DMC Global Revises Fourth Quarter Sales Forecast
December 17 2019 - 6:00AM
DMC Global Inc. (Nasdaq: BOOM) today announced that fourth quarter
2019 sales are expected in a range of $82 million to $86 million
versus a previously forecasted range of $92 million to $97
million. The revision is due to a sharp decline in North
American well completion activity and significant pricing pressure
affecting DynaEnergetics, DMC’s oilfield products business.
Fourth quarter sales at DynaEnergetics are expected in a range of
$62 million to $64 million versus a previously forecasted range of
$72 million to $75 million. Anticipated fourth quarter sales
at NobelClad, DMC’s composite metals business, remain in the
previously forecasted range of $20 million to $22 million.
Management expects fourth quarter adjusted EBITDA to be $14.0
million to $15.0 million versus its prior guidance range of $17.5
million to $20 million, and its consolidated full-year adjusted
earnings per share are expected to be in a range of $3.50
to $3.60 versus its prior guidance range of $3.65 to $3.80.
“The year-end decline in market activity at
DynaEnergetics occurred earlier, and was more pronounced than we
anticipated,” said Kevin Longe, president and CEO of DMC.
“DynaEnergetics also has turned away multiple order opportunities
that did not meet the margin objectives we seek for our
differentiated perforating systems.
“Customer interest in DynaEnergetics’ advanced
perforating systems remains strong, and we have not seen any
notable changes on the competitive product landscape,” Longe
added. “We believe sales activity at DynaEnergetics will
begin to recover early next year, as exploration and production
companies commence their 2020 well completion programs.”
Regional shifts in North American drilling and
completion activity recently led DynaEnergetics to close
distribution facilities in Canada and Oklahoma.
DynaEnergetics also is using the industry slowdown to accelerate a
planned consolidation of its perforating system assembly operations
in Mt. Braddock, Pennsylvania, into its flagship North American
facility in Blum, Texas. Annual cost savings related to the
reduction in fixed overhead and general and administrative expenses
are expected to be approximately $2.0 million. Restructuring
charges, which primarily address severance costs for a headcount
reduction of 54 employees, are expected to be approximately
$750,000, and will be recorded in the fourth quarter.
Longe said, “The consolidation of
DynaEnergetics’ distribution and assembly operations will further
improve operating efficiencies and reduce working capital
requirements. We sincerely appreciate the effort and
commitment of our assembly team in Mt. Braddock, and will work with
impacted employees to assist them during their transition.”
Longe added, “2019 has been an outstanding year
for DMC Global, and while the recent downturn in DynaEnergetics’
markets was steeper than expected, we are on pace to deliver record
full-year financial results at both DynaEnergetics and DMC.
Moreover, we believe DMC’s balance sheet at the end of 2019 will
reflect the strongest financial position the Company has reported
in recent history.”
DMC’s previously provided financial forecasts
for the fourth quarter and full-year 2019 are no longer applicable
based on the lower anticipated sales. DMC will report its
audited 2019 financial results in late February 2020.
About DMCDMC Global is a
diversified holding company. Our innovative businesses
provide differentiated products and services to niche
industrial and commercial markets around the world. DMC’s
objective is to identify well-run businesses and strong management
teams and support them with long-term capital and strategic, legal,
technology and operating resources. Our approach helps our
portfolio companies grow core businesses, launch new initiatives,
upgrade technologies and systems to support their long-term
strategy, and make acquisitions that improve their competitive
positions and expand their markets. DMC’s culture is to
foster local innovation versus centralized control, and stand
behind our businesses in ways that truly add value. Today,
DMC’s portfolio consists of DynaEnergetics and NobelClad, which
collectively address the energy, industrial processing and
transportation markets. Based in Broomfield, Colorado, DMC
trades on Nasdaq under the symbol “BOOM.” For more
information, visit the Company’s website at:
http://www.dmcglobal.com.
Safe Harbor LanguageExcept for
the historical information contained herein, this news release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, including fourth
quarter 2019 guidance on consolidated sales, sales at
DynaEnergetics and NobelClad, consolidated adjusted earnings per
share and adjusted EBITDA, the expectation that sales activity at
DynaEnergetics will increase early in 2020, and the expectation
that annual savings in general and administrative expenses will be
approximately $2 million. Such statements and information are based
on numerous assumptions regarding present and future business
strategies, the markets in which we operate, anticipated costs and
ability to achieve goals. Forward-looking information and
statements are subject to known and unknown risks, uncertainties
and other important factors that may cause actual results and
performance to be materially different from those expressed or
implied by such forward-looking information and statements,
including but not limited to: our ability to realize sales from our
backlog; our ability to obtain new contracts at attractive prices;
the execution of purchase commitments by our customers, and our
ability to successfully deliver on those purchase commitments; the
size and timing of customer orders and shipments; changes to
customer orders; product pricing and margins, fluctuations in
customer demand; our ability to successfully execute and capitalize
upon growth opportunities; fluctuations in foreign currencies;
fluctuations in tariffs and quotas; 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 our SEC
reports, including the annual report on Form 10-K for the year
ended December 31, 2018. We do not undertake any obligation to
release publicly revisions to any forward-looking statement,
including, without limitation, to reflect events or circumstances
after the date of this news release, or to reflect the occurrence
of unanticipated events, except as may be required under applicable
securities laws.
CONTACT:Geoff HighVice President of Investor
Relations303-604-3924
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