November 11, 2016 - 9:00 AM EST
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Deep Down Reports Third Quarter 2016 Results

HOUSTON, Nov. 11, 2016 /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, 2016.

Innovative Subsea Solutions.

OPERATING RESULTS

For the third quarter of 2016, Deep Down reported net income of approximately $1.0 million, or $0.06 per diluted share, compared to a net loss of $0.6 million, or $0.04 loss per diluted share for the third quarter of 2015.

Revenues for the quarter ended September 30, 2016 were $9.2 million compared to revenues of $6.1 million for the quarter ended September 30, 2015.  The increase of just over $3.0 million (51 percent) is a result of the commencement of procurement and manufacturing activities on several offshore projects that were delayed in prior quarters.

Gross profit for the quarter ended September 30, 2016 was $3.3 million, or 36 percent of revenues, compared to $1.9 million, or 31 percent of revenues for the quarter ended September 30, 2015.  The $1.4 million, and 5 percent increases in gross profit and gross profit percentage, respectively, are due primarily to increased costs incurred on prolonged fixed-price projects for a large customer that impacted our gross profit and gross profit percentage for the three months ended September 30, 2015, which did not occur during the three months ended September 30, 2016.

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 September 30, 2016 was $1.5 million compared to Modified EBITDA loss of $0.01 million for the quarter ended September 30, 2015.  The $1.5 million increase is primarily attributable to our increase in revenues and gross profit, as mentioned above. 

At September 30, 2016, we had working capital of $14.6 million, including cash of $6.7 million.

Ronald E. Smith, Chief Executive Officer, stated, "More than two years following significant decreases in oil prices, the industry has adjusted to the new normal of lower prices.  As companies continue to adapt, the industry is transitioning towards focusing on the total cost of a project, rather than simply pushing for reduced prices.

"This transition is providing unique opportunities for us, as we assist our customers through their project execution strategies.  We are also pursuing multiple opportunities where we seek to leverage our core technologies in non-traditional areas of the energy industry, as well as providing innovative solutions for emerging segments of the oil industry.

"While we have seen a reduction in our backlog from recent historic highs, our cost rationalization efforts continue to bear fruit, resulting in as strong a balance sheet as we have ever had. 

"We intend to continue adjusting our operations to best serve our customers' needs."

EARNINGS CONFERENCE CALL

In connection with this earnings release, Deep Down will host its quarterly conference call Thursday, November 17, 2016 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: 18041610.

At the conclusion of the call, a replay will be available until December 1, 2016.  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.

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


Nine Months Ended


September 30,


September 30,


2016


2015


2016


2015

(In thousands, except per share amounts)







(As restated)

Revenues

$             9,165


$           6,147


$         19,489


$         18,516

Cost of sales

5,868


4,231


12,817


13,364

Gross profit

3,297


1,916


6,672


5,152

Total operating expenses

2,323


2,492


7,689


7,026

Operating income (loss)

974


(576)


(1,017)


(1,874)

Total other income (expense)

10


(66)


1,019


(85)

Income (loss) before income taxes

984


(642)


2


(1,959)

Income tax (expense) benefit

(5)


3


(16)


(11)

Net income (loss)

$                979


$             (639)


$              (14)


$          (1,970)

Net income (loss) per share, basic and diluted

$               0.06


$            (0.04)


$                   -


$            (0.13)

Weighted-average shares outstanding, basic and diluted

15,493


15,032


15,534


15,091









Modified EBITDA data:








Net income (loss)

$                979


$             (639)


$              (14)


$          (1,970)

Less gain on sale of Channelview property

-


-


(1,070)


-

Deduct (add back) interest (income) expense, net

(10)


75


51


200

Add back depreciation and amortization

483


429


1,295


1,270

Add back (deduct) income tax expense (benefit)

5


(3)


16


11

Add back share-based compensation

35


129


309


382

Modified EBITDA (EBITDA Loss)

$             1,492


$                 (9)


$              587


$             (107)









Cash flow data:








Cash provided by (used in):








Operating activities





$           2,653


$              806

Investing activities





2,867


(488)

Financing activities





833


(661)










September 30, 2016


December 31, 2015





Balance sheet data:








Cash

$             6,727


$           4,274





Current assets

19,336


16,823





Current liabilities

4,712


4,955





Working capital

14,624


11,868





Total assets

28,153


28,538





Total debt

-


2,747





Total liabilities

4,712


4,955





Stockholders' equity

23,441


23,583





 

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/deep-down-reports-third-quarter-2016-results-300361102.html

SOURCE Deep Down, Inc.


Source: PR Newswire (November 11, 2016 - 9:00 AM EST)

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