USA: Deep Down Reports Improved First Quarter Results

USA Deep Down Reports Improved First Quarter Results

Deep Down, Inc. (“Deep Down”), an oilfield services company specializing in complex deepwater and ultra-deepwater oil production distribution system support services, reported net income of $0.2 million for the first quarter of 2013, an improvement of $0.5 million from the first quarter of 2012.

For the first quarter of 2013, Deep Down reported net income of $0.2 million, or $0.02 income per diluted share, compared to a net loss of $0.3 million, or $0.03 loss per diluted share, in the first quarter of 2012.

Revenues for the first quarter of 2013 were $6.2 million. Revenues for the first quarter of 2012 were $4.9 million. The $1.3 million increase (26 percent) in revenues occurred primarily due to increased demand by our customers for our technologically innovative solutions as a result of our consistently successful project execution.

Gross profit for the first quarter of 2013 was $2.2 million, or 35 percent of revenues. Gross profit for the first quarter of 2012 was $1.9 million, or 40 percent of revenues. The five percentage point decrease in gross profit occurred primarily as a result of a higher level of 2013 period planned repairs and maintenance on our revenue generating property, plant and equipment.

Operating expenses for the first quarter of 2013 were $1.9 million, or 31 percent of revenues. Operating expenses for the first quarter of 2012 were $2.1 million, or 44 percent of revenues. Much of the improvement in operating expenses is due to lower selling general and administrative expenses and amortization expense realized as a result of the consolidation of our Morgan City, Louisiana operations with our Channelview, Texas operations, which occurred in the third quarter of 2012.

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 $0.7 million in the first quarter of 2013. Modified EBITDA was $0.5 million in the first quarter of 2012. The $0.2 million increase in Modified EBITDA is due primarily to increased gross profit before depreciation expense of $262 due to increased demand for our technologically innovative solutions.

WORKING CAPITAL

At March 31, 2013, company had working capital of $6.9 million. Additionally, on March 5, 2013, entered into the fifth amendment of the bank credit agreement, which among other things, increased the committed amount under the revolving credit facility to $5 million from $2 million. Because of these factors, and because of cash company expects to generate from operations, and believes that it will have adequate liquidity to meet the future operating requirements.

EXECUTIVE MANAGEMENT

Ronald E. Smith, Chief Executive Officer, stated, “We are pleased with the results of the first quarter of 2013. As I have stated in the past, historically, the first quarter has been challenging for us, but we have started 2013 on a good note, and believe our results will be more favorable for the remainder of 2013.”

Press Release, May 16, 2013

 

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