rnet-8k_20200806.htm
false 0001162112 0001162112 2020-08-06 2020-08-06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 6, 2020

 

RigNet, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

001-35003

 

76-0677208

(State or other jurisdiction

of incorporation)

 

(Commission

file number)

 

(I.R.S. Employer

Identification No.)

 

15115 Park Row Blvd, Suite 300, Houston, Texas

 

77084-4947

(Address of principal executive offices)

 

(zip code)

 

(281) 674-0100

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 240.12b-2 of this chapter).

 

Emerging growth company      

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

RNET

NASDAQ Global Select Market

 

 

 

 

 


 

Item   2.02 — Results of Operations and Financial Condition

The following information is disclosed pursuant to Item 2.02—Results of Operations and Financial Condition:

On August 6, 2020, RigNet, Inc. issued a press release announcing its operating results for the three and six months ended June 30, 2020. The press release is attached as Exhibit 99.1.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including the exhibits, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

Item  9.01 — Financial Statements and Exhibits

(d)  Exhibits

 

Exhibit Number

 

Exhibit Description

99.1

 

Press release of RigNet, Inc. dated August 6, 2020, announcing its operating results for the three and six months ended June 30, 2020

104

 

Cover Page Interactive Data File (Embedded within the Inline XBRL Document)

 

 

2


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

RIGNET, INC.

 

 

 

By:

 

/s/ LEE AHLSTROM

Lee Ahlstrom

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

 

Date:  August 6, 2020

 

3

rnet-ex991_6.htm

Exhibit 99.1

 

PRESS RELEASE

FOR IMMEDIATE RELEASE

 

 

RigNet Announces Second Quarter 2020 Earnings Results

 

 

HOUSTON – August 6, 2020 – RigNet, Inc. (NASDAQ: RNET, the “Company”), a leading provider of ultra-secure, intelligent networking solutions and specialized applications, announced its results for the quarter ended June 30, 2020.

 

 

Second quarter 2020 revenue of $53.4 million, net loss of $4.3 million or $0.21 per share

 

Revenue decreased by 9.1% to $53.4 million compared to prior quarter

 

Adjusted EBITDA increased by 16.2% to $9.7 million compared to prior quarter

 

Managed Communications Services (MCS) Sites served decreased 9.0% to 1,229 compared to the prior quarter

 

System Integration project backlog of $15.9 million

 

“RigNet’s team delivered strong second quarter results despite the challenging oil and gas dynamics that impacted our MCS business,” said Steven Pickett, Chief Executive Officer and President. “While total revenue declined, the team’s discipline around costs controls and continued contributions from our growing Apps & IoT business contributed to an increase in Adjusted EBITDA. “During the quarter, offshore communications generally performed ahead of our expectations while onshore declined as anticipated due to reduced activity in the shale basins. Both Apps & IoT and SI continue to generate opportunities, though as we have previously discussed, we are seeing some delays in converting the opportunities into revenue as our customers’ decision-making processes have generally slowed. Looking ahead, we are focused on capitalizing on our available opportunities across all of our segments, further reducing costs, and ensuring we continue to deliver the industry-leading quality of service for which we’re known.”  

 

Quarterly revenue was $53.4 million, a decrease of $5.4 million, or 9.1%, compared to $58.8 million in the prior quarter and a decrease of $6.9 million, or 11.5%, compared to $60.3 million in the second quarter 2019. Compared to the first quarter 2020, Apps & IoT revenue grew by $0.1 million, or 0.7%, primarily driven our value-added applications. Systems Integration (SI) revenue grew by $0.3 million, or 3.2%, primarily due to the timing of projects. The increase was offset by a decrease in Managed Communications Services (MCS) revenue by $5.8 million, or 14.4%, due to decrease in site count and lower equipment resale. Compared to the second quarter of 2019, Apps & IoT revenue grew by $0.8 million, or 10.0%, primarily due to the continued strong performance of Intelie. The increase was offset by a $7.1 million decrease in MCS revenue due to decreased site counts, rig stacking, and lower equipment sales. SI revenue decreased by $0.7 million or 6.0%, compared to the second quarter of 2019 primarily due to differences in progress on certain large projects.

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 2 of 11

 

Net loss attributable to common stockholders in the second quarter 2020 was $4.3 million, or $0.21 per share, compared to net loss attributable to common stockholders of $26.8 million, or $1.34 per share, in the first quarter of 2020 and net loss attributable to common stockholders of $6.2 million, or $0.32 per share, in the second quarter of 2019.

 

First quarter 2020 results include a non-cash goodwill impairment of $23.1 million  or $1.15 per share. Excluding this charge, net loss attributable to common stockholders in the first quarter 2020 was $3.7 million of $0.18 per share.

 

Adjusted EBITDA, a non-GAAP measure defined and reconciled to GAAP net loss (as described below), was $9.7 million, an increase of 16.2% compared to $8.4 million in the first quarter of 2020 and a decrease of 0.8% compared to $9.8 million in the second quarter 2019.

 

Capital expenditures for the three months ending June 30, 2020 totaled $3.1 million compared to $3.7 million for the three months ending March 31, 2020 and $4.6 million for the quarter ending June 30, 2019. Capital expenditures for the six months ending June 30, 2020 totaled $6.8 million compared to $11.7 million for the six months ending June 30, 2019. After accounting for accrued capital expenditures, capital expenditures on a cash basis were $3.3 million and $5.3 million in the quarters ended June 30, 2020 and March 31, 2020, respectively. Capital expenditures on cash basis was $8.6 million for the six months ended June 30, 2020.

 

Contracting and Operational Update

 

In July 2020, RigNet announced a collaboration with CACI International Inc. on CACI’s Steelbox™ Secure Voice and Text App for government users. CACI’s Steelbox combines technologies from Microsoft Azure and from BlackBerry’s SecuSuite® to deliver a government cloud-hosted, FedRAMP-certified, secure mobile tenant environment. RigNet will provide telecommunications interconnectivity throughout the United States, increasing the utility and convenience to government entities.

 

In June 2020, Intelie achieved “co-sell ready” status through the Microsoft One Commercial Partner Program. Intelie’s real-time machine learning platform, Intelie Live, is now available in the Microsoft Azure Marketplace and optimized to run within Azure.  Microsoft’s co-sell ready status allows RigNet to work together with Microsoft’s sales organization, as well as other Microsoft partners, to rapidly expand the reach and deployment of Intelie Live running on Azure. Customers are able to deploy Intelie Live on Azure or in a multi-cloud platform and with an edge deployment model.

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 3 of 11

 

MCS Site count in the second quarter 2020 decreased by 9.0% to 1,229 compared to 1,351 in the first quarter 2020 and decreased by 11.2% compared to 1,384 in the second quarter 2019.

 

Project backlog (using percentage of completion accounting) was $15.9 million in the second quarter 2020 and $22.4 million in the first quarter 2020 and was $37.1 million in the second quarter 2019.

 

Additional Detail

 

In the second quarter 2020, the Company recorded $3.9 million increase in the fair value of earn-out/contingent consideration related to Intelie, $0.7 million in one-time costs directly related to COVID-19 pandemic, such as costs associated with cleaning, testing, quarantine of employees, and modifications to our Gulf of Mexico microwave network, $0.3 million in executive departure costs, and $0.1 million in merger and acquisition costs. As of June 30, 2020, the Consolidated Leverage Ratio was 3.03 and Consolidated Fixed Charge Coverage Ratio was 2.32. In the first quarter 2020, the Company recorded a non-cash goodwill impairment charge of $23.1 million as result of the carrying amounts in two of our reporting units were in excess of their fair value as a result of the effect of COVID-19 and unprecedented oil and gas prices on the Company’s internal forecast. The charge primarily related to goodwill in MCS of $21.8 million and Systems Integration of $1.4 million. Additionally, in the first quarter 2020, the company recorded $0.1 million in merger and acquisition costs and $0.3 million in executive departure costs. In the quarter ended June 30, 2019, the Company recorded $2.2 million in GX dispute Phase II costs and $1.3 million increase in the fair value of earn-out/contingent consideration related to Intelie.

 

Earnings Call Information

 

An Earnings Call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Friday, August 7, 2020, to discuss RigNet’s second quarter 2020 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.

 

 

 


 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 4 of 11

 

About RigNet

 

RigNet (NASDAQ: RNET) delivers advanced software and communications infrastructure that allow our customers to realize the business benefits of digital transformation. With world-class, ultra-secure solutions spanning global IP connectivity, bandwidth-optimized OTT applications, IIoT big data enablement, and industry-leading machine learning analytics, RigNet supports the full evolution of digital enablement, empowering businesses to respond faster to high priority issues, mitigate the risk of operational disruption, and maximize their overall financial performance. RigNet is headquartered in Houston, Texas with operations around the world.

 

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 future, not past, events. Opinions, expectations with respect to conditions in the oil and gas industry, customer perceptions of value, entry into new customer contracts, 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 Item 1A- Risk Factors of the Company’s 10-Q filing for the quarter ended March 31, 2020, filed with the SEC on Monday, May 11, 2020, 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 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.

 

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

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 5 of 11

 

principles, or GAAP. We refer you to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on Wednesday, March 11th, 2020, for a more detailed discussion of the uses and limitations of Adjusted EBITDA.

 

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; mergers and acquisitions costs; executive departure costs; restructuring charges; the GX dispute; the GX dispute Phase II costs, one-time costs directly related to COVID-19 pandemic one-time costs directly related to COVID-19 pandemic, such as costs associated with cleaning, testing, quarantine of employees, and modifications to our Gulf of Mexico microwave network, 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

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 6 of 11

 

RIGNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

2020

 

 

March 31,

2020

 

 

June 30,

2019

 

 

June 30,

2020

 

 

June 30,

2019

 

 

 

(in thousands, except per share amounts)

 

Unaudited Consolidated Statements of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

53,391

 

 

$

58,761

 

 

$

60,332

 

 

$

112,152

 

 

$

117,842

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (excluding depreciation and amortization)

 

 

33,687

 

 

 

37,950

 

 

 

36,519

 

 

 

71,637

 

 

 

72,975

 

Depreciation and amortization

 

 

6,913

 

 

 

6,931

 

 

 

7,679

 

 

 

13,844

 

 

 

16,591

 

Impairment of goodwill

 

 

-

 

 

 

23,141

 

 

 

-

 

 

 

23,141

 

 

 

-

 

Change in fair value of earn-out/contingent consideration

 

 

3,916

 

 

 

-

 

 

 

1,284

 

 

 

3,916

 

 

 

1,284

 

Selling and marketing

 

 

2,207

 

 

 

2,812

 

 

 

2,952

 

 

 

5,019

 

 

 

6,745

 

General and administrative

 

 

9,453

 

 

 

13,829

 

 

 

14,458

 

 

 

23,282

 

 

 

30,928

 

Total expenses

 

 

56,176

 

 

 

84,663

 

 

 

62,892

 

 

 

140,839

 

 

 

128,523

 

Operating loss

 

 

(2,785

)

 

 

(25,902

)

 

 

(2,560

)

 

 

(28,687

)

 

 

(10,681

)

Other expense, net

 

 

(1,338

)

 

 

(1,849

)

 

 

(1,362

)

 

 

(3,187

)

 

 

(2,528

)

Loss before income taxes

 

 

(4,123

)

 

 

(27,751

)

 

 

(3,922

)

 

 

(31,874

)

 

 

(13,209

)

Income tax (expense) benefit

 

 

(129

)

 

 

980

 

 

 

(2,204

)

 

 

851

 

 

 

(4,870

)

Net loss

 

$

(4,252

)

 

$

(26,771

)

 

$

(6,126

)

 

$

(31,023

)

 

$

(18,079

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss Per Share - Basic and Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to RigNet, Inc.

     common stockholders

 

$

(4,322

)

 

$

(26,841

)

 

$

(6,156

)

 

$

(31,163

)

 

$

(18,139

)

Net loss per share attributable to

     RigNet, Inc. common stockholders, basic

 

$

(0.21

)

 

$

(1.34

)

 

$

(0.32

)

 

$

(1.54

)

 

$

(0.95

)

Net loss per share attributable to

     RigNet, Inc. common stockholders, diluted

 

$

(0.21

)

 

$

(1.34

)

 

$

(0.32

)

 

$

(1.54

)

 

$

(0.95

)

Weighted average shares outstanding, basic

 

 

20,510

 

 

 

20,081

 

 

 

19,082

 

 

 

20,295

 

 

 

19,016

 

Weighted average shares outstanding, diluted

 

 

20,510

 

 

 

20,081

 

 

 

19,082

 

 

 

20,295

 

 

 

19,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited Non-GAAP Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

9,701

 

 

$

8,351

 

 

$

9,775

 

 

$

18,052

 

 

$

18,161

 

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 7 of 11

 

RIGNET, INC.

Reconciliation of Net Loss to Adjusted EBITDA

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

2020

 

 

March 31,

2020

 

 

June 30,

2019

 

 

June 30,

2020

 

 

June 30,

2019

 

 

 

(in thousands)

 

Reconciliation of Net Loss to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(4,252

)

 

$

(26,771

)

 

$

(6,126

)

 

$

(31,023

)

 

$

(18,079

)

Interest expense

 

 

1,325

 

 

 

1,528

 

 

 

1,269

 

 

 

2,853

 

 

 

2,507

 

Depreciation and amortization

 

 

6,913

 

 

 

6,931

 

 

 

7,679

 

 

 

13,844

 

 

 

16,591

 

Impairment of goodwill

 

 

-

 

 

 

23,141

 

 

 

-

 

 

 

23,141

 

 

 

-

 

(Gain) loss on sales of property, plant and equipment, net of retirements

 

 

(166

)

 

 

282

 

 

 

18

 

 

 

116

 

 

 

11

 

Stock-based compensation

 

 

832

 

 

 

3,854

 

 

 

1,170

 

 

 

4,686

 

 

 

5,628

 

Restructuring costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

573

 

Change in fair value of earn-out/contingent

   consideration

 

 

3,916

 

 

 

-

 

 

 

1,284

 

 

 

3,916

 

 

 

1,284

 

Executive departure costs

 

 

255

 

 

 

298

 

 

 

-

 

 

 

553

 

 

 

-

 

Mergers and Acquisitions costs

 

 

78

 

 

 

68

 

 

 

60

 

 

 

146

 

 

 

410

 

COVID-19 Costs

 

 

671

 

 

 

-

 

 

 

-

 

 

 

671

 

 

 

-

 

GX dispute Phase II costs

 

 

-

 

 

 

-

 

 

 

2,217

 

 

 

-

 

 

 

4,366

 

Income tax expense (benefit)

 

 

129

 

 

 

(980

)

 

 

2,204

 

 

 

(851

)

 

 

4,870

 

Adjusted EBITDA (non-GAAP measure)

 

$

9,701

 

 

$

8,351

 

 

$

9,775

 

 

$

18,052

 

 

$

18,161

 

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 8 of 11

 

RIGNET, INC.

Segment Information

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

2020

 

 

March 31,

2020

 

 

June 30,

2019

 

 

June 30,

2020

 

 

June 30,

2019

 

 

 

(in thousands)

 

Managed Communications Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

34,136

 

 

$

39,896

 

 

$

41,205

 

 

$

74,032

 

 

$

83,538

 

Cost of revenue

 

 

22,985

 

 

 

25,502

 

 

 

25,019

 

 

 

48,487

 

 

 

52,004

 

Depreciation and amortization

 

 

4,843

 

 

 

4,659

 

 

 

5,059

 

 

 

9,502

 

 

 

11,323

 

Impairment of goodwill

 

 

-

 

 

 

21,755

 

 

 

-

 

 

 

21,755

 

 

 

-

 

Selling, general and administrative

 

 

2,436

 

 

 

2,807

 

 

 

3,346

 

 

 

5,243

 

 

 

7,143

 

Operating income (loss)

 

$

3,872

 

 

$

(14,827

)

 

$

7,781

 

 

$

(10,955

)

 

$

13,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Applications and Internet-of-Things

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

8,805

 

 

$

8,743

 

 

$

8,005

 

 

$

17,548

 

 

$

16,020

 

Cost of revenue

 

 

3,221

 

 

 

4,561

 

 

 

4,387

 

 

 

7,782

 

 

 

8,884

 

Depreciation and amortization

 

 

1,154

 

 

 

1,182

 

 

 

1,226

 

 

 

2,336

 

 

 

2,457

 

Selling, general and administrative

 

 

1,563

 

 

 

1,620

 

 

 

835

 

 

 

3,183

 

 

 

1,400

 

Operating income

 

$

2,867

 

 

$

1,380

 

 

$

1,557

 

 

$

4,247

 

 

$

3,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Systems Integration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

10,450

 

 

$

10,122

 

 

$

11,122

 

 

$

20,572

 

 

$

18,284

 

Cost of revenue

 

 

7,481

 

 

 

7,887

 

 

 

7,113

 

 

 

15,368

 

 

 

12,087

 

Depreciation and amortization

 

 

157

 

 

 

164

 

 

 

639

 

 

 

321

 

 

 

1,301

 

Impairment of goodwill

 

 

-

 

 

 

1,386

 

 

 

-

 

 

 

1,386

 

 

 

-

 

Selling, general and administrative

 

 

302

 

 

 

404

 

 

 

570

 

 

 

706

 

 

 

1,694

 

Operating income

 

$

2,510

 

 

$

281

 

 

$

2,800

 

 

$

2,791

 

 

$

3,202

 

NOTE: Consolidated balances include the segments above along with corporate activities and intercompany eliminations.

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 9 of 11

 

RIGNET, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

June 30,

 

 

December 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

(in thousands, except share amounts)

 

ASSETS

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,591

 

 

$

12,941

 

Restricted cash

 

 

-

 

 

 

42

 

Accounts receivable, net

 

 

69,960

 

 

 

67,059

 

Costs and estimated earnings in excess of billings on uncompleted

   contracts (CIEB)

 

 

13,030

 

 

 

13,275

 

Prepaid expenses and other current assets

 

 

6,437

 

 

 

6,500

 

Total current assets

 

 

105,018

 

 

 

99,817

 

Property, plant and equipment, net

 

 

54,163

 

 

 

60,118

 

Restricted cash

 

 

1,500

 

 

 

1,522

 

Goodwill

 

 

20,134

 

 

 

46,792

 

Intangibles, net

 

 

25,626

 

 

 

30,145

 

Right-of-use lease asset

 

 

6,175

 

 

 

6,829

 

Deferred tax and other assets

 

 

5,417

 

 

 

5,757

 

TOTAL ASSETS

 

$

218,033

 

 

$

250,980

 

LIABILITIES AND EQUITY

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

23,670

 

 

$

28,517

 

Accrued expenses

 

 

17,523

 

 

 

16,660

 

Current maturities of long-term debt

 

 

8,792

 

 

 

10,793

 

Income taxes payable

 

 

2,464

 

 

 

2,649

 

GX dispute accrual

 

 

750

 

 

 

750

 

Deferred revenue and other current liabilities

 

 

7,440

 

 

 

11,173

 

Total current liabilities

 

 

60,639

 

 

 

70,542

 

Long-term debt

 

 

106,161

 

 

 

96,934

 

Deferred revenue

 

 

764

 

 

 

855

 

Deferred tax liability

 

 

1,955

 

 

 

2,672

 

Right-of-use lease liability - long-term portion

 

 

5,830

 

 

 

6,329

 

Other liabilities

 

 

30,440

 

 

 

26,771

 

Total liabilities

 

 

205,789

 

 

 

204,103

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Preferred stock - $0.001 par value; 10,000,000 shares authorized; no

   shares issued or outstanding at June 30, 2020 and December 31, 2019

 

 

-

 

 

 

-

 

Common stock - $0.001 par value; 190,000,000 shares authorized;

   20,551,153 and 19,979,284 shares issued and outstanding at

   June 30, 2020 and December 31, 2019, respectively

 

 

21

 

 

 

20

 

Treasury stock - 445,525 and 203,756 shares at June 30, 2020 and

   December 31, 2019, respectively, at cost

 

 

(3,281

)

 

 

(2,693

)

Additional paid-in capital

 

 

189,251

 

 

 

184,571

 

Accumulated deficit

 

 

(146,836

)

 

 

(115,673

)

Accumulated other comprehensive loss

 

 

(27,050

)

 

 

(19,502

)

Total stockholders' equity

 

 

12,105

 

 

 

46,723

 

Non-redeemable, non-controlling interest

 

 

139

 

 

 

154

 

Total equity

 

 

12,244

 

 

 

46,877

 

TOTAL LIABILITIES AND EQUITY

 

$

218,033

 

 

$

250,980

 

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 10 of 11

 

RIGNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(31,023

)

 

$

(18,079

)

Adjustments to reconcile net loss to net cash provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

13,844

 

 

 

16,591

 

Impairment of goodwill

 

 

23,141

 

 

 

-

 

Stock-based compensation

 

 

4,686

 

 

 

5,628

 

Amortization of deferred financing costs

 

 

189

 

 

 

153

 

Deferred taxes

 

 

(624

)

 

 

4,838

 

Change in fair value of earn-out/contingent consideration

 

 

3,916

 

 

 

1,284

 

Accretion of discount of contingent consideration payable for acquisitions

 

 

266

 

 

 

183

 

(Gain) loss on sales of property, plant and equipment, net of retirements

 

 

116

 

 

 

11

 

Changes in operating assets and liabilities, net of effect of acquisition:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(4,078

)

 

 

(488

)

Costs and estimated earnings in excess of billings on uncompleted contracts (CIEB)

 

 

(199

)

 

 

(1,644

)

Prepaid expenses and other assets

 

 

73

 

 

 

(6

)

Right-of-use lease asset

 

 

654

 

 

 

-

 

Accounts payable

 

 

(2,027

)

 

 

7,564

 

Accrued expenses

 

 

1,195

 

 

 

(1,574

)

GX Dispute payment

 

 

-

 

 

 

(45,000

)

Deferred revenue

 

 

(7,459

)

 

 

1,334

 

Right-of-use lease liability

 

 

(779

)

 

 

-

 

Other liabilities

 

 

5,138

 

 

 

(2,052

)

Net cash provided by (used in) operating activities

 

 

7,029

 

 

 

(31,257

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8,597

)

 

 

(11,868

)

Proceeds from sales of property, plant and equipment

 

 

26

 

 

 

112

 

Net cash used in investing activities

 

 

(8,571

)

 

 

(11,756

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of common stock upon the exercise of stock options and the vesting of restricted stock

 

 

1

 

 

 

4

 

Stock withheld to cover employee taxes on stock-based compensation

 

 

(594

)

 

 

(1,406

)

Subsidiary distributions to non-controlling interest

 

 

(155

)

 

 

(135

)

Proceeds from borrowings

 

 

6,750

 

 

 

40,000

 

Proceeds from Paycheck Protection Program Loan

 

 

6,298

 

 

 

-

 

Repayments of long-term debt

 

 

(8,354

)

 

 

(6,083

)

Payment of financing fees

 

 

(485

)

 

 

(486

)

Net cash provided by financing activities

 

 

3,461

 

 

 

31,894

 

Net change in cash and cash equivalents

 

 

1,919

 

 

 

(11,119

)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents including restricted cash:

 

 

 

 

 

 

 

 

Balance, January 1,

 

 

14,505

 

 

 

23,296

 

Changes in foreign currency translation

 

 

667

 

 

 

265

 

Balance, June 30,

 

$

17,091

 

 

$

12,442

 

 

15115 PARK ROW BLVD, SUITE 300, HOUSTON, TEXAS 77084-4947 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


 

Page 11 of 11

 

RIGNET, INC.

Selected Operational Data

MCS Site Count

(Unaudited)

 

 

2nd Quarter

 

 

1st Quarter

 

 

4th Quarter

 

 

3rd Quarter

 

 

2nd Quarter

 

 

 

2020

 

 

2020

 

 

2019

 

 

2019

 

 

2019

 

Selected Operational Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Offshore drilling rigs (1)

 

 

193

 

 

 

196

 

 

 

185

 

 

 

184

 

 

 

182

 

Offshore Production

 

 

337

 

 

 

386

 

 

 

385

 

 

 

384

 

 

 

375

 

Maritime

 

 

161

 

 

 

177

 

 

 

171

 

 

 

184

 

 

 

183

 

Other sites (2)

 

 

538

 

 

 

592

 

 

 

599

 

 

 

634

 

 

 

644

 

Total

 

 

1,229

 

 

 

1,351

 

 

 

1,340

 

 

 

1,386

 

 

 

1,384

 

Project Backlog (in thousands)

 

$

15,856