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Deep Down Reports Results
Wednesday, May 21, 2008
Deep Down, Inc. announced unaudited results for the first quarter ended March 31, 2008, on Form 10-Q filed with the U.S. Securities and Exchange Commission.
Deep Down generated revenue of $6,279,465 for the three months ended March 31, 2008, compared to $2,098,394 for the three months ended March 31, 2007, an increase of $4,181,071 or 199%. Increased activity from Deep Down’s offshore subsea business, including service activity related to installation and recoveries of subsea equipment, the delivery of launch and recovery systems, loose tube steel flying leads, winch system refurbishments, and an active heave compensated in-line winch system accounted for $4,293,820 of this revenue, an increase of $2,195,426, or 105% over the same prior year period. The Mako Technologies and ElectroWave USA acquisitions accounted for $1,985,645 of this revenue, an increase of 94% over the same prior year period.
Gross margin for the three months ended March 31, 2008, was $2,403,094 compared to $846,305 in the same prior year period, an increase of $1,556,789 or 184%. Gross margin as a percentage of revenue was 38% in the current period as compared to 40% in the prior period.
Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2008, were $1,762,247 compared to $659,651 for the same prior year period. The increase was primarily due to costs related to our acquisitions of Mako Technologies and ElectroWave USA. However, SG&A as a percent of net revenue was lower for the three months ended March 31, 2008, at approximately 28% compared to 31% for the same prior period.
Operating income for the three months ended March 31, 2008, was $342,698 compared to $122,629 for the same prior year period, an increase of 179%. Net loss for the three months ending March 31, 2008, was ($89,477) compared to ($109,258) for the same prior period. Income was impacted by interest expense related to the Credit Agreement entered into with a mezzanine lender in August 2007. For the three months ended March 31, 2008, interest expense was $769,030 compared to $231,887 for the same prior year period. Earnings before depreciation, interest, amortization, taxes and other non-cash charges (EBITDA) for the three months ended March 31, 2008, was $749,958, compared to $186,654, an increase of $563,304, or 302% over the same prior year period.
"We are very proud of our period-to-period comparisons for the first quarter. Revenues, gross profit, operating income and EBITDA experienced significant triple digit growth, driven by both organic growth and the addition of complementary acquisitions. The first quarter has been the weakest quarter for our company historically," commented Robert E. Chamberlain, Jr., Deep Down’s Chairman.
"Our balance sheet continues to show improvements. Liquidity is strong with unrestricted cash and equivalents of $3,115,818 and a current ratio of 2.8. Our working capital position is $8,645,592 and we no longer have any shares of preferred stock outstanding. Stockholders’ equity has improved dramatically and is now $18,716,186 compared to ($1,800,660) on March 31, 2007," said Eugene L. Butler, Deep Down’s CFO.
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