BLOOMFIELD, Colo., Oct. 21, 2024 (Globe Newswire) — DMC Global (NASDAQ: BOOM) (“DMC” or the “Company”) today provided an operational update and announced its third quarter results. Revised financial guidance. The company also commented on its strategic review process and announced changes to its governance. DMC said it expects third-quarter sales to be approximately $152 million, compared with previous expectations of $158 million to $168 million. This result reflects lower-than-expected sales of both Arcadia Products (“Arcadia”), DMC’s architectural and building products business, and DynaEnergetics, DMC’s energy products business.
Adjusted EBITDA* is now expected to be approximately $5 million, compared to previous guidance of $15 million to $18 million. Third quarter results include DynaEnergetics inventory and bad debt expenses totaling approximately $5 million, as well as lower fixed overhead absorption due to lower sales at both Arcadia and DynaEnergetics.
The company announced that its third quarter results will include approximately $142 million in non-cash goodwill impairment charges associated with DMC’s acquisition of a controlling interest in Arcadia in December 2021. This fee reflects Arcadia’s recent financial performance and near-term outlook. These factors, combined with the significant decline in DMC’s market capitalization, have led us to conclude that a goodwill impairment charge is appropriate at this time.
DMC President and CEO Michael Kuta, who will lead Arcadia on an interim basis, said, “Arcadia’s third-quarter results reflected weaker commercial and luxury residential construction activity and lower fixed cost absorption. “We were affected by supply chain disruptions that affected our products.” availability. DynaEnergetics’ results were lower than expected due to decreased North American well completion activity, an increased proportion of DynaEnergetics’ low-margin customers in the U.S. market, and inventory and bad debt expenses discussed above. Our composite metals business, NobelClad, is expected to have a strong quarter with sales and adjusted EBITDA results within or exceeding our expectations.
“Arcadia is a solid company with great employees and a respected brand, and we are focused on improving performance and delivering the value our customers expect. We expect our manufacturing automation and product design efforts to strengthen our adjusted EBITDA margins starting in 2025.”
strategic review process
DMC’s Board of Directors (the “Board”) also announced that it will no longer actively market DynaEnergetics and NobelClad. Since announcing the strategic review process for both businesses in January 2024, the Company has reviewed and considered divestitures, mergers and other strategic combinations. However, given the challenges of the past few months for DMC, including macroeconomic factors such as the downturn and volatility in the energy market, the board decided that rather than selling these market-leading businesses, it would be better to provide stability, simplification and , believes that prioritizing internal improvements will serve DMC’s shareholders better. current time.
Governance changes
DMC also announced that Director James O’Leary has agreed to serve as Executive Chairman, Director Ouma Sananikorn has been appointed as Lead Independent Director, and David Aldous has resigned as DMC’s Independent Chairman and member of the Board of Directors. . Additionally, Mr. Peter Rose has decided not to stand for re-election at the Company’s next annual general meeting. The Board of Directors would like to recognize and thank Mr. Aldous and Mr. Rose for their contributions to DMC over the years.
Mr. O’Leary joins the Board in November 2023 with nearly 40 years of executive leadership, finance, capital markets and board level experience. He has extensive expertise in the construction and industrial manufacturing industries and is a publicly traded company that is one of the largest suppliers in the United States of building products, prefabricated parts, and value-added services to the new home construction and home construction specialty market segments. He is a director of Builders FirstSource, Inc. Repairs and modifications.
Mr. O’Leary previously served as Chairman of publicly traded BMC Stock Holdings, Inc. prior to its merger with Builders FirstSource in 2021. He was also Chairman and CEO of Kaydon Corporation, Inc., a leading publicly traded manufacturer of high technology industrial products. , was sold to a peer company in a successful strategic transaction. Most recently, he served as Chairman and CEO of WireCo, a leading supplier of steel, synthetic rope and electromechanical cables to the global energy market. His experience also includes extensive work as a director and senior advisor at several leading private equity firms.
Mr. Sananikorn joins the Board in 2023 with more than 30 years of experience in finance, capital markets, mergers and acquisitions, and investment management. She was previously Managing Director of Corporate Strategy and Development at BT Financial Group, a $50 billion asset management company that includes BT Asset Management, Rothschild Asset Management and Westpac Financial Services. She also served as CEO of Australia-based Aberdeen Asset Management and EquityLink Group. She was CEO of EquityLink when it was acquired by Aberdeen and played a key role in the integration of the two asset management companies.
Mr. Sananikorn currently serves on the Board of Directors of IA Financial Group, an insurance group with operations in Canada and the United States. Innergex Renewable Energy is a renewable energy producer with operations in Canada, the United States, Chile, and France. and Paris-based real estate company Gecina.
DMC plans to report its third quarter financial results after market close on Monday, November 4, 2024, at which time it will discuss detailed operating results and ongoing profitability initiatives. Details regarding joining the call will be announced in the coming days.
*Use of non-GAAP financial measures
In addition to disclosing financial results determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP), we also disclose certain non-GAAP financial measures that we use in making operational and financial decisions. Non-GAAP financial measures include:
EBITDA: Defined as net income (loss) plus net interest, taxes, and depreciation. Adjusted EBITDA: EBITDA excludes stock-based compensation, restructuring charges, asset impairment charges (if applicable), and management non-recurring items where appropriate. It is not used to evaluate DMC’s operational performance.
Management believes that providing these additional financial metrics will help investors understand the Company’s results of operations, including the impact of restructuring, impairment and other non-recurring charges and liquidity. . Management typically monitors its business using non-GAAP measures in addition to GAAP results to understand and compare operating results across accounting periods, and certain management incentive awards may be based in part on these measures. based on the indicators. The presence of non-GAAP financial measures in this report does not imply that such measures should be considered separately from, as a substitute for, or superior to DMC’s GAAP information, and investors should Please note that non-GAAP financial measures are non-GAAP financial measures. Its usefulness is limited.
Because not all companies use the same calculations, the presentation of DMC’s non-GAAP financial measures may not be comparable to similarly titled measures of other companies. However, management believes that these metrics provide users with valuable insight into the key elements of GAAP financial disclosures, and therefore these metrics are important in evaluating the company’s performance relative to its industry peers. It may still be useful. For example, a company with high GAAP net income may be less attractive to investors if that net income is a large percentage of gains on asset sales. Similarly, removing the effects of interest income and expense reduces the impact of a firm’s capital structure on its performance.
About DMC Global
DMC Global is an owner and operator of innovative, asset-light manufacturing businesses that offer unique, highly engineered products and differentiated solutions. DMC’s businesses have established leadership positions in their respective markets and are comprised of: Arcadia, a leading supplier of architectural building products. DynaEnergetics serves the global energy industry. The other is NobelClad, which works on the global industrial infrastructure and transportation sectors. Based in Broomfield, Colorado, DMC trades on the Nasdaq under the symbol “BOOM.” For more information, please visit http://www.dmcglobal.com.
safe harbor language
This news release contains certain 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, without limitation, guidance for the third quarter of 2024. Contains descriptions of. Regarding sales and adjusted EBITDA. All such statements are based on management’s expectations and estimates and assumptions made by management, which, although believed to be reasonable, are inherently uncertain. These statements are subject to economic, competitive, governmental and other factors beyond our control that could cause our business, industry, strategy, financial activities or actual results to differ materially. They involve risks and uncertainties, including, but not limited to: For more information about potential factors that could affect the Company and its financial results, please see “Risk Factors” and “Management’s Discussion Regarding Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for that year. See section “Discussion and Analysis.” and in other documents filed or provided by the Company with the Securities and Exchange Commission. Except as required, the Company does not provide any forward-looking statements, including, without limitation, statements reflecting events or circumstances after the date of this news release or reflecting the occurrence of unanticipated events. We are not obligated to publish any modifications. Under applicable securities laws.
contact:
Investor:
jeff high
Vice President of Investor Relations
303-604-3924
media:
Riyaz Lalani or Dan Gagne
Gagné Communications
416-305-1459
DMCGLOBAL@GAGNIERFC.COM
