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8-K - FORM 8-K - RigNet, Inc. | h80890e8vk.htm |
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Marty Jimmerson
RigNet, Inc.
+1 (281) 674-0699
investor.relations@rig.net
Contact: Marty Jimmerson
RigNet, Inc.
+1 (281) 674-0699
investor.relations@rig.net
RigNet, Inc. Announces Full-Year and Fourth Quarter 2010 Earnings Results
HOUSTON, TX,
March 28, 2011
| Revenue of $92.9 million grew $14.8% year-over-year | ||
| Adjusted EBITDA of $29.7 million grew 2.1% year-over-year | ||
| Net income of $1.9 million (excluding the effect of pre-tax, non-cash derivatives charges) grew 35.7% year-over-year | ||
| Capital expenditures of $13.5 million for the full-year 2010, including $3.9 million in the fourth quarter of 2010 | ||
| Balance sheet highlights as of December 31, 2010: |
¡ | Cash was $50.4 million (excluding restricted cash of $10.0 million) | ||
¡ | Working capital was $46.0 million | ||
¡ | Debt was $32.1 million |
| Selected operational data as of December 31, 2010: |
Eastern | Western | |||||||||||
Hemisphere | Hemisphere | U.S. Land | ||||||||||
Drilling rigs (1) |
141 | 85 | 334 | |||||||||
Other sites (2) |
120 | 155 | 86 |
(1) | Includes jack up, semi-submersible and drillship rigs | |
(2) | Includes production facilities, energy support vessels, related remote support offices and supply bases |
For the three months ended December 31, 2010, RigNet, Inc.
(RigNet or the Company) (NASDAQ: RNET), today announced revenue of $24.3 million, Adjusted
EBITDA of $8.4 million and a net loss of $4.7 million. For the three months ended December 31,
2009, revenue was $20.1 million, Adjusted EBITDA was $6.3 million and the net loss was $6.8
million.
Revenue increased by $4.2 million or 20.9% for the three months ended December 31, 2010 as compared
to the same period of 2009 due primarily to improvement in deepwater activity in Brazil and the
Gulf of Mexico, widened geographic footprint in U.S. land drilling, and the recovery of the U.S.
land drilling market. Adjusted EBITDA increased by $2.1 million or 33.3% over the prior year
period primarily due to increased revenue as described above.
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net
The net loss decreased by $2.1 million or 30.9%, to $4.7 million for the three months ended
December 31, 2010 as compared to $6.8 million for the same period of 2009. Net loss for these
periods included pre-tax, non-cash charges of $4.8 million and $7.1 million, respectively, related
to changes in the fair value of preferred stock derivatives. Concurrent with the Companys initial
public offering in December 2010, all preferred stock derivatives were settled. Accordingly, no
charges related to the fair value of these derivatives will be recorded in future periods.
Excluding the effect of the pre-tax, non-cash derivatives charges, net income would have been $0.1
million and $0.3 million for the three months ended December 31, 2010 and 2009, respectively.
For the twelve months ended December 31, 2010, revenue was $92.9 million, Adjusted EBITDA was $29.7
million and the net loss was $15.3 million. For the twelve months ended December 31, 2009, revenue
was $80.9 million, Adjusted EBITDA was $29.1 million and the net loss was $19.6 million.
Revenue increased by $12.0 million or 14.8% for the twelve months ended December 31, 2010 as
compared to the same period of 2009 for the same reasons mentioned above. Adjusted EBITDA
increased by $0.6 million or 2.1% for the twelve months ended December 31, 2010 as compared to the
same period of 2009.
The net loss decreased by $4.3 million or 21.9%, to $15.3 million for the year ended December 31,
2010 as compared to $19.6 million for the year ended December 31, 2009. Net loss for these periods
included non-cash charges of $17.2 million and $21.0 million, respectively, related to changes in
the fair value of preferred stock derivatives. Excluding the effect of the pre-tax, non-cash
derivatives charges, net income would have been $1.9 million and $1.4 million for the twelve months
ended December 31, 2010 and 2009, respectively.
Mark B. Slaughter, President and Chief Executive Officer, commented, The year 2010 was a
successful one for RigNet, with growth in deepwater markets in Brazil and the U.S. Gulf of Mexico,
a rapidly improving U.S. land drilling market and, finally, our public listing on the NASDAQ last
December. We achieved these positive year-over-year results despite the regulatory headwinds
resulting from the oil spill in the U.S. Gulf of Mexico and challenging worldwide economic
conditions through much of last year. We look forward to providing the robust and reliable remote
communications solutions our customers have come to expect from RigNet as well as to delivering
enhanced value for our stockholders.
A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time)
tomorrow to discuss RigNets fourth quarter and full-year results. The call may be accessed live
over the telephone by dialing (877) 845-0777, or for international callers, +1 (760) 298-5090.
Interested parties may also listen to a simultaneous webcast of the conference call by logging onto
RigNets website at www.rig.net in the Investors Webcasts and Presentations section. A
replay of the conference call webcast will also be available for approximately thirty days
following the call on our website.
Non-GAAP Financial Measures
This press release contains the following non-GAAP measures: Gross Profit and Adjusted EBITDA.
Gross Profit and Adjusted EBITDA are financial measures that are not calculated in accordance with
generally accepted accounting principles, or GAAP.
We define Gross Profit as revenue less cost of revenue. This measure is used to evaluate operating
margins and the effectiveness of cost management.
We define Adjusted EBITDA as net income (loss) plus interest expense, income tax expense (benefit),
depreciation and amortization, impairment of goodwill, (gain) loss on retirement of property and
equipment, change in fair value of derivatives, stock-based compensation and IPO costs and related
bonuses. Adjusted EBITDA should not be considered as an alternative to net income (loss),
operating income (loss) or any other measure of financial performance calculated and presented in
accordance with GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of
other companies because other companies may not calculate Adjusted EBITDA or similarly titled
measures in the same manner as we do. We prepare Adjusted EBITDA to eliminate the impact of items
that we do not consider indicative of our core operating performance. We encourage you to evaluate
these adjustments and the reasons we consider them appropriate.
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net
We believe Adjusted EBITDA is useful to investors in evaluating our operating performance for
the following reasons:
| Securities analysts use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies, and we understand our investor and analyst presentations include Adjusted EBITDA; | ||
| By comparing our Adjusted EBITDA in different periods, our investors can evaluate our operating results without the additional variations caused by items that we do not consider indicative of our core operating performance and which are not necessarily comparable from year to year; and | ||
| Adjusted EBITDA is an integral component of the financial ratio covenants of our debt agreement. |
Our management uses Adjusted EBITDA:
| To indicate profit contribution and cash flow availability for growth and/or debt retirement; | ||
| For planning purposes, including the preparation of our annual operating budget and as a key element of annual incentive programs; | ||
| To allocate resources to enhance the financial performance of our business; and | ||
| In communications with our board of directors concerning our financial performance. |
Although Adjusted EBITDA is frequently used by investors and securities analysts in their
evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not
consider it in isolation or as a substitute for analysis of our results of operations as reported
under GAAP. Some of these limitations are:
| Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or other contractual commitments; | ||
| Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; | ||
| Adjusted EBITDA does not reflect interest expense; | ||
| Adjusted EBITDA does not reflect cash requirements for income taxes; | ||
| Adjusted EBITDA does not reflect the stock based compensation expense component of employee compensation; | ||
| Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for these replacements; and | ||
| Other companies in our industry may calculate Adjusted EBITDA or similarly titled measures differently than we do, limiting its usefulness as a comparative measure. |
In order to compensate for these limitations, management presents its non-GAAP financial measures
in connection with its GAAP results and does not rely on any single financial measure to evaluate
its business. RigNet urges investors to review the reconciliation of Adjusted EBITDA to net
income, the most directly comparable financial measure calculated and presented in accordance with
GAAP below.
About RigNet
RigNet (NASDAQ: RNET) is a leading global provider of managed communications, networks and
collaborative applications dedicated to the oil and gas industry. RigNet provides solutions
ranging from fully-managed voice and data networks to more advanced applications that include video
conferencing and real-time data services to remote sites in over 30 countries on six continents,
effectively spanning the drilling and production industry. RigNet is based in Houston, Texas. For
more information, please visit www.rig.net.
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net
Forward Looking Statements
This press release includes forward-looking statements within the meaning of the safe harbor
provisions of the United States Private Securities Litigation Reform Act of 1995 that is,
statements related to the future, not past, events. Forward-looking statements are based on the
current expectations and include any statement that does not directly relate to a current or
historical fact. In this context, forward-looking statements often address our expected future
business and financial performance, and often contain words such as anticipate, believe,
intend, expect, plan, will or other similar words. These forward-looking statements
involve certain risks and uncertainties that ultimately may not prove to be accurate. Actual
results and future events could differ materially from those anticipated in such statements. For
further discussion of risks and uncertainties, individuals should refer to RigNets SEC filings.
RigNet undertakes no obligation and does not intend to update these forward-looking statements to
reflect events or circumstances occurring after this press release. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date of this press
release. All forward-looking statements are qualified in their entirety by this cautionary
statement.
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net
Three Months | ||||||||||||||||
Ended December 31, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in thousands) | ||||||||||||||||
Unaudited Consolidated Statements of Loss Data: |
||||||||||||||||
Revenue |
$ | 24,317 | $ | 20,065 | $ | 92,921 | $ | 80,936 | ||||||||
Expenses: |
||||||||||||||||
Cost of revenue |
11,237 | 8,965 | 42,479 | 35,165 | ||||||||||||
Depreciation and amortization |
3,634 | 2,958 | 14,983 | 12,554 | ||||||||||||
Impairment of goodwill |
| | | 2,898 | ||||||||||||
Selling and marketing |
527 | 628 | 2,103 | 2,187 | ||||||||||||
General and administrative |
4,898 | 5,231 | 20,756 | 16,444 | ||||||||||||
Total expenses |
20,296 | 17,782 | 80,321 | 69,248 | ||||||||||||
Operating income |
4,021 | 2,283 | 12,600 | 11,688 | ||||||||||||
Other expense, net |
(5,004 | ) | (7,534 | ) | (19,207 | ) | (25,851 | ) | ||||||||
Loss before income taxes |
(983 | ) | (5,251 | ) | (6,607 | ) | (14,163 | ) | ||||||||
Income tax expense |
(3,716 | ) | (1,594 | ) | (8,669 | ) | (5,457 | ) | ||||||||
Net loss |
$ | (4,699 | ) | $ | (6,845 | ) | $ | (15,276 | ) | $ | (19,620 | ) | ||||
Income (Loss) Per Share Basic and Diluted |
||||||||||||||||
Net income (loss) attributable to RigNet, Inc.
common stockholders |
$ | (5,514 | ) | $ | (7,508 | ) | $ | (18,807 | ) | $ | (22,118 | ) | ||||
Net income (loss) per share attributable to
RigNet, Inc.common stockholders, basic |
$ | (0.87 | ) | $ | (1.41 | ) | $ | (3.38 | ) | $ | (4.16 | ) | ||||
Net income (loss) per share attributable to
RigNet, Inc. common stockholders, diluted |
$ | (0.87 | ) | $ | (1.41 | ) | $ | (3.38 | ) | $ | (4.16 | ) | ||||
Weighted average shares outstanding, basic |
6,321 | 5,317 | 5,571 | 5,312 | ||||||||||||
Weighted average shares outstanding, diluted |
6,321 | 5,317 | 5,571 | 5,312 | ||||||||||||
Unaudited Non-GAAP Data: |
||||||||||||||||
Gross Profit |
$ | 13,080 | $ | 11,100 | $ | 50,442 | $ | 45,771 | ||||||||
Adjusted EBITDA |
$ | 8,429 | $ | 6,342 | $ | 29,740 | $ | 29,093 |
Three Months | ||||||||||||||||
Ended December 31, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in thousands) | ||||||||||||||||
Reconciliation of Net Loss
to Adjusted EBITDA: |
||||||||||||||||
Net loss |
$ | (4,699 | ) | $ | (6,845 | ) | $ | (15,276 | ) | $ | (19,620 | ) | ||||
Interest expense |
444 | 508 | 1,618 | 5,146 | ||||||||||||
Depreciation and amortization |
3,634 | 2,958 | 14,983 | 12,554 | ||||||||||||
Impairment of goodwill |
| | | 2,898 | ||||||||||||
(Gain) loss on retirement of property and equipment |
(26 | ) | 20 | 294 | 111 | |||||||||||
Change in fair value of preferred stock derivatives |
4,806 | 7,144 | 17,190 | 21,009 | ||||||||||||
Stock-based compensation |
103 | 74 | 437 | 277 | ||||||||||||
Initial public offering costs |
451 | 889 | 1,825 | 1,261 | ||||||||||||
Income tax expense |
3,716 | 1,594 | 8,669 | 5,457 | ||||||||||||
Adjusted EBITDA (non-GAAP measure) |
$ | 8,429 | $ | 6,342 | $ | 29,740 | $ | 29,093 | ||||||||
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Unaudited Consolidated Balance Sheet Data: |
||||||||
Cash and cash equivalents |
$ | 50,435 | $ | 11,379 | ||||
Restricted cash current portion |
2,500 | 2,500 | ||||||
Restricted cash long-term portion |
7,500 | 7,500 | ||||||
Total assets |
129,785 | 88,810 | ||||||
Current maturities of long-term debt |
8,655 | 8,664 | ||||||
Long-term debt |
23,484 | 21,022 | ||||||
Preferred stock derivatives |
| 30,446 | ||||||
Preferred stock |
| 17,333 | ||||||
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Unaudited Consolidated Statements of Cash Flows Data: |
||||||||
Cash and cash equivalents, January 1, |
$ | 11,379 | $ | 15,376 | ||||
Net cash provided by operating activities |
19,896 | 26,189 | ||||||
Net cash used by investing activities |
(13,449 | ) | (19,305 | ) | ||||
Net cash provided (used) by financing activities |
33,480 | (10,774 | ) | |||||
Changes in foreign currency translation |
(871 | ) | (107 | ) | ||||
Cash and cash equivalents, December 31, |
$ | 50,435 | $ | 11,379 | ||||
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net
Three Months Ended December 31, 2010 (Unaudited) | ||||||||||||||||||||
Eastern | Western | Corporate & | Consolidated | |||||||||||||||||
Hemisphere | Hemisphere | U.S. Land | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue |
$ | 15,411 | $ | 5,032 | $ | 3,874 | $ | | $ | 24,317 | ||||||||||
Cost of revenue |
6,029 | 2,362 | 2,114 | 732 | 11,237 | |||||||||||||||
Gross Profit (non-GAAP measure) |
9,382 | 2,670 | 1,760 | (732 | ) | 13,080 | ||||||||||||||
Depreciation and amortization |
1,998 | 1,112 | 638 | (114 | ) | 3,634 | ||||||||||||||
Selling, general and administrative |
1,313 | 572 | 670 | 2,870 | 5,425 | |||||||||||||||
Operating income |
$ | 6,071 | $ | 986 | $ | 452 | $ | (3,488 | ) | $ | 4,021 | |||||||||
Adjusted EBITDA (non-GAAP measure) |
$ | 8,510 | $ | 2,100 | $ | 1,091 | $ | (3,272 | ) | $ | 8,429 | |||||||||
Three Months Ended December 31, 2009 (Unaudited) | ||||||||||||||||||||
Eastern | Western | Corporate & | Consolidated | |||||||||||||||||
Hemisphere | Hemisphere | U.S. Land | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue |
$ | 15,082 | $ | 3,192 | $ | 2,233 | $ | (442 | ) | $ | 20,065 | |||||||||
Cost of revenue |
5,724 | 1,431 | 1,189 | 621 | 8,965 | |||||||||||||||
Gross Profit (non-GAAP measure) |
9,358 | 1,761 | 1,044 | (1,063 | ) | 11,100 | ||||||||||||||
Depreciation and amortization |
1,806 | 697 | 437 | 18 | 2,958 | |||||||||||||||
Selling, general and administrative |
1,663 | 606 | 612 | 2,978 | 5,859 | |||||||||||||||
Operating income |
$ | 5,889 | $ | 458 | $ | (5 | ) | $ | (4,059 | ) | $ | 2,283 | ||||||||
Adjusted EBITDA (non-GAAP measure) |
$ | 7,910 | $ | 1,436 | $ | 88 | $ | (3,092 | ) | $ | 6,342 | |||||||||
Three Months Ended September 30, 2010 (Unaudited) | ||||||||||||||||||||
Eastern | Western | Corporate & | Consolidated | |||||||||||||||||
Hemisphere | Hemisphere | U.S. Land | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue |
$ | 15,572 | $ | 5,332 | $ | 3,376 | $ | (46 | ) | $ | 24,234 | |||||||||
Cost of revenue |
5,696 | 2,209 | 1,795 | 816 | 10,516 | |||||||||||||||
Gross Profit (non-GAAP measure) |
9,876 | 3,123 | 1,581 | (862 | ) | 13,718 | ||||||||||||||
Depreciation and amortization |
1,895 | 1,061 | 709 | (104 | ) | 3,561 | ||||||||||||||
Selling, general and administrative |
2,091 | 589 | 788 | 2,801 | 6,269 | |||||||||||||||
Operating income |
$ | 5,890 | $ | 1,473 | $ | 84 | $ | (3,559 | ) | $ | 3,888 | |||||||||
Adjusted EBITDA (non-GAAP measure) |
$ | 7,255 | $ | 2,538 | $ | 791 | $ | (2,878 | ) | $ | 7,706 | |||||||||
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net
Year Ended December 31, 2010 (Unaudited) | ||||||||||||||||||||
Eastern | Western | Corporate & | Consolidated | |||||||||||||||||
Hemisphere | Hemisphere | U.S. Land | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue |
$ | 61,390 | $ | 19,012 | $ | 12,845 | $ | (326 | ) | $ | 92,921 | |||||||||
Cost of revenue |
24,015 | 8,918 | 6,943 | 2,603 | 42,479 | |||||||||||||||
Gross Profit (non-GAAP measure) |
37,375 | 10,094 | 5,902 | (2,929 | ) | 50,442 | ||||||||||||||
Depreciation and amortization |
8,020 | 3,973 | 3,122 | (132 | ) | 14,983 | ||||||||||||||
Selling, general and administrative |
6,833 | 2,364 | 2,580 | 11,082 | 22,859 | |||||||||||||||
Operating income (loss) |
$ | 22,522 | $ | 3,757 | $ | 200 | $ | (13,879 | ) | $ | 12,600 | |||||||||
Adjusted EBITDA (non-GAAP measure) |
$ | 30,627 | $ | 7,657 | $ | 3,321 | $ | (11,865 | ) | $ | 29,740 | |||||||||
Year Ended December 31, 2009 (Unaudited) | ||||||||||||||||||||
Eastern | Western | Corporate & | Consolidated | |||||||||||||||||
Hemisphere | Hemisphere | U.S. Land | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue |
$ | 60,917 | $ | 11,222 | $ | 9,850 | $ | (1,053 | ) | $ | 80,936 | |||||||||
Cost of revenue |
23,247 | 4,841 | 5,195 | 1,882 | 35,165 | |||||||||||||||
Gross Profit (non-GAAP measure) |
37,670 | 6,381 | 4,655 | (2,935 | ) | 45,771 | ||||||||||||||
Depreciation and amortization |
6,894 | 2,428 | 3,204 | 28 | 12,554 | |||||||||||||||
Impairment of goodwill |
| | 2,898 | | 2,898 | |||||||||||||||
Selling, general and administrative |
5,818 | 1,834 | 2,749 | 8,230 | 18,631 | |||||||||||||||
Operating income (loss) |
$ | 24,958 | $ | 2,119 | $ | (4,196 | ) | $ | (11,193 | ) | $ | 11,688 | ||||||||
Adjusted EBITDA (non-GAAP measure) |
$ | 31,950 | $ | 4,633 | $ | 2,025 | $ | (9,515 | ) | $ | 29,093 | |||||||||
###
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net