RigNet
Mar 28, 2011

RigNet, Inc. Announces Full-Year and Fourth Quarter 2010 Earnings Results

HOUSTON, March 28, 2011 (GLOBE NEWSWIRE) --

  • Cash was $50.4 million (excluding restricted cash of $10.0 million)
  • Working capital was $46.0 million
  • Debt was $32.1 million

 

 
 
 Eastern
 Hemisphere 
 Western
 Hemisphere 
 
 U.S. Land 
Drilling rigs (1)  141  85  334
Other sites (2)  120  155  86
       
(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes production facilities, energy support vessels, related remote support offices and supply bases

For the three months ended December 31, 2010, RigNet, Inc. ("RigNet" or the "Company") (Nasdaq:RNET), today announced revenue of $24.3 million, Adjusted EBITDA of $8.4 million and a net loss of $4.7 million. For the three months ended December 31, 2009, revenue was $20.1 million, Adjusted EBITDA was $6.3 million and the net loss was $6.8 million.

Revenue increased by $4.2 million or 20.9% for the three months ended December 31, 2010 as compared to the same period of 2009 due primarily to improvement in deepwater activity in Brazil and the Gulf of Mexico, widened geographic footprint in U.S. land drilling, and the recovery of the U.S. land drilling market. Adjusted EBITDA increased by $2.1 million or 33.3% over the prior year period primarily due to increased revenue as described above.

The net loss decreased by $2.1 million or 30.9%, to $4.7 million for the three months ended December 31, 2010 as compared to $6.8 million for the same period of 2009. Net loss for these periods included pre-tax, non-cash charges of $4.8 million and $7.1 million, respectively, 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 future periods. Excluding the effect of the pre-tax, non-cash derivatives charges, net income would have been $0.1 million and $0.3 million for the three months ended December 31, 2010 and 2009, respectively.

For the twelve months ended December 31, 2010, revenue was $92.9 million, Adjusted EBITDA was $29.7 million and the net loss was $15.3 million. For the twelve months ended December 31, 2009, revenue was $80.9 million, Adjusted EBITDA was $29.1 million and the net loss was $19.6 million.

Revenue increased by $12.0 million or 14.8% for the twelve months ended December 31, 2010 as compared to the same period of 2009 for the same reasons mentioned above. Adjusted EBITDA increased by $0.6 million or 2.1% for the twelve months ended December 31, 2010 as compared to the same period of 2009.

The net loss decreased by $4.3 million or 21.9%, to $15.3 million for the year ended December 31, 2010 as compared to $19.6 million for the year ended December 31, 2009. Net loss for these periods included non-cash charges of $17.2 million and $21.0 million, respectively, related to changes in the fair value of preferred stock derivatives. Excluding the effect of the pre-tax, non-cash derivatives charges, net income would have been $1.9 million and $1.4 million for the twelve months ended December 31, 2010 and 2009, respectively.

Mark B. Slaughter, President and Chief Executive Officer, commented, "The year 2010 was a successful one for RigNet, with growth in deepwater markets in Brazil and the U.S. Gulf of Mexico, a rapidly improving U.S. land drilling market and, finally, our public listing on the NASDAQ last December. We achieved these positive year-over-year results despite the regulatory headwinds resulting from the oil spill in the U.S. Gulf of Mexico and challenging worldwide economic conditions through much of last year. We look forward to providing the robust and reliable remote communications solutions our customers have come to expect from RigNet as well as to delivering enhanced value for our stockholders."

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 fourth quarter and full-year 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 andPresentations section. A replay of the conference call webcast will also be available for approximately thirty days following the call on our website.

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. Our Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate Adjusted EBITDA or similarly titled measures in the same manner as we do. We prepare Adjusted EBITDA to eliminate the impact of items that we do not consider indicative of our core operating performance. We encourage you to evaluate these adjustments and the reasons we consider them appropriate.

We believe Adjusted EBITDA is useful to investors in evaluating our operating performance for the following reasons:

Our management uses Adjusted EBITDA:

Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Some of these limitations are:

In order to compensate for these limitations, management presents its non-GAAP financial measures in connection with its GAAP results and does not rely on any single financial measure to evaluate its business. RigNet urges investors to review the reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP below.

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.

The RigNet, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8418

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.

 
 
  Three Months
 Ended December 31, 
 
Year Ended December 31, 
  2010  2009  2010  2009 
  (in thousands)
Unaudited Consolidated Statements of Loss Data:        
Revenue  $ 24,317   $ 20,065   $ 92,921   $ 80,936 
Expenses:        
Cost of revenue   11,237   8,965   42,479   35,165
Depreciation and amortization   3,634   2,958   14,983   12,554
Impairment of goodwill  --  --  --   2,898
Selling and marketing   527   628   2,103   2,187
General and administrative   4,898    5,231    20,756    16,444 
Total expenses   20,296    17,782    80,321    69,248 
Operating income   4,021   2,283   12,600   11,688
Other expense, net   (5,004)   (7,534)   (19,207)   (25,851)
Loss before income taxes   (983)   (5,251)   (6,607)   (14,163)
Income tax expense   (3,716)   (1,594)   (8,669)   (5,457)
Net loss  $ (4,699)  $ (6,845)  $ (15,276)  $ (19,620)
         
Income (Loss) Per Share - Basic and Diluted        
Net income (loss) attributable to RigNet, Inc.
common stockholders
$ (5,514)  $ (7,508) $ (18,807)  $ (22,118)
Net income (loss) per share attributable to
RigNet, Inc. common stockholders, basic
 $ (0.87)  $ (1.41)  $ (3.38)  $ (4.16)
Net income (loss) per share attributable to
RigNet, Inc. common stockholders, diluted
 $ (0.87)  $ (1.41)  $ (3.38)  $ (4.16)
Weighted average shares outstanding, basic   6,321   5,317   5,571   5,312
Weighted average shares outstanding, diluted   6,321   5,317   5,571   5,312
         
Unaudited Non-GAAP Data:        
Gross Profit  $ 13,080  $ 11,100  $ 50,442  $ 45,771
Adjusted EBITDA  $ 8,429  $ 6,342  $ 29,740  $ 29,093
 
 
 Three Months
 Ended December 31, 
 
Year Ended December 31, 
  2010  2009  2010  2009 
  (in thousands)
Reconciliation of Net Loss
to Adjusted EBITDA:
       
Net loss  $ (4,699)  $ (6,845)  $ (15,276)  $ (19,620)
Interest expense   444   508   1,618   5,146
Depreciation and amortization   3,634   2,958   14,983   12,554
Impairment of goodwill  --  --  --   2,898
(Gain) loss on retirement of property and equipment   (26)   20   294   111
Change in fair value of preferred stock derivatives   4,806   7,144   17,190   21,009
Stock-based compensation   103   74   437   277
Initial public offering costs   451   889   1,825   1,261
Income tax expense  3,716    1,594    8,669    5,457 
Adjusted EBITDA (non-GAAP measure)  $ 8,429   $ 6,342   $ 29,740   $ 29,093 
   
  December 31, 
  2010  2009 
  (in thousands)
Unaudited Consolidated Balance Sheet Data:    
Cash and cash equivalents $ 50,435 $ 11,379
Restricted cash - current portion  2,500  2,500
Restricted cash - long-term portion  7,500  7,500
Total assets  129,785  88,810
Current maturities of long-term debt  8,655  8,664
Long-term debt  23,484  21,022
Preferred stock derivatives  --  30,446
Preferred stock  --  17,333
     
 Year Ended December 31,
  2010  2009 
  (in thousands)
   
Unaudited Consolidated Statements of Cash Flows Data:    
Cash and cash equivalents, January 1, $ 11,379 $ 15,376
Net cash provided by operating activities  19,896  26,189
Net cash used by investing activities  (13,449)  (19,305)
Net cash provided (used) by financing activities  33,480  (10,774)
Changes in foreign currency translation   (871)   (107)
Cash and cash equivalents, December 31, $ 50,435  $ 11,379 
   
  Three Months Ended December 31, 2010 (Unaudited) 
 
 
 Eastern
 Hemisphere 
 Western
 Hemisphere 
 
 U.S. Land 
 Corporate &
 Eliminations 
 Consolidated
 Total 
  (in thousands)
Revenue  $ 15,411  $ 5,032  $ 3,874  $ --  $ 24,317
Cost of revenue  6,029   2,362   2,114   732   11,237 
Gross Profit (non-GAAP measure)  9,382  2,670  1,760  (732)  13,080
Depreciation and amortization  1,998  1,112  638  (114)  3,634
Selling, general and administrative  1,313   572   670   2,870   5,425 
Operating income  $ 6,071   $ 986   $ 452   $ (3,488)  $ 4,021 
Adjusted EBITDA (non-GAAP measure)  $ 8,510   $ 2,100   $ 1,091   $ (3,272)  $ 8,429 
  Three Months Ended December 31, 2009 (Unaudited) 
 
 
 Eastern
 Hemisphere 
 Western
 Hemisphere 
 
 U.S. Land 
 Corporate &
 Eliminations 
 Consolidated
 Total 
  (in thousands)
Revenue  $ 15,082  $ 3,192  $ 2,233  $ (442)  $ 20,065
Cost of revenue   5,724    1,431    1,189    621    8,965 
Gross Profit (non-GAAP measure)   9,358   1,761   1,044   (1,063)   11,100
Depreciation and amortization   1,806   697   437   18   2,958
Selling, general and administrative   1,663    606    612    2,978    5,859 
Operating income  $ 5,889   $ 458   $ (5)  $ (4,059)  $ 2,283 
Adjusted EBITDA (non-GAAP measure)  $ 7,910   $ 1,436   $ 88   $ (3,092)  $ 6,342 
  Three Months Ended September 30, 2010 (Unaudited) 
 
 
 Eastern
 Hemisphere 
 Western
 Hemisphere 
 
 U.S. Land 
 Corporate &
 Eliminations 
 Consolidated
 Total 
  (in thousands)
Revenue  $ 15,572  $ 5,332  $ 3,376  $ (46)  $ 24,234
Cost of revenue   5,696    2,209    1,795    816    10,516 
Gross Profit (non-GAAP measure)   9,876   3,123   1,581   (862)   13,718
Depreciation and amortization   1,895   1,061   709   (104)   3,561
Selling, general and administrative   2,091    589    788    2,801    6,269 
Operating income  $ 5,890   $ 1,473   $ 84   $ (3,559)  $ 3,888 
Adjusted EBITDA (non-GAAP measure)  $ 7,255   $ 2,538   $ 791   $ (2,878)  $ 7,706 
  Year Ended December 31, 2010 (Unaudited) 
 
 
 Eastern
 Hemisphere 
 Western
 Hemisphere 
 
 U.S. Land 
 Corporate &
 Eliminations 
 Consolidated
 Total 
  (in thousands)
Revenue  $ 61,390  $ 19,012  $ 12,845  $ (326)  $ 92,921
Cost of revenue   24,015    8,918    6,943    2,603    42,479 
Gross Profit (non-GAAP measure)   37,375   10,094   5,902   (2,929)   50,442
Depreciation and amortization   8,020   3,973   3,122   (132)   14,983
Selling, general and administrative   6,833    2,364    2,580    11,082    22,859 
Operating income (loss)  $ 22,522   $ 3,757   $ 200   $ (13,879)  $ 12,600 
Adjusted EBITDA (non-GAAP measure)  $ 30,627   $ 7,657   $ 3,321   $ (11,865)  $ 29,740 
             
  Year Ended December 31, 2009 (Unaudited) 
 
 
 Eastern
 Hemisphere 
 Western
 Hemisphere 
 
 U.S. Land 
 Corporate &
 Eliminations 
 Consolidated
 Total 
  (in thousands)
Revenue  $ 60,917  $ 11,222  $ 9,850  $ (1,053)  $ 80,936
Cost of revenue   23,247    4,841    5,195    1,882    35,165 
Gross Profit (non-GAAP measure)   37,670   6,381   4,655   (2,935)   45,771
Depreciation and amortization   6,894   2,428   3,204   28   12,554
Impairment of goodwill   --   --   2,898   --   2,898
Selling, general and administrative   5,818    1,834    2,749    8,230    18,631 
Operating income (loss)  $ 24,958   $ 2,119   $ (4,196)  $ (11,193)  $ 11,688 
Adjusted EBITDA (non-GAAP measure)  $ 31,950   $ 4,633   $ 2,025   $ (9,515)  $ 29,093 
CONTACT: Marty Jimmerson

         RigNet, Inc.

         +1 (281) 674-0699

         investor.relations@rig.net