Dynamic Materials Corporation (NASDAQ: BOOM)
Selected Highlights:
- Q4 revenue of $54.3 million exceeds forecasts,
increases 21% vs. Q4 last year
- Q4 diluted EPS improves to $0.27 vs. $0.10 in
year-ago Q4
- Fiscal 2011 revenue increases 35% to $208.9
million versus fiscal 2010; full-year diluted EPS improves to $0.93
from $0.40 in prior year
- Oilfield Products segment starts 2012 with
acquisition of perforating gun manufacturer
Dynamic Materials Corporation (DMC) (NASDAQ: BOOM), a
diversified provider of industrial products and services, and the
world's leading manufacturer of explosion-welded clad metal plates,
today reported financial results for its fourth quarter and fiscal
year ended December 31, 2011.
Fourth quarter sales were $54.3 million, up 21% from $44.8
million reported in last year's fourth quarter and down 1% from
third quarter sales of $54.9 million. Sales were well above the
Company's prior forecast, which anticipated a 10% sequential
decline versus third quarter sales. Fourth quarter gross margin was
27% versus 22% in the year-ago fourth quarter and 27% in the third
quarter.
Operating income was $5.2 million, up 241% compared with $1.5
million in the fourth quarter last year, and down 9% from $5.7
million reported in the third quarter. Net income was $3.6 million,
or $0.27 per diluted share, up 174% from net income of $1.3
million, or $0.10 per diluted share, in the year-ago fourth quarter
and down from net income of $4.3 million, or $0.32 per diluted
share, in the third quarter.
Adjusted EBITDA was $8.7 million, an increase of 62% from $5.4
million in last year's fourth quarter, and a decrease of 9% from
$9.6 million in the third quarter. Adjusted EBITDA is a non-GAAP
(generally accepted accounting principles) 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
reported sales of $31.0 million, up 21% from sales of $25.6 million
in the fourth quarter last year. Operating income increased 249% to
$4.3 million from $1.2 million in the 2011 fourth quarter. Adjusted
EBITDA was $5.7 million, an improvement of 105% from $2.8 million
in the comparable year-ago quarter. The segment closed the year
with an order backlog of $45 million versus $47 million at the end
of the third quarter.
Oilfield Products Sales at DMC's Oilfield Products segment
increased 29% to $21.2 million from $16.5 million in the prior
year's fourth quarter. Operating income was $2.2 million, up 94%
from $1.1 million in last year's fourth quarter, while adjusted
EBITDA was up 43% to $3.4 million from $2.4 million in the 2010
fourth quarter.
AMK Welding DMC's AMK Welding segment reported fourth quarter
sales of $2.1 million, down 24% from $2.7 million in the prior
year's fourth quarter. Operating income was $314,000 compared with
$611,000 in the same quarter of 2010, and adjusted EBITDA was
$424,000 versus $732,000 in the prior year's fourth quarter.
Full-year Results Sales for 2011 were
$208.9 million, a 35% increase versus sales of $154.7 million in
2010. Gross margin improved to 27% from 24% in the prior year.
Operating income improved 168% to $18.2 million from $6.8 million,
while net income advanced 137% to $12.5 million, or $0.93 per
diluted share, from net income of $5.3 million, or $0.40 per
diluted share, in the prior year. Adjusted EBITDA increased 56% to
$32.9 million versus $21.0 million in 2010.
The Explosive Metalworking segment reported full-year sales of
$126.2 million, up 28% from $98.6 million in 2010. Operating income
was $16.1 million, up 115% from $7.5 million in the prior year.
Adjusted EBITDA increased 64% to $21.9 million compared with $13.4
million in 2010.
Full-year sales at DMC's Oilfield Products segment increased 61%
to $72.8 million from $45.3 million in 2010. Excluding incremental
sales contributions of $5.7 million from operations acquired during
last year's second quarter, Oilfield Product sales increased $21.7
million, or 48%, versus 2010. The segment reported full-year
operating income of $6.2 million, up 155% from $2.4 million in
2010. Adjusted EBITDA improved 64% to $11.1 million from $6.8
million in 2010.
AMK Welding recorded full-year sales of $9.9 million, down 9%
from $10.8 million in 2010. Operating income was $2.1 million
versus $2.6 million in the prior year. Adjusted EBITDA was $2.5
million compared with $3.1 million in 2010.
Management Commentary Yvon Cariou,
president and CEO, said, "We witnessed improved capital spending
trends in our Explosive Metalworking end markets throughout 2011,
and benefited from consistent strong demand from the oil and gas
industry for our oilfield product offerings. These factors fueled a
35% year-over-year improvement in our sales, well ahead of the 20%
to 25% growth rate we forecasted at the beginning of the year."
"It appears spending activity within many of our explosion
welding markets is actually gaining momentum," Cariou added. "Our
hot list of prospective orders for clad plates is stronger now than
it has been in many quarters, and we are actively quoting sizeable
potential projects in the chemical processing, upstream oil and
gas, and aluminum smelting sectors."
Commenting on DMC's second core business segment, Cariou said
management believes strong global demand for DMC's well perforating
guns and related equipment also will continue for the foreseeable
future. In January, the Oilfield Products segment acquired
substantially all the assets of Whitney, TX-based TRX Industries in
a transaction valued at approximately $11 million. TRX
manufacturers a line of perforating guns and is a longtime supplier
to the Company.
TRX recorded 2011 sales of $11.6 million, up 87% over sales in
2010, and was solidly profitable. DMC's Oilfield Products segment
was responsible for approximately 40% of TRX's 2011 sales.
"Our Oilfield Products business is pursuing additional
opportunities to capitalize on the strong demand from the
exploration and production sector," Cariou said. "Our efforts to
capture additional market share will likely involve initial
investments in greenfield projects in North America and Russia
during the coming year.
Cariou added, "Our Explosive Metalworking segment is evaluating
opportunities in Asia for the establishment of manufacturing
capacity and a broader sales and marketing presence."
Guidance Rick Santa, senior vice president
and chief financial officer, said, "Based on the $45 million
year-end backlog at our Explosive Metalworking segment, strong
explosion welding quoting activity and positive sales trends in our
Oilfield Products segment, we are forecasting that 2012
consolidated sales will increase by 7% to 10% from 2011 sales. Our
forecast may be adjusted later in the year based on our success at
booking prospective orders from our Explosive Metalworking hot list
and the expected sustained growth of our Oilfield Products
segment.
"Our full-year gross margin is expected to improve to a range of
28% to 29% versus the 27% we achieved in 2011. The anticipated
improvement reflects the growth in contributions from our higher
margin Oilfield Products business, as well as a more favorable
product mix anticipated at our Explosive Metalworking segment.
"For the first fiscal quarter, we are anticipating sales will be
flat to up 3% compared to the $45.6 million we reported in last
year's first quarter. However, gross margin is expected to improve
to a range of 26% to 27% from the 23% reported in the same quarter
last year."
Santa said management has budgeted capital expenditures of more
than $20 million for 2012. "This represents a significant increase
from the $7.7 million we spent during 2011, and primarily reflects
anticipated investments in our Oilfield Products segment," Santa
said. "In addition to greenfield projects, we intend to invest
nearly $2 million in new equipment at the TRX Industries facility
in Texas, which currently is running near full capacity."
DMC's blended effective tax rate for fiscal 2012 is projected in
a range of between 27% and 30%.
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 877-407-8031 (201-689-8031
for international callers). No passcode is necessary. 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 90 days and a telephonic replay will be available
through March 1, 2012, by calling 877-660-6853 (201-612-7415 for
international callers) and entering the Account Number 286 and the
passcode 388603.
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 serves a global
network of industrial customers through two core business segments:
Explosive Metalworking and Oilfield Products; as well as a
specialized industrial service provider, AMK Welding. The Explosive
Metalworking segment is the world's largest manufacturer of
explosion-welded clad metal plates, which are used to fabricate
capital equipment utilized within various process industries and
other industrial sectors. Oilfield Products is an international
manufacturer and marketer of advanced explosive components and
systems used to perforate oil and gas wells. AMK Welding utilizes
various specialized technologies to weld components for use in
power-generation turbines, and 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 first
quarter and full-year 2012 sales, margins and tax rates, capital
spending, greenfield projects, growth and diversification
prospects, as well as expectations about customer demand, business
conditions and growth opportunities, 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; our ability to successfully source and execute
upon greenfield growth as well as acquisition opportunities;
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, 2010.
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(Dollars in Thousands, Except Share Data)
(unaudited)
Three months ended Twelve months ended
December 31, December 31,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
NET SALES $ 54,262 $ 44,826 $ 208,891 $ 154,739
COST OF PRODUCTS SOLD 39,422 34,971 153,445 117,789
----------- ----------- ----------- -----------
Gross profit 14,840 9,855 55,446 36,950
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
General and
administrative
expenses 4,484 3,706 16,711 13,696
Selling and
distribution
expenses 3,812 3,217 14,809 11,135
Amortization of
purchased
intangible assets 1,383 1,417 5,707 5,330
----------- ----------- ----------- -----------
Total costs and
expenses 9,679 8,340 37,227 30,161
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 5,161 1,515 18,219 6,789
OTHER INCOME (EXPENSE):
Gain on step
acquisition of joint
ventures - - - 2,117
Other income
(expense), net 876 601 528 199
Interest expense (723) (573) (1,945) (3,046)
Interest income 4 4 8 74
Equity in earnings of
joint ventures - - - 255
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 5,318 1,547 16,810 6,388
INCOME TAX PROVISION 1,732 242 4,369 1,133
----------- ----------- ----------- -----------
NET INCOME 3,586 1,305 12,441 5,255
Less: Net loss
attributable to non-
controlling interest (13) (10) (50) (10)
----------- ----------- ----------- -----------
NET INCOME ATTRIBUTABLE
TO DYNAMIC MATERIALS
CORPORATION $ 3,599 $ 1,315 $ 12,491 $ 5,265
=========== =========== =========== ===========
INCOME PER SHARE:
Basic $ 0.27 $ 0.10 $ 0.94 $ 0.40
=========== =========== =========== ===========
Diluted $ 0.27 $ 0.10 $ 0.93 $ 0.40
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING:
Basic 13,093,517 12,970,214 13,089,691 12,869,666
=========== =========== =========== ===========
Diluted 13,101,972 12,980,471 13,099,121 12,881,754
=========== =========== =========== ===========
DIVIDENDS DECLARED PER
COMMON SHARE $ 0.04 $ 0.04 $ 0.16 $ 0.16
=========== =========== =========== ===========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2011 AND 2010
(Dollars in Thousands)
ASSETS 2011 2010
(unaudited)
------------- -------------
Cash and cash equivalents $ 5,276 $ 4,572
Accounts receivable, net 36,368 27,567
Inventories 43,218 35,880
Other current assets 6,327 4,716
------------- -------------
Total current assets 91,189 72,735
Property, plant and equipment, net 41,402 39,806
Goodwill, net 37,507 39,173
Purchased intangible assets, net 42,054 48,490
Other long-term assets 1,274 1,189
------------- -------------
Total assets $ 213,426 $ 201,393
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 14,753 $ 16,109
Customer advances 1,918 1,531
Dividend payable 535 529
Accrued income taxes 780 477
Other current liabilities 10,158 7,529
Lines of credit 13 2,621
Current portion of long-term debt 1,153 9,596
------------- -------------
Total current liabilities 29,310 38,392
Lines of credit 26,462 -
Long-term debt 118 14,579
Deferred tax liabilities 10,185 12,083
Other long-term liabilities 1,308 1,255
Stockholders' equity 146,043 135,084
------------- -------------
Total liabilities and stockholders' equity $ 213,426 $ 201,393
============= =============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(Dollars in Thousands)
2011 2010
(unaudited)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,441 $ 5,255
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation (including capital lease
amortization) 5,492 5,383
Amortization of purchased intangible assets 5,707 5,330
Amortization of deferred debt issuance costs 649 587
Stock-based compensation 3,397 3,501
Deferred income tax benefit (1,587) (1,708)
Equity in earnings of joint ventures - (255)
Gain on step acquisition of joint ventures - (2,117)
Loss on disposal of property, plant and
equipment 35 34
Change in working capital, net (16,408) 683
------------ ------------
Net cash provided by operating activities 9,726 16,693
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (7,726) (3,527)
Acquisition of Austin Explosives Company - (3,620)
Step acquisition of joint ventures, net of
cash acquired - (2,065)
Change in other non-current assets (5) (53)
------------ ------------
Net cash used in investing activities (7,731) (9,265)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on syndicated term loans (22,247) (22,124)
Borrowings on lines of credit, net 24,191 780
Payments on long-term debt (663) (797)
Payments on capital lease obligations (295) (304)
Payment of dividends (2,130) (2,089)
Payment of deferred debt issuance costs (435) -
Contribution from non-controlling stockholder 42 -
Net proceeds from issuance of common stock 177 188
Tax impact of stock-based compensation (35) (601)
------------ ------------
Net cash used in financing activities (1,395) (24,947)
------------ ------------
EFFECTS OF EXCHANGE RATES ON CASH 104 (320)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 704 (17,839)
CASH AND CASH EQUIVALENTS, beginning of the
period 4,572 22,411
------------ ------------
CASH AND CASH EQUIVALENTS, end of the period $ 5,276 $ 4,572
============ ============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
(unaudited)
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Explosive Metalworking $ 30,979 $ 25,649 $ 126,199 $ 98,570
Oilfield Products 21,219 16,464 72,782 45,332
AMK Welding 2,064 2,713 9,910 10,837
--------- --------- --------- ---------
Net sales $ 54,262 $ 44,826 $ 208,891 $ 154,739
========= ========= ========= =========
Explosive Metalworking $ 4,301 $ 1,232 $ 16,058 $ 7,461
Oilfield Products 2,224 1,148 6,188 2,426
AMK Welding 314 611 2,056 2,617
Unallocated expenses (1,678) (1,476) (6,083) (5,715)
--------- --------- --------- ---------
Income from operations $ 5,161 $ 1,515 $ 18,219 $ 6,789
========= ========= ========= =========
For the three months ended December 31, 2011
------------------------------------------------------
Explosive Oilfield AMK Unallocated
Metalworking Products Welding Expenses Total
------------ ---------- -------- ----------- --------
Income from
operations $ 4,301 $ 2,224 $ 314 $ (1,678) $ 5,161
Adjustments:
Net loss
attributable to
non-controlling
interest - 13 - - 13
Stock-based
compensation - - - 862 862
Depreciation 875 324 110 1,309
Amortization of
purchased
intangibles 539 844 - - 1,383
------------ ---------- -------- ----------- --------
Adjusted EBITDA $ 5,715 $ 3,405 $ 424 $ (816) $ 8,728
============ ========== ======== =========== ========
For the three months ended December 31, 2010
------------------------------------------------------
Explosive Oilfield AMK Unallocated
Metalworking Products Welding Expenses Total
------------ ---------- -------- ----------- --------
Income from
operations $ 1,232 $ 1,148 $ 611 $ (1,476) $ 1,515
Adjustments:
Net loss
attributable to
non-controlling
interest - 10 - - 10
Stock-based
compensation - - - 964 964
Depreciation 985 369 121 - 1,475
Amortization of
purchased
intangibles 565 852 - - 1,417
------------ ---------- -------- ----------- --------
Adjusted EBITDA $ 2,782 $ 2,379 $ 732 $ (512) $ 5,381
============ ========== ======== =========== ========
DYNAMIC MATERIALS CORPORATION & SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOST
DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(Dollars in thousands)
(unaudited)
For the twelve months ended December 31, 2011
------------------------------------------------------
Explosive Oilfield AMK Unallocated
Metalworking Products Welding Expenses Total
------------ ---------- -------- ----------- --------
Income from
operations $ 16,058 $ 6,188 $ 2,056 $ (6,083) $ 18,219
Adjustments:
Net loss
attributable to
non-controlling
interest - 50 - - 50
Stock-based
compensation - - - 3,397 3,397
Depreciation 3,609 1,394 489 - 5,492
Amortization of
purchased
intangibles 2,224 3,483 - - 5,707
------------ ---------- -------- ----------- --------
Adjusted EBITDA $ 21,891 $ 11,115 $ 2,545 $ (2,686) $ 32,865
============ ========== ======== =========== ========
For the twelve months ended December 31, 2010
------------------------------------------------------
Explosive Oilfield AMK Unallocated
Metalworking Products Welding Expenses Total
------------ ---------- -------- ----------- --------
Income from
operations $ 7,461 $ 2,426 $ 2,617 $ (5,715) $ 6,789
Adjustments:
Net loss
attributable to
non-controlling
interest - 10 - - 10
Stock-based
compensation - - - 3,501 3,501
Depreciation 3,620 1,292 471 - 5,383
Amortization of
purchased
intangibles 2,271 3,059 - - 5,330
------------ ---------- -------- ----------- --------
Adjusted EBITDA $ 13,352 $ 6,787 $ 3,088 $ (2,214) $ 21,013
============ ========== ======== =========== ========
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net income attributable to DMC $ 3,599 $ 1,315 $ 12,491 $ 5,265
Interest expense 723 573 1,945 3,046
Interest income (4) (4) (8) (74)
Provision for income taxes 1,732 242 4,369 1,133
Depreciation 1,309 1,475 5,492 5,383
Amortization of purchased
intangible assets 1,383 1,417 5,707 5,330
--------- --------- --------- ---------
EBITDA 8,742 5,018 29,996 20,083
Stock-based compensation 862 964 3,397 3,501
Other (income) expense, net (876) (601) (528) (2,316)
Equity in earnings of joint
ventures - - - (255)
--------- --------- --------- ---------
Adjusted EBITDA $ 8,728 $ 5,381 $ 32,865 $ 21,013
========= ========= ========= =========
CONTACT: Pfeiffer High Investor Relations, Inc. Geoff
High 303-393-7044
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