BOOM DMC Global Inc

DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its fourth quarter and fiscal year ended December 31, 2021.

Fourth quarter sales were $71.8 million, up 7% sequentially versus the 2021 third quarter, and up 26% versus the 2020 fourth quarter. The sequential improvement reflects a 15% sales increase at DynaEnergetics, DMC’s energy products business. DynaEnergetics’ growth was partially offset by a sequential sales decline at NobelClad, DMC’s composite metals business, which was negatively impacted by supply chain disruptions at its U.S. and European manufacturing facilities.

Fourth quarter gross margin was 18% versus 25% in the third quarter and 21% in the prior-year fourth quarter. The sequential decline reflects a $1.1 million inventory reserve adjustment at DynaEnergetics, a less favorable project mix at NobelClad, and approximately $1.0 million of post-acquisition expenses in cost of goods at Arcadia, DMC’s architectural building products business. DMC acquired a 60% controlling interest in Arcadia on December 23, 2021, however sales contributions from Arcadia did not begin until this year’s first quarter.

Selling, general and administrative expense (SG&A) was $16.3 million, up from $15.3 million in the third quarter and $12.5 million in the year-ago third quarter. SG&A in the fourth quarter included $2.7 million in litigation expense related to several patent infringement cases in which DynaEnergetics is the plaintiff. Litigation expense was approximately $750,000 above management’s forecast.

Fourth quarter operating loss was $5.5 million versus an operating loss of $818,000 in the 2020 fourth quarter. Adjusted operating loss* was $1.9 million and excludes $1.6 million in acquisition expenses and $2.0 million in operating expenses at Arcadia between December 23, 2021, and December 31, 2021. Adjusted operating loss in last year’s fourth quarter was $736,000.

Fourth quarter net loss attributable to DMC was $2.8 million. Following the acquisition of the 60% controlling interest in Arcadia, the calculation for net earnings per diluted share must account for the change in redemption value of the 40% redeemable noncontrolling interest in Arcadia. Redemption value is estimated at the end of each quarter based on the formula used to calculate a Put and Call Option in the Operating Agreement. At December 31, 2021, the adjustment was $4.4 million dollars. When added to the $2.8 million net loss attributable to DMC stockholders, the resulting net loss is $7.2 million or $0.38 per diluted share, based on 18.8 million diluted shares outstanding. Net loss in the prior-year fourth quarter was $927,000, or $0.06 per diluted share on 14.9 million diluted shares outstanding.

Adjusted net income attributable to DMC* was $197,000, or $0.01 per diluted share. Adjusted net loss* in the 2020 fourth quarter was $825,000, or $0.05 per diluted share.

Fourth quarter adjusted EBITDA attributable to DMC was $2.8 million versus $5.8 million in the 2021 third quarter and $3.6 million in the 2020 fourth quarter.

Cash flow used in operations was $10.9 million versus cash from operations of $9.0 million in the prior-year fourth quarter. Cash and marketable securities was $30.8 million versus $182.0 million at the end of the 2021 third quarter and $53.9 million at December 31, 2020.

DMC’s debt-to-adjusted EBITDA leverage ratio at December 31, 2021, was 3.0. The Company’s debt-to-adjusted EBITDA leverage ratio covenant for the end of the quarter was 3.50. DMC’s net-debt-to adjusted EBITDA at the end of the fourth quarter was 2.3. Net debt is defined as total debt less total cash, cash equivalents, and marketable securities.

DynaEnergetics DynaEnergetics reported fourth quarter sales of $50.7 million, up 15% sequentially and 43% versus the prior-year fourth quarter. Sales in North America increased 7% sequentially, while international sales increased 75% from the third quarter. Gross margin was 20% versus 22% in the 2021 third quarter and 24% in the 2020 fourth quarter. Adjusted EBITDA was $4.0 million versus $4.1 million in the 2020 fourth quarter.

NobelCladNobelClad reported fourth quarter sales of $21.2 million, down 8% sequentially and down 3% versus the 2020 fourth quarter. Gross margin was 20%, down from 30% in the 2021 third quarter and up from 18% in the prior-year fourth quarter. Adjusted EBITDA was $2.1 million versus $1.9 million in the prior-year fourth quarter.

NobelClad’s trailing 12-month book-to-bill ratio at the end of the fourth quarter was 1.03. Order backlog was $41.2 million versus $42.9 million at the end of the third quarter and $39.9 million at the end of the 2020 fourth quarter.

Full-year resultsConsolidated sales in 2021 were $260.1 million, up 14% from $229.2 million in 2020. Gross margin was 23% versus 25% in the prior year.

Operating loss was $2.4 million versus an operating loss of $996,000 in 2020. Full-year adjusted operating income was $1.3 million versus adjusted operating income of $2.4 million in 2020.

Full-year 2021 net loss attributable to DMC was $202,000. Inclusive of the $4.4 million redemption value adjustment to the redeemable noncontrolling interest in Arcadia, net loss was $4.6 million, or $0.26 per diluted share. Full-year adjusted net income attributable to DMC was $2.9 million, or $0.16 per diluted share. Net loss in 2020 was $1.4 million, or $0.10 per diluted share, while 2020 adjusted net income was $1.0 million, or $0.07 per diluted share.

Full-year adjusted EBITDA attributable to DMC was $20.2 million versus $19.1 million in 2020. Cash flow used in operations was $12.8 million, which excludes $8.7 million in capital expenditures. In 2020, cash flow from operations was $30.4 million, and excluded $13.9 million in capital expenditures.

DynaEnergeticsFull-year sales at DynaEnergetics were $175.4 million, up 20% from $146.4 million in 2020. Gross margin was 22%, down from 26% in the prior year. Adjusted EBITDA was $16.4 million versus $16.3 million in 2020.

NobelCladNobelClad reported full-year sales of $84.8 million, up 2% from $82.8 million in 2020. Gross margin was 26% versus 23% in the prior year. Adjusted EBITDA was $13.7 million versus $10.7 million in 2020.

Full-year Pro Forma ResultsDMC’s full-year pro forma sales, inclusive of Arcadia, were $500.5 million, while pro forma gross margin was 28%. Pro forma adjusted EBITDA attributable to DMC after accounting for the 40% held by Arcadia’s noncontrolling interest holder, was $50.1 million. DMC intends to acquire the remaining 40% interest in Arcadia through a three-year put and call option, the features of which are described in an Arcadia Acquisition Presentation, located here.

Management Commentary“The fourth quarter concluded a pivotal year for DMC,” said Kevin Longe, president and CEO. “DynaEnergetics and NobelClad both navigated a second year of very challenging market conditions, and DMC completed an acquisition that roughly doubled our consolidated sales, significantly expanded our addressable markets and strengthened DMC’s position as a diversified holding company of innovative, asset-light businesses.”

Longe said the acquisition of Arcadia, which serves both commercial and high-end residential markets, increased DMC’s total addressable market from $2 billion to approximately $7 billion. Arcadia’s commercial business provides exterior and interior architectural building products to a diverse customer base operating across the western and southwestern United States. Its high-end residential business, Arcadia Custom, supplies premium steel, aluminum and wood windows and doors to a national customer base that includes dealers, architects and homebuilders.

“For the past three years, Arcadia has operated at nearly full capacity to address strong demand from each of its end markets,” Longe said. “DMC is working with Arcadia to implement several initiatives that will expand its manufacturing capacity and enhance its operating efficiencies. These include installation of additional anodizing and painting capacity, and implementation of a new enterprise resource planning (ERP) system. I am encouraged by how quickly our teams have come together to launch these initiatives and capitalize on the strong position Arcadia has built in its growing markets.

“At DynaEnergetics, sales growth during the fourth quarter reflected increased international demand and a 7% sequential increase in North American sales, which outpaced a 4% increase in U.S. well completions. A global price increase took effect on November 22, 2021, however it was more than offset by inflation and the expiration of the CARES Act. We’ve instituted an additional price increase, the full effect of which will be seen during the second quarter. We also believe DynaEnergetics’ sales will improve during the second quarter, as we expect international project activity will accelerate and well completions in North America will increase.

“At NobelClad, the global pandemic slowed progress on several large international infrastructure projects on which the business is bidding. NobelClad also has faced delayed metal deliveries, which led to the shortfall in fourth quarter sales. We are confident NobelClad is well positioned in its markets, and will deliver improved bookings and sales results once end-market activity improves.”

Longe added, “As we enter 2022, I am very confident about DMC’s prospects for success. Demand for Arcadia’s products is strong, and its markets are healthy and growing. Our energy markets are gaining strength and we believe margins at DynaEnergetics will improve significantly during the balance of the year. We also expect the performance of NobelClad will improve as the disruptions in its supply chain subside. I want to thank our employees around the world for their continued dedication to DMC, and would like to again welcome the team from Arcadia to the DMC family.”

GuidanceMichael Kuta, CFO, said first quarter 2022 consolidated sales are expected to be in a range of $125 million to $135 million. At the business level, Arcadia is expected to report sales of $57 million to $61 million, while DynaEnergetics is expected to report sales in a range of $48 million to $52 million, and NobelClad’s sales are expected in a range of $20 million to $21 million. 

Consolidated gross margin is expected to be in a range of 25% to 27%. First quarter selling, general and administrative (SG&A) expense is expected in a range of $25.5 million to $26.5 million.  

First quarter amortization expense is expected to be approximately $13.5 million, and relates principally to the acquired trade names, customer relationships and backlog of Arcadia. Amortization expense is expected to decline significantly once the value assigned to Arcadia’s backlog has been amortized, which is expected in the third quarter. For the balance of 2022, amortization expense is expected to be approximately $13.5 million in the second quarter, $7.0 million in the third quarter and $4.0 million in the fourth quarter. After amortizing the backlog value, 2023 quarterly amortization expense is expected to be approximately $4.0 million. 

First quarter 2022 depreciation expense is expected to be $4.0 million, and interest expense is expected to be approximately $1.0 million

First quarter adjusted EBITDA attributable to DMC, after deducting the 40% noncontrolling interest, is expected to be $8.0 million to $10.0 million.  

Capital expenditures are expected to be $2.0 million to $4.0 million. 

Conference call informationManagement will hold a conference call to discuss these results today at 5:00 p.m. Eastern (3:00 p.m. Mountain). Investors may listen to a live webcast of the call at: https://www.webcaster4.com/Webcast/Page/2204/44661, or by dialing 888-506-0062 (973-528-0011 for international callers) and entering the code 317421. Webcast 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 10, 2022, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #44661.

*Use of Non-GAAP Financial MeasuresAdjusted EBITDA, adjusted operating income, adjusted net income, adjusted diluted earnings per share, net debt, and return on invested capital (ROIC) are non-GAAP (generally accepted accounting principles) financial measures used by management to measure operating performance and liquidity. 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, restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance (as further described in the attached financial schedules). Adjusted operating income is defined as operating income plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted net income is defined as net income plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Adjusted diluted earnings per share is defined as diluted earnings per share plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance. Net cash is defined as total cash, cash equivalents and marketable securities less total debt. ROIC is based on Bloomberg Finance's most recent calculation methodology and is computed as trailing 12-month net operating profit after tax divided by average invested capital, where average of invested capital is calculated based on the average of invested capital for the current period and invested capital for the same period a year ago. 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 adjusted EBITDA 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. As a result, internal management reports used during monthly operating reviews feature adjusted EBITDA measures. Management believes that investors may find this non-GAAP financial measure useful for similar reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. In addition, management incentive awards are based, in part, on the amount of adjusted EBITDA achieved during relevant periods. EBITDA and adjusted EBITDA are also used by research analysts, investment bankers and lenders to assess operating performance. For example, a measure similar to adjusted EBITDA is required by the lenders under DMC’s credit facility.

Net cash or net debt is used by management to supplement GAAP financial information and evaluate DMC’s performance, and management believes this information may be similarly useful to investors. Adjusted operating income, adjusted net income, and adjusted diluted earnings per share are presented because management believes these measures are useful to understand the effects of restructuring and impairment charges on DMC’s operating income, net income and diluted earnings per share, respectively. ROIC is used by management as one measure of the effectiveness of DMC’s use of capital in its operations, and management believes it may be of similar usefulness to investors.

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, restructuring and impairment charges). 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 DMC Global Inc.DMC Global operates a portfolio of innovative, asset-light businesses that provide differentiated products and services to their respective industries.  The Company’s strategy is to identify well-run businesses with strong management teams, and support them with long-term capital and strategic, financial, legal, technology and operating resources. DMC helps portfolio companies grow their core businesses, launch new initiatives, upgrade technologies and systems to support their long-term growth strategies, and make acquisitions that improve their competitive positions and expand their markets.  The Company’s current portfolio consists of Arcadia Inc., a leading supplier of architectural building products, DynaEnergetics, which serves the global energy industry, and NobelClad, which addresses the global industrial infrastructure and transportation sector.  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 the statements in “Guidance”, market conditions, the company’s strategy, growth opportunities and strategies, and the Company’s prospects the statements in “Guidance”, market conditions, the company’s strategy, growth opportunities and strategies, and the Company’s prospects. 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 navigate slowdowns in market activity or execute and capitalize upon growth opportunities; the success of DynaEnergetics’ product and technology development initiatives; our ability to successfully protect our technology and intellectual property and the costs associated with these efforts; potential consolidation among DynaEnergetics’ customers; 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; government actions or other changes in laws and regulations; the availability and cost of funds; our ability to access our borrowing capacity under our credit facility; impacts of COVID-19 and any related preventive or protective actions taken by governmental authorities and resulting economic impacts, including recessions or depressions; general economic conditions, both domestic and foreign, impacting our business and the business of our customers and the end-market users we serve; our ability to achieve the intended benefits of the acquisition of Arcadia, and our ability to achieve the intended benefits of the acquisition of Arcadia, and 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, 2020. We do not undertake any obligation to release public 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 High, Vice President of Investor Relations  303-604-3924

DMC GLOBAL INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in Thousands, Except Share and Per Share Data)(unaudited)

	Three months ended												Change
	Dec 31, 2021				Sep 30, 2021				Dec 31, 2020				Sequential			Year-on-year
NET SALES	$	71,844			$	67,175			$	57,113			7	%		26	%
COST OF PRODUCTS SOLD		58,910				50,513				44,927			17	%		31	%
Gross profit		12,934				16,662				12,186			-22	%		6	%
Gross profit percentage		18	%			25	%			21	%
COSTS AND EXPENSES:
General and administrative expenses		10,155				9,721				7,406			4	%		37	%
Selling and distribution expenses		6,127				5,593				5,143			10	%		19	%
Amortization of purchased intangible assets		568				211				373			169	%		52	%
Acquisition expenses		1,581				—				—			N/M			N/M
Restructuring expenses and asset impairments		—				—				82			N/M			-100	%
Total costs and expenses		18,431				15,525				13,004			19	%		42	%
OPERATING (LOSS) INCOME		(5,497	)			1,137				(818	)		-583	%		-572	%
OTHER EXPENSE:
Other expense, net		(152	)			(198	)			(115	)		23	%		-32	%
Interest expense, net		(74	)			(14	)			(167	)		-429	%		56	%
(LOSS) INCOME BEFORE INCOME TAXES		(5,723	)			925				(1,100	)		-719	%		-420	%
INCOME TAX (BENEFIT) PROVISION		(2,154	)			522				(173	)		-513	%		-1,145	%
NET (LOSS) INCOME		(3,569	)			403				(927	)		-986	%		-285	%
Less: Net loss attributable to noncontrolling interest		(808	)			—				—			N/M			N/M
NET (LOSS) INCOME ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS	$	(2,761	)		$	403			$	(927	)		-785	%		-198	%
NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS
Basic	$	(0.38	)		$	0.02			$	(0.06	)		-2,000	%		-533	%
Diluted	$	(0.38	)		$	0.02			$	(0.06	)		-2,000	%		-533	%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic		18,754,250				18,728,278				14,917,109			—	%		26	%
Diluted		18,754,250				18,739,085				14,917,109			—	%		26	%
DIVIDENDS DECLARED PER COMMON SHARE	$	—			$	—			$	—

Reconciliation to net (loss) income attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share

	Three months ended
	Dec 31, 2021				Sep 30, 2021			Dec 31, 2020
Net (loss) income attributable to DMC Global Inc. stockholders	$	(2,761	)		$	403		$	(927	)
Adjustment of redeemable noncontrolling interest		4,424				—			—
Net (loss) income attributable to DMC Global Inc. common stockholders after adjustment of redeemable noncontrolling interest	$	(7,185	)		$	403		$	(927	)

DMC GLOBAL INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in Thousands, Except Share and Per Share Data)(unaudited)

	Twelve months ended								Change
	Dec 31, 2021				Dec 31, 2020				Year-on-year
NET SALES	$	260,115			$	229,161			14	%
COST OF PRODUCTS SOLD		200,635				172,308			16	%
Gross profit		59,480				56,853			5	%
Gross profit percentage		23	%			25	%
COSTS AND EXPENSES:
General and administrative expenses		36,276				29,150			24	%
Selling and distribution expenses		22,507				23,863			-6	%
Amortization of purchased intangible assets		1,391				1,449			-4	%
Acquisition expenses		1,581				—			N/M
Restructuring expenses and asset impairments		127				3,387			-96	%
Total costs and expenses		61,882				57,849			7	%
OPERATING LOSS		(2,402	)			(996	)		-141	%
OTHER INCOME (EXPENSE):
Other income (expense), net		152				(233	)		165	%
Interest expense, net		(304	)			(731	)		58	%
LOSS BEFORE INCOME TAXES		(2,554	)			(1,960	)		-30	%
INCOME TAX BENEFIT		(1,544	)			(548	)		-182	%
NET LOSS		(1,010	)			(1,412	)		28	%
Less: Net loss attributable to noncontrolling interest		(808	)			—			N/M
NET LOSS ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS		(202	)			(1,412	)		86	%
NET LOSS PER SHARE ATTRIBUTABLE TO DMC GLOBAL INC. STOCKHOLDERS
Basic	$	(0.26	)		$	(0.10	)		-160	%
Diluted	$	(0.26	)		$	(0.10	)		-160	%
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic		17,610,711				14,790,296			19	%
Diluted		17,610,711				14,790,296			19	%
DIVIDENDS DECLARED PER COMMON SHARE	$	—			$	0.125

Reconciliation to net loss attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share

	Twelve months ended
	Dec 31, 2021				Dec 31, 2020
Net loss attributable to DMC Global Inc. stockholders		(202	)			(1,412	)
Adjustment of redeemable noncontrolling interest		4,424				—
Net loss attributable to DMC Global Inc. common stockholders after adjustment of redeemable noncontrolling interest	$	(4,626	)		$	(1,412	)



DMC GLOBAL INC.SEGMENT STATEMENTS OF OPERATIONS(Amounts in Thousands)(unaudited)

DynaEnergetics

	Three months ended												Change
	Dec 31, 2021				Sep 30, 2021				Dec 31, 2020				Sequential			Year-on-year
Net sales	$	50,679			$	44,237			$	35,330			15	%		43	%
Gross profit		9,922				9,924				8,433			—	%		18	%
Gross profit percentage		20	%			22	%			24	%
COSTS AND EXPENSES:
General and administrative expenses		4,559				4,990				2,952			-9	%		54	%
Selling and distribution expenses		3,348				3,260				2,945			3	%		14	%
Amortization of purchased intangible assets		87				89				271			-2	%		-68	%
Restructuring expenses and asset impairments		—				—				—			n/a			n/a
Operating income		1,928				1,585				2,265			22	%		-15	%
Adjusted EBITDA	$	3,950			$	3,597			$	4,118			10	%		-4	%

	Twelve months ended								Change
	Dec 31, 2021				Dec 31, 2020				Year-on-year
Net sales	$	175,356			$	146,395			20	%
Gross profit		38,955				38,072			2	%
Gross profit percentage		22	%			26	%
COSTS AND EXPENSES:
General and administrative expenses		17,132				13,116			31	%
Selling and distribution expenses		13,050				14,825			-12	%
Amortization of purchased intangible assets		538				1,059			-49	%
Restructuring expenses and asset impairments		—				2,922			-100	%
Operating income		8,235				6,150			34	%
Adjusted EBITDA	$	16,361			$	16,335			—	%

NobelClad

	Three months ended												Change
	Dec 31, 2021				Sep 30, 2021				Dec 31, 2020				Sequential			Year-on-year
Net sales	$	21,165			$	22,938			$	21,783			-8	%		-3	%
Gross profit		4,212				6,883				3,902			-39	%		8	%
Gross profit percentage		20	%			30	%			18	%
COSTS AND EXPENSES:
General and administrative expenses		581				933				739			-38	%		-21	%
Selling and distribution expenses		2,326				2,208				2,036			5	%		14	%
Amortization of purchased intangible assets		118				122				102			-3	%		16	%
Restructuring expenses and asset impairments		—				—				82			N/M			-100	%
Operating income		1,187				3,620				943			-67	%		26	%
Adjusted EBITDA	$	2,141			$	4,587			$	1,935			-53	%		11	%

DMC GLOBAL INC.SEGMENT STATEMENTS OF OPERATIONS(Amounts in Thousands)(unaudited)

	Twelve months ended								Change
	Dec 31, 2021				Dec 31, 2020				Year-on-year
Net sales	$	84,759			$	82,766			2	%
Gross profit		22,173				19,433			14	%
Gross profit percentage		26	%			23	%
COSTS AND EXPENSES:
General and administrative expenses		3,217				3,388			-5	%
Selling and distribution expenses		8,556				8,423			2	%
Amortization of purchased intangible assets		490				390			26	%
Restructuring expenses and asset impairments		127				346			-63	%
Operating income		9,783				6,886			42	%
Adjusted EBITDA	$	13,717			$	10,736			28	%

DMC GLOBAL INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in Thousands)(unaudited)

										Change
	Dec 31, 2021			Sep 30, 2021			Dec 31, 2020			Sequential			From year-end
ASSETS
Cash and cash equivalents	$	30,810		$	37,020		$	28,187		-17	%		9	%
Marketable securities		—			144,932			25,736		-100	%		-100	%
Accounts receivable, net		71,932			39,347			31,366		83	%		129	%
Inventories		124,214			62,172			52,573		100	%		136	%
Other current assets		12,240			9,974			5,448		23	%		125	%
Total current assets		239,196			293,445			143,310		-18	%		67	%
Property, plant and equipment, net		122,078			105,137			109,411		16	%		12	%
Goodwill		141,266			—			—		N/M			N/M
Purchased intangible assets, net		255,576			1,829			3,665		13,874	%		6,873	%
Other long-term assets		106,296			35,964			23,259		196	%		357	%
Total assets	$	864,412		$	436,375		$	279,645		98	%		209	%
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Accounts payable	$	40,276		$	24,436		$	17,574		65	%		129	%
Contract liabilities		21,052			9,759			4,928		116	%		327	%
Accrued income taxes		9			8,101			7,279		-100	%		-100	%
Current portion of long-term debt		15,000			—			3,125		N/M			380	%
Other current liabilities		29,477			17,692			14,202		67	%		108	%
Total current liabilities		105,814			59,988			47,108		76	%		125	%
Long-term debt		132,425			—			8,139		N/M			1,527	%
Deferred tax liabilities		2,202			1,373			2,254		60	%		-2	%
Other long-term liabilities		66,250			30,114			25,230		120	%		163	%
Redeemable noncontrolling interest		197,196			—			—		N/M			N/M
Stockholders' equity		360,525			344,900			196,914		5	%		83	%
Total liabilities, redeemable noncontrolling interest, and stockholders' equity	$	864,412		$	436,375		$	279,645		98	%		209	%

DMC GLOBAL INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in Thousands)(unaudited)

	Three months ended
	Dec 31, 2021				Sep 30, 2021				Dec 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(3,569	)		$	403			$	(927	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation		2,903				2,870				2,465
Amortization of purchased intangible assets		568				211				373
Amortization of deferred debt issuance costs		80				56				53
Stock-based compensation		1,670				1,569				1,521
Deferred income taxes		200				570				(1,474	)
Loss (gain) on disposal of property, plant and equipment		94				(15	)			134
Restructuring expenses and asset impairments		—				—				82
Change in working capital, net		(12,852	)			(1,549	)			6,781
Net cash (used in) provided by operating activities		(10,906	)			4,115				9,008
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash acquired		(261,000	)			—				—
Investment in marketable securities		—				—				(25,740	)
Proceeds from sales of marketable securities		144,921				—				—
Acquisition of property, plant and equipment		(2,311	)			(3,096	)			(4,171	)
Proceeds on sale of property, plant and equipment		—				15				16
Promissory note to redeemable noncontrolling interest holder		(24,902	)			—				—
Net cash used in investing activities		(143,292	)			(3,081	)			(29,895	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital expenditure facility		—				—				(781	)
Borrowings on term loan		150,000				—				—
Payment of deferred debt issuance costs		(2,337	)			—				(2	)
Net proceeds from issuance of common stock through at-the-market offering program		—				—				25,740
Net proceeds from issuance of common stock to employees and directors		181				—				165
Treasury stock purchases		(9	)			(25	)			(767	)
Net cash provided by (used in) financing activities		147,835				(25	)			24,355
EFFECTS OF EXCHANGE RATES ON CASH		153				(352	)			115
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(6,210	)			657				3,583
CASH AND CASH EQUIVALENTS, beginning of the period		37,020				36,363				24,604
CASH AND CASH EQUIVALENTS, end of the period	$	30,810			$	37,020			$	28,187

DMC GLOBAL INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in Thousands)(unaudited)

	Twelve months ended
	Dec 31, 2021				Dec 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,010	)		$	(1,412	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		11,303				9,632
Amortization of purchased intangible assets		1,391				1,449
Amortization of deferred debt issuance costs		248				207
Stock-based compensation		6,574				5,675
Deferred income taxes		(1,846	)			(2,313	)
(Gain) loss on disposal of property, plant and equipment		(204	)			247
Restructuring expenses and asset impairments		127				3,387
Change in working capital, net		(29,395	)			13,490
Net cash (used in) provided by operating activities		(12,812	)			30,362
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash acquired		(261,000	)			—
Investment in marketable securities		(123,984	)			(25,740	)
Proceeds from maturities of marketable securities		4,799				—
Proceeds from sales of marketable securities		144,921				—
Acquisition of property, plant and equipment		(8,659	)			(13,853	)
Proceeds on sale of property, plant and equipment		1,019				36
Promissory note to redeemable noncontrolling interest holder		(24,902	)			—
Net cash used in investing activities		(267,806	)			(39,557	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital expenditure facility		(11,750	)			(3,125	)
Borrowings on term loan		150,000				—
Payment of dividends		—				(3,749	)
Payment of deferred debt issuance costs		(2,337	)			(90	)
Net proceeds from issuance of common stock through equity offering		123,461				—
Net proceeds from issuance of common stock through at-the-market offering program		25,262				25,740
Net proceeds from issuance of common stock to employees and directors		434				431
Treasury stock purchases		(2,485	)			(1,890	)
Net cash provided by financing activities		282,585				17,317
EFFECTS OF EXCHANGE RATES ON CASH		656				(288	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		2,623				7,834
CASH AND CASH EQUIVALENTS, beginning of the period		28,187				20,353
CASH AND CASH EQUIVALENTS, end of the period	$	30,810			$	28,187

DMC GLOBAL INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOSTDIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS(Amounts in Thousands, Except Per Share Data)(unaudited)

DMC Global Inc.

EBITDA and Adjusted EBITDA

	Three months ended											Change
	Dec 31, 2021				Sep 30, 2021			Dec 31, 2020				Sequential			Year-on-year
Net (loss) income	$	(3,569	)		$	403		$	(927	)		-986	%		-285	%
Interest expense, net		74				14			167			429	%		-56	%
Income tax (benefit) provision		(2,154	)			522			(173	)		-513	%		-1,145	%
Depreciation		2,903				2,870			2,465			1	%		18	%
Amortization of purchased intangible assets		568				211			373			169	%		52	%
EBITDA		(2,178	)			4,020			1,905			-154	%		-214	%
Restructuring expenses and asset impairments		—				—			82			N/M			-100	%
Acquisition expenses		1,581				—			—			N/M			N/M
Arcadia stub period expenses excluding depreciation & amortization		1,605				—			—			N/M			N/M
Stock-based compensation		1,670				1,569			1,521			6	%		10	%
Other expense, net		152				198			115			-23	%		32	%
Adjusted EBITDA attributable to DMC Global Inc.	$	2,830			$	5,787		$	3,623			-51	%		-22	%

	Twelve months ended								Change
	Dec 31, 2021				Dec 31, 2020				Year-on-year
Net loss	$	(1,010	)		$	(1,412	)		28	%
Interest expense, net		304				731			-58	%
Income tax benefit		(1,544	)			(548	)		-182	%
Depreciation		11,303				9,632			17	%
Amortization of purchased intangible assets		1,391				1,449			-4	%
EBITDA		10,444				9,852			6	%
Restructuring expenses and asset impairments		127				3,387			-96	%
Acquisition expenses		1,581				—			N/M
Arcadia stub period expenses excluding depreciation & amortization		1,605				—			N/M
Stock-based compensation		6,574				5,675			16	%
Other (income) expense, net		(152	)			233			-165	%
Adjusted EBITDA attributable to DMC Global Inc.	$	20,179			$	19,147			5	%

DMC GLOBAL INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOSTDIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS(Amounts in Thousands, Except Per Share Data)(unaudited)

Adjusted Operating (Loss) Income

	Three months ended											Change
	Dec 31, 2021				Sep 30, 2021			Dec 31, 2020				Sequential			Year-on-year
Operating (loss) income, as reported	$	(5,497	)		$	1,137		$	(818	)		-583	%		-572	%
Restructuring programs:
NobelClad		—				—			82			N/M			-100	%
Acquisition expenses		1,581				—			—			N/M			N/M
Arcadia stub period expenses		2,020				—			—			N/M			N/M
Adjusted operating (loss) income	$	(1,896	)		$	1,137		$	(736	)		-267	%		-158	%

	Twelve months ended								Change
	Dec 31, 2021				Dec 31, 2020				Year-on-year
Operating loss, as reported	$	(2,402	)		$	(996	)		-141	%
Restructuring programs:
DynaEnergetics		—				2,922			-100	%
NobelClad		127				346			-63	%
Corporate		—				119			-100	%
Acquisition expenses		1,581				—			n/a
Arcadia stub period expenses		2,020				—			n/a
Adjusted operating income	$	1,326			$	2,391			-45	%

Adjusted Net Income (Loss) and Diluted Income (Loss) per Share

	Three months ended December 31, 2021
	Amount				Diluted weighted average shares outstanding		Per Share
Net loss attributable to DMC Global Inc. common stockholders	$	(2,761	)		18,754,250		$	(0.15	)
Acquisition expenses, net of tax		1,217			18,754,250			0.07
Arcadia stub period expenses, net of tax		1,741			18,754,250			0.09
Adjusted net income attributable to DMC Global Inc. stockholders(1)	$	197			18,754,250		$	0.01

(1) Previously reported as $840 and $0.05 per share

DMC GLOBAL INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOSTDIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS(Amounts in Thousands, Except Per Share Data)(unaudited)

	Three months ended December 31, 2020
	Amount				Diluted weighted average shares outstanding		Per Share
Net loss attributable to DMC Global Inc. common stockholders	$	(927	)		14,917,109		$	(0.06	)
Restructuring programs:
NobelClad, net of tax		102			14,917,109			0.01
Adjusted net loss attributable to DMC Global Inc. stockholders	$	(825	)		14,917,109		$	(0.05	)

	Twelve months ended December 31, 2021
	Amount				Diluted weighted average shares outstanding		Per Share
Net loss attributable to DMC Global Inc. common stockholders	$	(202	)		17,610,711		$	(0.01	)
Restructuring programs:
NobelClad, net of tax		127			17,610,711			—
Acquisition expenses, net of tax		1,217			17,610,711			0.07
Arcadia stub period expenses, net of tax		1,741			17,610,711			0.10
Adjusted net income attributable to DMC Global Inc. stockholders(1)	$	2,883			17,610,711		$	0.16

(1) Previously reported as $3,526 and $0.20 per share

	Twelve months ended December 31, 2020
	Amount				Diluted weighted average shares outstanding		Per Share
Net loss attributable to DMC Global Inc. common stockholders	$	(1,412	)		14,790,296		$	(0.10	)
Restructuring programs:
DynaEnergetics, net of tax		2,059			14,790,296			0.14
NobelClad, net of tax		290			14,790,296			0.02
Corporate, net of tax		94			14,790,296			0.01
Adjusted net income attributable to DMC Global Inc. stockholders	$	1,031			14,790,296		$	0.07

DMC GLOBAL INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOSTDIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS(Amounts in Thousands, Except Per Share Data)(unaudited)

Return on Invested Capital

			Three months ended
			Dec 31, 2020				Mar 31, 2021				Jun 30, 2021				Sep 30, 2021				Dec 31, 2021
Operating income (loss)			$	(818	)		$	(710	)		$	2,668			$	1,137			$	(5,497	)
Income tax provision (benefit) (1)				(54	)			(1,390	)			960				641				(1,664	)
Net operating (loss) profit after taxes (NOPAT)				(764	)			680				1,708				496				(3,833	)
Trailing Twelve Months NOPAT								(4,277	)			2,912				2,120				(949	)
	Balances as of
	Sep 30, 2020		Dec 31, 2020				Mar 31, 2021				Jun 30, 2021				Sep 30, 2021				Dec 31, 2021
Current portion of lease liabilities	1,804			1,741				1,505				1,477				1,648				6,126
Long-term portion of lease liabilities	10,155			10,066				10,137				9,944				10,432				47,000
Current portion of long-term debt	3,125			3,125				—				—				—				15,000
Long-term debt	8,867			8,139				—				—				—				132,425
Total stockholders' equity	169,951			196,914				218,430				346,037				344,900				360,525
Total invested capital	193,902			219,985				230,072				357,458				356,980				561,076
Average invested capital				208,946				214,182				276,369				275,441				390,531
Trailing Twelve Months Return on Invested Capital (ROIC)				—	%			(2	%)			1	%			1	%			—	%

(1) Tax calculation for NOPAT:
	Three months ended				Twelve months ended				Three months ended																Twelve months ended
	Dec 31, 2020				Dec 31, 2020				Mar 31, 2021				Jun 30, 2021				Sep 30, 2021				Dec 31, 2021				Dec 31, 2021
(Loss) income before income taxes	$	(1,100	)		$	(1,960	)		$	(451	)		$	2,695			$	925			$	(5,723	)		(2,554	)
Income tax provision (benefit)		(173	)			(548	)			(883	)			971				522				(2,154	)		(1,544	)
Effective tax rate		15.7	%			28.0	%			195.8	%			36.0	%			56.4	%			37.6	%		60.5	%

DMC GLOBAL INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOSTDIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS(Amounts in Thousands, Except Per Share Data)(unaudited)

DynaEnergetics

Adjusted operating income and EBITDA

	Three months ended									Change
	Dec 31, 2021			Sep 30, 2021			Dec 31, 2020			Sequential			Year-on-year
Operating income, as reported	$	1,928		$	1,585		$	2,265		22	%		-15	%
Adjusted operating income		1,928			1,585			2,265		22	%		-15	%
Depreciation		1,935			1,923			1,582		1	%		22	%
Amortization of purchased intangible assets		87			89			271		-2	%		-68	%
Adjusted EBITDA	$	3,950		$	3,597		$	4,118		10	%		-4	%

	Twelve months ended						Change
	Dec 31, 2021			Dec 31, 2020			Year-on-year
Operating income, as reported	$	8,235		$	6,150		34	%
Adjustments:
Restructuring expenses and asset impairments		—			2,922		-100	%
Adjusted operating income		8,235			9,072		-9	%
Depreciation		7,588			6,204		22	%
Amortization of purchased intangible assets		538			1,059		-49	%
Adjusted EBITDA	$	16,361		$	16,335		—	%

NobelClad

Adjusted operating income and EBITDA

	Three months ended									Change
	Dec 31, 2021			Sep 30, 2021			Dec 31, 2020			Sequential			Year-on-year
Operating income, as reported	$	1,187		$	3,620		$	943		-67	%		26	%
Adjustments:
Restructuring expenses and asset impairments		—			—			82		n/a			-100	%
Adjusted operating income		1,187			3,620			1,025		-67	%		16	%
Depreciation		836			845			808		-1	%		3	%
Amortization of purchased intangible assets		118			122			102		-3	%		16	%
Adjusted EBITDA	$	2,141		$	4,587		$	1,935		-53	%		11	%

DMC GLOBAL INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS TO MOSTDIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS(Amounts in Thousands, Except Per Share Data)(unaudited)

	Twelve months ended						Change
	Dec 31, 2021			Dec 31, 2020			Year-on-year
Operating income, as reported	$	9,783		$	6,886		42	%
Adjustments:
Restructuring expenses and asset impairments		127			346		-63	%
Adjusted operating income		9,910			7,232		37	%
Depreciation		3,317			3,114		7	%
Amortization of purchased intangible assets		490			390		26	%
Adjusted EBITDA	$	13,717		$	10,736		28	%

DMC GLOBAL INC.PRO FORMA RESULTS(Amounts in Thousands, Except Per Share Data)(unaudited)

Pro Forma Summary Income Statement*

	Three months ended December 31, 2021
	DMC				Arcadia				Redeemable Noncontrolling Interest(1)			Pro Forma Arcadia				Pro Forma Combined
Net Sales	$	71,844			$	56,653						$	56,653			$	128,497
Gross profit		12,934				16,082							16,082				29,016
Gross profit %		18.0	%			28.4	%						28.4	%			22.6	%
Selling, general, and administrative expenses		16,282				8,621							8,621				24,903
Amortization		568				—							—				568
Operating (loss) income		(3,916	)			7,461							7,461				3,545
Depreciation and Amortization		3,471				588							588				4,059
Stock-based compensation expense		1,670				—							—				1,670
Post acquisition stub period expenses		1,605				—							—				1,605
Adjusted EBITDA		2,830				8,049			(3,220	)			4,829				7,659
Adjusted EBITDA %		3.9	%			14.2	%						8.5	%			6.0	%

(1) Represents the Adjusted EBITDA attributable to the 40% redeemable noncontrolling interest.

	Twelve months ended December 31, 2021
	DMC				Arcadia				Redeemable Noncontrolling Interest(1)			Pro Forma Arcadia				Pro Forma Combined
Net sales	$	260,115			$	240,345						$	240,345			$	500,460
Gross profit		59,480				82,129							82,129				141,609
Gross profit %		22.9	%			34.2	%						34.2	%			28.3	%
Selling, general, and administrative expenses		58,783				34,117							34,117				92,900
Amortization		1,391				—							—				1,391
Operating (loss) income		(694	)			48,012							48,012				47,318
Depreciation and Amortization		12,694				1,907							1,907				14,601
Stock-based compensation expense		6,574				—							—				6,574
Post acquisition stub period expenses		1,605				—							—				1,605
Adjusted EBITDA		20,179				49,919			(19,968	)			29,951				50,130
Adjusted EBITDA %		7.8	%			20.8	%						12.5	%			10.0	%

(1) Represents the Adjusted EBITDA attributable to the 40% redeemable noncontrolling interest.

DMC GLOBAL INC.PRO FORMA RESULTS(Amounts in Thousands, Except Per Share Data)(unaudited)

Pro Form EBITDA and Adjusted EBITDA*

	Three months ended December 31, 2021
	DMC				Arcadia			Pro Forma Combined
Net (loss) income	$	(3,569	)		$	7,461		$	3,892
Interest expense, net		74				—			74
Income tax benefit		(2,154	)			—			(2,154	)
Depreciation		2,903				588			3,491
Amortization		568				—			568
EBITDA		(2,178	)			8,049			5,871
Acquisition expenses		1,581				—			1,581
Arcadia stub period expenses excluding depreciation & amortization		1,605				—			1,605
Stock-based compensation expense		1,670				—			1,670
Other expense, net		152				—			152
Adjusted EBITDA		2,830				8,049			10,879
Adjusted EBITDA attributable to redeemable noncontrolling interest		—				3,220			3,220
Adjusted EBITDA attributable to DMC Global Inc.	$	2,830			$	4,829		$	7,659

	Twelve months ended December 31, 2021
	DMC				Arcadia			Pro Forma Combined
Net (loss) income	$	(1,010	)		$	48,012		$	47,002
Interest expense, net		304				—			304
Income tax benefit		(1,544	)			—			(1,544	)
Depreciation		11,303				1,907			13,210
Amortization		1,391				—			1,391
EBITDA		10,444				49,919			60,363
Restructuring		127				—			127
Acquisition expenses		1,581				—			1,581
Arcadia stub period expenses excluding depreciation & amortization		1,605				—			1,605
Stock-based compensation expense		6,574				—			6,574
Other expense, net		(152	)			—			(152	)
Adjusted EBITDA		20,179				49,919			70,098
Adjusted EBITDA attributable to redeemable noncontrolling interest		—				19,968			19,968
Adjusted EBITDA attributable to DMC Global Inc.	$	20,179			$	29,951		$	50,130

*This unaudited pro forma combined financial information was not prepared under Article 11 of SEC Regulation S-X (“Article 11”) or Financial Accounting Standards Board Accounting Standards Codification 805 (“ASC 805”). Pro forma financial information as required under Article 11 will be filed in a Form 8-K/A that will be filed 75 days after the closing of the acquisition of Arcadia and the unaudited pro forma financial information as required under ASC 805 will be included within our 2021 Form 10-K.