• 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 Intelie^TM, 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