kvhi-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-28082

KVH Industries, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			05-0420589
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification Number)

50 Enterprise Center, Middletown, RI 02842

(Address of Principal Executive Offices) (Zip Code)

(401) 847-3327

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
		The Nasdaq Stock Market LLC
Common Stock, par value $0.01 per share	KVHI	(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Date	Class	Outstanding shares
May 1, 2023	Common Stock, par value $0.01 per share	19,504,180

KVH INDUSTRIES, INC. AND SUBSIDIARIES

Form 10-Q

INDEX


		Page No.
PART I. FINANCIAL INFORMATION
ITEM 1.	INTERIM FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022	3
	Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2023 and 2022 (unaudited)	6
	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 4.	CONTROLS AND PROCEDURES	31
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	33


ITEM 6.	EXHIBITS	34
SIGNATURE		35

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

KVH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	March 31, 2023		December 31, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	12,375	$	21,056
Marketable securities	56,280		55,680
Accounts receivable, net of allowance for credit losses of $1,526 and $1,268 as of March 31, 2023 and December 31, 2022, respectively	26,383		27,427
Inventories, net	23,886		22,730
Prepaid expenses and other current assets	3,192		3,067
Current contract assets	1,273		1,243

Total current assets	123,389		131,203
Property and equipment, net	51,792		53,118
Intangible assets, net	325		404
Goodwill	5,329		5,308
Right of use assets	1,780		2,168
Other non-current assets	4,713		5,037
Non-current contract assets	3,079		3,033
Deferred income tax asset	259		259

Total assets	$	190,666	$	200,530
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,445	$	20,449
Accrued compensation and employee-related expenses	4,159		7,621
Accrued other	11,728		4,234
Accrued product warranty costs	712		1,287

Contract liabilities	3,684		3,108
Current operating lease liability	1,393		1,532
Liability for uncertain tax positions	654		637

Total current liabilities	27,775		38,868

Long-term operating lease liability	376		636
Long-term contract liabilities	4,667		4,315

Deferred income tax liability	56		55

Total liabilities	$	32,874	$	43,874
Commitments and contingencies (Notes 2, 10, and 15)
Stockholders’ equity:
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; none issued	—		—
Common stock, $0.01 par value. Authorized 30,000,000 shares; 20,825,805 and 20,631,152 shares issued at March 31, 2023 and December 31, 2022, respectively; and 19,369,696 and 19,198,458 shares outstanding at March 31, 2023 and December 31, 2022, respectively	208		206
Additional paid-in capital	161,779		160,475
Retained earnings	11,924		11,936
Accumulated other comprehensive loss	(4,029)		(4,110)
	169,882		168,507
Less: treasury stock at cost, common stock, 1,456,109 and 1,432,694 shares as of March 31, 2023 and December 31, 2022, respectively.	(12,090)		(11,851)
Total stockholders’ equity	157,792		156,656
Total liabilities and stockholders’ equity	$	190,666	$	200,530

See accompanying Notes to Unaudited Consolidated Financial Statements.

KVH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except earnings per share amounts, unaudited)


	Three Months Ended
	March 31,
	2023		2022
Sales:
Product	$	4,949	$	6,563
Service	28,740		26,588
Net sales	33,689		33,151
Costs and expenses:
Costs of product sales	5,234		5,418
Costs of service sales	16,076		14,926
Research and development	2,565		3,011
Sales, marketing and support	5,712		6,969
General and administrative	4,650		7,075
Total costs and expenses	34,237		37,399
Loss from operations	(548)		(4,248)
Interest income	778		208
Interest expense	—		1
Other (expense) income, net	(224)		103
Income (loss) from continuing operations before income tax expense	6		(3,938)
Income tax expense from continuing operations	18		329
Net loss from continuing operations	$	(12)	$	(4,267)
Net loss from discontinued operations, net of tax	—		(425)
Net loss	$	(12)	$	(4,692)

Net loss from continuing operations per common share
Basic	$	0.00	$	(0.23)
Diluted	$	0.00	$	(0.23)

Net loss from discontinued operations per common share
Basic	$	0.00	$	(0.02)
Diluted	$	0.00	$	(0.02)

Net loss per common share
Basic	$	0.00	$	(0.25)
Diluted	$	0.00	$	(0.25)

Weighted average number of common shares outstanding:
Basic	18,882		18,449
Diluted	18,882		18,449

See accompanying Notes to Unaudited Consolidated Financial Statements.

KVH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, unaudited)


	Three Months Ended
	March 31,
	2023		2022
Net loss	$	(12)	$	(4,692)
Other comprehensive income (loss), net of tax:
Unrealized gain on available-for-sale securities	13		—
Foreign currency translation adjustment	68		(193)
Other comprehensive income (loss), net of tax(1)	81		(193)
Total comprehensive income (loss)	$	69	$	(4,885)

(1) Tax impact was nominal for all periods.

See accompanying Notes to Unaudited Consolidated Financial Statements.

KVH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, unaudited)



	Common Stock			Additional Paid-in Capital		Retained earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2022	20,631	$	206	$	160,475	$	11,936	$	(4,110)	(1,433)	$	(11,851)	$	156,656
Net loss	—	—		—		(12)		—		—	—		(12)
Other comprehensive income	—	—		—		—		81		—	—		81
Stock-based compensation	—	—		296		—		—		—	—		296

Acquisition of treasury stock	—	—		—		—		—		(23)	(239)		(239)




Exercise of stock options and issuance of restricted stock awards, net of forfeitures	195	2		1,008		—		—		—	—		1,010

Balance at March 31, 2023	20,826	$	208	$	161,779	$	11,924	$	(4,029)	(1,456)	$	(12,090)	$	157,792



	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2021	20,343	$	203	$	156,199	$	(12,165)	$	(3,409)	(1,433)	$	(11,851)	$	128,977
Net loss	—	—		—		(4,692)		—		—	—		(4,692)
Other comprehensive loss	—	—		—		—		(193)		—	—		(193)
Stock-based compensation	—	—		881		—		—		—	—		881
Issuance of common stock under employee stock purchase plan	22	—		193		—		—		—	—		193

Exercise of stock options and issuance of restricted stock awards, net of forfeitures	(37)	—		—		—		—		—	—		—
Taxes accrued for net share settlement of options	—	—		(131)		—		—		—	—		(131)
Balance at March 31, 2022	20,328	$	203	$	157,142	$	(16,857)	$	(3,602)	(1,433)	$	(11,851)	$	125,035

See accompanying Notes to Unaudited Consolidated Financial Statements.

KVH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)


	Three Months Ended
	March 31,
	2023		2022
Cash flows from operating activities:
Net loss	$	(12)	$	(4,692)
Adjustment

SEC Form 10-Q filed by KVH Industries Inc.