Dynamic Materials Corporation (DMC) (NASDAQ: BOOM), the world's
leading provider of explosion-welded clad metal plates, today
reported financial results for its first quarter ended March 31,
2010.
First quarter sales, which came in slightly higher than
management's prior forecast, were $30.4 million versus $49.8
million in last year's first quarter and $42.6 million in the 2009
fourth quarter. Gross margin was 23% versus 31% in last year's
first quarter and 23% in the fourth quarter. Income from operations
was $245,000 compared with $8.3 million in last year's first
quarter and $2.4 million in the fourth quarter. The Company
reported a net loss of $412,000, or $0.03 per diluted share, versus
net income of $4.9 million, or $0.38 per diluted share, in the
year-ago first quarter and net income of $1.0 million, or $0.08 per
diluted share, in the fourth quarter.
First quarter adjusted EBITDA was $3.5 million versus $11.5
million in the first quarter last year and $5.9 million in the
fourth quarter. Adjusted EBITDA is a non-GAAP (generally accepted
accounting principle) financial measure used by management to
measure operating performance. See additional information about
adjusted EBITDA at the end of this news release, as well as a
reconciliation of adjusted EBITDA to GAAP measures.
Explosive Metalworking
DMC's Explosive Metalworking segment recorded first quarter
sales of $21.3 million versus sales of $43.5 million in last year's
first quarter. Operating income was $1.2 million versus $9.4
million in the comparable year-ago quarter. Adjusted EBITDA was
$2.6 million compared with $10.9 million in the same quarter last
year. The Explosive Metalworking segment ended the first quarter
with an order backlog of $51.4 million, up slightly from a backlog
of $50 million at the end of fiscal 2009.
Oilfield Products
The Company's Oilfield Products segment reported first quarter
sales of $7.0 million versus $4.0 million in last year's first
quarter. Excluding $2.8 million in revenue contributions from LRI
Oil Tools, which DMC acquired on October 1, 2009, the Oilfield
Products segment reported a first quarter sales increase of
$156,000, or 4%, versus the same quarter a year ago.
The segment reported an operating loss of $404,000 versus an
operating loss of $694,000 in the prior year's first quarter.
Adjusted EBITDA was $541,000 as compared with $154,000 in the 2009
first quarter.
AMK Welding
DMC's AMK Welding segment reported first quarter sales of $2.0
million versus $2.3 million in the same quarter last year.
Operating income was $224,000 versus $375,000 in the comparable
prior-year quarter. The segment recorded adjusted EBITDA of
$339,000 versus $489,000 in the 2009 first quarter.
Management Commentary
Yvon Cariou, president and CEO, said, "Despite the duration and
severity of the current recession, this was our first quarterly
loss in more than five years. We are now seeing signs of increased
activity within key segments of the global economy and are
optimistic that these indicators foretell a rebound within the
worldwide industrial processing sector. Consistent with the past
several quarters, our Explosive Metalworking business is receiving
quote requests from several of our end markets at a relatively
healthy pace. We believe that as economic growth gains momentum,
investments in capital projects will accelerate, and many of the
prospective projects we are tracking will ultimately be released
for production."
"We are increasingly encouraged about the growth prospects for
our oilfield products business," Cariou added. "Our integration of
recently acquired LRI Oil Tools is going smoothly, and we expect to
finalize our purchase of Austin Explosives later this quarter.
Customer feedback and recent commentary from major players in the
oilfield services sector suggest that global exploration and
production activity is gaining momentum."
Rick Santa, senior vice president and chief financial officer,
said that despite the pullback in first quarter revenue, the
Company generated $13.8 million in operating cash flow through the
first fiscal period. "We utilized our strong cash position to make
significant reductions to our overall debt levels during the
quarter. We pre-paid the balance of our European term loan and
reduced our net debt by $12.5 million, while our total debt was
reduced by $16.5 million."
DMC ended the first quarter with cash and cash equivalents of
$18.4 million, total assets of $206 million and a working capital
position of $36.3 million.
Guidance
Santa said second quarter sales are expected to increase by
approximately 10% to 15% versus the first quarter. Second quarter
sales guidance is predicated on the Company shipping the first half
of $14.8 million in orders associated with the Gorgon Natural Gas
project. The second half of the orders is expected to ship during
the third quarter. Second quarter gross margin is expected to be in
a range of 20% to 22%. Management continues to forecast full-year
sales in a range of flat to down 5% compared with fiscal 2009
sales, and the full-year gross margin forecast remains at a range
of 22% to 24%.
DMC's effective tax rate during the first quarter decreased to
27% from 33% for the same period of 2009, and the Company is now
anticipating a blended effective tax rate for 2010 in a range of
25% to 28% versus prior forecasts of between 33% and 35%. The lower
expected tax rate is due in part to the expected reduction in DMC's
2010 consolidated pre-tax income versus that reported in 2009.
Beginning in 2011, management expects that DMC's blended effective
tax rate will to return to a normalized level of 33% to 35%.
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 via the Internet at
www.dynamicmaterials.com, or by dialing into the teleconference at
866-394-8610 (706-758-0876 for international callers) and entering
the passcode 69112738. 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 30 days and
a telephonic replay will be available through May 2, 2010, by
calling 800-642-1687 (706-645-9291 for international callers) and
entering the passcode 69112738.
Use of Non-GAAP Financial Measures
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 and, when appropriate, other items
that management does not utilize in assessing DMC's operating
performance (as further described in the attached financial
schedules). 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 these non-GAAP measures 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 and the
company's ability to generate cash flow from operations. As a
result, internal management reports used during monthly operating
reviews feature the adjusted EBITDA. Management also believes that
investors may find non-GAAP financial measures useful for the same
reasons, although investors are cautioned that non-GAAP financial
measures are not a substitute for GAAP disclosures. EBITDA and
adjusted EBITDA are also used by research analysts, investment
bankers and lenders to assess operating performance. For example, a
measure similar to EBITDA is required by the lenders under DMC's
credit facility.
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
and gain on sale of assets). 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 Dynamic Materials Corporation
Based in Boulder, Colorado, Dynamic Materials Corporation is a
leading international metalworking company. Its products, which are
typically used in industrial capital projects, include
explosion-welded clad metal plates and other metal fabrications for
use in a variety of industries, including oil and gas,
petrochemicals, alternative energy, hydrometallurgy, aluminum
production, shipbuilding, power generation, industrial
refrigeration and similar industries. The Company operates three
business segments: Explosive Metalworking, which uses proprietary
explosive processes to fuse different metals and alloys; Oilfield
Products, which manufactures, markets and sells specialized
explosive components and systems used to perforate oil and gas
wells; and AMK Welding, which utilizes various technologies to weld
components for use in power-generation turbines, as well as
commercial and military jet engines. For more information, visit
the Company's websites at http://www.dynamicmaterials.com and
http://www.dynaenergetics.de.
Safe Harbor Language
Except for the historical information contained herein, this
news release contains forward-looking statements, including our
guidance for second quarter and full-year 2010 sales, margins and
tax rates, planned timing of order shipments, quoting and booking
expectations, our long-range strategy of growing the market share
and improving investment activity within certain industrial
processing sectors, all of which involve risks and uncertainties.
These risks and uncertainties include, but are not limited to, the
following: our ability to realize sales from our backlog; our
ability to obtain new contracts at attractive prices; the size and
timing of customer orders and shipments; fluctuations in customer
demand; fluctuations in foreign currencies, changes to customer
orders; 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 the Company's SEC reports,
including the report on Form 10-K for the year ended December 31,
2009.
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(Dollars in Thousands, Except Share Data)
(unaudited)
Three months ended
March 31,
----------------------
2010 2009
---------- ----------
NET SALES $ 30,357 $ 49,759
COST OF PRODUCTS SOLD 23,373 34,431
---------- ----------
Gross profit 6,984 15,328
---------- ----------
COSTS AND EXPENSES:
General and administrative expenses 3,145 3,526
Selling expenses 2,321 2,324
Amortization of purchased intangible assets 1,273 1,183
---------- ----------
Total costs and expenses 6,739 7,033
---------- ----------
INCOME FROM OPERATIONS 245 8,295
OTHER INCOME (EXPENSE):
Other income (expense), net 129 (117)
Interest expense (1,144) (902)
Interest income 35 65
Equity in earnings (loss) of joint ventures 169 (49)
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (566) 7,292
INCOME TAX PROVISION (BENEFIT) (154) 2,376
---------- ----------
NET INCOME (LOSS) $ (412) $ 4,916
========== ==========
INCOME (LOSS) PER SHARE:
Basic $ (0.03) $ 0.38
========== ==========
Diluted $ (0.03) $ 0.38
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Basic 12,690,510 12,527,452
========== ==========
Diluted 12,690,510 12,569,879
========== ==========
DIVIDENDS DECLARED PER COMMON SHARE $ 0.04 $ -
========== ==========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
2010 2009
ASSETS (unaudited)
------------- -------------
Cash and cash equivalents $ 18,358 $ 22,411
Accounts receivable, net 16,804 25,807
Inventories 35,529 32,501
Other current assets 6,532 7,255
------------- -------------
Total current assets 77,223 87,974
Property, plant and equipment, net 40,693 42,052
Goodwill, net 40,366 43,164
Purchased intangible assets, net 44,938 49,079
Other long-term assets 3,132 2,907
------------- -------------
Total assets $ 206,352 $ 225,176
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 10,980 $ 9,183
Customer advances 12,502 6,528
Dividend payable 518 515
Accrued income taxes 804 1,485
Other current liabilities 7,223 9,162
Lines of credit 1,379 1,777
Current portion of long-term debt 7,558 13,485
------------- -------------
Total current liabilities 40,964 42,135
Long-term debt 23,958 34,120
Deferred tax liabilities 13,516 15,217
Other long-term liabilities 1,473 1,593
Stockholders' equity 126,441 132,111
------------- -------------
Total liabilities and stockholders' equity $ 206,352 $ 225,176
============= =============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(Dollars in Thousands)
(unaudited)
2010 2009
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (412) $ 4,916
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation (including capital lease
amortization) 1,154 1,267
Amortization of purchased intangible assets 1,273 1,183
Amortization of capitalized debt issuance costs 369 69
Stock-based compensation 792 798
Deferred income tax benefit (830) (605)
Equity in earnings of joint ventures (169) 49
Change in working capital, net 11,631 (4,440)
-------- --------
Net cash provided by operating activities 13,808 3,237
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (764) (1,170)
Change in other non-current assets (4) 8
-------- --------
Net cash used in investing activities (768) (1,162)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on syndicated credit agreement (15,374) (3,862)
Borrowings (repayments) on lines of credit, net (441) 4,215
Payments on long-term debt (208) (233)
Payments on capital lease obligations (74) (71)
Payment of dividends (515) -
Payment of deferred debt issuance costs - (19)
Net proceeds from issuance of common stock - 236
Excess tax benefit related to stock options 2 57
-------- --------
Net cash provided by (used in) financing
activities (16,610) 323
-------- --------
EFFECTS OF EXCHANGE RATES ON CASH (483) (480)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,053) 1,918
CASH AND CASH EQUIVALENTS, beginning of the period 22,411 14,360
-------- --------
CASH AND CASH EQUIVALENTS, end of the period $ 18,358 $ 16,278
======== ========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
Three months ended
March 31,
------------------
2010 2009
-------- --------
(unaudited)
Explosive Metalworking Group $ 21,306 $ 43,472
Oilfield Products 7,006 4,034
AMK Welding 2,045 2,253
Net sales $ 30,357 $ 49,759
======== ========
Explosive Metalworking Group $ 1,217 $ 9,412
Oilfield Products (404) (694)
AMK Welding 224 375
Unallocated expenses (792) (798)
Income from operations $ 245 $ 8,295
======== ========
For the three months ended March 31, 2010
-----------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
------------ -------- ------- -------- ------
(unaudited)
Income (loss) from
operations $ 1,217 $ (404) $ 224 $ (792) $ 245
Adjustments:
Stock-based compensation - - - 792 792
Depreciation 769 270 115 1,154
Amortization of purchased
intangibles 598 675 - - 1,273
------------ -------- ------- -------- ------
Adjusted EBITDA $ 2,584 $ 541 $ 339 $ - $3,464
============ ======== ======= ======== ======
For the three months ended March 31, 2009
------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
------------ -------- ------- -------- -------
(unaudited)
Income (loss) from
operations $ 9,412 $ (694) $ 375 $ (798) $ 8,295
Adjustments:
Stock-based compensation - - - 798 798
Depreciation 924 229 114 - 1,267
Amortization of purchased
intangibles 564 619 - - 1,183
------------ -------- ------- -------- -------
Adjusted EBITDA $ 10,900 $ 154 $ 489 $ - $11,543
============ ======== ======= ======== =======
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
Three months ended
March 31,
------------------
2010 2009
-------- --------
(unaudited)
Net income (loss) $ (412) $ 4,916
Interest expense 1,144 902
Interest income (35) (65)
Provision for income taxes (154) 2,376
Depreciation 1,154 1,267
Amortization of purchased
intangible assets 1,273 1,183
EBITDA 2,970 10,579
Stock-based compensation 792 798
Other (income) expense (129) 117
Equity in earnings of joint
ventures (169) 49
Adjusted EBITDA $ 3,464 $ 11,543
======== ========
CONTACT: Pfeiffer High Investor Relations, Inc. Geoff High
303-393-7044
DMC Global (NASDAQ:BOOM)
Historical Stock Chart
From Jun 2024 to Jul 2024
DMC Global (NASDAQ:BOOM)
Historical Stock Chart
From Jul 2023 to Jul 2024