Market Overview

RigNet Announces Second Quarter 2018 Earnings Results

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  • 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 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 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.

Media / Investor Relations Contact  
Jerri Dean  Tel:  +1 (281) 674-0699
RigNet, Inc.  investor.relations@rig.net


   Three Months Ended Six Months Ended
  June 30,
2018
  March 31,
2018
  June 30,
2017
  June 30,
2018
  June 30,
2017
 
  (in thousands, except per share amounts)
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.

  

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