DMC Global Inc. (NASDAQ:BOOM) Q2 2024 Results Conference Call August 1, 2024 5:00 PM ET Company Participants Geoff High - Vice President, Investor Relations Michael Kuta - Chief Executive Officer Eric Walter - Chief Financial Officer Conference Call Participants Gerry Sweeney - Roth Capital Partners Stephen Gengaro - Stifel Ken Newman - KeyBanc Capital Markets Operator Greetings, and welcome to the DMC Global Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief que ...

DMC Global (BOOM) reported $171.18 million in revenue for the quarter ended June 2024, representing a year-over-year decline of 9.3%. EPS of $0.29 for the same period compares to $0.72 a year ago. The reported revenue represents a surprise of +3.46% over the Zacks Consensus Estimate of $165.45 million. With the consensus EPS estimate being $0.13, the EPS surprise was +123.08%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determi ...

DMC Global (BOOM) came out with quarterly earnings of $0.29 per share, beating the Zacks Consensus Estimate of $0.13 per share. This compares to earnings of $0.72 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 123.08%. A quarter ago, it was expected that this diversified holding company would post earnings of $0.19 per share when it actually produced earnings of $0.21, delivering a surprise of 10.53%. Over the last four quar ...

Financial Performance - Net sales for Q2 2024 were $171,179,000, a decrease of 9.2% from $188,664,000 in Q2 2023[8] - Gross profit for Q2 2024 was $46,413,000, down 25.0% from $61,890,000 in Q2 2023[8] - Net income attributable to DMC Global Inc. stockholders for Q2 2024 was $4,012,000, a decline of 70.7% compared to $13,703,000 in Q2 2023[9] - Operating income for Q2 2024 was $11,685,000, a decrease of 56.6% from $26,997,000 in Q2 2023[8] - Comprehensive income attributable to DMC Global Inc. stockholders for Q2 2024 was $3,497,000, down from $14,149,000 in Q2 2023[11] - The net income for the six months ended June 30, 2024, was $8,612,000, compared to $19,665,000 for the same period in 2023, indicating a decrease of approximately 56.2%[18] - Net income attributable to DMC Global Inc. stockholders for the six months ended June 30, 2024, was $6,575, a decrease of 55% compared to $14,612 for the same period in 2023[130] - Adjusted EBITDA attributable to DMC Global Inc. decreased to $19,420 for the three months ended June 30, 2024, from $31,776 in the same period in 2023, a decline of 39%[111] - Adjusted EBITDA attributable to DMC Global Inc. was $36,103 for the six months ended June 30, 2024, down 30% from $51,867 in 2023[131] Assets and Liabilities - Total assets as of June 30, 2024, were $869,485,000, a decrease from $884,495,000 as of December 31, 2023[5] - Total liabilities decreased to $266,416,000 as of June 30, 2024, from $286,440,000 as of December 31, 2023[5] - Cash and cash equivalents were $14,567,000 as of June 30, 2024, down from $31,040,000 as of December 31, 2023[5] - The total debt as of June 30, 2024, was $84,112 million, down from $115,851 million as of December 31, 2023, showing a reduction of about 27.5%[62] - The redeemable noncontrolling interest was valued at $187,080 million as of June 30, 2024, compared to $187,760 million on December 31, 2023[29] - The company reported a significant increase in accounts payable, which rose to $22,070,000 for the six months ended June 30, 2024, compared to $10,015,000 in 2023[18] Cash Flow - Cash flows provided by operating activities for the six months ended June 30, 2024, were $15,783,000, down from $18,544,000 in the prior year, reflecting a decline of about 9.5%[18] - The company experienced a net cash decrease of $16,473,000 for the six months ended June 30, 2024, compared to a decrease of $6,420,000 in the same period of 2023[18] - Net cash flows used in financing activities for the six months ended June 30, 2024, totaled $39,727, which included net credit facility repayments of $31,500[173] Inventory and Expenses - Total inventories as of June 30, 2024, amounted to $174,791 million, compared to $166,712 million as of December 31, 2023, indicating an increase of about 4.5%[54][55] - Consolidated SG&A expenses were $27,122 in Q2 2024, down from $29,226 in Q2 2023, mainly due to reduced compensation and outside services costs[101] - Selling and distribution expenses decreased by $802 for the six months ended June 30, 2024, primarily due to lower compensation and marketing costs[126] Strategic Initiatives - The company reported a strategic review expense of $2,020,000 in Q2 2024, which was not present in Q2 2023[8] - Strategic review expenses amounted to $4,189 for the six months ended June 30, 2024, related to a review of strategic alternatives for business segments[126] - DMC expects Arcadia Products to drive future growth, leveraging new digital technologies and increased manufacturing capacity[103] Market Conditions - The company’s expected loss rate reflects uncertainties in market conditions, including supply chain disruptions and rising interest rates[23] - The company is currently evaluating the impact of recent accounting standards updates on its financial statements and disclosures, which may affect future reporting[51][52] Shareholder Information - The Stockholder Protection Rights Agreement was adopted on June 5, 2024, allowing shareholders to purchase shares at $75.00 if certain conditions are met[68] - The company suspended its quarterly dividend indefinitely as of April 23, 2020, with future dividends subject to Board discretion[173]

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) DMC Global's Q2 2024 performance exceeded guidance with **$171.2 million** sales and **$19.4 million** adjusted EBITDA, driven by strong segment execution [Second Quarter 2024 Performance Overview](index=1&type=section&id=Second%20Quarter%202024%20Performance%20Overview) DMC Global's Q2 2024 sales of **$171.2 million** and adjusted EBITDA of **$19.4 million** surpassed guidance, reflecting strong segment execution Q2 2024 Key Financial Metrics | Metric | Q2 2024 (Millions USD) | Q2 2023 (Millions USD) | YoY Change (%) | Q1 2024 (Millions USD) | QoQ Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | 171.2 | 188.7 | -9 | 166.9 | +3 | | Net Income | 6.3 | 17.5 | -64 | 2.3 | +171 | | Adj. Net Income (to DMC) | 5.7 | 14.1 | -60 | 4.2 | +36 | | Adj. Diluted EPS (USD) | 0.29 | 0.72 | -60 | 0.21 | +38 | | Adj. EBITDA (to DMC) | 19.4 | 31.8 | -39 | 16.7 | +16 | | Total Adj. EBITDA | 24.4 | 38.4 | -36 | 19.0 | +28 | - All three business segments (Arcadia, DynaEnergetics, NobelClad) delivered on key financial and operational objectives, leading to **consolidated sales** and **adjusted EBITDA** that surpassed the **high end of the company's guidance**[2](index=2&type=chunk) - The company's management remains focused on evaluating options to drive improved value for DMC's stockholders[5](index=5&type=chunk) [Business Segment Performance](index=1&type=section&id=Business%20Segment%20Performance) This section details the individual financial and operational performance of DMC Global's Arcadia, DynaEnergetics, and NobelClad segments [Arcadia (Architectural Building Products)](index=1&type=section&id=Arcadia%20%28Architectural%20Building%20Products%29) Arcadia's Q2 2024 sales of **$69.7 million** and Adjusted EBITDA margin of **17.8%** exceeded expectations, driven by operational efficiencies despite weak markets Arcadia Q2 2024 Financials | Metric | Q2 2024 (Millions USD) | Q1 2024 (Millions USD) | Q2 2023 (Millions USD) | | :--- | :--- | :--- | :--- | | Net Sales | 69.7 | 61.9 | 79.2 | | Adj. EBITDA (before NCI) | 12.4 | 5.9 | 16.5 | | Adj. EBITDA Margin (%) | 17.8 | 9.5 | 20.8 | - Gross margin improved significantly by **600 basis points sequentially to 33.2%**, nearing the **34.7%** reported in Q2 2023, attributed to higher sales on fixed overhead and cost streamlining efforts[3](index=3&type=chunk)[6](index=6&type=chunk) [DynaEnergetics (Energy Products)](index=1&type=section&id=DynaEnergetics%20%28Energy%20Products%29) DynaEnergetics' Q2 2024 sales of **$76.2 million** declined due to softer U.S. onshore demand, with Adjusted EBITDA margin contracting to **11.5%** DynaEnergetics Q2 2024 Financials | Metric | Q2 2024 (Millions USD) | Q1 2024 (Millions USD) | Q2 2023 (Millions USD) | | :--- | :--- | :--- | :--- | | Net Sales | 76.2 | 78.1 | 84.8 | | Adj. EBITDA | 8.8 | 10.5 | 19.5 | | Adj. EBITDA Margin (%) | 11.5 | 13.5 | 23.0 | - The sales decline is linked to a **4% sequential drop in U.S. well completions**, with anticipated continued softness in H2 2024 but expected EBITDA margin improvements from automation and product enhancements[3](index=3&type=chunk)[4](index=4&type=chunk) [NobelClad (Composite Metals)](index=1&type=section&id=NobelClad%20%28Composite%20Metals%29) NobelClad's Q2 2024 sales of **$25.2 million** saw an improved Adjusted EBITDA margin of **22.7%**, with backlog growing to **$64 million** due to a record petrochemical order NobelClad Q2 2024 Financials | Metric | Q2 2024 (Millions USD) | Q1 2024 (Millions USD) | Q2 2023 (Millions USD) | | :--- | :--- | :--- | :--- | | Net Sales | 25.2 | 26.8 | 24.8 | | Adj. EBITDA | 5.7 | 5.9 | 5.4 | | Adj. EBITDA Margin (%) | 22.7 | 21.9 | 21.8 | - The order backlog increased to **$64 million** from **$52 million** at the end of Q1 2024, indicating strong future demand, with a rolling 12-month book-to-bill ratio of **1.0**[4](index=4&type=chunk)[8](index=8&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) This section provides DMC Global's consolidated sales and Adjusted EBITDA guidance for Q3 and full-year 2024, along with key financial estimates [Third Quarter and Full-Year 2024 Guidance](index=3&type=section&id=Third%20Quarter%20and%20Full-Year%202024%20Guidance) DMC Global projects Q3 2024 consolidated sales between **$158 million** and **$168 million**, with Adjusted EBITDA attributable to DMC between **$15 million** and **$18 million** Q3 2024 Guidance | Measure | Expected Range (Millions USD) | | :--- | :--- | | **Sales** | | | DMC Consolidated | 158 - 168 | | Arcadia | 64 - 68 | | DynaEnergetics | 70 - 74 | | NobelClad | 24 - 26 | | **Adj. EBITDA (to DMC)** | 15 - 18 | Full-Year 2024 Guidance on Select Items | Measure | Expected Range | | :--- | :--- | | Depreciation & Amortization (Millions USD) | 35 - 36 | | Interest Expense (Millions USD) | 8 - 9 | | Annualized Effective Tax Rate (%) | 30 - 32 | | Capital Expenditures (Millions USD) | 16 - 20 | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents DMC Global's condensed consolidated statements of operations, balance sheets, and cash flows for the reported periods [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) DMC Global reported Q2 2024 net sales of **$171.2 million** and net income of **$6.3 million**, with six-month net sales of **$338.0 million** and net income of **$8.6 million** Q2 Statement of Operations Highlights (in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Sales | $171,179 | $188,664 | | Gross Profit | $46,413 | $61,890 | | Operating Income | $11,685 | $26,997 | | Net Income | $6,293 | $17,526 | | Net Income (to DMC) | $4,012 | $13,703 | Six-Month Statement of Operations Highlights (in thousands) | Line Item | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net Sales | $338,048 | $373,005 | | Gross Profit | $88,765 | $114,101 | | Operating Income | $18,373 | $34,217 | | Net Income | $8,612 | $19,665 | | Net Income (to DMC) | $6,575 | $14,612 | [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, DMC Global's total assets were **$869.5 million**, with cash of **$14.6 million** and total debt of **$84.1 million** Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $14,567 | $31,040 | | Total current assets | $320,875 | $326,812 | | Total assets | $869,485 | $884,495 | | Total current liabilities | $126,678 | $126,461 | | Long-term debt | $81,612 | $100,851 | | Total stockholders' equity | $415,989 | $410,295 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2024, net cash from operating activities was **$15.8 million**, with **$7.2 million** from investing and **$39.7 million** used in financing Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $15,783 | $18,544 | | Net cash (used in)/from investing activities | $7,204 | ($7,536) | | Net cash used in financing activities | ($39,727) | ($18,270) | | **Net decrease in cash** | **($16,473)** | **($6,420)** | [Non-GAAP Financial Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income, used to assess operating performance [Use and Definition of Non-GAAP Measures](index=3&type=section&id=Use%20and%20Definition%20of%20Non-GAAP%20Measures) DMC Global uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income to provide a clearer view of operating performance by excluding non-recurring items - Key non-GAAP measures disclosed include **EBITDA**, **Adjusted EBITDA** (total and attributable to DMC), **Adjusted Net Income**, **Adjusted Diluted EPS**, **Net Debt**, and **Free Cash Flow**[11](index=11&type=chunk)[12](index=12&type=chunk) - Management believes these measures are useful for comparing operating results across periods and against peer companies, as they moderate the impact of capital structure and non-recurring items[13](index=13&type=chunk)[14](index=14&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) In Q2 2024, GAAP Net Income of **$6.3 million** was reconciled to a total Adjusted EBITDA of **$24.4 million**, with **$19.4 million** attributable to DMC Q2 2024 Net Income to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q2 2024 | | :--- | :--- | | Net Income | $6,293 | | Interest, Taxes, D&A | $11,546 | | **EBITDA** | **$20,139** | | Stock-based compensation | $1,676 | | Strategic review expenses | $2,020 | | Other adjustments | $563 | | **Adjusted EBITDA (Total)** | **$24,398** | | Less: NCI portion | ($4,978) | | **Adjusted EBITDA (to DMC)** | **$19,420** | [Reconciliation of Net Income to Adjusted Net Income](index=14&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) Q2 2024 Net Income attributable to DMC of **$4.0 million** was adjusted to an Adjusted Net Income of **$5.7 million**, or **$0.29** per diluted share Q2 2024 Adjusted Net Income Reconciliation (in thousands, except per share) | Line Item | Amount | Per Share | | :--- | :--- | :--- | | Net income attributable to DMC | $4,012 | $0.20 | | Strategic review expenses, net of tax | $1,538 | $0.08 | | Restructuring expenses, net of tax | $125 | $0.01 | | **As adjusted** | **$5,675** | **$0.29** |

Core Insights - DMC Global Inc. has appointed Simon Bates as an independent director, bringing nearly 30 years of leadership experience in the building products industry [4][5] - The appointment fulfills a requirement from a cooperation agreement with Bradley L. Radoff and his affiliate to add a director with relevant expertise [2] Company Overview - DMC Global operates innovative, asset-light manufacturing businesses that provide unique, highly engineered products and differentiated solutions [7] - The company consists of several businesses, including Arcadia, DynaEnergetics, and NobelClad, which have established leadership positions in their respective markets [7] - DMC is based in Broomfield, Colorado, and trades on Nasdaq under the symbol "BOOM" [7] Leadership Experience - Simon Bates previously served as CEO of Argos North America and president, CEO, and director of GCP Applied Technologies Inc., both significant players in the building products sector [1] - Bates has also held leadership roles at CRH plc, enhancing his expertise in the industry [1] Board Composition - With the addition of Simon Bates, the DMC board now consists of eight directors [5] - Bates will serve on the Corporate Governance and Nominating Committee and the Compensation Committee [5] Educational Background - Simon Bates holds a bachelor's degree in economics from the University of York and postgraduate degrees in accounting, finance, and marketing from various UK universities [6]

To simplify its portfolio and focus more on the Arcadia Products business, DMC Global's board initiated a review of strategic alternatives for the DynaEnergetics and NobelClad segments in the first quarter of 2024. The board has been supervising the assessment process, which includes sale options, a merger or other business combinations involving one or both businesses. However, no definitive timeline has been set for the conclusion of the process and the company stated that it might not even materialize in ...

BROOMFIELD, Colo., June 14, 2024 (GLOBE NEWSWIRE) -- DMC Global Inc. (NASDAQ:BOOM) ("DMC" or the "Company") today commented on Steel Connect's recent unsolicited proposal (the "Proposal"). DMC's board of directors (the "Board") previously announced a review of strategic alternatives. The Board will consider the Proposal as part of its ongoing deliberations, in consultation with its legal and financial advisors and in accordance with its fiduciary duties. In the meantime, stockholders need not take any actio ...

BROOMFIELD, Colo., June 06, 2024 (GLOBE NEWSWIRE) -- DMC Global Inc. (NASDAQ:BOOM) today announced its board of directors (the "Board") has unanimously adopted a limited-duration Stockholder Protection Rights Agreement (the "Rights Plan") to protect stockholder interests. The Rights Plan is intended to enable stockholders to realize the full value of their investment in DMC Global while reducing the likelihood that any entity, person or group gains control of the Company through openmarket accumulation with ...

DMC Global Inc. (NASDAQ:BOOM) Q1 2024 Earnings Conference Call May 2, 2024 5:00 PM ET Company Participants Geoff High - Vice President, Investor Relations Michael Kuta - Chief Executive Officer Eric Walter - Chief Financial Officer Conference Call Participants Ken Newman - KeyBanc Capital Markets Stephen Gengaro - Stifel Gerry Sweeney - ROTH Capital Partners Operator Greetings, and welcome to the DMC Global First Quarter Earnings Release and Conference Call. [Operator Instructions] As a reminder, this confe ...