RigNet Announces First Quarter 2016 Earnings Results

Houston, Tex., May 9, 2016--RigNet, Inc. (NASDAQ:RNET), a provider of digital technology solutions focusing on serving energy facilities, maritime vessels and other global remote locations, today reported quarterly results for the quarter ended March 31, 2016. Quarterly revenues was US$ 62.3 million representing an increase of US$ 10.2 million compared to the prior quarter and a decrease of US$ 15.3 million compared to the prior year quarter.

The revenues increase compared to the prior quarter was primarily due to a US$12.8 million increase in TSI due to the settlement of the TSI contractual dispute partially offset by a US$ 2.6 million decrease from Managed Services. The decrease compared to the prior year resulted primarily from Managed Services revenues which decreased US$12.7 million. These Managed Services decreases are primarily due to reduced spending by oil and gas operators on upstream drilling projects as a result of lower commodity prices.

During the first quarter of 2016, the Company settled the TSI contractual dispute. As a result, the Company has reduced the accrued estimated loss from US$14.3 million to US$12.0 million for the life of this project, thus recognizing incremental Adjusted EBITDA in the quarter of US$2.1 million consisting of revenues of US$2.3 million and US$ 0.2 million in legal fees. The Company believes it will complete the project in the second quarter of 2016.

Quarterly Adjusted EBITDA was US$ 10.7 million compared to negative $3.2 million in the prior quarter and $17.1 million in the prior year quarter. The increase since the prior quarter was due to the settlement of the TSI dispute coupled with cost containment actions partially offset by lower Managed Services results. The decrease compared to the prior year quarter resulted primarily from lower revenues partially offset by benefits from cost containment actions.

GAAP net loss attributable to common stockholders was US$ 1.3 million, or US$ 0.08 per share, compared to US$ 11.0 million, or US$ 0.63 per share, in the prior quarter and US$ 1.0 million, or US$ 0.06 per share, in the prior year quarter.

Quarterly Cash Earnings were US$ 9.1 million, or US$ 0.52 per diluted share compared to US$ 0.6 million, or US$ 0.03 per share, in the prior quarter and US$ 14.3 million, or US$ 0.82 in the prior year quarter.

Capital expenditures were US$ 4.9 million compared to US$ 10.5 million in the prior quarter and US$ 8.1 million in the prior year quarter.  Unlevered Free Cash Flow, defined as Adjusted EBITDA less capital expenditures was US$ 5.8 million compared to a negative US$ 13.7 million in the prior quarter and US$ 9.0 million in the prior year quarter.

The Company recorded US$ 1.9 million of executive departure costs, acquisition costs of US$ 0.2 million, US$ 0.3 million of CEO search costs, and ERP implementation costs of US$ 0.4 million in the quarter ended March 31, 2016. The Company recorded total negative adjustments of US$ 15.6 million related to the TSI contractual dispute, a US$ 1.7 million impairment of property, plant and equipment in our North America land operations, and incurred US$ 1.0 million of executive departure costs in the quarter ended December 31, 2015.  The Company recorded restructuring charges of (US$ 0.6) million, (US$ 0.1) million and US$ 6.2 million in the quarters ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively. The executive departure costs, acquisition costs, impairment of property, plant and equipment and restructuring charges are added back to net income in our non-GAAP measures below.

Marty L. Jimmerson, interim chief executive officer and president, commented, “During the first quarter, our managed services business performed well despite continuing difficult market conditions. We will continue to focus on reducing costs and providing the same best-in-class and high quality services to the energy industry during this down cycle, which we expect to continue in the near term.  We are pleased with the accomplishments achieved to date regarding expanding our service offerings to the maritime and channel sales verticals.  While not significant today we are encouraged with the opportunities that we see ahead of us in these two markets. Finally, we are pleased to have resolved the contractual dispute with our TSI customer, resulting in improvements to our revenues and earnings during the quarter and look forward to concluding this project in the second quarter of 2016.”

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