DMC Global Reports Third Quarter Financial Results

Rhea-AI Summary

DMC Global Inc. reported third quarter sales of $172.1 million, down 1% compared to 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% compared to Q3 2022. Adjusted diluted EPS attributable to DMC was $0.50, up 43% compared to Q3 2022. Adjusted EBITDA attributable to DMC was $24.6 million, up 13% compared to Q3 2022. Total adjusted EBITDA, inclusive of non-controlling interest, was $30.0 million, or 17.4% of sales, up 220 basis points compared to Q3 2022. Third quarter free cash flow was $21.9 million.

• 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%

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 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 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

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	%

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

FAQ

What were DMC Global Inc.'s third quarter sales?

DMC Global Inc.'s third quarter sales were $172.1 million.

What was the net income for the third quarter?

The net income for the third quarter was $11.5 million.

What was the adjusted net income attributable to DMC for the third quarter?

The adjusted net income attributable to DMC for the third quarter was $9.9 million, up 47% compared to Q3 2022.

What was the adjusted diluted EPS attributable to DMC for the third quarter?

The adjusted diluted EPS attributable to DMC for the third quarter was $0.50, up 43% compared to Q3 2022.

What was the adjusted EBITDA attributable to DMC for the third quarter?

The adjusted EBITDA attributable to DMC for the third quarter was $24.6 million, up 13% compared to Q3 2022.

What was the total adjusted EBITDA for the third quarter?

The total adjusted EBITDA, inclusive of non-controlling interest, for the third quarter was $30.0 million, or 17.4% of sales, up 220 basis points compared to Q3 2022.

What was the third quarter free cash flow?

The third quarter free cash flow was $21.9 million.