04/01/08 - Deep Down Announces 120% Increase in Revenue
HOUSTON, TX – April 1, 2008 – Deep Down, Inc., a Nevada corporation (OTCBB: DPDW), today announced it has filed its Form 10-KSB for the period ending December 31, 2007, with the Securities and Exchange Commission. Under purchase accounting rules, the financial results of operations for 2006 include the operations of Deep Down only for the period beginning November 21, 2006 and ending December 31, 2006, the period after which its Deep Down (Delaware) subsidiary was acquired. During this period in 2006, Deep Down reported revenues of $978,047. In order to present a more complete view of full-year operations for Deep Down during 2006 and to present more meaningful comparable results, management also presented unaudited pro forma consolidated results of operations for 2006 as if the acquisition of Deep Down had occurred on January 1, 2006. The discussion below compares audited financial information for the fiscal year ended December 31, 2007 with unaudited pro forma financial information for the year ended December 31, 2006.
Revenue for the year ended December 31, 2007, was $19,389,730, an increase of $10,568,581 or 119.8%, compared to revenue of $8,821,149 for the comparable period in 2006. Gross profit for 2007 was $6,369,361, an increase of $2,703,611 or 73.8%, compared to gross profit of $3,665,750 for 2006. Gross profit dropped from 41.6% to 32.8%, primarily as the result of increased expenses associated with the development of new products during the year. Management expects margins to improve with wider acceptance of these recent product introductions. Operating income for 2007 was $1,657,844 for 2007, an increase of $3,868,886 compared to a loss of $2,211,042 for the comparable period in 2006. Net income for 2007 was $952,509, an increase of $3,764,136 compared to a loss of $2,811,627 for the comparable period in 2006.
Deep Down uses EBITDA as an unaudited supplemental financial measure to assess the financial performance of its assets without regard to financing methods, capital structure, taxes or historical cost basis. The Company defines EBITDA as net income plus interest expense, income taxes, depreciation, amortization and other non-cash, non-operating expense. The term EBITDA is not defined under generally accepted accounting principles, and EBITDA is not presented as an alternative measure of operating results or cash flow from operations. EBITDA does not give effect to cash used for debt service requirements, and thus, does not reflect funds available for investment, distributions or other discretionary uses. When assessing Deep Down’s operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net income, cash flow from operating activities, or other cash flow data calculated in accordance with generally accepted accounting principles. However, Deep Down also understands that such data are used by some investors, equity analysts, and others to make informed investment decisions. EBITDA is used as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected EBITDA are used to estimate current or projected enterprise value. EBITDA for 2007 was $2,272,202, up 43.0% compared to $1,296,218 for 2006.
“Our management team is extremely proud of our first full year’s results of operations as a public company. The income statement is primarily reflective of growth in our core operations and includes only one month of financial results for our most recent acquisition, Mako Technologies. We expect the full impact of this acquisition to manifest itself in future periods,” commented Robert E. Chamberlain, Jr., Deep Down’s Chairman and Chief Acquisitions Officer. “We are committed to the continued fulfillment of our strategic acquisition objectives to position Deep Down as a preferred provider of services and products in support of deepwater exploration, development and production of oil and gas, and other maritime operations,” Chamberlain added.
“Our significant revenue growth is reflective of Deep Down’s commitment to offer innovative services, products, and solutions to support major oil and gas operators, installation contractors, and umbilical and control suppliers in their continual effort to enhance the progression and completion of major offshore oil and gas exploration and production projects. Our goal is to deliver innovative solutions to our customers quicker, more cost-effectively, and more safely. We are also focused on protecting our innovations more effectively as we venture into the uncharted frontier of deeper water,” commented Ronald E. Smith, Deep Down’s President and Chief Executive Officer.
“We are particularly proud of the balance sheet improvements experienced during 2007. We have simplified the capital structure by redeeming for cash or exchanging for common stock various series of preferred stock. Deep Down experienced significant balance sheet improvements over the period with an increase in shareholders’ equity of $15.9 million. This dramatic increase does not reflect the recent conversion of the Series D Preferred Stock or the final payment for the Mako acquisition. We believe our liquidity to be healthy as well. Compared to the prior period, our accounts receivable have increased by $5.9 million to $7.2 million. Our accounts payable have only increased by $2.8 million to $3.6 million. We will continue to focus on simplifying the capital structure, reducing capital costs, and positioning the company to finance future acquisitions,” said Eugene L. Butler, Deep Down’s Chief Financial Officer.
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project.
The Company’s ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.
The Company’s Mako subsidiary serves the growing offshore petroleum and marine industries with technical support services, and products vital to offshore petroleum production, through rentals of its remotely operated vehicles (ROV), topside and subsea equipment, and diving support systems used in diving operations, maintenance and repair operations, offshore construction, and environmental/marine surveys.
The Company’s strategy is to consolidate service providers to the offshore industry, as well as designers and manufacturers of subsea, surface, and offshore rig equipment used by major, independent, and foreign national oil and gas companies in deep-water exploration and production of oil and gas throughout the world. Deep Down’s customers include BP Petroleum, Royal Dutch Shell, Exxon Mobil Corporation, Devon Energy Corporation, Chevron Corporation, Anadarko Petroleum Corporation, Marathon Oil Corporation, Kerr-McGee Corporation, Nexen Inc., BHP, Amerada Hess, Helix, Oceaneering International, Inc., Subsea 7, Inc., Transocean Offshore, Diamond Offshore, Marinette Marine Corporation, Acergy, Veolia Environmental Services, Noble Energy Inc., Aker Kvaerner, Cameron, Oil States, Dril-Quip, Inc., Nexans, Cabett, JDR, and Duco, among others. For further company information, please visit www.deepdowninc.com, www.electrowaveusa.com and www.makotechnologies.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.