RigNet
Nov 4, 2013

RigNet Announces Third Quarter 2013 Earnings Results

HOUSTON, Nov. 4, 2013 (GLOBE NEWSWIRE) -- RigNet, Inc. (Nasdaq:RNET), a leading global provider of remote communications services to the oil and gas industry, today reported quarterly results for the quarter ended September 30, 2013.

Record revenue of $56.9 million for the third quarter represents an increase of $9.0 million, or 18.6%, for the three months ended September 30, 2013, as compared to the same period of 2012, primarily due to increased systems integration revenue, sites served and increased revenue-per-site. Revenue increased by $5.6 million, or 10.8%, for the three months ended September 30, 2013, as compared to the previous quarter primarily due to increased systems integration revenue and increased revenue-per-site.

Record Adjusted EBITDA of $14.5 million in the third quarter, or 25.4% of revenue, represents an increase of $2.1 million, or 16.6%, over the same quarter last year and an increase of $0.5 million, or 3.9%, over the previous quarter. These increases are primarily due to growth in our core offshore business partially offset by costs associated with headcount additions to support our continued growth.

Net income attributable to common stockholders was $2.3 million, or $0.13 per diluted share, for the third quarter. This amount includes $2.8 million of acquisition costs associated with the upcoming purchase of Inmarsat's Energy Broadband business. Excluding acquisition costs, net income attributable to common stockholders was $5.1 million, or $0.29 per diluted share, an increase of $0.07 per diluted share, or 33.7%, over the same quarter last year and an increase of $0.01 per diluted share, or 3.3%, over the previous quarter.

Capital expenditures were $9.1 million in the third quarter compared to $5.2 million in the same quarter last year and $8.5 million in the previous quarter.

Mark B. Slaughter, chief executive officer and president, commented, "I was very pleased with our solid third quarter results, which included record revenue and EBITDA, reflecting continued strong growth in our core offshore rig communications business. We have also made significant progress with the integration planning for our pending acquisition of Inmarsat's Energy Broadband business, and expect to be well-positioned to operate that business upon closing in or before the first quarter of 2014. Looking forward, we are maintaining a positive view of the market environment for our services and are extremely delighted with our new relationship with Inmarsat that includes the acquisition of their energy broadband business as well as our becoming a premier distribution partner in oil and gas for their Global Express and L-band service platforms. Overall, we are very excited about the broadened services and capabilities we will soon be bringing to market that will better serve our customers and position the company to enhance returns to stockholders."

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, November 5, 2013, to discuss RigNet's 2013 third quarter 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 Measures

This press release contains the following non-GAAP measures: Gross Profit (excluding depreciation and amortization) and Adjusted EBITDA. Gross Profit (excluding depreciation and amortization) and Adjusted EBITDA are financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP. We refer you to the Company's most recent 10-K filing for the year ended December 31, 2012, for a more detailed discussion of the uses and limitations of our non-GAAP financial measures.

GAAP defines gross profit as revenue less cost of revenue, and includes in costs of revenue depreciation and amortization expenses related to revenue-generating long-lived and intangible assets. We define Gross Profit (excluding depreciation and amortization) as revenue less cost of revenue (excluding depreciation and amortization). This measure differs from the GAAP definition of gross profit as we do not include the impact of depreciation and amortization expenses related to revenue-generating long-lived and intangible assets which represent non-cash expenses. We use this measure 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 or merger/acquisition 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.

About RigNet

RigNet (Nasdaq:RNET) is a leading global provider of managed remote communications, systems integration and collaborative applications dedicated to the oil and gas industry, focusing on offshore and onshore drilling rigs, energy production facilities and energy maritime.  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 over 1,100 remote sites in over thirty 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. 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.  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" 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 Nine Months Ended
  September 30,
2013
June 30,
2013
September 30,
2012
September 30,
2013
September 30,
2012
  (in thousands)
Unaudited Consolidated Statements of          
Comprehensive Income Data:          
Revenue  $ 56,856  $ 51,329  $ 47,939  $ 161,003  $ 112,389
Expenses:          
Cost of revenue (excluding depreciation and amortization)  31,140  25,927  24,850  86,189  54,193
Depreciation and amortization  5,450  5,249  4,837  15,668  12,571
Selling and marketing  937  1,029  891  2,753  2,278
General and administrative  13,036  11,530  10,428  36,326  26,833
Total expenses  50,563  43,735  41,006  140,936  95,875
Operating income   6,293  7,594  6,933  20,067  16,514
Other income (expense), net  (1,305)  (127)  (952)  (1,325)  (1,103)
Income before income taxes   4,988  7,467  5,981  18,742  15,411
Income tax expense  (2,581)  (2,552)  (2,808)  (7,645)  (6,883)
Net income  $ 2,407  $ 4,915  $ 3,173  $ 11,097  $ 8,528
           
Income Per Share - Basic and Diluted          
Net income attributable to RigNet, Inc.
 common stockholders
 $ 2,347  $ 4,861  $ 3,238  $ 10,943  $ 8,503
Net income per share attributable to
 RigNet, Inc. common stockholders, basic
 $ 0.15  $ 0.30  $ 0.21  $ 0.69  $ 0.55
Net income per share attributable to
 RigNet, Inc. common stockholders, diluted
 $ 0.13  $ 0.28  $ 0.19  $ 0.63  $ 0.50
Weighted average shares outstanding, basic  16,148  15,963  15,647  15,958  15,564
Weighted average shares outstanding, diluted  17,630  17,480  17,104  17,404  16,991
           
Unaudited Non-GAAP Data:          
Gross Profit (excluding depreciation and amortization)  $ 25,716  $ 25,402  $ 23,089  $ 74,814  $ 58,196
Gross Profit (excluding depreciation and amortization) margin 45.2% 49.5% 48.2% 46.5% 51.8%
Adjusted EBITDA  $ 14,450  $ 13,902  $ 12,392  $ 40,973  $ 31,765
Adjusted EBITDA margin 25.4% 27.1% 25.8% 25.4% 28.3%
           
   Three Months Ended Nine Months Ended
  September 30,
2013
June 30,
2013
September 30,
2012
September 30,
2013
September 30,
2012
  (in thousands)
Reconciliation of Gross Profit to Gross Profit          
(excluding depreciation and amortization):          
Gross profit  $ 20,564  $ 20,414  $ 18,487  $ 59,946  $ 46,264
Depreciation and amortization related to cost of revenue  5,152  4,988  4,602  14,868  11,932
Gross Profit (excluding depreciation and amortization)  $ 25,716  $ 25,402  $ 23,089  $ 74,814  $ 58,196
           
   Three Months Ended Nine Months Ended
  September 30,
2013
June 30,
2013
September 30,
2012
September 30,
2013
September 30,
2012
  (in thousands)
Reconciliation of Net Income to Adjusted EBITDA:          
Net income  $ 2,407  $ 4,915  $ 3,173  $ 11,097  $ 8,528
Interest expense  432  440  611  1,379  927
Depreciation and amortization  5,450  5,249  4,837  15,668  12,571
(Gain) loss on sales of property and equipment, net of retirements  93  33  (90)  167  (141)
Stock-based compensation  696  713  592  2,226  1,874
Acquisition costs  2,791  --  461  2,791  1,123
Income tax expense  2,581  2,552  2,808  7,645  6,883
Adjusted EBITDA (non-GAAP measure)  $ 14,450  $ 13,902  $ 12,392  $ 40,973  $ 31,765
     
  September 30,
2013
December 31,
2012
  (in thousands)
Unaudited Consolidated Balance Sheet Data:    
Cash and cash equivalents  $ 49,584  $ 59,744
Restricted cash - current portion  790  987
Restricted cash - long-term  1,345  1,809
Total assets  226,363  215,932
Current maturities of long-term debt  9,384  9,422
Long-term debt  44,778  51,871
     
  Nine Months Ended
September 30,
  2013 2012
  (in thousands)
Unaudited Consolidated Statements of Cash Flows Data:    
Cash and cash equivalents, January 1,  $ 59,744  $ 53,106
Net cash provided by operating activities  15,353  17,459
Net cash used in investing activities  (21,391)  (59,691)
Net cash provided by (used in) financing activities  (2,728)  40,384
Changes in foreign currency translation  (1,394)  2,422
Cash and cash equivalents, September 30,  $ 49,584  $ 53,680
           
  3rd Quarter
2012
4th Quarter
2012
1st Quarter
2013
2nd Quarter
2013
3rd Quarter
2013
Selected Operational Data:          
Offshore drilling rigs (1) 233 237 245 255 251
U.S. onshore drilling rigs 302 282 271 261 250
Strategic initiatives (2) 232 239 264 291 265
Other sites (3) 318 336 344 331 330
Total 1,085 1,094 1,124 1,138 1,096
           
(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes production facilities, energy support vessels and international land rigs
(3) Includes completion sites, man-camps, remote offices and supply bases 
           
   Three Months Ended Nine Months Ended
  September 30,
2013
June 30,
2013
September 30,
2012
September 30,
2013
September 30,
2012
  (in thousands)
Americas:          
Revenue  $ 13,884  $ 13,141  $ 13,053  $ 39,440  $ 37,065
Cost of revenue  6,734  6,149  5,765  18,164  17,012
Gross Profit (non-GAAP measure)  7,150  6,992  7,288  21,276  20,053
 Gross Profit margin 51.5% 53.2% 55.8% 53.9% 54.1%
Depreciation and amortization  1,924  1,848  1,909  5,566  5,536
Selling, general and administrative  2,000  2,090  2,012  5,767  5,738
Operating income  $ 3,226  $ 3,054  $ 3,367  $ 9,943  $ 8,779
Adjusted EBITDA (non-GAAP measure)  $ 5,142  $ 4,855  $ 5,235  $ 15,414  $ 14,328
Adjusted EBITDA margin 37.0% 36.9% 40.1% 39.1% 38.7%
           
Europe/Africa:          
Revenue  $ 26,277  $ 23,057  $ 21,972  $ 76,906  $ 41,292
Cost of revenue  17,576  12,807  13,536  47,905  21,869
Gross Profit (non-GAAP measure)  8,701  10,250  8,436  29,001  19,423
 Gross Profit margin 33.1% 44.5% 38.4% 37.7% 47.0%
Depreciation and amortization  1,900  1,812  1,774  5,458  3,267
Selling, general and administrative  1,895  1,983  2,655  6,414  4,848
Operating income  $ 4,906  $ 6,455  $ 4,007  $ 17,129  $ 11,308
Adjusted EBITDA (non-GAAP measure)  $ 6,494  $ 8,805  $ 5,013  $ 23,553  $ 14,338
Adjusted EBITDA margin 24.7% 38.2% 22.8% 30.6% 34.7%
           
Middle East/Asia Pacific:          
Revenue  $ 16,695  $ 15,131  $ 12,914  $ 44,657  $ 34,032
Cost of revenue  5,685  5,503  4,512  16,196  12,442
Gross Profit (non-GAAP measure)  11,010  9,628  8,402  28,461  21,590
Gross Profit margin 65.9% 63.6% 65.1% 63.7% 63.4%
Depreciation and amortization  1,407  1,385  1,153  4,074  3,767
Selling, general and administrative  1,371  2,915  1,088  5,403  3,085
Operating income  $ 8,232  $ 5,328  $ 6,161  $ 18,984  $ 14,738
Adjusted EBITDA (non-GAAP measure)  $ 9,524  $ 6,657  $ 7,232  $ 22,887  $ 18,408
Adjusted EBITDA margin 57.0% 44.0% 56.0% 51.3% 54.1%
           
NOTE: Consolidated balances include the three segments above along with corporate activities and intercompany eliminations.
CONTACT: Investor contact

         Marty Jimmerson

         Tel:  +1 (281) 674-0699

         Chief Financial Officer, RigNet, Inc.

         investor.relations@rig.net