Good day and welcome to the KVH First Quarter 2015 Earnings Call. Today's conference is being recorded. At this time, I like to turn the call over to Peter Rendall, Chief Financial Officer. Please go ahead, sir.

Good morning and thank you for joining us today to discuss KVH Industries first quarter results and update for 2015 guidance. With me on this call is Martin Kits van Heyningen, the company's Chief Executive Officer. We issued our first quarter earnings and 2015 guidance press release this morning, which is available on our website and also from our Investor Relations department. If you would like to listen to a recording of today's call you can access a webcast replay on our website. If you are 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 are subject to a number of assumptions and uncertainties that may cause our actual results to differ materially from those expressed in these statements. And we undertake no obligation to update or revise any forward-looking statements. We would also discuss certain non-GAAP financial measures and you will find definitions of these measures as well as reconciliations of these non-GAAP measures to comparable GAAP measures in our earnings press release. We encourage you to review the cautionary statements and other disclosures made in our SEC filings specifically those under the heading “Risk Factors” in our 10-k filed on March 17. The company's SEC filings are directly available from us, from the SEC or from the Investor Information section of our website. At this time, I'd like to turn the call over to Martin.

Thanks Peter, and thank you all for joining us today. We have got a lot of news to go over. KVH has gotten off to a good start in 2015 with a number of encouraging developments in every area of our business. Starting off with our first quarter results, we were right in line with our guidance of revenues of $41.3 million, were up 12% year-over-year from $37 million in Q1 of 2014. Our non-GAAP earnings of $0.06 per share were also in line with our expectations, and up from breakeven year-over-year. We are happy we are able to achieve our numbers in Q1 in light of the economic headwinds created by the strong US dollar and the impact of low oil prices on our customers in the Gulf of Mexico and the South American offshore markets. But overall, we’re seeing clear indications of increasing demand in each of our major market areas. That gives us confidence in meeting our projections for the year. Peter will cover the numbers in more detail shortly. I will provide the operating highlights for each of our key business areas. Beginning with our mobile broadband business, our Q1 revenues of $36.2 million were up 25% from Q1 of 2014. Our strategy of focusing on network, hardware, content and delivery is starting to pay off. We are starting to cross sell our new training, entertainment and other content with our maritime VSAT services. In fact, our sales pipeline has never been stronger. Our global TracPhone V11 has been selling particularly well as we continue to win multi-vessel orders from larger fleet customers. The dual band V11 is the only maritime VSAT product that can deliver truly global coverage with a 1 meter antenna. This is especially appealing as the coverage limitations of the new Inmarsat…

Thank you, Martin. Now I would like to discuss in more detail the financial results of the company for the first quarter. As Martin mentioned earlier, our first quarter revenues of $41.3 million were in line with the guidance range we previously gave and were 12% higher than the first quarter of 2014. The primary drivers for this growth were the incremental contribution of Videotel revenues and higher VSAT airtime revenues, which were offset somewhat by lower guidance and stabilization revenues. Our product revenues of $15.4 million in the first quarter decreased by 15% or $2.6 million from the prior year quarter mainly due to lower FOG and TACNAV revenues. Our first quarter service revenues of $25.9 million increased year-over-year by 37%, mainly due to the addition of Videotel in conjunction with our VSAT revenue growth. Looking at our service revenues more closely, our total airtime subscription revenues for the first quarter of $15.7 million were up 12% from the prior year period. Our VSAT ARPUs during the quarter for fixed rate plans were between $1800 to $1900 per month, while the ARPUs for our metered plans continued to run slightly lower than we have seen previously of $500 and $600 per month. Our content and service revenue in the quarter, which include subscription revenues associated with the entertainment and e-Learning content as well as any professional service fees was $10.2 million, which was up 112% higher than a year ago. Most of this increase was attributed to revenues from our Videotel e-Learning business, which was acquired in July last year offset by a reduction in non-recurring engineering primarily related to the Saudi Arabia National Guard contract, which was completed midway through 2014. We were pleased with the level of subscription based service revenues in the quarter, which were at…

[Operator Instructions] We will take our first question from Rich Valera with Needham & Company.

Thank you. You have identified a couple of headwinds including the oil and gas pressure on some of your customers, and then lighter than expected FOG in the first quarter, if you maintain the full year guidance, so is there something that we expect to make up for those sort of near-term headwinds of should we think about maybe shading the guidance below the mid-point at this point for the year?

Yes. Some of the FOG business miss were for contracts that we feel we have won, but we haven’t received the order yet. So we do expect to make that up. As far as the rest of the business we have backlog now in our VSAT, which we normally don’t have, like normally that sort of a shift. Today we get the order we ship it. So it is a little bit unusual for us to have backlog, and that has been growing. So we are in pretty good shape for some of these larger fleet deals. So we are pretty confident in the full-year number, especially given the fact that we have some specific contracts that are back end loaded. So overall, I think we are – we continue to be where we expected we would be when we gave our guidance for the year.

I don’t think you mentioned Martin in your prepared remarks roughly how many subs you added in the quarter, can you talk about that number?

Yes, we generally don’t talk about subs. We are still running around that 250 range. But again we do have backlog in terms of new unit sales, but we do have a fairly significant backlog on top of that now.

That is helpful, and then airtime revenue growth of up 12%, I’m just trying to understand what is behind that, you have been adding subs roughly an annualized rate of 1000 per year and if you add that on top of a base of say a 1000 subs roughly from last year, I’m sorry, 4000 subs, you would expect that business to maybe be growing, north of 20%, ex-churn or any kind of compression of ARPU, but you are running about half that, so just want to try to understand why is it growing at only 12% and how should we think about that revenue growth rate for the entire year, you are expecting that to see acceleration for the balance of the year and roughly how fast you think that can grow?

Yes. So it is a – it is a little bit complicated. So the factors that are playing off here, we are adding – we are continuing to add subs at the normal pace, but we have some meter plan customers, particularly in the oil and gas that are on either day rates or they are on plans with overages, and that is where we have seen a decline. So oil and gas isn’t that big a part of our business, all offshore vessels of all types, not just oil and gas put together are about 20% of our subscriber base. But sometimes those can be very significant users and as those – if the rigs get tied up, the vessels get tied up at the dock and your usage can fall dramatically. So that has really been the key factor. And then on the leisure side, sort of a late spring didn’t help either. So, even though most of our customers are on fixed rate plans, we do have probably 40% on what we call metered plans, meaning that their usage determines what their bill is every month. So that is where we are seeing variability.

Just to get back to my question, can you say roughly what is baked into the guidance at the mid-point for airtime growth this year, I mean I would think you would have to see an acceleration from 12% to make the mid-point of your guidance?

Well, I will let Peter answer that. But I don’t think we give specific guidance for airtime, but I think a little of it, it does depend on what happens in these variable meter plan markets. So, 60% of the customer base is fixed and that is very predictable because they are planned long-term contracts, and 40% is variable.

And Rich, this is Peter. Also remember that historically the year starts out, the first quarter is the low point and there is usually an acceleration in Q2 with Q3 being significantly higher, and then pulling back again in Q4. So you should start to see the acceleration increase in airtime growth over the next six months and that is baked into our projections, which is slightly below the 20% year-over-year.

Okay, I mean because the comps obviously have the same seasonality, you are comping off of should be a light first quarter of ’14, so I’m not sure how seasonality should weigh into the year-over-year growth, it sounds like you expect acceleration in year-over-year growth as we move through the year, is that fair?

That is correct.

Okay. That is it from me. Thank you gentlemen.

And at this time there are no other questions in queue. I will turn it back to our presenters for any closing remarks.

I will give people just another few seconds here if there are any additional questions or follow up questions?

[Operator Instructions] It looks like we do have a follow-up from Rich Valera with Needham & Company.

Thank you. On guidance and stabilization, just wanted to try to – first of all on the quarter I wonder if you could give the split of FOG versus TACNAV Peter?

In terms of the revenue split?

Yes, please. Thank you.

So, it would be – it is under 20% of TACNAV.

Did you say under 20% of TACNAV?

Just under 20% would be TACNAV.

Got you. And then just looking at the full year for that segment, obviously expect significantly better results in the back half, particularly for TACNAV, just wanted to get the feeling last quarter I think we talked about in aggregate guidance and stabilization being sort of flattish for the year obviously with a much stronger second half, is that still how you think about that business?

Yes, I think that is right and – but don’t forget last quarter and Q4 was very strong for TACNAV as well. So really what we’re forecasting here is kind of a repeat of what happened in 2014. So that is just sort of the order pattern that our customers have gotten into related to vehicle deliveries and larger programs, we are a small part of these multibillion-dollar programs.

And could you talk about the army vehicle program, any sense on the size of that or magnitude and how much of that – how much could that actually contribute in 2015?

Very little in 2015. So this is – and it is not currently in our guidance for 2015. So it would be more of a 2016 event. So it is LRIP type thing this year and production beyond. So it is really important to contract strategically and the opportunity it represents is on the order of 3000 to 5000 vehicles something like that. So it is very material.

Could you give any sense of the kind of content per vehicle that you might be able to get or like what you have a TACNAV unit in each vehicle?

Yes, our TACNAV systems typically sell for in the $10,000 to $20,000 range. This would be towards the higher end of that. So it is significant.

Got you, helpful. And just on MobileCast Martin, trying to get a sense of the potential revenue impact this year, do you think this year it is more about the enabling of broadband sales and kind of pulling in essentially or more broadband sales via MobileCast versus actual direct contribution from the service itself from a revenue perspective or just how do we think about how MobileCast affects the numbers this year?

Yes, no, I think you are right. I think as you start out, the big thing with all our value added services is really to have a differentiable product. We don’t want to become commoditized and see the margins get eroded, and the ARPUs get eroded. So we are really focusing on having something that is truly unique, and I think we are being very successful in that. So that is helping us as I mentioned in the prepared remarks is that about 75% of the new deals that we are working on, they want IP-MobileCast as part of the proposal, and it is part of the things that they are trialing. So, that is better than we expected. Now we haven’t yet seen that kind of a take up rate, but the point is that we are winning deals that we never would have won if we didn’t have it. That is sort of direct feedback from the sales team.

And Martin based on the significant backlog you have in the mini-VSAT business, which you said is pretty atypical, do you think you would see above your historical kind of 250ish a quarter installs as you move into the back half of the year?

I think so, and I think we will have to probably be clear about how we communicate that. If items that are ordered in prior periods get installed, just so that everybody is on the same page, but yes, we will start to see installations and activations from these prior periods, as we roll through the year.

Got it. Okay, that is it from me. Thanks gentlemen.

And at this time there are no other questions in queue.

Okay. As always if anyone has a follow up question feel free to call us or email us here at KVH. Thank you.