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8-K - FORM 8-K - RigNet, Inc.d482827d8k.htm

Exhibit 99

 

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PRESS RELEASE

FOR IMMEDIATE RELEASE

RigNet Announces Third Quarter 2017 Earnings Results

 

    Quarterly revenue of $50.8 million consisting of:

 

    Managed Services revenue of $40.2 million

 

    Applications and Internet-of-Things (Apps & IoT) revenue of $5.0 million

 

    Systems Integration revenue of $5.6 million

 

    Quarterly GAAP Net Loss attributable to common stockholders of $4.2 million, $0.23 per share

 

    Quarterly Adjusted EBITDA of $7.8 million

 

    Quarterly Unlevered Free Cash Flow of $2.0 million after capital expenditures of $5.9 million

HOUSTON – November 6, 2017 – RigNet, Inc. (NASDAQ: RNET), a global technology company that provides customized communications services, applications and cybersecurity solutions, today reported results for the quarter ended September 30, 2017.

Quarterly revenue was $50.8 million representing an increase of $1.7 million compared to the prior quarter and an increase of $0.2 million compared to the prior year quarter. The revenue increase compared to the prior quarter reflects a $2.6 million increase in Apps & IoT partially offset by a $0.5 million decrease in Systems Integration revenue and a $0.4 million decrease in Managed Services revenue. The increase compared to the prior year quarter reflects a $3.4 million increase in Apps & IoT and a $2.2 million increase in Systems Integration revenue partially offset by a $5.4 million decrease in Managed Services revenue. Revenue increased due to our strategy of growth into the application layer and internet-of-things space coupled with the acquisition of DTS and ESS, partially offset by previously announced sluggishness in offshore drilling.

GAAP net loss attributable to common stockholders was $4.2 million, or $0.23 per share, compared to net loss attributable to common stockholders of $4.2 million, or $0.24 per share, in the prior quarter and net loss attributable to common stockholders of $1.7 million, or $0.09 per share, in the prior year quarter.

Quarterly Adjusted EBITDA was $7.8 million compared to $6.1 million in the prior quarter and $8.5 million in the prior year quarter. The increase compared to the prior quarter was due primarily to increased revenue. The decrease compared to the prior year quarter was due primarily to ongoing operating expenses partially offset by increased revenue.

Capital expenditures were $5.9 million compared to $4.9 million in the prior quarter and $1.9 million in the prior year quarter. Unlevered Free Cash Flow, defined as Adjusted EBITDA less capital expenditures, was $2.0 million compared to $1.1 million in the prior quarter and $6.6 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 third quarter of 2017, after the acquisition of ESS, the Company reorganized its business and reportable segments into Managed Services, Apps & IoT and Systems Integration. All historical segment financial data has been recast to conform to the current presentation. In the quarter ended September 30, 2017, the Company recorded $0.8 million in acquisition costs and $0.8 million in restructuring charges. In the quarter ended June 30, 2017, the Company recorded $1.9 million in acquisition costs and a gain of $0.8 million for the change in fair value of an earn-out. In the quarter ended September 30, 2016, the Company recorded net restructuring charges of $0.8 million offset by $1.3 million from the change in the fair value of an earn-out. The restructuring charges, acquisition costs and change in fair value of the earn-out are added back to net loss in our non-GAAP measures below.

Steven E. Pickett, chief executive officer and president, commented, “I am proud of how the team responded to our customers’ needs during and in the wake of Hurricane Harvey. Despite those challenges, the team delivered revenue growth for the second consecutive quarter and site count growth for the third consecutive quarter. During the third quarter, our team expanded RigNet’s market position by increasing site count by approximately 12% quarter over quarter while delivering $2.0 million in Unlevered Free Cash Flow.”

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, November 7, 2017, to discuss RigNet’s third 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 filing 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 earn-outs and contingent consideration, stock-based compensation, merger and acquisition costs, executive departure costs, restructuring charges and non-recurring items.

We define Unlevered Free Cash Flow as Adjusted EBITDA less capital expenditures. Adjusted EBITDA and 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 global technology company that provides customized communications services, applications and cybersecurity solutions enhancing customer decision making and business performance. RigNet is headquartered in Houston, Texas with operations around the world.

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     Nine Months Ended  
     September 30,
2017
    June 30,
2017
    September 30,
2016
    September 30,
2017
    September 30,
2016
 
    

(in thousands, except per share amounts)

 

Unaudited Consolidated Statements of Comprehensive Income Data:

          

Revenue

   $ 50,844     $ 49,162     $ 50,612     $ 148,078     $ 167,864  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

          

Cost of revenue (excluding depreciation and amortization)

     32,385       33,038       29,860       95,298       99,412  

Depreciation and amortization

     7,999       7,552       8,305       22,867       25,561  

Impairment of intangible assets

     —         —         —         —         397  

Selling and marketing

     2,400       2,132       1,724       5,968       5,559  

General and administrative

     11,011       9,878       10,476       31,401       39,393  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     53,795       52,600       50,365       155,534       170,322  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (2,951     (3,438     247       (7,456     (2,458

Other expense, net

     (480     (873     (1,155     (1,859     (2,437
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (3,431     (4,311     (908     (9,315     (4,895

Income tax benefit (expense)

     (762     101       (540     (1,075     (2,676
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (4,193   $ (4,210   $ (1,448   $ (10,390   $ (7,571
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss Per Share - Basic and Diluted

          

Net loss attributable to RigNet, Inc. common stockholders

   $ (4,232   $ (4,249   $ (1,658   $ (10,507   $ (7,742

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

   $ (0.23   $ (0.24   $ (0.09   $ (0.58   $ (0.44

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

   $ (0.23   $ (0.24   $ (0.09   $ (0.58   $ (0.44

Weighted average shares outstanding, basic

     18,086       17,985       17,782       17,982       17,677  

Weighted average shares outstanding, diluted

     18,086       17,985       17,782       17,982       17,677  

Unaudited Non-GAAP Data:

          

Adjusted EBITDA

   $ 7,843     $ 6,053     $ 8,534     $ 21,121     $ 27,824  

Unlevered Free Cash Flow

   $ 1,990     $ 1,142     $ 6,598     $ 7,197     $ 16,313  

 

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     Nine Months Ended  
     September 30,
2017
    June 30,
2017
    September 30,
2016
    September 30,
2017
    September 30,
2016
 
                 (in thousands)              

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

          

Net loss

   $ (4,193   $ (4,210   $ (1,448   $ (10,390   $ (7,571

Interest expense

     689       613       729       1,921       2,040  

Depreciation and amortization

     7,999       7,552       8,305       22,867       25,561  

Impairment of intangible assets

     —         —         —         —         397  

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

     5       13       (14     55       (164

Stock-based compensation

     1,007       1,116       866       2,949       2,708  

Restructuring costs

     767       —         835       767       1,332  

Change in fair value of earn-out/contingent consideration

     —         (846     (1,279     (846     (1,279

Executive departure costs

     —         —         —         —         1,884  

Acquisition costs

     807       1,916       —         2,723       240  

Income tax expense

     762       (101     540       1,075       2,676  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 7,843     $ 6,053     $ 8,534     $ 21,121     $ 27,824  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 7,843     $ 6,053     $ 8,534     $ 21,121     $ 27,824  

Capital expenditures

     5,853       4,911       1,936       13,924       11,511  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unlevered Free Cash Flow (non-GAAP measure)

   $ 1,990     $ 1,142     $ 6,598     $ 7,197     $ 16,313  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     September 30,      December 31,  
     2017      2016  
     (in thousands)  

Unaudited Consolidated Balance Sheet Data:

     

Cash and cash equivalents

   $ 32,900      $ 57,152  

Restricted cash - current portion

     43        139  

Restricted cash - long-term portion

     1,500        1,514  

Total assets

     237,848        230,972  

Current maturities of long-term debt

     8,545        8,478  

Long-term debt

     51,455        52,990  
     Nine Months Ended
September 30,
 
     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

     20,888        22,754  

Net cash used in investing activities

     (45,007      (16,886

Net cash used in financing activities

     (1,052      (8,111

Changes in foreign currency translation

     919        (986
  

 

 

    

 

 

 

Cash and cash equivalents, September 30,

   $ 32,900      $ 57,239  
  

 

 

    

 

 

 

 

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

Selected Operational Data:

              

Offshore drilling rigs (1)

     184        173        173        175        194  

Offshore Production

     316        296        290        280        287  

Maritime

     165        134        124        122        128  

International Land

     132        112        104        104        101  

Other sites (2)

     378        336        304        240        238  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,175        1,051        995        921        948  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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     Nine Months Ended  
     September 30,
2017
     June 30,
2017
    September 30,
2016
    September 30,
2017
     September 30,
2016
 
     (in thousands)  

Managed Services

            

Revenue

   $ 40,243      $ 40,625     $ 45,653     $ 122,531      $ 146,766  

Cost of revenue

     24,902        25,549       26,253       75,798        85,455  

Depreciation and amortization

     5,263        6,222       6,716       17,509        20,032  

Selling, general and administrative

     3,013        4,983       5,235       12,435        20,631  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

   $ 7,065      $ 3,871     $ 7,449     $ 16,789      $ 20,648  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Applications and Internet-of-Things

            

Revenue

   $ 4,985      $ 2,430     $ 1,552     $ 9,846      $ 5,079  

Cost of revenue

     3,394        1,995       696       6,844        2,176  

Depreciation and amortization

     835        7       —         849        —    

Selling, general and administrative

     363        298       67       1,149        201  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

   $ 393      $ 130     $ 789     $ 1,004      $ 2,702  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Systems Integration

            

Revenue

   $ 5,616      $ 6,107     $ 3,407     $ 15,701      $ 16,019  

Cost of revenue

     4,089        5,494       2,911       12,656        11,781  

Depreciation and amortization

     615        611       631       1,813        2,127  

Selling, general and administrative

     280        422       499       1,179        2,141  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Operating income (loss)

   $ 632      $ (420   $ (634   $ 53      $ (30
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

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

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