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): May 7, 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 May 7, 2018, RigNet, Inc. issued a press release announcing its operating results for the three months ended March 31, 2018. 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 May 7, 2018, announcing its operating results for the three months ended March 31, 2018

 

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: May 7, 2018

 

3

EX-99

Exhibit 99

 

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PRESS RELEASE    FOR IMMEDIATE RELEASE

RigNet Announces First Quarter 2018 Earnings Results

 

  Quarterly revenue of $53.8 million consisting of:

 

  - Managed Services revenue of $42.1 million

 

  - Applications and Internet-of-Things (Apps & IoT) revenue of $5.3 million

 

  - Systems Integration revenue of $6.4 million

 

  Quarterly GAAP Net Loss attributable to common stockholders of $5.6 million, $0.31 per share

 

  Quarterly Adjusted EBITDA (a non-GAAP measure) of $7.4 million

 

  Quarterly Unlevered Free Cash Flow (a non-GAAP measure) of $0.8 million after capital expenditures of $6.6 million

HOUSTON – May 7, 2018 – 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 March 31, 2018.

Quarterly revenue was $53.8 million representing an increase of $5.8 million, or 12.0%, compared to the prior year quarter and a decrease of $3.0 million, or 5.2%, compared to the prior quarter. Compared to the prior year quarter revenue grew in all segments: a $2.9 million increase in Apps & IoT, a $2.5 million increase in Systems Integration revenue and a $0.4 million increase in Managed Services revenue. Revenue increased due to our strategy of growth into the application layer and internet-of-things space, increased activity on Systems Integration projects and revenue from acquisitions. The revenue decrease compared to the prior quarter reflects a $2.9 million decrease in Systems Integration revenue and a $0.4 million decrease in Apps & IoT primarily due to the prior quarter having elevated equipment sales, partially offset by a $0.3 million increase in Managed Services revenue. The revenue decrease compared to the prior quarter was primarily due to decreased activity on Systems Integration projects and was also impacted by 2 fewer days (2.2%) in the first quarter than the fourth quarter.

GAAP net loss attributable to common stockholders was $5.6 million, or $0.31 per share, compared to net loss attributable to common stockholders of $2.0 million, or $0.11 per share, in the prior year quarter and net loss attributable to common stockholders of $5.7 million, or $0.31 per share, in the prior quarter.

Quarterly Adjusted EBITDA was $7.4 million compared to $7.2 million in the prior year quarter and $8.5 million in the prior quarter. The increase compared to the prior year quarter was due primarily to increased operating activity and revenue. The decrease compared to the prior quarter was due primarily to decreased revenue.

 

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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Capital expenditures were $6.6 million compared to $3.2 million in the prior year quarter and $4.0 million in the prior quarter. Capital expenditures increased as we invested in success-based projects. Unlevered Free Cash Flow, defined as Adjusted EBITDA less capital expenditures, was $0.8 million compared to $4.1 million in the prior year quarter and $4.6 million in the prior quarter.

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 December 31, 2017, the Company recorded a $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. 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 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 Pickett, chief executive officer and president, commented, “In the first quarter of 2018, the RigNet team delivered 12.0% revenue growth compared to the prior year quarter, two consecutive quarters of Managed Service segment revenue growth, and increased site count in all categories compared to the prior year quarter and prior quarter. RigNet’s bundling of Applications and IoT to our core offering contributed to site count growth of 20.5% in the last 12 months. The recent acquisitions of Auto-Comm and SAFCON will grow both our Managed Services and Systems Integration businesses and will further enhance our relationships within the oil and gas industry.”

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, May 8, 2018, to discuss RigNet’s first 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 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, real-time machine learning, and cybersecurity solutions that enhance 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 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

 

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  
     March 31,
2018
    December 31,
2017
    March 31,
2017
 
     (in thousands, except per share
amounts)
 

Unaudited Consolidated Statements of Comprehensive Income Data:

      

Revenue

   $ 53,833     $ 56,814     $ 48,072  
  

 

 

   

 

 

   

 

 

 

Expenses:

      

Cost of revenue (excluding depreciation and amortization)

     33,681       35,868       29,875  

Depreciation and amortization

     7,987       7,978       7,316  

Selling and marketing

     2,949       2,379       1,436  

General and administrative

     13,686       13,121       10,512  
  

 

 

   

 

 

   

 

 

 

Total expenses

     58,303       59,346       49,139  
  

 

 

   

 

 

   

 

 

 

Operating loss

     (4,470     (2,532     (1,067

Other expense, net

     (453     (878     (506
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (4,923     (3,410     (1,573

Income tax benefit (expense)

     (603     (2,397     (414
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (5,526   $ (5,807   $ (1,987
  

 

 

   

 

 

   

 

 

 

Loss Per Share—Basic and Diluted

      

Net loss attributable to RigNet, Inc. common stockholders

   $ (5,556   $ (5,669   $ (2,026

Net loss per share attributable to RigNet, Inc. common stockholders, basic

   $ (0.31   $ (0.31   $ (0.11

Net loss per share attributable to RigNet, Inc. common stockholders, diluted

   $ (0.31   $ (0.31   $ (0.11

Weighted average shares outstanding, basic

     18,146       18,090       17,873  

Weighted average shares outstanding, diluted

     18,146       18,090       17,873  

Unaudited Non-GAAP Data:

      

Adjusted EBITDA

   $ 7,419     $ 8,548     $ 7,225  

Unlevered Free Cash Flow

   $ 806     $ 4,563     $ 4,065  

 

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  
     March 31,
2018
    December 31,
2017
    March 31,
2017
 
     (in thousands)  

Reconciliation of Net Loss to Adjusted EBITDA and Unlevered Free Cash Flow:

      

Net loss

   $ (5,526   $ (5,807   $ (1,987

Interest expense

     959       949       619  

Depreciation and amortization

     7,987       7,978       7,316  

(Gain) loss on sales of property, plant and equipment, net of retirements

     (53     —         37  

Stock-based compensation

     2,445       754       826  

Change in fair value of earn-out/contingent consideration

     22       526       —    

Executive departure costs

     157       1,192       —    

Acquisition costs

     825       559       —    

Income tax expense

     603       2,397       414  
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 7,419     $ 8,548     $ 7,225  
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 7,419     $ 8,548     $ 7,225  

Capital expenditures

     6,613       3,985       3,160  
  

 

 

   

 

 

   

 

 

 

Unlevered Free Cash Flow (non-GAAP measure)

   $ 806     $ 4,563     $ 4,065  
  

 

 

   

 

 

   

 

 

 

 

     March 31,
2018
     December 31,
2017
 
     (in thousands)  

Unaudited Consolidated Balance Sheet Data:

     

Cash and cash equivalents

   $ 21,858      $ 34,598  

Restricted cash—current portion

     45        43  

Restricted cash—long-term portion

     1,546        1,500  

Total assets

     245,259        230,094  

Current maturities of long-term debt

     4,945        4,941  

Long-term debt

     51,934        53,173  

 

     Three Months Ended
March 31,
 
     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 (used in) provided by operating activities

     (2,492     8,806  

Net cash used in investing activities

     (8,152     (3,897

Net cash used in financing activities

     (2,319     (6,639

Changes in foreign currency translation

     271       (296
  

 

 

   

 

 

 

Cash and cash equivalents including restricted cash, March 31,

   $ 23,449     $ 56,779  
  

 

 

   

 

 

 

 

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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     1st Quarter
2018
     4th Quarter
2017
     3rd Quarter
2017
     2nd Quarter
2017
     1st Quarter
2017
 

Selected Operational Data:

              

Offshore drilling rigs (1)

     188        182        184        173        173  

Offshore Production

     310        304        316        296        290  

Maritime

     176        172        165        134        124  

Other sites (2)

     525        513        510        448        408  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,199        1,171        1,175        1,051        995  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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  
     March 31,
2018
     December 31,
2017
     March 31,
2017
 
     (in thousands)  

Managed Services

        

Revenue

   $ 42,050      $ 41,707      $ 41,663  

Cost of revenue

     25,745        25,884        25,347  

Depreciation and amortization

     5,726        5,692        6,023  

Selling, general and administrative

     4,215        4,406        4,439  
  

 

 

    

 

 

    

 

 

 

Operating income

   $ 6,364      $ 5,725      $ 5,854  
  

 

 

    

 

 

    

 

 

 

Applications and Internet-of-Things

        

Revenue

   $ 5,336      $ 5,780      $ 2,431  

Cost of revenue

     3,085        3,907        1,455  

Depreciation and amortization

     847        889        7  

Selling, general and administrative

     354        536        488  
  

 

 

    

 

 

    

 

 

 

Operating income

   $ 1,050      $ 448      $ 481  
  

 

 

    

 

 

    

 

 

 

Systems Integration

        

Revenue

   $ 6,447      $ 9,327      $ 3,978  

Cost of revenue

     4,851        6,078        3,073  

Depreciation and amortization

     652        625        587  

Selling, general and administrative

     323        224        470  
  

 

 

    

 

 

    

 

 

 

Operating income (loss)

   $ 621      $ 2,400      $ (152
  

 

 

    

 

 

    

 

 

 

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