HOUSTON, May 12, 2017 /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, 2017.
For the first quarter of 2017, Deep Down reported net income of $64,000, or $0.00 earnings per diluted share, compared to a net loss of $450,000, or $0.03 loss per diluted share for the first quarter of 2016.
Revenues for the quarter ended March 31, 2017 were $5.6 million compared to revenues of $4.4 million for the quarter ended March 31, 2016. The $1.2 million (29 percent) increase is primarily a result of work completed on certain large projects, as well as revenue generated for offshore work during the three months ended March 31, 2017.
Gross profit in the first quarter of 2017 was $2.6 million, or 47 percent of revenues, compared to $1.4 million, or 33 percent of revenues, for the three months ended March 31, 2016. The $1.2 million and 14 percent increases in gross profit and gross profit percentage, respectively, were due primarily to increased revenues and a larger proportion of higher margin service work.
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 for the quarter ended March 31, 2017 was $0.5 million compared to a Modified EBITDA loss of $0.9 million for the quarter ended March 31, 2016. The $1.4 million increase in Modified EBITDA was due to increased net income in 2017, as well as exclusion of gain on sale of assets in 2016 related to our Channelview property. At March 31, 2017, we had working capital of $11.9 million, including cash of $8.0 million.
Ronald E. Smith, Chief Executive Officer, stated, "The oil and gas industry has largely adapted to the new normal of lower oil prices. While there is some optimism about higher prices in the mid to long-term horizon, most companies are developing project strategies with current prices in mind.
"Our strategic shift towards working primarily for operators continues to show results. These operators are increasingly realizing the cost and schedule benefits of working directly with us, by eliminating the need for equipment manufacturers, without requiring us to reduce our competitive prices. The increased costs of packaging products through the equipment manufacturers outweigh the previously envisioned benefits, especially with the increased focus on standardization and cost optimization across the industry.
"While we initially saw some prolonged engineering cycles resulting from our modified contracting and project execution strategy, we are now reaping the fruits of this strategy. The positive results of the quarter ended March 31, 2017 are a testament to the mutually beneficial, open and collaborative nature of some of our large projects. Our customers have also realized significant cost savings, while getting the most ideal solutions.
"We continue to feel confident that our backlog, strong balance sheet, and continuous organizational optimization, will enable us to continue providing the most value for our customers, shareholders and employees."
EARNINGS CONFERENCE CALL
In connection with this earnings release, Deep Down will host its quarterly conference call on Tuesday, May 16, 2017 at 4:30 PM Eastern Time (3:30 PM Central Time). Interested investors are invited to dial the toll free number at (877) 303-6187 and provide the Conference ID: 18901139.
At the conclusion of the call, a replay will be available until May 30, 2017. 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.deepdowninc.com.
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.