EX-99 2 d922895dex99.htm EX-99 EX-99

Exhibit 99

 

LOGO

 

 

PRESS RELEASE FOR IMMEDIATE RELEASE

RigNet Announces First Quarter 2015 Earnings Results

 

    Quarterly revenue of $77.7 million, an increase of 3.5% over the same quarter last year

 

    Quarterly Adjusted EBITDA of $17.1 million, an increase of 5.6% over the same quarter last year

 

    Quarterly Cash Earnings of $14.3 million, for the first quarter, an increase of 14.2% over the same quarter last year

HOUSTON – May 11, 2015 – RigNet, Inc. (NASDAQ: RNET), a leading global provider of digital technology solutions to the oil and gas industry, today reported quarterly results for the quarter ended March 31, 2015.

Quarterly revenue was $77.7 million representing an increase of $2.6 million, or 3.5%, as compared to the same quarter last year. The increase was primarily due to increased revenue-per-site and increased offshore drilling sites served as well as an additional month of revenue from the Inmarsat Enterprise Energy business unit acquisition, though it was partially offset by decreased Telecommunications Systems Integration (TSI) revenue.

Quarterly Adjusted EBITDA was $17.1 million, or 22.0% of revenue, representing an increase of $0.9 million, or 5.6%, over the same quarter last year. The increase primarily resulted from increased revenue from our core offshore rig services, an additional month of revenue from the Inmarsat Enterprise Energy business unit acquisition, cost containment from our resource reallocation plan announced in February and a separate cost savings initiative.

Quarterly Cash Earnings were $14.3 million, or $0.82 per diluted share, for the first quarter, an increase of $1.8 million, or 14.2%, over the same quarter last year.

Capital expenditures were $8.1 million in the first quarter compared to $9.7 million in the same quarter last year. Unlevered Free Cash Flow, defined as Adjusted EBITDA less capital expenditures, was $9.0 million in the quarter, an increase of $2.5 million, or 37.9%, over the prior year quarter.

Mark B. Slaughter, chief executive officer and president, commented, “The RigNet team delivered solid results in the first quarter, despite executing against a backdrop of lower oil prices and decreased oil and gas activity. Our sales force delivered important wins in our core market serving offshore drilling rigs. Provisioning of new service on offshore rigs was rather brisk in the quarter as we added fourteen rigs into service, but also saw eleven rigs leave service primarily due to cold stacking or retirement. Against that market backdrop, we were quite pleased to raise to 281 the number of offshore rigs served in the quarter, representing an increase of 15 offshore rigs over the prior year quarter and an increase of three offshore rigs over the prior quarter. The environment in front of us, with oil prices and spending down significantly since last summer, presents us with challenges in the near term until the macro environment improves. Despite these challenges, we plan to strengthen our capabilities, expand our market presence and emerge as a stronger and better company. Moreover, with our strong financial position, consisting of strong cash flow, minimal net debt and approximately $90 million available, if needed, under our credit revolver, we are well-positioned to execute against our growth plans, both organically and inorganically, under the current market conditions.”

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Tuesday, May 12, 2015, to discuss RigNet’s 2015 first 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.

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


LOGO

Page 2 of 6

 

Non-GAAP Financial Measures

This press release contains the following non-GAAP measures: Gross Profit (excluding depreciation and amortization), Adjusted EBITDA, Unlevered Free Cash Flow, Cash Earnings and Cash EPS. Gross Profit (excluding depreciation and amortization), Adjusted EBITDA, Unlevered Free Cash Flow, Cash Earnings and Cash EPS 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 and 10-Q filings for the year ended December 31, 2014 and the three months ended March 31, 2015, respectively, 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, foreign exchange impact of intercompany financing activities, (gain) loss on retirement of property, plant and equipment, change in fair value of derivatives, stock-based compensation, IPO or merger/acquisition costs and related bonuses, 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 net income (loss) plus interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, foreign exchange impact of intercompany financing activities, (gain) loss on retirement of property, plant and equipment, change in fair value of derivatives, stock-based compensation, IPO or merger/acquisition costs and related bonuses, restructuring charges and non-recurring items 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.

We define Cash Earnings as net income (loss), plus depreciation and amortization, impairment of goodwill, foreign exchange impact of intercompany financing activities, (gain) loss on retirement of property and equipment, change in fair value of derivatives, stock-based compensation, IPO or merger/acquisition costs and related bonuses, restructuring charges and non-recurring items. We define Cash EPS as Cash Earnings divided by diluted shares. Cash Earnings and Cash EPS should not be considered as an alternative to net income (loss), operating income (loss), basic or diluted earnings per share 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 digital technology solutions to the oil and gas industry, serving 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 more than 1,200 remote sites in 50 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

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


LOGO

Page 3 of 6

 

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.

 

Investor contact
Marty Jimmerson Tel: +1 (281) 674-0699
Chief Financial Officer, RigNet, Inc. investor.relations@rig.net

 

     Three Months Ended  
     March 31,
2015
    December 31,
2014
    March 31,
2014
 
     (in thousands)  

Unaudited Consolidated Statements of Comprehensive Income Data:

      

Revenue

   $ 77,650      $ 86,656      $ 75,043   
  

 

 

   

 

 

   

 

 

 

Expenses:

Cost of revenue (excluding depreciation and amortization)

  43,933      46,815      46,521   

Depreciation and amortization

  8,096      7,855      6,797   

Impairment of goodwill

  —        2,719      —     

Selling and marketing

  1,823      1,672      1,529   

General and administrative

  21,346      20,367      14,843   
  

 

 

   

 

 

   

 

 

 

Total expenses

  75,198      79,428      69,690   
  

 

 

   

 

 

   

 

 

 

Operating income

  2,452      7,228      5,353   

Other income (expense), net

  (1,080   (1,235   170   
  

 

 

   

 

 

   

 

 

 

Income before income taxes

  1,372      5,993      5,523   

Income tax expense

  (2,314   (3,996   (3,215
  

 

 

   

 

 

   

 

 

 

Net income (loss)

$ (942 $ 1,997    $ 2,308   
  

 

 

   

 

 

   

 

 

 

Income (loss) Per Share - Basic and Diluted

Net income (loss) attributable to RigNet, Inc. common stockholders

$ (1,029 $ 1,916    $ 2,195   

Net income (loss) per share attributable to RigNet, Inc. common stockholders, basic

$ (0.06 $ 0.11    $ 0.13   

Net income (loss) per share attributable to RigNet, Inc. common stockholders, diluted

$ (0.06 $ 0.11    $ 0.12   

Weighted average shares outstanding, basic

  17,463      17,454      17,267   

Weighted average shares outstanding, diluted

  17,463      17,874      17,993   

Unaudited Non-GAAP Data:

Gross Profit (excluding depreciation and amortization)

$ 33,717    $ 39,841    $ 28,522   

Gross Profit (excluding depreciation and amortization) margin

  43.4   46.0   38.0

Adjusted EBITDA

$ 17,114    $ 18,541    $ 16,208   

Adjusted EBITDA margin

  22.0   21.4   21.6

Unlevered Free Cash Flow

$ 9,041    $ 9,320    $ 6,556   

Cash Earnings

$ 14,289    $ 13,994    $ 12,512   

Cash EPS

$ 0.82    $ 0.78    $ 0.70   

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


LOGO

Page 4 of 6

 

     Three Months Ended  
     March 31,
2015
     December 31,
2014
     March 31,
2014
 
     (in thousands)  

Reconciliation of Gross Profit to Gross Profit (excluding depreciation and amortization):

        

Gross profit

   $ 25,978       $ 32,341       $ 22,054   

Depreciation and amortization related to cost of revenue

     7,739         7,500         6,468   
  

 

 

    

 

 

    

 

 

 

Gross Profit (excluding depreciation and amortization)

$ 33,717    $ 39,841    $ 28,522   
  

 

 

    

 

 

    

 

 

 
     Three Months Ended  
     March 31,
2015
     December 31,
2014
     March 31,
2014
 
     (in thousands)  

Reconciliation of Net Income (loss) to Adjusted EBITDA, Cash Earnings, Cash EPS and Unlevered Free Cash Flow:

        

Net income (loss)

   $ (942    $ 1,997       $ 2,308   

Interest expense

     511         551         481   

Depreciation and amortization

     8,096         7,855         6,797   

Impairment of goodwill

     —           2,719         —     

Foreign exchange impact of intercompany financing activities

     —           856         —     

Gain on sales of property, plant and equipment, net of retirements

     (12      (35      (73

Stock-based compensation

     949         602         1,148   

Restructuring costs

     6,198         —           —     

Acquisition costs

     —           —           2,332   

Income tax expense

     2,314         3,996         3,215   
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 17,114    $ 18,541    $ 16,208   
  

 

 

    

 

 

    

 

 

 

Interest expense

  (511   (551   (481

Income tax expense

  (2,314   (3,996   (3,215
  

 

 

    

 

 

    

 

 

 

Cash Earnings (non-GAAP measure)

$ 14,289    $ 13,994    $ 12,512   
  

 

 

    

 

 

    

 

 

 

Diluted Shares

  17,463      17,874      17,993   
  

 

 

    

 

 

    

 

 

 

Cash EPS (non-GAAP measure)

$ 0.82    $ 0.78    $ 0.70   
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 17,114    $ 18,541    $ 16,208   

Capital expenditures

  8,073      9,221      9,652   
  

 

 

    

 

 

    

 

 

 

Unlevered Free Cash Flow (non-GAAP measure)

$ 9,041    $ 9,320    $ 6,556   
  

 

 

    

 

 

    

 

 

 

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


LOGO

Page 5 of 6

 

     March 31,
2015
     December 31,
2014
 
     (in thousands)  

Unaudited Consolidated Balance Sheet Data:

     

Cash and cash equivalents

   $ 60,789       $ 66,576   

Restricted cash - current portion

     1,096         1,200   

Total assets

     287,458         299,837   

Current maturities of long-term debt

     8,409         8,405   

Long-term debt

     75,583         77,706   
     Three Months Ended
March 31,
 
     2015      2014  
     (in thousands)  

Unaudited Consolidated Statements of Cash Flows Data:

     

Cash and cash equivalents, January 1,

   $ 66,576       $ 59,822   

Net cash provided by operating activities

     5,822         15,053   

Net cash used in investing activities

     (8,056      (31,945

Net cash provided by (used in) financing activities

     (2,213      23,661   

Changes in foreign currency translation

     (1,340      156   
  

 

 

    

 

 

 

Cash and cash equivalents, March 31,

$ 60,789    $ 66,747   
  

 

 

    

 

 

 

 

     1st Quarter
2014
     2nd Quarter
2014
     3rd Quarter
2014
     4th Quarter
2014
     1st Quarter
2015
 

Selected Operational Data (4):

              

Offshore drilling rigs (1)

     266         277         285         278         281   

Strategic initiatives (2)

     517         553         548         562         526   

Other sites (3)

     713         705         691         676         493   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

  1,496      1,535      1,524      1,516      1,300   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes production facilities, energy support vessels and international land rigs
(3) Includes U.S. onshore drilling rigs, completion sites, man-camps, remote offices and supply bases
(4) Includes sites acquired from Inmarsat’s Enterprise Energy business unit

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net


LOGO

Page 6 of 6

 

     Three Months Ended  
     March 31,
2015
    December 31,
2014
    March 31,
2014
 
     (in thousands)  

Eastern Hemisphere:

      

Revenue

   $ 38,971      $ 42,312      $ 38,022   

Cost of revenue

     17,900        19,854        18,693   
  

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

  21,071      22,458      19,329   
  

 

 

   

 

 

   

 

 

 

Gross Profit margin

  54.1   53.1   50.8

Depreciation and amortization

  3,972      3,721      2,723   

Selling, general and administrative

  3,528      4,051      2,984   
  

 

 

   

 

 

   

 

 

 

Operating income

$ 13,571    $ 14,686    $ 13,622   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 17,475    $ 18,568    $ 16,691   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

  44.8   43.9   43.9

Western Hemisphere:

Revenue

$ 28,128    $ 31,129    $ 21,408   

Cost of revenue

  13,954      13,170      12,672   
  

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

  14,174      17,959      8,736   
  

 

 

   

 

 

   

 

 

 

Gross Profit margin

  50.4   57.7   40.8

Depreciation and amortization

  3,016      2,959      2,763   

Selling, general and administrative

  4,554      5,732      2,289   
  

 

 

   

 

 

   

 

 

 

Operating income

$ 6,604    $ 9,268    $ 3,684   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 9,249    $ 11,858    $ 6,580   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

  32.9   38.1   30.7

Telecoms Systems Integration:

Revenue

$ 10,551    $ 13,215    $ 15,613   

Cost of revenue

  8,073      11,185      12,942   
  

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

  2,478      2,030      2,671   
  

 

 

   

 

 

   

 

 

 

Gross Profit margin

  23.5   15.4   17.1

Depreciation and amortization

  764      867      1,055   

Impairment of Goodwill

  —        2,719      —     

Selling, general and administrative

  1,080      1,413      653   
  

 

 

   

 

 

   

 

 

 

Operating income (loss)

$ 634    $ (2,969 $ 963   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

$ 1,249    $ 701    $ 2,011   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

  11.8   5.3   12.9

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

###

 

1880 SOUTH DAIRY ASHFORD, SUITE 300 HOUSTON, TEXAS 77077 PHONE 281.674.0100 FAX 281.674.0101 http://www.rig.net