DMC (US:BOOM)2020-02-24 12:43Financial Performance - Net sales for the year 2019 reached $397,550,000, a 21.8% increase from $326,429,000 in 2018[347]. - Gross profit for 2019 was $144,923,000, up from $110,695,000 in 2018, reflecting a gross margin improvement[347]. - Operating income increased to $58,425,000 in 2019, compared to $37,424,000 in 2018, marking a 55.9% growth[347]. - Net income for 2019 was $34,041,000, a 11.5% increase from $30,473,000 in 2018[349]. - Basic net income per share rose to $2.29 in 2019, compared to $2.05 in 2018, indicating a 11.7% increase[347]. - Total comprehensive income for 2019 was $43,252,000, significantly higher than $26,278,000 in 2018[349]. - Total costs and expenses for 2019 were $86,498,000, an increase from $73,271,000 in 2018, primarily due to restructuring expenses[347]. - The company reported a restructuring expense of $19,503,000 in 2019, compared to $1,114,000 in 2018, indicating significant operational changes[347]. - Net cash provided by operating activities increased significantly to $64,594 million in 2019 from $27,638 million in 2018, representing a growth of 133.4%[353]. Assets and Liabilities - Total assets increased to $277,421,000 in 2019 from $240,418,000 in 2018, representing a growth of approximately 15.4%[343]. - Total current liabilities increased to $71,423,000 in 2019 from $64,565,000 in 2018, reflecting an increase of approximately 13.7%[343]. - The company’s long-term debt decreased to $11,147,000 in 2019 from $38,230,000 in 2018, a reduction of approximately 70.8%[343]. - The company’s total liabilities decreased slightly to $105,280,000 in 2019 from $106,132,000 in 2018[343]. - The company had total outstanding borrowings of $14,875 million as of December 31, 2019, down from $42,128 million in 2018[417]. - The company recognized deferred debt issuance costs of $603 million and $773 million as of December 31, 2019, and 2018, respectively[424]. Revenue Recognition and Taxation - The company adopted a new revenue recognition standard on January 1, 2018, with no cumulative financial statement effect noted[386]. - Current income tax expense for 2019 was $18,372 million, significantly higher than $7,787 million in 2018, reflecting a substantial increase in taxable income[444]. - The provision for income taxes in 2019 was $22,661 million, compared to $4,134 million in 2018, indicating a notable rise in tax obligations[449]. - The Tax Cuts and Jobs Act reduced the U.S. federal corporate tax rate from 35% to 21%, impacting the company's tax provision calculations[449]. Operational Risks - The company is dependent on a relatively small number of large projects and customers for a significant portion of its net sales, which could adversely affect cash flow if contracts are not completed on time[140]. - The company is susceptible to the cyclicality of the steel industry, which is affected by supply and demand factors and general economic conditions[141]. - The company relies on suppliers for components and raw materials, and disruptions in supply could adversely affect operations[135]. - The company is exposed to litigation risks that may result in substantial legal fees and could adversely affect its financial position[173]. - Cybersecurity incidents pose risks to the company's information technology systems, which could disrupt operations and lead to financial losses[180]. Compliance and Regulation - The company is subject to extensive government regulation, and failure to comply could result in significant liabilities and restrictions on business operations[148]. - The company faces risks related to compliance with the Foreign Corrupt Practices Act and other anti-bribery laws, which could adversely affect its financial condition[162]. - The company is subject to extensive environmental, health, and safety regulations in the U.S. and other countries, which could lead to significant liabilities if not complied with[161]. Market and Economic Factors - The U.S. government imposed tariffs of 25% on steel and 10% on aluminum in 2018, impacting the cost of imported steel used in the company's products[143]. - The company is exposed to foreign currency risk primarily related to the euro, due to the percentage of U.S. dollar revenue derived from countries where the euro is the functional currency[134]. - The company’s operations are subject to political and economic instability in the countries where it operates, which could adversely affect financial condition[159]. Research and Development - Total research and development costs reached $8,450 million in 2019, up from $7,210 million in 2018, reflecting a growth of approximately 17.2%[397]. - Research and development costs for DynaEnergetics increased to $7,057 million in 2019 from $5,932 million in 2018, while NobelClad's R&D costs rose to $1,393 million from $1,278 million[397]. Stock and Compensation - The company declared a dividend payable of $1,866,000 in 2019, compared to $295,000 in 2018, showing a substantial increase in dividend distribution[343]. - The company granted 75,531 RSAs in 2019 with an average grant date fair value of $48.74[432]. - Total stock-based compensation expense for 2019 was $159 million, up from $121 million in 2018, a 31.4% increase[435].