DMC Global Reports Second Quarter Financial Results
Consolidated second quarter sales were $111.0 million, up 11% sequentially and 37% versus Q2 2018
Gross margin was 38%, up from 36% in Q1 2019 and 33% in Q2 2018
Operating income was $24.7 million versus $10.2 million in Q2 2018
Net income was $17.2 million, or $1.15 per diluted share; adjusted net income* was $17.6 million, or $1.17 per diluted share
Adjusted EBITDA* of $29.0 million was up 21% sequentially and 108% versus Q2 2018
Return on invested capital* increases to 30%
BROOMFIELD, Colo., July 25, 2019 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its second quarter ended June 30, 2019.
Consolidated sales were a record $111.0 million, up 37% versus the second quarter of 2018 and up 11% sequentially. The growth was driven by stronger than forecasted sales at both DynaEnergetics, DMC’s oilfield products business, and NobelClad, the Company’s composite metals business.
Second quarter gross margin was 38% versus 33% in the 2018 second quarter and 36% in the 2019 first quarter. The increase was principally due to a more favorable product mix and improved manufacturing and supply chain efficiencies at DynaEnergetics.
Operating income was $24.7 million, up 141% from $10.2 million in the 2018 second quarter. Net income was $17.2 million, or $1.15 per diluted share, versus $6.4 million, or $0.43 per diluted share, in last year’s second quarter.
Adjusted operating income* was $25.0 million, and excludes $324,000 in restructuring expenses at NobelClad. Adjusted net income was $17.6 million, or $1.17 per diluted share.
Second quarter adjusted EBITDA was $29.0 million, up 108% from $13.9 million in the 2018 second quarter, and a 21% sequential increase versus $23.9 million reported in this year’s first quarter.
Net debt* (total debt less cash and cash equivalents) at June 30, 2019, was $21.0 million, down from $28.5 million at March 31, 2019 and $28.0 million at December 31, 2018.
DynaEnergetics Second quarter sales at DynaEnergetics were a record $88.6 million, up 50% from the 2018 second quarter and 11% sequentially. Gross margin was 41%, up from 37% in last year’s second quarter and 39% in the first quarter. Operating income was $26.8 million versus $12.2 million in the comparable year-ago quarter. Adjusted EBITDA was $28.5 million versus $13.8 million in last year’s second quarter.
NobelClad NobelClad reported second-quarter sales of $22.3 million, up 1% versus the 2018 second quarter and up 10% sequentially. Gross margin was 26%, up from 23% in the 2018 second quarter and flat compared to this year’s first quarter. Operating income was $1.9 million versus $1.7 million in the year-ago second quarter. Excluding restructuring charges, adjusted operating income was $2.2 million versus $1.9 million in the year-ago second quarter. Adjusted EBITDA was $3.1 million versus $2.7 million in last year’s second quarter.
NobelClad’s trailing 12-month book-to-bill ratio at the end of the second quarter was 1.01. Order backlog was $38.8 million versus $40.5 million at the end of the first quarter.
Six-month results Consolidated sales for the six-month period were $211.1 million, up 42% versus the same period a year ago. Gross margin was 37% versus 33% in the 2018 six-month period. Operating income was $45.1 million versus $15.5 million in last year’s six-month period, which included $3.1 million in accrued anti-dumping penalties. Net income for the period was $32.4 million, or $2.17 per diluted share, versus $10.3 million, or $0.69 per diluted share, in the same period a year ago.
Six-month adjusted operating income was $45.5 million and adjusted net income was $32.8 million, or $2.20 per diluted share. Adjusted EBITDA was $52.9 million versus $25.6 million in last year’s six-month period.
DynaEnergetics Six-month sales at DynaEnergetics were $168.5 million, up 56% from $108.0 million, in last year’s six-month period. Operating income was $49.9 million versus $20.9 million in the comparable year-ago period. Adjusted EBITDA was $53.0 million versus $27.2 million in last year’s six-month period.
NobelClad NobelClad reported six-month sales of $42.6 million, up 6% from $40.2 million at the six-month mark last year. Operating income was $3.8 million versus $1.7 million in the comparable year-ago period, while adjusted EBITDA was $5.8 million versus $3.7 million.
Management Commentary “Both DynaEnergetics and NobelClad exceeded their second quarter financial forecasts and continued to execute well on their 2019 business plans,” said Kevin Longe, president and CEO. “DynaEnergetics further extended its product offering and added several new customers for its intrinsically safe initiating systems (IS2™) and its family of DynaStage® (DS) Factory-Assembled, Performance-Assured™ perforating systems.
“The safety features of the IS2 product family remain a critical point of differentiation versus other detonating components in the market,” Longe added. “Our solid-state IS2 systems do not contain internal wiring and require a digital signal from a control panel at surface to fire, making them immune to stray voltage and current. Although several companies have incorporated addressable switches into their perforating guns, we believe these devices are universally wired to resistorized detonators, which are more sensitive to electrical interference and increased failure. This distinction has growing relevance as our industry addresses increased electromagnetic interference, including from electric frac fleets utilizing generators that can produce more than 30 megawatts of power. We believe prudent operators will ultimately require their service companies to deploy solid-state integrated initiating systems that have been proven to be intrinsically safe.”
Longe said, “DynaEnergetics’ broad portfolio of IS2 products, performance charges, and packaging options enable customers to select from thousands of configurations of DS Factory-Assembled, Performance-Assured perforating systems.”
DynaEnergetics introduced two new models to its DS product family during the second quarter. DS Trinity™ 3.5 is currently in field trials and is a smaller-diameter version of the DS Trinity™ 4.0, which was introduced in the first quarter. DS Trinity 3.5 features three charges on a single plane within a 7-inch long carrier, and does not require detonating cord or a connecting sub. A second new system, DS NLine™, enables the operator to align at surface the charges of multiple guns, and then orient the gun string downhole to fire in a pre-determined direction.
Longe continued, “The NobelClad team delivered another quarter of strong contribution margins and made additional progress in its effort to expand NobelClad’s composite-metal solutions and end-market applications.
“I am very pleased with the progress DMC and its businesses made during the first half of 2019. In addition to our commercial and operational achievements, we reported a 12-month return on invested capital of 30%. I would like to thank our customers for their continued support, and our employees around the world for their innovative thinking, outstanding execution, and dedication to DMC’s success.”
Guidance Michael Kuta, CFO, said third quarter sales are expected in a range of $96 million to $102 million versus the $87.9 million in the 2018 third quarter. At the business level, DynaEnergetics is expected to report sales in a range of $76 million to $80 million versus $66.3 million reported in last year’s third quarter. NobelClad’s sales are expected to be in the range of $20 million to $22 million versus $21.6 million reported in the 2018 third quarter.
Consolidated gross margin is expected to be in the 35.5% to 36.5% range versus 34% reported in the year-ago third quarter. The sequential decline versus the 38% reported in this year’s second quarter reflects unfavorable fixed manufacturing overhead absorption from lower sales at DynaEnergetics and a less favorable project mix in the second half at NobelClad.
Third quarter selling, general and administrative (SG&A) expense is expected to be approximately $17.5 million versus SG&A of $15.1 million in last year’s third quarter. Amortization expense is expected to be approximately $400,000 versus $769,000 in the third quarter last year, while interest expense is expected to be approximately $400,000.
Adjusted EBITDA is expected in a range of $20 million to $24 million versus $17.2 million in last year’s third quarter.
Kuta said due to widespread industry uncertainty regarding near-term well completion activity, management is lowering its prior full-year top-line sales forecasts, but is maintaining its prior forecast for adjusted EBITDA and is increasing the lower end of its range for anticipated adjusted net income per share. Sales are now expected in a range of $400 million to $415 million versus the $326.4 million reported in 2018. Sales at DynaEnergetics are expected in a range of $315 million to $325 million versus the $237.4 million reported in 2018, while NobelClad’s sales are expected to be in a range of $85 million to $90 million versus the $89.0 million in 2018 and up from a prior forecast of $80 million to $85 million. Gross margin is expected in a range of 36% to 37% versus the 34% reported in 2018, and the prior forecast of 35%. The increase reflects the Company’s continued focus on enhancing manufacturing efficiencies and achieving product margins that reflect the value of its technologies.
Kuta said full-year SG&A should be approximately $64 million to $67 million versus the $61.2 million reported in 2018. The increase relates to higher expected spending on sales and marketing programs at both DynaEnergetics and NobelClad. Anticipated amortization expense remains at approximately $1.6 million versus the $2.9 million reported in 2018.
Anticipated interest expense in 2019 is expected to be approximately $1.5 million, and the expected effective tax rate for 2019 is still approximately 30%, which reflects a higher expected rate in the second half of the year primarily due to geographic sales mix.
Adjusted EBITDA is expected in a range of $90 million to $100 million, up from 2018 adjusted EBITDA of $59.6 million. Full-year adjusted net income per share is expected in a range of $3.55 to $3.70 versus the $2.07 reported in fiscal 2018.
Anticipated capital expenditures in 2019 are expected to be in the range of $30 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). The call is available live via the Internet at: https://www.investornetwork.com/event/presentation/50089, or by dialing 877-407-0778 (201-689-8565 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 August 1, 2019, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #50089.
*Use of Non-GAAP Financial Measures
Adjusted EBITDA, adjusted operating income, adjusted net income, 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 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 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 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 Based in Broomfield, Colorado, DMC operates in two sectors: oilfield products and services, and industrial infrastructure. The oilfield products and services sector is served by DynaEnergetics, an international developer, manufacturer and marketer of advanced explosive systems used to perforate oil and gas wells. The industrial infrastructure sector is served by DMC’s NobelClad business, the world’s largest manufacturer of explosion-welded clad metal plates, which are used to fabricate capital equipment utilized within various process industries and other industrial sectors. 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 third quarter and full-year 2019 guidance on sales and gross margin, SG&A, litigation expense, amortization expenses, earnings per share, adjusted EBITDA, interest expense, and our effective tax rate, and expectations regarding the development of industry preferences for solid state integrated initiating systems. 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 execute and capitalize upon growth opportunities; the success of DynaEnergetics’ product and technology development initiatives; 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; 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.
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Share and Per Share Data) (unaudited)
Three months ended
Change
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Sequential
Year-on-year
NET SALES
$
110,954
$
100,135
$
80,915
11
%
37
%
COST OF PRODUCTS SOLD
68,881
63,730
54,140
8
%
27
%
Gross profit
42,073
36,405
26,775
16
%
57
%
Gross profit percentage
37.9
%
36.4
%
33.1
%
COSTS AND EXPENSES:
General and administrative expenses
9,460
9,168
9,743
3
%
-3
%
Selling and distribution expenses
7,239
6,309
5,795
15
%
25
%
Amortization of purchased intangible assets
397
398
791
—
%
-50
%
Restructuring expenses, net
324
78
217
315
%
49
%
Total costs and expenses
17,420
15,953
16,546
9
%
5
%
OPERATING INCOME
24,653
20,452
10,229
21
%
141
%
OTHER INCOME (EXPENSE):
Other income (expense), net
343
(21
)
(327
)
1,733
%
205
%
Interest expense, net
(409
)
(373
)
(136
)
-10
%
-201
%
INCOME BEFORE INCOME TAXES
24,587
20,058
9,766
23
%
152
%
INCOME TAX PROVISION
7,343
4,888
3,394
50
%
116
%
NET INCOME
17,244
15,170
6,372
14
%
171
%
NET INCOME PER SHARE
Basic
$
1.17
$
1.02
$
0.43
15
%
172
%
Diluted
$
1.15
$
1.01
$
0.43
14
%
167
%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic
14,647,019
14,606,052
14,534,016
—
%
1
%
Diluted
14,899,987
14,671,689
14,534,016
2
%
3
%
DIVIDENDS DECLARED PER COMMON SHARE
$
0.02
$
0.02
$
0.02
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Share and Per Share Data) (unaudited)
Six months ended
Change
Jun 30, 2019
Jun 30, 2018
Year-on-year
NET SALES
$
211,089
$
148,228
42
%
COST OF PRODUCTS SOLD
132,611
98,700
34
%
Gross profit
78,478
49,528
58
%
Gross profit percentage
37.2
%
33.4
%
COSTS AND EXPENSES:
General and administrative expenses
18,628
17,920
4
%
Selling and distribution expenses
13,548
11,007
23
%
Amortization of purchased intangible assets
795
1,596
-50
%
Restructuring expenses, net
402
361
11
%
Anti-dumping duty penalties
—
3,103
-100
%
Total costs and expenses
33,373
33,987
-2
%
OPERATING INCOME
45,105
15,541
190
%
OTHER INCOME (EXPENSE):
Other income (expense), net
322
(704
)
146
%
Interest expense, net
(782
)
(601
)
-30
%
INCOME BEFORE INCOME TAXES
44,645
14,236
214
%
INCOME TAX PROVISION
12,231
3,944
210
%
NET INCOME
32,414
10,292
215
%
NET INCOME PER SHARE
Basic
$
2.20
$
0.69
219
%
Diluted
$
2.17
$
0.69
214
%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic
14,624,718
14,491,569
1
%
Diluted
14,849,816
14,491,569
2
%
DIVIDENDS DECLARED PER COMMON SHARE
$
0.04
$
0.04
DMC GLOBAL INC. SEGMENT STATEMENTS OF OPERATIONS (Amounts in Thousands) (unaudited)
DynaEnergetics
Three months ended
Change
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Sequential
Year-on-year
Net sales
$
88,628
$
79,836
$
58,899
11
%
50
%
Gross profit
36,341
31,232
21,748
16
%
67
%
Gross profit percentage
41.0
%
39.1
%
36.9
%
COSTS AND EXPENSES:
General and administrative expenses
4,591
3,722
5,120
23
%
-10
%
Selling and distribution expenses
4,637
4,099
3,711
13
%
25
%
Amortization of purchased intangible assets
300
301
689
—
%
-56
%
Operating income
26,813
23,110
12,228
16
%
119
%
Adjusted EBITDA
$
28,532
$
24,509
$
13,803
16
%
107
%
Six months ended
Change
Jun 30, 2019
Jun 30, 2018
Year-on-year
Net sales
$
168,464
$
108,020
56
%
Gross profit
67,573
41,375
63
%
Gross profit percentage
40.1
%
38.3
%
COSTS AND EXPENSES:
General and administrative expenses
8,313
8,964
-7
%
Selling and distribution expenses
8,736
6,971
25
%
Amortization of purchased intangible assets
601
1,389
-57
%
Anti-dumping duty penalties
—
3,103
-100
%
Operating income
49,923
20,948
138
%
Adjusted EBITDA
$
53,041
$
27,185
95
%
DMC GLOBAL INC. SEGMENT STATEMENTS OF OPERATIONS (Amounts in Thousands) (unaudited)
NobelClad
Three months ended
Change
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Sequential
Year-on-year
Net sales
$
22,326
$
20,299
$
22,016
10
%
1
%
Gross profit
5,884
5,360
5,120
10
%
15
%
Gross profit percentage
26.4
%
26.4
%
23.3
%
COSTS AND EXPENSES:
General and administrative expenses
1,102
1,244
1,135
-11
%
-3
%
Selling and distribution expenses
2,438
2,111
1,963
15
%
24
%
Amortization of purchased intangible assets
97
97
102
—
%
-5
%
Restructuring expenses, net
324
78
217
315
%
49
%
Operating income
1,923
1,830
1,703
5
%
13
%
Adjusted EBITDA
$
3,082
$
2,705
$
2,737
14
%
13
%
Six months ended
Change
Jun 30, 2019
Jun 30, 2018
Year-on-year
Net sales
$
42,625
$
40,208
6
%
Gross profit
11,244
8,312
35
%
Gross profit percentage
26.4
%
20.7
%
COSTS AND EXPENSES:
General and administrative expenses
2,346
2,215
6
%
Selling and distribution expenses
4,549
3,838
19
%
Amortization of purchased intangible assets
194
207
-6
%
Restructuring expenses, net
402
361
11
%
Operating income
3,753
1,691
122
%
Adjusted EBITDA
$
5,787
$
3,685
57
%
DMC GLOBAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands)
Change
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sequential
From year-end
(unaudited)
(unaudited)
ASSETS
Cash and cash equivalents
$
14,881
$
14,874
$
13,375
—
%
11
%
Accounts receivable, net
76,800
73,252
59,709
5
%
29
%
Inventory, net
59,980
50,851
51,074
18
%
17
%
Other current assets
6,650
7,015
8,058
-5
%
-17
%
Total current assets
158,311
145,992
132,216
8
%
20
%
Property, plant and equipment, net
105,232
99,911
95,140
5
%
11
%
Purchased intangible assets, net
7,375
7,882
8,589
-6
%
-14
%
Other long-term assets
14,266
12,321
4,473
16
%
219
%
Total assets
$
285,184
$
266,106
$
240,418
7
%
19
%
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable
$
36,179
$
29,747
$
24,243
22
%
49
%
Accrued anti-dumping penalties
—
8,000
8,000
-100
%
-100
%
Contract liabilities
2,076
2,490
1,140
-17
%
82
%
Dividend payable
299
299
295
—
%
1
%
Accrued income taxes
9,419
5,367
9,545
75
%
-1
%
Current portion of long-term debt
3,125
3,125
3,125
—
%
—
%
Other current liabilities
19,234
17,895
18,217
7
%
6
%
Total current liabilities
70,332
66,923
64,565
5
%
9
%
Long-term debt
32,744
40,239
38,230
-19
%
-14
%
Deferred tax liabilities
458
880
379
-48
%
21
%
Other long-term liabilities
18,149
9,153
2,958
98
%
514
%
Stockholders’ equity
163,501
148,911
134,286
10
%
22
%
Total liabilities and stockholders’ equity
$
285,184
$
266,106
$
240,418
7
%
19
%
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) (unaudited)
Three months ended
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
17,244
$
15,170
$
6,372
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation
2,157
1,798
1,601
Amortization of purchased intangible assets
397
398
791
Amortization of deferred debt issuance costs
36
47
34
Stock-based compensation
1,495
1,171
1,084
Deferred income taxes
81
343
341
Loss on disposal of property, plant and equipment
317
—
26
Restructuring expenses
324
78
217
Change in working capital, net
(5,746
)
(12,008
)
(9,067
)
Net cash provided by operating activities
16,305
6,997
1,399
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment
(9,682
)
(6,601
)
(10,899
)
Proceeds on sale of property, plant and equipment
1,054
204
—
Net cash used in investing activities
(8,628
)
(6,397
)
(10,899
)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments) borrowings on revolving loans, net
(6,749
)
2,750
(3,076
)
(Repayments) borrowings on capital expenditure facility
(781
)
(781
)
8,525
Payment of dividends
(300
)
(298
)
(298
)
Payment of deferred debt issuance costs
—
—
(131
)
Net proceeds from issuance of common stock
358
—
230
Treasury stock purchases
(103
)
(853
)
(40
)
Net cash provided by (used in) financing activities
(7,575
)
818
5,210
EFFECTS OF EXCHANGE RATES ON CASH
(95
)
81
151
NET INCREASE IN CASH AND CASH EQUIVALENTS
7
1,499
(4,139
)
CASH AND CASH EQUIVALENTS, beginning of the period
14,874
13,375
10,768
CASH AND CASH EQUIVALENTS, end of the period
$
14,881
$
14,874
$
6,629
DMC GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) (unaudited)
Six months ended
Jun 30, 2019
Jun 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
32,414
$
10,292
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation
3,955
3,171
Amortization of purchased intangible assets
795
1,596
Amortization of deferred debt issuance costs
83
224
Stock-based compensation
2,666
1,792
Deferred income taxes
424
33
Loss on disposal of property, plant and equipment
317
26
Restructuring expenses
402
361
Transition tax liability
—
(268
)
Change in working capital, net
(17,754
)
(18,806
)
Net cash provided by (used in) operating activities
23,302
(1,579
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment
(16,283
)
(16,201
)
Proceeds on sale of property, plant and equipment
1,258
—
Net cash used in investing activities
(15,025
)
(16,201
)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments) borrowings on revolving loans, net
(3,999
)
4,822
(Repayments) borrowings on capital expenditure facility
(1,562
)
11,803
Payment of dividends
(598
)
(593
)
Payment of deferred debt issuance costs
—
(131
)
Net proceeds from issuance of common stock
358
230
Treasury stock purchases
(956
)
(383
)
Net cash provided by (used in) financing activities
(6,757
)
15,748
EFFECTS OF EXCHANGE RATES ON CASH
(14
)
(322
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
1,506
(2,354
)
CASH AND CASH EQUIVALENTS, beginning of the period
13,375
8,983
CASH AND CASH EQUIVALENTS, end of the period
$
14,881
$
6,629
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
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Sequential
Year-on-year
Net income
$
17,244
$
15,170
$
6,372
14
%
171
%
Interest expense, net
409
373
136
10
%
201
%
Income tax provision
7,343
4,888
3,394
50
%
116
%
Depreciation
2,157
1,798
1,601
20
%
35
%
Amortization of purchased intangible assets
397
398
791
—
%
-50
%
EBITDA
27,550
22,627
12,294
22
%
124
%
Restructuring expenses, net
324
78
217
315
%
49
%
Stock-based compensation
1,495
1,171
1,084
28
%
38
%
Other (income) expense, net
(343
)
21
327
-1,733
%
-205
%
Adjusted EBITDA
$
29,026
$
23,897
$
13,922
21
%
108
%
Six months ended
Jun 30, 2019
Jun 30, 2018
Year-on-year
Net income
$
32,414
$
10,292
215
%
Interest expense, net
782
601
30
%
Income tax provision
12,231
3,944
210
%
Depreciation
3,955
3,171
25
%
Amortization of purchased intangible assets
795
1,596
-50
%
EBITDA
50,177
19,604
156
%
Restructuring expenses, net
402
361
11
%
Accrued anti-dumping penalties
—
3,103
-100
%
Stock-based compensation
2,666
1,792
49
%
Other (income) expense, net
(322
)
704
-146
%
Adjusted EBITDA
$
52,923
$
25,564
107
%
Adjusted operating income
Three months ended
Change
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Sequential
Year-on-year
Operating income, as reported
$
24,653
$
20,452
$
10,229
21
%
141
%
Restructuring programs:
NobelClad
324
78
217
315
%
49
%
Adjusted operating income
$
24,977
$
20,530
$
10,446
22
%
139
%
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands) (unaudited)
Six months ended
Jun 30, 2019
Jun 30, 2018
Year-on-year
Operating income, as reported
$
45,105
$
15,541
190
%
Restructuring programs:
NobelClad
402
361
11
%
Accrued anti-dumping penalties
—
3,103
-100
%
Adjusted operating income
$
45,507
$
19,005
139
%
Adjusted Net Income and Adjusted Diluted Earnings per Share
Three months ended June 30, 2019
Pretax
Tax
Net
Diluted EPS
Net income, as reported
$
24,587
$
7,343
$
17,244
$
1.15
Restructuring programs:
NobelClad
324
—
324
0.02
Adjusted net income
$
24,911
$
7,343
$
17,568
$
1.17
Three months ended March 31, 2019
Pretax
Tax
Net
Diluted EPS
Net income, as reported
$
20,058
$
4,888
$
15,170
$
1.01
Restructuring programs:
NobelClad
78
—
78
0.01
Adjusted net income
$
20,136
$
4,888
$
15,248
$
1.02
Three months ended June 30, 2018
Pretax
Tax
Net
Diluted EPS
Net income, as reported
$
9,766
$
3,394
$
6,372
$
0.43
Restructuring programs:
NobelClad
217
—
217
0.02
Adjusted net income
$
9,983
$
3,394
$
6,589
$
0.45
Six months ended June 30, 2019
Pretax
Tax
Net
Diluted EPS
Net income, as reported
$
44,645
$
12,231
$
32,414
$
2.17
Restructuring programs:
NobelClad
402
—
402
0.03
Adjusted net income
$
45,047
$
12,231
$
32,816
$
2.20
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands) (unaudited)
Six months ended June 30, 2018
Pretax
Tax
Net
Diluted EPS
Net income, as reported
$
14,236
$
3,944
$
10,292
$
0.69
Restructuring programs:
NobelClad
361
—
361
0.03
Accrued anti-dumping duties
3,103
—
3,103
0.22
Adjusted net income
$
17,700
$
3,944
$
13,756
$
0.94
Return on Invested Capital
Three months ended
Jun 30, 2018
Sep 30, 2018
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Operating income
$
10,229
$
8,820
$
13,063
$
20,452
$
24,653
Income tax provision (benefit) (1)
3,555
3,396
(2,809
)
4,990
7,371
Net operating profit after taxes (NOPAT)
6,674
5,424
15,872
15,462
17,282
Trailing Twelve Months NOPAT
43,432
54,040
Balances as of
Mar 31, 2018
Jun 30, 2018
Sep 30, 2018
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Allowance for doubtful accounts
1,269
572
490
513
574
428
Deferred tax assets
—
—
—
(4,001
)
(3,843
)
(3,656
)
Deferred tax liabilities
265
606
849
379
880
458
Accrued income taxes
4,603
6,557
9,299
9,545
5,367
9,419
Current portion of long-term debt
—
—
—
3,125
3,125
3,125
Long-term debt
29,350
34,611
41,454
38,230
40,239
32,744
Total stockholders' equity
111,357
114,229
119,390
134,286
148,911
163,501
Total invested capital
146,844
156,575
171,482
182,077
195,253
206,019
Average invested capital
171,049
181,297
Trailing Twelve Months Return on Invested Capital (ROIC)
25
%
30
%
(1) Tax calculation for NOPAT:
Three months ended
Twelve months ended
Three months ended
Jun 30, 2018
Sep 30, 2018
Dec 31, 2018
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Income before income taxes
9,766
7,990
12,381
34,607
20,058
24,587
Income tax provision (benefit)
3,394
3,080
(2,890
)
4,134
4,888
7,343
Effective tax rate
34.8
%
38.5
%
(23.3
)%
11.9
%
24.4
%
29.9
%
DMC GLOBAL INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS (Amounts in Thousands) (unaudited)
