Kvh Industries, Inc. · NASDAQ:KVHI
Kvh Industries — Investor Presentation (November 2012)
40 slides from Kvh Industries's investor presentation, November 2012
Slide 1: KVH Industries Investor Presentation
KVH Industries Investor Presentation Mobile Broadband • Guidance & Stabilization
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. Forward- looking statements include statements regarding our future financial goals and our anticipated revenue growth, market share, profitability and product orders. The actual re
Slide 3: KVH Industries Overview
KVH Industries Overview • KVH applies advanced technology with end-to-end design for mobile applications – Innovative, technology-focused company – Addressing large markets – Solid revenue growth with strong balance sheet • Mobile Broadband Satellite Systems – A leading manufacturer of solutions for
Slide 4: Mobile Broadband Solutions
Mobile Broadband Solutions y HD [1 1) cs an) TRAGPHONF TRACVISION 5) Mo} TRACVIS' HI a TRACVISION TRAGPHONE KV © KVH Industries, Inc.
Slide 5: Maritime Mobile Broadband
Maritime Mobile Broadband • World’s largest mobile satellite TV provider Blue: 287 C – Land, sea, and air – 150,000+ systems fielded ® • World’s No. 1 maritime VSAT provider* mini- – Achieved leading position in less than 5 years B R O A D B A N D SM – KVH VSAT airtime service revenue 4 year CAGR >1
Slide 6: Large Addressable Market: Maritime Broadband
Large Addressable Market: Maritime Broadband 250,000+ vessels 1.4 million seafarers
Slide 7: Mobile Broadband Adoption Driving Demand Globally
Mobile Broadband Adoption Driving Demand Globally • Broadband cellular mobile data use is exploding and straining networks – Smartphones and tablets ubiquitous – 50% of mobile Internet traffic is now video* – Mobile data traffic now 8x entire global Internet traffic in 2000!* • Trends have significa
Slide 8: Installed Base Expected to Double in Five Years
Installed Base Expected to Double in Five Years Maritime Broadband Unit Sales Projection 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Ku-band Units L-band Units C-band Units HTS Units Source: NSR Mobile Satellite Services, 2012
Slide 9: Ku-band and C-band VSAT Expected to Dominate Airtime Revenues
Ku-band and C-band VSAT Expected to Dominate Airtime Revenues Maritime Broadband Service Revenue Projections ($M) $2,500 $2,000 $1,500 $1,000 $500 $- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Ku-band Service L-band Service C-band Service HTS Service Source: NSR Mobile Satellite Services
Slide 10: Satellite Communications Cost is Only Tiny Part of Fleet Operating Expenses
Satellite Communications Cost is Only Tiny Part of Fleet Operating Expenses But it has significant ROI in other expense areas
Slide 11: Commercial Marine Companies Need to Upgrade to True Broadband
Commercial Marine Companies Need to Upgrade to True Broadband • Improve operational efficiency – Real-time, weather-based route planning for improved fuel efficiency • Enhance crew morale and promote crew retention – Access to Internet and e-mail for staying in touch with family and friends • Many n
Slide 12: KVH's End-to-end Business Model
KVH’s End-to-end Business Model • Fully integrated hardware and service – Design and manufacture the onboard hardware – Own the terrestrial hubs at the teleports – Lease the satellite bandwidth • Provide high-speed connectivity – Monthly airtime service – Voice and data – 24/7/365 support Turnkey so
Slide 13: Robust Network Infrastructure
Robust Network Infrastructure • 17 hubs located around the world – Satellite and IP protocol traffic shapers – Subscriber management tools in each hub • Enterprise-grade network Blue: 287 C – 200+ terabytes and 15 million voice minutes annually ® mini- B R O A D B A N D SM
Slide 14: World's First Seamless Global C/Ku-band VSAT Network
World’s First Seamless Global C/Ku-band VSAT Network Blue: 287 C ® mini- B R O A D B A N D SM
Slide 15: KVH's Flexible Capacity Strategy
KVH’s Flexible Capacity Strategy • Leverage readily available commercial satellites – Hundreds of satellites and thousands of transponders – KVH does not need to buy or launch satellites – Low cap-ex business model • Over-the-air map updates to add satellite capacity – Backwards compatible with fiel
Slide 16: Key Enabling Technology for mini-VSAT Broadband
Key Enabling Technology for mini-VSAT Broadband
Slide 17: Compact, Rugged Hardware Options
Compact, Rugged Hardware Options
Slide 18: Advanced RF and Tracking Antenna Technology
Advanced RF and Tracking Antenna Technology Patents Pending
Slide 19: Integrated Approach Replaces Entire Rack Full of Equipment
Integrated Approach Replaces Entire Rack Full of Equipment New CommBox-ACU – Built-in server – Network manager – VoIP with crew calling – Ethernet switch – USB ports – Wi-Fi Typical Solution KVH’s Solution
Slide 20: End-to-end Solution Includes Onboard Network
End-to-end Solution Includes Onboard Network • CommBox is now built into standard hardware • Hosted platform for value-added services – Crew calling – Internet café – Sold directly to crew and passengers • Multicast services – IPTV, digital newspapers, radio – Weather and charting updates
Slide 21: Software as a Service Solution for IT Departments
Software as a Service Solution for IT Departments Benefit KVH Sells IT Solutions, not just Connectivity Adds to ARPU
Slide 22: World's Most Demanding Customers Choose KVH
World’s Most Demanding Customers Choose KVH All third-party trademarks and logos are the property of their respective owners.
Slide 23: Why Top Global Companies Select KVH
Why Top Global Companies Select KVH • Global network with unrivaled coverage – Advanced spread spectrum technology delivers fast, reliable, low-latency service – Global C/Ku-band provides overlapping coverage and redundancy • Reliable onboard equipment for any size vessel – Innovative hardware that
Slide 24: Guidance & Stabilization
Guidance & Stabilization
Slide 25: High Performance Inertial Markets
High Performance Inertial Markets
Slide 26: Technology and Capabilities
Technology and Capabilities • Vertically integrated fiber optic gyro manufacturer – Fiber draw tower – Optical components – Digital control and systems • Patented technology as a result of significant investment in R&D – Photonic technology enables higher performance sensors • One of the largest fib
Slide 27: Expanded Diverse Product Line
Expanded Diverse Product Line • Fiber Optic Gyros (FOGs) – Compact, rugged, solid-state with ultra-high bandwidth • Inertial Measurement Units (IMUs) – Combines 3 axes of FOGs & 3 accelerometers • Inertial Navigation Systems (INS) – Combines an IMU with a GPS receiver • Tactical Navigation Systems –
Slide 28: Market Size and Growth (Units)
Market Size and Growth (Units) • $1.7B market today • Focusing on fast growing commercial sector High Performance IMU Market (Units) 400 350 300 Thousands of Units 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 Aerospace Commercial Defense Source: Yole Developpement, Gyroscopes and IMU
Slide 29: Commercial Market Drivers
Commercial Market Drivers • Emerging autonomous applications – Robotics and factory automation – Automotive market: driverless cars • Precision mapping and aerial surveying – Google maps StreetView – Remapping the world in 3-D with stabilized cameras • Augmented reality – Overlaying geo-referenced d
Slide 30: ThinFiber Photonic Technology Sensors and IMUs
ThinFiber Photonic Technology Sensors and IMUs • Enables gyros that are smaller, more accurate, and less costly – Order of magnitude performance improvement – Extremely low noise (ARW 0.013°/√hr ) – Designed into exciting new OEM products • New 1750 IMU product – Breakthrough level of performance/si
Slide 31: Defense Market Drivers
Defense Market Drivers • Stabilized weapons – Remotely operated weapons to take soldiers out of harm’s way – U.S. Army CROWS III project with Kongsberg • Drones and RPVs – Remotely piloted vehicles rapidly replacing manned aircraft – Optical stabilization for drone cameras, night vision systems • Ne
Slide 32: Solid Demand for TACNAV Systems
Solid Demand for TACNAV Systems • Record order received in 2012 – $35.6 million contract from Saudi Arabian National Guard • TACNAV cannot be blocked or jammed – GPS signal is easy to deliberately jam – Militaries have grown dependent on real time navigation – Need 100% situational awareness • Devel
Slide 33: World's Most Demanding Customers Choose KVH
World’s Most Demanding Customers Choose KVH All third-party trademarks and logos are the property of their respective owners.
Slide 34: Operational & Financial Overview
Slide 35: Operational Highlights
Operational Highlights • Q3 2012 Revenue $38.8M up $13.2M (+52%) vs. 2011 • Mobile Broadband $22.2M up $4.3M (+24%) vs. 2011 – VSAT (hardware & airtime) $14.5M +43% – VSAT (airtime) $9.5M +56% • ~$38.0M per year run rate • Airtime gross margin 31% up from 19% Q3 2011 – Satellite TV products up 17% v
Slide 36: KVH Revenue Breakdown
KVH Revenue Breakdown Mobile Mobile Satellite TV Guidance & Satellite TV Guidance & 26% Stabilization 26% Stabilization 38% 31% mini-VSAT mini-VSAT Broadband Broadband 36% 43% FY 2011 YTD Q3 2012
Slide 37: Strong Product & Airtime Growth
Strong Product & Airtime Growth $ in mini-VSAT Broadband % of Total Millions Trailing 4 Quarter Revenue Trend Revenue • Airtime revenue larger $60 25% than VSAT hardware revenue $50 20% • Airtime increased to 24% of total company revenue $40 15% • Expanding YOY margins due to leverage of $30 relativ
Slide 38: What to Look for in 2013 and Beyond
What to Look for in 2013 and Beyond • Mobile Broadband – Strong subscriber growth driving higher predictable, recurring airtime service revenues – Leveraging the relatively fixed cost infrastructure to drive higher airtime service margins – New value-added service offerings expected to drive higher
Slide 39: Summary
Summary • Large addressable markets • Unique and attractive products and services • Network and physical infrastructure in place • Rapidly growing revenues • Profits and margins improving • Solid progress towards long-term goals – 3-4 year goal of $250M-$300M in revenues
Slide 40: www.kvh.com
www.kvh.com Mobile Broadband • Guidance & Stabilization
KVH Industries — Investor Presentation (November 2012) on 6ix