Deep Down (DPDW)

Charles Njuguna President, CEO, CFO and Director
Trevor Ashurst VP of Finance
Walter Schenker MAZ Partners
Call transcript
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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Deep Down's Fourth Quarter and Full Year 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 a question-and-answer session.

call recorded this XX, Wednesday, reminder, XXXX. a is today, being March As related forward-looking filed Deep in detailed to A disclaimer Down's release Tuesday SEC. the issued statements afternoon the and with press included is is request. upon available deepdowninc.com the Web company's It site, also or on call non-GAAP on today's our included reconciliation Web and of the release press measures site. financial A in in our used press on is and release made. as on cautioned these undue forward-looking of not the speak which are date Listeners reliance only to statements, place undertakes to made. circumstances obligation of forward-looking also any Down or Deep events statements no after its revise to reflect date the At call Njuguna. Charles I’ll this time, turn over to the CEO,

Charles Njuguna

you, Thank morning, Joel. Good everyone.

some continues pandemic, Coupled customers. optimism the the slow and in vaccines, for gradual of increase with While gaining jurisdictions various a of reopening about of uncertain. impacted resurgence is provided a by though price availability to are the gas and prominence, still cautious recent full discussions timing rebound the increased global industry our the oil of has be the oil

and to and to general as revenue whose on crash XXXX. the price year administrative cost to to industry, a XXXX. pandemic critically offshore reduction company expenses X% XXXX, structure, tied primarily oil services the we in XX% resulting to a analyze the response business this selling, are took significant the our by global In had from impact XXXX the our reduced process and such decline, in sharp the XXXX year and As our opportunity in from products the

adjust decision of swan economic event Another some this our from equipments. of value the black outcome of our the to disruption resulting was

on time value expect opportunities. impaired impact year, last have at carousels, of adjustment did not this quarter second we that but we an of to the future mentioned our accounting the During the

with get have our and therefore, adjustment company. help projects lower rental discussed in-house announce perform and increasing quarter in our with order associated us Incidentally, net third to our the one quarter. we to manufacturing income an quarter. pleased project the this These call services. to the our other the enabled generate carousels still of November, costs fourth for a are, our for contracting recently creative to strategy of profitable order receipt outcome held of projects service engineering enabled us customer back and We When work we fourth in combined we during also travel investor to in have their

At of since our year Trinidad the we team have year the a team. service today. despite scheduled during XXXX outset to scheduled prevailing the this mentioned first a personnel held Our March XXXX, into ability we the ago a to our the able on put to of to full is call offshore almost a execute more traveled This travel month, team is project some who to during XXXX. originally finally Heading a half originally a conditions point generate now economic of efforts A pandemic. at the case I which in profit hold been our the testament the the mentioned day date. year were campaigns, time, of to of

of are As reopen. And expect timing delayed of some fully to the parts to the new of a we the more projects look yet in year, remains pursuing, rest are in opportunities execute this world, waves jurisdictions we to campaigns other towards addition few these we with uncertain. of reports though

manage organizations in of off light the resulted performance. we industry. finances, was personnel during turmoil top many tough lay In changes their industry, having our were organizations last which to within order Another area call make many in in decisions the their of our year forced to discussed to personnel

loans, Program of not have particulars financial Paychecks may afford. to of Protection PPP loans, we known these talent better loans been While Trevor the to ability been practical discuss attract has will small our as able the benefit the administration's business

While able which we and significantly of make of create also had some offerings. to been to service have some standard roles, have critical fill increased and the we personnel our our adjustments own, product recently

needed While record industry I to an recently different the team, how interest provides as with would of many they the much only Manager. new as time, options. long well perspectives in considering him after to name which be Engineering as situations our of experience was veteran that companies, face happy our with competitors, It what larger as evaluate Hess, much the customer includes of us realized all strategic some only Gunn competitors, and them. each seriously including highlight experience by Jeff their in We of he one the will Jeff’s having were us of join project our Shell, I track at I we and had bring introduced joined Exxon industry Mobil different teams.

most referred the wide Jeff worked industry, the the increase use to energy. energy to evaluate which and undertaken experience, efforts as as very support to being to That recently sources solar is of his addition what the transition. industry widely In options is ranging of we helpful non-oil gas in different is

initiatives in current same projects we While is flows different of from time to the while the working parties, at burning reduce timing developing cleaner operations, our internal with on various as equipments. are engaged cash emissions discussions uncertain, such such from actively by

like to generation customers opportunities services and shift services also products have which with of of process and from in of installation potential discussions previously pursue to power focus and to outcome manufacture emphasize would having these some cables, unsolicited efforts, confident evaluation to the I to and maintain and These of use we're our request providers intend able other an the sight now unconventional of very of collaborative right opportunities place, install these we balance design and not with losing solution. segment. without equipment between to power diligently business. bear sources, for fruit efforts our geothermal yet can for subsea partners our as discussions, we but the carousels are innovative renewable to most types different technology two. Again, core a begun our we the discussions potentially With existing an discussed I include recently predict team competencies; engineer, power have detailed core in we We am the

our Speaking Finance, our results President turn review to on of let financial financial for now and Trevor? Vice ability XXXX our future to Trevor briefly me call our prospects, the of of over capitalize Ashurst prospects.

Trevor Ashurst

Thank you, Charles.

XXXX revenues XX% Down XXXX. the XX, $XX.X the months compared For December generated due which stemming decrease coronavirus $XX to combined versus of which due travel primarily from revenues projects of for to the of pandemic. process XXXX, when the in months to This volume lower in decrease is ended in ending in is the decline of oil Deep restrictions December prices primarily having XXXX, XX million, million revenue a represents impact XX a and XX,

was year, full in in quarter However, which driven increase to in in margin QX operating XX% gross in QX revenues a XX% to revenues. work On expenses XXXX compared increase a this XXXX a This $X.X for service a generated to margin of the XXXX. were compared of is fourth primarily year XXXX. represents which QX last XX% or million, increase expenses to a for having Gross the XX% in compared XXXX which equipment XX% was margin X% XXXX increased to margin of million of and rent million year. XX%, in XX% rental of receiving XXX% gross when gross QX represents $X.X of in $X.X basis, The operating collective QX increase gross or $X.X to margin larger revenue increased higher the XXXX. of in represents by proportion margin compared abatements million revenues. of

to However, identified the related related includes for and core matters. of certain figure equipment an business charge XXXX the non-strategic an charge $XXX,XXX legal $XXX,XXX the operations to to accrual a QX as

So basis approximately million QX XXXX adjusted expenses were revenues. an of charges, operating on for and excluding these $X legal or XX% impairment

our the charge time an related of a to costs, driven charge million included impairment of year, XXXX cash legal or by the of Switching lower payroll to the $X.X $XX the as costs, $XXX,XXX made $XXX,XXX expenses the one-time to ongoing well asset lower future whose operating company. compared flows decrease at to as carousels operating of the to related reduce full million and COO or revenues expenses was when at our objectively projected in be XX% QX efforts of of operating expenses during QX So XX% 'XX. position elimination was charge cannot

related million. compared After Excluding basis of of were the these XXXX Down’s year expenses operating in to XXXX year impairment charge legal revenues. were $X.X asset to the a expenses mentioned, full normalized one-time $XXX,XXX full the and operating on charges, of $X.X million, resignation founder, XX% company's or XXXX operating addition XX% charges is previously or year to the full of Deep million, of This excluding company's revenues. $X.X a expenses

in efforts So remove primarily due company's expense the operating or decrease to XX% normalized was million, the costs. $X.X ongoing to excess

mindful to measures the operations Our will while pursue of be focus of business. continue and containment growth supporting our to to improve profitability cost being opportunistic

million to of of company We reported XXXX a over share share As of that loss XXXX. Deep operating XXXX, current December loss cash per due a the lower in or $X.X to $X.X in of or net a following diluted was and non-recurring sits used per report caused QX our disciplined net a PPP or $X.X million and bottom capital working at compared I'm revenues focused million, diluted XXXX loan, capital loss by diluted in diluted of a net includes coronavirus in which that company aforementioned XXXX in per $XXX,XXX, million for or the impairment XX, was remain in $X.X loss from addition a a $X.X expenses. principally in structure and the last share million positive to million line, as in cash $X.X to dollars. months. compared million 'XX. year, QX In net loss profit $X.X April the payroll note, per loss disruption economic to obtained $X.XX global on of to share $X.XX $X.XX finance balance a happy the the Net the generated incurring Down of $X.XX pandemic, On loss sustaining

we grow addition, and earlier $X.X workforce. our working applied we which this allows as In strengthen us loan capital month, million a received PPP for second to

for our loan, receive application. from SBA of outcome our to the balance We forgiveness forgiveness regarding this ultimate have of yet of application or however, the the timing we've guidance submitted entire first PPP

signs full In XXXX. to commodity of increased period has XXXX quarter cover orders apply the loan also for satisfied. to healthier a of We And encouraging to in came started forgiveness close, increased to been we the levels. recovered once as second activity, this PPP gradually market fourth of expect translated macro seeing prices our summary, trend

our forward, will while devote much growth now position with with well investments and for allows continued superior for and said, our your Charles. capital our turn sheet all unmanned us services, call efficiency balance We'll as to providing efforts you thank products over to appropriate. us possible. make time. when customers I back Looking as to the strategic operating That And

Charles Njuguna

Trevor. you, remarks prepared our concludes today. Thank That

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


Instructions]. [Operator Thank you.

Our comes Partners. with MAZ question Walter first Schenker from

now is open. line Your

Walter Schenker

me a on through are where Thank of a money that that making fourth reduced you asset already congratulations been off? is with and quarter, if even had written good rental it not off? walk which I’d Does that a the written in or carousel the versus associated has the been of Could thing. mean the rental economics breaking you costs say

Charles Njuguna

costs. goes, able Nice Walter. personnel the carousel large customer incur will therefore to which on the umbilicals the hear itself piece no for costs as quite projects, the fine morning, to the very our because rather depreciation bit we generate revenue have unique far have to to comment. Essentially, Yes. book on are be you. or to as this barge. for spooling will carousel carousel offer putting carousel Good associated we services, case and from essentially and And a on at these the we a nature the strengthen the put it because price of Thanks cost the some low of the of in on we from

make some do project. the to we expect money However, on

Walter Schenker

business overall money less? To similar anyway. this make some or the normal the what be know would profitability your to means of the of business I somewhat possibly anymore profitability don't

Charles Njuguna

Yes, installation I It we think services it be project to and installation equipment. will be. provide will where similar a

Walter Schenker

Okay, didn’t away. so it give you

Charles Njuguna

at Not all.

Walter Schenker


Charles Njuguna

than we lower operating would have adjustment. We’ve if been the taken we hadn’t

Walter Schenker

who we one third brief carousel? thought to you how one now us get second have So a has don't just for on you somebody that contract, a why a or give have really

Charles Njuguna

was I that question. expecting

to in As umbilicals I people gas talking about and multiple touched on briefly, we're the space. oil

or also that many However, in road, opportunities it second for to markets optimistic such took far we the But caveat XXXX XXXX of me make in the are for one. the as projects. offshore I be potentially are fairly late the will cautiously want will call timing I down when that exactly happen. to do the some seeing winds. know throw you I'm don't that that those shorter to

Walter Schenker

carousel we from sheet it, second sort with as the energy PPP just you really higher general the a opportunities -- level? the roll or enough especially opportunities there there and needle do the breakeven comment, move it's of benefiting from back in are higher forward, the balance company to a but something Largely prices up look along are pick And shape, base to this with loan, get somewhat just as meaningfully business. being good big beyond we'll

Charles Njuguna

to positive down see we are road. opportunities the stockholders the really that make contribution There to a

see Here, obviously, because size, we our opportunities. of do

Walter Schenker

one we Okay. years of with? for charges is finished about this thing point, write-off; or litigation, And done or years, these all largely since going eight with nine back except

Charles Njuguna

have But up. will do is our on more which flows this Yes. to the cash not We of the other pop rest wood, continue from any settlements, goal have through knock year.

Walter Schenker

Okay. Thank you, Charles.

Charles Njuguna

Walter. Thanks,


time. now would closing to for this like showing any remarks. questions back call Njuguna you. at [Operator further over not to the turn I Charles I’m Instructions]. Thank

Charles Njuguna

Thank you, to who you our Joel. joined of And thanks today. all call

a Before moment I'd like we go, to final team. take recognize to our

on next earlier, that a today necessary financials. pulling it of us. mentioned this the economic was ago be would to which the At day key navigate knew to had that for I I we number XXXX disruption before we us we a time, trigger year the discuss call were the decisions, As felt our

past surprised it up the the in XX team While the always pleasantly to adequately a team we severely team our with has have step everyone was I by We conclude And gratifying impacted you, in see knew best during been the that, I personally. that express how them good let's today's months. do cannot industry. when everyone. how really even supportive Thank had call. decisions place, I was,


concludes call. this you Ladies participating. and Thank gentlemen, for today's conference

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