Deep Down, Inc. (now Koil Energy Solutions, Inc.) Announces Second Quarter 2022 Results
Deep Down, Inc. (DPDW) reported Q2 2022 results, revealing a 23% revenue decline to $3.5 million, with a net profit of $0.2 million. Operating expenses decreased to $1.5 million, aiding gross profit growth to $1.5 million, equivalent to 42% of revenue. The company has $3.4 million in cash and strong working capital of $6.3 million. Despite challenges in the offshore industry and pending rebranding to Koil Energy Solutions, management remains focused on growth opportunities, emphasizing cable management services and hydrogen energy projects. A conference call is scheduled for August 9, 2022.
- Increased gross profit to $1.5 million, or 42% of revenues, due to lower material costs.
- Improved modified EBITDA to $0.2 million compared to negative $0.1 million in Q2 2021.
- Strong working capital of $6.3 million, with cash totaling $3.4 million.
- Revenue decreased by 23% to $3.5 million compared to Q2 2021.
- Net profit declined from $0.7 million in Q2 2021 to $0.2 million in Q2 2022.
- Operating expenses remain high at 42% of revenues.
HOUSTON, Aug. 08, 2022 (GLOBE NEWSWIRE) -- Deep Down, Inc. (OTCQB: DPDW) (“Deep Down” or the “Company”), a specialist in deepwater production and distribution equipment and services, today reported results for its quarter ended June 30, 2022. Deep Down will hold a conference call tomorrow, Tuesday, August 9, 2022 at 10:00 am Eastern Time to review its results and outlook (call details below).
Deep Down at a Glance:
| Share Price†: | Cash*: | ||
| 52-Week Range†: | Book Value*: | ||
| Shares Out.†: | 11.9M | Price / Book Value: | 0.7x |
| Market Cap†: | TTM Revenue: | ||
| *As of 06/30/22; †As of 08/05/22 |
Charles Njuguna, Deep Down’s CEO, commented, “Deep Down’s top-line results for the second quarter of 2022 are indicative of the ongoing challenges that face the offshore industry. Inflation, certain geopolitical events, and the possibility of a prolonged recession continue to weigh on our customers’ abilities to commit to long-term deepwater projects. While some of these factors are systemic, we remain focused on the levers within our control as we work to grow the business.
“We are dedicated to the growth of our business, and during the quarter, we saw a glimpse of what that growth could entail. We expanded our cable management expertise beyond our traditional oil and gas offerings by providing cable management services for a military project in the northern half of the United States, and we received an order to provide hydrogen energy related services. The scope of these projects not only demonstrate the transferability of expertise we developed over the past 25 years, but it also validates our strategy to shift focus from core products and services to core competencies. This is in addition to announcing the relocation of the business and a rebranding of the company in the first quarter of 2022. When the move is completed later in the third quarter of 2022, we are confident that our new headquarters will enrich our team’s ability to support the needs of our clients, while allowing us to spread our wings to discover even more diverse offerings. Secondly, rebranding the company from Deep Down, Inc. to Koil Energy Solutions, Inc. was the next step in promoting our core competencies to expand our product and service offerings into new markets. While we are still awaiting approval from the Financial Industry Regulatory Authority (“FINRA”) for our name and ticker symbol change, we have moved forward with this change operationally and are currently working with our customers under the new brand.
“The growth of our business remains a top priority and managing cash flow and preserving liquidity remains of critical importance. Bidding and project activity remain strong, and we are confident our streamlined operations and continued focus on our core strengths will enable us to be the primary choice for our customers. This, combined with our recent rebranding efforts to Koil Energy and the upcoming move to our new headquarters later this year, will provide us with the momentum needed to achieve this desired growth.”
Operating Results
Deep Down’s revenues for the three months ended June 30, 2022 (“Q2 2022”) decreased 23 percent to
Gross profit for Q2 2022 was
Operating expenses were
Due to the factors discussed above, Deep Down reported a Q2 2022 net profit of
Deep Down reported a modified EBITDA of
Share Repurchases
On June 3, 2022, the Company repurchased 147,059 shares of common stock from Mr. Smith at a total cost of
No shares of common stock were purchased during the quarter ended June 30, 2021.
Financial Strength
At June 30, 2022, Deep Down had working capital of
Conference Call Details:
| Call Dial-in: | 1-833-630-1956 for domestic callers |
| 1-412-317-1837 for international callers | |
| Webcast/Replay URL: | https://edge.media-server.com/mmc/p/b77jxdz2 |
| Replay: | Available through August 16, 2022 on www.koilenergy.com |
About Deep Down, Inc. (www.deepdowninc.com)
Deep Down (now Koil Energy Solutions) is a leading energy services company offering subsea equipment and support services to the world’s energy and offshore industries. We provide innovative solutions to complex customer challenges presented between the production facility and the energy source. Our core services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, and related services. Additionally, Deep Down’s highly experienced team can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world.
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.
Investor Relations:
Trevor Ashurst
ir@koilenergy.com
281-862-2201
DEEP DOWN, INC.
SUMMARY FINANCIAL DATA
(UNAUDITED)
Comparative Condensed Consolidated Income Statement
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||
| Revenues | $ | 3,499 | $ | 4,528 | $ | 7,100 | $ | 8,450 | |||||||
| Cost of sales | 2,018 | 3,122 | 4,204 | 5,316 | |||||||||||
| Gross profit | 1,481 | 1,406 | 2,896 | 3,134 | |||||||||||
| Total operating expenses | 1,475 | 1,830 | 3,203 | 3,442 | |||||||||||
| Operating income (loss) | 6 | (424 | ) | (307 | ) | (308 | ) | ||||||||
| Total other (income) expense | (181 | ) | (1,154 | ) | (235 | ) | (1,190 | ) | |||||||
| Income (loss) before income tax expense | 187 | 730 | (72 | ) | 882 | ||||||||||
| Income tax expense | 10 | 6 | 15 | 10 | |||||||||||
| Net income (loss) | $ | 177 | $ | 724 | $ | (87 | ) | $ | 872 | ||||||
| Net income (loss) per share, basic and diluted | $ | 0.01 | $ | 0.06 | $ | (0.01 | ) | $ | 0.07 | ||||||
| Weighted-average shares outstanding, basic and diluted | 12,057 | 12,444 | 12,136 | 12,439 | |||||||||||
Comparative Condensed Consolidated Balance Sheets
| June 30, | December 31, | ||||||
| 2022 | 2021 | ||||||
| (In thousands) | |||||||
| Assets: | |||||||
| Cash | $ | 3,439 | $ | 3,676 | |||
| Other current assets | 5,890 | 7,288 | |||||
| PP&E, net | 2,267 | 1,727 | |||||
| Other non-current assets | 1,408 | 2,035 | |||||
| Total assets | $ | 13,004 | $ | 14,726 | |||
| Liabilities: | |||||||
| Current liabilities | 3,053 | 3,866 | |||||
| Other long-term liabilities | 21 | 588 | |||||
| Total liabilities | 3,074 | 4,454 | |||||
| Stockholders' equity | 9,930 | 10,272 | |||||
| Total liabilities and stockholders' equity | $ | 13,004 | $ | 14,726 | |||
DEEP DOWN, INC.
SUMMARY FINANCIAL DATA, CONTINUED
(UNAUDITED)
Modified EBITDA:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (In thousands) | |||||||||||||||
| Net income (loss) | $ | 177 | $ | 724 | $ | (87 | ) | $ | 872 | ||||||
| Add: Interest expense, net | 3 | 8 | 5 | 21 | |||||||||||
| Add: Income tax expense | 10 | 6 | 15 | 10 | |||||||||||
| Add: Depreciation and amortization | 173 | 262 | 369 | 522 | |||||||||||
| Add: Share-based compensation | 14 | 17 | 71 | 37 | |||||||||||
| Add: Relocation costs | 29 | - | 29 | - | |||||||||||
| Deduct: Gain on sale of asset | (134 | ) | (6 | ) | (188 | ) | (55 | ) | |||||||
| Deduct: Forgiveness of PPP loan | - | (1,124 | ) | - | (1,124 | ) | |||||||||
| Deduct: Reversal of litigation accrual | (100 | ) | - | (100 | ) | - | |||||||||
| Modified EBITDA (loss) | $ | 172 | $ | (113 | ) | $ | 114 | $ | 283 | ||||||
Cash flow data:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (In thousands) | |||||||||||||||
| Cash provided by (used in): | |||||||||||||||
| Operating activities | $ | 1,257 | $ | (447 | ) | $ | 780 | $ | (643 | ) | |||||
| Investing activities | (420 | ) | (134 | ) | (767 | ) | (140 | ) | |||||||
| Financing activities | (100 | ) | - | (250 | ) | 1,111 | |||||||||
| Change in cash | $ | 737 | $ | (581 | ) | $ | (237 | ) | $ | 328 | |||||
FAQ
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