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Deep Down (DPDW)

Participants
Charles Njuguna CEO, CFO, President & Director
Trevor Ashurst VP, Finance
Walter Schenker MAZ Capital Advisors
Ron Smith JUMA
Call transcript
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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Deep Down's Fourth Quarter and Full Year 2021 Conference Call. [Operator Instructions].

As a reminder, this call is being recorded today, Tuesday, March 29, 2021. to release forward-looking filed issued SEC. related in is with disclaimer press the Monday detailed Deep statements Down's included the A afternoon and is deepdowninc.com company's It on request. upon website, available also or the today's website. non-GAAP of press in release in measures A call on reconciliation included our financial is and the used press on release our 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's also after of revise made. team its I'd this over At turn to CEO, like time, to the Charles call Njuguna.

Charles Njuguna

thank Thank for you, Gigi. Good morning, us and you today. joining

XXXX. While XXXX, not we did to rebounced of we pleased pre-pandemic from were able level by our XXXX are revenues increase to revenues our the XX% about

our our ability generate However, are resulted some which pandemic, the challenges they to impacted bad to from debt which in of customers, operational income. expenses, attributed cashflow

least made like cost to a well of landlord at some various company beginning projects. initially our waterways gross our of so, improved our impacted the product us to we diverse and energy further the facility, after details shortly. This to a to pricing position recently the of several our dock. margins financial the access followed month was last rebranding Shortly a on our we another about activities better to further inflations few margin about future and installing results service When for as to by offerings. new But commitments pressures we of one will for enhancements better by lower provide suited which facility moved the announcement before services. also property, not were I'd relocate current was about to by Trevor explain of this our strategic Our our a announced. does he our call, investor initiatives intention minutes to couple announced of take business as

from to case. contingent Texas near imperative of us on had general we markets is, this the be will wait was be and a the is likely And forced the end estate and up, dock to industrial did the The [indiscernible] minutes not understood not we hitting the various be facility. settle minutes Airports, lease. XX very to moving basic real from options facility to from scramble Houston. until another want about of we our Houston end ExxonMobil to subpar and expectation Downtown therefore, barely minutes Unfortunately, It as and XX utilities. Bush out for International reliable we George While XX with evaluating factors, begin for and turned about

opening closer to facility residential is a us, a personnel pool moving high from for Aside concentration in a up customers, of from about industry with talent been XX Houston large has which area historically the challenge. also our minutes a

significant XXXX. expect Our constant, traditional and facility, have eliciting of line already store is components outside with to X the to $X.XX and moved being we in share. factors facilities, about sometime having in per see to bottom positive once this fully We not we impacts begin a pay will currently realizing benefit for us to expansion different in customers the the reaction positive and from areas optionality provides capabilities. planned manufacture, different of the business, for All service move it given areas nature in our

watching XXXX, a challenges on current various exits expires July given have faced. in but Our we're negotiated lease of we

major announcement rebranding The the of the second was made we company.

and interest the from company future a shareholders' of we in relative celebrate our past. differently XXth the that to weeks, to product competencies our stock our core our prepare few of becoming took service best offerings we current the energy and anniversary As and position to

offered a EPIC installation ultimately by activities and or a us shift as provider known response to other be strategy is by contracts. of is refer will all been We our our interaction as Internally, will engineering, projects offerings where have to the repositioning of commonly further procurement, customer this influencing value towards services supplier. their complementary execution project as This for to one this more preference what our personnel aspect already The traditionally history are individual our requests. provide superior as components fast streamlining and becoming decisions. We throughout construction provided a further our envision customers strategy customers' costs. and of are supporting in participants with provider products lowering systems

such vessel. general in leveraging carousels and on engaged revolves around and the supplier. renewables which growing from we of to transported service services the on skill deepwater be power subsea European traditional cables the our an from discussions industry on. were hoses and industry. our and as of we incumbent are to a surface Various of lot carousel a last about around a multifunction miles was area offshore wind developed connectivity a safely transfer we year manufacturing vehicles, One one structures decision losing to optic did in and competencies successful Another that where generally XX a to for The of around specifically and were project our our being to then validated installation discussions sets we further umbilicals, our about to core to have installed barge fast facilities. Despite which fiber cables, from hydraulic we core reason or electric a purely these and vast rebrand handling oil repeatedly Over a majority as projects about project that a facility unique bidding pigeonholed time, an previous revolve of rebranding out are sea-flow gas provider. hoses our mentioned industry company aspect ultimately our and we Unfortunately, offerings. products unsuccessful, growth the beyond continuing learn and that avoid we spoke

to the power such to transmitted injury product, uncoil. with up the Koil, us damage cables the denote safely to but to long personnel and the parallel lengths by to to the it's K led we coil or name ability Our coil

We which are and changes, is on SEC the still Down. filings have from the approval Deep why our our name still ticker awaiting name symbol

Koil envision future we the X growth traditional As Energy, primary taking energy fast generation as from we value is view forms. to sources. The path

opportunities renewable companies and like actively providing we traditional to customers extend engender or increased existing While as energy for the are in maintenance ago not are minutes towards contracts EPIC to of to offerings, does ours. new also current infrastructure seeing lives customers mentioned existing facilities, opportunities to applications our regulatory services is giving for coupled nimble Similar to commonly also their either the the Box, provide medium-term environment any at rise to would components through through Tire of in as developments, this this pursuing hydrogen for deepwater in shift is cannot confidence project industry to opportunities imminent I these few our and adding areas time, storage. known subsea we in some shorts with areas. in the We equipment. industry Consolidation a caution, however, repairs guarantee and opportunities such which awards that like the large-scale is to installed

products leverage strategic second services industries. joint or partner market to well gas renewable could projects markets. consortium pillar where where would and in traditional oil locations. broaden our will services, for us as we through ventures as situation scale our both alliances footprints strategy form offer enable and we our energy we partnerships take we The where partnerships different in jointly the during could products in arrangement are growth of operational Such the our and of within is the a international to one of This we traditional valuating what the offer partners' execution

of on integration our renewable installation offshore to technologies capitalize would energy, subsea. case new we systems the expertise enable the in and installation of know-how While

either growth longer-term likely The new current developments strategy identify third offerings, newer as for in technologies avenue or industries. This organically of is in is a gaps inorganically. we especially offshore

However, meet by industry, these and challenges that working faced participants the challenges. are on previously we renewable some energy were face we to beginning to solutions oil are gas and see

also equipment. with technology our breadth our electrification to engineering, manufacturing the is to offerings including subsea which from us size for the equipment. on both personnel unique is to push evaluate installation, of by focus The installation and Our also design, electrification of driving own our driven is towards operations, of and

our financial given over now Trevor turn for we cautiously results. Given markets, President across our are which beyond expertise prospects our that our traditional Vice a let briefly XXXX path Ashurst, span about Finance, our at review overview, prospects the all of more than call could transferability me time. With the of of optimistic X avenues, Trevor? to one any

Trevor Ashurst

Thank you, Charles.

price demand revenues Gross the generated a and XXXX. XX, compared when as year. revenues when and margin how generated the percentage in the Down compression some million, equipment, in the compared form ending in X% due ended million XX% as operators environment margins materials backlog operate projects subsea currently a XX XX, attributed we XXXX incurred navigate for of profit The XXXX, mobilized of general $XX.X the prior through to of during world to compared to For increase $XX to as a was the inflationary all which select be of a work just Deep in support were pandemic. decrease to months which in on represents rise in the of as growth the which The December came XX% XXXX. revenues hold in figured in out costs in gross XX months low-margin increases December revenues for the third-party pass-through on projects the we represents to of which XX% for of previously year, services XXXX, rental a put projects to solutions can

for of the into onetime COO Additionally, company. remained million the Selling, were payments the expenses XXXX administrative for pandemic you a after with consistent the year the XXXX $X related received in that relatively onset charge at the to repeated rental we $X.X of XXXX of position the not in general million exclude elimination XXXX. during $XXX,XXX and in XXXX

the of $X.X But bottom XXXX at as was included $X.XX as the charge to impairment million million time for I a compared to flows per mentioned charge year or the the for a an objectively note net made future of to XXXX. be $X.XX well cash the cannot charge projected onetime that ended share income carousels, company of diluted $X.X reported Turning $X.X XXXX related line. of who's COO net asset that severance or The for per loss million share earlier. our loss

aforementioned by uplift charges, of improvement in year. on this administrative retention mainly sheet. the revenues, Shifting to both net a full in the Act, expect the of during claim cost employee structure, income the credit continuing our receive the forgiveness these receiving focus some recognizing refundable loans driven was Excluding we under CARES provisions which year, point balance to the and at PPP the

Our This capital and December capital in in million of capital time XXXX. million at having in to in structure $X.X year. compared is includes million $X.X cash working same last and $X.X cash million the $X.X working as XX,

I with entire levels the our hard both means tailwind collaborative me to of mentioned, confidence received This when balance every our we your will especially And trend back longer strong without team. Charles. line continue for doubt but of obtained, achieved this of sheet. level just call have loans you this throughout said, to member over work, positive the trend not commitment will no compared that now summary, any on forgiveness thank activity which is be balance loan year. I This full XXXX. top the of the the no witnessed As of balances effort project XXXX, would that time. we determination enthusiasm and and In of provides PPP With throughout we outstanding turn success

Charles Njuguna

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

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

Operator

[Operator Instructions].

the from Partners. Schenker line MAZ from comes Walter question of first Our

Walter Schenker

at one It's fairly company is me, that can look a you to carousel? it's Could I some profitability a of there either too. the finger -- to carousel you if it's sell call me if think, employ more or a the or it Can't we of sense clear the to carousels. additional question. our are, rent significant opportunities XXXX, have or you, without crossing clear, to a give just positive as

Charles Njuguna

profitability did for before, does yes, you see thanks are the we had but in successfully we out a all we our a providing renting provide To bit Walter, some them. I question, number customers to as we we where we've them customers business. now. signed active of and The to of I the that twice will chicken actively talking now a of egg But And for been them would hand, have them. question. opportunities contracts it not are different with opportunities until us last for We the have wanted employ increased projects. Yes, discussing some say always, customers on on year, we we carousels actual for was have to it seeing future. actually a the are -- correct. do fast But your to And that's project couple

Walter Schenker

a And out of do which be a current the historically that do just middle are plus, it if and seemed leaving was new you facility, the things the question, of you your large, general how in fairly given near large transportation location? at you nowhere as as the water, which equipment should of some transport are

Charles Njuguna

Yes.

we'll is an street -- their sharing a for there down Hughes in area location compass other the Baker with some So of is -- components. new large industries, us where the are be from is Schlumberger actually

the ingress of measurements was at power facility the we items very egress reason. for things lines operational very and literally the of the that facility the of One about particular were those around kind and the taking

We items, for can where water them And will where the able move in. in space Mobile, to vessels out. rent large Alabama, right industries out core be continue we the place pull do so we on -- a large at to

do So has core us carousels absolutely if a be base where currently out we are we where rent project -- have on to water located to our enables the that. which

Walter Schenker

Hopefully, the But is would we that everyone. way. positive year to start be year even monetize carousel Again, to this hopefully luck. each beyond have renting actually can this a we -- Okay. meaningfully good

Operator

line question Ron comes next Our from of the Smith from JUMA. from

Ron Smith

all large wish of and and success very I to and well Koil a And counting you, Koil Energy. Energy you. wanted us, hope investor now all as changes proud whole in I'm as you. in you team on only these Charles of you for done. just the I greatest I'm of tell the I'm

Charles Njuguna

sir. without that, you, you be this appreciate We set. Thank we and doing wouldn't foundation the

that appreciate very encouragement we So much.

Operator

At [Operator to back the I call this like remarks. Charles Njuguna questions. for no Instructions]. time, further to over closing I'm would turn showing

Charles Njuguna

who all you joined and Thank today. to Gigi, you, call thanks of our

are be can While the levers beyond broader actively impacted be control while said, we energy to control, by pursuing continue factors we industry focused continues to we our the laser as on we X.X forward support, much to your opportunities. growth again you different conclude that, And with very you. of call. We months. appreciate all speaking with and we let's about Thank in look today's

Operator

conference call. for you This concludes Thank today's participating.

You may now disconnect.