UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15
(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported)
August 14, 2014
DEEP DOWN, INC.
(Exact name of registrant as specified in
its charter)
Nevada |
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0-30351 |
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75-2263732 |
(State or other jurisdiction
of incorporation) |
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(Commission File Number) |
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(I.R.S. Employer
Identification No.) |
8827 W. Sam Houston Pkwy N. Suite
100, Houston, TX 77040
(Address of principal executive offices) (Zip
Code)
(281) 517-5000
Registrant’s telephone number, including
area code
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
SECTION 2 – Financial Information
ITEM 2.02 |
RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
On August 14, 2014, Deep Down, Inc. issued a press release
announcing its financial results for the quarter ended June 30, 2014. A copy of the press release is furnished as Exhibit 99.1
to this report and is incorporated herein by reference.
SECTION 9 – Financial Statements and Exhibits
ITEM 9.01 |
FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits:
|
99.1 |
Press Release issued by Deep Down, Inc. dated August 14, 2014 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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DEEP DOWN, INC. |
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By : |
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/s/ Eugene L. Butler |
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Eugene L. Butler |
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Executive Chairman and Chief Financial Officer |
Date: August 15, 2014
Exhibit 99.1
NEWS RELEASE
August 14, 2014 |
OTCQX: DPDW |
DEEP DOWN REPORTS FIRST QUARTER 2014 RESULTS
HOUSTON, August
14, 2014 /PRNewswire/ -- Deep Down, Inc. (OTCQX: DPDW) ("Deep Down" or the "Company"), an oilfield services
company specializing in complex deepwater and ultra-deepwater oil production distribution system support services, today reported
financial results for the quarter ended June 30, 2014.
OPERATING RESULTS
For the second quarter of 2014, Deep Down reported
a net loss of $1.2 million, or $0.08 loss per diluted share, compared to net income of $1.0 million, or $0.10 income per diluted
share, for the second quarter of 2013.
Revenues for the second quarter of 2014 and
2013 were $5.8 million and $9.2 million, respectively. The $3.4 million decrease (37 percent) is the result of the 2013 period
being unusually high. Additionally, projects valued in excess of $17.0 million were delayed during the second quarter of 2014,
resulting in lower revenues of approximately $7.0 million.
Gross profit as a percentage of revenues for
the second quarter of 2014 and 2013 was 29 percent and 38 percent, respectively. The nine percentage point decrease in gross profit
was due primarily to the delay of several lump sum projects just discussed. The delay of these projects negatively impacted the
gross margin by approximately $2.6 million.
Selling, general
and administrative expenses (“SG&A”) for the second quarter of 2014 was $2.8 million, or 48 percent of revenues.
SG&A for the second quarter of 2013 was $2.4 million, or 26 percent of revenues. The $0.4 million increase in SG&A is due
primarily to quality, project management, engineering, shop improvements related to safety
systems, increased security costs and an increase in bad debt expense.
A significant portion of the increase was due
to the impact of the decision to delay a Latin America regional operation in Panama, which included a $0.2 million accrual of all
related costs, and an increase in security costs at the new facility of $0.1 million.
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 $(0.3) million for the second quarter of 2014 vs. $1.7 million for the second quarter of 2013. The $2.0 million decrease
in Modified EBITDA was due to a $1.8 million decrease in gross profit before depreciation due to reasons previously discussed,
and a $0.2 million increase in SG&A before Panama exit costs and share-based compensation expense, also due to reasons previously
discussed.
LIQUIDITY / CAPITAL RESOURCES
In the third quarter of 2013, in a private
placement, we issued 4.4 million shares of our common stock raising net cash proceeds of $7.6 million. Effective April 15, 2014,
we completed the renewal of our bank credit facility. At June 30, 2014, we had working capital of $15.1 million, including cash
and cash equivalents of $5.7 million. Because of these factors, and because of cash we expect to generate from operations, we believe
that we will have adequate liquidity to meet our future operating requirements.
EXECUTIVE MANAGEMENT
Ronald E. Smith, Chief Executive Officer, stated,
“Although our second quarter results were not what we had hoped, there is more to the story than meets the eye. The disappointing
revenue and gross profit figures were caused primarily by customer requested delays in several of our large fixed-price contracts.
Had these delays not occurred and we had met our contract delivery dates, we would have added approximately $7.0 million
to revenue and approximately $2.6 million to gross profit in the quarter. We are hopeful that as these delays abate, the effect
of completing these projects for our customers will have a positive effect on the third and fourth quarters of 2014.
“Our balance sheet remains strong, and
we continue to replenish our backlog, which is currently at approximately $28.5 million as of July 31, 2014. We are fully operational
at our new facility and sufficiently staffed with the right people. Relations with our customers has never been better, and we
are poised to generate excellent financial results for the remainder of 2014.”
About Deep Down, Inc.
Deep Down, Inc. is an oilfield services
company serving the worldwide offshore exploration and production industry. Deep Down's proven services and technological solutions
include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads
(LSFL), installation buoyancy, ROVs and tooling, marine vessel automation, control, and ballast systems. Deep Down supports subsea
engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered
technological solutions. The company's primary focus is on more complex deepwater and ultra-deepwater oil production distribution
system support services and technologies, used between the platform and the wellhead. More information about Deep Down is available
at www.deepdowncorp.com.
Forward-Looking
Statements
Any forward-looking
statements in the preceding paragraphs of this release are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties in
that actual results may differ materially from those projected in the forward-looking statements. In the course of operations,
we are subject to certain risk factors, competition and competitive pressures, sensitivity to general economic and industrial conditions,
international political and economic risks, availability and price of raw materials and execution of business strategy. For further
information, please refer to the Company's filings with the Securities and Exchange Commission, copies of which are available from
the Company without charge.
For Further Information
Investor Relations
Casey Stegman
casey@stonegateinc.com
Stonegate Inc.
972.850.2001
DEEP DOWN, INC.
SUMMARY FINANCIAL DATA
(Unaudited)
| |
Three Months Ended | | |
Six Months Ended | |
| |
June 30, | | |
June 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
(in thousands, except per share amounts) | |
| | |
| | |
| | |
| |
Results of operations data: | |
| | |
| | |
| | |
| |
Revenues | |
$ | 5,847 | | |
$ | 9,156 | | |
$ | 12,010 | | |
$ | 15,314 | |
Cost of sales | |
| 4,134 | | |
| 5,636 | | |
| 8,048 | | |
| 9,628 | |
Gross profit | |
| 1,713 | | |
| 3,520 | | |
| 3,962 | | |
| 5,686 | |
Total operating expenses | |
| 2,843 | | |
| 2,399 | | |
| 5,023 | | |
| 4,294 | |
Operating (loss) income | |
| (1,130 | ) | |
| 1,121 | | |
| (1,061 | ) | |
| 1,392 | |
Total other (expense) income | |
| (68 | ) | |
| (50 | ) | |
| 244 | | |
| (76 | ) |
(Loss) income before income taxes | |
| (1,198 | ) | |
| 1,071 | | |
| (817 | ) | |
| 1,316 | |
Income tax benefit (expense) | |
| 18 | | |
| (49 | ) | |
| 9 | | |
| (70 | ) |
Net (loss) income | |
$ | (1,180 | ) | |
$ | 1,022 | | |
$ | (808 | ) | |
$ | 1,246 | |
| |
| | | |
| | | |
| | | |
| | |
Net (loss) income per share, basic and diluted | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | (0.08 | ) | |
$ | 0.10 | | |
$ | (0.05 | ) | |
$ | 0.12 | |
Diluted | |
$ | (0.08 | ) | |
$ | 0.10 | | |
$ | (0.05 | ) | |
$ | 0.12 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted-average shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 15,215 | | |
| 10,324 | | |
| 15,227 | | |
| 10,238 | |
Diluted | |
| 15,215 | | |
| 10,324 | | |
| 15,227 | | |
| 10,238 | |
| |
| | | |
| | | |
| | | |
| | |
Modified EBITDA data: | |
| | | |
| | | |
| | | |
| | |
Net (loss) income | |
$ | (1,180 | ) | |
$ | 1,022 | | |
$ | (808 | ) | |
$ | 1,246 | |
Add back interest expense, net | |
| 48 | | |
| 54 | | |
| 109 | | |
| 91 | |
Add back depreciation and amortization | |
| 396 | | |
| 385 | | |
| 806 | | |
| 764 | |
(Deduct) add back income tax (benefit) expense | |
| (18 | ) | |
| 49 | | |
| (9 | ) | |
| 70 | |
Add back Panama exit costs accrual | |
| 192 | | |
| – | | |
| 192 | | |
| – | |
Add back share-based compensation | |
| 300 | | |
| 235 | | |
| 435 | | |
| 275 | |
Modified EBITDA | |
$ | (262 | ) | |
$ | 1,745 | | |
$ | 725 | | |
$ | 2,446 | |
| |
| | | |
| | | |
| | | |
| | |
(in thousands) | |
| | | |
| | | |
| | | |
| | |
Cash flow data: | |
| | | |
| | | |
| | | |
| | |
Cash provided by (used in): | |
| | | |
| | | |
| | | |
| | |
Operating activities | |
| | | |
| | | |
$ | 1,267 | | |
$ | (874 | ) |
Investing activities | |
| | | |
| | | |
| 198 | | |
| 99 | |
Financing activities | |
| | | |
| | | |
| (1,012 | ) | |
| 358 | |
| |
June 30, 2014 | | |
December 31, 2013 | |
(in thousands) | |
| | |
| |
Balance sheet data: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 5,713 | | |
$ | 5,260 | |
Current assets | |
| 19,254 | | |
| 16,614 | |
Current liabilities | |
| 4,204 | | |
| 4,705 | |
Working capital | |
| 15,050 | | |
| 11,909 | |
Total assets | |
| 37,049 | | |
| 38,302 | |
Total debt | |
| 4,085 | | |
| 4,934 | |
Total liabilities | |
| 7,347 | | |
| 7,923 | |
Stockholders' equity | |
| 29,702 | | |
| 30,379 | |
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