EXHIBIT 99.1
PRESS RELEASE
NEWS RELEASE
August 21, 2009 | OTC BB: DPDW |
Deep Down Announces Second Quarter Results
HOUSTON, TX – August 21, 2009 – Deep Down, Inc. (OTCBB: 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 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
Investor Relations
ir@deepdowninc.com
(281) 517-5000 (O)
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DEEP DOWN, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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ASSETS | June 30, 2009 | December 31, 2008 | ||||||
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.
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DEEP DOWN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Six Months Ended | ||||||||
June 30, | ||||||||
2009 | 2008 | |||||||
Revenues | $ | 13,303,184 | $ | 14,199,663 | ||||
Cost of sales | 9,137,129 | 9,456,561 | ||||||
Gross profit | 4,166,055 | 4,743,102 | ||||||
Operating expenses: | ||||||||
Selling, general & administrative | 6,717,297 | 5,682,965 | ||||||
Depreciation and amortization | 826,772 | 520,721 | ||||||
Total operating expenses | 7,544,069 | 6,203,686 | ||||||
Operating loss | (3,378,014 | ) | (1,460,584 | ) | ||||
Other income (expense): | ||||||||
Interest income | 6,155 | 66,510 | ||||||
Interest expense | (118,097 | ) | (3,459,564 | ) | ||||
Loss on debt extinguishment | - | (446,412 | ) | |||||
Other income (expense) | 11,468 | (9,136 | ) | |||||
Total other expense | (100,474 | ) | (3,848,602 | ) | ||||
Loss before income taxes | (3,478,488 | ) | (5,309,186 | ) | ||||
Income tax benefit | 987,619 | 354,366 | ||||||
Net loss | $ | (2,490,869 | ) | $ | (4,954,820 | ) | ||
Loss per share: | - | |||||||
Basic and diluted | $ | (0.01 | ) | $ | (0.05 | ) | ||
Weighted-average common shares outstanding | 176,150,630 | 109,326,053 |
See accompanying notes to unaudited consolidated financial statements.
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DEEP DOWN, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOW
(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.
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