Exhibit 99.1
FOR IMMEDIATE RELEASE
|
|
CONTACT:
|
March 6, 2008
|
|
Pfeiffer High Investor
Relations, Inc.
|
|
|
Geoff High
|
|
|
303-393-7044
|
DYNAMIC
MATERIALS REPORTS FOURTH QUARTER AND FULL-YEAR
FINANCIAL
RESULTS
Selected
Highlights
· Q4 sales increase 55% to $55.2 million versus
comparable year-ago quarter
· Fourth quarter operating income up 24% to $12 million
· Order backlog at Explosive Metalworking segment reaches
$100 million
BOULDER, Colo. — Mar. 6, 2008 — Dynamic
Materials Corporation (DMC) (Nasdaq: BOOM), the world’s leading provider of
explosion-welded clad metal plates, today reported financial results for its
fourth quarter and full fiscal year ended Dec. 31, 2007.
Fourth quarter sales
increased 55% to $55.2 million from $35.7 million in the fourth quarter last
year. The increase resulted from continued strong global demand for the Company’s
explosion welded plates, as well as $6.9 million in revenue contributions from
DYNAenergetics, which was acquired by DMC on Nov. 15, 2007. Revenue from DYNAenergetics was comprised of
$4.4 million from its explosion welding business and $2.5 million from its
Oilfield Products division.
Gross margin was 32% versus
a record 41% in the fourth quarter a year ago. Last year’s fourth quarter gross
margin benefited from highly favorable terms received on an $11 million order,
while gross margin in the most recent quarter reflected a more normalized
product mix from DMC pre-acquisition explosion welding business, lower gross
margins on incremental sales from DYNAenergetics, and the impact of a $0.3
million purchase-accounting adjustment to cost of goods sold related to the
acquired inventory of DYNAenergetics.
Fourth quarter general and
administrative expense was $2.6 million, or 4.8% of revenue, versus $1.9
million, or 5.2% of revenue, in last year’s fourth quarter. Selling expense was $2.0 million, or 3.6% of
revenue, versus $3.0 million, 8.3% of revenue, in the comparable year ago
quarter. Selling expense in last year’s
fourth quarter included unusually high commissions associated with the
previously mentioned $11 million order.
The 2007 fourth quarter included $1.2 million of amortization expense
and $0.8 million of interest expense associated with the DYNAenergetics acquisition. DMC did not record any amortization and had
net interest income of $0.3 million in the 2006 fourth quarter.
Income from operations
advanced 24% to $12.0 million from $9.7 million in the fourth quarter a year
ago. Net income was $6.9 million, or $0.56 per share, versus $6.6 million, or $0.54
per diluted share, in last year’s fourth quarter.
Explosive Metalworking
The Company’s Explosive Metalworking segment
reported fourth quarter sales of $50.2 million,
up 48% from $34.0 million in the fourth quarter last year. Operating
income increased 25% to $11.7 million from $9.4 million in the 2006 fourth
quarter. The six weeks of contributions from DYNAenergetics’ explosion welding
business included $4.4 million in fourth quarter revenue. Order backlog at the end of fiscal 2007 was
$100.0 million versus $68.8 million at Dec. 31, 2006, and $77.1 million at
the end of the third quarter. The
acquisition of DYNAenergetics contributed $21.5 million to the 2007 year-end
backlog.
AMK Welding
Fourth quarter sales at the Company’s AMK Welding
segment advanced 49% to $2.5 million versus $1.7 million in the fourth quarter
last year. Operating income was $0.8
million versus $0.5 million
reported in the comparable year-ago quarter.
Oilfield Products
The six weeks of contributions from DYNAenergetics’
Oilfield Products business included revenue of $2.5 million. The Oilfield Products business recorded a
loss from operations of $0.1 million, which included the impact of
acquisition-related amortization expense.
Management Commentary
“Our fourth quarter results represented a
continuation of the strong sales and earnings growth we achieved throughout
fiscal 2007,” said Yvon Cariou, president and CEO. “During the quarter, we completed production
and delivery on a large contract from the alternative energy sector. At the same time, our sales team did an
effective job of maintaining the breadth of our order backlog.”
“The quarter also was marked by a strategic
acquisition that served to significantly expand our production capacity, market
share and geographic reach,” Cariou added.
“Our integration of Germany-based DYNAenergetics is proceeding smoothly,
and I am especially encouraged by how effectively our management teams are
working together to blend these organizations.”
“In addition to new explosion-welding capacity, the
DYNAenergetics acquisition provided us with a highly regarded
explosive-products business serving the oil and gas industry,” Cariou
added. “Rolf Rospek and Dr. Uwe
Gessel, who previously managed the combined DYNAenergetics businesses, will now
focus principally on the global expansion of DYNAenergetics Oilfield Products.”
Cariou said DMC’s AMK Welding business is now
delivering the strong results management has been anticipating. “We expect improved revenue contributions
from AMK throughout 2008, as there has been a marked increase in activity
associated with its ground-based turbine business.”
Cariou said that current explosion-welding quoting
volume and end-market activity suggests the robust capital spending taking
place across most of DMC’s end markets
will continue during 2008. “From a geographic perspective, activity in
our U.S. and European home markets remains strong. We also are seeing considerable demand from
global markets such as India, China, Russia and the Middle East. We therefore will continue to explore
opportunities to expand our global presence.
Guidance
Rick Santa, chief financial
officer, said management expects to report 2008 revenue growth of up to 60%
versus revenue in 2007, which will include incremental revenue contributions
from the DYNAenergetics acquisition.
While the company expects to experience quarter-to-quarter fluctuations
in gross margin, full-year gross margins are expected to be comparable to the
32% achieved in the 2007 fourth quarter. Gross margins will include the impact
of higher proportionate sales from DMC’s European explosion welding businesses,
which historically have achieved lower margins than DMC’s domestic explosion
welding business. Gross margins also
will be affected by the addition of the Oilfield Products business, which
historically has delivered lower margins than DMC’s business.
Full-year operating income
for 2008 is expected to be impacted by approximately $7.3 million of
amortization expense associated with the DYNAenergetics acquisition. Pre-tax income will be impacted by more than
$5.0 million of interest expense associated with the acquisition. Management anticipates the company’s 2008
consolidated tax rate will be in the range of 36% to 37%.
Santa said that revenue in
the 2008 first quarter, which will include the incremental sales contributions
from DYNAenergetics, is expected to be approximately 80% higher than revenue in
the comparable quarter of 2007. First quarter operating income is expected to
be negatively affected by lower quarter-over-quarter gross margins and
approximately $3 million of acquisition-related amortization expense. The added impact of higher interest expense
is expected to result in first quarter net income that will be comparable to
the first quarter last year.
Santa said, “Our two most
recent quarters benefited significantly from our deliveries on certain large
orders. As we have previously mentioned,
these orders can lead to spikes in our quarterly performance. Although we currently are pursuing several
significant order opportunities and overall demand remains strong, we do not
expect to deliver on any unusually large contracts during the first quarter,
and this is expected to result in only a modest sequential increase in Q1
revenue. Nevertheless, our order backlog is at an all-time high and we remain
optimistic about our growth prospects during 2008 and beyond.”
2007
Full-Year Results
For the full fiscal year,
sales increased 46% to $165.2 million compared with $113.5 million in
2006. Gross margin was 33% versus 37%
last year. Income from operations increased 29% to $38.9 million compared with
$30.1 million in the prior year. Net
income for 2007 was $24.6 million, or $2.00 per diluted share, versus net
income of $20.8 million, or $1.70 per diluted share, in the same period last
year. Net income in
2006 included a gain from
discontinued operations of $1.5 million, or $0.12 per share, net of tax.
The Explosive Metalworking segment reported
full-year sales of $155.4 million, up 43% versus sales of $108.4 million in
2006. Operating income increased 31% to $38.9 million compared with $29.6
million in the prior year.
Full-year sales at AMK Welding increased 41% to $7.2
million compared with sales of $5.1 million in 2006. Operating income was up
22% to $1.4 million compared with $1.2 million in the prior year.
Conference call information
Management
will hold a conference call to discuss fourth quarter and full-year 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 888-713-4215 (617-213-4867 for international callers) and
entering the passcode 74258348. 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 Mar. 8, 2008, by
calling 888-286-8010 (617-801-6888 for international callers) and entering the
passcode 28518624.
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 oilfield perforating equipment and explosives; 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; 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, 2006.
###
DYNAMIC MATERIALS
CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF OPERATIONS
(Dollars in Thousands,
Except Share Data)
(unaudited)
|
|
|
Three months ended
|
|
Twelve months ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
|
NET SALES
|
|
$
|
55,211
|
|
$
|
35,691
|
|
$
|
165,175
|
|
$
|
113,472
|
|
|
COST OF PRODUCTS SOLD
|
|
37,426
|
|
21,170
|
|
110,168
|
|
71,439
|
|
|
Gross profit
|
|
17,785
|
|
14,521
|
|
55,007
|
|
42,033
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
2,630
|
|
1,854
|
|
8,049
|
|
5,802
|
|
|
Selling expenses
|
|
1,962
|
|
2,953
|
|
6,875
|
|
6,128
|
|
|
Amortization expense of purchased intangible assets
|
|
1,191
|
|
—
|
|
1,191
|
|
—
|
|
|
Total costs and expenses
|
|
5,783
|
|
4,807
|
|
16,115
|
|
11,930
|
|
|
INCOME FROM OPERATIONS OF
CONTINUING OPERATIONS
|
|
12,002
|
|
9,714
|
|
38,892
|
|
30,103
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
(162
|
)
|
(75
|
)
|
(158
|
)
|
(115
|
)
|
|
Interest income (expense), net
|
|
(601
|
)
|
272
|
|
(24
|
)
|
620
|
|
|
Equity in earnings of joint ventures
|
|
24
|
|
—
|
|
24
|
|
—
|
|
|
INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS
|
|
11,263
|
|
9,911
|
|
38,734
|
|
30,608
|
|
|
INCOME TAX PROVISION
|
|
4,334
|
|
3,476
|
|
14,147
|
|
11,341
|
|
|
INCOME FROM CONTINUING
OPERATIONS
|
|
6,929
|
|
6,435
|
|
24,587
|
|
19,267
|
|
|
INCOME FROM DISCONTINUED
OPERATIONS, net of tax
|
|
—
|
|
141
|
|
—
|
|
1,497
|
|
|
NET INCOME
|
|
$
|
6,929
|
|
$
|
6,576
|
|
$
|
24,587
|
|
$
|
20,764
|
|
|
INCOME PER SHARE - BASIC:
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.57
|
|
$
|
0.54
|
|
$
|
2.03
|
|
$
|
1.63
|
|
|
Discontinued operations
|
|
—
|
|
0.01
|
|
—
|
|
0.12
|
|
|
Net income
|
|
$
|
0.57
|
|
$
|
0.55
|
|
$
|
2.03
|
|
$
|
1.75
|
|
|
INCOME PER SHARE -
DILUTED:
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.56
|
|
$
|
0.53
|
|
$
|
2.00
|
|
$
|
1.58
|
|
|
Discontinued operations
|
|
—
|
|
0.01
|
|
—
|
|
0.12
|
|
|
Net income
|
|
$
|
0.56
|
|
$
|
0.54
|
|
$
|
2.00
|
|
$
|
1.70
|
|
|
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
12,249,681
|
|
11,924,467
|
|
12,083,851
|
|
11,841,373
|
|
|
Diluted
|
|
12,455,468
|
|
12,206,704
|
|
12,293,158
|
|
12,213,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANNUAL DIVIDENDS DECLARED
PER COMMON SHARE
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.15
|
|
$
|
0.15
|
|
DYNAMIC MATERIALS
CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Dollars in Thousands)
|
|
|
2007
|
|
2006
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
9,045
|
|
$
|
17,886
|
|
|
Restricted cash
|
|
371
|
|
3,059
|
|
|
Accounts receivable, net
|
|
39,833
|
|
21,549
|
|
|
Inventories
|
|
41,628
|
|
19,226
|
|
|
Other current assets
|
|
3,853
|
|
2,127
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
94,730
|
|
63,847
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
35,446
|
|
20,260
|
|
|
Goodwill, net
|
|
45,862
|
|
847
|
|
|
Intangible assets, net
|
|
61,914
|
|
—
|
|
|
Other long-term assets
|
|
2,947
|
|
19
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
240,899
|
|
$
|
84,973
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
22,590
|
|
$
|
13,572
|
|
|
Accrued income taxes
|
|
1,212
|
|
1,892
|
|
|
Other current liabilities
|
|
19,394
|
|
9,451
|
|
|
Lines of credit - current
|
|
7,587
|
|
—
|
|
|
Current portion of
long-term debt
|
|
8,035
|
|
382
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
58,818
|
|
25,297
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
61,530
|
|
382
|
|
|
Deferred tax liabilities
|
|
20,604
|
|
1,512
|
|
|
Other long-term
liabilities
|
|
1,668
|
|
202
|
|
|
Stockholders’ equity
|
|
98,279
|
|
57,580
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity
|
|
$
|
240,899
|
|
$
|
84,973
|
|
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(Dollars in Thousands)
(unaudited)
|
|
|
2007
|
|
2006
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
24,587
|
|
$
|
20,764
|
|
|
Adjustments to reconcile net income to net cash provided by operating
activities -
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
—
|
|
(1,497
|
)
|
|
Depreciation and amortization
|
|
3,347
|
|
1,369
|
|
|
Amortization of capitalized debt issuance costs
|
|
30
|
|
50
|
|
|
Stock-based compensation
|
|
1,301
|
|
660
|
|
|
Provision for deferred income taxes
|
|
(357
|
)
|
2,115
|
|
|
Equity in earnings of joint ventures
|
|
(24
|
)
|
—
|
|
|
Change in working capital, net
|
|
(10,200
|
)
|
(6,904
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
18,684
|
|
16,557
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
Acquisition of DYNAenergetics, net of cash acquired
|
|
(81,224
|
)
|
—
|
|
|
Acquisition of property, plant and equipment
|
|
(8,979
|
)
|
(8,650
|
)
|
|
Sale of marketable securities
|
|
—
|
|
1,950
|
|
|
Loan to related party
|
|
—
|
|
(1,206
|
)
|
|
Repayment on loan to related party
|
|
—
|
|
1,206
|
|
|
Change in other non-current assets
|
|
(87
|
)
|
290
|
|
|
Payment received on other receivables related to discontinued operations
|
|
—
|
|
576
|
|
|
Cash flows provided by investing activities of discontinued operations
|
|
—
|
|
3,089
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
(90,290
|
)
|
(2,745
|
)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
Borrowed under syndicated credit agreement
|
|
65,480
|
|
—
|
|
|
Repayments on lines of credit, net
|
|
(524
|
)
|
(48
|
)
|
|
Payments on long-term debt
|
|
(655
|
)
|
(2,084
|
)
|
|
Payments on capital lease obligations
|
|
(34
|
)
|
—
|
|
|
Payment of dividends
|
|
(1,821
|
)
|
(1,766
|
)
|
|
Payment of deferred debt issuance costs
|
|
(1,534
|
)
|
—
|
|
|
Net proceeds from issuance of common stock
|
|
891
|
|
585
|
|
|
Excess tax benefit related to stock options
|
|
402
|
|
1,154
|
|
|
Other cash flows from financing activities
|
|
87
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
62,292
|
|
(2,178
|
)
|
|
|
|
|
|
|
|
|
EFFECTS OF EXCHANGE RATES
ON CASH
|
|
473
|
|
489
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS
|
|
(8,841
|
)
|
12,123
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS,
beginning of the period
|
|
17,886
|
|
5,763
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS,
end of the period
|
|
$
|
9,045
|
|
$
|
17,886
|
|