DMC Global Reports Record Third Quarter Financial Results
Third quarter sales were a record $87.9 million, up 68% from Q3 2017 and 9% sequentially
DynaEnergetics sales increased 12% sequentially while NobelClad’s declined 2% sequentially; both businesses exceeded forecasted sales
Consolidated gross margin was 34% versus 33% in Q3 2017 and 33% in Q2 2018
Net income was $4.9 million, or $0.33 per diluted share; adjusted net income* was $10.0 million, or $0.68 per diluted share
Adjusted EBITDA* of $17.2million was up 23% sequentially and 100% versus Q3 2017
DynaEnergetics resolves 2015 anti-dumping case; will tender one-time $8 million penalty in Q4 2018; penalty fully accrued as of Q3 2018
DynaEnergetics successfully defends itself in third consecutive patent infringement action brought by a competitor
BOULDER, Colo. – October 25, 2018 - DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its third quarter ended September 30, 2018.
Consolidated sales were a quarterly record $87.9 million, up 68% versus the third quarter of 2017 and up 9% sequentially from the 2018 second quarter. The results, which exceeded management’s forecasted range of $82 million to $85 million, principally were driven by strong demand and an expanding customer base at DynaEnergetics, DMC’s oilfield products business. Sales at NobelClad, DMC’s explosion welding business, also exceeded forecasts.
Third quarter gross margin was 34% versus 33% in the year-ago third quarter and 33% in the second quarter. The improvement primarily resulted from higher proportional sales from DynaEnergetics versus NobelClad, as well as higher average selling prices at DynaEnergetics and an improved project mix at NobelClad.
Operating income was $8.8 million versus an operating loss of $12.4 million in last year’s third quarter, which included a $17.6 million goodwill impairment charge. Net income was $4.9 million, or $0.33 per diluted share, versus net loss of $14.1 million, or a loss of $0.98 per diluted share, in last year’s third quarter.
Excluding $192,000 in restructuring expenses at NobelClad and $4.9 million of accrued anti-dumping penalties at DynaEnergetics, adjusted operating income* was $13.9 million and adjusted net income was $10.0 million, or $0.68 per diluted share.
Subsequent to the close of the third quarter, DynaEnergetics was notified by U.S. Customs of its decision to assess an $8.0 million penalty with respect to a 2015 anti-dumping and countervailing duties case. The Company previously estimated a potential penalty range of $3.1 million to $12.4 million. DynaEnergetics, which has elected not to continue its appeals in the case, recorded an accrual for potential penalties of $3.1 million in the first quarter of 2018 and an additional $4.9 million in the third quarter of 2018. DMC plans to tender the $8.0 million in the fourth quarter of 2018.
Third quarter adjusted EBITDA, inclusive of approximately $2.2 million in litigation expense, was $17.2 million versus $8.6 million in last year’s third quarter and $13.9 million in this year’ssecond quarter.
Net debt* (lines of credit less cash and cash equivalents) at September 30, 2018, was $30.4 million versus $28.0 million at June 30, 2018, and $9.0 million at December 31, 2017. The increase primarily is attributable to borrowings to fund increased working capital and for the construction of DynaEnergetics’ new manufacturing, assembly and administrative facility in Blum, Texas.
Third quarter sales at DynaEnergetics were a record $66.3 million, up 88% versus last year’s third quarter and a 12% sequential increase. Gross margin was 37%, down from 39% in last year’s third quarter and flat versus this year’s second quarter. Operating income was $9.9 million versus $6.9 million in the comparable year-ago quarter. Adjusted EBITDA was $16.4 million versus $8.6 million in the 2017 third quarter.
NobelClad reported third-quarter sales of $21.6 million, up 28% versus the 2017 third quarter and down 2% sequentially. Gross margin was 25% versus 21% in last year’s third quarter and 23% in the second quarter. The improvement reflects a higher margin project mix. Operating income was $2.1 million versus an operating loss of $17.0 million in the year-ago quarter, which included the $17.6 million goodwill impairment charge. Excluding restructuring charges related to NobelClad’s European consolidation program, adjusted operating income in this year’s third quarter was $2.3 million. Adjusted EBITDA was $3.1 million versus $1.5 million in last year’s third quarter.
NobelClad’s trailing 12-month book-to-bill ratio at the end of the third quarter was 1.05. Order backlog was $36.3 million versus $37.0 million at the end of the 2018 second quarter.