BOULDER, CO (NASDAQ: BOOM), a leading provider of
explosion-welded clad metal plates, today reported financial
results for its first quarter ended March 31, 2008.
Sales increased 76% to $58.4 million from $33.1 million in the
first quarter last year. This year's first quarter sales results
included a $15.2 million contribution from the recently acquired
businesses of DYNAenergetics. Gross margin was 30.3% versus 32.8%
in the comparable year-ago quarter. The decline is partially
attributable to lower gross margin at the company's Explosive
Metalworking division, where a higher proportion of sales was
generated by the company's European operations as a result of the
acquisition of Germany-based DYNAenergetics. Gross margin at
European explosive welding operations traditionally has been lower
than in the United States. Consolidated gross margin also was
impacted by sales contributions from the company's new Oilfield
Products segment, which was part of the DYNAenergetics acquisition
and historically has reported lower gross margins than the
explosive welding business.
First quarter income from operations increased 25% to $9.4
million versus $7.5 million in the comparable year-ago quarter. Net
income increased 7% to $5.2 million, or $0.42 per diluted share,
from $4.9 million, or $0.40 per diluted share, in the first quarter
last year.
Adjusted EBITDA for the first quarter increased 66% to $13.5
million from $8.2 million in the first quarter last year. Adjusted
EBITDA is a non-GAAP (generally accepted accounting principal)
financial measure used by management to measure operating
performance. See additional information about this measure at the
end of this news release.
Explosive Metalworking
First quarter sales at the company's Explosive Metalworking
segment increased 64% to $51.6 million from $31.5 million in the
first quarter last year. The increase reflects a $10.7 million
sales contribution from the explosive welding business of
DYNAenergetics, as well as a $9.4 million increase in sales from
DMC's legacy explosion welding divisions. Operating income
increased 33% to $10.0 million from $7.5 million in last year's
first quarter. Adjusted EBITDA increased 58% to $12.4 million from
$7.8 million in the year-ago first quarter.
Order backlog at the end of the first quarter was a record
$102.1 million, up from $100.0 million reported at the end of the
last quarter and $67.9 million recorded at the end of last year's
first quarter.
AMK Welding
Sales at DMC's AMK Welding segment increased 44% to $2.3 million
from $1.6 million in the first quarter last year. Operating income
increased 141% to $637,000 from $264,000 reported in the comparable
year-ago quarter. Adjusted EBITDA advanced 130% to $745,000 from
$324,000 in the same quarter last year.
Oilfield Products
First quarter sales at DMC's new Oilfield Products segment were
$4.5 million. The segment recorded a loss from operations of
$565,000. The loss was attributable to $709,000 of amortization
expense associated with purchased intangible assets and lower than
expected first quarter sales. First quarter adjusted EBITDA was
$418,000.
Management Commentary
Yvon Cariou, president and CEO, said, "First quarter earnings
were in-line with our expectations, and we achieved another period
of solid quarter-over-quarter growth within our Explosive Welding
and AMK Welding business segments. Bookings activity during the
quarter also was strong, which pushed the quarter-end order backlog
at our Explosive Welding segment to another all-time high.
"The broad range of order opportunities being pursued by our
explosion welding sales team reflects continued strength in our
global end markets. Worldwide demand for industrial capital
equipment appears very healthy, and is, in fact, placing added
pressure on the supply chain for specialized, high-quality carbon
steel. We are encouraged by the overall level of demand, although
it is unclear what impact the unsettled nature of steel supplies
and pricing might have on the near-term timing of customer orders
or the arrival of metals at our production facilities. We maintain
healthy relationships with our suppliers, and are working to ensure
that our material needs are met on the most timely basis
possible."
Rick Santa, senior vice president and chief financial officer,
said management expects that prior 2008 full-year financial
forecasts will be achieved, provided expected customer orders are
received under anticipated timeframes and metal supplies are
adequate to meet 2008 production goals. Guidance provided in DMC's
2007 year-end earnings release called for revenue growth of up to
60% versus 2007, and gross margin in the range of 32%. Based upon
current foreign exchange rates, it is now expected that full-year
operating income will be impacted by approximately $7.7 million of
amortization expense associated with the DYNAenergetics
acquisition, while pre-tax income will be impacted by approximately
$5.0 million of interest expense. Santa said that second quarter
sales and earnings results are expected to be comparable to those
of the first quarter, and added that the company's financial
performance during the second half of fiscal 2008 is expected to be
significantly stronger than that of the first.
Conference call information
Management will hold a conference call to discuss first quarter
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
888-713-4205 (617-213-4862 for international callers) and entering
the passcode 63402808. 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 May 3, 2008, by
calling 888-286-8010 (617-801-6888 for international callers) and
entering the passcode 68076308.
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
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 2008 revenue, margins, income, expenses and tax rates,
that 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 successfully
integrate and operate the recently-acquired DYNAenergetics
businesses; 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 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
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(Dollars in Thousands, Except Share Data)
(unaudited)
Three months ended
March 31,
----------------------
2008 2007
---------- ----------
NET SALES $ 58,393 $ 33,094
COST OF PRODUCTS SOLD 40,682 22,243
---------- ----------
Gross profit 17,711 10,851
---------- ----------
COSTS AND EXPENSES:
General and administrative expenses 3,119 1,662
Selling expenses 2,841 1,647
Amortization expense of purchased intangible
assets 2,361 -
---------- ----------
Total costs and expenses 8,321 3,309
---------- ----------
INCOME FROM OPERATIONS 9,390 7,542
OTHER INCOME (EXPENSE):
Other expense (149) (7)
Interest expense (1,279) -
Interest income 239 188
Equity in earnings of joint ventures 16 -
---------- ----------
INCOME BEFORE INCOME TAXES 8,217 7,723
INCOME TAX PROVISION 2,972 2,841
NET INCOME $ 5,245 $ 4,882
========== ==========
INCOME PER SHARE:
Basic $ 0.42 $ 0.41
========== ==========
Diluted $ 0.42 $ 0.40
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 12,377,019 12,009,577
========== ==========
Diluted 12,557,068 12,222,601
========== ==========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
2008 2007
(unaudited)
ASSETS ------------- -------------
Cash and cash equivalents $ 17,610 $ 9,045
Restricted cash - 371
Accounts receivable, net 35,341 39,833
Inventories 44,293 41,628
Other current assets 4,515 3,853
------------- -------------
Total current assets 101,759 94,730
Property, plant and equipment, net 37,735 35,446
Goodwill, net 49,620 45,862
Purchased intangible assets, net 63,925 61,914
Other long-term assets 3,176 2,947
------------- -------------
Total assets $ 256,215 $ 240,899
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 19,703 $ 22,590
Accrued income taxes 3,286 1,212
Other current liabilities 16,165 19,394
Lines of credit - current 7,265 7,587
Current portion of long-term debt 8,293 8,035
------------- -------------
Total current liabilities 54,712 58,818
Lines of credit 4,741 -
Long-term debt 62,778 61,530
Deferred tax liabilities 21,046 20,604
Other long-term liabilities 1,682 1,668
Stockholders' equity 111,256 98,279
------------- -------------
Total liabilities and stockholders' equity $ 256,215 $ 240,899
============= =============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(Dollars in Thousands)
(unaudited)
2008 2007
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,245 $ 4,882
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 3,474 395
Amortization of capitalized debt issuance costs 60 -
Stock-based compensation 664 224
Provision for deferred income taxes (1,174) (46)
Equity in earnings of joint ventures (16) -
Change in working capital, net (1,004) (622)
-------- --------
Net cash provided by operating activities 7,249 4,833
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (2,361) (3,257)
Change in other non-current assets 15 -
-------- --------
Net cash used in investing activities (2,346) (3,257)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on lines of credit, net 3,665 -
Payments on long-term debt (265) -
Payments on capital lease obligations (105) -
Payment of deferred debt issuance costs (125) -
Net proceeds from issuance of common stock 93 278
Other cash flows from financing activities 16 5
-------- --------
Net cash provided by financing activities 3,279 283
-------- --------
EFFECTS OF EXCHANGE RATES ON CASH 383 34
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,565 1,893
CASH AND CASH EQUIVALENTS, beginning of the period 9,045 17,886
-------- --------
CASH AND CASH EQUIVALENTS, end of the period $ 17,610 $ 19,779
======== ========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
Three months ended
March 31,
------------------
2008 2007
-------- --------
(unaudited)
Explosive Metalworking Group $ 51,644 $ 31,495
Oilfield Products 4,450 -
AMK Welding 2,299 1,599
-------- --------
Net sales $ 58,393 $ 33,094
======== ========
Explosive Metalworking Group $ 9,982 $ 7,502
Oilfield Products (565) -
AMK Welding 637 264
Unallocated Expenses (664) (224)
-------- --------
Income (loss) from operations $ 9,390 $ 7,542
======== ========
For the three months ended March 31, 2008
---------------------------------------------------------
Explosive
Metal-
working Oilfield AMK Unallocated
Group Products Welding Expenses Total
-------- ---------- ------------- ------------ --------
(unaudited)
Income (loss)
from operations $ 9,982 $ (565) $ 637 $ (664) $ 9,390
Adjustments:
Stock-based
compensation - - - 664 664
Depreciation 731 274 108 - 1,113
Amortization of
purchased
intangibles 1,652 709 - - 2,361
-------- ---------- ------------- ------------ --------
Adjusted EBITDA $ 12,365 $ 418 $ 745 $ - $ 13,528
======== ========== ============= ============ ========
For the three months ended March 31, 2007
------------------------------------------------
Explosive
Metal-
working AMK Unallocated
Group Welding Expenses Total
---------- ------------- ------------ --------
(unaudited)
Income (loss)
from operations $ 7,502 $ 264 $ (224) $ 7,542
Adjustments:
Stock-based
compensation - - 224 224
Depreciation 335 60 - 395
---------- ------------- ------------ --------
Adjusted EBITDA $ 7,837 $ 324 $ - $ 8,161
========== ============= ============ ========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
Three months ended
March 31,
------------------
2008 2007
-------- --------
(unaudited)
Net income $ 5,245 $ 4,882
Other expense 149 7
Interest expense 1,279 -
Interest income (239) (188)
Equity in earnings of joint ventures (16) -
Provision for income taxes 2,972 2,841
Depreciation 1,113 395
Amortization of purchased intangible assets 2,361 -
-------- --------
EBITDA 12,864 7,937
Stock-based compensation 664 224
-------- --------
Adjusted EBITDA $ 13,528 $ 8,161
======== ========
CONTACT: Pfeiffer High Investor Relations, Inc. Geoff High
303-393-7044
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