RigNet
Aug 4, 2014

RigNet Announces Second Quarter 2014 Earnings Results

HOUSTON, Aug. 4, 2014 (GLOBE NEWSWIRE) -- RigNet, Inc. (Nasdaq:RNET), a leading global technology solutions provider to the oil and gas industry, today reported quarterly results for the quarter ended June 30, 2014.

Revenue was a record $80.7 million for the second quarter, including $19.2 million from the Enterprise Energy business unit recently acquired from Inmarsat. Organic revenue increased by $10.1 million, or 19.7%, for the three months ended June 30, 2014, as compared to the same period of 2013, primarily due to increased revenue-per-site and increased sites served. Revenue increased by $5.6 million, or 7.5%, for the three months ended June 30, 2014, as compared to the previous quarter due to results from our recent acquisition, Inmarsat's Enterprise Energy business unit, and increased revenue-per-site offset by lower revenue from our telecommunications systems integration (TSI) business segment.

Record Adjusted EBITDA of $18.8 million in the second quarter, or 23.3% of revenue, represents an increase of $4.9 million, or 35.3% over the same quarter last year and an increase of $2.6 million, or 16.0% over the previous quarter. The increase resulted from organic growth in our core managed services business and, to a lesser extent, contributions from our recent acquisition partially offset by increased compensation associated with headcount additions.

Net income attributable to common stockholders was $5.7 million, or $0.31 per diluted share, for the second quarter. This amount included $0.6 million of acquisition costs associated with the purchase of Inmarsat's Enterprise Energy business unit. Excluding acquisition costs, net income attributable to common stockholders was $6.3 million, or $0.35 per diluted share, an increase of $0.07 per diluted share, or 23.4%, over the same quarter last year, and an increase of $0.10 per diluted share, or 40.0%, over the previous quarter.

Capital expenditures were $11.6 million in the second quarter compared to $8.5 million in the same quarter last year and $9.7 million in the previous quarter.

Mark B. Slaughter, chief executive officer and president, commented, "I was very pleased with our solid second quarter results, which included record revenue and EBITDA, reflecting continued strong growth in our core managed communications business. The integration of Inmarsat's Enterprise Energy business unit into the RigNet family remains on track and is resulting in uniquely differentiated offerings to our energy customers around the world who require highly reliable and robust communications solutions to drill and produce safely, efficiently and effectively. Looking forward, we are maintaining a positive view of the market environment as we advance our strategy of becoming a technology solutions provider across the life of the field."

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, August 5, 2014, to discuss RigNet's 2014 second 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 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 (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, 2013, 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, telecoms 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 vessels. 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 1,200 remote sites in over 45 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 EndedSix Months Ended
 June 30,
2014
March 31,
2014
June 30,
2013
June 30,
2014
June 30,
2013
  (in thousands)
Unaudited Consolidated Statements of Comprehensive Income Data:          
Revenue  $ 80,656  $ 75,043  $ 51,329  $ 155,699  $ 104,147
Expenses:          
Cost of revenue (excluding depreciation and amortization)  45,656  46,521  25,927  92,177  55,049
Depreciation and amortization  7,280  6,797  5,249  14,077  10,218
Selling and marketing  1,764  1,529  1,029  3,293  1,816
General and administrative  16,154  14,843  11,530  30,997  23,290
Total expenses  70,854  69,690  43,735  140,544  90,373
Operating income   9,802  5,353  7,594  15,155  13,774
Other income (expense), net  (616)  170  (127)  (446)  (20)
Income before income taxes   9,186  5,523  7,467  14,709  13,754
Income tax expense  (3,438)  (3,215)  (2,552)  (6,653)  (5,064)
Net income  $ 5,748  $ 2,308  $ 4,915  $ 8,056  $ 8,690
           
Income Per Share - Basic and Diluted          
Net income attributable to RigNet, Inc. common stockholders  $ 5,667  $ 2,195  $ 4,861  $ 7,862  $ 8,596
Net income per share attributable to RigNet, Inc. common stockholders, basic  $ 0.32  $ 0.13  $ 0.30  $ 0.45  $ 0.54
Net income per share attributable to RigNet, Inc. common stockholders, diluted  $ 0.31  $ 0.12  $ 0.28  $ 0.44  $ 0.50
Weighted average shares outstanding, basic  17,490  17,267  15,963  17,379  15,861
Weighted average shares outstanding, diluted  18,108  17,993  17,480  18,029  17,362
           
Unaudited Non-GAAP Data:          
Gross Profit (excluding depreciation and amortization)  $ 35,000  $ 28,522  $ 25,402  $ 63,522  $ 49,098
Gross Profit (excluding depreciation and amortization) margin43.4%38.0%49.5%40.8%47.1%
Adjusted EBITDA  $ 18,806  $ 16,208  $ 13,902  $ 35,014  $ 26,523
Adjusted EBITDA margin23.3%21.6%27.1%22.5%25.5%
           
           
  Three Months EndedSix Months Ended
 June 30,
2014
March 31,
2014
June 30,
2013
June 30,
2014
June 30,
2013
  (in thousands)
Reconciliation of Gross Profit to Gross Profit (excluding depreciation and amortization):          
Gross profit  $ 28,073  $ 22,054  $ 20,414  $ 50,127  $ 39,382
Depreciation and amortization related to cost of revenue  6,927  6,468  4,988  13,395  9,716
Gross Profit (excluding depreciation and amortization)  $ 35,000  $ 28,522  $ 25,402  $ 63,522  $ 49,098
           
           
  Three Months EndedSix Months Ended
 June 30,
2014
March 31,
2014
June 30,
2013
June 30,
2014
June 30,
2013
  (in thousands)
Reconciliation of Net Income to Adjusted EBITDA:          
Net income  $ 5,748  $ 2,308  $ 4,915  $ 8,056  $ 8,690
Interest expense  565  481  440  1,046  947
Depreciation and amortization  7,280  6,797  5,249  14,077  10,218
(Gain) loss on sales of property, plant and equipment, net of retirements  (10)  (73)  33  (83)  74
Stock-based compensation  1,195  1,148  713  2,343  1,530
Acquisition costs  590  2,332  --  2,922  --
Income tax expense  3,438  3,215  2,552  6,653  5,064
Adjusted EBITDA (non-GAAP measure)  $ 18,806  $ 16,208  $ 13,902  $ 35,014  $ 26,523
     
     
 June 30,
2014
December 31,
2013
  (in thousands)
Unaudited Consolidated Balance Sheet Data:    
Cash and cash equivalents  $ 61,007  $ 59,822
Restricted cash - current portion  475  509
Restricted cash - long-term  950  1,321
Total assets  298,149  238,803
Current maturities of long-term debt  8,395  8,388
Long-term debt  76,929  51,175
     
     
 Six Months Ended
June 30,
 20142013
  (in thousands)
Unaudited Consolidated Statements of Cash Flows Data:    
Cash and cash equivalents, January 1,  $ 59,822  $ 59,744
Net cash provided by operating activities  10,040  9,473
Net cash used in investing activities  (37,875)  (14,539)
Net cash provided by (used in) financing activities  27,572  (3,747)
Changes in foreign currency translation  1,448  (2,330)
Cash and cash equivalents, June 30,  $ 61,007  $ 48,601
           
           
 2nd Quarter
2013
3rd Quarter
2013
4th Quarter
2013
1st Quarter
2014
2nd Quarter
2014
Selected Operational Data (4):          
Offshore drilling rigs (1) 255 251 262 266 277
U.S. onshore drilling rigs 261 250 266 284 266
Strategic initiatives (2) 291 265 253 262 298
Other sites (3) 331 330 346 381 391
Total 1,138 1,096 1,127 1,193 1,232
           
(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 
(4) Excludes sites acquired from Inmarsat's Enterprise Energy business unit 
           
  Three Months EndedSix Months Ended
 June 30,
2014
March 31,
2014
June 30,
2013
June 30,
2014
June 30,
2013
  (in thousands)
Eastern Hemisphere:          
Revenue  $ 39,842  $ 38,022  $ 31,185  $ 77,864  $ 59,800
Cost of revenue  19,204  18,693  13,607  37,897  26,806
Gross Profit (non-GAAP measure)  20,638  19,329  17,578  39,967  32,994
 Gross Profit margin51.8%50.8%56.4%51.3%55.2%
Depreciation and amortization  3,353  2,723  2,122  6,076  4,065
Selling, general and administrative  3,783  2,984  4,614  6,767  8,137
Operating income  $ 13,502  $ 13,622  $ 10,842  $ 27,124  $ 20,792
Adjusted EBITDA (non-GAAP measure)  $ 17,187  $ 16,691  $ 13,446  $ 33,878  $ 26,079
Adjusted EBITDA margin43.1%43.9%43.1%43.5%43.6%
           
Western Hemisphere:          
Revenue  $ 30,053  $ 21,408  $ 13,141  $ 51,461  $ 25,556
Cost of revenue  16,572  12,672  6,149  29,244  11,430
Gross Profit (non-GAAP measure)  13,481  8,736  6,992  22,217  14,126
 Gross Profit margin44.9%40.8%53.2%43.2%55.3%
Depreciation and amortization  2,682  2,763  1,848  5,445  3,642
Selling, general and administrative  4,039  2,289  2,090  6,328  3,767
Operating income  $ 6,760  $ 3,684  $ 3,054  $ 10,444  $ 6,717
Adjusted EBITDA (non-GAAP measure)  $ 9,564  $ 6,580  $ 4,855  $ 16,144  $ 10,272
Adjusted EBITDA margin31.8%30.7%36.9%31.4%40.2%
           
Telecoms Systems Integration:          
Revenue  $ 10,761  $ 15,613  $ 7,003  $ 26,374  $ 18,791
Cost of revenue  7,466  12,942  4,703  20,408  14,034
Gross Profit (non-GAAP measure)  3,295  2,671  2,300  5,966  4,757
Gross Profit margin30.6%17.1%32.8%22.6%25.3%
Depreciation and amortization  954  1,055  1,075  2,009  2,160
Selling, general and administrative  843  653  284  1,496  414
Operating income  $ 1,498  $ 963  $ 941  $ 2,461  $ 2,183
Adjusted EBITDA (non-GAAP measure)  $ 2,391  $ 2,011  $ 2,016  $ 4,402  $ 4,343
Adjusted EBITDA margin22.2%12.9%28.8%16.7%23.1%
           
NOTE: Consolidated balances include the three segments above along with corporate activities and intercompany eliminations.
CONTACT: Investor contact

         Marty Jimmerson

         Chief Financial Officer, RigNet, Inc.

         Tel: +1 (281) 674-0699

         investor.relations@rig.net