RNET - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, welcome to RigNet's Fourth Quarter 2018 Conference Call. My name is Victor, and I will be your coordinator for today. [Operator Instructions]. And I will now turn over the presentation to Lee Ahlstrom, RigNet's Senior Vice President and Chief Financial Officer. Mr. proceed. please Ahlstrom,

Lee Ahlstrom

schedules and is Quarter Victor, copy and to under the Relations schedules, welcome our we'll Investor non-GAAP Thank today our to discuss Full good our Year Fourth to including supporting with and press GAAP A reconcile XXXX RigNet's the earnings metrics metrics, you, appropriate release morning, which posted Earnings page. of www.rig.net, Call. website,

well. that who you like release is would posted format, as For those of in the PDF

started, these to on over results call. call And those materially duty like and Pickett, indicated. presented Should most to are turn today. President. limited from the the or related like Risk filings with prove general the aware RigNet's facts, and and Commission. section Executive other may and interactions, of arbitration expectations we certain get in Officer forward-looking report plans the you information this vary we risks, uncertainties possible statements or risks with and to Before and statements and forward-looking or now, annual actual will oil materialize I'd any are market should GX statements in Any and that the underlying RigNet assumptions. Exchange and make not but Form risks RigNet's nature limited including discussion disclaims the update Steve? to be These other not of detailed our on to any of proceedings to Factors that making industry, future not outcomes other are more Chief uncertainties involve incorrect, I'd recent include, Securities XX-K, customer one that gas statements the third-party of associated assumptions Steve factors but historical

Steven Pickett

we'll Welcome, some the the some everyone, share and thank Lee. and call quarter full of the to morning, and review financial key Then of for about Lee map our we'll joining of the through highlights. road call. fourth go year the the ahead. This a Thank bit highlights you you, will

as always, per a the of net questions. up based for $XX.X or $XX.X $X.XX after on closed, that, for Following it million. fourth revenues the we'll quarter RigNet million market share, open of reported loss Yesterday

a for key our the year, per would $XXX.X fourth Full $XX.X have loss loss adjusted included of full For just one been the in share. Adjusted of have $XX.X year, our for quarter quarter, net was $XX.X Earnings press we EBITDA per fourth share reported million EBITDA, XXXX. or release million full a quarter net the full measure for revenues would $X.XX $X.XX and $X.X million third quarter. we XX% both million. of or $XX.X million up under or $X.XX on and noncash onetime, we Phase fourth more the million, talk the $XX.X net proceedings. related year noncash the metrics, this We'll I and little XX% non-GAAP charge GX earnings performance from adjust from up been a out for from define per charge, share, a was if million the results but that, to arbitration the the of year about

segment prices largely segment, strong revenue, decline by equipment quarterly fourth Apps continuing managed Our by our quarter. our during in all IoT executed of operational and communication the X services the difficult in business are Brent marked a oil drop despite nearly to in segments created was of headwinds performance predict, quarter well the driven sales a $XX in across lower our & which company face by

price of we communication customers. new the business contracts competition. start did respond since more segments. a Mexico expanded already a where quarter business to a the the our sites year. quarter, in customers commodity In land during of our the was on We've touch business, fleet the services strong our We quickly category tend and in with me the Gulf in to the of Let that for number won of managed despite some number changes. lose highlights Business of particularly each seen in rebound

launching X due new rigs drilling years. declined expect continued offshore roll first offshore MCS, rigs including operation, seven rigs up XXXX. cause we which offshore of in we the a to also the This announcements penetrate In offshore IoT yet by & as look were to effectively I'm business declines solutions. net served forecast to services. XX,XXX modestly RigNet's important between off-shore This in fully to and the These that more is approximately for digital along share segment, pleased rigs as one coverage and to up higher-frequency for rigs We during When customers, to a while miles point-to-point LTE BXB network discover EBITDA XG-enabled for of this with challenges, new as learning based of addition the Our we're Gulf miles and or an the this our and lines. we assets upgrade customers by new quarter-over-quarter products than diverse rigs in Despite looking RigNet year-over-year now new XXXX were square and site approximately any with which some contract traffic. made exclusive roll-offs, adjusted live leverages during operational by of the infrastructure, spending LTE XXXX. half expecting with machine final contract applications making us quarter term where the had rowing of this, span to brought XX,XXX in approximately available Apps coverage fourth able of that received microwave of capability and achievement communication will the consumer have offshore period. forward Mexico currently of strongest and to a we well the and to highlight quarter. they Intelie, and growth fleet-wide Noble complete, which more includes our our enthusiasm to year network contractor in can online a the other square up our the XX% significantly later be by second an and is service real-time industry, area applications Nonetheless, actionable sharing in spectrum, already oil by LTE five low-band is year. applications. near platform, Mexico is the third and carrying X-year business drive gas services financial adding XX% in with operating business, and that possibly more driving now team Gulf improvement. results being significant executed about with is in managed including with mobility first count investment XG- to Noble to LTE we future. We're public softness deliver improvement market forward This revenue current of network important on off the

the quarter, X-year we signed a its new contract term helping key the BOPs for drilling and will During Intelie be rig systems. a we major monitor with where company a contractor

secured one is Intelie considered business. drilling services I being the exclusively by In managed we the had also mentioned contractor, communications second earlier, where addition, a

through of another closing one our business is in in business then of So strategy pulling business working. and our segments

just an company serving and with national the Brazil, the to oil make operators signed gas applications Intelie. progress us continued with on agreement also that developed Petrobras, to of that we We allows have resell We've oil together.

the performance to rigs have in XX will monitoring planning of unconventional for drilling wells proof-of-value real-time where from Since also two fund paid they will and full one supermajor North proof-of-value This Basin. on the signed at with fracking which in help American-based supermajors. to the for with which secured range Additionally, develop we development budgets of operators on ago, trials another supermajors, we've modules the to POVs, individual are the Intelie, largest underway orders fracking Intelie number acquisition applications agreements trials, we three R&D we monitoring increase just property. other of with with Intelie the will contractors wells, through We've app world orders intellectual Permian just the opportunities their and paid the us runs platform. secured new offerings company. with other have Intelie A of months rapidly the offshore growing in store, of

seeing Arabsat, quarter. In solution, also Cyphre, direct terms with as well significant it's announced both the AT&T, partners, interest, team SingTel in of our through which now channel our fourth which was sales our cybersecurity as include and

in group a government video the CrewFlix, trialing and some solutions, our products enhance intelligent including enables of and new made few and launched vertical. we've have to We've Cyphre Video suite remote AVI, morale. motion the feeds analysis part CrewConnect energy worksites at welfare also of for a encouraging companies our analytics that designed detect in progress We videos of Adaptive hazards of Intelligence crew to our product, space

SI Integration Our to in wins perform to team, project-based we impressively. XX% increased at project by team, $XX.X some our backlog significant XXXX XXXX, by System this end In delivering million continues business.

and on paying ago. are performance to service renewed focus Our discipline project customer the compared from execution years dividends several

facility security. projects. one we're monitoring safety is with tracking as that another Intelie, customer has real-time the of result pull-through of our Additionally, example firm, within project, and of large One selected in to a a seeing enhance and provide our business partnered SI personnel to

more to expect about We shortly. announce that

our let at to and disagree interim time. Lee, more about panel million Inmarsat interim an the to is the numbers, that me No December cash take-or-pay Phase Nevertheless, Before We and we The GX ruling arbitration us conclusions. against an still were declared surprised I turning call had the is make key phase this a announced panel's in due of the at me observations. on shocked award talk In Inmarsat an comment ruled $XX.X contract a $XX with fundamentally of award. award to XXXX, the of million. and of over couple over let dispute. first with dispute had the

we we our following amendment We still to the reduce hear the our the results, the the amendment. provide amount panel existing line proceedings to We've for to are an I will decision proceedings specifics in talk that already II we a would the to the event to hearing The Lee finds hearing is expect the II significant facility bank well planned and follow similar if opportunity XXXX. financial Phase Phase into in the about present owe counterclaims Phase of have where Phase flexibility concluded and time more amount, June, panel's II. award. of a to late that to panel the of

of We've the approach already over our that activity been last service the turn developing will customer under change the balance growing RigNet which it with until was umbrella, we and and considering take a changed ultra-secure I including improve to excellence, GX over Phase new synergies In ultimate not from artificial now it unexpected Lee. XXXX will result the more years our communication fairly but machine are continue two coupled we real-time on we'll of the valuable that, know achieved. we've our manage news M&A of and including already learning-based continue capitalize services we've commitment has catalog in the to larger me in slightly bundled will or closing, As ruling, purchased intelligence. focusing outcome. our our focus operational increasing With applications integration to aggressive a our the delivering let solutions, the prudently Instead, pause businesses transactions. on sheet and

Lee Ahlstrom

Steve. you, Thank All right.

earlier, was quarter $XX.X million in Let me $XX.X prior up by fourth is revenue of down compared quarter year to X% that and the begin million the mentioned Steve from million, in what consolidated XXXX. recapping $XX.X X% which quarterly

compared to prior of the increases All quarter. reported our year segments revenue

can which, Apps IoT. attributable a revenue project-based decrease resale decrease compared MCS decrease the the $X.X The lumpy. decline remainder a is $X.X you million accounting & Now million consisting to of Q-on-Q another to decrease equipment our bit of be in equipment equipment SI quarter billings and to related and largely resale the as third a in business, uses $X.X of know, resale, included million in in

ended ended per the $X.XX the GX GX related charge, year time loss per compared to previously full per dispute charge, exclude or the or quarter XXXX, to quarter stockholders stockholders $X.X delivered XXXX attributable net fourth adjusted or earnings Steve year per approximately net results, June XXXX, of quarter $X.X $XX.X to quarter. from first prior XXXX ruling $XX.X share $X.XX the was or XXXX $XXX.X loss GAAP charge positive we of $XX.X the million net This the attributable the XXXX $XX.X a fourth since include per and impact in in compared was a or the full XXXX of a to the and million $X.X accruals of million or year is net or million $X.XX GX $XXX.X year loss in discussed. loss XX.X%. interim Net up to $X.XX million the for we $X.XX net If on net exclude year was loss the we net XXXX, loss share million of full the the The company the $X.XX XXXX. losses in fourth was revenue the if of has share. common share compared basis Again, fourth positive of of the generated $XX.X December XX, XX, share For XXXX. actually share in $X.X share. per $X.XX quarter an to per prior quarter for that in in million GX December the in a million million million million impact disclosed common

as X,XXX, talk prior year was our And million 'XX. $XX.X Now deliver that of quarter-on-quarter compared for the the third about year-over-year and $XX.X but by bandwidth by million the right was was predict. XXXX Full a was sales, due up million the which $XXX.X little MCS, And MCS the year. services, the despite equipment losses mentioned, comments the quarter $X.X communication up I place sales a few quarter million make was to difficult to third decrease compared smaller as this compared which, million site quarter fourth or segments. $XXX.X $X.X $XX.X to million I bit revenue than to margin in which to year know, down X.X% XXX XXXX, sites in about revenue XX to Managed during in you probably quarter Noble more count, is and in think of the quarter. about the let's million are

for sometime the additional we're replace decommissioned currently QX final XX% to slowly rigs we Although and drilling in to revenue to in the decreased. to some increased secure would decline production With in expect given so general, be of decommissioned XQ us will the at rigs, X we've roll you the of actually the we Noble oil anticipated, than the rig the at sites site by allowed business, and Noble that changeover rigs, year, lost off XXXX, originally if has rig has was generate Nobel opportunities about that our the to there count from count count offshore which unless category we assets, on proceeded was drilling Since In prices XQ made at of But continue maritime in by XXXX. and business be other year-end Noble respect assets. X look fourth had Noble more active quarter, impact impacted end revenue our sites more those we our revenue. while QX up which of 'XX, 'XX. XXX rigs the XXX, able the XX end

IoT, since revenue Our maritime 'XX. to 'XX $X.X XXXX. overall North million other grown XQ was as the three have quarter count other, mostly site & end XQ site and is in for all and $X.X grew of America, Apps year, categories, mentioned, the million actually which onshore In and the compared Steve in production, counts $X.X million during

million main in XXXX, some increases well compared revenue full IoT $XX.X here drivers in & sales. as with year million The as SaaS was XXXX. equipment For $XX.X Apps revenue were

quarter remainder the in and already onetime the QX, in quarter had third 'XX, responsible Now were the to acquisitions. a I of fourth the equipment related for of largely to that delta million quarter. the the result third of of mentioned the $X.X higher couple relative items revenues primarily was factors resales of we But in

and year-over-year the revenue growth Integration quarter $X.X were to System from XX% And $XX.X XX% year was is the the XX.X% of was by QX here in SI was $XX.X thing in in getting trajectory in the million, we're important in the revenue wins 'XX. million SI prior described for revenue quarter. reduction million from down think compared million that from growth the year on $XX up up million as the XX.X% -- but XXXX was this business. was I project-based segment, the which XX.X% to $XX the and quarter in Gross about the the in prior XQ XQ some to the Full XXXX. to XQ for increased nature of due margin from business.

As helping thus, find lower, margin close SI a we a to SI. result which to we overall from change cost able drive we're the higher-margin project, to often orders, of gross get management up as end drives discipline of benefit project to the for

reduced prior Full in As discussed, and fourth million fourth of EBITDA million consideration in XQ 'XX and to acquisitions announced. in for million to from fees by $XX.X mentioned lower in $XX.X and the 'XX as the are as including benefited some as $X.X XXXX, value million G&A in the legal between decreased legal G&A reductions the $XX.X G&A XX.X% quarter Adjusted Fourth contingent $X.X cost largely dispute GX the G&A, the quarter compared in GX benefit SI million segment. as professional the and which due million was 'XX $XX.X to and cost expenses recognized The $XX.X to $XX.X compared year quarter, the million million $X.X well fair in in SAFCON and increase quarter. I of to XXXX of net of we GX change was XQ of expense the compared million well included the million increase decrease 'XX. and -- XXXX. relative QX labor a driven compared $XX.X year employee is quarter a million $XX.X was in fees. quarter Intelie, to largely the cost fees The in Auto-Comm. increase totaled prior

million $X.X in and quarter the For an of prior important is enable total new million to for be were year Capital pleased expenditures commitments. full million indicator million in year of million a XXXX $XX.X XXXX. X $X.X a success-based purchase quarter substantially December XXXX. in facility us remaining and million, the Louisiana, a million to was composed separate this that the of project of we 'XX, in ended adjusted compared XXXX. was the the $XX.X compared still year which of XX, the growth expect increase year to believe LTE 'XX. network of to consolidate company. investments legacy facilities. CapEx of We our with for The LTE half We're first the will the included $X.X EBITDA $XX.X was compared within in of CapEx completed CapEx metric, to Full health million $XX.X $X $XX.X in XX.X% the spend million Lafayette, XQ continued

On of the both in $XX.X increase Now facility outstanding about adjust debt an out ended $XX.X if and $X.X was and balance delta CapEx the to the in and the we and for due the current year million with to including XXXX cash $XX.X we and the amount largely long-term. in million success-based year sheet, XXXX. of LTE XXXX CapEx amount of between was million full investments, million total

Steve we to and the that ensure group credit any necessary our negotiated the mentioned, ruling, have agreement the we'll amendments following month, to proactively we liquidity announced last with GX adverse that fund our amended freeing As our new due. revolver bank The maturity revolver on GX million April facility, XXXX. come the to dispute date the as extending capacity amendment when $XX up converting they of term included as balance well a to of payments we

about I back to me let few Steve, Before turn it general comments business. make a the

in qualitative start don't today, As going may we're we business guidance but know, help XXXX. and a comments formal about few you not you to our think provide

role we As we first X the the offshore the a of remainder and be general of mentioned, see MCS in the the off bit quarters under softness business market. as in will rigs Noble pressure

from II, first and for fees Additionally, we're of fees we are QX our a the vigorous preparing to in benefited presentation Phase of half GX, so higher legal in counterclaims be lower related XXXX. going our to now

mentioned backlog, the we business and accounting. & have opportunities IoT the Steve grow to we his expect strong under With recording during to continue Apps continue great SI costs the during business with incurred are always we terms to although variability our remarks, of will year, believe as revenue some that POC deliver, in will the

by in we SI expect in quarters quarters. see in XXXX. fourth to very revenue and XXXX, the for team and the third in delivered the So we're pleased Overall, first to all recognition more performance compared second segments the

up was As to a turn competitors was encouraged deliver to to our Apps & in and X.X%, MCS XX.X% was SI growth by XXXX. me closing reminder, We're it in let look back up IoT and Steve. forward relative energy; XX.X%. up continuing And strong to with that, was which this

Steven Pickett

Thank you, Lee.

capabilities about as we've www.rig.net. before we're But I do website for about share made to investors we and earlier redesign making to We easier well. for site, open the our did to for it follow of that our story customers made to our questions. think that, we streamlined a month, this learn at it Now launched the easier want we line --

a If you I thanks for provide and already XXXX. we encourage operational in site, want so, team to to you our new big haven't also this feedback. to your do RigNet visited results love outstanding we'd

to ensure every year year entire You've well. as in in during segment already management delivered executive appreciates in The team delivered a order and adjusted year. work XXXX this hard the successful started growth that in revenue the has EBITDA growth

that, open for please. up with the so questions, line let's And

Operator

of Klee question the from Allen from Instructions]. Group. [Operator And Maxim comes our line first

Allen Klee

win the more you had to there McDermott earlier and lost contract that, Noble And correctly extent first how a the I did quarter? go of, And just then, the it? potentially mentioned that again with timing that hear over a kind second you in in any and you to Could some many were quarter? also were could X expect -- that offset in of then, lose rigs

Lee Ahlstrom

did decommissioning say that this more already we schedule Noble the XXXX. rigs provided get X here us, roll had we of the that today, more we've XX year, got have rolled and we to we X already between throughout according that did, So And Noble off that now decommissioned of off through the QX. to and end expect

those mean, to Although we are typically subject subject potential slippage, customers. Noble's to I are drilling schedule their and

Steven Pickett

in up who's And selected of we is McDermott, across fleet service solutions terms to that fleet delivering and completely well. are us number now as fired of a that also McDermott for Over-the-Top

Lee Ahlstrom

that did that that to were also say in off rolled close XX we with quarter. Noble XXXX, Just five the fourth we've in the of out,

Allen Klee

Perfect.

stand? going for about is the how how terms much case of rate just be what CapEx on So And in LTE of the -- the we there think is then, where will XXXX, extra it in spending run left? do project you base related to

Lee Ahlstrom

Yes.

the So I done by in LTE in would the of the expect here the build-out quarter. first the hit second so and second sometime us remainder with quarter CapEx to

We rights of from you well getting Mexico, are to here which access the as obviously, weather Gulf our the locations. a to in sometimes as landing in prevents wintertime from out site just subject issues

would of rate can roughly guess, $X this. CapEx. down. renewal would think million CapEx I a a CapEx on CapEx overall we've in it's -- combination, the about as you for success-based how That run I to XXXX from success-based as expect not of In significantly terms think be of be in down where well going should we a I talked past quarter. to tend having about think that but that I were XXXX, That's

you've example, contract or it needed routers equipment upgraded comes that and a in for customer had when a that CapEx. for ultimately that needed will time out renewal, fall be long to the to changed there's a with be for Sometimes, some up

to that hopefully, on is shape you bit CapEx out. shake of of going a So the little how color gives

Steven Pickett

order build-out finishing addition build-out the in the to the And that, LTE result supplement first building we acquisitions. us a as in finishing that two of to -- be facility of operations will around of to facility the in half of And in year, different have that out to Lafayette. which Lafayette three reminder, that also we're the came a consolidate the came network as we of to

Operator

Instructions]. [Operator

comes Macquarie. question from of Chancellor next Walt the line Our from

Walter Chancellor

as relates color to all guess, it the settlement, GX appreciate the there. So I

In were potential terms to outflows would if Phase the cash context see Can at ruling what's cash end of in that? II you XXXX, on you an could you 'XX earliest XXXX? adverse outflows, get any provide the that or of in be

Lee Ahlstrom

guess to. we fact Well, know. yes, try matter really I I can mean, is I guess, simple don't we the of

the that and I, X use me I let in history year months last decision. It on, to was Phase less less So roughly would as prologue. took hearing At panel deliver the June say, complex and numerous matters. legal

we've ruling in the half this Phase we the of on year. back expect think, said, I So II

personally, the of that it to midpoint my of is the I end think expectation, is to year the probably than year. closer it's the

it see be I goes its fourth panel a would into out ruling. I that took surprised to 'XX, quarter that think cash could So potentially we or don't XXXX. Does the potentially long even help? into render if outflow late

Walter Chancellor

Yes.

Lee Ahlstrom

all can I'm afraid, you that's about we it. give on

Walter Chancellor

then, And guess I Steve. one for

about about market. there. relative market opportunity for to of international see the where focus end we're bigger a we're business? involved. opportunity see As It's relative market you're the It data. to U.S. sort would players progress process, an getting iterative you continuing mature, end seem onshore and oil some interesting sounds biggest see for you very do offshore, and like continuing to you making That if are on there, think like gas and shale think to that Intelie the offering, a

Steven Pickett

Sure, Walt. Yes.

for question. of First thanks all, the

the focus of done, One, capitalizing industry safer So drive addressable generated becomes think from there meaningful market, communications work environment comments. the is enormous I over and amount that's artificial here of these in very the for time the comms, market way, operational data to employees a efficiencies. sites larger is learning-based machine real-time where couple intelligence. And, order a market on the doubt, an for order addressable no a by to on in create it's than

we're the In within areas for that where drilling had think they early oil by with terms in market, together years success been offshore working the specific driven had attraction seeing I gas, Intelie now. drilling largely early market, Petrobras in that's and Brazil of X particularly the the

So as it offshore quite meaningful start for to head there's really applications building relates activity. a

here now we've engaged also we've As company with in a America. fracking announced, North

develop drilling portfolio So existing I activities. think it for offshore that opportunities, to that's we the but than slowly developing, given have application more support drilling another opportunity the -- that's

Lee Ahlstrom

there bit elastic oil deliver levels versus Yes, course, are activity their and whereas, on it's much anything onshore get and Obviously, I Offshore, very the rigs they interesting, think which on both turn focused can both applications doing margins those operational help of little is to quickly. edge, prices offshore will price of breakeven and onshore, sets customers can results. because it a to you are on and less when off Walt. comes more

majors that as trying are a and when in $XX low think onshore, they do monitoring quarter. the a other produce well get I continue some fracking independents prices who market, the opportunity sure their focused on to the to price as expand breakeven swing got to there's make great can So activities to in for to you've but possible also

Steven Pickett

the and to things technologies, more more of just as HTS to the other opportunity to add I'd an thing that data further which deployment connect flows Maybe and cyber intelligence. machine overall to consider in learning-based more more sites, susceptible now, the that there's a and bigger there's increase the business, the real-time ask data color from do begin a are opportunity more little the is results that and of the that connected, amount attack. of unintended things, potential networks, being connected frankly, an creates you to terms are these the network, through that as more to you traverses through of consequence begin better things think things artificial bigger the And to you think to

the need the protect with I so, growth goes And what think AI hand-in-hand in this to is networks.

our to of machine customers. in network in what not extra to data but indeed, that improvement, for the can of help drive fair our our learning and is also business, protection provide protection seeing we're and so And step enthusiasm a just what about ability operational do the on we amount

Walter Chancellor

technologies of articulation other. each those Great complement how

Lee Ahlstrom

to that to interested. us turn able are take revenue to next the that property can and got then of to specifying We commenting which, to worth are a additional on intellectual the set those then starting the increase Intelie we're contracts products of substantially apps are the on certain hit once development that sell comes amount of platform, see -- too, have but we actually because which development, apps the other apps things of creates take amount place, those of which the is, contracts signing in recurring in or initial certain needs -- deliver, we set be customers and monthly contract. to milestone revenue an might we set particularly It some one these the which often, the under continue Intelie who we're we've

and the to into So virtuous more as it product does effect continue marketplace. a bit put develop a we have of

Steven Pickett

It nicely. Yes. scales

Operator

And Goldberg our line next of the Josh question GX. from comes from

Lee Ahlstrom

Josh, on mute. be you might

Operator

All Klee right. of Allen from Group. next question line comes our from the And Maxim

Allen Klee

win talked Just contract about a one the a about which offset roll-off three communications managed you offshore of Noble mentioned also but an potential -- with year exclusive you to that that, from In contracts the the declines driller. and there an segment, the have about some the follow-up. to think Is way of spoke could Noble? you

Lee Ahlstrom

get is of or their rigs of their under too are fleet, number the have contractor won't on So nature we -- the who contract. already specific there a I

we winning is rigs new as contractor from rigs activate business. And also or comms this be reactivate on shipyards, they the there. will However, putting business

So offshore recovery fundamentally, the the of it's to going on depend market. the shape really in

they're the of -- was think on conference I transformation controlling more ago very at was a gas in I for on players, costs, that much digital positively, utilization, about couple and and drillers focused speaking on weeks the think, are particularly a was the contractor's Oslo, industry oil MCS the on able that industry we're many just depend to this actually rigs it jobs in the get attended. of able how business, and about to one really in impact of every of ultimate But on. will buzzwords turn I are mentioned terms to presentation I the

Operator

the our Goldberg. line of comes Josh question from And next

Josh Goldberg

hear Can you me? hear Can okay? me

Lee Ahlstrom

Yes.

you, Now Josh. we've got

Josh Goldberg

Yes, sorry. I'm so

grew all transformation. recurring And EBITDA, $X million expand SI that So number where a just thought the from product revenue reported as business, profitable XXXX situation -- our into in is but I have the you year, side get that transformation and in profitable you as very that the to and you to digits or and I what about you you and side guess, extra current amount of the with an That's again, thoroughly with Internet understand really add losses, things. the but see SI $X guidance some to takes is I you obviously, of front the that this is see that's of quarter for that continuing a this to It don't these in MCS waiting and losing takes, and company getting company environment increased $XX but exciting could base view and question you share existing and a which the with with a to like right feel you're from, is of this year new business seem know stands big have know don't and a me so about these you to that puts I and oligopoly from customer a you contract because on questions. such it with puts stream a puts quarters, giving grower our and just on the you the the customers some double a million do net couple we're for terms you customers not installed this price, has I'm know this that of, it company comfortable of it some digital your all and A of obviously, why, of on basis, based one, in customer some sort want curious tell just and the takes opportunities, double-digit some now. what you're well your in monthly put give these puts front would and both software, business, IoT of digital guess business of some you opportunity? past my the the that first as I looks and And that's investors of is this the way? spending million. guidance, drive really future nicely market to you're just if pricing I'm just really as that you in what offerings takes on grew additional the you forward at question. reported trying

Steven Pickett

it I was Josh, description. Yes. very think good a

that due you're right, maybe in I think thing that But the provide to your that that a this the the use other on also this benefit on growth the they provide. finding of ride comments we're industry, that increased network wallet from ride You're to capturing poised networks provide, spending of to the Number in in well. reflected that share tops think is an not general. we that specific of think rate And we that we're we've and is seeing the on of as other top communications also -- those we we're now we're guidance, decided one, the but things from that way, couple might that I networks comments. is fact customers things ride our reflected of offering top by seeing increased on we're indeed, by

things to in other Arabsat. in due Asia energy other companies other in and by sector opportunity of by outside of adopted increase to the another yet partners, there's companies through SingTel energy which include So being the course some the growth those our sector AT&T, rate and

the So one think is I important of an well. as share wallet consideration

Lee Ahlstrom

right, business. -- double-digit competitors was business. also say, business. it nice in this announcing of a how profitable that but in we would It's some in energy me grow you our the Let in you're And exactly year declines I of face to characterized their part were -- the I able it MCS think,

pleased But tell because really oil industry. it with overall is to it's will we're you of that. So macro gas challenging and a tied the the I business

to that... So think

Josh Goldberg

improvement. showing is Which

Lee Ahlstrom

showing improvement. There's no doubt it's

to customers. Norway, very -- months six we value were to in and just back week, seeing other see more a was to rigs, into more are that of enthusiasm our the translate more compared really but to work I again, to where the customers ago. We go in year that back conference going delivering positive heard need or We the work,

Josh Goldberg

of that to adding Just that and seem grow contracts, with a dollars generating you're should loss here? it of would from on of possibly continue million EBITDA on healthy to mean, to I $XX show very that numbers based MCS your a some confident EBITDA me from how you're that. revenue million couple even that

Lee Ahlstrom

backlog work that very getting some is and a the potentially business you're would and the is I know about the made a might this like bigger, -- talking the various of will that but IoT think going I'll team SI grow. the in don't and this to this because It's in think sort segment the getting we I believe IoT see go the guidance business in quarters. add and made or But qualitatively we into of continuing now I overall, growth area where I clearly that we're remarks and off Apps I numbers Apps I to yes, & say, with XX% healthy the XX% efficiently. just & it shape backlog know of dealing revenue expect cost look year-over-year. to of some would that's to smaller expect year, of do I you what year laws business we grow back that growing

Josh Goldberg

An important question the... on

Steven Pickett

point terms done GX matter with an of will the view, at point, In and come headwinds EBITDA, so end cost will we point legal view the get to some as point well. -- of be from of at cost a some

Josh Goldberg

would to bit winning that thought the the it that, up quarter, fact grow SI we next your the months. of little was last Obviously, off backlog kind to more your business on think that, business, the million Xx a in talked backlog Just quarter. kind that But this went fourth XX SI good or margin. rolling year. And very I'm you added I XX so in $XX entering actually about I curious, Or looks you just of, of revenue will number are I impressive know be drive, able it's half to into in these gateway doubled this know XXXX? backlog the additional first it you be backlog, that, -- that, get it that year? will recognize that record number, your the won't helps you as But that cadence confident it are that just of even a revenue contracts you it contracts. much though you longer

Lee Ahlstrom

XX typically on And tend or other Josh. the Thanks, focused and revenue sort we year of being versus coming I Sure. SI I the years. months described business QX to saw comments. QX this to the and QX be more think X backlog anywhere of into QX. projects from couple SI These A how

hit bids. focused positive energy industry, the We've in uptick, that backlog that downturn are uptick are another in seen sign on continues. that capital sleeping. the number projects the the now pause the was maybe XXXX. years. responding They is for bidding. right definitely the in to out There goes big And So of bids about an we've X certainly that seen available ongoing after not a on team business SI in it's large projects XXXX, The industry

right guys Our of there in to they frankly, business in more than to of respond are almost opportunities out the there. in number terms could responding

the we're as use into to that is Apps comms think rightly as and IoT. as you continue I that by good businesses another the here, win very pointed about XXX% drug So of & saying their going SI ability as but out, well think world to that don't feel grow gateway the to and then where us we work, our backlog

Josh Goldberg

'XX, talking XXXX So said just to talking are and when going about about that? more third the quarter of you Or -- the you're revenue? you second you're see

Lee Ahlstrom

'XX be QX I about will talking year and in the QX and sort revenue, and this sorry, no. versus shape of of was hit in more QX which No, will I'm us XXXX QX. focused heavily

Josh Goldberg

contracts, some that get you of to your been those sometimes on the systems? MCS systems not are it's or know it. Got additional And the ones on your I SI Okay. in terms IoT have but business? able

Steven Pickett

And cases, group in is to that in Integration to have. categories. Yes, strategic mission indeed of we here System some find pull opportunities other a the revenue through

we're specifically that through currently have the we talked solution other to about solution one has executing, an developed pull -- larger projects such provide not did that that of on we well. opportunities just opportunity look So to management ruthless basically but but for other a as we'll solutions

Operator

I'd this remarks. And Lee I'm at no to further for like questions turn call closing time. to seeing back the Ahlstrom

Lee Ahlstrom

you, Thank earnings all right. call for Victor, us quarter All RigNet. and and thank you the year fourth for full joining on here

available, first XXXX today, the addressed if have office back be the in that I'll any weren't on May our earnings. you follow-up report in will of be to call. questions XXXX We quarter

free me and a have day. Thanks good ring. feel to please give a So

Operator

Everyone, and a you participating does disconnect. today's all our conference. conclude may gentlemen, in Ladies program, This you thank and great have day. for

RigNet (RNET) 16 Mar 192018 Q4 Earnings call transcript