DMC Global Inc. (Nasdaq: BOOM) today reported financial results for
its first quarter ended March 31, 2023.
“The first quarter represented a strong start to
2023, and reflects continued healthy demand in the markets served
by our three differentiated manufacturing businesses,” said David
Aldous, director and interim co-CEO. “Our record consolidated sales
resulted from strong top-line results at our businesses, each of
which also delivered sequential gross margins improvements. The
quarter also was marked by important progress in our strategy to
improve business-level operating efficiencies and strengthen the
profitability of DMC.”
Michael Kuta, interim co-CEO, said, “Arcadia,
our architectural building products business, delivered sales of
$80.3 million, up 8% sequentially and 18% year over year. Arcadia
benefitted from resilient pricing and healthy demand across
multiple end markets, including industrial construction,
manufacturing, medical, education and hospitality.
“Arcadia’s adjusted EBITDA margin of 13% was up
340 basis points sequentially, reflecting the beginning of an
anticipated recovery in profitability following several quarters of
compressed margins that resulted from aluminum price
volatility.
“DynaEnergetics, our energy products business,
reported sales of $82.0 million, up 6% sequentially and 68% year
over year. Well completion activity in Dyna’s international and
North American markets remains strong; and effective execution by
the commercial and manufacturing teams led to the eleventh
consecutive quarter of increased unit sales of our fully integrated
DS perforating systems.”
Kuta said DynaEnergetics’ adjusted EBITDA margin
of 18% was down 40 basis points sequentially, but up 740 basis
points versus the first quarter last year. This sequential decline
reflects the impact of $3.1 million in litigation expense. DMC
expects significantly lower quarterly litigation expense going
forward.
“Sales at NobelClad, our composite metals
business, were $22.0 million, down 5% sequentially and flat versus
the first quarter last year. NobelClad delivered another solid
quarter of bookings, which drove its order backlog to a 10-year
high of $60 million. Healthy activity in NobelClad’s core energy
and petrochemical markets, combined with a strong order backlog,
should result in sequential sales growth of approximately 10% in
the second quarter.” Eric Walter, CFO,
said “Our first quarter selling, general and administrative expense
(SG&A) of $39.3 million included approximately $9 million of
charges related to patent litigation, CEO transition costs and
related accelerated stock vesting. The elimination of these
expenses would put us in our targeted quarterly SG&A range of
approximately $30 million.”
Aldous said, “Despite macroeconomic
uncertainties, we are optimistic about DMC’s prospects for growth
and improved profitability during 2023. The medium to long-range
outlook at DynaEnergetics is encouraging, particularly as major
energy companies increase their investments in North America’s
lower risk, lower-cost unconventional oil and gas basins. Arcadia’s
diverse end markets continue to be resilient, and the business is
making progress on its ERP and capacity expansion initiatives.
NobelClad’s strong backlog and broad product offering also bode
well for future growth.”
Summary First
Quarter Results
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net sales |
$ |
184,341 |
|
|
$ |
175,074 |
|
|
$ |
138,716 |
|
|
5 |
% |
|
33 |
% |
Gross
profit percentage |
|
28.3 |
% |
|
|
25.8 |
% |
|
|
26.6 |
% |
|
|
|
|
SG&A |
|
39,324 |
|
|
|
30,636 |
|
|
|
27,808 |
|
|
28 |
% |
|
41 |
% |
Net
income (loss) |
|
2,139 |
|
|
|
3,441 |
|
|
|
(4,280 |
) |
|
(38)% |
|
150 |
% |
Net
income (loss) attributable to DMC |
$ |
909 |
|
|
$ |
3,266 |
|
|
$ |
(3,288 |
) |
|
(72)% |
|
128 |
% |
Diluted
net (loss) income per share attributable to DMC |
$ |
(0.01 |
) |
|
$ |
0.52 |
|
|
$ |
(0.47 |
) |
|
(102)% |
|
98 |
% |
Adjusted
net income (loss) attributable to DMC |
$ |
6,144 |
|
|
$ |
4,259 |
|
|
$ |
(3,133 |
) |
|
44 |
% |
|
296 |
% |
Adjusted
diluted net (loss) income per share |
$ |
0.32 |
|
|
$ |
0.22 |
|
|
$ |
(0.16 |
) |
|
45 |
% |
|
300 |
% |
Adjusted
EBITDA attributable to DMC |
$ |
20,091 |
|
|
$ |
19,581 |
|
|
$ |
10,505 |
|
|
3 |
% |
|
91 |
% |
Adjusted EBITDA before NCI allocation |
$ |
24,279 |
|
|
$ |
22,438 |
|
|
$ |
15,073 |
|
|
8 |
% |
|
61 |
% |
First Quarter
Notes
- The sequential increase in DMC’s
gross margin principally reflects an expected recovery in margin at
Arcadia. Additionally, the fourth quarter of 2022 included
inventory write offs and reserves within DynaEnergetics’ North
American business that unfavorably impacted gross margin.
- First quarter net income
attributable to DMC was $0.9 million, or $(0.01) per diluted share,
versus a net loss attributable to DMC stockholders in the
prior-year first quarter of $(3.3) million, or $(0.47) per diluted
share.
- DMC’s debt-to-adjusted EBITDA
leverage ratio at March 31, 2023, was 1.47. The Company’s
debt-to-adjusted EBITDA leverage ratio covenant for the end of the
quarter was 3.25.
Arcadia
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net sales |
$ |
80,338 |
|
|
$ |
74,400 |
|
|
$ |
67,968 |
|
|
8 |
% |
|
18 |
% |
Gross profit percentage |
|
27.5 |
% |
|
|
24.2 |
% |
|
|
29.8 |
% |
|
|
|
|
Adjusted EBITDA attributable
to DMC |
$ |
6,282 |
|
|
$ |
4,286 |
|
|
$ |
6,852 |
|
|
47 |
% |
|
(8)% |
Adjusted EBITDA before NCI
allocation |
|
10,470 |
|
|
|
7,143 |
|
|
|
11,420 |
|
|
47 |
% |
|
(8)% |
- Arcadia’s sequential sales increase
reflects anticipated recovery from impacts of seasonality and
maintenance occurring in the fourth quarter.
DynaEnergetics
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net sales |
$ |
81,968 |
|
|
$ |
77,551 |
|
|
$ |
48,887 |
|
|
6 |
% |
|
68 |
% |
Gross
profit percentage |
|
29.8 |
% |
|
|
28.1 |
% |
|
|
25.8 |
% |
|
|
|
|
Adjusted EBITDA |
$ |
14,955 |
|
|
$ |
14,439 |
|
|
$ |
5,282 |
|
|
4 |
% |
|
183 |
% |
- The sequential gross margin
improvement principally relates to inventory write offs and
reserves that unfavorably impacted Q4 2022 gross margin.
NobelClad
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net sales |
$ |
22,035 |
|
|
$ |
23,123 |
|
|
$ |
21,861 |
|
|
(5)% |
|
1 |
% |
Gross
profit percentage |
|
26.2 |
% |
|
|
23.9 |
% |
|
|
19.1 |
% |
|
|
|
|
Adjusted EBITDA |
$ |
3,361 |
|
|
$ |
3,433 |
|
|
$ |
1,652 |
|
|
(2)% |
|
103 |
% |
- NobelClad’s order backlog increased
to $60.0 million from $55.5 million at the end of the fourth
quarter.
- Trailing 12-month book-to-bill
ratio at the end of the first quarter was 1.2.
Second Quarter
2023 Guidance
Measure |
Expected Range |
Sales |
|
DMC Consolidated |
$177M - $187M |
Arcadia |
$75M - $80M |
DynaEnergetics |
$78M - $82M |
NobelClad |
$24M - $25M |
Consolidated Gross Margin |
29% - 30% |
Consolidated SG&A |
$29M - $31M |
Depreciation & Amortization |
~$9.2 |
Interest Expense |
$2.4M |
Annualized effective tax rate |
$28% - 30% |
Adjusted EBITDA Attributable to DMC |
$23M - $26M |
Adjusted EBITDA before NCI allocation |
$27M – $30M |
Capital Expenditures |
$4M - $6M |
Full Year Capital Expenditures |
~$20M |
Conference call
informationManagement will hold a conference call to
discuss these results today at 5:00 p.m. Eastern (3:00 p.m.
Mountain). Investors may dial in to the call at 877-407-5783 (or +1
201-689-8782 for international callers).
Investors may also listen to a live webcast of
the call
at:https://event.choruscall.com/mediaframe/webcast.html?webcastid=H2wUSSpz
Webcast participants should access the website
at least 15 minutes early to register and download any necessary
audio software. The webcast also will be available on the Investor
page of DMC’s website, located at: ir.dmcglobal.com. A replay of
the webcast will be available for 6 months.
*Use of Non-GAAP Financial
Measures Adjusted EBITDA, adjusted net income (loss), and
adjusted diluted earnings per share are non-GAAP (generally
accepted accounting principles) financial measures used by
management to measure operating performance and liquidity. Non-GAAP
results are presented only as a supplement to the financial
statements based on U.S. generally accepted accounting principles
(GAAP). The non-GAAP financial information is provided to enhance
the reader’s understanding of DMC’s financial performance, but no
non-GAAP measure should be considered in isolation or as a
substitute for financial measures calculated in accordance with
GAAP. Reconciliations of the most directly comparable GAAP measures
to non-GAAP measures are provided within the schedules attached to
this release.
EBITDA is defined as net income (loss) plus or
minus net interest plus taxes, depreciation and amortization.
Adjusted EBITDA excludes from EBITDA stock-based compensation,
restructuring and impairment charges and, when appropriate, other
items that management does not utilize in assessing DMC’s operating
performance (as further described in the attached financial
schedules). Adjusted net income (loss) is defined as net income
(loss) attributable to DMC stockholders plus restructuring and
impairment charges (if applicable) and, when appropriate, other
items that management does not utilize in assessing DMC’s operating
performance. Adjusted diluted earnings per share is defined as
diluted earnings per share plus restructuring and impairment
charges (if applicable) and, when appropriate, other items that
management does not utilize in assessing DMC’s operating
performance. None of these non-GAAP financial measures are
recognized terms under GAAP and do not purport to be an alternative
to net income (loss) as an indicator of operating performance or
any other GAAP measure.
Management uses adjusted EBITDA in its
operational and financial decision-making, believing that it is
useful to eliminate certain items in order to focus on what it
deems to be a more reliable indicator of ongoing operating
performance. As a result, internal management reports used during
monthly operating reviews feature adjusted EBITDA measures.
Management believes that investors may find this non-GAAP financial
measure useful for similar reasons, although investors are
cautioned that non-GAAP financial measures are not a substitute for
GAAP disclosures. In addition, management incentive awards are
based, in part, on the amount of adjusted EBITDA achieved during
relevant periods. EBITDA and adjusted EBITDA are also used by
research analysts, investment bankers and lenders to assess
operating performance. For example, a measure similar to adjusted
EBITDA is required by the lenders under DMC’s credit facility.
Adjusted net income (loss) and adjusted diluted
earnings per share are presented because management believes these
measures are useful to understand the effects of restructuring and
impairment charges (if applicable) and, when appropriate, other
items that management does not utilize in assessing DMC’s operating
performance, on DMC’s net income (loss) and diluted earnings per
share, respectively.
Because not all companies use identical
calculations, DMC’s presentation of non-GAAP financial measures may
not be comparable to other similarly titled measures of other
companies. However, these measures can still be useful in
evaluating the company’s performance against its peer companies
because management believes the measures provide users with
valuable insight into key components of GAAP financial disclosures.
For example, a company with greater GAAP net income may not be as
appealing to investors if its net income is more heavily comprised
of gains on asset sales. Likewise, eliminating the effects of
interest income and expense moderates the impact of a company’s
capital structure on its performance.
All of the items included in the reconciliation
from net income to EBITDA and adjusted EBITDA are either (i)
non-cash items (e.g., depreciation, amortization of purchased
intangible assets and stock-based compensation) or (ii) items that
management does not consider to be useful in assessing DMC’s
operating performance (e.g., income taxes, restructuring and
impairment charges, CEO transition expenses). In the case of the
non-cash items, management believes that investors can better
assess the company’s operating performance if the measures are
presented without such items because, unlike cash expenses, these
adjustments do not affect DMC’s ability to generate free cash flow
or invest in its business. For example, by adjusting for
depreciation and amortization in computing EBITDA, users can
compare operating performance without regard to different
accounting determinations such as useful life. In the case of the
other items, management believes that investors can better assess
operating performance if the measures are presented without these
items because their financial impact does not reflect ongoing
operating performance.
About DMC Global Inc.DMC Global
is an owner and operator of innovative, asset-light manufacturing
businesses that provide unique, highly engineered products and
differentiated solutions. DMC’s businesses have established
leadership positions in their respective markets and consist of:
Arcadia, a leading supplier of architectural building products;
DynaEnergetics, which serves the global energy industry; and
NobelClad, which addresses the global industrial infrastructure and
transportation sectors. DMC’s businesses are led by experienced,
strategically focused management teams, which are supported with
business resources and capital allocation expertise to advance
their operating strategies and generate the greatest returns.
Headquartered in Broomfield, Colorado, DMC trades on Nasdaq under
the symbol “BOOM.” For more information, visit:
HTTP://WWW.DMCGLOBAL.COM.
Safe Harbor Language Except for
the historical information contained herein, this news release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, including guidance
on sales, gross margin, SG&A, depreciation and amortization
expense, interest expense, tax rate, adjusted EBITDA, and capital
expenditures; our expectations for double-digit sequential sales
growth at NobelClad; and our expectations for growth and improved
profitability for 2023. Such statements and information are based
on numerous assumptions regarding present and future business
strategies, the markets in which we operate, anticipated costs and
the ability to achieve goals. Forward-looking information and
statements are subject to known and unknown risks, uncertainties
and other important factors that may cause actual results and
performance to be materially different from those expressed or
implied by such forward-looking information and statements,
including but not limited to: our ability to realize sales from our
backlog; our ability to obtain new contracts at attractive prices;
the execution of purchase commitments by our customers, and our
ability to successfully deliver on those purchase commitments; the
size and timing of customer orders and shipments; changes to
customer orders; product pricing and margins; fluctuations in
customer demand; our ability to successfully navigate slowdowns in
market activity or execute and capitalize upon growth
opportunities; the success of DynaEnergetics’ product and
technology development initiatives; our ability to successfully
protect our technology and intellectual property and the costs
associated with these efforts; potential consolidation among
DynaEnergetics’ customers; fluctuations in foreign currencies;
fluctuations in tariffs and quotas; the cost and availability of
energy; the cyclicality of our business; competitive factors; the
timely completion of contracts; the timing and size of
expenditures; the timing and price of metal and other raw material;
the adequacy of local labor supplies at our facilities; our ability
to attract and retain key personnel, including a new CEO and our
executive officers and directors; current or future limits on
manufacturing capacity at our various operations; government
actions or other changes in laws and regulations; the availability
and cost of funds; our ability to access our borrowing capacity
under our credit facility; geopolitical and economic instability,
including recessions, depressions, wars or other military actions;
inflation; supply chain delays and disruptions; the availability
and cost of energy; transportation disruptions; general economic
conditions, both domestic and foreign, impacting our business and
the business of our customers and the end-market users we serve; as
well as the other risks detailed from time to time in our SEC
reports, including the annual report on Form 10-K for the year
ended December 31, 2022. We do not undertake any obligation to
release public revisions to any forward-looking statement,
including, without limitation, to reflect events or circumstances
after the date of this news release, or to reflect the occurrence
of unanticipated events, except as may be required under applicable
securities laws.
CONTACT: |
Geoff High, Vice President of Investor Relations |
303-604-3924 |
DMC GLOBAL INC.CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS(Amounts in Thousands, Except Share and Per Share
Data)(unaudited)
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
NET SALES |
$ |
184,341 |
|
|
$ |
175,074 |
|
|
$ |
138,716 |
|
|
5 |
% |
|
33 |
% |
COST OF PRODUCTS SOLD |
|
132,130 |
|
|
|
129,970 |
|
|
|
101,810 |
|
|
2 |
% |
|
30 |
% |
Gross profit |
|
52,211 |
|
|
|
45,104 |
|
|
|
36,906 |
|
|
16 |
% |
|
41 |
% |
Gross profit percentage |
|
28.3 |
% |
|
|
25.8 |
% |
|
|
26.6 |
% |
|
|
|
|
COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
26,500 |
|
|
|
19,789 |
|
|
|
17,718 |
|
|
34 |
% |
|
50 |
% |
Selling and distribution expenses |
|
12,824 |
|
|
|
10,847 |
|
|
|
10,090 |
|
|
18 |
% |
|
27 |
% |
Amortization of purchased intangible assets |
|
5,667 |
|
|
|
3,772 |
|
|
|
12,976 |
|
|
50 |
% |
|
(56)% |
Restructuring expenses |
|
— |
|
|
|
129 |
|
|
|
32 |
|
|
(100)% |
|
(100)% |
Total costs and expenses |
|
44,991 |
|
|
|
34,537 |
|
|
|
40,816 |
|
|
30 |
% |
|
10 |
% |
OPERATING INCOME (LOSS) |
|
7,220 |
|
|
|
10,567 |
|
|
|
(3,910 |
) |
|
(32)% |
|
285 |
% |
OTHER EXPENSE: |
|
|
|
|
|
|
|
|
|
Other expense, net |
|
(200 |
) |
|
|
(559 |
) |
|
|
(209 |
) |
|
(64)% |
|
(4)% |
Interest expense, net |
|
(2,381 |
) |
|
|
(2,129 |
) |
|
|
(1,024 |
) |
|
12 |
% |
|
133 |
% |
INCOME (LOSS) BEFORE INCOME
TAXES |
|
4,639 |
|
|
|
7,879 |
|
|
|
(5,143 |
) |
|
(41)% |
|
190 |
% |
INCOME TAX PROVISION
(BENEFIT) |
|
2,500 |
|
|
|
4,438 |
|
|
|
(863 |
) |
|
(44)% |
|
390 |
% |
NET INCOME (LOSS) |
|
2,139 |
|
|
|
3,441 |
|
|
|
(4,280 |
) |
|
(38)% |
|
150 |
% |
Less: Net income (loss) attributable to redeemable noncontrolling
interest |
|
1,230 |
|
|
|
175 |
|
|
|
(992 |
) |
|
603 |
% |
|
224 |
% |
NET INCOME (LOSS) ATTRIBUTABLE
TO DMC GLOBAL INC. STOCKHOLDERS |
$ |
909 |
|
|
$ |
3,266 |
|
|
$ |
(3,288 |
) |
|
(72)% |
|
128 |
% |
NET (LOSS) INCOME
PER SHARE ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.01 |
) |
|
$ |
0.52 |
|
|
$ |
(0.47 |
) |
|
(102)% |
|
98 |
% |
Diluted |
$ |
(0.01 |
) |
|
$ |
0.52 |
|
|
$ |
(0.47 |
) |
|
(102)% |
|
98 |
% |
WEIGHTED AVERAGE SHARES
OUTSTANDING: |
|
|
|
|
|
|
|
|
|
Basic |
|
19,462,636 |
|
|
|
19,384,678 |
|
|
|
19,301,126 |
|
|
— |
% |
|
1 |
% |
Diluted |
|
19,462,636 |
|
|
|
19,393,245 |
|
|
|
19,301,126 |
|
|
— |
% |
|
1 |
% |
Reconciliation to net income (loss) attributable to DMC Global
Inc. stockholders after adjustment of redeemable noncontrolling
interest for purposes of calculating earnings per share
|
Three months ended |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
Net income (loss) attributable to DMC Global Inc. stockholders |
$ |
909 |
|
|
$ |
3,266 |
|
$ |
(3,288 |
) |
Adjustment of redeemable
noncontrolling interest |
|
(1,138 |
) |
|
|
6,933 |
|
|
(5,717 |
) |
Net (loss) income attributable
to DMC Global Inc. stockholders after adjustment of redeemable
noncontrolling interest |
$ |
(229 |
) |
|
$ |
10,199 |
|
$ |
(9,005 |
) |
|
|
|
|
|
|
|
|
|
|
|
DMC GLOBAL INC.SEGMENT STATEMENTS OF
OPERATIONS(Amounts in Thousands)(unaudited)
Arcadia
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net sales |
$ |
80,338 |
|
|
$ |
74,400 |
|
|
$ |
67,968 |
|
|
8 |
% |
|
18 |
% |
Gross profit |
|
22,094 |
|
|
|
17,970 |
|
|
|
20,245 |
|
|
23 |
% |
|
9 |
% |
Gross profit percentage |
|
27.5 |
% |
|
|
24.2 |
% |
|
|
29.8 |
% |
|
|
|
|
COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
7,857 |
|
|
|
9,535 |
|
|
|
6,143 |
|
|
(18)% |
|
28 |
% |
Selling and distribution expenses |
|
5,452 |
|
|
|
4,352 |
|
|
|
3,737 |
|
|
25 |
% |
|
46 |
% |
Amortization of purchased intangible assets |
|
5,652 |
|
|
|
3,642 |
|
|
|
12,808 |
|
|
55 |
% |
|
(56)% |
Operating income (loss) |
|
3,133 |
|
|
|
441 |
|
|
|
(2,443 |
) |
|
610 |
% |
|
228 |
% |
Adjusted EBITDA |
|
10,470 |
|
|
|
7,143 |
|
|
|
11,420 |
|
|
47 |
% |
|
(8)% |
Less: adjusted EBITDA
attributable to redeemable noncontrolling interest |
|
(4,188 |
) |
|
|
(2,857 |
) |
|
|
(4,568 |
) |
|
47 |
% |
|
(8)% |
Adjusted EBITDA attributable
to DMC Global Inc. |
$ |
6,282 |
|
|
$ |
4,286 |
|
|
$ |
6,852 |
|
|
47 |
% |
|
(8)% |
DynaEnergetics
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net sales |
$ |
81,968 |
|
|
$ |
77,551 |
|
|
$ |
48,887 |
|
|
6 |
% |
|
68 |
% |
Gross profit |
|
24,437 |
|
|
|
21,764 |
|
|
|
12,608 |
|
|
12 |
% |
|
94 |
% |
Gross profit percentage |
|
29.8 |
% |
|
|
28.1 |
% |
|
|
25.8 |
% |
|
|
|
|
COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
6,197 |
|
|
|
4,970 |
|
|
|
5,322 |
|
|
25 |
% |
|
16 |
% |
Selling and distribution expenses |
|
5,057 |
|
|
|
4,270 |
|
|
|
3,903 |
|
|
18 |
% |
|
30 |
% |
Amortization of purchased intangible assets |
|
15 |
|
|
|
54 |
|
|
|
85 |
|
|
(72)% |
|
(82)% |
Operating income |
|
13,168 |
|
|
|
12,470 |
|
|
|
3,298 |
|
|
6 |
% |
|
299 |
% |
Adjusted EBITDA |
$ |
14,955 |
|
|
$ |
14,439 |
|
|
$ |
5,282 |
|
|
4 |
% |
|
183 |
% |
NobelClad
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net sales |
$ |
22,035 |
|
|
$ |
23,123 |
|
|
$ |
21,861 |
|
|
(5)% |
|
1 |
% |
Gross profit |
|
5,783 |
|
|
|
5,518 |
|
|
|
4,181 |
|
|
5 |
% |
|
38 |
% |
Gross profit percentage |
|
26.2 |
% |
|
|
23.9 |
% |
|
|
19.1 |
% |
|
|
|
|
COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
923 |
|
|
|
943 |
|
|
|
1,037 |
|
|
(2)% |
|
(11)% |
Selling and distribution expenses |
|
2,239 |
|
|
|
2,071 |
|
|
|
2,324 |
|
|
8 |
% |
|
(4)% |
Amortization of purchased intangible assets |
|
— |
|
|
|
76 |
|
|
|
83 |
|
|
(100)% |
|
(100)% |
Restructuring expenses |
|
— |
|
|
|
129 |
|
|
|
32 |
|
|
(100)% |
|
(100)% |
Operating income |
|
2,621 |
|
|
|
2,299 |
|
|
|
705 |
|
|
14 |
% |
|
272 |
% |
Adjusted EBITDA |
$ |
3,361 |
|
|
$ |
3,433 |
|
|
$ |
1,652 |
|
|
(2)% |
|
103 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DMC GLOBAL INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Amounts in Thousands)
|
|
|
|
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
From year-end |
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
19,647 |
|
$ |
25,144 |
|
(22)% |
Accounts receivable, net |
|
109,332 |
|
|
94,415 |
|
16 |
% |
Inventories |
|
179,545 |
|
|
156,590 |
|
15 |
% |
Other current assets |
|
17,069 |
|
|
10,723 |
|
59 |
% |
|
|
|
|
|
|
Total current assets |
|
325,593 |
|
|
286,872 |
|
13 |
% |
|
|
|
|
|
|
Property, plant and equipment,
net |
|
128,795 |
|
|
129,445 |
|
(1)% |
Goodwill |
|
141,725 |
|
|
141,725 |
|
— |
% |
Purchased intangible assets,
net |
|
212,258 |
|
|
217,925 |
|
(3)% |
Other long-term assets |
|
95,632 |
|
|
103,011 |
|
(7)% |
|
|
|
|
|
|
Total assets |
$ |
904,003 |
|
$ |
878,978 |
|
3 |
% |
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
71,408 |
|
$ |
46,816 |
|
53 |
% |
Contract liabilities |
|
31,198 |
|
|
32,080 |
|
(3)% |
Accrued income taxes |
|
5,837 |
|
|
4,256 |
|
37 |
% |
Current portion of long-term
debt |
|
15,000 |
|
|
15,000 |
|
— |
% |
Other current liabilities |
|
38,508 |
|
|
29,898 |
|
29 |
% |
|
|
|
|
|
|
Total current liabilities |
|
161,951 |
|
|
128,050 |
|
26 |
% |
|
|
|
|
|
|
Long-term debt |
|
111,686 |
|
|
117,798 |
|
(5)% |
Deferred tax liabilities |
|
2,122 |
|
|
1,908 |
|
11 |
% |
Other long-term
liabilities |
|
58,445 |
|
|
63,053 |
|
(7)% |
Redeemable noncontrolling
interest |
|
187,522 |
|
|
187,522 |
|
— |
% |
Stockholders’ equity |
|
382,277 |
|
|
380,647 |
|
— |
% |
|
|
|
|
|
|
Total liabilities, redeemable
noncontrolling interest, and stockholders’ equity |
$ |
904,003 |
|
$ |
878,978 |
|
3 |
% |
|
|
|
|
|
|
|
|
|
DMC GLOBAL INC.CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS(Amounts in Thousands)(unaudited)
|
Three months ended |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
Net income (loss) |
$ |
2,139 |
|
|
$ |
3,441 |
|
|
$ |
(4,280 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
Depreciation |
|
3,400 |
|
|
|
3,703 |
|
|
|
3,359 |
|
Amortization of purchased intangible assets |
|
5,667 |
|
|
|
3,772 |
|
|
|
12,976 |
|
Amortization of deferred debt issuance costs |
|
138 |
|
|
|
141 |
|
|
|
132 |
|
Amortization of acquisition-related inventory valuation
step-up |
|
— |
|
|
|
— |
|
|
|
258 |
|
Stock-based compensation |
|
5,027 |
|
|
|
3,167 |
|
|
|
2,358 |
|
Deferred income taxes |
|
178 |
|
|
|
1,013 |
|
|
|
(2,714 |
) |
Other |
|
(405 |
) |
|
|
1,768 |
|
|
|
41 |
|
Change in working capital, net |
|
(9,079 |
) |
|
|
3,596 |
|
|
|
(16,714 |
) |
Net cash provided by (used in) operating activities |
|
7,065 |
|
|
|
20,601 |
|
|
|
(4,584 |
) |
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
Consideration adjustment related to acquisition of a business |
|
— |
|
|
|
(370 |
) |
|
|
— |
|
Acquisition of property, plant and equipment |
|
(2,226 |
) |
|
|
(7,307 |
) |
|
|
(1,536 |
) |
Proceeds on sale of property, plant and equipment |
|
— |
|
|
|
62 |
|
|
|
— |
|
Net cash used in investing activities |
|
(2,226 |
) |
|
|
(7,615 |
) |
|
|
(1,536 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
Repayments on term loan |
|
(6,250 |
) |
|
|
(3,750 |
) |
|
|
(3,750 |
) |
Payment of debt issuance costs |
|
— |
|
|
|
(1 |
) |
|
|
(97 |
) |
Net proceeds from issuance of common stock to employees and
directors |
|
— |
|
|
|
201 |
|
|
|
— |
|
Distribution to redeemable noncontrolling interest holder |
|
(2,600 |
) |
|
|
(2,007 |
) |
|
|
(4,400 |
) |
Treasury stock activity |
|
(2,157 |
) |
|
|
(139 |
) |
|
|
(1,088 |
) |
Net cash used in financing activities |
|
(11,007 |
) |
|
|
(5,696 |
) |
|
|
(9,335 |
) |
EFFECTS OF EXCHANGE RATES ON
CASH |
|
671 |
|
|
|
(632 |
) |
|
|
21 |
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS |
|
(5,497 |
) |
|
|
6,658 |
|
|
|
(15,434 |
) |
CASH AND CASH EQUIVALENTS,
beginning of the period |
|
25,144 |
|
|
|
18,486 |
|
|
|
30,810 |
|
CASH AND CASH EQUIVALENTS, end
of the period |
$ |
19,647 |
|
|
$ |
25,144 |
|
|
$ |
15,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
DMC GLOBAL INC.RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASUREMENTS TO MOSTDIRECTLY COMPARABLE GAAP FINANCIAL
MEASUREMENTS(Amounts in Thousands)(unaudited)
DMC Global
EBITDA and Adjusted EBITDA
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Net income (loss) |
|
2,139 |
|
|
|
3,441 |
|
|
|
(4,280 |
) |
|
(38)% |
|
150 |
% |
Interest expense, net |
|
2,381 |
|
|
|
2,129 |
|
|
|
1,024 |
|
|
12 |
% |
|
133 |
% |
Income tax provision
(benefit) |
|
2,500 |
|
|
|
4,438 |
|
|
|
(863 |
) |
|
(44)% |
|
390 |
% |
Depreciation |
|
3,400 |
|
|
|
3,703 |
|
|
|
3,359 |
|
|
(8)% |
|
1 |
% |
Amortization of purchased
intangible assets |
|
5,667 |
|
|
|
3,772 |
|
|
|
12,976 |
|
|
50 |
% |
|
(56)% |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
16,087 |
|
|
|
17,483 |
|
|
|
12,216 |
|
|
(8)% |
|
32 |
% |
CEO transition
expenses(1) |
|
2,965 |
|
|
|
— |
|
|
|
— |
|
|
100 |
% |
|
100 |
% |
Stock-based compensation |
|
5,027 |
|
|
|
3,167 |
|
|
|
2,358 |
|
|
59 |
% |
|
113 |
% |
Other expense, net |
|
200 |
|
|
|
559 |
|
|
|
209 |
|
|
(64)% |
|
(4)% |
Restructuring expenses |
|
— |
|
|
|
129 |
|
|
|
32 |
|
|
(100)% |
|
(100)% |
Nonrecurring retirement
expenses |
|
— |
|
|
|
1,100 |
|
|
|
— |
|
|
(100)% |
|
— |
% |
Amortization of
acquisition-related inventory valuation step-up |
|
— |
|
|
|
— |
|
|
|
258 |
|
|
— |
% |
|
(100)% |
Adjusted EBITDA |
$ |
24,279 |
|
|
$ |
22,438 |
|
|
$ |
15,073 |
|
|
8 |
% |
|
61 |
% |
Less: adjusted EBITDA
attributable to redeemable noncontrolling interest |
|
(4,188 |
) |
|
|
(2,857 |
) |
|
|
(4,568 |
) |
|
47 |
% |
|
(8)% |
Adjusted EBITDA attributable
to DMC Global Inc. stockholders |
$ |
20,091 |
|
|
$ |
19,581 |
|
|
$ |
10,505 |
|
|
3 |
% |
|
91 |
% |
(1) During the first quarter of 2023, the Company and its former
CEO entered into a separation agreement. In conjunction with this
event as well as a reprioritization of near-term initiatives, we
have incurred certain transition expenses, primarily including: (a)
severance related charges for the former CEO and other impacted
employees of $1,906; (b) CEO transition and executive search firm
costs of $557; and (c) contract termination costs of $350.
Adjusted Net Income and Adjusted Diluted Earnings per Share
|
Three months ended March 31, 2023 |
|
Amount |
|
Per Share (1) |
Net income attributable to DMC Global Inc. |
$ |
909 |
|
$ |
0.05 |
CEO transition expenses and
accelerated stock-based compensation, net of tax(2) |
|
5,235 |
|
|
0.27 |
As adjusted |
$ |
6,144 |
|
$ |
0.32 |
(1) Calculated using diluted weighted average shares outstanding
of 19,462,636(2) Includes CEO transition expenses of $2,965 and
accelerated stock-based compensation of $3,040 related to the
vesting of the former CEO’s outstanding equity awards, net of
tax.
|
Three months ended December 31, 2022 |
|
Amount |
|
Per Share (1) |
Net income attributable to DMC Global Inc. |
$ |
3,266 |
|
$ |
0.17 |
Nonrecurring retirement
expenses, net of tax |
|
905 |
|
|
0.05 |
NobelClad restructuring
expenses, net of tax |
|
88 |
|
|
— |
As adjusted |
$ |
4,259 |
|
$ |
0.22 |
(1) Calculated using diluted weighted average shares outstanding
of 19,393,245
|
Three months ended March 31, 2022 |
|
Amount |
|
Per Share (1) |
Net loss attributable to DMC Global Inc. |
$ |
(3,288 |
) |
|
$ |
(0.17 |
) |
Amortization of
acquisition-related inventory valuation step-up, net of tax |
|
133 |
|
|
|
0.01 |
|
NobelClad restructuring
expenses and asset impairments, net of tax |
|
22 |
|
|
|
— |
|
As adjusted |
$ |
(3,133 |
) |
|
$ |
(0.16 |
) |
1) Calculated using diluted weighted average shares outstanding
of 19,301,126
Segment Adjusted EBITDA
Arcadia
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Operating income (loss), as reported |
$ |
3,133 |
|
|
$ |
441 |
|
|
$ |
(2,443 |
) |
|
610 |
% |
|
228 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
817 |
|
|
|
762 |
|
|
|
541 |
|
|
7 |
% |
|
51 |
% |
Amortization of purchased intangible assets |
|
5,652 |
|
|
|
3,642 |
|
|
|
12,808 |
|
|
55 |
% |
|
(56)% |
Stock-based compensation |
|
579 |
|
|
|
1,198 |
|
|
|
256 |
|
|
(52)% |
|
126 |
% |
CEO transition expenses |
|
289 |
|
|
|
— |
|
|
|
— |
|
|
100 |
% |
|
100 |
% |
Nonrecurring retirement expenses |
|
— |
|
|
|
1,100 |
|
|
|
— |
|
|
(100)% |
|
— |
% |
Amortization of acquisition-related inventory valuation
step-up |
|
— |
|
|
|
— |
|
|
|
258 |
|
|
— |
% |
|
(100)% |
Adjusted EBITDA |
|
10,470 |
|
|
|
7,143 |
|
|
|
11,420 |
|
|
47 |
% |
|
(8)% |
Less: adjusted EBITDA
attributable to redeemable noncontrolling interest |
|
(4,188 |
) |
|
$ |
(2,857 |
) |
|
$ |
(4,568 |
) |
|
47 |
% |
|
(8)% |
Adjusted EBITDA attributable
to DMC Global Inc. |
$ |
6,282 |
|
|
$ |
4,286 |
|
|
$ |
6,852 |
|
|
47 |
% |
|
(8)% |
DynaEnergetics
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Operating income, as reported |
$ |
13,168 |
|
$ |
12,470 |
|
$ |
3,298 |
|
6 |
% |
|
299 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
1,772 |
|
|
1,915 |
|
|
1,899 |
|
(7)% |
|
(7)% |
Amortization of purchased intangible assets |
|
15 |
|
|
54 |
|
|
85 |
|
(72)% |
|
(82)% |
Adjusted EBITDA |
$ |
14,955 |
|
$ |
14,439 |
|
$ |
5,282 |
|
4 |
% |
|
183 |
% |
NobelClad
|
Three months ended |
|
Change |
|
Mar 31, 2023 |
|
Dec 31, 2022 |
|
Mar 31, 2022 |
|
Sequential |
|
Year-on-year |
Operating income, as reported |
$ |
2,621 |
|
$ |
2,299 |
|
$ |
705 |
|
14 |
% |
|
272 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
740 |
|
|
929 |
|
|
832 |
|
(20)% |
|
(11)% |
Restructuring expenses |
|
— |
|
|
129 |
|
|
32 |
|
(100)% |
|
(100)% |
Amortization of purchased intangible assets |
|
— |
|
|
76 |
|
|
83 |
|
(100)% |
|
(100)% |
Adjusted EBITDA |
$ |
3,361 |
|
$ |
3,433 |
|
$ |
1,652 |
|
(2)% |
|
103 |
% |
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