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DPDW 1.77 November 14, 2007 - 4:01 PM EST

DPDW News

Deep Down Announces Third Quarter Results
HOUSTON, Nov. 14 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC Bulletin Board: DPDW) today announced unaudited results for the third quarter ended September 30, 2007, on Form 10-QSB filed with the U.S. Securities and Exchange Commission.

'We are pleased with our third quarter financial performance which is on target with our business plan,' commented Robert E. Chamberlain, Jr., Deep Down's Chairman. Looking on the horizon, we expect continued record setting internal growth to be complemented with strategic acquisitions, including Mako Technologies, Inc.'

Deep Down generated revenue of $12,128,737 for the nine months ended September 30, 2007, with cost-of-sales of $8,098,001, for a gross profit of $4,030,736, or 33.2%. Revenues for the third quarter ended September 30, 2007, were $4,885,555, with cost-of-sales of $3,552,599, for a gross profit of $1,332,956, or 27.3%.

'Gross margins were impacted by increased engineering and other costs associated with new product development, including our new line of Proteus(TM) custom-engineered active heave compensated in-line winches, deep water rated (4000 meter) launch and retrieval systems, and other products in development. We expect gross margins on these products to increase on future orders. We are actively looking at broadening the breadth of product and service offerings to meet the increasing demands of our growing customer base,' commented Ron E. Smith, Deep Down's President and CEO.

Operating income for the three months and nine months ended September 30, 2007 was $290,298 and $1,070,236, respectively. Net income for the three months and nine months ending September 30, 2007, was $195,969 and $1,036,177, respectively. Included in net income for the nine months ended September 30, 2007, is a one-time gain of $2,000,000 related to the extinguishment of debt coupled with associated non-cash interest expense of $1,102,385, or a net gain of $897,615, related to 4,000 shares of Series E preferred stock that was redeemed at a 50% discount to face value. Adjusting for this nonrecurring non-operating activity, net income for the three months ending September 30, 2007 was $195,969 compared to $138,562 for the nine months ended September 30, 2007. Earnings before depreciation, interest, amortization, taxes and other non-cash charges (EBITDA) for the three months and nine months ended September 30, 2007 was $457,994 and $1,431,218, respectively.

'We are particularly proud of the improvements to our balance sheet over the last nine months. Since December 31, 2007, working capital has increased $2,358,323 from $932,929 on December 31, 2006, to $3,291,252 on September 30, 2007. Major changes in current assets include an increase in accounts receivable of $2,123,830; an increase in cash of $1,049,974; and increase in work in progress of $1,019,158; an increase in finished goods of $515,601 and an increase in lease receivables of $414,000. Major changes in current liabilities include an increase in accounts payable of $2,782,072 and a payable of $560,000. Our current ratio as of September 30, 2007 remains strong at 1.78 times. Stockholders' equity has increased $6,045,744 from ($3,299,717) on December 31, 2006 to $2,746,027 on September 30, 2007,' commented Eugene L. Butler, Deep Down's CFO.

About Deep Down, Inc.

Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project. The Company's ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.

The Company's strategy is to consolidate service providers to the offshore industry, as well as designers and manufacturers of subsea, surface, and offshore rig equipment used by major, independent, and foreign national oil and gas companies in deep-water exploration and production of oil and gas throughout the world. Deep Down's customers include BP Petroleum, Royal Dutch Shell, Exxon Mobil Corporation, Devon Energy Corporation, Chevron Corporation, Anadarko Petroleum Corporation, Marathon Oil Corporation, Kerr-McGee Corporation, Nexen Inc., BHP, Amerada Hess, Helix, Oceaneering International, Inc., Subsea 7, Inc., Transocean Offshore, Diamond Offshore, Marinette Marine Corporation, Acergy, Veolia Environmental Services, Noble Energy Inc., Aker Kvaerner, Cameron, Oil States, Dril-Quip, Inc., Nexans, Cabett, JDR, and Duco, among others. For further company information, please visit http://www.deepdowninc.com and http://www.electrowaveusa.com

One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered 'forward-looking statements,' generally preceded by words such as 'plans,' 'expects,' 'believes,' 'anticipates,' or 'intends.' We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.

SOURCE Deep Down, Inc.



Source: PR Newswire (November 14, 2007 - 4:01 PM EST)

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