November 8, 2018 - 4:05 PM EST
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RigNet Announces Third Quarter 2018 Earnings Results
  • Quarterly revenue increased 7.9% sequentially to $64.8 million consisting of:
    - Managed Services revenue of $44.9 million
    - Applications and Internet-of-Things (Apps & IoT) revenue of $7.5 million
    - Systems Integration revenue of $12.4 million
  • Quarterly Net Loss attributable to common stockholders improved 34.2% to $2.8 million or $0.15 per share
  • Quarterly Adjusted EBITDA increased 7.8% sequentially to $8.7 million
  • Project backlog more than doubled sequentially to $41.4 million
  • Site count increased across all categories to 1,350 total sites

HOUSTON, Nov. 08, 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 September 30, 2018.

“RigNet continues to execute on our strategic growth plan which focuses on enabling our customers to realize the tangible business benefits of digital transformation,” said Steven Pickett, Chief Executive Officer and President. “In the third quarter of 2018, and for the second consecutive quarter, the team grew both consolidated revenue and Adjusted EBITDA.  Furthermore, revenue grew across all segments during the third quarter of 2018, both sequentially and year-on-year. Our customers continue to see increasing value in our bundled Apps & IoT solutions, particularly with respect to IntelieTM, our real time machine learning and artificial intelligence platform which secured new contracts with both onshore and offshore customers during the quarter.”

Quarterly revenue was $64.8 million, an increase of $13.9 million, or 27.4%, compared to the third quarter 2017 and an increase of $4.8 million, or 7.9%, compared to the prior quarter. Compared to the third quarter 2017, revenue grew in all segments: a $6.7 million increase in Systems Integration (SI) revenue, a $4.7 million increase in Managed Services (MS) revenue, and a $2.5 million increase in Apps & IoT. The revenue increase compared to the prior quarter reflects a $3.2 million increase in MS revenue, a $0.9 million increase in Apps & IoT, and a $0.6 million increase in SI revenue.

Net loss attributable to common stockholders was $2.8 million, or $0.15 per share, compared to net loss attributable to common stockholders of $4.2 million, or $0.23 per share, in the third quarter 2017 and net loss attributable to common stockholders of $4.3 million, or $0.23 per share, in the prior quarter. 

Project backlog (using percentage of completion accounting) was $41.4 million compared to $31.5 million in the third quarter 2017 and $19.6 million in the prior quarter. The increase was driven by new project wins primarily in the United States, both onshore and offshore.

Adjusted EBITDA, a non-GAAP measure defined below, was $8.7 million in the third quarter 2018 compared to $7.8 million in the third quarter 2017 and $8.1 million in the prior quarter. Adjusted EBITDA was $24.2 million for the nine months ended September 30, 2018 compared to $21.1 million for the nine months ended September 30, 2017.

The Company recorded $0.7 million in restructuring charges in the third quarter of 2018, as well as a $0.8 million decrease in the fair value of an earn-out related to the TECNOR acquisition, bringing the fair value to zero, and $0.9 million in acquisition costs. In the previous quarter, the Company recorded $2.8 million for the change in fair value of an earn-out related to the TECNOR acquisition and $0.3 million in acquisition costs. In the quarter ended September 30, 2017, the Company recorded $0.8 million in acquisition costs and $0.8 million in restructuring charges. The acquisition costs, restructuring charges and change in fair value of the earn-out are added back to net loss in our non-GAAP measure Adjusted EBITDA.  

Capital expenditures for the three and nine months ending September 30, 2018 totaled $6.5 million and $19.7 million, respectively, compared to $5.9 million and $13.9 million, respectively, for the three and nine months ending September 30, 2017.  Capital expenditures for the second quarter ending June 30, 2018 totaled $6.6 million.

Site count in the third quarter 2018 increased across all categories to 1,350 from 1,175 in the third quarter 2017 and 1,297 in the prior quarter.

Earnings Call Information

An Earnings Call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Friday, November 9, 2018, to discuss RigNet’s third 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 and Presentations section.  A replay of the conference call webcast will also be available on our website for approximately thirty days following the call.

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.  Opinions, expectations with respect to conditions in the oil and gas industry, and customer perceptions of value 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.

Non-GAAP Financial Measure

This press release contains the non-GAAP measure Adjusted EBITDA, a measure we believe is useful to investors as a supplemental measure to evaluate overall operating performance and is an integral component of financial covenant ratios in our credit agreement.  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.

A reconciliation of net loss to Adjusted EBITDA is found in the table below.

Media / Investor Relations Contact
Lee M. Ahlstrom     Tel:  +1 (281) 674-0480
RigNet, Inc.     [email protected]


           
RIGNET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
           
           
   Three Months Ended Nine Months Ended
  September 30,
2018
 June 30,
2018
 September 30,
2017
 September 30,
2018
 September 30,
2017
  (in thousands, except per share amounts)
           
Revenue $  64,770  $  60,007  $  50,844  $  178,610  $  148,078 
Expenses:          
Cost of revenue (excluding depreciation and amortization)    40,734     36,246     32,385     110,661     95,298 
Depreciation and amortization    8,413     8,356     7,999     24,756     22,867 
Selling and marketing    2,728     4,189     2,400     9,866     5,968 
General and administrative    13,916     15,546     11,011     43,148     31,401 
Total expenses    65,791     64,337     53,795     188,431     155,534 
Operating loss    (1,021)    (4,330)    (2,951)    (9,821)    (7,456)
Other expense, net    (1,465)    (895)    (480)    (2,813)    (1,859)
Loss before income taxes     (2,486)    (5,225)    (3,431)    (12,634)    (9,315)
Income tax benefit (expense)    (312)    926     (762)    11     (1,075)
Net loss $  (2,798) $  (4,299) $  (4,193) $  (12,623) $  (10,390)
           
Loss Per Share - Basic and Diluted          
Net loss attributable to RigNet, Inc. common stockholders $  (2,847) $  (4,329) $  (4,232) $  (12,732) $  (10,507)
Net loss per share attributable to RigNet, Inc. common stockholders, basic $  (0.15) $  (0.23) $  (0.23) $  (0.69) $  (0.58)
Net loss per share attributable to RigNet, Inc. common stockholders, diluted $  (0.15) $  (0.23) $  (0.23) $  (0.69) $  (0.58)
Weighted average shares outstanding, basic    18,905     18,639     18,086     18,566     17,982 
Weighted average shares outstanding, diluted    18,905     18,639     18,086     18,566     17,982 
           
Unaudited Non-GAAP Data:          
Adjusted EBITDA $  8,730  $  8,098  $  7,843  $  24,247  $  21,121 

 

            
RIGNET, INC. 
Reconciliation of Net Loss to Adjusted EBITDA 
(Unaudited) 
            
   Three Months Ended Nine Months Ended 
  September 30,
2018
 June 30,
2018
 September 30,
2017
 September 30,
2018
 September 30,
2017
 
  (in thousands) 
            
Net loss $  (2,798) $  (4,299) $  (4,193) $  (12,623) $  (10,390) 
Interest expense    807     1,007     689     2,773     1,921  
Depreciation and amortization    8,413     8,356     7,999     24,756     22,867  
Loss on sales of property, plant and equipment, net of retirements    66     21     5     34     55  
Stock-based compensation    1,086     837     1,007     4,368     2,949  
Restructuring costs    664     -     767     664     767  
Change in fair value of earn-out/contingent consideration    (750)    2,778     -     2,050     (846) 
Executive departure costs    -     4     -     161     -  
Acquisition costs    930     320     807     2,075     2,723  
Income tax expense (benefit)    312     (926)    762     (11)    1,075  
Adjusted EBITDA (non-GAAP measure) $  8,730  $  8,098  $  7,843  $  24,247  $  21,121  
            

 

           
RIGNET, INC.
Segment Information
(Unaudited)
           
           
   Three Months Ended Nine Months Ended
  September 30,
2018
 June 30,
2018
 September 30,
2017
 September 30,
2018
 September 30,
2017
  (in thousands)
Managed Services          
Revenue $  44,943 $  41,712 $  40,243 $  128,705 $  122,531
Cost of revenue    27,930    25,307    24,902    78,982    75,798
Depreciation and amortization    5,641    5,645    5,263    17,012    17,509
Selling, general and administrative    3,779    5,023    3,013    13,017    12,435
Operating income $  7,593 $  5,737 $  7,065 $  19,694 $  16,789
           
Applications and Internet-of-Things          
Revenue $  7,463 $  6,576 $  4,985 $  19,375 $  9,846
Cost of revenue    3,677    3,165    3,394    9,927    6,844
Depreciation and amortization    1,661    836    835    3,344    849
Selling, general and administrative    520    430    363    1,304    1,149
Operating income  $  1,605 $  2,145 $  393 $  4,800 $  1,004
           
Systems Integration           
Revenue $  12,364 $  11,719 $  5,616 $  30,530 $  15,701
Cost of revenue    9,127    7,774    4,089    21,752    12,656
Depreciation and amortization    605    665    615    1,922    1,813
Selling, general and administrative    380    557    280    1,260    1,179
Operating income  $  2,252 $  2,723 $  632 $  5,596 $  53
           
NOTE:  Consolidated balances include the segments above along with corporate activities and intercompany eliminations.

 

RIGNET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
     
   September 30, December 31,
    2018   2017 
   (in thousands, except share amounts)
 ASSETS
 Current assets:   
  Cash and cash equivalents$  20,726  $  34,598 
  Restricted cash   42     43 
  Accounts receivable, net    68,161     49,021 
  Costs and estimated earnings in excess of billings on uncompleted contracts   4,395     2,393 
  Prepaid expenses and other current assets   6,388     5,591 
 Total current assets   99,712      91,646  
 Property, plant and equipment, net   60,835     60,344 
 Restricted cash   1,546     1,500 
 Goodwill   46,275     37,088 
 Intangibles, net   34,485     30,405 
 Deferred tax and other assets   8,385     9,111 
 TOTAL ASSETS$   251,238   $   230,094  
      
 LIABILITIES AND EQUITY
 Current liabilities:   
  Accounts payable$  17,579  $  12,234 
  Accrued expenses   17,021     16,089 
  Current maturities of long-term debt   4,943     4,941 
  Income taxes payable   -     1,601 
  Deferred revenue and other current liabilities   4,419     8,511 
 Total current liabilities   43,962      43,376  
 Long-term debt   66,214     53,173 
 Deferred revenue   369     546 
 Deferred tax liability   3,281     189 
 Other liabilities   32,101     25,533 
 Total liabilities   145,927      122,817  
 Commitments and contingencies    
 Equity:   
 Stockholders' equity   
  Preferred stock - $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at September 30, 2018 or December 31, 2017   -     - 
  Common stock - $0.001 par value; 191,000,000 shares authorized; 19,411,467 and 18,232,872 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively   19     18 
  Treasury stock - 89,880 and 5,516 shares at September 30, 2018 and December 31, 2017, respectively, at cost   (1,246)    (116)
  Additional paid-in capital   172,599     155,829 
  Accumulated deficit   (46,796)    (33,726)
  Accumulated other comprehensive loss   (19,295)    (14,806)
 Total stockholders' equity   105,281      107,199  
 Non-redeemable, non-controlling interest   30     78 
 Total equity   105,311      107,277  
 TOTAL LIABILITIES AND EQUITY$   251,238   $   230,094  
 

 

RIGNET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
       
    Nine Months Ended September 30,
     2018   2017 
    (in thousands)
Cash flows from operating activities:    
 Net loss$  (12,623) $  (10,390)
 Adjustments to reconcile net loss to net cash provided by operations:   
  Depreciation and amortization   24,756     22,867 
  Stock-based compensation   4,368     2,949 
  Amortization of deferred financing costs   141     192 
  Deferred taxes   (117)    (271)
  Change in fair value of earn-out/contingent consideration   2,050     (846)
  Accretion of discount of contingent consideration payable for acquisitions   368     417 
  Loss on sales of property, plant and equipment, net of retirements   34     55 
 Changes in operating assets and liabilities, net of effect of acquisition:   
  Accounts receivable, net   (15,428)    (122)
  Costs and estimated earnings in excess of billings on uncompleted contracts   (1,095)    716 
  Prepaid expenses and other assets   (1,634)    3,714 
  Accounts payable   3,986     1,697 
  Accrued expenses   (1,584)    1,733 
  Deferred revenue   1,512     6,212 
  Other liabilities   (1,807)    (8,035)
  Payout of TECNOR contingent consideration - inception to date change in fair value portion   (1,575)    -  
Net cash provided by operating activities   1,352      20,888  
       
Cash flows from investing activities:   
 Acquisitions (net of cash acquired)   (5,405)    (32,205)
 Capital expenditures   (18,791)    (13,186)
 Proceeds from sales of property, plant and equipment   685     274 
Net cash used in investing activities   (23,511)    (45,117)
       
Cash flows from financing activities:   
 Proceeds from issuance of common stock net of stock witheld to cover employee taxes on stock-based compensation   967     800 
 Stock withheld to cover employee taxes on stock-based compensation   (1,130)    (116)
 Subsidiary distributions to non-controlling interest   (157)    (76)
 Payout of TECNOR contingent consideration - fair value on acquisition date portion   (6,425)    -  
 Proceeds from borrowings   16,750     15,000 
 Repayments of long-term debt   (3,848)    (16,660)
Net cash provided by (used) in financing activities   6,157      (1,052)
Net change in cash and cash equivalents   (16,002)    (25,281)
       
Cash and cash equivalents including restricted cash:   
 Balance, January 1,   36,141     58,805 
 Changes in foreign currency translation   2,175     919 
Balance, September 30,$   22,314   $   34,443  
       

 

           
RIGNET, INC.
Selected Operational Data
(Unaudited)
           
  3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
  2018 2018 2018 2017 2017
           
Offshore drilling rigs (1) 191 190 188 182 184
Offshore Production 332 320 310 304 316
Maritime 187 177 176 172 165
Other sites (2) 640 610 525 513 510
Total 1,350 1,297 1,199 1,171 1,175
           
(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
 

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Source: GlobeNewswire (November 8, 2018 - 4:05 PM EST)

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