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): August 10, 2011
RigNet, Inc.
(Exact name of registrant as specified in its charter)
         
Delaware
(State or other jurisdiction
of incorporation)
  001-35003
(Commission file number)
  76-0677208
(I.R.S. Employer
Identification No.)
     
1880 S. Dairy Ashford, Suite 300
Houston, Texas

(Address of principal executive offices)
  77077-4760
(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:
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))
 
 

 


 

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 10, 2011, RigNet, Inc. issued a press release announcing its operating results for the three and six months ended June 30, 2011. 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 10, 2011 announcing its operating results for the three and six months ended June 30, 2011

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/ MARTIN L. JIMMERSON, JR.    
  Martin L. Jimmerson, Jr.   
  Chief Financial Officer
(Principal Financial & Accounting Officer)
 
 
 
Date: August 10, 2011

3

Exhibit 99
Exhibit 99
(RIGNET LOGO)
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Marty Jimmerson
RigNet, Inc.
+1 (281) 674-0699
investor.relations@rig.net
RigNet, Inc. Announces Second Quarter 2011 Earnings Results
HOUSTON, TX — August 10, 2011 —
   
Reported revenue of $26.2 million, a 16.2% increase over the same quarter last year and a 7.1% increase over the previous quarter
 
   
Reported Adjusted EBITDA of $8.3 million, a 10.5% increase over the same quarter last year and a 25.7% increase from the previous quarter
 
   
Reported net income of $2.2 million, or $0.13 per diluted share, an increase of $2.37 per diluted share over the same quarter last year and $0.13 per diluted share over the previous quarter
 
   
Reported capital expenditures of $5.7 million, a 72.7% increase over the same quarter last year and a 32.6% increase over the previous quarter
For the three months ended June 30, 2011, RigNet, Inc. (“RigNet” or the “Company”) (NASDAQ: RNET), today announced revenue of $26.2 million, Adjusted EBITDA of $8.3 million and net income of $2.2 million, or $0.13 per diluted share. For the three months ended June 30, 2010, revenue was $22.6 million, Adjusted EBITDA was $7.5 million and net loss was $11.1 million, or $2.24 loss per diluted share. For the sequential comparison of the three months ended March 31, 2011, revenue was $24.5 million, Adjusted EBITDA was $6.6 million and net income was zero.
Revenue increased by $3.6 million, or 16.2%, for the three months ended June 30, 2011 as compared to the same period of 2010 due primarily to continued growth in a robust U.S. land drilling market, favorable customer wins throughout our Eastern Hemisphere operations, and improvement in our U.S. Gulf of Mexico results. Adjusted EBITDA increased by $0.8 million, or 10.5%, over the prior year period primarily due to increased revenue described above partially offset by additional costs related to operating as a publicly-traded company.
Net income increased by $13.3 million, or $2.37 per diluted share, for the three months ended June 30, 2011 as compared to the same period of 2010. This increase is due to the operational improvements discussed above, as well as an expense of $12.2 million recorded during the second quarter of 2010 related to changes in the fair value of preferred stock derivatives. Concurrent with the Company’s initial public offering in December 2010, all preferred stock derivatives were settled. Accordingly, no charges related to the fair value of these derivatives will be recorded in 2011.
Revenue increased by $1.7 million, or 7.1%, for the three months ended June 30, 2011 as compared to the previous quarter due primarily to the continued robust activity in the U.S. land drilling market and improvement in penetration of deepwater drilling and other remote sites. Adjusted EBITDA increased by $1.7 million, or 25.7%, over the previous quarter primarily due to increased revenue and efficiencies in our management of bandwidth capacity. Net income increased by $2.2 million, or $0.13 per diluted share, for the three months ended June 30, 2011 as compared to the prior quarter due to the operational improvements discussed above.
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net

 

 


 

(RIGNET LOGO)
Mark B. Slaughter, Chief Executive Officer and President, commented, “I am pleased with our second quarter performance, which reflected positive contributions and improved margins from each of our three reporting segments. During the quarter we benefited from solid execution in our U.S. Land segment, international land drilling wins in the Middle East, tender rig support wins in Asia Pacific and improved results from the U.S. Gulf of Mexico. We continue to focus our efforts on our core offshore and onshore drilling communications business as well as pursue our strategic growth initiatives in the areas of offshore production and upstream energy maritime.”
A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) tomorrow to discuss RigNet’s 2011 second quarter results. The call may be accessed live over the telephone by dialing (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: Gross Profit and Adjusted EBITDA. Gross Profit and Adjusted EBITDA are financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP.
We define Gross Profit as revenue less cost of revenue. This measure is used to evaluate operating margins and the effectiveness of cost management.
We define Adjusted EBITDA as net income (loss) plus interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, (gain) loss on retirement of property and equipment, change in fair value of derivatives, stock-based compensation and IPO costs and related bonuses. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP.
We refer you to the Company’s most recent 10-K filing for the year ended December 31, 2010 for a more detailed discussion of the uses and limitations of our non-GAAP financial measures.
About RigNet
RigNet (NASDAQ: RNET) is a leading global provider of managed communications, networks and collaborative applications dedicated to the oil and gas industry. RigNet provides solutions ranging from fully-managed voice and data networks to more advanced applications that include video conferencing and real-time data services to remote sites in over 30 countries on six continents, effectively spanning the drilling and production industry. RigNet is based in Houston, Texas. For more information, please visit www.rig.net.
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. 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, and often contain words such as “anticipate,” “believe,” “intend,” “expect,” “plan,” “will” or other similar words. These forward-looking statements involve certain risks and uncertainties that 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.
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net

 

Page 2 of 5


 

(RIGNET LOGO)
                                 
    Three Months     Six Months  
    Ended June 30,     Ended June 30,  
    2011     2010     2011     2010  
    (in thousands)  
Unaudited Consolidated Statements of Income (Loss) Data:
                               
Revenue
  $ 26,197     $ 22,550     $ 50,664     $ 44,370  
 
                       
Expenses:
                               
Cost of revenue
    11,399       10,454       22,572       20,726  
Depreciation and amortization
    3,600       3,837       7,112       7,788  
Selling and marketing
    591       428       1,053       894  
General and administrative
    6,234       5,007       12,500       10,271  
 
                       
Total expenses
    21,824       19,726       43,237       39,679  
 
                       
Operating income
    4,373       2,824       7,427       4,691  
Other expense, net
    (226 )     (12,650 )     (760 )     (13,458 )
 
                       
Income (loss) before income taxes
    4,147       (9,826 )     6,667       (8,767 )
Income tax expense
    (1,946 )     (1,226 )     (4,443 )     (2,292 )
 
                       
Net income (loss)
  $ 2,201     $ (11,052 )   $ 2,224     $ (11,059 )
 
                       
 
                               
Income (Loss) Per Share — Basic and Diluted
                               
Net loss attributable to RigNet, Inc. common stockholders
  $ 2,120     $ (11,941 )   $ 2,095     $ (12,741 )
Net income (loss) per share attributable to RigNet, Inc. common stockholders, basic
  $ 0.14     $ (2.24 )   $ 0.14     $ (2.40 )
Net income (loss) per share attributable to RigNet, Inc. common stockholders, diluted
  $ 0.13     $ (2.24 )   $ 0.12     $ (2.40 )
Weighted average shares outstanding, basic
    15,420       5,319       15,331       5,319  
Weighted average shares outstanding, diluted
    16,894       5,319       16,768       5,319  
 
                               
Unaudited Non-GAAP Data:
                               
Gross Profit
  $ 14,798     $ 12,096     $ 28,092     $ 23,644  
Gross Profit margin
    56.5 %     53.6 %     55.4 %     53.3 %
Adjusted EBITDA
  $ 8,289     $ 7,504     $ 14,884     $ 13,605  
Adjusted EBITDA margin
    31.6 %     33.3 %     29.4 %     30.7 %
                                 
    Three Months     Six Months  
    Ended June 30,     Ended June 30,  
    2011     2010     2011     2010  
    (in thousands)  
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
                               
Net income (loss)
  $ 2,201     $ (11,052 )   $ 2,224     $ (11,059 )
Interest expense
    349       350       795       762  
Depreciation and amortization
    3,600       3,837       7,112       7,788  
(Gain) loss on retirement of property and equipment
    (104 )     306       (110 )     320  
Change in fair value of preferred stock derivatives
          12,206             12,446  
Stock-based compensation
    297       96       420       218  
Initial public offering costs
          535             838  
Income tax expense
    1,946       1,226       4,443       2,292  
 
                       
Adjusted EBITDA (non-GAAP measure)
  $ 8,289     $ 7,504     $ 14,884     $ 13,605  
 
                       
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net

 

Page 3 of 5


 

(RIGNET LOGO)
                 
    June 30,     December 31,  
    2011     2010  
    (in thousands)  
Unaudited Consolidated Balance Sheet Data:
               
Cash and cash equivalents
  $ 61,319     $ 50,435  
Restricted cash — current portion
          2,500  
Restricted cash — long-term portion
          7,500  
Total assets
    136,894       129,785  
Current maturities of long-term debt
    8,723       8,655  
Long-term debt
    19,153       23,484  
                 
    Six Months Ended June 30,  
    2011     2010  
    (in thousands)  
Unaudited Consolidated Statements of Cash Flows Data:
               
Cash and cash equivalents, January 1,
  $ 50,435     $ 11,379  
Net cash provided by operating activities
    9,025       8,574  
Net cash provided (used) by investing activities
    1,011       (6,563 )
Net cash provided (used) by financing activities
    177       (4,512 )
Changes in foreign currency translation
    671       (1,410 )
 
           
Cash and cash equivalents, June 30,
  $ 61,319     $ 7,468  
 
           
                         
    4th Quarter     1st Quarter     2nd Quarter  
    2010     2011     2011  
Selected Operational Data:
                       
Eastern Hemisphere
                       
Drilling rigs (1)
    141       143       141  
Other sites (2)
    120       131       160  
Western Hemisphere
                       
Drilling rigs (1)
    85       80       78  
Other sites (2)
    155       159       138  
U.S. Land
                       
Drilling rigs (1)
    334       323       331  
Other sites (2)
    86       82       106  
 
     
(1)  
Eastern and Western Hemisphere include jack up, semi-submersible and drillship rigs
 
(2)  
Includes production facilities, energy support vessels, related remote support offices and supply bases
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net

 

Page 4 of 5


 

(RIGNET LOGO)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (in thousands)  
Eastern Hemisphere:
                               
Revenue
  $ 16,503     $ 15,340     $ 31,620     $ 30,407  
Cost of revenue
    6,202       6,322       11,879       12,290  
 
                       
Gross Profit (non-GAAP measure)
    10,301       9,018       19,741       18,117  
 
                       
Gross Profit margin (non-GAAP measure)
    62.4 %     58.8 %     62.4 %     59.6 %
Depreciation and amortization
    2,050       1,962       4,052       4,127  
Selling, general and administrative
    2,140       1,546       4,168       3,429  
 
                       
Operating income
  $ 6,111     $ 5,510     $ 11,521     $ 10,561  
 
                       
Adjusted EBITDA (non-GAAP measure)
  $ 8,153     $ 7,631     $ 15,467     $ 14,862  
 
                       
Adjusted EBITDA margin (non-GAAP measure)
    49.4 %     49.7 %     48.9 %     48.9 %
 
                               
Western Hemisphere:
                               
Revenue
  $ 4,978     $ 4,297     $ 9,935     $ 8,648  
Cost of revenue
    2,309       2,119       4,896       4,347  
 
                       
Gross Profit (non-GAAP measure)
    2,669       2,178       5,039       4,301  
 
                       
Gross Profit margin (non-GAAP measure)
    53.6 %     50.7 %     50.7 %     49.7 %
Depreciation and amortization
    1,149       993       2,257       1,800  
Selling, general and administrative
    799       634       1,516       1,203  
 
                       
Operating income (loss)
  $ 721     $ 551     $ 1,266     $ 1,298  
 
                       
Adjusted EBITDA (non-GAAP measure)
  $ 1,899     $ 1,460     $ 3,568     $ 3,019  
 
                       
Adjusted EBITDA margin (non-GAAP measure)
    38.1 %     34.0 %     35.9 %     34.9 %
 
                               
U.S. Land:
                               
Revenue
  $ 4,713     $ 2,927     $ 9,106     $ 5,595  
Cost of revenue
    2,373       1,665       4,644       3,034  
 
                       
Gross Profit (non-GAAP measure)
    2,340       1,262       4,462       2,561  
 
                       
Gross Profit margin (non-GAAP measure)
    49.6 %     43.1 %     49.0 %     45.8 %
Depreciation and amortization
    452       853       909       1,775  
Selling, general and administrative
    720       648       1,469       1,122  
 
                       
Operating income (loss)
  $ 1,168     $ (239 )   $ 2,084     $ (336 )
 
                       
Adjusted EBITDA (non-GAAP measure)
  $ 1,621     $ 614     $ 2,993     $ 1,439  
 
                       
Adjusted EBITDA margin (non-GAAP measure)
    34.4 %     21.0 %     32.9 %     25.7 %
NOTE: Consolidated balances include the three segments above along with corporate activities and intercompany eliminations.
###
1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net

 

Page 5 of 5