DMC (US:BOOM)2024-08-01 20:09Financial and Operational Highlights DMC Global's Q2 2024 performance exceeded guidance with $171.2 million sales and $19.4 million adjusted EBITDA, driven by strong segment execution Second Quarter 2024 Performance Overview DMC Global's Q2 2024 sales of $171.2 million and adjusted EBITDA of $19.4 million surpassed guidance, reflecting strong segment execution Q2 2024 Key Financial Metrics | Metric | Q2 2024 (Millions USD) | Q2 2023 (Millions USD) | YoY Change (%) | Q1 2024 (Millions USD) | QoQ Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | 171.2 | 188.7 | -9 | 166.9 | +3 | | Net Income | 6.3 | 17.5 | -64 | 2.3 | +171 | | Adj. Net Income (to DMC) | 5.7 | 14.1 | -60 | 4.2 | +36 | | Adj. Diluted EPS (USD) | 0.29 | 0.72 | -60 | 0.21 | +38 | | Adj. EBITDA (to DMC) | 19.4 | 31.8 | -39 | 16.7 | +16 | | Total Adj. EBITDA | 24.4 | 38.4 | -36 | 19.0 | +28 | - All three business segments (Arcadia, DynaEnergetics, NobelClad) delivered on key financial and operational objectives, leading to consolidated sales and adjusted EBITDA that surpassed the high end of the company's guidance2 - The company's management remains focused on evaluating options to drive improved value for DMC's stockholders5 Business Segment Performance This section details the individual financial and operational performance of DMC Global's Arcadia, DynaEnergetics, and NobelClad segments Arcadia (Architectural Building Products) Arcadia's Q2 2024 sales of $69.7 million and Adjusted EBITDA margin of 17.8% exceeded expectations, driven by operational efficiencies despite weak markets Arcadia Q2 2024 Financials | Metric | Q2 2024 (Millions USD) | Q1 2024 (Millions USD) | Q2 2023 (Millions USD) | | :--- | :--- | :--- | :--- | | Net Sales | 69.7 | 61.9 | 79.2 | | Adj. EBITDA (before NCI) | 12.4 | 5.9 | 16.5 | | Adj. EBITDA Margin (%) | 17.8 | 9.5 | 20.8 | - Gross margin improved significantly by 600 basis points sequentially to 33.2%, nearing the 34.7% reported in Q2 2023, attributed to higher sales on fixed overhead and cost streamlining efforts36 DynaEnergetics (Energy Products) DynaEnergetics' Q2 2024 sales of $76.2 million declined due to softer U.S. onshore demand, with Adjusted EBITDA margin contracting to 11.5% DynaEnergetics Q2 2024 Financials | Metric | Q2 2024 (Millions USD) | Q1 2024 (Millions USD) | Q2 2023 (Millions USD) | | :--- | :--- | :--- | :--- | | Net Sales | 76.2 | 78.1 | 84.8 | | Adj. EBITDA | 8.8 | 10.5 | 19.5 | | Adj. EBITDA Margin (%) | 11.5 | 13.5 | 23.0 | - The sales decline is linked to a 4% sequential drop in U.S. well completions, with anticipated continued softness in H2 2024 but expected EBITDA margin improvements from automation and product enhancements34 NobelClad (Composite Metals) NobelClad's Q2 2024 sales of $25.2 million saw an improved Adjusted EBITDA margin of 22.7%, with backlog growing to $64 million due to a record petrochemical order NobelClad Q2 2024 Financials | Metric | Q2 2024 (Millions USD) | Q1 2024 (Millions USD) | Q2 2023 (Millions USD) | | :--- | :--- | :--- | :--- | | Net Sales | 25.2 | 26.8 | 24.8 | | Adj. EBITDA | 5.7 | 5.9 | 5.4 | | Adj. EBITDA Margin (%) | 22.7 | 21.9 | 21.8 | - The order backlog increased to $64 million from $52 million at the end of Q1 2024, indicating strong future demand, with a rolling 12-month book-to-bill ratio of 1.048 Financial Outlook This section provides DMC Global's consolidated sales and Adjusted EBITDA guidance for Q3 and full-year 2024, along with key financial estimates Third Quarter and Full-Year 2024 Guidance DMC Global projects Q3 2024 consolidated sales between $158 million and $168 million, with Adjusted EBITDA attributable to DMC between $15 million and $18 million Q3 2024 Guidance | Measure | Expected Range (Millions USD) | | :--- | :--- | | Sales | | | DMC Consolidated | 158 - 168 | | Arcadia | 64 - 68 | | DynaEnergetics | 70 - 74 | | NobelClad | 24 - 26 | | Adj. EBITDA (to DMC) | 15 - 18 | Full-Year 2024 Guidance on Select Items | Measure | Expected Range | | :--- | :--- | | Depreciation & Amortization (Millions USD) | 35 - 36 | | Interest Expense (Millions USD) | 8 - 9 | | Annualized Effective Tax Rate (%) | 30 - 32 | | Capital Expenditures (Millions USD) | 16 - 20 | Consolidated Financial Statements This section presents DMC Global's condensed consolidated statements of operations, balance sheets, and cash flows for the reported periods Condensed Consolidated Statements of Operations DMC Global reported Q2 2024 net sales of $171.2 million and net income of $6.3 million, with six-month net sales of $338.0 million and net income of $8.6 million Q2 Statement of Operations Highlights (in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Sales | $171,179 | $188,664 | | Gross Profit | $46,413 | $61,890 | | Operating Income | $11,685 | $26,997 | | Net Income | $6,293 | $17,526 | | Net Income (to DMC) | $4,012 | $13,703 | Six-Month Statement of Operations Highlights (in thousands) | Line Item | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net Sales | $338,048 | $373,005 | | Gross Profit | $88,765 | $114,101 | | Operating Income | $18,373 | $34,217 | | Net Income | $8,612 | $19,665 | | Net Income (to DMC) | $6,575 | $14,612 | Condensed Consolidated Balance Sheets As of June 30, 2024, DMC Global's total assets were $869.5 million, with cash of $14.6 million and total debt of $84.1 million Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $14,567 | $31,040 | | Total current assets | $320,875 | $326,812 | | Total assets | $869,485 | $884,495 | | Total current liabilities | $126,678 | $126,461 | | Long-term debt | $81,612 | $100,851 | | Total stockholders' equity | $415,989 | $410,295 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash from operating activities was $15.8 million, with $7.2 million from investing and $39.7 million used in financing Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $15,783 | $18,544 | | Net cash (used in)/from investing activities | $7,204 | ($7,536) | | Net cash used in financing activities | ($39,727) | ($18,270) | | Net decrease in cash | ($16,473) | ($6,420) | Non-GAAP Financial Measures and Reconciliations This section defines and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income, used to assess operating performance Use and Definition of Non-GAAP Measures DMC Global uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income to provide a clearer view of operating performance by excluding non-recurring items - Key non-GAAP measures disclosed include EBITDA, Adjusted EBITDA (total and attributable to DMC), Adjusted Net Income, Adjusted Diluted EPS, Net Debt, and Free Cash Flow1112 - Management believes these measures are useful for comparing operating results across periods and against peer companies, as they moderate the impact of capital structure and non-recurring items1314 Reconciliation of Net Income to Adjusted EBITDA In Q2 2024, GAAP Net Income of $6.3 million was reconciled to a total Adjusted EBITDA of $24.4 million, with $19.4 million attributable to DMC Q2 2024 Net Income to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q2 2024 | | :--- | :--- | | Net Income | $6,293 | | Interest, Taxes, D&A | $11,546 | | EBITDA | $20,139 | | Stock-based compensation | $1,676 | | Strategic review expenses | $2,020 | | Other adjustments | $563 | | Adjusted EBITDA (Total) | $24,398 | | Less: NCI portion | ($4,978) | | Adjusted EBITDA (to DMC) | $19,420 | Reconciliation of Net Income to Adjusted Net Income Q2 2024 Net Income attributable to DMC of $4.0 million was adjusted to an Adjusted Net Income of $5.7 million, or $0.29 per diluted share Q2 2024 Adjusted Net Income Reconciliation (in thousands, except per share) | Line Item | Amount | Per Share | | :--- | :--- | :--- | | Net income attributable to DMC | $4,012 | $0.20 | | Strategic review expenses, net of tax | $1,538 | $0.08 | | Restructuring expenses, net of tax | $125 | $0.01 | | As adjusted | $5,675 | $0.29 |