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)
November
13, 2014
DEEP DOWN, INC.
(Exact name of registrant as specified
in its charter)
Nevada |
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0-30351 |
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75-2263732 |
(State or other jurisdiction
of incorporation) |
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(Commission File Number) |
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(I.R.S. Employer
Identification No.) |
8827 W. Sam Houston Pkwy N. Suite
100, Houston, TX 77040
(Address of principal executive offices)
(Zip Code)
(281) 517-5000
Registrant’s telephone number, including
area code
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:
o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
SECTION 2 – Financial Information
ITEM 2.02 |
RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
On November 13, 2014, Deep Down, Inc. issued a press release
announcing its financial results for the quarter ended September 30, 2014. A copy of the press release is furnished as Exhibit
99.1 to this report and is incorporated herein by reference.
SECTION 9 – Financial Statements and Exhibits
ITEM 9.01 |
FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits:
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99.1 |
Press Release issued by Deep Down, Inc. dated November 13, 2014 |
SIGNATURE
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 thereunto duly authorized.
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DEEP DOWN, INC. |
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By : |
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/s/ Eugene L. Butler |
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Eugene L. Butler |
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Executive Chairman and Chief Financial Officer |
Date: November 13, 2014
Exhibit 99.1
NEWS RELEASE
November 13, 2014 |
OTCQX: DPDW |
DEEP DOWN
REPORTS THIRD QUARTER 2014 RESULTS
HOUSTON, November
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 September 30, 2014.
OPERATING RESULTS
For the third quarter of 2014, Deep Down
reported net income of $1.2 million, or $0.08 per diluted share, compared to net income of $0.4 million, or $0.03 per diluted share,
for the third quarter of 2013.
Revenues for the quarter ended September
30, 2014 were $8.5 million, and were relatively flat when compared to revenues of $8.6 million for the quarter ended September
30, 2013. The $0.1 million decrease is the result of customer delays in certain projects due primarily to lower oil prices.
Gross profit
as a percentage of revenues for the third quarter of 2014 and 2013 was 41 percent and 29 percent, respectively. The twelve percentage-point
increase is due primarily to a loss recognized on a large fabrication project in the third quarter of 2013. In the third quarter
of 2014, our gross profit percentage returned to more normalized levels.
Selling, general and administrative expenses
(“SG&A”) for the quarter ended September 30, 2014 was $2.2 million, or 26 percent of revenues. SG&A for
the quarter ended September 30, 2013 was $2.1 million, or 24 percent of revenues. The $0.1 million increase in SG&A is due
primarily to added security costs at our new operating facility.
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 $1.8 million for the third quarter of 2014 versus $1.0 million for the third
quarter of 2013. The $0.8 million increase in Modified EBITDA was due to increased gross profit
before depreciation expense of $1.0 million. This was 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. Effective April 15, 2014,
we completed the renewal of our bank credit facility. At September 30, 2014, we had working capital of $16.2 million, including
cash of $6.0 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 projects that were delayed in the first half of the year are getting back on track, which is reflected in our
financial results. Our backlog remains fairly strong at $28.7 million at September 30, 2014. Our quoting continues to be very strong;
however, we are seeing some delays in commitments from our customers, particularly in the deepwater projects. We remain involved
in the planning of several major projects and we believe we will continue to grow with the offshore industry.”
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.
For Further Information
Investor Relations
Casey Stegman
casey@stonegateinc.com
Stonegate Inc.
972.850.2001
DEEP DOWN, INC.
SUMMARY FINANCIAL DATA
(Unaudited)
| |
Three Months Ended | | |
Nine Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
(in thousands, except per share amounts) | |
| | |
| | |
| | |
| |
Results of operations data: | |
| | | |
| | | |
| | | |
| | |
Revenues | |
$ | 8,462 | | |
$ | 8,639 | | |
$ | 20,472 | | |
$ | 23,953 | |
Cost of sales | |
| 4,998 | | |
| 6,164 | | |
| 13,046 | | |
| 15,792 | |
Gross profit | |
| 3,464 | | |
| 2,475 | | |
| 7,426 | | |
| 8,161 | |
Total operating expenses | |
| 2,228 | | |
| 2,117 | | |
| 7,251 | | |
| 6,411 | |
Operating income | |
| 1,236 | | |
| 358 | | |
| 175 | | |
| 1,750 | |
Total other income (expense) | |
| (25 | ) | |
| (39 | ) | |
| 219 | | |
| (115 | ) |
Income before income taxes | |
| 1,211 | | |
| 319 | | |
| 394 | | |
| 1,635 | |
Income tax (expense) benefit | |
| (32 | ) | |
| 62 | | |
| (23 | ) | |
| (8 | ) |
Net income | |
$ | 1,179 | | |
$ | 381 | | |
$ | 371 | | |
$ | 1,627 | |
| |
| | | |
| | | |
| | | |
| | |
Net income per share, basic and diluted | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.08 | | |
$ | 0.03 | | |
$ | 0.02 | | |
$ | 0.15 | |
Diluted | |
$ | 0.08 | | |
$ | 0.03 | | |
$ | 0.02 | | |
$ | 0.15 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted-average shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 15,131 | | |
| 11,691 | | |
| 15,195 | | |
| 10,728 | |
Diluted | |
| 15,131 | | |
| 11,739 | | |
| 15,195 | | |
| 10,729 | |
| |
| | | |
| | | |
| | | |
| | |
Modified EBITDA data: | |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 1,179 | | |
$ | 381 | | |
$ | 371 | | |
$ | 1,627 | |
Add back interest expense, net | |
| 47 | | |
| 52 | | |
| 156 | | |
| 143 | |
Add back depreciation and amortization | |
| 396 | | |
| 393 | | |
| 1,202 | | |
| 1,157 | |
Add back (deduct) income tax expense (benefit) | |
| 32 | | |
| (62 | ) | |
| 23 | | |
| 8 | |
Add back Panama exit costs accrual | |
| – | | |
| – | | |
| 192 | | |
| – | |
Add back share-based compensation | |
| 129 | | |
| 196 | | |
| 564 | | |
| 471 | |
Deduct equity in net income of joint venture | |
| (32 | ) | |
| – | | |
| (32 | ) | |
| (1 | ) |
Modified EBITDA | |
$ | 1,751 | | |
$ | 960 | | |
$ | 2,476 | | |
$ | 3,405 | |
| |
| | | |
| | | |
| | | |
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(in thousands) | |
| | | |
| | | |
| | | |
| | |
Cash flow data: | |
| | | |
| | | |
| | | |
| | |
Cash provided by (used in): | |
| | | |
| | | |
| | | |
| | |
Operating activities | |
| | | |
| | | |
$ | 2,028 | | |
$ | (1,284 | ) |
Investing activities | |
| | | |
| | | |
| (55 | ) | |
| (355 | ) |
Financing activities | |
| | | |
| | | |
| (5,146 | ) | |
| 6,060 | |
| |
September 30, 2014 | | |
December 31, 2013 | |
(in thousands) | |
| | |
| |
Balance sheet data: | |
| | | |
| | |
Cash (included in the September 30, 2014 balance is a compensating balance of
$3,900) | |
$ | 5,987 | | |
$ | 5,260 | |
Current assets | |
| 20,424 | | |
| 16,614 | |
Current liabilities | |
| 4,181 | | |
| 4,705 | |
Working capital | |
| 16,243 | | |
| 11,909 | |
Total assets | |
| 38,097 | | |
| 38,302 | |
Total debt | |
| 3,851 | | |
| 4,934 | |
Total liabilities | |
| 7,087 | | |
| 7,923 | |
Stockholders' equity | |
| 31,010 | | |
| 30,379 | |