DMC Global Reports Third Quarter Financial Results

Broomfield, Colorado, UNITED STATES


  • Consolidated third quarter sales were $55.3 million, up 28% sequentially and down 45% from Q3 2019
  • Gross margin was 25%, up from 15% in Q2 2020 and down from 36% in Q3 2019
  • Operating income was $1.5 million versus $12.8 million in Q3 2019
  • Net income was $1.0 million, or $0.07 per diluted share; while adjusted net income* was $1.2 million, or $0.08 per diluted share
  • Adjusted EBITDA* was $6.0 million versus negative $1.8 million in Q2 2020 and positive $23.2 million in Q3 2019
  • Cash and cash equivalents at September 30, 2020, were $24.6 million, up from $17.2 million at June 30, 2020.
  • Net cash* (cash and cash equivalents less total debt) at September 30, 2020, was $12.6 million, up from net cash of $4.5 million at June 30, 2020

BROOMFIELD, Colo., Oct. 22, 2020 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its third quarter ended September 30, 2020.

Consolidated sales were $55.3 million, up 28% sequentially and down 45% versus the third quarter of 2019. The sequential increase reflects improved demand in North America for integrated perforating systems from DynaEnergetics, DMC’s oilfield products business. North American sales improved 122% sequentially, and were partially offset by a 27% sequential decline in international sales, which can fluctuate based on order timing. Consolidated third quarter sales also reflect an 8% sequential improvement at NobelClad, DMC’s composite metals business. The sales decline versus last year’s third quarter reflects the collapse in global oil and gas demand as a result of the Covid-19 pandemic.

Gross margin for the third quarter was 25% versus 15% in the 2020 second quarter and 36% in the 2019 third quarter.

Third quarter operating income was $1.5 million, down from $12.8 million in last year’s third quarter. Net income was $1.0 million, or $0.07 per diluted share, versus net income of $6.9 million, or $0.46 per diluted share, in last year’s third quarter. Adjusted net income was $1.2 million, or $0.08 per diluted share.

Third quarter adjusted EBITDA was $6.0 million versus a negative $1.8 million in the 2020 second quarter, and a positive $23.2 million in the 2019 third quarter.

Net cash (total cash and cash equivalents less total debt) at September 30, 2020, was $12.6 million, up from net cash of $4.5 million at June 30, 2020.  

DynaEnergetics
Third quarter sales at DynaEnergetics were $34.2 million, up 45% sequentially and down 56% from the 2019 third quarter. Gross margin was 24%, up from 8% in the second quarter of 2020 and down from 39% in last year’s third quarter. Operating income was $2.2 million versus $14.9 million in the comparable year-ago quarter. Excluding restructuring charges, adjusted operating income was $2.3 million versus $21.4 million in the 2019 third quarter. Adjusted EBITDA was $4.2 million versus $23.2 million in last year’s third quarter.

NobelClad
Third quarter sales at NobelClad, DMC's composite metals business, were $21.1 million, up 8% sequentially and down 7% versus the 2019 third quarter. Gross margin was 26%, up from 25% in the 2020 second quarter and flat versus last year's third quarter. Operating income was $2.5 million versus $2.2 million in the year-ago third quarter. Adjusted EBITDA was $3.4 million versus $3.1 million in last year’s third quarter.

NobelClad’s trailing 12-month book-to-bill ratio at the end of the third quarter was 1.09, and its rolling 12-month bookings were $90 million versus $89 million at June 30, 2020. Order backlog was $42.6 million versus $42.9 million at the end of the second quarter.

Nine-month results
Consolidated sales for the nine-month period were $172.0 million, down 45% versus the same period a year ago. Gross margin was 26% versus 37% in the 2019 nine-month period. Operating loss was $178,000 versus operating income of $57.9 million in last year’s nine-month period. Net loss for the period was $485,000, or $0.03 per diluted share, versus net income of $39.3 million, or $2.64 per diluted share, in the same period a year ago.

Nine-month adjusted operating income was $3.1 million and adjusted net income was $1.8 million, or $0.13 per diluted share. Adjusted EBITDA was $15.5 million versus $76.1 million in last year’s nine-month period.

DynaEnergetics
Nine-month sales at DynaEnergetics were $111.1 million, down 55% from $245.8 million in last year’s nine-month period. Operating income was $3.9 million versus $64.8 million in the comparable year-ago period. Adjusted EBITDA was $12.2 million versus $76.2 million in last year’s nine-month period.

NobelClad
NobelClad reported nine-month sales of $61.0 million, down 7% from $65.4 million at the nine-month mark last year. Operating income was $5.9 million versus $6.0 million in the comparable year-ago period, while adjusted EBITDA was $8.8 million versus $8.9 million in last year’s nine-month period.

Management Commentary
President and CEO Kevin Longe said, “The third quarter brought a stronger-than-expected upturn in North American well completion activity, and DynaEnergetics’ customers were able to quickly accelerate operations, in part by deploying our Factory-Assembled, Performance-Assured™ DS perforating systems, which are delivered just-in-time to the wellsite. In addition, NobelClad reported better-than-expected order shipments. These factors led to third quarter financial results that exceeded publicly issued guidance.

“Despite the recent improvement in well completion activity, the environment for North America’s unconventional oil and gas industry remains challenging, and most operators and service companies are actively streamlining operations and reducing costs. Many also are adopting new well-completion technologies, including DynaEnergetics’ integrated DS perforating systems, which require fewer people and less time to arm and deploy, and significantly enhance the safety, performance and reliability of our customers’ well-completion programs.

“DynaEnergetics made several additions to its product portfolio during the third quarter, including the DS MicroSet™, a compact, disposable setting tool used to install the plug at the end of each stage in an unconventional oil or gas well. The factory-assembled tool has performed extremely well in field trials with multiple customers. It works seamlessly with our DS perforating systems, and is fully disposable, eliminating the dangerous redressing processes required with most setting tools. DS MicroSet and the new DS Liberator™ ballistic release tool will be commercially available next month.

“DynaEnergetics anticipates fourth quarter demand from North America’s unconventional market will be consistent with the third quarter.  However, it also expects a seasonal decline in international order volume, which is expected to accelerate again in the first half of 2021.”

Longe continued, “During the third quarter, NobelClad booked several orders in the petrochemical sector, as well as the upstream and downstream energy industries. In addition, shipments began on the first major order from the engineered wood industry, which NobelClad expects could become a long-term end market.

“We continue to enhance our financial position, and ended the third quarter with cash and cash equivalents of $24.6 million, and net cash of $12.6 million.

“Our third quarter performance was achieved in the midst of difficult market conditions that were made more challenging by the global pandemic. I am extremely proud of our employees around the world for their efforts to keep themselves and their co-workers safe, while also delivering on our commitments to our customers.”

Guidance
Michael Kuta, CFO, said fourth quarter 2020 sales are expected in a range of $50 million to $55 million versus the $55.3 million reported in the 2020 third quarter. At the business level, DynaEnergetics is expected to report sales in a range of $30 million to $33 million versus the $34.2 million reported in 2020 third quarter, while NobelClad’s sales are expected in a range of $20 million to $22 million versus the $21.1 million reported in the 2020 third quarter.

Consolidated gross margin is expected in a range of 20% to 23% versus 25% in the 2020 third quarter. The anticipated sequential decline reflects an expected seasonal drop in higher-margin international sales at DynaEnergetics, and a less favorable project mix at NobelClad.

Third quarter selling, general and administrative (SG&A) expense is expected to be approximately $12 million versus the $11.6 million reported in the 2020 third quarter, while amortization expense is expected to be approximately $370,000. Interest expense is expected in a range of $150,000 to $200,000.

Adjusted EBITDA is expected in a range of $2 million to $4 million versus the $6.0 million in the third quarter of 2020.

Fourth quarter capital expenditures are expected in a range of $2 million to $3 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). The call is available live via the Internet at: https://www.webcaster4.com/Webcast/Page/2204/38112, 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 until November 5, 2020, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #38112.

*Use of Non-GAAP Financial Measures
Adjusted EBITDA, adjusted operating income (loss), adjusted net income (loss), and net cash 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 (loss) is defined as operating income (loss) plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted net income (loss) 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. Net cash is defined as cash and cash equivalents less total debt. 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 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 (loss) and adjusted net income (loss) are presented because management believes these measures are useful to understand the effects of restructuring and impairment charges on DMC’s operating income (loss) and net income (loss), respectively.

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 fourth quarter guidance on sales, gross margin, SG&A, amortization expense, interest expense, adjusted EBITDA, capital expenditures; as well as our expectation that the DS MicroSet and DS Liberator products will be commercially available in November 2020, fourth quarter demand from North America’s unconventional market will be consistent with the third quarter, international order volume will decline in the fourth quarter and accelerate again in the first half of 2021; and our expectation that the engineered wood industry could become a meaningful long-term end market for NobelClad. 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; our ability to collect on our accounts receivable; fluctuations in customer demand; our ability to successfully execute and capitalize upon growth opportunities; the success of DynaEnergetics’ product and technology development initiatives; 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; 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; our ability to access our borrowing capacity under our credit facility; impacts of COVID-19 and any related preventive or protective actions taken by governmental authorities and resulting economic impacts, including recessions or depressions; 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, 2019. 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.


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

 Three months ended Change
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sequential Year-on-year
NET SALES$55,281  $43,203  $100,094  28% -45%
COST OF PRODUCTS SOLD41,688  36,599  63,870  14% -35%
Gross profit13,593  6,604  36,224  106% -62%
Gross profit percentage25% 15% 36%    
COSTS AND EXPENSES:         
General and administrative expenses6,911  6,707  10,128  3% -32%
Selling and distribution expenses4,705  5,488  6,983  -14% -33%
Amortization of purchased intangible assets369  353  394  5% -6%
Restructuring expenses and asset impairments143  2,046  5,898  -93% -98%
Total costs and expenses12,128  14,594  23,403  -17% -48%
OPERATING INCOME (LOSS)1,465  (7,990) 12,821  118% -89%
OTHER (EXPENSE) INCOME:         
Other (expense) income, net(148) (85) 170  -74% -187%
Interest expense, net(170) (156) (387) -9% 56%
INCOME (LOSS) BEFORE INCOME TAXES1,147  (8,231) 12,604  114% -91%
INCOME TAX PROVISION (BENEFIT)139  (2,583) 5,689  105% -98%
NET INCOME (LOSS)1,008  (5,648) 6,915  118% -85%
NET INCOME (LOSS) PER SHARE         
Basic$0.07  $(0.38) $0.47  118% -85%
Diluted$0.07  $(0.38) $0.46  118% -85%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:         
Basic14,820,881  14,832,242  14,632,276  —% 1%
Diluted14,820,881  14,832,242  14,851,166  —% —%
DIVIDENDS DECLARED PER COMMON SHARE$  $  $0.125     


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

 Nine months ended Change
 Sep 30, 2020 Sep 30, 2019 Year-on-year
NET SALES$172,048  $311,183  -45%
COST OF PRODUCTS SOLD127,381  196,481  -35%
Gross profit44,667  114,702  -61%
Gross profit percentage26% 37%  
COSTS AND EXPENSES:     
General and administrative expenses21,744  28,756  -24%
Selling and distribution expenses18,720  20,531  -9%
Amortization of purchased intangible assets1,076  1,189  -10%
Restructuring expenses and asset impairments3,305  6,300  -48%
Total costs and expenses44,845  56,776  -21%
OPERATING (LOSS) INCOME(178) 57,926  -100%
OTHER (EXPENSE) INCOME:     
Other (expense) income, net(118) 492  -124%
Interest expense, net(564) (1,169) 52%
(LOSS) INCOME BEFORE INCOME TAXES(860) 57,249  -102%
INCOME TAX (BENEFIT) PROVISION(375) 17,920  -102%
NET (LOSS) INCOME(485) 39,329  -101%
NET (LOSS) INCOME PER SHARE     
Basic$(0.03) $2.67  -101%
Diluted$(0.03) $2.64  -101%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:     
Basic14,759,062  14,589,655  1%
Diluted14,759,062  14,800,132  —%
DIVIDENDS DECLARED PER COMMON SHARE$0.125  $0.165   


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

DynaEnergetics

 Three months ended Change
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sequential Year-on-year
Net sales$34,201  $23,643   $77,356  45% -56%
Gross profit8,194  1,967   30,543  317% -73%
Gross profit percentage24% 8% 39%    
COSTS AND EXPENSES:         
General and administrative expenses3,176  3,157   5,048  1% -37%
Selling and distribution expenses2,445  3,595   4,405  -32% -44%
Amortization of purchased intangible assets269  259   299  4% -10%
Restructuring expenses and asset impairments133  1,851   5,880  -93% -98%
Operating income (loss)2,171  (6,895)  14,911  131% -85%
Adjusted EBITDA$4,170  $(3,272)  $23,193  227% -82%


 Nine months ended Change
 Sep 30, 2020 Sep 30, 2019 Year-on-year
Net sales$111,065  $245,820  -55%
Gross profit29,640  98,116  -70%
Gross profit percentage27% 40%  
COSTS AND EXPENSES:     
General and administrative expenses10,164  13,360  -24%
Selling and distribution expenses11,880  13,142  -10%
Amortization of purchased intangible assets788  900  -12%
Restructuring expenses and asset impairments2,922  5,880  -50%
Operating income3,886  64,834  -94%
Adjusted EBITDA$12,218  $76,234  -84%

NobelClad

 Three months ended Change
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sequential Year-on-year
Net sales$21,080  $19,560  $22,738  8% -7%
Gross profit5,577  4,802  5,811  16% -4%
Gross profit percentage26% 25% 26%    
COSTS AND EXPENSES:         
General and administrative expenses878  797  1,032  10% -15%
Selling and distribution expenses2,106  1,731  2,447  22% -14%
Amortization of purchased intangible assets100  94  95  6% 5%
Restructuring expenses and asset impairments10  195  18  -95% -44%
Operating income2,483  1,985  2,219  25% 12%
Adjusted EBITDA$3,372  $3,061  $3,082  10% 9%


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

 Nine months ended Change
 Sep 30, 2020 Sep 30, 2019 Year-on-year
Net sales$60,983  $65,363  -7%
Gross profit15,530  17,055  -9%
Gross profit percentage25% 26%  
COSTS AND EXPENSES:     
General and administrative expenses2,649  3,378  -22%
Selling and distribution expenses6,388  6,996  -9%
Amortization of purchased intangible assets288  289  —%
Restructuring expenses and asset impairments264  420  -37%
Operating income5,941  5,972  -1%
Adjusted EBITDA$8,799  $8,869  -1%


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

       Change
 Sep 30, 2020 Jun 30, 2020 Dec 31, 2019 Sequential From year-end
 (unaudited) (unaudited)      
ASSETS         
          
Cash and cash equivalents$24,604  $17,248  $20,353  43% 21%
Accounts receivable, net34,424  33,684  60,855  2% -43%
Inventory, net56,958  59,760  53,728  -5% 6%
Other current assets9,831  8,419  9,417  17% 4%
          
Total current assets125,817  119,111  144,353  6% -13%
          
Property, plant and equipment, net107,402  106,453  108,234  1% -1%
Purchased intangible assets, net4,383  4,784  5,880  -8% -25%
Other long-term assets21,681  21,669  18,954  —% 14%
          
Total assets$259,283  $252,017  $277,421  3% -7%
          
LIABILITIES AND STOCKHOLDERS’ EQUITY        
          
Accounts payable$22,123  $21,473  $34,758  3% -36%
Contract liabilities5,195  5,226  2,736  -1% 90%
Dividend payable    1,866  n/a -100%
Accrued income taxes7,080  5,727  9,651  24% -27%
Current portion of long-term debt3,125  3,125  3,125  —% —%
Other current liabilities16,555  14,340  19,287  15% -14%
          
Total current liabilities54,078  49,891  71,423  8% -24%
          
Long-term debt8,867  9,595  11,147  -8% -20%
Deferred tax liabilities3,181  2,747  3,786  16% -16%
Other long-term liabilities23,206  19,501  18,924  19% 23%
Stockholders’ equity169,951  170,283  172,141  —% -1%
          
Total liabilities and stockholders’ equity$259,283  $252,017  $277,421  3% -7%


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

 Three months ended
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income (loss)$1,008  $(5,648) $6,915 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:     
Depreciation2,451  2,364  2,223 
Amortization of purchased intangible assets369  353  394 
Amortization of deferred debt issuance costs55  59  47 
Stock-based compensation1,595  1,441  1,242 
Deferred income taxes521  (1,200) 1,236 
Loss (gain) on disposal of property, plant and equipment114  (14) 26 
Restructuring expenses and asset impairment143  2,046  5,898 
Change in working capital, net3,970  6,807  (6,187)
Net cash provided by operating activities10,226  6,208  11,794 
CASH FLOWS FROM INVESTING ACTIVITIES:     
Acquisition of property, plant and equipment(2,206) (2,355) (6,094)
Proceeds on sale of property, plant and equipment6  14   
Net cash used in investing activities(2,200) (2,341) (6,094)
CASH FLOWS FROM FINANCING ACTIVITIES:     
Repayments on revolving loans, net    (7,000)
Repayments on capital expenditure facility(782) (781) (782)
Payment of dividends  (1,883) (298)
Payment of deferred debt issuance costs(4) (84)  
Net proceeds from issuance of common stock3  263   
Treasury stock purchases(55) (34) (123)
Net cash used in financing activities(838) (2,519) (8,203)
EFFECTS OF EXCHANGE RATES ON CASH168  (551) (195)
      
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS7,356  797  (2,698)
CASH AND CASH EQUIVALENTS, beginning of the period17,248  16,451  14,881 
CASH AND CASH EQUIVALENTS, end of the period$24,604  $17,248  $12,183 


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

 Nine months ended
 Sep 30, 2020 Sep 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net (loss) income(485) 39,329 
Adjustments to reconcile net (loss) Income to net cash provided by operating activities:   
Depreciation7,167  6,178 
Amortization of purchased intangible assets1,076  1,189 
Amortization of deferred debt issuance costs154  130 
Stock-based compensation4,154  3,908 
Deferred income taxes(839) 1,660 
Loss on disposal of property, plant and equipment113  343 
Restructuring expenses and asset impairments3,305  6,300 
Change in working capital, net6,709  (23,941)
Net cash provided by operating activities21,354  35,096 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Acquisition of property, plant and equipment(9,682) (22,377)
Proceeds on sale of property, plant and equipment20  1,258 
Net cash used in investing activities(9,662) (21,119)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Repayments on revolving loans, net  (10,999)
Repayments on capital expenditure facility(2,344) (2,344)
Payment of dividends(3,749) (896)
Payment of deferred debt issuance costs(88)  
Net proceeds from issuance of common stock266  358 
Treasury stock purchases(1,123) (1,079)
Net cash used in financing activities(7,038) (14,960)
EFFECTS OF EXCHANGE RATES ON CASH(403) (209)
    
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS4,251  (1,192)
CASH AND CASH EQUIVALENTS, beginning of the period20,353  13,375 
CASH AND CASH EQUIVALENTS, end of the period$24,604  $12,183 


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

DMC Global

EBITDA and Adjusted EBITDA

 Three months ended Change
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sequential Year-on-year
Net income (loss)$1,008  $(5,648) $6,915  118% -85%
Interest expense, net170  156  387  9% -56%
Income tax provision (benefit)139  (2,583) 5,689  105% -98%
Depreciation2,451  2,364  2,223  4% 10%
Amortization of purchased intangible assets369  353  394  5% -6%
          
EBITDA4,137  (5,358) 15,608  177% -73%
Restructuring expenses and asset impairments143  2,046  5,898  -93% -98%
Restructuring related inventory write down    630  n/a -100%
Stock-based compensation1,595  1,441  1,242  11% 28%
Other expense (income), net148  85  (170) 74% 187%
Adjusted EBITDA$6,023  $(1,786) $23,208  437% -74%


 Nine months ended Change
 Sep 30, 2020 Sep 30, 2019 Year-on-year
Net (loss) income(485) 39,329  -101%
Interest expense, net564  1,169  -52%
Income tax (benefit) provision(375) 17,920  -102%
Depreciation7,167  6,178  16%
Amortization of purchased intangible assets1,076  1,189  -10%
      
EBITDA7,947  65,785  -88%
Restructuring expenses and asset impairments3,305  6,300  -48%
Restructuring related inventory write down  630  -100%
Stock-based compensation4,154  3,908  6%
Other expense (income), net118  (492) 124%
Adjusted EBITDA$15,524  $76,131  -80%

Adjusted operating income


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

 Three months ended Change
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sequential Year-on-year
Operating income (loss), as reported$1,465  $(7,990) $12,821  118% -89%
Restructuring programs:         
DynaEnergetics133  1,851  5,880  -93% -98%
NobelClad10  195  18  -95% -44%
Restructuring related inventory write down    630  n/a -100%
Adjusted operating income (loss)$1,608  $(5,944) $19,349  127% -92%


 Nine months ended Change
 Sep 30, 2020 Sep 30, 2019 Year-on-year
Operating (loss) income, as reported$(178) $57,926  -100%
Restructuring programs:     
DynaEnergetics2,922  5,880  -50%
NobelClad264  420  -37%
Corporate119    n/a
Restructuring related inventory write down  630  -100%
Adjusted operating income$3,127  $64,856  -95%

Adjusted Net Income and Adjusted Diluted Earnings per Share

 Three months ended September 30, 2020
 Pretax Tax Net Diluted EPS
Net income, as reported$1,147  $139  $1,008  $0.07 
Restructuring programs:       
DynaEnergetics133  (39) 172  0.01 
NobelClad10  3  7   
Adjusted net income$1,290  $103  $1,187  $0.08 


 Three months ended June 30, 2020
 Pretax Tax Net Diluted EPS
Net loss, as reported$(8,231) $(2,583) $(5,648) $(0.38)
Restructuring programs:       
DynaEnergetics1,851  728  1,123  0.08 
NobelClad195  65  130  0.01 
Adjusted net loss$(6,185) $(1,790) $(4,395) $(0.29)


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

 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:       
DynaEnergetics5,880  77  5,803  0.40 
NobelClad18    18   
Restructuring related inventory write down630    630  0.04 
Adjusted net income$19,132  $5,766  $13,366  $0.90 


 Nine months ended September 30, 2020
 Pretax Tax Net Diluted EPS
Net loss, as reported$(860) $(375) $(485) $(0.03)
Restructuring programs:       
DynaEnergetics2,922  896  2,026  0.14 
NobelClad264  77  187  0.01 
Corporate119  25  94  0.01 
Adjusted net income$2,445  $623  $1,822  $0.13 


 Nine months ended September 30, 2019
 Pretax Tax Net Diluted EPS
Net income, as reported$57,249  $17,920  $39,329  $2.64 
Restructuring programs:       
DynaEnergetics5,880  77  5,803  0.39 
NobelClad420    420  0.03 
Restructuring related inventory write down630    630  0.04 
Adjusted net income$64,179  $17,997  $46,182  $3.10 


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

Return on Invested Capital

   Three months ended
   Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020
Operating income (loss)  12,821  $499  $6,347  $(7,990) $1,465 
Income tax provision (benefit) (1)  5,782  5,227  2,107  (2,509) 177 
Net operating profit (loss) after taxes (NOPAT)  7,039  (4,728) 4,240  (5,481) 1,288 
Trailing Twelve Months NOPAT        1,070  (4,681)
            
 Balances as of
 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020
Allowance for doubtful accounts428  405  967  2,320  2,882  2,709 
Deferred tax assets(3,656) (3,431) (3,836) (3,902) (4,157) (4,070)
Deferred tax liabilities458  1,469  3,786  3,692  2,747  3,181 
Accrued income taxes9,419  10,427  9,651  8,666  5,727  7,080 
Current portion of lease liabilities2,016  1,944  1,716  1,618  1,846  1,804 
Long-term portion of lease liabilities9,506  9,487  9,777  9,454  10,430  10,155 
Current portion of long-term debt3,125  3,125  3,125  3,125  3,125  3,125 
Long-term debt32,744  25,010  11,147  10,406  9,595  8,867 
Total stockholders' equity163,501  167,076  172,141  173,689  170,283  169,951 
Total invested capital217,541  215,512  208,474  209,068  202,478  202,802 
Average invested capital      206,300  210,010  209,157 
            
Trailing Twelve Months Return on Invested Capital (ROIC)     18% 12% 1% (2)%


(1) Tax calculation for NOPAT:
 Three months ended Twelve months ended Three months ended
 Sep 30, 2019 Dec 31, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020
Income (loss) before income taxes12,604  (547)  56,702  6,224  (8,231)  1,147 
Income tax provision (benefit)5,689  4,741   22,661  2,069  (2,583)  139 
Effective tax rate45.1% (866.7)%  40.0% 33.2% 31.4%  12.1%


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

DynaEnergetics

 Three months ended Change
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sequential Year-on-year
Operating income (loss), as reported$2,171  $(6,895) $14,911  131%  -85% 
Adjustments:         
Restructuring133  1,851  5,880  -93%  -98% 
Restructuring related inventory write down    630  n/a -100% 
          
Adjusted operating (loss) income2,304  (5,044) 21,421  146%  -89% 
Depreciation1,597  1,513  1,473  6%  8% 
Amortization of purchased intangibles269  259  299  4%  -10% 
Adjusted EBITDA$4,170  $(3,272) $23,193  227%  -82% 


 Nine months ended  
 Sep 30, 2020 Sep 30, 2019 Year-on-year
Operating income, as reported$3,886  $64,834  -94%
Adjustments:     
Restructuring2,922  5,880  -50%
Restructuring related inventory write down  630  -100%
      
Adjusted operating income6,808  71,344  -90%
Depreciation4,622  3,990  16%
Amortization of purchased intangibles788  900  -12%
Adjusted EBITDA$12,218  $76,234  -84%

NobelClad

 Three months ended Change
 Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sequential Year-on-year
Operating income, as reported$2,483  $1,985  $2,219  25% 12%
Adjustments:         
Restructuring expenses and asset impairments10  195  18  -95% -44%
          
Adjusted operating income2,493  2,180  2,237     
Depreciation779  787  750  -1% 4%
Amortization of purchased intangibles100  94  95  6% 5%
Adjusted EBITDA$3,372  $3,061  $3,082  10% 9%


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

 Nine months ended  
 Sep 30, 2020 Sep 30, 2019 Year-on-year
Operating income, as reported$5,941  $5,972  -1%
Adjustments:     
Restructuring expenses and asset impairments264  420  -37%
      
Adjusted operating income6,205  6,392   
Depreciation2,306  2,188  5%
Amortization of purchased intangibles288  289  —%
Adjusted EBITDA$8,799  $8,869  -1%

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