Company Quick10K Filing
RigNet
Price7.74 EPS-3
Shares20 P/E-2
MCap155 P/FCF-6
Net Debt99 EBIT-57
TEV253 TEV/EBIT-4
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-11
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-06
10-Q 2019-03-31 Filed 2019-05-10
10-K 2018-12-31 Filed 2019-03-15
10-Q 2018-09-30 Filed 2018-11-09
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-07
10-K 2017-12-31 Filed 2018-03-06
10-Q 2017-09-30 Filed 2017-11-06
10-Q 2017-06-30 Filed 2017-08-07
10-Q 2017-03-31 Filed 2017-05-08
10-K 2016-12-31 Filed 2017-03-06
10-Q 2016-09-30 Filed 2016-11-07
10-Q 2016-06-30 Filed 2016-08-08
10-Q 2016-03-31 Filed 2016-05-09
10-K 2015-12-31 Filed 2016-02-29
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-04
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-03-02
10-Q 2014-09-30 Filed 2014-11-04
10-Q 2014-06-30 Filed 2014-08-04
10-Q 2014-03-31 Filed 2014-05-12
10-K 2013-12-31 Filed 2014-03-07
10-Q 2013-09-30 Filed 2013-11-04
10-Q 2013-06-30 Filed 2013-08-05
10-Q 2013-03-31 Filed 2013-05-06
10-Q 2012-09-30 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-06
10-Q 2012-03-31 Filed 2012-05-09
10-Q 2011-09-30 Filed 2011-11-10
10-Q 2011-06-30 Filed 2011-08-11
10-Q 2011-03-31 Filed 2011-05-12
10-K 2010-12-31 Filed 2011-03-30
8-K 2020-06-11
8-K 2020-05-08
8-K 2020-05-06
8-K 2020-04-17
8-K 2020-03-04
8-K 2020-02-21
8-K 2020-01-06
8-K 2019-12-06
8-K 2019-11-07
8-K 2019-09-04
8-K 2019-08-05
8-K 2019-06-23
8-K 2019-06-07
8-K 2019-05-06
8-K 2019-04-29
8-K 2019-04-29
8-K 2019-04-02
8-K 2019-03-14
8-K 2019-02-13
8-K 2019-01-07
8-K 2018-12-06
8-K 2018-11-29
8-K 2018-11-29
8-K 2018-11-08
8-K 2018-09-04
8-K 2018-08-20
8-K 2018-05-07
8-K 2018-05-03
8-K 2018-03-26
8-K 2018-03-15
8-K 2018-03-06
8-K 2018-02-26
8-K 2018-01-17
8-K 2018-01-10

RNET 10Q Quarterly Report

Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1 - Basis of Presentation
Note 2 - Business and Credit Concentrations
Note 3 - Goodwill and Intangibles
Note 4 - Restricted Cash
Note 5 - Long - Term Debt
Note 6 - Fair Value Disclosures
Note 7 - Income Taxes
Note 8 - Stock - Based Compensation
Note 9 - Earnings (Loss) per Share
Note 10 - Commitments and Contingencies
Note 11 - Segment Information
Note 12 - Related Party Transactions
Note 13 - Restructuring Costs - Cost Reduction Plans
Note 14 - Subsequent Event
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.2 rnet-ex102_368.htm
EX-31.1 rnet-ex311_6.htm
EX-31.2 rnet-ex312_8.htm
EX-32.1 rnet-ex321_9.htm
EX-32.2 rnet-ex322_7.htm

RigNet Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
3052441831226102012201420172020
Assets, Equity
9062346-22-502012201420172020
Rev, G Profit, Net Income
35205-10-25-402012201420172020
Ops, Inv, Fin

10-Q 1 rnet-10q_20200331.htm 10-Q rnet-10q_20200331.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number 001-35003

 

RigNet, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

76-0677208

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

15115 Park Row Blvd, Suite 300

Houston, Texas

 

77084-4947

(Address of principal executive offices)

 

(Zip Code)

(281) 674-0100

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

RNET

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer  

 

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

At April 30, 2020, there were outstanding 20,455,615 shares of the registrant’s Common Stock.

 

 

 

 

 

 

 


Table of Contents

 

 

  

 

  

Page

 

 

 

 

 

 

  

PART I – FINANCIAL INFORMATION

  

 

 

 

 

 

 

Glossary

 

 

 

3

Item 1

  

Condensed Consolidated Financial Statements (Unaudited)

  

5

 

 

 

 

 

Item 2

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

22

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures about Market Risk

 

32

 

 

 

 

 

Item 4

  

Controls and Procedures

  

32

 

 

 

 

 

 

  

PART II – OTHER INFORMATION

  

 

 

 

 

 

 

Item 1

  

Legal Proceedings

  

33

 

 

 

 

 

Item 1A

  

Risk Factors

  

33

 

 

 

 

 

Item 2

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

34

 

 

 

 

 

Item 3

  

Defaults Upon Senior Securities

  

34

 

 

 

 

 

Item 4

  

Mine Safety Disclosures

  

34

 

 

 

 

 

Item 5

  

Other Information

  

34

 

 

 

 

 

Item 6

  

Exhibits

  

34

 

 

2


Glossary

The table below sets forth a number of terms commonly used in our current and periodic reports filed with the Securities and Exchange Commission and is provided as a reference for the readers of our filings.

 

Adjusted EBITDA

 

A non-GAAP measure. Net loss plus (minus) interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, intangibles, property, plant and equipment, foreign exchange impact of intercompany financing activities, (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 expense, acquisition costs, executive departure costs, restructuring charges, the GX Dispute, the GX Dispute Phase II costs and non-recurring items. A reconciliation of Adjusted EBITDA to Net loss can be found in Part 1, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

AI

 

Artificial Intelligence

Apps

 

Applications

ASC

 

Accounting Standards Codification

ASU

 

Accounting Standards Update

AVI

 

Adaptive Video Intelligence

B2B

 

Business to Business

BOP

 

Blow-Out Preventer

CIEB

 

Costs and Estimated Earnings in Excess of Billings on uncompleted contracts

Credit Agreement

 

Third Amendment and Joinder to the Third Amended and Restated Credit Agreement dated as of February 21, 2020 among RigNet, Inc. as Borrower, the Subsidiaries of RigNet, Inc. party thereto as Guarantors, Bank of America, N.A. as Administrative Agent, Swingline Lender and L/C Issuer, BBVA Compass, as Syndication Agent, the Lenders party hereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole Lead Arranger and Sole Bookrunner, as amended.

Consolidated Leverage Ratio

 

The ratio, as of any given date, of Consolidated Funded Indebtedness to Consolidated EBITDA for the most recently completed Measurement Period (as each such capitalized term is defined in the Credit Agreement)

COVID-19

 

Coronavirus

Cyphre®

 

Cyphre Security Solutions, LLC, acquired in 2017, provides cybersecurity solutions with advanced enterprise data protection

ECS

 

Enhanced Cyber Security

EPC

 

Engineering, Procurement and Construction

Exchange Act

 

The United States Securities Exchange Act of 1934, as amended

FASB

 

Financial Accounting Standards Board

FCC

 

Federal Communications Commission

GAAP

 

Generally Accepted Accounting Principles in the United States

GX

 

Inmarsat plc’s Global Express satellite bandwidth service

GX Dispute

 

Inmarsat, a satellite telecommunications company, filed arbitration with the International Centre for Dispute Resolution tribunal in October 2016 concerning a January 2014 take-or-pay agreement to purchase up to $65.0 million, under certain conditions, of GX capacity from Inmarsat over several years. This arbitration and related developments are collectively referred to as the GX Dispute.

GX Dispute Phase II

 

The portion of the GX Dispute arbitration which was to address RigNet’s counterclaims against Inmarsat on a variety of subjects, as well as Inmarsat’s additional claims and for interest and attorneys’ fees.

Intelie

 

Intelie soluções em Informática SA, acquired in 2018, provides machine learning and real-time predictive analytics

IoT

 

Internet-of-Things

LIBOR

 

London Interbank Offered Rate

3


LTE

 

A 4G and 5G technology, Long Term Evolution

MCS

 

Managed Communications Services

NASDAQ

 

NASDAQ Global Select Market, where RigNet’s common shares are listed for trading

Nessco

 

Nessco Group Holdings LTD, acquired in 2012, provides Systems Integration solutions

NOC

 

Network Operations Center

OPEC

 

Organization of Petroleum Exporting Countries

PLC

 

Programmable Logic Controller

SaaS

 

Software as a Service

SAB

 

Staff Accounting Bulletin

SCADA

 

Supervisory Control and Data Acquisition

SEC

 

The United States Securities and Exchange Commission

SI

 

Systems Integration

TECNOR

 

Orgtec S.A.P.I. de C.V., d.b.a. TECNOR, acquired in March 2016, increases solutions offerings in Mexico

The Tax Act

 

The Tax Cuts and Jobs Act of 2017

 


4


PART I – FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements

 

RIGNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

(in thousands, except share amounts)

 

ASSETS

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,614

 

 

$

12,941

 

Restricted cash

 

 

40

 

 

 

42

 

Accounts receivable, net

 

 

63,529

 

 

 

67,059

 

Costs and estimated earnings in excess of billings on uncompleted

   contracts (CIEB)

 

 

15,848

 

 

 

13,275

 

Prepaid expenses and other current assets

 

 

6,046

 

 

 

6,500

 

Total current assets

 

 

99,077

 

 

 

99,817

 

Property, plant and equipment, net

 

 

57,297

 

 

 

60,118

 

Restricted cash

 

 

1,523

 

 

 

1,522

 

Goodwill

 

 

20,464

 

 

 

46,792

 

Intangibles, net

 

 

26,871

 

 

 

30,145

 

Right-of-use lease asset

 

 

6,660

 

 

 

6,829

 

Deferred tax and other assets

 

 

5,702

 

 

 

5,757

 

TOTAL ASSETS

 

$

217,594

 

 

$

250,980

 

LIABILITIES AND EQUITY

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

23,252

 

 

$

28,517

 

Accrued expenses

 

 

17,635

 

 

 

16,660

 

Current maturities of long-term debt

 

 

8,747

 

 

 

10,793

 

Income taxes payable

 

 

2,420

 

 

 

2,649

 

GX dispute accrual

 

 

750

 

 

 

750

 

Deferred revenue and other current liabilities

 

 

11,966

 

 

 

11,173

 

Total current liabilities

 

 

64,770

 

 

 

70,542

 

Long-term debt

 

 

105,087

 

 

 

96,934

 

Deferred revenue

 

 

853

 

 

 

855

 

Deferred tax liability

 

 

2,034

 

 

 

2,672

 

Right-of-use lease liability - long-term portion

 

 

6,166

 

 

 

6,329

 

Other liabilities

 

 

22,614

 

 

 

26,771

 

Total liabilities

 

 

201,524

 

 

 

204,103

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Preferred stock - $0.001 par value; 10,000,000 shares authorized; no

   shares issued or outstanding at March 31, 2020 and December 31, 2019

 

 

-

 

 

 

-

 

Common stock - $0.001 par value; 190,000,000 shares authorized;

   20,454,705 and 19,979,284 shares issued and outstanding at

   March 31, 2020 and December 31, 2019, respectively

 

 

20

 

 

 

20

 

Treasury stock - 432,432 and 203,756 shares at March 31, 2020 and

   December 31, 2019, respectively, at cost

 

 

(3,271

)

 

 

(2,693

)

Additional paid-in capital

 

 

188,425

 

 

 

184,571

 

Accumulated deficit

 

 

(142,514

)

 

 

(115,673

)

Accumulated other comprehensive loss

 

 

(26,659

)

 

 

(19,502

)

Total stockholders' equity

 

 

16,001

 

 

 

46,723

 

Non-redeemable, non-controlling interest

 

 

69

 

 

 

154

 

Total equity

 

 

16,070

 

 

 

46,877

 

TOTAL LIABILITIES AND EQUITY

 

$

217,594

 

 

$

250,980

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

5


 

RIGNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2020

 

 

2019

 

 

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

58,761

 

 

$

57,510

 

Expenses:

 

 

 

 

 

 

 

 

Cost of revenue (excluding depreciation and amortization)

 

 

37,950

 

 

 

36,456

 

Depreciation and amortization

 

 

6,931

 

 

 

8,912

 

Impairment of goodwill

 

 

23,141

 

 

 

-

 

Selling and marketing

 

 

2,812

 

 

 

3,793

 

General and administrative

 

 

13,829

 

 

 

16,470

 

Total expenses

 

 

84,663

 

 

 

65,631

 

Operating loss

 

 

(25,902

)

 

 

(8,121

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,528

)

 

 

(1,238

)

Other income (expense), net

 

 

(321

)

 

 

72

 

Loss before income taxes

 

 

(27,751

)

 

 

(9,287

)

Income tax benefit (expense)

 

 

980

 

 

 

(2,666

)

Net loss

 

 

(26,771

)

 

 

(11,953

)

Less: Net loss attributable to

   non-redeemable, non-controlling interest

 

 

70

 

 

 

30

 

Net loss attributable to RigNet, Inc.

   stockholders

 

$

(26,841

)

 

$

(11,983

)

COMPREHENSIVE LOSS

 

 

 

 

 

 

 

 

Net loss

 

$

(26,771

)

 

$

(11,953

)

Foreign currency translation

 

 

(7,157

)

 

 

158

 

Comprehensive loss

 

 

(33,928

)

 

 

(11,795

)

Less: Comprehensive income attributable to

   non-controlling interest

 

 

70

 

 

 

30

 

Comprehensive loss attributable to

   RigNet, Inc. stockholders

 

$

(33,998

)

 

$

(11,825

)

LOSS PER SHARE - BASIC AND DILUTED

 

 

 

 

 

 

 

 

Net loss attributable to RigNet, Inc. common

   stockholders

 

$

(26,841

)

 

$

(11,983

)

Net loss per share attributable to RigNet, Inc.

   common stockholders, basic

 

$

(1.34

)

 

$

(0.63

)

Net loss per share attributable to RigNet, Inc.

   common stockholders, diluted

 

$

(1.34

)

 

$

(0.63

)

Weighted average shares outstanding, basic

 

 

20,081

 

 

 

18,949

 

Weighted average shares outstanding, diluted

 

 

20,081

 

 

 

18,949

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

6


 

RIGNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(26,771

)

 

$

(11,953

)

Adjustments to reconcile net loss to net cash provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,931

 

 

 

8,912

 

Impairment of goodwill

 

 

23,141

 

 

 

-

 

Stock-based compensation

 

 

3,854

 

 

 

4,458

 

Amortization of deferred financing costs

 

 

93

 

 

 

61

 

Deferred taxes

 

 

(626

)

 

 

2,469

 

Accretion of discount of contingent consideration payable for acquisitions

 

 

134

 

 

 

94

 

(Gain) loss on sales of property, plant and equipment, net of retirements

 

 

30

 

 

 

(7

)

Changes in operating assets and liabilities, net of effect of acquisition:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

2,490

 

 

 

(6,777

)

Costs and estimated earnings in excess of billings on uncompleted contracts (CIEB)

 

 

(3,000

)

 

 

1,439

 

Prepaid expenses and other assets

 

 

213

 

 

 

85

 

Right-of-use lease asset

 

 

169

 

 

 

-

 

Accounts payable

 

 

(2,689

)

 

 

4,058

 

Accrued expenses

 

 

1,147

 

 

 

(38

)

Deferred revenue

 

 

861

 

 

 

3,074

 

Right-of-use lease liability

 

 

(231

)

 

 

-

 

Other liabilities

 

 

(2,195

)

 

 

(1,227

)

Net cash provided by operating activities

 

 

3,551

 

 

 

4,648

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(5,337

)

 

 

(4,814

)

Proceeds from sales of property, plant and equipment

 

 

-

 

 

 

66

 

Net cash used in investing activities

 

 

(5,337

)

 

 

(4,748

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of common stock upon the exercise of stock options and the vesting of restricted stock

 

 

-

 

 

 

1

 

Stock withheld to cover employee taxes on stock-based compensation

 

 

(578

)

 

 

(1,407

)

Subsidiary distributions to non-controlling interest

 

 

(155

)

 

 

(135

)

Proceeds from borrowings

 

 

3,750

 

 

 

-

 

Repayments of long-term debt

 

 

(41

)

 

 

(1,295

)

Payment of financing fees

 

 

(485

)

 

 

(250

)

Net cash provided by (used in) financing activities

 

 

2,491

 

 

 

(3,086

)

Net change in cash and cash equivalents

 

 

705

 

 

 

(3,186

)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents including restricted cash:

 

 

 

 

 

 

 

 

Balance, January 1,

 

 

14,505

 

 

 

23,296

 

Changes in foreign currency translation

 

 

(33

)

 

 

91

 

Balance, March 31,

 

$

15,177

 

 

$

20,201

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Income taxes paid

 

$

1,081

 

 

$

737

 

Interest paid

 

 

1,245

 

 

 

1,019

 

Non-cash investing - capital expenditures accrued

 

 

868

 

 

 

4,398

 

Right-of-use operating lease entered into

 

 

121

 

 

 

-

 

 

 

 

March 31,

 

 

March 31,

 

 

 

 

2020

 

 

 

2019

 

Cash and cash equivalents

 

$

13,614

 

 

$

18,660

 

Restricted cash - current portion

 

 

40

 

 

 

42

 

Restricted cash - long-term portion

 

 

1,523

 

 

 

1,499

 

Cash and cash equivalents including restricted cash

 

$

15,177

 

 

$

20,201

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

 

7


 

RIGNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

 

 

 

Common

Stock

 

 

 

 

 

 

Treasury

Stock

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Accumulated

Other

 

 

Total

 

 

Non-Redeemable,

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-In

Capital

 

 

Accumulated

Deficit

 

 

Comprehensive

Loss

 

 

Stockholders'

Equity

 

 

Non-Controlling

Interest

 

 

Total

Equity

 

 

 

(dollars and shares in thousands)

 

Balance, January 1, 2019

 

 

19,465

 

 

$

19

 

 

 

92

 

 

$

(1,270

)

 

$

172,946

 

 

$

(96,517

)

 

$

(19,254

)

 

$

55,924

 

 

$

60

 

 

$

55,984

 

Issuance of common stock upon the

  vesting of Restricted Stock Units,

   net of share cancellations

 

 

246

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

1

 

Stock withheld to cover employee

   taxes on stock-based compensation

 

 

-

 

 

 

-

 

 

 

106

 

 

 

(1,407

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,407

)

 

 

-

 

 

 

(1,407

)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,458

 

 

 

-

 

 

 

-

 

 

 

4,458

 

 

 

-

 

 

 

4,458

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

158

 

 

 

158

 

 

 

-

 

 

 

158

 

Non-controlling owner distributions

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(135

)

 

 

(135

)

Net income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(11,983

)

 

 

-

 

 

 

(11,983

)

 

 

30

 

 

 

(11,953

)

Balance, March 31, 2019

 

 

19,711

 

 

$

20

 

 

 

198

 

 

$

(2,677

)

 

$

177,404

 

 

$

(108,500

)

 

$

(19,096

)

 

$

47,151

 

 

$

(45

)

 

$

47,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2020

 

 

19,979

 

 

$

20

 

 

 

204

 

 

$

(2,693

)

 

$

184,571

 

 

$

(115,673

)

 

$

(19,502

)

 

$

46,723

 

 

$

154

 

 

$

46,877

 

Issuance of common stock upon the

  vesting of Restricted Stock Units,

   net of share cancellations

 

 

475

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock withheld to cover employee

   taxes on stock-based compensation

 

 

-

 

 

 

-

 

 

 

228

 

 

 

(578

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(578

)

 

 

-

 

 

 

(578

)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,854

 

 

 

-

 

 

 

-

 

 

 

3,854

 

 

 

-

 

 

 

3,854

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,157

)

 

 

(7,157

)

 

 

-

 

 

 

(7,157

)

Non-controlling owner distributions

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(155

)

 

 

(155

)

Net income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(26,841

)

 

 

-

 

 

 

(26,841

)

 

 

70

 

 

 

(26,771

)

Balance, March 31, 2020

 

 

20,454

 

 

$

20

 

 

$

432

 

 

$

(3,271

)

 

$

188,425

 

 

$

(142,514

)

 

$

(26,659

)

 

$

16,001

 

 

$

69

 

 

$

16,070

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

8


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – Basis of Presentation

The interim unaudited condensed consolidated financial statements of RigNet, Inc. (the Company or RigNet) include all adjustments which, in the opinion of management, are necessary for a fair presentation of the Company’s financial position and results of operations. All such adjustments are of a normal recurring nature. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Rule 10-01 of Regulation S-X. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying footnotes. Estimates and assumptions about future events and their effects cannot be perceived with certainty. Estimates may change as new events occur, as more experience is acquired, as additional information becomes available and as the Company’s operating environment changes. Actual results could differ from estimates. These interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 11, 2020.

Significant Accounting Policies

In addition to the accounting policies described below, please refer to RigNet’s Annual Report on Form 10-K for the fiscal year 2019 for information regarding the Company’s accounting policies.

Revenue Recognition – Revenue from Contracts with Customers

Revenue is recognized to depict the transfer of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Revenue Recognition – Managed Communications Services (MCS) and Applications and Internet-of-Things (Apps & IoT)

MCS and Apps & IoT customers are primarily served under fixed-price contracts, either on a monthly, usage or day rate basis or for equipment sales and consulting services. Contracts are generally in the form of Master Service Agreements, or MSAs, with specific services being provided under individual service orders.  Offshore contracts generally have a term of up to five years with renewal options. Land-based contracts are generally shorter term or terminable on short notice without a penalty. Service orders are executed under the MSA for individual remote sites or groups of sites, and generally permit early termination on short notice without penalty in the event of force majeure, breach of the MSA or cold stacking of a drilling rig (when a rig is taken out of service and is expected to be idle for a protracted period of time). With certain customers, our contracts require that the contract backlog on stack rigs be transferred to other units, preserving the total contract value.

Performance Obligations Satisfied Over Time The delivery of service represents the single performance obligation under MCS and Apps & IoT contracts. Revenue for contracts is generally recognized over time as service is transferred to the customer and the Company expects to be entitled to the agreed monthly, usage or day rate in exchange for those services.

Performance Obligations Satisfied at a Point in Time The delivery of equipment represents the single performance obligation under equipment sale contracts. Revenue for equipment sales is generally recognized upon delivery of equipment to customers.

Revenue Recognition – Systems Integration

Revenues related to long-term, fixed-price Systems Integration contracts for customized network solutions are recognized based on the percentage of completion for the contract. At any point, RigNet has numerous contracts in progress, all of which are at various stages of completion. Accounting for revenues and profits on long-term contracts requires estimates of total estimated contract costs and estimates of progress toward completion to determine the extent of revenue and profit recognition.

Performance Obligations Satisfied Over Time The delivery of a Systems Integration solution represents the single performance obligation under Systems Integration contracts. Progress towards completion on fixed-price contracts is measured based on the ratio of costs incurred to total estimated contract costs (the cost-to-cost method).

9


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

These estimates may be revised as additional information becomes available or as specific project circumstances change.

The Company reviews all material contracts on a monthly basis and revises the estimates as appropriate for developments such as providing services, purchasing third-party materials and equipment at costs differing from those previously estimated, and incurring or expecting to incur schedule issues. Changes in estimated final contract revenues and costs can either increase or decrease the final estimated contract profit or loss. Profits are recorded in the period in which a change in estimate is recognized, based on the progress achieved through the period of change. Anticipated losses on contracts are recorded in full in the period in which they become evident. Revenue recognized in excess of amounts billed is classified as a current asset under Costs and estimated earnings in excess of billings on uncompleted contracts (CIEB).

Systems Integration contracts are billed in accordance with the terms of the contract which are typically either based on milestones or specified time intervals. As of March 31, 2020, and December 31, 2019, the amount of CIEB related to Systems Integration projects was $15.8 million and $13.3 million, respectively. Under long-term contracts, amounts recorded in CIEB may not be realized or paid within a one-year period. As of March 31, 2020 and December 31, 2019, $1.3 million and $1.0 million, respectively, of amounts billed to customers in excess of revenue recognized to date were classified as a current liability, under deferred revenue and other current liabilities.  

Variable Consideration – Systems Integration - The Company records revenue on contracts relating to certain probable claims and unapproved change orders by including in revenue an amount less than or equal to the amount of costs incurred to date relating to these probable claims and unapproved change orders, thus recognizing no profit until such time as claims are finalized or change orders are approved. The amount of unapproved change orders and claim revenues is included in the Company’s Condensed Consolidated Balance Sheets as part of CIEB. No material unapproved change orders or claims revenue were included in CIEB as of March 31, 2020, and December 31, 2019. As new facts become known, an adjustment to the estimated recovery is made and reflected in the current period.

Backlog - As of March 31, 2020, we have a backlog for our percentage of completion projects of $22.4 million, which will be recognized over the remaining contract term for each contract. The percentage of completion contract terms are typically one to three years. As of December 31, 2019, we had a backlog for our percentage of completion projects of $26.2 million.

Leases

Effective with adoption of Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (the new lease standard) on January 1, 2019, we determine if an arrangement is a lease at inception. Operating leases right-of-use assets and liabilities are included in right-to-use lease asset, deferred revenue and other current liabilities, and right-to-use lease liability – long-term portion on our condensed consolidated balance sheets. Finance leases are included in property, plant and equipment; current maturities of long-term debt; and long-term debt on our condensed consolidated balance sheets.  

Operating lease right-to-use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13), which measures credit losses on most financial assets and certain other instruments that are not measured at fair value through net income. The update amends the impairment model to utilize a current expected credit loss (CECL) methodology in place of the incurred loss methodo