HOUSTON, Aug. 21 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC Bulletin Board: DPDW) announced today unaudited results for the second quarter ended June 30, 2009.
Revenues for the second quarter of 2009 were $6,200,595, compared to $7,920,196 for the second quarter of 2008, for a 22% 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 second quarter ended June 30, 2009, was $1,761,094 as compared to a net loss of $4,865,373 for the same period of 2008.
Gross profit decreased approximately $0.5 million to approximately $1.9 million for the three months ended June 30, 2009, a decrease of approximately 22% compared to the three months ended June 30, 2008. This decrease in gross profit was consistent with the decrease in total revenue. Accordingly, our gross margins remained constant at 30% of revenue for the second quarter of 2009.
"Operations for the past six months have been negatively impacted by the worldwide recession, lower oil prices and delays in many of our major projects," commented Eugene L. Butler, Chief Financial Officer. "We have also had a slow start on the production of our large floatation order. As a result of this downturn in the industry, our operations in the first half of 2009 were significantly lower than expected and had a negative EBITDA of approximately $1.8 million. The third quarter of 2009 started out sluggish, however, we are finally commencing the production cycle of our large floatation order, we have several ROVs that have started working again, and our offshore service jobs are increasing. Our backlog is currently over $20 million and is expected to continue to increase over the next several quarters. We have also commenced a cost containment program to lower overall costs; particularly, our 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 four subsidiaries. More information about Deep Down is available at http://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 June 30, 2009 December 31, 2008 ASSETS Current Assets: Cash and cash equivalents $1,900,547 $2,495,464 Restricted cash 135,855 135,855 Accounts receivable, net 7,261,971 10,772,097 Inventory 1,146,395 1,362,110 Costs and estimated earnings in excess of billings on uncompleted contracts 81,124 707,737 Deferred tax asset 2,373,957 216,900 Prepaid expenses and other current assets 778,071 633,868 Total current assets 13,677,920 16,324,031 Property and equipment, net 19,606,805 13,799,196 Intangibles, net 17,436,378 18,090,680 Goodwill 14,965,975 15,024,300 Other assets, net 1,062,986 457,836 Total assets $66,750,064 $63,696,043 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $3,035,403 $4,318,394 Billings in excess of costs and estimated earnings on uncompleted contracts 3,951,364 2,315,043 Current portion of long-term debt 579,586 382,912 Total current liabilities 7,566,353 7,016,349 Long-term debt 5,256,366 1,718,475 Deferred tax liabilities 2,261,488 1,125,945 Total liabilities 15,084,207 9,860,769 Commitments and contingencies (Note 9) Stockholders' equity: Common stock, $0.001 par value, 490,000,000 shares authorized, 179,700,630 and 177,350,630 shares issued and outstanding, respectively 179,701 177,351 Additional paid-in capital 60,647,226 60,328,124 Accumulated deficit (9,161,070) (6,670,201) Total stockholders' equity 51,665,857 53,835,274 Total liabilities and stockholders' equity $66,750,064 $63,696,043 See accompanying notes to unaudited consolidated financial statements. DEEP DOWN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months For the Six Months Ended Ended June 30, June 30, 2009 2008 2009 2008 Revenues $6,200,595 $7,920,196 $13,303,184 $14,199,663 Cost of sales 4,338,341 5,525,006 9,137,129 9,456,561 Gross profit 1,862,254 2,395,190 4,166,055 4,743,102 Operating expenses: Selling, general & administrative 3,873,521 3,803,556 6,717,297 5,682,965 Depreciation and amortization 420,675 394,918 826,772 520,721 Total operating expenses 4,294,196 4,198,474 7,544,069 6,203,686 Operating loss (2,431,942) (1,803,284) (3,378,014) (1,460,584) Other income (expense): Interest income 3,927 27,347 6,155 66,510 Interest expense (69,753) (2,690,533) (118,097) (3,459,564) Loss on debt extinguishment - (446,412) - (446,412) Other income (expense) 14,378 (37,491) 11,468 (9,136) Total other expense (51,448) (3,147,089) (100,474) (3,848,602) Loss before income taxes (2,483,390) (4,950,373) (3,478,488) (5,309,186) Income tax benefit 722,296 85,000 987,619 354,366 Net loss $(1,761,094)$(4,865,373) $(2,490,869)$(4,954,820) Loss per share: Basic and diluted $ (0.01) $ (0.04) $ (0.01) $ (0.05) Weighted-average common shares outstanding 176,150,630 132,666,860 176,150,630 109,326,053 See accompanying notes to unaudited consolidated financial statements. DEEP DOWN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2009 2008 Cash flows from operating activities: Net loss $(2,490,869) $(4,954,820) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Interest income - (30,467) Non-cash amortization of debt discount - 1,816,847 Non-cash amortization of deferred financing costs - 762,700 Share-based compensation 321,452 253,669 Bad debt expense 96,128 832,328 Depreciation and amortization 1,523,728 898,998 Loss on disposal of equipment (15,531) 9,136 Deferred taxes payable (1,021,514) - Changes in assets and liabilities: Accounts receivable 3,498,428 (254,958) Inventory 215,715 955,662 Costs and estimated earnings in excess of billings on uncompleted contracts 626,613 - Prepaid expenses and other current assets (144,203) (586,618) Other Assets (203,868) - Accounts payable and accrued liabilities (1,309,096) (1,601,586) Billings in excess of costs and estimated earnings on uncompleted contracts 1,636,321 537,491 Net cash provided by (used in) operating activities 2,733,304 (1,361,618) Cash flows used in investing activities: Cash paid for acquisition of Flotation, net of cash acquired of $0 and $235,040 - (22,116,140) Cash paid for acquisition of Mako, net of expenses - (4,236,634) Purchases of property and equipment (4,557,799) (687,060) Proceeds from sale of property and equipment 48,073 - Cash paid for capitalized software (277,403) - Purchase of investment (100,000) - Note receivable (25,000) - Repayments on note receivable 1,121 - Restricted cash - 375,000 Net cash used in investing activities (4,911,008) (26,664,834) Cash flows from financing activities: Proceeds from sale of common stock, net of expenses - 37,059,670 Proceeds from sales-type lease - 172,500 Borrowings on long-term debt 1,829,500 5,604,000 Repayments on long-term debt (246,713) (12,930,395) Net cash provided by financing activities 1,582,787 29,905,775 Change in cash and equivalents (594,917) 1,879,323 Cash and cash equivalents, beginning of period 2,495,464 2,206,220 Cash and cash equivalents, end of period $1,900,547 $4,085,543 See accompanying notes to unaudited consolidated financial statements.
Deep Down, Inc.
CONTACT: Investor Relations of Deep Down, Inc., +1-281-517-5000,
ir@deepdowninc.com
Web Site: http://www.deepdowninc.com/
