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Deep Down (DPDW)

Participants
Charles Njuguna Chief Executive Officer
Trevor Ashurst Vice President of Finance
Walter Schenker MAZ Partners
Call transcript
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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Deep Down's First Quarter 2020 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.

call recorded this XX, Tuesday, reminder, XXXX. a is today, being May As

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

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

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

Charles Njuguna

these despite Thank dollars' its us Good face production remains and safety challenges, joining for of But limited operators, economy. thank this and plans. offshore the is continues you unprecedented visibility and functioning and morning. owners, uncertainty level global you, in for continued to morning industry to worth infrastructure its place of stress of creates critical billions an energy Teresa. and that The future

substantial We tied markets in that infrastructure. make to production opportunity are development demonstrate this point the to the not exists that offshore services of new

recovers as industry of opportunities that It the primarily the expansion our this products and services is efforts and maintenance on we will current focus from environments.

recovery the is timing uncertain. However, of this

quarter, new our better cost and a moved to the more align energy the towards and end industry as the likely structure with challenges company coronavirus first clear impact adjust the free business the pandemic to As became realities. of quickly focus the of we

costs accounting our reducing temporarily fixed our XX% of to further roles retaining our continue payroll for addition organization, serving streamline customers. In to overhead ability reduce while compensation in levels our order and organizations, eliminated SG&A the certain we across to

our rent from negotiated and successfully received also pricing our of landlord have abatement We from some suppliers. concessions our

this remains of and that variables and and While there to there emergency at still significant many amount unknowns suited ideally we skills time, believe our are are expertise. deferred maintenance repairs work a

these high of committed we We service that remain and solving opportunities levels expect and have our come delivering the pursuing problem to actively are from us. to customers

match the At to continue we'll our footprints foreseeable same fine-tune expense time, to demand.

some implement expect modest they delays the to offshore customers project as value environments. changing We

to ongoing efficiently. to expect production abandon However, initiatives as to are we discussions or as on required soon these their required other service them our And keep based customers, with do occur running activities lifted. travel and restrictions safe not priority of we expect maintenance system some

challenging pace calculus consideration. new the new to decisions the which difficult current to environment it's at is in therefore, of return and gauge course, investment the could projects Of more

distant future. new about to -- continue while to new While cautiously not make yet promising assumptions previously optimistic we and stop in which likely in been too various are the with announcements project engage customers sanctioned had being delayed, to projects on some able be conversations

quarter net quickly, expound will cash objectives first operations that headwinds our minutes. on clear few Trevor in we calls, came investor managing to modestly and and we further achieve main this cash able positive performance quarter the made XXXX. As of despite on were on strength. our financial first of prior flow very one recent in a maintaining from flow ends our To is

flows in likely adjusting invoices. for new macroeconomic projects, customers impact of addition continue. And which in further delays to such delays factors, working we into in are cash the arrangements, This future. the would that sanctioning reacting could have is the the including started our our the processing to the second foreseeable the quarter, Heading we to delays as seen operations remote our some of concerned

line credits, that Protection and a apply In in faced circumstances the for Small getting we Administration's light through given determined these company of the Business challenges a it we the loan Program. best would Paycheck to interest have of the of be in

company, a As The in capital raising can have companies economy. small it like be publicly more circumstances traded challenging for good a challenge a made even ours.

form grateful PPP the our and during able payroll, assistance government crisis. rent with are was we provide So the to this of help that to loan, in utilities the

identifying and of bottom while deliver spending pursuing being best balance of opportunities, on tight funded, results. to select leash the line a Our high year possible very the focus likelihoods the time managing with keeping and operations throughout line the on at was same bottom

let that of briefly Finance, now review Trevor our Vice to turn overview, President call financials. quick for over our With Ashurst, me of the

Trevor Ashurst

process year, Thank projects XXXX. price first of to quarter you, to last quarter of prices the and was a the compared the revenue oil million million decline Charles. pandemic. the of fixed in period same and decline XXXX This impact restrictions for resulting for from and $X.X the COVID-XX $X.X travel having of was year, combination compared revenue of of this are lower volume the first Revenue in

also to last XX% revenue was margin for gross primary the in the as Low to in of XX% QX in this compared of driver year year. decrease QX

compared $X.X administrative first of quarter the XXXX, in million declined to for XXXX. $X XX% and approximately general million selling, the However, first approximately of quarter expenses to

a This take company implemented indicator are the decrease to year that cost starting initiatives by in SG&A last expense reduction effect. the positive is

core pursuing measures our additional focus business. As and earlier, renewed actively profitability improve Charles to the support our we're cost mentioned containment on company's

net reported This period we to of a to year Looking share for revenue per the drop or of compared compared loss or in year, primarily quarter this net $XXX,XXX, first this quarter XXXX. $XXX,XXX income of in is first per $X.XX income at income, year. share $X.XX the net due loss to lower a same a net last QX of again reporting of

$X debt of long XX, March in includes structures being disciplined That of been and We XXXX. cash has be a cash that priority. $X said, to capital zero working capital in million continue as to term preservation continues million maintain and a

items. the during $XX,XXX approximately spending on critical As limited quarter, such, CapEx we

a result we quarter. free that free $XXX,XXX the cash, As generate cash of QX is able XXXX, during reporting despite period. are our cash flow continued flow positive of compared to higher negative for in focus This of to on $XX,XXX revenue having of

COVID-XX for in summary, and commodity supply prices producers. pandemic in pressure global So and has the on global disruptions created uncertainty demand, energy

mitigate ahead, to our as execute Looking as of operating to the macro possible. these customers by our on economic taking efficiently continuing actively business while are impact events we steps for

back now Thank call turn for That time. over your you Charles. then said, And we'll the

Charles Njuguna

and current is as have as eyes the challenges a march We ensure open the and are The immense Management we we strong Trevor. remain right Deep you, Down we but the regarding we opportunities navigate has that shining positioned to Thank taking to steps of circumstances. our by face, which fueled Board and a the commitment light talents team, been organization. unprecedented commitment a believe

of And services. problem fueled customers and the our unique continued offshore capabilities, our very recognize to world support we also who of our are challenging the proven solving by experience abilities our

today. That prepared concludes remarks our

to Teresa? the I the questions. operator investor take So call to turn back

Operator

Your comes first Schenker. question Instructions] Walter [Operator from

Walter Schenker

questions. of Charles. A couple Hi,

your has about down? higher some people in to structure letting this round, ask recent you level, done cost you including go, has much total Someone were come them, think how with when do

Trevor Ashurst

quick. real I’ll take that Walter,

of we're that about said corporate a end on to around SGA cost our So $XXX,XXX, our going overhead result basis, as so forward an $XXX,XXX of estimating to I XX% up or annualized reductions, representing around Charles that's corporate roughly, lower be overhead. and think

Walter Schenker

Second, you you've received just or have PPP your loan, applied?

Charles Njuguna

Walter. We have received it,

Walter Schenker

your disclosed be Okay. in And filings will it obviously?

Trevor Ashurst

an we filed yes, X-K, $X.X million. received We

Walter Schenker

Okay. additional where up need the of name that to orders, leads? you and talked and are not about on to but business, end, hopefully getting companies major things get around not are there work business the projects production, where making a since development flying do get And are shell, world exploration umbilicals are because the into hoping there end thinking repair, from we in number work, you're still like but some production about the you the to

Charles Njuguna

-- we’re with by did the everything the and forward to we customers time south, have on continuing production which are projects, are sanctioned, clients the we which -- in the some negotiations there move some Yes, which the went projects, in because had previously the been with the projects. side, already those

through soon. So walking we we're finalizing some negotiations details, which just projects contract be said the different making do like are, cautiously optimistic, I which some and have we we'll announcements

Walter Schenker

That being said…

Charles Njuguna

ahead. Go

Walter Schenker

being That said.

Charles Njuguna

as things projects will are been look we continue the where, at That we that there's as today, we time how sanctions. through when already where because at we you're said, lag often a walk side, to production being look unfold, and the have on and

way in faced which our terms have delayed things eyes later early would to open coming year. We been next that are challenges this that the be could our year, get now, of keeping

Walter Schenker

at have or this the from not this to Okay. get – or business. preventing been haven't point, And to, on moment, repair the travel – you to you is projects, the you is at jobs able haven't been side doing you side,

Charles Njuguna

South have projects overseas. our our but set Yes, couple because equipments are the of America, where We restrictions we get personnel West we travel. not went projects able been to do Africa, not set then have to to. actually One to of some a able one to travel have

in and complete we lifted, and Gulf projects those travel in the parts the to So others, expect once two of able restrictions world. and are both the be go other to

Walter Schenker

close Okay. seems we're it there's to might both might currently, call. been laughing down big I are deferred, that on If projects, not for on the further have which going stuff or every has the carousel? going answer carousels people And might, that ask didn't road, some require since possible lucky, whatever where you if doing still have a and been not

Charles Njuguna

going We requires stuff on, a do carousel. have which

about So that on we optimistic the are front. progress

Walter Schenker

Okay.

possible this going it even happy So energy the year with is make still current to me environment? you're

Charles Njuguna

you quite it I'll that is happy possible be year. this making very Yes,

Walter Schenker

Okay.

Okay. I lot. it. a Thanks appreciate

Charles Njuguna

Roger. Thanks,

Operator

appears there the to [Operator back questions. call further Njuguna. be Mr. Instructions] And I'll to no turn

Charles Njuguna

thanks you support to forward with you earnings you, to your our our all on call. look today. who of speaking Down We Deep the progress joined of call Thank about and and Teresa, next appreciate interest and our

Thank So today's call. let's you conclude all.

Operator

gentlemen Thank you, ladies and participating. for

You disconnect. may now