RigNet Announces Second Quarter 2018 Earnings Results
Quarterly revenue of $60.0 million consisting of: - Managed Services revenue of $41.7 million - Applications and Internet-of-Things (Apps & IoT) revenue of $6.6 million - Systems Integration revenue of $11.7 million
Quarterly GAAP Net Loss attributable to common stockholders of $4.3 million, $0.23 per share
Quarterly Adjusted EBITDA (a non-GAAP measure) of $8.1 million
HOUSTON, Aug. 06, 2018 (GLOBE NEWSWIRE) -- RigNet, Inc. (NASDAQ: RNET), a global technology company that provides customized communications services, applications, real-time machine learning, and cybersecurity solutions, today reported results for the quarter ended June 30, 2018.
Quarterly revenue was $60.0 million representing an increase of $10.8 million, or 22.1%, compared to the prior year quarter and an increase of $6.2 million, or 11.5%, compared to the prior quarter. Compared to the prior year quarter revenue grew in all segments: a $5.6 million increase in Systems Integration revenue, a $4.1 million increase in Apps & IoT and a $1.1 million increase in Managed Services revenue. The revenue increase compared to the prior quarter reflects a $5.3 million increase in Systems Integration revenue, a $1.2 million increase in Apps & IoT, partially offset by a $0.3 million decrease in Managed Services revenue. Revenue increased due to acquisitions, site count growth and our strategy of growth into the application layer and internet-of-things space.
GAAP net loss attributable to common stockholders was $4.3 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 year quarter and net loss attributable to common stockholders of $5.6 million, or $0.31 per share, in the prior quarter.
Quarterly Adjusted EBITDA was $8.1 million compared to $6.1 million in the prior year quarter and $7.4 million in the prior quarter. The increase was due primarily to increased operating activity and revenue.
Steven Pickett, chief executive officer and president, commented, “In the second quarter of 2018, the RigNet team delivered 22.1% revenue growth compared to the prior year quarter and 170.6% growth in the Apps & IoT segment compared to the prior year quarter. The RigNet team continues to demonstrate their ability to execute against our strategic growth plan. That plan has made RigNet uniquely able to support our customers’ digital transformation with services that are always connected, always secure, and always learning.”
In the quarter ended June 30, 2018, the Company recorded $2.8 million for the change in fair value of an earn-out and $0.3 million in acquisition costs. In the quarter ended March 31, 2018, the Company recorded $0.8 million in acquisition costs and $0.2 million in executive departure costs. 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. The acquisition costs, executive departure costs and change in fair value of the earn-out are added back to net loss in our non-GAAP measure Adjusted EBITDA below. In the third quarter of 2017, after the acquisition of Energy Satellite Services (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.
A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, August 7, 2018, to discuss RigNet’s second quarter 2018 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 andPresentations 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 Measure
This press release contains the non-GAAP measure Adjusted EBITDA. Adjusted EBITDA is a financial measure that is not calculated in accordance with generally accepted accounting principles, or GAAP. We refer you to the Company’s recent 10-K filing for the year ended December 31, 2017 for a more detailed discussion of the uses and limitations of Adjusted EBITDA.
We define Adjusted EBITDA as net loss plus interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, intangibles, property, plant and equipment, (gain) loss on sales of property, plant and equipment, net of retirements, change in fair value of earn-outs and contingent consideration, stock-based compensation, acquisition costs, executive departure costs, restructuring charges and non-recurring items.
About RigNet
RigNet (NASDAQ: RNET) is a global technology company that provides customized communications services, applications, real-time machine learning, and cybersecurity solutions to enhance customer decision-making and business performance. RigNet delivers a digital transformation bundle that accelerates technology adoption and empowers customers to be always connected, always secure, and always learning. 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. The opinions, forecasts, projections, expected benefits and synergies from acquisitions, future opportunities for the combined company and products, and future financial performance are examples of forward-looking statements in this press release. 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, including the expected benefits of acquiring and integrating other businesses, and often contain words such as “anticipate,” “believe,” “intend,”, “will”, “expect,” “plan” or other similar words. These forward-looking statements involve certain risks and uncertainties, including those risks set forth in Item 1A – Risk Factors of the Company’s most recent 10-K filing, and 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.
Unaudited Consolidated Statements of Comprehensive Income Data:
Revenue
$ 60,007
$ 53,833
$ 49,162
$ 113,840
$ 97,234
Expenses:
Cost of revenue (excluding depreciation and amortization)
36,246
33,681
33,038
69,927
62,913
Depreciation and amortization
8,356
7,987
7,552
16,343
14,868
Selling and marketing
4,189
2,949
2,132
7,138
3,568
General and administrative
15,546
13,686
9,878
29,232
20,390
Total expenses
64,337
58,303
52,600
122,640
101,739
Operating loss
(4,330
)
(4,470
)
(3,438
)
(8,800
)
(4,505
)
Other expense, net
(895
)
(453
)
(873
)
(1,348
)
(1,379
)
Loss before income taxes
(5,225
)
(4,923
)
(4,311
)
(10,148
)
(5,884
)
Income tax benefit (expense)
926
(603
)
101
323
(313
)
Net loss
$ (4,299
)
$ (5,526
)
$ (4,210
)
$ (9,825
)
$ (6,197
)
Loss Per Share - Basic and Diluted
Net loss attributable to RigNet, Inc. common stockholders
$ (4,329
)
$ (5,556
)
$ (4,249
)
$ (9,885
)
$ (6,275
)
Net loss per share attributable to RigNet, Inc. common stockholders, basic
$ (0.23
)
$ (0.31
)
$ (0.24
)
$ (0.54
)
$ (0.35
)
Net loss per share attributable to RigNet, Inc. common stockholders, diluted
$ (0.23
)
$ (0.31
)
$ (0.24
)
$ (0.54
)
$ (0.35
)
Weighted average shares outstanding, basic
18,639
18,146
17,985
18,394
17,929
Weighted average shares outstanding, diluted
18,639
18,146
17,985
18,394
17,929
Unaudited Non-GAAP Data:
Adjusted EBITDA
$ 8,098
$ 7,419
$ 6,053
$ 15,517
$ 13,278
Three Months Ended
Six Months Ended
June 30, 2018
March 31, 2018
June 30, 2017
June 30, 2018
June 30, 2017
(in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss
$ (4,299
)
$ (5,526
)
$ (4,210
)
$ (9,825
)
$ (6,197
)
Interest expense
1,007
959
613
1,966
1,232
Depreciation and amortization
8,356
7,987
7,552
16,343
14,868
(Gain) loss on sales of property, plant and equipment, net of retirements
21
(53
)
13
(32
)
50
Stock-based compensation
837
2,445
1,116
3,282
1,942
Change in fair value of earn-out/contingent consideration
2,778
22
(846
)
2,800
(846
)
Executive departure costs
4
157
-
161
-
Acquisition costs
320
825
1,916
1,145
1,916
Income tax expense
(926
)
603
(101
)
(323
)
313
Adjusted EBITDA (non-GAAP measure)
$ 8,098
$ 7,419
$ 6,053
$ 15,517
$ 13,278
June 30,
December 31,
2018
2017
(in thousands)
Unaudited Consolidated Balance Sheet Data:
Cash and cash equivalents
$ 18,366
$ 34,598
Restricted cash - current portion
42
43
Restricted cash - long-term portion
1,546
1,500
Total assets
252,853
230,094
Current maturities of long-term debt
4,949
4,941
Long-term debt
53,195
53,173
Six Months Ended June 30,
2018
2017
(in thousands)
Unaudited Consolidated Statements of Cash Flows Data:
Cash and cash equivalents including restricted cash, January 1,
$ 36,141
$ 58,805
Net cash provided by operating activities
1,329
9,283
Net cash used in investing activities
(17,613
)
(11,175
)
Net cash used in financing activities
(1,211
)
(13,845
)
Changes in foreign currency translation
1,308
1,172
Cash and cash equivalents including restricted cash, June 30,
$ 19,954
$ 44,240
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
2018
2018
2017
2017
2017
Selected Operational Data:
Offshore drilling rigs (1)
190
188
182
184
173
Offshore Production
320
310
304
316
296
Maritime
177
176
172
165
134
Other sites (2)
610
525
513
510
448
Total
1,297
1,199
1,171
1,175
1,051
(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes U.S. and International land 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
Six Months Ended
June 30, 2018
March 31, 2018
June 30, 2017
June 30, 2018
June 30, 2017
(in thousands)
Managed Services
Revenue
$ 41,712
$ 42,050
$ 40,625
$ 83,762
$ 82,288
Cost of revenue
25,307
25,745
25,549
51,052
50,896
Depreciation and amortization
5,645
5,726
6,222
11,371
12,245
Selling, general and administrative
5,023
4,215
4,983
9,238
9,422
Operating income
$ 5,737
$ 6,364
$ 3,871
$ 12,101
$ 9,725
Applications and Internet-of-Things
Revenue
$ 6,576
$ 5,336
$ 2,430
$ 11,912
$ 4,861
Cost of revenue
3,165
3,085
1,995
6,250
3,450
Depreciation and amortization
836
847
7
1,683
14
Selling, general and administrative
430
354
298
784
786
Operating income
$ 2,145
$ 1,050
$ 130
$ 3,195
$ 611
Systems Integration
Revenue
$ 11,719
$ 6,447
$ 6,107
$ 18,166
$ 10,085
Cost of revenue
7,774
4,851
5,494
12,625
8,567
Depreciation and amortization
665
652
611
1,317
1,198
Selling, general and administrative
557
323
422
880
892
Operating income (loss)
$ 2,723
$ 621
$ (420
)
$ 3,344
$ (572
)
NOTE: Consolidated balances include the segments above along with corporate activities and intercompany eliminations.
