, and op
Slide 14: Current & Planned Coverage
Current & Planned Coverage This map depicts KVH’s expectations for mini-VSAT Broadband’s future coverage; actual coverage and availability may vary. For current, available coverage, visit www.minivsat.com. © KVH Industries, Inc. www.kvh.com
Slide 15: Large Addressable Markets
Large Addressable Markets • TracPhone V7 suitable for broad market use • Commercial and government vessels – 42,000 vessels in world merchant fleet – Less than 10% of these vessels have VSAT today – 40,000 other commercial vessels including work boats, fishing, and ferries – Getting traction in comm
Slide 16: Evolving Revenue Model
Evolving Revenue Model • The mini-VSAT airtime business has the potential to dramatically re-shape KVH • Maritime mobile satellite services >$1B market in 2008 – Expected to double by 2012* • KVH airtime service revenues are expected to eventually far exceed TracPhone V7 hardware sales – Airtime rev
Slide 17: Defense Satellite Technology
Defense Satellite Technology • KVH’s smaller, higher data rate antenna systems also ideal for: – Military – Homeland defense – Emergency services at state and federal level • Military SATCOM on the move (SOTM) is a growing requirement • Higher precision pointing requirements likely to require KVH fi
Slide 18: Guidance & Stabilization
Guidance & Stabilization • Defense business provides balance • TACNAV tactical navigation – A 20-year record of success in the field, including Iraq and Afghanistan – Selling to prime contractors • Fiber optic gyro and digital compass technology – Stabilization – Guidance – Precision navigation © KV
Slide 19: Gyros Driving Our Defense Growth
Gyros Driving Our Defense Growth • KVH fiber optic gyros are a growing revenue stream – Five year CAGR 20% through December 2008 • Up 215% YTD 2009 • Has passed a significant growth inflection point • Current quarterly revenue run rate = $7M to $8M – More than 25,000 FOGs manufactured to date – Typi
Slide 20: Stabilized Weapons Opportunity
Stabilized Weapons Opportunity • Growing market demand for stabilized remote weapon stations to increase crew safety and improve accuracy – 2007 CROWS II program for 6,500 weapon stations • RWS a key driver of growth – >$17M in RWS orders over last several quarters – 3 KVH FOGs in each remote weapon
Slide 21: Operational & Financial Overview
KVH Industries, Inc. Operational&FinancialOverview
Slide 22: Q2 2009 Results
Q2 2009 Results • Q2 2009 $80.9M $82.4M – Revenue $21.9M; down 2% YOY $79.0M • Mobile communications revenue down 31% YOY $71.3M • Defense revenue up 130% YOY – Net profit $0.2M or $0.01 per share • Maintaining tight operating expense controls • Assets – strong balance sheet $40.1M – Cash balance: $
Slide 23: Operating Model
Operating Model FY 2008 6 mos YTD 2009 Target Run Rate* % of Revenue % of Revenue % of Revenue Revenue 100 100 100 Cost of Goods 59 67 62 Gross Margin 41 33 38 R&D 9 10 8 SG&A 28 30 20 Operating Margin 4 (7) 10 * ~2 year time horizon & evolving as airtime services business develops © KVH Industries,
Slide 24: KVH Summary
KVH Summary • Diversified business profile to weather economic challenges – Commercial marine satcom and guidance/stabilization revenues growing • Seeing benefits from new initiatives – TracPhone V7 and airtime driving marine growth – FOG production for remote weapon stations and continuous navigati
Slide 25: Leader in Mobile Broadband, Guidance & Stabilization
KVH Industries, Inc. Leader in Mobile Broadband, Guidance & Stabilization © KVH Industries, Inc. www.kvh.com