-
DMC Global Reports Third Quarter Financial Results
Источник: Nasdaq GlobeNewswire / 02 ноя 2023 16:05:01 America/New_York
- Third quarter sales were $172.1 million, down 1% vs. Q3 2022
- Net income was $11.5 million, while net income attributable to DMC was $8.9 million
- Adjusted net income attributable to DMC* was $9.9 million, up 47% versus Q3 2022
- Adjusted diluted EPS attributable to DMC* was $0.50, up 43% versus Q3 2022
- Adjusted EBITDA attributable to DMC* was $24.6 million, up 13% vs. Q3 2022
- Total adjusted EBITDA, inclusive of non-controlling interest (NCI), was $30.0 million, or 17.4% of sales, up 220 basis points versus Q3 2022
- Third quarter free cash flow* was $21.9 million
BROOMFIELD, Colo., Nov. 02, 2023 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its third quarter ended September 30, 2023.
“Our third quarter sales of $172.1 million were comparable to the third quarter of 2022, but below our forecasts,” said Michael Kuta, president & CEO. “While our adjusted EBITDA was within our forecasted range and we delivered solid free cash flow, our sales shortfall was disappointing, and was principally due to lower-than-expected top-line results at our Arcadia and DynaEnergetics businesses.”
“Arcadia, our architectural building products business, saw steady demand at its primary regional service centers and its ultra-high-end residential business. However, third quarter sales of $71.5 million were down 11% year-over-year due to lower product pricing, soft demand for commercial interior products, and brief operational challenges related to the go-live of a new ERP system. Adjusted EBITDA margin was 18.8%, up from 15.0% in the 2022 third quarter, as the decline in product pricing was not as pronounced as the year-over-year drop in raw material costs.
“DynaEnergetics, our energy products business, reported sales of $73.0 million, up 4% versus last year’s third quarter and down 14% sequentially. Demand in Dyna’s core North American market was impacted by a 10% sequential decline in U.S. well completions, as well as customer project delays late in the quarter. The sales decline in North America was partially offset by the continued strong performance of Dyna’s international business, which is on pace to deliver record full-year sales. Dyna’s third quarter adjusted EBITDA margin was 17.2%, down from 19.8% in last year’s third quarter and 23.0% in this year’s second quarter. The decline was related to lower absorption and customer mix.
“NobelClad, our composite metals business, reported third quarter sales of $27.7 million, up 18% versus last year’s third quarter and the strongest quarterly performance in nearly 10 years. Adjusted EBITDA margin was 23.1%, up from 14.6% in last year’s third quarter. NobelClad is benefitting from robust activity across several industrial end markets, including liquified natural gas, downstream energy and petrochemicals. Order backlog at the end of the third quarter was $61 million versus $64 million at the end of the second quarter. Rolling 12-month bookings increased sequentially to $110.9 million from $108.4 million; and the book-to-bill ratio at the end of the quarter was 1.1.”
Kuta added, “Arcadia and DynaEnergetics both are taking steps to strengthen sales, profit margins and cash flow. Arcadia has nearly completed the first phase of an expansion in paint capacity, which will increase the sales potential of its commercial and ultra-high-end residential businesses. We also expect Arcadia’s new ERP system will deliver incremental operational benefits in the coming quarters. DynaEnergetics is implementing a series of automation, lean manufacturing and cost-reduction initiatives designed to enhance profitability and improve quality. DynaEnergetics has incurred approximately $1 million in fourth-quarter restructuring expenses, which we anticipate will result in roughly $3 million in annualized savings.”
Eric Walter, CFO, said, “We recorded approximately $22 million in third-quarter free cash flow, reflecting our focus on maximizing profitability and reducing inventory. We further strengthened our balance sheet in the third quarter, improving our debt-to-adjusted EBITDA leverage ratio to 1.26x, and our net-debt leverage ratio to 0.89x. This was the seventh consecutive quarter in which we de-levered DMC’s balance sheet.”
Walter said roughly half of this year’s $20 million capex budget has been allocated to the fourth quarter. “Our fourth quarter expenditures should be in a range of $8 million to $10 million and will include additional investments in painting capacity at Arcadia and manufacturing automation at DynaEnergetics.”
Kuta concluded, “Despite macro-economic uncertainties, I am encouraged by the resiliency of Arcadia’s and NobelClad’s diverse end markets, and by the expected acceleration in well-completion activity in DynaEnergetics’ core North American market beginning early next year. Our long-term strategy is to deliver adjusted EBITDA margins of 20% or better at the business level, and we are positioning our businesses to achieve this objective with greater consistency. I want to thank DMC’s employees for their consistent dedication and hard work.”
Summary Third Quarter Results
Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net sales $ 172,147 $ 188,664 $ 174,465 (9)% (1)% Gross profit percentage 30.6 % 32.8 % 29.4 % SG&A 28,713 29,226 30,544 (2)% (6) % Net income 11,525 17,526 8,213 (34)% 40% Net income attributable to DMC $ 8,883 $ 13,703 $ 6,717 (35)% 32% Diluted net income per share attributable to DMC $ 0.38 $ 0.70 $ 0.46 (46)% (17)% Adjusted net income attributable to DMC $ 9,861 $ 14,131 $ 6,722 (30)% 47% Adjusted diluted net income per share $ 0.50 $ 0.72 $ 0.35 (31)% 43% Adjusted EBITDA attributable to DMC $ 24,607 $ 31,776 $ 21,751 (23)% 13% Adjusted EBITDA before NCI allocation $ 29,981 $ 38,370 $ 26,577 (22)% 13%
ArcadiaThree months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net sales $ 71,455 $ 79,158 $ 80,697 (10)% (11)% Gross profit percentage 33.3 % 34.7 % 29.6 % Adjusted EBITDA attributable to DMC $ 8,060 $ 9,892 $ 7,239 (19)% 11% Adjusted EBITDA before NCI allocation 13,434 16,486 12,065 (19)% 11% - Sales decline reflects reduced product pricing and brief ERP go-live challenges
DynaEnergetics
Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net sales $ 72,998 $ 84,754 $ 70,372 (14)% 4% Gross profit percentage 26.8 % 31.3 % 30.2 % Adjusted EBITDA $ 12,568 $ 19,461 $ 13,935 (35)% (10)% - Sequential sales decline reflects lower North American well-completion activity and project delays at end of quarter
NobelClad
Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net sales $ 27,694 $ 24,752 $ 23,396 12% 18% Gross profit percentage 33.6 % 32.4 % 27.0 % Adjusted EBITDA $ 6,384 $ 5,407 $ 3,412 18% 87% - Sales growth reflects healthy pressure vessel construction and strong demand for Cylindra™ cryogenic transition joints
- Gross margin improvement driven by favorable petrochemical project mix
Fourth Quarter 2023 Guidance
Measure Expected Range Sales DMC Consolidated $170M - $180M Arcadia $70M - $74M DynaEnergetics $72M - $76M NobelClad $28M - $30M Consolidated Gross Margin 28% - 30% Consolidated SG&A* $28M - $29M Depreciation & Amortization ~$9.2M Interest Expense ~$2.4M Annualized effective tax rate 27% - 29% Adjusted EBITDA attributable to DMC $20M - $24M Adjusted EBITDA before NCI allocation $25M - $29M Capital Expenditures $8M - $10M *Excludes one-time expenses
Conference call information
The conference call will begin today at 5 p.m. Eastern (3 p.m. Mountain) and will be accessible by dialing 877-407-5783 (or +1 201-689-8782 for international callers).Investors are invited to listen to the webcast live via the Internet at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=VxX1JGSY
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 six months.
*Use of Non-GAAP Financial Measures
Adjusted EBITDA, adjusted net income (loss), adjusted diluted earnings per share and free cash flow 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, 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. Free cash flow is defined as cash flows provided by (used in) operating activities minus acquisitions of property, plant and equipment. Management believes that free cash flow is a key measure to assess liquidity of the business. 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 (loss) 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, as well as our expectation of record full-year sales at DynaEnergetics’ international business; stronger sales, margin and cashflow at Arcadia and DynaEnergetics; operational benefits in the coming quarters from Arcadia’s new ERP system; initiatives expected to deliver improvements in profitability and quality at DynaEnergetics; approximately $3 million in expected annualized savings at DynaEnergetics from cost reduction initiatives; the resiliency of Arcadia’s and NobelClad’s end markets; the expected acceleration in well-completion activity in DynaEnergetics’ core North American market early next year; and our objective to achieve consistent quarterly adjusted EBITDA margins of 20% or greater at our businesses. 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; 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; 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; 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.DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Share and Per Share Data) (unaudited) Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year NET SALES $ 172,147 $ 188,664 $ 174,465 (9 )% (1 )% COST OF PRODUCTS SOLD 119,550 126,774 123,127 (6 )% (3 )% Gross profit 52,597 61,890 51,338 (15 )% 2 % Gross profit percentage 30.6 % 32.8 % 29.4 % COSTS AND EXPENSES: General and administrative expenses 16,259 17,526 19,796 (7 )% (18 )% Selling and distribution expenses 12,454 11,700 10,748 6 % 16 % Amortization of purchased intangible assets 5,667 5,667 7,385 — % (23 )% Restructuring expenses and asset impairments 515 — 8 — % 6,338 % Total costs and expenses 34,895 34,893 37,937 — % (8 )% OPERATING INCOME 17,702 26,997 13,401 (34 )% 32 % OTHER INCOME (EXPENSE): Other income (expense), net 302 (439 ) 120 169 % 152 % Interest expense, net (2,392 ) (2,432 ) (1,771 ) (2 )% 35 % INCOME BEFORE INCOME TAXES 15,612 24,126 11,750 (35 )% 33 % INCOME TAX PROVISION 4,087 6,600 3,537 (38 )% 16 % NET INCOME 11,525 17,526 8,213 (34 )% 40 % Less: Net income attributable to redeemable noncontrolling interest 2,642 3,823 1,496 (31 )% 77 % NET INCOME ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS $ 8,883 $ 13,703 $ 6,717 (35 )% 32 % NET INCOME PER SHARE ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS Basic $ 0.38 $ 0.70 $ 0.46 (46 )% (17 )% Diluted $ 0.38 $ 0.70 $ 0.46 (46 )% (17 )% WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 19,543,251 19,497,871 19,381,489 — % 1 % Diluted 19,596,575 19,504,963 19,381,794 — % 1 % Reconciliation to net income attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share
Three months ended Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Net income attributable to DMC Global Inc. stockholders $ 8,883 $ 13,703 $ 6,717 Adjustment of redeemable noncontrolling interest (1,263 ) 112 2,256 Net income attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest $ 7,620 $ 13,815 $ 8,973 Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year NET SALES $ 545,152 $ 479,012 14 % COST OF PRODUCTS SOLD 378,454 338,669 12 % Gross profit 166,698 140,343 19 % Gross profit percentage 30.6 % 29.3 % COSTS AND EXPENSES: General and administrative expenses 60,285 56,330 7 % Selling and distribution expenses 36,978 31,383 18 % Amortization of purchased intangible assets 17,001 33,154 (49 )% Restructuring expenses and asset impairments 515 53 872 % Total costs and expenses 114,779 120,920 (5 )% OPERATING INCOME 51,919 19,423 167 % OTHER EXPENSE: Other expense, net (337 ) (35 ) 863 % Interest expense, net (7,205 ) (4,058 ) 78 % INCOME BEFORE INCOME TAXES 44,377 15,330 189 % INCOME TAX PROVISION 13,187 4,938 167 % NET INCOME 31,190 10,392 200 % Less: Net income attributable to redeemable noncontrolling interest 7,695 1,411 445 % NET INCOME ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS $ 23,495 $ 8,981 162 % NET INCOME PER SHARE ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS Basic $ 1.07 $ 0.20 435 % Diluted $ 1.07 $ 0.20 435 % WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 19,492,212 19,352,638 1 % Diluted 19,540,978 19,357,333 1 % Reconciliation to net income attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share
Nine months ended Sep 30, 2023 Sep 30, 2022 Net income attributable to DMC Global Inc. stockholders $ 23,495 $ 8,981 Adjustment of redeemable noncontrolling interest (2,289 ) (4,996 ) Net income attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest $ 21,206 $ 3,985 DMC GLOBAL INC. SEGMENT STATEMENTS OF OPERATIONS (Amounts in Thousands) (unaudited) Arcadia Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net sales $ 71,455 $ 79,158 $ 80,697 (10 )% (11 )% Gross profit 23,789 27,459 23,892 (13 )% — % Gross profit percentage 33.3 % 34.7 % 29.6 % COSTS AND EXPENSES: General and administrative expenses 7,413 8,206 8,782 (10 )% (16 )% Selling and distribution expenses 4,248 4,021 4,135 6 % 3 % Amortization of purchased intangible assets 5,652 5,652 7,233 — % (22 )% Operating income 6,476 9,580 3,742 (32 )% 73 % Adjusted EBITDA 13,434 16,486 12,065 (19 )% 11 % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (5,374 ) (6,594 ) (4,826 ) (19 )% 11 % Adjusted EBITDA attributable to DMC Global Inc. $ 8,060 $ 9,892 $ 7,239 (19 )% 11 % Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year Net sales $ 230,951 $ 225,127 3 % Gross profit 73,342 70,364 4 % Gross profit percentage 31.8 % 31.3 % COSTS AND EXPENSES: General and administrative expenses 23,476 22,337 5 % Selling and distribution expenses 13,721 11,832 16 % Amortization of purchased intangible assets 16,956 32,674 (48 )% Operating income 19,189 3,521 445 % Adjusted EBITDA 40,390 39,777 2 % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (16,156 ) (15,911 ) 2 % Adjusted EBITDA attributable to DMC Global Inc. $ 24,234 $ 23,866 2 % DynaEnergetics Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net sales $ 72,998 $ 84,754 $ 70,372 (14 )% 4 % Gross profit 19,585 26,552 21,237 (26 )% (8 )% Gross profit percentage 26.8 % 31.3 % 30.2 % COSTS AND EXPENSES: General and administrative expenses 3,095 3,577 4,924 (13 )% (37 )% Selling and distribution expenses 5,604 5,227 4,257 7 % 32 % Amortization of purchased intangible assets 15 15 78 — % (81 )% Operating income 10,871 17,733 11,978 (39 )% (9 )% Adjusted EBITDA $ 12,568 $ 19,461 $ 13,935 (35 )% (10 )% Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year Net sales $ 239,720 $ 186,776 28 % Gross profit 70,574 53,805 31 % Gross profit percentage 29.4 % 28.8 % COSTS AND EXPENSES: General and administrative expenses 12,869 14,657 (12 )% Selling and distribution expenses 15,888 12,318 29 % Amortization of purchased intangible assets 45 245 (82 )% Operating income 41,772 26,585 57 % Adjusted EBITDA $ 46,984 $ 32,493 45 % NobelClad Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net sales $ 27,694 $ 24,752 $ 23,396 12 % 18 % Gross profit 9,309 8,021 6,325 16 % 47 % Gross profit percentage 33.6 % 32.4 % 27.0 % COSTS AND EXPENSES: General and administrative expenses 1,106 949 1,475 17 % (25 )% Selling and distribution expenses 2,531 2,365 2,263 7 % 12 % Amortization of purchased intangible assets — — 74 — % (100 )% Restructuring expenses and asset impairments 440 — 8 — % 5,400 % Operating income 5,232 4,707 2,505 11 % 109 % Adjusted EBITDA $ 6,384 $ 5,407 $ 3,412 18 % 87 % Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year Net sales $ 74,481 $ 67,109 11 % Gross profit 23,113 16,532 40 % Gross profit percentage 31.0 % 24.6 % COSTS AND EXPENSES: General and administrative expenses 2,978 3,644 (18 )% Selling and distribution expenses 7,135 6,910 3 % Amortization of purchased intangible assets — 235 (100 )% Restructuring expenses and asset impairments 440 53 730 % Operating income 12,560 5,690 121 % Adjusted EBITDA $ 15,152 $ 8,468 79 % DMC GLOBAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) Change Sep 30, 2023 Jun 30, 2023 Dec 31, 2022 Sequential Year-end (unaudited) (unaudited) ASSETS Cash and cash equivalents $ 28,060 $ 18,724 $ 25,144 50 % 12 % Marketable securities 7,516 2,414 — 211 % 100 % Accounts receivable, net 105,519 112,177 94,415 (6 )% 12 % Inventories 185,777 190,947 156,590 (3 )% 19 % Prepaid expenses and other 9,945 16,434 10,723 (39 )% (7 )% Total current assets 336,817 340,696 286,872 (1 )% 17 % Property, plant and equipment, net 126,095 128,627 129,445 (2 )% (3 )% Goodwill 141,725 141,725 141,725 — % — % Purchased intangible assets, net 200,925 206,593 217,925 (3 )% (8 )% Other long-term assets 90,716 92,706 103,011 (2 )% (12 )% Total assets $ 896,278 $ 910,347 $ 878,978 (2 )% 2 % LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY Accounts payable $ 45,589 $ 57,559 $ 46,816 (21 )% (3 )% Contract liabilities 28,557 32,863 32,080 (13 )% (11 )% Accrued income taxes 11,527 9,455 4,256 22 % 171 % Current portion of long-term debt 15,000 15,000 15,000 — % — % Other current liabilities 36,954 40,259 29,898 (8 )% 24 % Total current liabilities 137,627 155,136 128,050 (11 )% 7 % Long-term debt 104,460 108,069 117,798 (3 )% (11 )% Deferred tax liabilities 3,336 2,214 1,908 51 % 75 % Other long-term liabilities 58,167 59,100 63,053 (2 )% (8 )% Redeemable noncontrolling interest 187,522 187,522 187,522 — % — % Stockholders’ equity 405,166 398,306 380,647 2 % 6 % Total liabilities, redeemable noncontrolling interest, and stockholders’ equity $ 896,278 $ 910,347 $ 878,978 (2 )% 2 % DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) (unaudited) Three months ended Nine months ended Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 11,525 $ 17,526 $ 8,213 $ 31,190 $ 10,392 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,460 3,434 3,541 10,294 10,578 Amortization of purchased intangible assets 5,667 5,667 7,385 17,001 33,154 Amortization of deferred debt issuance costs 141 133 145 412 412 Amortization of acquisition-related inventory valuation step-up — — — — 430 Stock-based compensation 1,832 1,699 2,242 8,558 6,891 Deferred income taxes 1,558 482 (1,448 ) 2,218 (1,612 ) Restructuring expenses and asset impairments 515 — 8 515 53 Other (1,607 ) (28 ) (340 ) (2,040 ) (295 ) Change in working capital, net 1,113 (17,434 ) 2,053 (25,400 ) (35,668 ) Net cash provided by operating activities 24,204 11,479 21,799 42,748 24,335 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in marketable securities (5,102 ) (2,414 ) — (7,516 ) — Consideration adjustments related to acquisition of business — — (2,674 ) — (2,034 ) Acquisition of property, plant and equipment (2,333 ) (2,896 ) (4,958 ) (7,455 ) (11,277 ) Net cash used in investing activities (7,435 ) (5,310 ) (7,632 ) (14,971 ) (13,311 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments on term loan (3,750 ) (3,750 ) (3,750 ) (13,750 ) (11,250 ) Payment of debt issuance costs — — (3 ) — (179 ) Distribution to redeemable noncontrolling interest holder (4,034 ) (3,711 ) (3,293 ) (10,345 ) (10,293 ) Net proceeds from issuance of common stock to employees and directors — 212 — 212 — Treasury stock activity (157 ) (14 ) 2 (2,328 ) (1,092 ) Net cash used in financing activities (7,941 ) (7,263 ) (7,044 ) (26,211 ) (22,814 ) EFFECTS OF EXCHANGE RATES ON CASH 508 171 (456 ) 1,350 (534 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,336 (923 ) 6,667 2,916 (12,324 ) CASH AND CASH EQUIVALENTS, beginning of the period 18,724 19,647 11,819 25,144 30,810 CASH AND CASH EQUIVALENTS, end of the period $ 28,060 $ 18,724 $ 18,486 $ 28,060 $ 18,486 DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands) (unaudited) DMC Global EBITDA and Adjusted EBITDA Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Net income 11,525 17,526 8,213 (34 )% 40 % Interest expense, net 2,392 2,432 1,771 (2 )% 35 % Income tax provision 4,087 6,600 3,537 (38 )% 16 % Depreciation 3,460 3,434 3,541 1 % (2 )% Amortization of purchased intangible assets 5,667 5,667 7,385 — % (23 )% EBITDA 27,131 35,659 24,447 (24 )% 11 % Stock-based compensation 1,832 1,699 2,242 8 % (18 )% CEO transition expenses (1) 805 573 — 40 % 100 % Other (income) expense, net (302 ) 439 (120 ) 169 % 152 % Restructuring expenses and asset impairments 515 — 8 100 % 6,338 % Adjusted EBITDA $ 29,981 $ 38,370 $ 26,577 (22 )% 13 % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (5,374 ) (6,594 ) (4,826 ) (19 )% 11 % Adjusted EBITDA attributable to DMC Global Inc. $ 24,607 $ 31,776 $ 21,751 (23 )% 13 % Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year Net income $ 31,190 $ 10,392 200 % Interest expense, net 7,205 4,058 78 % Income tax provision 13,187 4,938 167 % Depreciation 10,294 10,578 (3 )% Amortization of purchased intangible assets 17,001 33,154 (49 )% EBITDA 78,877 63,120 25 % Stock-based compensation 8,558 6,891 24 % CEO transition expenses (1) 4,343 — 100 % Restructuring expenses and asset impairments 515 53 872 % Amortization of acquisition-related inventory valuation step-up — 430 (100 )% Other expense, net 337 35 863 % Adjusted EBITDA $ 92,630 $ 70,529 31 % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (16,156 ) (15,911 ) 2 % Adjusted EBITDA attributable to DMC Global Inc. $ 76,474 $ 54,618 40 % (1) The Company and its former CEO entered into a separation agreement in the first quarter of 2023. In conjunction with this event as well as a reprioritization of near-term initiatives, we incurred certain expenses during the nine months ended September 30, 2023, primarily including: (a) severance-related charges for the former CEO and other impacted employees of $1,948; (b) CEO transition and executive search firm costs of $1,893; and (c) contract termination costs of $350.
Adjusted Net Income and Adjusted Diluted Earnings per Share Three months ended September 30, 2023 Amount Per Share(1) Net income attributable to DMC Global Inc.(2) $ 8,883 $ 0.45 CEO transition expenses, net of tax 620 0.03 Restructuring expenses and asset impairments, net of tax 358 0.02 As adjusted $ 9,861 $ 0.50 (1) Calculated using diluted weighted average shares outstanding of 19,596,575
(2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interestThree months ended June 30, 2023 Amount Per Share(1) Net income attributable to DMC Global Inc.(2) $ 13,703 $ 0.70 CEO transition expenses, net of tax 428 0.02 As adjusted $ 14,131 $ 0.72 (1) Calculated using diluted weighted average shares outstanding of 19,504,963
(2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interestThree months ended September 30, 2022 Amount Per Share(1) Net income attributable to DMC Global Inc. (2) $ 6,717 $ 0.35 NobelClad restructuring expenses, net of tax 5 — As adjusted $ 6,722 $ 0.35 (1) Calculated using diluted weighted average shares outstanding of 19,381,794
(2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interestNine months ended September 30, 2023 Amount Per Share(1) Net income attributable to DMC Global Inc. (2) $ 23,495 $ 1.20 CEO transition expenses and accelerated stock-based compensation, net of tax (3) 6,284 0.32 Restructuring expenses and asset impairments, net of tax 358 0.02 As adjusted $ 30,137 $ 1.54 (1) Calculated using diluted weighted average shares outstanding of 19,540,978
(2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest
(3) Includes CEO transition expenses of $4,343 and accelerated stock-based compensation of $3,040 related to the vesting of the former CEO’s outstanding equity awards, net of tax.Nine months ended September 30, 2022 Amount Per Share(1) Net income attributable to DMC Global Inc. (2) $ 8,981 $ 0.47 Amortization of acquisition-related inventory valuation step-up, net of tax 199 0.01 NobelClad restructuring expenses, net of tax 36 — As adjusted $ 9,216 $ 0.48 (1) Calculated using diluted weighted average shares outstanding of 19,357,333
(2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interestSegment Adjusted EBITDA Arcadia Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Operating income, as reported $ 6,476 $ 9,580 $ 3,742 (32 )% 73 % Adjustments: Depreciation 969 889 733 9 % 32 % Amortization of purchased intangible assets 5,652 5,652 7,233 — % (22 )% Stock-based compensation 337 323 357 4 % (6 )% CEO transition expenses — 42 — (100 )% — % Adjusted EBITDA 13,434 16,486 12,065 (19 )% 11 % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (5,374 ) $ (6,594 ) $ (4,826 ) (19 )% 11 % Adjusted EBITDA attributable to DMC Global Inc. $ 8,060 $ 9,892 $ 7,239 (19 )% 11 % Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year Operating income, as reported $ 19,189 $ 3,521 445 % Adjustments: Depreciation 2,675 2,144 25 % Amortization of purchased intangible assets 16,956 32,674 (48 )% Stock-based compensation 1,239 1,008 23 % CEO transition expenses 331 — 100 % Amortization of acquisition-related inventory valuation step-up — 430 (100 )% Adjusted EBITDA 40,390 39,777 2 % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (16,156 ) $ (15,911 ) 2 % Adjusted EBITDA attributable to DMC Global Inc. $ 24,234 $ 23,866 2 % DynaEnergetics Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Operating income, as reported $ 10,871 $ 17,733 $ 11,978 (39 )% (9 )% Adjustments: Depreciation 1,682 1,713 1,879 (2 )% (10 )% Amortization of purchased intangible assets 15 15 78 — % (81 )% Adjusted EBITDA $ 12,568 $ 19,461 $ 13,935 (35 )% (10 )% Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year Operating income, as reported $ 41,772 $ 26,585 57 % Adjustments: Depreciation 5,167 5,663 (9 )% Amortization of purchased intangible assets 45 245 (82 )% Adjusted EBITDA $ 46,984 $ 32,493 45 % NobelClad
Three months ended Change Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sequential Year-on-year Operating income, as reported $ 5,232 $ 4,707 $ 2,505 11 % 109 % Adjustments: Depreciation 712 700 825 2 % (14 )% Amortization of purchased intangible assets — — 74 — % (100 )% Restructuring expenses and asset impairments 440 — 8 100 % 5,400 % Adjusted EBITDA $ 6,384 $ 5,407 $ 3,412 18 % 87 % Nine months ended Change Sep 30, 2023 Sep 30, 2022 Year-on-year Operating income, as reported $ 12,560 $ 5,690 121 % Adjustments: Depreciation 2,152 2,490 (14 )% Amortization of purchased intangible assets — 235 (100 )% Restructuring expenses and asset impairments 440 53 730 % Adjusted EBITDA $ 15,152 $ 8,468 79 % CONTACT: Geoff High, Vice President of Investor Relations 303-604-3924