RigNet Announces Fourth Quarter and Full Year 2013 Earnings Results

RigNet, Inc. Logo

  • Record quarterly revenue of $59.7 million, a 21.2% increase over the same quarter last year and a 5.0% increase over the previous quarter
  • Record quarterly Adjusted EBITDA of $15.2 million, a 28.7% increase over the same quarter last year and a 5.2% increase over the previous quarter
  • Excluding acquisition costs, quarterly net income attributable to common stockholders was $6.7 million, or $0.38 per diluted share, an increase of $0.17 per diluted share, or 77.6%, over the same quarter last year

HOUSTON, March 5, 2014 (GLOBE NEWSWIRE) -- RigNet, Inc. (Nasdaq:RNET), a leading global provider of remote communications services to the oil and gas industry, today reported results for the quarterly and full year periods ended December 31, 2013.

Record revenue of $59.7 million for the fourth quarter represents an increase of $10.4 million, or 21.2%, for the three months ended December 31, 2013, as compared to the same period of 2012, primarily due to increased sites served and increased revenue-per-site. Revenue increased by $2.9 million, or 5.0%, for the three months ended December 31, 2013, as compared to the previous quarter for the same reasons.

Record Adjusted EBITDA of $15.2 million in the fourth quarter, or 25.5% of revenue, represents an increase of $3.4 million, or 28.7%, over the same quarter last year and an increase of $0.8 million, or 5.2%, over the previous quarter. These increases are primarily due to growth in our core offshore business partially offset by costs associated with headcount additions to support our continued growth.

Net income attributable to common stockholders was $5.4 million, or $0.30 per diluted share, for the fourth quarter. This amount includes $1.3 million of acquisition costs associated with the purchase of Inmarsat's Energy Broadband business, which closed on January 31, 2014. Excluding acquisition costs, net income attributable to common stockholders was $6.7 million, or $0.38 per diluted share, an increase of $0.17 per diluted share, or 77.6%, over the same quarter last year and an increase of $0.09 per diluted share, or 30.6%, over the previous quarter.

Capital expenditures were $7.7 million in the fourth quarter compared to $5.3 million in the same quarter last year and $9.1 million in the previous quarter.

Mark B. Slaughter, chief executive officer and president, commented, "I was very pleased with our strong fourth quarter results, which included record revenue and EBITDA, reflecting continued strong growth in our core offshore rig communications business. Subsequent to year-end, we closed the Inmarsat strategic transaction on January 31 and have integration efforts well underway. We are delighted with our new long-term relationship with Inmarsat that includes our acquisition of their Enterprise Energy business unit as well as our becoming a premier distribution partner in oil and gas for their Global Express and L-band service platforms. This transaction brings us broadened services and capabilities that will better serve our customers and position the Company to enhance returns to stockholders. Looking forward, we are maintaining a positive view of the market environment as we advance our strategy of becoming a technology solutions provider across the life of the field."

A conference call for investors will be held at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, March 6, 2014, to discuss RigNet's 2013 fourth quarter and full year 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: Gross Profit (excluding depreciation and amortization) and Adjusted EBITDA. Gross Profit (excluding depreciation and amortization) and Adjusted EBITDA 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 filing for the year ended December 31, 2013, 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, (gain) loss on retirement of property and equipment, change in fair value of derivatives, stock-based compensation and IPO or merger/acquisition costs and related bonuses. 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.

About RigNet

RigNet (Nasdaq:RNET) is a leading global provider of managed remote communications, systems integration and collaborative applications dedicated to the oil and gas industry, focusing on offshore and onshore drilling rigs, energy production facilities and energy maritime. 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 over 1,100 remote sites in over 45 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 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 Year Ended
December 31, September 30, December 31, December 31, December 31,
2013 2013 2012 2013 2012
(in thousands)
Unaudited Consolidated Statements of
Comprehensive Income Data:
Revenue $ 59,707 $ 56,856 $ 49,280 $ 220,710 $ 161,669
Expenses:
Cost of revenue (excluding depreciation and amortization) 32,692 31,140 26,878 118,881 81,071
Depreciation and amortization 5,381 5,450 4,963 21,049 17,534
Selling and marketing 1,032 937 803 3,785 3,081
General and administrative 12,444 13,036 10,351 48,770 37,184
Total expenses 51,549 50,563 42,995 192,485 138,870
Operating income 8,158 6,293 6,285 28,225 22,799
Other income (expense), net (1,198) (1,305) (942) (2,523) (2,045)
Income before income taxes 6,960 4,988 5,343 25,702 20,754
Income tax expense (1,513) (2,581) (1,850) (9,158) (8,733)
Net income $ 5,447 $ 2,407 $ 3,493 $ 16,544 $ 12,021
Income Per Share - Basic and Diluted
Net income attributable to RigNet, Inc. common stockholders $ 5,393 $ 2,347 $ 3,379 $ 16,336 $ 11,882
Net income per share attributable to RigNet, Inc. common stockholders, basic $ 0.31 $ 0.15 $ 0.22 $ 1.00 $ 0.76
Net income per share attributable to RigNet, Inc. common stockholders, diluted $ 0.30 $ 0.13 $ 0.20 $ 0.93 $ 0.70
Weighted average shares outstanding, basic 17,190 16,148 15,680 16,268 15,591
Weighted average shares outstanding, diluted 17,792 17,630 17,151 17,557 17,017
Unaudited Non-GAAP Data:
Gross Profit (excluding depreciation and amortization) $ 27,015 $ 25,716 $ 22,402 $ 101,829 $ 80,598
Gross Profit (excluding depreciation and amortization) margin 45.2% 45.2% 45.5% 46.1% 49.9%
Adjusted EBITDA $ 15,205 $ 14,450 $ 11,818 $ 56,178 $ 43,583
Adjusted EBITDA margin 25.5% 25.4% 24.0% 25.5% 27.0%
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2013 2013 2012 2013 2012
(in thousands)
Reconciliation of Gross Profit to Gross Profit
(excluding depreciation and amortization):
Gross profit $ 22,004 $ 20,564 $ 17,700 $ 81,950 $ 63,964
Depreciation and amortization related to cost of revenue 5,011 5,152 4,702 19,879 16,634
Gross Profit (excluding depreciation and amortization) $ 27,015 $ 25,716 $ 22,402 $ 101,829 $ 80,598
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2013 2013 2012 2013 2012
(in thousands)
Reconciliation of Net Income to Adjusted EBITDA:
Net income $ 5,447 $ 2,407 $ 3,493 $ 16,544 $ 12,021
Interest expense 904 432 625 2,283 1,552
Depreciation and amortization 5,381 5,450 4,963 21,049 17,534
(Gain) loss on sales of property, plant and equipment, net of retirements (101) 93 10 66 (131)
Stock-based compensation 737 696 628 2,963 2,502
Acquisition costs 1,324 2,791 249 4,115 1,372
Income tax expense 1,513 2,581 1,850 9,158 8,733
Adjusted EBITDA (non-GAAP measure) $ 15,205 $ 14,450 $ 11,818 $ 56,178 $ 43,583
December 31, December 31,
2013 2012
(in thousands)
Unaudited Consolidated Balance Sheet Data:
Cash and cash equivalents $ 59,822 $ 59,744
Restricted cash - current portion 509 987
Restricted cash - long-term 1,321 1,809
Total assets 238,803 215,932
Current maturities of long-term debt 8,388 9,422
Long-term debt 51,175 51,871
Year Ended December 31,
2013 2012
(in thousands)
Unaudited Consolidated Statements of Cash Flows Data:
Cash and cash equivalents, January 1, $ 59,744 $ 53,106
Net cash provided by operating activities 28,045 32,255
Net cash used in investing activities (28,844) (66,763)
Net cash provided by (used in) financing activities 3,202 37,707
Changes in foreign currency translation (2,325) 3,439
Cash and cash equivalents, December 31, $ 59,822 $ 59,744
4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
2012 2013 2013 2013 2013
Selected Operational Data:
Offshore drilling rigs (1) 237 245 255 251 262
U.S. onshore drilling rigs 282 271 261 250 266
Strategic initiatives (2) 239 264 291 265 253
Other sites (3) 336 344 331 330 346
Total 1,094 1,124 1,138 1,096 1,127
(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes production facilities, energy support vessels and international land rigs
(3) Includes completion sites, man-camps, remote offices and supply bases
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2013 2013 2012 2013 2012
(in thousands)
Americas:
Revenue $ 14,781 $ 13,884 $ 12,816 $ 54,221 $ 49,881
Cost of revenue 6,898 6,734 5,586 25,062 22,598
Gross Profit (non-GAAP measure) 7,883 7,150 7,230 29,159 27,283
Gross Profit margin 53.3 % 51.5 % 56.4 % 53.8 % 54.7 %
Depreciation and amortization 1,583 1,924 1,873 7,149 7,409
Selling, general and administrative 2,080 2,000 1,647 7,847 7,385
Operating income $ 4,220 $ 3,226 $ 3,710 $ 14,163 $ 12,489
Adjusted EBITDA (non-GAAP measure) $ 5,545 $ 5,142 $ 5,520 $ 20,959 $ 19,848
Adjusted EBITDA margin 37.5 % 37.0 % 43.1 % 38.7 % 39.8 %
Europe/Africa:
Revenue $ 26,772 $ 26,277 $ 23,913 $ 103,678 $ 65,205
Cost of revenue 17,789 17,576 15,516 65,694 37,385
Gross Profit (non-GAAP measure) 8,983 8,701 8,397 37,984 27,820
Gross Profit margin 33.6 % 33.1 % 35.1 % 36.6 % 42.7 %
Depreciation and amortization 2,145 1,900 1,806 7,603 5,073
Selling, general and administrative 2,566 1,895 2,711 8,980 7,559
Operating income $ 4,272 $ 4,906 $ 3,880 $ 21,401 $ 15,188
Adjusted EBITDA (non-GAAP measure) $ 6,423 $ 6,494 $ 5,473 $ 29,976 $ 19,811
Adjusted EBITDA margin 24.0 % 24.7 % 22.9 % 28.9 % 30.4 %
Middle East/Asia Pacific:
Revenue $ 18,154 $ 16,695 $ 12,551 $ 62,811 $ 46,583
Cost of revenue 6,505 5,685 4,671 22,701 17,113
Gross Profit (non-GAAP measure) 11,649 11,010 7,880 40,110 29,470
Gross Profit margin 64.2 % 65.9 % 62.8 % 63.9 % 63.3 %
Depreciation and amortization 1,393 1,407 1,243 5,467 5,010
Selling, general and administrative 1,622 1,371 1,246 7,025 4,331
Operating income $ 8,634 $ 8,232 $ 5,391 $ 27,618 $ 20,129
Adjusted EBITDA (non-GAAP measure) $ 9,988 $ 9,524 $ 6,582 $ 32,875 $ 24,990
Adjusted EBITDA margin 55.0 % 57.0 % 52.4 % 52.3 % 53.6 %
NOTE: Consolidated balances include the three segments above along with corporate activities and intercompany eliminations.

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

Source:RigNet, Inc.