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8-K - FORM 8-K - RigNet, Inc.d723186d8k.htm

Exhibit 99

 

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PRESS RELEASE    FOR IMMEDIATE RELEASE

RigNet Announces First Quarter 2014 Earnings Results

 

    Revenue was a record $75.0 million for the first quarter, including $13.7 million from the Enterprise Energy business unit recently acquired from Inmarsat. Organic revenue increased by $8.5 million, or 16.1%, over the same quarter last year

 

    Adjusted EBITDA was a record $16.2 million in the first quarter, or 21.6% of revenue, including $1.0 million from the recently acquired business unit. Organic adjusted EBITDA increased by 20.5% over the same quarter last year

 

    Excluding acquisition costs, quarterly net income attributable to common stockholders was $4.5 million, or $0.25 per diluted share, an increase of $0.03 per diluted share, or 13.6%, over the same quarter last year

HOUSTON – May 12, 2014 – RigNet, Inc. (NASDAQ: RNET), a leading global technology solutions provider to the oil and gas industry, today reported quarterly results for the quarter ended March 31, 2014.

Revenue was a record $75.0 million for the first quarter, including $13.7 million from the Enterprise Energy business unit recently acquired from Inmarsat. Organic revenue increased by $8.5 million, or 16.1%, for the three months ended March 31, 2014, as compared to the same period of 2013, primarily due to increased sites served and increased revenue-per-site. Revenue increased by $15.3 million, or 25.7%, for the three months ended March 31, 2014, as compared to the previous quarter due to the acquisition of Inmarsat’s Enterprise Energy business unit, increased sites served and increased revenue-per-site.

Adjusted EBITDA was a record $16.2 million in the first quarter, or 21.6% of revenue, including $1.0 million from the recently acquired business unit. Organic adjusted EBITDA increased by $2.6 million, or 20.5%, over the same quarter last year. The increase was primarily due to growth in our core offshore business partially offset by costs associated with headcount additions to support our continued growth. Adjusted EBITDA increased $1.0 million, or 6.6%, over the previous quarter. The increase was primarily due to the addition of the Inmarsat business unit’s results over the last two months of the quarter.

Net income attributable to common stockholders was $2.2 million, or $0.12 per diluted share, for the first quarter. This amount included $2.3 million of acquisition costs associated with the purchase of Inmarsat’s Enterprise Energy business unit, which closed on January 31, 2014. Excluding acquisition costs, net income attributable to common stockholders was $4.5 million, or $0.25 per diluted share, an increase of $0.03 per diluted share, or 13.6%, over the same quarter last year, and a decrease of $0.05 per diluted share, or 16.7%, over the previous quarter.

Capital expenditures were $9.7 million in the first quarter compared to $6.6 million in the same quarter last year and $7.7 million in the previous quarter.

Mark B. Slaughter, chief executive officer and president, commented, “I was very pleased with our strong first quarter results, which included record revenue and EBITDA, reflecting continued strong growth in our core offshore rig communications business. We closed the Inmarsat strategic transaction on January 31 and have integration efforts well underway. We are delighted with our new long-term relationship with Inmarsat that includes our acquisition of their Enterprise Energy business unit as well as our becoming a premier partner in oil and gas for their Global Express and L-band service platforms. This transaction brings us broadened services and capabilities that will better serve our customers and position the Company to enhance returns to stockholders. Looking forward, we are maintaining a positive view of the market environment as we advance our strategy of becoming a technology solutions provider across the life of the field.”

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, May 13, 2014, to discuss RigNet’s 2014 first quarter results. The call may be accessed live over the telephone by dialing +1 (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 RigNet’s website at www.rig.net in the Investors – Webcasts and Presentations section. A replay of the conference call webcast will also be available on our website for approximately thirty days following the call.

Non-GAAP Financial Measures

This press release contains the following non-GAAP measures: Gross Profit (excluding depreciation and amortization) and Adjusted EBITDA. Gross Profit (excluding depreciation and amortization) and Adjusted EBITDA are financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP. We refer you to the Company’s most recent 10-K filing for the year ended December 31, 2013, for a more detailed discussion of the uses and limitations of our non-GAAP financial measures.

GAAP defines gross profit as revenue less cost of revenue, and includes in costs of revenue depreciation and amortization expenses related to revenue-generating long-lived and intangible assets. We define Gross Profit (excluding depreciation and amortization) as revenue less cost of revenue (excluding depreciation and amortization). This measure differs from the GAAP definition of gross profit as we do not include the impact of depreciation and amortization expenses related to revenue-generating long-lived and intangible assets which represent non-cash expenses. We use this measure 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 or merger/acquisition 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.

About RigNet

RigNet (NASDAQ: RNET) is a leading global provider of managed remote communications, telecoms systems integration and collaborative applications dedicated to the oil and gas industry, focusing on offshore and onshore drilling rigs, energy production facilities and energy maritime vessels. 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 over 1,100 remote sites in over 45 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. RigNet is a registered trademark of RigNet, Inc.

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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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” 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 RigNet’s 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.

 

Investor contact   
Marty Jimmerson    Tel: +1 (281) 674-0699
Chief Financial Officer, RigNet, Inc.    investor.relations@rig.net

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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    Three Months Ended  
    March 31,     December 31,     March 31,  
    2014     2013     2013  
    (in thousands)  

Unaudited Consolidated Statements of Comprehensive Income Data:

     

Revenue

  $ 75,043      $ 59,707      $ 52,818   
 

 

 

   

 

 

   

 

 

 

Expenses:

     

Cost of revenue (excluding depreciation and amortization)

    46,521        32,692        29,122   

Depreciation and amortization

    6,797        5,381        4,969   

Selling and marketing

    1,529        1,032        787   

General and administrative

    14,843        12,444        11,760   
 

 

 

   

 

 

   

 

 

 

Total expenses

    69,690        51,549        46,638   
 

 

 

   

 

 

   

 

 

 

Operating income

    5,353        8,158        6,180   

Other income (expense), net

    170        (1,198     107   
 

 

 

   

 

 

   

 

 

 

Income before income taxes

    5,523        6,960        6,287   

Income tax expense

    (3,215     (1,513     (2,512
 

 

 

   

 

 

   

 

 

 

Net income

  $ 2,308      $ 5,447      $ 3,775   
 

 

 

   

 

 

   

 

 

 

Income Per Share—Basic and Diluted

     

Net income attributable to RigNet, Inc. common stockholders

  $ 2,195      $ 5,393      $ 3,735   

Net income per share attributable to RigNet, Inc. common stockholders, basic

  $ 0.13      $ 0.31      $ 0.24   

Net income per share attributable to RigNet, Inc. common stockholders, diluted

  $ 0.12      $ 0.30      $ 0.22   

Weighted average shares outstanding, basic

    17,267        17,190        15,759   

Weighted average shares outstanding, diluted

    17,993        17,792        17,327   

Unaudited Non-GAAP Data:

     

Gross Profit (excluding depreciation and amortization)

  $ 28,522      $ 27,015      $ 23,696   

Gross Profit (excluding depreciation and amortization) margin

    38.0     45.2     44.9

Adjusted EBITDA

  $ 16,208      $ 15,205      $ 12,621   

Adjusted EBITDA margin

    21.6     25.5     23.9
    Three Months Ended  
    March 31,     December 31,     March 31,  
    2014     2013     2013  
    (in thousands)  

Reconciliation of Gross Profit to Gross Profit (excluding depreciation and amortization):

     

Gross profit

  $ 22,054      $ 22,004      $ 18,968   

Depreciation and amortization related to cost of revenue

    6,468        5,011        4,728   
 

 

 

   

 

 

   

 

 

 

Gross Profit (excluding depreciation and amortization)

  $ 28,522      $ 27,015      $ 23,696   
 

 

 

   

 

 

   

 

 

 
    Three Months Ended  
    March 31,     December 31,     March 31,  
    2014     2013     2013  
    (in thousands)  

Reconciliation of Net Income to Adjusted EBITDA:

     

Net income

  $ 2,308      $ 5,447      $ 3,775   

Interest expense

    481        904        507   

Depreciation and amortization

    6,797        5,381        4,969   

(Gain) loss on sales of property, plant and equipment, net of retirements

    (73     (101     41   

Stock-based compensation

    1,148        737        817   

Acquisition costs

    2,332        1,324        —     

Income tax expense

    3,215        1,513        2,512   
 

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

  $ 16,208      $ 15,205      $ 12,621   
 

 

 

   

 

 

   

 

 

 

 

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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     March 31,     December 31,  
     2014     2013  
     (in thousands)  

Unaudited Consolidated Balance Sheet Data:

    

Cash and cash equivalents

   $ 66,747      $ 59,822   

Restricted cash—current portion

     919        509   

Restricted cash—long-term

     929        1,321   

Total assets

     283,844        238,803   

Current maturities of long-term debt

     8,382        8,388   

Long-term debt

     74,070        51,175   
     Three Months Ended  
     March 31,  
     2014     2013  
     (in thousands)  

Unaudited Consolidated Statements of Cash Flows Data:

    

Cash and cash equivalents, January 1,

   $ 59,822      $ 59,744   

Net cash provided by operating activities

     15,053        3,890   

Net cash used in investing activities

     (31,945     (5,265

Net cash provided by (used in) financing activities

     23,661        (2,035

Changes in foreign currency translation

     156        (1,618
  

 

 

   

 

 

 

Cash and cash equivalents, March 31,

   $ 66,747      $ 54,716   
  

 

 

   

 

 

 

 

     1st Quarter      2nd Quarter      3rd Quarter      4th Quarter      1st Quarter  
     2013      2013      2013      2013      2014  

Selected Operational Data (4):

              

Offshore drilling rigs (1)

     245         255         251         262         266   

U.S. onshore drilling rigs

     271         261         250         266         284   

Strategic initiatives (2)

     264         291         265         253         262   

Other sites (3)

     344         331         330         346         381   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,124         1,138         1,096         1,127         1,193   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes production facilities, energy support vessels and international land rigs
(3) Includes completion sites, man-camps, remote offices and supply bases
(4) Excludes sites acquired from Inmarsat’s Enterprise Energy business unit

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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     Three Months Ended  
     March 31,     December 31,     March 31,  
     2014     2013     2013  
     (in thousands)  

Eastern Hemisphere:

      

Revenue

   $ 38,022      $ 35,902      $ 28,615   

Cost of revenue

     18,693        16,939        13,199   
  

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     19,329        18,963        15,416   
  

 

 

   

 

 

   

 

 

 

Gross Profit margin

     50.8     52.8     53.9

Depreciation and amortization

     2,723        2,417        1,943   

Selling, general and administrative

     2,984        3,851        3,523   
  

 

 

   

 

 

   

 

 

 

Operating income

   $ 13,622      $ 12,695      $ 9,950   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 16,691      $ 15,074      $ 12,633   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     43.9     42.0     44.1

Western Hemisphere:

      

Revenue

   $ 21,408      $ 14,781      $ 12,415   

Cost of revenue

     12,672        6,898        5,281   
  

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     8,736        7,883        7,134   
  

 

 

   

 

 

   

 

 

 

Gross Profit margin

     40.8     53.3     57.5

Depreciation and amortization

     2,763        1,583        1,794   

Selling, general and administrative

     2,289        2,080        1,677   
  

 

 

   

 

 

   

 

 

 

Operating income

   $ 3,684      $ 4,220      $ 3,663   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 6,580      $ 5,545      $ 5,417   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     30.7     37.5     43.6

Telecom Systems Integration:

      

Revenue

   $ 15,613      $ 9,024      $ 11,788   

Cost of revenue

     12,942        7,355        9,331   
  

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     2,671        1,669        2,457   
  

 

 

   

 

 

   

 

 

 

Gross Profit margin

     17.1     18.5     20.8

Depreciation and amortization

     1,055        1,121        1,085   

Selling, general and administrative

     653        337        130   
  

 

 

   

 

 

   

 

 

 

Operating income

   $ 963      $ 211      $ 1,242   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 2,011      $ 1,337      $ 2,327   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     12.9     14.8     19.7

NOTE: Consolidated balances include the three segments above along with corporate activities and intercompany eliminations.

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1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net