DMC Global Reports First Quarter 2022 Financial Results

CONTACT:

Geoff High, Vice President of Investor Relations

303-604-3924

 

 

DMC GLOBAL REPORTS FIRST QUARTER FINANCIAL RESULTS

 

•  First quarter sales were $138.7 million

•  Excluding the acquisition of Arcadia, first quarter sales were $70.7 million, down 2% sequentially and up 27% versus Q1 2021

•  First quarter gross margin improved to 27% from 18% in Q4 2021 and 23% in Q1 2021

•  First quarter net loss attributable to DMC was $3.3 million

•  First quarter net loss per diluted share, inclusive of adjustment for redeemable noncontrolling interest, was $0.47

•  First quarter adjusted net loss attributable to DMC*, inclusive of $13.0 million in non-cash amortization expense for purchased intangible assets, was $3.1 million, or $0.16 per diluted share

•  First quarter adjusted EBITDA attributable to DMC* was $10.5 million versus $2.8 million in Q4 2021 and $4.0 million in Q1 2021

 

BROOMFIELD, Colo. - May 5, 2022 - DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its first quarter ended March 31, 2022.

 

First quarter sales were $138.7 million versus $71.8 million in the fourth quarter of 2021, and $55.7 million in the first quarter a year ago.  This year’s first quarter results include $68.0 million in sales from Arcadia, a leading supplier of architectural building products.  DMC acquired a 60% controlling interest in Arcadia on December 23, 2021.

 

Excluding Arcadia, first quarter sales were $70.7 million, down 2% sequentially and up 27% versus the first quarter of 2021.  The sequential decline reflects lower international sales at DynaEnergetics, DMC’s energy products business. The improvement versus the year-ago first quarter resulted from increased well completion activity in North America, which drove greater demand at DynaEnergetics, as well as increased order shipments at NobelClad, DMC’s composite metals business. 

 

First quarter gross margin was 27% versus 18% in the fourth quarter and 23% in the first quarter a year ago. The sequential and year-over-year improvements reflect the addition of Arcadia’s higher-margin first quarter sales, as well as increased North American sales at DynaEnergetics, which resulted in more favorable absorption of fixed manufacturing overhead expenses. These improvements were partially offset by a lower-margin project mix at NobelClad.

 

Selling, general and administrative expense (SG&A) was $27.8 million.  Excluding $9.9 million in expenses from Arcadia, SG&A was $17.9 million, up from $16.3 million in the fourth quarter and $13.2 million in the year-ago first quarter.  The increase versus both periods reflects increased litigation expenses at DynaEnergetics, higher non-cash stock compensation expense, and higher salaries, benefits and other payroll related costs primarily due the expiration of the Employee Retention Credit under the CARES Act.

 

First quarter operating loss was $3.9 million and included $13.0 million in non-cash amortization expense primarily associated with purchased intangible assets at Arcadia. DMC reported operating losses of $5.5 million in the fourth quarter, and $710,000 in the first quarter last year. 

 

First quarter net loss attributable to DMC was $3.3 million. Following the acquisition of the 60% controlling interest in Arcadia, the calculation for net earnings per diluted share must account for the change in redemption value of the 40% redeemable noncontrolling interest in Arcadia. Redemption value is estimated at the end of each quarter based on the formula used to calculate a Put and Call Option in the Operating Agreement.  At March 31, 2022, the adjustment was $5.7 million dollars. When added to the $3.3 million net loss attributable to DMC stockholders, the resulting net loss is $9.0 million, or $0.47 per diluted share, based on 19.3 million diluted shares outstanding.  Net income in the prior-year first quarter was $432,000, or $0.03 per diluted share on 15.5 million diluted shares outstanding.

 

First quarter adjusted net loss attributable to DMC*, which includes $13.0 million in non-cash amortization expense of the purchased intangible assets of Arcadia, was $3.1 million, or $0.16 per diluted share.

 

First quarter adjusted EBITDA attributable to DMC* was $10.5 million versus $2.8 million in the fourth quarter and $4.0 million in the 2021 first quarter.

 

Cash flow used in operations was $4.6 million versus cash provided by operating activities of $2.2 million in the prior-year first quarter. The increased use of cash primarily relates to funding working capital at DynaEnergetics and Arcadia, both of which increased investments in inventory due to rising raw material prices, longer lead times and anticipated sales volume growth. Cash and cash equivalents were $15.4 million versus $30.8 million at December 31, 2021.

 

DMC’s debt-to-adjusted EBITDA leverage ratio at March 31, 2022, was 2.9. The Company’s debt-to-adjusted EBITDA leverage ratio covenant for the end of the quarter was 3.5.

 

Arcadia

Arcadia reported first quarter sales of $68.0 million, which exceeded the high end of management’s forecasted range by 11%. Sales were up 20% sequentially from fourth quarter pro forma sales of $56.7 million, and up 19% from pro forma sales of $57.2 million in the first quarter last year.  The increase versus both periods reflects higher average selling prices, which were implemented to address sharply higher raw material costs.

 

First quarter gross margin was 30% versus pro forma gross margin of 28% in the fourth quarter and 37% in last year’s first quarter.  The gross margin decline versus last year’s first quarter reflects inflation on raw materials that outpaced increases in selling prices. However, during both periods, Arcadia delivered consistent gross profit dollars, which were $20.2 million in the 2022 first quarter and $20.9 million in the year-ago first quarter. 

 

Arcadia’s first quarter adjusted EBITDA attributable to DMC was $6.9 million versus pro forma adjusted EBITDA of $4.8 in the fourth quarter and $7.7 million in the comparable year-ago quarter. 

 

DynaEnergetics

DynaEnergetics reported first quarter sales of $48.9 million, down 4% sequentially and up 28% versus the prior-year first quarter. Sales in North America increased 2% sequentially, while international sales declined 33% sequentially. Gross margin was 26% versus 20% in the 2021 fourth quarter and 22% in the 2021 first quarter. Adjusted EBITDA increased to $5.3 million from $4.0 million in the fourth quarter and $3.5 million in the 2021 first quarter.

 

NobelClad

NobelClad reported first quarter sales of $21.9 million, up 3% sequentially and up 25% versus the 2021 first quarter. Gross margin was 19%, versus 20% in the fourth quarter and 26% in the prior-year first quarter. Adjusted EBITDA was $1.7 million versus $2.1 million in the fourth quarter and $2.7 million in the 2021 first quarter.

 

NobelClad’s trailing 12-month book-to-bill ratio at the end of the first quarter was 1.02. Order backlog increased to $44.4 million from $41.2 million at the end of the fourth quarter.

 

 

Management Commentary

“DMC’s businesses delivered a solid start to 2022, despite a variety of macro-economic challenges,” said Kevin Longe, president and CEO.

 

“The sales growth at Arcadia was principally driven by price increases implemented throughout the quarter to offset rapidly escalating raw material costs. Arcadia’s pricing strategies enabled stable year-over-year gross profits despite aluminum and energy prices that spiked to multi-year highs.

 

“Arcadia continues report very healthy demand from its core low-rise and mid-rise building markets throughout the western and southwestern United States, as well as from the national high-end residential market. The capacity expansion programs we are implementing will enable Arcadia to address its diverse customer base more efficiently. Initiatives include the design and installation of new paint and anodizing lines, which are scheduled to be operational in the first half of next year. Implementation of a new enterprise resource planning system also is on plan, and I am encouraged by the progress our teams are making on the integration of Arcadia’s finance and IT systems.

 

“At DynaEnergetics, demand from North America’s unconventional oil and gas industry accelerated in March and led to a new monthly record for shipments of our fully integrated DS perforating systems. Strong demand has continued into the second quarter, as high energy prices and growing reliance on North American oil and gas are driving increased well completion activity. These factors, coupled with the significant performance and cost benefits of our DS systems; should fuel continued growth at DynaEnergetics during the balance of 2022.  We also believe recent price increases; enhanced operating efficiencies at our Blum, Texas, manufacturing facility; and an expected acceleration of international sales will lead to continued improvement in DynaEnergetics’ gross margin.

 

“At NobelClad, global supply chain constraints continue to impede progress on several large projects on which we are bidding. However, bookings are healthy, order backlog is improving, and the medium to longer-range outlook for profitable growth remains positive.

 

We are encouraged by our start to 2022, and by the strong early contributions of Arcadia,” Longe added. “We now operate three differentiated and innovative businesses that have built leading positions in their respective industries.  I am confident DMC’s prospects for long-term growth and improved returns for our stakeholders have never been stronger.”

 

Guidance

Michael Kuta, CFO, said second quarter 2022 consolidated sales are expected in a range of $142 million to $152 million. At the business level, Arcadia is expected to report sales of $68 million to $72 million versus the $68 million reported in the first quarter. The increase reflects anticipated higher pricing to address inflation on raw materials. Sales at DynaEnergetics are expected in a range of $54 million to $58 million, up from $48.9 million in the first quarter. DynaEnergetics expects significantly higher international sales and improved pricing in North America during the second quarter. NobelClad’s sales are expected in a range of $20 million to $22 million versus the $21.9 million reported in the first quarter. 

 

Consolidated gross margin is expected in a range of 28% to 30% versus the 27% reported in the first quarter. The expected improvement reflects DynaEnergetics’ anticipated increase in international sales and improved pricing in North America. Second quarter selling, general and administrative (SG&A) expense is expected in a range of $26.5 million to $27.5 million versus the $27.8 million reported in the first quarter.  

 

Second quarter amortization expense is expected to be $12.8 million versus the $13.0 million reported in the first quarter. The remaining value assigned to Arcadia’s acquired backlog will be largely amortized during the second quarter and will result in a significant decline in amortization expense during the second half of the year. Amortization expense is expected to be $6.7 million in the third quarter and $3.6 million in the fourth quarter. 

 

Second quarter depreciation expense is expected to be $3.7 million, and interest expense is expected to be approximately $1.3 million.

 

Second quarter adjusted EBITDA attributable to DMC, after deducting the 40% noncontrolling interest, is expected in a range of $15 million to $18 million versus the $10.5 million reported in the first quarter.

 

Second quarter capital expenditures are expected to be $4.0 million to $6.0 million. 

 

Conference call information

Management will hold a conference call to discuss these results today at 5:00 p.m. Eastern (3:00 p.m. Mountain). Investors may listen to a live webcast of the call at https://www.webcaster4.com/Webcast/Page/2204/45322 , or by dialing 888-267-2822 (973-528-0002 for international callers) and entering the code 755328. Webcast participants should access the website at least 15 minutes early to register and download any necessary audio software. A replay of the webcast will be available for 90 days and a telephonic replay will be available through May 12, 2022, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #45322.

 

*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 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 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 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 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 and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance, on DMC’s net income 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 intangibles 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). 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 operates a portfolio of differentiated businesses that lead niche segments of the energy, industrial infrastructure and building products industries.  The Company’s strategy is to identify well-run businesses with strong management teams, and support them with long-term capital and strategic, financial, legal, technology and operating resources. DMC helps portfolio companies grow their core businesses, launch new initiatives, upgrade technologies and systems to support their long-term growth strategies, and make acquisitions that improve their competitive positions and expand their markets.  The Company’s current portfolio consists of Arcadia Inc., 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.  Based in Broomfield, Colorado, DMC trades on Nasdaq under the symbol “BOOM.” For more information, visit the Company’s website at https://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 second quarter 2022 guidance on sales, gross margin, SG&A, depreciation expense, interest expense, adjusted EBITDA and capital expenditures; second quarter and full-year amortization expense; our expectations that new manufacturing capacity at Arcadia will be on line in the first half of next year; our expectations for continued growth and gross margin improvement at DynaEnergetics during the balance of 2022. Such statements and information are based on numerous assumptions regarding present and future business strategies, the markets in which we operate, anticipated costs and 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 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; 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; impacts of COVID-19 and any related preventive or protective actions taken by governmental authorities and resulting economic impacts, including recessions or depressions; 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, 2021. 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

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

 

Sequential

 

Year-on-year

NET SALES

$ 138,716

 

$ 71,844

 

$ 55,658

 

93 %

 

149 %

COST OF PRODUCTS SOLD

101,810

 

58,910

 

42,745

 

73 %

 

138 %

Gross profit

36,906

 

12,934

 

12,913

 

185 %

 

186 %

Gross profit percentage

27%

 

18%

 

23%

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

General and administrative expenses

17,718

 

10,155

 

7,929

 

74 %

 

123 %

Selling and distribution expenses

10,090

 

6,127

 

5,243

 

65 %

 

92 %

Amortization of purchased intangible assets

12,976

 

568

 

324

 

2,185 %

 

3,905 %

Acquisition expenses

 

1,581

 

 

-100 %

 

—%

Restructuring expenses and asset impairments

32

 

 

127

 

—%

 

-75 %

Total costs and expenses

40,816

 

18,431

 

13,623

 

121 %

 

200 %

OPERATING LOSS

(3,910)

 

(5,497)

 

(710)

 

29 %

 

-451 %

OTHER (EXPENSE) INCOME:

 

 

 

 

 

 

 

 

 

Other (expense) income, net

(209)

 

(152)

 

394

 

-38 %

 

-153 %

Interest expense, net

(1,024)

 

(74)

 

(135)

 

-1,284 %

 

-659 %

LOSS BEFORE INCOME TAXES

(5,143)

 

(5,723)

 

(451)

 

10 %

 

-1,040 %

INCOME TAX BENEFIT

(863)

 

(2,154)

 

(883)

 

-60 %

 

-2 %

NET (LOSS) INCOME

(4,280)

 

(3,569)

 

432

 

-20 %

 

-1,091 %

Less: Net loss attributable to redeemable noncontrolling interest

(992)

 

(808)

 

 

-23 %

 

—%

NET (LOSS) INCOME ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS

$ (3,288)

 

$ (2,761)

 

$ 432

 

-19 %

 

-861 %

NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS

Basic

$ (0.47)

 

$ (0.38)

 

$ 0.03

 

-24 %

 

-1,667 %

Diluted

$ (0.47)

 

$ (0.38)

 

$ 0.03

 

-24 %

 

-1,667 %

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

Basic

19,301,126

 

18,754,250

 

15,453,103

 

3 %

 

25 %

Diluted

19,301,126

 

18,754,250

 

15,463,923

 

3 %

 

25 %

 

Reconciliation to net (loss) income attributable to DMC Global Inc. stockholders after
adjustment of redeemable noncontrolling interest for purposes of calculating earnings
per share

 

Three months ended

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

Net (loss) income attributable to DMC Global Inc. stockholders

$ (3,288)

 

$ (2,761)

 

$ 432

Adjustment of redeemable noncontrolling interest

(5,717)

 

(4,424)

 

Net (loss) income attributable to DMC Global Inc. common stockholders after adjustment of redeemable noncontrolling interest

$ (9,005)

 

$ (7,185)

 

$ 432

 

 

DMC GLOBAL INC.

SEGMENT STATEMENTS OF OPERATIONS

(Amounts in Thousands)

(unaudited)

 

 

Arcadia

 

Three months ended

 

Mar 31, 2022

Net sales

$ 67,968

Gross profit

20,245

Gross profit percentage

30%

COSTS AND EXPENSES:

 

General and administrative expenses

6,143

Selling and distribution expenses

3,737

Amortization of purchased intangible assets

12,808

Operating loss

(2,443)

Adjusted EBITDA

11,420

Less: adjusted EBITDA attributable to redeemable noncontrolling interest

(4,568)

Adjusted EBITDA attributable to DMC Global Inc.

$ 6,852

 

DynaEnergetics

 

Three months ended

 

Change

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

 

Sequential

 

Year-on-year

Net sales

$ 48,887

 

$ 50,679

 

$ 38,172

 

-4 %

 

28 %

Gross profit

12,608

 

9,922

 

8,434

 

27 %

 

49 %

Gross profit percentage

26%

 

20%

 

22%

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

General and administrative expenses

5,322

 

4,559

 

3,574

 

17 %

 

49 %

Selling and distribution expenses

3,903

 

3,348

 

3,140

 

17 %

 

24 %

Amortization of purchased intangible assets

85

 

87

 

199

 

-2 %

 

-57 %

Operating income

3,298

 

1,928

 

1,521

 

71 %

 

117 %

Adjusted EBITDA

$ 5,282

 

$ 3,950

 

$ 3,521

 

34 %

 

50 %

 

NobelClad

 

Three months ended

 

Change

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

 

Sequential

 

Year-on-year

Net sales

$ 21,861

 

$ 21,165

 

$ 17,486

 

3 %

 

25 %

Gross profit

4,181

 

4,212

 

4,617

 

-1 %

 

-9 %

Gross profit percentage

19%

 

20%

 

26%

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

General and administrative expenses

1,037

 

581

 

813

 

78 %

 

28 %

Selling and distribution expenses

2,324

 

2,326

 

1,948

 

— %

 

19 %

Amortization of purchased intangible assets

83

 

118

 

125

 

-30 %

 

-34 %

Restructuring expenses and asset impairments

32

 

 

127

 

—%

 

-75 %

Operating income

705

 

1,187

 

1,604

 

-41 %

 

-56 %

Adjusted EBITDA

$ 1,652

 

$ 2,141

 

$ 2,670

 

-23 %

 

-38 %

 

 

 

DMC GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)


 

 

 

 

 

Change

 

Mar 31, 2022

 

Dec 31, 2021

 

From year-end

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$ 15,376

 

$ 30,810

 

-50 %

Accounts receivable, net

79,782

 

71,932

 

11 %

Inventories

143,304

 

124,214

 

15 %

Other current assets

17,354

 

12,240

 

42 %

 

 

 

 

 

 

Total current assets

255,816

 

239,196

 

7 %

 

 

 

 

 

 

Property, plant and equipment, net

120,479

 

122,078

 

-1 %

Goodwill

140,234

 

141,266

 

-1 %

Purchased intangible assets, net

242,568

 

255,576

 

-5 %

Other long-term assets

104,827

 

106,296

 

-1 %

 

 

 

 

 

 

Total assets

$ 863,924

 

$864,412

 

— %

 

 

 

 

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Accounts payable

$ 48,114

 

$ 40,276

 

19 %

Contract liabilities

26,952

 

21,052

 

28 %

Accrued income taxes

834

 

9

 

9,167 %

Current portion of long-term debt

15,000

 

15,000

 

— %

Other current liabilities

30,288

 

29,477

 

3 %

 

 

 

 

 

 

Total current liabilities

121,188

 

105,814

 

15 %

 

 

 

 

 

 

Long-term debt

128,710

 

132,425

 

-3 %

Deferred tax liabilities

937

 

2,202

 

-57 %

Other long-term liabilities

64,398

 

66,250

 

-3 %

Redeemable noncontrolling interest

197,196

 

197,196

 

— %

Stockholders’ equity

351,495

 

360,525

 

-3 %

 

 

 

 

 

 

Total liabilities, redeemable noncontrolling interest, and stockholders’ equity

$ 863,924

 

$864,412

 

— %

 

DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(unaudited)


 

Three months ended

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net (loss) income

$ (4,280)

 

$ (3,569)

 

$ 432

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

 

 

Depreciation

3,359

 

2,903

 

2,698

Amortization of purchased intangible assets

12,976

 

568

 

324

Amortization of deferred debt issuance costs

132

 

80

 

56

Amortization of acquisition-related inventory valuation step-up

258

 

 

Stock-based compensation

2,358

 

1,670

 

1,608

Deferred income taxes

(2,714)

 

200

 

(2,334)

Loss (gain) on disposal of property, plant and equipment

9

 

94

 

(288)

Restructuring expenses and asset impairments

32

 

 

127

Change in working capital, net

(16,714)

 

(12,852)

 

(447)

Net cash (used in) provided by operating activities

(4,584)

 

(10,906)

 

2,176

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Acquisition of business, net of cash acquired

 

(261,000)

 

Proceeds from maturities of marketable securities

 

 

4,799

Proceeds from sales of marketable securities

 

144,921

 

Acquisition of property, plant and equipment

(1,536)

 

(2,311)

 

(1,365)

Proceeds on sale of property, plant and equipment

 

 

281

Promissory note to redeemable noncontrolling interest holder

 

(24,902)

 

Net cash (used in) provided by investing activities

(1,536)

 

(143,292)

 

3,715

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on capital expenditure facility

 

 

(11,750)

Borrowings on term loan

 

150,000

 

Payments on term loan

(3,750)

 

 

Payment of debt issuance costs

(97)

 

(2,337)

 

Net proceeds from issuance of common stock through at-the-market offering program

 

 

25,262

Net proceeds from issuance of common stock to employees and directors

 

181

 

Distribution to redeemable noncontrolling interest holder

(4,400)

 

 

Treasury stock purchases

(1,088)

 

(9)

 

(2,435)

Net cash (used in) provided by financing activities

(9,335)

 

147,835

 

11,077

EFFECTS OF EXCHANGE RATES ON CASH

21

 

153

 

682

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(15,434)

 

(6,210)

 

17,650

CASH AND CASH EQUIVALENTS, beginning of the period

30,810

 

37,020

 

28,187

CASH AND CASH EQUIVALENTS, end of the period

$ 15,376

 

$ 30,810

 

$ 45,837

 

 

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

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

 

Sequential

 

Year-on-year

Net (loss) income

(4,280)

 

(3,569)

 

432

 

-20 %

 

-1,091 %

Interest expense, net

1,024

 

74

 

135

 

1,284 %

 

659 %

Income tax benefit

(863)

 

(2,154)

 

(883)

 

-60 %

 

-2 %

Depreciation

3,359

 

2,903

 

2,698

 

16 %

 

24 %

Amortization of purchased intangible assets

12,976

 

568

 

324

 

2,185 %

 

3,905 %

 

 

 

 

 

 

 

 

 

 

EBITDA

12,216

 

(2,178)

 

2,706

 

661 %

 

351 %

Acquisition expenses

 

1,581

 

 

-100 %

 

—%

Arcadia stub period expenses excluding depreciation & amortization

 

1,605

 

 

-100 %

 

—%

Amortization of acquisition-related inventory valuation step-up

258

 

 

 

—%

 

—%

Restructuring expenses and asset impairments

32

 

 

127

 

—%

 

-75 %

Stock-based compensation

2,358

 

1,670

 

1,608

 

41 %

 

47 %

Other expense (income), net

209

 

152

 

(394)

 

38 %

 

153 %

Adjusted EBITDA

$ 15,073

 

$ 2,830

 

$ 4,047

 

433 %

 

272 %

Less: adjusted EBITDA attributable to redeemable noncontrolling interest

(4,568)

 

 

 

—%

 

—%

Adjusted EBITDA attributable to DMC Global Inc.

$ 10,505

 

$ 2,830

 

$ 4,047

 

271 %

 

160 %


Adjusted Net Income and Adjusted Diluted Earnings per Share


 

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


 

Three months ended December 31, 2021

 

Amount

 

Per Share (1)

Net loss attributable to DMC Global Inc.

$ (2,761)

 

$ (0.15)

Acquisition expenses, net of tax

1,217

 

0.07

Arcadia stub period expenses, net of tax

1,741

 

0.09

As adjusted

$ 197

 

$ 0.01

(1) Calculated using diluted weighted average shares outstanding of 18,754,250


 

Three months ended March 31, 2021

 

Amount

 

Per Share (1)

Net income attributable to DMC Global Inc.

$ 432

 

$ 0.03

NobelClad restructuring expenses and asset impairments, net of tax

127

 

0.01

As adjusted

$ 559

 

$ 0.04

1) Calculated using diluted weighted average shares outstanding of 15,463,923


Segment Adjusted EBITDA


Arcadia

 

Three months ended

 

Mar 31, 2022

Operating (loss), as reported

$ (2,443)

Adjustments:

 

Amortization of acquisition-related inventory valuation step-up

258

Depreciation

541

Amortization of purchased intangible assets

12,808

Stock-based compensation

256

Adjusted EBITDA

11,420

Less: adjusted EBITDA attributable to redeemable noncontrolling interest

(4,568)

Adjusted EBITDA attributable to DMC Global Inc.

$ 6,852

 

DynaEnergetics

 

Three months ended

 

Change

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

 

Sequential

 

Year-on-year

Operating income, as reported

$ 3,298

 

$ 1,928

 

$ 1,521

 

71 %

 

117 %

Adjustments:

 

 

 

 

 

 

 

 

 

Depreciation

1,899

 

1,935

 

1,801

 

-2 %

 

5 %

Amortization of purchased intangible assets

85

 

87

 

199

 

-2 %

 

-57 %

Adjusted EBITDA

$ 5,282

 

$ 3,950

 

$ 3,521

 

34 %

 

50 %

 


NobelClad

 

Three months ended

 

Change

 

Mar 31, 2022

 

Dec 31, 2021

 

Mar 31, 2021

 

Sequential

 

Year-on-year

Operating income, as reported

$ 705

 

$ 1,187

 

$ 1,604

 

-41 %

 

-56 %

Adjustments:

 

 

 

 

 

 

 

 

 

Restructuring expenses and asset impairments

32

 

 

127

 

—%

 

-75 %

Depreciation

832

 

836

 

814

 

— %

 

2 %

Amortization of purchased intangible assets

83

 

118

 

125

 

-30 %

 

-34 %

Adjusted EBITDA

$ 1,652

 

$ 2,141

 

$ 2,670

 

-23 %

 

-38 %

 

 

DMC GLOBAL INC.

PRO FORMA RESULTS

(Amounts in Thousands, Except Per Share Data)

(unaudited)

Pro Forma Summary Income Statement*


 

Three months ended March 31, 2021

 

DMC

 

Arcadia

 

Redeemable Noncontrolling Interest(1)

 

Pro Forma Arcadia

 

Pro Forma Combined

Net Sales

$ 55,658

 

$ 57,241

 

 

 

$ 57,241

 

$ 112,899

Gross profit

12,913

 

20,930

 

 

 

20,930

 

33,843

Gross profit %

23.2 %

 

36.6 %

 

 

 

36.6 %

 

30.0 %

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

13,172

 

8,453

 

 

 

8,453

 

21,625

Amortization of purchased intangible assets

324

 

 

 

 

 

324

Restructuring expenses and asset impairments

127

 

 

 

 

 

127

Operating (loss) income

(710)

 

12,477

 

 

 

12,477

 

11,767

 

 

 

 

 

 

 

 

 

 

Depreciation and Amortization

3,022

 

406

 

 

 

406

 

3,428

Restructuring expenses and asset impairments

127

 

 

 

 

 

127

Stock-based compensation expense

1,608

 

 

 

 

 

1,608

Adjusted EBITDA

4,047

 

12,883

 

(5,153)

 

7,730

 

11,777

Adjusted EBITDA %

7.3 %

 

22.5 %

 

 

 

13.5 %

 

10.4 %

(1) Represents the Adjusted EBITDA attributable to the 40% redeemable
noncontrolling interest.

 

Pro Forma EBITDA and Adjusted EBITDA*

 

Three months ended March 31, 2021

 

DMC

 

Arcadia

 

Pro Forma Combined

Net income

$ 432

 

$ 12,477

 

$ 12,909

Interest expense, net

135

 

 

135

Income tax benefit

(883)

 

 

(883)

Depreciation

2,698

 

406

 

3,104

Amortization

324

 

 

324

EBITDA

2,706

 

12,883

 

15,589

Restructuring

127

 

 

127

Stock-based compensation expense

1,608

 

 

1,608

Other income, net

(394)

 

 

(394)

Adjusted EBITDA

4,047

 

12,883

 

16,930

Less: adjusted EBITDA attributable to redeemable noncontrolling interest

 

(5,153)

 

(5,153)

Adjusted EBITDA attributable to DMC Global Inc.

4,047

 

7,730

 

11,777

 

*This unaudited pro forma combined financial information was not prepared under Article 11 of SEC Regulation S-X (“Article 11”) or Financial Accounting Standards Board Accounting Standards Codification 805 (“ASC 805”).


 

Information

Date

05.05.2022

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