“Once again,
Quarterly revenue was
Net loss attributable to common stockholders in the first quarter 2019 was
Adjusted EBITDA, a non-GAAP measure defined and reconciled to its most comparable GAAP measure below, was
Net loss and Adjusted EBITDA in the first quarter of 2019 compared to the prior quarter were adversely impacted by decreases in SI, due to the variable nature of that business. Additionally there was the effect of two fewer days in the first quarter 2019 compared to the fourth quarter 2018. Net loss was also adversely impacted by increased stock-based compensation, GX dispute Phase II costs, depreciation, and restructuring costs, which are added back and reconciled to Adjusted EBITDA below.
Capital expenditures for the three months ending
Contracting and Operational Update
During the first quarter of 2019,
MCS Site count in the first quarter 2019 increased by 13.4% to 1,360 from 1,199 in the first quarter 2018, largely due to increases in production sites and other sites, which are primarily related to onshore drilling. MCS Site count increased 2.8% from 1,323 in the prior quarter, with increases in offshore rigs, production, and other sites, offset by the loss of one maritime site.
In the Apps and IoT segment,
Project backlog (using percentage of completion accounting) was
Additional Detail
In the first quarter 2019, the Company recorded
Earnings Call Information
An Earnings Call for investors will be held at
About
For more information on
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 future, not past, events. Opinions, expectations with respect to conditions in the oil and gas industry, customer perceptions of value, ability to reduce the interim GX dispute award through counterclaims, ability to make payments for any GX dispute final award, growth prospects, and the ultimate payout amount of any earnout / contingent consideration are examples of forward-looking statements in this press release. Forward-looking statements are based on 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, including the expected benefits of acquiring and integrating other businesses, and often contain words such as “anticipate,” “believe,” “intend,” “will,” “expect,” “plan” or other similar words. These forward-looking statements involve certain risks and uncertainties, including those risks set forth in Item 1A – Risk Factors of the Company’s most recent 10-K filing, and 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
Non-GAAP Financial Measure
This press release contains the non-GAAP measure Adjusted EBITDA, a measure we believe is useful to investors as a supplemental measure to evaluate overall operating performance and is an integral component of financial covenant ratios in our credit agreement. Adjusted EBITDA is a financial measure that is not calculated in accordance with generally accepted accounting principles, or GAAP. We refer you to the Company’s recent 10-K filing for the year ended
We define Adjusted EBITDA as net loss plus interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, intangibles, property, plant and equipment, (gain) loss on sales of property, plant and equipment, net of retirements, change in fair value of earn-outs and contingent consideration, stock-based compensation, acquisition costs, executive departure costs, restructuring charges, the GX dispute, the GX dispute Phase II costs and non-recurring items.
A reconciliation of net loss to Adjusted EBITDA is found in the table below.
Media / Investor Relations Contact | |
Lee M. Ahlstrom, SVP & CFO | Tel: +1 (281) 674-0699 |
RigNet, Inc. | investor.relations@rig.net |
RIGNET, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | |||||||||||
March 31, 2019 |
December 31, 2018 |
March 31, 2018 |
|||||||||
(in thousands, except per share amounts) | |||||||||||
Revenue | $ | 57,510 | $ | 60,244 | $ | 53,833 | |||||
Expenses: | |||||||||||
Cost of revenue (excluding depreciation and amortization) | 36,456 | 35,942 | 33,681 | ||||||||
Depreciation and amortization | 8,912 | 8,398 | 7,987 | ||||||||
Change in fair value of earn-out/contingent consideration | - | 1,493 | 22 | ||||||||
GX dispute | - | 50,612 | - | ||||||||
Selling and marketing | 3,793 | 2,978 | 2,949 | ||||||||
General and administrative | 16,470 | 12,095 | 13,664 | ||||||||
Total expenses | 65,631 | 111,518 | 58,303 | ||||||||
Operating loss | (8,121 | ) | (51,274 | ) | (4,470 | ) | |||||
Other expense, net | (1,166 | ) | (1,152 | ) | (453 | ) | |||||
Loss before income taxes | (9,287 | ) | (52,426 | ) | (4,923 | ) | |||||
Income tax benefit (expense) | (2,666 | ) | 2,735 | (603 | ) | ||||||
Net loss | $ | (11,953 | ) | $ | (49,691 | ) | $ | (5,526 | ) | ||
Loss Per Share - Basic and Diluted | |||||||||||
Net loss attributable to RigNet, Inc. common stockholders | $ | (11,983 | ) | $ | (49,721 | ) | $ | (5,556 | ) | ||
Net loss per share attributable to RigNet, Inc. common stockholders, basic | $ | (0.63 | ) | $ | (2.62 | ) | $ | (0.31 | ) | ||
Net loss per share attributable to RigNet, Inc. common stockholders, diluted | $ | (0.63 | ) | $ | (2.62 | ) | $ | (0.31 | ) | ||
Weighted average shares outstanding, basic | 18,949 | 18,948 | 18,146 | ||||||||
Weighted average shares outstanding, diluted | 18,949 | 18,948 | 18,146 | ||||||||
Unaudited Non-GAAP Data: | |||||||||||
Adjusted EBITDA | $ | 8,386 | $ | 10,546 | $ | 7,419 |
RIGNET, INC. | |||||||||||
Reconciliation of Net Loss to Adjusted EBITDA | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | |||||||||||
March 31, 2019 |
December 31, 2018 |
March 31, 2018 |
|||||||||
(in thousands) | |||||||||||
Reconciliation of Net Loss to Adjusted EBITDA: | |||||||||||
Net loss | $ | (11,953 | ) | $ | (49,691 | ) | $ | (5,526 | ) | ||
Interest expense | 1,238 | 1,196 | 959 | ||||||||
Depreciation and amortization | 8,912 | 8,398 | 7,987 | ||||||||
(Gain) loss on sales of property, plant and equipment, net of retirements | (7 | ) | 297 | (53 | ) | ||||||
Stock-based compensation | 4,458 | 344 | 2,445 | ||||||||
Restructuring costs | 573 | 178 | - | ||||||||
Change in fair value of earn-out/contingent consideration | - | 1,493 | 22 | ||||||||
Executive departure costs | - | 245 | 157 | ||||||||
Acquisition costs | 350 | 209 | 825 | ||||||||
GX dispute | - | 50,612 | - | ||||||||
GX dispute Phase II costs | 2,149 | - | - | ||||||||
Income tax expense (benefit) | 2,666 | (2,735 | ) | 603 | |||||||
Adjusted EBITDA (non-GAAP measure) | $ | 8,386 | $ | 10,546 | $ | 7,419 |
RIGNET, INC. | ||||||||
Segment Information | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, 2019 |
December 31, 2018 |
March 31, 2018 |
||||||
(in thousands) | ||||||||
Managed Communication Services | ||||||||
Revenue | $ | 42,333 | $ | 42,869 | $ | 42,050 | ||
Cost of revenue | 26,985 | 26,120 | 25,745 | |||||
Depreciation and amortization | 6,264 | 5,746 | 5,726 | |||||
Selling, general and administrative | 3,797 | 3,431 | 4,215 | |||||
Operating income | $ | 5,287 | $ | 7,572 | $ | 6,364 | ||
Applications and Internet-of-Things | ||||||||
Revenue | $ | 8,015 | $ | 6,338 | $ | 5,336 | ||
Cost of revenue | 4,497 | 3,459 | 3,085 | |||||
Depreciation and amortization | 1,231 | 1,226 | 847 | |||||
Selling, general and administrative | 565 | 657 | 354 | |||||
Operating income | $ | 1,722 | $ | 996 | $ | 1,050 | ||
Systems Integration | ||||||||
Revenue | $ | 7,162 | $ | 11,037 | $ | 6,447 | ||
Cost of revenue | 4,974 | 6,364 | 4,851 | |||||
Depreciation and amortization | 662 | 589 | 652 | |||||
Selling, general and administrative | 1,124 | 438 | 323 | |||||
Operating income | $ | 402 | $ | 3,646 | $ | 621 | ||
NOTE: Consolidated balances include the segments above along with corporate activities and intercompany eliminations. |
RIGNET, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
(in thousands, except share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 18,660 | $ | 21,711 | |||
Restricted cash | 42 | 41 | |||||
Accounts receivable, net | 74,115 | 67,450 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts (CIEB) | 5,710 | 7,138 | |||||
Prepaid expenses and other current assets | 7,180 | 6,767 | |||||
Total current assets | 105,707 | 103,107 | |||||
Property, plant and equipment, net | 63,889 | 63,585 | |||||
Restricted cash | 1,499 | 1,544 | |||||
Goodwill | 46,830 | 46,631 | |||||
Intangibles, net | 31,495 | 33,733 | |||||
Right-of-use lease asset | 4,588 | - | |||||
Deferred tax and other assets | 7,211 | 10,325 | |||||
TOTAL ASSETS | $ | 261,219 | $ | 258,925 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 26,922 | $ | 20,568 | |||
Accrued expenses | 16,015 | 16,374 | |||||
Current maturities of long-term debt | 10,809 | 4,942 | |||||
Income taxes payable | 2,680 | 2,431 | |||||
GX dispute accrual | 50,765 | 50,765 | |||||
Deferred revenue and other current liabilities | 9,724 | 5,863 | |||||
Total current liabilities | 116,915 | 100,943 | |||||
Long-term debt | 64,734 | 72,085 | |||||
Deferred revenue | 272 | 318 | |||||
Deferred tax liability | 619 | 652 | |||||
Right-of-use lease liability - long-term portion | 5,789 | - | |||||
Other liabilities | 25,784 | 28,943 | |||||
Total liabilities | 214,113 | 202,941 | |||||
Equity: | |||||||
Stockholders' equity | |||||||
Preferred stock - $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at March 31, 2019 or December 31, 2018 | - | - | |||||
Common stock - $0.001 par value; 190,000,000 shares authorized; 19,711,075 and 19,464,847 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 20 | 19 | |||||
Treasury stock - 198,199 and 91,567 shares at March 31, 2019 and December 31, 2018, respectively, at cost | (2,677 | ) | (1,270 | ) | |||
Additional paid-in capital | 177,404 | 172,946 | |||||
Accumulated deficit | (108,500 | ) | (96,517 | ) | |||
Accumulated other comprehensive loss | (19,096 | ) | (19,254 | ) | |||
Total stockholders' equity | 47,151 | 55,924 | |||||
Non-redeemable, non-controlling interest | (45 | ) | 60 | ||||
Total equity | 47,106 | 55,984 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 261,219 | $ | 258,925 |
RIGNET, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (11,953 | ) | $ | (5,526 | ) | |
Adjustments to reconcile net loss to net cash provided by operations: | |||||||
Depreciation and amortization | 8,912 | 7,987 | |||||
Stock-based compensation | 4,458 | 2,445 | |||||
Amortization of deferred financing costs | 61 | 51 | |||||
Deferred taxes | 2,469 | 449 | |||||
Change in fair value of earn-out/contingent consideration | - | 22 | |||||
Accretion of discount of contingent consideration payable for acquisitions | 94 | 162 | |||||
Gain on sales of property, plant and equipment, net of retirements | (7 | ) | (53 | ) | |||
Changes in operating assets and liabilities, net of effect of acquisition: | |||||||
Accounts receivable, net | (6,777 | ) | (6,255 | ) | |||
Costs and estimated earnings in excess of billings on uncompleted contracts (CIEB) | 1,439 | 520 | |||||
Prepaid expenses and other assets | 85 | (1,012 | ) | ||||
Accounts payable | 4,058 | (999 | ) | ||||
Accrued expenses | (38 | ) | (2,613 | ) | |||
Deferred revenue | 3,074 | 1,905 | |||||
Other liabilities | (1,227 | ) | 425 | ||||
Net cash provided by (used in) operating activities | 4,648 | (2,492 | ) | ||||
Cash flows from investing activities: | |||||||
Acquisitions (net of cash acquired) | - | (3,202 | ) | ||||
Capital expenditures | (4,814 | ) | (5,099 | ) | |||
Proceeds from sales of property, plant and equipment | 66 | 149 | |||||
Net cash used in investing activities | (4,748 | ) | (8,152 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of common stock upon the exercise of stock options and the vesting of restricted stock | 1 | 13 | |||||
Stock withheld to cover employee taxes on stock-based compensation | (1,407 | ) | (980 | ) | |||
Subsidiary distributions to non-controlling interest | (135 | ) | (66 | ) | |||
Repayments of long-term debt | (1,295 | ) | (1,286 | ) | |||
Payment of financing fees | (250 | ) | - | ||||
Net cash used in financing activities | (3,086 | ) | (2,319 | ) | |||
Net change in cash and cash equivalents | (3,186 | ) | (12,963 | ) | |||
Cash and cash equivalents including restricted cash: | |||||||
Balance, January 1, | 23,296 | 36,141 | |||||
Changes in foreign currency translation | 91 | 271 | |||||
Balance, March 31, | $ | 20,201 | $ | 23,449 |
RIGNET, INC. | ||||||||||||||
Selected Operational Data | ||||||||||||||
(Unaudited) | ||||||||||||||
1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | ||||||||||
2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||
Offshore drilling rigs (1) | 185 | 184 | 191 | 190 | 188 | |||||||||
Offshore Production | 368 | 347 | 332 | 320 | 310 | |||||||||
Maritime | 180 | 181 | 187 | 177 | 176 | |||||||||
Other sites (2) | 627 | 611 | 640 | 610 | 525 | |||||||||
Total Managed Communications Services Sites | 1,360 | 1,323 | 1,350 | 1,297 | 1,199 | |||||||||
Project Backlog (000s) | $ | 43,058 | $ | 45,536 | $ | 39,694 | $ | 19,630 | $ | 23,537 | ||||
(1) Includes jack up, semi-submersible and drillship rigs | ||||||||||||||
(2) Includes U.S. and International land sites, completion sites, man-camps, remote offices, and supply bases and offshore-related supply bases, shore offices, tender rigs and platform rigs | ||||||||||||||
Source: RigNet, Inc.