BOULDER, CO--(Marketwire - March 5, 2009) -
Selected Highlights:
-- Explosive Metalworking segment reports year-end backlog of $97 million
-- Multiple large contracts awarded from alternative energy, aluminum
production & power generation sectors
-- Full-year operating cash flow increases 82% to $34.0 million versus
2007
-- Corporate liquidity strengthened through a 32%, or $21.8 million,
reduction in net debt
-- Preliminary full-year EPS reported at $1.91 versus $2.00 in fiscal
2007
Dynamic Materials Corporation (DMC) (NASDAQ: BOOM), the world's leading
provider of
explosion-welded clad metal plates, today reported preliminary financial
results for its fourth quarter and full fiscal year ended Dec. 31, 2008.
As previously announced, audited financial results will be issued following
the completion of an annual evaluation of the recoverability of goodwill
within the Company's Oilfield Products business segment.
Fourth quarter sales increased to $58.6 million versus $55.2 million in the
comparable prior-year quarter. Sales were approximately $4.6 million, or
8%, below Company expectations due to end-of-year delays in product
shipments. The delays resulted from difficulties in scheduling third-party
inspections, which are required for some of DMC's high-end products. Fourth
quarter gross margin was 29% compared with 32% in the 2007 fourth quarter.
Income from operations was $9.2 million versus $12.0 million in the
prior-year fourth quarter. Net income was $5.4 million, or $0.43 per
diluted share, versus net income of $6.9 million, or $0.56 per diluted
share, in the 2007 fourth quarter.
Adjusted EBITDA for the fourth quarter was $12.1 million versus $14.3
million in prior-year 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.
Explosive Metalworking
Fourth quarter sales at the Company's Explosive Metalworking segment were
$47.7 million versus $50.2 million in the fourth quarter last year. The
decline is largely attributable to the previously noted delays in product
shipments. Operating income was $9.1 million versus $11.7 million in last
year's fourth quarter. Adjusted EBITDA was $10.0 million versus $13.1
million in the fourth quarter of 2007.
Order backlog for the Explosive Metalworking segment at December 31, 2008,
was $97 million versus $99 million reported at the end of the 2008 third
quarter and $100 million recorded at the end of fiscal 2007.
Oilfield Products
Sales at DMC's Oilfield Products segment were $8.7 million. DMC acquired
the segment as part of its Nov. 15, 2007, acquisition of Germany-based
DYNAenergetics. Oilfield Products contributed $2.5 million in sales during
the six weeks of 2007 it was part of DMC. Operating income was $697,000
versus a loss from operations of $126,000 in the fourth quarter a year ago.
Fourth quarter adjusted EBITDA was $1.7 million versus $325,000 in the
comparable prior-year quarter.
AMK Welding
Fourth quarter sales at DMC's AMK Welding segment were $2.3 million versus
$2.5 million in the same quarter last year. Operating income was $267,000
versus $811,000 in the comparable quarter last year, while adjusted EBITDA
was $378,000 versus $912,000 in the comparable year-ago quarter.
Management Commentary
Yvon Cariou, president and CEO, said, "The strength of our 2008 financial
and operational performance was very encouraging, particularly in light of
the challenges that the global financial crises has presented for so many
industries. We closed the fourth quarter by capturing two unusually large
contracts totaling slightly more than $20 million. One, a $14 million
order from the alternative energy sector, represents the largest contract
in DMC's history. The other was our largest-ever order from the aluminum
production market. Early in the first quarter we received three additional
large orders from the power generation market with a combined value of $10
million. It has been extremely rewarding for the entire DMC team to
finalize several of the high-value orders we have been pursuing during the
past several months.
"The current composition of our 'hot list' of prospective orders continues
to include a broad range of multi-size contract opportunities. As was the
case during fiscal 2008, the timing of these orders can be difficult to
predict. While demand from the chemical, petrochemical and hydrometallurgy
sectors has slowed in recent months, end markets such as alternative
energy, refining and multiple segments of the power generation industry are
all very active, and could result in significant order volume during fiscal
2009."
Cariou added, "We noted last quarter that our efforts to diversify our
carbon steel supply chain were showing signs of progress. That progress
continued in the fourth quarter, and today, we are much less dependent on a
select few sources of pressure-vessel quality (PVQ) carbon steel. We
continue to work with a number of metals providers on addressing our
rigorous quality standards, and our efforts are resulting in the
establishment of a broader supply network for PVQ metal plates."
Rick Santa, senior vice president and chief financial officer, said, "The
cash generating capacity of DMC's business model was clearly evident in
2008, when we reported operating cash flow of $34.0 million, an increase of
82% versus fiscal 2007. Our liquidity allowed us to reduce our net
indebtedness at Dec. 31, 2008, to $46.3 million. This represents a
reduction of $21.8 million, or 32%, versus the end of fiscal 2007. We are
encouraged by the strength of our year-end balance sheet, which included
cash and cash equivalents of $14.4 million. Moreover, we had no
outstanding borrowings on roughly $35 million in available revolving credit
facilities. Despite the current economic crisis, we expect to continue
generating strong operating cash flow in fiscal 2009.
"With respect to guidance, we expect first quarter sales will be down
approximately 15% to 20% from the 2008 fourth quarter. The anticipated
sequential sales decline is due to the composition of our backlog, which
contains several orders that came in at the end of the fourth quarter and
will not begin to ship until later in the year. First quarter gross margin
is expected to be in a range of 27% to 29%. Due to the difficulty in
predicting the timing of large orders; the slowdown in the chemical,
petrochemical and hydrometallurgy sectors; and uncertainty associated with
macro-economic conditions, we are forecasting that revenue for fiscal 2009
will decline between 12% and 20% versus fiscal 2008. It should be noted
that some of the large contracts we have signed have lengthy delivery
schedules that will extend into fiscal 2010."
Santa said 2009 operating income will be impacted by various non-cash
charges, including approximately 3.6 million Euros (approximately $4.7
million at current exchange rates) of amortization expense associated with
the acquisition of Germany-based DYNAenergetics, $4.5 million of
depreciation expense and $3.8 million of stock-based compensation expense.
The Company's blended effective tax rate for 2009 is expected to be in a
range of 30% to 32%.
Full-year Results
Sales for fiscal 2008 increased 41% to $232.6 million from $165.2 million
in fiscal 2007. DYNAenergetics' businesses contributed sales of $58.6
million in fiscal 2008 and $6.9 million during the six weeks they were a
part of DMC's business in fiscal 2007. Fiscal 2008 gross margin was 30%
versus 33% in the prior year.
Full-year operating income was $38.1 million versus $38.9 million in fiscal
2007. Net income was $24.1 million, or $1.91 per diluted share, compared
with net income of $24.6 million, or $2.00 per diluted share, in 2007.
Full-year adjusted EBITDA increased 22% to $53.2 million from $43.5 million
in 2007.
The Explosive Metalworking segment reported full-year sales of $195.0
million, up 25% from $155.4 million in fiscal 2007. The explosion welding
business of DYNAenergetics contributed $30.8 million to DMC's 2008
full-year sales and $4.4 million during the last six weeks of fiscal 2007.
Sales from the Company's legacy explosive metalworking businesses increased
by 9% during 2008 versus the prior year. Operating income was $37.5
million versus $38.9 million in the prior year. Adjusted EBITDA increased
9% to $45.0 million from $41.5 million in fiscal 2007.
Full-year sales at DMC's Oilfield Products segment were $27.8 million.
Operating income for the year was $1.5 million and adjusted EBITDA was $5.4
million. During the six-weeks of fiscal 2007 that the Oilfield Products
segment was a part of DMC's business, it contributed sales of $2.5 million,
a loss from operations of $126,000, and adjusted EBITDA of $325,000.
AMK Welding recorded fiscal 2008 sales of $9.7 million, an increase of 35%
from sales of $7.2 million in fiscal 2007. Operating income increased 67%
to a record $2.4 million from $1.4 million, and adjusted EBITDA was $2.8
million, up 62% versus $1.7 million in fiscal 2007.
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 87708381. 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 March 9, 2009, by
calling 800-642-1687 (706-645-9291 for international callers) and entering
the passcode 87708381.
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 first
quarter and full-year 2009 revenue, margins, expenses and tax rates, as
well as the potential that we will recognize impairment of the goodwill
associated with our Oilfield Products segment, 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 timely receipt of
government approvals and permits; 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, 2007.
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share Data)
(unaudited)
Three months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
NET SALES $ 58,621 $ 55,211 $ 232,577 $ 165,175
COST OF PRODUCTS SOLD 41,561 37,426 161,732 110,168
---------- ---------- ---------- ----------
Gross profit 17,060 17,785 70,845 55,007
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
General and administrative
expenses 3,644 2,630 14,256 8,049
Selling expenses 3,070 1,962 11,155 6,875
Amortization expense of
purchased intangible
assets 1,193 1,191 7,382 1,191
---------- ---------- ---------- ----------
Total costs and expenses 7,907 5,783 32,793 16,115
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 9,153 12,002 38,052 38,892
OTHER INCOME (EXPENSE):
Other expense (40) (162) (269) (158)
Interest income (expense),
net (1,057) (601) (4,783) (24)
Equity in earnings of
joint ventures 4 24 274 24
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 8,060 11,263 33,274 38,734
INCOME TAX PROVISION 2,670 4,334 9,206 14,147
---------- ---------- ---------- ----------
NET INCOME $ 5,390 $ 6,929 $ 24,068 $ 24,587
========== ========== ========== ==========
INCOME PER SHARE - BASIC:
Net income $ 0.43 $ 0.57 $ 1.93 $ 2.03
========== ========== ========== ==========
INCOME PER SHARE - DILUTED:
Net income $ 0.43 $ 0.56 $ 1.91 $ 2.00
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
Basic 12,488,898 12,249,681 12,445,685 12,083,851
========== ========== ========== ==========
Diluted 12,562,767 12,455,468 12,579,598 12,293,158
========== ========== ========== ==========
ANNUAL DIVIDENDS DECLARED
PER COMMON SHARE $ - $ - $ 0.15 $ 0.15
========== ========== ========== ==========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(unaudited)
ASSETS 2008 2007
------------ ------------
Cash and cash equivalents $ 14,360 $ 9,045
Restricted cash - 371
Accounts receivable, net 34,719 39,833
Inventories 35,300 41,628
Other current assets 6,389 3,853
------------ ------------
Total current assets 90,768 94,730
Property, plant and equipment, net 40,457 35,446
Goodwill, net 43,066 45,862
Purchased intangible assets, net 52,264 61,914
Other long-term assets 2,664 2,947
------------ ------------
Total assets $ 229,219 $ 240,899
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 15,402 $ 22,590
Accrued income taxes 846 1,212
Other current liabilities 14,768 19,394
Lines of credit - current - 7,587
Current portion of long-term debt 14,450 8,035
------------ ------------
Total current liabilities 45,466 58,818
Long-term debt 46,178 61,530
Deferred tax liabilities 16,986 20,604
Other long-term liabilities 2,087 1,668
Stockholders' equity 118,502 98,279
------------ ------------
Total liabilities and stockholders' equity $ 229,219 $ 240,899
============ ============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007
(Dollars in Thousands)
(unaudited)
2008 2007
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 24,068 $ 24,587
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation (including capital lease
amortization) 4,531 2,156
Amortization of purchased intangible assets 7,382 1,191
Amortization of capitalized debt issuance
costs 279 30
Stock-based compensation 3,237 1,301
Deferred income tax provision (benefit) (2,079) (357)
Equity in earnings of joint ventures (274) (24)
Change in working capital, net (3,141) (10,200)
------------ ------------
Net cash provided by operating activities 34,003 18,684
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of DYNAenergetics, net of cash
acquired (559) (81,224)
Acquisition of property, plant and equipment (9,925) (8,979)
Change in other non-current assets 20 (87)
------------ ------------
Net cash used in investing activities (10,464) (90,290)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowed under syndicated credit agreement - 65,480
Borrowings on lines of credit, net (7,579) (524)
Payments on long-term debt (7,753) (655)
Payments on capital lease obligations (389) (34)
Payment of dividends (1,894) (1,821)
Payment of deferred debt issuance costs (218) (1,534)
Net proceeds from issuance of common stock 441 891
Excess tax benefit related to stock options 143 402
Other cash flows from financing activities - 87
------------ ------------
Net cash provided by (used in) financing
activities (17,249) 62,292
------------ ------------
EFFECTS OF EXCHANGE RATES ON CASH (975) 473
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,315 (8,841)
CASH AND CASH EQUIVALENTS, beginning of the
period 9,045 17,886
----------- -----------
CASH AND CASH EQUIVALENTS, end of the period $ 14,360 $ 9,045
=========== ===========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
(unaudited) (unaudited)
Explosive Metalworking Group $ 47,656 $ 50,181 $ 194,999 $ 155,438
Oilfield Products 8,705 2,545 27,833 2,545
AMK Welding 2,260 2,485 9,745 7,192
--------- --------- --------- ---------
Net sales $ 58,621 $ 55,211 $ 232,577 $ 165,175
========= ========= ========= =========
Explosive Metalworking Group $ 9,063 $ 11,706 $ 37,454 $ 38,902
Oilfield Products 697 (126) 1,472 (126)
AMK Welding 267 811 2,363 1,417
Unallocated expenses (874) (389) (3,237) (1,301)
--------- --------- --------- ---------
Income from operations $ 9,153 $ 12,002 $ 38,052 $ 38,892
========= ========= ========= =========
For the three months ended December 31, 2008
-----------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
--------- --------- ---------- --------- ----------
(unaudited)
Income from
operations $ 9,063 $ 697 $ 267 $ (874) $ 9,153
Adjustments:
Stock-based
compensation - - - 874 874
Depreciation 396 402 111 909
Amortization of
purchased
intangibles 569 624 - - 1,193
--------- --------- ---------- --------- ----------
Adjusted EBITDA $ 10,028 $ 1,723 $ 378 $ - $ 12,129
========= ========= ========== ========= ==========
For the three months ended December 31, 2007
-----------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
--------- --------- ---------- --------- ----------
(unaudited)
Income from
operations $ 11,706 $ (126) $ 811 $ (389) $ 12,002
Adjustments:
Stock-based
compensation - - - 389 389
Depreciation 555 105 101 - 761
Amortization of
purchased
intangibles 845 346 - - 1,191
--------- --------- ---------- --------- ----------
Adjusted EBITDA $ 13,106 $ 325 $ 912 $ - $ 14,343
========= ========= ========== ========= ==========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
For the twelve months ended December 31, 2008
-----------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
--------- --------- ---------- --------- ----------
(unaudited)
Income from
operations $ 37,454 $ 1,472 $ 2,363 $ (3,237) $ 38,052
Adjustments:
Stock-based
compensation - - - 3,237 3,237
Depreciation 2,989 1,107 435 - 4,531
Amortization of
purchased
intangibles 4,596 2,786 - - 7,382
--------- --------- ---------- --------- ----------
Adjusted EBITDA $ 45,039 $ 5,365 $ 2,798 $ - $ 53,202
========= ========= ========== ========= ==========
For the twelve months ended December 31, 2007
-----------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
--------- --------- ---------- --------- ----------
(unaudited)
Income from
operations $ 38,902 $ (126) $ 1,417 $ (1,301) $ 38,892
Adjustments:
Stock-based
compensation - - - 1,301 1,301
Depreciation 1,746 105 305 - 2,156
Amortization of
purchased
intangibles 845 346 - - 1,191
--------- --------- ---------- --------- ----------
Adjusted EBITDA $ 41,493 $ 325 $ 1,722 $ - $ 43,540
========= ========= ========== ========= ==========
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
(unaudited) (unaudited)
Net income $ 5,390 $ 6,929 $ 24,068 $ 24,587
Interest expense 1,269 765 5,472 722
Interest income (212) (164) (689) (698)
Provision for income taxes 2,670 4,334 9,206 14,147
Depreciation 909 761 4,531 2,156
Amortization of purchased
intangible assets 1,193 1,191 7,382 1,191
--------- --------- --------- ---------
EBITDA 11,219 13,816 49,970 42,105
Stock-based compensation 874 389 3,237 1,301
Other expense 40 162 269 158
Equity in earnings of joint
ventures (4) (24) (274) (24)
--------- --------- --------- ---------
Adjusted EBITDA $ 12,129 $ 14,343 $ 53,202 $ 43,540
========= ========= ========= =========
Contact Information: CONTACT:
Pfeiffer High Investor Relations, Inc.
Geoff High
303-393-7044