KVH Industries, Inc. reports 166% Net Income decline in 2020 and 0.53% Revenue growth
03/02/2021 • About KVH Industries, Inc. (
$KVHI) • By InTwits
KVH Industries, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -2.7%
- EBITDA Margin is quite volatile: -2.7% in 2020, -2.1% in 2019, 3.3% in 2018, 1.4% in 2017, 6.4% in 2016
- KVH Industries, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.5%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $12m in FY2020, $8m in FY2019, $4m in FY2018, $4m in FY2017, $4m in FY2016
- The company has unprofitable business model: ROIC is -14.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased slightly on 0.53%. Revenue growth showed acceleration in 20Q4 - it increased 3.9% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.9 pp from 12.1% to 5.2% in 2020. EBITDA Margin stuck to a declining trend at -2.2 pp per annum in 2016-2020.
Gross Margin increased on 2.3 pp from 34.0% to 36.3% in 2020. Gross Margin followed a declining trend at -2.4 pp per annum in 2016-2020. SG&A as a % of Revenue decreased on 3.1 pp from 37.3% to 34.2% in 2020.
Net Income margin dropped on 34.9 pp from 21.1% to -13.8% in 2020.
Investments (CAPEX, working capital and M&A)
KVH Industries, Inc.'s CAPEX/Revenue was 8.9% in 2020. KVH Industries, Inc.'s CAPEX/Revenue increased slightly on 0.87 pp from 8.0% in 2017 to 8.9% in 2020. It's average CAPEX/Revenue for the last three years was 8.7%.
Return on investment
The company operates at negative ROIC (-14.6%) and ROE (-15.6%). ROIC increased slightly on 0.51 pp from -15.1% to -14.6% in 2020. ROE dropped on 42.2 pp from 26.7% to -15.6% in 2020. ROIC declined at -3.7 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is -4.1x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2020. Debt surged on 85.6% while cash dropped on 31.5%.
KVH Industries, Inc. has no short term refinancing risk: cash is higher than short term debt (133.3%).
Management team
The company's CEO is Martin A Kits Van Heyningen. Martin A Kits Van Heyningen has 31 years tenure with the company.
Financial and operational results
FY ended 12/31/2020
KVH Industries, Inc. ($KVHI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 176.1 | 160.1 | 170.8 | 157.9 | 158.7 | 0.5% |
| Gross Profit | 76.8 | 69.9 | 70.7 | 53.8 | 57.6 | 7.2% |
| SG&A | 62.1 | 62.8 | 62.9 | 58.9 | 54.3 | -7.9% |
| EBITDA | 11.2 | 2.3 | 5.7 | -3.3 | -4.2 | |
| Net Income | -7.5 | -11.0 | -8.2 | 33.3 | -21.9 | -166.0% |
Balance Sheet
|
|---|
| Cash | 26.4 | 34.6 | 18.1 | 18.4 | 12.6 | -31.5% |
| Short Term Debt | 7.9 | 2.5 | 9.9 | 3.4 | 9.4 | 173.9% |
| Long Term Debt | 50.2 | 44.6 | 19.4 | 4.8 | 5.8 | 21.8% |
Cash flow
|
|---|
| Capex | 5.6 | 12.8 | 15.9 | 12.5 | 14.1 | 12.3% |
Ratios
|
|---|
| Revenue growth | -4.6% | -9.1% | 6.7% | -7.5% | 0.5% | |
| EBITDA growth | -29.4% | -79.8% | 150.5% | -157.9% | 28.8% | |
|
|---|
| Gross Margin | 43.6% | 43.7% | 41.4% | 34.0% | 36.3% | 2.3% |
| EBITDA Margin | 6.4% | 1.4% | 3.3% | -2.1% | -2.7% | -0.6% |
| SG&A, % of revenue | 35.3% | 39.2% | 36.8% | 37.3% | 34.2% | -3.1% |
| Net Income Margin | -4.3% | -6.9% | -4.8% | 21.1% | -13.8% | -34.9% |
| CAPEX, % of revenue | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% | 0.9% |
|
|---|
| ROIC | -0.7% | -5.3% | -4.9% | -15.1% | -14.6% | 0.5% |
| ROE | -6.7% | -10.4% | -8.0% | 26.7% | -15.6% | -42.2% |
| Net Debt/EBITDA | 2.8x | 5.5x | 2.0x | | |
KVH Industries, Inc. ($KVHI) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 37 | 37 | 41 | 44 | | 0.5% | -7.1% | 4.6% | 3.9% |
| EBITDA | -4 | 0 | 3 | -1 | | - | - | - | -348.0% |
| Net Income | -6 | -4 | -1 | -12 | | - | -107.5% | - | - |
Balance Sheet
|
|---|
| Cash | 19 | 21 | 18 | 13 | | 30.0% | 40.1% | 96.4% | -31.5% |
| Short Term Debt | 2 | 5 | 6 | 9 | | -85.9% | -34.0% | 37.5% | 173.9% |
| Long Term Debt | 5 | 8 | 6 | 6 | | -81.9% | 49.9% | 34.5% | 21.8% |
Ratios
|
|---|
| Gross Margin | 32.1% | 35.2% | 38.5% | 38.7% | | -2.9% | 5.7% | 4.2% | 1.3% |
| EBITDA Margin | -10.2% | 0.8% | 6.8% | -3.1% | | -6.3% | 7.2% | 9.7% | -4.4% |
| Net Income Margin | -17.0% | -9.6% | -1.3% | -26.4% | | 0.2% | -128.8% | 9.7% | -18.2% |
Peers in Communications Equipment
Below we provide KVH Industries, Inc. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 2.8% | 3.7% | 4.4% |
|---|
| KVH Industries, Inc. ($KVHI) | - | -9.1% | 6.7% | -7.5% | 0.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.0% | 40.5% | 44.3% | 46.8% |
|---|
| KVH Industries, Inc. ($KVHI) | 43.6% | 43.7% | 41.4% | 34.0% | 36.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.5% | 6.5% | 5.4% | 5.0% | 9.3% |
|---|
| KVH Industries, Inc. ($KVHI) | 6.4% | 1.4% | 3.3% | -2.1% | -2.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| PC-Tel, Inc. ($PCTI) | 2.0% | 2.9% | 3.3% | 2.5% | 5.3% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.0% |
|---|
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.2% | 0.7% | 1.2% | 2.3% |
|---|
| KVH Industries, Inc. ($KVHI) | -0.7% | -5.3% | -4.9% | -15.1% | -14.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (25 companies) | -0.9x | -0.8x | -0.3x | -0.3x | -0.4x |
|---|
