Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE:

 

CONTACT:

 

 

Pfeiffer High Investor Relations, Inc.

 

 

Geoff High

 

 

303-393-7044

 

DYNAMIC MATERIALS REPORTS FIRST QUARTER FINANCIAL RESULTS

 

BOULDER, Colo. — April 29, 2010 — Dynamic Materials Corporation (DMC) (Nasdaq: BOOM), the world’s leading provider of explosion-welded clad metal plates, today reported financial results for its first quarter ended March 31, 2010.

 

First quarter sales, which came in slightly higher than management’s prior forecast, were $30.4 million versus $49.8 million in last year’s first quarter and $42.6 million in the 2009 fourth quarter. Gross margin was 23% versus 31% in last year’s first quarter and 23% in the fourth quarter.  Income from operations was $245,000 compared with $8.3 million in last year’s first quarter and $2.4 million in the fourth quarter.  The Company reported a net loss of $412,000, or $0.03 per diluted share, versus net income of $4.9 million, or $0.38 per diluted share, in the year-ago first quarter and net income of $1.0 million, or $0.08 per diluted share, in the fourth quarter.

 

First quarter adjusted EBITDA was $3.5 million versus $11.5 million in the first quarter last year and $5.9 million in the 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, as well as a reconciliation of adjusted EBITDA to GAAP measures.

 

Explosive Metalworking

 

DMC’s Explosive Metalworking segment recorded first quarter sales of $21.3 million versus sales of $43.5 million in last year’s first quarter.  Operating income was $1.2 million versus $9.4 million in the comparable year-ago quarter.  Adjusted EBITDA was $2.6 million compared with $10.9 million in the same quarter last year. The Explosive Metalworking segment ended the first quarter with an order backlog of $51.4 million, up slightly from a backlog of $50 million at the end of fiscal 2009.

 

Oilfield Products

 

The Company’s Oilfield Products segment reported first quarter sales of $7.0 million versus $4.0 million in last year’s first quarter. Excluding $2.8 million in revenue contributions from LRI Oil Tools, which DMC acquired on October 1, 2009, the Oilfield Products segment reported a first quarter sales increase of $156,000, or 4%, versus the same quarter a year ago.

 

The segment reported an operating loss of $404,000 versus an operating loss of $694,000 in the prior year’s first quarter. Adjusted EBITDA was $541,000 as compared with $154,000 in the 2009 first quarter.

 

AMK Welding

 

DMC’s AMK Welding segment reported first quarter sales of $2.0 million versus $2.3 million in the same quarter last year.  Operating income was $224,000 versus $375,000 in the comparable prior-year quarter.  The segment recorded adjusted EBITDA of $339,000 versus $489,000 in the 2009 first quarter.

 



 

Management Commentary

 

Yvon Cariou, president and CEO, said, “Despite the duration and severity of the current recession, this was our first quarterly loss in more than five years.  We are now seeing signs of increased activity within key segments of the global economy and are optimistic that these indicators foretell a rebound within the worldwide industrial processing sector.  Consistent with the past several quarters, our Explosive Metalworking business is receiving quote requests from several of our end markets at a relatively healthy pace.  We believe that as economic growth gains momentum, investments in capital projects will accelerate, and many of the prospective projects we are tracking will ultimately be released for production.”

 

“We are increasingly encouraged about the growth prospects for our oilfield products business,” Cariou added.  “Our integration of recently acquired LRI Oil Tools is going smoothly, and we expect to finalize our purchase of Austin Explosives later this quarter.  Customer feedback and recent commentary from major players in the oilfield services sector suggest that global exploration and production activity is gaining momentum.”

 

Rick Santa, senior vice president and chief financial officer, said that despite the pullback in first quarter revenue, the Company generated $13.8 million in operating cash flow through the first fiscal period.  “We utilized our strong cash position to make significant reductions to our overall debt levels during the quarter.  We pre-paid the balance of our European term loan and reduced our net debt by $12.5 million, while our total debt was reduced by $16.5 million.”

 

DMC ended the first quarter with cash and cash equivalents of $18.4 million, total assets of $206 million and a working capital position of $36.3 million.

 

Guidance

 

Santa said second quarter sales are expected to increase by approximately 10% to 15% versus the first quarter.  Second quarter sales guidance is predicated on the Company shipping the first half of $14.8 million in orders associated with the Gorgon Natural Gas project.  The second half of the orders is expected to ship during the third quarter.  Second quarter gross margin is expected to be in a range of 20% to 22%.  Management continues to forecast full-year sales in a range of flat to down 5% compared with fiscal 2009 sales, and the full-year gross margin forecast remains at a range of 22% to 24%.

 

DMC’s effective tax rate during the first quarter decreased to 27% from 33% for the same period of 2009, and the Company is now anticipating a blended effective tax rate for 2010 in a range of 25% to 28% versus prior forecasts of between 33% and 35%. The lower expected tax rate is due in part to the expected reduction in DMC’s 2010 consolidated pre-tax income versus that reported in 2009.  Beginning in 2011, management expects that DMC’s blended effective tax rate will to return to a normalized level of 33% to 35%.

 

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 69112738.  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 2, 2010, by calling 800-642-1687 (706-645-9291 for international callers) and entering the passcode 69112738.

 



 

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 second quarter and full-year 2010 sales, margins and tax rates, planned timing of order shipments, quoting and booking expectations, our long-range strategy of growing the market share 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 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, 2009.

 

###

 



 

DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(Dollars in Thousands, Except Share Data)

(unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2010

 

2009

 

NET SALES

 

$

30,357

 

$

49,759

 

 

 

 

 

 

 

COST OF PRODUCTS SOLD

 

23,373

 

34,431

 

 

 

 

 

 

 

Gross profit

 

6,984

 

15,328

 

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

General and administrative expenses

 

3,145

 

3,526

 

Selling expenses

 

2,321

 

2,324

 

Amortization of purchased intangible assets

 

1,273

 

1,183

 

 

 

 

 

 

 

Total costs and expenses

 

6,739

 

7,033

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

245

 

8,295

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

Other income (expense), net

 

129

 

(117

)

Interest expense

 

(1,144

)

(902

)

Interest income

 

35

 

65

 

Equity in earnings (loss) of joint ventures

 

169

 

(49

)

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

(566

)

7,292

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

(154

)

2,376

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

(412

)

$

4,916

 

 

 

 

 

 

 

INCOME (LOSS) PER SHARE:

 

 

 

 

 

Basic

 

$

(0.03

)

$

0.38

 

Diluted

 

$

(0.03

)

$

0.38

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:

 

 

 

 

 

Basic

 

12,690,510

 

12,527,452

 

Diluted

 

12,690,510

 

12,569,879

 

 

 

 

 

 

 

DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.04

 

$

 

 



 

DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

 

 

 

March 31,

 

December 31,

 

 

 

2010

 

2009

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,358

 

$

22,411

 

Accounts receivable, net

 

16,804

 

25,807

 

Inventories

 

35,529

 

32,501

 

Other current assets

 

6,532

 

7,255

 

 

 

 

 

 

 

Total current assets

 

77,223

 

87,974

 

 

 

 

 

 

 

Property, plant and equipment, net

 

40,693

 

42,052

 

Goodwill, net

 

40,366

 

43,164

 

Purchased intangible assets, net

 

44,938

 

49,079

 

Other long-term assets

 

3,132

 

2,907

 

 

 

 

 

 

 

Total assets

 

$

206,352

 

$

225,176

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,980

 

$

9,183

 

Customer advances

 

12,502

 

6,528

 

Dividend payable

 

518

 

515

 

Accrued income taxes

 

804

 

1,485

 

Other current liabilities

 

7,223

 

9,162

 

Lines of credit

 

1,379

 

1,777

 

Current portion of long-term debt

 

7,558

 

13,485

 

 

 

 

 

 

 

Total current liabilities

 

40,964

 

42,135

 

 

 

 

 

 

 

Long-term debt

 

23,958

 

34,120

 

Deferred tax liabilities

 

13,516

 

15,217

 

Other long-term liabilities

 

1,473

 

1,593

 

Stockholders’ equity

 

126,441

 

132,111

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

206,352

 

$

225,176

 

 



 

DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(Dollars in Thousands)

(unaudited)

 

 

 

2010

 

2009

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income (loss)

 

$

(412

)

$

4,916

 

Adjustments to reconcile net income to net cash provided by operating activities -

 

 

 

 

 

Depreciation (including capital lease amortization)

 

1,154

 

1,267

 

Amortization of purchased intangible assets

 

1,273

 

1,183

 

Amortization of capitalized debt issuance costs

 

369

 

69

 

Stock-based compensation

 

792

 

798

 

Deferred income tax benefit

 

(830

)

(605

)

Equity in earnings of joint ventures

 

(169

)

49

 

Change in working capital, net

 

11,631

 

(4,440

)

 

 

 

 

 

 

Net cash provided by operating activities

 

13,808

 

3,237

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Acquisition of property, plant and equipment

 

(764

)

(1,170

)

Change in other non-current assets

 

(4

)

8

 

 

 

 

 

 

 

Net cash used in investing activities

 

(768

)

(1,162

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payment on syndicated credit agreement

 

(15,374

)

(3,862

)

Borrowings (repayments) on lines of credit, net

 

(441

)

4,215

 

Payments on long-term debt

 

(208

)

(233

)

Payments on capital lease obligations

 

(74

)

(71

)

Payment of dividends

 

(515

)

 

Payment of deferred debt issuance costs

 

 

(19

)

Net proceeds from issuance of common stock

 

 

236

 

Excess tax benefit related to stock options

 

2

 

57

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

(16,610

)

323

 

 

 

 

 

 

 

EFFECTS OF EXCHANGE RATES ON CASH

 

(483

)

(480

)

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

(4,053

)

1,918

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, beginning of the period

 

22,411

 

14,360

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, end of the period

 

$

18,358

 

$

16,278

 

 



 

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,

 

 

 

2010

 

2009

 

 

 

(unaudited)

 

 

 

 

 

 

 

Explosive Metalworking Group

 

$

21,306

 

$

43,472

 

Oilfield Products

 

7,006

 

4,034

 

AMK Welding

 

2,045

 

2,253

 

 

 

 

 

 

 

Net sales

 

$

30,357

 

$

49,759

 

 

 

 

 

 

 

Explosive Metalworking Group

 

$

1,217

 

$

9,412

 

Oilfield Products

 

(404

)

(694

)

AMK Welding

 

224

 

375

 

Unallocated expenses

 

(792

)

(798

)

 

 

 

 

 

 

Income from operations

 

$

245

 

$

8,295

 

 

 

 

For the three months ended March 31, 2010

 

 

 

Explosive

 

 

 

 

 

 

 

 

 

 

 

Metalworking

 

Oilfield

 

AMK

 

Unallocated

 

 

 

 

 

Group

 

Products

 

Welding

 

Expenses

 

Total

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

1,217

 

$

(404

)

$

224

 

$

(792

)

$

245

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

792

 

792

 

Depreciation

 

769

 

270

 

115

 

 

 

1,154

 

Amortization of purchased intangibles

 

598

 

675

 

 

 

1,273

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

2,584

 

$

541

 

$

339

 

$

 

$

3,464

 

 

 

 

For the three months ended March 31, 2009

 

 

 

Explosive

 

 

 

 

 

 

 

 

 

 

 

Metalworking

 

Oilfield

 

AMK

 

Unallocated

 

 

 

 

 

Group

 

Products

 

Welding

 

Expenses

 

Total

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

9,412

 

$

(694

)

$

375

 

$

(798

)

$

8,295

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

798

 

798

 

Depreciation

 

924

 

229

 

114

 

 

1,267

 

Amortization of purchased intangibles

 

564

 

619

 

 

 

1,183

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

10,900

 

$

154

 

$

489

 

$

 

$

11,543

 

 



 

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,

 

 

 

2010

 

2009

 

 

 

(unaudited)

 

 

 

 

 

 

 

Net income (loss)

 

$

(412

)

$

4,916

 

Interest expense

 

1,144

 

902

 

Interest income

 

(35

)

(65

)

Provision for income taxes

 

(154

)

2,376

 

Depreciation

 

1,154

 

1,267

 

Amortization of purchased intangible assets

 

1,273

 

1,183

 

 

 

 

 

 

 

EBITDA

 

2,970

 

10,579

 

Stock-based compensation

 

792

 

798

 

Other (income) expense

 

(129

)

117

 

Equity in earnings of joint ventures

 

(169

)

49

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

3,464

 

$

11,543