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: Pfeiffer High Investor Relations, Inc. Geoff High
303-393-7044
DMC Global (NASDAQ:BOOM)
Historical Stock Chart
From Sep 2024 to Oct 2024
DMC Global (NASDAQ:BOOM)
Historical Stock Chart
From Oct 2023 to Oct 2024