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Deep Down (DPDW)

Participants
Ron Smith President & CEO
Charles Njuguna CFO
Walter Schenker MAZ Partners
George Sutton Craig-Hallum Capital
Call transcript
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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Deep Down's First Quarter 2019 Conference Call. [Operator Instructions].

As a reminder, this call is being recorded today, Tuesday, May 14, 2019. to release forward-looking filed published SEC. related in is with disclaimer press the last detailed Deep statements Down's included the A night and is DeepDownInc.com Company's It on request. upon website, available also or the on website. non-GAAP of our in release included measures A today's on reconciliation is our financial call release the used press and press in which as of the Listeners are undue place only to reliance on made. speak cautioned not these forward-looking statements date or statements circumstances no undertakes to any to obligation reflect forward-looking events the Deep Down also after of revise made. date its I'd this over At turn to Chief like time to the Executive Smith. call Officer, Ron begin. Please

Ron Smith

for morning given spending XXXX night service just so exploration, cautiously announcing all-important with jump these right further in new industry Despite our turned Good last my month prices. continue oil to and their QX gas breakeven have revenue way, and the and optimism included of lower top- and additional specialized seek customers. Q&A. bottom-line production welcome but, continues the pushed results our of provided development their investor and with we oil can business some on projects The last last we're to that having are the work activity and was existing over keep our the have brief and one dialogue balance call. the actual in success adopted some production saw response our XXXX. which quarter be patterns fluctuations, for Deep gas as signal we to years. drilling remarks high-margin the and to the quarter, achieve was a costs offshore three key operations optimistic QX These activities. the published international highlighted solid first-quarter of on our about and to by large us By from ago, across Granted, volatility level and Down of revenue lower the operators ways release was oil by in The highest reasons XXXX press call opportunities large first-quarter I'll industry. a to prices forward which, the gas prepared impacted domestic situations projects. to many XXXX In supports price quarterly

oilfield the but With cost nimble rise and on bigger Deep is capabilities to of capitalize relative fewer able organizations, larger to Down service efficient competitors. our

in for exploration investments incentivizing aimed to this, key We in activity. direct be production indicator view in political both and deepwater fast future pitch a countries. about America. We are in which is across and for challenges. continuously Down, complex to especially deepwater of revenue seems high foreign driven these There value national ability independent we business by Africa, renewed at reforms we Asia and our oil pipeline as leading solve are part a for Geographically move Deep Latin well potential as client developing proposition where these our regions, as in potential breadth optimistic from regions companies rooted meetings our the in investments

Directors to our Down in core Finally, this but ability multiple our commitment of subject we Board $XX of our with and our customer are is XXXX start achieve configured business. confident to are newly on fronts, in and million a the in schedules. backlog discussions unified our off engaged to we Deep to great of remainder is

Charles? over to to And Neil turn Charles. forward with a looking the call that board. David with are We I future will and brighter on

Charles Njuguna

and you, for Good Thank call. today's Ron. thank joining you morning

first first-quarter of quarter million compared revenues XX% $X.X Our million XXXX improved to to the $X.X XXXX. in

of had offshore of XXXX. their commence in of to service to results half the our QX which were XXXX benefited but mentioned, QX second expected As from originally XXXX, some projects, schedules Ron shifted

quarter. This but in bullish pace the experienced improved growth revenues to the in the don't the we a first are proportion for first quarter XX% the on which of just due margins XXXX. We quarter increase mirror in of we what of XXXX, year service the of included Gross of balance to improved to primarily was to compared XXXX large work. XX% higher first margin expect

manage as Turning in our $X general $X.X from percentage to XXXX QX due due increased in of our quarter significantly the our operating of to of expenses cost increased revenues to continued QX first and overhead, the of expenses expenses first-quarter XX% XXXX. and revenues, a in XXXX structure. of higher million compared selling, however, administrative to to of to our million improved efforts slightly XX% benefit operating SG&A and

line in QX As modified EBITDA QX of XXXX. improved bottom $XXX,XXX of QX This during a a of press from net during XXXX. of night's $XXX,XXX a announced of resulted loss last compared XXXX for our loss of income release, an in of EBITDA $XXX,XXX to to net we $XXX,XXX

structure, of million sheet financial capital capital a Down to Deep shareholder's and our of $X.X equity working million, investments turning and strong short-term total $X.X in with cash Now balance including and position of remains million. $XX.X

for total number by leases. in requires resulted liabilities. an million $X.X standard which of accounting capital new impacted us was to assets increase assets our use, corresponding present our operating and both long-term of and now current of working a and all operating This in liabilities right Our

this million. standard, of $X.X our Excluding impact working capital would the been new have

more compared balance working needs to of accounts increased Our execute first quarter. enable increase our us of to first activity and in our capital reflection on opportunities. We increased of capital XXXX. business end future a as million XXXX includes This meet our the business quarter is is during the to principally the believe working than year-end receivable sufficient $X.X sheet to a of the

assets mostly that our today. Our an our opportunities non-core our in improvements enhance And our cost will XXXX we prepared this structure evaluate at we on to plan, remarks further point continue continue opportunities to pursue is to execute concludes sell will to business to effort for but and optimized liquidity.

I'll turn operator the back to call the investor questions. to take So

Operator

[Operator Instructions].

Our Schenker from of Walter question first MAZ comes Partners.

open. is line Your

Walter Schenker

should The uptick terms? those in see big receivables, Good or to paid? extended revenue terms profitability; the return how those regular to good get growth. Are to

Charles Njuguna

uptick very of getting we is all key our so receivables of just A quarter it are work first questionable. none regularly. is paid function the and some offshore we in had The of heavy in a really actually the proportion is of customers, it

Walter Schenker

slightly happen I funny. hopefully question I would not balance with losing am pickup It's about wasn't what level think, we But paid; just getting smiling; and you that on of the that as to worried normal of you level a I in question. are more increasing had liquidity of sheet a That's have not too. that although sort receivables was historically. revenues. returns reduced, it money a

Charles Njuguna

Yes, in as normalize range. to our that receivables, also uptick typical normalizes we even year in terms the will the receivables of our expect revenues

Walter Schenker

see Okay, at I will the but and conference late. and transcript, in a apologize and dialed I I'm

And those ago had assets so Did if sell the carousels provide liquidating non-base update off. saw to any this two a get we is on your -- groups? asset trying What did hopefully or were and on just final make that talking redundant call you I it transcript. comments comment both I'll if about -- about you I written assets. the any shortly know just

Charles Njuguna

the assets-- we other No, talk didn't any or about of the carousels

Walter Schenker

question. the That's

Charles Njuguna

the any this have we new carousels from point yet. developments At don't

We talked developed a concrete nothing ago, are yet. pursue opportunities about we the month continuing but to has

Ron Smith

had OTC Last meetings us. and week international on to litany from that out full talk visitors and several we was us and we And always a of here carousels had come week. the last clients visit

are are of items finalized companies anything we we'll now that in in direction. they recover right we direction. now, of couple some so, the that about moving a that And have with written on But haven't return but and we're those we've that as as be hoping the off, hopeful purchase far discussions home, And to of items some either. in that we success

Operator

[Operator Instructions].

question George of next Hallum. comes Our from Sutton Craig

open. is line Your

George Sutton

quite active us There process? been undergoing that there? you alternatives time. updates Is the potential Could that process you've was no discussion some an still about for strategic any give

Charles Njuguna

is process ongoing. strategic The it's review --

leadership One first Board. we recently with of meeting touched our we've month, hired outcomes that we change -- now the the of the full And in last had just -- of one the the the on was organization.

anything yet part a it review. at been point have But to to that. of There Board, and just tangible point new evaluating the report organization that where of leadership strategic nothing we ongoing plan feedback renewed are lot a a when strategic and of at but terms our the received. a focus, is of we of as we're report we We in in can have changes will the the are. is are on you tangible discussions, review a There this happen ongoing -- were that not has

Operator

like call And Ron closing I questions. back to any am showing the further currently I'd turn Mr. not for to remarks.

Ron Smith

to our today's forward speaking you with Thank earnings We appreciate Deep and of you, let's call. Down your with support look Thank of and who call. about the our thanks And next Norma. you all progress to joined call And in our that interest conclude today. you.

Operator

thank your you gentlemen, in for and Ladies participation conference. today's

Everyone day. You have disconnect. a may wonderful