RigNet
Aug 10, 2011

RigNet, Inc. Announces Second Quarter 2011 Earnings Results

HOUSTON, Aug. 10, 2011 (GLOBE NEWSWIRE) --

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.

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 andPresentations 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.

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 June 30,
 Six Months
Ended June 30,
 2011201020112010
  (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 margin56.5 %53.6 %55.4 %53.3 %
Adjusted EBITDA  $ 8,289  $ 7,504  $ 14,884  $ 13,605
Adjusted EBITDA margin31.6 %33.3 %29.4 %30.7 %
         
  Three Months
Ended June 30,
 Six Months
Ended June 30,
 2011201020112010
  (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
     
     
 June 30,
2011
December 31,
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, 
 20112010
  (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
2010
1st Quarter
2011
2nd Quarter
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
         
     
  Three Months Ended
June 30,
 Six Months Ended
June 30,
 2011201020112010
  (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 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 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 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 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 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 34.4 % 21.0 % 32.9 % 25.7 %
         
NOTE: Consolidated balances include the three segments above along with corporate activities and intercompany eliminations.
CONTACT: Marty Jimmerson

         RigNet, Inc.

         +1 (281) 674-0699

         investor.relations@rig.net