BOOM DMC Global Inc

Selected Highlights BOULDER, Colo., Feb. 22 /PRNewswire-FirstCall/ -- Dynamic Materials Corporation (DMC) (NASDAQ:BOOM), a leading provider of explosion-welded clad metal plates, today reported record financial results for its fourth quarter and full fiscal year ended December 31, 2006. DMC established single-quarter records for sales and earnings, and achieved strong gross margin results, thanks in large part to the Company's fourth quarter delivery on an $11 million contract - DMC's largest-ever order. Fourth quarter sales increased 54% to $35.7 million from $23.2 million in the fourth quarter last year. Sequentially, fourth quarter sales were up 44% from the $24.9 million reported in the 2006 third quarter. Fourth quarter gross margin was 41% versus 32% in the comparable year-ago quarter and 33% in the third quarter. The improvement in 2006 fourth quarter margin resulted from favorable terms received on the aforementioned $11 million order, which involved complex materials engineering and a tight delivery schedule. Income from operations increased 87% to $9.7 million from $5.2 million in the fourth quarter last year, and was up 58% from third quarter income from operations of $6.1 million. Net income increased 90% to $6.6 million, or $0.54 per diluted share, from $3.5 million, or $0.28 per diluted share, in the fourth quarter last year. Net income in the 2006 fourth quarter included a gain from discontinued operations of $141,000, or $0.01 per share, from the sale of leased equipment. Sequentially, fourth quarter net income increased 78% versus third quarter net income of $3.7 million, or $0.30 per diluted share. Explosive Metalworking The Company's Explosive Metalworking segment reported fourth quarter sales of $34.0 million, up 53% from $22.2 million reported in the fourth quarter last year, and up 45% from the $23.5 million reported in the 2006 third quarter. Fourth quarter operating income increased 85% to $9.4 million from $5.1 million in the comparable year-ago quarter, and was up 61% from the $5.8 million reported in the third quarter. Order backlog at the end of the fourth quarter was a record $68.8 million, up slightly from the $68.5 million reported at the end of the 2006 third quarter. AMK Welding Fourth quarter sales at the Company's AMK Welding segment increased 69% to $1.7 million versus $1.0 million in the fourth quarter last year, and were up 24% from $1.3 million reported in the third quarter. Operating income was $538,000, up 337% from $123,000 reported in the comparable year-ago quarter and an increase of 38% from the $391,000 reported in the third quarter. Management Commentary Yvon Cariou, president and chief executive officer, said, "Our full-year and fourth quarter results have established new high water marks for both revenue and profits. The fourth quarter was an exceptionally strong period for both of our operating segments, and included the best-ever single month of bookings for our explosion welding business, as well as full delivery of our largest ever order. These results, when coupled with our record-level order backlog and our strong balance sheet, are a clear indication of the current strength of our business. "Capital spending within the global markets we serve remains robust, and there appear to be a broad range of new business opportunities on the horizon," Cariou added. "We therefore believe fiscal 2007 will be another year of respectable growth at DMC. "Our program to double the production capacity at our Mt. Braddock facility in Pennsylvania remains on track, and we expect our new production equipment will be up and running by the end of the second quarter," Cariou said. "We also continue to upgrade our European cladding operations. We have established a 2007 capital expenditure budget of approximately $7.1 million, the majority of which will be directed toward modernization of our Nobelclad and Nitro Metall facilities. We also expect to spend more than $5 million remaining from our 2006 budget on completing our expansion at Mt. Braddock." Rick Santa, chief financial officer, said, "With more than $68 million in our order backlog and an extensive range of contract opportunities on our hot list, we are looking to achieve revenue growth in the 20% range during fiscal 2007. The availability of source metals has fluctuated in recent quarters. Although there were adequate supplies to achieve record shipments during the fourth quarter, tightness in the supply chain is likely to lead to first quarter financial results that will approximate the average results we reported during the first three quarters of fiscal 2006. In light of our full- year growth expectations, we believe the average quarterly results during the balance of the fiscal year will be stronger than those of the first quarter. In addition, we believe that improvements in the supply situation could result in even better full-year financial growth than we are currently projecting." Full-Year Results For the full fiscal year, sales increased 43% to $113.5 million compared with $79.3 million in fiscal 2005. Gross margin improved to 37% from 30% in the prior year. The improvement reflects the Company's strong sales increases, more effective absorption of fixed manufacturing and overhead expenses, and strong profit margin on the large contract completed in the fourth quarter. Income from operations increased 91% to $30.1 million compared with $15.8 million in 2005. Net income increased 100% to $20.8 million, or $1.70 per diluted share, versus net income of $10.4 million, or $0.86 cents per diluted share, in the prior year. Net income in 2006 included a gain from discontinued operations of $1.5 million, or $0.12 per share, net of tax, attributable to the first quarter sale of a real estate purchase option and to the fourth quarter sale of leased equipment, both related to the Company's former Spin Forge division. The Explosive Metalworking segment reported full-year sales of $108.3 million, an improvement of 43% versus sales of $75.6 million in 2005. Operating income increased 95% to $29.6 million compared with $15.2 million in the prior year. Full-year sales at AMK Welding increased 38% to $5.1 million compared with 2005 sales of $3.7 million. Operating income increased 91% to $1.2 million compared with $608,000 in the prior year. Conference call information Management will hold a conference call to discuss fourth quarter 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 http://www.dynamicmaterials.com/, or by dialing into the teleconference at 800-237-9752 (617-847-8706 for international callers) and entering the passcode 47718534. 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 1, 2007, by calling 888-286-8010 (617-801-6888 for international callers) and entering the passcode 79495997. 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 upstream oil and gas, oil refinery, petrochemicals, hydrometallurgy, aluminum production, shipbuilding, power generation, industrial refrigeration and similar industries. The Company operates two business segments: Explosive Metalworking, which uses proprietary explosive processes to fuse different 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. 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: our ability to obtain new contracts at attractive prices; the size and timing of customer orders and shipment; 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, 2005. DYNAMIC MATERIALS CORPORATION & SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Share Data) (unaudited) Three months ended Twelve months ended December 31, December 31, 2006 2005 2006 2005 NET SALES $35,691 $23,167 $113,472 $79,291 COST OF PRODUCTS SOLD 21,170 15,865 71,439 55,856 Gross profit 14,521 7,302 42,033 23,435 COSTS AND EXPENSES: General and administrative expenses 1,854 1,325 5,802 4,051 Selling expenses 2,953 772 6,128 3,616 Total costs and expenses 4,807 2,097 11,930 7,667 INCOME FROM OPERATIONS OF CONTINUING OPERATIONS 9,714 5,205 30,103 15,768 OTHER INCOME (EXPENSE): Other expense, net (75) (15) (115) (7) Interest income (expense), net 272 55 620 (156) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 9,911 5,245 30,608 15,605 INCOME TAX PROVISION 3,476 1,788 11,341 5,233 INCOME FROM CONTINUING OPERATIONS 6,435 3,457 19,267 10,372 INCOME FROM DISCONTINUED OPERATIONS, net of tax: 141 -- 1,497 -- NET INCOME $6,576 $3,457 $20,764 $10,372 INCOME PER SHARE - BASIC: Continuing operations $0.54 $0.29 $1.63 $0.92 Discontinued operations 0.01 -- 0.12 -- Net income $0.55 $0.29 $1.75 $0.92 INCOME PER SHARE - DILUTED: Continuing operations $0.53 $0.28 $1.58 $0.86 Discontinued operations 0.01 -- 0.12 -- Net income $0.54 $0.28 $1.70 $0.86 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic 11,924,467 11,731,186 11,841,373 11,290,053 Diluted 12,206,704 12,186,659 12,213,075 12,086,884 ANNUAL DIVIDENDS DECLARED PER COMMON SHARE $-- $-- $0.15 $0.10 DYNAMIC MATERIALS CORPORATION & SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005 (Dollars in Thousands) (unaudited) ASSETS 2006 2005 Cash and cash equivalents $17,886 $5,763 Restricted cash 3,059 -- Marketable securities -- 1,950 Accounts receivable, net 21,549 15,576 Inventories 19,226 11,869 Other current assets 2,127 1,394 Total current assets 63,847 36,552 Property, plant and equipment, net 20,260 12,572 Other long-term assets 866 6,187 Total assets $84,973 $55,311 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $13,572 $7,278 Customer advances 2,394 1,885 Other current liabilities 8,949 5,102 Current portion of long-term debt 382 573 Total current liabilities 25,297 14,838 Long-term debt 382 2,221 Other long-term liabilities 1,714 3,297 Stockholders' equity 57,580 34,955 Total liabilities and stockholders' equity $84,973 $55,311 DYNAMIC MATERIALS CORPORATION & SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (Dollars in Thousands) (unaudited) 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $20,764 $10,372 Adjustments to reconcile net income to net cash provided by operating activities - Income from discontinued operations, net of tax (1,497) -- Depreciation 1,369 1,527 Amortization of capitalized debt issuance costs 50 41 Stock-based compensation 660 -- Provision for deferred income taxes 2,115 (1,431) Tax benefit related to stock options -- 3,728 Change in working capital, net (6,904) (2,599) Net cash flows provided by operating activities 16,557 11,638 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (8,650) (2,848) Investment in marketable securities -- (1,950) 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 290 288 Payment received on other receivables related to discontinued operations 576 1,016 Cash flows provided by investing activities of discontinued operations 3,089 -- Net cash flows used in investing activities (2,745) (3,494) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments on lines of credit, net (48) (3,291) Payments on long-term debt (2,084) (1,818) Payment of dividends (1,766) (1,155) Net proceeds from issuance of common stock 585 1,555 Tax benefit related to stock options 1,154 -- Other cash flows from financing activities (19) 47 Net cash flows used in financing activities (2,178) (4,662) EFFECTS OF EXCHANGE RATES ON CASH 489 (123) NET INCREASE IN CASH AND CASH EQUIVALENTS 12,123 3,359 CASH AND CASH EQUIVALENTS, beginning of the period 5,763 2,404 CASH AND CASH EQUIVALENTS, end of the period $17,886 $5,763 DATASOURCE: Dynamic Materials Corporation CONTACT: Geoff High of Pfeiffer High Investor Relations, Inc., +1-303-393-7044, for Dynamic Materials Corporation

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