HOUSTON, May 13, 2014 /PRNewswire/ -- Deep Down, Inc.
(OTCQX: DPDW) ("Deep Down" or the "Company"), an oilfield services
company specializing in complex deepwater and ultra-deepwater oil
production distribution system support services, today reported
financial results for the quarter ended March 31, 2014.
OPERATING RESULTS
For the first quarter of 2014, Deep Down reported net income of
$0.4 million, or $0.02 income per diluted share, compared to net
income of $0.2 million, or
$0.02 income per diluted share, for
the first quarter of 2013.
Revenues for both the first quarter of 2014 and the first
quarter of 2013 were $6.2
million.
Gross profit for both the first quarter of 2014 and the first
quarter of 2013 was $2.2 million; 36
percent of revenues in the 2014 period and 35 percent of revenues
in the 2013 period.
Selling, general and administrative expenses ("SG&A") for
the first quarter of 2014 was $2.1
million, or 35 percent of revenues. SG&A for the first
quarter of 2013 was $1.9 million, or
30 percent of revenues. The $0.2
million increase was due to increased security expense at
our new facility, increased share-based compensation expense due to
new grants, and increased legal expense associated with the
collection of our receivables.
Other income (expense) for the quarter ended March 31, 2014 improved by $0.3 million compared to the first quarter of
2013 primarily as a result of the gain recognized on the sale of a
significant piece of equipment.
The Company's management evaluates its financial performance
based on a non-GAAP measure, Modified EBITDA, which consists of
earnings (net income or loss) available to common shareholders
before net interest expense, income taxes, depreciation and
amortization, and other non-cash and non-recurring
charges. Modified EBITDA was $1.0
million for the first quarter of 2014 vs. $0.7 million for the first quarter of 2013. The
$0.3 million increase in Modified
EBITDA was due to a $0.4 million
improvement in other income (expense), and a $0.1 million increase in gross profit before
depreciation, partially offset by a $0.2
million increase in SG&A before share-based compensation
expense.
LIQUIDITY / CAPITAL RESOURCES
In the third quarter of 2013, in a private placement, we issued
4.4 million shares of our common stock raising net cash proceeds of
$7.6 million. We are currently in
negotiations with our primary bank for the renewal of our credit
facility, which expired April 15,
2014. We expect to have this renewal in place by
May 15, 2015. At March 31, 2014, we had working capital of
$12.5 million, including cash and
cash equivalents of $5.3 million.
Because of these factors, and because of cash we expect to generate
from operations, we believe that we will have adequate liquidity to
meet our future operating requirements.
EXECUTIVE MANAGEMENT
Ronald E. Smith, Chief Executive
Officer, stated, "The industry continued to strengthen in the first
quarter, particularly in the major offshore deepwater projects. The
Gulf of Mexico has continued to
strengthen, as well as many of the international deepwater and
ultra-deepwater projects, such as offshore Brazil. We believe that the industry, and in
particular the subsea market we serve, will continue to strengthen
throughout the year.
"Revenues for our first quarter, which is typically our slowest
quarter, were flat compared to the first quarter of 2013. Our
backlog, however, has increased almost 25 percent to $30 million, compared to $25 million at the end of the first quarter of
2013. Our number of employees has grown from 80 as reported in our
2013 10-K to 84 currently, and will continue to grow with the
increase in business. Based on the number of projects we are
working on, and the associated quotes we continue to make, we
believe our operations will continue to grow.
"We recently received our first order through our new Brazilian
entity. Activity in Brazil has
been slow to develop, but we believe this first order is key to our
future participation in the subsea market there."
EARNINGS CONFERENCE CALL
In connection with this earnings release, Deep Down will
host its annual conference call on Wednesday, May 14, 2014 at 3:30 PM Central Time (4:30
PM Eastern). Interested investors are invited to dial the
toll free number at (877) 303-6187 and provide the Conference ID:
42068415.
At the conclusion of the call, a replay will be available until
May 19, 2014. To access the
replay of the call dial (855) 859-2056 and provide the same
Conference ID.
The call can also be accessed via the web by going to the
Investor Relations section of the Company's website at
www.deepdowninc.com.
About Deep Down, Inc.
Deep Down, Inc. is an oilfield services company serving the
worldwide offshore exploration and production industry. Deep Down's
proven services and technological solutions include distribution
system installation support and engineering services, umbilical
terminations, loose-tube steel flying leads (LSFL), installation
buoyancy, ROVs and tooling, marine vessel automation, control, and
ballast systems. Deep Down supports subsea engineering,
installation, commissioning, and maintenance projects through
specialized, highly experienced service teams and engineered
technological solutions. The company's primary focus is on more
complex deepwater and ultra-deepwater oil production distribution
system support services and technologies, used between the platform
and the wellhead. More information about Deep Down is available at
www.deepdowncorp.com.
Forward-Looking Statements
Any forward-looking statements in the preceding paragraphs of
this release are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that such forward-looking statements involve risks and
uncertainties in that actual results may differ materially from
those projected in the forward-looking statements. In the course of
operations, we are subject to certain risk factors, competition and
competitive pressures, sensitivity to general economic and
industrial conditions, international political and economic risks,
availability and price of raw materials and execution of business
strategy. For further information, please refer to the Company's
filings with the Securities and Exchange Commission, copies of
which are available from the Company without charge.
DEEP DOWN,
INC.
|
SUMMARY FINANCIAL
DATA
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2014
|
|
2013
|
(in thousands,
except per share amounts)
|
|
|
|
Results of
operations data:
|
|
|
|
Revenues
|
$
6,163
|
|
$
6,158
|
Cost of
sales
|
3,914
|
|
3,992
|
Gross
profit
|
2,249
|
|
2,166
|
Total operating
expenses
|
2,180
|
|
1,895
|
Operating
income
|
69
|
|
271
|
Total other income
(expense)
|
312
|
|
(26)
|
Income before income
taxes
|
381
|
|
245
|
Income tax
expense
|
(9)
|
|
(21)
|
Net income
|
$
372
|
|
$
224
|
Net income per share,
basic and diluted
|
$
0.02
|
|
$
0.02
|
Weighted-average
shares outstanding, basic and diluted
|
15,238
|
|
10,152
|
|
|
|
|
Modified EBITDA
data:
|
|
|
|
Net income
|
$
372
|
|
$
224
|
Add back interest
expense, net
|
61
|
|
37
|
Add back depreciation
and amortization
|
410
|
|
379
|
Add back income tax
expense
|
9
|
|
21
|
Add back share-based
compensation
|
135
|
|
40
|
Subtract equity in
net income of joint venture
|
-
|
|
(1)
|
Modified
EBITDA
|
$
987
|
|
$
700
|
|
|
|
|
Cash flow
data:
|
|
|
|
Cash provided by
(used in):
|
|
|
|
Operating
activities
|
$
(46)
|
|
$
(753)
|
Investing
activities
|
624
|
|
(125)
|
Financing
activities
|
(547)
|
|
(89)
|
|
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
(in
thousands)
|
|
|
|
Balance sheet
data:
|
|
|
|
Cash and cash
equivalents
|
$
5,291
|
|
$
5,260
|
Current
assets
|
16,942
|
|
16,614
|
Current
liabilities
|
4,399
|
|
4,705
|
Working
capital
|
12,543
|
|
11,909
|
Total
assets
|
37,938
|
|
38,302
|
Total debt
|
4,512
|
|
4,934
|
Total
liabilities
|
7,177
|
|
7,923
|
Stockholders'
equity
|
30,761
|
|
30,379
|
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SOURCE Deep Down, Inc.