KVH Industries, Inc.

Good day, and thank you for standing by. Welcome to the Q2 2024 KBH Industries, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the call over to our first speaker for today, CFO Anthony Pipe.

Thank you, Crystal. Good morning, everyone, and thank you for joining us today for KVH Industries' second quarter results, which are included in the earnings release we published earlier this morning. Joining me on the call is the company's Chief Executive Officer, Brent Bruin. Before I get into the numbers, a few standard statements. Firstly, if you would like a copy of the earnings release, or if you would like to listen to a recording of today's call, both will be available on our website. And if you are listening via the web, please feel free to submit questions to ir.kvh.com. Further, this conference call will contain certain forward-looking statements that are subject to numerous assumptions and uncertainties that may cause our actual results to differ materially from those expressed in these statements. We undertake no obligation to update or revise any of these statements. We will also discuss adjusted EBITDA, which is a non-GAAP financial measure. You will find a definition of this measure in our press release, as well as a reconciliation to comparable gap numbers. We encourage you to review the cautionary statements made in our SEC filings, specifically those under the heading Risk Factors in our Q2 2024 Form 10Q, which will be filed later today. The company's other SEC filings are available directly from the Investor Information section of our website. To walk you through the highlights of our second quarter, I'll turn the call over to Brent.

Thank you, Anthony, and good morning, everyone. Let me begin with a high-level overview of our results. Second quarter airtime revenue was $23.0 million, down $3.9 million from the second quarter of 2023. As anticipated, airtime gross margins declined slightly due to a shift in our airtime subscriber base. Total revenue for the quarter? was $28.7 million, roughly a 15% decrease from a year ago. This was due to the continuing decline in VSAT product sales and corresponding VSAT service revenue. These results are in line with the expectations we provided last quarter. The maritime industry continues to undergo significant changes driven by the emergence of NGSO networks. In response to the new market realities, we have taken aggressive steps this year to reposition the company for the future. We are already seeing encouraging results. We have now completed our reorganization efforts and believe that we are now appropriately sized with the right resources to meet our goals as we move forward. The reorganization is expected to result in annualized operating expense savings of approximately $5 million. We achieved a slight increase in our subscriber vessel count in the second quarter. reversing the decline in subscribers we experienced in the first quarter. We shipped a record number of communication antennas for the second consecutive quarter, and we substantially increased shipments of our Combox Edge gateway. Many of the second quarter product shipments are now being installed and awaiting activation. Historically, previous quarter shipments have been a strong leading indicator for future airtime and service subscription growth. Additionally, we signed a bulk data distribution agreement with Starlink. Under this agreement, we made a prepayment for a large block of data to be used over a period of more than one year at favorable rates. This new arrangement offers us increased flexibility in developing and selling custom data plans. As a matter of fact, this morning we introduced a number of custom Starlink data plans, which offer new options for fleet operators and boaters to select the plan most suitable for each vessel and budget. Additionally, we have expanded our value-added services to include vessel-based telephone connections using our global voice over IP service offering. We can now provide any Starlink-equipped vessel with two voice lines and as many as 10 virtual local numbers. Starlink is an exciting part of our multi-orbit, multi-channel portfolio that offers outstanding communications for commercial and leisure subscribers worldwide. We are pleased to be able to offer custom data plans and other valuable supporting services, such as global VSAT-LEO hybrid always-on connectivity, the Combox Edge communications gateway service, and 24-7, 365 live airtime and technical support for our customers around the world. Our customers appreciate the breadth and quality of our integrated solutions and support. The result is the fastest-growing connectivity service in our history. We have activated more than 1,000 new Starlink terminals for new and existing customers since the start of the year. We are also moving forward with other new product and service enhancements. In addition to the anticipated rollout of one web service later this quarter, we will be expanding the capabilities of Combox Edge in the coming months with enhanced cybersecurity and crew internet options. At the same time, we plan to offer new ways to bring crew entertainment and news content on board using the KVH link service. Our industry is changing rapidly. Stand-alone VSAT service subscriptions have declined faster than anticipated, but we have been nimble and have taken steps to adjust our business models. We are seeing continued growth in VSAT LEO hybrid solutions and reduced churn for those deployments, which indicates that commercial fleet managers and leisure boaters recognize the value of our hybrid approach. We are anticipating subscriber growth in the third quarter and are hopeful that this trend continues. We are on our way to achieving our strategic, financial, and operational goals for 2024 and believe that we are on the right path and will emerge from a reorganization as a world-class solution provider built on global airtime and superior service and support. I'd now like to hand it back to our CFO, Anthony Pike, for a look at the numbers.