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8-K - 8-K - RigNet, Inc.d882188d8k.htm

Exhibit 99

 

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PRESS RELEASE FOR IMMEDIATE RELEASE

RigNet Announces Fourth Quarter and Full Year 2014 Earnings Results

 

    Quarterly revenue of $86.7 million for the fourth quarter, including $24.6 million from the Enterprise Energy business unit acquired from Inmarsat. Organic revenue increased by $2.4 million, or 4.0%, over the same quarter last year

 

    Quarterly Adjusted EBITDA of $18.5 million, an increase of 21.9% over the same quarter last year

 

    Quarterly Cash EPS of $14.0 million, or $0.78 per diluted share, for the fourth quarter, an increase of $0.06 per diluted share, or $9.4% over the same quarter last year

HOUSTON – March 2, 2015 – RigNet, Inc. (NASDAQ: RNET), a leading global provider of digital technology solutions to the oil and gas industry, today reported results for the quarterly and full year periods ended December 31, 2014.

Revenue was $86.7 million for the fourth quarter, including $24.6 million from the Enterprise Energy business unit acquired from Inmarsat. Organic revenue increased by $2.4 million, or 4.0%, for the three months ended December 31, 2014, as compared to the same period of 2013, primarily due to increased revenue-per-site and increased sites served, offset by decreased Telecommunications Systems Integration (TSI) revenue of $3.9 million. Revenue decreased by $1.2 million, or 1.3%, for the three months ended December 31, 2014, as compared to the previous quarter, primarily due to decreased activity in TSI and lower revenue earned from other sites not associated with our core offshore drilling rig communications market.

Quarterly Adjusted EBITDA was $18.5 million, or 21.4% of revenue, representing an increase of $3.3 million, or 21.9%, over the same quarter last year and a decrease of $1.6 million, or 8.1%, over the previous quarter. The increase compared to the same quarter last year resulted from organic growth in our core managed communications business and contributions from our acquisition. The decrease over the previous quarter was primarily due to decreased activity in TSI and increased professional fees.

Cash Earnings were $14.0 million, or $0.78 per diluted share, for the fourth quarter, an increase of $0.06 per diluted share, or 9.4% over the same quarter last year, and a decrease of $0.05 per diluted share, or 5.7% when compared to the previous quarter.

Capital expenditures were $9.1 million in the fourth quarter compared to $7.7 million in the same quarter last year and $10.0 million in the previous quarter.

For the full year ended December 31, 2014, revenue was a record $330.2 million, including $80.2 million from the Inmarsat acquisition. Organic revenue increased 13.3% compared to the prior year. Adjusted EBITDA was a record $73.7 million, or 22.3% of revenue, representing an increase of 31.3% over the prior year. Cash Earnings were a record $56.2 million, or $3.14 per diluted share, for all of 2014, representing an increase of $0.59 per diluted share, or 25.5%, compared to the prior year. Capital expenditures were $40.4 million, including $4.5 million for an ERP implementation, compared to $31.9 million in the prior year.

Mark B. Slaughter, chief executive officer and president, commented, “The RigNet team delivered record results in 2014 and finished the year strongly in the fourth quarter, demonstrating that the increasing digitization of the oilfield supports our approach of providing technology solutions across the life of the field. The challenging market conditions in front of us, with oil prices down significantly since last summer, present us with an opportunity to build market share and expand our geographic presence. Our previously announced plan to reallocate certain people investments from our North America land communications business and corporate back office functions to growth areas of our business, strikes the right balance, we believe, between prudence in the near-term while continuing to strengthen our capabilities and market positioning for the future. Finally, with our

 

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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strong financial position, consisting of minimal net debt, approximately $90 million available under our credit revolver and the ability to upsize our current credit facility, we are well positioned to execute on our growth plans, both organically and inorganically, under the current market conditions.”

 

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, March 3, 2015, to discuss RigNet’s 2014 fourth 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), Adjusted EBITDA, Cash Earnings and Cash EPS. Gross Profit (excluding depreciation and amortization), Adjusted EBITDA, Cash Earnings and Cash EPS 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, 2014, 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, foreign exchange impact of intercompany financing activities, (gain) loss on retirement of property, plant and equipment, change in fair value of derivatives, stock-based compensation, IPO or merger/acquisition costs and related bonuses, restructuring charges and non-recurring items. 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.

We define Cash Earnings as net income (loss), plus depreciation and amortization, impairment of goodwill, foreign exchange impact of intercompany financing activities, (gain) loss on retirement of property and equipment, change in fair value of derivatives, stock-based compensation, IPO or merger/acquisition costs and related bonuses, restructuring charges and non-recurring items. We define Cash EPS as Cash Earnings divided by diluted shares. Cash Earnings and Cash EPS should not be considered as an alternative to net income (loss), operating income (loss), basic or diluted earnings per share 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 digital technology solutions to the oil and gas industry, serving 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 1,200 remote sites in 50 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

Chief Financial Officer, RigNet, Inc.

 

Tel: +1 (281) 674-0699

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     Year Ended  
     December 31,
2014
    September 30,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
     (in thousands)  

Unaudited Consolidated Statements of Comprehensive Income Data:

          

Revenue

   $ 86,656      $ 87,819      $ 59,707      $ 330,174      $ 220,710   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

Cost of revenue (excluding depreciation and amortization)

  46,815      49,217      32,692      188,209      118,881   

Depreciation and amortization

  7,855      7,530      5,381      29,462      21,049   

Impairment of goodwill

  2,719      —        —        2,719      —     

Selling and marketing

  1,672      1,599      1,032      6,564      3,785   

General and administrative

  20,367      17,772      12,444      69,136      48,770   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

  79,428      76,118      51,549      296,090      192,485   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  7,228      11,701      8,158      34,084      28,225   

Other income (expense), net

  (1,235   (1,020   (1,198   (2,701   (2,523
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

  5,993      10,681      6,960      31,383      25,702   

Income tax expense

  (3,996   (4,751   (1,513   (15,400   (9,158
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

$ 1,997    $ 5,930    $ 5,447    $ 15,983    $ 16,544   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income Per Share—Basic and Diluted

Net income attributable to RigNet, Inc. common stockholders

$ 1,916    $ 5,857    $ 5,393    $ 15,635    $ 16,336   

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

$ 0.11    $ 0.34    $ 0.31    $ 0.90    $ 1.00   

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

$ 0.11    $ 0.33    $ 0.30    $ 0.87    $ 0.93   

Weighted average shares outstanding, basic

  17,454      17,443      17,190      17,321      16,268   

Weighted average shares outstanding, diluted

  17,874      17,987      17,792      17,899      17,557   

Unaudited Non-GAAP Data:

Gross Profit (excluding depreciation and amortization)

$ 39,841    $ 38,602    $ 27,015    $ 141,965    $ 101,829   

Gross Profit (excluding depreciation and amortization) margin

  46.0   44.0   45.2   43.0   46.1

Adjusted EBITDA

$ 18,541    $ 20,180    $ 15,205    $ 73,735    $ 56,178   

Adjusted EBITDA margin

  21.4   23.0   25.5   22.3   25.5

Cash Earnings

$ 13,994    $ 14,841    $ 12,788    $ 56,150    $ 44,737   

Cash EPS

$ 0.78    $ 0.83    $ 0.72    $ 3.14    $ 2.55   

 

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      Year Ended  
     December 31,
2014
     September 30,
2014
     December 31,
2013
     December 31,
2014
     December 31,
2013
 
     (in thousands)  

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

              

Gross profit

   $ 32,341       $ 31,400       $ 22,004       $ 113,868       $ 81,950   

Depreciation and amortization related to cost of revenue

     7,500         7,202         5,011         28,097         19,879   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Gross Profit (excluding depreciation and amortization)

$ 39,841    $ 38,602    $ 27,015    $ 141,965    $ 101,829   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended     Year Ended  
     December 31,
2014
    September 30,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
     (in thousands)  

Reconciliation of Net Income to Adjusted EBITDA:

          

Net income

   $ 1,997      $ 5,930      $ 5,447      $ 15,983      $ 16,544   

Interest expense

     551        588        904        2,185        2,283   

Depreciation and amortization

     7,855        7,530        5,381        29,462        21,049   

Impairment of goodwill

     2,719        —          —          2,719        —     

Foreign exchange impact of intercompany financing activities

     856        —          —          856        —     

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

     (35     74        (101     (44     66   

Stock-based compensation

     602        1,307        737        4,252        2,963   

Acquisition costs

     —          —          1,324        2,922        4,115   

Income tax expense

     3,996        4,751        1,513        15,400        9,158   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 18,541    $ 20,180    $ 15,205    $ 73,735    $ 56,178   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

  (551   (588   (904   (2,185   (2,283

Income tax expense

  (3,996   (4,751   (1,513   (15,400   (9,158
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash Earnings (non-GAAP measure)

$ 13,994    $ 14,841    $ 12,788    $ 56,150    $ 44,737   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted Shares

  17,874      17,987      17,792      17,899      17,557   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash EPS (non-GAAP measure)

$ 0.78    $ 0.83    $ 0.72    $ 3.14    $ 2.55   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

Unaudited Consolidated Balance Sheet Data:

    

Cash and cash equivalents

   $ 66,576      $ 59,822   

Restricted cash—current portion

     1,200        509   

Restricted cash—long-term

     62        1,321   

Total assets

     299,837        238,803   

Current maturities of long-term debt

     8,405        8,388   

Long-term debt

     77,706        51,175   
     Year Ended December 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

     43,763        28,045   

Net cash used in investing activities

     (65,334     (28,844

Net cash provided by financing activities

     30,536        3,202   

Changes in foreign currency translation

     (2,211     (2,325
  

 

 

   

 

 

 

Cash and cash equivalents, December 31,

$ 66,576    $ 59,822   
  

 

 

   

 

 

 

 

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

Selected Operational Data (4):

              

Offshore drilling rigs (1)

     262         266         277         285         278   

Strategic initiatives (2)

     253         262         298         293         307   

Other sites (3)

     612         665         657         643         628   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

  1,127      1,193      1,232      1,221      1,213   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes production facilities, energy support vessels and international land rigs
(3) Includes U.S. onshore drilling rigs, 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     Year Ended  
     December 31,
2014
    September 30,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
     (in thousands)  

Eastern Hemisphere:

          

Revenue

   $ 42,312      $ 43,759      $ 35,902      $ 163,935      $ 128,987   

Cost of revenue

     19,854        19,091        16,939        76,842        58,826   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

  22,458      24,668      18,963      87,093      70,161   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

  53.1   56.4   52.8   53.1   54.4

Depreciation and amortization

  3,721      3,452      2,417      13,249      8,701   

Selling, general and administrative

  4,051      3,932      3,851      14,750      14,948   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

$ 14,686    $ 17,284    $ 12,695    $ 59,094    $ 46,512   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 18,568    $ 20,159    $ 15,074    $ 72,605    $ 55,970   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

  43.9   46.1   42.0   44.3   43.4

Western Hemisphere:

Revenue

$ 31,129    $ 30,366    $ 14,781    $ 112,956    $ 54,221   

Cost of revenue

  13,170      16,582      6,898      58,996      25,062   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

  17,959      13,784      7,883      53,960      29,159   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

  57.7   45.4   53.3   47.8   53.8

Depreciation and amortization

  2,959      2,857      1,583      11,261      7,149   

Selling, general and administrative

  5,732      4,084      2,080      16,144      7,847   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

$ 9,268    $ 6,843    $ 4,220    $ 26,555    $ 14,163   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 11,858    $ 9,222    $ 5,545    $ 37,224    $ 20,959   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

  38.1   30.4   37.5   33.0   38.7

Telecoms Systems Integration:

Revenue

$ 13,215    $ 13,694    $ 9,024    $ 53,283    $ 37,502   

Cost of revenue

  11,185      11,051      7,355      42,644      29,569   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

  2,030      2,643      1,669      10,639      7,933   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

  15.4   19.3   18.5   20.0   21.2

Depreciation and amortization

  867      930      1,121      3,806      4,369   

Impairment of Goodwill

  2,719      —        —        2,719      —     

Selling, general and administrative

  1,413      920      337      3,829      1,057   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

$ (2,969 $ 793    $ 211    $ 285    $ 2,507   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 701    $ 1,737    $ 1,337    $ 6,840    $ 6,881   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

  5.3   12.7   14.8   12.8   18.3

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