DMC (BOOM)2022-11-06 11:32Financial Data and Key Metrics Changes - Consolidated third quarter sales reached a record 6.7 million or 403,000 or 70.4 million, up 4% sequentially and up 59% year-over-year [7] - Arcadia'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 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 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 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]