Deepwater Oil and Gas Specialist Deep Down Q3 Revenue Rose 12% to $4.4M; Hosts Investor Call Wed. Nov. 13th at 10am ET

HOUSTON, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Deep Down, Inc. (OTCQB: DPDW) (“Deep Down”), a specialist in deepwater oil and gas production and distribution equipment and services, today reported results for its third quarter ended September 30, 2019 (Q3’19). Deep Down will hold a conference call on November 13, 2019 at 10:00 am ET to review its results and discuss its business outlook (details below).

Deep Down at a Glance

Charles Njuguna, CEO, commented, “Deep Down continues to capture new offshore projects despite fluctuations in energy pricing and sentiment in the oil & gas industry, with year-to-date revenue of $16M. We believe our growth this year reflects early signs of the industry’s recovery, along with a sharpening of our focus on projects in the Gulf of Mexico and other regions closer to our Houston base of operations, which provide better visibility and clearer timing.

“We are focused on driving our business toward consistent profitability, an objective we are cautiously optimistic we can accomplish as evidenced by our reduced operating expenses, excluding approximately $349,000 in transition and other non-recurring expenses in relation to the resignation of the Company’s Founder. Our recently appointed Chief Operating Officer, Micah Simmons is already making important contributions in support of our growth and profitability goals. Micah was previously VP of Project Management for Global Operations at Siemens Oil and Gas, following 20 years with TechnipFMC.”

“Going forward, we expect our cost reduction actions will begin to be reflected in our Q4 results and then more fully in calendar 2020. We hope to pair this more efficient cost structure with the benefits from our refocused sales and marketing efforts on domestic and Latin American opportunities in our core areas of expertise.”

Operating Results
Q3’19 revenues improved 12% to $4.4 million compared to $3.9 million in Q3’18, primarily due to a higher number of projects in process, while gross margin improved to 42% in Q3’19 compared to 40% in Q3’18. Gross profit in Q3‘19 improved to $1.8 million compared to $1.5 million in Q3'18, reflecting the revenue and margin improvements.

Q3’19 selling, general and administrative (SG&A) expenses decreased slightly to $2.14 million compared to $2.15 million in Q3‘18, and declined significantly as a percentage of revenues to 49% in Q3’19 from 55% in Q3’18 as the Company’s overhead initiatives continued to progress. .  Excluding approximately $349,000 related to one-time expenses incurred in relation to the resignation of Deep Down’s Founder, Q3’19 SG&A would have improved to $1.8 million or approximately 41% of revenues.

Deep Down’s modified EBITDA improved to $408,000 in Q3'19 compared to a modified EBITDA loss of $317,000 in Q3’18, primarily due to higher revenues and gross profit.

Deep Down reported a Q3’19 net loss of $373,000, or ($0.03) per basic share, compared with Q3’18 net loss of $649,000, or ($0.05) per basic share. Per share results are based on 13.3 million and 13.6 million weighted average shares outstanding in Q3’19 and Q3’18, respectively.

At September 30, 2019, Deep Down had working capital of $6.6 million, and total shareholders’ equity of $16.8 million, or approximately $1.27 per share. Deep Down had a $1.6 million increase in accounts receivable in Q3 ’19 compared to Q2 ‘19, principally reflecting delayed payments by some customers.

“We believe Deep Down remains well positioned to execute on our business goals given our solid working capital position, combined with anticipated operating cash flows and receivables collection. While we do plan to make some modest investments in the business aimed at driving sales, we will do so off an expense base that is now at an annual run rate approximately $1.5M lower than in 2018,” concluded Mr. Njuguna.

About Deep Down, Inc. (www.deepdowninc.com)
Deep Down focuses on complex deepwater and ultra-deepwater oil and gas production distribution system technologies and support services, connecting the platform and the wellhead. Deep Down's proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, installation buoyancy, remotely operated vehicles 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.

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.

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Investor Relations:
Catalyst IR
Chris Eddy or David Collins
212-924-9800
dpdw@catalyst-ir.com

DEEP DOWN, INC.
SUMMARY FINANCIAL DATA (Unaudited)