DMC GLOBAL REPORTS THIRD QUARTER FINANCIAL RESULTS
•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. - November 2, 2023 - 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.”
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.”
•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
3
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.
4
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.
###
5
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.
6
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
7
DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Data)
(unaudited)
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
8
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)
%
9
DMC GLOBAL INC.
SEGMENT STATEMENTS OF OPERATIONS
(Amounts in Thousands)
(unaudited)
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
%
10
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
%
11
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
12
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.
13
DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)
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 interest
Three 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 interest
Three 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 interest
Nine 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 interest
14
DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)
Segment 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
%
15
DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST