05 Aug President Jonathan Cartu Reports – RigNet Announces Second Quarter 2019 Earnings Results
HOUSTON, Aug. 05, 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 June 30, 2019.
- Increased quarterly revenue 4.9% to $60.3 million compared to the prior quarter
- Net loss of $6.2 million or $0.32 per share; compared to net loss of $12.0 million or $0.63 per share in the prior quarter
- Increased quarterly Adjusted EBITDA by 16.6% to $9.8 million compared to the prior quarter
- Increased Managed Communications Services (MCS) Sites served by 1.8% to 1,384 compared to the prior quarter
- Project backlog of $37.1 million
“RigNet delivered solid operating results in the second quarter of 2019, growing total revenue by 4.9% and improving Adjusted EBITDA by 16.6% compared to the prior quarter,” said Steven Pickett, Chief Executive Officer and President. “We continue to see positive developments across all three segments of RigNet’s business. We are winning and renewing long-term contracts to provide communications services to major oil and gas customers who are choosing us for our global reach, ultra-secure network, and service delivery. Intelie, our real-time machine learning solution, is rapidly gaining acceptance as ‘the’ standard for speed, efficiency, and ease of implementation. As we continue to execute break-through contracts, which expand in scope and complexity, Intelie is quickly becoming the flagship solution in RigNet’s applications portfolio. Finally, our Systems Integration team delivered another strong quarter and is responding to an increasing number of global opportunities as customers continue to call upon RigNet’s trusted team to execute these complex projects around the world.”
Quarterly revenue was $60.3 million, an increase of $2.8 million, or 4.9%, compared to $57.5 million in the prior quarter, and an increase of $0.3 million, or 0.5%, compared to $60.0 million the second quarter 2018. Compared to the prior quarter, Systems Integration (SI) revenue grew $4.0 million, or 55.3%, due to the variable nature of the business, with several new projects ramping up and savings being recognized on several projects nearing completion. The increase in SI revenue was partially offset by a $1.1 million decrease in Managed Communications Services (MCS) revenue due to the prior quarter having higher equipment resale revenue. Apps & IoT revenues were flat compared to the prior quarter. Compared to the second quarter 2018, Apps & IoT revenue grew $1.4 million, or 21.7%. The increase in Apps & IoT was partially offset by a $0.6 million decrease in SI revenue and $0.5 million decrease in MCS revenue.
Net loss attributable to common stockholders in the second quarter 2019 was $6.2 million, or $0.32 per share, compared to net loss attributable to common stockholders of $12.0 million, or $0.63 per share, in the first quarter 2019 and net loss attributable to common stockholders of $4.3 million, or $0.23 per share, in the second quarter 2018.
Adjusted EBITDA, a non-GAAP measure defined and reconciled to GAAP net loss (as described below), was $9.8 million, a 16.6% increase compared to $8.4 million in the prior quarter and a 20.7% increase compared to $8.1 million in the second quarter 2018.
Net loss and Adjusted EBITDA in the second quarter of 2019 compared to the prior quarter and prior year quarter were positively impacted by increased revenue and reduced selling and marketing costs. Net loss was also impacted by changes in the fair value of earn-out/contingent consideration, GX dispute Phase II costs, depreciation and amortization, and restructuring costs, which are added back and reconciled to Adjusted EBITDA below.
Capital expenditures for the three months ending June 30, 2019 totaled $4.6 million compared to $7.1 million for the quarter ending March 31, 2019 and $6.6 million for the three months ending June 30, 2018. Capital expenditures were $11.7 million and $13.2 million for the six months ended June 30, 2019 and 2018, respectively.
Contracting and Operational Update
During the second quarter of 2019, RigNet won multi-year contracts (previously announced) with two large international offshore drilling contractors to provide rig analytics through Intelie Live. Additionally RigNet introduced Live-IT, a new IT as a service (ITaaS) solution to its inaugural customer, Transocean. In the U.S. Gulf of Mexico, the company has substantially completed the buildout of our 4G LTE and 5G-enabled network, where we are partnered with T-Mobile, and we are already carrying live traffic.
MCS Site count in the second quarter 2019 increased by 6.7% to 1,384 from 1,297 in the second quarter 2018 and grew 1.8% from 1,360 in the prior quarter, largely due to increases in production, maritime and other sites, which are primarily related to onshore drilling.
Project backlog (using percentage of completion accounting) was $37.1 million compared to $19.6 million in the second quarter 2018 and $43.1 million in the prior quarter.
In June 2019, the Company announced that it had reached a settlement that concludes the GX dispute. Pursuant to the settlement the Company paid $45.0 million in June 2019 and paid $5.0 million in July 2019 and will pay $0.8 million in the third quarter of 2020. The Company has an accrued liability of $5.8 million as of June 30, 2019.
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. In the first quarter 2019, the Company recorded $2.1 million in GX dispute Phase II costs, $0.4 million in acquisition costs and $0.6 million in restructuring costs. In the quarter ended June 30, 2018, the Company recorded $2.8 million for the increase in fair value of an earn-out related to TECNOR which was acquired in February 2016 and paid in July 2018 and $0.3 million in acquisition costs. All items listed above are added back to net loss in our non-GAAP measure Adjusted EBITDA.
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 Tuesday, August 6, 2019, to discuss RigNet’s second quarter 2019 results. The call may be accessed live over the telephone by…