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): August 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 August 6, 2018, RigNet, Inc. issued a press release announcing its operating results for the three and six months ended June 30, 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 August 6, 2018, announcing its operating results for the three and six months ended June 30, 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: August 6, 2018

 

3

EX-99

Exhibit 99

 

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PRESS RELEASE    FOR IMMEDIATE RELEASE

RigNet Announces Second Quarter 2018 Earnings Results

 

   

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 – August 6, 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 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.”

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 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.

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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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

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     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,  
     2018     2018     2017     2018     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  

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     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,  
     2018     2018     2017     2018     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,
2018
     December 31,
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  
  

 

 

    

 

 

 

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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     2nd Quarter
2018
     1st Quarter
2018
     4th Quarter
2017
     3rd Quarter
2017
     2nd Quarter
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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15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net