What changed in this filing

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Item 1A. Risk Factors

2024-11-07 compared with 2024-08-01 · 26 added, 19 removed, 329 unchanged (12% of the section changed)

5 unchanged sentences

We have a history of losses, and achieving sustained profitability may take longer than we anticipate or may not be achievable.

We recorded substantial losses from continuing operations in the first half of 2024 and in each of the last four fiscal years (notwithstanding the income we recognized in 2022 from the sale of the inertial navigation business and in 2021 from the forgiveness of the PPP Loan).

We recorded substantial losses from continuing operations in the first nine months of 2024 and in each of the last four fiscal years (notwithstanding the income we recognized in 2022 from the sale of the inertial navigation business and in 2021 from the forgiveness of a PPP loan).

Although our continuing operations were profitable in the fourth quarter of 2022 and second quarter of 2023, we may continue to incur losses as we face increasingly stiff competition.

12 unchanged sentences

Our quarterly net sales and results of operations could continue to vary significantly for various reasons, many of which are outside our control.

For example, service sales declined 14% in the second quarter of 2024 compared to the second quarter of 2023, and product sales declined 48% in the fourth quarter of 2023 compared to the fourth quarter of 2022.

For example, service sales declined 17.0% in the third quarter of 2024 compared to the third quarter of 2023, and product sales declined 48% in the fourth quarter of 2023 compared to the fourth quarter of 2022.

You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance.

10 unchanged sentences

market and competitive pricing pressures;

unanticipated charges or expenses, such as the aggregate $6.0 million impairment charges to goodwill and long-lived assets we recorded in the third quarter of 2023;

unanticipated charges or expenses, such as the aggregate $6.0 million impairment charges to goodwill and long-lived assets we recorded in the third quarter of 2023 and the $1.1 million impairment charges to long-lived assets we recorded in the third quarter of 2024;

the $5.2 million charge related to the inventory write-down, the $3.6 million provision for excess purchase order obligations and the $2.1 million charge for the discontinuation of a project for implementing a new manufacturing-centric accounting system that we recorded in the fourth quarter of 2023;

7 unchanged sentences

A material increase in sales of third-party airtime services and products could reduce our gross margins and our profitability.

The gross margin percentage from our VSAT airtime services in most cases significantly exceeds the gross margin percentage from other third-party products and airtime services.

The gross margin percentage from our VSAT airtime services in many cases exceeds the gross margin percentage from other third-party products and airtime services.

To the extent that the mix of airtime services we sell shifts away from VSAT services, our gross profit dollars may decline, perhaps materially, if we are unable to significantly increase revenue on non-VSAT airtime services, which may reduce our profitability.

22 unchanged sentences

We are highly dependent on qualified personnel at all levels, including our senior management team and other key technical, operational, managerial and sales and marketing personnel, each of whom would be difficult to replace.

Our recent reduction-in-force increased our dependence on continuing personnel.

Our recent reductions-in-force increased our dependence on continuing personnel.

If we fail to retain and attract the necessary personnel, we may be unable to achieve our business objectives and may lose our competitive position, which could lead to a significant decline in net sales.

8 unchanged sentences

We may also choose to dispose of assets or make strategic divestitures, such as the sale of our inertial navigation business in August 2022.

During the third quarter of 2024, we commenced a plan to sell the warehouse building and surface parking lot located at 75 Enterprise Center in Middletown, Rhode Island, and the property, building, improvements, and land located at 50 Enterprise Center in Middletown, Rhode Island.

These efforts may not succeed in improving profitability.

55 unchanged sentences

Coast Guard, a significant government customer, is structured as an indefinite delivery/indefinite quantity contract.

Coast Guard has advised us that it intends to transition its primary satellite service relationship on the vessels we currently serve to Starlink, as a result of which we currently anticipate a material decline in revenue from the Coast Guard starting in the third or fourth quarter of 2024.

In the third quarter of 2024, we received and processed the anticipated service downgrade request from the U.S.

Coast Guard, which reduces anticipated revenue for 2025 through 2027 by approximately 95%.

As a result, we expect to generate substantially less revenue from the U.S.

For example, we anticipate that revenue from the U.S.

Coast Guard will decline from approximately $2.4 million in the third quarter of 2024 to approximately $0.2 million in the fourth quarter of 2024.

Current and future competitors have greater financial resources than we do, enabling them to operate at lower margins to gain market share.

We believe increased competition contributed to the decreases in both our service sales and our product sales in the six months ended June 30, 2024, including unit sales of our VSAT products, and we expect that this trend will continue in future periods.

We believe increased competition contributed to the decreases in both our service sales and our product sales in the nine months ended September 30, 2024, including unit sales of our VSAT products, and we expect that this trend will continue in future periods.

Some of our VSAT competitors have already leveraged partnerships amongst themselves in order to capture larger combined market share.

Further, some of the companies that we depend on to supply us with capacity on satellite communications networks may vertically integrate by introducing their own products and services to compete with ours, which might motivate them to stop providing satellite network capacity to us, or to make it available on less favorable terms.

The Starlink LEO service continues to adversely impact our business, particularly within the global leisure segment.

The Starlink LEO service continues to have some adverse impact on our business, particularly within the global leisure segment.

A significant number of leisure customers have adopted Starlink systems for both two-way communications as well as streaming, which has impacted both our VSAT Broadband and TracVision businesses.

Although our leisure business accounts for less than 15% of our total revenue, competition from Starlink has adversely impacted our commercial business as well, particularly our growth in that segment.

While we did increase our subscriber count in the second quarter of 2024, in the third and fourth quarter of 2023 and the first quarter of 2024 the total number of our subscribers declined.

Although our leisure business accounts for less than 15% of our total revenue, competition from Starlink has had some adverse impact on our commercial business as well, particularly our growth in that segment.

While we did increase our subscriber count in the second and third quarter of 2024, the total number of our subscribers declined in the third and fourth quarter of 2023 and the first quarter of 2024.

If we are unable to sustain growth, it would have a material adverse effect on our revenue, profitability, and cash flow.

In the marine market for high-speed Internet, voice, fax, and data services, we have historically competed primarily with Inmarsat, Marlink, Speedcast, Viasat, and Network Innovations, along with smaller, single-hub regional services to deliver VSAT service.

Additionally, we are facing meaningful competition from new NGSO networks such as SpaceX’s Starlink and OneWeb and an emerging group of smaller LEO-focused providers, such as Clarus and Elcome.

Additionally, we are facing meaningful competition from new NGSO networks such as SpaceX’s Starlink and Eutelsat OneWeb and an emerging group of smaller LEO-focused providers, such as Clarus and Elcome.

We also face competition from providers of low-speed data services, which include Inmarsat and Iridium Satellite LLC.

26 unchanged sentences

Vodafone currently provides the 5G/LTE services used by our TracNet H-series terminals and compatible third-party products to provide cellular service in 150+ countries.

Starlink provides the data services for Starlink LEO services, while Eutelsat OneWeb will provide the data connectivity for OneWeb LEO service, which we currently anticipate providing for maritime use late in the third quarter of 2024.

We rely on Inmarsat for satellite communications services for our FleetBroadband-compatible and FleetOne-compatible products.

18 unchanged sentences

Our media and entertainment business relies on licensing arrangements with content providers, and the loss of, or changes in, those arrangements could adversely affect our business.

We distribute premium news, television shows, sports, and movies to commercial customers in the maritime and hotel markets.

We distribute premium news, television shows, sports, and movies to commercial customers in the maritime market.

We license this content from third parties on a non-exclusive basis without long-term license agreements.

26 unchanged sentences

trade policy have created ongoing turmoil in international trade relations, and it is unclear what future actions governments will or will not take with respect to tariffs or other international trade agreements and policies.

During his campaign, President-Elect Trump expressed various intentions to impose tariffs on imports, including 60% tariffs on goods imported from China, 25% tariffs on goods imported from Mexico and between 10% and 20% tariffs on other imports.

It is unclear what action the next presidential administration or Congress will take with respect to these proposals.

Ongoing or new trade wars or other governmental action related to tariffs or international trade agreements or policies could reduce demand for our products and services, increase our costs, reduce our profitability, adversely impact our supply chain or otherwise have a material adverse effect on our business and results of operations.

19 unchanged sentences

The market for mobile connectivity solutions is characterized by rapid technological change, frequent new product innovations, changes in customer requirements and expectations, and evolving industry standards.

For example, we are facing competition from new LEO networks such as SpaceX’s Starlink and OneWeb.

For example, we are facing competition from new LEO networks such as SpaceX’s Starlink and Eutelsat OneWeb.

If we fail to make innovations in our existing products and services and reduce the costs of our products and services, our market share will likely decline.

19 unchanged sentences

Historically, sales to customers outside the United States have accounted for an increasingly significant portion of our net sales.

We derived 72%, 68% and 63% of our revenues from continuing operations in the six months ended June 30, 2024 and the years ended December 31, 2023 and 2022, respectively, from sales to these foreign customers.

We derived 72%, 68% and 63% of our revenues from continuing operations in the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, respectively, from sales to these foreign customers.

We have foreign offices in Denmark, the United Kingdom, Singapore, Japan, Norway and the Philippines, as well as a subsidiary in Brazil that manages local sales.

43 unchanged sentences

Our stock price has historically been volatile.

During the period from January 1, 2018 to June 30, 2024, the trading price of our common stock ranged from $4.30 to $15.29.

During the period from January 1, 2018 to September 30, 2024, the trading price of our common stock ranged from $4.17 to $15.29.

Many factors may cause our stock price to fluctuate, including variations in quarterly results;

21 unchanged sentences

Section 1350 certification of principal executive officer and principal financial officer X

101 The following financial information from KVH Industries, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL (Extensible Business Reporting Language):

(i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Operations (unaudited), (iii) the Consolidated Statements of Comprehensive (Loss) Income (unaudited), (iv) the Consolidated Statements of Stockholders' Equity (unaudited), (v) the Consolidated Statements of Cash Flows (unaudited), and (vi) the Notes to Consolidated Interim Financial Statements (unaudited).

101 The following financial information from KVH Industries, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL (Extensible Business Reporting Language):

(i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Operations (unaudited), (iii) the Consolidated Statements of Comprehensive Loss (unaudited), (iv) the Consolidated Statements of Stockholders' Equity (unaudited), (v) the Consolidated Statements of Cash Flows (unaudited), and (vi) the Notes to Consolidated Interim Financial Statements (unaudited).

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

August 1, 2024

November 7, 2024

KVH Industries, Inc.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors