8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 6, 2018

 

 

RigNet, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-35003   76-0677208

(State or other jurisdiction

of incorporation)

 

(Commission

file number)

 

(I.R.S. Employer

Identification No.)

 

15115 Park Row Blvd, Suite 300, Houston, Texas   77084-4947
(Address of principal executive offices)   (zip code)

(281) 674-0100

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02 — Results of Operations and Financial Condition

The following information is disclosed pursuant to Item 2.02—Results of Operations and Financial Condition:

On March 6, 2018, RigNet, Inc. issued a press release announcing its operating results for the three months and year ended December 31, 2017. The press release is attached as Exhibit 99.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including the exhibits, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

Item 9.01 — Financial Statements and Exhibits

(d) Exhibits

 

Exhibit Number

  

Exhibit Description

99    Press release of RigNet, Inc. dated March 6, 2018, announcing its operating results for the three months and year ended December 31, 2017

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

RIGNET, INC.
By:   /s/ TONYA M. MCDERMOTT
Tonya M. McDermott
Interim Chief Financial Officer and
Vice President of Tax and Treasury
(Principal Financial Officer)

 

/s/ BENJAMIN A. CARTER
Benjamin A. Carter
Director of Accounting and Reporting
(Principal Accounting Officer)

Date: March 6, 2018

 

3

EX-99

Exhibit 99

 

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PRESS RELEASE    FOR IMMEDIATE RELEASE

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 6, 2018 – 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.

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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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 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 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.

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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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.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 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

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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     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  

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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     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,
2017
     December 31,
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  
  

 

 

    

 

 

 

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


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     4th Quarter
2017
     3rd Quarter
2017
     2nd Quarter
2017
     1st Quarter
2017
     4th Quarter
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.

###

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net