RigNet Announces Third Quarter 2019 Earnings Results

HOUSTON, Nov. 07, 2019 (GLOBE NEWSWIRE) — RigNet, Inc. (NASDAQ: RNET, the “Company”), the leading provider of ultra-secure, intelligent networking solutions and specialized applications, announced today its results for the quarter ended September 30, 2019.
Increased quarterly revenue 1.1% to $61.0 million compared to the prior quarterNet loss of $0.5 million or $0.02 per share; compared to net loss of $6.2 million or $0.32 per share in the prior quarterIncreased quarterly Adjusted EBITDA by 12.6% to $11.0 million compared to the prior quarterIncreased Managed Communications Services (MCS) Sites served by 2.7% to 1,386 compared to the prior year quarterProject backlog of $35.9 million“RigNet delivered solid operating results in the third quarter of 2019, growing total revenue by 1.1% and improving Adjusted EBITDA by 12.6% compared to the prior quarter,” said Steven Pickett, Chief Executive Officer and President. “Revenue from our Apps & IoT segment, including Intelie, LIVE-IT, and our other SaaS solutions, increased to 15% of total revenues in the third quarter, highlighting the progress of RigNet’s strategy to move ‘up the stack’ by providing new, innovative solutions to enable our customers’ digital transformation.  Profitability within the segment improved as well with the gross margin expanding to 55.8% during the quarter.  Business in the Managed Services segment remained steady in spite of the volatility in commodity prices and revenue from site count gains in offshore rigs, maritime and production sites more than offset a lower onshore site count.  Revenues in our Systems Integration segment were lower quarter-on-quarter due to the project-based nature of the business. Our project backlog at quarter end was $35.9 million and our outlook for this segment is positive.  Finally, our team is focused on delivering value to our shareholders through a number of ongoing efforts which include increased attention to controlling costs and reducing leverage.”Quarterly revenue was $61.0 million, an increase of $0.7 million, or 1.1%, compared to $60.3 million in the prior quarter, and a decrease of $3.8 million, or 5.8%, compared to $64.8 million in the third quarter 2018. Compared to the prior quarter, Apps & IoT revenue grew by $1.3 million, or 15.7%, and Managed Communications Services (MCS) revenue grew $0.9 million or 2.1%. The increase in Apps & IoT and MCS was partially offset by a Systems Integration (SI) revenue decrease of $1.4 million, or 13.0%, due to the variable nature of the business. Compared to the third quarter 2018, Apps & IoT revenue grew $1.8 million, or 24.1%. The increase in Apps & IoT revenue compared to the third quarter of 2018 was offset by a $2.9 million decrease in MCS revenue and a $2.7 million decrease in SI revenue.  Net loss attributable to common stockholders in the third quarter 2019 was $0.5 million, or $0.02 per share, compared to net loss attributable to common stockholders of $6.2 million, or $0.32 per share, in the second quarter 2019 and net loss attributable to common stockholders of $2.8 million, or $0.15 per share, in the third quarter 2018.Adjusted EBITDA, a non-GAAP measure defined and reconciled to GAAP net loss (as described below), was $11.0 million, a 12.6% increase compared to $9.8 million in the prior quarter and a 26.1% increase compared to $8.7 million in the third quarter 2018.Net loss and Adjusted EBITDA in the third quarter of 2019 compared to the prior quarter and prior year quarter were positively impacted by reduced costs. Net loss was also impacted by reduced costs related to the GX dispute, which was settled during the second quarter of 2019, and reduced depreciation and amortization, which are added back and reconciled to Adjusted EBITDA below.Capital expenditures for the three months ending September 30, 2019 totaled $5.9 million compared to $4.6 million for the quarter ending June 30, 2019 and $6.5 million for the three months ending September 30, 2018. Capital expenditures were $17.5 million and $19.7 million for the nine months ended September 30, 2019 and 2018, respectively.Contracting and Operational UpdateDuring the third quarter of 2019, RigNet renewed a long-term contract with its largest MCS customer, global offshore drilling contractor Valaris (which is the new name for the former Ensco and Rowan who recently merged and are the largest drilling contractor globally). RigNet has also signed an exclusive three-year agreement to provide enhanced MCS to Borr Drilling, a leading offshore drilling contractor. Additionally, RigNet has signed a multi-year agreement to provide Intelie Live, the Company’s real-time machine learning-based analytics platform to Ocyan, one of Brazil’s largest providers of solutions to the upstream oil and gas industry. RigNet signed with Galoc Production its first “triple play” contract, which is a contract to provide a combination of MCS, Cyphre, Enhanced Cyber Security (ECS) services and Intelie AI based real-time machine learning. This is the ongoing expansion of RigNet’s portfolio of FPSO clients including 10 FPSOs won in offshore Brazil in the last 9 months. Further RigNet has signed two multi-year agreements with Transocean, a leading offshore drilling contractor, to provide rig analytic applications through Intelie Live coupled with our enhanced remote Adaptive Video Intelligence (AVI) capability to help improve operational integrity and efficiency. RigNet has also introduced its first implementation of LIVE-IT, RigNet’s edge computing solution services that assist customers with collecting and standardizing the complex data produced by edge devices.MCS Site count in the third quarter 2019 increased by 0.1% to 1,386 from 1,384 in the prior quarter and grew by 2.7% from 1,350 in the third quarter 2018.Project backlog (using percentage of completion accounting) was $35.9 million as of September 30, 2019, compared $37.1 million in the prior quarter and $41.4 million in the third quarter 2018.Additional DetailIn the quarter ended September 30, 2019, the Company recorded $0.2 million in restructuring costs associated with consolidating three legacy facilities into our new Lafayette, Louisiana office and a credit of $0.4 million in GX dispute phase II 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. The Company recorded $0.7 million in restructuring charges in the third quarter of 2018, as well as a $0.8 million decrease in the fair value of an earn-out related to the TECNOR acquisition and $0.9 million in acquisition costs. All items listed above are added back to net loss in our non-GAAP measure Adjusted EBITDA.Earnings Call InformationAn Earnings Call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Friday, November 8, 2019, to discuss RigNet’s third quarter 2019 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.About RigNetRigNet (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 StatementsThis 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 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 MeasureThis 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 Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on Friday, March 15th, 2019 (as amended), 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; 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.                                                                                                            [email protected]

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