RigNet
Mar 6, 2017

RigNet Announces Fourth Quarter and Full Year 2016 Earnings Results

HOUSTON, March 06, 2017 (GLOBE NEWSWIRE) -- RigNet, Inc. (NASDAQ:RNET), a leading global provider of customized systems and solutions serving customers with complex data networking and operational requirements, today reported results for the quarter and full year ended December 31, 2016.

Quarterly revenue was $52.8 million representing an increase of $2.1 million compared to the prior quarter and an increase of $0.6 million compared to the prior year quarter. The revenue increase compared to the prior quarter was primarily due to a $2.2 million increase in SI&A revenue. The increase compared to the prior year quarter resulted primarily from SI&A revenue, which increased $10.5 million, partially offset by a $9.9 million decrease in Managed Services revenue. The increase in SI&A revenue was due to the timing of SI&A projects. Managed Services continues to be challenged by reduced spending by oil and gas operators on upstream drilling projects as a result of lower commodity prices.

GAAP net loss attributable to common stockholders was $3.8 million, or $0.21 per share, compared to net loss attributable to common stockholders of $1.7 million, or $0.09 per share, in the prior quarter and net loss attributable to common stockholders of $11.0 million, or $0.63 per share, in the prior year quarter.

Quarterly Adjusted EBITDA was $9.4 million compared to $8.5 million in the prior quarter and a negative $3.2 million in the prior year quarter. The increase compared to the prior quarter and prior year quarter was due primarily to increased revenue coupled with savings from cost containment actions.

Capital expenditures were $3.7 million compared to $1.9 million in the prior quarter and $10.5 million in the prior year quarter.  Unlevered Free Cash Flow, defined as Adjusted EBITDA less capital expenditures, was $5.7 million compared to $6.6 million in the prior quarter and a negative $13.7 million in the prior year quarter.

In the quarter ended December 31, 2016, the Company recorded $0.6 million of restructuring charges, and recorded $2.3 million of revenue and $1.5 million of cost for equipment sales to a certain customer. In the quarter ended September 30, 2016, the Company recorded net restructuring charges of $0.8 million offset by $1.3 million from the change in the fair value of the TECNOR earn-out.  In the quarter ended December 31, 2015, the Company recorded total negative adjustments of $15.6 million related to the SI&A contractual dispute, a $1.7 million impairment of property, plant and equipment in our North America land operations, and incurred $1.0 million of executive departure costs.  The restructuring charges, change in fair value of the TECNOR earn-out, and the impairment of property, plant and equipment, and executive departure costs are added back to net loss in our non-GAAP measures below.

Steven E. Pickett, chief executive officer and president, commented, "Despite continued headwinds in the offshore oil and gas market, we are pleased with the progress we have made related to cost containment and capex management, which produced Unlevered Free Cash Flow of $5.7 million for the quarter.  We remain focused on continuing implementation of initiatives to improve operating leverage of the Company, developing a broad range of SaaS and cyber security solutions for our customers, and growing our business in new vertical markets."

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, March 7, 2017, to discuss RigNet's 2016 fourth 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:  Adjusted EBITDA and Unlevered Free Cash Flow.  Adjusted EBITDA and Unlevered Free Cash Flow 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 filings for the year ended December 31, 2016 for a more detailed discussion of the uses and limitations of our non-GAAP financial measures.

We define Adjusted EBITDA as net income (loss) plus interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, intangibles, property, plant and equipment, foreign exchange impact of intercompany financing activities, (gain) loss on retirement of property, plant and equipment, stock-based compensation, merger/acquisition costs, executive departure costs, restructuring charges and non-recurring items.  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 define Unlevered Free Cash Flow as Adjusted EBITDA less capital expenditures.  Unlevered Free Cash Flow 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 customized systems and solutions serving customers with complex data networking and operational requirements. RigNet provides solutions ranging from fully-managed voice and data networks to more advanced applications that include video conferencing, crew welfare, asset monitoring and real-time data services. RigNet is based in Houston, Texas and has operations around the globe.  

For more information on RigNet, 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 Year Ended
  December 31,
2016
 September 30,
2016
 December 31,
2015
 December 31,
2016
 December 31,
2015
                     
  (in thousands)
Unaudited Consolidated Statements of           
Comprehensive Income Data:          
Revenue $  52,759  $  50,612  $  52,186  $  220,623  $  271,260 
Expenses:          
Cost of revenue (excluding depreciation and amortization)    30,347     29,860     41,378     129,759     163,238 
Depreciation and amortization    7,995     8,305     8,070     33,556     32,471 
Impairment of goodwill, intangibles, and property, plant and equipment    -     -     1,670     397     14,262 
Selling and marketing    1,613     1,724     2,380     7,172     9,449 
General and administrative    12,797     10,476     13,369     52,190     63,192 
Total expenses    52,752     50,365     66,867     223,074     282,612 
Operating income (loss)    7     247     (14,681)    (2,451)    (11,352)
Other expense, net    (584)    (1,155)    (607)    (3,021)    (2,899)
Loss before income taxes     (577)    (908)    (15,288)    (5,472)    (14,251)
Income tax expense    (3,149)    (540)    4,329     (5,825)    (2,409)
Net loss $  (3,726) $  (1,448) $  (10,959) $  (11,297) $  (16,660)
           
Net Loss Per Share - Basic and Diluted          
Net loss attributable to RigNet, Inc.
  common stockholders
 $  (3,765) $  (1,658) $  (11,040) $  (11,507) $  (16,974)
Net loss per share attributable to
  RigNet, Inc. common stockholders, basic
 $  (0.21) $  (0.09) $  (0.63) $  (0.65) $  (0.97)
Net loss per share attributable to
  RigNet, Inc. common stockholders, diluted
 $  (0.21) $  (0.09) $  (0.63) $  (0.65) $  (0.97)
Weighted average shares outstanding, basic    17,833     17,782     17,610     17,768     17,534 
Weighted average shares outstanding, diluted    17,833     17,782     17,610     17,768     17,534 
           
Unaudited Non-GAAP Data:          
Adjusted EBITDA $  9,357  $  8,534  $  (3,211) $  37,181  $  46,907 
Unlevered Free Cash Flow $  5,671  $  6,598  $  (13,674) $  21,984  $  14,217 
 

 

           
   Three Months Ended Year Ended
  December 31,
2016
 September 30,
2016
 December 31,
2015
 December 31,
2016
 December 31,
2015
                     
  (in thousands)
Reconciliation of Net Income (Loss) to Adjusted EBITDA and Unlevered Free Cash Flow:        
Net loss $  (3,726) $  (1,448) $  (10,959) $  (11,297) $  (16,660)
Interest expense    668     729     533     2,708     2,054 
Depreciation and amortization    7,995     8,305     8,070     33,556     32,471 
Impairment of goodwill, intangibles, and property, plant and equipment    -     -     1,670     397     14,262 
Gain on sales of property, plant and equipment, net of retirements    11     (14)    (18)    (153)    (41)
Stock-based compensation    681     866     705     3,389     3,660 
Restructuring costs    579     835     (104)    1,911     7,410 
Change in fair value of TECNOR earn-out    -     (1,279)    -     (1,279)    - 
Executive departure costs    -     -     1,000     1,884     1,000 
Acquisition costs    -     -     221     240     342 
Income tax expense    3,149     540     (4,329)    5,825     2,409 
Adjusted EBITDA (non-GAAP measure) $  9,357  $  8,534  $  (3,211) $  37,181  $  46,907 
           
Adjusted EBITDA (non-GAAP measure) $  9,357  $  8,534  $  (3,211) $  37,181  $  46,907 
Capital expenditures    3,686     1,936     10,463     15,197     32,690 
Unlevered Free Cash Flow (non-GAAP measure) $  5,671  $  6,598  $  (13,674) $  21,984  $  14,217 
           

 

      
  December 31, December 31, 
   2016   2015  
          
  (in thousands) 
Unaudited Consolidated Balance Sheet Data:     
Cash and cash equivalents $  57,152  $  60,468  
Restricted cash - current portion    139     543  
Restricted cash - long-term portion    1,514     -  
Total assets    230,972     258,116  
Current maturities of long-term debt    8,478     8,421  
Long-term debt    52,990     69,238  
      
      
  Year Ended December 31, 
   2016   2015  
          
  (in thousands) 
Unaudited Consolidated Statements of Cash Flows Data:     
Cash and cash equivalents, January 1, $  60,468  $  66,576  
Net cash provided by operating activities    39,174     37,034  
Net cash used in investing activities    (19,398)    (33,325) 
Net cash used in financing activities    (15,352)    (7,247) 
Changes in foreign currency translation    (7,740)    (2,570) 
Cash and cash equivalents, December 31, $  57,152  $  60,468  
 

 

           
  4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter
  2016 2016 2016 2016 2015
Selected Operational Data:          
Offshore drilling rigs (1) 175 194 211 232 238
Offshore Production 280 287 287 291 283
Maritime 122 128 105 107 121
International Land 104 101 99 101 115
Other sites (2) 240 238 236 287 373
Total 921 948 938 1,018 1,130
           
(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes U.S. onshore drilling and production sites, completion sites, man-camps, remote offices, and supply bases and offshore-related supply
bases, shore offices, tender rigs and platform rigs
 

 

           
   Three Months Ended Year Ended
  December 31,
2016
 September 30,
2016
 December 31,
2015
 December 31,
2016
 December 31,
2015
                   
  (in thousands)
Managed Services          
Revenue $  47,188 $  47,205  $  57,070  $  199,033 $  249,721 
Cost of revenue    27,118    26,949     32,223     114,749    132,476 
Depreciation and amortization    6,549    6,716     6,453     26,581    26,967 
Impairment of goodwill, intangibles, and property, plant and equipment    -    -     1,670     -    14,262 
Selling, general and administrative    7,858    5,302     7,839     28,690    36,055 
Operating income $  5,663 $  8,238  $  8,885  $  29,013 $  39,961 
Adjusted EBITDA (non-GAAP measure) $  12,091 $  16,984  $  16,768  $  57,839 $  97,727 
           
Systems Integration and Automation          
Revenue $  5,571 $  3,407  $  (4,884) $  21,590 $  21,539 
Cost of revenue    3,229    2,911     9,155     15,010    30,762 
Depreciation and amortization    585    631     775     2,712    3,104 
Selling, general and administrative    524    499     1,217     2,665    4,120 
Operating income (loss) $  1,233 $  (634) $  (16,031) $  1,203 $  (16,447)
Adjusted EBITDA (non-GAAP measure) $  1,939 $  (284) $  (15,275) $  3,389 $  (13,685)
           
NOTE:  Consolidated balances include the two segments above along with corporate activities and intercompany eliminations.

 

Investor contact
Charles E. Schneider
Chief Financial Officer, RigNet, Inc.

Tel:  +1 (281) 674-0699
investor.relations@rig.net