BOULDER, CO--(Marketwire - October 29, 2009) - Dynamic Materials Corporation (DMC) (
NASDAQ:
BOOM)
Selected Highlights:
-- Company Reports Q3 EPS of $.08 on Sales of $34.7 Million
-- Year-to-date Cash Flow from Operations at $23.4 Million
-- Explosion Welding Order Backlog Increases to $63 Million
Dynamic Materials Corporation (DMC) (
NASDAQ:
BOOM), the world's leading
provider of explosion-welded clad metal plates, today reported financial
results for its third quarter and nine-month period ended September 30,
2009.
Third quarter sales were $34.7 million versus $52.4 million in the third
quarter a year ago and $37.8 million in this year's second quarter. The 8%
sales decline versus the second quarter was better than management's prior
forecasts, which called for a sequential pullback of 10% to 15%. Management
said strong customer shipment volumes near quarter-end from the Company's
Mt. Braddock, Pennsylvania explosion welding facility led to the better
than expected performance. Gross margin was 25% versus 33% in the
comparable quarter a year ago. This year's third quarter gross margin was
above prior forecasts due to a favorable mix of products shipped from the
Company's U.S. explosion welding operations.
Income from operations was $2.5 million versus $9.4 million in the third
quarter a year ago. Net income was $1.1 million, or $0.08 per diluted
share, versus net income of $7.2 million, or $0.57 per diluted share, in
the comparable year-ago quarter. Last year's net income figure benefitted
from unrecognized tax benefits and tax provision adjustments, which
resulted in a 2008 third quarter effective tax rate of 7.0%. This year's
third quarter effective tax rate of 12.1% was well below the anticipated
full-year 2009 tax rate of 34% to 35% due primarily to adjustments
identified during third quarter 2009 preparation and filing of DMC's 2008
income tax returns.
Third quarter adjusted EBITDA was $6.0 million versus $12.8 million in the
third quarter last year. 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
DMC's Explosive Metalworking segment recorded third quarter sales of $27.3
million compared with sales of $42.7 million in the same quarter a year
ago. Operating income was $3.4 million versus $8.6 million in the
comparable year-ago quarter. Adjusted EBITDA was $4.9 million versus $10.2
million in the third quarter of 2008. Order backlog at the Explosive
Metalworking segment was $63 million versus $57 million at the end of this
year's second quarter.
Oilfield Products
Third quarter sales at DMC's Oilfield Products segment were $5.1 million
versus $6.8 million in the same quarter last year. The segment reported an
operating loss of $414,000 versus operating income of $725,000 in the third
quarter a year ago. Adjusted EBITDA was $498,000 versus $1.7 million in
the comparable prior-year quarter.
AMK Welding
DMC's AMK Welding segment reported third quarter sales of $2.2 million
versus $2.9 million in the same quarter last year. Operating income was
$441,000 versus $874,000 in the comparable year-ago quarter. The segment
recorded adjusted EBITDA of $555,000 versus $983,000 in the comparable
quarter last year.
Management Commentary
"The third quarter was marked by important progress on a number of fronts,"
said Yvon Cariou, president and CEO. "A record $14.8 million explosion
welding contract received during the quarter helped strengthen our position
in the upstream oil and gas sector -- a non-traditional segment for our
cladding business. We also finalized negotiations for our recent purchase
of Alberta-based LRI Oil Tools. This acquisition advances our long-range
strategy of growing the market share, distribution capabilities and product
offerings of our Oilfield Products business."
"The volume of quoting activity at our Explosive Metalworking segment
remained healthy during the third quarter, and we continue to bid on a wide
array of prospective projects from across several of our end markets,"
Cariou added. "As has been the case during recent quarters, our rate of
converting quotes to bookings remains below historical levels. However,
investment activity within certain industrial processing sectors appears to
be improving. As we get deeper into the next capital spending cycle, we
are optimistic that many of the projects we have been tracking will convert
into formal bookings."
Rick Santa, senior vice president and chief financial officer, said,
"Dynamic Materials remains on very solid financial footing. During the
third quarter, we increased our cash position by 44% to $30 million, and at
the nine-month mark of fiscal 2009, we had generated $23.4 million in
operating cash flow."
Guidance
Santa said fourth quarter sales are expected to increase by 10% to 20% from
third quarter sales, while full-year sales are now expected to decline from
29% to 31% versus fiscal 2008. Full-year gross margin is expected to be in
a range of 26% to 27%, and the full year tax rate is now anticipated to be
in a range of 32% to 33%.
Nine-month Results
Sales for the nine-month period were $122.3 million versus $174.0 million
in the same period of 2008. Gross margin was 27% versus 31% in the same
period last year. Operating income was $13.8 million versus $28.9 million
in the prior year's nine-month period. Net income through nine months was
$7.5 million, or $0.58 per diluted share, compared with net income of $18.7
million, or $1.47 per diluted share, in the same period last year.
Adjusted EBITDA was $23.9 million compared with $41.1 million in the same
period a year ago.
The Explosive Metalworking segment reported nine-month sales of $102.4
million versus $147.3 million at the nine-month mark last year. The
segment reported nine-month operating income of $17.4 million compared with
$28.4 million in the same period a year ago. Adjusted EBITDA was $21.8
million versus $35.0 million in the comparable year-ago period.
Nine-month sales at DMC's Oilfield Products segment were $13.2 million
versus $19.1 million in last year's nine-month period. The segment
reported an operating loss of $2.0 million versus operating income of
$775,000 in the same period a year ago. Nine-month adjusted EBITDA was
$603,000 versus $3.6 million in the prior-year's nine-month period.
AMK Welding recorded nine-month sales of $6.7 million compared with $7.5
million in the comparable year-ago period. Operating income was $1.1
million versus $2.1 million in the prior-year period. Adjusted EBITDA at
the nine-month mark was $1.5 million compared with $2.4 million in the same
period a year ago.
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 35685453. 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 November 1, 2009, by
calling 800-642-1687 (706-645-9291 for international callers) and entering
the passcode 35685453.
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 fourth
quarter and full-year 2009 sales, margins and tax rates, quoting and
booking expectations, our long-range strategy of growing the market share,
distribution capabilities and product offerings of our Oilfield Products
business, and improving investment activity within certain industrial
processing sectors, all of which involve risks and uncertainties. These
risks and uncertainties include, but are not limited to, the following: our
ability to realize sales from our backlog; our ability to obtain new
contracts at attractive prices; the size and timing of customer orders and
shipments; fluctuations in customer demand; fluctuations in foreign
currencies, changes to customer orders; the cyclicality of our business;
competitive factors; the timely completion of contracts; the timing and
size of expenditures; the 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,
2008.
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in Thousands, Except Share Data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
NET SALES $ 34,690 $ 52,380 $ 122,268 $ 173,957
COST OF PRODUCTS SOLD 25,936 35,355 89,032 120,171
---------- ---------- ---------- ----------
Gross profit 8,754 17,025 33,236 53,786
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
General and
administrative
expenses 2,749 3,679 9,318 10,612
Selling expenses 2,212 2,611 6,376 8,085
Amortization expense of
purchased intangible
assets 1,293 1,363 3,709 6,188
---------- ---------- ---------- ----------
Total costs and
expenses 6,254 7,653 19,403 24,885
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 2,500 9,372 13,833 28,901
OTHER INCOME (EXPENSE):
Other expense (633) (268) (560) (227)
Interest expense (752) (1,469) (2,521) (4,203)
Interest income 41 153 145 477
Equity in earnings
(losses) of joint
ventures 91 (19) 170 270
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 1,247 7,769 11,067 25,218
INCOME TAX PROVISION 151 546 3,540 6,535
---------- ---------- ---------- ----------
NET INCOME $ 1,096 $ 7,223 $ 7,527 $ 18,683
========== ========== ========== ==========
INCOME PER SHARE:
Basic $ 0.09 $ 0.57 $ 0.59 $ 1.48
========== ========== ========== ==========
Diluted $ 0.08 $ 0.57 $ 0.58 $ 1.47
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
Basic 12,632,406 12,463,060 12,597,023 12,426,369
========== ========== ========== ==========
Diluted 12,645,500 12,556,320 12,621,970 12,546,743
========== ========== ========== ==========
DIVIDENDS DECLARED PER
COMMON SHARE $ 0.04 $ - $ 0.08 $ 0.15
========== ========== ========== ==========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September 30, December 31,
2009 2008
ASSETS (unaudited)
------------- -------------
Cash and cash equivalents $ 30,031 $ 14,360
Accounts receivable, net 21,945 34,719
Inventories 32,565 35,300
Other current assets 6,643 6,670
------------- -------------
Total current assets 91,184 91,049
Property, plant and equipment, net 40,768 40,457
Goodwill, net 44,045 43,066
Purchased intangible assets, net 50,137 52,264
Other long-term assets 2,785 2,750
------------- -------------
Total assets $ 228,919 $ 229,586
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 9,403 $ 15,402
Dividend payable 515 -
Accrued income taxes 72 846
Other current liabilities 12,401 15,049
Current portion of long-term debt 10,690 14,450
------------- -------------
Total current liabilities 33,081 45,747
Long-term debt 45,957 46,178
Deferred tax liabilities 15,909 16,833
Other long-term liabilities 1,803 2,326
Stockholders' equity 132,169 118,502
------------- -------------
Total liabilities and stockholders' equity $ 228,919 $ 229,586
============= =============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in Thousands)
(unaudited)
2009 2008
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,527 $ 18,683
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation (including capital lease
amortization) 3,701 3,621
Amortization of purchased intangible assets 3,709 6,188
Amortization of capitalized debt issuance costs 215 210
Stock-based compensation 2,657 2,363
Deferred income tax benefit (1,875) (2,735)
Equity in earnings of joint ventures (170) (270)
Change in working capital, net 7,650 (3,255)
-------- --------
Net cash provided by operating activities 23,414 24,805
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (3,238) (7,325)
Change in other non-current assets 42 50
-------- --------
Net cash used in investing activities (3,196) (7,275)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on syndicated credit agreement (3,912) -
Borrowings on lines of credit, net - 7,247
Payments on long-term debt (653) (1,251)
Payments on capital lease obligations (132) (308)
Payment of dividends (513) (1,894)
Payment of deferred debt issuance costs (58) (167)
Net proceeds from issuance of common stock 373 333
Excess tax benefit related to stock options 90 9
-------- --------
Net cash provided by (used in) financing
activities (4,805) 3,969
-------- --------
EFFECTS OF EXCHANGE RATES ON CASH 258 (36)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 15,671 21,463
CASH AND CASH EQUIVALENTS, beginning of the period 14,360 9,045
-------- --------
CASH AND CASH EQUIVALENTS, end of the period $ 30,031 $ 30,508
======== ========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
(unaudited) (unaudited)
Explosive Metalworking Group $ 27,327 $ 42,703 $ 102,403 $ 147,344
Oilfield Products 5,123 6,756 13,171 19,128
AMK Welding 2,240 2,921 6,694 7,485
--------- --------- --------- ---------
Net sales $ 34,690 $ 52,380 $ 122,268 $ 173,957
========= ========= ========= =========
Explosive Metalworking Group $ 3,370 $ 8,593 $ 17,381 $ 28,393
Oilfield Products (414) 725 (2,013) 775
AMK Welding 441 874 1,122 2,096
Unallocated expenses (897) (820) (2,657) (2,363)
--------- --------- --------- ---------
Income from operations $ 2,500 $ 9,372 $ 13,833 $ 28,901
========= ========= ========= =========
For the three months ended September 30, 2009
------------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ----------
(unaudited)
Income (loss) from
operations $ 3,370 $ (414) $ 441 $ (897) $ 2,500
Adjustments:
Stock-based
compensation - - - 897 897
Depreciation 910 236 114 1,260
Amortization of
purchased
intangibles 617 676 - - 1,293
---------- --------- ---------- --------- ----------
Adjusted EBITDA $ 4,897 $ 498 $ 555 $ - $ 5,950
========== ========= ========== ========= ==========
For the three months ended September 30, 2008
------------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ----------
(unaudited)
Income from
operations $ 8,593 $ 725 $ 874 $ (820) $ 9,372
Adjustments:
Stock-based
compensation - - - 820 820
Depreciation 924 234 109 - 1,267
Amortization of
purchased
intangibles 650 713 - - 1,363
---------- --------- ---------- --------- ----------
Adjusted EBITDA $ 10,167 $ 1,672 $ 983 $ - $ 12,822
========== ========= ========== ========= ==========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
For the nine months ended September 30, 2009
------------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ----------
(unaudited)
Income (loss) from
operations $ 17,381 $ (2,013) $ 1,122 $ (2,657) $ 13,833
Adjustments:
Stock-based
compensation - - - 2,657 2,657
Depreciation 2,683 676 342 - 3,701
Amortization of
purchased
intangibles 1,769 1,940 - - 3,709
---------- --------- ---------- --------- ----------
Adjusted EBITDA $ 21,833 $ 603 $ 1,464 $ - $ 23,900
========== ========= ========== ========= ==========
For the nine months ended September 30, 2008
------------------------------------------------------
Explosive
Metalworking Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ----------
(unaudited)
Income from
operations $ 28,393 $ 775 $ 2,096 $ (2,363) $ 28,901
Adjustments:
Stock-based
compensation - - - 2,363 2,363
Depreciation 2,593 704 324 - 3,621
Amortization of
purchased
intangibles 4,026 2,162 - - 6,188
---------- --------- ---------- --------- ----------
Adjusted EBITDA $ 35,012 $ 3,641 $ 2,420 $ - $ 41,073
========== ========= ========== ========= ==========
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
(unaudited) (unaudited)
Net income $ 1,096 $ 7,223 $ 7,527 $ 18,683
Interest expense 752 1,469 2,521 4,203
Interest income (41) (153) (145) (477)
Provision for income taxes 151 546 3,540 6,535
Depreciation 1,260 1,267 3,701 3,621
Amortization of purchased
intangible assets 1,293 1,363 3,709 6,188
-------- -------- -------- --------
EBITDA 4,511 11,715 20,853 38,753
Stock-based compensation 897 820 2,657 2,363
Other expense 633 268 560 227
Equity in (earnings) / loss of
joint ventures (91) 19 (170) (270)
-------- -------- -------- --------
Adjusted EBITDA $ 5,950 $ 12,822 $ 23,900 $ 41,073
======== ======== ======== ========
Contact Information: CONTACT:
Pfeiffer High Investor Relations, Inc.
Geoff High
303-393-7044