DPDW - Earnings call transcript Q1 2022 | Koil Energy Solutions, Inc.

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Deep Down’s First Quarter 2022 Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, Tuesday, August 8, 2022. A detailed disclaimer related to Deep Down’s forward-looking statements is included in the press release issued Monday afternoon and filed with the SEC. on website, available request. or also is the koilenergy.com company’s upon It press the reconciliation used call on the measures non-GAAP is and the in A financial and in of website. press release included release on today’s Listeners forward-looking as which these reliance statements, not are date speak made. to cautioned the undue on place of only reflect no after the circumstances undertakes also any Down or to revise of made. events its Deep obligation forward-looking statements to date Charles like I’d turn call Njuguna. to CEO, At this time, over the to go Please ahead.

Charles Njuguna

thank you and joining us Thanks, morning Gary. for today. Good

Our the offshore second events challenges oil into a weigh ongoing and possibility come deepwater geopolitical to to prolonged long-term the results certain on projects. quarter reflect willingness in our couple totaling carousel a recession continue both was gas the but and hesitation delayed industry. and the customers’ of Inflation, million off which year, various exemplified of more to $X.X half reasons. was opportunities, have kicked first were for supposed during by gas-related than this oil of best This

through remain to both such expected cases, have other well, We have dates situation in customers Unfortunately is customers commitment will the coming we that a projects several the with gone in with this which but months. we by the had cautiously and projects. initiate optimistic witnessed clarification of situations as rounds abate

as occurrences While control grow our work we on our control, are within to outside business. the these we remain levers focused the

Speaking of growth.

energy-related the not years, from services in slated and the basis. services our northern These it is focus only benefits an competencies. XX also of to developed our past expertise military over core to United to of We our traditional some ongoing the During but shift beyond products reaped long-term to ongoing our to core provided be of provide a currently have received from efforts we demonstrate successfully validates for the quarter, strategy States what the transferability the hydrogen order management second we services on projects half projects business. lines and expand cable our

evaluating of these in wind projects, storage. applications spectrum, to capture areas for opportunities various such we other carbon In even energy and addition utilization and are as shallow offshore water the

seeing our Aside oil in from increase and are gas we traditional non-traditional activity within marked business. building a opportunities, these

new these with reduced various of increasing are our and of discussions, enabled some activities, During in we of early products service the developments the research first our This for of identify our our not have Concurrent as applications as of we worked we efforts development engage customers’ internal having a energy with year, budgeted on most half result in projects. as primarily XXXX. customers new look for But was of in for renewable high in developments. on opportunities the gas beyond active promise towards and new engaged both budget potentially the offerings. various expectation developments and to discussions resources oil solutions the of traditional us for levels XXXX of to these wallets. approvals future, displaying customers well our These for intention capitalizing we for share with even new are about with patentable utilization

rebranding updates further previously these fruition. as in the the strategic to are company. in provide will We mainly growth initiatives These due efforts efforts come announced, to addition the of the course we relocation and

I customer and this third speaking will ability Down. of why the Trevor turn the of complete that base. we new of move we to within the the Industry are is which goes, Trevor? President And and increasingly our known as enrich Regulatory as ticker the over Vice name approval Financial the better change still full filings rebranding our overview, continue Authority, Finance, are name the we to the far As diverse our to now have of support awaiting relocation, Deep Ashurst. into moving be from to call now will we which possession will needs And symbol team’s of quarter, our with which our targeting facility, bear FINRA,

Trevor Ashurst

Thank you, Charles.

million June a XXXX, and For project that revenues X million Gross for year-over-year $X.X months shorter driven of for utilizing demand ending project revenues generated quarter margin XXXX. current Deep mix. in XXXX. $X.X $X.X when was the was XX, of second million projects rental and in of Down $X.X the incurred More in months The decrease XX% XXXX. to result XX% we in solutions. mix or to which quarter rental million, duration our XX% represents the of support work June services reflects revenues revenues means compared ended generated of of improvement XX, the less gross service we shortfall revenues was profit material increase X for gross compared This or the XX% second represents by an This costs. the margin

this million we QX of SG&A third-party larger the year pass-through last a and to that due doubtful repeated The contracts $X.X included charge to for incurring general year. QX year. mainly in in that $XXX,XXX year not last XXXX $X.X of Selling, low-margin our some costs accounts to was compared in was quarter. not were XX% reserve most decrease expenses were recent million repeated this on last several worked administrative Additionally,

XXXX, of last repeated in The QX XXXX. because we year, was recent loan reported diluted comparative in income mainly per net which, income line. recorded $X.XX net net to our for of most $XXX,XXX quarter. translates income is of which to $XXX,XXX $X.XX This not this of bottom share. QX is forgiveness QX of in the generating share for PPP course, The decline a or of company of to compared Turning per the first

balance the sheet. to shifting Now

which and million in XXXX, includes June XX, is structure working to receivables. in million of of which as is cash capital XXXX. capital, in Our million This trade working of of $X.X $X.X compared cash having trade composed $X.X $X.X as and receivables million of million XX, includes in capital million December $X.X $X

$XXX,XXX visibility credits to these related retention have of do quarters. will the CARES point QX. few receivable receive under be to these Act. paid, provisions credits when outstanding next not still for at summary we funds the concludes This on expect but employee We the the the some over We an financial also claimed have

And you I now for to your call thank So the turn time. will back over Charles.

Charles Njuguna

Thank you, That remarks prepared today. our Trevor. concludes

turn So I’ll investor take the the Gary? now call operator to to back questions.

Operator

Walter [Operator MAZ Instructions] question ahead. from Please Partners. with first comes Our go Schenker

Walter Schenker

Hi, guys.

Charles Njuguna

Good Walter. morning,

Walter Schenker

under they on this intend to the are few be buy A to we selling and to and and not whatever, expect be questions, one have understand trying it rolling. regular I’m works. maybe so basis, saying I them? I’m it’s Is – does buying to related. how no book expect problem shares a not complaining. some I’m – unrelated just

Charles Njuguna

he point, put afterwards, this he and Ron’s in of intentions, him, could I I’m call, better and At you answer but on is aware – that. could long-term I follow-up not can the could

Walter Schenker

don’t and I I’m others. Well, know something only not want supposed I know Okay. to I if me know to if that had,

which But public this in does or is it, – when happens, program the there there Okay. know place, that’s point, no doesn’t – something at no and is is information. it either

Charles Njuguna

unfolds has historically cash program comes we with situation not but situation and him. up we’ve Yes, opportunistic as we in a place, as been sales the done have what do our

Walter Schenker

I’ll got that’s every on answer to call. be Then asked Okay. smile, just question and you the can

Charles Njuguna

I had have months. carousel some outside we – will do Yes. actually do and opportunities, see some oil gas, I we prospects think mentioned in but have how this coming that and unfolds have we We the

Walter Schenker

generating being neither today, And the or one – are of as any units of revenue?

Charles Njuguna

As of today, of is generating correct, are them revenue. that none any

Walter Schenker

you about business you are to deepwater you which by little we production, in not oil legacy deepwater currently new don’t at boom, or large drilling, maintenance, being more projects, that although for is not spent if as Okay. there deepwater there the early prices, current color the RFQs large the something? where companies much the competing – or we’re in And surely the or oil out cycle business, to seems I in are look money a continue as you not supports drilling. give it but appreciate Could of in do while in hear on in if or

Charles Njuguna

X probably probably new more are on spending highly on. least There – concurrent discussions than a within are We and for going And involved that’s is exploration Yes, appraisal, we’ve based appraisal a products at lot years in drilling. there been involved X, we for of in that, increased our companies. the good – in, our at with question. of lots past, customers customers’ developments in indicators

of services seeing developments. are mapping out the some whether a are And they those in involved and good conversations There very So are for fields they active bids for identified and equipment. already we are number products prospects.

required. ‘XX and ‘XX in So see do we get an being we into – see products increase we as beyond, do and

Walter Schenker

carousels, but over gas where could Okay. rental – a have over our years, carousel the And short-term oil XX the XX one the months, in say the beyond just might there possible going opportunities other last and or months last back need business X people the been to last I – rentals.

to came or you lost we bigger never to where else those were? somebody if there some pass – You maybe opportunities them were

Charles Njuguna

pushed there begin. happened both that the had – ones project we – dates expected are into is of on lots to when one delays. earlier, – commitment we’ve I projects mentioned they two – QX what was the of even has push had in Two we had of cases, the XXXX. And

they other products The need if going – needed, step back reevaluate they’ll for forward. or to a be that the taken they have one, not to they’ll whether

those delays about uncertainty where of the – And business, but on lots of hold. we’re so other what the aspects they seeing does also future

with talk evaluate so environment. suddenly they they macro And back pull then you clients talk the while and

Walter Schenker

your I made And XX XX generate outside in markets, months possibly – over the as your up ability months. and look traditional business look I traditional market energy to if at of recovery some the you Okay. last

you money some XX Deep the I’m you not little But money? forecast. bit to asking but believe firm lose quarters Some over not you for over – a of make actual money. to forward it a for an as quarter-to-quarter, look a breakeven quarters, little next a is months, Down or make little possible

Charles Njuguna

Yes.

Walter Schenker

It sounds a but like forecast, soft. it’s

Charles Njuguna

Yes, we’ve past. We to very prospects do we believe have promising than we in done do. better the

Walter Schenker

Okay.

the sort the of we world financial at standpoint given least stability the are as at financially, from going you sheet, pressure? the on balance financial forward, any cash So look not under of and

Charles Njuguna

we disciplined – We we are well. as – with are No. structure extremely our remaining cost not

it. We’re continuing to evaluate

our doubts ability. closely And no so we situation are this point, we at concern is. how have about going our But working

Walter Schenker

Okay, thank waiting day. a you very much. for I’m call still one

Charles Njuguna

yes, and I’m to to two next looking forward made I one. you, the

Walter Schenker

you. thank Okay,

Charles Njuguna

Thanks, Walter.

Operator

Investor. [Operator Instructions] Wisneski, is Frank go Please ahead. Private next from question a The

Frank Wisneski

Charles. morning good Hey,

Charles Njuguna

morning Good Frank.

Frank Wisneski

last I the question minimal you short had expenses. noticed One a quarter, and broader pretty in one question. relocation

And quarter? what current does $XX,XXX. think it like or Are look more in for change lease do spending relocation Do less, the expenses the related facilities there? was or to your more, expect secondly, that, I like what spending you in payments? it you does

Charles Njuguna

we Yes. expect there We be that an bit quarter, relocation do our of – quite expenses. this in increase will a

have to And costs us. aware, costs and We term, that’s the little are longer monthly the inflationary up, you far our are gone an a remodeling. a gone reduce by $XX,XXX as place. material over as doing But way pressures, way so into the up, going some when having we fully impact settled new annual are spend as month is on have labor

our annual $XXX,XXX our we reduce so And over based it are a by footprint, expecting on to year. current expense,

evaluating that a some caveat would expansion facility a to. could of footprint Now, if have, throw opportunities good itself the have we I which out it are because lends require to that we we chose facility, to us need our problem is we at be why but the to chosen will new a expand in

Frank Wisneski

would broad. Good. Yes. problem. Obviously, is it question be The next high-class a more

by As the have way, competencies, oil marketing? you your or You probably offshore to plugged your plugged into the you mean you. marketing drilling this deepwater By core potential into and customers area gas? that move changed how I and were were

– you you into how have other your non-oil to how As and approach opportunities, had your change offshore strategy? or How you marketing just you markets? do do new as gas move

Charles Njuguna

success question. lot customers us. And a because good business, at people certain a traditional of our Yes, we plugged lot past times, are a knew into That’s were our victims us. of of

has But or a become We have call fairly last who people couple call us in meaning years they would the when are projects. would had have done they when need reactive, also target. we in strategic us we what people more of

integrated an We have that market the within mindset. strong these – contractors. developed relationships at That’s is contractors, big contracts given integrated moving the to

gas and relationships of lot a from renewable to moved on who capitalizing of also are people energy. We oil

And so or if energy arms farms. oil creating – we all they think new about companies, they have the venture big are

those. so being are as opportunities get the some that have are away we capitalizing rebrand our a that was in And also pursuing deepwater in But pigeonhole rebrand relationships are so there areas. name because we name we – water to other on of the are part solid also moved, from well some as shallow

So, have past, we to mindset successful we our for than mindset. but time the strategic were think we changed reactive, in more that which become it’s rather with a new the

Frank Wisneski

One final are useable gas? to are pretty they The much they or going the are confined new question. oil you after, to carousels, or applicable and business

Charles Njuguna

some have with. the winds But And we offshore it Yes. offshore particular. some There a incumbents of promising business. who They wind. are is very have new do developers very in applicable relationships opportunities in for are

to but are have some gaining we we are traction. cases, – break some in we to so in, trying And

Frank Wisneski

you. Thank

Charles Njuguna

Frank. Thanks

Operator

The Please go JUMA Smith next ahead. question is Properties. with from Ron

Ron Smith

Frank’s ITF Atlantic I was and oil are the to renewable one to gas in little there bit of the new it’s shows is I world. saw lot energy for – in in and well, largest renewable. and a the of display [ph] Show a the springs starting now answer as question And So, what the the shows City, in the

So, show Nexans of a companies where used subsea boat new of these in a looked from buyback see OTC Orleans, at it mini and to shows. and like New Oceaneering lot Cables like actually lot work a are and people almost little

Buoyancy used company to Our own. we past our Buoyancy,

transfer boat have work Energy platforms. some the to boat shows renewable They a Koil seeing shift presence I energy from of recommend to advertising gas like at small and some of people, the to a work am would the personnel oil like show large are them, now I these So, towards because be – sharp competencies the boats boats.

now the out looking more in more Mexico. of to going first are to of wind shows. is the I in getting at for Mexico and Gulf company So, think lease the people in a even as the where between about are the now also year And have that next the will of renewable sale see of quarter Gulf leases they

chance get I move me. to the of they give and and I to help to oil And little people am to I them been of lot of my renewable stuff some energy that bit have a that So, these don’t buying kind a shift. need of Down basically help friends, to Walter’s gas a orders of need will have there while bit question, And little waiting to a cash flow. Deep

couple this of years. Mary’s want I gaps So, in draw the to a sort flow retirement is don’t covering until because little cash of XX any a

you So, me letting good work, for guys, voice. thank and

Charles Njuguna

some wind we Thanks touch Ron. got traction. one you mentioned I and And to that, am Yes, at yes, that. the on did of offshore glad as display well conferences

that’s Ron, So, good a point.

are continue will and do make We we sure to that visible.

Operator

to to turn would session. question-and-answer closing I any the Charles like conference remarks. for concludes our Njuguna This back over

Charles Njuguna

We speaking all to the again, we joined your company, who Thank all call. this you Thank all. about on and support you earnings And morning. the your of with and you next interest for appreciate call. you, This once today’s our forward concludes look Gary. to progress thanks

Operator

The you Thank today’s now has presentation. for concluded. conference attending

You may now disconnect.

Koil Energy Solutions (KLNG) 15 Aug 222022 Q1 Earnings call transcript