OK. Let's try a little crystal ball peering into the future
here. KVH has finally provided enough details to attempt
this.
They said:
1) Communication revenues will continue increasing
significantly each quarter
2) Military revenues are on the rebound starting with Q2.
3) FOG sales are just now beginning
4) backlog is $4.3 million, spread equally across the 3
areas
5) GMs have been depressed by lagging Military and FOG
sales, but can rise to the low 40%s as these revs increase.
6) additional military orders are imminent.
7) R&D should begin to decline in absolute dollars.
8) S&M will continue to rise in absolute dollars, but
decline as a percent of revenues.
9) Administrative expenses will remain about flat.
10) Return to profitability in the 2nd half.
11) Good chance of full year profitability.
12) Communications sales alone should cover profitability in
2001
From these, we can make some judgement calls, pop the data
into a spreadsheet and see what happens.
Here are my assumptions, which I tried to fit to the CC
comments, but stay conservative.
1) A smaller loss in Q2.
2) Communication revenues to grow 25% Q-Q.
3) I jumped military (nav) revs by 50% in Q2 (1/2 the
backlog) and 20% each quarter after that for the rest of
2000. I think they can see that far anyway.
4) I started FOG sales at 1/2 the backlog in Q2 and grew 20%
each quarter after that. This is the weakest of the
assumptions.
5) I raised GMs to 35% in Q2, and increased them 2% each
quarter after that.
6) I reduced R&D by 2% each quarter.
7) I grew S&M by 3% each quarter.
8) I left Admin and Other Income/(expense) constant
9) I didn't try to estimate the effect of taxes, as there is
no data to support this.
Keep in mind that these are just numbers that I made up
based on the statements in the CC. The future is never
certain. This does show that once break even is reached,
profitability can increase dramatically going forward.
As an acid test. I tried Q4 2000 and Q1 2001 using only the
projected Communications revenues. I get a small loss in Q4
and a small profit in Q1 2001, so I think these growth
numbers are reasonable.
I hope everyone realizes that this is just an honest attempt
to project out what was said in the conference call, and I
am not trying to hype the stock in any way. I do this kind
of thing for myself anyway as part of my ongoing DD, but
this time I will share it.
Comments appreciated.
Q4 1999 Q1 2000 Q2 2000 Q3 2000 Q4 2000 PCT
(000) omitted est est est chng
Net Sales 5.54 5.70 8.35 10.28 12.67
Communications 2.90 4.20 5.25 6.56 8.20 1.25
Navigation 2.54 1.60 2.40 2.88 3.46 1.20
FOG 0.70 0.84 1.01 1.20
Cost of Sales 3.69 3.82 5.43 6.48 7.73
Gross Profit 1.86 1.88 2.92 3.80 4.94
Gross Margin 34% 33% 35% 37% 39%
R&D exp 1.13 1.07 1.05 1.03 1.01 0.98
S&M exp 1.69 1.42 1.46 1.50 1.55 1.03
Admin exp 0.54 0.53 0.53 0.53 0.53 1.00
Inc/(Loss) (1.50) (1.14) (0.12) 0.74 1.85
from ops
Other Income (0.01) (0.21) (0.21) (0.21) (0.21)
Income/(Loss)
before Taxes (1.51) (1.35) (0.33) 0.53 1.64 |
