Exhibit 99.1
| FOR IMMEDIATE RELEASE: | CONTACT: | ||||
| Geoff High, Vice President of Investor Relations | |||||
| 303-604-3924 | |||||
DMC GLOBAL REPORTS FIRST QUARTER FINANCIAL RESULTS
Arcadia and DynaEnergetics Deliver Solid Sequential Sales Growth & Margin Expansion;
NobelClad’s Order Backlog Reaches 10-year High
•First quarter sales were a record $184.3 million, up 5% sequentially and up 33% versus Q1 2022
•Consolidated gross margin was 28%, up from 26% in Q4 2022 and 27% in Q1 2022
•Net income was $2.1 million, while net income attributable to DMC was $0.9 million
•Adjusted net income attributable to DMC* was $6.1 million, or $0.32 per diluted share
•Adjusted EBITDA attributable to DMC* was $20.1 million, while total adjusted EBITDA, inclusive of non-controlling interest (NCI), was $24.3 million
BROOMFIELD, Colo. - May 4, 2023 - DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its first quarter ended March 31, 2023.
“The first quarter represented a strong start to 2023, and reflects continued healthy demand in the markets served by our three differentiated manufacturing businesses,” said David Aldous, director and interim co-CEO. “Our record consolidated sales resulted from strong top-line results at our businesses, each of which also delivered sequential gross margins improvements. The quarter also was marked by important progress in our strategy to improve business-level operating efficiencies and strengthen the profitability of DMC.”
Michael Kuta, interim co-CEO, said, “Arcadia, our architectural building products business, delivered sales of $80.3 million, up 8% sequentially and 18% year over year. Arcadia benefitted from resilient pricing and healthy demand across multiple end markets, including industrial construction, manufacturing, medical, education and hospitality.
“Arcadia’s adjusted EBITDA margin of 13% was up 340 basis points sequentially, reflecting the beginning of an anticipated recovery in profitability following several quarters of compressed margins that resulted from aluminum price volatility.
“DynaEnergetics, our energy products business, reported sales of $82.0 million, up 6% sequentially and 68% year over year. Well completion activity in Dyna’s international and North American markets remains strong; and effective execution by the commercial and manufacturing teams led to the eleventh consecutive quarter of increased unit sales of our fully integrated DS perforating systems.”
Kuta said DynaEnergetics’ adjusted EBITDA margin of 18% was down 40 basis points sequentially, but up 740 basis points versus the first quarter last year. This sequential decline reflects the impact of $3.1 million in litigation expense. DMC expects significantly lower quarterly litigation expense going forward.
“Sales at NobelClad, our composite metals business, were $22.0 million, down 5% sequentially and flat versus the first quarter last year. NobelClad delivered another solid quarter of bookings, which drove its order backlog to a 10-year high of $60 million. Healthy activity in NobelClad’s core energy and petrochemical markets, combined with a strong order backlog, should result in sequential sales growth of approximately 10% in the second quarter.”
Eric Walter, CFO, said “Our first quarter selling, general and administrative expense (SG&A) of $39.3 million included approximately $9 million of charges related to patent litigation, CEO transition costs and related
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accelerated stock vesting. The elimination of these expenses would put us in our targeted quarterly SG&A range of approximately $30 million.”
Aldous said, “Despite macroeconomic uncertainties, we are optimistic about DMC’s prospects for growth and improved profitability during 2023. The medium to long-range outlook at DynaEnergetics is encouraging, particularly as major energy companies increase their investments in North America’s lower risk, lower-cost unconventional oil and gas basins. Arcadia’s diverse end markets continue to be resilient, and the business is making progress on its ERP and capacity expansion initiatives. NobelClad’s strong backlog and broad product offering also bode well for future growth.”
Summary First Quarter Results
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net sales | $ | 184,341 | $ | 175,074 | $ | 138,716 | 5 | % | 33 | % | |||||||||||||||||||
| Gross profit percentage | 28.3 | % | 25.8 | % | 26.6 | % | |||||||||||||||||||||||
| SG&A | 39,324 | 30,636 | 27,808 | 28 | % | 41 | % | ||||||||||||||||||||||
| Net income (loss) | 2,139 | 3,441 | (4,280) | (38) | % | 150 | % | ||||||||||||||||||||||
| Net income (loss) attributable to DMC | $ | 909 | $ | 3,266 | $ | (3,288) | (72) | % | 128 | % | |||||||||||||||||||
| Diluted net (loss) income per share attributable to DMC | $ | (0.01) | $ | 0.52 | $ | (0.47) | (102) | % | 98 | % | |||||||||||||||||||
| Adjusted net income (loss) attributable to DMC | $ | 6,144 | $ | 4,259 | $ | (3,133) | 44 | % | 296 | % | |||||||||||||||||||
| Adjusted diluted net (loss) income per share | $ | 0.32 | $ | 0.22 | $ | (0.16) | 45 | % | 300 | % | |||||||||||||||||||
| Adjusted EBITDA attributable to DMC | $ | 20,091 | $ | 19,581 | $ | 10,505 | 3 | % | 91 | % | |||||||||||||||||||
| Adjusted EBITDA before NCI allocation | $ | 24,279 | $ | 22,438 | $ | 15,073 | 8 | % | 61 | % | |||||||||||||||||||
First Quarter Notes
•The sequential increase in DMC’s gross margin principally reflects an expected recovery in margin at Arcadia. Additionally, the fourth quarter of 2022 included inventory write offs and reserves within DynaEnergetics’ North American business that unfavorably impacted gross margin.
•First quarter net income attributable to DMC was $0.9 million, or $(0.01) per diluted share, versus a net loss attributable to DMC stockholders in the prior-year first quarter of $(3.3) million, or $(0.47) per diluted share.
•DMC’s debt-to-adjusted EBITDA leverage ratio at March 31, 2023, was 1.47. The Company’s debt-to-adjusted EBITDA leverage ratio covenant for the end of the quarter was 3.25.
Arcadia
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net sales | $ | 80,338 | $ | 74,400 | $ | 67,968 | 8 | % | 18 | % | |||||||||||||||||||
| Gross profit percentage | 27.5 | % | 24.2 | % | 29.8 | % | |||||||||||||||||||||||
| Adjusted EBITDA attributable to DMC | $ | 6,282 | $ | 4,286 | $ | 6,852 | 47 | % | (8) | % | |||||||||||||||||||
| Adjusted EBITDA before NCI allocation | 10,470 | 7,143 | 11,420 | 47 | % | (8) | % | ||||||||||||||||||||||
•Arcadia’s sequential sales increase reflects anticipated recovery from impacts of seasonality and maintenance occurring in the fourth quarter.
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DynaEnergetics
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net sales | $ | 81,968 | $ | 77,551 | $ | 48,887 | 6 | % | 68 | % | |||||||||||||||||||
| Gross profit percentage | 29.8 | % | 28.1 | % | 25.8 | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 14,955 | $ | 14,439 | $ | 5,282 | 4 | % | 183 | % | |||||||||||||||||||
•The sequential gross margin improvement principally relates to inventory write offs and reserves that unfavorably impacted Q4 2022 gross margin.
NobelClad
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net sales | $ | 22,035 | $ | 23,123 | $ | 21,861 | (5) | % | 1 | % | |||||||||||||||||||
| Gross profit percentage | 26.2 | % | 23.9 | % | 19.1 | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 3,361 | $ | 3,433 | $ | 1,652 | (2) | % | 103 | % | |||||||||||||||||||
•NobelClad’s order backlog increased to $60.0 million from $55.5 million at the end of the fourth quarter.
•Trailing 12-month book-to-bill ratio at the end of the first quarter was 1.2.
Second Quarter 2023 Guidance
| Measure | Expected Range | ||||
| Sales | |||||
| DMC Consolidated | $177M - $187M | ||||
| Arcadia | $75M - $80M | ||||
| DynaEnergetics | $78M - $82M | ||||
| NobelClad | $24M - $25M | ||||
| Consolidated Gross Margin | 29% - 30% | ||||
| Consolidated SG&A | $29M - $31M | ||||
| Depreciation & Amortization | ~$9.2M | ||||
| Interest Expense | $2.4M | ||||
| Annualized effective tax rate | 28% - 30% | ||||
| Adjusted EBITDA Attributable to DMC | $23M - $26M | ||||
| Adjusted EBITDA before NCI allocation | $27M – $30M | ||||
| Capital Expenditures | $4M - $6M | ||||
| Full Year Capital Expenditures | ~$20M | ||||
Conference call information
Management will hold a conference call to discuss these results today at 5:00 p.m. Eastern (3:00 p.m. Mountain).
Investors may dial in to the call at 877-407-5783 (or +1 201-689-8782 for international callers).
Investors may also listen to a live webcast of the call at:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=H2wUSSpz
Webcast participants should access the website at least 15 minutes early to register and download any necessary audio software. The webcast also will be available on the Investor page of DMC’s website, located at: ir.dmcglobal.com. A replay of the webcast will be available for 6 months.
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*Use of Non-GAAP Financial Measures
Adjusted EBITDA, adjusted net income (loss), and adjusted diluted earnings per share are non-GAAP (generally accepted accounting principles) financial measures used by management to measure operating performance and liquidity. Non-GAAP results are presented only as a supplement to the financial statements based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the reader’s understanding of DMC’s financial performance, but no non-GAAP measure should be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided within the schedules attached to this release.
EBITDA is defined as net income (loss) plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation, restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance (as further described in the attached financial schedules). Adjusted net income (loss) is defined as net income (loss) attributable to DMC stockholders plus restructuring and impairment charges (if applicable) and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted diluted earnings per share is defined as diluted earnings per share plus restructuring and impairment charges (if applicable) and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income (loss) as an indicator of operating performance or any other GAAP measure.
Management uses adjusted EBITDA in its operational and financial decision-making, believing that it is useful to eliminate certain items in order to focus on what it deems to be a more reliable indicator of ongoing operating performance. As a result, internal management reports used during monthly operating reviews feature adjusted EBITDA measures. Management believes that investors may find this non-GAAP financial measure useful for similar reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. In addition, management incentive awards are based, in part, on the amount of adjusted EBITDA achieved during relevant periods. EBITDA and adjusted EBITDA are also used by research analysts, investment bankers and lenders to assess operating performance. For example, a measure similar to adjusted EBITDA is required by the lenders under DMC’s credit facility.
Adjusted net income (loss) and adjusted diluted earnings per share are presented because management believes these measures are useful to understand the effects of restructuring and impairment charges (if applicable) and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance, on DMC’s net income (loss) and diluted earnings per share, respectively.
Because not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the company’s performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures. For example, a company with greater GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, eliminating the effects of interest income and expense moderates the impact of a company’s capital structure on its performance.
All of the items included in the reconciliation from net income to EBITDA and adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangible assets and stock-based compensation) or (ii) items that management does not consider to be useful in assessing DMC’s operating performance (e.g., income taxes, restructuring and impairment charges, CEO transition expenses). In the case of the non-cash items, management believes that investors can better assess the company’s operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect DMC’s ability to generate free cash flow or invest in its business. For example, by adjusting for depreciation and amortization in computing EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, management believes that investors can better
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assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.
About DMC Global Inc.
DMC Global is an owner and operator of innovative, asset-light manufacturing businesses that provide unique, highly engineered products and differentiated solutions. DMC’s businesses have established leadership positions in their respective markets and consist of: Arcadia, a leading supplier of architectural building products; DynaEnergetics, which serves the global energy industry; and NobelClad, which addresses the global industrial infrastructure and transportation sectors. DMC’s businesses are led by experienced, strategically focused management teams, which are supported with business resources and capital allocation expertise to advance their operating strategies and generate the greatest returns. Headquartered in Broomfield, Colorado, DMC trades on Nasdaq under the symbol “BOOM.” For more information, visit: HTTP://WWW.DMCGLOBAL.COM.
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Safe Harbor Language
Except for the historical information contained herein, this news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including guidance on sales, gross margin, SG&A, depreciation and amortization expense, interest expense, tax rate, adjusted EBITDA, and capital expenditures; our expectations for double-digit sequential sales growth at NobelClad; and our expectations for growth and improved profitability for 2023. Such statements and information are based on numerous assumptions regarding present and future business strategies, the markets in which we operate, anticipated costs and the ability to achieve goals. Forward-looking information and statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results and performance to be materially different from those expressed or implied by such forward-looking information and statements, including but not limited to: our ability to realize sales from our backlog; our ability to obtain new contracts at attractive prices; the execution of purchase commitments by our customers, and our ability to successfully deliver on those purchase commitments; the size and timing of customer orders and shipments; changes to customer orders; product pricing and margins; fluctuations in customer demand; our ability to successfully navigate slowdowns in market activity or execute and capitalize upon growth opportunities; the success of DynaEnergetics’ product and technology development initiatives; our ability to successfully protect our technology and intellectual property and the costs associated with these efforts; potential consolidation among DynaEnergetics’ customers; fluctuations in foreign currencies; fluctuations in tariffs and quotas; the cost and availability of energy; the cyclicality of our business; competitive factors; the timely completion of contracts; the timing and size of expenditures; the timing and price of metal and other raw material; the adequacy of local labor supplies at our facilities; our ability to attract and retain key personnel, including a new CEO and our executive officers and directors; current or future limits on manufacturing capacity at our various operations; government actions or other changes in laws and regulations; the availability and cost of funds; our ability to access our borrowing capacity under our credit facility; geopolitical and economic instability, including recessions, depressions, wars or other military actions; inflation; supply chain delays and disruptions; the availability and cost of energy; transportation disruptions; general economic conditions, both domestic and foreign, impacting our business and the business of our customers and the end-market users we serve; as well as the other risks detailed from time to time in our SEC reports, including the annual report on Form 10-K for the year ended December 31, 2022. We do not undertake any obligation to release public revisions to any forward-looking statement, including, without limitation, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.
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DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Data)
(unaudited)
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| NET SALES | $ | 184,341 | $ | 175,074 | $ | 138,716 | 5 | % | 33 | % | |||||||||||||||||||
| COST OF PRODUCTS SOLD | 132,130 | 129,970 | 101,810 | 2 | % | 30 | % | ||||||||||||||||||||||
| Gross profit | 52,211 | 45,104 | 36,906 | 16 | % | 41 | % | ||||||||||||||||||||||
| Gross profit percentage | 28.3 | % | 25.8 | % | 26.6 | % | |||||||||||||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||||||||||||||
| General and administrative expenses | 26,500 | 19,789 | 17,718 | 34 | % | 50 | % | ||||||||||||||||||||||
| Selling and distribution expenses | 12,824 | 10,847 | 10,090 | 18 | % | 27 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | 5,667 | 3,772 | 12,976 | 50 | % | (56) | % | ||||||||||||||||||||||
| Restructuring expenses | — | 129 | 32 | (100) | % | (100) | % | ||||||||||||||||||||||
| Total costs and expenses | 44,991 | 34,537 | 40,816 | 30 | % | 10 | % | ||||||||||||||||||||||
| OPERATING INCOME (LOSS) | 7,220 | 10,567 | (3,910) | (32) | % | 285 | % | ||||||||||||||||||||||
| OTHER EXPENSE: | |||||||||||||||||||||||||||||
| Other expense, net | (200) | (559) | (209) | (64) | % | (4) | % | ||||||||||||||||||||||
| Interest expense, net | (2,381) | (2,129) | (1,024) | 12 | % | 133 | % | ||||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 4,639 | 7,879 | (5,143) | (41) | % | 190 | % | ||||||||||||||||||||||
| INCOME TAX PROVISION (BENEFIT) | 2,500 | 4,438 | (863) | (44) | % | 390 | % | ||||||||||||||||||||||
| NET INCOME (LOSS) | 2,139 | 3,441 | (4,280) | (38) | % | 150 | % | ||||||||||||||||||||||
| Less: Net income (loss) attributable to redeemable noncontrolling interest | 1,230 | 175 | (992) | 603 | % | 224 | % | ||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS | $ | 909 | $ | 3,266 | $ | (3,288) | (72) | % | 128 | % | |||||||||||||||||||
| NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS | |||||||||||||||||||||||||||||
| Basic | $ | (0.01) | $ | 0.52 | $ | (0.47) | (102) | % | 98 | % | |||||||||||||||||||
| Diluted | $ | (0.01) | $ | 0.52 | $ | (0.47) | (102) | % | 98 | % | |||||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||||||||||||||||||||||||||
| Basic | 19,462,636 | 19,384,678 | 19,301,126 | — | % | 1 | % | ||||||||||||||||||||||
| Diluted | 19,462,636 | 19,393,245 | 19,301,126 | — | % | 1 | % | ||||||||||||||||||||||
Reconciliation to net income (loss) attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share
| Three months ended | |||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | |||||||||||||||
| Net income (loss) attributable to DMC Global Inc. stockholders | $ | 909 | $ | 3,266 | $ | (3,288) | |||||||||||
| Adjustment of redeemable noncontrolling interest | (1,138) | 6,933 | (5,717) | ||||||||||||||
| Net (loss) income attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest | $ | (229) | $ | 10,199 | $ | (9,005) | |||||||||||
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DMC GLOBAL INC.
SEGMENT STATEMENTS OF OPERATIONS
(Amounts in Thousands)
(unaudited)
Arcadia
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net sales | $ | 80,338 | $ | 74,400 | $ | 67,968 | 8 | % | 18 | % | |||||||||||||||||||
| Gross profit | 22,094 | 17,970 | 20,245 | 23 | % | 9 | % | ||||||||||||||||||||||
| Gross profit percentage | 27.5 | % | 24.2 | % | 29.8 | % | |||||||||||||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||||||||||||||
| General and administrative expenses | 7,857 | 9,535 | 6,143 | (18) | % | 28 | % | ||||||||||||||||||||||
| Selling and distribution expenses | 5,452 | 4,352 | 3,737 | 25 | % | 46 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | 5,652 | 3,642 | 12,808 | 55 | % | (56) | % | ||||||||||||||||||||||
| Operating income (loss) | 3,133 | 441 | (2,443) | 610 | % | 228 | % | ||||||||||||||||||||||
| Adjusted EBITDA | 10,470 | 7,143 | 11,420 | 47 | % | (8) | % | ||||||||||||||||||||||
| Less: adjusted EBITDA attributable to redeemable noncontrolling interest | (4,188) | (2,857) | (4,568) | 47 | % | (8) | % | ||||||||||||||||||||||
| Adjusted EBITDA attributable to DMC Global Inc. | $ | 6,282 | $ | 4,286 | $ | 6,852 | 47 | % | (8) | % | |||||||||||||||||||
DynaEnergetics
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net sales | $ | 81,968 | $ | 77,551 | $ | 48,887 | 6 | % | 68 | % | |||||||||||||||||||
| Gross profit | 24,437 | 21,764 | 12,608 | 12 | % | 94 | % | ||||||||||||||||||||||
| Gross profit percentage | 29.8 | % | 28.1 | % | 25.8 | % | |||||||||||||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||||||||||||||
| General and administrative expenses | 6,197 | 4,970 | 5,322 | 25 | % | 16 | % | ||||||||||||||||||||||
| Selling and distribution expenses | 5,057 | 4,270 | 3,903 | 18 | % | 30 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | 15 | 54 | 85 | (72) | % | (82) | % | ||||||||||||||||||||||
| Operating income | 13,168 | 12,470 | 3,298 | 6 | % | 299 | % | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 14,955 | $ | 14,439 | $ | 5,282 | 4 | % | 183 | % | |||||||||||||||||||
NobelClad
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net sales | $ | 22,035 | $ | 23,123 | $ | 21,861 | (5) | % | 1 | % | |||||||||||||||||||
| Gross profit | 5,783 | 5,518 | 4,181 | 5 | % | 38 | % | ||||||||||||||||||||||
| Gross profit percentage | 26.2 | % | 23.9 | % | 19.1 | % | |||||||||||||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||||||||||||||
| General and administrative expenses | 923 | 943 | 1,037 | (2) | % | (11) | % | ||||||||||||||||||||||
| Selling and distribution expenses | 2,239 | 2,071 | 2,324 | 8 | % | (4) | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | — | 76 | 83 | (100) | % | (100) | % | ||||||||||||||||||||||
| Restructuring expenses | — | 129 | 32 | (100) | % | (100) | % | ||||||||||||||||||||||
| Operating income | 2,621 | 2,299 | 705 | 14 | % | 272 | % | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 3,361 | $ | 3,433 | $ | 1,652 | (2) | % | 103 | % | |||||||||||||||||||
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DMC GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
| Change | |||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | From year-end | |||||||||||||||
| (unaudited) | |||||||||||||||||
| ASSETS | |||||||||||||||||
| Cash and cash equivalents | $ | 19,647 | $ | 25,144 | (22) | % | |||||||||||
| Accounts receivable, net | 109,332 | 94,415 | 16 | % | |||||||||||||
| Inventories | 179,545 | 156,590 | 15 | % | |||||||||||||
| Other current assets | 17,069 | 10,723 | 59 | % | |||||||||||||
| Total current assets | 325,593 | 286,872 | 13 | % | |||||||||||||
| Property, plant and equipment, net | 128,795 | 129,445 | (1) | % | |||||||||||||
| Goodwill | 141,725 | 141,725 | — | % | |||||||||||||
| Purchased intangible assets, net | 212,258 | 217,925 | (3) | % | |||||||||||||
| Other long-term assets | 95,632 | 103,011 | (7) | % | |||||||||||||
| Total assets | $ | 904,003 | $ | 878,978 | 3 | % | |||||||||||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
| Accounts payable | $ | 71,408 | $ | 46,816 | 53 | % | |||||||||||
| Contract liabilities | 31,198 | 32,080 | (3) | % | |||||||||||||
| Accrued income taxes | 5,837 | 4,256 | 37 | % | |||||||||||||
| Current portion of long-term debt | 15,000 | 15,000 | — | % | |||||||||||||
| Other current liabilities | 38,508 | 29,898 | 29 | % | |||||||||||||
| Total current liabilities | 161,951 | 128,050 | 26 | % | |||||||||||||
| Long-term debt | 111,686 | 117,798 | (5) | % | |||||||||||||
| Deferred tax liabilities | 2,122 | 1,908 | 11 | % | |||||||||||||
| Other long-term liabilities | 58,445 | 63,053 | (7) | % | |||||||||||||
| Redeemable noncontrolling interest | 187,522 | 187,522 | — | % | |||||||||||||
| Stockholders’ equity | 382,277 | 380,647 | — | % | |||||||||||||
| Total liabilities, redeemable noncontrolling interest, and stockholders’ equity | $ | 904,003 | $ | 878,978 | 3 | % | |||||||||||
8
DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(unaudited)
| Three months ended | |||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | |||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||
| Net income (loss) | $ | 2,139 | $ | 3,441 | $ | (4,280) | |||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||
| Depreciation | 3,400 | 3,703 | 3,359 | ||||||||||||||
| Amortization of purchased intangible assets | 5,667 | 3,772 | 12,976 | ||||||||||||||
| Amortization of deferred debt issuance costs | 138 | 141 | 132 | ||||||||||||||
| Amortization of acquisition-related inventory valuation step-up | — | — | 258 | ||||||||||||||
| Stock-based compensation | 5,027 | 3,167 | 2,358 | ||||||||||||||
| Deferred income taxes | 178 | 1,013 | (2,714) | ||||||||||||||
| Other | (405) | 1,768 | 41 | ||||||||||||||
| Change in working capital, net | (9,079) | 3,596 | (16,714) | ||||||||||||||
| Net cash provided by (used in) operating activities | 7,065 | 20,601 | (4,584) | ||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||
| Consideration adjustment related to acquisition of a business | — | (370) | — | ||||||||||||||
| Acquisition of property, plant and equipment | (2,226) | (7,307) | (1,536) | ||||||||||||||
| Proceeds on sale of property, plant and equipment | — | 62 | — | ||||||||||||||
| Net cash used in investing activities | (2,226) | (7,615) | (1,536) | ||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||
| Repayments on term loan | (6,250) | (3,750) | (3,750) | ||||||||||||||
| Payment of debt issuance costs | — | (1) | (97) | ||||||||||||||
| Net proceeds from issuance of common stock to employees and directors | — | 201 | — | ||||||||||||||
| Distribution to redeemable noncontrolling interest holder | (2,600) | (2,007) | (4,400) | ||||||||||||||
| Treasury stock activity | (2,157) | (139) | (1,088) | ||||||||||||||
| Net cash used in financing activities | (11,007) | (5,696) | (9,335) | ||||||||||||||
| EFFECTS OF EXCHANGE RATES ON CASH | 671 | (632) | 21 | ||||||||||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (5,497) | 6,658 | (15,434) | ||||||||||||||
| CASH AND CASH EQUIVALENTS, beginning of the period | 25,144 | 18,486 | 30,810 | ||||||||||||||
| CASH AND CASH EQUIVALENTS, end of the period | $ | 19,647 | $ | 25,144 | $ | 15,376 | |||||||||||
9
DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)
DMC Global
EBITDA and Adjusted EBITDA
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Net income (loss) | 2,139 | 3,441 | (4,280) | (38) | % | 150 | % | ||||||||||||||||||||||
| Interest expense, net | 2,381 | 2,129 | 1,024 | 12 | % | 133 | % | ||||||||||||||||||||||
| Income tax provision (benefit) | 2,500 | 4,438 | (863) | (44) | % | 390 | % | ||||||||||||||||||||||
| Depreciation | 3,400 | 3,703 | 3,359 | (8) | % | 1 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | 5,667 | 3,772 | 12,976 | 50 | % | (56) | % | ||||||||||||||||||||||
| EBITDA | 16,087 | 17,483 | 12,216 | (8) | % | 32 | % | ||||||||||||||||||||||
CEO transition expenses (1) | 2,965 | — | — | 100 | % | 100 | % | ||||||||||||||||||||||
| Stock-based compensation | 5,027 | 3,167 | 2,358 | 59 | % | 113 | % | ||||||||||||||||||||||
| Other expense, net | 200 | 559 | 209 | (64) | % | (4) | % | ||||||||||||||||||||||
| Restructuring expenses | — | 129 | 32 | (100) | % | (100) | % | ||||||||||||||||||||||
| Nonrecurring retirement expenses | — | 1,100 | — | (100) | % | —% | |||||||||||||||||||||||
| Amortization of acquisition-related inventory valuation step-up | — | — | 258 | —% | (100) | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 24,279 | $ | 22,438 | $ | 15,073 | 8 | % | 61 | % | |||||||||||||||||||
| Less: adjusted EBITDA attributable to redeemable noncontrolling interest | (4,188) | (2,857) | (4,568) | 47 | % | (8) | % | ||||||||||||||||||||||
| Adjusted EBITDA attributable to DMC Global Inc. stockholders | $ | 20,091 | $ | 19,581 | $ | 10,505 | 3 | % | 91 | % | |||||||||||||||||||
(1) During the first quarter of 2023, the Company and its former CEO entered into a separation agreement. In conjunction with this event as well as a reprioritization of near-term initiatives, we have incurred certain transition expenses, primarily including: (a) severance related charges for the former CEO and other impacted employees of $1,906; (b) CEO transition and executive search firm costs of $557; and (c) contract termination costs of $350.
Adjusted Net Income and Adjusted Diluted Earnings per Share
| Three months ended March 31, 2023 | |||||||||||
| Amount | Per Share (1) | ||||||||||
| Net income attributable to DMC Global Inc. | $ | 909 | $ | 0.05 | |||||||
CEO transition expenses and accelerated stock-based compensation, net of tax(2) | 5,235 | 0.27 | |||||||||
| As adjusted | $ | 6,144 | $ | 0.32 | |||||||
(2) Includes CEO transition expenses of $2,965 and accelerated stock-based compensation of $3,040 related to the vesting of the former CEO’s outstanding equity awards, net of tax.
| Three months ended December 31, 2022 | |||||||||||
| Amount | Per Share (1) | ||||||||||
| Net income attributable to DMC Global Inc. | $ | 3,266 | $ | 0.17 | |||||||
| Nonrecurring retirement expenses, net of tax | 905 | 0.05 | |||||||||
| NobelClad restructuring expenses, net of tax | 88 | — | |||||||||
| As adjusted | $ | 4,259 | $ | 0.22 | |||||||
10
DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)
| Three months ended March 31, 2022 | |||||||||||
| Amount | Per Share (1) | ||||||||||
| Net loss attributable to DMC Global Inc. | $ | (3,288) | $ | (0.17) | |||||||
| Amortization of acquisition-related inventory valuation step-up, net of tax | 133 | 0.01 | |||||||||
| NobelClad restructuring expenses and asset impairments, net of tax | 22 | — | |||||||||
| As adjusted | $ | (3,133) | $ | (0.16) | |||||||
11
DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)
Segment Adjusted EBITDA
Arcadia
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Operating income (loss), as reported | $ | 3,133 | $ | 441 | $ | (2,443) | 610 | % | 228 | % | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Depreciation | 817 | 762 | 541 | 7 | % | 51 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | 5,652 | 3,642 | 12,808 | 55 | % | (56) | % | ||||||||||||||||||||||
| Stock-based compensation | 579 | 1,198 | 256 | (52) | % | 126 | % | ||||||||||||||||||||||
| CEO transition expenses | 289 | — | — | 100 | % | 100 | % | ||||||||||||||||||||||
| Nonrecurring retirement expenses | — | 1,100 | — | (100) | % | —% | |||||||||||||||||||||||
| Amortization of acquisition-related inventory valuation step-up | — | — | 258 | — | % | (100) | % | ||||||||||||||||||||||
| Adjusted EBITDA | 10,470 | 7,143 | 11,420 | 47 | % | (8) | % | ||||||||||||||||||||||
| Less: adjusted EBITDA attributable to redeemable noncontrolling interest | (4,188) | $ | (2,857) | $ | (4,568) | 47 | % | (8) | % | ||||||||||||||||||||
| Adjusted EBITDA attributable to DMC Global Inc. | $ | 6,282 | $ | 4,286 | $ | 6,852 | 47 | % | (8) | % | |||||||||||||||||||
DynaEnergetics
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Operating income, as reported | $ | 13,168 | $ | 12,470 | $ | 3,298 | 6 | % | 299 | % | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Depreciation | 1,772 | 1,915 | 1,899 | (7) | % | (7) | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | 15 | 54 | 85 | (72) | % | (82) | % | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 14,955 | $ | 14,439 | $ | 5,282 | 4 | % | 183 | % | |||||||||||||||||||
NobelClad
| Three months ended | Change | ||||||||||||||||||||||||||||
| Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Sequential | Year-on-year | |||||||||||||||||||||||||
| Operating income, as reported | $ | 2,621 | $ | 2,299 | $ | 705 | 14 | % | 272 | % | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Depreciation | 740 | 929 | 832 | (20) | % | (11) | % | ||||||||||||||||||||||
| Restructuring expenses | — | 129 | 32 | (100) | % | (100) | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | — | 76 | 83 | (100) | % | (100) | % | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 3,361 | $ | 3,433 | $ | 1,652 | (2) | % | 103 | % | |||||||||||||||||||
12