KVH Industries, Inc.

Good day. Thank you for standing by. Welcome to KBH Industries' fourth quarter 2024 earnings conference call. At this time, all participants are on 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 automatic message advising you your hand is raised. Please note that today's conference may be recorded. I would now like to turn the conference over to Mr. Anthony Pike, Chief Financial Officer, Please go ahead, sir.

Thank you, Olivia. Good morning, everyone, and thank you for joining us today for KVH Industries' fourth 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 at 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 the definition of this measure in our press release, as well as a reconciliation to comparable GAAP numbers. We encourage you to review the cautionary statements made in our SEC filings, specifically those under the heading Risk Factors in our 2024 Form 10-K, which we plan to file later today. The company's other SEC filings are available directly from our investor information section of our website. Now, to walk you through the highlights of our fourth quarter, I'll turn the call over to Brent.

Thank you, Anthony. Good morning, everyone. Before discussing our high-level results, I want to address the overall shift in our business. During 2024, we continued our transition from focusing solely on VSAT services to offering multi-orbit, multi-channel solutions. What does this mean? In addition to VSAT services, we now offer LEO solutions, the most significant of which is Starlink. We have also expanded our portfolio to include a high-speed cellular solution. Additionally, we added a cutting-edge appliance, the Combox Edge, to deliver advanced and easy-to-use onboard remote bandwidth management for multiple wide and local area networks. Over the course of 2024, we integrated each of these elements into our go-to-market strategy, which is steadily building positive momentum. In the fourth quarter, we shipped more than 1,000 Starlink units and roughly 200 VSAT terminals, our fourth consecutive quarterly record for terminal shipments. With more than 2,300 active maritime Starlink terminals at the end of 2024, Starlink is our fastest growing product line in our history. And currently, there are roughly 1,000 Starlink terminals in the field that are awaiting activation. Our customers find our custom Starlink data plans, along with our live 24-7 technical and airtime support, compelling differentiators. Additionally, Our KVH manager platform offers a robust and secure set of tools to track and control onboard data usage. These factors are driving our unit growth in both leisure and commercial markets. We recently completed the installation and activation of Starlink terminals across the entire Bruin fleet. The addition of Starlink to their existing KVH VSAT service illustrates a strong demand for hybrid connectivity. In fact, roughly 50% of our Starlink terminals have been activated in tandem with a new or existing VSAT terminal. Our Combox Edge communication gateway, introduced early in 24, is the heart of our integrated connectivity approach. Demand for Combox Edge remains strong. Q4 activations were double the number of activations in Q3. We are now preparing to roll out a range of new Combox Edge capabilities. including a suite of security features that deliver integrated cybersecurity, intrusion protection, and risk mitigation tools. In December, we launched our new TrackNet Coastal cellular Wi-Fi system, cellular and Wi-Fi system, excuse me, which offers data speeds as fast as 300 megabits per second and data costs as low as $1 per gigabyte. TrackNet Coastal uses our unique Fusion eSIM technology to create a high-performance marine-grade cellular solution offering connectivity in 135 countries. The Fusion eSIM enables us to add and provision multiple cellular services over the air and then switch intelligently among them based on geographic location or other parameters. As a result, we can deliver a maintenance-free and seamless global cellular service that makes BACnet Coastal an attractive enhancement for VSAT and LEO services as well as a standalone communication system. I'm also pleased to inform you that we've added OneWeb to our satellite communications service portfolio. C-SPAN, a leading owner and operator of container ships, recently signed an agreement with us to equip its fleet with the OneWeb service. They will be among the first commercial fleets to install OneWeb and use it in an expanded hybrid configuration alongside KVH VSAT and Starlink services. These strategic initiatives are beginning to take hold and will position us well in 2025. Total revenue for the fourth quarter was $26.9 million, roughly a 4.5 percent decrease from fourth quarter of 2023. But a more relevant comparison is our third quarter revenue of $29 million. Excluding the U.S. Coast Guard revenue reduction of $1.7 million, revenue was effectively flat sequentially. Non-U.S. Coast Guard geo-airtime revenue in the fourth quarter contracted by around $1 million, which was offset by increased Starlink revenues in the same period. Going forward, we anticipate Starlink as well as other new revenue sources to outpace the decrease in geo airtime revenue. Additionally, we anticipated a contraction in revenue in 2024 and worked diligently to implement cost reduction initiatives. As a result, we brought recurring OpEx down by almost 10% for the full year. So to wrap things up, mobile connectivity remains a market in transition, as the geo-marketplace continues to adjust to the new disruption caused by legal services such as Starlink and OneWeb. While our results reflect the impact of the dynamic nature of the geo-market, the decisive steps we have taken to embrace Starlink while adding supplemental offerings such as OneWeb, Combox Edge, and a global 5G cellular service are creating a foundation for future growth. We have made the hard decisions necessary to reconfigure our business operations, streamline costs, and focus on our core strengths. We are in a stronger position now than a year ago, and I believe we are on a path towards renewed growth and profitability. I will now turn the call back to Anthony to discuss the numbers.