Deep Down today commented on its results of operations for the year ended December 31, 2008, reported on Form 10-K and filed on March 16, 2009 with the Securities and Exchange Commission.
Revenues for the year 2008 were $35.8 million for an increase of 84.5% over last year's revenues of $19.4 million. A net loss of $4.3 million was reported as compared to net income of $1.0 million reported for the year 2007. The increase in revenues was primarily attributable to the inclusion of our acquisitions of Mako Technologies, Inc. for the whole year and Flotation Technologies, Inc. for 8 months. Gross profit was $14.1 million for the year ended December 31, 2008, compared to $6.1 million for the previous year, reflecting an overall improvement in gross profit margin from 31% to 39%. Gross margins were positively impacted by the inclusion of our acquisitions of Flotation and Mako, which had slightly better margins than the rest of the Company's operations.
"In 2008 the Company sold $40 million of common stock in a private placement that required the Company to file a registration statement with the Securities and Exchange Commission to register these shares," commented Eugene L. Butler, Deep Down's Chief Financial Officer.
"This successful transaction allowed us to acquire Flotation Technologies, Inc. and retire $12.5 million of long-term debt. The Company's net loss is directly attributable to $6.7 million in one-time expenses for the year ended December 31, 2008. The expenses recorded for the early retirement of debt reduced earnings by $2.9 million. In connection with the Flotation Technologies, Inc. acquisition and the filing of the registration statement, our selling, general and administrative expenses increased approximately $1.2 million for professional fees and $1.2 million for registration statement fees. Additionally, our bad debt expense increased $1.4 million as a result of increasing our reserves as well as expensing a receivable for a large customer in Louisiana that filed for bankruptcy during the year. The Company would have been profitable without these one-time type expenses; however, we now will be much stronger in future operations."
"2008 has been a very difficult year economically and on Wall Street; however, it has been a very good year for Deep Down in continuing our dramatic growth operationally," commented Ronald E. Smith, Deep Down's President and Chief Executive Officer. "Our 2008 results reflect growth through the increase in our core operations and our acquisitions, as well as our successful efforts to improve the balance sheet through the elimination of our very expensive debt.
"It is critical to understand our business is project-based, and not tied to the constantly fluctuating price of oil. Forecasted subsea tree demand within the subsea and deepwater subsectors continues to grow in spite of the volatility of the oil & gas industry. With our company's history of year-over-year growth and the strong outlook for the deepwater market, we are positioned for increased growth during 2009. We truly are in the best of markets, during the worst of times," Smith concluded.
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