DMC Global (BOOM) 4 Nov 242024 Q3 Earnings call transcript

Greetings, and welcome to the DMC Global Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Geoff High, Vice President of Investor Relations. Thank you.

You may begin.

DMC's conference to welcome and third call. quarter Hello, Chairman, CEO, Michael today are and O'Leary; Executive DMC's Walter. Presenting Kuta; James CFO, Eric

to and in with to assumptions risks matters our that of today's include filings are remind uncertainties are this as on like subject and based projections may that forward-looking that discussed estimates, the our and SEC. date call statements I'd during everyone are disclosed

those become to anticipated to subject risks could differ certain DMC materially results no forward-looking from of our Our to business is events. assumes in cause that statements. untrue forward-looking update actual subsequent obligation statements because that

replay earnings release be available today's our performance page quarter the presentation website Today's third at Investors conclusion the shortly a webcast and of call. our on at of of our available located this on presentation will are website after related A dmcglobal.com.

with now O'Leary. And I'll that, Jim? the call Jim to over turn

everybody Board a I've thanks My today. was for first Executive and us Geoff, Chairman. And now. official recently year a you, for I appointed as Geoff as meeting strategic when to process Thank the was joining announced. was mentioned, the little Board on been under

last activity an of very all I'm with over I've with shareholders. opportunity our months, the familiar And it. the to So engage many few had associated with

good have you're what a sense So for how and you're thinking. feeling

dealing of what industrial a called past was CFO diversified that the manufacturer experience or manufacturing for relevant went DMC XX with about strategic a Corporation, XX the CEO often publicly My and similar number which as months. businesses industrial products been building assessments company traded over either with to with I've associated years, Kaydon most traded has was serving most been publicly through of a companies.

time. peer best was Ultimately, my transaction the strategic at in that was a to Board sale outcome highly the what I concluded a a successful and

the country's adviser traded the including For I've adviser Builders to on the director, publicly or [ primarily been or services. ] focused of as I've companies products equity value-added industrial years, executive. director building largest worked several space companies, and past private in XX a mid-cap either distributor FirstSource, a also

DynaEnergetics, X key and that worth. interested As than businesses they're is ago, for the we're on The in NobelClad. announced weeks what strategic we've we DynaEnergetics takeaway selling process not review we excellent concluded less in believe of to space, in time the very and conditions is and concluded now was particular, the maximize that challenged by that oilfield to volatile services we not value the business. choppy right try

Michael third an I'll quarter. the it for now update to on over turn

quarter Thank the down quarter. X% last approximately were you, DMC's The third and construction Adjusted to and million, or was energy attributable EBITDA reflect services $X.X industries. Jim. third million U.S. DMC sales in sales. $XXX.X XX% second weakness both declines the of year's from quarter

third availability. quarter reflects construction have market from and reflects adjusted XX% third margin Products DynaEnergetics Arcadia's regional of down chain X.X%, of lower principally absorption Persistently reported, million Arcadia's Arcadia slowed versus $X decline cost absorption activity last Building cost bad reported fixed quarter sales inventory Architectural down about and disruptions previously adjusted XX.X% markets. product the debt on and XX.X% XX% quarter Arcadia's in several to $XX.X both and quarter Arcadia, As impacted fixed interest supply high limited luxury home reduced our year-over-year. second Arcadia's in and DynaEnergetics. quarter in sequentially high-end the that lower also and rates EBITDA sales. million, affected was The EBITDA also by down charges negatively commercial sales third third business, year. at at was

strengthening productivity. as leveraging ERP and President extensive operational background sourcing is system. and an in chain lean improving and effectively Arcadia. Scocos Chris plant on supply new improving processes at Arcadia's excellence planning sales, named inventory operations manufacturing, and immediate brings Interim recently more We our He functions, focus His

product certain not our reviewing have are also lines consistently that We met profitability targets.

X% Blum, customer According EIA, mentioned margin decline DynaEnergetics, lower year's was were the initiatives quarter results Dyna's products of is sequentially EBITDA just sequentially the down as the several third and down operations included our off improvement X%. completions Dyna of EBITDA business, for The quarter quarter sales and phase flagship XX% year. the margin A in Phase margins has roughly is quarter. expected Dyna's under in X% debt completed continued also early next-generation charges well million in the to well and XXXX. DynaStage is and were system version implementing early X% energy its onshore DynaStage year. and $XX.X versus last of million, first last U.S. in adjusted enhance as X completions. completion previously scheduled bad in reported versus $X down was inventory third and the margin assembly to third Texas. third adjusted breakeven next automating beginning mix

bookings million and reflecting and second our backlog project second Adjusted ratio at quarter. composite million $XX versus ended the NobelClad an mix. down a the million, were the quarter $XX.X book-to-bill $XXX.X favorable NobelClad, of was Sales of EBITDA improved X.XX. with were metals Rolling margin third year-over-year. quarter XX% versus flat at order business, XX-month million the to end $XX.X XX.X%,

over look to turn a I'll guidance. Eric call at for the some additional financial and Eric? Now information

Michael. Thanks,

of million $X in $XX or sales compared charges million Third net included last note XX.X% or bad important that sales was of year. XX.X% debt of Dyna. $XX third with quarter It's to the approximately quarter million at SG&A SG&A

XX.X% quarter net charges, million of been approximately or have $XX would Excluding sales. third SG&A these

to net $X.X DMC adjusted was million, quarter Third attributable was DMC while adjusted attributable EPS loss $X.XX. negative to

third and million. Total million With respect net $XX debt ended and roughly debt was quarter costs, debt, equivalents issuance approximately to liquidity, the approximately we of $XX inclusive cash cash million. was of with $XX

basis, well a below covenant our after the end cash, of at was which adjusted X.X. the of subtracting X.XX. ratio On X.XX, our leverage debt remains debt forma to EBITDA was third quarter Our net leverage threshold ratio pro

decided the guidance our uncertainty adjusted limit Given markets, quarterly and to construction to and our we've consolidated and EBITDA. sales volatility financial significant in energy

the performance. fourth The our products consolidated For quarter, to DMC negatively fixed million, we high-end high at million is are expected seasonality the expect challenging some of DynaEnergetics luxury residential factories, rates and of supporting in be lower the interest of and attributable of and cost sales a impact certain sales absorption The $X decline Arcadia. range $XXX to of adjusted expected expected home in while sales those range to on $XXX $X to related in principally fourth million. principally quarter reflects market impact conditions the sequential Arcadia's to impact EBITDA million

With that, from we're our Operator? analysts. questions ready to take any

the question comes line with of Stephen first [Operator Gengaro Stifel. Instructions] Our from

X me. for there's So things

a that The is the level, first at change seen kind so could think and of related market? leadership we've I'm is I kind the is direction the figure right, performance to related at maybe a and/or much leadership to to of either much of help leaving? this is the Or performance And is company? at changing picture macro. of out, leadership? is I'm why versus more trying market? how how of the trying Is and big high it Board. you And to or Dyna, Arcadia, maybe of But turnover, other the one lot understand is the the

Nice answer you. O'Leary. Jim is I'll this Stephen, meet that. to

So answer you I the percentages. but is give couldn't specific yes,

that of with people look Let's lot Baker a why as that it particularly And market. lot Absolutely, of a is at And back DynaEnergetics. you peers, the do this having with year, the in Hughes, the start really played halves. talked to frac a the with one halted. look if much competitors, you tale the half more We noteworthy, process every holiday markets the do to space, specifically at Halliburton, about X if in the year. of Schlumberger, was

terrible; year, half, the half more lot more reliant much First challenged, of a international second too business. not

So the surprise Dyna anybody. should a not market for to be

and building market companies leadership of decade We yes, and a it like the products conditions, space. testament Arcadia, couple -- $XXX I'll we're my probably top though, announced that you, where of ago -- of tell answer in I the Most is job, doing Is -- and been X million this absolute The down? That's a spend to said for -- I and in I time that. wrote is the industrial weeks off most we goodwill. the has not DMC. over market mentioned it I a last know time the from in we of last when spectacular is that the is decades leadership? as rousing The CEO spent probably

on ours, job like-for-like look self-help businesses initiatives the to they're question, starting, the today, If its no you Apogee, that when much on at which some But is numbers were things initiatives. at you a better look and at not released doing doing great if of the on. JELD-WEN businesses with doing But they self-help margin better, are the that just you that little we're are that really look better. comparable a

that's has had as say top has to lot hasn't for a do I'd you it, from when but performed a that not, pay the on down. lot So the market Arcadia business a with reflection us a

change, And in and the the the looking leadership of talk division. made, Chairman the probably manufacturing, company in Industries about Chris' the at the it. at who at retirements level. Board is We his We've some background, career on you we put Cooper we change couple a self-help in at my Now initiatives made of guy on called thing immensely basic the things a him Arcadia, was the when lighting points chain, all got supply months. a commercial and of that qualified caught made that had he a capacitization, we spent lean eye some most at that on past

set candid, in that's of prowess a things have really like terms company a right in didn't the all right to guy robust a fill gaps family lot to now. skill be And manufacturing the at, that, those Arcadia of and

answer to had said, it. as a do with lot So Market I yes. is

major to we a begun the market that. prepared I've at on million off our been hiding for the And to for top mentioned, with $XXX shareholders. not from gotten You Arcadia. a fact combine market the the we remarks, the months. lot I've mean robust the changes in wrote price I Board paid that's I I very XX of about goodwill. We're of why think probably we've make know that of

STOP. they're know to And us. expect FULL from do better, is our thinking, You job they exactly what what

back be Great. the to flattish. not like that fourth down wanting into No, think domestic here. that's quarter, in that's business and double-digit to was the pumping had kind get great had, And I we And about triangulate NobelClad But when I here, answer. I then line low sort pressure of I'll appreciate exhaustion, one in seems of the I of holidays, one But business. would other decline and color. appreciate and think the other but to et that I'm everybody suggesting budget is sort segments. trying cetera, I a break

it? it about how that worse So is we should I'm Is Or of other thinking the is be reasons missing? Dyna rest that Arcadia? for than

Arcadia the when is catch even -- I interest think everybody is timing in say narrative -- we, rates end wildcard. High thinks and we the eventually, I a Maybe with But not custom anything. space, There's insulated. up a insulated that from niches. always high building is high-end end issue. the

residential, absorption the I high heard to very their it business, things that I'm haven't to very you factory associated I the on are other JELD-WEN ] So soon. when I going led sell [ throughout I know have the want there. and with we've very call conservative the And discussion off, think on discussion press companies you're don't it's -- after priced they and and are a project-driven when -- release, -- drop yet, but calls been until

of lot a maybe bump decade, holding remember has in affordability. recent more of certainly now for swirling had while I great COVID, a a in than there's probably from the -- rates, in years, around recent uncertainty, interest which pattern because been but recent a Election, in housing,

on impact getting of to and efforts expect should you I on kind where we're fixed. it of think the getting Arcadia, our I'm disproportionate that's focusing probably a rambling point from

following the And your Stephen, comments. all, I'd say, for Dyna generally market is

in range. that So

Capital comes line with LLC. Our ROTH next Sweeney of question from the Gerry Partners

more subset could discuss hoping bit to that And to that low-hanging systems or explicitly about to question, But Arcadia maybe And on are operations. fruit work have what's place ERP as manage about front? to detail into you a leveraging and if want path in -- go the systems was little in then at curious little you then place to all of forward bit improve the on a do that. maybe that a maybe you? just what is I that? talked You the the some more are the the where

turn I'm Chris over sets the think that forward pushing on have for some it accelerating the initiating, going specific been the acquisition. Mike of with initiatives since really he to first I time skill right to and the and

A around And system the VP what you've have We bought a write-off, be they'd a time. them. to compliance the release. underestimated upgrading issues the little to right being with have implementation, bought people simple right -- public the the a And a for with spot, They got of calls in aggressiveness we underestimated and we took that if I've we fix few to not handle business They but people really macro a easy after are press have you Chain, but might time. with no, people, change family diagnosed, post-COVID Supply to of titles, and means, comment, look seen, diagnose, just the the people every had in not particularly at takes understood org dealing the ERP, acquisition I was markets. first the company sure again, certainly goodwill last dealing company, we They right take happens in answer who making business. that and amount fixes robustness pricing. in which to you think, have being to that commercial things the the set, to with just write-off. a like skill know what a with the of company. that the the had putting able are of couple charts, ever these And bit me, We've excellent of comes the company, difficult the people right people. our public title contributed led a actually understood blush their family putting digestion wildly family systems there. really that on ERP all exactly around and challenges of environment. spotted, with that the think a of It family And

be little time a wind going is whatever was whichever election And feel a You'd interest in the lot a of in -- us, better lower rates party market put is help would little more market. the when sails it puts if the at -- place high-end behind being more bit to bit construction. a hope housing broadly and residential

But sails, recognize be wind nice don't. have to in the said, it we while would we our that

little very underway from the that have some of things we've initiatives So are got probably a respectful on. been targeted the specifically could we more get-go bit to

some Mike, initiatives? of do to you want about talk the specific

Yes, Gerry.

job do on working the to that a so So planning of can sourcing, better we chain sourcing related S&OP processes. and things as a and as chain both on well we're supply couple with team supply

planning the of demand need one it. when we we there have knowing and gaps So need what we is

disruption. So around my of that was the some chain comments supply

So place we're we've working there programs in on. got putting

other there's finishing The the improvements is make other the can end thing in -- item certainly our of back our there's some is some in operations. we business

you and right you chain lot a -- So gets that -- up. debottlenecked got your supply get finishing and scheduling get to and of to

making doing on product improve a ways lead progress, deliveries customers, in to with we've of sure lot go. we're shelf to work stock making So to got but a and on full time times that --

as happening, sort Jim some things it's that to mentioned, take time, So going good out. there's but to

headwind much residential of high-end versus the weak of had And you maybe of is business, bread-and-butter where a as maybe and this maybe being operational sure exactly follow-up. to blocking that. some fix not even commercial I'm sort that versus How tackling sort stands

on in that has it, high-priced or that batches but shortfall. then really product gross me. impact with quickly I lot to let comes product, very look We when do The high-margin, the And steps we But manufactured back don't EBITDA issues, it please of factories. a margins take and tells type don't into from contribution to habit the that Mike will, That remediate shouldn't are. guess, margin. it's get That margins you out. story. other ask I what disproportionately, of has I'll the And high-end the at the Mike? discrete disproportionate again, contribution correct and probably and piece. the a giving residential absorption

Jim, I I is. you it think -- covered it mean, as exactly

points, quarter's product disproportionate and price factory got Yes. a guidance, this footprint had way. what we've where at in our the Absorption, impact from absorption given particular the and by coming and story on

more se residential, high-end or on guess. per One the I -- high-end

in or high-end maybe the curious, But impression even as right? cost truth sales, growing marketing building was it is and rates potentially Just that maybe the effort how I business? to -- interest not or interest Obviously, on higher There's the the under interest some my there. behind -- viewpoint could is residential. there much but it's be that rates, only do rates, this, on that I a wrong wasn't or past, or get and validity maybe some in backlog focus even I higher marketing much correct put --

on you're the Gerry, right Yes, thread.

XX- several XX-month high-end range. years we in I to be And lead ago XX-week up a to backlog think got you a what the us on happened residential, time. to is built the in

there build out until a to they're from have, XX in and we've weeks, in -- this getting only XX months fulfilled and is they getting the backlog backlog those about before, helping talked less customers and orders to that to through sitting what interested interested are you So process. that XX happened, take that

in reflected, said, a absorption Jim standpoint, and valley on that residential. it's in we're So as our from definitely

And in business, function a a of Gerry, you with work and lot -- things lot they in pristinely of lot businesses. family sponsors, past I've them. lives, a absolutely test I There's stress family like a bought look of that until

backlog, your to getting easy lot of right a just when spot. there's fixes, you as really aging, require start the I Mike people. in really stuff customer fixes what order that, say to when described, quick the when a dates, basic And an is said, hole easy wouldn't not right have I service but you're

because are would And they know. business project-driven. really haven't know even of out. the anyway from even other think I Brothers I I of can building our right you're JELD-WENs. interest the remember, if think see areas as couple buying times. seen don't they're space doing buy got well, you've high I Again, things, end, you a these are Toll I every the tend is building of tough rate And at And have down rates. that really, in business be builders where caught high-end us Some do, down project-driven environment. very that coming builders things the rates. the a to interest I of But builder, really if the now,

improve. won't all project people. which happen a things visibility coupled off business bringing overnight, gaps You've is where lot the in company. production, diagnosed commercial robust got to right the is in less in robust are we're got systems we and the activity, with was that, the you've them than got the bought And It see got it when but we've we've dropping to

with Ken line of the Our Markets. KeyBanc comes next Capital question Newman from

businesses would on the Arcadia? quickly in to it to give start end? progressed off start through demand there? a helpful just to in of the kind how provide loaded color Was quarter any the relative maybe September of little off, just you fall on be trending really could did if this are could And bit how Just to -- how Maybe October then back-end us sense you September? just

and Ken, we it's the of I I in business in across what through think terms come shipments. demand, think So level last saw the the this fairly bookings quarter, pretty

was So I'm but it that quarter. talk see we about in -- not started across ready details the come QX, to third to

implementation you're at actions was One, Arcadia. Maybe thought to the restructuring switching there already place kind an I in ERP taking. of over already

talk size of sourcing And cash kind expect you when So what's to any cost of of be be? you're some just just payback initiatives, about long is that? taking that there restructuring these way the with associated with to to you and the what's actions kind that's going involved how --

are So additions. these

specifically certainly, top specifically are table talked restructuring, the but is we've All upgrading haven't any everything We additions we're results people. the when like on there's but you had, that grading, about have nothing announcing.

guy past, We've cost, it's getting some really holding You're about we have it could additional and -- are business doing of and Chris part The like that XXX% case people the a comparable smoother in. correct. go people who when you're grading certainly in replacing talked salary. adding but of gone the accountable top kind had of cash let ERP Chris, and in is a resources

So incremental huge on. not cost a a payback it's that we'd put

-- ask in kind kind this we about way here planning to size if that timed obviously, steps how think some paint I'll potentially to quarter? think seeing, of relative just much process of from are a I'm past there in of revenue do well overcapacity was more. Maybe you how market incremental rightsize we you an the And year. first not to in put the to that the is try And were but capacity here? what impact one help this curious Obviously,

with business, was all paint Mike? where, issues or to in are it. high-margin again, The paint do most capacity had that batch, Yes. the capacity, knowledge, there. nothing specific of overcapacity. had absorption were residential The nothing to best in projects the all the of That to the the my do high-price, issues with done absorption

added industrial challenges creating time. engineering it the we we -- of capacity engineering. bit Yes. or was And this absorption industrial capacity, through at that's did isn't But when a what so

back question-and-answer closing And of the Kuta the floor to remarks. session. Michael the turn now reached we end I have would for to like

forward to quarter. talking next for Thanks Look everyone. Thanks the to call today, joining for you joining, everyone.

We asked the own add at question And and issue. deservedly is our beginning really get issue just not goodwill a the good the pointed. but that one the pointed it. market, thing, fact just Stephen We

to Stephen Some taking on appropriately out our not obviously action from, and We not to turnover things these here of what to of. committed get We've fixed. ownership that of that the and every we've of. know because to you issues but shareholders. that's get price hiding pointed work We're and we're going doing share taken But the we're is we're for up day. proud listened to guys,

So your for thanks patience.

And thank you. This concludes today's conference.

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