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 ...

PART I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Q1 2024 financials show decreased net sales and gross profit, increased net income, improved operating cash flow, and net cash outflow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) [Condensed Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interest](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20and%20Redeemable%20Noncontrolling%20Interest) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Key Financial Highlights (Three Months Ended March 31) | Metric | 2024 (Thousands) | 2023 (Thousands) | Change (Thousands) | % Change | |:---|:---|:---|:---|:---| | Net Sales | $166,869 | $184,341 | $(17,472) | -9% | | Gross Profit | $42,352 | $52,211 | $(9,859) | -19% | | Operating Income | $6,688 | $7,220 | $(532) | -7% | | Net Income attributable to DMC Global Inc. | $2,563 | $909 | $1,654 | 182% | | Net Cash Provided by Operating Activities | $13,440 | $7,065 | $6,375 | 90% | | Net Cash Provided by (Used in) Investing Activities | $9,651 | $(2,226) | $11,877 | -533% | | Net Cash Used in Financing Activities | $(34,296) | $(11,007) | $(23,289) | 212% | Balance Sheet Snapshot (As of) | Metric | March 31, 2024 (Thousands) | December 31, 2023 (Thousands) | |:---|:---|:---| | Total Assets | $860,020 | $884,495 | | Total Liabilities | $263,026 | $286,440 | | Redeemable Noncontrolling Interest | $187,080 | $187,760 | | Total Stockholders' Equity | $409,914 | $410,295 | | Cash and Cash Equivalents | $20,444 | $31,040 | | Total Debt (net of issuance costs) | $88,009 | $115,851 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, disclosures, a credit agreement amendment, legal proceedings, and a strategic review for two business segments [1. BASIS OF PRESENTATION](index=10&type=section&id=1.%20BASIS%20OF%20PRESENTATION) [2. SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=2.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) [3. INVENTORIES](index=15&type=section&id=3.%20INVENTORIES) [4. PURCHASED INTANGIBLE ASSETS](index=15&type=section&id=4.%20PURCHASED%20INTANGIBLE%20ASSETS) [5. CONTRACT LIABILITIES](index=16&type=section&id=5.%20CONTRACT%20LIABILITIES) [6. LEASES](index=16&type=section&id=6.%20LEASES) [7. DEBT](index=17&type=section&id=7.%20DEBT) [8. INCOME TAXES](index=18&type=section&id=8.%20INCOME%20TAXES) [9. BUSINESS SEGMENTS](index=18&type=section&id=9.%20BUSINESS%20SEGMENTS) [10. DERIVATIVE INSTRUMENTS](index=21&type=section&id=10.%20DERIVATIVE%20INSTRUMENTS) [11. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=11.%20COMMITMENTS%20AND%20CONTINGENCIES) [12. STRATEGIC REVIEW EXPENSES](index=22&type=section&id=12.%20STRATEGIC%20REVIEW%20EXPENSES) - The Company's Condensed Consolidated Financial Statements are unaudited and should be read in conjunction with the Annual Report on Form **10**-K for the year ended December **31**, **2023**[44](index=44&type=chunk) - A First Amendment to the credit agreement was executed in February **2024**, increasing the maximum commitment amount from **$200,000** to **$300,000**, including revolving loans, a term loan, and a delayed draw term loan facility[128](index=128&type=chunk)[248](index=248&type=chunk) - The Board of Directors initiated a review of strategic alternatives for the DynaEnergetics and NobelClad segments, incurring **$2,169** in strategic review expenses during Q**1** **2024**, primarily for professional service fees and employee retention compensation[120](index=120&type=chunk)[219](index=219&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - Arcadia Products settled wage and hour class action (PAGA) claims for **$375,000** in April **2024**, with the Company indemnified for the liability[149](index=149&type=chunk)[156](index=156&type=chunk) - An environmental matter involving alleged Clean Water Act violations at Arcadia Products facilities was initiated by Los Angeles Waterkeeper, with a complaint filed in April **2024**[157](index=157&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Consolidated sales decreased **9%** in Q**1** **2024**, gross profit percentage declined, but net income increased due to lower operating expenses, with strong liquidity maintained [General](index=23&type=section&id=General) [Factors Affecting Results](index=23&type=section&id=Factors%20Affecting%20Results) [Outlook](index=24&type=section&id=Outlook) [Use of Non-GAAP Financial Measures](index=24&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) [Consolidated Results of Operations](index=26&type=section&id=Consolidated%20Results%20of%20Operations) [Business Segment Financial Information](index=29&type=section&id=Business%20Segment%20Financial%20Information) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) [Critical Accounting Estimates](index=34&type=section&id=Critical%20Accounting%20Estimates) - Consolidated sales decreased by **9%** in Q**1** **2024** to **$166,869**, primarily due to lower sales at Arcadia Products and DynaEnergetics[170](index=170&type=chunk)[194](index=194&type=chunk)[222](index=222&type=chunk) - Consolidated gross profit percentage declined to **25.4%** in Q**1** **2024** from **28.3%** in Q**1** **2023**, mainly due to margin declines at DynaEnergetics and lower absorption of fixed manufacturing overhead costs[180](index=180&type=chunk)[187](index=187&type=chunk)[222](index=222&type=chunk) - SG&A expenses decreased by **$10,520** (**40%**) in Q**1** **2024**, largely due to the absence of nonrecurring CEO transition expenses and patent infringement litigation costs present in Q**1** **2023**[173](index=173&type=chunk)[223](index=223&type=chunk) - The company's leverage ratio was **1.0** to **1.0** as of March **31**, **2024**, well below the maximum permitted ratio of **3.0** to **1.0**, indicating strong financial health[174](index=174&type=chunk)[249](index=249&type=chunk) - Net cash provided by operating activities increased to **$13,440** in Q**1** **2024** from **$7,065** in Q**1** **2023**, driven by improved working capital impacts[41](index=41&type=chunk)[252](index=252&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=34&type=section&id=Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) No material changes in market risk exposures for foreign currency and interest rates were reported compared to the **2023** Annual Report - No material changes in market risk for foreign currency exchange rates and interest rates from the **2023** Annual Report on Form **10**-K[279](index=279&type=chunk) [Controls and Procedures](index=34&type=section&id=Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March **31**, **2024**, with no material changes to internal controls over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of March **31**, **2024**[256](index=256&type=chunk) - No material changes occurred in internal controls over financial reporting during the quarter[257](index=257&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note **11** for details on legal proceedings, including wage and hour matters and an environmental matter - Legal proceedings information is detailed in Note **11** to the Condensed Consolidated Financial Statements[282](index=282&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No significant changes to risk factors were identified compared to the Company's **2023** Annual Report on Form **10**-K - No significant changes in risk factors from the Annual Report on Form **10**-K for the year ended December **31**, **2023**[283](index=283&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Common stock was retained as treasury shares in Q**1** **2024** to satisfy tax withholding for equity incentive plans and deferred compensation, and for diversification - Shares of common stock were retained as treasury shares to offset tax withholding obligations from equity incentive plans and deferred compensation, and due to diversification of deferred equity awards[260](index=260&type=chunk) Shares Purchased During Q1 2024 | Period | Total Number of Shares Purchased | |:---|:---| | January 1 to January 31, 2024 | 20,782 | | February 1 to February 29, 2024 | 5,010 | | March 1 to March 31, 2024 | 28,732 | | **Total** | **54,524** | [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - No defaults upon senior securities occurred during the quarter ended March **31**, **2024**[261](index=261&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No specified health and safety violations, orders, citations, assessments, legal actions, or mining-related fatalities were reported for Q**1** **2024** - No specified health and safety violations, orders, citations, related assessments, legal actions, or mining-related fatalities were reported for Q**1** **2024**[284](index=284&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No Rule **10**b**5**-**1** or non-Rule **10**b**5**-**1** trading arrangements were adopted or terminated by directors or officers during Q**1** **2024** - No Rule **10**b**5**-**1** or non-Rule **10**b**5**-**1** trading arrangements were adopted or terminated by directors or officers during the quarter[262](index=262&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Exhibits include a retention agreement, CEO and CFO certifications (SOX **302** and **906**), and XBRL formatted financial statements - Exhibits include a Retention Agreement, CEO and CFO certifications (Sections **302** and **906**), and XBRL formatted financial statements[263](index=263&type=chunk)[291](index=291&type=chunk) [Signatures](index=36&type=section&id=Signatures) The report is signed by the Registrant's Chief Accounting Officer and Chief Financial Officer, dated May **2**, **2024** - The report is signed by Brett Seger, Chief Accounting Officer, and Eric V. Walter, Chief Financial Officer, on May **2**, **2024**[167](index=167&type=chunk)[287](index=287&type=chunk)

FOR IMMEDIATE RELEASE: CONTACT: Geoff High, Vice President of Investor Relations 303-604-3924 • First quarter sales were $166.9 million, down 9% vs. Q1 2023 • Net income was $2.3 million, while net income attributable to DMC was $2.6 million • Adjusted net income attributable to DMC* was $4.2 million versus $6.1 million in Q1 2023 • Adjusted diluted EPS attributable to DMC* was $0.21 versus $0.32 in Q1 2023 • Adjusted EBITDA* attributable to DMC was $16.7 million, down 17% vs. Q1 2023 • Total adjusted EBITD ...

BROOMFIELD, Colo., April 17, 2024 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) will announce its 2024 first quarter financial results after the stock market closes on Thursday, May 2, 2024. Following the earnings release, executive management will host a conference call and simultaneous webcast. The conference call will begin at 5 p.m. Eastern (3 p.m. Mountain) and will be accessible by dialing 877-407-5783 (or +1 201-689-8782 for international callers). Investors are invited to listen to the webcast ...

BROOMFIELD, Colo., April 02, 2024 (GLOBE NEWSWIRE) -- DMC Global Inc. (NASDAQ:BOOM) today published its Annual Letter to Stakeholders from President and CEO Michael Kuta. The letter is available HERE, or under "Company Info" on the INVESTORS page of DMC's website. About DMC GlobalDMC 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 ...

BROOMFIELD, Colo., March 15, 2024 (GLOBE NEWSWIRE) -- DMC Global Inc. (NASDAQ:BOOM) today announced that the Company has entered into a cooperation agreement (the "Cooperation Agreement") with Bradley L. Radoff and his affiliate (the "Radoff Parties"), pursuant to which the Company and the Radoff Parties will identify and mutually agree to appoint a new independent director to the board of directors of DMC (the "Board") with expertise and experience in the building products sector. Pursuant to the terms of ...

DMC Global Inc. (NASDAQ:BOOM) Q4 2023 Earnings Call Transcript February 22, 2024 5:00 PM ET Company Participants Geoff High - VP of IR Michael Kuta - CEO Eric Walter - CFO Conference Call Participants Ken Newman - KeyBanc Capital Markets Alec Scheibelhoffer - Stifel Operator Greetings. Welcome to the DMC Global Fourth Quarter and Full Year Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I will ...

Financial Highlights - Q4 2023 sales were $174 million[7], with adjusted EBITDA attributable to DMC at $19.6 million[7], flat compared to Q4 2022[7] - Consolidated gross margin was 26.1%[7] - Total adjusted EBITDA, inclusive of NCI, increased by 4% year-over-year[7] - Free cash flow was $15 million[20] Business Segment Performance - Arcadia's sales were $68 million[8], with adjusted EBITDA of $9 million, representing 13.6% of sales[8] - DynaEnergetics' sales were $75 million[8], with adjusted EBITDA of $9 million, representing 12.3% of sales[8] - NobelClad's sales were $31 million[8], with adjusted EBITDA of $8 million, representing 24.7% of sales[8]; NobelClad achieved its highest sales in a decade[20] Financial Strength and Guidance - Net debt was $72 million[23], with a net debt leverage ratio of 0.78x[23] - Q1 2024 sales guidance: DMC Consolidated $168 million - $178 million, Arcadia $67 million - $71 million, DynaEnergetics $77 million - $81 million, NobelClad $24 million - $26 million[33] - Q1 2024 adjusted EBITDA attributable to DMC is expected to be $15 million - $20 million[33]

For the quarter ended December 2023, DMC Global (BOOM) reported revenue of $174.04 million, down 0.6% over the same period last year. EPS came in at $0.26, compared to $0.22 in the year-ago quarter.The reported revenue represents a surprise of +1.90% over the Zacks Consensus Estimate of $170.8 million. With the consensus EPS estimate being $0.33, the EPS surprise was -21.21%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine ...

DMC Global (BOOM) came out with quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.33 per share. This compares to earnings of $0.22 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -21.21%. A quarter ago, it was expected that this diversified holding company would post earnings of $0.54 per share when it actually produced earnings of $0.50, delivering a surprise of -7.41%.Over the last four quarte ...