DMC Global Inc. (NASDAQ:BOOM) Q1 2023 Earnings Conference Call May 4, 2023 5:00 PM ET Company Participants Geoff High – Vice President-Investor Relations David Aldous – Director & Interim Co-Chief Executive Officer Mike Kuta – Interim Co-Chief Executive Officer Eric Walter – Chief Financial Officer Conference Call Participants Gerry Sweeney – ROTH Capital Patrick Ouellette – Stifel Ken Newman – Keybanc Capital Markets Operator Greetings. Welcome to the DMC Global First Quarter Earnings Call. [Operator Instr ...

Financial Performance - For the three months ended March 31, 2023, DMC Global Inc. reported a net income of $2,139,000, compared to a net loss of $4,280,000 for the same period in 2022, representing a significant turnaround[26]. - DMC Global Inc. reported a comprehensive income attributable to stockholders of $1,678,000 for the three months ended March 31, 2023, compared to a loss of $4,492,000 in the same period of 2022[26]. - Net income attributable to DMC Global Inc. stockholders for the three months ended March 31, 2023, was $909,000, compared to a net loss of $3,288,000 for the same period in 2022[79]. - Basic and diluted net loss per share attributable to DMC Global Inc. stockholders was $(0.01) for the three months ended March 31, 2023, compared to $(0.47) for the same period in 2022[79]. - Segment operating income for the three months ended March 31, 2023, was $18,922,000, significantly up from $1,560,000 in the same period of 2022[105]. Balance Sheet and Liabilities - Total current liabilities increased to $161,951,000 as of March 31, 2023, up from $128,050,000 at the end of 2022, reflecting a 26.5% increase[22]. - The company's total liabilities reached $334,204,000 as of March 31, 2023, compared to $310,809,000 at the end of 2022, indicating an increase of 7.5%[22]. - The company’s long-term debt decreased to $111,686,000 as of March 31, 2023, down from $117,798,000 at the end of 2022, reflecting a reduction of 5.0%[22]. - Total debt as of March 31, 2023, was $126,686,000, down from $132,798,000 as of December 31, 2022[93]. - Deferred compensation obligations that will be settled in cash amounted to $17,222,000 as of March 31, 2023, down from $15,292,000 as of December 31, 2022[83]. Cash Flow and Operating Activities - Cash and cash equivalents at the end of the period were $19,647,000, up from $15,376,000 at the end of March 31, 2022, showing a year-over-year increase of 27.5%[31]. - The company experienced a net cash provided by operating activities of $7,065,000 for the three months ended March 31, 2023, compared to a net cash used of $4,584,000 in the same period of 2022[31]. Equity and Stockholder Information - Stockholders' equity as of March 31, 2023, was $382,277,000, a slight increase from $380,647,000 at the end of 2022[22]. - DMC Global Inc. had a total of 20,399,461 common shares issued as of March 31, 2023, an increase from 20,140,654 shares at the end of 2022[28]. - The company incurred $5,027,000 in stock-based compensation for the three months ended March 31, 2023, compared to $2,358,000 in the same period of 2022, indicating a rise of approximately 112%[31]. Inventory and Receivables - Total inventories as of March 31, 2023, amounted to $179,545 million, with raw materials accounting for $42,502 million[61]. - As of March 31, 2023, the allowance for doubtful accounts decreased to $772 million from $925 million on December 31, 2022, reflecting a provision for expected credit losses of $32 million[41]. - During the three months ended March 31, 2023, net recoveries of accounts receivable amounted to $154 million[40]. Future Plans and Strategies - The company plans to continue focusing on operational efficiency and market expansion strategies to drive future growth[37]. - DMC Global Inc. plans to continue its focus on market expansion and product development, although specific new products or technologies were not detailed in the report[37]. Compliance and Financial Covenants - As of March 31, 2023, the company was in compliance with all financial covenants and other provisions of its debt agreements[97]. - The maximum leverage ratio permitted by the credit facility is 3.25 to 1.0 through the quarter ended March 31, 2023, and will decrease to 3.0 to 1.0 from the quarter ended June 30, 2023[96]. - The minimum debt service coverage ratio permitted under the credit facility is 1.35 to 1.0[125]. Miscellaneous - The company has established a Non-Qualified Deferred Compensation Plan, allowing participants to defer a portion of their salary and bonuses on a tax-deferred basis[50]. - The company recognizes deferred tax assets and liabilities for expected future income tax consequences, with a valuation allowance recorded when realization is not likely[46]. - The company continues to permanently reinvest the earnings of its international subsidiaries, avoiding U.S. income taxes on undistributed foreign income[129].

NobelClad revenues are affected both by the demand for NobelClad's explosion-welded cladding services and the base price of metal used in explosion-welded cladding operations. The explosion-welded cladding market is dependent upon sales of products for use by customers in a limited number of heavy industries, including oil and gas, chemicals and petrochemicals, alternative energy, hydrometallurgy, aluminum production, shipbuilding, rail car manufacturing, power generation, and industrial refrigeration. Thes ...

Financial Data and Key Metrics Changes - Fourth quarter sales were $175.1 million, flat compared to the third quarter but up 36% year-over-year [16] - Consolidated operating income was $10.6 million, with adjusted net income of $4.3 million or $0.22 per diluted share, down from $6.7 million or $0.35 per diluted share in the previous quarter [9] - Adjusted EBITDA attributable to DMC was $19.6 million, down 10% sequentially but up over 150% year-over-year [18] Business Line Data and Key Metrics Changes - DynaEnergetics reported fourth quarter sales of $77.6 million, up 10% sequentially and over 50% year-over-year, driven by a 56% growth in DynaStage system units sold [42] - Arcadia's fourth quarter sales were $74.4 million, down 8% sequentially but up 31% compared to the prior year [16] - NobelClad sales were $23.1 million, slightly down sequentially but up 9% year-over-year, driven by increased average selling prices [8] Market Data and Key Metrics Changes - DynaEnergetics experienced strong demand in North America, with new customers adopting the DynaStage system [28] - NobelClad's order backlog increased 16% sequentially, reaching a 10-year high of $55.5 million, driven by demand from the liquefied natural gas industry [41] Company Strategy and Development Direction - The company aims to improve returns for stakeholders by focusing on operational excellence and strategic investments [39] - Key priorities include accelerating the integration of Arcadia, strengthening DynaEnergetics' profitability, and improving cash flow through targeted cost reductions [39] - The introduction of new products and operational efficiencies is expected to enhance margins in DynaEnergetics [40] Management's Comments on Operating Environment and Future Outlook - Management noted a strong start to 2023, with expectations for improved margins and sales growth across all business lines [28][40] - The company anticipates stable pricing in the DynaEnergetics segment and plans to introduce new products to enhance market competitiveness [31] - Management expressed confidence in achieving historical margins for Arcadia as raw material prices stabilize [70] Other Important Information - The company ended the fourth quarter with cash of $25.1 million, down from $30.8 million a year earlier, and generated free cash flow of $26.4 million [46] - First quarter sales are expected to be in the range of $168 million to $178 million, with gross margins anticipated to improve sequentially [47][48] Q&A Session Summary Question: Insights on DynaEnergetics business and market share - Management reported a strong start to the year with new customers adopting the DynaStage system, indicating positive market conditions [28][29] Question: Pricing stability and margin improvement - Pricing is stable, and management is working on new products to improve margins, with expectations for gradual margin increases throughout the year [31][32] Question: Inventory write-offs and future inventory management - Inventory cleanup was conducted in Q4, and management is confident in recovering margins quickly, with better working capital management expected in 2023 [65] Question: SG&A expenses and operational leverage - SG&A expenses are expected to decline as a percentage of sales, with plans to improve operational efficiencies [75][67] Question: Cost-benefit analysis of ongoing litigation - The company will continue to protect its intellectual property while being more selective in litigation, expecting a decrease in legal expenses [93]

Financial Data and Key Metrics Changes - Consolidated third quarter sales reached a record $174.5 million, up 5% from the second quarter and up 160% year-over-year [6] - Excluding revenues from Arcadia, third quarter sales increased 5% sequentially and 40% year-over-year [6] - Consolidated gross margin for the third quarter was 29%, down from 31% in the second quarter but up from 25% in the same quarter last year [16] - Adjusted net income attributable to DMC was $6.7 million or $0.35 per diluted share, compared to $403,000 or $0.02 per diluted share in the previous year [20] Business Line Data and Key Metrics Changes - DynaEnergetics reported third quarter sales of $70.4 million, up 4% sequentially and up 59% year-over-year [7] - Arcadia's third quarter sales were $80.7 million, up 6% sequentially and up 24% year-over-year [9] - NobelClad's third quarter sales were $23.4 million, up 7% sequentially and up 2% year-over-year [14] - DynaEnergetics achieved a gross margin of 30%, flat compared to the second quarter and up from 22% in the previous year [17] Market Data and Key Metrics Changes - DynaEnergetics' North American sales increased 6% sequentially, while international sales decreased 5% [15] - Arcadia's gross margin decreased to 30% from 34% in the second quarter due to rising aluminum costs [10] - NobelClad's rolling 12-month bookings increased to $97.7 million, up from $92.5 million at the end of the second quarter [14] Company Strategy and Development Direction - The company is focused on long-term growth and improving returns for shareholders, with investments in resources to support future growth [12][15] - Arcadia is implementing a new enterprise resource planning system and expanding its workforce in key markets [12] - The company is optimistic about the demand for its products in the Western US commercial market [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong exit to the year and a positive start to 2023, with expectations for continued demand in the energy sector [40] - The company anticipates a return to normalized gross margins in Arcadia in the first half of 2023 [34] - Management acknowledged potential challenges from rising interest rates but noted strong order input in the high-end luxury home market [44] Other Important Information - The company ended the third quarter with cash of $18.5 million, down from $30.8 million at the end of 2021, primarily due to increased working capital [21] - Fourth quarter sales are expected to be in the range of $158 million to $168 million, reflecting anticipated seasonality [22] Q&A Session Summary Question: Progress on Arcadia's geographic expansion - Management reported healthy progress in geographic expansion efforts, particularly in Houston and Dallas, which are seen as growth opportunities [28] Question: DynaEnergetics' gross margins and pricing - Management indicated that gross margins are expected to improve as slow-moving inventory is cleared and pricing strengthens in the first half of 2023 [30][31] Question: Pricing impact in Arcadia - Revenue growth in Arcadia was driven by price rather than volume, with expectations for a return to normal gross margins as inventory is sold through [34] Question: Commercial non-residential project delays - Management has not observed a slowdown in order input, attributing any delays to lead time issues rather than demand disruptions [38] Question: Competitive landscape for integrated systems - The market is shifting towards integrated systems, with the company gaining market share due to product performance and delivery reliability [42][43] Question: Impact of rising interest rates on demand - While a slowdown in the broader residential market is expected, the high-end luxury segment remains strong, and commercial demand is anticipated to lag behind [44] Question: Market misunderstanding of the company's story - Management acknowledged a transition in shareholder base and expressed confidence that execution will drive performance and valuation recognition [49][50]

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, 2022 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file numbe ...

Financial Performance - Net sales for the three months ended June 30, 2022, were $65,438,000, compared to $121,096,000 for the same period in 2021, representing a decrease of approximately 46.0%[14] - Gross profit for the six months ended June 30, 2022, was $89,005,000, a decrease from $29,884,000 in the same period of 2021, indicating a significant increase in profitability[14] - Net income attributable to DMC Global Inc. stockholders for the six months ended June 30, 2022, was $2,264,000, compared to $2,156,000 for the same period in 2021, showing a growth of approximately 5.0%[14] - The company reported a basic net income per share of $0.10 for the three months ended June 30, 2021, while for the same period in 2022, it reported a loss of $0.26 per share[14] - Comprehensive income attributable to DMC Global Inc. stockholders for the three months ended June 30, 2022, was $2,965,000, compared to $2,197,000 for the same period in 2021, an increase of approximately 35.0%[16] - Net income for the six months ended June 30, 2022, was $2,179,000, compared to $2,156,000 for the same period in 2021, reflecting a slight increase[23] - The company recorded a net income of $5,552,000 for the quarter ending June 30, 2022, compared to a net income of $2,264,000 for the quarter ending December 31, 2021[20] - Net income attributable to DMC Global Inc. stockholders for the three months ended June 30, 2022, was $5,552,000, compared to $1,724,000 for the same period in 2021, representing a significant increase[47] - Basic and diluted EPS for the three months ended June 30, 2022, was $0.20, up from $0.10 in the same period of 2021[47] Assets and Liabilities - Total current assets increased to $268,728,000 as of June 30, 2022, compared to $239,196,000 as of December 31, 2021, reflecting a growth of approximately 12.4%[12] - Total liabilities rose to $311,304,000 as of June 30, 2022, compared to $306,691,000 as of December 31, 2021, marking an increase of about 1.0%[12] - Cash and cash equivalents decreased to $11,819,000 as of June 30, 2022, from $30,810,000 as of December 31, 2021, indicating a decline of approximately 61.6%[12] - The total stockholders' equity decreased to $355,055,000 as of June 30, 2022, from $360,525,000 as of December 31, 2021, representing a decline of about 1.5%[12] - As of June 30, 2022, DMC Global Inc. reported total stockholders' equity of $355,055,000, an increase from $351,495,000 as of March 31, 2022[18] - The company had treasury stock at cost amounting to $(597,758,000) as of June 30, 2022, indicating a significant investment in its own shares[20] - Total assets acquired from Arcadia amounted to $515,262,000, with liabilities assumed totaling $31,312,000[66] Cash Flow and Investments - Net cash provided by operating activities was $2,536,000 for the six months ended June 30, 2022, compared to a cash outflow of $6,021,000 in 2021, indicating improved operational efficiency[23] - Cash used in investing activities was $5,679,000 for the six months ended June 30, 2022, a significant reduction from $121,433,000 in 2021, reflecting a shift in investment strategy[23] - The company made repayments of $7,500,000 on term loans during the period, indicating a focus on reducing debt[23] Acquisitions and Growth Strategy - The company completed the acquisition of a 60% controlling interest in Arcadia Products, LLC, for total consideration of $290,370,000, which included $261,000,000 in cash and 551,458 shares of common stock[62][66] - The acquisition of Arcadia is part of the company's strategy to build a diversified portfolio of industry-leading businesses with differentiated products and services[64] - DynaEnergetics plans additional price increases in the second half of 2022 to offset rising labor and material costs[153] - Arcadia is focusing on increasing manufacturing throughput and expects new finishing capacity to be operational next year[155] Revenue and Sales Performance - For the three months ended June 30, 2022, net sales were $165,831, a significant increase from $65,438 in the same period of 2021, representing a growth of approximately 153.5%[112] - Arcadia segment reported net sales of $76,462 for the three months ended June 30, 2022, while DynaEnergetics and NobelClad reported $67,517 and $21,852 respectively[112] - DynaEnergetics' net sales for the six months ended June 30, 2022, were $116,404, up from $80,440 in the same period of 2021, reflecting a growth of approximately 44.7%[116] - Consolidated sales for the second quarter of 2022 were $165,831, with a 37% increase to $89,369 when excluding the Arcadia acquisition compared to the second quarter of 2021[143] Expenses and Profitability - Consolidated gross profit was $52,099 in Q2 2022, representing a gross profit percentage of 31.4%, up from 25.9% in Q2 2021, primarily due to the acquisition of Arcadia[147][164] - Consolidated selling, general and administrative expenses increased to $29,361 in Q2 2022 from $14,015 in Q2 2021, with Arcadia contributing $11,372 to this increase[148] - General and administrative expenses increased by $20,134 for the six months ended June 30, 2022, compared to the same period in 2021, with the Arcadia acquisition contributing $13,555 to this increase[180] - Interest expense, net for the six months ended June 30, 2022, was $2,287, significantly higher than $216 in the same period in 2021, due to a $150,000 credit facility related to the Arcadia acquisition[184] Market and Economic Conditions - Future sales to Russia have been indefinitely suspended due to the ongoing conflict in Ukraine[118] - The company anticipates filling most backlog orders within the following 12 months, indicating a positive outlook for revenue generation[139] - The effective tax rate varies due to differences in foreign tax rates, which range from 20% to 33%[105] - The company continues to permanently reinvest the earnings of its international subsidiaries, avoiding U.S. income taxes on undistributed foreign income[109]

DMC Global Inc. (NASDAQ:BOOM) Q1 2022 Earnings Conference Call May 5, 2022 5:00 PM ET Company Participants Geoff High – Vice President, Investor Relations & Corporate Communications Kevin Longe – President and Chief Executive Officer Mike Kuta – Chief Financial Officer Conference Call Participants Stephen Gengaro – Stifel Cameron Lochridge – Stephens Ken Newman – KeyBanc Jim Brilliant – Century Management Operator Good afternoon, ladies and gentlemen. And welcome to the DMC Global First Quarter Earnings Cal ...

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 March 31, 2022 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file number 00 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO | --- | --- | --- | |--------------------------------------------------|----------------------------------------------------------------------------------------|------------- ...