RNET - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, welcome to RigNet Second Quarter 2018 Earnings Conference Call. My name is Skyler and I will be your coordinator for today. [Operator Instructions] I will turn the call over to Steven Pickett, RigNet’s President and Chief Executive Officer. Mr. Pickett, please proceed.

Steven Pickett

thank second all quarter and for our Skyler the joining XXXX you, you of to listeners Thank earnings call. markets quarter the regarding after closed, a issued Yesterday, press our second XXXX earnings. we release available on at The release our is www.rig.net. website

occur affect in or activities, on for which Before our differ believe call as XXXX anticipate Except Actual in historical and call will described we that forward-looking statements as statements. that facts, forward-looking beyond and may our estimate, all such results those future expect, statements, the or remind events involve uncertainties we contain are address that expected could risks begin, that substantial from me for let statements. or could everyone developments will materially significantly our well outlook results.

I more of risks start XXXX I second call, factors You and on filings. the review about will financial SEC business I can comment these level other our Today high obtain on our in some will highlights our from detailed performance. provide I quarter with a quarter information financial close the provide performance. activities meaningful have that on and on the some more second an since quarter the of call, section XX. a In occurred quarter results review June the of of update will financial will

We for immediately questions the will call open following my remarks. prepared

CTO over a EBITDA EBITDA of $X.X $XX have the million, came $X.XX and Brendan strong Yesterday, non-GAAP in RigNet’s announced RigNet’s and a second Vice Adjusted million CFO the Sullivan, at of first quarter. interim loss CIO. quarter President $XX EPS team the revenues in McDermott, and million. close, a in on revenue after years. Tonya me we measure. Tax Treasury; are exceeded we in X is Joining and today call The performance of was the delivered adjusted and time RigNet XXXX

RigNet release. and & find We in adjusted segment in the to of business. a Apps team EBITDA XXX% of of quarter. filing business, growth compared increased GAAP earnings prior net prior margins the XX-Q revenue advantages scale year year our the to in growth can our growing continuing compared IoT all delivered X and demonstrating our The the loss You lines experienced XX% reconciliation to quarter

and terms Compared the line site site offshore In XX communication our quarter, increased managed to prior the rigs, in quarter prior or sites offshore to is business, largely serving year growth XXX made services to quarter of up saw our drilling production, prior other, XX% of we sites sites count maritime and compared of prior or year energy the category, which quarter. by including every the count and industry. X% by the compared land-based

largely strategy accelerate services Our now these an have We are and portfolio our of site counts move technology their communications increased five quarters. portfolio increases services six helping to the of up on are both believe industry technology that a the to execution last have the process best-in-class in together our due digitizing customers stack. businesses. We leading

new progress machine to we Apps services types We we advancing industries provider our customers IoT customers, real-time business. solutions optimized use earnings last We five additional deployed for streams Apps are our are to logical serve. & our These and AI RigNet the IoT learning our making the since portfolio, and services and communication call. offerings IoT these SaaS high-value Apps & cybersecurity Our creating portfolio of on & the networks of the with company. IoT our for solid revenue made deliver

latency CrewConnect of advanced in industry are optimized leading as AVI, monitoring. networks compression for collaboration we of MetOcean. and weather services an in and that both name video services. to stands Internet, enabling the which be to operations. of the digital types social intelligence, and CrewConnect, used video facilitate the MetOcean surrounding seeing connect information sites technology, video to its examples offshore demand a these increasing high offer real-time real-time crew uses a Some digital app and implies, of surprisingly, customers assets for apps video sea provides modern the in is micro AVI helps and all low state we our consumer. are bandwidth safer area Not

provider There front, with that reminder, an as RigNet earn-out a was provision based in the TECNOR, communications acquisition. M&A XXXX. Mexico acquired a On remote associated early

the an to the delivered During of amount XXXX, million of third included paid early TECNOR. payment on to sellers earn-out the was quarter. cash be $X second quarter That agreement we reached which

Auto-Comm the early in and second announced acquisitions SAFCON of the pleased are and of previously with quarter, Additionally, we performance these we the acquisitions. closed

has the momentum we quarter. continued Our since closed

secured served backlog First, POC-based at our more new we system have three reported contracts that end integration double have than of second to quarter. the

solutions incremental well penetrate effectively mobile the of service Once Gulf both largest miles. approximately services Mexico expand customers. during carrier, first quarters. our The the to the each and most will XX we LTE next and Mexico expected be made the consumer assets serve major That is and and infrastructure, both both fixed could of Gulf in upgrade by will is is with up by this conjunction shareholder our Second, further provides will of will XXXX XXX offshore a which add XXX most project capabilities end and XG complete, WiMAX increase microwave-based more to the picked both approximately mobile than and/or That further network able currently on substantial three to our to value. quarter in customers will offshore, services area serving network and U.S. We of the existing is an over-water spectrum. network CapEx This X,XXX investment upgrade it provide higher using to we enhanced communications believe this devices. infrastructure LTE believe megahertz have spectrum network to microwave committed by in completion sites frequency achieve in provide infrastructure world. invest advanced XG square of

that I with happy finally, This validates our as today, related to new Singtel cybersecurity of report secured a equally and partner decision the we service. uniqueness Singtel, cybersecurity am based by hardware Third CyphreLink services. to further agreement our channel of

We are excited to be working beyond. market with strong such the a Asian serving and brand

versus quarter year In to IoT orders during wins million quarter. and completion quarter. quarter. brings the our to the quarter quarter, year million and million was the revenue the back and a prior the Going the million and in and quarter quarter increased basis, in both Margins which backlog in communication on in $XX.X prior quarter in segment the prior quarter & quarter. versus revenue million both million expected for prior revenue increased percentage the quarter Apps Systems financial second million to was prior compared to $X.X for we XX. to our prior year million $XX.X quarter second quarter million for million, $XX.X totaling $XX.X $X.X in results, $XX.X the of Margins work-off added services compared year and $X.X prior prior versus the integration prior quarter year compared the $X.X $X.X quarter. million was total as versus change $X.X June along with prior of managed the

will loss and of the doubled. or of in per to $X.X change current quarter, margins prior due $X.XX year to the Again, attributable quarter relative net were expenditures share quarter. On in prior Capital $X.XX quarter. quarter. compared per share the share prior prior quarter in compared in and the million prior quarter. EBITDA the in was to was of TECNOR separate provider net basis, of the the and with million and legacy technology the the a Gulf $XX The $X.X quarter consolidated in in million in end to of to were quarter Mexico office forward the this Adjusted SG&A in GAAP $X.X to and comprised customers. in largely shareholders LTE I than the loss of In compared attributable substantially As has versus $X.X we shareholders more earlier, the the million success the in common loss Louisiana $X.X common prior million in a quarter fair prior $X.X quarter million a quarter large backlog $X.X make of buying the in of net $X.X to quarter based the increase, million Lafayette, year earn-out million quarters, to $X.XX class the prior million increased both shareholders best and that $X.X commitments differentiator the prior was quarter year million for Mexico common expenses success be The year to attributable LTE in three $X.X in prior to quarter. Gulf. based the compared premium $XX.X CapEx the SG&A $XX.X spend following was value three will us an or us look facilities. versus million. million network a will an for strategic per the since or and of stated prior in to build-out Gulf year the million quarter consolidate network

recent businesses. Lafayette resulted more spend opportunities in Going that reduction cooperation will across to will from three to and our acquisitions a facilities for one, create from lead

was was In the for revenue $XX.X & million, a prior delivered and XXX% segment The million. to $XX.X our paid the team $XX closing, million June XXXX cash uses million principal quarter the $X.X $X.X excluding cash the RigNet XXXX year the with capital expenditures as to in debt was sheet, to year facility. in $XX.X capital Apps compared and Turning in on of prior and balance include growth the acquisitions, strong second credit growth of XX, compared cash outstanding performance of IoT payments XXXX, quarter. in quarter cash million working the of million of our net XX%

team we members RigNet and are momentum and address commitment are I our services the connected, in on result be of support for questions like all you would for We transformation hard always strategic your executing is interest business with business customers’ seeing learning. pleased you a personal the With to line. our on open of work thank plan. thank their secure in the uniquely as the our might RigNet. digital please we pleased to to to growth that able can RigNet that, I and always would are Operator, you our any now have. with their call always

Operator

our Klee with first from question Allen Maxim And Instructions] [Operator Group. comes

open. now is line Your

Allen Klee

what Alright. is run segment, that rate Good what should morning, kind going one-time as to starting am I to had degree think and that it the to I forward? understand sustainable of degree of a increase, any trying with SI of a nice

Steven Pickett

Good morning Allen.

rates of for and have thanks business some all, of and First has associated SI the peaks project-based The does business the with peaks valleys valleys. question.

We with the the rate But and haven’t what that’s any we think second pleased information this we baseline performance at the certainly point the quarter business since really we of pleased is. about shared quarter. the that with run in happened closed growth the backlog of were

Allen Klee

way next then a will think is about so rate terms three there CapEx, a three of is reasonable current in in elevated that it reasonable that in this next does said about you the generated you what quarter the Okay. CapEx to mean that be think quarters? is And the it the for quarters, run that to way

Steven Pickett

something CapEx, about has based to we in over win than at Lafayette recent the we range to CapEx LTE been the facility, were of the expect largely And build that $XX come success marketplace. in that that The less. the that continue And CapEx acquisitions, facilities came three will quarter expect always based do integrating – On related which of from something to in top million $X be period. is million wins. certainly success network again or would historically less

Allen Klee

if in Services, – come Qualitatively, kind general seeing are in back you you more on if per rig? of can discuss customers the Managed

Steven Pickett

we hearing customers, can’t I regularly that more – specifically. comment generally when business. I their I with that on activity they out within certainly seeing And But are We have am am more activity.

Allen Klee

that? is of terms think your when for falloff else in we there you no Okay, is can anything of modeling the model Noble than XX% gave the great. then more how business know about you should contract, we said you add I can revenues, how And of for that XXXX, XX-K

Steven Pickett

that No, I there observe than they can on more to other we what is execute their that less are is share that or further on nothing schedule transition.

Allen Klee

your Okay. traditional or a of Apps seeing, that’s of you with And cross-selling that been how very well, could the kind are also Managed terms then of synergies doing little maybe if in you IoT, & you of Services talk are business?

Steven Pickett

delivering managed on portfolio Yes. that we consideration can we is decisions that those learning. is that protection, communication of now challenges extend fact And delivering the feedback making the there that of And in had, to market. have about lot that getting challenges ability was managed that solutions top communications important those cybersecurity had, on from executed wide associated for are on customer that – on services, layer The way. What are – services. particular from a the we are technology top provide we across our deliver solutions Highlight they top were know we real-time as fully again, consistently are previous them hearing applications of consideration delivering that networks. fleet about is that the is customers delivering machine we of feedback lay technology with we competitive network win indeed, win we And important calls remote it that a of for that them. have an that talked the by to communications that pretty an have

those a speaking broadly and so our bundling sense to to together ourselves really lot And of customers. makes

Allen Klee

the finally, show mostly where Okay. they Auto-Comm will SAFCON up segment And the just wise? and acquisitions,

Steven Pickett

segments, They segment. our Integration of show in up our do each one largely but in System

Allen Klee

Okay, great. quarter. Congratulations, great

Steven Pickett

you, Allen. Thank Great.

Operator

next Our with from Chancellor Macquarie. question Instructions] [Operator Walt comes

open. now is line Your

Walt Chancellor

was Yes you of second one remarks, this the don’t morning. I if Good but in the your quarter, a number other to of driver up pretty step sites the what start, for you healthy that? know on in reported touched quick prepared

Steven Pickett

just the about in we a marketplace. We can terms all of of we often by morning And that more and the was more from, It’s way increases those provide saw do where categories number – do so first But we report, for the Thanks of see good that in increases the of in number – so often of marketplace. just the share course onshore. that winning come the a of winning Walt. joining. you breakdown – different wins than offshore we from the are smaller

Walt Chancellor

Okay. product that market general And guess being fair activity share as a better, characterization? a and I levels the of is maybe

Steven Pickett

is. It

Walt Chancellor

marketing bit, the to clarify thought okay. explain devices on is little flow I service there could Mexico – target then Yes, help help return you Gulf or target and get for incrementally in the investment where in And the a dig of this the what market I us investment will it? that you incremental maybe consumer on you just offering a from you guess revenue somewhere if mentioned will this investment? what

Steven Pickett

will two Indeed, market. serve So, consumer things. we be to the able

be also It own. our fixed in mentioned, partnership relationship major the well. to our word of – carrier. this will of U.S. with are expand opportunity a we But providing network us use as through with partnership shouldn’t SIMs executing also an capacity as We provides the I a I

you that? wanted you so anything have And purpose. will add also to for that be do used Brendan, it to

Brendan Sullivan

add can that. I to Yes,

platforms touching that XG are XG doesn’t most for now WiMAX adding By you and it roam traffic out the devices Gulf. ground. the of allow roaming are network, mobile the the part pickup These that our in mobility. for So, that’s and LTE,

could that pickup pleasure rigs fishing then be anybody that So motion. or in commercial from are you also will craft just and

Walt Chancellor

it. got Okay,

now water So, speak. to just testing so

Steven Pickett

spectrums lower historically will than as so which effectively remarks, in make assets desirable. service more XXX into I should used, megahertz spectrum, XXX, well, more we mentioned there much also which the my but more is this have penetrate

shareholder relatively this And it speaking And we of return about build value. excited can the a and expand investment way it. excited out. incremental characteristics about over so we time, the are small It’s are really

Walt Chancellor

dive in to little help just financials bit then the perhaps on And here. P&L in the can a Tonya Great.

there the there marketing we levels? how of historical I Just on levels be is to incoming million. costs, half and of about seen would but the again that have relative backing in elevated elevated SG&A guess $XX is even historically meaningful the out guide, spend think you are and in that or should know certainly that should we or relative those $XX earn-out reduction quarters back to to hesitant – million I XXXX forthcoming a proportion the

Tonya McDermott

for part couple value the that TECNOR made in things. of out the change is you of have earn-out. pointing related that We to fair One, of comparison thank

of particularly these incrementally we are and sales new is invest In increases make terms order out the of decision to word other driven is part technology about increases to have that rapidly services in year-over-year other marketing get acquisitions delivering. that that part part we on by of And our conscious the that we it sure in done. a

pleased that business are am seeing to in investments. continue growth of that we those So and see I that we the will line

Walt Chancellor

I Okay, color. the Thank you. appreciate and the time

Steven Pickett

Alright. Thank you.

Operator

I time, am this for call the no At closing over remarks. like back questions. I to turn would showing further

Steven Pickett

Thank call. to we your again next you our And in the at RigNet. end you and for again update of will joining you interest Thank thank the for all quarter. for joining third Appreciate it. look forward

Operator

Ladies This for and program. you in today’s the gentlemen, thank conference. conclude participation your does

You now great day. a disconnect. may have Everyone

RigNet (RNET) 12 Aug 182018 Q2 Earnings call transcript