8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 6, 2019

RigNet, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-35003	76-0677208
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS 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)

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2)

Emerging growth company  ☐

If an emerging growth, 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  ☐

Item 7.01. Regulation FD Disclosure.

Beginning on December 6, 2019, the management of RigNet, Inc. (the “Company”) will host a series of investor meetings from time to time using the presentation materials (the “Presentation Materials”) attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference.

The information disclosed in this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act except as expressly set forth by specific reference in such filing.

Safe Harbor Statement

Statements contained in the Presentation Materials that state expectations or predictions about the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act and the Exchange Act. The Company’s actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include “Risk Factors” and the other factors appearing in the documents that the Company has filed with the Securities and Exchange Commission. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Readers of the Presentation Materials should consider these factors in evaluating, and are cautioned not to place undue reliance on, the forward-looking statements contained therein. The Company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits. The following is furnished as an exhibit to this Current Report on Form 8-K:

Exhibit Number	Exhibit Description
99.1	Presentation of RigNet, Inc. as of December 6, 2019.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

RIGNET, INC.
By:	/s/ Brad Eastman
	Brad Eastman
	Senior Vice President & General Counsel

Dated: December 6, 2019

EX-99.1

RigNet Update

November 2019

Enabling Intelligence.

Delivering Results.

Exhibit 99.1

2

2

2

2

Enabling Intelligence.  Delivering Results.

Forward-looking statements and non-gaap measures

Certain statements made in this presentation may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private

Securities Litigation Reform Act of 1995 —

that is, statements related to the future, not past, events.  Forward-looking statements are based on current expectations and include any

statement that does not directly relate to a current or historical fact.  In this context, forward-looking statements often address our expected future business and financial performance,

and often contain words such as "anticipate," "believe," "intend, “will”, "expect," "plan" or other similar words.  Forward-looking statements in this presentation include, without limitation,

statements

regarding

the

timing

of

the

closing

of

future

acquisitions,

if

at

all,

or

the

benefits

provided

by

such

acquisitions,

and

margin

expectations

in

our

businesses.

These

forward-

looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate.  Actual results and future events could differ materially from those anticipated in

such statements.  Factors that could cause actual results to differ materially from those contemplated in our forward-looking statements include, among others: adverse changes in

economic

conditions

in

the

markets

we

operate;

the

extent,

timing

and

overall

effects

of

competition

in

our

industry;

the

impact

of

new,

emerging

or

competing

technologies;

material

changes

in

the

communications

industry

that

could

adversely

affect

vendor

relationships

with

equipment

and

network

suppliers

and

customer

relationships

with

wholesale

customers;

unfavorable results of litigation or intellectual property infringement claims asserted against us; unanticipated increases or other changes in our future cash requirements; the effects of

federal

and

state

legislation,

and

rules

and

regulations

governing

the

communications

industry;

the

impact

of

equipment

failure,

natural

disasters

or

terrorist

acts;

and

those

additional

factors set forth under the caption “Risk Factors” and other factors described in our filings with the SEC, including under the section “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” in our Form 10-K for the fiscal period December 31, 2018, which is incorporated by reference herein.

RigNet undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this presentation. 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. 

All forward-looking statements are qualified in their entirety by this cautionary statement.

In

addition

to

U.S.

GAAP

financials,

this

presentation

includes

certain

non-GAAP

financial

measures.

These

non-GAAP

measures

are

in

addition

to,

not

a

substitute

for

or

superior

to,

measures of financial performance prepared in accordance with GAAP. Definitions of these non-GAAP measures and reconciliations between certain GAAP and non-GAAP measures

are included in the appendix to this presentation.

2

3

3

3

3

Enabling Intelligence.  Delivering Results.

RigNet at a Glance

3

4

4

4

4

Enabling Intelligence.  Delivering Results.

RigNet’s Strategic Transformation

$192.5,

87%

$21.6,

10%

$6.5,

3%

Total Revenue: $220.6 million

MCS

SI

Apps & IoT

4

$125.6,

70%

$28.0,

16%

$25.3,

14%

MCS

SI

Apps & IoT

2016

9M19

Move Up the Stack

Expand Across

Energy Value Chain

Acquire New

Capabilities

Build Scale

Fix and Leverage SI

Enter New Verticals

Built for the Future of Remote Communications

Total Revenue: $178.8 million

5

5

5

5

Enabling Intelligence.  Delivering Results.

RigNet’s Evolving Business Mix

84%

88%

90%

87%

87%

83%

79%

73%

78%

70%

69%

71%

74%

68%

69%

13%

9%

7%

11%

8%

12%

11%

16%

12%

20%

19%

18%

12%

18%

16%

3%

3%

3%

3%

5%

5%

10%

10%

10%

11%

12%

11%

14%

13%

15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

Managed Services

Systems Integration

Applications & Internet-of-Things

5

•

Steadily growing contribution

from Apps & IoT

–

12.2% CAGR of contribution

from 1Q16 to 3Q19

–

Continued growth expected

driven largely by Intelie

•

Improved performance of SI

segment contributing to more

opportunities and more

revenue

•

MCS segment lower as a

percentage of total revenue,

but relatively stable and tied

to oil and gas recovery

% of Quarterly

Revenue

6

6

6

6

Enabling Intelligence.  Delivering Results.

3Q19 and Nine Months 2019 Financial Highlights: Solid Performance

Total Revenues

Segment* Operating

Income

Gross Margin**

Adjusted EBITDA**

3Q19

vs. 3Q18

9M 19

9M 18

$60,993

$13,555

41.5%

$11,010

6%

18%

4 bps

+26%

$178,835

$70,198

39.3%

$29,171

0.1%

+3%

1 bps

+20%

$ Thousands

*   Segments defined as MCS, Apps/IoT, SI

** Note:  See Appendix for definitions and calculation of Adjusted EBITDA and Gross Margin

Strong performance on Revenues, Operating Income and Adjusted EBITDA

7

7

7

RigNet’s Three Complimentary Business Segments

3Q19

vs. 3Q18

$9,265

$9,673

$42,055

$ Thousands

Managed

Communication Services

Systems Integration

Apps & IoT

Move up stack to deliver

higher-value solutions

across many verticals

Segment* Revenues

Increase win rate, manage

risk, and expand margins

Build scale, leverage

efficiencies & bundle with

Apps & IoT for pull-through

Segment Strategy

*   Segments defined as MCS, Apps/IoT, SI

$7,463

$11,122

$41,205

Apps

IoT

& SCADA

7

8

8

8

8

Enabling Intelligence.  Delivering Results.

Current Market Dynamics

•

Equity market uncertainty driven by US/China trade war,

BREXIT, and global recession concerns

•

Continued energy sector volatility, particularly offshore

Slowly increasing rig utilization, but a long way to go

Strong pipeline of large energy projects including LNG and

FPSOs

•

Continued cost and margin pressures driving operators’

and service companies’ critical need to digitally

transform

•

Increasing technological sophistication of assets and

crew welfare drawing more bandwidth

•

Energy companies and infrastructure under ubiquitous

cyber threat

•

Real-time machine learning coming of age

8

9

9

9

9

Enabling Intelligence.  Delivering Results.

Managed Communications Services (MCS)

184

182

188

190

191

184

185

182

184

316

304

310

320

332

347

368

375

384

165

172

176

177

187

181

180

183

184

510

513

525

610

640

611

627

644

634

0

200

400

600

800

1000

1200

1400

1600

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

Site Count Growth

Offshore Rigs

Offshore Production

Maritime

Other

1,386

1,175

1,171

1,199

1,350

+3%

Year on

Year

•

70% of 9M19 revenues; 36-40% margins

•

End-to-end service assuring maximum

uptime, reliability and security that

enables:

–

Fully-managed voice and data networks

–

Video surveillance and collaboration

–

Real-time operational monitoring

–

Data protection (Cyphre)

–

Machine learning (Intelie)

•

Own and install communications

infrastructure

•

Satellite backhaul with L, C, Ka, and Ku

bands, fiber, microwave, cellular, and

cellular

•

Bundling Intelie and Cypher with MCS

creating competitive advantage with

customers

1,297

1,323

1,360

1,384

71%

29%

Jackups

Floaters

RigNet’s

3Q19

Offshore

Rig Split

31

159

RigNet

Other

RNET’s

Share of

FPSO

Market

38%

36%

0%

10%

20%

30%

40%

50%

60%

Jackups

Floaters

3Q19 Offshore

Global Rig

Market Share

Source:  Company, RigLogix

10

10

10

10

Enabling Intelligence.  Delivering Results.

MCS Offshore Segment Dynamics

10

Jackup Market Utilization (Built after 2000)

Source:  SpareBank1 Markets; SBM; Rystad Energy

Drillship Market Utilization

Projected FPSO Project FID

12

11

11

0

2

4

6

8

10

12

14

2019 (Aug.

forward)

2020

2021

•

Largely projected for South

America with Petrobras as

the leading operator by a

wide margin

•

RigNet has won 17 FPSOs

in last 36 months, including

10 with Petrobras

•

High data intensity

Expected new FPSO

Construction Awards

•

Despite a challenging equity market, offshore activity has

continued to be stable or slightly increasing

•

Newer, higher specification rigs are preferred.  These assets

are generally more ‘connected,’ requiring higher bandwidth

as well as creating pull-through opportunities for additional

RigNet solutions

•

Offshore production investment has resumed after a multi-

year pause, with more than 30 FPSOs expected to be

approved for construction over the next three years

11

11

11

11

Enabling Intelligence.  Delivering Results.

RNET Owned US GoM Infrastructure Coverage

11

•

RNET WiMax/Microwave Coverage

o

Largest over-water digital microwave communications

network in the world built > 10 years ago

o

Backbone built on 56 fully-owned and managed nodes on

fixed and floating platforms in the central GoM

o

Over 24,000 square miles of coverage

o

Supports more than 85 oil and gas customers including

Shell, Chevron, ExxonMobil, etc.

o

Multiple nested rings; stabilized solutions for floating

platforms with VSAT failover

•

RNET / TMOB LTE Coverage

o

Installed in 2018/2019 in a partnership between RNET and

T-Mobile

o

IP-based technology

o

4G and 5G enabled; Voice and data

o

600/700 MHz frequencies for greatest penetration and

propagation

o

Covers over 60,000 square miles for B2B applications;

more than twice as far RNET’s traditional WiMax

o

RNET and T-Mobile split revenue from roaming consumers

(commercial and private); free to T-Mobile customers

o

RNET able to offer private B2B LTE networks to industrial

customers

12

12

12

12

Enabling Intelligence.  Delivering Results.

Systems Integration (SI)

•

•

$35 million in project backlog as of 9/30/19

•

Fully-managed turnkey capital integration projects

–

Voice and data communications, radio, safety, and security subsystems

–

Early Works and Permanent Plant systems/infrastructure

•

Delivering SI solutions for more than 40 years with over 160

executed projects globally

–

Onshore and Offshore –

for new and existing assets

–

Platforms, FPSOs, Refineries, LNG and Ethane Cracker facilities

•

Margin expansion opportunities as we focus on efficiencies and

improved project management (mid-20% -

30%+ depending on

project)

•

Successfully converting projects into recurring revenue business

EPCs

Operators

16% of 9M19 Revenues

13

13

13

13

Enabling Intelligence.  Delivering Results.

13

RigNet’s Apps & IoT: a rapidly growing segment

Solutions

•

One of the largest IoT/SCADA footprints in North

America operating SkyEdge I and SkyEdge II

•

Global leader in SCADA M2M traffic

•

Solutions harness and

protect mission-critical

information

to enhance

business performance :

–

Intelie

collects and analyzes operational data to drive

real-time mission-critical decisions that optimize

business performance

–

Cyphre

©

,

with

BlackTIE

®

Technology,

provides

best-in-

class data protection and cybersecurity

–

Adaptive Video Intelligence (AVI) uses lower

bandwidth to stream high-quality video content

–

CrewConnect™ portfolio provides internet and

infotainment services to  crews in remote locations

–

MetOcean Systems provide accurate, reliable weather

data

6.5

15.6

25.7

25.3

0

5

10

15

20

25

30

2016

2017

2018

9M19

Apps & IoT Revenue Growth

$ million

+140%

+65%

•

Apps & IoT is currently RigNet’s fastest growing

segment

•

Positioned to become the growth engine of the

company; not reliant upon MCS growth

•

Competitively distinctive

•

14% of 9M19 revenues; margins at 50%+

•

3Q19 Split:  55% IoT; 45% Apps

14

14

14

14

Enabling Intelligence.  Delivering Results.

Cybersecurity: RigNet’s ECS Protects Critical Infrastructure

14

Middle East

North

America

RoW

Global Energy Industry Cyberattacks

BitSight scores are a standard

measure of network security

Advanced

Intermediate

Basic

BitSight

Rating

350

incidents direct

at energy companies

between 2011-

2015

RigNet

Average of Top 2

Global Field Services

Average of Top 3

Energy VSAT

Providers

(excluding RigNet)

Average of Top 3

Energy LTE Providers

(excluding RigNet)

300

400

500

600

700

800

730

597

391

313

15

15

15

15

Enabling Intelligence.  Delivering Results.

Commercializing

15

Intelie LIVE Platform for real-time, advanced analytics

“Intelie is to real-time, machine learning what Excel is to financial analysis”

Safety/Environment

Operations

Non-Energy

Energy

Hourly/daily sales

predictions

2010

ATM fraud detection

2010

Mud weight prediction

in pre-salt

2013

Planning

Basic Well Design

2016

Maritime vessel fuel

prediction, fuel loss

prevention

2015

Drilling ROP prediction

2016

Emissions monitoring

and prediction

2016

Drilling NPT reduction/

problem insight

2016

Drilling safety

enhancement

2018

Pressure pumping

monitoring and

maintenance

2018

Drillship DP monitoring

2018

People and asset

tracking

2018

BOP negative pressure

testing

2018

Car rental monitoring

2013

Manufacturing utilities

monitoring and

optimization

2019

Plus:

•

Multiple additional Super-majors

•

Major onshore pressure pumping

company

•

Non-energy companies

SEEDS Drilling,

Workover & Completion

2017

Well Barrier

2018

Not comprehensive

16

16

16

16

Enabling Intelligence.  Delivering Results.

Intelie Use Cases

16

Three specific use cases:

-

Diagnostics for subsea

BOPs

-

Fuel management for

seagoing vessels

-

Pressure integrity at the

wellhead

Intelie can not only be

accessed in the office or a

real-time operations center,

live dashboards can be

accessed directly from a

user’s Apple or Android

phone.

For a demonstration, use

your phone to take a

picture of the QR code and

go to the website.

17

17

17

17

Enabling Intelligence.  Delivering Results.

Intelie Use Cases—Flywheel Effect from SI

17

RigNet has partnered with Certified

Safety to deliver the Connected

Worker Initiative (CWI) to GCCV, a

large petrochemical plan being built

on the Gulf Coast.

The technology combines Intelie LIVE

with a digital tracking badge that will

enable workers to monitor and

respond in real-time to situations that

include:

-

Man down, including summoning

emergency personnel

-

Zone violation, to ensure

personnel don’t enter

unauthorized areas

-

Muster alerts, to notify, guide, and

account for workers in the event of

an emergency

The system also delivers KPI reports

to establish baselines and track

performance.

Connected Worker Initiative

Improve on-site communication

Enhance safety / security

Tighten teamwork

Help remove obstacles

Improve processes

18

18

18

18

Enabling Intelligence.  Delivering Results.

18

Digital transformation strategies driving

increased need for “ultra-secure” bandwidth and

actionable intelligence

Unique, holistic, end-to-end solutions provider

with a growing portfolio of advanced technology

& software, services, and expertise

Leading position in oil and gas with growing

presence in other verticals

Global footprint with expanding universe of

significant long-term, regional partnerships

Increasing revenues and EBITDA margins

Rapidly growing Apps & IoT differentiation

Focus on deleveraging and strengthening

balance sheet

RigNet delivers the advanced software,

optimized industry solutions, and ultra-

secure communications infrastructure

that allows the oil and gas industry, and

others, to finally realize the business

results of digital transformation.

RigNet:  Well-Positioned for Further Success

Enabling Intelligence.  Delivering Results.

15115 Park Row, Suite 300 |

Houston, TX  77084 |

USA

www.rig.net

NASDAQ:  RNET

Investor Contact:

Lee M. Ahlstrom

SVP & CFO

281.674.0100

20

20

Enabling Intelligence.  Delivering Results.

RigNet Non-GAAP Reconciliation

Adjusted

EBITDA

Adjusted

EBITDA

is

a

financial

measure

that

is

not

calculated

in

accordance

with

generally

accepted

accounting

principles,

or

GAAP.

We

refer

you

to

the

Company’s

recent

10-K

filing

for

the

year

ended

December

31,

2018

for

a

more

detailed

discussion

of

the

uses

and

limitations

of

Adjusted

EBITDA.

We

define

Adjusted

EBITDA

as

net

loss

plus

interest

expense,

income

tax

expense

(benefit),

depreciation

and

amortization,

impairment

of

goodwill,

intangibles,

property,

plant

and

equipment,

(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,

acquisition

costs,

executive

departure

costs,

restructuring

charges

and

non-recurring

items.

Gross

Margin

We

define

Gross

Margin

for

any

period

as

the

difference

between

Revenues

and

Costs

of

Revenues

(excluding

Depreciation

and

Amortization);

that

difference

divided

by

Revenues.

21

21

21

21

Enabling Intelligence.  Delivering Results.

Executive Management

21

Steve Pickett

CEO & President

Joined May 2016

Brendan Sullivan

Chief Technology/

Information Officer

Joined May 2017

Brad Eastman

SVP, General

Counsel

Joined November 2017

Jay Hilbert

SVP, Global Sales

Joined November 2016

Ed Traupman

VP/GM, Products &

Services

Joined November 2016

Egbert Clarke

VP, Operations

Joined July 2017

Lance Smith

VP, Cyphre

Joined May 2017

Lelio Souza

VP, Intelie

Joined March 2018

Jackson Markley

VP, Corporate

Development

Joined June 2018

Lee M. Ahlstrom

SVP & CFO

Joined August 2018

Keith Frederick

Chief Information Security

Officer

Joined November 2017

Jamie Barnett

Rear Admiral USN (Retired)

SVP, Government Services

Joined January 2019

22

22

22

22

Enabling Intelligence.  Delivering Results.

OIL & GAS DRILLING

OIL & GAS OPERATORS

CONTRACTORS

SERVICE COMPANIES

OTHER

RigNet Major Global Customers

23

23

23

23

Enabling Intelligence.  Delivering Results.

23

RigNet’s Apps & IoT: Why Invest?

Addressable Digital Oilfield Market

Significant scale:  “…the digital oilfield market is poised to

surpass US $30.7 billion by 2020, with

a compound annual growth rate

(CAGR)

of

5%

from

2015.”

Customer Value

Fewer people:  “… the changes could reduce the number

of jobs [done by a well logger] by more than

25%...”

Better decisions:  “what we’re trying to do is help the

people who make the decisions to make

those decisions with additional support

from

the

intelligence

that

we’ve

created.”

Lower costs:  “The company’s production unit … has

reduced its noncontractor workforce by

40%, largely through technology updates,

and has cut lease operating expenses 48%

since

2014.…”

1

https://www.ogj.com/articles/ogfj/print/volume-14/issue-9/features/the-next-generation-

digital-oilfield.html

2

https://www.wsj.com/articles/oils-new-technology-spells-end-of-boom-for-roughnecks-

1531233085

3

https://www.forbes.com/sites/bernardmarr/2019/01/18/the-incredible-ways-shell-uses-

artificial-intelligence-to-help-transform-the-oil-and-gas-giant/#29c278392701

4

https://www.bcg.com/publications/2019/digital-value-oil-gas.aspx

Opportunity

for

Savings

in

Upstream

Alone

is

Significant

4

1

2

3

2

24

24

24

24

Enabling Intelligence.  Delivering Results.

Cyphre Products:

RigNet’s Cyphre technology delivers next generation network and

data security

•

Unique, fully-managed service providing powerful encryption for data in-transit,

data at-rest, and encryption keys

•

Delivers best-in-class encryption on all network types (satellite, public internet,

private WAN, cloud, etc.)

•

In

satellite

applications,

hardware

solution

saves

~20

-

40%

bandwidth

over

traditional software encryption solutions with ultra-low latency

•

Always-on protection with “set and forget” administration

•

No switching costs; easily integrated into existing data protection technologies

Channel partners reselling

Cyphre in USA, AsiaPacific, and

MENA

CyphreLINK

CyphreLOCK

CyphreCERT

CyphreKey

management