DMC Global Reports Fourth Quarter Financial Results
- Fourth quarter sales of $54.5 million increased 4% sequentially and 36% from Q4 2016
- DynaEnergetics and NobelClad report sequential sales increases of 5% and 3%, respectively
- Gross margin was 33% versus 33% in Q3 2017 and 25% in Q4 2016
- Operating income of $513,000 versus an operating loss of $1.9 million in last year’s fourth quarter
- Excluding restructuring charges, fourth quarter adjusted operating income* (non-GAAP measure) was $4.3 million and adjusted EBITDA* (non-GAAP measure) was $7.7 million
- Year-end net debt* (lines of credit less cash and equivalents) (non-GAAP measure) was $9.0 million, down from $13.1 million at September 30, 2017 and $9.3 million at the end of 2016
BOULDER, Colo. – March 8, 2018 - DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its fourth quarter and fiscal year ended December 31, 2017.
Fourth quarter sales were $54.5 million, a 4% sequential increase versus the 2017 third quarter, and a 36% improvement from $40.2 million reported in the 2016 fourth quarter. The results exceeded management’s forecast of a 30% year-over-year sales increase due to accelerated efforts at DynaEnergetics, DMC’s oilfield products business, to address rapidly growing demand for its well perforating technologies.
Fourth quarter gross margin was 33% versus 33% in the third quarter and 25% in the year-ago fourth quarter. The results exceeded management’s 30% gross margin forecast primarily due to improved pricing and a more profitable product mix.
DMC recorded a $3.8 million fourth-quarter restructuring charge, which relates to the previously announced consolidation of European manufacturing facilities at NobelClad, DMC’s explosion welding business. Including the charge, fourth quarter operating income was $513,000 versus an operating loss of $1.9 million in last year’s fourth quarter. Excluding the charge, adjusted operating income was $4.3 million.
Net loss was $2.0 million, or $0.13 per diluted share, versus a net loss of $2.2 million, or $0.15 per diluted share, in the year-ago fourth quarter. The 2017 fourth quarter included an income tax provision of $1.6 million, $946,000 of which was a transition tax related to the recently enacted Tax Cuts and Jobs Act. Excluding restructuring charges, fourth quarter adjusted net income* (non-GAAP measure) was $1.3 million, or $0.09 per diluted share.
Fourth quarter adjusted EBITDA was $7.7 million versus $8.6 million in the 2017 third quarter and $1.5 million in last year’s fourth quarter.
Total debt at December 31, 2017, was $18.0 million and the Company’s debt-to-adjusted EBITDA leverage ratio was 0.8. Net debt* (lines of credit less cash and cash equivalents) was $9.0 million versus $13.1 million at the end of the 2017 third quarter and $9.3 million at December 31, 2016.
Fourth quarter sales at DynaEnergetics were a quarterly record $37.1 million, up 5% sequentially and a 115% increase versus last year’s fourth quarter. Gross margin was 38%, up from 27% in last year’s fourth quarter. Operating income was $6.6 million versus an operating loss of $2.4 million in the year-ago fourth quarter. Adjusted EBITDA was $8.3 million versus negative EBITDA of $702,000 in the 2016 fourth quarter.
NobelClad reported fourth-quarter sales of $17.4 million, up 3% sequentially and down 24% versus the 2016 fourth quarter. Gross margin was 22% versus 23% in last year’s fourth quarter. Operating loss was $3.0 million versus operating income of $2.5 million in the year-ago quarter. Excluding restructuring charges, adjusted operating income was $777,000. Adjusted EBITDA was $1.5 million versus $3.5 million in last year’s fourth quarter.
NobelClad’s trailing 12-month book-to-bill ratio at the end of the fourth quarter was 1.04. Order backlog was $37.5 million, up 17% from $32.0 million at the end of the third quarter.
Consolidated full-year sales were $192.8 million, up 22% from $158.6 million in 2016. Gross margin was 31% versus 25% in the prior year. Operating loss was $12.3 million versus an operating loss of $5.3 million in 2016. Excluding goodwill impairment and restructuring charges, full-year adjusted operating income was $9.6 million.
Net loss was $18.9 million, or $1.31 per diluted share, versus a net loss of $6.5 million, or $0.46 per diluted share, in 2016. Excluding goodwill impairment and restructuring charges, adjusted net income was $2.1 million, or $0.16 per diluted share.
Full-year adjusted EBITDA was $23.1 million versus $9.0 million in 2016.
Full-year sales at DynaEnergetics were a record $121.3 million, up 80% from $67.3 million in the prior year. Gross margin was 36%, up from 29% in 2016. Operating income was $15.5 million versus an operating loss of $5.4 million in 2016. Adjusted EBITDA was $22.8 million versus $2.5 million in the previous year.
NobelClad reported full-year sales of $71.6 million, down 22% from $91.3 million in 2016. Gross margin was 22% versus 21% in the prior year. Operating loss was $17.4 million versus operating income of $8.9 million in 2016. Excluding restructuring and goodwill impairment charges, 2017 adjusted operating income was $4.0 million. Adjusted EBITDA was $7.7 million versus $12.9 million in 2016.
“The fourth quarter represented a strong finish to a pivotal year at DMC,” said Kevin Longe, president and CEO. “As the recovery in unconventional drilling and completion activity gained momentum, operators and service companies sought technologies that would enable more efficient, reliable and cost effective perforating programs. This fueled very strong demand at DynaEnergetics, particularly for the intrinsically safe DynaSelect™ detonator and Factory-assembled, Performance-assured™ DynaStage™ system. Orders accelerated throughout the year for these advanced products, which now generate the majority of DynaEnergetics’ total sales.
“DynaEnergetics is working on multiple fronts to address growing customer demand. Two DynaStage assembly lines were added at our Mt. Braddock, Pennsylvania facility during the fourth quarter. A new automated detonator assembly line is scheduled for installation in April in our Troisdorf, Germany plant, and will double the production capacity of our DynaSelect and DynaStage initiators. Steel is being erected on 74,000 square feet of new manufacturing, assembly and administrative space on DynaEnergetics’ manufacturing campus in Blum, Texas, and the new facilities should be operational by the third quarter.
“While NobelClad’s 2017 sales reflect continued weak capital spending in global industrial infrastructure markets, the business made important progress establishing new commercial uses for explosion-welded plate. Two of the largest orders booked during 2017 were for new clad plate applications. Although the backlogs at most major engineering and construction companies have yet to show improvement, we have seen two consecutive quarters of backlog growth and improved quoting activity at NobelClad, and are optimistic the business will return to year-over-year sales growth in 2018.”
Longe added, “I am extremely proud of the entire DMC team and the effort put forth during the past year to achieve our strategic objectives. As we embark on 2018, I am confident DMC is well positioned for another year of strong financial growth and operational success.”