DMC Global Reports Third Quarter Financial Results

10/21/2021, 10:05 PM (Source: GlobeNewswire)
  • Third quarter sales were $67.2 million, up 3% sequentially and 22% from Q3 2020
  • Gross margin was 25% versus 26% in Q2 2021 and 25% in Q3 2020
  • Net income was $403,000, or $0.02 per diluted share
  • Adjusted EBITDA* was $5.8 million versus $7.5 million in Q2 2021 and $6.0 million in Q3 2020
  • Cash and marketable securities at September 30, 2021, were $182.0 million versus $53.9 million at December 31, 2020

BROOMFIELD, Colo., Oct. 21, 2021 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its third quarter ended September 30, 2021.

Third quarter sales were $67.2 million, up 3% sequentially versus the second quarter, and up 22% versus the third quarter of 2020. DynaEnergetics, DMC’s energy products business, reported a 19% sequential increase in unit sales of its fully integrated and factory-assembled DS perforating systems in North America. The increase outpaced the 6% sequential increase in U.S. onshore well completions, as reported by the U.S. Energy Information Administration. Higher DS unit sales were partially offset by supply chain bottlenecks and travel restrictions that impacted certain international orders at both DynaEnergetics and NobelClad, DMC’s composite metals business.

Third quarter gross margin was 25% versus 26% in the 2021 second quarter and 25% in last year's third quarter. This year’s third quarter gross margin includes the effects of Employee Retention Credits related to the CARES Act, while last year’s third quarter benefitted from higher-margin international sales at DynaEnergetics that were $4.6 million greater than this year’s third quarter.

Selling, general and administrative expense (SG&A) was $15.3 million, up from $14.0 million in the second quarter and $11.6 million in the year-ago third quarter. SG&A in this year’s third quarter included $2.3 million in litigation expense related to several patent infringement cases in which DynaEnergetics is the plaintiff. Litigation expense was $1.2 million in this year’s second quarter and $521,000 in the third quarter a year ago.

Third quarter operating income was $1.1 million versus $1.5 million in last year's third quarter. Net income was $403,000, or $0.02 per diluted share, versus net income of $1.0 million, or $0.07 per diluted share, in last year’s third quarter.

Third quarter adjusted EBITDA was $5.8 million versus $7.5 million in the 2021 second quarter, and $6.0 million in the 2020 third quarter.

DMC ended the third quarter with cash and marketable securities of $182.0 million, up from $181.3 million at the end of the second quarter, and $53.9 million at December 31, 2020. During this year’s second quarter, the Company raised net proceeds of $123.5 million through a registered public equity offering.   

DynaEnergetics
Third quarter sales at DynaEnergetics were $44.2 million, up 5% sequentially and 29% from the 2020 third quarter. Gross margin was 22%, down from 25% in the second quarter of 2021 and 24% in last year’s third quarter. The decline reflects the previously mentioned dip in higher-margin international sales. Adjusted EBITDA was $3.6 million versus $4.2 million in last year’s third quarter.

NobelClad
Third quarter sales at NobelClad were $22.9 million, down 1% sequentially and up 9% versus the 2020 third quarter. Gross margin was 30%, up from 28% in the 2021 second quarter and 26% in last year's third quarter. The gross margin improvement reflects a more favorable project mix. Adjusted EBITDA was $4.6 million, up from $3.4 million in last year’s third quarter.

NobelClad’s trailing 12-month book-to-bill ratio at the end of the third quarter was 0.99, and its rolling 12-month bookings were $84.3 million. Order backlog was $42.9 million versus $45.1 million at the end of the second quarter.

Nine-month results
Consolidated sales for the nine-month period were $188.3 million, up 9% versus the same period a year ago. Gross margin was 25% versus 26% in the 2020 nine-month period. Operating income was $3.1 million versus an operating loss of $178,000 in last year’s nine-month period. Net income for the period was $2.6 million, or $0.15 per diluted share, versus a net loss of $485,000, or $0.03 per diluted share, in the same period a year ago. Adjusted EBITDA was $17.3 million versus $15.5 million in last year’s nine-month period.

DynaEnergetics
Nine-month sales at DynaEnergetics were $124.7 million, up 12% from $111.1 million, in last year’s nine-month period. Operating income was $6.3 million versus $3.9 million in the comparable year-ago period. Adjusted EBITDA was $12.4 million versus $12.2 million in last year’s nine-month period.

NobelClad
NobelClad reported nine-month sales of $63.6 million, up 4% from $61.0 million at the nine-month mark last year. Operating income was $8.6 million versus $5.9 million in the comparable year-ago period, while adjusted EBITDA was $11.6 million versus $8.8 million in last year’s nine-month period.

Management Commentary
Kevin Longe, president and CEO, said, “Supply chain disruptions and travel restrictions challenged the international operations of both DMC businesses during the third quarter. As a result, consolidated sales were below our expectations. DynaEnergetics’ international sales were down $2.8 million sequentially versus the $7.4 million reported in second quarter; and at NobelClad, disruptions in global metals supplies slowed activity at its U.S. and European manufacturing facilities.

“In North America, rising crude prices led to higher well completion activity, which drove a strong increase in unit sales of DynaEnergetics’ fully integrated and factory-assembled DS perforating systems. However, pricing for products and services remained weak. As market conditions continue to improve and operators implement their 2022 budgets, we believe pricing will begin to improve as well. We expect DynaEnergetics will be among the first to benefit from strengthening prices, as it offers a highly differentiated product line that delivers proven improvements in the safety, efficiency and reliability of its customers’ operations. Factory-assembled DS systems are delivered just in time to the wellsite, eliminating assembly operations and requiring fewer people on location. Our systems also lead to better performing wells for operators.”

Earlier this week, DynaEnergetics announced a 5% price increase that will go into effect November 22, 2021. The increase was implemented to offset higher labor and material costs, as well as the anticipated wind down of the CARES Act. DynaEnergetics expects to implement additional increases during 2022 as it seeks to return margins to levels that reflect the inherent value of its products.

“We continue to aggressively pursue legal action against several companies that have commercialized products we believe violate DynaEnergetics’ intellectual property,” Longe added. “We are steadfastly committed to our legal position and believe our strategy is critical to maintaining our competitive advantages and protecting our substantial investments in new technologies and products.

“I am encouraged by the progress NobelClad is making to strengthen its commercial organization and expand its addressable market. The sales team also is reporting growing customer interest in its new DetaPipe™ offering.”  

Longe concluded, “The economy continues to strengthen, and demand in our primary end markets is improving. DMC has a strong balance sheet, and our businesses are well positioned with the right people, products and infrastructure to address the growing demand.”

Guidance
Michael Kuta, CFO, said fourth quarter 2021 sales are expected in a range of $68 million to $74 million versus the $67.2 million reported in the 2021 third quarter. DynaEnergetics is expected to report fourth quarter sales in a range of $46 million to $50 million versus the $44.2 million reported in 2021 third quarter. The anticipated increase reflects an expected improvement in international sales following the Covid-related order delays in the third quarter. NobelClad’s sales are expected in a range of $22 million to $24 million versus the $22.9 million reported in the 2021 third quarter. NobelClad’s fourth quarter sales forecast includes $8.8 million related to a previously announced order from the chemical industry. Receipt of the raw materials required to produce the order has been delayed due to supply chain bottlenecks, and while NobelClad still expects to receive the materials and fulfil the order during the fourth quarter, there remains a risk that some, or all, of the shipment will occur after year end.   

Consolidated gross margin is expected in a range of 23% to 24% versus the 25% reported in the 2021 third quarter. The expected decline relates to a less favorable project mix at NobelClad.

Fourth quarter selling, general and administrative (SG&A) expense is expected in a range of $15 million to $16 million versus the $15.3 million reported in the 2021 third quarter. Fourth quarter SG&A includes anticipated patent infringement litigation expenses of approximately $2.0 million at DynaEnergetics.

Amortization expense is expected to be approximately $200,000.  DMC’s full year tax-rate is expected in a range of 31% to 33%.

Adjusted EBITDA is expected in a range of $5 million to $6 million versus the $5.8 million in the third quarter of 2021. The fourth quarter Adjusted EBITDA forecast includes litigation expenses of approximately $2.0 million and assumes the previously enacted CARES Act legislation remains in effect through year end.

Fourth quarter capital expenditures are expected in a range of $2 million to $4 million. For modeling purposes, fourth quarter weighted average shares outstanding will be approximately 18.7 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.webcaster4.com/Webcast/Page/2204/43173, or by dialing 888-506-0062 (973-528-0011 for international callers) and entering the code 414967. A telephonic replay will be available through November 4, 2021, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID 43173.

*Use of Non-GAAP Financial Measures
Adjusted EBITDA, adjusted operating income (loss), adjusted net income (loss), and net cash 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 (loss) is defined as operating income (loss) plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted net income (loss) 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. Net cash is defined as cash and cash equivalents less total debt. 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 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 (loss) and adjusted net income (loss) are presented because management believes these measures are useful to understand the effects of restructuring and impairment charges on DMC’s operating income (loss) and net income (loss), respectively.

Because not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the company’s performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures. For example, a company with greater GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, eliminating the effects of interest income and expense moderates the impact of a company’s capital structure on its performance.

All of the items included in the reconciliation from net income to EBITDA and adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles and stock-based compensation) or (ii) items that management does not consider to be useful in assessing DMC’s operating performance (e.g., income taxes, restructuring and impairment charges). In the case of the non-cash items, management believes that investors can better assess the company’s operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect DMC’s ability to generate free cash flow or invest in its business. For example, by adjusting for depreciation and amortization in computing EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, management believes that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

About DMC
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
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 fourth quarter guidance on sales, gross margin, SG&A, amortization expense, litigation expense, adjusted EBITDA, capital expenditures and tax rate; as well as our belief that pricing will improve for perforating systems generally and for DynaEnergetics’ systems; plans to implement price increases at DynaEnergetics; our expectation that international orders at DynaEnergetics will improve next year; and the anticipated timing of NobelClad’s large chemical industry order. Statements other than those of historical fact included in this press release are forward-looking statements. Forward-looking statements are based on numerous assumptions regarding present and future business strategies, the markets in which we operate, anticipated costs, ability to achieve goals and numerous other factors. 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; our ability to collect on our accounts receivable; 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 materials; 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; our ability to access our borrowing capacity under our credit facility; impacts of COVID-19 and any related preventive or protective actions taken by governmental authorities and resulting economic impacts, including recessions or depressions; 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, 2020. 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, 2021 Jun 30, 2021 Sep 30, 2020 Sequential Year-on-year
NET SALES$67,175   $65,438   $55,281   3% 22%
COST OF PRODUCTS SOLD50,513   48,467   41,688   4% 21%
Gross profit16,662   16,971   13,593   -2% 23%
Gross profit percentage25 % 26 % 25 %    
COSTS AND EXPENSES:         
General and administrative expenses9,721   8,471   6,911   15% 41%
Selling and distribution expenses5,593   5,544   4,705   1% 19%
Amortization of purchased intangible assets211   288   369   -27% -43%
Restructuring expenses and asset impairments      143   n/a -100%
Total costs and expenses15,525   14,303   12,128   9% 28%
OPERATING INCOME1,137   2,668   1,465   -57% -22%
OTHER (EXPENSE) INCOME:         
Other (expense) income, net(198)  108   (148)  -283% -34%
Interest expense, net(14)  (81)  (170)  83% 92%
INCOME BEFORE INCOME TAXES925   2,695   1,147   -66% -19%
INCOME TAX PROVISION522   971   139   -46% 276%
NET INCOME403   1,724   1,008   -77% -60%
NET INCOME PER SHARE         
Basic$0.02   $0.10   $0.07   -80% -71%
Diluted$0.02   $0.10   $0.07   -80% -71%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:         
Basic18,728,278   17,554,809   14,820,881   7% 26%
Diluted18,739,085   17,568,444   14,820,881   7% 26%
DIVIDENDS DECLARED PER COMMON SHARE$   $   $      

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Data)
(unaudited)

 Nine months ended Change
 Sep 30, 2021 Sep 30, 2020 Year-on-year
NET SALES$188,271   $172,048   9 %
COST OF PRODUCTS SOLD141,725   127,381   11 %
Gross profit46,546   44,667   4 %
Gross profit percentage25 % 26 %  
COSTS AND EXPENSES:     
General and administrative expenses26,121   21,744   20 %
Selling and distribution expenses16,380   18,720   -13 %
Amortization of purchased intangible assets823   1,076   -24 %
Restructuring expenses and asset impairments127   3,305   -96 %
Total costs and expenses43,451   44,845   -3 %
OPERATING INCOME (LOSS)3,095   (178)  1,839 %
OTHER INCOME (EXPENSE):     
Other income (expense), net304   (118)  358 %
Interest expense, net(230)  (564)  59 %
INCOME (LOSS) BEFORE INCOME TAXES3,169   (860)  468 %
INCOME TAX PROVISION (BENEFIT)610   (375)  263 %
NET INCOME (LOSS)2,559   (485)  628 %
NET INCOME (LOSS) PER SHARE     
Basic$0.15   $(0.03)  600 %
Diluted$0.15   $(0.03)  600 %
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:     
Basic 17,239,306    14,759,062   17 %
Diluted 17,250,525    14,759,062   17 %
DIVIDENDS DECLARED PER COMMON SHARE$   $0.125    

DMC GLOBAL INC.
SEGMENT STATEMENTS OF OPERATIONS
(Amounts in Thousands)
(unaudited)

DynaEnergetics

 Three months ended Change
 Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sequential Year-on-year
Net sales$44,237  $42,268  $34,201  5% 29%
Gross profit9,924  10,676  8,194  -7% 21%
Gross profit percentage22% 25% 24%    
COSTS AND EXPENSES:         
General and administrative expenses4,990  4,012  3,176  24% 57%
Selling and distribution expenses3,260  3,300  2,445  -1% 33%
Amortization of purchased intangible assets89  163  269  -45% -67%
Restructuring expenses and asset impairments    133  n/a  -100%
Operating income1,585  3,201  2,171  -50% -27%
Adjusted EBITDA$3,597  $5,284  $4,170  -32% -14%


 Nine months ended Change
 Sep 30, 2021 Sep 30, 2020 Year-on-year
Net sales$124,677  $111,065  12%
Gross profit29,034  29,640  -2%
Gross profit percentage23% 27%  
COSTS AND EXPENSES:     
General and administrative expenses12,574  10,164  24%
Selling and distribution expenses9,702  11,880  -18%
Amortization of purchased intangible assets451  788  -43%
Restructuring expenses and asset impairments  2,922  -100%
Operating income6,307  3,886  62%
Adjusted EBITDA$12,402  $12,218  2%

NobelClad

 Three months ended Change
 Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sequential Year-on-year
Net sales$22,938  $23,170  $21,080  -1% 9%
Gross profit6,883  6,460  5,577  7% 23%
Gross profit percentage30% 28% 26%    
COSTS AND EXPENSES:         
General and administrative expenses933  889  878  5% 6%
Selling and distribution expenses2,208  2,075  2,106  6% 5%
Amortization of purchased intangible assets122  125  100  -2% 22%
Restructuring expenses and asset impairments    10  n/a  -100%
Operating income3,620  3,371  2,483  7% 46%
Adjusted EBITDA$4,587  $4,316  $3,372  6% 36%

DMC GLOBAL INC.
SEGMENT STATEMENTS OF OPERATIONS
(Amounts in Thousands)
(unaudited)

 Nine months ended Change
 Sep 30, 2021 Sep 30, 2020 Year-on-year
Net sales$63,594  $60,983  4%
Gross profit17,960  15,530  16%
Gross profit percentage28% 25%  
COSTS AND EXPENSES:     
General and administrative expenses2,636  2,649  %
Selling and distribution expenses6,230  6,388  -2%
Amortization of purchased intangible assets372  288  29%
Restructuring expenses and asset impairments127  264  -52%
Operating income8,595  5,941  45%
Adjusted EBITDA$11,573  $8,799  32%

DMC GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)

       Change
 Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sequential From year-end
 (unaudited) (unaudited)      
ASSETS         
          
Cash and cash equivalents$37,020  $36,363  $28,187  2% 31%
Marketable securities144,932  144,931  25,736  —% 463%
Accounts receivable, net39,347  43,027  31,366  -9% 25%
Inventories62,172  62,478  52,573  —% 18%
Other current assets9,974  10,577  5,448  -6% 83%
          
Total current assets293,445  297,376  143,310  -1% 105%
          
Property, plant and equipment, net105,137  105,589  109,411  —% -4%
Purchased intangible assets, net1,829  2,391  3,665  -24% -50%
Other long-term assets35,964  28,990  23,259  24% 55%
          
Total assets$436,375  $434,346  $279,645  —% 56%
          
LIABILITIES AND STOCKHOLDERS’ EQUITY        
          
Accounts payable$24,436  $25,122  $17,574  -3% 39%
Contract liabilities9,759  10,188  4,928  -4% 98%
Accrued income taxes8,101  8,696  7,279  -7% 11%
Current portion of long-term debt    3,125  n/a -100%
Other current liabilities17,692  15,204  14,202  16% 25%
          
Total current liabilities59,988  59,210  47,108  1% 27%
          
Long-term debt    8,139  n/a -100%
Deferred tax liabilities1,373  1,153  2,254  19% -39%
Other long-term liabilities30,114  27,946  25,230  8% 19%
Stockholders’ equity344,900  346,037  196,914  —% 75%
          
Total liabilities and stockholders’ equity$436,375  $434,346  $279,645  —% 56%

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(unaudited)

 Three months ended
 Sep 30, 2021 Jun 30, 2021 Sep 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income$403   $1,724   $1,008  
Adjustments to reconcile net income to net cash provided (used in) by operating activities:     
Depreciation2,870   2,832   2,451  
Amortization of purchased intangible assets211   288   369  
Amortization of deferred debt issuance costs56   56   55  
Stock-based compensation1,569   1,727   1,595  
Deferred income taxes570   (282)  521  
(Gain) loss on disposal of property, plant and equipment(15)  5   114  
Restructuring expenses and asset impairments      143  
Change in working capital, net(1,549)  (14,547)  3,970  
Net cash provided by (used in) operating activities4,115   (8,197)  10,226  
CASH FLOWS FROM INVESTING ACTIVITIES:     
Investment in marketable securities   (123,984)    
Acquisition of property, plant and equipment(3,096)  (1,887)  (2,206) 
Proceeds on sale of property, plant and equipment15   723   6  
Net cash used in investing activities(3,081)  (125,148)  (2,200) 
CASH FLOWS FROM FINANCING ACTIVITIES:     
Repayments on capital expenditure facility      (782) 
Payment of deferred debt issuance costs      (4) 
Net proceeds from issuance of common stock through equity offering   123,461   3  
Net proceeds from issuance of common stock   253     
Treasury stock purchases(25)  (16)  (55) 
Net cash (used in) provided by financing activities(25)  123,698   (838) 
EFFECTS OF EXCHANGE RATES ON CASH(352)  173   168  
      
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS657   (9,474)  7,356  
CASH AND CASH EQUIVALENTS, beginning of the period36,363   45,837   17,248  
CASH AND CASH EQUIVALENTS, end of the period$37,020   $36,363   $24,604  

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(unaudited)

 Nine months ended
 Sep 30, 2021 Sep 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income (loss)$2,559  $(485)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:   
Depreciation8,400  7,167 
Amortization of purchased intangible assets823  1,076 
Amortization of deferred debt issuance costs168  154 
Stock-based compensation4,904  4,154 
Deferred income taxes(2,046) (839)
(Gain) loss on disposal of property, plant and equipment(298) 113 
Restructuring expenses and asset impairments127  3,305 
Change in working capital, net(16,543) 6,709 
Net cash (used in) provided by operating activities(1,906) 21,354 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Investment in marketable securities(123,984)  
Proceeds from maturities of marketable securities4,799   
Acquisition of property, plant and equipment(6,348) (9,682)
Proceeds on sale of property, plant and equipment1,019  20 
Net cash used in investing activities(124,514) (9,662)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Repayments on capital expenditure facility(11,750) (2,344)
Payment of dividends  (3,749)
Payment of deferred debt issuance costs  (88)
Net proceeds from issuance of common stock through equity offering123,461   
Net proceeds from issuance of common stock through at-the-market offering program25,262   
Net proceeds from issuance of common stock253  266 
Treasury stock purchases(2,476) (1,123)
Net cash provided by (used in) financing activities134,750  (7,038)
EFFECTS OF EXCHANGE RATES ON CASH503  (403)
    
NET INCREASE IN CASH AND CASH EQUIVALENTS8,833  4,251 
CASH AND CASH EQUIVALENTS, beginning of the period28,187  20,353 
CASH AND CASH EQUIVALENTS, end of the period$37,020  $24,604 

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, 2021 Jun 30, 2021 Sep 30, 2020 Sequential Year-on-year
Net income$403  $1,724   $1,008  -77% -60%
Interest expense, net14  81   170  -83% -92%
Income tax provision522  971   139  -46% 276%
Depreciation2,870  2,832   2,451  1% 17%
Amortization of purchased intangible assets211  288   369  -27% -43
          
EBITDA4,020  5,896   4,137  -32% -3%
Restructuring expenses and asset impairments     143  n/a -100%
Stock-based compensation1,569  1,727   1,595  -9% -2%
Other expense (income), net198  (108)  148  283% 34%
Adjusted EBITDA$5,787  $7,515   $6,023  -23% -4%


 Nine months ended Change
 Sep 30, 2021 Sep 30, 2020 Year-on-year
Net income (loss)$2,559  $(485) 628%
Interest expense, net230  564  -59%
Income tax provision (benefit)610  (375) 263%
Depreciation8,400  7,167  17%
Amortization of purchased intangible assets823  1,076  -24%
      
EBITDA12,622  7,947  59%
Restructuring expenses and asset impairments127  3,305  -96%
Stock-based compensation4,904  4,154  18%
Other (income) expense, net(304) 118  -358%
Adjusted EBITDA$17,349  $15,524  12%

Adjusted operating income (loss)

 Three months ended Change
 Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sequential Year-on-year
Operating income, as reported$1,137  $2,668  $1,465  -57% -22%
Restructuring expenses and asset impairments:         
DynaEnergetics    133  n/a -100%
NobelClad    10  n/a -100%
Adjusted operating income$1,137  $2,668  $1,608  -57% -29%

DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)

 Nine months ended Change
 Sep 30, 2021 Sep 30, 2020 Year-on-year
Operating income (loss), as reported$3,095  $(178) 1,839%
Restructuring expenses and asset impairments:     
DynaEnergetics  2,922  -100%
NobelClad127  264  -52%
Corporate  119  -100%
Adjusted operating income$3,222  $3,127  3%

Adjusted Net Income and Adjusted Diluted Earnings per Share

 Three months ended September 30, 2020
 Pretax Tax
Provision
 Net Diluted weighted
average shares
outstanding
 Diluted EPS
Net income, as reported$1,147   $139   $1,008   14,820,881  $0.07  
Restructuring expenses and asset impairments:         
DynaEnergetics133   (39) 172   14,820,881  0.01  
NobelClad10       14,820,881  —  
Adjusted net income$1,290   $103   $1,187   14,820,881  $0.08  


 Nine months ended September 30, 2021
 Pretax Tax
Provision
 Net Diluted weighted
average shares
outstanding
 Diluted EPS
Net income, as reported$3,169   $610   $2,559   17,250,525  0.15  
Restructuring expenses and asset impairments:         
NobelClad127   —   127   17,250,525  0.01  
Adjusted net income$3,296   $610   $2,686   17,250,525  $0.16  


 Nine months ended September 30, 2020
 Pretax Tax (Benefit)
Provision
 Net Diluted weighted
average shares
outstanding
 Diluted EPS
Net loss, as reported$(860) $(375) $(485) 14,759,062 $(0.03)
Restructuring expenses and asset impairments:         
DynaEnergetics2,922  896  2,026  14,759,062 0.14 
NobelClad264  77  187  14,759,062 0.01 
Corporate119  25  94  14,759,062 0.01 
Adjusted net income$2,445  $623  $1,822  14,759,062 $0.13 

DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)

Return on Invested Capital

   Three months ended
   Sep 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sep 30, 2021
Operating income (loss)   $1,465  $(818)  $(710)  $2,668  $1,137 
Income tax provision (benefit) (1)   177  (54)  (1,390)  960  641 
Net operating profit (loss) after taxes (NOPAT)   1,288  (764)  680   1,708  496 
Trailing Twelve Months NOPAT     (717)  (4,277)  2,912  2,120 
            
 Balances as of
 Jun 30, 2020 Sep 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sep 30, 2021
Current portion of lease liabilities1,846  1,804  1,741   1,505   1,477  1,648 
Long-term portion of lease liabilities10,430  10,155  10,066   10,137   9,944  10,432 
Current portion of long-term debt3,125  3,125  3,125         
Long-term debt9,595  8,867  8,139         
Total stockholders' equity170,283  169,951  196,914   218,430   346,037  344,900 
Total invested capital195,279  193,902  219,985   230,072   357,458  356,980 
Average invested capital    208,946   214,182   276,369  275,441 
            
Trailing Twelve Months Return on Invested Capital (ROIC)        % (2%)  1% 1%


(1) Tax calculation for NOPAT:
 Three months ended Twelve months ended Three months ended
 Sep 30, 2020 Dec 31, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sep 30, 2021
Income (loss) before income taxes1,147  (1,100)  (1,960)  (451)  2,695  925 
Income tax provision (benefit)139  (173)  (548)  (883)  971  522 
Effective tax rate12.1% 15.7 % 28.0 % 195.8 % 36.0% 56.4%

DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)

DynaEnergetics

 Three months ended Change
 Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sequential Year-on-year
Operating income, as reported$1,585  $3,201  $2,171  -50% -27%
Adjustments:         
Restructuring expenses and asset impairments    133  n/a -100%
          
Adjusted operating income1,585  3,201  2,304  -50% -31%
Depreciation1,923  1,920  1,597  —% 20%
Amortization of purchased intangibles89  163  269  -45% -67%
Adjusted EBITDA$3,597  $5,284  $4,170  -32% -14%


 Nine months ended  
 Sep 30, 2021 Sep 30, 2020 Year-on-year
Operating income, as reported$6,307  $3,886  62%
Adjustments:     
Restructuring expenses and asset impairments  2,922  -100%
      
Adjusted operating income6,307  6,808  -7%
Depreciation5,644  4,622  22%
Amortization of purchased intangibles451  788  -43%
Adjusted EBITDA$12,402  $12,218  2%

NobelClad

 Three months ended Change
 Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sequential Year-on-year
Operating income, as reported$3,620   $3,371   $2,483   7% 46%
Adjustments:         
Restructuring expenses and asset impairments—   —   10   n/a -100%
          
Adjusted operating income3,620   3,371   2,493      
Depreciation845   820   779   3% 8%
Amortization of purchased intangibles122   125   100   -2% 22%
Adjusted EBITDA$4,587   $4,316   $3,372   6% 36%

DMC GLOBAL INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Amounts in Thousands)
(unaudited)

 Nine months ended  
 Sep 30, 2021 Sep 30, 2020 Year-on-year
Operating income, as reported$8,595  $5,941  45%
Adjustments:     
Restructuring expenses and asset impairments127  264  -52%
      
Adjusted operating income8,722  6,205  41%
Depreciation2,479  2,306  8%
Amortization of purchased intangibles372  288  29%
Adjusted EBITDA$11,573  $8,799  32%

 

CONTACT:
Geoff High, Vice President of Investor Relations
303-604-3924

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