DMC Global Reports Record Fourth Quarter Financial Results
- Fourth quarter sales were a record $90.3 million, up 3% sequentially and 66% versus Q4 2017
- DynaEnergetics reported a sequential sales decline of 5% versus a forecasted decline of 5% to 10%
- NobelClad reported a sequential sales increase of 25%, versus a forecasted increase of 2%
- Gross margin was 35% versus 34% in Q3 2018 and 33% in Q4 2017
- Operating income was $13.1 million; adjusted operating income* was $13.6 million
- Net income was $15.3 million, or $1.02 per diluted share, while adjusted net income* was $7.0 million, or $0.46 per diluted share
- Fourth quarter adjusted EBITDA* was $16.9 million
- Year-end net debt* (total debt less cash and equivalents) was $28.0 million, down from $30.4 million at September 30, 2018, and up from $9.0 million at the end of 2017
BOULDER, Colo. - February 21, 2019 - DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its fourth quarter and fiscal year ended December 31, 2018.
Fourth quarter sales were a record $90.3 million, up 3% sequentially versus the 2018 third quarter, and a 66% increase versus the 2017 fourth quarter. The results, which exceeded management’s forecasted range of $82 million to $85 million, were principally driven by the accelerated production and delivery of a large chemical-industry order at NobelClad, DMC’s composite metals business. NobelClad also reported stronger-than-expected book-and-ship activity.
Gross margin was 35% versus 34% in the third quarter and 33% in the year-ago fourth quarter. The results were above a forecasted range of 33% to 34% primarily due to a more profitable project mix at NobelClad and improved factory productivity at DynaEnergetics.
Fourth quarter operating income was $13.1 million versus $513,000 in last year’s fourth quarter. Net income was $15.3 million, or $1.02 per diluted share, versus a net loss of $2.0 million, or a loss of $0.13 per diluted share, in the prior-year fourth quarter.
Adjusted operating income*, which excludes $561,000 in restructuring charges related to the final phase of NobelClad’s European consolidation program, was $13.6 million. Adjusted net income*, which excludes the restructuring charges and the impact of non-cash tax valuation allowances, was $7.0 million, or $0.46 per diluted share.
Fourth quarter adjusted EBITDA, which includes $2.5 million in litigation expenses, was $16.9 million versus $17.2 million in the 2018 third quarter and $7.7 million in last year’s fourth quarter.
Total debt at December 31, 2018, was $41.4 million and the Company’s debt-to-adjusted EBITDA leverage ratio was 0.70. Net debt* (total debt less cash and cash equivalents) was $28.0 million versus $30.4 million at the end of the 2018 third quarter and $9.0 million at December 31, 2017.
Fourth quarter sales at DynaEnergetics were $63.2 million, down 5% sequentially and an increase of 70% versus last year's fourth quarter. Gross margin was 39%, up from 37% in the 2018 third quarter and 38% in the 2017 fourth quarter. Operating income was $13.7 million versus $6.6 million in the prior-year fourth quarter. Adjusted EBITDA was $15.2 million versus $8.3 million in the 2017 fourth quarter.
NobelClad reported fourth quarter sales of $27.1 million, up 25% sequentially and a 56% increase versus the 2017 fourth quarter. Gross margin was 25%, flat versus the 2018 third quarter and up from 22% in the 2017 fourth quarter. Operating income was $2.7 million versus an operating loss of $3.0 million in the prior-year fourth quarter. Excluding restructuring charges, adjusted operating income was $3.3 million in the 2018 fourth quarter. Adjusted EBITDA was $4.0 million versus $1.5 million in the 2017 fourth quarter.
NobelClad’s trailing 12-month book-to-bill ratio at the end of the fourth quarter was 0.87. Order backlog was $29.9 million, down from $36.3 million at the end of the third quarter.
Consolidated full-year sales were a record $326.4 million, up 69% from $192.8 million in 2017. Gross margin was 34% versus 31% in the prior year. Operating income was $37.4 million versus an operating loss of $12.3 million in 2017. Excluding anti-dumping penalties and restructuring charges, 2018 full-year adjusted operating income was $46.5 million.
Full-year net income was $30.5 million, or $2.04 per diluted share, versus a net loss of $18.9 million, or $1.31 loss per diluted share, in 2017. Excluding anti-dumping duties, restructuring charges and the impact of tax valuation allowances, 2018 adjusted net income was $30.7 million, or $2.07 per diluted share.
Full-year adjusted EBITDA, which included $7.6 million in litigation expense, was a record $59.6 million versus $23.1 million in 2017.
Full-year sales at DynaEnergetics were a record $237.4 million, up 96% from $121.3 million in the prior year. Gross margin was 38%, up from 36% in 2017. Operating income was $44.5 million versus $15.5 million in 2017. Adjusted EBITDA was $58.8 million versus $22.8 million in the previous year.
NobelClad reported full-year sales of $89.0 million, up 24% from $71.6 million in 2017. Gross margin was 23% versus 22% in the prior year. Operating income was $6.5 million versus an operating loss of $17.4 million in 2017. Excluding restructuring charges, 2018 adjusted operating income was $7.6 million. Adjusted EBITDA was $10.8 million versus $7.7 million in 2017.
“The exceptional effort and execution by our teams at DynaEnergetics and NobelClad enabled DMC to deliver record financial results for the fourth quarter and full fiscal year,” said Kevin Longe, president and CEO. “It was an encouraging finish to a year that included a number of important strategic and operational accomplishments.
“During the fourth quarter alone, DynaEnergetics completed its new manufacturing, assembly and administrative facility in Blum, Texas; added several new customers; successfully defended itself in a third consecutive patent-infringement case and resolved two related patent litigation claims; and concluded a prolonged anti-dumping case. Concurrently, NobelClad completed a multi-year consolidation of its European manufacturing operations, shipped the third of three large orders executed in 2018, and commenced a strategic distribution partnership that expands its opportunities in the composite-metals market.”
Longe continued, “Despite continued soft crude-oil prices, customer demand for DynaEnergetics’ Factory-assembled, Performance-assured™ DynaStage™ perforating system remained strong. DynaStage is a unique system when compared to other pre-loaded perforating guns that recently have entered the market. A primary point of differentiation is our intrinsically safe initiating system, which combines a detonator, microelectronics and an addressable switch, all in a compact, wireless unit that can be installed in seconds. Customers have reported significant improvements in well-site efficiency due to the simplicity of the arming and gun-string assembly process. In addition, because the system is intrinsically safe, customers can surface test the entire gun string, including all switches and detonators, before deploying the string down hole. This has enabled an industry-leading reliability rate that exceeds 99.9%.
“DynaEnergetics recently completed successful field trials on its new DS Trinity™ system – a key addition to the DynaStage family. The three shaped charges in DS Trinity are aligned on a single plane, and at 8-inches in length, the system is up to 3.5 times shorter than conventional perforating guns. DynaEnergetics intends to release a 4-inch diameter version of DS Trinity in this year’s second quarter, and a 3 ½-inch diameter version shortly thereafter.
“Our accomplishments during 2018 have enabled us to shift our focus to our primary business objectives: develop differentiated products and applications that improve our customers’ operational and financial performance; and continue to expand the presence of our businesses in their respective markets. We have entered 2019 a stronger company than at any point in our history, and I am encouraged by our prospects for continued growth and positive returns for our stakeholders.”