Financial Data and Key Metrics Changes - In Q4 2021, consolidated sales increased 7% sequentially to $71.8 million, with DynaEnergetics sales rising 15% to $50.7 million [12][16] - Fourth quarter consolidated gross margin was 18%, down from 25% in Q3, attributed to inventory reserve adjustments and project mix [14][16] - Adjusted EBITDA for Q4 was $2.8 million, down from $5.8 million in Q3, while full-year consolidated sales were $260.1 million, up 14% from 2020 [16][23] Business Line Data and Key Metrics Changes - DynaEnergetics International sales grew 75% to $8.1 million, while North American sales increased 7% to $42.6 million [13] - NobelClad sales declined 8% sequentially to $21.2 million due to delays in receiving metals [13] - Arcadia's pro forma sales for 2021 were $500.5 million, with a pro forma gross margin of 28% [16] Market Data and Key Metrics Changes - DynaEnergetics sales in North America exceeded the 4% increase in U.S. well completions reported by the Energy Information Administration [13] - Arcadia serves a $7 billion addressable market, capturing approximately 10% market share in its regions [7][8] Company Strategy and Development Direction - The acquisition of Arcadia is expected to double DMC's pro forma sales and strengthen its market position in the building products sector [7][20] - DMC aims to improve operating efficiencies and increase manufacturing capacity at Arcadia through investments in new facilities and systems [10][11] - The company is focused on margin improvement and long-term revenue growth across its asset-light businesses [20][55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strengthening end markets and the ability to meet demand, particularly in the oil and gas sector [17] - DynaEnergetics is expected to see margin recovery through price increases and increased well completion activity [18][46] - NobelClad is positioned to improve bookings and financial performance as supply chain disruptions ease [19] Other Important Information - Fourth quarter net loss attributable to DMC was $2.8 million, with an adjusted net income of $840,000 [22][23] - First quarter 2022 consolidated sales are expected to be between $125 million and $135 million, with Arcadia projected to report sales of $57 million to $62 million [24][25] Q&A Session Summary Question: Discussion on Arcadia's CapEx and growth expectations - Management plans $8 million to $10 million in CapEx for Arcadia, focusing on operational efficiency and capacity expansion [29][30] Question: Arcadia's revenue seasonality and growth direction - Revenue is expected to remain stable, with growth driven by price increases and capacity improvements [31][32] Question: DynaEnergetics' Q1 guidance and international sales - International sales are expected to pull back slightly, while North American sales are projected to increase [35][36] Question: Pricing strategy and competitive behavior in DynaEnergetics - A 5% price increase was implemented, with expectations for further increases to offset inflation [43][46] Question: Arcadia's EBITDA margins and growth potential - Expected EBITDA margins for Arcadia are around 20%, with growth driven by pricing and operational improvements [50][51] Question: Capital allocation and debt management for 2022 - The company aims to reduce debt to below 2x debt-to-EBITDA by the end of 2022, with a long-term CapEx target of 3% to 4% of sales [57][58]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading Symbol Name of exchange on which registered Common Stock, $0.05 Par Value BOOM The Nasdaq Global Select Market Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file numbe ...

DMC Global Inc. (NASDAQ:BOOM) Q2 2021 Earnings Conference Call July 22, 2021 5:00 PM ET Company Participants Geoff High - Vice President of Investor Relations Kevin Longe - President, Chief Executive Officer Mike Kuta - Chief Financial Officer Conference Call Participants Tommy Moll - Stephens Taylor Zurcher - Tudor, Pickering, Holt & Co. Stephen Gengaro - Stifel Matthew Galinko - Sidoti & Company Operator Good afternoon, ladies and gentlemen and welcome to the DMC Global Second Quarter Earnings Call. At th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading Symbol Name of exchange on which registered Common Stock, $0.05 Par Value BOOM The Nasdaq Global Select Market Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file number 001 ...

Financial Data and Key Metrics Changes - First quarter sales were $55.7 million, down 3% sequentially and down 24% year-over-year [12] - Consolidated gross margin was 23%, up from 21% in the previous quarter but down from 33% in the same quarter last year [13] - Adjusted net income for the first quarter was $559,000 or $0.04 per diluted share, compared to $5.3 million or $0.35 per diluted share in the prior year [15] - Adjusted EBITDA was $4 million, down from $11.3 million in the first quarter of the previous year [15] Business Line Data and Key Metrics Changes - DynaEnergetics reported first quarter sales of $38.2 million, up 8% sequentially but down 28% year-over-year [12] - NobelClad sales were $17.5 million, down 20% sequentially and 14% year-over-year [12] - DynaEnergetics' gross margin was 22%, down from 24% in the previous quarter and 37% in the same quarter last year [13] - NobelClad's gross margin improved to 26% from 18% in the previous quarter and was stable compared to the same quarter last year [13] Market Data and Key Metrics Changes - International sales increased 65% sequentially, while North American sales increased 1% sequentially [12] - Frac spreads in the U.S. approached 200 by the end of the first quarter, indicating a recovery in well completion activity [10] Company Strategy and Development Direction - The company aims to explore bolt-on acquisitions to enhance competitive positioning and expand total available market [23] - DMC is focused on growing through adding new product lines and businesses, positioning itself as a holding company for technical businesses in niche markets [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stronger financial results in the second quarter and the latter half of 2021, supported by an order backlog of $43 million at NobelClad [9] - The company noted that the inventory overhang in the market has largely been resolved, leading to expectations of increased demand [20] - Management highlighted the importance of customer profitability for improving pricing and margins over time [21] Other Important Information - The company spent approximately $1 million on patent litigation during the quarter, with ongoing legal actions against companies believed to be infringing on DynaEnergetics' patents [7] - The company ended the quarter with cash and marketable securities of approximately $67 million and zero long-term debt [8] Q&A Session Summary Question: Can you elaborate on the competitive dynamics in the DynaEnergetics market? - Management indicated that the inventory overhang has been mostly resolved, and they expect companies to build for demand moving forward [20] Question: Should we expect potential acquisitions or changes in capital allocation strategy? - Management stated that the cash balance is intended to explore acquisition opportunities and enhance competitive positioning [23] Question: How do you see the impact of the new administration's policies on your products? - Management expressed excitement about potential opportunities related to the administration's focus on capping abandoned wells, which aligns with their product capabilities [24] Question: Can you provide insights on the growth expectations for DynaEnergetics in Q2? - Management noted that growth is expected primarily in North America, with international sales forecasted to be flat [29] Question: What is the outlook for gross margins in DynaEnergetics? - Management believes that gross margins can return to 30% or more as market conditions normalize [39] Question: How has COVID impacted the sales cycle for NobelClad? - Management indicated that while there were some logistical challenges, the overall activity in NobelClad's markets remained stable [49] Question: Can you provide an update on the patent litigation timeline? - Management stated that IP litigation is a lengthy process and is expected to continue throughout 2021 and into 2022 [52]

[Part I - Financial Information](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Q1 2021 net sales decreased **24%** to **$55.7 million**, with net income at **$0.4 million**, while total assets increased to **$304.8 million** and debt was fully repaid [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets reached **$304.8 million**, driven by increased cash, with total liabilities at **$86.4 million**, equity at **$218.4 million**, and long-term debt eliminated Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $45,837 | $28,187 | | Total current assets | $168,188 | $143,310 | | Total assets | $304,817 | $279,645 | | **Liabilities & Equity** | | | | Total current liabilities | $58,373 | $47,108 | | Long-term debt | $0 | $8,139 | | Total liabilities | $86,387 | $82,731 | | Total stockholders' equity | $218,430 | $196,914 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2021 net sales decreased **24%** to **$55.7 million**, gross profit fell **47%** to **$12.9 million**, resulting in an operating loss of **$0.7 million** and net income of **$0.4 million** Q1 2021 vs. Q1 2020 Statement of Operations (in thousands, except per share data) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net sales | $55,658 | $73,564 | | Gross profit | $12,913 | $24,470 | | Operating (loss) income | $(710) | $6,347 | | Net income | $432 | $4,155 | | Diluted EPS | $0.03 | $0.28 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2021 operating cash flow was **$2.2 million**, investing activities provided **$3.7 million**, and financing activities provided **$11.1 million**, leading to a **$17.7 million** net increase in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,176 | $4,920 | | Net cash provided by (used in) investing activities | $3,715 | $(5,121) | | Net cash provided by (used in) financing activities | $11,077 | $(3,681) | | Net increase (decrease) in cash | $17,650 | $(3,902) | | Cash and cash equivalents, end of period | $45,837 | $16,451 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, inventory at **$57.9 million**, elimination of **$11.75 million** long-term debt, **$25.3 million** net proceeds from ATM equity, and segment sales - During Q1 2021, the company sold **397,820 shares** through its ATM equity program for gross proceeds of **$25.6 million**, resulting in net proceeds of **$25.3 million**[84](index=84&type=chunk) - In February 2021, the company repaid the remaining Capex Facility balance of **$11.75 million**, resulting in no outstanding debt as of March 31, 2021[71](index=71&type=chunk) Net Sales by Business Segment (in thousands) | Segment | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | DynaEnergetics | $38,172 | $53,220 | | NobelClad | $17,486 | $20,344 | | **Total Net Sales** | **$55,658** | **$73,564** | Operating Income by Business Segment (in thousands) | Segment | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | DynaEnergetics | $1,521 | $8,606 | | NobelClad | $1,604 | $1,476 | | **Total Segment Operating Income** | **$3,125** | **$10,082** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Consolidated sales declined **24%** due to pandemic and operational issues, gross margin fell to **23.2%**, while liquidity improved to **$66.8 million** through equity offerings and debt repayment - Consolidated sales decreased **24%** YoY, primarily due to the COVID-19 pandemic's impact on energy demand, a winter storm in Texas affecting DynaEnergetics (**$5.1 million** sales pushed out), and shipping delays at NobelClad (**$1.7 million**)[123](index=123&type=chunk) - The company's net cash position (cash and marketable securities minus total debt) improved from **$42.7 million** at year-end 2020 to **$66.8 million** at March 31, 2021, largely due to proceeds from the ATM equity program[123](index=123&type=chunk)[167](index=167&type=chunk) - The outlook for DynaEnergetics is improving with accelerating well completion activity, but a sustained recovery depends on stable oil prices and a successful global vaccine rollout. The company also expects increased litigation expenses to protect its intellectual property[124](index=124&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Reconciliation Item | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net income | $432 | $4,155 | | Interest expense, net | $135 | $238 | | Income tax (benefit) provision | $(883) | $2,069 | | Depreciation & Amortization | $3,022 | $2,706 | | **EBITDA** | **$2,706** | **$9,168** | | Restructuring expenses | $127 | $1,116 | | Stock-based compensation | $1,608 | $1,118 | | Other income, net | $(394) | $(115) | | **Adjusted EBITDA** | **$4,047** | **$11,287** | [Business Segment Financial Information](index=28&type=section&id=Business%20Segment%20Financial%20Information) DynaEnergetics' sales fell **28%** to **$38.2 million** with gross margin at **22.1%**, while NobelClad's sales decreased **14%** to **$17.5 million** but its gross margin improved to **26.4%** - DynaEnergetics' sales decreased **28%** YoY, with gross profit percentage falling from **36.6%** to **22.1%** due to lower market activity, reduced selling prices, and costs from the Texas winter storm[151](index=151&type=chunk)[152](index=152&type=chunk) - NobelClad's sales decreased **14%** YoY due to shipment timing, but its gross profit percentage increased to **26.4%** from **25.3%** due to a favorable project mix, leading to a **9%** increase in operating income[159](index=159&type=chunk)[160](index=160&type=chunk)[163](index=163&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company significantly improved liquidity by repaying **$11.75 million** debt and generating **$25.3 million** from equity, maintaining **$50.0 million** available borrowing capacity - The company repaid its outstanding Capex Facility balance of **$11.75 million** in February 2021 and had no outstanding borrowings as of March 31, 2021[170](index=170&type=chunk) - Since its inception in Q4 2020, the ATM equity program has sold **1,006,180 shares** for net proceeds of **$51.0 million**[166](index=166&type=chunk) - As of March 31, 2021, available borrowing capacity was **$50.0 million**, and the company was in compliance with all financial covenants[177](index=177&type=chunk)[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosure about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) No material changes occurred in market risk related to foreign currency exchange rates and interest rates compared to the 2020 Annual Report on Form 10-K - There were no material changes in market risk for changes in foreign currency exchange rates and interest rates from the information provided in the company's 2020 Annual Report on Form 10-K[189](index=189&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO confirmed the effectiveness of disclosure controls and procedures, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[190](index=190&type=chunk) - No changes occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls over financial reporting[191](index=191&type=chunk) [Part II - Other Information](index=33&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any legal proceedings or claims expected to have a material adverse effect on its business or financial condition - The company is currently not aware of any legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating results[108](index=108&type=chunk)[194](index=194&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No significant changes occurred in the risk factors previously disclosed in the 2020 Annual Report on Form 10-K - No significant changes have occurred in the risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company retained **56,101 shares** at an average price of **$65.63** to cover employee withholding tax obligations related to restricted stock vesting - In connection with the vesting of restricted common stock, the company retained shares to satisfy withholding tax obligations. These shares are held as treasury shares[196](index=196&type=chunk) Share Purchases in Q1 2021 | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | January 1 to January 31, 2021 | — | $ — | | February 1 to February 28, 2021 | 38,001 | $65.75 | | March 1 to March 31, 2021 | 18,100 | $65.37 | | **Total** | **56,101** | **$65.63** | [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no specified health and safety violations, orders, citations, or mining-related fatalities at its MSHA-regulated Coolspring property - During the quarter ended March 31, 2021, the company had no specified health and safety violations, orders, citations, or other reportable events under the Dodd-Frank Act for its MSHA-regulated operations[199](index=199&type=chunk)

Part I [Business](index=4&type=section&id=Item%201.%20Business) DMC Global operates two main segments, DynaEnergetics and NobelClad, serving oil & gas and industrial processing markets - DMC Global operates as a diversified holding company with two primary segments: DynaEnergetics, serving the oil and gas market, and NobelClad, serving industrial processing and transportation markets[14](index=14&type=chunk) - The company's strategy is to acquire and support well-run businesses, providing long-term capital and resources while fostering local innovation over centralized control[15](index=15&type=chunk) [DynaEnergetics Segment](index=4&type=section&id=DynaEnergetics) DynaEnergetics designs and sells perforating systems for the oil and gas industry, tied to exploration and production activity DynaEnergetics Sales Contribution | Year | Contribution to Consolidated Net Sales | | :--- | :--- | | 2020 | 64% | | 2019 | 78% | | 2018 | 73% | - DynaEnergetics focuses on advanced, safer perforating products like the IS2™ Intrinsically Safe Initiating Systems and the factory-assembled DS DynaStage systems, which improve well-site efficiency and safety[20](index=20&type=chunk)[28](index=28&type=chunk) - In 2020, the segment expanded its product line with new systems for re-frac (DS Echo™), oriented perforating (DS Gravity™), and large entry holes (DS LoneStar™), as well as setting and release tools (DS MicroSet™, DS Liberator™), expanding its addressable market by an estimated **20%**[29](index=29&type=chunk)[34](index=34&type=chunk) - Research and development expenses for DynaEnergetics were **$6.3 million** in 2020, down from **$7.1 million** in 2019, focusing on new technology and products[44](index=44&type=chunk) [NobelClad Segment](index=9&type=section&id=NobelClad) NobelClad specializes in explosion-welded clad metal plates for heavy industrial equipment in cyclical markets NobelClad Sales Contribution | Year | Contribution to Consolidated Net Sales | | :--- | :--- | | 2020 | 36% | | 2019 | 22% | | 2018 | 27% | - NobelClad's primary technology is explosion welding, a versatile process for joining dissimilar metals like titanium-steel or aluminum-steel, creating a bond stronger than the parent metals[45](index=45&type=chunk)[47](index=47&type=chunk) - The main end-use markets are oil & gas and chemical/petrochemical, which made up approximately **60%** of NobelClad's sales in 2020. Other key markets include alternative energy, shipbuilding, and power generation[48](index=48&type=chunk)[49](index=49&type=chunk)[52](index=52&type=chunk) - NobelClad manufactures a majority of its own explosives from standard raw materials, which it believes allows for higher quality and lower cost[67](index=67&type=chunk) [Human Capital](index=15&type=section&id=Human%20Capital) DMC Global employed **531** individuals as of December 31, 2020, prioritizing health, safety, and diversity initiatives - As of December 31, 2020, the company employed **531** permanent and part-time employees, with **320** in the U.S. and **211** internationally. None of the manufacturing employees are unionized[87](index=87&type=chunk) - The company prioritizes employee health and safety, with an OH&S management system aligned with ISO 45001:2018. Specific measures were taken to ensure employee safety during the COVID-19 pandemic[89](index=89&type=chunk) - DMC plans to develop and adopt a formal diversity and inclusion program in 2021, building on its commitment to a diverse workforce[92](index=92&type=chunk) [Foreign and Domestic Operations and Export Sales](index=16&type=section&id=Foreign%20and%20Domestic%20Operations%20and%20Export%20Sales) DMC Global operates globally with manufacturing in the U.S., Germany, and Canada, experiencing decreased U.S. sales in 2020 Net Sales by Geographic Location (in thousands) | Region | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | :--- | | United States | $149,214 | $309,826 | $221,847 | | Canada | $10,428 | $17,688 | $30,126 | | India | $7,236 | $1,831 | $4,291 | | Germany | $5,704 | $4,900 | $4,067 | | China | $5,390 | $28 | $12,503 | | Rest of the world | $45,285 | $63,177 | $54,185 | | **Total Net Sales** | **$229,161** | **$397,550** | **$326,429** | [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from cyclical markets, volatile oil/gas, COVID-19, supply chain, and regulatory compliance - Demand for DynaEnergetics' products is substantially dependent on the volatile expenditures of the oil and gas industry, which are influenced by oil and gas prices[107](index=107&type=chunk)[108](index=108&type=chunk) - NobelClad's business is dependent on sales to a limited number of customers in cyclical heavy industries (e.g., oil and gas, chemicals, power generation) and is affected by metal prices[125](index=125&type=chunk)[126](index=126&type=chunk) - The COVID-19 pandemic has had, and is likely to continue to have, a material adverse effect on the company's financial condition due to reduced economic activity, low oil prices, and supply chain disruptions[135](index=135&type=chunk)[138](index=138&type=chunk) - The use of explosives in manufacturing processes subjects the company to extensive environmental, health, and safety regulations. Accidents could lead to significant liabilities and operational disruptions[177](index=177&type=chunk)[179](index=179&type=chunk) - The company's operations are subject to risks from tariffs, such as the U.S. tariffs on steel and aluminum, which have increased costs and may lead to further trade conflicts[156](index=156&type=chunk)[157](index=157&type=chunk) [Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[201](index=201&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) DMC's corporate headquarters are leased in Colorado, with DynaEnergetics and NobelClad operating owned and leased facilities across the U.S., Germany, and Canada - DynaEnergetics owns its key manufacturing and assembly sites in Blum and Whitney, Texas, and leases its main European manufacturing site in Troisdorf, Germany[204](index=204&type=chunk)[206](index=206&type=chunk) - NobelClad owns its principal U.S. manufacturing facility in Mount Braddock, Pennsylvania, but leases its primary clad plate shooting site in Dunbar, Pennsylvania. It also owns a manufacturing site in Liebenscheid, Germany and a shooting site in Dillenburg, Germany[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings information is detailed in Note 9 of the Consolidated Financial Statements, with no material adverse effects expected - Information regarding legal proceedings is detailed in Note 9 to the Consolidated Financial Statements[214](index=214&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company's Coolspring property is subject to MSHA regulations, with no reportable mine safety violations or fatalities in 2020 - During the year ended December 31, 2020, the company had no reportable mine safety violations, orders, citations, or related events[215](index=215&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=36&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) DMC's common stock trades on Nasdaq under "BOOM"; the company purchased **42,957** shares in Q4 2020 and suspended its dividend - The company's common stock is traded on The Nasdaq Global Select Market under the symbol "BOOM"[218](index=218&type=chunk) Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | Oct 2020 | 214 | $32.94 | | Nov 2020 | 23,303 | $39.92 | | Dec 2020 | 19,440 | $45.71 | | **Total** | **42,957** | **$42.50** | - The Board of Directors suspended the quarterly dividend in April 2020 to preserve liquidity amid the COVID-19 pandemic, and there is no assurance it will be reinstated[201](index=201&type=chunk) [Selected Financial Data](index=38&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data shows a significant decline in 2020, with net sales falling to **$229.2 million** and a net loss of **$1.4 million** Selected Financial Data (in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | :--- | | Net sales | $229,161 | $397,550 | $326,429 | | Gross profit | $56,853 | $144,923 | $110,695 | | Operating (loss) income | $(996) | $58,425 | $37,424 | | Net (loss) income | $(1,412) | $34,041 | $30,473 | | Diluted (loss) income per share | $(0.10) | $2.28 | $2.04 | | Total assets | $279,645 | $277,421 | $240,418 | | Long-term debt | $11,264 | $14,272 | $17,984 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) DMC's 2020 performance was severely impacted by COVID-19, with a **42%** sales drop to **$229.2 million**, primarily in DynaEnergetics, offset by cost-containment [Consolidated Results of Operations](index=43&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated net sales for 2020 decreased by **42%** to **$229.2 million**, resulting in a net loss of **$1.4 million** and an **80%** decline in Adjusted EBITDA Consolidated Results of Operations (2020 vs. 2019, in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | $ Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $229,161 | $397,550 | $(168,389) | (42)% | | Gross profit | $56,853 | $144,923 | $(88,070) | (61)% | | Gross profit % | 24.8% | 36.5% | - | - | | Operating (loss) income | $(996) | $58,425 | $(59,421) | (102)% | | Net (loss) income | $(1,412) | $34,041 | $(35,453) | (104)% | | Adjusted EBITDA | $19,147 | $93,753 | $(74,606) | (80)% | - Selling, general, and administrative (SG&A) expenses decreased by **$12.4 million** year-over-year due to cost containment actions, including reduced spending on outside services, incentive compensation, and travel[237](index=237&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk) Reconciliation of Net (Loss) Income to Adjusted EBITDA (in thousands) | Line Item | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Net (loss) income | $(1,412) | $34,041 | | Interest expense, net | $731 | $1,554 | | Income tax (benefit) provision | $(548) | $22,661 | | Depreciation & Amortization | $11,081 | $9,860 | | EBITDA | $9,852 | $68,116 | | Restructuring & Impairments | $3,387 | $19,503 | | Stock-based compensation | $5,675 | $5,204 | | Other adjustments | $233 | $800 | | **Adjusted EBITDA** | **$19,147** | **$93,753** | [Business Segment Financial Information](index=47&type=section&id=Business%20Segment%20Financial%20Information) DynaEnergetics sales fell **53%** to **$146.4 million** with operating income down **91%**, while NobelClad sales decreased only **5%** with stable operating income DynaEnergetics Segment Performance (2020 vs. 2019, in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Net sales | $146,395 | $310,424 | (53)% | | Gross profit | $38,072 | $122,703 | (69)% | | Gross profit % | 26.0% | 39.5% | - | | Operating income | $6,150 | $68,781 | (91)% | | Adjusted EBITDA | $16,335 | $94,541 | (83)% | NobelClad Segment Performance (2020 vs. 2019, in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Net sales | $82,766 | $87,126 | (5)% | | Gross profit | $19,433 | $22,840 | (15)% | | Gross profit % | 23.5% | 26.2% | - | | Operating income | $6,886 | $7,193 | (4)% | | Adjusted EBITDA | $10,736 | $11,118 | (3)% | - NobelClad's order backlog increased **26%** to **$39.9 million** at the end of 2020 from **$31.7 million** at the end of 2019, indicating positive future prospects[234](index=234&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) DMC significantly strengthened liquidity in 2020 with **$30.4 million** operating cash flow, raising **$25.7 million** via ATM, ending with **$53.9 million** cash - The company improved its net cash position from **$6.1 million** at year-end 2019 to **$42.7 million** at year-end 2020 through cost-containment actions and capital raising[237](index=237&type=chunk) - In October 2020, the company commenced an at-the-market (ATM) equity program, selling **608,360** shares for net proceeds of **$25.7 million** in Q4 2020[245](index=245&type=chunk)[291](index=291&type=chunk) - The company amended its credit facility in June 2020 to waive the debt service coverage ratio for three quarters and add a minimum liquidity covenant, enhancing financial flexibility[290](index=290&type=chunk)[299](index=299&type=chunk) Contractual Obligations as of Dec 31, 2020 (in thousands) | Obligation Type | Less than 1 Year (in thousands) | 1-3 Years (in thousands) | 3-5 Years (in thousands) | More than 5 Years (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Credit facility | $3,125 | $8,625 | $0 | $0 | $11,750 | | Operating lease obligations | $1,741 | $3,805 | $3,351 | $5,200 | $14,097 | | Purchase obligations | $22,653 | $0 | $0 | $0 | $22,653 | | **Total** | **$27,519** | **$12,430** | **$3,351** | **$5,200** | **$48,500** | [Critical Accounting Policies and Estimates](index=52&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies revenue recognition, asset impairments, intangible assets, and income taxes as critical accounting policies requiring significant judgment - The most critical accounting policies involve significant management judgment and estimates in the areas of revenue recognition, asset impairments, intangible assets, and income taxes[318](index=318&type=chunk) - Revenue is recognized at a point in time when control of the goods is transferred to the customer, based on the relevant Incoterms[325](index=325&type=chunk)[327](index=327&type=chunk) - In 2020, the company recorded asset impairment charges on certain manufacturing assets in the DynaEnergetics segment due to the downturn in demand caused by the COVID-19 pandemic[333](index=333&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from foreign currency fluctuations, primarily the Euro, and variable interest rates, using forward contracts - The company's primary foreign currency risk exposure is the Euro. Sales in non-U.S. dollar currencies accounted for **17%** of total sales in 2020[339](index=339&type=chunk) - The company uses foreign currency forward contracts to offset exchange rate fluctuations on certain asset and liability positions. The notional amount of these contracts was **$2.1 million** at year-end 2020, down from **$22.9 million** at year-end 2019[340](index=340&type=chunk) - All of the company's debt at year-end 2020 was at variable interest rates. A **1%** change in average interest rates would have impacted 2020 interest expense by **$146,000**[340](index=340&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for 2020, detailing a net loss of **$1.4 million** on **$229.2 million** revenue [Report of Independent Registered Public Accounting Firm](index=57&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on DMC Global's 2020 consolidated financial statements and internal controls, identifying DynaEnergetics' inventory valuation as a critical audit matter - The auditor, Ernst & Young LLP, issued an unqualified (clean) opinion on both the financial statements and the company's internal control over financial reporting[346](index=346&type=chunk)[347](index=347&type=chunk) - A critical audit matter was identified concerning the valuation of DynaEnergetics' finished goods inventory, specifically the estimates for excess and obsolete inventory, which are sensitive to future demand forecasts[350](index=350&type=chunk)[352](index=352&type=chunk) [Consolidated Financial Statements](index=59&type=section&id=Consolidated%20Financial%20Statements) The 2020 consolidated financial statements show a net loss of **$1.4 million** on **$229.2 million** revenue, with **$30.4 million** operating cash flow Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2020 (in thousands) | Dec 31, 2019 (in thousands) | | :--- | :--- | :--- | | Cash & Marketable Securities | $53,923 | $20,353 | | Accounts Receivable, net | $31,366 | $60,855 | | Inventories | $52,573 | $53,728 | | **Total Current Assets** | **$143,310** | **$144,353** | | Property, Plant & Equipment, net | $109,411 | $108,234 | | **Total Assets** | **$279,645** | **$277,421** | | Accounts Payable | $17,574 | $34,758 | | **Total Current Liabilities** | **$47,108** | **$71,423** | | Long-term Debt | $8,139 | $11,147 | | **Total Liabilities** | **$82,731** | **$105,280** | | **Total Stockholders' Equity** | **$196,914** | **$172,141** | Consolidated Statement of Operations Highlights (in thousands) | Account | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | :--- | | Net sales | $229,161 | $397,550 | $326,429 | | Gross profit | $56,853 | $144,923 | $110,695 | | Operating (loss) income | $(996) | $58,425 | $37,424 | | Net (loss) income | $(1,412) | $34,041 | $30,473 | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,362 | $64,594 | | Net cash used in investing activities | $(39,557) | $(25,947) | | Net cash provided by (used in) financing activities | $17,317 | $(30,562) | | **Net increase in cash** | **$7,834** | **$6,978** | [Notes to Consolidated Financial Statements](index=65&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, debt, stock-based compensation, income taxes, segment performance, and 2020 restructuring activities - The company adopted a new credit loss standard on Jan 1, 2020, resulting in a **$50 thousand** adjustment to retained earnings. The allowance for credit losses increased from **$1.0 million** to **$2.6 million** during 2020, primarily due to increased provisions in the DynaEnergetics segment[378](index=378&type=chunk)[382](index=382&type=chunk) - The company maintains a **$50 million** syndicated revolving credit facility and a term loan (Capex Facility), with **$11.8 million** outstanding on the Capex Facility at year-end 2020. The company was in compliance with all covenants[438](index=438&type=chunk)[444](index=444&type=chunk) - In 2020, the company incurred **$3.4 million** in restructuring charges, primarily related to severance and asset impairments at DynaEnergetics due to the COVID-19 pandemic's impact[502](index=502&type=chunk)[503](index=503&type=chunk)[510](index=510&type=chunk) Quarterly Financial Data 2020 (Unaudited, in thousands) | Quarter | Net Sales (in thousands) | Gross Profit (in thousands) | Net Income (Loss) (in thousands) | | :--- | :--- | :--- | :--- | | Q1 | $73,564 | $24,470 | $4,155 | | Q2 | $43,203 | $6,604 | $(5,648) | | Q3 | $55,281 | $13,593 | $1,008 | | Q4 | $57,113 | $12,186 | $(927) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=90&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on any accounting or financial disclosure matters for 2020 - There were no changes in or disagreements with accountants on accounting and financial disclosure[515](index=515&type=chunk) [Controls and Procedures](index=91&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020, with an unqualified auditor opinion - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[516](index=516&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020[521](index=521&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2020[529](index=529&type=chunk) [Other Information](index=94&type=section&id=Item%209B.%20Other%20Information) This section is not applicable - Not applicable[537](index=537&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=95&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2021 Annual Meeting of Stockholders[541](index=541&type=chunk) [Executive Compensation](index=95&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2021 Annual Meeting of Stockholders[542](index=542&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=95&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2021 Annual Meeting of Stockholders[543](index=543&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=95&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2021 Annual Meeting of Stockholders[544](index=544&type=chunk) [Principal Accounting Fees and Services](index=95&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2021 Annual Meeting of Stockholders[545](index=545&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=96&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This item lists all exhibits filed with the annual report, including key corporate documents, material contracts, certifications, and financial schedules - Lists all exhibits filed with the Form 10-K, including material contracts, incentive plans, and certifications[549](index=549&type=chunk)[550](index=550&type=chunk) - Includes Schedule II(a), which details the activity in the allowance for doubtful accounts[548](index=548&type=chunk)[562](index=562&type=chunk)

Financial Data and Key Metrics Changes - DMC reported third quarter sales of $55.3 million, up 28% sequentially but down 45% year-over-year [12] - Consolidated gross margin for the third quarter was 25%, up from 15% in the second quarter of 2020 but down from 36% in the third quarter of 2019 [12][13] - Adjusted net income for the third quarter was $1.2 million or $0.08 per diluted share, compared to $13.4 million or $0.90 per diluted share in the same quarter last year [14] Business Line Data and Key Metrics Changes - DynaEnergetics reported third quarter sales of $34.2 million, up 45% sequentially but down 56% year-over-year; North American sales increased 122% sequentially [12][6] - NobelClad's sales were $21.1 million, up 8% sequentially and down 7% year-over-year, with a gross margin of 26% [12][13] Market Data and Key Metrics Changes - The company anticipates a seasonal sales decline in international markets during the fourth quarter, with improved order volume expected in early 2021 [8][16] - DynaEnergetics expects fourth quarter sales in the range of $30 million to $33 million, while NobelClad's sales are expected to be between $20 million and $22 million [15][16] Company Strategy and Development Direction - DMC aims to build a diversified portfolio of innovative solutions that create value for customers and superior returns for shareholders [18] - The company is focused on maintaining leadership positions in their respective industries and developing innovative products [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the market recovery, indicating that the bottom may be behind them and expecting sustained demand through the end of the year [8] - The company believes that the inventory overhang will be depleted during the first half of next year, leading to improved demand for their products [8] Other Important Information - DMC ended the third quarter with cash and cash equivalents of $24.6 million and total debt of $12 million [10][11] - The company filed a prospectus supplement to establish an at-the-market offering program for up to $75 million [11] Q&A Session All Questions and Answers Question: Inventory overhang and pricing dynamics - Management indicated that the inventory overhang might take until the first half of 2021 to be consumed, with expectations for pricing to stabilize and improve in the first quarter of 2021 [20][22] Question: DynaEnergetics margins and cost structure - Management noted that most costs removed during the downturn were activity-driven, and as volumes pick up, they expect to see margin expansion without significantly increasing fixed costs [24] Question: North American performance and Q4 guidance - Management does not anticipate a fall-off in North American sales towards year-end, expecting activity levels to continue into the fourth quarter [28] Question: Market share dynamics and integrated systems - Management confirmed a shift back to integrated systems, emphasizing the benefits of their factory-assembled products over field-assembled components [33][34] Question: New product uptake and market share - Management reported strong market acceptance of new products like NLine and Trinity, with expectations for continued growth in market share [37] Question: Engineered wood market development - Management expressed optimism about the engineered wood market, indicating significant potential for growth and follow-on orders [41] Question: Competitive landscape and future outlook - Management highlighted ongoing consolidation in the E&P sector and anticipated attrition among lower-technology component manufacturers, favoring companies with integrated systems [46][48]

PART I - FINANCIAL INFORMATION [Item 1: Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201%3A%20Condensed%20Consolidated%20Financial%20Statements) This section presents DMC Global Inc.'s unaudited condensed consolidated financial statements for the three and nine-month periods ended September 30, 2020, including key financial statements and notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and liabilities from year-end 2019 to September 30, 2020, with stockholders' equity remaining relatively stable Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2020 (unaudited) | Dec 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $125,817 | $144,353 | | **Total assets** | **$259,283** | **$277,421** | | **Total current liabilities** | $54,078 | $71,423 | | **Total liabilities** | **$89,332** | **$105,280** | | **Total stockholders' equity** | **$169,951** | **$172,141** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company experienced a significant year-over-year decline in financial performance, with net sales and income falling sharply in Q3 2020 and a net loss for the nine-month period Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $55,281 | $100,094 | $172,048 | $311,183 | | **Gross profit** | $13,593 | $36,224 | $44,667 | $114,702 | | **Operating income (loss)** | $1,465 | $12,821 | $(178) | $57,926 | | **Net income (loss)** | $1,008 | $6,915 | $(485) | $39,329 | | **Diluted EPS** | $0.07 | $0.46 | $(0.03) | $2.64 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased for the nine months ended September 30, 2020, while cash used in investing and financing activities also saw reductions Cash Flow Summary (Nine months ended Sep 30, in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $21,354 | $35,096 | | **Net cash used in investing activities** | $(9,662) | $(21,119) | | **Net cash used in financing activities** | $(7,038) | $(14,960) | | **Net increase (decrease) in cash** | $4,251 | $(1,192) | | **Cash and cash equivalents, end of period** | $24,604 | $12,183 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, segment information, debt facilities, restructuring, and subsequent events - On January 1, 2020, the company adopted a new accounting standard for credit losses, which requires measuring expected credit losses based on historical experience, current conditions, and forecasts, and the adoption **did not have a material impact** on the company's financial position[34](index=34&type=chunk)[35](index=35&type=chunk) - Due to the COVID-19 pandemic's impact on oil and gas demand, the company increased its expected loss rate for accounts receivable, recording provisions of **$3.3 million** during the first nine months of 2020[37](index=37&type=chunk) - The company's business is organized into two segments: DynaEnergetics (products for oil and gas well perforation) and NobelClad (explosion-welded clad metal plates)[93](index=93&type=chunk) - In response to declining demand, the company initiated restructuring, including workforce reductions and asset impairments at its DynaEnergetics facilities, resulting in charges of **$3.3 million** for the first nine months of 2020[111](index=111&type=chunk)[112](index=112&type=chunk)[117](index=117&type=chunk) - Subsequent to the quarter end, on October 22, 2020, the company commenced an at-the-market (ATM) equity program to sell up to **$75 million** in common stock[118](index=118&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the severe impact of the COVID-19 pandemic on financial performance, outlining consolidated and segment results, cost-containment, and liquidity preservation efforts [Overview and Outlook](index=30&type=section&id=Overview%20and%20Outlook) The company's two segments faced significant COVID-19 impacts, leading to substantial cost-containment actions, liquidity bolstering, and new product introductions, with varied demand outlooks - The company implemented significant cost-containment actions in Q2 2020, including a **32% workforce reduction**, a **50% cut in capital expenditures**, and suspension of the quarterly dividend[132](index=132&type=chunk) - To preserve liquidity, the company amended its credit facility to waive the debt service coverage ratio for three quarters and established an at-the-market (ATM) equity program to potentially raise up to **$75 million**[132](index=132&type=chunk)[133](index=133&type=chunk) - DynaEnergetics introduced new products (DS Echo™, DS MicroSet™, DS Liberator™) to expand its addressable market by **over 20%**, targeting applications like re-frac and plug setting[134](index=134&type=chunk) - NobelClad's backlog increased to **$42.6 million** at September 30, 2020, from **$31.7 million** at year-end 2019, though some customers have delayed projects[127](index=127&type=chunk)[136](index=136&type=chunk) [Consolidated Results of Operations](index=33&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated net sales and gross profit declined significantly in Q3 2020 and for the nine-month period, leading to an operating loss and substantial drop in Adjusted EBITDA Consolidated Results - Q3 2020 vs Q3 2019 (in thousands) | Metric | Q3 2020 | Q3 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $55,281 | $100,094 | $(44,813) | (45)% | | **Gross profit** | $13,593 | $36,224 | $(22,631) | (62)% | | **Operating income** | $1,465 | $12,821 | $(11,356) | (89)% | | **Net income** | $1,008 | $6,915 | $(5,907) | (85)% | Adjusted EBITDA Reconciliation - Nine Months Ended Sep 30 (in thousands) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Net (loss) income** | $(485) | $39,329 | | **EBITDA** | $7,947 | $65,785 | | **Adjusted EBITDA** | **$15,524** | **$76,131** | [Business Segment Financial Information](index=38&type=section&id=Business%20Segment%20Financial%20Information) DynaEnergetics' Q3 2020 sales and operating income significantly declined, while NobelClad saw a modest sales decrease but improved operating income due to project mix and cost control DynaEnergetics Segment Results - Q3 2020 vs Q3 2019 (in thousands) | Metric | Q3 2020 | Q3 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $34,201 | $77,356 | $(43,155) | (56)% | | **Operating income** | $2,171 | $14,911 | $(12,740) | (85)% | | **Adjusted EBITDA** | $4,170 | $23,193 | $(19,023) | (82)% | NobelClad Segment Results - Q3 2020 vs Q3 2019 (in thousands) | Metric | Q3 2020 | Q3 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $21,080 | $22,738 | $(1,658) | (7)% | | **Operating income** | $2,483 | $2,219 | $264 | 12% | | **Adjusted EBITDA** | $3,372 | $3,082 | $290 | 9% | [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company strengthened its liquidity through cost-containment, working capital management, and reduced capital expenditures, maintaining an undrawn credit facility and securing covenant relief - The company improved its net cash position from **$2.9 million** at March 31, 2020, to **$12.6 million** at September 30, 2020[191](index=191&type=chunk) - As of September 30, 2020, the company had an available borrowing capacity of **$50 million** under its revolving credit facility[202](index=202&type=chunk) - A June 2020 credit facility amendment waived the debt service coverage ratio for three quarters and added a minimum liquidity covenant of **$10 million**[199](index=199&type=chunk)[200](index=200&type=chunk) - The Board of Directors suspended the quarterly dividend indefinitely in April 2020 due to the uncertain economic outlook[213](index=213&type=chunk) [Item 3: Quantitative and Qualitative Disclosure about Market Risk](index=47&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) There were no material changes in the company's market risk exposures for foreign currency exchange rates and interest rates since the prior year-end report - There were **no material changes** in market risk related to foreign currency exchange rates and interest rates since the 2019 year-end report[215](index=215&type=chunk) [Item 4: Controls and Procedures](index=48&type=section&id=Item%204%3A%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO evaluated the company's disclosure controls and procedures and concluded they are **effective** as of September 30, 2020[217](index=217&type=chunk) - **No changes occurred** during the quarter that have materially affected or are reasonably likely to materially affect internal controls over financial reporting[218](index=218&type=chunk) PART II - OTHER INFORMATION [Item 1: Legal Proceedings](index=49&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is not aware of any legal proceedings or claims expected to have a material adverse effect on its business, financial condition, or operating results - The company is **not aware of any legal proceedings** that would have a material adverse effect on its business[107](index=107&type=chunk)[220](index=220&type=chunk) [Item 1A: Risk Factors](index=49&type=section&id=Item%201A%3A%20Risk%20Factors) This section updates risk factors, emphasizing the material adverse effects of the COVID-19 pandemic on business, operations, supply chain, and financial condition - The primary updated risk factor is the **adverse effect of the COVID-19 pandemic** on the company's business, operations, financial condition, cash flows, and stock price[221](index=221&type=chunk) - Impacts from COVID-19 include reduced demand for oil and gas, downward pressure on prices, and potential disruptions to the workforce, supply chain, and customer payments[223](index=223&type=chunk) - The company warns that even after the pandemic subsides, it may experience adverse impacts from a resulting economic recession or depression, and market volatility could affect its stock price and access to capital[224](index=224&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2020, the company retained common stock shares to satisfy employee tax withholding obligations related to restricted stock vesting Share Purchases in Q3 2020 | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | July 1 to July 31, 2020 | 47 | $27.60 | | August 1 to August 31, 2020 | 1,163 | $35.97 | | September 1 to September 30, 2020 | 100,320 | $36.03 | | **Total** | **101,530** | **$36.02** | - Share purchases were made to offset tax withholding obligations upon vesting of restricted stock and for participant elections in the Non-Qualified Deferred Compensation Plan[225](index=225&type=chunk)[229](index=229&type=chunk) [Item 4: Mine Safety Disclosures](index=51&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) The company's Coolspring property reported no specified health and safety violations, orders, citations, or fatalities during Q3 2020 under MSHA regulations - During Q3 2020, the company had **no reportable mine safety violations, orders, or fatalities** under the Dodd-Frank Act[231](index=231&type=chunk)

DMC Global Inc. (NASDAQ:BOOM) Q2 2020 Earnings Conference Call July 23, 2020 5:00 PM ET Company Participants Geoff High – Vice President-Investor Relations Kevin Longe – President and Chief Executive Officer Mike Kuta – Chief Financial Officer Conference Call Participants Tommy Moll – Stephens Stephen Gengaro – Stifel Taylor Zurcher – Tudor, Pickering & Holt Operator Good day, ladies and gentlemen, and welcome to the DMC Global Second Quarter 2020 Earnings Conference Call. All lines have been placed on a li ...