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8-K - FORM 8-K - RigNet, Inc.d388568d8k.htm

Exhibit 99

 

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PRESS RELEASE    FOR IMMEDIATE RELEASE

RigNet Announces First Quarter 2017 Earnings Results

 

    Quarterly revenue of $48.1 million consisting of:

 

    Managed Services revenue of $44.1 million,

 

    Systems Integration and Automation (SI&A) revenue of $4.0 million

 

    Quarterly GAAP Net Loss attributable to common stockholders of $2.0 million, $0.11 per share

 

    Quarterly Adjusted EBITDA of $7.2 million

 

    Quarterly Unlevered Free Cash Flow of $4.1 million after capital expenditures of $3.2 million

HOUSTON – May 8, 2017 – RigNet, Inc. (NASDAQ: RNET), a leading global provider of customized systems and solutions serving customers with complex data networking and operational requirements, today reported results for the quarter ended March 31, 2017.

Quarterly revenue was $48.1 million representing a decrease of $4.7 million compared to the prior quarter and a decrease of $14.3 million compared to the prior year quarter. The revenue decrease compared to the prior quarter reflects a $3.1 million decrease in Managed Service revenue and a $1.6 million decrease in SI&A revenue. The decrease compared to the prior year quarter reflects a $10.3 million decrease in Managed Services revenue and a decrease of $3.9 million in SI&A revenue. Revenue continues to be impacted by previously announced reductions in offshore drilling.

GAAP net loss attributable to common stockholders was $2.0 million, or $0.11 per share, compared to net loss attributable to common stockholders of $3.8 million, or $0.21 per share, in the prior quarter and net loss attributable to common stockholders of $1.3 million, or $0.08 per share, in the prior year quarter.

Quarterly Adjusted EBITDA was $7.2 million compared to $9.4 million in the prior quarter and $10.7 million in the prior year quarter. The decrease compared to the prior quarter and prior year quarter was due primarily to decreased revenue partially offset by a reduction in ongoing operating expenses.

Capital expenditures were $3.2 million compared to $3.7 million in the prior quarter and $4.9 million in the prior year quarter. Unlevered Free Cash Flow, defined as Adjusted EBITDA less capital expenditures, was $4.1 million compared to $5.7 million in the prior quarter and $5.8 million in the prior year quarter.

 

15115  PARK  ROW  BLVD,  SUITE  300,  HOUSTON,  TEXAS   77084-4947  PHONE  281.674.0100  FAX  281.674.0101  http:/www.rig.net


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In the quarter ended December 31, 2016, the Company recorded $0.6 million of restructuring charges, and recorded $2.3 million of revenue and $1.5 million of cost for equipment sales to a certain customer. In the quarter ended March 31, 2016, the Company recorded $1.9 million of executive departure costs, acquisition costs of $0.2 million, $0.3 million of CEO search costs, and ERP implementation costs of $0.4 million. The restructuring charges, acquisition costs and executive departure costs are added back to net loss in our non-GAAP measures below.

Steven E. Pickett, chief executive officer and president, commented, “I am pleased with our team’s efforts during the quarter which, among other things, resulted in $4.1 million of Unlevered Free Cash Flow and further improvements to our balance sheet. Despite sluggishness in the offshore drilling market, we are encouraged by signs of recovery in the upstream sector as a whole, where during the first quarter, we recorded increases in the number of sites that we are serving. We continue streamlining the business, resulting in lower costs and better service consistency for our customers around the world.”

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, May 9, 2017, to discuss RigNet’s first quarter 2017 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: Adjusted EBITDA and Unlevered Free Cash Flow. Adjusted EBITDA and Unlevered Free Cash Flow 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 filings for the year ended December 31, 2016 for a more detailed discussion of the uses and limitations of our non-GAAP financial measures.

We define Adjusted EBITDA as net income (loss) plus interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, intangibles, property, plant and equipment, foreign exchange impact of intercompany financing activities, (gain) loss on retirement of property, plant and equipment, change in fair value of the TECNOR earn-out, stock-based compensation, merger/acquisition costs, executive departure costs, restructuring charges and non-recurring items.

We define Unlevered Free Cash Flow as Adjusted EBITDA less capital expenditures. Unlevered Free Cash Flow 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.

 

15115  PARK  ROW  BLVD,  SUITE  300,  HOUSTON,  TEXAS   77084-4947  PHONE  281.674.0100  FAX  281.674.0101  http://www.rig.net


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About RigNet

RigNet (NASDAQ:RNET) is a leading global provider of customized systems and solutions serving customers with complex data networking and operational requirements. RigNet provides solutions ranging from fully-managed voice and data networks to more advanced applications that include video conferencing, crew welfare, asset monitoring and real-time data services. RigNet is based in Houston, Texas and has operations around the globe.

For more information on RigNet, please visit www.rig.net. RigNet is a registered trademark of RigNet, Inc.

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   
Charles E. Schneider    Tel: +1 (281) 674-0699
Chief Financial Officer, RigNet, Inc.    investor.relations@rig.net

 

15115  PARK  ROW  BLVD,  SUITE  300,  HOUSTON,  TEXAS   77084-4947  PHONE  281.674.0100  FAX  281.674.0101  http://www.rig.net


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     Three Months Ended  
     March 31,
2017
    December 31,
2016
    March 31,
2016
 
     (in thousands)  

Unaudited Consolidated Statements of Comprehensive Income Data:

      

Revenue

   $ 48,072     $ 52,759     $ 62,341  
  

 

 

   

 

 

   

 

 

 

Expenses:

      

Cost of revenue (excluding depreciation and amortization)

     29,875       30,347       36,276  

Depreciation and amortization

     7,316       7,995       8,243  

Selling and marketing

     1,436       1,613       1,892  

General and administrative

     10,512       12,797       15,341  
  

 

 

   

 

 

   

 

 

 

Total expenses

     49,139       52,752       61,752  
  

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (1,067     7       589  

Other income (expense), net

     (506     (584     (954
  

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (1,573     (577     (365

Income tax expense

     (414     (3,149     (902
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (1,987   $ (3,726   $ (1,267
  

 

 

   

 

 

   

 

 

 

Loss Per Share - Basic and Diluted

      

Net loss attributable to RigNet, Inc. common stockholders

   $ (2,026   $ (3,765   $ (1,333

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

   $ (0.11   $ (0.21   $ (0.08

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

   $ (0.11   $ (0.21   $ (0.08

Weighted average shares outstanding, basic

     17,873       17,833       17,613  

Weighted average shares outstanding, diluted

     17,873       17,833       17,613  

Unaudited Non-GAAP Data:

      

Adjusted EBITDA

   $ 7,225     $ 9,357     $ 10,666  

Unlevered Free Cash Flow

   $ 4,065     $ 5,671     $ 5,761  

 

15115  PARK  ROW  BLVD,  SUITE  300,  HOUSTON,  TEXAS   77084-4947  PHONE  281.674.0100  FAX  281.674.0101  http://www.rig.net


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     Three Months Ended  
     March 31,
2017
    December 31,
2016
    March 31,
2016
 
     (in thousands)  

Reconciliation of Net Loss to Adjusted EBITDA and Unlevered Free Cash Flow:

      

Net loss

   $ (1,987   $ (3,726   $ (1,267

Interest expense

     619       668       668  

Depreciation and amortization

     7,316       7,995       8,243  

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

     37       11       (16

Stock-based compensation

     826       681       714  

Restructuring costs

     —         579       (632

Executive departure costs

     —         —         1,884  

Acquisition costs

     —         —         170  

Income tax expense

     414       3,149       902  
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 7,225     $ 9,357     $ 10,666  
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 7,225     $ 9,357     $ 10,666  

Capital expenditures

     3,160       3,686       4,905  
  

 

 

   

 

 

   

 

 

 

Unlevered Free Cash Flow (non-GAAP measure)

   $ 4,065     $ 5,671     $ 5,761  
  

 

 

   

 

 

   

 

 

 

 

     March 31,
2017
     December 31,
2016
 
     (in thousands)  

Unaudited Consolidated Balance Sheet Data:

     

Cash and cash equivalents

   $ 55,239      $ 57,152  

Restricted cash - current portion

     40        139  

Restricted cash - long-term portion

     1,500        1,514  

Total assets

     224,733        230,972  

Current maturities of long-term debt

     8,539        8,478  

Long-term debt

     45,706        52,990  

 

     Three Months Ended
March 31,
 
     2017     2016  
     (in thousands)  

Unaudited Consolidated Statements of Cash Flows Data:

    

Cash and cash equivalents, January 1,

   $ 57,152     $ 60,468  

Net cash provided by operating activities

     8,806       1,890  

Net cash used in investing activities

     (3,784     (8,361

Net cash used in financing activities

     (6,639     (2,363

Changes in foreign currency translation

     (296     345  
  

 

 

   

 

 

 

Cash and cash equivalents, March 31,

   $ 55,239     $ 51,979  
  

 

 

   

 

 

 

 

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     1st Quarter
2017
     4th Quarter
2016
     3rd Quarter
2016
     2nd Quarter
2016
     1st Quarter
2016
 

Selected Operational Data:

              

Offshore drilling rigs (1)

     173        175        194        211        232  

Offshore Production

     290        280        287        287        291  

Maritime

     124        122        128        105        107  

International Land

     104        104        101        99        101  

Other sites (2)

     304        240        238        236        287  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     995        921        948        938        1,018  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes U.S. onshore drilling and production sites, completion sites, man-camps, remote offices, and supply bases and offshore-related supply bases, shore offices, tender rigs and platform rigs

 

     Three Months Ended  
     March 31,
2017
    December 31,
2016
     March 31,
2016
 
     (in thousands)  

Managed Services

       

Revenue

   $ 44,094     $ 47,188      $ 54,421  

Cost of revenue

     26,802       27,118        31,000  

Depreciation and amortization

     6,031       6,549        7,189  

Selling, general and administrative

     4,956       7,858        7,895  
  

 

 

   

 

 

    

 

 

 

Operating income

   $ 6,305     $ 5,663      $ 8,337  
  

 

 

   

 

 

    

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 12,448     $ 12,091      $ 14,994  
  

 

 

   

 

 

    

 

 

 

Systems Integration and Automation

       

Revenue

   $ 3,978     $ 5,571      $ 7,920  

Cost of revenue

     3,073       3,229        5,276  

Depreciation and amortization

     587       585        29  

Selling, general and administrative

     470       524        921  
  

 

 

   

 

 

    

 

 

 

Operating income (loss)

   $ (152   $ 1,233      $ 1,694  
  

 

 

   

 

 

    

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 435     $ 1,939      $ (977
  

 

 

   

 

 

    

 

 

 

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

###

 

15115  PARK  ROW  BLVD,  SUITE  300,  HOUSTON,  TEXAS   77084-4947  PHONE  281.674.0100  FAX  281.674.0101  http://www.rig.net