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 ended June 30, 2017.
Quarterly revenue was $49.2 million representing
an increase of $1.1 million compared to the prior quarter and a
decrease of $5.7 million compared to the prior year quarter. The
revenue increase compared to the prior quarter reflects a $2.1
million increase in SI&A revenue partially offset by a $1.0
million decrease in Managed Service revenue. The decrease compared
to the prior year quarter reflects a $7.2 million decrease in
Managed Services revenue partially offset by a $1.4 million
increase in SI&A revenue. Revenue continues to be impacted by
previously announced reductions in offshore drilling.
GAAP net loss attributable to common stockholders was $4.2
million, or $0.24 per share, compared to net loss attributable to
common stockholders of $2.0 million, or $0.11 per share, in the
prior quarter and net loss attributable to common stockholders of
$4.8 million, or $0.27 per share, in the prior year quarter.
Quarterly Adjusted EBITDA was $6.1 million compared to $7.2
million in the prior quarter and $8.6 million in the prior year
quarter. The decrease compared to the prior quarter was due
primarily to ongoing operating expenses. The decrease compared to
the prior year quarter was due primarily to decreased revenue
partially offset by a reduction in ongoing operating expenses.
Capital expenditures were $4.9 million compared
to $3.2 million in the prior quarter and $4.7 million in the prior
year quarter. Unlevered Free Cash Flow, defined as Adjusted
EBITDA less capital expenditures, was $1.1 million compared to $4.1
million in the prior quarter and $4.0 million in the prior year
quarter.
In the quarter ended June 30, 2017, the Company
recorded $1.9 million in acquisition costs, and a gain of $0.8
million for the change in fair value of an earn-out. In the quarter
ended June 30, 2016, the Company recorded restructuring charges of
$1.1 million, $0.4 million of impairment of intangible assets, $0.2
million of CEO search costs and ERP implementation costs of $0.6
million. The restructuring charges and acquisition costs are added
back to net loss in our non-GAAP measures below.
Steven E. Pickett, chief executive officer and
president, commented, "Our recent acquisition of Cyphre, in
conjunction with our acquisitions of substantially all of the
assets of DTS and ESS, have helped advance our stated strategies to
build and grow our over-the-top portfolio and to diversify our
revenue stream. These acquisitions also demonstrate our
commitment to expand the RigNet value proposition to our customers
while increasing RigNet's addressable market. Furthermore,
during the second quarter, our team expanded RigNet's core market
position by increasing the number of sites we serve by 5% quarter
over quarter while delivering $1.1m in Unlevered Free Cash
Flow.”
A conference call for investors will be held at
11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday,
August 8, 2017, to discuss RigNet’s second quarter 2017
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, change in fair value of earn-outs, stock-based
compensation, merger/acquisition costs, executive departure costs,
restructuring charges and non-recurring items.
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
specialized 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 |
|
Six Months Ended |
|
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Unaudited
Consolidated Statements of Comprehensive Income Data: |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
49,162 |
|
|
$ |
48,072 |
|
|
$ |
54,911 |
|
|
$ |
97,234 |
|
|
$ |
117,252 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of
revenue (excluding depreciation and amortization) |
|
|
33,038 |
|
|
|
29,875 |
|
|
|
33,276 |
|
|
|
62,913 |
|
|
|
69,552 |
|
Depreciation and amortization |
|
|
7,552 |
|
|
|
7,316 |
|
|
|
9,013 |
|
|
|
14,868 |
|
|
|
17,256 |
|
Impairment of intangible assets |
|
|
- |
|
|
|
- |
|
|
|
397 |
|
|
|
- |
|
|
|
397 |
|
Selling
and marketing |
|
|
2,132 |
|
|
|
1,436 |
|
|
|
1,943 |
|
|
|
3,568 |
|
|
|
3,835 |
|
General
and administrative |
|
|
9,878 |
|
|
|
10,512 |
|
|
|
13,576 |
|
|
|
20,390 |
|
|
|
28,917 |
|
Total
expenses |
|
|
52,600 |
|
|
|
49,139 |
|
|
|
58,205 |
|
|
|
101,739 |
|
|
|
119,957 |
|
Operating
income (loss) |
|
|
(3,438 |
) |
|
|
(1,067 |
) |
|
|
(3,294 |
) |
|
|
(4,505 |
) |
|
|
(2,705 |
) |
Other
income (expense), net |
|
|
(873 |
) |
|
|
(506 |
) |
|
|
(328 |
) |
|
|
(1,379 |
) |
|
|
(1,282 |
) |
Income
(loss) before income taxes |
|
|
(4,311 |
) |
|
|
(1,573 |
) |
|
|
(3,622 |
) |
|
|
(5,884 |
) |
|
|
(3,987 |
) |
Income
tax benefit (expense) |
|
|
101 |
|
|
|
(414 |
) |
|
|
(1,234 |
) |
|
|
(313 |
) |
|
|
(2,136 |
) |
Net
loss |
|
$ |
(4,210 |
) |
|
$ |
(1,987 |
) |
|
$ |
(4,856 |
) |
|
$ |
(6,197 |
) |
|
$ |
(6,123 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss Per
Share - Basic and Diluted |
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to RigNet, Inc. common stockholders |
|
$ |
(4,249 |
) |
|
$ |
(2,026 |
) |
|
$ |
(4,751 |
) |
|
$ |
(6,275 |
) |
|
$ |
(6,084 |
) |
Net loss
per share attributable to RigNet, Inc. common stockholders,
basic |
|
$ |
(0.24 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.35 |
) |
Net loss
per share attributable to RigNet, Inc. common stockholders,
diluted |
|
$ |
(0.24 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.35 |
) |
Weighted
average shares outstanding, basic |
|
|
17,985 |
|
|
|
17,873 |
|
|
|
17,634 |
|
|
|
17,929 |
|
|
|
17,624 |
|
Weighted
average shares outstanding, diluted |
|
|
17,985 |
|
|
|
17,873 |
|
|
|
17,634 |
|
|
|
17,929 |
|
|
|
17,624 |
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
Non-GAAP Data: |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
6,053 |
|
|
$ |
7,225 |
|
|
$ |
8,624 |
|
|
$ |
13,278 |
|
|
$ |
19,290 |
|
Unlevered
Free Cash Flow |
|
$ |
1,142 |
|
|
$ |
4,065 |
|
|
$ |
3,954 |
|
|
$ |
5,207 |
|
|
$ |
9,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months Ended |
|
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Reconciliation
of Net Loss to Adjusted EBITDA and Unlevered Free Cash
Flow: |
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(4,210 |
) |
|
$ |
(1,987 |
) |
|
$ |
(4,856 |
) |
|
$ |
(6,197 |
) |
|
$ |
(6,123 |
) |
Interest
expense |
|
|
613 |
|
|
|
619 |
|
|
|
643 |
|
|
|
1,232 |
|
|
|
1,311 |
|
Depreciation and amortization |
|
|
7,552 |
|
|
|
7,316 |
|
|
|
9,013 |
|
|
|
14,868 |
|
|
|
17,256 |
|
Impairment of intangible assets |
|
|
- |
|
|
|
- |
|
|
|
397 |
|
|
|
- |
|
|
|
397 |
|
(Gain)
loss on sales of property, plant and equipment, net of
retirements |
|
|
13 |
|
|
|
37 |
|
|
|
(134 |
) |
|
|
50 |
|
|
|
(150 |
) |
Stock-based compensation |
|
|
1,116 |
|
|
|
826 |
|
|
|
1,128 |
|
|
|
1,942 |
|
|
|
1,842 |
|
Restructuring costs |
|
|
- |
|
|
|
- |
|
|
|
1,129 |
|
|
|
- |
|
|
|
497 |
|
Change in
fair value of earn-out/contingent consideration |
|
|
(846 |
) |
|
|
- |
|
|
|
- |
|
|
|
(846 |
) |
|
|
- |
|
Executive
departure costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,884 |
|
Acquisition costs |
|
|
1,916 |
|
|
|
- |
|
|
|
70 |
|
|
|
1,916 |
|
|
|
240 |
|
Income
tax expense (benefit) |
|
|
(101 |
) |
|
|
414 |
|
|
|
1,234 |
|
|
|
313 |
|
|
|
2,136 |
|
Adjusted EBITDA
(non-GAAP measure) |
|
$ |
6,053 |
|
|
$ |
7,225 |
|
|
$ |
8,624 |
|
|
$ |
13,278 |
|
|
$ |
19,290 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(non-GAAP measure) |
|
$ |
6,053 |
|
|
$ |
7,225 |
|
|
$ |
8,624 |
|
|
$ |
13,278 |
|
|
$ |
19,290 |
|
Capital
expenditures |
|
|
4,911 |
|
|
|
3,160 |
|
|
|
4,670 |
|
|
|
8,071 |
|
|
|
9,575 |
|
Unlevered Free Cash
Flow (non-GAAP measure) |
|
$ |
1,142 |
|
|
$ |
4,065 |
|
|
$ |
3,954 |
|
|
$ |
5,207 |
|
|
$ |
9,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Unaudited
Consolidated Balance Sheet Data: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
42,699 |
|
|
$ |
57,152 |
|
|
Restricted cash - current portion |
|
|
41 |
|
|
|
139 |
|
|
Restricted cash - long-term portion |
|
|
1,500 |
|
|
|
1,514 |
|
|
Total
assets |
|
|
222,705 |
|
|
|
230,972 |
|
|
Current
maturities of long-term debt |
|
|
8,546 |
|
|
|
8,478 |
|
|
Long-term
debt |
|
|
38,570 |
|
|
|
52,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Unaudited
Consolidated Statements of Cash Flows Data: |
|
|
|
|
|
Cash and
cash equivalents, January 1, |
|
$ |
57,152 |
|
|
$ |
60,468 |
|
|
Net cash
provided by operating activities |
|
|
9,283 |
|
|
|
18,440 |
|
|
Net cash
used in investing activities |
|
|
(11,063 |
) |
|
|
(15,343 |
) |
|
Net cash
used in financing activities |
|
|
(13,845 |
) |
|
|
(3,859 |
) |
|
Changes
in foreign currency translation |
|
|
1,172 |
|
|
|
(250 |
) |
|
Cash and
cash equivalents, June 30, |
|
$ |
42,699 |
|
|
$ |
59,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Quarter |
|
1st Quarter |
|
4th Quarter |
|
3rd Quarter |
|
2nd Quarter |
|
|
2017 |
|
2017 |
|
2016 |
|
2016 |
|
2016 |
Selected
Operational Data: |
|
|
|
|
|
|
|
|
|
|
Offshore
drilling rigs (1) |
|
173 |
|
173 |
|
175 |
|
194 |
|
211 |
Offshore
Production |
|
296 |
|
290 |
|
280 |
|
287 |
|
287 |
Maritime |
|
134 |
|
124 |
|
122 |
|
128 |
|
105 |
International Land |
|
112 |
|
104 |
|
104 |
|
101 |
|
99 |
Other
sites (2) |
|
336 |
|
304 |
|
240 |
|
238 |
|
236 |
Total |
|
1,051 |
|
995 |
|
921 |
|
948 |
|
938 |
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
Six Months Ended |
|
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Managed
Services |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
43,055 |
|
|
$ |
44,094 |
|
|
$ |
50,219 |
|
$ |
87,149 |
|
|
$ |
104,640 |
Cost of
revenue |
|
|
27,544 |
|
|
|
26,802 |
|
|
|
29,682 |
|
|
54,346 |
|
|
|
60,682 |
Depreciation and amortization |
|
|
6,229 |
|
|
|
6,031 |
|
|
|
7,585 |
|
|
12,260 |
|
|
|
14,774 |
Selling,
general and administrative |
|
|
5,272 |
|
|
|
4,956 |
|
|
|
7,635 |
|
|
10,237 |
|
|
|
15,530 |
Operating
income |
|
$ |
4,010 |
|
|
$ |
6,305 |
|
|
$ |
5,317 |
|
$ |
10,306 |
|
|
$ |
13,654 |
Adjusted
EBITDA (non-GAAP measure) |
|
$ |
10,319 |
|
|
$ |
12,448 |
|
|
$ |
14,587 |
|
$ |
22,767 |
|
|
$ |
28,764 |
|
|
|
|
|
|
|
|
|
|
|
Systems
Integration and Automation |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
6,107 |
|
|
$ |
3,978 |
|
|
$ |
4,692 |
|
$ |
10,085 |
|
|
$ |
12,612 |
Cost of
revenue |
|
|
5,494 |
|
|
|
3,073 |
|
|
|
3,594 |
|
|
8,567 |
|
|
|
8,870 |
Depreciation and amortization |
|
|
611 |
|
|
|
587 |
|
|
|
9 |
|
|
1,198 |
|
|
|
38 |
Selling,
general and administrative |
|
|
422 |
|
|
|
470 |
|
|
|
721 |
|
|
892 |
|
|
|
1,642 |
Operating
income (loss) |
|
$ |
(420 |
) |
|
$ |
(152 |
) |
|
$ |
368 |
|
$ |
(572 |
) |
|
$ |
2,062 |
Adjusted
EBITDA (non-GAAP measure) |
|
$ |
192 |
|
|
$ |
435 |
|
|
$ |
80 |
|
$ |
627 |
|
|
$ |
1,734 |
|
|
|
|
|
|
|
|
|
|
|
NOTE: Consolidated balances include the three
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
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