Deep Down Releases Q2 2011 Results (USA)
Deep Down, Inc. an oilfield services company specializing in products and services for the deepwater and ultra-deepwater oil and gas industry, today reported $156 thousand of net income before equity in joint venture operations for the second quarter of 2011, an improvement of $648 thousand, or 132 percent, over the same period in 2010.
For the first quarter of 2011, Deep Down reported a net loss of $1.8 million, or $0.01 loss per diluted share, compared to a net loss of $2.5 million, or $0.01 loss per diluted share, in the first quarter of 2010.
Revenues for the first quarter of 2011 were $6.3 million. Revenues for the first quarter of 2010 were also $6.3 million, but included $2.7 million related to our Flotation operating segment, which was contributed to the Cuming Flotation Technologies, LLC joint venture (“CFT”), effective December 31, 2010. Excluding the first quarter 2010 revenue related to the Flotation operating segment, comparable revenues increased $2.7 million or 75% from the quarter ended March 31, 2010 to the quarter ended March 31, 2011, partially as the result of a large installation of a subsea distribution system we performed offshore Gabon, West Africa which commenced in the fourth quarter of 2010 and was completed in the first quarter of 2011. Additionally, our ROV and related services revenues increased due to improved utilization and we recorded increased revenue on a large fabrication project that is projected to be completed in mid-2011.
Gross profit for the first quarter of 2011 was $1.2 million, or 19 percent of revenues. Gross profit for the first quarter of 2010 was $1.6 million or 25 percent of revenues, and included $0.6 million, or 23 percent of revenues, related to our Flotation operating segment, which, as was previously mentioned, was contributed to CFT effective December 31, 2010. Excluding the first quarter 2010 gross profit related to the Flotation operating segment, comparable gross profit increased $0.2 million or 20% from the quarter ended March 31, 2010 to the quarter ended March 31, 2011, primarily as the result of the previously mentioned installation job we performed offshore Gabon, West Africa and improved utilization of our ROV fleet.
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 the effects of net interest expense, income taxes, non-cash stock compensation expense, equity in net loss of joint venture, non-cash impairments, depreciation and amortization and other non-cash items. Modified EBITDA for the first quarter of 2011 was negative $1.0 million compared to negative $1.2 million in the first quarter of 2010. The $0.2 million improvement was driven primarily by increased gross profit as previously mentioned.
The Company had a working capital deficit of $2.7 million at June 30, 2011, a decrease of $4.3 million from the $1.6 million of working capital at December 31, 2010. This decrease is due primarily to a $3.0 million decrease in cash caused by the completion of a large installation project we performed offshore Gabon, West Africa. We believe we will achieve our planned financial results, and therefore we believe that we will have adequate liquidity to meet our future operating requirements.
Ronald E. Smith, Chief Executive Officer stated, “We are thrilled to be able to report $156 thousand of net income before equity in joint venture operations for the second quarter of 2011, our main focus, in addition to successfully executing our projects and managing our cash, has been to return to profitability. This quarter’s results demonstrate we have turned the corner and are heading in the right direction.”
“As previously announced, we were awarded two large carousel orders in the second quarter in excess of $8 million. Fabrication of both of these profitable orders is well underway and on-schedule delivery to our customers is expected in the third quarter of 2011 and in the first quarter of 2012. We also expect our owned and operated 3,200 metric ton carousel to begin generating revenues in the third quarter. Our customers have shown a great deal of interest in our carousel product and we are actively pursuing additional orders. Additionally, we are seeing increased ROV and related services activity in the Gulf of Mexico. All of these factors demonstrate that we are poised for profitability for the remainder of 2011 and beyond.”
“CFT’s profit in the second quarter of 2011 was lower than anticipated. It is expected that the shortfall will be recovered during the remainder of the year. Additionally, CFT has been awarded multiple international contracts, the value of which, with options, exceeds $50 million. We continue to believe very strongly in CFT and its prospects of being a very profitable investment for Deep Down.”
Source: Deep Down, August 12, 2011;