Exhibit 99.1
NEWS RELEASE
DEEP DOWN ANNOUNCES FIRST QUARTER RESULTS
HOUSTON, TX – May 14, 2009 – Deep Down, Inc. (OTCBB: DPDW) announced today unaudited results for the first quarter ended March 31, 2009.
Revenues for the first quarter of 2009 were $7,102,589, compared to $6,279,465 for the first quarter of 2008, for a 13.1% increase. The increase in revenues included $2.6 million from the acquisition of Flotation Technologies. Net loss for the first quarter ended March 31, 2009, was $729,775 as compared to a net loss of $89,477 for the same period of 2008. The first quarter loss included a net loss from Flotation Technologies of approximately $300,000.
Ron Smith, President and Chief Executive Officer stated “Historically, the first quarter is our weakest operating quarter; however, our operations as a whole have been naturally affected by the economic slowdown and falling oil and gas prices. We are fortunate to be in the deepwater sector of the industry, which is currently the strongest sector. We have recently announced several new contracts that are commencing this year, and are beginning work on our large riser buoyancy contract for delivery in the first quarter of 2010. We continue to expect growth in our operations for the balance of the year.”
“The Company’s financial condition continues to be strong,” commented Eugene L. Butler, Chief Financial Officer. “With all of the Company’s recent acquisitions and the significant growth we have experienced, we are now implementing a new Enterprise, Resource, and Planning (ERP) system to strengthen and improve our internal controls, consolidate our accounting systems, and streamline our service, manufacturing, and operating processes.”
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 ROV tooling, as well as 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 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.
For Further Information
Steven Haag, Investor Relations
ir@deepdowninc.com
(281) 517-5000 (O)
|
| CONSOLIDATED BALANCE SHEETS |
| (Unaudited) |
| |
| | | | | | | |
| | | March 31, 2009 | | | December 31, 2008 | |
| ASSETS | | | | | | |
| Cash and cash equivalents | | $ | 6,260,939 | | | $ | 2,495,464 | |
| Restricted cash | | | 135,855 | | | | 135,855 | |
| Accounts receivable, net | | | 6,422,509 | | | | 10,772,097 | |
| Prepaid expenses and other current assets | | | 663,342 | | | | 633,868 | |
| Inventory | | | 993,545 | | | | 1,224,170 | |
| Costs and estimated earnings in excess of billings on uncompleted contracts | | | 165,454 | | | | 707,737 | |
| Work in progress | | | 78,007 | | | | 137,940 | |
| Deferred tax asset | | | 1,683,806 | | | | 216,900 | |
| Total current assets | | | 16,403,457 | | | | 16,324,031 | |
| Property and equipment, net | | | 14,806,223 | | | | 13,799,196 | |
| Other assets, net (see Related Party Note 10) | | | 928,453 | | | | 457,836 | |
| Intangibles, net | | | 17,763,529 | | | | 18,090,680 | |
| Goodwill | | | 15,024,300 | | | | 15,024,300 | |
| Total assets | | $ | 64,925,962 | | | $ | 63,696,043 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 3,522,510 | | | $ | 4,318,394 | |
| Billings in excess of costs and estimated earnings on uncompleted contracts | | | 2,128,356 | | | | 2,315,043 | |
| Current portion of long-term debt | | | 471,015 | | | | 382,912 | |
| Total current liabilities | | | 6,121,881 | | | | 7,016,349 | |
| Long-term debt | | | 3,358,435 | | | | 1,718,475 | |
| Deferred tax liabilities | | | 2,310,728 | | | | 1,125,945 | |
| Total liabilities | | | 11,791,044 | | | | 9,860,769 | |
| | | | | | | | | |
| 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 | | | 60,355,193 | | | | 60,328,124 | |
| Accumulated deficit | | | (7,399,976 | ) | | | (6,670,201 | ) |
| Total stockholders' equity | | | 53,134,918 | | | | 53,835,274 | |
| Total liabilities and stockholders' equity | | $ | 64,925,962 | | | $ | 63,696,043 | |
| | | | | | | | | |
| | | | | | | | | |
| DEEP DOWN, INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Unaudited) |
| | | | | | | |
| | | For the Three Months Ended | |
| | | March 31, | |
| | | 2009 | | | 2008 | |
| Revenues | | $ | 7,102,589 | | | $ | 6,279,465 | |
| Cost of sales | | | 4,798,788 | | | | 3,931,555 | |
| Gross profit | | | 2,303,801 | | | | 2,347,910 | |
| Operating expenses: | | | | | | | | |
| Selling, general & administrative | | | 2,843,776 | | | | 1,879,409 | |
| Depreciation and amortization | | | 406,097 | | | | 125,803 | |
| Total operating expenses | | | 3,249,873 | | | | 2,005,212 | |
| Operating income (loss) | | | (946,072 | ) | | | 342,698 | |
| Other income (expense): | | | | | | | | |
| Interest income | | | 2,228 | | | | 39,164 | |
| Interest expense | | | (48,344 | ) | | | (769,030 | ) |
| Other (expense) income | | | (2,910 | ) | | | 28,355 | |
| Total other expense | | | (49,026 | ) | | | (701,511 | ) |
| Loss before income taxes | | | (995,098 | ) | | | (358,813 | ) |
| Benefit from income taxes | | | 265,323 | | | | 269,366 | |
| Net loss | | $ | (729,775 | ) | | $ | (89,447 | ) |
| | | | | | | | | |
| Loss per share: | | | | | | | | |
| Basic | | $ | - | | | $ | - | |
| Weighted-average common shares outstanding | | | 176,150,630 | | | | 87,185,242 | |
| | | | | | | | | |
| Diluted | | $ | - | | | $ | - | |
| Weighted-average common shares outstanding | | | 176,150,630 | | | | 87,185,242 | |
| |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |
| (Unaudited) | |
| | | | | | | |
| | | Three Months Ended | |
| | | March 31, | |
| | | 2009 | | | 2008 | |
| Cash flows from operating activities: | | | | | | |
| | | | | | | |
| Net loss | | $ | (729,775 | ) | | $ | (89,447 | ) |
| Adjustments to reconcile net income to net cash used in | | | | | | | | |
| operating activities: | | | | | | | | |
| Non-cash amortization of debt discount | | | - | | | | 231,760 | |
| Non-cash amortization of deferred financing costs | | | - | | | | 56,915 | |
| Share-based compensation | | | 29,419 | | | | 105,162 | |
| Bad debt expense | | | 60,000 | | | | 3,949 | |
| Depreciation and amortization | | | 751,276 | | | | 298,150 | |
| Loss on disposal of equipment | | | (3,038 | ) | | | 58,115 | |
| Deferred taxes payable | | | (282,123 | ) | | | - | |
| Changes in assets and liabilities: | | | | | | | | |
| Accounts receivable | | | 4,289,588 | | | | (282,869 | ) |
| Prepaid expenses and other current assets | | | (30,091 | ) | | | (107,239 | ) |
| Inventory | | | 230,625 | | | | - | |
| Costs and estimated earnings in excess of billings on uncompleted contracts | | | 542,283 | | | | - | |
| Work in progress | | | 59,933 | | | | (161,279 | ) |
| Accounts payable and accrued liabilities | | | (795,884 | ) | | | (603,631 | ) |
| Billings in excess of costs and estimated earnings on uncompleted contracts | | | (186,687 | ) | | | (53,030 | ) |
| Net cash provided by (used in) operating activities | | $ | 3,935,526 | | | $ | (543,444 | ) |
| Cash flows used in investing activities: | | | | | | | | |
| Cash paid for acquisition of Mako | | | - | | | | (2,979,192 | ) |
| Purchases of equipment | | | (1,428,114 | ) | | | (156,958 | ) |
| Deposits, related party | | | (470,000 | ) | | | - | |
| Restricted cash | | | - | | | | (187,500 | ) |
| Net cash used in investing activities | | $ | (1,898,114 | ) | | $ | (3,323,650 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from sales-type lease | | | - | | | | 103,500 | |
| Borrowings on long-term debt | | | 1,840,000 | | | | 5,600,000 | |
| Payments of long-term debt | | | (111,937 | ) | | | (926,808 | ) |
| Net cash provided by financing activities | | $ | 1,728,063 | | | $ | 4,776,692 | |
| Change in cash and equivalents | | | 3,765,475 | | | | 909,598 | |
| Cash and cash equivalents, beginning of period | | | 2,495,464 | | | | 2,206,220 | |
| Cash and cash equivalents, end of period | | $ | 6,260,939 | | | $ | 3,115,818 | |
| | | | | | | | | |
| | | | | | | | | |
-5-
