Good day, everyone and welcome to the KVH Q3 2014 Earnings Call. Today’s call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Peter Rendall. Please go ahead, sir.

Good morning, everyone. I’m Peter Rendall and with me is Martin Kits van Heyningen, Chief Executive Officer of KVH Industries. This call will address the third quarter earnings release that we issued earlier today. Copies of this release are available on our website and also from our Investor Relations department. This call is being simulcast on the Internet and will be archived on our website for future reference. If you’re listening via the Web, feel free to submit questions to ir@kvh.com and we will answer them following this call. This conference call will contain certain forward-looking statements that involve risk and uncertainty. For example, statements regarding financial and product development goals are forward-looking. The company’s future results may differ materially from the projections described in today’s discussion. Factors that might cause these differences include, but are not limited to, those mentioned in today’s call and risk factors described in our most recent Form 10-K filed with the SEC on March 17, 2014. The company’s SEC filings are directly available from us, from the SEC or from the Investor Information section of our website. At this point, I’d like to turn it over to Martin for today’s discussion of results. Martin?

Thanks, Peter, and thank you all for joining us today. Overall, we’re very pleased with our third quarter results. Although the mix is a bit different, we came in as expected for revenue and earnings. Revenues were $44.3 million, 10% increase year-over-year with an EPS of $0.01 on a GAAP basis, but adjusting for the Videotel acquisition expense and purchase accounting, revenues were $44.9 million and EPS was $0.07 on non-GAAP basis. Adjusted EBITDA was up to $5.9 million this quarter from $4.9 million in the year-ago quarter. Overall, this is an incredibly productive quarter for KVH. We finished the roll out of our entire Ku-band and C-band IP-MobileCast network. We completed beta trials and launched our new media server and we delivered the World Cup finals to over 1,000 seafarers back in July. We’ve continued to acquire additional content rights for films, TV shows and additional foreign news channels. We truly have developed a compelling end-to-end service here and we’re very excited about it. And others are too. We’re attracting more content partners as evidenced by our Transas and AWT deals announced in September. We recently finished our patent application that covers many of the unique aspects of our service. Because we believe that this is going to give us a competitive advantage in the marketplace. This quarter, we also completed our acquisition of Videotel, the leading supplier of e-Learning and training services in the marine market. And we feel that the group is now fully integrated into our organization. They’re already making a positive contribution to our bottom line. On the VSAT side, we had a strong quarter for hardware and unit sales coupled with very strong air time revenues and record ARPUs for our V7 Series products. Air time revenues were up 24% year-over-year and 12% sequentially.…

Thank you, Martin. Now I’d like to turn your attention to our third quarter financial results. This morning we reported record third quarter GAAP revenues of $44.3 million which was 10% higher year-over-year and 8% higher sequentially. With the acquisition of Videotel on July 2, our subscription-based service revenues for the quarter were 58% of total revenues representing a 51% increase year-over-year and 36% sequentially. In the third quarter, we were unable to recognize approximately $600,000 of Videotel revenue because of the application of the purchase accounting. Taking this adjustment into account, our non-GAAP revenues for the third quarter was $44.9 million. Looking at our service revenues more closely, we have now broken them out into a time which includes both VSAT and Inmarsat revenues and another category we call value-added services which includes revenues associated with entertainment and e-learning content, as well as professional services. In the third quarter, we recorded $16.4 million of airtime service revenues, which were up 20% from a year ago, and within that, the year-over-year growth in VSAT service revenue was 24%. Our VSAT ARPUs during the quarter for fixed and meter plans was solid with fixed rate plan ARPUs recording approximately $2,000 per month while our meter plans came in around $700 per month. Our value-added services in the quarter of $11 million which includes Videotel subscription revenues were, as expected, 75% higher than a year ago. Our product revenues in the third quarter was $16.9 million which was 17% lower than the same period last year and 20% lower sequentially. Both of these decreases were primarily attributable to guidance and stabilization product revenues which had generally been incorporated into our third quarter guidance. Guidance in stabilization hardware revenues of $6.6 million were 29% lower than the prior year, primarily reflecting the impact…

Thank you, sir. [Operator Instructions] We’ll go now to Rich Valera of Needham & Company. Rich Valera – Needham & Company: Thank you. Good morning.

Good morning. Rich Valera – Needham & Company: On your airtime revenue increase quarter-over-quarter, you took about 12% quarter-over-quarter increase. Is that all organic or was there something else in there to drive that increase which was bigger than I would have expected?

Yes. That was all organic. So there’s a little bit of seasonality in that. The summer tends to be better, but the Q2 number was a little bit lower than we expected and Q3 came in stronger than we expected. Rich Valera – Needham & Company: So, to this year with the sort of non-contract, the variation and it’s really on the kind of month-to-month usage. Is that fair or?

Yeah, I mean that you’re talking specifically about the sequential increase. Rich Valera – Needham & Company: Yeah.

The part of that is... Rich Valera – Needham & Company: Yeah, and the weaker than expected 2Q stronger than expected 3Q.

Right. So, there is a variable component in there that’s a somewhat significant. I’d say approximately 40% to 50% of our subscribers are now have some variable component in our airtime revenue. Rich Valera – Needham & Company: Okay. Fair enough. So, it sounds like your kind of early days trying to kind of cross-sell between IP-MobileCast and some of the new content you’ve procured here in the last year plus. Can you give us any sense of, one, have you actually seen any initial success in trying to do that? I know it’s early, but I’d be curious to get your color on that. And then any sense of what impact that might have next year? Probably too early to quantify, but sort of color on that would be helpful. Thanks.

Right. From a sort of just a general feedback point of view, what we’ve seen is that our sales teams are now making joint sale calls, and the people that we’re calling on really get it. They really like the fact that they have – that we’re solving a problem for them. In other words, they’re getting their charts updated automatically in the background where they don’t have to do anything. That adds real value. The fact that the training is being able to be updated, again, automatically, adds real value. You don’t have to worry about air time costs for that. So, the entertainment problem on board is a real thing. So, I think what we’re seeing is that when we go in and present sort of a unified presentation of all the new capabilities, people really get it, and they like it. So, I think that, as you say, it’s early days yet, but at the macro level, we’re getting confirmation that what we’ve done here makes an awful lot of sense, and people appreciate the value add that we’re bringing. Rich Valera – Needham & Company: Got you. Then on the guidance in stabilization business, I just wanted to hear that number again. How much of that backlog – I think the backlog is $19 million. How much of that was expected to shift in 4Q.

About $13 million scheduled. Rich Valera – Needham & Company: Okay. And then, Peter, you said that doesn’t include the two orders you announced, the $19 million and the $4 million. Is that correct?

The backlog does not include that. Rich Valera – Needham & Company: Right. Okay. But the $13 million does include some shipments of...

Correct. Rich Valera – Needham & Company: ...one or both of those orders?

That’s correct, yeah. Rich Valera – Needham & Company: Okay. Got it. And then, if you look to next year, obviously FOG has been pretty soft this year. How should we think of that business going forward? I don’t know if it’s too early, but in terms of year-over-year or is that business flat now to the near term and then start growing at some point, but just wondering how you’re thinking about FOG as we look at the next year.

Yeah. I think, we’re not ready to give our 2015 guidance yet, but at a high level, we definitely see the FOG business recovering next year. So we were sort of planning for low Q4 again, but we’ve got some new products. We’ve got a number of programs that were designed into that should start to hit in 2015. We’re also – some of these big TACNAV orders include FOG, like the $19 million TACNAV order as a FOG-based solution. So that’s also part of the reason that we’re beginning to merge some of the ways that we talk about these things because the TACNAV contract is FOG, but then we’re saying the FOG was really low last quarter. So, we’re going to have to just start blending and talking more about guidance and stabilization business as those two product lines start to merge. But to answer your question, we do see it growing. We’re investing in it. We’ve got new products coming. So we think it’s going to be a growth business next year. Rich Valera – Needham & Company: Got it. And then, Peter, would you give a non-GAAP EPS number, I know we kind of look at the company on both the GAAP and non-GAAP and you gave the GAAP for fourth quarter, but is there an equivalent non-GAAP number you’d be willing to provide us?

So, it depends obviously on the impact of discrete tax items which we don’t know about today, so we can’t forecast those and there will be some purchase accounting adjustment related to the Videotel acquisition in the fourth quarter that’s less than what we recorded in the current quarter. So non-GAAP should be slightly higher, but we haven’t put a figure on that. Rich Valera – Needham & Company: Great. And one more, did you give the CapEx and cash flow from operations numbers or if you could give them, that’d be great.

We do not give the cash flow from operations number. But the CapEx was $1.7 million in the quarter. Rich Valera – Needham & Company: Do you have a rough CFO number?

Not of this second. Rich Valera – Needham & Company: Okay. Fair enough. Thank you very much.

Thank you. With no further questions, I’d like to turn the conference back over for any additional or closing remarks.

Okay, if – I know there were a couple of conflicts with other earnings calls, so I will take some of these questions offline. If anybody has anything, feel free to call us directly or e-mail us. Thanks for your time.