For the first quarter of 2016, Deep Down reported a net loss of US$0.5 million, or US$0.03 loss per diluted share, compared to a net loss of US$1.3 million, or US$0.09 loss per diluted share for the first quarter of 2015.
Revenues for the quarter ended March 31, 2016 were US$4.4 million compared to revenues of US$5.8 million for the quarter ended March 31, 2015. The US$1.4 million (25% decrease is primarily a result of some large projects having longer than expected engineering cycles due to a series of requested changes. The prolonged engineering resulted in delays in the commencement of procurement and manufacturing activities, thus reducing the corresponding revenues to be recognised.
Gross profit in the first quarter of 2016 was US$1.4 million compared to US$1.2 million in the first quarter of 2015. Despite the lower revenues in 2016, our gross profit percentage in 2016 increased to 33% compared to gross profit percentage in 2015 of 21%. The lower margins in the first quarter of 2015 related to significant costs incurred on a large project, whose revenues were not recognised due to a contractual dispute.
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 amortisation, and other non-cash and non-recurring charges. Modified EBITDA loss for the quarter ended March 31, 2016 was US$0.9 million compared to a Modified EBITDA loss of US$0.7 million for the quarter ended March 31, 2015. The US$0.2 million loss increase is primarily attributable to the prolonged engineering on some of our large projects, as mentioned above.
As of March 31, 2016, we had working capital of US$14.7 million, including cash of US$6.9 million.
Ronald E. Smith, Chief Executive Officer, stated:
"Oil prices have continued to stay at lower than ideal levels, resulting in more project delays, lower than expected first quarter results and prolonged uncertainty over the future in the industry. However, we feel confident that our historically high backlog, coupled with our focus on continuing to maintain a strong balance sheet, our recent organisational restructuring, and our closer collaboration with our customers will all enable us to successfully navigate the current low oil price environment, while we prepare for the inevitable rebound."
Earnings conference call
In connection with this earnings release, Deep Down will host its quarterly conference call on Monday, May 16, 2016 at 4:30 PM Eastern Time (3:30 PM Central Time). Interested investors are invited to dial the toll free number at (877) 303-6187 and provide the Conference ID: 10195179. At the conclusion of the call, a replay will be available until May 30, 2016. To access the replay of the call dial (855) 859-2056 and provide the same Conference ID.
The call can also be accessed via the web by going to the Investor Relations section of the company's website at www.deepdowninc.com.
Adapted from a press release by Louise Mulhall
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/13052016/deep-down-reports-1q-2016-results/