kvhi-20230930

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: September 30, 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
October 30, 2023	Common Stock, par value $0.01 per share	19,610,790

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 September 30, 2023 (unaudited) and December 31, 2022	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2023 and 2022 (unaudited)	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 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	33
PART II. OTHER INFORMATION

ITEM 1A.	RISK FACTORS	34

ITEM 6.	EXHIBITS	43
SIGNATURE		44

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

KVH INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	September 30, 2023		December 31, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	11,484	$	21,056
Marketable securities	57,710		55,680
Accounts receivable, net of allowance for credit losses of $1,010 and $1,268 as of September 30, 2023 and December 31, 2022, respectively	28,190		27,427
Inventories	26,423		22,730
Prepaid expenses and other current assets	4,617		3,067
Current contract assets	1,130		1,243

Total current assets	129,554		131,203
Property and equipment, net	49,407		53,118
Intangible assets, net	—		404
Goodwill	—		5,308
Right of use assets	1,191		2,168
Other non-current assets	3,985		5,037
Non-current contract assets	2,557		3,033
Deferred income tax asset	258		259

Total assets	$	186,952	$	200,530
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,644	$	20,449
Accrued compensation and employee-related expenses	4,936		7,621
Accrued other	11,609		4,234
Accrued product warranty costs	642		1,287

Contract liabilities	3,268		3,108
Current operating lease liability	921		1,532
Liability for uncertain tax positions	693		637

Total current liabilities	25,713		38,868

Long-term operating lease liability	272		636
Long-term contract liabilities	3,905		4,315

Deferred income tax liability	55		55

Total liabilities	$	29,945	$	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; 21,066,899 and 20,631,152 shares issued at September 30, 2023 and December 31, 2022, respectively; and 19,610,790 and 19,198,458 shares outstanding at September 30, 2023 and December 31, 2022, respectively	211		206
Additional paid-in capital	164,505		160,475
Retained earnings	8,603		11,936
Accumulated other comprehensive loss	(4,222)		(4,110)
	169,097		168,507
Less: treasury stock at cost, common stock, 1,456,109 and 1,432,694 shares as of September 30, 2023 and December 31, 2022, respectively.	(12,090)		(11,851)
Total stockholders’ equity	157,007		156,656
Total liabilities and stockholders’ equity	$	186,952	$	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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Sales:
Product	$	4,152	$	6,625	$	14,526	$	19,808
Service	29,397		28,544		86,883		83,065
Net sales	33,549		35,169		101,409		102,873
Costs and expenses:
Costs of product sales	4,729		6,747		16,596		17,363
Costs of service sales	16,238		15,379		47,848		45,505
Research and development	2,398		2,745		7,379		8,380
Sales, marketing and support	4,854		5,710		15,708		18,355
General and administrative	4,367		5,559		13,139		19,532
Goodwill impairment charge	5,333		—		5,333		—
Long-lived assets impairment charge	657		—		657		—
Total costs and expenses	38,576		36,140		106,660		109,135
Loss from operations	(5,027)		(971)		(5,251)		(6,262)
Interest income	997		389		2,660		798
Interest expense	—		1		—		3
Other (expense) income, net	(121)		569		(583)		1,561
Loss from continuing operations before income tax expense	(4,151)		(14)		(3,174)		(3,906)
Income tax expense from continuing operations	95		81		159		645
Net loss from continuing operations	$	(4,246)	$	(95)	$	(3,333)	$	(4,551)
Net income from discontinued operations, net of tax	—		29,741		—		28,061
Net (loss) income	$	(4,246)	$	29,646	$	(3,333)	$	23,510

Net loss from continuing operations per common share
Basic	$	(0.22)	$	(0.01)	$	(0.17)	$	(0.25)
Diluted	$	(0.22)	$	(0.01)	$	(0.17)	$	(0.25)

Net income from discontinued operations per common share
Basic	$	0.00	$	1.59	$	0.00	$	1.51
Diluted	$	0.00	$	1.59	$	0.00	$	1.51

Net (loss) income per common share
Basic	$	(0.22)	$	1.58	$	(0.17)	$	1.27
Diluted	$	(0.22)	$	1.58	$	(0.17)

SEC Form 10-Q filed by KVH Industries Inc.