USA: Deep Down Reports Improved Results
Deep Down, Inc., an oilfield services company specializing in products and services for the deepwater and ultra-deepwater oil and gas industry, reported net income of $970 thousand for the third quarter of 2012, an improvement of $364 thousand over the same period in 2011.
For the third quarter of 2012, Deep Down reported net income of $970 thousand, or $0.10 income per diluted share, compared to net income of $606 thousand, or $0.06 income per diluted share, in the third quarter of 2011.
Revenues for the third quarter of 2012 were $9.4 million. Revenues for the third quarter of 2011 were $8.6 million. The $0.8 million increase in revenues in the 2012 period compared to the 2011 period was due primarily to an increase of $2.3 million in our subsea solutions services due to continued strong demand for our technologically innovative solutions, offset by a decrease of $1.5 million in our ROV and topside equipment rental services due to decreased demand.
Gross profit for the third quarter of 2012 was $3.2 million, or 34 percent of revenues. Gross profit for the third quarter of 2011 was $2.7 million, or 31 percent of revenues. The $0.5 million, or 3 percentage-points, increase in gross profit in the 2012 period compared to the same period in 2011, was due primarily to a $1.3 million increase related to our subsea solutions services, offset by a $0.8 million decrease related to our ROV and topside equipment rental services.
Selling, general and administrative expenses (“SG&A”) for both the third quarter of 2012 and the third quarter of 2011 were $2.0 million. Slight decreases in professional services fees and share-based compensation expense were offset by a reduction in reimbursements under a terminated joint venture management services agreement, leaving SG&A flat in the 2012 period compared to the 2011 period.
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 net interest expense, income taxes, depreciation and amortization, and other non-cash and non-recurring charges. Modified EBITDA was $1.9 million in the third quarter of 2012. Modified EBITDA was $1.3 million in the third quarter of 2011. The $0.6 million increase in Modified EBITDA in the 2012 period compared to the 2011 period was caused primarily by increased gross profit before depreciation and non-recurring operational consolidation expense of $0.6 million.
Ronald E. Smith, Chief Executive Officer stated, “This was the Company’s strongest third quarter performance since 2008. We are very satisfied with what our subsea solutions business was able to achieve in the third quarter of 2012. We added approximately $4.6 million to backlog bringing total current backlog to approximately $16.3 million.
“On August 27, 2012, we announced that we had consolidated the operations of our ROV and topside equipment rental business as part of our ongoing cost containment program. All of the assets and operations previously located in Morgan City, Louisiana are now operating out of our Channelview, Texas facility. We were able to reduce our total workforce by 10% and expect to recognize additional cost savings during the remainder of 2012 and beyond. Additionally, our customers will benefit from increased visibility of these services and synergies in our operations.”
Press Release, November 14, 2012