Selected Highlights BOULDER, Colo., Nov. 8 /PRNewswire-FirstCall/
-- Dynamic Materials Corporation (DMC) (NASDAQ:BOOM), the world's
leading provider of explosion- welded clad metal plates and
associated services, today reported financial results for its third
quarter ended September 30, 2005. It is important to note that the
per-share amounts and shares outstanding discussed in this news
release do not reflect the recent 2-for-1 split of DMC's common
stock, which occurred subsequent to the close of the third quarter.
Sales in the quarter advanced 68% to $20.2 million versus $12.1
million in the third quarter last year. Sequentially, sales
increased 10% versus sales of $18.4 million in this year's second
quarter. Gross profit margin improved to 31% from 27% in the same
period last year and 28% in this year's second quarter. Income from
operations increased 126% to $4.4 million versus $1.9 million in
last year's third quarter. Third quarter operating income was up
28% versus the $3.4 million reported in the second quarter. Third
quarter net income improved 278% to $3.2 million, or $0.52 per
diluted share, versus net income of $0.8 million, or $0.16 per
diluted share, in the third quarter last year. Sequentially, third
quarter net income increased 49% versus net income of $2.1 million,
or $0.35 per diluted share, in this year's second quarter. Diluted
shares outstanding increased to 6,067,571 from 5,416,542 in last
year's third quarter and 6,026,669 in the second quarter. Net
income in this year's third quarter and year-to-date periods was
positively impacted by approximately $254,000, or $0.04 cents per
diluted share, in federal and state tax benefits that were
identified and claimed on either original 2004 or amended
prior-year tax returns that were filed during the third quarter.
Based upon these tax credits and a reduction in the expected
effective state income tax rate that is attributable to recent
divestitures and other changes to DMC's business, the company now
estimates that its consolidated effective tax rate for the full
year 2005 will be approximately 34%. Following 2005, management
expects its consolidated effective tax rate to be in the 36% to 37%
range. Bottom-line results in last year's third quarter were
impacted by a loss from discontinued operations of $0.3 million, or
$0.05 per diluted share, which was associated with the company's
former Spin Forge division. Explosive Metalworking Group Third
quarter sales at DMC's Explosive Metalworking Group advanced 69% to
$19.2 million from $11.3 million in last year's third quarter, and
were up 11% versus sales of $17.2 million in the second quarter.
Operating income increased 122% to $4.1 million from $1.9 million
in the comparable period last year, and was up 33% from the $3.1
million reported in the second quarter. The Group ended the quarter
with an order backlog of $34.1 million, up from a backlog of $33.2
million reported at the end of this year's second quarter. AMK
Welding Third quarter sales from the company's AMK Welding division
increased 44% to $1.1 million from $0.7 million in last year's
comparable quarter. AMK's sales in this year's second quarter also
were $1.1 million. The division reported third quarter operating
income of $258,000 versus $78,000 in the third quarter last year
and $343,000 in the second quarter. The year-over- year
improvements reflect the second quarter commencement of production
work on a previously discussed ground-based turbine project. The
slight sequential decline resulted from late-stage modifications to
the turbine's design, which have now been completed. Management
Commentary Yvon Cariou, president and CEO, said, "The third quarter
was another very strong period for DMC as a whole and for our
Explosive Metalworking Group in particular. Our ability to achieve
solid revenue growth and concurrently increase our order backlog is
indicative of the robust market conditions we have been addressing
during the past year." Cariou said the worldwide oil and gas,
petrochemical, and hydrometallurgy sectors remain very active,
which has fueled considerable investment in new capital equipment
and infrastructure projects that incorporate clad metals. "Many of
our customers are working to keep pace with demand for their
products," Cariou said. "In no industry is this more evident than
in the oil and gas refining sector, which is one of our largest
target markets." Rick Santa, chief financial officer, said that
DMC's customers will not be alone in their capacity expansion
programs during the coming year. "We are currently planning for
significant investments in new capital equipment, facility
expansions and shift additions during fiscal 2006," Santa said.
Cariou said that DMC also will focus more attention on
opportunities in China during the coming year. "We have stated
previously that our estimated worldwide market share for
explosion-welded plates is in the range of 60%, excluding China. As
China's barriers to international commerce continue to recede, we
are working to address new opportunities that will increase our
involvement in this important market." Cariou noted that it was in
last year's third quarter that DMC began to report sharp
improvements in its financial performance versus the prior-year's
results. "The strong performance was a direct reflection of rapidly
improving market conditions and a successful corporate turnaround
effort designed to eliminate unprofitable operations and streamline
our business. With a full year of results from this new phase of
our business now recorded, we expect that the sharp
quarter-over-quarter increases we have been reporting will begin to
moderate. In addition, given the very large contracts we are
periodically awarded, we will likely experience fluctuations in our
quarterly revenue and earnings performance. However, given the
robust demand within the markets we serve, we are encouraged about
our opportunities for ongoing annualized growth through the next
fiscal year." Nine-Month Results Through nine months, sales
increased 64% to $56.1 million compared with sales of $34.2 million
at the nine-month mark last year. Gross profit margin improved to
29% from 24% in the respective periods. Income from operations
increased 179% to $10.6 million compared with $3.8 million in the
same period a year ago. Net income at the nine-month mark advanced
to $6.9 million, or $1.15 per diluted share, versus net income of
$0.5 million, or $0.11 per diluted share, during the same period a
year ago. Diluted shares outstanding increased to 6,014,281 from
5,392,441 in last year's nine-month period. This year's nine-month
net income was positively impacted by the previously discussed tax
benefits, while last year's net income through nine months was
impacted by a loss from discontinued operations of $1.6 million, or
$0.29 per diluted share, associated with the former Spin Forge
division. The Explosive Metalworking Group reported nine-month
sales of $53.4 million, a 65% increase versus sales of $32.4
million at the nine-month mark a year ago. Operating income
increased 170% to $10.1 million compared with $3.7 million during
the same period a year prior. The improvement in operating income
reflects both increased sales and more effective expense absorption
within the division. Nine-month sales at the AMK Welding division
improved 52% to $2.7 million compared with $1.8 million during the
comparable period last year. Operating income for the period
improved to $485,000 compared with operating income of $44,000
during the same period a year ago. Additional Development DMC also
reported that it has reached an agreement to sell the property
purchase option rights associated with its former California-based
Spin Forge division to the property owner for $2.3 million. The
transaction is currently scheduled to close in late January 2006
and is expected to result in a pre-tax gain of approximately $2.2
million that will be reported as discontinued operations. About
Dynamic Materials Corporation Based in Boulder, Colorado, Dynamic
Materials Corporation is a leading international metalworking
company. Its products include explosion-welded clad metal plates
and other metal fabrications for use in a variety of industries,
including petrochemicals, refining, hydrometallurgy, aluminum
smelting and shipbuilding. The company operates two business
segments: the Explosive Metalworking Group, which uses proprietary
explosive processes to fuse dissimilar metals and alloys, and AMK
Welding, which utilizes various technologies to weld components for
use in power-generation turbines, as well as commercial and
military jet engines. With more than 30 years of international
experience, DMC has captured a commanding share of the worldwide
market for explosion-welded clad metals. For more information,
visit the company's website at http://www.dynamicmaterials.com/.
Except for the historical information contained herein, this news
release contains forward-looking statements that involve risks and
uncertainties including, but not limited to, the following: the
ability to obtain new contracts at attractive prices; the size and
timing of customer orders; fluctuations in customer demand;
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 the
company's facilities; the availability and cost of funds; and
general economic conditions, both domestically and abroad; 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, 2004. DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2005 AND 2004 (Dollars in Thousands, Except Per
Share Data) (unaudited) Three months ended Nine months ended
September 30, September 30, 2005 2004 2005 2004 NET SALES $20,238
$12,070 $56,124 $34,215 COST OF PRODUCTS SOLD 13,970 8,820 39,990
25,862 Gross profit 6,268 3,250 16,134 8,353 COSTS AND EXPENSES:
General and administrative expenses 1,020 529 2,726 2,102 Selling
expenses 849 774 2,845 2,471 Total costs and expenses 1,869 1,303
5,571 4,573 INCOME FROM OPERATIONS OF CONTINUING OPERATIONS 4,399
1,947 10,563 3,780 OTHER INCOME (EXPENSE): Other income (expense)
(8) (5) 9 2 Interest expense (65) (117) (233) (351) Interest income
2 6 22 18 INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS
4,328 1,831 10,361 3,449 INCOME TAX PROVISION 1,176 696 3,445 1,343
INCOME FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS
3,152 1,135 6,916 2,106 DISCONTINUED OPERATIONS: Loss from
operations of discontinued operations, net of tax -- (133) -- (783)
Loss on sale of discontinued operations, net of tax -- (168) --
(787) Loss from discontinued operations -- (301) -- (1,570) NET
INCOME $3,152 $834 $6,916 $536 INCOME PER SHARE - BASIC: Continuing
operations $0.54 $0.22 $1.24 $0.41 Discontinued operations --
(0.06) -- (0.31) Net income $0.54 $0.16 $1.24 $0.10 INCOME PER
SHARE - DILUTED: Continuing operations $0.52 $0.21 $1.15 $0.40
Discontinued operations -- (0.05) -- (0.29) Net income $0.52 $0.16
$1.15 $0.11 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic
5,824,251 5,122,225 5,570,697 5,106,287 Diluted 6,067,571 5,416,542
6,014,281 5,392,441 DIVIDENDS DECLARED PER COMMON SHARE $0.20 $--
$0.20 $-- DYNAMIC MATERIALS CORPORATION & SUBSIDIARY CONDENSED
CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) September 30,
December 31, 2005 2004 ASSETS (unaudited) Cash and cash equivalents
$1,368 $2,404 Accounts receivable, net 14,109 13,936 Inventories
12,577 8,000 Other current assets 2,500 1,906 Total current assets
30,554 26,246 Property, plant and equipment, net 12,186 11,844
Deferred tax assets 896 -- Other long-term assets 5,449 5,663 Total
assets $49,085 $43,753 LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $6,080 $6,041 Other current liabilities 5,366
4,519 Bank lines of credit -- 3,216 Current portion of long-term
debt 565 3,186 Total current liabilities 12,011 16,962 Long-term
debt 2,283 2,906 Deferred tax liabilities 1,412 729 Other long-term
liabilities 3,082 3,086 Stockholders' equity 30,297 20,070 Total
liabilities and stockholders' equity $49,085 $43,753 DYNAMIC
MATERIALS CORPORATION & SUBSIDIARY CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2005 AND 2004 (Dollars in Thousands) (unaudited) 2005 2004 CASH
FLOWS FROM OPERATING ACTIVITIES: Income from continuing operations
$6,916 $2,106 Adjustments to reconcile income from continuing
operations to net cash provided by operating activities -
Depreciation and amortization 1,132 1,025 Amortization of
capitalized debt issuance costs 33 61 Provision for deferred income
taxes (171) 1,265 Tax benefit related to stock options 2,477 --
Change in working capital, net (5,843) (1,600) Net cash flows
provided by operating activities 4,544 2,857 CASH FLOWS FROM
INVESTING ACTIVITIES: Payment received on other receivable 1,016
105 Acquisition of property, plant and equipment (1,966) (899)
Change in other non-current assets 218 (15) Net cash flows used in
investing activities (732) (809) CASH FLOWS FROM FINANCING
ACTIVITIES: Borrowings / (repayments) on lines of credit, net
(3,302) 1,059 Payments on long-term debt (1,778) (1,712) Payment of
dividends (1,155) -- Net proceeds from issuance of common stock
1,481 98 Other cash flows from financing activities 23 361 Net cash
flows used in financing activities (4,731) (194) EFFECTS OF
EXCHANGE RATES ON CASH (117) 7 CASH FLOWS USED IN DISCONTINUED
OPERATIONS -- (1,807) NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,036) 54 CASH AND CASH EQUIVALENTS, beginning of the
period 2,404 522 CASH AND CASH EQUIVALENTS, end of the period
$1,368 $576 DATASOURCE: Dynamic Materials Corporation CONTACT:
Geoff High of Pfeiffer High Investor Relations, Inc.,
+1-303-393-7044, for Dynamic Materials Corporation Web site:
http://www.dynamicmaterials.com/
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