• Full-year 2019 sales were a record $397.6 million, up 22% from 2018
  • Fourth quarter sales were $86.4 million, down 14% sequentially and down 4% versus Q4 2018
  • Fourth quarter gross margin was 35% versus 36% in Q3 2019 and 35% in Q4 2018
  • DynaEnergetics completes previously announced exit of Siberian manufacturing facility and consolidates its manufacturing and distribution infrastructure
  • Fourth-quarter and full-year restructuring charges were $13.2 million and $19.5 million, respectively
  • Fourth quarter operating income was $499,000; adjusted operating income* was $13.8 million
  • Fourth quarter net loss was $5.3 million, or $0.36 loss per diluted share, while adjusted net income* was $9.5 million, or $0.65 per diluted share
  • Fourth quarter adjusted EBITDA* was $17.6 million
  • Full-year 2019 net income was $34.0 million, or $2.28 per diluted share, while full-year adjusted net income was $55.6 million, or $3.75 per diluted share 
  • Year-end net cash* was $6.1 million compared with net debt* of $16.0 million at September 30, 2019, and $28.0 million at the end of 2018

BROOMFIELD, Colo., Feb. 20, 2020 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its fourth quarter and fiscal year ended December 31, 2019.

Fourth quarter sales were $86.4 million, down 14% sequentially versus the 2019 third quarter, and down 4% versus the 2018 fourth quarter. The sales decline was principally due to the previously reported sharp decline in North American well completion activity, which negatively impacted demand at DynaEnergetics, DMC’s oilfield products business.  Fourth quarter gross margin was 35% versus 36% in the third quarter and 35% in the prior-year fourth quarter.

Fourth quarter operating income was $499,000 versus $13.1 million in the 2018 fourth quarter. Net loss was $5.3 million, or $0.36 loss per diluted share, versus net income of $15.3 million, or $1.02 per diluted share, in the prior-year fourth quarter.

Adjusted operating income* was $13.8 million, and excludes $13.2 million in restructuring charges ($12.1 million of which were non-cash) principally related to the closure of DynaEnergetics’ manufacturing plant in Tyumen, Siberia. Adjusted net income*, which excludes the restructuring charges, was $9.5 million, or $0.65 per diluted share.

Fourth quarter adjusted EBITDA was $17.6 million versus $23.2 million in the 2019 third quarter and $16.9 million in the prior-year fourth quarter.  Cash flow from operations was $29.5 million versus $21.1 million in the fourth quarter of 2018.

Net cash* (cash and cash equivalents less total debt) was $6.1 million versus net debt* (total debt less cash and cash equivalents) of $16.0 million at the end of the 2019 third quarter and $28.0 million at December 31, 2018. Total debt at December 31, 2019, was $14.3 million and the Company’s debt-to-adjusted EBITDA leverage ratio was 0.2.

DynaEnergetics
DynaEnergetics reported fourth quarter sales of $64.6 million, down 16% sequentially and an increase of 2% versus the prior-year fourth quarter. Gross margin was 38% versus 39% in the 2019 third quarter and 39% in the 2018 fourth quarter. Adjusted EBITDA was $18.5 million versus $15.2 million in the 2018 fourth quarter.

NobelClad
NobelClad reported fourth quarter sales of $21.8 million, down 4% sequentially and down 20% versus the 2018 fourth quarter. Gross margin was 27%, up from 26% in the 2019 third quarter and 25% in the prior-year fourth quarter. Adjusted EBITDA was $2.4 million versus $4.0 million in the prior-year fourth quarter.

NobelClad’s trailing 12-month book-to-bill ratio at the end of the fourth quarter was 1.03. Order backlog was $31.7 million versus $33.2 million at the end of the third quarter.

Full-year results
Consolidated sales in 2019 were a record $397.6 million, up 22% from $326.4 million in 2018. Gross margin was 36% versus 34% in the prior year.

Operating income was $58.4 million versus $37.4 million in 2018. Excluding $19.5 million in restructuring charges ($16.6 million of which were non-cash), 2019 full-year adjusted operating income was $78.7 million. 

Full-year 2019 net income was $34.0 million, or $2.28 per diluted share, while full-year adjusted net income was $55.6 million, or $3.75 per diluted share.  Net income in 2018 was $30.5 million, or $2.04 per diluted share, while 2018 adjusted net income was $30.7 million, or $2.07 per diluted share.

Full-year adjusted EBITDA was a record $93.8 million.  Adjusted EBITDA in 2018 was $59.6 million and included $7.6 million in litigation expense.

Cash flow from operations was $64.6 million, which excluded $27.2 million in capital expenditures.  In 2018, cash flow from operations was $27.6 million, and excluded $45.1 million in capital expenditures.  Trailing 12-month return on invested capital was 18%, down from 29% at the end of the third quarter.  The decline principally relates to the closure of DynaEnergetics’ manufacturing plant in Tyumen, Siberia, and the write down of the facility’s carrying value.    

DynaEnergetics
Full-year sales at DynaEnergetics were a record $310.4 million, up 31% from $237.4 million in 2018. Gross margin was 40%, up from 38% in the prior year. Adjusted EBITDA was $94.5 million versus $58.8 million in the prior year.

NobelClad
NobelClad reported full-year sales of $87.1 million, down 2% from $89.0 million in 2018. Gross margin was 26% versus 23% in the prior year. Adjusted EBITDA was $11.1 million versus $10.8 million in the prior year.

Management Commentary
“Our employees executed extremely well during 2019, and their efforts enabled DMC to deliver record consolidated sales and earnings, strong operating cash flow, and increased shareholder returns that included a significant increase in our annual dividend,” said Kevin Longe, CEO. 

“Increased customer adoption of DynaEnergetics’ DynaStage™ DS Factory-Assembled, Performance-Assured™ perforating systems was a key factor in our 2019 performance.  More than 20 percent of the perforating systems deployed in North America during 2019 were either DS™ systems, or were enabled by DynaEnergetics’ IS2™ intrinsically safe initiating systems.

“North American well completion activity began slowing in the third quarter of 2019, and the decline accelerated rapidly in the fourth quarter,” Longe said.  “This downturn reflects a long-overdue shift in the industry toward capital discipline, free cash flow generation, strengthening of balance sheets, and ultimately, improved returns for investors. While this dynamic has slowed near-term drilling and completion activity, it is necessary for strengthening the health of our industry over the longer term.   

“DynaEnergetics capitalized on the fourth-quarter slowdown by accelerating a planned streamlining of its global manufacturing and distribution footprint.  This process involved exiting a manufacturing plant in Tyumen, Siberia, and closing distribution facilities in Canada and Oklahoma. DynaEnergetics also accelerated the planned consolidation of its Mt. Braddock, Pennsylvania, assembly operations into its facility in Blum, Texas.  We expect approximately $2.0 million in annual cost savings as a result of these initiatives.”

“E&Ps are highly focused on lowering operating costs through more effective well completion programs," Longe added. “Increasingly, these operators are specifying DynaEnergetics’ perforating systems, which remain unmatched in their safety, efficiency and reliability.  DynaEnergetics continued to expand its product and technology portfolio during 2019.  In addition to launching its DS Trinity™ and DS™ NLine™ systems, DynaEnergetics was awarded 17 new patents and filed 126 patent applications in the U.S. and internationally.  It was the most active year ever for patent applications and awards at DynaEnergetics, which currently holds a total of 63 patents and 186 pending patent applications, covering a total of 73 patent families.”

Longe continued, “NobelClad’s market development team made significant progress during 2019 at establishing new applications for its composite metal plates. New customers in the aerospace, power generation and engineered wood products sectors have turned to NobelClad’s capabilities to address complex corrosion and temperature resistance issues.  NobelClad currently is seeing an anticipated pick up in booking activity for projects expected to ship later this year.   We are optimistic 2020 will be a year of growth for NobelClad.

“We have entered 2020 with a strong balance sheet and a very efficient organizational structure,” Longe added.  “While current market conditions suggest a relatively slow start to 2020, we are well positioned to navigate the near-term headwinds and pricing pressure in the energy market.  We expect financial results to improve at DynaEnergetics and NobelClad as the year progresses.  DMC’s financial strength will enable us to continue to invest in research and development, new product introductions, and new market development initiatives.   Our focus remains on innovation and achieving profit margins that reflect the inherent value our products deliver to customers.”

Guidance
Michael Kuta, CFO, said first quarter 2020 sales are expected to be in a range of $80 million to $84 million versus the $86.4 million reported in the 2019 fourth quarter. At the business level, DynaEnergetics is expected to report sales in a range of $62 million to $65 million versus the $64.6 million reported in last year’s fourth quarter, while NobelClad’s sales are expected in a range of $18 million to $19 million versus the $21.8 million reported in the 2019 fourth quarter. Consolidated gross margin is expected to be in a range of 34% to 35% versus 35% in last year’s fourth quarter.

First quarter selling, general and administrative (SG&A) expense is expected in a range of $16 million to $17 million versus the $16.2 million reported in the 2019 fourth quarter, while amortization expense is expected to be approximately $350,000.  Interest expense is expected to be approximately $400,000.

Adjusted EBITDA is expected in a range of $14 million to $15 million versus $17.6 million in the fourth quarter of 2019. Earnings per share are expected in a range of $0.50 to $0.55 versus adjusted earnings per share of $0.65 in the 2019 fourth quarter.

“With respect to 2020, we anticipate sales will begin to improve during the second quarter as new products  from DynaEnergetics take hold in the market,” Kuta said.  “However, it is difficult to predict the impact macro developments, such as the Coronavirus outbreak in China, will have on economic activity and oil and gas demand during the balance of the year.  Based on our current assessment of the market,  we expect full-year 2020 sales in a range of $370 million to $400 million versus the $397.6 million reported in 2019. Sales at DynaEnergetics are expected in a range of $280 million to $300 million versus the $310.4 million reported in 2019, while NobelClad’s sales are expected in a range of $90 million to $100 million versus the $87.1 million in 2019. Full-year gross margin is expected in a range of 34% to 35% versus the 36% reported in 2019.”

Full-year SG&A is anticipated in a range of  $62 million to $64 million versus the $65.5 million reported in 2019. Full-year amortization expense is expected to be approximately $1.3 million versus the $1.5 million reported in 2019.

Interest expense in 2020 is expected to be approximately $700,000, down from the $1.6 million reported in 2019. The effective tax rate for 2020 is expected to be in a range of 28% to 29%.

Adjusted EBITDA is expected to be in a range of $80 million to $90 million versus adjusted EBITDA of $93.8 million in 2019. Full-year net income per share is expected in a range of $3.00 to $3.30 versus adjusted net income per share of $3.75 reported in fiscal 2019.

Capital expenditures in 2020 are expected to be in a range of $20 million to $25 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). Investors are invited to listen to the call live at: https://www.investornetwork.com/event/presentation/58664, or by dialing 844-407-9500 (862-298-0850 for international callers). No passcode is necessary. Webcast 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 90 days and a telephonic replay will be available through February 27, 2020, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #58664.

*Use of Non-GAAP Financial Measures
Adjusted EBITDA, adjusted operating income, adjusted net income, adjusted gross margin, adjusted diluted earnings per share, net debt, and return on invested capital (ROIC) 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 is defined as operating income plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted net income 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. Adjusted gross margin is defined as gross margin plus inventory write downs associated with restructuring. Adjusted diluted earnings per share is defined as diluted earnings per share plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Net debt is defined as total debt less cash and cash equivalents. ROIC is based on Bloomberg Finance's most recent calculation methodology and is computed as trailing 12-month net operating profit after tax divided by average invested capital, where average of invested capital is calculated based on the average of invested capital for the current period and invested capital for the same period a year ago. 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 or net debt 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, adjusted net income, adjusted gross margin and adjusted diluted earnings per share are presented because management believes these measures are useful to understand the effects of restructuring and impairment charges on DMC’s operating income, net income and diluted earnings per share, respectively. ROIC is used by management as one measure of the effectiveness of DMC’s use of capital in its operations, and management believes it may be of similar usefulness to investors.

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
Except for the historical information contained herein, 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 first quarter and full-year 2020 guidance on sales, gross margin, adjusted gross margin, SG&A, amortization expenses, adjusted earnings per share, adjusted EBITDA and interest expense; expected capital expenditures in 2020; expected cost savings from DynaEnergetics’ streamlining of manufacturing and distribution infrastructure; our expectations regarding NobelClad booking activity later in 2020; our belief that 2020 could be year of meaningful growth for NobelClad and our expectation that our financial results will improve as the year progresses. Such statements and information are based on numerous assumptions regarding present and future business strategies, the markets in which we operate, anticipated costs and ability to achieve goals. 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; fluctuations in customer demand; our ability to successfully navigate slowdowns in market activity or execute and capitalize upon growth opportunities; the success of DynaEnergetics’ product and technology development initiatives; potential consolidation among DynaEnergetics’ customers; 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 material; potential supply-chain disruptions, including as may be related to the coronavirus; 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 our SEC reports, including the annual report on Form 10-K for the year ended December 31, 2018. 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.

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

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

 Three months ended Change
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential Year-on-year
NET SALES$86,367  $100,094  $90,318  -14% -4%
COST OF PRODUCTS SOLD56,146  63,870  58,879  -12% -5%
Gross profit30,221  36,224  31,439  -17% -4%
Gross profit percentage35.0% 36.2% 34.8%    
COSTS AND EXPENSES:         
General and administrative expenses9,220  10,128  10,902  -9% -15%
Selling and distribution expenses6,944  6,983  6,334  -1% 10%
Amortization of purchased intangible assets355  394  579  -10% -39%
Restructuring expenses, net and asset impairments13,203  5,898  561  124% 2,253%
Total costs and expenses29,722  23,403  18,376  27% 62%
OPERATING INCOME499  12,821  13,063  -96% -96%
OTHER (EXPENSE) INCOME:         
Other (expense) income, net(661) 170  (163) -489% -306%
Interest expense, net(385) (387) (519) 1% 26%
INCOME (LOSS) BEFORE INCOME TAXES(547) 12,604  12,381  -104% -104%
INCOME TAX (BENEFIT) PROVISION4,741  5,689  (2,890) -17% 264%
NET INCOME (LOSS)(5,288) 6,915  15,271  -176% -135%
NET INCOME (LOSS) PER SHARE:         
Basic$(0.36) $0.47  $1.02  -177% -135%
Diluted$(0.36) $0.46  $1.02  -178% -135%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:         
Basic14,640,110  14,632,276  14,576,522  % %
Diluted14,640,110  14,851,166  14,676,240  -1% %
DIVIDENDS DECLARED PER COMMON SHARE$0.125  $0.125  $0.02     
 

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

 Twelve months ended Change
 Dec 31, 2019 Dec 31, 2018 Year-on-year
NET SALES$397,550  $326,429  22%
COST OF PRODUCTS SOLD252,627  215,734  17%
Gross profit144,923  110,695  31%
Gross profit percentage36.5% 33.9%  
COSTS AND EXPENSES:     
General and administrative expenses37,976  38,452  -1%
Selling and distribution expenses27,475  22,761  21%
Amortization of purchased intangible assets1,544  2,944  -48%
Restructuring expenses, net and asset impairments19,503  1,114  1651%
Anti-dumping duty penalties  8,000  -100%
Total costs and expenses86,498  73,271  18%
OPERATING INCOME58,425  37,424  56%
OTHER EXPENSE:     
Other expense, net(169) (1,202) 86%
Interest expense, net(1,554) (1,615) 4%
INCOME BEFORE INCOME TAXES56,702  34,607  64%
INCOME TAX PROVISION22,661  4,134  448%
NET INCOME34,041  30,473  12%
NET INCOME PER SHARE:     
Basic$2.29  $2.05  12%
Diluted$2.28  $2.04  12%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:     
Basic14,579,608  14,529,745  %
Diluted14,655,350  14,620,635  %
DIVIDENDS DECLARED PER COMMON SHARE$0.29  $0.08   
 

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

DynaEnergetics

 Three months ended Change
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential Year-on-year
Net sales$64,604  $77,356  $63,178  -16% 2%
Gross profit24,586  30,543  24,744  -20% -1%
Gross profit percentage38.1% 39.5% 39.2%    
COSTS AND EXPENSES:         
General and administrative expenses3,516  5,048  6,577  -30% -47%
Selling and distribution expenses4,119  4,405  4,016  -6% 3%
Amortization of purchased intangible assets260  299  482  -13% -46%
Restructuring expenses, net and asset impairments12,744  5,880    117% n/a 
Operating income3,947  14,911  13,669  -74% -71%
Adjusted EBITDA$18,472  $23,193  $15,247  -20% 21%


 Twelve months ended Change
      
 Dec 31, 2019 Dec 31, 2018 Year-on-year
Net sales$310,424  $237,448  31%
Gross profit122,703  90,623  35%
Gross profit percentage39.5% 38.2%  
COSTS AND EXPENSES:     
General and administrative expenses16,876  21,097  -20%
Selling and distribution expenses17,260  14,509  19%
Amortization of purchased intangible assets1,162  2,541  -54%
Restructuring expenses, net and asset impairments18,624    n/a 
Anti-dumping duty penalties  8,000  -100%
Operating income68,781  44,476  55%
Adjusted EBITDA$94,541  $58,784  61%
           

NobelClad

 Three months ended Change
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential Year-on-year
Net sales$21,763  $22,738  $27,140  -4% -20%
Gross profit5,786  5,811  6,799  % -15%
Gross profit percentage26.6% 25.6% 25.1%    
COSTS AND EXPENSES:         
General and administrative expenses1,324  1,032  1,217  28% 9%
Selling and distribution expenses2,687  2,447  2,216  10% 21%
Amortization of purchased intangible assets95  95  97  % -2%
Restructuring expenses, net and asset impairments459  18  561  2,450% -18%
Operating income1,221  2,219  2,708  -45% -55%
Adjusted EBITDA$2,390  $3,082  $4,047  -22% -41%
                  

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

 Twelve months ended Change
 Dec 31, 2019 Dec 31, 2018 Year-on-year
Net sales$87,126  $88,981  -2%
Gross profit22,840  20,414  12%
Gross profit percentage26.2% 22.9%  
COSTS AND EXPENSES:     
General and administrative expenses4,703  4,522  4%
Selling and distribution expenses9,683  7,876  23%
Amortization of purchased intangible assets382  403  -5%
Restructuring expenses, net and asset impairments879  1,114  -21%
Operating income7,193  6,499  11%
Adjusted EBITDA$11,118  $10,825  3%
           

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

       Change
          
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential From year-end
          
ASSETS         
          
Cash and cash equivalents$20,353  $12,183  $13,375  67% 52%
Accounts receivable, net60,855  71,689  59,709  -15% 2%
Inventories53,728  58,923  51,074  -9% 5%
Other current assets9,417  9,206  8,058  2% 17%
          
Total current assets144,353  152,001  132,216  -5% 9%
          
Property, plant and equipment, net108,234  103,670  95,140  4% 14%
Purchased intangible assets, net5,880  6,251  8,589  -6% -32%
Other long-term assets18,954  13,893  4,473  36% 324%
          
Total assets$277,421  $275,815  $240,418  1% 15%
          
LIABILITIES AND STOCKHOLDERS' EQUITY        
          
Accounts payable$34,758  $24,306  $24,243  43% 43%
Accrued anti-dumping penalties    8,000  n/a  -100%
Contract liabilities2,736  2,563  1,140  7% 140%
Dividend payable1,866  1,866  295  % 533%
Accrued income taxes9,651  10,427  9,545  -7% 1%
Current portion of long-term debt3,125  3,125  3,125  % %
Other current liabilities19,287  21,671  18,217  -11% 6%
          
Total current liabilities71,423  63,958  64,565  12% 11%
          
Long-term debt11,147  25,010  38,230  -55% -71%
Deferred tax liabilities3,786  1,469  379  158% 899%
Other long-term liabilities18,924  18,302  2,958  3% 540%
Stockholders' equity172,141  167,076  134,286  3% 28%
          
Total liabilities and stockholders' equity$277,421  $275,815  $240,418  1% 15%
 

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

 Three months ended
      
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income (loss)$(5,288) $6,915  $15,271 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:     
Depreciation2,138  2,223  1,777 
Amortization of purchased intangible assets355  394  579 
Amortization of deferred debt issuance costs48  47  46 
Stock-based compensation1,296  1,242  918 
Deferred income taxes2,629  1,236  (3,929)
Loss on disposal of property, plant and equipment187  26  48 
Restructuring expenses, net and asset impairments13,203  5,898  561 
Change in working capital, net14,930  (6,187) 5,822 
Net cash provided by operating activities29,498  11,794  21,093 
CASH FLOWS FROM INVESTING ACTIVITIES:     
Acquisition of property, plant and equipment(4,833) (6,094) (18,521)
Proceeds on sale of property, plant and equipment5     
Net cash used in investing activities(4,828) (6,094) (18,521)
CASH FLOWS FROM FINANCING ACTIVITIES:     
Payments on revolving loans(6,130) (7,000) (6,150)
(Payments) borrowing on capital expenditure facility(7,781) (782) 6,010 
Payment of dividends(1,866) (298) (298)
Payment of deferred debt issuance costs—     (4)
Net proceeds from issuance of common stock199    210 
Treasury stock purchases(24) (123)  
Net cash used in financing activities(15,602) (8,203) (232)
EFFECTS OF EXCHANGE RATES ON CASH(898) (195) (63)
      
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS8,170  (2,698) 2,277 
CASH AND CASH EQUIVALENTS, beginning of the period12,183  14,881  11,098 
CASH AND CASH EQUIVALENTS, end of the period$20,353  $12,183  $13,375 
 

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

 Twelve months ended
 Dec 31, 2019 Dec 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income$34,041  $30,473 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation8,316  6,576 
Amortization of purchased intangible assets1,544  2,944 
Amortization of deferred debt issuance costs178  314 
Stock-based compensation5,204  3,580 
Deferred income taxes4,289  (3,653)
Loss on disposal of property, plant and equipment530  78 
Restructuring expenses, net and asset impairments19,503  1,114 
Transition tax liability  (679)
Change in working capital, net(9,011) (13,109)
Net cash provided by operating activities64,594  27,638 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Acquisition of property, plant and equipment(27,210) (45,095)
Proceeds on sale of property, plant and equipment1,263   
Net cash used in investing activities(25,947) (45,095)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Payments on revolving loans(17,129) (1,628)
(Payments) borrowings on capital expenditure facility(10,125) 25,000 
Payment of dividends(2,762) (1,189)
Payment of deferred debt issuance costs  (314)
Net proceeds from issuance of common stock557  442 
Treasury stock purchases(1,103) (453)
Net cash provided by (used in) financing activities(30,562) 21,858 
EFFECTS OF EXCHANGE RATES ON CASH(1,107) (9)
    
NET INCREASE IN CASH AND CASH EQUIVALENTS6,978  4,392 
CASH AND CASH EQUIVALENTS, beginning of the period13,375  8,983 
CASH AND CASH EQUIVALENTS, end of the period$20,353  $13,375 
 

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

DMC Global Inc.

EBITDA and Adjusted EBITDA

 Three months ended Change
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential Year-on-year
Net income (loss)$(5,288) $6,915  $15,271  -176% -389%
Interest expense, net385  387  519  -1% -35%
Income tax (benefit) provision4,741  5,689  (2,890) -17% -264%
Depreciation2,138  2,223  1,777  -4% 20%
Amortization of purchased intangible assets355  394  579  -10% -63%
          
EBITDA2,331  15,608  15,256  -85% -554%
Restructuring expenses, net and asset impairments13,203  5,898  561  124% 2,253%
Restructuring related inventory write down  630    -100% n/a 
Restructuring related accounts receivable write off131      n/a  n/a 
Stock-based compensation1,296  1,242  918  4% 41%
Other expense (income), net661  (170) 163  489% 306%
          
Adjusted EBITDA$17,622  $23,208  $16,898  -24% 4%


 Twelve months ended Change
 Dec 31, 2019 Dec 31, 2018 Year-on-year
Net income$34,041  $30,473  12%
Interest expense, net1,554  1,615  -4%
Income tax provision22,661  4,134  448%
Depreciation8,316  6,576  26%
Amortization of purchased intangible assets1,544  2,944  -48%
      
EBITDA68,116  45,742  49%
Restructuring expenses, net and asset impairments19,503  1,114  1,651%
Restructuring related inventory write down630    n/a 
Restructuring related accounts receivable write off131    n/a 
Anti-dumping duty penalties  8,000  -100%
Stock-based compensation5,204  3,580  45%
Other expense, net169  1,202  -86%
      
Adjusted EBITDA$93,753  $59,638  57%
 

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

Adjusted operating income

 Three months ended Change
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential Year-on-year
Operating income, as reported$499  $12,821  $13,063  -96% -2%
Restructuring programs:         
NobelClad458  18  561  2,444% -97%
DynaEnergetics12,745  5,880    117% n/a 
Restructuring related inventory write down  630    -100% n/a 
Restructuring related accounts receivable write off131      n/a  n/a 
          
Adjusted operating income$13,833  $19,349  $13,624  -29% 42%


 Twelve months ended Change
 Dec 31, 2019 Dec 31, 2018 Year-on-year
Operating income, as reported$58,425  $37,424  56%
Restructuring programs:     
NobelClad872  1,114  -22%
DynaEnergetics18,631    n/a 
Restructuring related inventory write down630    n/a 
Restructuring related accounts receivable write off131    n/a 
Anti-dumping duty penalties  8,000  -100%
      
Adjusted operating income$78,689  $46,538  69%
 

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

Adjusted Net Income and Diluted Income per Share

 Three months ended December 31, 2019
 Pretax Tax Net Diluted EPS
Net loss, as reported$(547) $4,741  $(5,288) $(0.36)
Restructuring programs:       
NobelClad458  4  454  0.03 
DynaEnergetics12,745  160  12,585  0.86 
Restructuring related accounts receivable write off131    131  0.01 
Impact of tax valuation allowances  (1,647) 1,647  0.11 
        
Net income, excluding charges$12,787  $3,258  $9,529  $0.65 


 Three months ended September 30, 2019
 Pretax Tax Net Diluted EPS
Net income, as reported$12,604  $5,689  $6,915  $0.46 
Restructuring programs:       
NobelClad18    18   
DynaEnergetics5,880  77  5,803  0.40 
Restructuring related inventory write down630    630  0.04 
        
Net income, excluding charges$19,132  $5,766  $13,366  $0.90 


 Three months ended December 31, 2018
 Pre-Tax Tax Net Diluted EPS
Net income, as reported$12,381  $(2,890) $15,271  $1.02 
Restructuring programs:       
NobelClad561    561  0.04 
Impact of tax valuation allowances  8,860  (8,860) (0.60)
        
Net income, excluding charges$12,942  $5,970  $6,972  $0.46 


 Twelve months ended December 31, 2019
 Pre-Tax Tax Net Diluted EPS
Net income, as reported$56,702  $22,661  $34,041  $2.28 
Restructuring programs:       
NobelClad873  33  840  0.06 
DynaEnergetics18,625  239  18,386  1.25 
Restructuring related inventory write down630  109  521  0.04 
Restructuring related accounts receivable write off131    131  0.01 
Impact of tax valuation allowances  (1,647) 1,647  0.11 
        
Net income, excluding charges$76,961  $21,395  $55,566  $3.75 
 

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

 Twelve months ended December 31, 2018
 Pre-Tax Tax Net Diluted EPS
Net income, as reported$34,607  $4,134  $30,473  $2.04 
Restructuring programs:       
NobelClad1,114    1,114  0.08 
Accrued anti-dumping duties8,000    8,000  0.55 
Impact of tax valuation allowances  8,860  (8,860) (0.60)
        
Net income, excluding charges$43,721  $12,994  $30,727  $2.07 

Return on Invested Capital

  Three months ended
           
  Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019
Operating income$13,063  $20,452  $24,653  $12,821  $499 
Income tax provision (benefit) (1)(2,809) 4,990  7,371  5,782  5,227 
Net operating profit after taxes (NOPAT)15,872  15,462  17,282  7,039  (4,728)
Trailing Twelve Months NOPAT      55,655  35,055 
           
 Balances as of
           
 Sep 30, 2018Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019
Allowance for doubtful accounts$490 $513  $574  $428  $405  $967 
Deferred tax assets (4,001) (3,843) (3,656) (3,431) (3,836)
Deferred tax liabilities849 379  880  458  1,469  3,786 
Accrued income taxes9,299 9,545  5,367  9,419  10,427  9,651 
Current portion of lease liabilities   2,122  2,016  1,944  1,716 
Long-term portion of lease liabilities   6,157  9,506  9,487  9,777 
Current portion of long-term debt 3,125  3,125  3,125  3,125  3,125 
Long-term debt41,454 38,230  40,239  32,744  25,010  11,147 
Total stockholders' equity119,390 134,286  148,911  163,501  167,076  172,141 
Total invested capital171,482 182,077  203,532  217,541  215,512  208,474 
Average invested capital     187,058  193,497  195,276 
           
Trailing Twelve Months Return on Invested Capital (ROIC) 25% 29% 29% 18%
 

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

(1) Tax calculation for NOPAT:  
        
 Three months ended Twelve months ended Three months ended Twelve months ended
 Dec 31, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Dec 31, 2019
Income before income taxes$12,381  $34,607  $20,058  $24,587  $12,604  $(547) 56,702 
Income tax provision (benefit)(2,890) 4,134  4,888  7,343  5,689  4,741  22,661 
Effective tax rate(23.3)% 11.9% 24.4% 29.9% 45.1% (866.7)% 40.0%
 

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

DynaEnergetics

Adjusted EBITDA

 Three months ended Change
          
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential Year-on-year
Operating income$3,947  $14,911  $13,669  -74% -71%
Adjustments:          
Restructuring expenses, net and asset impairments12,744  5,880    117% n/a 
Restructuring related inventory write down  630    -100% n/a 
Restructuring related accounts receivable write off131      n/a  n/a 
           
Adjusted operating income16,822  21,421  13,669  -21% 23%
Depreciation1,390  1,473  1,096  -6% 27%
Amortization of purchased intangible assets260  299  482  -13% -46%
           
Adjusted EBITDA$18,472  $23,193  $15,247  -20% 21%


 Twelve months ended Change
      
 Dec 31, 2019 Dec 31, 2018 Year-on-year
Operating income$68,781  $44,476  55%
Adjustments:      
Restructuring expenses, net and asset impairments18,624    n/a 
Restructuring related inventory write down630    n/a 
Restructuring related accounts receivable write off131    n/a 
Anti-dumping duty penalties  8,000  -100%
       
Adjusted operating income88,166  52,476  68%
Depreciation5,213  3,767  38%
Amortization of purchased intangible assets1,162  2,541  -54%
       
Adjusted EBITDA$94,541  $58,784  61%
           

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

NobelClad

Adjusted EBITDA

 Three months ended Change
          
 Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Sequential Year-on-year
Operating income$1,221  $2,219  $2,708  -45% -55%
Adjustments:         
Restructuring expenses, net and asset impairments459  18  561  2,450% -18%
          
Adjusted operating income1,680  2,237  3,269  -25% -49%
Depreciation615  750  681  -18% -10%
Amortization of purchased intangible assets95  95  97  % -2%
          
Adjusted EBITDA$2,390  $3,082  $4,047  -22% -41%


 Twelve months ended Change
      
 Dec 31, 2019 Dec 31, 2018 Year-on-year
Operating income$7,193  $6,499  11%
Adjustments:     
Restructuring expenses, net and asset impairments879  1,114  -21%
      
Adjusted operating income8,072  7,613  6%
Depreciation2,664  2,809  -5%
Amortization of purchased intangible assets382  403  -5%
      
Adjusted EBITDA$11,118  $10,825  3%