Form 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 14, 2019

 

 

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 14, 2019, RigNet, Inc. issued a press release announcing its operating results for the three months and year ended December 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 March 14, 2019, announcing its operating results for the three months and year ended December 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/ LEE AHLSTROM

Lee Ahlstrom

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

Date: March 14, 2019

 

3

EX-99

Exhibit 99

 

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PRESS RELEASE    FOR IMMEDIATE RELEASE

RigNet Announces Fourth Quarter and Full Year 2018 Earnings Results

 

   

Quarterly revenue of $60.2 million; net loss of $49.7 million or $2.62 per share

 

   

Full year 2018 revenue of $238.9 million; net loss of $62.5 million or $3.34 per share

 

   

Quarterly and full year results include a $50.6 million non-cash charge, net of previous accruals, for the Phase I interim GX ruling (the GX Charge), subject to reduction under our Phase II counterclaims

 

   

Quarterly net income of $0.9 million or $0.05 per share and full year net loss, excluding the GX Charge, of $11.8 million or $0.63 per share, respectively

 

   

Quarterly and full year 2018 Adjusted EBITDA of $10.5 million and $34.8 million respectively

 

   

Project backlog increased 75.0% year-on-year to $45.5 million

 

   

Site count increased 13.0% year-on-year to 1,323 total sites

HOUSTON – March 14, 2019 – RigNet, Inc. (NASDAQ: RNET, the “Company”), a global technology company that provides customized ultra-secure communications services and specialized applications including real-time machine learning-based artificial intelligence, today reported results for the quarter and full year ended December 31, 2018.

“RigNet’s continued strong operating results in the fourth quarter of 2018 enabled us to end the year with full-year revenue 17% higher than 2017, despite ongoing challenges in the offshore energy market. Revenue in each of our reporting segments was higher year-over-year and the team also grew Adjusted EBITDA, an important non-GAAP metric, for the third consecutive quarter, further highlighting the underlying strength of our business and our ability to execute,” said Steven Pickett, Chief Executive Officer and President. “Rignet’s machine learning, advanced analytics, enhanced cybersecurity, bundled with our managed communications services, help our customers achieve meaningful business improvements. We continue to see increasing interest in this highly differentiated bundle by oil and gas customers who are focused on digital transformation.”

Mr. Pickett continued, “During the fourth quarter 2018, we recorded a $50.6 million net non-cash charge related to the Phase I interim award in the GX dispute. Although we were disappointed in the outcome of Phase I, we will continue to vigorously pursue our counterclaims in Phase II with the goal of minimizing any final award amount. We have also proactively negotiated an amendment to our credit agreement to help ensure we will have the liquidity available to make any payments when they come due. Looking ahead, we remain focused on the business and I believe we are well positioned to continue our overall growth in 2019, which will largely come in the back half of the year, through our bundled offerings combining ultra-secure network communications, specialized apps, and actionable machine-learning insight.”

Quarterly revenue was $60.2 million, an increase of $3.4 million, or 6.0%, compared to the fourth quarter 2017 and a decrease of $4.5 million, or 7.0%, compared to the prior quarter. Compared to the fourth quarter 2017, revenue grew in all segments: a $1.7 million increase in Systems Integration (SI) revenue or 18.3%, a $1.2 million increase in Managed Communications Services (MCS) revenue or 2.8%, and a $0.6 million increase in Apps & IoT revenue or 9.7%. The revenue decrease compared to

 

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the prior quarter reflects a $2.1 million decrease in MCS revenue, a $1.3 million decrease in SI revenue, and a $1.1 million decrease in Apps & IoT. The decrease compared to prior quarter included a $2.2 million decrease in equipment resale, consisting of a $1.7 million decrease of equipment resale in MCS and a $0.5 million decrease of equipment resale in Apps & IoT.

Net loss attributable to common stockholders in the fourth quarter 2018 was $49.7 million, or $2.62 per share, compared to net loss attributable to common stockholders of $5.7 million, or $0.31 per share, in the fourth quarter 2017 and net loss attributable to common stockholders of $2.8 million, or $0.15 per share, in the prior quarter.

Revenue for full year 2018 was $238.9 million, an increase of $34.0 million, or 16.6%, compared to full year 2017 revenue of $204.9 million. Year-over-year revenue grew in all segments: a $16.5 million increase in SI revenue or 66.1%, a $10.1 million increase in Apps & IoT revenue or 64.6%, and a $7.3 million increase in MCS revenue or 4.5%. Net loss attributable to common stockholders for the year ended December 31, 2018 was $62.5 million or $3.34 per share, compared to net loss attributable to common stockholders of $16.2 million or $0.90 per share, in the year ended December 31, 2017.

Net losses in the fourth quarter and full year 2018 include the $50.6 million GX Charge, net of approximately $0.2 million of prior accruals, related to the previously disclosed interim ruling in the Inmarsat plc (Inmarsat) arbitration (GX dispute). Excluding the impact of the GX Charge, net income in the fourth quarter 2018 was $0.9 million, or $0.05 per share. Excluding the impact of the GX Charge, net loss for the full year 2018 was $11.8 million, or $0.63 per share.

Adjusted EBITDA, a non-GAAP measure defined below, was $10.5 million in the fourth quarter 2018, a 23.4% increase compared to $8.5 million in the fourth quarter 2017 and a 20.8% increase compared to $8.7 million in the prior quarter. Adjusted EBITDA was $34.8 million for the year ended December 31, 2018, a 17.3% increase compared to $29.7 million for the year ended December 31, 2017.

Project backlog (using percentage of completion accounting) was $45.5 million compared to $26.0 million in the fourth quarter 2017 and $41.4 million in the prior quarter. The increase was driven by new project wins primarily in the United States.

Capital expenditures for the three months and year ending December 31, 2018 totaled $10.8 million and $30.5 million, respectively, compared to $4.0 million and $17.9 million, respectively, for the three months and year ending December 31, 2017. Capital expenditures for the third quarter ending September 30, 2018 totaled $6.5 million. The increase in capital expenditures in the fourth quarter 2018 relative to the third quarter 2018 was largely due to the deployment of the Company’s LTE network in the U.S. Gulf of Mexico and the purchase of a new operational facility in Lafayette, Louisiana. When complete the LTE network will cover up to approximately 45,000 square miles for B2B applications and up to approximately 30,000 square miles for consumer applications. Capital expenditures increased in 2018 relative to 2017 as result of the LTE network deployment, the purchase of the new facility in Louisiana, and an increase in success-based capital spending.

Site count in the fourth quarter 2018 increased to 1,323 from 1,171 in the fourth quarter 2017. Site count was 1,350 in the prior quarter.

 

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In the fourth quarter of 2018, the Company recorded a $50.6 million charge, net of approximately $0.2 million of prior accruals, for the GX dispute, $0.2 million of executive departure costs, and $0.2 million of acquisition costs, as well as a net $1.5 million increase in the fair value of earn-outs / contingent consideration which is composed of a $1.8 million increase in fair value related to Intelie partially offset by a $0.3 million decrease related to Cyphre. The change in fair value of both the Intelie and Cyphre earn-outs / contingent consideration were non-cash impacting in the current period. The Intelie earn-out will ultimately be settled with stock. In the previous quarter, the Company recorded $0.7 million in restructuring charges, 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 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. The acquisition costs, restructuring charges, the GX Charge and change in fair value of the earn-out are added back to net loss in our non-GAAP measure Adjusted EBITDA.

GX Dispute

As previously announced, Inmarsat filed arbitration with the International Centre for Dispute Resolution tribunal (the panel) in October 2016 concerning a January 2014 take-or-pay agreement to purchase up to $65.0 million, under certain conditions, of GX capacity from Inmarsat over several years. Phase I of the arbitration, now concluded, concerned only whether RigNet’s take-or-pay obligation ever commenced under the agreement. In December 2018, the panel’s Phase I ruling found that a take-or-pay obligation had commenced and that RigNet owed Inmarsat $50.8 million, subject to any offsets from RigNet’s counterclaims in Phase II of the arbitration. The Phase I ruling is an interim ruling, and RigNet is not required to pay any amounts to Inmarsat until the panel rules on Phase II counterclaims. The Company currently expects a Phase II ruling in the second half of 2019. As of December 31, 2018, the Company has an accrued liability of $50.8 million, based on the Phase I interim award amount. While management believes it has strong counterclaims, which will be heard in Phase II and could reduce the ultimate liability, the amount of the final award is not estimable at this time. No assurance can be given as to the ultimate outcome of the GX dispute, and the ultimate outcome may differ from the accrued amount.

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, March 15, 2019, to discuss RigNet’s fourth quarter 2018 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.

About RigNet

RigNet (NASDAQ: RNET) delivers advanced software, optimized industry solutions, and communications infrastructure that allow our customers to realize the business benefits of digital

 

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transformation. With world-class, ultra-secure solutions spanning global IP connectivity, bandwidth-optimized OTT applications, IoT big data enablement, and industry-leading machine learning analytics, RigNet supports the full evolution of digital enablement, empowering businesses to respond faster to high priority issues, mitigate the risk of operational disruption, and maximize their overall financial 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. Opinions, expectations with respect to conditions in the oil and gas industry, customer perceptions of value, ability to reduce the interim GX dispute award through counterclaims, ability to make payments for any GX dispute final award, and growth prospects 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, 2018, expected to be filed Friday March 15th, 2019, 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, the GX dispute and non-recurring items.

 

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A reconciliation of net loss to Adjusted EBITDA is found in the table below.

 

Media / Investor Relations Contact

  

Lee M. Ahlstrom, SVP & CFO

   Tel: +1 (281) 674-0699

RigNet, Inc.

   investor.relations@rig.net

RIGNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

     Three Months Ended     Year Ended  
     December 31,
2018
    September 30,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 
     (in thousands, except per share amounts)  

Unaudited Consolidated Statements of Comprehensive Income Data:

          

Revenue

   $ 60,244     $ 64,770     $ 56,814     $ 238,854     $ 204,892  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

          

Cost of revenue (excluding depreciation and amortization)

     35,942       40,734       35,868       146,603       131,166  

Depreciation and amortization

     8,398       8,413       7,978       33,154       30,845  

Selling and marketing

     2,978       2,728       2,379       12,844       8,347  

Change in fair value of earn-out/contingent consideration

     1,493       (750     526       3,543       (320

GX dispute

     50,612       —         —         50,612       —    

General and administrative

     12,095       14,666       12,595       53,193       44,842  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     111,518       65,791       59,346       299,949       214,880  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (51,274     (1,021     (2,532     (61,095     (9,988

Other expense, net

     (1,152     (1,465     (878     (3,965     (2,737
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (52,426     (2,486     (3,410     (65,060     (12,725

Income tax (expense) benefit

     2,735       (312     (2,397     2,746       (3,472
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (49,691   $ (2,798   $ (5,807   $ (62,314   $ (16,197
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss Per Share - Basic and Diluted

          

Net loss attributable to RigNet, Inc. common stockholders

   $ (49,721   $ (2,847   $ (5,669   $ (62,453   $ (16,176

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

   $ (2.62   $ (0.15   $ (0.31   $ (3.34   $ (0.90

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

   $ (2.62   $ (0.15   $ (0.31   $ (3.34   $ (0.90

Weighted average shares outstanding, basic

     18,948       18,905       18,090       18,713       18,009  

Weighted average shares outstanding, diluted

     18,948       18,905       18,090       18,713       18,009  

Unaudited Non-GAAP Data:

          

Adjusted EBITDA

   $ 10,546     $ 8,730     $ 8,548     $ 34,793     $ 29,669  

 

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RIGNET, INC.

Reconciliation of Net Loss to Adjusted EBITDA

(Unaudited)

 

    Three Months Ended     Year Ended  
    December 31,
2018
    September 30,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 
    (in thousands)  

Reconciliation of Net Loss to Adjusted EBITDA:

         

Net loss

  $ (49,691   $ (2,798   $ (5,807   $ (62,314   $ (16,197

Interest expense

    1,196       807       949       3,969       2,870  

Depreciation and amortization

    8,398       8,413       7,978       33,154       30,845  

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

    297       66       —         331       55  

Stock-based compensation

    344       1,086       754       4,712       3,703  

Restructuring costs

    178       664       —         842       767  

Change in fair value of earn-out/contingent consideration

    1,493       (750     526       3,543       (320

Executive departure costs

    245       —         1,192       406       1,192  

Acquisition costs

    209       930       559       2,284       3,282  

GX dispute

    50,612       —         —         50,612       —    

Income tax expense (benefit)

    (2,735     312       2,397       (2,746     3,472  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

  $ 10,546     $ 8,730     $ 8,548     $ 34,793     $ 29,669  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

RIGNET, INC.

Segment Information

(Unaudited)

 

 

 

    Three Months Ended     Year Ended  
    December 31,
2018
    September 30,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 
    (in thousands)  

Managed Communication Services

         

Revenue

  $ 42,869     $ 44,943     $ 41,707     $ 171,574     $ 164,238  

Cost of revenue

    26,120       27,930       25,884       105,101       101,681  

Depreciation and amortization

    5,746       5,641       5,692       22,759       23,202  

Selling, general and administrative

    3,431       3,779       4,406       16,448       16,841  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  $ 7,572     $ 7,593     $ 5,725     $ 27,266     $ 22,514  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Applications and Internet-of-Things

         

Revenue

  $ 6,338     $ 7,463     $ 5,780     $ 25,713     $ 15,626  

Cost of revenue

    3,459       3,677       3,907       13,386       10,751  

Depreciation and amortization

    1,226       1,661       889       4,570       1,738  

Selling, general and administrative

    657       520       536       1,961       1,685  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  $ 996     $ 1,605     $ 448     $ 5,796     $ 1,452  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Systems Integration

         

Revenue

  $ 11,037     $ 12,364     $ 9,327     $ 41,567     $ 25,028  

Cost of revenue

    6,364       9,127       6,078       28,116       18,734  

Depreciation and amortization

    589       605       625       2,511       2,438  

Selling, general and administrative

    438       380       224       1,698       1,403  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  $ 3,646     $ 2,252     $ 2,400     $ 9,242     $ 2,453  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NOTE: Consolidated balances include the segments above along with corporate activities and intercompany eliminations.

 

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RIGNET, INC.

CONSOLIDATED BALANCE SHEETS

 

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

Current assets:

    

Cash and cash equivalents

   $ 21,711     $ 34,598  

Restricted cash

     41       43  

Accounts receivable, net

     67,450       49,021  

Costs and estimated earnings in excess of billings on uncompleted contracts (CIEB)

     7,138       2,393  

Prepaid expenses and other current assets

     6,767       5,591  
  

 

 

   

 

 

 

Total current assets

     103,107       91,646  

Property, plant and equipment, net

     63,585       60,344  

Restricted cash

     1,544       1,500  

Goodwill

     46,631       37,088  

Intangibles, net

     33,733       30,405  

Deferred tax and other assets

     10,325       9,111  
  

 

 

   

 

 

 

TOTAL ASSETS

   $  258,925     $  230,094  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Accounts payable

   $ 20,568     $ 12,234  

Accrued expenses

     16,374       16,089  

Current maturities of long-term debt

     4,942       4,941  

Income taxes payable

     2,431       1,601  

GX dispute accrual

     50,765       —    

Deferred revenue and other current liabilities

     5,863       8,511  
  

 

 

   

 

 

 

Total current liabilities

     100,943       43,376  

Long-term debt

     72,085       53,173  

Deferred revenue

     318       546  

Deferred tax liability

     652       189  

Other liabilities

     28,943       25,533  
  

 

 

   

 

 

 

Total liabilities

     202,941       122,817  
  

 

 

   

 

 

 

Equity:

    

Stockholders’ equity

    

Preferred stock - $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at December 31, 2018 and 2017

     —         —    

Common stock - $0.001 par value; 190,000,000 shares authorized; 19,464,847 and 18,232,872 shares issued and outstanding at December 31, 2018 and 2017, respectively

     19       18  

Treasury stock - 91,567 and 5,516 shares at December 31, 2018 and 2017, respectively, at cost

     (1,270     (116

Additional paid-in capital

     172,946       155,829  

Accumulated deficit

     (96,517     (33,726

Accumulated other comprehensive loss

     (19,254     (14,806
  

 

 

   

 

 

 

Total stockholders’ equity

     55,924       107,199  

Non-redeemable, non-controlling interest

     60       78  
  

 

 

   

 

 

 

Total equity

     55,984       107,277  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 258,925     $ 230,094  
  

 

 

   

 

 

 

 

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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Page 8 of 9

 

RIGNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Year Ended December 31,  
     2018     2017     2016  
     (in thousands)  

Cash flows from operating activities:

      

Net loss

   $ (62,314   $ (16,197   $ (11,297

Adjustments to reconcile net loss to net cash provided by operations:

      

Depreciation and amortization

     33,154       30,845       33,556  

Impairment of intangibles

     —         —         397  

Stock-based compensation

     4,712       3,703       3,389  

Amortization of deferred financing costs

     184       217       135  

Deferred taxes

     (5,263     3,917       (1,830

Change in fair value of earn-out/contingent consideration

     3,543       (320     (1,279

Accretion of discount of contingent consideration payable for acquisitions

     450       624       498  

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

     331       55       (153

Changes in operating assets and liabilities, net of effect of acquisitions:

      

Accounts receivable

     (15,254     203       18,347  

Costs and estimated earnings in excess of billings on uncompleted contracts

     (4,103     122       4,378  

Prepaid expenses and other assets

     (1,026     4,659       392  

Accounts payable

     7,527       2,733       129  

Accrued expenses

     279       3,601       (8,579

GX dispute

     50,612       —         —    

Deferred revenue and other assets

     1,565       4,933       (1,150

Other liabilities

     (5,149     (9,867     2,241  

Payout of TECNOR contingent consideration - inception to date change in fair value portion

     (1,575     —         —    
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     7,673       29,228       39,174  
  

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

      

Acquisitions (net of cash acquired)

     (5,208     (32,205     (4,841

Capital expenditures

     (30,072     (18,284     (13,641

Proceeds from sales of property, plant and equipment

     1,082       499       194  
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (34,198     (49,990     (18,288
  

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

      

Proceeds from issuance of common stock upon the exercise of stock options

     970       916       1,680  

Stock withheld to cover employee taxes on stock-based compensation

     (1,154     (116     —    

Subsidiary distributions to non-controlling interest

     (157     (76     (197

Payout of TECNOR contingent consideration - fair value on acquisition date portion

     (6,425     —         —    

Proceeds from borrowings

     23,750       15,000       —    

Repayments of long-term debt

     (5,129     (18,171     (16,560

Payments of financing fees

     —         (400     (100

Excess tax benefits from stock-based compensation

     —         —         (175
  

 

 

   

 

 

   

 

 

 

Net cash provided by (used) in financing activities

     11,855       (2,847     (15,352
  

 

 

   

 

 

   

 

 

 

Net change in cash and cash equivalents

     (14,670     (23,609     5,534  
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents:

      

Balance, January 1,

     36,141       58,805       61,011  

Changes in foreign currency translation

     1,825       945       (7,740
  

 

 

   

 

 

   

 

 

 

Balance, December 31,

   $ 23,296     $ 36,141     $ 58,805  
  

 

 

   

 

 

   

 

 

 

 

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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Page 9 of 9

 

RIGNET, INC.

Selected Operational Data

MCS Site Count

(Unaudited)

 

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

Selected Operational Data:

              

Offshore drilling rigs (1)

     184        191        190        188        182  

Offshore Production

     347        332        320        310        304  

Maritime

     181        187        177        176        172  

Other sites (2)

     611        640        610        525        513  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,323        1,350        1,297        1,199        1,171  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Includes jack up, semi-submersible and drillship rigs

(2)

Includes U.S. onshore drilling and production sites, completion sites, man-camps, remote offices, supply bases and offshore-related supply bases, shore offices, tender rigs and platform rigs

###

 

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