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8-K - 8-K - RigNet, Inc.d439111d8k.htm

Exhibit 99.1

Selected Financial and Operational Data for the

2012 and 2011 Quarterly Periods

RigNet, Inc. (the “Company”), a leading global provider of remote communication services to the oil and gas industry, presents the following financial and operational data for the 2012 and 2011 quarterly periods, recast based on the Company’s current reportable segments.

As part of RigNet’s continuous review of its business and in connection with the acquisition of Nessco Group Holdings Ltd. (Nessco) in July 2012, the Company evaluated its current core assets and operations, and organized them into three segments based on geographic location. Accordingly, RigNet now considers its business to consist of three reportable segments:

 

   

Americas. The Americas segment provides remote communications services for offshore and onshore drilling rigs and production facilities, as well as, energy support vessels and other remote sites. The Americas segment services are performed out of the Company’s United States and Brazil based offices for onshore and offshore customers and rig sites located on the western side of the Atlantic Ocean primarily in the United States, Mexico and Brazil, and within the Gulf of Mexico.

 

   

Europe/Africa. The Europe/Africa segment provides remote communications services for offshore drilling rigs, production facilities, energy support vessels and other remote sites, as well as, systems integration projects. The Europe/Africa segment services are performed out of the Company’s Norway and United Kingdom based offices for customers and rig sites located on the eastern side of the Atlantic Ocean primarily off the coasts of the United Kingdom, Norway and West Africa.

 

   

Middle East/Asia Pacific (MEAP). The MEAP segment provides remote communications services for onshore and offshore drilling rigs, production facilities, energy support vessels and other remote sites. The MEAP segment services are primarily performed out of the Company’s Qatar and Singapore based offices for customers and rig sites located on the eastern side of the Atlantic Ocean primarily around the Indian Ocean in Qatar, Saudi Arabia and India, around the Pacific Ocean near Australia, and within the South China Sea.

Corporate and Eliminations primarily represents unallocated corporate office activities, interest expenses, income taxes and eliminations.

Segment information has been prepared consistent with the components of the enterprise for which separate financial information is available and regularly evaluated by the chief operating decision-maker for the purpose of allocating resources and assessing performance. Selected segment information for the quarterly periods of 2012 and 2011 is presented below. Prior period information has been recast to conform to the current segment presentation.

 

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Selected Financial Data

 

     Three Months Ended     Nine Months
Ended
September 30, 2012
 
     March 31,     June 30,     September 30,    
     2012     2012     2012    
           (in thousands)        

Americas:

        

Revenue

   $ 11,843      $ 12,169      $ 13,053      $ 37,065   

Cost of revenue

     5,654        5,593        5,765        17,012   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     6,189        6,576        7,288        20,053   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     52.3     54.0     55.8     54.1

Depreciation and amortization

     1,880        1,747        1,909        5,536   

Selling, general and administrative

     1,639        2,087        2,012        5,738   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 2,670      $ 2,742      $ 3,367      $ 8,779   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 4,695      $ 4,398      $ 5,235      $ 14,328   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     39.6     36.1     40.1     38.7

Europe/Africa (1) :

        

Revenue

   $ 9,513      $ 9,807      $ 21,972      $ 41,292   

Cost of revenue

     3,773        4,560        13,536        21,869   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     5,740        5,247        8,436        19,423   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     60.3     53.5     38.4     47.0

Depreciation and amortization

     741        752        1,774        3,267   

Selling, general and administrative

     872        1,321        2,655        4,848   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 4,127      $ 3,174      $ 4,007      $ 11,308   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 4,705      $ 4,620      $ 5,013      $ 14,338   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     49.5     47.1     22.8     34.7

Middle East/Asia Pacific:

        

Revenue

   $ 9,854      $ 11,264      $ 12,914      $ 34,032   

Cost of revenue

     3,821        4,109        4,512        12,442   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     6,033        7,155        8,402        21,590   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     61.2     63.5     65.1     63.4

Depreciation and amortization

     1,302        1,312        1,153        3,767   

Selling, general and administrative

     950        1,047        1,088        3,085   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 3,781      $ 4,796      $ 6,161      $ 14,738   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 5,004      $ 6,172      $ 7,232      $ 18,408   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     50.8     54.8     56.0     54.1

Corporate and Eliminations:

        

Revenue

   $ —        $ —        $ —        $ —     

Cost of revenue

     933        900        1,037        2,870   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     (933     (900     (1,037     (2,870
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization

     5        (5     1        1   

Selling, general and administrative

     4,742        5,134        5,564        15,440   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ (5,680   $ (6,029   $ (6,602   $ (18,311
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ (5,121   $ (5,100   $ (5,088   $ (15,309
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated RigNet:

        

Revenue

   $ 31,210      $ 33,240      $ 47,939      $ 112,389   

Cost of revenue

     14,181        15,162        24,850        54,193   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     17,029        18,078        23,089        58,196   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     54.6     54.4     48.2     51.8

Depreciation and amortization

     3,928        3,806        4,837        12,571   

Selling, general and administrative

     8,203        9,589        11,319        29,111   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 4,898      $ 4,683      $ 6,933      $ 16,514   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 9,283      $ 10,090      $ 12,392      $ 31,765   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     29.7     30.4     25.8     28.3

 

(1) Includes acquired Nessco operations beginning July 5, 2012

 

2


     Three Months Ended     Twelve  Months
Ended
December 31, 2011
 
     March 31,
2011
    June 30,
2011
    September 30,
2011
    December 31,
2011
   
     (in thousands)  

Americas:

          

Revenue

   $ 9,350      $ 9,691      $ 11,124      $ 11,352      $ 41,517   

Cost of revenue

     4,858        4,682        5,553        5,391        20,484   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     4,492        5,009        5,571        5,961        21,033   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     48.0     51.7     50.1     52.5     50.7

Depreciation and amortization

     1,565        1,601        1,767        1,810        6,743   

Selling, general and administrative

     1,466        1,519        1,825        3,084        7,894   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 1,461      $ 1,889      $ 1,979      $ 1,067      $ 6,396   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 3,041      $ 3,520      $ 3,720      $ 2,924      $ 13,205   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     32.5     36.3     33.4     25.8     31.8

Europe/Africa:

          

Revenue

   $ 7,805      $ 8,337      $ 8,871      $ 9,358      $ 34,371   

Cost of revenue

     2,813        3,069        3,439        3,847        13,168   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     4,992        5,268        5,432        5,511        21,203   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     64.0     63.2     61.2     58.9     61.7

Depreciation and amortization

     750        788        770        744        3,052   

Selling, general and administrative

     1,324        1,193        1,256        1,639        5,412   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 2,918      $ 3,287      $ 3,406      $ 3,128      $ 12,739   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 3,593      $ 4,083      $ 4,502      $ 4,069      $ 16,247   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     46.0     49.0     50.7     43.5     47.3

Middle East/Asia Pacific:

          

Revenue

   $ 7,312      $ 8,166      $ 8,985      $ 9,321      $ 33,784   

Cost of revenue

     2,864        3,133        3,059        3,279        12,335   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     4,448        5,033        5,926        6,042        21,449   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     60.8     61.6     66.0     64.8     63.5

Depreciation and amortization

     1,252        1,262        1,226        1,228        4,968   

Selling, general and administrative

     704        947        867        1,040        3,558   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 2,492      $ 2,824      $ 3,833      $ 3,774      $ 12,923   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 3,721      $ 4,070      $ 5,100      $ 4,976      $ 17,867   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     50.9     49.8     56.8     53.4     52.9

Corporate and Eliminations:

          

Revenue

   $ —        $ 3      $ (75   $ (245   $ (317

Cost of revenue

     638        515        913        592        2,658   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     (638     (512     (988     (837     (2,975
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization

     (55     (51     (46     (27     (179

Selling, general and administrative

     3,234        3,166        3,193        2,779        12,372   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

   $ (3,817   $ (3,627   $ (4,135   $ (3,589   $ (15,168
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ (3,760   $ (3,384   $ (3,874   $ (2,845   $ (13,863
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated RigNet:

          

Revenue

   $ 24,467      $ 26,197      $ 28,905      $ 29,786      $ 109,355   

Cost of revenue

     11,173        11,399        12,964        13,109        48,645   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (non-GAAP measure)

     13,294        14,798        15,941        16,677        60,710   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit margin

     54.3     56.5     55.1     56.0     55.5

Depreciation and amortization

     3,512        3,600        3,717        3,755        14,584   

Selling, general and administrative

     6,728        6,825        7,141        8,542        29,236   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 3,054      $ 4,373      $ 5,083      $ 4,380      $ 16,890   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (non-GAAP measure)

   $ 6,595      $ 8,289      $ 9,448      $ 9,124      $ 33,456   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     27.0     31.6     32.7     30.6     30.6

 

3


Selected Operational Data

 

     1st Quarter
2011
     2nd Quarter
2011
     3rd Quarter
2011
     4th Quarter
2011
     1st Quarter
2012
     2nd Quarter
2012
     3rd Quarter
2012 (3)
 

Total RigNet:

                    

Offshore drilling rigs (1)

     223         219         217         228         233         234         233   

U.S. onshore drilling rigs

     323         331         330         338         323         308         302   

Other sites (2)

     372         404         444         488         493         515         550   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     918         954         991         1,054         1,049         1,057         1,085   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Includes jack up, semi-submersible and drillship rigs
(2) Includes production facilities, energy support vessels, international land rigs, completion sites, man-camps, remote offices and supply bases
(3) Excludes Nessco, which is immaterial

Non-GAAP Financial Measures

This exhibit contains the following non-GAAP measures: Gross Profit and Adjusted EBITDA. Gross Profit 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, 2011 for a more detailed discussion of the uses and limitations of our non-GAAP financial measures.

We define Gross Profit as revenue less cost of revenue. This measure is used 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 communications, networks and collaborative applications dedicated to the oil and gas industry. 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 remote sites in over thirty 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,” “will” 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.

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