DMC (US:BOOM)2024-02-22 16:00Sales Performance - DynaEnergetics' sales increased by 19% to $315,026 in 2023, driven by a 28% increase in international sales and an 18% increase in North American sales[435] - Net sales increased by 10% to $719,188 for the twelve months ended December 31, 2023, driven by DynaEnergetics' DS perforating systems and NobelClad's energy and petrochemical markets[468] - DynaEnergetics total revenue increased to $315.026 million in 2023 from $264.327 million in 2022, with significant growth in the United States ($245.391 million in 2023 vs. $211.025 million in 2022)[802] - Arcadia Products reported sales of $298,909 in 2023, consistent with $299,527 in 2022[462] Expenses and Costs - Consolidated SG&A expenses rose to $124,442 in 2023, up from $118,349 in 2022, primarily due to $4,343 in CEO transition expenses and higher compensation costs[436] - General and administrative expenses decreased by $3,821 in 2023, primarily due to lower patent litigation costs of $3,019[486] - Research and development costs were $6,864 in 2023, slightly higher than $6,781 in 2022 but lower than $7,240 in 2021[733] - Restructuring expenses totaled $3,766 in 2023, including $1,871 in asset impairments at DynaEnergetics and $440 at NobelClad[766] - Total restructuring expenses for 2023 were $3,766, primarily related to asset impairments and employee severance[741] - Unallocated corporate expenses, including restructuring and asset impairments, increased by $3,584 in 2023, primarily due to $2,471 in software asset impairments and $1,295 in cost reduction initiatives at DynaEnergetics[470] - Restructuring expenses and asset impairments totaled $17,466, with unallocated stock-based compensation at $8,544[826] Assets and Liabilities - Current assets increased to $326,812 in 2023 from $286,872 in 2022, driven by higher cash and cash equivalents ($31,040 vs. $25,144) and accounts receivable ($106,205 vs. $94,415)[644] - Property, plant, and equipment net value slightly decreased to $129,267 in 2023 from $129,445 in 2022, despite an increase in gross property value to $223,683 from $211,277[644] - Goodwill remained unchanged at $141,725 in 2023, while purchased intangible assets decreased to $195,260 from $217,925 in 2022[644] - Total assets increased marginally to $884,495 in 2023 from $878,978 in 2022, with a notable increase in inventories to $166,712 from $156,590[644] - The company's total debt as of December 31, 2023, was $115,851, with a term loan of $117,500 and no outstanding revolving loan[775] - The company's line of credit with a German bank has a borrowing capacity of €7,000, with no outstanding borrowings as of December 31, 2023[756] - The company's ROU asset and lease liability as of December 31, 2023, were $45,409 and $47,396, respectively[772] - The company's total future minimum lease payments as of December 31, 2023, were $55,495, with imputed interest of $8,099[752] - The company's total intangible assets were $195,260 as of December 31, 2023, with customer relationships accounting for $176,215 of the net value[769] Income and Profitability - The company's net income attributable to DMC Global Inc. stockholders increased from $12,247,000 in 2022 to $26,259,000 in 2023[712] - Basic EPS increased from $0.72 in 2022 to $1.08 in 2023, with diluted EPS remaining the same as basic EPS[712] - Adjusted EBITDA increased to $56,270 in 2023 from $46,932 in 2022, driven by higher operating income and lower depreciation expenses[487] - Total income before income taxes increased to $49.879 million in 2023 from $23.209 million in 2022, driven by foreign income ($33.698 million in 2023 vs. $23.511 million in 2022)[819] - Income before income taxes for Arcadia Products was $21,407, compared to a loss of $2,020 in the previous period[826] - Segment operating income was $87,187, with DynaEnergetics contributing $46,353 and NobelClad contributing $19,427[826] Taxes and Provisions - The income tax provision (benefit) for the year ended December 31, 2023 was $15,120, compared to $9,376 in 2022 and ($1,544) in 2021[796] - Current income tax expense increased to $14.150 million in 2023 from $9.975 million in 2022, with foreign tax expense contributing $9.895 million in 2023[819] - Net deferred tax assets decreased to $4.782 million in 2023 from $5.725 million in 2022, primarily due to changes in valuation allowances[821] - The company's tax benefits from uncertain tax positions are recognized only when it is more likely than not that the position will be sustained upon examination[709] - The company had tax loss carryforwards totaling approximately $55,317 as of December 31, 2023, with $37,072 foreign and $18,245 domestic state loss carryforwards[795] Leases and Contracts - DynaEnergetics leases manufacturing and storage facilities in Germany, the U.S., and Canada, with lease expirations ranging from 2025 to 2050[445][446] - Total operating lease expense for 2023 was $12,822, compared to $11,883 in 2022 and $4,453 in 2021[750] - The weighted average remaining lease term for operating leases as of December 31, 2023, was 7.0 years, with a weighted average discount rate of 4.3%[752] - Contract liabilities decreased to $21,621 in 2023 from $32,080 in 2022, with Arcadia Products contributing $13,815 and NobelClad contributing $6,662[722] Investments and Financial Instruments - The company's foreign currency forward contracts and money market funds are classified as Level 2 assets, valued at $3,257 as of December 31, 2023[713] - The company did not hold any Level 3 assets or liabilities as of December 31, 2023 or December 31, 2022[714] - The company's investment policy limits credit exposure to any one issuer and focuses on preserving principal and providing liquidity[687] - The fair value of RSAs and RSUs granted to employees and non-employee directors is based on the fair value of DMC's stock on the grant date[759] Employee Benefits and Compensation - 5,000,000 shares were approved for grant under the 2016 Omnibus Incentive Plan, with 3,360,119 shares available at inception and 1,777,266 shares remaining as of December 31, 2023[780] - Unvested RSUs under the 2016 Plan had a balance of 53,971 shares as of December 31, 2023, with a weighted average grant date fair value of $28.33[784] - The Employee Stock Purchase Plan (ESPP) had 161,269 shares available for future purchase as of December 31, 2023, with 20,686 shares purchased in 2023[785] - Total DMC contributions to the 401(k) Plan were $2,590, $1,772, and $1,057 for the years ended December 31, 2023, 2022, and 2021, respectively[788] - The company recorded an unfunded pension obligation of $1,490 and $1,352 as of December 31, 2023 and 2022, respectively[789] - Deferred compensation obligations settled in cash are adjusted based on changes in the value of underlying investment options chosen by Plan participants[791] - Stock-based compensation increased to $10.270 million in 2023 from $10.058 million in 2022, with a net impact of $7.166 million after taxes[806] - The company contributed $285 to the defined contribution plan in 2023, compared to $261 in 2022 and $282 in 2021[814] - Unvested PSUs under the 2016 Plan decreased to a balance of 33.62 at the end of 2023, down from 51.67 at the end of 2022[811] Market and Industry Dependence - NobelClad's business is highly dependent on cyclical markets and metal prices, with demand driven by maintenance, retrofit projects, and new industrial projects[460][295] - NobelClad's backlog increased to $59,357 as of December 31, 2023, compared to $55,451 in 2022, with most orders expected to ship within twelve months[439] Foreign Currency and Exchange Rates - Sales in currencies other than U.S. dollars accounted for 9% of total sales in 2023, down from 16% in 2021, with the Euro being the primary foreign currency exposure[629] - The company's functional currency for foreign operations is the local currency, with assets and liabilities translated at period-end exchange rates, and Statements of Operations at average exchange rates during the period[657] Credit and Allowances - The allowance for doubtful accounts increased from $925,000 in 2022 to $1,955,000 in 2023, with a current period provision for expected credit losses of $1,508,000[689] - The company's leverage ratio is capped at 3.0 to 1.0 from December 31, 2023, as per the credit facility terms[804] - The company's debt service coverage ratio under the credit facility must maintain a minimum of 1.35 to 1.0[777] Revenue Recognition - Revenue recognition for DynaEnergetics and NobelClad occurs when control is transferred at a point in time, while Arcadia Products may recognize revenue over time for customized products[700] - The company's revenue recognition for customized products in Arcadia Products is based on an over-time output method, with shipments fulfilling performance obligations[703] Depreciation and Amortization - Consolidated depreciation and amortization decreased to $36.507 million in 2023 from $51.207 million in 2022[800] - Consolidated acquisition of property, plant, and equipment decreased to $15.974 million in 2023 from $18.584 million in 2022[800] - The company's purchased intangible assets have a remaining weighted average amortization period of approximately 13 years[746] Legal and Regulatory Matters - The company reached a settlement of $375 out of a total $600 to resolve PAGA claims in the Felipe and Mayorga actions[837] - The company's disclosure controls and procedures were deemed effective as of December 31, 2023[843] - No changes or disagreements with accountants on accounting and financial disclosure for the fiscal year ended December 31, 2023[842] Interest and Debt - Interest expense, net, increased to $9,516 in 2023 from $6,187 in 2022[826] - The redeemable noncontrolling interest was $187,760 as of December 31, 2023, compared to $187,522 in 2022[725] Asset Impairments - Asset impairments of $2,471 were recorded in 2023, including $1,871 for a software asset at DynaEnergetics and $440 for a manufacturing asset at NobelClad[719] - The company's reporting units for goodwill impairment assessment are Arcadia Products, DynaEnergetics, and NobelClad[663] Earnings Per Share - Earnings per share calculations for 2023 and 2022 included all potentially dilutive shares, as the company was in a net income position[736]