Mar 6, 2018

RigNet Announces Fourth Quarter and Full Year 2017 Earnings Results

  • Quarterly revenue of $56.8 million consisting of:
    - Managed Services revenue of $41.7 million
    - Applications and Internet-of-Things (Apps & IoT) revenue of $5.8 million
    - Systems Integration revenue of $9.3 million
     
  • Quarterly GAAP Net Loss attributable to common stockholders of $5.7 million, $0.31 per share
     
  • Quarterly Adjusted EBITDA (a non-GAAP measure) of $8.5 million
     
  • Quarterly Unlevered Free Cash Flow (a non-GAAP measure) of $4.6 million after capital expenditures of $4.0 million          

HOUSTON, March 06, 2018 (GLOBE NEWSWIRE) -- RigNet, Inc. (NASDAQ:RNET), a global technology company that provides customized communications services, applications and cybersecurity solutions, today reported results for the quarter and full year ended December 31, 2017.

Quarterly revenue was $56.8 million representing an increase of $6.0 million compared to the prior quarter and an increase of $4.1 million compared to the prior year quarter. The revenue increase compared to the prior quarter reflects a $3.7 million increase in Systems Integration revenue, a $1.5 million increase in Managed Services revenue and a $0.8 million increase in Apps & IoT. The increase compared to the prior year quarter reflects a $4.4 million increase in Apps & IoT and a $3.8 million increase in Systems Integration revenue partially offset by a $4.1 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 acquisitions of DTS and ESS.

GAAP net loss attributable to common stockholders was $5.7 million, or $0.31 per share, compared to net loss attributable to common stockholders of $4.2 million, or $0.23 per share, in the prior quarter and net loss attributable to common stockholders of $3.8 million, or $0.21 per share, in the prior year quarter.

Quarterly Adjusted EBITDA was $8.5 million compared to $7.8 million in the prior quarter and $9.4 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 increased operating expenses partially offset by increased revenue. Operating expenses have increased due to our investing in our growth strategy including investing in Apps & IoT and our sales and marketing efforts.

Capital expenditures were $4.0 million compared to $5.9 million in the prior quarter and $3.7 million in the prior year quarter.  Unlevered Free Cash Flow, defined as Adjusted EBITDA less capital expenditures, was $4.6 million compared to $2.0 million in the prior quarter and $5.7 million in the prior year quarter.

In the quarter ended December 31, 2017, the Company recorded $0.5 million increase in fair value of an earn-out, $1.2 million in executive departure costs and $0.6 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. In the quarter ended December 31, 2016, the Company recorded $0.6 million of restructuring charges. 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. 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.  

Steven E. Pickett, chief executive officer and president, commented, "The RigNet team delivered revenue growth for the third sequential quarter along with two sequential quarters of growth in both Adjusted EBITDA and Unlevered Free Cash Flow. Additionally, compared to the prior year quarter, site count increased in every category that we track with an aggregate increase of 250 sites. The Intelie acquisition, that was announced earlier this quarter, will deliver real time machine learning and artificial intelligence (AI) capabilities that will take our clients to a new level by allowing timely prediction models based on live data delivered over our highly reliable network and secured by our unique cybersecurity capabilities from the Cyphre acquisition. Our clients will now be “always connected, always secure and always learning”. The Intelie acquisition further delivers on our stated strategy of moving up the stack in order to deliver a more robust and highly differentiated managed communications service to our customers.”

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Wednesday, March 7, 2018, to discuss RigNet’s 2017 fourth quarter and full year 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 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 recent 10-K filing for the year ended December 31, 2017 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 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. 

We define Unlevered Free Cash Flow as Adjusted EBITDA less capital expenditures.  Adjusted EBITDA and Unlevered Free Cash Flow should not be considered as alternatives to net income (loss), operating income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP.

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.netRigNet 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 timetable for completing the Intelie acquisition, benefits and synergies of that acquisition, 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 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   Year Ended
    December 31,
2017
  September 30,
2017
  December 31,
2016
  December 31,
2017
  December 31,
2016
                                         
    (in thousands, except per share amounts)
Unaudited Consolidated Statements of                     
Comprehensive Income Data:                    
Revenue   $ 56,814     $ 50,844     $ 52,759     $ 204,892     $ 220,623  
Expenses:                    
Cost of revenue (excluding depreciation and amortization)     35,868       32,385       30,347       131,166       129,759  
Depreciation and amortization     7,978       7,999       7,995       30,845       33,556  
Impairment of intangible assets     -       -       -       -       397  
Selling and marketing     2,379       2,400       1,613       8,347       7,172  
General and administrative     13,121       11,011       12,797       44,522       52,190  
Total expenses     59,346       53,795       52,752       214,880       223,074  
Operating income (loss)     (2,532 )     (2,951 )     7       (9,988 )     (2,451 )
Other expense, net     (878 )     (480 )     (584 )     (2,737 )     (3,021 )
Loss before income taxes     (3,410 )     (3,431 )     (577 )     (12,725 )     (5,472 )
Income tax expense     (2,397 )     (762 )     (3,149 )     (3,472 )     (5,825 )
Net loss   $ (5,807 )   $ (4,193 )   $ (3,726 )   $ (16,197 )   $ (11,297 )
                     
Net Loss Per Share - Basic and Diluted                    
Net loss attributable to RigNet, Inc.
  common stockholders
  $ (5,669 )   $ (4,232 )   $ (3,765 )   $ (16,176 )   $ (11,507 )
Net loss per share attributable to
  RigNet, Inc. common stockholders, basic
  $ (0.31 )   $ (0.23 )   $ (0.21 )   $ (0.90 )   $ (0.65 )
Net loss per share attributable to
  RigNet, Inc. common stockholders, diluted
  $ (0.31 )   $ (0.23 )   $ (0.21 )   $ (0.90 )   $ (0.65 )
Weighted average shares outstanding, basic     18,090       18,086       17,833       18,009       17,768  
Weighted average shares outstanding, diluted     18,090       18,086       17,833       18,009       17,768  
                     
Unaudited Non-GAAP Data:                    
Adjusted EBITDA   $ 8,548     $ 7,843     $ 9,357     $ 29,669     $ 37,181  
Unlevered Free Cash Flow   $ 4,563     $ 1,990     $ 5,671     $ 11,760     $ 21,984  
 

 

                     
     Three Months Ended   Year Ended
    December 31,
2017
  September 30,
2017
  December 31,
2016
  December 31,
2017
  December 31,
2016
                                         
    (in thousands)
Reconciliation of Net Loss to Adjusted EBITDA and Unlevered Free Cash Flow:                
Net loss   $ (5,807 )   $ (4,193 )   $ (3,726 )   $ (16,197 )   $ (11,297 )
Interest expense     949       689       668       2,870       2,708  
Depreciation and amortization     7,978       7,999       7,995       30,845       33,556  
Impairment of intangible assets     -       -       -       -       397  
(Gain) loss on sales of property, plant and equipment, net of retirements     -       5       11       55       (153 )
Stock-based compensation     754       1,007       681       3,703       3,389  
Restructuring costs     -       767       579       767       1,911  
Change in fair value of earn-out/contingent consideration     526       -       -       (320 )     (1,279 )
Executive departure costs     1,192       -       -       1,192       1,884  
Acquisition costs     559       807       -       3,282       240  
Income tax expense     2,397       762       3,149       3,472       5,825  
Adjusted EBITDA (non-GAAP measure)   $ 8,548     $ 7,843     $ 9,357     $ 29,669     $ 37,181  
                     
Adjusted EBITDA (non-GAAP measure)   $ 8,548     $ 7,843     $ 9,357     $ 29,669     $ 37,181  
Capital expenditures     3,985       5,853       3,686       17,909       15,197  
Unlevered Free Cash Flow (non-GAAP measure)   $ 4,563     $ 1,990     $ 5,671     $ 11,760     $ 21,984  
 

 

           
    December 31,   December 31,  
    2017   2016  
                   
    (in thousands)  
Unaudited Consolidated Balance Sheet Data:          
Cash and cash equivalents   $ 34,598     $ 57,152    
Restricted cash - current portion     43       139    
Restricted cash - long-term portion     1,500       1,514    
Total assets     230,094       230,972    
Current maturities of long-term debt     4,941       8,478    
Long-term debt     53,173       52,990    
           
           
    Year Ended December 31,  
   
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     29,228       39,174    
Net cash used in investing activities     (49,880 )     (19,398 )  
Net cash used in financing activities     (2,847 )     (15,352 )  
Changes in foreign currency translation     945       (7,740 )  
Cash and cash equivalents, December 31,   $ 34,598     $ 57,152    
 

 

                     
    4th Quarter   3rd Quarter   2nd Quarter   1st Quarter   4th Quarter
    2017   2017   2017   2017   2016
Selected Operational Data:                    
Offshore drilling rigs (1)   182   184   173   173   175
Offshore Production   304   316   296   290   280
Maritime   172   165   134   124   122
International Land   149   132   112   104   104
Other sites (2)   364   378   336   304   240
Total   1,171   1,175   1,051   995   921
                     
(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   Year Ended  
    December 31,
2017
  September 30,
2017
  December 31,
2016
  December 31,
2017
  December 31,
2016
 
                                 
    (in thousands)  
Managed Services                      
Revenue   $ 41,707   $ 40,243   $ 45,772   $ 164,238   $ 192,538  
Cost of revenue     25,884     24,902     26,591     101,681     112,046  
Depreciation and amortization     5,692     5,263     6,549     23,202     26,581  
Selling, general and administrative     4,406     3,013     7,791     16,841     28,422  
Operating income   $ 5,725   $ 7,065   $ 4,841   $ 22,514   $ 25,489  
                       
Applications and Internet-of-Things                      
Revenue   $ 5,780   $ 4,985   $ 1,416   $ 15,626   $ 6,495  
Cost of revenue     3,907     3,394     527     10,751     2,703  
Depreciation and amortization     889     835     -     1,738     -  
Selling, general and administrative     536     363     67     1,685     268  
Operating income   $ 448   $ 393   $ 822   $ 1,452   $ 3,524  
                       
Systems Integration                       
Revenue   $ 9,327   $ 5,616   $ 5,571   $ 25,028   $ 21,590  
Cost of revenue     6,078     4,089     3,229     18,734     15,010  
Depreciation and amortization     625     615     585     2,438     2,712  
Selling, general and administrative     224     280     524     1,403     2,665  
Operating income (loss)   $ 2,400   $ 632   $ 1,233   $ 2,453   $ 1,203  
                       
NOTE:  Consolidated balances include the segments above along with corporate activities and intercompany eliminations.  
 


Primary Logo

Source: RigNet, Inc.