DMC Global Reports Fourth Quarter and Full-Year Financial Results
Full-year 2019 sales were a record $397.6 million, up 22% from 2018
Fourth quarter sales were $86.4 million, down 14% sequentially and down 4% versus Q4 2018
Fourth quarter gross margin was 35% versus 36% in Q3 2019 and 35% in Q4 2018
DynaEnergetics completes previously announced exit of Siberian manufacturing facility and consolidates its manufacturing and distribution infrastructure
Fourth-quarter and full-year restructuring charges were $13.2 million and $19.5 million, respectively
Fourth quarter operating income was $499,000; adjusted operating income* was $13.8 million
Fourth quarter net loss was $5.3 million, or $0.36 loss per diluted share, while adjusted net income* was $9.5 million, or $0.65 per diluted share
Fourth quarter adjusted EBITDA* was $17.6 million
Full-year 2019 net income was $34.0 million, or $2.28 per diluted share, while full-year adjusted net income was $55.6 million, or $3.75 per diluted share
Year-end net cash* was $6.1 million compared with net debt* of $16.0 million at September 30, 2019, and $28.0 million at the end of 2018
BROOMFIELD, Colo., Feb. 20, 2020 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its fourth quarter and fiscal year ended December 31, 2019.
Fourth quarter sales were $86.4 million, down 14% sequentially versus the 2019 third quarter, and down 4% versus the 2018 fourth quarter. The sales decline was principally due to the previously reported sharp decline in North American well completion activity, which negatively impacted demand at DynaEnergetics, DMC’s oilfield products business. Fourth quarter gross margin was 35% versus 36% in the third quarter and 35% in the prior-year fourth quarter.
Fourth quarter operating income was $499,000 versus $13.1 million in the 2018 fourth quarter. Net loss was $5.3 million, or $0.36 loss per diluted share, versus net income of $15.3 million, or $1.02 per diluted share, in the prior-year fourth quarter.
Adjusted operating income* was $13.8 million, and excludes $13.2 million in restructuring charges ($12.1 million of which were non-cash) principally related to the closure of DynaEnergetics’ manufacturing plant in Tyumen, Siberia. Adjusted net income*, which excludes the restructuring charges, was $9.5 million, or $0.65 per diluted share.
Fourth quarter adjusted EBITDA was $17.6 million versus $23.2 million in the 2019 third quarter and $16.9 million in the prior-year fourth quarter. Cash flow from operations was $29.5 million versus $21.1 million in the fourth quarter of 2018.
Net cash* (cash and cash equivalents less total debt) was $6.1 million versus net debt* (total debt less cash and cash equivalents) of $16.0 million at the end of the 2019 third quarter and $28.0 million at December 31, 2018. Total debt at December 31, 2019, was $14.3 million and the Company’s debt-to-adjusted EBITDA leverage ratio was 0.2.
DynaEnergetics DynaEnergetics reported fourth quarter sales of $64.6 million, down 16% sequentially and an increase of 2% versus the prior-year fourth quarter. Gross margin was 38% versus 39% in the 2019 third quarter and 39% in the 2018 fourth quarter. Adjusted EBITDA was $18.5 million versus $15.2 million in the 2018 fourth quarter.
NobelClad NobelClad reported fourth quarter sales of $21.8 million, down 4% sequentially and down 20% versus the 2018 fourth quarter. Gross margin was 27%, up from 26% in the 2019 third quarter and 25% in the prior-year fourth quarter. Adjusted EBITDA was $2.4 million versus $4.0 million in the prior-year fourth quarter.
NobelClad’s trailing 12-month book-to-bill ratio at the end of the fourth quarter was 1.03. Order backlog was $31.7 million versus $33.2 million at the end of the third quarter.
Full-year results Consolidated sales in 2019 were a record $397.6 million, up 22% from $326.4 million in 2018. Gross margin was 36% versus 34% in the prior year.
Operating income was $58.4 million versus $37.4 million in 2018. Excluding $19.5 million in restructuring charges ($16.6 million of which were non-cash), 2019 full-year adjusted operating income was $78.7 million.
Full-year 2019 net income was $34.0 million, or $2.28 per diluted share, while full-year adjusted net income was $55.6 million, or $3.75 per diluted share. Net income in 2018 was $30.5 million, or $2.04 per diluted share, while 2018 adjusted net income was $30.7 million, or $2.07 per diluted share.
Full-year adjusted EBITDA was a record $93.8 million. Adjusted EBITDA in 2018 was $59.6 million and included $7.6 million in litigation expense.
Cash flow from operations was $64.6 million, which excluded $27.2 million in capital expenditures. In 2018, cash flow from operations was $27.6 million, and excluded $45.1 million in capital expenditures. Trailing 12-month return on invested capital was 18%, down from 29% at the end of the third quarter. The decline principally relates to the closure of DynaEnergetics’ manufacturing plant in Tyumen, Siberia, and the write down of the facility’s carrying value.
DynaEnergetics Full-year sales at DynaEnergetics were a record $310.4 million, up 31% from $237.4 million in 2018. Gross margin was 40%, up from 38% in the prior year. Adjusted EBITDA was $94.5 million versus $58.8 million in the prior year.
NobelClad NobelClad reported full-year sales of $87.1 million, down 2% from $89.0 million in 2018. Gross margin was 26% versus 23% in the prior year. Adjusted EBITDA was $11.1 million versus $10.8 million in the prior year.
Management Commentary “Our employees executed extremely well during 2019, and their efforts enabled DMC to deliver record consolidated sales and earnings, strong operating cash flow, and increased shareholder returns that included a significant increase in our annual dividend,” said Kevin Longe, CEO.
“Increased customer adoption of DynaEnergetics’ DynaStage™ DS Factory-Assembled, Performance-Assured™ perforating systems was a key factor in our 2019 performance. More than 20 percent of the perforating systems deployed in North America during 2019 were either DS™ systems, or were enabled by DynaEnergetics’ IS2™ intrinsically safe initiating systems.
“North American well completion activity began slowing in the third quarter of 2019, and the decline accelerated rapidly in the fourth quarter,” Longe said. “This downturn reflects a long-overdue shift in the industry toward capital discipline, free cash flow generation, strengthening of balance sheets, and ultimately, improved returns for investors. While this dynamic has slowed near-term drilling and completion activity, it is necessary for strengthening the health of our industry over the longer term.
“DynaEnergetics capitalized on the fourth-quarter slowdown by accelerating a planned streamlining of its global manufacturing and distribution footprint. This process involved exiting a manufacturing plant in Tyumen, Siberia, and closing distribution facilities in Canada and Oklahoma. DynaEnergetics also accelerated the planned consolidation of its Mt. Braddock, Pennsylvania, assembly operations into its facility in Blum, Texas. We expect approximately $2.0 million in annual cost savings as a result of these initiatives.”
“E&Ps are highly focused on lowering operating costs through more effective well completion programs," Longe added. “Increasingly, these operators are specifying DynaEnergetics’ perforating systems, which remain unmatched in their safety, efficiency and reliability. DynaEnergetics continued to expand its product and technology portfolio during 2019. In addition to launching its DS Trinity™ and DS™ NLine™ systems, DynaEnergetics was awarded 17 new patents and filed 126 patent applications in the U.S. and internationally. It was the most active year ever for patent applications and awards at DynaEnergetics, which currently holds a total of 63 patents and 186 pending patent applications, covering a total of 73 patent families.”
Longe continued, “NobelClad’s market development team made significant progress during 2019 at establishing new applications for its composite metal plates. New customers in the aerospace, power generation and engineered wood products sectors have turned to NobelClad’s capabilities to address complex corrosion and temperature resistance issues. NobelClad currently is seeing an anticipated pick up in booking activity for projects expected to ship later this year. We are optimistic 2020 will be a year of growth for NobelClad.
“We have entered 2020 with a strong balance sheet and a very efficient organizational structure,” Longe added. “While current market conditions suggest a relatively slow start to 2020, we are well positioned to navigate the near-term headwinds and pricing pressure in the energy market. We expect financial results to improve at DynaEnergetics and NobelClad as the year progresses. DMC’s financial strength will enable us to continue to invest in research and development, new product introductions, and new market development initiatives. Our focus remains on innovation and achieving profit margins that reflect the inherent value our products deliver to customers.”
Guidance Michael Kuta, CFO, said first quarter 2020 sales are expected to be in a range of $80 million to $84 million versus the $86.4 million reported in the 2019 fourth quarter. At the business level, DynaEnergetics is expected to report sales in a range of $62 million to $65 million versus the $64.6 million reported in last year’s fourth quarter, while NobelClad’s sales are expected in a range of $18 million to $19 million versus the $21.8 million reported in the 2019 fourth quarter. Consolidated gross margin is expected to be in a range of 34% to 35% versus 35% in last year’s fourth quarter.
First quarter selling, general and administrative (SG&A) expense is expected in a range of $16 million to $17 million versus the $16.2 million reported in the 2019 fourth quarter, while amortization expense is expected to be approximately $350,000. Interest expense is expected to be approximately $400,000.
Adjusted EBITDA is expected in a range of $14 million to $15 million versus $17.6 million in the fourth quarter of 2019. Earnings per share are expected in a range of $0.50 to $0.55 versus adjusted earnings per share of $0.65 in the 2019 fourth quarter.
“With respect to 2020, we anticipate sales will begin to improve during the second quarter as new products from DynaEnergetics take hold in the market,” Kuta said. “However, it is difficult to predict the impact macro developments, such as the Coronavirus outbreak in China, will have on economic activity and oil and gas demand during the balance of the year. Based on our current assessment of the market, we expect full-year 2020 sales in a range of $370 million to $400 million versus the $397.6 million reported in 2019. Sales at DynaEnergetics are expected in a range of $280 million to $300 million versus the $310.4 million reported in 2019, while NobelClad’s sales are expected in a range of $90 million to $100 million versus the $87.1 million in 2019. Full-year gross margin is expected in a range of 34% to 35% versus the 36% reported in 2019.”
Full-year SG&A is anticipated in a range of $62 million to $64 million versus the $65.5 million reported in 2019. Full-year amortization expense is expected to be approximately $1.3 million versus the $1.5 million reported in 2019.
Interest expense in 2020 is expected to be approximately $700,000, down from the $1.6 million reported in 2019. The effective tax rate for 2020 is expected to be in a range of 28% to 29%.
Adjusted EBITDA is expected to be in a range of $80 million to $90 million versus adjusted EBITDA of $93.8 million in 2019. Full-year net income per share is expected in a range of $3.00 to $3.30 versus adjusted net income per share of $3.75 reported in fiscal 2019.
Capital expenditures in 2020 are expected to be in a range of $20 million to $25 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 are invited to listen to the call live at: https://www.investornetwork.com/event/presentation/58664, or by dialing 844-407-9500 (862-298-0850 for international callers). No passcode is necessary. 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 February 27, 2020, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #58664.
*Use of Non-GAAP Financial Measures Adjusted EBITDA, adjusted operating income, adjusted net income, adjusted gross margin, adjusted diluted earnings per share, net debt, and return on invested capital (ROIC) 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 operating income is defined as operating income plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted net income is defined as net income plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted gross margin is defined as gross margin plus inventory write downs associated with restructuring. 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. Net debt is defined as total debt less cash and cash equivalents. ROIC is based on Bloomberg Finance's most recent calculation methodology and is computed as trailing 12-month net operating profit after tax divided by average invested capital, where average of invested capital is calculated based on the average of invested capital for the current period and invested capital for the same period a year ago. 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.
Net cash or net debt is used by management to supplement GAAP financial information and evaluate DMC’s performance, and management believes this information may be similarly useful to investors. Adjusted operating income, adjusted net income, adjusted gross margin and adjusted diluted earnings per share are presented because management believes these measures are useful to understand the effects of restructuring and impairment charges on DMC’s operating income, net income and diluted earnings per share, respectively. ROIC is used by management as one measure of the effectiveness of DMC’s use of capital in its operations, and management believes it may be of similar usefulness to investors.
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 DMC Global is a diversified holding company. Our innovative businesses provide differentiated products and services to niche industrial and commercial markets around the world. DMC’s objective is to identify well-run businesses and strong management teams and support them with long-term capital and strategic, legal, technology and operating resources. Our approach helps our portfolio companies grow core businesses, launch new initiatives, upgrade technologies and systems to support their long-term strategy, and make acquisitions that improve their competitive positions and expand their markets. DMC’s culture is to foster local innovation versus centralized control, and stand behind our businesses in ways that truly add value. Today, DMC’s portfolio consists of DynaEnergetics and NobelClad, which collectively address the energy, industrial processing and transportation markets. Based in Broomfield, Colorado, DMC trades on Nasdaq under the symbol “BOOM.” For more information, visit the Company’s website at: 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 first quarter and full-year 2020 guidance on sales, gross margin, adjusted gross margin, SG&A, amortization expenses, adjusted earnings per share, adjusted EBITDA and interest expense; expected capital expenditures in 2020; expected cost savings from DynaEnergetics’ streamlining of manufacturing and distribution infrastructure; our expectations regarding NobelClad booking activity later in 2020; our belief that 2020 could be year of meaningful growth for NobelClad and our expectation that our financial results will improve as the year progresses. 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; 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; potential supply-chain disruptions, including as may be related to the coronavirus; the adequacy of local labor supplies at our facilities; current or future limits on manufacturing capacity at our various operations; the availability and cost of funds; and general economic conditions, both domestic and foreign, impacting our business and the business of 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, 2018. 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.
CONTACT: Geoff High, Vice President of Investor Relations 303-604-3924
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Share and Per Share Data) (unaudited)
Three months ended
Change
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
Sequential
Year-on-year
NET SALES
$
86,367
$
100,094
$
90,318
-14
%
-4
%
COST OF PRODUCTS SOLD
56,146
63,870
58,879
-12
%
-5
%
Gross profit
30,221
36,224
31,439
-17
%
-4
%
Gross profit percentage
35.0
%
36.2
%
34.8
%
COSTS AND EXPENSES:
General and administrative expenses
9,220
10,128
10,902
-9
%
-15
%
Selling and distribution expenses
6,944
6,983
6,334
-1
%
10
%
Amortization of purchased intangible assets
355
394
579
-10
%
-39
%
Restructuring expenses, net and asset impairments
13,203
5,898
561
124
%
2,253
%
Total costs and expenses
29,722
23,403
18,376
27
%
62
%
OPERATING INCOME
499
12,821
13,063
-96
%
-96
%
OTHER (EXPENSE) INCOME:
Other (expense) income, net
(661
)
170
(163
)
-489
%
-306
%
Interest expense, net
(385
)
(387
)
(519
)
1
%
26
%
INCOME (LOSS) BEFORE INCOME TAXES
(547
)
12,604
12,381
-104
%
-104
%
INCOME TAX (BENEFIT) PROVISION
4,741
5,689
(2,890
)
-17
%
264
%
NET INCOME (LOSS)
(5,288
)
6,915
15,271
-176
%
-135
%
NET INCOME (LOSS) PER SHARE:
Basic
$
(0.36
)
$
0.47
$
1.02
-177
%
-135
%
Diluted
$
(0.36
)
$
0.46
$
1.02
-178
%
-135
%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic
14,640,110
14,632,276
14,576,522
—
%
—
%
Diluted
14,640,110
14,851,166
14,676,240
-1
%
—
%
DIVIDENDS DECLARED PER COMMON SHARE
$
0.125
$
0.125
$
0.02
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Share and Per Share Data) (unaudited)
Twelve months ended
Change
Dec 31, 2019
Dec 31, 2018
Year-on-year
NET SALES
$
397,550
$
326,429
22
%
COST OF PRODUCTS SOLD
252,627
215,734
17
%
Gross profit
144,923
110,695
31
%
Gross profit percentage
36.5
%
33.9
%
COSTS AND EXPENSES:
General and administrative expenses
37,976
38,452
-1
%
Selling and distribution expenses
27,475
22,761
21
%
Amortization of purchased intangible assets
1,544
2,944
-48
%
Restructuring expenses, net and asset impairments
19,503
1,114
1651
%
Anti-dumping duty penalties
—
8,000
-100
%
Total costs and expenses
86,498
73,271
18
%
OPERATING INCOME
58,425
37,424
56
%
OTHER EXPENSE:
Other expense, net
(169
)
(1,202
)
86
%
Interest expense, net
(1,554
)
(1,615
)
4
%
INCOME BEFORE INCOME TAXES
56,702
34,607
64
%
INCOME TAX PROVISION
22,661
4,134
448
%
NET INCOME
34,041
30,473
12
%
NET INCOME PER SHARE:
Basic
$
2.29
$
2.05
12
%
Diluted
$
2.28
$
2.04
12
%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic
14,579,608
14,529,745
—
%
Diluted
14,655,350
14,620,635
—
%
DIVIDENDS DECLARED PER COMMON SHARE
$
0.29
$
0.08
DMC GLOBAL INC. SEGMENT STATEMENTS OF OPERATIONS (Amounts in Thousands) (unaudited)
DynaEnergetics
Three months ended
Change
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
Sequential
Year-on-year
Net sales
$
64,604
$
77,356
$
63,178
-16
%
2
%
Gross profit
24,586
30,543
24,744
-20
%
-1
%
Gross profit percentage
38.1
%
39.5
%
39.2
%
COSTS AND EXPENSES:
General and administrative expenses
3,516
5,048
6,577
-30
%
-47
%
Selling and distribution expenses
4,119
4,405
4,016
-6
%
3
%
Amortization of purchased intangible assets
260
299
482
-13
%
-46
%
Restructuring expenses, net and asset impairments
12,744
5,880
—
117
%
n/a
Operating income
3,947
14,911
13,669
-74
%
-71
%
Adjusted EBITDA
$
18,472
$
23,193
$
15,247
-20
%
21
%
Twelve months ended
Change
Dec 31, 2019
Dec 31, 2018
Year-on-year
Net sales
$
310,424
$
237,448
31
%
Gross profit
122,703
90,623
35
%
Gross profit percentage
39.5
%
38.2
%
COSTS AND EXPENSES:
General and administrative expenses
16,876
21,097
-20
%
Selling and distribution expenses
17,260
14,509
19
%
Amortization of purchased intangible assets
1,162
2,541
-54
%
Restructuring expenses, net and asset impairments
18,624
—
n/a
Anti-dumping duty penalties
—
8,000
-100
%
Operating income
68,781
44,476
55
%
Adjusted EBITDA
$
94,541
$
58,784
61
%
NobelClad
Three months ended
Change
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
Sequential
Year-on-year
Net sales
$
21,763
$
22,738
$
27,140
-4
%
-20
%
Gross profit
5,786
5,811
6,799
—
%
-15
%
Gross profit percentage
26.6
%
25.6
%
25.1
%
COSTS AND EXPENSES:
General and administrative expenses
1,324
1,032
1,217
28
%
9
%
Selling and distribution expenses
2,687
2,447
2,216
10
%
21
%
Amortization of purchased intangible assets
95
95
97
—
%
-2
%
Restructuring expenses, net and asset impairments
459
18
561
2,450
%
-18
%
Operating income
1,221
2,219
2,708
-45
%
-55
%
Adjusted EBITDA
$
2,390
$
3,082
$
4,047
-22
%
-41
%
DMC GLOBAL INC. SEGMENT STATEMENTS OF OPERATIONS (Amounts in Thousands) (unaudited)
Twelve months ended
Change
Dec 31, 2019
Dec 31, 2018
Year-on-year
Net sales
$
87,126
$
88,981
-2
%
Gross profit
22,840
20,414
12
%
Gross profit percentage
26.2
%
22.9
%
COSTS AND EXPENSES:
General and administrative expenses
4,703
4,522
4
%
Selling and distribution expenses
9,683
7,876
23
%
Amortization of purchased intangible assets
382
403
-5
%
Restructuring expenses, net and asset impairments
879
1,114
-21
%
Operating income
7,193
6,499
11
%
Adjusted EBITDA
$
11,118
$
10,825
3
%
DMC GLOBAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) (unaudited)
Change
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
Sequential
From year-end
ASSETS
Cash and cash equivalents
$
20,353
$
12,183
$
13,375
67
%
52
%
Accounts receivable, net
60,855
71,689
59,709
-15
%
2
%
Inventories
53,728
58,923
51,074
-9
%
5
%
Other current assets
9,417
9,206
8,058
2
%
17
%
Total current assets
144,353
152,001
132,216
-5
%
9
%
Property, plant and equipment, net
108,234
103,670
95,140
4
%
14
%
Purchased intangible assets, net
5,880
6,251
8,589
-6
%
-32
%
Other long-term assets
18,954
13,893
4,473
36
%
324
%
Total assets
$
277,421
$
275,815
$
240,418
1
%
15
%
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
$
34,758
$
24,306
$
24,243
43
%
43
%
Accrued anti-dumping penalties
—
—
8,000
n/a
-100
%
Contract liabilities
2,736
2,563
1,140
7
%
140
%
Dividend payable
1,866
1,866
295
—
%
533
%
Accrued income taxes
9,651
10,427
9,545
-7
%
1
%
Current portion of long-term debt
3,125
3,125
3,125
—
%
—
%
Other current liabilities
19,287
21,671
18,217
-11
%
6
%
Total current liabilities
71,423
63,958
64,565
12
%
11
%
Long-term debt
11,147
25,010
38,230
-55
%
-71
%
Deferred tax liabilities
3,786
1,469
379
158
%
899
%
Other long-term liabilities
18,924
18,302
2,958
3
%
540
%
Stockholders' equity
172,141
167,076
134,286
3
%
28
%
Total liabilities and stockholders' equity
$
277,421
$
275,815
$
240,418
1
%
15
%
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) (unaudited)
Three months ended
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(5,288
)
$
6,915
$
15,271
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation
2,138
2,223
1,777
Amortization of purchased intangible assets
355
394
579
Amortization of deferred debt issuance costs
48
47
46
Stock-based compensation
1,296
1,242
918
Deferred income taxes
2,629
1,236
(3,929
)
Loss on disposal of property, plant and equipment
187
26
48
Restructuring expenses, net and asset impairments
13,203
5,898
561
Change in working capital, net
14,930
(6,187
)
5,822
Net cash provided by operating activities
29,498
11,794
21,093
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment
(4,833
)
(6,094
)
(18,521
)
Proceeds on sale of property, plant and equipment
5
—
—
Net cash used in investing activities
(4,828
)
(6,094
)
(18,521
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on revolving loans
(6,130
)
(7,000
)
(6,150
)
(Payments) borrowing on capital expenditure facility
(7,781
)
(782
)
6,010
Payment of dividends
(1,866
)
(298
)
(298
)
Payment of deferred debt issuance costs
—
—
(4
)
Net proceeds from issuance of common stock
199
—
210
Treasury stock purchases
(24
)
(123
)
—
Net cash used in financing activities
(15,602
)
(8,203
)
(232
)
EFFECTS OF EXCHANGE RATES ON CASH
(898
)
(195
)
(63
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
8,170
(2,698
)
2,277
CASH AND CASH EQUIVALENTS, beginning of the period
12,183
14,881
11,098
CASH AND CASH EQUIVALENTS, end of the period
$
20,353
$
12,183
$
13,375
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) (unaudited)
Twelve months ended
Dec 31, 2019
Dec 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
34,041
$
30,473
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
8,316
6,576
Amortization of purchased intangible assets
1,544
2,944
Amortization of deferred debt issuance costs
178
314
Stock-based compensation
5,204
3,580
Deferred income taxes
4,289
(3,653
)
Loss on disposal of property, plant and equipment
530
78
Restructuring expenses, net and asset impairments
19,503
1,114
Transition tax liability
—
(679
)
Change in working capital, net
(9,011
)
(13,109
)
Net cash provided by operating activities
64,594
27,638
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment
(27,210
)
(45,095
)
Proceeds on sale of property, plant and equipment
1,263
—
Net cash used in investing activities
(25,947
)
(45,095
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on revolving loans
(17,129
)
(1,628
)
(Payments) borrowings on capital expenditure facility
(10,125
)
25,000
Payment of dividends
(2,762
)
(1,189
)
Payment of deferred debt issuance costs
—
(314
)
Net proceeds from issuance of common stock
557
442
Treasury stock purchases
(1,103
)
(453
)
Net cash provided by (used in) financing activities
(30,562
)
21,858
EFFECTS OF EXCHANGE RATES ON CASH
(1,107
)
(9
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
6,978
4,392
CASH AND CASH EQUIVALENTS, beginning of the period
13,375
8,983
CASH AND CASH EQUIVALENTS, end of the period
$
20,353
$
13,375
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands, Except Per Share Data) (unaudited)
DMC Global Inc.
EBITDA and Adjusted EBITDA
Three months ended
Change
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
Sequential
Year-on-year
Net income (loss)
$
(5,288
)
$
6,915
$
15,271
-176
%
-389
%
Interest expense, net
385
387
519
-1
%
-35
%
Income tax (benefit) provision
4,741
5,689
(2,890
)
-17
%
-264
%
Depreciation
2,138
2,223
1,777
-4
%
20
%
Amortization of purchased intangible assets
355
394
579
-10
%
-63
%
EBITDA
2,331
15,608
15,256
-85
%
-554
%
Restructuring expenses, net and asset impairments
13,203
5,898
561
124
%
2,253
%
Restructuring related inventory write down
—
630
—
-100
%
n/a
Restructuring related accounts receivable write off
131
—
—
n/a
n/a
Stock-based compensation
1,296
1,242
918
4
%
41
%
Other expense (income), net
661
(170
)
163
489
%
306
%
Adjusted EBITDA
$
17,622
$
23,208
$
16,898
-24
%
4
%
Twelve months ended
Change
Dec 31, 2019
Dec 31, 2018
Year-on-year
Net income
$
34,041
$
30,473
12
%
Interest expense, net
1,554
1,615
-4
%
Income tax provision
22,661
4,134
448
%
Depreciation
8,316
6,576
26
%
Amortization of purchased intangible assets
1,544
2,944
-48
%
EBITDA
68,116
45,742
49
%
Restructuring expenses, net and asset impairments
19,503
1,114
1,651
%
Restructuring related inventory write down
630
—
n/a
Restructuring related accounts receivable write off
131
—
n/a
Anti-dumping duty penalties
—
8,000
-100
%
Stock-based compensation
5,204
3,580
45
%
Other expense, net
169
1,202
-86
%
Adjusted EBITDA
$
93,753
$
59,638
57
%
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands, Except Per Share Data) (unaudited)
Adjusted operating income
Three months ended
Change
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
Sequential
Year-on-year
Operating income, as reported
$
499
$
12,821
$
13,063
-96
%
-2
%
Restructuring programs:
NobelClad
458
18
561
2,444
%
-97
%
DynaEnergetics
12,745
5,880
—
117
%
n/a
Restructuring related inventory write down
—
630
—
-100
%
n/a
Restructuring related accounts receivable write off
131
—
—
n/a
n/a
Adjusted operating income
$
13,833
$
19,349
$
13,624
-29
%
42
%
Twelve months ended
Change
Dec 31, 2019
Dec 31, 2018
Year-on-year
Operating income, as reported
$
58,425
$
37,424
56
%
Restructuring programs:
NobelClad
872
1,114
-22
%
DynaEnergetics
18,631
—
n/a
Restructuring related inventory write down
630
—
n/a
Restructuring related accounts receivable write off
131
—
n/a
Anti-dumping duty penalties
—
8,000
-100
%
Adjusted operating income
$
78,689
$
46,538
69
%
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands, Except Per Share Data) (unaudited)
Adjusted Net Income and Diluted Income per Share
Three months ended December 31, 2019
Pretax
Tax
Net
Diluted EPS
Net loss, as reported
$
(547
)
$
4,741
$
(5,288
)
$
(0.36
)
Restructuring programs:
NobelClad
458
4
454
0.03
DynaEnergetics
12,745
160
12,585
0.86
Restructuring related accounts receivable write off
131
—
131
0.01
Impact of tax valuation allowances
—
(1,647
)
1,647
0.11
Net income, excluding charges
$
12,787
$
3,258
$
9,529
$
0.65
Three months ended September 30, 2019
Pretax
Tax
Net
Diluted EPS
Net income, as reported
$
12,604
$
5,689
$
6,915
$
0.46
Restructuring programs:
NobelClad
18
—
18
—
DynaEnergetics
5,880
77
5,803
0.40
Restructuring related inventory write down
630
—
630
0.04
Net income, excluding charges
$
19,132
$
5,766
$
13,366
$
0.90
Three months ended December 31, 2018
Pre-Tax
Tax
Net
Diluted EPS
Net income, as reported
$
12,381
$
(2,890
)
$
15,271
$
1.02
Restructuring programs:
NobelClad
561
—
561
0.04
Impact of tax valuation allowances
—
8,860
(8,860
)
(0.60
)
Net income, excluding charges
$
12,942
$
5,970
$
6,972
$
0.46
Twelve months ended December 31, 2019
Pre-Tax
Tax
Net
Diluted EPS
Net income, as reported
$
56,702
$
22,661
$
34,041
$
2.28
Restructuring programs:
NobelClad
873
33
840
0.06
DynaEnergetics
18,625
239
18,386
1.25
Restructuring related inventory write down
630
109
521
0.04
Restructuring related accounts receivable write off
131
—
131
0.01
Impact of tax valuation allowances
—
(1,647
)
1,647
0.11
Net income, excluding charges
$
76,961
$
21,395
$
55,566
$
3.75
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands, Except Per Share Data) (unaudited)
Twelve months ended December 31, 2018
Pre-Tax
Tax
Net
Diluted EPS
Net income, as reported
$
34,607
$
4,134
$
30,473
$
2.04
Restructuring programs:
NobelClad
1,114
—
1,114
0.08
Accrued anti-dumping duties
8,000
—
8,000
0.55
Impact of tax valuation allowances
—
8,860
(8,860
)
(0.60
)
Net income, excluding charges
$
43,721
$
12,994
$
30,727
$
2.07
Return on Invested Capital
Three months ended
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Sep 30, 2019
Dec 31, 2019
Operating income
$
13,063
$
20,452
$
24,653
$
12,821
$
499
Income tax provision (benefit) (1)
(2,809
)
4,990
7,371
5,782
5,227
Net operating profit after taxes (NOPAT)
15,872
15,462
17,282
7,039
(4,728
)
Trailing Twelve Months NOPAT
55,655
35,055
Balances as of
Sep 30, 2018
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Sep 30, 2019
Dec 31, 2019
Allowance for doubtful accounts
$
490
$
513
$
574
$
428
$
405
$
967
Deferred tax assets
—
(4,001
)
(3,843
)
(3,656
)
(3,431
)
(3,836
)
Deferred tax liabilities
849
379
880
458
1,469
3,786
Accrued income taxes
9,299
9,545
5,367
9,419
10,427
9,651
Current portion of lease liabilities
—
—
2,122
2,016
1,944
1,716
Long-term portion of lease liabilities
—
—
6,157
9,506
9,487
9,777
Current portion of long-term debt
—
3,125
3,125
3,125
3,125
3,125
Long-term debt
41,454
38,230
40,239
32,744
25,010
11,147
Total stockholders' equity
119,390
134,286
148,911
163,501
167,076
172,141
Total invested capital
171,482
182,077
203,532
217,541
215,512
208,474
Average invested capital
187,058
193,497
195,276
Trailing Twelve Months Return on Invested Capital (ROIC)
25
%
29
%
29
%
18
%
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands, Except Per Share Data) (unaudited)
(1) Tax calculation for NOPAT:
Three months ended
Twelve months ended
Three months ended
Twelve months ended
Dec 31, 2018
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Sep 30, 2019
Dec 31, 2019
Dec 31, 2019
Income before income taxes
$
12,381
$
34,607
$
20,058
$
24,587
$
12,604
$
(547
)
56,702
Income tax provision (benefit)
(2,890
)
4,134
4,888
7,343
5,689
4,741
22,661
Effective tax rate
(23.3
)%
11.9
%
24.4
%
29.9
%
45.1
%
(866.7
)%
40.0
%
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands, Except Per Share Data) (unaudited)
DynaEnergetics
Adjusted EBITDA
Three months ended
Change
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018
Sequential
Year-on-year
Operating income
$
3,947
$
14,911
$
13,669
-74
%
-71
%
Adjustments:
Restructuring expenses, net and asset impairments
12,744
5,880
—
117
%
n/a
Restructuring related inventory write down
—
630
—
-100
%
n/a
Restructuring related accounts receivable write off
131
—
—
n/a
n/a
Adjusted operating income
16,822
21,421
13,669
-21
%
23
%
Depreciation
1,390
1,473
1,096
-6
%
27
%
Amortization of purchased intangible assets
260
299
482
-13
%
-46
%
Adjusted EBITDA
$
18,472
$
23,193
$
15,247
-20
%
21
%
Twelve months ended
Change
Dec 31, 2019
Dec 31, 2018
Year-on-year
Operating income
$
68,781
$
44,476
55
%
Adjustments:
Restructuring expenses, net and asset impairments
18,624
—
n/a
Restructuring related inventory write down
630
—
n/a
Restructuring related accounts receivable write off
131
—
n/a
Anti-dumping duty penalties
—
8,000
-100
%
Adjusted operating income
88,166
52,476
68
%
Depreciation
5,213
3,767
38
%
Amortization of purchased intangible assets
1,162
2,541
-54
%
Adjusted EBITDA
$
94,541
$
58,784
61
%
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands, Except Per Share Data) (unaudited)
