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Deep Down Announces Third Quarter Results
HOUSTON, Sept. 17 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC Bulletin Board: DPDW) announced today unaudited results for the third quarter ended September 30, 2009.
Revenues for the third quarter of 2009 were $8.4 million, compared to $11.7 million for the third quarter of 2008, for a 28% decrease. The reduction in revenue over the same prior year period was a result of customers delaying future projects or slowing down many of their offshore and deepwater projects. Net loss for the third quarter ended September 30, 2009, was $2.1 million as compared to net income of $1.6 million for the same period of 2008.
Gross profit decreased approximately $3.5 million to approximately $2.2 million for the three months ended September 30, 2009, a decrease of approximately 62% compared to the three months ended September 30, 2008. For the three months ended September 30, 2009, gross margins were negatively impacted by our large floatation order and by two other floatation orders, all which have incurred more costs than originally estimated. As such, gross margins decreased to 26 percent of revenue for the third quarter of 2009.
"Revenues in the third quarter improved by $2.2 million over the second quarter revenues while the loss before income taxes was lower by over $500,000 compared to the second quarter, and we expect operations to continue to improve during the fourth quarter," commented Eugene L. Butler, Chief Financial Officer. "The cost containment program, which was commenced in the second quarter is continuing and beginning to have a positive effect on general and administrative expenses."
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, distributed and drill riser 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. Deep Down provides these services through its subsidiaries. More information about Deep Down is available at www.deepdowncorp.com, by contacting the company at (281) 517-5000, or ir@deepdowninc.com.
One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered "forward-looking statements," generally preceded by words such as "plans," "expects," "believes," "anticipates," or "intends." We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.
DEEP DOWN, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
(In thousands) 2009 2008
-------------- ---- ----
ASSETS
Current assets:
Cash and cash equivalents $3,896 $2,495
Restricted cash - 136
Accounts receivable, net 4,206 10,772
Inventory 1,052 1,362
Costs and estimated earnings in excess
of billings on uncompleted contracts 748 708
Deferred tax asset 2,892 217
Prepaid expenses and other current assets 921 634
--- ---
Total current assets 13,715 16,324
Property and equipment, net 20,088 13,799
Intangibles, net 17,109 18,091
Goodwill 14,966 15,024
Other assets, net 1,126 458
----- ---
Total assets $67,004 $63,696
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $4,030 $4,319
Lease Receivable - -
Billings in excess of costs and
estimated earnings on uncompleted
contracts 3,252 2,315
Current portion of long-term debt 6,029 383
----- ---
Total current liabilities 13,311 7,017
Long-term debt, net 904 1,718
Deferred tax liabilities 2,892 1,126
----- -----
Total liabilities 17,107 9,861
------ -----
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock, $0.001 par value, 490,000
shares authorized, 180,451 and 177,351
shares issued and outstanding,
respectively 180 177
Additional paid-in capital 60,968 60,328
Accumulated deficit (11,251) (6,670)
------- ------
Total stockholders' equity 49,897 53,835
------ ------
Total liabilities and
stockholders' equity $67,004 $63,696
======= =======
Deep Down, Inc.
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended
September 30,
-------------
(In thousands except per share amounts) 2009 2008
----------------- ---- ----
Revenues $21,729 $25,852
Cost of sales 15,413 15,462
------ ------
Gross profit 6,316 10,390
Operating expenses:
Selling, general & administrative 10,302 9,414
Depreciation and amortization 1,242 883
----- ---
Total operating expenses 11,544 10,297
------ ------
Operating income (loss) (5,228) 93
Other income (expense):
Interest income 9 103
Interest expense (236) (3,484)
Loss on debt extinguishment - (446)
Other income 15 6
--- ---
Total other income (expense) (212) (3,821)
---- ------
Income (loss) before income taxes (5,440) (3,728)
Income tax (expense) benefit 859 351
--- ---
Net income (loss) $(4,581) $(3,377)
======= =======
Income (loss) per share:
Basic $(0.03) $(0.03)
====== ======
Weighted-average number of common shares
outstanding 176,276 131,744
======= =======
Diluted $(0.03) $(0.03)
====== ======
Weighted-average number of common shares
outstanding 176,276 131,744
======= =======
DEEP DOWN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
-------------
(In thousands) 2009 2008
-------------- ---- ----
Cash flows from operating activities:
Net loss $(4,581) $(3,377)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Interest income - (55)
Non-cash amortization of debt discount - 1,817
Non-cash amortization of deferred financing
costs - 763
Share-based compensation 643 424
Bad debt expense 126 1,053
Depreciation and amortization 2,389 1,642
(Gain) loss on disposal of equipment (21) 161
Deferred taxes payable (909) -
Changes in assets and liabilities: - -
Accounts receivable 6,440 942
Inventory 310 (821)
Costs and estimated earnings in excess of
billings on uncompleted contracts (40) (41)
Prepaid expenses and other current assets (287) (453)
Other assets (112) -
Accounts payable and accrued liabilities (289) (1,059)
Billings in excess of costs and estimated
earnings on uncompleted contracts 937 179
--- ---
Net cash provided by operating
activities 4,606 1,175
----- -----
Cash flows from investing activities:
Cash paid for acquisition of Flotation, net of
cash acquired of $235 - (22,162)
Proceeds from final settlement of acquisition
of Flotation 58 -
Cash paid for acquisition of Mako, net of
expenses - (4,237)
Purchases of property and equipment (5,536) (2,564)
Proceeds from sale of property and equipment 53 -
Cash paid for capitalized software (383) -
Purchase of investment (150) -
Note receivable, net of repayments (23) -
Restricted cash 136 375
--- ---
Net cash used in investing activities (5,845) (28,588)
------ -------
Cash flows from financing activities:
Proceeds from sale of common stock, net of
expenses - 37,060
Proceeds from sales-type lease - 587
Borrowings on long-term debt 3,000 5,604
Repayments on long-term debt (360) (12,889)
---- -------
Net cash provided by financing
activities 2,640 30,362
----- ------
Change in cash and equivalents 1,401 2,949
Cash and cash equivalents, beginning of period 2,495 2,206
----- -----
Cash and cash equivalents, end of period $3,896 $5,155
====== ======
SOURCE Deep Down, Inc.
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