Deep Down Inc.

Description

Revenues increase 55 percent to $9.6 million - Gross profit increases 93 percent to $3.6 million - EBITDA turns positive to $724 thousand HOUSTON, Aug. 16 /PRNewswire-FirstCall/ -- Deep Down, Incorporated (OTC Bulletin Board:DPDW.ob) ("Deep Down" or the "Company"), an oilfield services company specializing in products and services for the deepwater and ultra-deepwater oil and gas industry, today announced results for the second quarter of 2010. For the second quarter of 2010, Deep Down reported a net loss of $452 thousand, or $0.00 loss per share on revenues of $9.6 million compared to a loss of $1.8 million, or $0.01 loss per share on revenues of $6.2 million during the same quarter last year. OPERATING RESULTS Revenues increased by $3.4 million, or 55 percent to $9.6 million for the second quarter 2010 from $6.2 million for the same quarter last year. The increase was due primarily to increased revenues from the production of products for deepwater projects and ROV and other related services. During the second quarter 2010, the Company's flotation plant ran at over 30 percentage points greater capacity for the production of buoyancy products compared to the same quarter last year. The higher demand for our ROV and other related services in the second quarter 2010 resulted primarily from customers commencing work that had previously been delayed, projects supporting relief efforts and work related to the increased emphasis on inspection and safety as a result of the oil spill in the U.S. Gulf of Mexico ("GOM"). Gross profit increased $1.7 million to $3.6 million for the second quarter 2010, an increase of 93 percent over the same period of the prior year, reflecting an overall increase in the gross profit margin from 30 percent to 37 percent. The increase in gross profit and gross profit margin was due to the increased revenues described above and to the revenue mix which included higher margin ROV services and engineered subsea projects than during the same period last year. When comparing the second quarter of 2010 to the second quarter of 2009, the operating loss was reduced by $2.1 million to a loss of $339 thousand primarily as a result of improved gross margin and a decrease in selling, general and administrative expenses ("SG&A") of 9.8 percent as the Company continued to focus on more efficient operations. EBITDA (please see definition in last paragraph below) for the second quarter of 2010 was $724 thousand compared to negative $1.6 million for the same period last year. This improvement was primarily driven by the increase in gross profit and lower SG&A. "There will undoubtedly be greater regulatory scrutiny and higher costs associated with finding and developing hydrocarbon reserves in deep water, particularly in the GOM. Additionally, we believe that the international markets will be more important to our operations going forward as we continue our focus on Brazil and West Africa deepwater projects. The deepwater market remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates.

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