BOULDER, CO -- (Marketwire) -- 07/30/09 -- Dynamic Materials Corporation (DMC) (NASDAQ: BOOM), the world's leading provider of explosion-welded clad metal plates,
today reported financial results for its second quarter and six-month
period ended June 30, 2009.
Sales in the quarter were $37.8 million versus $63.2 million in the second
quarter a year ago. The decline was largely related to the global economic
downturn and its impact on several of DMC's end markets, as well as the
previously announced customer-driven shipping delays on certain orders for
the Company's explosion welded plates. In addition, approximately $4.0
million of the sales decline was related to unfavorable foreign exchange
translation. Gross margin was 24% versus 30% in the comparable quarter a
year ago. The gross margin decline was due to lower sales volumes
throughout the Company and resultant less efficient absorption of fixed
manufacturing overhead expenses, particularly at DMC's smaller European
explosion welding facilities, and a more competitive pricing environment.
Income from operations was $3.0 million versus $10.1 million in the
year-ago second quarter. Net income was $1.5 million, or $0.12 per diluted
share, versus net income of $6.2 million, or $0.49 per diluted share, in
last year's comparable quarter. Adjusted EBITDA was $6.4 million versus
$14.7 million in the 2008 second 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
Second quarter sales at DMC's Explosive Metalworking segment were $31.6
million compared with sales of $53.0 million in the same quarter a year
ago. Operating income was $4.6 million versus $9.8 million in the
comparable year-ago quarter. Adjusted EBITDA was $6.0 million versus $12.5
million in the second quarter of 2008. Order backlog at the Explosive
Metalworking segment was $57 million versus $74 million at the end of this
year's first quarter.
Oilfield Products
Second quarter sales at DMC's Oilfield Products segment were $4.0 million
versus $7.9 million in the second quarter last year. The segment reported
an operating loss of $906,000 versus operating income of $616,000 in the
second quarter a year ago. Second quarter adjusted EBITDA was a negative
$49,000 versus a positive $1.6 million in the comparable prior-year
quarter.
AMK Welding
DMC's AMK Welding segment reported second quarter sales of $2.2 million
versus $2.3 million in the same quarter last year. Operating income was
$306,000 versus $585,000 in the comparable quarter last year. The segment
recorded adjusted EBITDA of $421,000 versus $693,000 in the comparable
year-ago quarter.
Management Commentary
"While worldwide economic conditions have led to trepidation in many of our
end markets, quoting activity for our explosion welded plates remains very
healthy," said Yvon Cariou, president and CEO. "Our ability to effectively
predict order timing remains challenging. Nevertheless, we believe the
current flow of quote requests, coupled with the extensive list of large
infrastructure projects we are tracking, is likely an accurate gauge of
strong future demand."
Cariou continued, "Of the three large prospective projects we discussed
after the close of our first quarter, two have been awarded to DMC. One
was related to a significant North American alternative energy project and
the second was tied to an overseas hydrometallurgy operation. The third, a
Middle Eastern oil and gas project, was awarded to a roll bond manufacturer
based on price.
"Alternative energy, power generation and aluminum production have remained
relatively healthy end markets, and we are optimistic that a number of the
orders we are pursuing from within these sectors will be awarded during the
second half of the year. We also are seeing a range of international
opportunities for our Oilfield Products segment, particularly in Russia.
Not surprisingly, exploration and production activity in North America
remains relatively weak."
Rick Santa, chief financial officer, said, "Our operating cash flow at the
mid-year mark was $12 million and we expect to continue delivering positive
cash flow during the back half of the year. We also are encouraged by the
continued strength of our balance sheet, which included more than $20
million in cash at the end of the second quarter. We will continue to
carefully manage our expenses as we wait for an anticipated rebound in
order volume.
"In light of continued uncertainty regarding order timing at both our
Explosive Metalworking and Oilfield Products segments, we are now
forecasting that sales for fiscal 2009 will be down between 28% and 32%
versus fiscal 2008. We previously had forecasted a decline of between 17%
and 23%. Gross margins for the second half of the year are expected to be
in a range of 23% to 25%, while full-year gross margins are now expected to
be between 25% and 27%. Our full-year tax rate is expected to be between
34% and 35%. We are expecting that third quarter sales will be 10% to 15%
below those of the second quarter."
Six-month Results
Sales for the six-month period were $87.6 million versus $121.6 million in
the comparable period of 2008. Gross margin was 28% versus 30% in the same
period a year ago. Operating income was $11.3 million versus $19.5 million
in the prior year's six-month period. Net income through six months was
$6.4 million, or $0.50 per diluted share, compared with net income of $11.5
million, or $0.90 per diluted share, in the same period last year.
Adjusted EBITDA was $18.0 million compared with $28.3 million in the same
period a year ago.
The Explosive Metalworking segment reported six-month sales of $75.1
million versus $104.6 million in the first half of 2008. The segment
reported six-month operating income of $14.0 million compared with $19.8
million in the same period a year ago. Adjusted EBITDA was $16.9 million
versus $24.8 million in the comparable year-ago period.
Six-month sales at DMC's Oilfield Products segment were $8.0 million versus
$12.4 million in last year's six-month period. The segment reported an
operating loss of $1.6 million versus operating income of $50,000 in the
same period a year ago. Six-month adjusted EBITDA was $104,000 versus $2.0
million in the prior-year's six-month period.
AMK Welding recorded six-month sales of $4.5 million as compared with $4.6
million in the comparable year-ago period. Operating income was $681,000
versus $1.2 million in the prior-year period. Adjusted EBITDA at the
six-month mark was $909,000 compared with $1.4 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 19900183. 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 August 2, 2009, by
calling 800-642-1687 (706-645-9291 for international callers) and entering
the passcode 19900183.
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 third
quarter and full-year 2009 revenue, margins and tax rates, as well as
quoting and booking expectations, 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 SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(Dollars in Thousands, Except Share Data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
NET SALES $ 37,819 $ 63,183 $ 87,578 $ 121,576
COST OF PRODUCTS SOLD 28,665 44,134 63,096 84,816
---------- ---------- ---------- ----------
Gross profit 9,154 19,049 24,482 36,760
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
General and administrative
expenses 3,043 3,815 6,569 6,933
Selling expenses 1,840 2,633 4,164 5,474
Amortization expense of
purchased intangible
assets 1,232 2,464 2,416 4,825
---------- ---------- ---------- ----------
Total costs and
expenses 6,115 8,912 13,149 17,232
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 3,039 10,137 11,333 19,528
OTHER INCOME (EXPENSE):
Other income 191 189 74 41
Interest expense (867) (1,471) (1,769) (2,734)
Interest income 38 99 104 323
Equity in earnings of
joint ventures 127 273 79 289
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 2,528 9,227 9,821 17,447
INCOME TAX PROVISION 1,013 3,017 3,389 5,989
---------- ---------- ---------- ----------
NET INCOME $ 1,515 $ 6,210 $ 6,432 $ 11,458
========== ========== ========== ==========
INCOME PER SHARE:
Basic $ 0.12 $ 0.49 $ 0.50 $ 0.91
========== ========== ========== ==========
Diluted $ 0.12 $ 0.49 $ 0.50 $ 0.90
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
Basic 12,595,551 12,416,900 12,570,640 12,406,210
========== ========== ========== ==========
Diluted 12,611,430 12,538,362 12,601,160 12,539,580
========== ========== ========== ==========
DIVIDENDS DECLARED PER
COMMON SHARE * $ 0.04 $ 0.15 $ 0.04 $ 0.15
========== ========== ========== ==========
* Dividends declared were on a quarterly basis in 2009 versus an annual
basis in 2008.
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, December 31,
2009 2008
ASSETS (unaudited)
------------ ------------
Cash and cash equivalents $ 20,794 $ 14,360
Accounts receivable, net 29,197 34,719
Inventories 32,548 35,300
Other current assets 6,015 6,670
------------ ------------
Total current assets 88,554 91,049
Property, plant and equipment, net 40,234 40,457
Goodwill, net 42,434 43,066
Purchased intangible assets, net 49,540 52,264
Other long-term assets 3,088 2,750
------------ ------------
Total assets $ 223,850 $ 229,586
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 10,613 $ 15,402
Dividend payable 513 -
Accrued income taxes 261 846
Other current liabilities 12,003 15,049
Lines of credit - current 151 -
Current portion of long-term debt 10,543 14,450
------------ ------------
Total current liabilities 34,084 45,747
Long-term debt 45,610 46,178
Deferred tax liabilities 15,566 16,833
Other long-term liabilities 1,942 2,326
Stockholders' equity 126,648 118,502
------------ ------------
Total liabilities and stockholders' equity $ 223,850 $ 229,586
============ ============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(Dollars in Thousands)
(unaudited)
2009 2008
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,432 $ 11,458
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation (including capital lease
amortization) 2,441 2,354
Amortization of purchased intangible assets 2,416 4,825
Amortization of capitalized debt issuance
costs 141 114
Stock-based compensation 1,760 1,543
Deferred income tax benefit (954) (2,410)
Equity in earnings of joint ventures (79) (289)
Change in working capital, net 214 (5,782)
----------- -----------
Net cash provided by operating activities 12,371 11,813
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (2,231) (4,203)
Change in other non-current assets 23 31
----------- -----------
Net cash used in investing activities (2,208) (4,172)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on syndicated credit agreement (3,885) -
Borrowings on lines of credit, net 143 12,081
Payments on long-term debt (438) (985)
Payments on capital lease obligations (102) (216)
Payment of deferred debt issuance costs (19) (140)
Net proceeds from issuance of common stock 373 240
Excess tax benefit related to stock options 93 132
Other cash flows from financing activities - 33
----------- -----------
Net cash provided by (used in) financing
activities (3,835) 11,145
----------- -----------
EFFECTS OF EXCHANGE RATES ON CASH 106 553
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,434 19,339
CASH AND CASH EQUIVALENTS, beginning of the
period 14,360 9,045
----------- -----------
CASH AND CASH EQUIVALENTS, end of the period $ 20,794 $ 28,384
=========== ===========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Explosive Metalworking
Group $ 31,604 $ 52,996 $ 75,076 $ 104,638
Oilfield Products 4,014 7,922 8,048 12,373
AMK Welding 2,201 2,265 4,454 4,565
Net sales $ 37,819 $ 63,183 $ 87,578 $ 121,576
========== ========== ========== ==========
Explosive Metalworking
Group $ 4,601 $ 9,815 $ 14,012 $ 19,799
Oilfield Products (906) 616 (1,600) 50
AMK Welding 306 585 681 1,222
Unallocated expenses (962) (879) (1,760) (1,543)
---------- ---------- ---------- ----------
Income from operations $ 3,039 $ 10,137 $ 11,333 $ 19,528
========== ========== ========== ==========
For the three months ended June 30, 2009
-----------------------------------------------------
Explosive
Metalwork-
ing Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ---------
(unaudited)
Income (loss) from
operations $ 4,601 $ (906) $ 306 $ (962) $ 3,039
Adjustments:
Stock-based
compensation - - - 962 962
Depreciation 847 212 115 - 1,174
Amortization of
purchased
intangibles 588 645 - - 1,233
---------- --------- ---------- --------- ---------
Adjusted EBITDA $ 6,036 $ (49) $ 421 $ - $ 6,408
========== ========= ========== ========= =========
For the three months ended June 30, 2008
-----------------------------------------------------
Explosive
Metalwork-
ing Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ---------
(unaudited)
Income from
operations $ 9,815 $ 616 $ 585 $ (879) $ 10,137
Adjustments:
Stock-based
compensation - - - 879 879
Depreciation 936 197 108 - 1,241
Amortization of
purchased
intangibles 1,724 740 - - 2,464
---------- --------- ---------- --------- ---------
Adjusted EBITDA $ 12,475 $ 1,553 $ 693 $ - $ 14,721
========== ========= ========== ========= =========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
For the six months ended June 30, 2009
-----------------------------------------------------
Explosive
Metalwork-
ing Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ---------
(unaudited)
Income (loss) from
operations $ 14,012 $ (1,600) $ 681 $ (1,760) $ 11,333
Adjustments:
Stock-based
compensation - - - 1,760 1,760
Depreciation 1,773 440 228 - 2,441
Amortization of
purchased
intangibles 1,152 1,264 - - 2,416
---------- --------- ---------- --------- ---------
Adjusted EBITDA $ 16,937 $ 104 $ 909 $ - $ 17,950
========== ========= ========== ========= =========
For the six months ended June 30, 2008
-----------------------------------------------------
Explosive
Metalwork-
ing Oilfield AMK Unallocated
Group Products Welding Expenses Total
---------- --------- ---------- --------- ---------
(unaudited)
Income from
operations $ 19,799 $ 50 $ 1,222 $ (1,543) $ 19,528
Adjustments:
Stock-based
compensation - - - 1,543 1,543
Depreciation 1,668 470 216 - 2,354
Amortization of
purchased
intangibles 3,376 1,449 - - 4,825
---------- --------- ---------- --------- ---------
Adjusted EBITDA $ 24,843 $ 1,969 $ 1,438 $ - $ 28,250
========== ========= ========== ========= =========
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Net income $ 1,515 $ 6,210 $ 6,432 $ 11,458
Interest expense 867 1,471 1,769 2,734
Interest income (38) (99) (104) (323)
Provision for income taxes 1,013 3,017 3,389 5,989
Depreciation 1,174 1,241 2,441 2,354
Amortization of purchased
intangible assets 1,233 2,464 2,416 4,825
EBITDA 5,764 14,304 16,343 27,037
Stock-based compensation 962 879 1,760 1,543
Other income (191) (189) (74) (41)
Equity in earnings of
joint ventures (127) (273) (79) (289)
---------- ---------- ---------- ----------
Adjusted EBITDA $ 6,408 $ 14,721 $ 17,950 $ 28,250
========== ========== ========== ==========
CONTACT:
Pfeiffer High Investor Relations, Inc.
Geoff High
303-393-7044
