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Deep Down (DPDW)

Participants
Charles Njuguna Chief Executive Officer
Micah Simmons Chief Operating Officer
Walter Schenker MAZ Partners
Andrew Kustas White Pine Investments
Call transcript
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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Deep Down's Third Quarter 2019 Conference Call.

During the presentation, all participants will be in a listen-only mode. After the speakers’ remarks, you will be invited to participate in the question-and-answer session.

As a reminder, this call is being recorded today, Wednesday, November 13, 2019.

to release forward-looking and published the related in is filed disclaimer SEC. press the on detailed Deep statements Down's included with A Tuesday night request. company's also deepdowninc.com on is the It or available upon website, release A reconciliation of website. release call financial measures press included our on on the in used is and today's in non-GAAP press our

revise date date these any circumstances no speak only which are not cautioned statements, undertakes statements forward-looking to Listeners its after also of of place made. the to forward-looking obligation or Down undue to made. reliance on events Deep as reflect the

At this Njuguna. to Please to the Charles your sir. call time, over I'd like begin, Officer, Chief Executive turn

Charles Njuguna

lead thank for founder the morning. and you, for as gas industry. this having today's first outside Good time Thank pursue as to who oil the Smith, joining CEO Down’s investor you Deep Noma. to reins from opportunities CEO, call morning. And resigned us recently taken Ron honored I am the

With Officer, who this me Operating technical, the leader key throughout business. new be innovation morning Simmons, driving our our on is operational will Chief excellence Micah the and call

in will You minutes. him few hear a from

creating shareholder we process strategic some value conversations propositions, acquirers and potential strength, like getting of This challenges came we forward strategic faced value. and quarter Before third I recap core this partners, our for in-depth best supported our priorities range with results, the Fundamentally, actions to review. our of our by and some out us the was the would held of a firm. identify our to of our focusing to that of possible path helped effort

core focus prioritize with to clearer core that was in path forward suspend and business, our existing outside allocation investments and customers, to clear of opportunities sharpen on our is predictable business. more processes, build to resources best procurement areas to and our the It our the

bottom-line performance enhance and our to also overhead cost further ways structure, streamline identified generation. our and We

we are Though may caused step reward there foundation. that deliver feel and Down to away to efforts strengthen Deep best some us have performance changes turn from appropriate will that shareholders our financial these potential, have offered the

on As emerged and matches a team business, renewed operating an objectives. focus result, Deep better core that with our a has Down

stakeholder in these have have and our performance Recent customer and and changes we energy overwhelming supportive. optimism going deliver positive to on levels feedback been potential internally, of renewed forward. And strong

two, matching needs current Our base and of specific around organization. our discipline financial and number the with one, thinking revolves objectives expertise unique number identifying across And experience. client and

conversations solid business, Notwithstanding customers have to developed to relationship positioned Down had we with of we've to well current this their opportunities likely awards. we including range project laurels. feel Deep solid and a on ramp where playing resting future plans, of business whom Recent not secure our in with potential future key efforts. a we on have for plans signaled a years, continue development role up remains our several are that highly base And

of our out interest facility. on Houston execute Geographically opportunities we speaking, prime our be can will

and We to back where into Southeast can scale West processes will certain markets, unpredictable. therefore African procurement expand become our efforts Asian

pool the our compelling By chances focusing we where the for Deep with select criteria. and projects highly financial of returns Down shareholders. be we the to better and feel for deliver should opportunities on our We projects, meet have timing the will resources best can international pursue positioned scope visibility expect of our we talented success, which

revenue close that I'm XXXX almost XXXX, months is for in to of briefly Deep me pleased quarterly let turned nine a third of note our our to solid in $XX touch in and year full same our the Now, Down compared the on quarter million, XXXX. revenue results. XXXX. past quarter to

revenue quarter XXXX, of XX% which to project to improved a is quarter activity. third in result million increased of $X.X third million Our $X.X the compared

and general just XXXX. improvement revenues $X.XX quarter the an selling, decreased to XXXX as the this a XXXX XX% XX% was But quarter of the in percentage administrative quarter slightly XXXX. to expenses Third third third to of in $X.XX million, million third quarter of from compared in of

third Our transition balance initiatives. related one-time included XXXX, SG&A the quarter reduction in from in about CEO cost to resulted the expenses other $XXX,XXX and

SG&A Excluding as declined have percentage of would factors, these XX% one-time a to revenues.

compared to third the the higher in in a negative $XXX,XXX to XXXX, loss primarily rose quarter EBITDA XXXX revenues. due EBITDA modified to quarter modified $XXX,XXX Our of third of of

remains sheets and our as to capital, working in equity, million Down shareholders million of September in $X.X with With $X.X XXXX. financial Deep $XX.X positioned cash liquidity, balance well XX, respect including million in and

rose the XXXX, Accounts million principally of our by to million compared of in in some $X.X second Receivable third $X.X the reflecting payments of to quarter XXXX, delayed quarter customers.

October. we’re million during the of able almost However, receivable collect to month in $X.X accounts

on the I financial industry a experience, new here call, is the of of years Siemens his Micah who industry contacts watch. introduce and over pleased and improved as delivering veteran and us proven questions, brings am us a units Company. a oil performance track solid wealth Micah Officer this at recently, and joined respected of Operating a under with for open XX & call we for of experience at TechnipFMC and Micah base Chief Oil most business for to Before efficiency at recently Gas. gas operational role Simmons, record offshore the of

the turn a few to now me for Let introductory Micah over briefly remarks. call

Micah Simmons

working call to build of bringing Down joining today. and Thank this to words, excited look you, Organization history forward our morning team to deepwater talented joined hand-in-hand kind a on customers have in Deep to to with the those long Charles for solutions projects. I'm everyone and the good

ago, projects. my IOCs, and Gulf subsea essential across forward how I I ingredients the commitment the complex in of to narrative, team look from hear exceeds company with I've large Although, the Independence, regularly than their working that regularly expectations. Mexico firms are execute These months and been Deep first-hand that to and the engineering our to offshore delighted space. succeed And two joined OEMs, from less experience to to install see customers contributing cooperate to Down

Looking forward, and to activity oil volatility be impacted by prices. commodity continues gas and

However, and in cycle maintain and we a are subsea longer remains projects projects life tend extend to that investment, existing assets. that the offshore large to linked confident to required work is there it developments, or be of ongoing a Brownfield of activities base sanction

I efficiencies a comes can the execution. project decision Fortunately, Down to areas where Deep when responsiveness disciplined deepwater that demonstrated expertise, said, is it streamlined technical ensuring element customers' key possess making service and provider's of our projects the opportunities, our competencies see again, leverage That technical strengthen competitiveness those targeting proposition continuing to been our value by by our just continue it's core two But to improve of that and operations. months. by across offering increasing

now. forward in leave to investors speaking But it future. for I with I'll there do the look So,

over With pass call the that, I'll to back Charles.

Charles Njuguna

offerings increasing see are to orders in includes these orders. I'll to week the you, October, Thank conclude industry. demand of efforts customers to the received our our our a where to Micah. off. $X that signs which offshore in paying recent over million we've continue expand our existing we is prepared believe recent And We noting disclosed new by pleased scope wins mid customer remarks we show in of

you the questions? call Noma, please open would to

Operator

comes Walter Instructions] from Our of Schenker Partners. first [Operator MAZ question you. Thank

Your line is open.

Walter Schenker

back getting would you, is there're things to extraordinary. and back big book the something October, orders new and payments $X level expecting are value from In realized we stock mean that is Charles, million like new around currently? cash the getting book in that I the

Charles Njuguna

$X the price of on which intend payrolls had morning, Good more we a about higher yes, the the stock as cash quarter, your Walter. today get we few goal. of since And, yes, To our is our receive to is we to but, continue do cash yes, end the cash, million, question in.

Walter Schenker

West why, sure There not and in the Asia. I'm lot about about a Africa calls both surprised, conference was there. I the commentary commentary been of prior had opportunities about Good.

-- Or your that what much us little reduce decision doing doing or there? business had on been and just can we're efforts give exposure there? you your a to you more actually reduce color not You

Charles Njuguna

Yes.

both operations as actually about those to continue Nigeria, and West business countries, some Ghana in and markets. a we of been Southeast We point in of up few point other a targeted was, case Africa, Malaysia, at a talking in What do in Asia setting cases areas. lot had in

some But is the Gulf, as we those with seen Ron with and strengthened. a lot can for And scaling months. in is now of -- change especially. the actually Latin revisit America, you efforts the seeing we to there, what There efforts, are our lot know, set are we've new Trinidad and home in, getting and a opportunities established the get we opportunities then to in the base, We've country and that. XX countries pop last up focus also in on traveled just up Brazil, to back I

And so be countries. on we'll two focusing those

That Ironically, being Africa, Nigeria. meet last up coast over popped the their to clients project especially new I'll continue this opportunity to in discuss themselves. in said, to to just present week that’s off of West opportunities be quick-turn heading afternoon, the for a a

equipments. we project, Walter. send Hopefully, path today's cash the meeting answers question, flows. And It's have we back. to clear your there ensure our purpose our a service bring real that And it where is personnel of a to and that

Walter Schenker

queue long have people And is any I questions. progress more, if can't of what I or conference In there's carousels. Mic the on a updated asking without does is not optimism, a it just a exist call regard, asking about couple assume your

Charles Njuguna

talk on so about different So we table, There Walter, continue now. right the I carousels. to that two contracts no to is expected you folks from about the customers

announce as but we something so, soon we as it. have will And

Walter Schenker

so that less take you done. gotten a There It's are of Okay. make to opportunities are comment? not should chance -- that, have done less. just less something's or I mean been to things getting prefer not any something

Charles Njuguna

something's comment. who right an is based not something winning, said we prefer this until Yes, customer a And one have actually make we on done, I until obviously, we've order. before, them now is think, umbilical to --

mean they like would I And so that's but happen, that, in claim hadn’t case us they a what anything. told they've want which

we're some that we receive until and actually not counting So, our for money contract it.

Walter Schenker

of go structure with, always that and forward the we I historically, some in good. putting And there payments. at the can of you severance the company, versus in give look is you've the cost money process efficiencies as some lastly, savings, cost you magnitude where was realized now as sense and us place? sort But as the been overall of you Okay, to it's we're of think

Charles Njuguna

on with of to need some may of jobs also strengthen we're are still based like based want We through realize to the our walking that find. team can where investments looking our identifying efficiencies We make. we we we the places we renewed team, any all do on at focus, where

I likes phrase, investments, I'll Engineering. a Value say When borrow Michael to use

in do that expanding we for to to some lost that challenging thinking we need which than cases, may just others. some why really are there you if our as we our we where ask customers, our to team about And are maybe work just will work. solution realized So, therefore, are really some we clients be, we our to of salesforce. understand, the higher efforts of we some we but over what bring think who part some And be competition, the for projects table, how our we've rethink

we we savings That million annual long-term. where continue And in today, make $X.X about cost run of as on said, we've rates. see to at more identified savings an basis can our current being

Walter Schenker

based going EBITDA reduced necessarily not company expect going a forward and to cost forecast, a you're know but I you be not positive? but on structure And the every full Okay. quarter, should would therefore make

Charles Njuguna

be That absence and goal yes, that expectation other is the things is -- that the changing. we'll walking towards

Walter Schenker

you. Okay. luck. Thank Good

Charles Njuguna

Walter. to talk you. to you. Thank good Always

Operator

Pine from Thank White Andrew The open. is line Investments. our comes question you. And next of Kustas

Andrew Kustas

guys. Hi,

is Just been any anything strategic on -- that for a news or still about question, off now. talk we quick heard What option Is were a about few alternatives company front? an that There we've the--? that. that the never investors of some years the selling

Charles Njuguna

the morning, process, of spoke lot number Good of We spoke acquirers. customers. the most us process. of to potential around went July the identify the started current the most potential a We that a efforts. XXth June, the spoke financial, value value markets, through partners. strategic our the suspend to where July, we Good Yeah. last brought end decision Andrew. made through at the second potential some so to of we early We helps Andrew. of of to We brought the acquirers. And it quarter to to year this where morning, we end We year,

strengthen were shareholder efforts, us be acquirers. potential But not for to may -- some the creating we And changes level. a decision elements. our We or what really suspend very why also outside for made step corporate governance, non-core take that made back, value our that's identify there are ourselves to in our the changes attractive what core is; on business, elements the Board so suspend efforts that

of things the do on decision other end Ron with on. he and move moving to the that, At step made been had to and fully away trying

And all so, in of had suspended conjunction effort. -- with we those, the we

public any to shareholders. interest of open be what be we to in like the company, continue However, would best

that. of arranging with quick a showed vote shareholder up somebody a for if today I'd So, to share, get their all check be on meeting a $X

Andrew Kustas

that. Right. No, I appreciate

is of book are listed and they just a book time should taken. overstated? value than concern That's as be? then becomes, Are higher the of having there frustrated half getting question I value Just of the assets than less just that ours the the think been frustration it's

Charles Njuguna

your We We Yes. share appreciate it. frustration.

of those along questions our with auditors, I some did think outside we a impaired asset go the of last at we really through and and exercise year, evaluated such impairments lot an with consultants an those lines. end

Andrew Kustas

Right.

at you the value the is the feel accurate? So, book moment,

Charles Njuguna

Yes.

that For feel the we Yes. way. moment, do

Andrew Kustas

then share business it's will the guess hopefully I about Well, and do execution continuing too. well just and to price the

Charles Njuguna

part and way. plan and of consistently just working for our of that execute do Thanks execute profitability caliber bringing us to and join call. a That's to Michael's us the different see to in on improved EBITDA strengthen goal path We that. help positive of to to Yes. the a market diligently consistent being someone team we're and go

Andrew Kustas

Okay. Very good.

Operator

Njuguna to over you. at questions like back no to closing showing the I'd call Thank this Charles comments. queue in And I'm for the time. other currently hand Mr.

Charles Njuguna

your And support today. And We your call Thank our strongly call. all interest you of you, Noma. conclude Down. let's in Deep Noma, to that appreciate thanks our joined who and with today's

Operator

today's this gentlemen, concludes and conference. Ladies

You you for may disconnect. Thank your participation.