SECURITIES AND EXCHANGE COMMISSION

(Exact name of Registrant as Specified in its Charter)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☒

~~Large accelerated filer~~ o

~~Accelerated filer~~ x

~~Non-accelerated filer~~ o

~~(Do not check if smaller reporting company)~~

~~Smaller reporting company~~ o

Emerging growth company o

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. We intend the forward-looking statements throughout this quarterly report on Form 10-Q to be covered by the safe harbor provisions for forward-looking statements. Statements contained in this report which are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. These statements can sometimes be identified by our use of forward-looking words such as “may,” “believe,” “plan,” “anticipate,” “estimate,” “expect,” “intend,” and other phrases of similar meaning. Such statements include projections, guidance and other statements regarding our expected financial position and operating results, the expected impacts of new accounting standards and the timing of our implementation thereof, our business strategy, expectations regarding ~~NobelClad's~~improvements to DynaEnergetics’ end markets and ~~activity levels, comments regarding expanding demand~~customer pricing, planned price increases at DynaEnergetics, DynaEnergetics’ ability to benefit from strengthening prices, projected growth in Arcadia’s core geographic regions and end markets, plans to install new paint and anodizing lines to increase capacity and targets for ~~DynaEnergetics' products, particularly DynaSelect~~^TMsuch lines to be operational, our ability to access our at-the-market offerings or the capital markets in the future, expected continuing litigation costs, expected material and ~~DynaStage~~^TM~~, expected expansion plans in Blum, Texas, Troisdorf, Germany~~labor cost trends, and ~~Mt. Braddock, Pennsylvania,~~the availability of funds to support our liquidity position and ~~factors impacting such position, including expectations regarding legal costs, and the outcome of any pending litigation or contingencies.~~our expected future liquidity position. The forward-looking information is based on information available as of the date of this quarterly report and on numerous assumptions and developments that are not within our control. Although we believe that our expectations as expressed in these forward-looking statements are reasonable, we cannot assure you that our expectations will turn out to be correct. Factors that could cause actual results to differ materially include, but are not limited to, those factors referenced in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 and such things as the following: ~~changes in global~~impacts of COVID-19 and any related preventative or protective actions taken by governmental authorities and resulting economic ~~conditions;~~impacts, including recessions or depressions; inflation; supply chain delays and disruptions; transportation disruptions; the ability to obtain new contracts at attractive prices; the size and timing of customer orders and ~~shipment;~~shipments; product pricing and margins; our ability to realize sales from our backlog; fluctuations in customer demand; fluctuations in foreign currencies; competitive factors; the timely completion of contracts; the timing and size of expenditures; the timely receipt of government approvals and permits; the price and availability of metal and other raw material; fluctuations in tariffs or quotas; changes in laws and regulations, both domestic and foreign, impacting our business and the business of the end-market users we serve; the adequacy of local labor supplies at our facilities; current or future limits on manufacturing capacity at our various operations; our ability to successfully integrate ~~acquired~~Arcadia and future-acquired businesses; the impact of pending or future litigation or regulatory matters; the availability and cost of funds; our ability to access our borrowing capacity under our credit facility or access the capital markets; global economic conditions; and ~~general~~political and economic ~~conditions, both domestic~~developments including political instability and ~~foreign, impacting our business and the business of the end-market users we serve.~~armed conflicts. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

INDEX


				Page
PART I - FINANCIAL INFORMATION

			~~Page~~
~~PART I - FINANCIAL INFORMATION~~

Item 1	Condensed Consolidated Financial Statements		34

		Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 3 1 , 202 2 (unaudited) and December 31, ~~2016~~202 1		34
		Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 3 1 , 202 2 and ~~2016~~202 1 (unaudited)		5
		Condensed Consolidated Statements of Comprehensive ~~Loss~~(Loss) Income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31 , 202 2 and ~~2016~~202 1 (unaudited)		6
		Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity and Redeemable Noncontrolling Interest for the ~~nine~~ three months ended ~~September 30, 2017~~March 3 1 , 202 2 and 202 1 (unaudited)		7
		Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~Ma rch 3 1 , 202 2 and ~~2016~~202 1 (unaudited)		89
		Notes to Condensed Consolidated Financial Statements (unaudited)		910

Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations		1926

Item 3		Quantitative and Qualitative Disclosure about Market Risk		3137

Item 4		Controls and Procedures		3137

PART II - OTHER INFORMATION

Item 1		Legal Proceedings		3338

Item 1A		Risk Factors		3338

Item 2		Unregistered Sales of Equity Securities and Use of Proceeds		3338

Item 3		Defaults Upon Senior Securities		3338

Item 4		Mine Safety Disclosures		3338

Item 5		Other Information		3338

Item 6		Exhibits		3338

		Signatures		3539

Table of Contents

Part I - FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

DMC GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except Share and Per Share Data)

September 30, December 31,
2017 2016
(unaudited)
ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 8,861
$ 6,419
Accounts receivable, net of allowance for doubtful accounts of $1,102 and $1,146, respectively 45,443
32,959
Inventory, net 31,489
28,833
Prepaid expenses and other 5,293
5,148

Total current assets 91,086
73,359

PROPERTY, PLANT AND EQUIPMENT 118,752
109,427
Less - accumulated depreciation (59,167 ) (52,294 )

Property, plant and equipment, net 59,585
57,133

GOODWILL, net —
16,097

PURCHASED INTANGIBLE ASSETS, net 13,980
15,827

OTHER ASSETS, net 215
139

TOTAL ASSETS $ 164,866
$ 162,555

~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~DMC GLOBAL INC.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(Amounts in Thousands, Except Share and Per Share Data)~~

September 30, December 31,
2017 2016
(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable $ 15,794
$ 13,260
Accrued expenses 4,188
4,173
Accrued anti-dumping duties 3,585
6,550
Dividend payable 295
290
Accrued income taxes 958
548
Accrued employee compensation and benefits 5,437
3,307
Customer advances 2,772
2,619

Total current liabilities 33,029
30,747

LINES OF CREDIT 21,958
15,732

DEFERRED TAX LIABILITIES 1,040
1,448

OTHER LONG-TERM LIABILITIES 2,534
2,219

Total liabilities 58,561
50,146

COMMITMENTS AND CONTINGENT LIABILITIES

STOCKHOLDERS’ EQUITY:
Preferred stock, $0.05 par value; 4,000,000 shares authorized; no issued and outstanding shares —
—
Common stock, $0.05 par value; 25,000,000 shares authorized; 14,769,342 and 14,496,359 shares outstanding, respectively 740
725
Additional paid-in capital 75,380
73,116
Retained earnings 62,330
80,107
Other cumulative comprehensive loss (31,784 ) (41,514 )
Treasury stock, at cost; 39,783 and 2,378 shares, respectively (361 ) (25 )

Total stockholders’ equity 106,305
112,409

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 164,866
$ 162,555


	March 31, 2022		December 31, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,376	$	30,810

Accounts receivable, net of allowance for doubtful accounts of $2,752 and $2,773, respectively	79,782		71,932
Inventories	143,304		124,214
Prepaid expenses and other	17,354		12,240


Total current assets	255,816		239,196
Property, plant and equipment	192,161		191,022
Less - accumulated depreciation	(71,682)		(68,944)
Property, plant and equipment, net	120,479		122,078
Goodwill	140,234		141,266

Purchased intangible assets, net	242,568		255,576
Deferred tax assets	8,379		6,930
Other assets	96,448		99,366
Total assets	$	863,924	$	864,412

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	48,114	$	40,276
Accrued expenses	14,793		13,585


Accrued income taxes	834		9
Accrued employee compensation and benefits	9,208		9,766
Contract liabilities	26,952		21,052
Current portion of long-term debt	15,000		15,000
Other current liabilities	6,287		6,126

Total current liabilities	121,188		105,814
Long-term debt	128,710		132,425

Deferred tax liabilities	937		2,202
Other long-term liabilities	64,398		66,250
Total liabilities	315,233		306,691
Commitments and contingencies (Note 12)	0		0
Redeemable noncontrolling interest	197,196		197,196
Stockholders’ equity
Preferred stock, $0.05 par value; 4,000,000 shares authorized; no issued and outstanding shares	—		—
Common stock, $0.05 par value; 25,000,000 shares authorized; 20,084,272 and 19,920,829 shares issued, respectively	1,004		996
Additional paid-in capital	296,774		294,515
Retained earnings	102,026		111,031
Other cumulative comprehensive loss	(27,742)		(26,538)
Treasury stock, at cost, and company stock held for deferred compensation, at par; 587,188 and 570,415 shares, respectively	(20,567)		(19,479)


Total stockholders’ equity	351,495		360,525
Total liabilities, redeemable noncontrolling interest, and stockholders’ equity	$	863,924	$	864,412

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in Thousands, Except Share and Per Share Data)

(unaudited)


	Three months ended March 31,
	2022		2021
Net sales	$	138,716	$	55,658
Cost of products sold	101,810		42,745
Gross profit	36,906		12,913
Costs and expenses:
General and administrative expenses	17,718		7,929
Selling and distribution expenses	10,090		5,243
Amortization of purchased intangible assets	12,976		324

Restructuring expenses and asset impairments	32		127


Total costs and expenses	40,816		13,623
Operating loss	(3,910)		(710)
Other income (expense):
Other (expense) income, net	(209)		394
Interest expense, net	(1,024)		(135)
Loss before income taxes	(5,143)		(451)
Income tax benefit	(863)		(883)





Net (loss) income	$	(4,280)	$	432
Less: Net loss attributable to redeemable noncontrolling interest	(992)		—
Net (loss) income attributable to DMC Global Inc. stockholders	$	(3,288)	$	432

Net (loss) income per share attributable to DMC Global Inc. stockholders:
Basic	$	(0.47)	$	0.03
Diluted	$	(0.47)	$	0.03
Weighted average shares outstanding:
Basic	19,301,126		15,453,103
Diluted	19,301,126		15,463,923

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 March 31,
	2022		2021
Net (loss) income attributable to DMC Global Inc. stockholders	$	(3,288)	$	432
Adjustment of redeemable noncontrolling interest	(5,717)		—
Net (loss) income attributable to DMC Global Inc. common shareholders after adjustment of redeemable noncontrolling interest	$	(9,005)	$	432

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
NET SALES $ 52,161
$ 36,553
$ 138,314
$ 118,402
COST OF PRODUCTS SOLD 34,999
28,096
96,767
89,652
Gross profit 17,162
8,457
41,547
28,750
COSTS AND EXPENSES:

General and administrative expenses 6,535
5,685
19,821
15,522
Selling and distribution expenses 4,446
3,832
13,420
12,352
Amortization of purchased intangible assets 1,046
1,009
3,034
3,023
Restructuring expenses —
373
458
1,202
Goodwill impairment charge 17,584
—
17,584
—
Total costs and expenses 29,611
10,899
54,317
32,099
OPERATING LOSS (12,449 ) (2,442 ) (12,770 ) (3,349 )
OTHER INCOME (EXPENSE):

Other income (expense), net (436 ) (157 ) (965 ) 178
Interest expense (367 ) (265 ) (1,203 ) (826 )
Interest income —
—
2
2
LOSS BEFORE INCOME TAXES (13,252 ) (2,864 ) (14,936 ) (3,995 )
INCOME TAX PROVISION 812
272
1,956
321
NET LOSS $ (14,064 ) $ (3,136 ) $ (16,892 ) $ (4,316 )

LOSS PER SHARE

Basic $ (0.98 ) $ (0.22 ) $ (1.18 ) $ (0.31 )
Diluted $ (0.98 ) $ (0.22 ) $ (1.18 ) $ (0.31 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:

Basic 14,368,225
14,195,921
14,333,452
14,105,594
Diluted 14,368,225
14,195,921
14,333,452
14,105,594

DIVIDENDS DECLARED PER COMMON SHARE $ 0.02
$ 0.02
$ 0.06
$ 0.06

Table of Contents

DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Amounts in Thousands)

(unaudited)


	Three months ended March 31,
	2022		2021
Net (loss) income	$	(4,280)	$	432

Change in cumulative foreign currency translation adjustment	(1,204)		(1,967)
Other comprehensive loss	$	(5,484)	$	(1,535)

Less: comprehensive loss attributable to redeemable noncontrolling interest	(992)		—

Comprehensive loss attributable to DMC Global Inc. stockholders	$	(4,492)	$	(1,535)

Table of Contents

DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE LOSS~~STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

(Amounts in ~~Thousands)~~Thousands, Except Share Data)

(unaudited)


								Other		Treasury Stock, at cost, and			Total		Redeemable
				Additional				Cumulative		Company Stock Held for			DMC Global Inc.		Non-
	Common Stock			Paid-In		Retained		Comprehensive		Deferred Compensation, at par			Stockholders’		Controlling
	Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Equity		Interest
Balances, December 31, 2021	19,920,829	$	996	$	294,515	$	111,031	$	(26,538)	(570,415)	$	(19,479)	$	360,525	$	197,196
Net loss	—	—		—		(3,288)		—		—	—		(3,288)		(992)
Change in cumulative foreign currency translation adjustment	—	—		—		—		(1,204)		—	—		(1,204)		—


Shares issued in connection with stock compensation plans	163,443	8		(8)		—		—		—	—		—		—

Escrow adjustment related to redeemable noncontrolling interest	—	—		—		—		—		—	—		—		(427)
Adjustment of redeemable noncontrolling interest to redemption value	—	—		—		(5,717)		—		—	—		(5,717)		5,717

Stock-based compensation	—	—		2,267		—		—		—	—		2,267		102

Distribution to redeemable noncontrolling interest holder	—	—		—		—		—		—	—		—		(4,400)
Treasury stock activity	—	—		—		—		—		(16,773)	(1,088)		(1,088)		—

Balances, March 31, 2022	20,084,272	$	1,004	$	296,774	$	102,026	$	(27,742)	(587,188)	$	(20,567)	$	351,495	$	197,196

Table of Contents

DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

(Amounts in Thousands, Except Share Data)

(unaudited)


								Other		Treasury Stock, at cost, and			Total
				Additional				Cumulative		Company Stock Held for			DMC Global Inc.
	Common Stock			Paid-In		Retained		Comprehensive		Deferred Compensation, at par			Stockholders’
	Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Equity
Balances, December 31, 2020	15,917,559	$	796	$	117,387	$	115,657	$	(22,962)	(528,274)	$	(13,964)	$	196,914
Net income	—	—		—		432		—		—	—		432
Change in cumulative foreign currency translation adjustment	—	—		—		—		(1,967)		—	—		(1,967)

Shares issued in connection with at-the-market offering program	397,820	20		25,242		—		—		—	—		25,262
Shares issued in connection with stock compensation plans	84,434	4		(4)		—		—		—	—		—




Stock-based compensation	—	—		1,469				—		—	—		1,469

Treasury stock activity	—	—		—		—		—		(38,069)	(3,680)		(3,680)
Balances, March 31, 2021	16,399,813	$	820	$	144,094	$	116,089	$	(24,929)	(566,343)	$	(17,644)	$	218,430

Table of Contents

~~DMC GLOBAL INC.~~

~~CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY~~

~~(Amounts in Thousands, Except Share Data)~~

~~(unaudited)~~

~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(unaudited)


	Three months ended March 31,
	2022		2021
Cash flows (used in) provided by operating activities:
Net (loss) income	$	(4,280)	$	432
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation	3,359		2,698
Amortization of purchased intangible assets	12,976		324
Amortization of deferred debt issuance costs	132		56
Amortization of acquisition-related inventory valuation step-up	258		—
Stock-based compensation	2,358		1,608

Deferred income taxes	(2,714)		(2,334)
Loss (gain) on disposal of property, plant and equipment	9		(288)
Restructuring expenses and asset impairments	32		127



Change in:
Accounts receivable, net	(7,480)		(4,629)
Inventories	(19,877)		(6,184)
Prepaid expenses and other	(2,324)		(4,480)
Accounts payable	7,162		9,963
Contract liabilities	5,968		2,432

Accrued expenses and other liabilities	(163)		2,451
Net cash (used in) provided by operating activities	(4,584)		2,176

Cash flows (used in) provided by investing activities:



Proceeds from maturities of marketable securities	—		4,799

Acquisition of property, plant and equipment	(1,536)		(1,365)

Proceeds on sale of property, plant and equipment	—		281

Net cash (used in) provided by investing activities	(1,536)		3,715

Cash flows (used in) provided by financing activities:

Payments on term loan	(3,750)		—
Repayments on capital expenditure facility	—		(11,750)



Payment of debt issuance costs	(97)		—
Distributions to redeemable noncontrolling interest holder	(4,400)		—

Net proceeds from issuance of common stock through at-the-market offering program	—		25,262

Treasury stock purchases	(1,088)		(2,435)

Net cash (used in) provided by financing activities	(9,335)		11,077

Effects of exchange rates on cash	21		682

Net (decrease) increase in cash and cash equivalents	(15,434)		17,650
Cash and cash equivalents, beginning of the period	30,810		28,187
Cash and cash equivalents, end of the period	$	15,376	$	45,837

Nine months ended September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (16,892 ) $ (4,316 )
Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation (including capital lease amortization) 5,030
5,024
Amortization of purchased intangible assets 3,034
3,023
Amortization of deferred debt issuance costs 359
123
Stock-based compensation 2,125
1,599
Deferred income tax (408 ) (563 )
Gain (loss) on disposal of property, plant and equipment (46 ) 35
Restructuring expenses 458
1,202
Goodwill impairment charge 17,584
—
Change in:

Accounts receivable, net (10,747 ) 10,480
Inventory, net (1,221 ) 3,400
Prepaid expenses and other 20
(347 )
Accounts payable 1,051
(3,166 )
Customer advances 97
180
Accrued anti-dumping duties (2,965 ) 128
Accrued expenses and other liabilities 3,039
1,037
Net cash provided by operating activities 518
17,839

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property, plant and equipment (3,299 ) (4,070 )
Proceeds on sale of property, plant and equipment 2
31
Change in other non-current assets —
31
Net cash used in investing activities (3,297 ) (4,008 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings (repayments) on bank lines of credit, net 6,000
(12,250 )
Payment on capital lease obligations —
(3 )
Payment of dividends (880 ) (861 )
Payment of deferred debt issuance costs (133 ) —
Net proceeds from issuance of common stock to employees and directors 154
190
Treasury stock purchases (336 ) (21 )
Net cash provided by (used in) financing activities 4,805
(12,945 )

EFFECTS OF EXCHANGE RATES ON CASH 416
274

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,442
1,160
CASH AND CASH EQUIVALENTS, beginning of the period 6,419
6,291
CASH AND CASH EQUIVALENTS, end of the period $ 8,861
$ 7,451

The information included in the condensed consolidated financial statements is unaudited but includes all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the interim periods presented. Certain information and footnote disclosures, including critical and significant accounting policies normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted for this quarterly presentation. These condensed consolidated financial statements should be read in conjunction with the financial statements that are included in our Annual Report filed on Form 10-K for the year ended December 31, ~~2016.~~2021.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of DMC Global Inc. ~~("DMC"~~(“DMC”, “we”, “us”, “our”, or the “Company”) and its controlled subsidiaries. Only subsidiaries in which controlling interests are maintained are consolidated. All significant intercompany accounts, profits, and transactions have been eliminated in consolidation.

Accounts and Notes Receivable

The Company measures expected credit losses for its accounts receivable using a current expected credit loss model, which is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company has disaggregated pools of accounts receivable balances by business, geography and/or customer risk profile and has used history and other experience to establish an allowance for credit losses at the time the receivable is recognized. To measure expected credit losses, we have elected to pool trade receivables by segment and analyze each segment’s accounts receivable balances as separate populations. Within each segment, receivables exhibit similar risk characteristics.

During the three months ended March 31, 2022, our expected loss rate reflects uncertainties in market conditions that could impact our businesses, including COVID-19 related considerations, supply chain disruptions, as well as global geopolitical and economic instability. In addition, we reviewed receivables outstanding, including aged balances, and in circumstances where we are aware of a specific customer’s inability to meet its financial obligation to us, we recorded a specific allowance for credit losses (with the offsetting expense charged to “Selling and distribution expenses” in our Condensed Consolidated Statements of Operations) against the amounts due, reducing the net recognized receivable to the amount we estimate will be collected. In total, net recoveries of $20 were recorded during the three months ended March 31, 2022. Net recoveries recorded do not reflect $1,237 of receivable balances outstanding that we are currently monitoring related to a DynaEnergetics customer that operates in Western Ukraine.

The following table summarizes year-to-date activity in the allowance for credit losses on receivables from customers in each of our business segments:


	Arcadia		DynaEnergetics		NobelClad		DMC Global Inc.
Allowance for doubtful accounts, December 31, 2021	$	—	$	2,758	$	15	$	2,773

Current period provision for expected credit losses	$	11	16		—		27

Recoveries of amounts previously reserved	$	—	(47)		—		(47)
Impacts of foreign currency exchange rates and other	$	—	(1)		—		(1)
Allowance for doubtful accounts, March 31, 2022	$	11	$	2,726	$	15	$	2,752

During 2021, the Company entered into a note receivable with terms of repayment over five years, collateralized by certain fixed assets. The note, with an outstanding current balance of $974 as of March 31, 2022 recorded within “Prepaid expenses and other” and an outstanding long-term balance of $8,768 as of March 31, 2022 recorded within “Other Assets”, is

The Company’s revenues are primarily derived from consideration paid by customers for tangible goods. The Company analyzes its different goods by segment to determine the appropriate basis for revenue recognition. Revenue is not generated from sources other than contracts with customers and revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. There are no material upfront costs for operations that are incurred from contracts with customers.

Our rights to payments for goods transferred to customers within our DynaEnergetics and NobelClad business segments arise when control is transferred at a point in time and not on any other criteria. Our rights to payments for goods transferred to customers within our Arcadia business segment also generally arise when control is transferred at a point in time; however, at times, control of certain project-based products passes to the customer over time. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 90 days across all of our segments. In instances when we require customers to make advance payments prior to the shipment of their orders, we record a contract liability. We have determined that our contract liabilities do not include a significant financing component given the short duration between order initiation and order fulfillment within each of our segments. Please refer to Note 6 "Contract Liabilities" for further information on contract liabilities and Note 10 "Business Segments" for disaggregated revenue disclosures.

See additional revenue recognition policy disclosures specific to the DynaEnergetics and NobelClad business segments within our Annual Report filed on Form 10-K for the year ended December 31, 2021.

Customers agree to terms and conditions at the time of initiating an order. The significant majority of transactions contain standard architectural building materials that are not made-to-order, which include storefronts and entrances, windows, curtain walls, doors and interior partitions. In instances where multiple products are included within an order, each product represents a separate performance obligation given that: (1) the customer can benefit from each product on a standalone basis and (2) each product is distinct within the context of the contract.

The transaction price is readily determinable and fixed at the time the transaction is entered into with the customer. Arcadia is entitled to each product’s transaction price upon the customer obtaining control of the item. For standard architectural building materials that are not made-to-order, such control transfers at a point in time, which is generally when the product has been delivered to the customer and the legal title has been transferred. Upon delivery and title transfer, Arcadia has performed its contractual requirements such that it has a present right to payment, and the customer from that point forward bears all risks and rewards of ownership. In addition, at this date, the customer has the ability to direct the use of, or restrict access to, the asset. Payment discounts, rebates, refunds, or any other forms of variable consideration are typically not included within Arcadia contracts.

For contracts that contain only one performance obligation, the total transaction price is allocated to the sole performance obligation. For contracts which contain multiple distinct performance obligations, judgment is required to determine the standalone selling price (“SSP”) for each performance obligation. However, such judgment is largely mitigated given that standard architectural building materials purchased are generally shipped at the same time. In instances where products purchased are not shipped at the same time, Arcadia uses the contractually stated price to determine SSP as this price approximates the price of each good as sold separately.

At times, Arcadia will also contract with customers to supply customized architectural building materials based on design specifications, measurements, finishes, framing materials, and other options selected by the customer at the time an order is initiated. For these contracts, Arcadia has an enforceable right to payment from its customers at the time an order is received and accepted for all manufacturing efforts expended on behalf of its customers. Due to the customized nature of these products, the Company has concluded that the substantial portion of the related goods produced have no alternative use, and therefore control of these products passes to the customer over time. We have concluded that recognizing revenue utilizing an over-time output method based upon units delivered reasonably depicts the fulfillment of our performance obligations under our contracts and the value received by the customer based upon our performance to date. This conclusion is further supported by the frequency of shipments in fulfilling these contracts. We have elected not to disclose our unsatisfied performance obligations as of March 31, 2022 under the short-term contract exemption as we expect such performance obligations will be satisfied within the next 12 months following the end of the reporting period.

Billings for customized architectural building materials occur at times upon delivery, but also can occur via pre-established billing schedules agreed-upon at the commencement of the contract. Therefore, we frequently generate contract liabilities in instances when we have billed the customer in excess of revenue recognized for units delivered.

The effective tax rate for each of the periods reported differs from the U.S. statutory rate due primarily to variation in contribution to consolidated pre-tax income from each jurisdiction for the respective periods, differences between the U.S. and foreign tax rates (which range from 20% to 35%) on earnings that have been permanently reinvested and changes to valuation allowances on our deferred tax assets.

We recognize deferred tax assets and liabilities for the expected future income tax consequences of temporary differences between the financial reporting and tax ~~bases~~basis of assets and liabilities. Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment. The deferred income tax impact of tax credits ~~are~~is recognized as an immediate adjustment to income tax expense. We recognize deferred tax assets for the expected future effects of all deductible temporary differences to the extent we believe these assets will more likely than not be realized. We record a valuation allowance when, based on current circumstances, it is more likely than not that all or a portion of the deferred tax assets will not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, recent financial operations and their associated valuation allowances, if any.

We recognize the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the ~~position; the tax~~ position that it will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that is more likely than not ~~of being~~to be realized upon ultimate resolution. We recognize interest and penalties related to uncertain tax positions in operating expense.

In the U.S., tax audits for the years 2012 through 2015 were closed during the second quarter 2017, and no adjustments to the Company's tax provisions were proposed. In Germany, tax audits are currently in progress for the years 2011 through 2014. Our tax provisions reflect our best estimate of state, local, federal, and foreign taxes. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with our expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

~~Unvested awards of share-based payments~~In periods with ~~rights to receive dividends or dividend equivalents are considered participating securities for purposes of calculating~~net income, the Company computes earnings per share (“EPS”) using a two-class method, which is an earnings allocation formula that determines EPS for (i) each class of common stock (the Company has a single class of common stock), and (ii) participating securities according to dividends declared and participation rights in undistributed earnings. Restricted stock awards are considered participating securities in periods of net income as they receive non-forfeitable rights to dividends as common stock. Restricted stock awards do not participate in net losses.

Basic EPS is calculated by dividing net income (loss) attributable to the Company’s stockholders after adjustment of redeemable noncontrolling interest by the weighted average number of common shares outstanding during the period. Please refer to Note 3 "Business Combination" for further discussion of the calculation of the adjustment of the redeemable noncontrolling interest to redemption value as of the end of the period presented. Diluted EPS adjusts basic EPS for the effects of restricted stock awards, restricted stock units, performance share units and other potentially dilutive financial instruments (dilutive securities), only in the periods in which ~~we have net income and require the use~~such effect is dilutive. The effect of the ~~two class~~dilutive securities is reflected in diluted EPS by application of the more dilutive of (1) the treasury stock method or (2) the two-class method. For the applicable periods presented, diluted EPS using the treasury stock method was less dilutive than the two-class method; as such, only the two-class method has been included below.


	Three months ended March 31,
	2022		2021
Net (loss) income attributable to DMC Global Inc. stockholders, as reported	$	(3,288)	$	432
Less: Adjustment of redeemable noncontrolling interest	(5,717)		—

Less: Undistributed net income available to participating securities	—		(5)
Numerator for basic net (loss) income per share:	(9,005)		427
Add: Undistributed net income allocated to participating securities	—		5
Less: Undistributed net income reallocated to participating securities	—		(5)
Numerator for diluted net (loss) income per share:	(9,005)		427
Denominator:
Weighted average shares outstanding for basic net (loss) income per share	19,301,126		15,453,103
Effect of dilutive securities (1)	—		10,820
Weighted average shares outstanding for diluted net (loss) income per share	19,301,126		15,463,923
Net (loss) income per share
Basic	$	(0.47)	$	0.03
Diluted	$	(0.47)	$	0.03

Deferred compensation

The Company maintains a Non-Qualified Deferred Compensation Plan (the “Plan”) as part of its overall compensation package for ~~calculating EPS. Under this method,~~certain employees. Participants are eligible to defer a portion of ~~net income is allocated~~their annual salary, their annual incentive bonus, and their equity awards through the Plan on a tax-deferred basis. Deferrals into the Plan are not matched or subsidized by the Company, nor are they eligible for above-market or preferential earnings.

The Plan provides for deferred compensation obligations to ~~these participating securities and therefore is excluded from the calculation~~be settled either by delivery of ~~EPS allocated to~~a fixed number of shares of DMC’s common stock or in cash, in accordance with participant contributions and elections. For deferred equity awards, subsequent to equity award vesting and after a period prescribed by the Plan, participants can elect to diversify contributions of equity awards into other investment options available to Plan participants. If diversified, these contributions will be subsequently settled by delivery of cash.

The Company has established a grantor trust commonly known as ~~shown~~a “rabbi trust” and contributed certain assets to satisfy the future obligations to participants in the ~~table below.~~Plan. These assets are subject to potential claims of the Company’s general creditors. The assets held in the trust include unvested restricted stock awards (“RSAs”), vested company stock awards, company-owned life insurance (“COLI”) on certain employees, and money market and mutual funds. Unvested RSAs and common stock held by the trust are reflected in the Condensed Consolidated Balance Sheets within “Treasury stock, at cost, and company stock held for deferred compensation, at par” at the par value of the common stock or unvested RSAs. These accounts are not adjusted for subsequent changes in the fair value of the common stock. COLI is accounted for at the cash surrender value while money market and mutual funds held by the trust are accounted for at fair value.

Deferred compensation obligations that will be settled in cash are accounted for on an accrual basis in accordance with the terms of the Plan. These obligations are adjusted based on changes in value of the underlying investment options chosen by Plan participants. Deferred compensation obligations that will be settled by delivery of a fixed number of previously vested shares of the Company’s common stock are reflected in the Condensed Consolidated Statements of Stockholders’ Equity and Redeemable Noncontrolling Interest within “Common stock” at the par value of the common stock or unvested RSAs. These accounts are not adjusted for subsequent changes in the fair value of the common stock.

The balances related to the deferred compensation plan were as follows:


	Balance Sheet location	March 31, 2022		December 31, 2021
Deferred compensation assets	Other assets	$	13,973	$	13,812
Deferred compensation obligations	Other long-term liabilities	$	15,516	$	15,944

~~Computation and reconciliation of earnings per share of common stock are as follows:~~

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Numerator:
Net loss $ (14,064 ) $ (3,136 ) $ (16,892 ) $ (4,316 )
Less income allocated to RSAs —
—
—
—
Net income (loss) allocated to common stock for EPS calculation $ (14,064 ) $ (3,136 ) $ (16,892 ) $ (4,316 )

Denominator:
Weighted average common shares outstanding - basic 14,368,225
14,195,921
14,333,452
14,105,594
Dilutive stock-based compensation plans —
—
—
—
Weighted average common shares outstanding - diluted 14,368,225
14,195,921
14,333,452
14,105,594

Net income (loss) allocated to common stock for EPS calculation:
Basic $ (0.98 ) $ (0.22 ) $ (1.18 ) $ (0.31 )
Diluted $ (0.98 ) $ (0.22 ) $ (1.18 ) $ (0.31 )

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to use an established hierarchy for fair value measurements based upon the inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels in the hierarchy are as follows:

•Level 1 — Inputs to the valuation based upon quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.

•Level 2 — Inputs to the valuation include quoted prices in either markets that are not active, or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data.

•Level 3 — Inputs to the valuation that are unobservable inputs for the asset or liability.

The highest priority is assigned to Level 1 inputs and the lowest priority to Level 3 inputs.

The carrying value of ~~cash and cash equivalents, trade~~ accounts receivable and ~~payables,~~payable, accrued expenses, and ~~lines of~~the revolving loans and term loan under our credit facility, when outstanding, approximate their fair value.

Our revolving loans and term loan under our credit facility, when outstanding, reset each month at market interest rates. As a result, we classify these liabilities as Level 1 in the fair value hierarchy.

Our foreign currency forward contracts are valued using quoted market prices or are determined using a yield curve model based on current market rates. As a result, we ~~intend to~~ classify these ~~investments~~instruments as Level 2 in the fair value hierarchy. Money market funds and mutual funds of $9,430 as of March 31, 2022 and $9,083 as of December 31, 2021 held to satisfy future deferred compensation obligations are valued based upon the market values of underlying securities, and therefore we classify these assets as Level 2 in the fair value hierarchy.

We ~~did not~~ did not hold any Level 3 assets or liabilities as of ~~September 30, 2017~~March 31, 2022 or December 31, ~~2016. The goodwill impairment charge recorded~~2021. However, the fair value measurements of certain assets and liabilities acquired as part of the Arcadia acquisition were based on significant inputs not observable in the ~~third quarter of 2017 was calculated using~~market and thus represent Level 3 ~~inputs.~~measurements within the fair value measurement hierarchy.

~~Recently Adopted~~Recent Accounting ~~Standards~~Pronouncements

In ~~July 2015,~~March 2020, the Financial Accounting Standards Board ~~("FASB"~~issued a new accounting standard which provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions apply only to contracts and other transactions that reference the London interbank offered rate (“LIBOR”) ~~issued an accounting standards update ("ASU")~~or another reference rate expected to ~~change the measurement~~be discontinued as a result of ~~inventory from lower of cost~~reference rate reform. These amendments are not applicable to contract modifications made and hedging relationships entered into or ~~market to lower of cost and net realizable value. This pronouncement is effective for reporting periods beginning~~evaluated after December ~~15, 2016, and the~~31, 2022. The Company ~~has adopted it as of the first quarter of 2017. The~~will adopt this standard when LIBOR is discontinued; however, given that we do not have significant exposure to LIBOR or other referenced rates expected to be discontinued, we do not believe that adoption of this standard ~~did not have a material impact on the Company's consolidated financial statements.~~

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” to simplify the method of measuring a goodwill impairment charge in the event a reporting unit’s carrying amount exceeds its fair value. In those circumstances, the new standard requires the Company to recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. The Company adopted this standard during the third quarter of 2017 and applied it in the test for goodwill impairment described in Note 4.

~~Recent Accounting Pronouncements~~

In ~~October 2016, the~~ ~~FASB issued an ASU which~~ removes the prohibition against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. This ASU is effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. ~~The Company is in the process of evaluating the impact of adopting this standard on its consolidated financial statements.~~

In February 2016, the FASB issued an ASU which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This ASU will be effective beginning in the first quarter of 2019. Early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In May 2014, the FASB issued an ASU to clarify the principles of recognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and IFRS. The pronouncement is effective for reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The standard can be adopted using either of two methods: (1) retrospective application to each prior reporting period presented with the option to elect certain practical expedients, as defined within the standard ("full retrospective") or (2) retrospective application with the cumulative effect of adoption recognized at the date of initial application and providing certain additional disclosures, as defined within the standard ("modified retrospective"). Management currently plans to adopt the ASU for the quarter ended March 31, 2018, as required by the standard, and plans to use the modified retrospective approach.

Currently, using internal resources, management is analyzing contracts from the NobelClad and DynaEnergetics segments to determine the technical accounting conclusions and the impact on business processes and systems of the new revenue standard. In our NobelClad business, contracts are often for unique projects, but the vast majority of contracts contain standard terms and conditions. In our DynaEnergetics business, we sell a range of products to a wide variety of customers, but the contracts also often contain similar terms and conditions. We have reviewed contracts representing a majority of NobelClad's and DynaEnergetics' revenue for the year ended December 31, 2016 and have preliminarily concluded that applying the new standard to those contracts would not have a material impact on our ~~financial statements.~~Consolidated Financial Statements.

On December 16, 2021, the Company entered into an equity purchase agreement with Arcadia, Inc., a California corporation, the shareholders of Arcadia, Inc. and certain other parties (the “Equity Purchase Agreement”). On December 23, 2021, pursuant to the Equity Purchase Agreement, the Company completed the acquisition of a 60% controlling interest in Arcadia Products, LLC, a Colorado limited liability company resulting from the conversion of Arcadia, Inc. (collectively, “Arcadia”) for closing consideration of $261,000 in cash (excluding $7,654 in acquired cash) and 551,458 shares of its common stock, par value $0.05 per share. A portion of the cash consideration was placed into escrow and is subject to certain post-closing adjustments.

DMC acquired Arcadia as part of its strategy of building a diversified portfolio of industry-leading businesses with differentiated products and services. Arcadia is a leading U.S. supplier of architectural building products, which include exterior and interior framing systems, windows, curtain walls, doors, and interior partitions for the commercial buildings market, and highly engineered windows and doors for the high-end residential real estate market.

The acquisition was funded by the Company through cash and marketable securities, equity, and debt financing. Assets acquired and liabilities assumed have been recorded at their fair values. Certain fair values were determined by management using the assistance of third-party valuation specialists. The valuation methods used to determine the fair value of intangible assets included the income approach—excess earnings method for customer relationships and the income approach—relief from royalty method for the trade name acquired. A number of assumptions and estimates were involved in the application of these valuation methods, including forecasts of revenues, costs of revenues, operating expenses, tax rates, forecasted capital expenditures, customer attrition rate, discount rates and working capital changes.

The following table sets forth the preliminary components of the fair value of the total consideration transferred and preliminary purchase price allocation of the net assets acquired at the date of acquisition, along with the measurement period adjustments that occurred during the quarter. The assets acquired and liabilities assumed exclude Arcadia's right-of-use asset and lease liabilities, respectively, as they have an immaterial impact on the total net assets acquired. Please see Note 7 “Leases” for additional discussion of lease accounting. The total consideration transferred is still subject to potential adjustment and the preliminary purchase price allocation related to the assets acquired and liabilities assumed may be adjusted as a result of the finalization of our procedures, primarily as it pertains to the valuation of certain long-lived assets.


	Preliminary		Measurement Period Adjustments		Preliminary
	December 23, 2021				March 31, 2022
Cash, including cash acquired(1)	$	268,654	$	(640)	$	268,014
Equity(2)	21,716		—		21,716
Total fair value of consideration transferred	290,370		(640)		289,730

Assets acquired:
Cash and cash equivalents	$	7,654	$	—	$	7,654
Accounts receivable	31,456		—		31,456
Inventories	60,503		—		60,503
Prepaid expenses and other	2,438		—		2,438
Property, plant and equipment(3)	17,323		—		17,323
Goodwill(4)	141,266		(1,032)		140,234
Intangible assets(5)	254,500		—		254,500
Other long-term assets	122		(35)		87
Total assets acquired	515,262		(1,067)		514,195
Liabilities assumed:
Accounts payable	8,792		—		8,792
Other current liabilities	22,520		—		22,520


Total liabilities assumed	31,312		—		31,312
Redeemable noncontrolling interest(6)	193,580		(427)		193,153
Total assets acquired and liabilities assumed	$	290,370	$	(640)	$	289,730

(1) Cash sources of funding included $150,000 in new term loan debt and $118,654 of cash and marketable securities on hand. During the quarter ended March 31, 2022, working capital estimates at the time of acquisition were finalized. In April 2022, $640 was returned to the Company from the funds previously placed into escrow.

(2) Equity consideration included 551,458 shares of DMC common stock.

(3) Property, plant and equipment primarily consists of the following:




Land	$	2,922
Buildings and improvements	4,015
Manufacturing equipment and tooling	9,877
Furniture, fixtures, and computer equipment	95
Other	414

Total property, plant and equipment	17,323

The useful lives of the property, plant and equipment is consistent with the Company's accounting policies.

(4) Amounts recorded for goodwill resulting in a tax basis step-up are generally expected to be deductible for tax purposes. Tax deductible goodwill is estimated to be $85,815.

(5) Intangible assets consist of $211,000 of customer relationships, $22,000 of trade name, and $21,500 of customer backlog.

(6) Redeemable noncontrolling interest represents 40% of the total fair value of Arcadia upon acquisition.

The final fair value determination of the assets acquired and liabilities assumed will be completed prior to one year from the transaction completion date, consistent with Accounting Standards Codification (“ASC”) 805 Business Combinations ("ASC 805"). Measurement period adjustments will be recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed as of the acquisition date.

Redeemable noncontrolling interest

The limited liability company operating agreement for Arcadia (the “Operating Agreement”) contains a right for the Company to purchase the remaining interest in Arcadia from the minority interest holder on or after the third anniversary of the acquisition closing date (“Call Option”). Similarly, the minority interest holder of Arcadia has the right to sell its remaining interest in Arcadia to the Company on or after the third anniversary of the acquisition closing date (“Put Option”). Both the Call Option and Put Option enable the respective holder to exercise their rights based upon a predefined calculation as included within the Operating Agreement.

The Company initially accounted for the noncontrolling interest at its acquisition date fair value. We determined that both the Call Option and Put Option do not meet the definition of a derivative under ASC 815 Derivatives and Hedging as the Operating Agreement does not allow for contractual net settlement, the options cannot be settled outside the Operating Agreement through a market mechanism, and the underlying shares are deemed illiquid as they are not publicly traded and thus not considered readily convertible to cash. Additionally, the settlement price for both options is ~~continuing~~based upon a predefined calculation tied to ~~evaluate~~adjusted earnings rather than a fixed price, and the ~~impacts of our pending adoption,~~formula is based upon Arcadia’s operating results. As such, we have concluded that the Call Option and ~~our preliminary assessments~~Put Option are embedded within the noncontrolling interest and therefore do not represent freestanding instruments.

Given that the noncontrolling interest is subject to ~~change.~~possible redemption (with redemption rights that are not entirely within the control of the Company), we have concluded that the noncontrolling interest should be accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity ("ASC 480"). The Company has also concluded that the noncontrolling interest is probable of redemption, as the only criteria for the security to become redeemable is the passage of time. As such, the Company has classified the redeemable noncontrolling interest separate from the stockholders’ equity section in the Condensed Consolidated Balance Sheets.

At each balance sheet date subsequent to acquisition, the carrying value of the redeemable noncontrolling interest has been adjusted to its estimated redemption value as if redemption were to occur at the balance sheet date. This immediate adjustment is charged directly to retained earnings and therefore does not impact the Condensed Consolidated Statements of Operations or Comprehensive (Loss) Income. As of March 31, 2022, the Company’s estimated redemption value of the redeemable noncontrolling interest has not changed in comparison to our estimate at December 31, 2021 of $197,196. As such, during the three months ended March 31, 2022, the Company recorded an adjustment of the redeemable noncontrolling interest’s carrying value to its estimated redemption value of $5,717. In accordance with ASC 480, this adjustment occurs only after the Company ascribes net income or loss and any cash distributions attributable to the redeemable noncontrolling interest.

In order to equalize after-tax consideration to the redeemable noncontrolling interest holder relative to an alternative transaction structure, immediately following the closing of the acquisition, the Company loaned approximately $24,902 to the redeemable noncontrolling interest holder. The loan was evidenced by an unsecured promissory note, and the loan will be repaid out of proceeds from the sale of the redeemable noncontrolling interest holder’s interests in Arcadia, whether received upon exercise of the Put Option, the Call Option or upon sales to third parties permitted under the terms of the Operating Agreement. The loan must be repaid in full by December 16, 2051 and has been recorded within “Other Assets”.

Unaudited Pro Forma Financial Information

Pro forma financial information is presented for informational purposes and is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the acquisition of Arcadia been completed at an earlier date, nor is it representative of future operating results of the Company.

ASC 805 requires pro forma adjustments to reflect the effects of fair value adjustments, transaction costs, capital structure changes, the tax effects of such adjustments, and also requires nonrecurring adjustments to be prepared and presented. For the three months ended March 31, 2021, operating results have been adjusted to reflect (a) fair value adjustments related to incremental intangible asset amortization, (b) interest expense with the higher principal and interest rates associated with the Company's new term loan debt incurred to finance, in part, the acquisition of Arcadia, (c) the effects of integration costs on the results of Arcadia's operations, and (d) the effects of the adjustments on income taxes.

The following unaudited pro forma combined financial information presents combined results of the Company and Arcadia. Arcadia’s operating results have been included in the Company’s operating results for the three months ended March 31, 2022.


	Three months ended March 31, 2021
	As Reported		Pro Forma
Net sales	$	55,658	$	112,899
Net income attributable to DMC Global Inc. stockholders	$	432	$	4,353

Inventories are stated at the lower of cost (first-in, first-out) ~~and~~or net realizable value. ~~Cost~~Significant cost elements included in inventory are material, labor, freight, subcontract costs, and manufacturing overhead. As necessary, we ~~record~~write down inventory to its net realizable value by recording provisions ~~and maintain reserves~~ for excess, slow moving and obsolete inventory. ~~To determine reserve amounts, we~~We regularly review inventory quantities on hand and values, and compare them to estimates of future product demand, market conditions, production requirements and technological developments.

Inventories ~~consist~~consisted of the following at ~~September 30, 2017~~ ~~and~~ ~~December~~March 31, ~~2016~~ ~~and include reserves of $2,985 and $4,226, respectively:~~2022:


	Arcadia		DynaEnergetics		NobelClad		DMC Global Inc.
Raw materials	$	14,086	$	14,003	$	8,979	$	37,068
Work-in-process	5,634		21,269		8,781		35,684
Finished goods	50,143		19,760		440		70,343
Supplies	—		—		209		209
Total inventories	$	69,863	$	55,032	$	18,409	$	143,304

AsInventories consisted of the following at December 31, ~~2016, all of the goodwill was recorded within our NobelClad segment. The changes to the carrying amount of goodwill during the period are summarized below:~~2021:


	Arcadia		DynaEnergetics		NobelClad		DMC Global Inc.
Raw materials	$	12,168	$	15,209	$	7,655	$	35,032
Work-in-process	3,987		13,672		10,257		27,916
Finished goods	44,348		14,998		1,651		60,997
Supplies	—		—		269		269
Total inventories	$	60,503	$	43,879	$	19,832	$	124,214

Goodwill balance at December 31, 2016 $ 16,097
Adjustment due to recognition of tax benefit of tax amortization of certain goodwill (450 )
Adjustment due to exchange rate differences 1,937
Goodwill impairment (17,584 )

Goodwill balance at September 30, 2017 $ —

As required under ASC 350, “Goodwill and Other Intangible Assets”, we routinely review the carrying value of our net assets, including goodwill, to determine if any impairment has occurred. A quantitative assessment was conducted at June 30, 2017, at which time, based on existing conditions and management’s outlook, we determined there was no impairment. In the third quarter of 2017, activity in NobelClad’s primary end markets slowed considerably. NobelClad experienced a significant decline in its small size core maintenance bookings within the oil and gas industry. Additionally, certain large petrochemical projects previously forecasted to ship in the next twelve months were delayed, and uncertainty exists as to the ultimate timing of booking and shipping these potential orders. As a result, we determined that a potential indicator of goodwill impairment existed during the third quarter of 2017. We utilized an income approach (discounted cash flow analysis) to determine the fair value of the NobelClad reporting unit and concluded that our long-term forecasts were not materializing and needed to be revised downward. We believe the discounted cash flow approach is the most reliable indicator of fair value. The key assumptions used in the discounted cash flow analysis included, among other measures, expected future sales, operating income, working capital and capital expenditures. The discount rate was determined using a peer-based, risk-adjusted weighted average cost of capital.

We determined that the estimated fair value of the NobelClad reporting unit was less than its carrying value primarily due to the factors described above and their related impact on expected future cash flows. During the third quarter, we adopted ASU 2017-04 which amends and simplifies how an entity measures a goodwill impairment loss by eliminating step two from the goodwill impairment test. As the carrying value of the NobelClad reporting unit exceeded the fair value by more than the book value of goodwill, we recorded an impairment charge of $17,584 to fully impair the goodwill related to this reporting unit as of September 30, 2017.

For purchased intangible assets, we performed an assessment of the recoverability in accordance with the general valuation requirements set forth under ASC 360, “Accounting for the Impairment of Long-Lived Assets.” The result of this assessment indicated that no impairment existed for purchased intangible assets.

~~The following table presents details of our~~Our purchased intangible assets ~~other than goodwill,~~consisted of the following as of ~~September 30, 2017~~:

~~The following table presents details of our~~Our purchased intangible assets ~~other than goodwill,~~consisted of the following as of December 31, ~~2016~~:

The change in the gross value of our purchased intangible assets at March 31, 2022 from December 31, ~~2016~~ to ~~September 30, 2017~~2021 primarily was due to foreign currency translation and an adjustment due to recognition of tax benefit of tax amortization previously applied to certain goodwill related to the DynaEnergetics and NobelClad reporting ~~unit.~~units. After the goodwill associated with each reporting unit was ~~written off~~impaired at December 31, 2015 and September 30, 2017, respectively, the tax amortization reduces other ~~noncurrent~~ intangible assets related to the historical acquisition.

~~On occasion,~~At times, we require customers to make advance payments prior to the shipment of ~~goods~~their orders in order to help finance our inventory investment on large orders or to keep customers’ credit limits at acceptable levels. Contract liabilities were as follows:


	March 31, 2022		December 31, 2021
Arcadia	$	21,931	$	14,697
NobelClad	4,879		5,881
DynaEnergetics	142		474
Total contract liabilities	$	26,952	$	21,052

We generally expect to recognize the revenue associated with contract liabilities over a time period no longer than one year, but unforeseen circumstances can cause delays in shipments associated with contract liabilities.

The Company leases real properties for use in manufacturing and as administrative and sales offices, and also leases automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the

Nearly all of the Company’s leasing arrangements are classified as operating leases. ROU asset and lease liability balances were as follows for the periods presented:


	March 31, 2022		December 31, 2021
ROU asset	$	50,934	$	52,219

Current lease liability	6,287		6,126
Long-term lease liability	45,613		47,000
Total lease liability	$	51,900	$	53,126

The ROU asset is reported in “Other assets” while the current lease liability is reported in “Other current liabilities” and the long-term lease liability is reported in “Other long-term liabilities” in the Company’s Condensed Consolidated Balance Sheets. Cash paid for operating lease liabilities are recorded as operating cash flows in the Company’s Condensed Consolidated Statements of Cash Flows.

Arcadia leases certain office, manufacturing, distribution and warehouse facilities from entities affiliated with the redeemable noncontrolling interest holder and the President of Arcadia. There were 8 related party leases in effect as of March 31, 2022, with expiration dates ranging from calendar years 2023 to 2031. As of ~~September 30, 2017~~March 31, 2022, the total ROU asset and ~~December~~related lease liability recognized for related party leases was $31,438 and $31,572, respectively. The Company believes that the lease terms for these properties are fair and reasonable to the Company and on terms comparable to those reasonably expected to be agreed to with independent third parties for similar types of property. For the three months ended March 31, ~~2016, customer advances totaled~~ ~~$2,772~~2022, operating lease expense was $2,767, inclusive of $1,156 related to related party leases. For the three months ended March 31, 2021, operating lease expense was $971. Short term and ~~$2,619, respectively,~~variable lease costs were not material for the three months ended March 31, 2022 and ~~originated from several customers.~~2021.

~~Lines~~As of ~~credit~~March 31, 2022 and December 31, 2021, outstanding borrowings consisted of the ~~following at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~:following:


	March 31, 2022		December 31, 2021
Syndicated credit agreement:
U.S. Dollar revolving loan	$	—	$	—
Term loan	146,250		150,000


Commerzbank line of credit	—		—
Outstanding borrowings	146,250		150,000
Less: debt issuance costs	(2,540)		(2,575)
Total debt	143,710		147,425
Less: current portion of long-term debt	(15,000)		(15,000)
Long-term debt	$	128,710	$	132,425

Syndicated Credit Agreement

~~As of~~On December ~~31, 2016,~~23, 2021, we ~~had~~entered into a ~~$75,000~~five-year $200,000 syndicated credit agreement (“credit facility”) ~~that allowed~~which included a $150,000 Term Loan, which is amortizable at 10% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in 2026, and allows for revolving loans of ~~$65,000 in U.S. dollars and $10,000 in alternative currencies as well as a $100,000~~up to $50,000. The credit facility has an accordion feature to increase the commitments ~~in any of the loan classes subject to approval~~ by ~~applicable lenders. The credit facility matures on February 23, 2020.~~

~~second, and third quarters of 2017, and added~~revolving loan class and/or by adding a ~~minimum EBITDA covenant for those same periods and is inapplicable thereafter. The maturity of the credit facility did not change with the amendment.~~

After the amendment, our credit facility allows for borrowings up to $35,000, consisting of revolving loans of $30,000 in U.S. dollars and $5,000 in alternate currencies as well as a $25,000 accordion feature to increase the commitments in any of theterm loan ~~classes~~ subject to approval by applicable lenders. We ~~also maintain a line of~~entered into the credit facility with a ~~German bank for certain European operations. This line~~syndicate of 4 banks, with KeyBank, N.A. acting

as administrative agent. The credit ~~provides a borrowing capacity~~facility is secured by the assets of ~~€4,000, of which €2,478 is available after considering outstanding letters of credit.~~DMC including accounts receivable, inventory, and fixed assets, including Arcadia and its subsidiary, as well as guarantees and share pledges by DMC and its subsidiaries.

~~U.S. borrowings~~Borrowings under the ~~amended credit facility~~$150,000 Term Loan and $50,000 revolving loan limit can be in the form of ~~Alternate~~Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or one month Adjusted Term SOFR loans. Additionally, U.S. dollar borrowings on the revolving loan can be in the form of Base Rate loans ~~(“ABR”~~(Base Rate borrowings are based on the greater of ~~adjusted~~the administrative agent’s Prime ~~rates, adjusted CD rates, or~~rate, an adjusted Federal Funds ~~rates)~~rate or ~~one, two, three, or six month London Interbank Offered~~an adjusted SOFR rate). SOFR loans bear interest at the applicable SOFR rate plus an applicable margin (varying from 1.50% to 3.00%). Base Rate ~~(“LIBOR”) loans. ABR~~ loans bear interest at the defined ~~ABR~~Base rate plus an applicable margin ~~and LIBOR loans bear interest at the applicable LIBOR rate plus an applicable margin.~~(varying from 0.50% to 2.00%).

~~Alternative currency borrowings under the amended~~The credit facility can be in Canadian Dollars, Euros, Pounds Sterling and any other currency that is freely transferable and convertible to U.S. Dollars. Alternative currency borrowings denominated in Canadian Dollars shall be comprised of Canadian Dealer Offered Rate (“CDOR”) Loans or Canadian Prime Loans, at our option, and bear interest at the CDOR rate plus applicable margin or the applicable Canadian Prime Rate plus an applicable margin, respectively. Alternative currency borrowings denominated in Euros shall be comprised of Euro Interbank Offered Rate (“EURIBOR”) loans and bear interest at the EURIBOR rate plus an applicable margin. Alternative currency borrowings denominated in any other alternative currency shall be comprised of Eurocurrency loans and bear interest at the LIBOR rate plus an applicable margin.

~~LIBOR, EURIBOR, and CDOR applicable margins vary from 1.75% to 3.25%, and ABR and Canadian Prime applicable margins vary from 0.75% to 2.25%.~~

~~Loan Covenants and Restrictions~~

~~Our existing loan agreements include~~includes various covenants and restrictions, certain of which relate to the payment of dividends or other distributions to stockholders; redemption of capital stock; incurrence of additional indebtedness; mortgaging, pledging or disposition of major assets; and maintenance of specified ~~financial~~ ratios.

The leverage ratio is defined in the credit facility as the ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of any trailing four quarter period to Consolidated Pro Forma EBITDA (as defined in the credit facility) for such period. The maximum leverage ratio permitted by our credit facility is 3.5 to 1.0 through the quarter ended March 31, 2022, 3.25 to 1.0 from the quarter ended June 30, 2022 through the quarter ended March 31, 2023, and 3.0 to 1.0 from the quarter ended June 30, 2023 and thereafter.

The debt service coverage ratio is defined in the credit facility as the ratio of Consolidated Pro Forma EBITDA less the sum of capital distributions paid in cash (other than those made with respect to the preferred stock issued under the Operating Agreement), Consolidated Unfunded Capital Expenditures (as defined in the credit facility), and net cash income taxes to the sum of cash interest expense, any dividends on the preferred stock paid in cash, and scheduled principal payments on funded indebtedness. Under our credit facility, the minimum debt service coverage ratio permitted is 1.35 to 1.0.

As of ~~September 30, 2017,~~March 31, 2022, we were in compliance with all financial covenants and other provisions of our debt agreements.

We also maintain a line of credit with a German bank of €7,000 for our NobelClad and DynaEnergetics operations in Europe. This line of credit is also used to issue bank guarantees to customers to secure advance payments made by them. As of March 31, 2022 and December 31, 2021, we had no outstanding borrowings under this line of credit and bank guarantees of €2,609 and €2,997 were secured by the line of credit, respectively. The line of credit has open-ended terms and can be canceled by the bank at any time.

Included in long-term debt are deferred debt issuance costs of $2,540 and $2,575 as of March 31, 2022 and December 31, 2021, respectively. Deferred debt issuance costs are being amortized over the remaining term of the credit facility which expires on December 23, 2026.

The effective tax rate for each of the periods reported differs from the U.S. statutory rate primarily due to variation in contribution to consolidated pre-tax income from each jurisdiction for the respective periods, differences between the U.S. and foreign tax rates (which range from 20% to 33%), permanent differences between book and taxable income, income or loss attributable to the redeemable noncontrolling interest holder, and changes to valuation allowances on our deferred tax assets.

Arcadia is treated as a partnership for U.S. tax purposes. With the exception of certain state taxes, income or loss flows through to the shareholders and is taxed at the shareholder level. Tax impacts related to income or loss from Arcadia that are included in consolidated pretax results but are attributable to the redeemable noncontrolling interest holder are not included in the consolidated income tax provision.

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use existing deferred tax assets. Additionally, a three-year cumulative loss at a consolidated financial statement level may be viewed as negative evidence impacting a jurisdiction that by itself is not in a three-year cumulative loss position. During the three months ended March 31, 2022 and March 31, 2021, we did not record any adjustments to previously established valuation allowances, except for adjustments related to the changes in balances of the related deferred tax assets. The Company will continue to monitor the realizability of deferred tax assets and the need for valuation allowances and will record adjustments in the periods in which facts support such adjustments.

The Tax Cuts and Jobs Act (“TCJA”) provides that foreign earnings generally can be repatriated to the U.S. without federal tax consequence. We have assessed the assertion that cumulative earnings by our foreign subsidiaries are indefinitely reinvested. We continue to permanently reinvest the earnings of our international subsidiaries and therefore we do not provide for U.S. income taxes or withholding taxes that could result from the distribution of those earnings to the U.S. parent. If any such earnings were ultimately distributed to the U.S. in the form of dividends or otherwise, or if the shares of our international subsidiaries were sold or transferred, we could be subject to additional U.S. federal and state income taxes. Due to the multiple avenues in which earnings can be repatriated, and because a large portion of these earnings are not liquid, it is not practical to estimate the amount of additional taxes that might be payable on these amounts of undistributed foreign income.

Our business is organized into ~~two~~3 segments: ~~NobelClad~~Arcadia, DynaEnergetics and ~~DynaEnergetics.~~NobelClad. In December 2021, DMC acquired a 60% controlling interest in Arcadia, a leading U.S. supplier of architectural building products, including storefronts and entrances, windows, curtain walls, doors and interior partitions for the commercial buildings market. Arcadia also supplies the luxury home market with highly engineered steel, aluminum and wood door and window systems. DynaEnergetics designs, manufactures and distributes products utilized by the global oil and gas industry principally to perforate oil and gas wells. NobelClad is a ~~global~~ leader in the production of explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints. ~~DynaEnergetics designs, manufactures and distributes products utilized by the global oil and gas industry principally for the perforation of oil and gas wells.~~

The accounting policies of all of the segments are the same as those described in the summary of significant accounting policies included herein and in our Annual Report on Form 10-K for the year ended December 31, 2016.

Our reportable segments are separately managed strategic business units that offer different products and services. Each segment’s products are marketed to different customer types and require different manufacturing processes and technologies.

Segment information is ~~presented for the three and nine months ended September 30, 2017 and 2016~~ as follows:


	Three months ended March 31,
	2022		2021
Net sales:
Arcadia	$	67,968	$	—
DynaEnergetics	48,887		38,172
NobelClad	21,861		17,486
Net sales	$	138,716	$	55,658


	Three months ended March 31,
	2022		2021
(Loss) income before income taxes:
Arcadia	$	(2,443)	$	—
DynaEnergetics	3,298		1,521
NobelClad	705		1,604
Segment operating income	1,560		3,125

Unallocated corporate expenses	(3,368)		(2,227)
Unallocated stock-based compensation*	(2,102)		(1,608)
Other (expense) income, net	(209)		394
Interest expense, net	(1,024)		(135)
Loss before income taxes	$	(5,143)	$	(451)

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Net sales:
NobelClad $ 16,841
$ 16,915
$ 54,145
$ 68,374
DynaEnergetics 35,320
19,638
84,169
50,028

Consolidated net sales $ 52,161
$ 36,553
$ 138,314
$ 118,402

Table of Contents


	Three months ended March 31,
	2022		2021
Depreciation and amortization:
Arcadia	$	13,349	$	—
DynaEnergetics	1,984		2,000
NobelClad	915		939
Segment depreciation and amortization	16,248		2,939
Corporate and other	87		83
Consolidated depreciation and amortization	$	16,335	$	3,022

* Stock-based compensation is not allocated to wholly owned segments DynaEnergetics and NobelClad. Stock-based compensation is allocated to the Arcadia segment as only 60% of such expense is attributable to the Company, whereas the remaining 40% is attributable to the redeemable noncontrolling interest holder.

The disaggregation of revenue earned from contracts with customers based on the geographic location of the customer is as follows. For Arcadia, net sales have been presented consistent with regional definitions as provided by the American Institute of Architects.

Arcadia


	Three Months Ended
	March 31, 2022
West	$	56,204
South	5,839
Northeast	3,217
Midwest	2,708








Total Arcadia	$	67,968

DynaEnergetics


	Three months ended March 31,
	2022		2021
United States	$	38,743	$	27,831
Canada	4,749		3,702
Egypt	1,004		1,053
Oman	928		781
Indonesia	342		571
India	230		393

Pakistan	100		509
Germany	99		314
Romania	50		322
Hong Kong	24		1,190
Rest of the world	2,618		1,506
Total DynaEnergetics	$	48,887	$	38,172

Table of Contents

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Operating income (loss)
NobelClad $ (17,030 ) $ 701
$ (14,313 ) $ 6,340
DynaEnergetics 6,867
(977 ) 8,908
(2,959 )

Segment operating income (loss) (10,163 ) (276 ) (5,405 ) 3,381

Unallocated corporate expenses (1,543 ) (1,614 ) (5,240 ) (5,057 )
Stock-based compensation (743 ) (552 ) (2,125 ) (1,673 )
Other income (expense), net (436 ) (157 ) (965 ) 178
Interest expense (367 ) (265 ) (1,203 ) (826 )
Interest income —
—
2
2

Loss before income taxes $ (13,252 ) $ (2,864 ) $ (14,936 ) $ (3,995 )
NobelClad


	Three months ended March 31,
	2022		2021
United States	$	9,155	$	8,347
China	2,357		239
India	2,325		649
Canada	1,438		1,024
United Arab Emirates	998		664
Germany	587		390
Netherlands	491		591
Italy	413		435
France	351		669
Australia	325		578
South Korea	271		886
Norway	234		283
Spain	199		413
Russia*	196		1,021
Taiwan	19		278

Rest of the world	2,502		1,019



Total NobelClad	$	21,861	$	17,486

*Future sales to Russia have been indefinitely suspended due to the ongoing conflict in Ukraine.

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Depreciation and amortization:
NobelClad $ 932
$ 1,006
$ 2,927
$ 3,000
DynaEnergetics 1,757
1,763
5,137
5,047

Segment depreciation and amortization $ 2,689
$ 2,769
$ 8,064
$ 8,047

During the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2022, no ~~one~~single customer accounted for ~~more~~greater than 10% of ~~total~~consolidated net sales. During the three months ended March 31, 2021, one customer in our DynaEnergetics segment accounted for approximately 10% of consolidated net sales. As of March 31, 2022 and December 31, 2021, no single customer accounted for greater than 10% of consolidated accounts receivable.

9.11. DERIVATIVE INSTRUMENTS

We are exposed to foreign currency exchange risk resulting from fluctuations in exchange rates, primarily the U.S. dollar to euro, the U.S. dollar to the Canadian dollar, ~~the euro to the Russian ruble,~~ and, to a lesser extent, other currencies, arising from ~~inter-company~~intercompany and ~~third party~~third-party transactions entered into by our subsidiaries that are denominated in currencies other than their functional currency. Changes in exchange rates with respect to these transactions result in unrealized gains or losses if such transactions are unsettled at the end of the reporting period or realized gains or losses at settlement of the transaction. ~~During the third quarter of 2017, we began using~~We use foreign currency forward contracts to offset foreign exchange rate fluctuations on foreign currency denominated asset and liability positions. None of these contracts are designated as accounting hedges, and all changes in the fair value of the forward contracts are recognized in ~~"Other~~“Other (expense) income, ~~(expense), net"~~net” within our Condensed Consolidated Statements of Operations.

We execute derivatives with a specialized foreign exchange brokerage ~~firm.~~firm as well as other large financial institutions. The primary credit risk inherent in derivative agreements ~~represents~~is the possibility that a loss may occur from the nonperformance of a counterparty to the ~~agreements, and thus we~~agreements. We perform a review of the credit risk of our counterparties at the inception of the contract and on an ongoing basis. We anticipate that our counterparties will be able to fully satisfy their obligations under the agreements but will take action if doubt arises regarding the ~~counterparties'~~counterparties’ ability to perform.

As of ~~September 30, 2017,~~March 31, 2022 and December 31, 2021, the notional amounts of the forward currency contracts the Company held ~~to purchase currencies~~ were ~~$19,297,~~$5,017 and $13,032, respectively. At March 31, 2022 and December 31, 2021, the ~~notional amounts of forward contracts the Company held to sell currencies were $2,910. The~~ fair values of outstanding foreign currency forward contracts were ~~not material at September 30, 2017.~~$0.

~~Table of Contents~~

The following table presents the location and amount of net ~~gains~~ (losses) income from hedging ~~activities for the three and nine months ended September 30, 2017 and 2016:~~activities:


		Three months ended March 31,
Derivative	Statements of Operations Location	2022		2021
Foreign currency contracts	Other (expense) income, net	$	(127)	$	55

Table of Contents

Gain/(Loss) Recognized in Income on Derivatives
Amount
Three months ended September 30, Nine months ended September 30,
Derivatives Income Statement Location 2017 2016 2017 2016
Foreign currency contracts Other income (expense), net $ (193 ) $ —
$ (193 ) $ —
Total gain (loss) $ (193 ) $ —
$ (193 ) $ —

~~10.~~12. COMMITMENTS AND CONTINGENCIES

Contingent Liabilities

The Company records an accrual for contingent liabilities when a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, that amount is accrued. When no amount within a range of loss appears to be a better estimate than any other amount, the lowest amount in the range is accrued.

~~Anti-dumping~~Legal Proceedings

From time to time, we may become involved in various lawsuits and ~~Countervailing Duties~~

~~In June 2015, U.S. Customs and Border Protection (“U.S. Customs”) sent us a Notice~~legal proceedings which arise in the ordinary course of ~~Action that proposed to classify certain of our imports as~~business. However, litigation is subject to ~~anti-dumping duties pursuant~~inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results except as set forth below:

Association of Apartment Owners of Poipu Point v. Arcadia, Inc., et. al.

At the closing of the Arcadia acquisition, Arcadia was a defendant in a products liability matter brought by the Association of Apartment Owners of Poipu Point relating to Arcadia products sold to a ~~2010 anti-dumping duty (“AD”) order on Oil Country Tubular Goods (“OCTG”) from China. A companion countervailing duty (“CVD”) order on the same product~~project in Hawaii. The case is in effect as well. The Notice of Action covered one entry of certain raw material steel mechanical tubing made in China and imported into the U.S. from Canada by our DynaEnergetics segment during 2015 for use in manufacturing perforating guns.

In July 2015, we sent a response to U.S. Customs outlining the reasons our mechanical tubing imports do not fall within the scope of the AD order on OCTG from China and should not be subject to anti-dumping duties. U.S. Customs proposed to take similar action with respect to other entries of this product and requested an approximately $1,100 cash deposit or bond for AD/CVD duties.

In August 2015, we posted the bond of approximately $1,100 to U.S. Customs. Subsequently, U.S. Customs declined to conclude on the Company's assertion that the mechanical tubing the Company has been importing is not within the scope of the AD order on OCTG from China. As a result, on September 25, 2015 the Company filed a request for a scope ruling with the U.S. Department of Commerce ("Commerce Department").

~~On February 15, 2016, the Company received the Commerce Department’s scope ruling, which determined certain imports, primarily used for gun carrier tubing, are included~~proceeding in the ~~scope~~First Circuit, State of Hawaii. This matter relates to a product liability claim brought against Arcadia and others alleging that Arcadia windows and sliding glass doors have suffered significant deterioration and corrosion in ocean facing applications at a timeshare project at Poipu Point in Kauai, Hawaii. On January 22, 2022, the ~~AD/CVD orders on OCTG from China and thus are subject to AD/CVD duties.~~

~~On March 11, 2016, the Company filed an appeal with the U.S. Court of International Trade (“CIT”)~~parties entered into a settlement agreement related to the ~~Commerce Department’s scope ruling. On February 7, 2017,~~case, which provided for the CIT remanded the scope ruling to the Commerce Department to reconsider its determination. The Commerce Department filed its remand determination with the CIT on June 7, 2017 continuing to find that the Company's imports at issue are within the scope of the AD/CVD orders on OCTG from China. This determination is subject to the CIT's review in the ongoing appeal, which is continuing.

On December 27, 2016, we received notice from U.S. Customs that it may pursue penalties against us related to the AD/CVD issue and demanding tender of alleged loss of AD/CVD duties in an amount of $3,049, which was covered by our reserve. We filed a response to the notice on February 6, 2017 asserting our position that any decision to pursue penalties would be premature in light of the Remand Order and that penalties would not be appropriate under the applicable legal standards. On February 16, 2017, we received notice that U.S. Customs was seeking penalties in the amount of $14,783. U.S. Customs also reasserted its demand for tender of alleged loss of AD/CVD duties in the amount of $3,049. We tendered $3,049 in AD amounts (“Tendered Amounts”) on March 6, 2017 into a suspense account pending ultimate resolution of the ~~AD/CVD case. We believe that this penalty assessment is premature~~case involving Arcadia in exchange for the payment of $4,300 by Arcadia. This amount was included within liabilities assumed at the date of acquisition. The settlement agreement was approved by the court on April 14, 2022, and ~~patently unreasonable in the face~~payment of the ~~ongoing CIT appeal and~~settlement amount is due by May 13, 2022. It is anticipated that ~~penalties are not appropriate under applicable legal standards. Further, even if penalties are found to be justified, we~~

~~Table of Contents~~

believe the amount of penalties asserted by U.S. Customs is unreasonable and subject to challenge on various grounds. We submitted a petition for relief and mitigation of penalties on May 17, 2017 asserting these and other points and seeking a stayapproximately $1,000 of the ~~penalty proceedings pending ultimate resolution~~settlement amount will be paid by Arcadia’s insurance carriers. This amount was included within assets acquired at the date of acquisition. The remaining $3,300 will be funded by Arcadia. DMC obtained a purchase price reduction under the Equity Purchase Agreement for its share of the ~~CIT appeal~~$3,300 relating to this matter.

Wage and Hour Matters

Felipe v. Arcadia, Inc. and One Stop Employment Services, Inc. (“One Stop”). This complaint was filed on October 22, 2021 in Los Angeles Superior Court and purports to allege a class action on behalf of all non-exempt California employees who worked on behalf of One Stop or Arcadia at any ~~further appeals. We are awaiting~~time during the four years preceding the date of the complaint. One Stop is a ~~response from U.S. Customs~~staffing agency which provides temporary workers, including to Arcadia. The complaint states claims under California’s labor laws and ~~U.S. Customs Headquarters on this petition.~~

~~For the nine months ended September 30, 2017, the Company recorded $84 of interest on~~under its ~~reserve for AD/CVD duties, bringing the total reserved amount related to AD/CVD duties as of September 30, 2017 to $3,585.~~general Unfair Business Practices Act, California Business & Professions Code section 17200. The ~~Tendered Amounts were applied to reduce the reserve. The Company will continue to incur legal defense costs and could~~plaintiff also be subject to additional interest and penalties. Accruals for the potential penalties discussed above are not reflected in our financial statements as of September 30, 2017 as we do not believe they are probable at this time.

~~Patent and Trademark Infringement~~

~~On September 22, 2015, GEODynamics, Inc., a US-based oil and gas perforating equipment manufacturer based in Fort Worth, TX,~~ filed a ~~patent~~letter with the California Labor and ~~trademark infringement~~Workforce Department under California’s Private Attorneys General Act (“PAGA”). In February, the claims were amended to remove class action against DynaEnergetics US, Inc., (“DynaEnergetics”), a wholly owned subsidiary of DMC, in the United States District Court for the Eastern District of Texas (“District Court”) regarding alleged infringement of US Patent No. 9,080,431 granted on July 14, 2015 (the “431 patent”) and ~~a related US trademark for REACTIVE, alleging that DynaEnergetics’ US sales of DPEX~~^TM ~~shaped charges infringe the ‘431 patent and the trademark. The 431 case went to trial in late March 2017, and on March 30, 2017, the jury found~~individual claims in favor of ~~DynaEnergetics~~arbitration on ~~all counts. A bench trial on related matters, including~~an individual, non-class basis, with the ~~trademark infringement action occurred on April 20, 2017,~~plaintiff also asserting representative claims under PAGA. The parties have agreed to stay the remaining PAGA claims pending the U.S. Supreme Court’s decision in Viking River Cruises, Inc. versus Moriana, which relates to the ability of plaintiffs to bring representative claims where a binding arbitration agreement exists. The Viking River case was argued in March, and the ~~Court ordered cancellation~~parties anticipate a ruling in the next few months. Plaintiff has not yet commenced arbitration of ~~GEODynamics' REACTIVE trademark.~~her individual claims.

~~On July 1, 2016, GEODynamics~~Mayorga v. Arcadia, Inc. This complaint was filed on November 15, 2021 in Los Angeles Superior Court. It purports to allege a ~~second patent infringement~~class action ~~against DynaEnergetics in District Court alleging infringement~~on behalf of ~~US Patent No. 8,544,563 (the “563 patent”), also based on DynaEnergetics’ US sales of DPEX shaped charges. DynaEnergetics denies validity and infringement~~all of the ~~563 patent~~Company’s non-exempt California employees who worked at the Company within four years before the date the complaint was filed. It asserts claims substantially similar to those asserted in the Felipe case but does not include One Stop as a defendant. As in Felipe, the plaintiff has amended his complaint to delete class action claims and ~~plans~~any individual non-PAGA claims. Accordingly, Plaintiff’s complaint is now limited, like the Felipe complaint, to PAGA collective action claims. As in Felipe, Plaintiff has agreed to stay those PAGA claims pending the U.S. Supreme Court’s decision in Viking River Cruises, Inc. versus Moriana. Plaintiff has however commenced arbitration on a solely individual basis of his wage and hour claims. The arbitral body has appointed an arbitrator to adjudicate those claims, but no hearing or other dates have yet been set.

Arcadia intends to vigorously defend against ~~this lawsuit. On September 20, 2016, DynaEnergetics filed~~both the Felipe and Mayorga actions. Due to the nature of these matters and inherent uncertainties, it is not possible to provide an ~~Inter Parties Review (IPR) against the 563 patent at the U.S. Patent Trial and Appeal Board (“PTAB”), requesting invalidation~~evaluation of the ~~563 patent. On March 17, 2017, DynaEnergetics' IPR request was instituted by~~ likelihood of an unfavorable outcome or an estimate of

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the ~~PTAB, and a decision is expected~~amount or range of potential loss, if any. Further, under the Equity Purchase Agreement, certain amounts have been placed in ~~early 2018. Trial on the 563 patent has been stayed~~escrow pending resolution of ~~the IPR.~~these matters.

On April 28, 2017, GEODynamics filed a third patent infringement action against DynaEnergetics in District Court alleging infringement of U.S. Patent No. 8,220,394 (the “394 patent”), based on DynaEnergetics' sales of its DPEX and HaloFrac® shaped charges. DynaEnergetics denies validity and infringement of the 394 patent and plans to vigorously defend against this lawsuit. On June 9, 2017, DynaEnergetics filed a motion to dismiss for improper venue, or in the alternative to change venue, and the District Court’s decision is pending. On August 28, 2017, DynaEnergetics filed an IPR against the 394 patent at the PTAB, requesting invalidation of the 394 patent.

On August 21, 2017, GEODynamics filed a patent infringement action against DynaEnergetics GmbH & Co. KG and DynaEnergetics Beteiligungs GmbH, both wholly owned subsidiaries of DMC (collectively, “DynaEnergetics EU”), in the Regional Court of Düsseldorf, Germany, alleging infringement of European patent EP 1 671 013 B1 granted on June 29, 2011, a patent related to the 394 patent (the “EP 013 patent”), based on the manufacturing, sale and marketing of DPEX shaped charges in Germany. DynaEnergetics EU denies validity and infringement of the EP 013 patent and plans to vigorously defend against this lawsuit.

We do not believe that the 563 patent, the 394 patent, the EP 013 patent or infringement claims based on the patents are valid, and we do not believe it is probable that we will incur a material loss on the 563 matter, the 394 matter or the EP 013 matter. However, if it is determined that the patents are valid and that DynaEnergetics or DynaEnergetics EU, as applicable, has infringed them, it is reasonably possible that our financial statements could be materially affected. We are not able to provide a reasonable estimate of the range of loss, and we have not accrued for any such losses. Such an evaluation includes, among other things, a determination of the total number of infringing sales in the United States or infringing products manufactured in Germany, as applicable, what a reasonable royalty, if any, might be under the circumstances; or, alternatively, the scope of damages and the relevant period for which damages would apply, if any.

~~11. RESTRUCTURING~~

~~There was no restructuring activity in the third quarter of 2017.~~ In the second quarter of 2017, DynaEnergetics announced the closure of its operations in Kazakhstan after legislative changes increased our costs to do business while the overall sales in Kazakhstan were not significant to our results. During the quarter, we recorded severance expense, wrote off remaining receivables,

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prepaid assets, and inventory, recorded an asset impairment to mark the fixed assets down to their salable value, and recorded to the statement of operations foreign exchange losses that had previously been recorded to the balance sheet through currency translation adjustments, due to the substantial liquidation of the entity. In the second quarter of 2016, DynaEnergetics reduced headcount ~~in Troisdorf, Germany and Austin, Texas.~~

Total restructuring and impairment charges incurred for these programs are as follows and are reported in the “restructuring expenses” line item in our Condensed Consolidated Statement of Operations:

Nine months ended September 30, 2017
Severance Asset Impairment Other Exit Costs Total
DynaEnergetics $ 20
$ 143
$ 295
$ 458

Total $ 20
$ 143
$ 295
$ 458

Three months ended September 30, 2016
Severance Contract Termination Costs Equipment Moving Costs Other Exit Costs Total
DynaEnergetics $ (41 ) $ 370
$ 1
$ 43
$ 373

Total $ (41 ) $ 370
$ 1
$ 43
$ 373

Nine months ended September 30, 2016
Severance Contract Termination Costs Equipment Moving Costs Other Exit Costs Total
DynaEnergetics $ 684
$ 386
$ 15
$ 43
$ 1,128
Corporate 74
—
—
—
74

Total $ 758
$ 386
$ 15
$ 43
$ 1,202

~~During the nine months ended September 30, 2017, the changes to the restructuring liability associated with these programs is summarized below:~~

December 31, 2016 Expense Payments and Other Adjustments September 30, 2017
Severance $ 62
$ 20
$ (62 ) $ 20
Contract termination costs 112
—
(102 ) 10

Total $ 174
$ 20
$ (164 ) $ 30

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our historical ~~consolidated financial statements~~Consolidated Financial Statements and notes, as well as the selected historical consolidated financial data that is included in our Annual Report filed on Form 10-K for the year ended December 31, ~~2016~~.2021.

Unless stated otherwise, all ~~currency amounts~~dollar figures are presented in thousands ~~of U.S. dollars~~ (000s).

Overview

General

DMC Global Inc.~~, formerly Dynamic Materials Corporation ("DMC"~~ (“DMC”)~~, operates two technical product~~ is a diversified holding company. Our innovative businesses provide differentiated products and ~~process business segments serving the energy,~~services to niche industrial and ~~infrastructure markets. These segments, NobelClad and DynaEnergetics, operate globally through an international network of manufacturing, distribution and sales facilities.~~

~~Our diversified segments each provide a suite of unique technical products to niche sectors of~~commercial markets around the global energy, industrial and infrastructure markets, and each has established a strong or leading position in the markets in which it participates. With an underlying focus on free-cash flow generation, ourworld. DMC’s objective is to sustain and grow the market share of our businesses through increased market penetration, development of new applications, and research and development of new and adjacent products that can be sold across our global network of sales and distribution facilities. We routinely explore acquisitions of related businesses that could strengthen or add to our existing product portfolios, or expand our geographic footprint and market presence. We also seek acquisition opportunities outside our current markets that would complement our existingidentify well-run businesses and ~~enable us~~strong management teams and support them with long-term capital and strategic, legal, technology and operating resources. DMC’s culture is to ~~build~~foster local innovation versus centralized control. We help 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. Today, DMC’s portfolio consists of Arcadia, DynaEnergetics, and NobelClad, which collectively address the building products, energy, industrial processing and transportation markets. Based in Broomfield, Colorado, DMC trades on Nasdaq under the symbol “BOOM.”

Arcadia

On December 23, 2021, DMC completed the acquisition of 60% of the membership interests in Arcadia Products, LLC, a ~~stronger~~Colorado limited liability company resulting from the conversion of Arcadia, Inc. (collectively, “Arcadia”). Arcadia is a leading U.S. supplier of architectural building products, which include exterior and ~~more diverse company.~~interior framing systems, windows, curtain walls, doors, and interior partitions for the commercial buildings market; and highly engineered windows and doors for the high-end residential real estate market.

Cost of products sold for Arcadia includes the cost of aluminum, paint, and other raw materials used to manufacture windows, curtain walls, doors, and interior partitions as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses.

DynaEnergetics

DynaEnergetics designs, manufactures and distributes products utilized by the global oil and gas industry principally to perforate oil and gas wells. These products are sold to oilfield service companies in the U.S., Europe, Canada, Africa, the Middle East, and Asia. DynaEnergetics also sells directly to end-users. The market for perforating products, which are used during the well completion process, generally corresponds with oil and gas exploration and production activity. Well completion operations are increasingly complex, which in turn has increased the demand for intrinsically-safe, reliable and technically advanced perforating systems.

Cost of products sold for DynaEnergetics includes the cost of metals, explosives and other raw materials used to manufacture shaped charges, detonating products and perforating guns as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses.

NobelClad

NobelClad ~~is a global leader in the production of~~produces explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints. While a ~~large~~significant portion of the demand for our clad metal products is driven by ~~new plant construction and large plant expansion projects,~~ maintenance and retrofit projects at existing chemical processing, petrochemical processing, oil refining, and aluminum smelting facilities, new plant construction and large plant expansion projects also account for a significant portion of total demand. These industries tend to be cyclical in nature and timing of new order inflow remains difficult to predict. We use backlog as a primary means to measure the immediate outlook for our NobelClad business. We define “backlog” at any given point in time as all firm, unfulfilled purchase orders and commitments at that time. Most firm purchase orders and commitments are realized, and we expect to fill most backlog orders within the following 12 months. ~~NobelClad's~~NobelClad’s backlog increased to ~~$31,994~~$44,373 at ~~September 30, 2017~~March 31, 2022 from ~~$31,634~~$41,181 at December 31, ~~2016.~~ 2021.

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Cost of products sold for NobelClad includes the cost of metals, explosive powders and ~~alloys~~other raw materials used to manufacture clad metal plates ~~the cost of explosives,~~as well as employee compensation and benefits, ~~freight,~~ outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses.

Employee Retention Credit

In the ~~third~~first quarter of ~~2017, activity~~2021, under provisions of legislation enacted in ~~NobelClad’s primary end markets slowed considerably. NobelClad experienced a significant decline in its small size core maintenance bookings within~~December 2020 the ~~oil~~Company became eligible for the Employee Retention Credit (“ERC”) under the Coronavirus Aid, Relief, and ~~gas industry. Additionally, certain large petrochemical projects previously forecasted to ship in the next twelve months were delayed, and uncertainty exists~~Economic Security Act, as ~~to the ultimate timing of booking and shipping these potential orders.~~amended (“CARES Act”). As a result ~~we determined that a potential indicator of goodwill impairment existed during the third quarter of 2017. We utilized an income approach (discounted cash flow analysis) to determine the fair value~~ of the ~~NobelClad reporting unit and concluded that our long-term forecasts were not materializing and needed~~new legislation, the Company was able to ~~be revised downward. We determined that the estimated fair value~~claim a refundable tax credit equal to 70% of the ~~NobelClad reporting unit was less than its carrying value due primarily~~qualified wages they paid to employees for portions of calendar year 2021. The ERC favorably impacted the ~~factors~~financial statement results of the Company for the three months ended March 31, 2021, as described ~~above and their related~~further in the “Consolidated Results of Operations” section below. The ERC had no impact on ~~expected future cash flows. As~~ the ~~carrying value~~financial statement results of the ~~NobelClad reporting unit exceeded~~Company for the ~~fair value by more than the book value of goodwill, we recorded an impairment charge of $17,584 to fully impair the goodwill related to this reporting unit as of September 30, 2017.~~three months ended March 31, 2022.

~~DynaEnergetics~~

DynaEnergetics designs, manufactures and distributes products utilized by the global oil and gas industry principally to perforate oil and gas wells. These products are sold to large, mid-sized, and small oilfield service companies in the U.S., Europe, Canada, South America, Africa, the Middle East, Russia, and Asia. DynaEnergetics also sells directly to end-users. The market for perforating products, which are used during the well completion process, generally corresponds with oil and gas exploration and production activity. Exploration activity over the last several years has led to increasingly complex well completion operations, which in turn, has increased the demand for high quality and technically advanced perforating products.

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Factors Affecting Results

~~During~~•Consolidated sales were $138,716 in the ~~three~~first quarter of 2022. Excluding the Arcadia acquisition, consolidated sales were $70,748, a decrease of 2% versus the fourth quarter of 2021 and ~~nine months ended September 30, 2017,~~an increase of 27% versus the ~~following factors most affected our financial performance:~~first quarter of 2021. International sales at DynaEnergetics declined in the first quarter of 2022 compared to the fourth quarter of 2021, which was partially offset by higher sales in NobelClad due to the timing of shipments out of backlog. The year-over-year increase in consolidated sales primarily was due to a recovery in energy demand, North American drilling and well completions activity and corresponding sales at DynaEnergetics as well as higher sales at NobelClad due to the timing of shipments out of backlog.

•Arcadia reported sales of $67,968 in the first quarter of 2022.

•DynaEnergetics sales of ~~$35,320~~$48,887 in the ~~third~~first quarter of ~~2017 increased 80%~~2022 decreased 4% compared with the ~~third~~fourth quarter of ~~2016 and~~2021 primarily due to a decline in international sales. Sales increased ~~32% sequentially versus~~28% compared with the ~~second~~first quarter of ~~2017. Despite~~2021 primarily due to higher North American drilling and well completions, and a ~~slowdown~~corresponding increase in ~~the growth~~unit sales of the U.S. onshore rig count, the unconventional well-completions sector remained very active during the third quarter of 2017, reflecting increased completion intensity and longer laterals. This fueled strong demand for DynaEnergetics’ intrinsically safeDS perforating ~~products, which include the DynaSelect detonator and the factory-assembled, performance-assured DynaStage system.~~systems.

•NobelClad’s sales of ~~$16,841~~$21,861 in the ~~third~~first quarter of ~~2017 were essentially flat~~2022 increased 3% compared to the ~~third~~fourth quarter of ~~2016~~2021 and ~~decreased 17% from~~25% compared with the ~~second~~first quarter of ~~2017. In 2017, weak capital spending in NobelClad's industrial infrastructure and energy markets has led to a downturn in both large-project orders and smaller repair and maintenance work.~~ 2021 reflecting increased shipments of projects out of backlog.

~~A non-cash goodwill impairment charge of $17,584 was recorded in third quarter of 2017 related to the NobelClad reporting unit.~~

•Consolidated gross profit ~~of 33%~~was 27% in the ~~third~~first quarter of ~~2017 improved from~~2022 versus 18% in the fourth quarter of 2021 and 23% in the ~~same period of 2016 and 30% in the second~~first quarter of ~~2017.~~2021. The ~~sequential~~ improvement compared to prior year primarily ~~related~~was due to the acquisition of Arcadia, which had a higher ~~proportion~~gross profit percentage than DMC’s other business units. The impact of higher sales volume on fixed manufacturing overhead expenses at DynaEnergetics also contributed to higher gross margin percentage. These favorable impacts were offset by project mix at NobelClad and a decline in high-margin international sales ~~relative to NobelClad sales, coupled with~~and higher ~~average~~material costs at DynaEnergetics. Additionally, 2021 gross profit was favorably impacted by the receipt of $846 ERC under the CARES Act.

•Consolidated selling, ~~prices and improved product mix in DynaEnergetics.~~

~~Consolidated~~ general and administrative expenses were ~~$6,535~~$27,808 in the ~~third~~first quarter of ~~2017~~2022 compared with ~~$5,685~~$13,172 in the ~~third~~first quarter of ~~2016.~~2021. Arcadia’s incremental selling, general and administrative expenses were $9,880. The year-over-year increase ~~primarily~~also was ~~due~~attributable to higher ~~patent~~salaries, benefits, and other-payroll related costs, litigation expenses related to patent enforcement actions against companies that we believe infringe on DynaEnergetics’ patents, and stock-based compensation expense. Additionally, SG&A in ~~DynaEnergetics and increased salaries and wages.~~ the first quarter of 2021 included receipt of $730 of ERC under the CARES Act.

~~Net debt (lines~~

•Cash of ~~credit less cash and cash equivalents) of $13,097~~$15,376 decreased ~~$2,215 sequentially~~$15,434 from ~~$15,312 at June 30, 2017 and increased $3,784 from $9,313~~$30,810 at December 31, ~~2016.~~2021. The decrease in cash primarily related to funding working capital at DynaEnergetics and Arcadia. Both businesses increased their investments in inventory due to rising raw material prices, longer-lead times and expected sales volume growth.

Outlook

We remain in a period of rising raw material and other input costs as well as continued supply chain disruptions and challenges. Each of our businesses have been and may continue to be impacted by rising raw material prices (particularly aluminum at Arcadia and steel at DynaEnergetics), increasing wages, the availability of labor, and supply chain disruptions such as increased lead times related to raw materials.

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In North America, although crude prices and well completion activity increased in the first quarter of 2022, supply chain disruptions including a shortage of sand, which is a key material used to complete unconventional wells, impacted DynaEnergetics’ end customers’ activity levels. These disruptions negatively impacted unit sales of DynaEnergetics’ fully integrated and factory-assembled DS perforating systems early in the quarter. Supply constraints began to ease at the end of the quarter which in combination with improving market conditions, led to a significant increase in ~~net debt from December 31, 2016 primarily was attributable~~unit sales of DS perforating systems.

As operators implement their 2022 budgets, we believe well completion activity and customer pricing will continue to borrowing to fund working capital requirements from sales growth in DynaEnergetics, the tender of $3,049 in anti-dumping duty and countervailing duty (AD/CVD) amounts to U.S. Customs pending ultimate resolution of the AD/CVD case and legal expenses in DynaEnergetics associated with the patent infringement litigation.

~~Business Outlook~~

To address the accelerating demand for its intrinsically-safe perforating products, DynaEnergetics recently announced plans to significantly expand the manufacturing and assembly capacity of its DynaSelect, DynaStage and shaped charge product lines. A new 40,000 square foot manufacturing center is scheduled to open during the third quarter of 2018 in Blum, Texas, where the business is expected to double its shaped charge production capacity. A second automated DynaSelect detonator line is planned to be installed next year at DynaEnergetics’ facility in Troisdorf Germany, and the business also plans to re-open its DynaStage assembly center in Mt. Braddock Pennsylvania inimprove. In the fourth quarter of ~~2017.~~2021, DynaEnergetics announced a 5% price increase. An additional price increase was implemented on April 1, 2022. These price increases have been implemented to offset higher labor and material costs and the expiration of the previously enacted CARES Act. DynaEnergetics is planning on additional price increases in the second half of 2022 as it seeks to return margins to levels that reflect the inherent value of its products. We believe DynaEnergetics is among the first to benefit from strengthening prices, as it offers a highly differentiated product line. Factory-assembled DS systems are delivered just in time to the wellsite, eliminating assembly operations and requiring fewer people on location.

We believe many of the pre-wired carriers in the market incorporate features that violate DynaEnergetics patents, and we are continuing to take aggressive legal action against the companies that make these products. DynaEnergetics has made significant investments in technologies and products that have improved the safety, efficiency and performance of its customers’ well completions, and have enhanced the effectiveness and profitability of the industry as a whole. Our patent strategy is designed to protect these investments and provide transparency so others can innovate without violating our intellectual property. These lawsuits have increased our general and administrative expenses, and we expect these costs to be ongoing throughout 2022.

Arcadia services both commercial building and high-end residential markets. Arcadia’s current geographic regions of focus include the western and southwestern regions of the United States. The ~~recent decline~~building products industry is forecasting both short-term and long-term growth, particularly in ~~NobelClad’s~~Arcadia’s core ~~repair~~geographic regions and ~~maintenance orders from the downstream energy industry has continued into the fourth quarter of 2017. In October 2017, NobelClad received a $7.4 million purchase order related~~end markets served. We are working to ~~a petrochemical project in Asia. The order~~design and install new paint and anodizing lines to increase manufacturing capacity, which we expect will be ~~reflected in NobelClad's fourth quarter backlog.~~operational by next year. The design and implementation of a new enterprise resource planning system has also begun which will improve operating efficiencies and enhance the buying experience for Arcadia’s commercial and residential customers.

Use of Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP (generally accepted accounting principles) measure that we believe provides an important indicator of our ongoing operating performance and that we use in operational and financial decision-making. We define EBITDA as net income or loss plus or minus net interest, 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 tables below). Adjusted EBITDA attributable to DMC Global Inc. excludes the adjusted EBITDA attributable to the 40% redeemable noncontrolling interest in Arcadia. For our business segments, Adjusted EBITDA is defined as operating income (loss) plus depreciation, amortization, allocated stock-based compensation, restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing operating performance. As a result, internal management reports used during monthly operating reviews feature Adjusted EBITDA and certain management incentive awards are based, in part, on the amount of Adjusted EBITDA achieved during the year.

~~Table~~Adjusted net income (loss) is defined as net income (loss) attributable to DMC Global Inc. stockholders 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 attributable to DMC Global Inc. stockholders (exclusive of ~~Contents~~adjustment of redeemable noncontrolling interest) plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance.

Adjusted net income (loss) and adjusted diluted earnings per share are presented because management believes these measures are useful to understand the effects of restructuring, impairment, and other non-recurring charges on DMC’s net income (loss) and diluted earnings per share, respectively.

Net ~~Debt~~debt is a non-GAAP measure we use to supplement information in our Condensed Consolidated Financial Statements. We define net debt as ~~lines of credit~~total debt less total cash and cash equivalents. In addition to conventional measures prepared

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in accordance with GAAP, the Company uses this information to evaluate its performance, and we believe that certain investors may do the same.

The presence of non-GAAP financial measures in this report is not intended to suggest that such measures be considered in isolation or as a substitute for, or as superior to, DMC’s GAAP information, and investors are cautioned that the non-GAAP financial measures are limited in their usefulness. 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.

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Consolidated Results of Operations

Three months ended ~~September 30, 2017~~March 31, 2022 compared with three months ended ~~September 30, 2016~~March 31, 2021


	Three months ended March 31,
	2022			2021			$ change		% change
Net sales	$	138,716		55,658			$	83,058	149	%
Gross profit	36,906			12,913			23,993		186	%
Gross profit percentage	26.6		%	23.2		%
COSTS AND EXPENSES:
General and administrative expenses	17,718			7,929			9,789		123	%
% of net sales	12.8		%	14.2		%
Selling and distribution expenses	10,090			5,243			4,847		92	%
% of net sales	7.3		%	9.4		%
Amortization of purchased intangible assets	12,976			324			12,652		3,905	%
% of net sales	9.4		%	0.6		%

Restructuring expenses and asset impairments	32			127			(95)		(75	%)


Operating loss	(3,910)			(710)			(3,200)		(451	%)
Other (expense) income, net	(209)			394			(603)		(153	%)
Interest expense, net	(1,024)			(135)			(889)		(659	%)
Loss before income taxes	(5,143)			(451)			(4,692)		(1,040	%)
Income tax benefit	(863)			(883)			20		(2	%)
Net (loss) income	(4,280)			432			(4,712)		(1,091	%)
Net (loss) income attributable to redeemable noncontrolling interest	(992)			—			(992)		n/a
Net (loss) income attributable to DMC Global Inc.	(3,288)			432			(3,720)		(861	%)
Adjusted EBITDA attributable to DMC Global Inc.	$	10,505		$	4,047		$	6,458	160	%

Three months ended September 30,
2017 2016 $ change % change
Net sales $ 52,161
$ 36,553
$ 15,608
43 %
Gross profit 17,162
8,457
8,705
103 %
Gross profit percentage 32.9 % 23.1 %
COSTS AND EXPENSES:
General and administrative expenses 6,535
5,685
850
15 %
% of net sales 12.5 % 15.6 %
Selling and distribution expenses 4,446
3,832
614
16 %
% of net sales 8.5 % 10.5 %
Amortization of purchased intangible assets 1,046
1,009
37
4 %
% of net sales 2.0 % 2.8 %
Restructuring expenses —
373
(373 ) (100 )%
Goodwill impairment charge 17,584
—
17,584
— %
Operating loss (12,449 ) (2,442 ) (10,007 ) (410 )%
Other expense, net (436 ) (157 ) (279 ) (178 )%
Interest income (expense), net (367 ) (265 ) (102 ) (38 )%
Loss before income taxes (13,252 ) (2,864 ) (10,388 ) (363 )%
Income tax provision (benefit) 812
272
540
199 %
Net loss (14,064 ) (3,136 ) (10,928 ) (348 )%
Adjusted EBITDA $ 8,567
$ 1,178
$ 7,389
627 %

Net sales ~~increased compared with 2016~~were $138,716. Excluding the Arcadia acquisition, net sales were $70,748, an increase of 27%, primarily due to ~~an 80%~~increased drilling and well completion activity in North America and a corresponding increase in ~~DynaEnergetics' net~~unit sales ~~from increased demand for its intrinsically-safe, addressable initiating systems, coupled with an active unconventional well-completion industry in North America.~~of DynaEnergetics’ DS perforating systems.

Gross profit percentage ~~increased from a~~ was 26.6%. Excluding the Arcadia acquisition, gross profit percentage was 23.5% versus 23.2% in the prior year. The improvement compared to prior year primarily was due to the impact of higher ~~proportion of DynaEnergetics’ net~~DynaEnergetics sales ~~relative to~~volume on fixed manufacturing overhead expenses. This increase was offset by less favorable project mix at NobelClad and ~~better price~~a decline in high-margin international sales and ~~product mix in~~higher material costs at DynaEnergetics. Additionally, 2021 gross profit was favorably impacted by the receipt of $846 ERC under the CARES Act.

General and administrative expenses increased $9,789 compared with ~~2016~~the first quarter of 2021. The Arcadia acquisition contributed $6,143 to the increase. The remainder of the increase primarily was due to higher outside ~~legal expenses~~services costs by $1,559, which was primarily related to patent infringement ~~defense costs,~~litigation in which DynaEnergetics is the plaintiff, higher salaries, benefits, and ~~wages, and higher~~other payroll-related costs by $300, which is net of the 2021 receipt of $335 ERC under the CARES Act, an increase in stock-based compensation ~~expense.~~by $533, and an increase from business-related travel by $465.

Selling and distribution expenses increased $4,847 compared with ~~2016~~the first quarter of 2021.The Arcadia acquisition contributed $3,737 to the increase. The remainder of the increase primarily was due to an increase from business-related travel by $227, higher ~~salaries and wages.~~

~~Restructuring expenses~~ ~~in 2016 included~~ ~~severance adjustments~~outside service costs by $207 primarily related to ~~headcount reductions announced in prior quarters, lease termination costs to exit administrative offices in Austin, Texas,~~enterprise resource planning and ~~costs related to relocation~~digital projects, and higher depreciation expense by $131.The first quarter of ~~perforating gun manufacturing in Germany~~.2021 included $395 of ERC under the CARES Act.

~~Goodwill impairment charge~~ ~~relates to fully impairing NobelClad's goodwill balance.~~

Operating loss ~~increased~~ was $3,910 in the first quarter of 2022 compared ~~with 2016 primarily~~to $710 in the same period last year. Excluding the Arcadia acquisition, operating loss was $1,467 due in part to a decrease in earnings at NobelClad. Operating income was also favorably impacted by receipt of $1,576 ERC under the ~~goodwill impairment charge, which partially was offset by improved earnings~~ CARES Act in ~~our DynaEnergetics segment.~~the first quarter of 2021.

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Other expense, net of$209in ~~2017~~the first quarter of 2022 primarily related to net unrealized and ~~2016 primarily relates to~~ realized ~~and unrealized~~ foreign currency exchange losses. ~~Our~~Currency gains and losses can arise when subsidiaries ~~frequently~~ enter into inter-company and ~~third party~~third-party transactions that are denominated in currencies other than their functional currency. Changes in exchange rates with respect to these transactions will result in unrealized gains or losses if unsettled at the end of the reporting period or realized gains or losses at settlement of the transaction. During the third quarter of 2017, we began usingcurrency, including foreign currency forward contracts ~~generally with maturities up to one month,~~used to offset foreign

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exchange rate fluctuations on certain foreign currency denominated asset and liability positions. None of these contracts are designated as accounting hedges, and all changes in the fair value of the forward contracts are recognized immediately in "Other income (expense), net" within our Condensed Consolidated Statements of Operations.

Interest ~~income (expense),~~expense, net of$1,024increased compared with ~~2016~~the first quarter of 2021 primarily due to ~~higher~~ interest ~~rates~~expense incurred on ~~a higher average outstanding line~~the $150,000 credit facility entered into in December 2021 in conjunction with the acquisition of ~~credit balance.~~Arcadia.

Income tax ~~provision~~ benefit of ~~$812~~$863 was recorded on loss before income taxes of $5,143. Our most significant operations are in the United States, which has a 21% statutory income tax rate, and Germany, which has a 33% statutory income tax rate. The mix of income or loss before income taxes between these jurisdictions is one of the primary drivers of the difference between our 21% statutory tax rate and our effective tax rate. The effective rate was impacted unfavorably by geographic mix of pretax income, state taxes, and certain compensation expenses that are not tax deductible in the U.S. The operating results of Arcadia that are attributable to the redeemable noncontrolling interest holder are not taxed at DMC, which resulted in a favorable impact to the effective tax rate. The effective rate was impacted unfavorably by discrete stock-based compensation shortfalls of $386. We recorded an income tax benefit of $883 on loss before income taxes of $451 for the ~~third~~first quarter of ~~2017 compared with a provision~~2021. The effective rate was impacted favorably by discrete stock-based compensation windfall benefits of ~~$272 for~~$720. The rate was also impacted unfavorably by geographic mix of pretax income, state taxes, and certain compensation expenses that are not tax deductible in the third quarter of 2016. We currently are unable to recognize tax benefits associated with losses incurred in certain jurisdictions due to valuation allowances recorded against deferred tax assets in those jurisdictions.U.S.

Net loss attributable to DMC Global Inc for the three months ended ~~September 30, 2017~~March 31, 2022 was ~~$14,064,~~$3,288, or ~~$0.98~~$0.47 per diluted share, compared ~~with $3,136,~~to net income of $432, or ~~$0.22~~$0.03 per diluted share, for the same period in ~~2016.~~2021.

Adjusted EBITDA increased compared with ~~2016~~the first quarter of 2021 primarily due to the ~~factors discussed above.~~acquisition of Arcadia. See ~~"Overview"~~“Overview” above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.


	Three months ended March 31,
	2022		2021
Net (loss) income	$	(4,280)	$	432
Interest expense, net	1,024		135
Income tax benefit	(863)		(883)
Depreciation	3,359		2,698
Amortization of purchased intangible assets	12,976		324
EBITDA	12,216		2,706

Restructuring expenses and asset impairments	32		127


Amortization of purchased inventory valuation step-up	258		—


Stock-based compensation	2,358		1,608
Other expense (income), net	209		(394)
Adjusted EBITDA attributable to redeemable noncontrolling interest	(4,568)		—
Adjusted EBITDA attributable to DMC Global Inc.	$	10,505	$	4,047

Three months ended September 30,
2017 2016
Net loss $ (14,064 ) $ (3,136 )
Interest expense 367
265
Interest income —
—
Provision for income taxes 812
272
Depreciation 1,643
1,760
Amortization of purchased intangible assets 1,046
1,009
EBITDA (10,196 ) 170
Restructuring expenses —
373
Goodwill impairment charge 17,584
—
Stock-based compensation 743
478
Other (income) expense, net 436
157
Adjusted EBITDA $ 8,567
$ 1,178

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~~Nine months ended September 30, 2017~~Adjusted Net Income and Adjusted Diluted Earnings per Share decreased compared with ~~nine months ended September 30, 2016~~

Nine months ended September 30,
2017 2016 $ change % change
Net sales $ 138,314
$ 118,402
$ 19,912
17 %
Gross profit 41,547
28,750
12,797
45 %
Gross profit percentage 30.0 % 24.3 %
COSTS AND EXPENSES:
General and administrative expenses 19,821
15,522
4,299
28 %
% of net sales 14.3 % 13.1 %
Selling and distribution expenses 13,420
12,352
1,068
9 %
% of net sales 9.7 % 10.4 %
Amortization of purchased intangible assets 3,034
3,023
11
— %
% of net sales 2.2 % 2.6 %
Restructuring expenses 458
1,202
(744 ) (62 )%
Goodwill impairment charge 17,584
—
17,584
— %
Operating loss (12,770 ) (3,349 ) (9,421 ) (281 )%
Other income (expense), net (965 ) 178
(1,143 ) (642 )%
Interest income (expense), net (1,201 ) (824 ) (377 ) (46 )%
Loss before income taxes (14,936 ) (3,995 ) (10,941 ) (274 )%
Income tax provision 1,956
321
1,635
509 %
Net loss (16,892 ) (4,316 ) (12,576 ) (291 )%
Adjusted EBITDA $ 15,461
$ 7,499
$ 7,962
106 %

~~Net sales~~ increased compared with 2016 due to a 68% increase in DynaEnergetics' net sales due to increased onshore unconventional drilling and completion activity in North America and strong demand for DynaEnergetics' intrinsically-safe, addressable initiating systems. This increase partially was offset by a 21% decline in NobelClad's net sales from a recent decline in core repair and maintenance orders from the ~~downstream energy industry and absence of large-project bookings in 2017. In the second~~first quarter of ~~2016 NobelClad shipped a large semiconductor-related project.~~

~~Gross profit percentage~~ ~~increased from higher average selling prices and improved product mix in DynaEnergetics, combined with better project mix in NobelClad.~~

~~General and administrative expenses~~ ~~increased compared with 2016 primarily due to higher outside legal expenses related to patent infringement defense costs as well as higher salaries and wages.~~

~~Selling and distribution expenses~~ ~~increased compared with 2016 principally due to an increase in salaries and benefits and higher outside services expenses.~~

~~Restructuring expenses~~ ~~for 2017~~ ~~related to the announced closure of DynaEnergetics operations~~ ~~in Kazakhstan. In 2016, restructuring expenses~~ ~~related to severance for headcount reductions at~~ ~~DynaEnergetics locations in~~ ~~Troisdorf, Germany and Austin, Texas, lease termination costs to exit administrative offices in Austin, Texas, costs related to relocation of perforating gun manufacturing in Germany, and~~ ~~the accelerated vesting of stock awards in connection with the elimination of certain positions.~~

~~Goodwill impairment charge~~ ~~relates to fully impairing NobelClad's goodwill balance.~~

~~Operating loss~~ ~~increased compared with 2016 due to the goodwill impairment charge. However, the charge was offset by higher sales volume and favorable product mix in DynaEnergetics.~~

~~Other income (expense), net~~ in 2017 primarily was made up of realized and unrealized foreign currency losses. In 2016, other income (expense), net principally consisted of realized and unrealized foreign currency gains. Our subsidiaries frequently enter into inter-company and third party transactions that are denominated in currencies other than their functional currency.

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Changes in exchange rates with respect to these transactions will result in unrealized gains or losses if unsettled at the end of the reporting period or realized gains or losses at settlement of the transaction. During the third quarter of 2017, we began using foreign currency forward contracts, generally with maturities of one month, to offset foreign exchange rate fluctuations on certain foreign currency denominated asset and liability positions. None of these contracts are designated as accounting hedges, and all changes in the fair value of the forward contracts are recognized immediately in "Other income (expense), net" within our Condensed Consolidated Statements of Operations.

~~Interest income (expense), net~~ increased compared with 2016 primarily due to expensing $261 of deferred debt issuance costs in conjunction with amending our credit facility in March 2017 combined with higher interest rates on a higher average outstanding line of credit balance.

~~Income tax provision~~ of $1,956 for the nine months ended September 30, 2017 compared with $321 for the same period of 2016. We currently are unable to recognize tax benefits associated with losses incurred in certain jurisdictions due to valuation allowances recorded against deferred tax assets in those jurisdictions.

~~Net loss~~ ~~for the nine months ended September 30, 2017 was $16,892, or $1.18 per diluted share, compared to $4,316, or $0.31 per diluted share, for the same period in 2016.~~

~~Adjusted EBITDA~~ ~~increased compared with 2016~~2021 primarily due to the factors discussed above. See "Overview" above for the explanation of the use of ~~Adjusted EBITDA.~~non-GAAP measures. The following is a reconciliation of the most directly comparable GAAP ~~measure~~measures to Adjusted ~~EBITDA.~~Net Income and Adjusted Diluted Earnings Per Share.


	Three months ended March 31, 2022
	Amount		Per Share (1)
Net loss attributable to DMC Global Inc.	$	(3,288)	$	(0.17)

Amortization of acquisition-related inventory valuation step-up, net of tax	133		0.01

NobelClad restructuring expenses and asset impairments, net of tax	22		—




As adjusted	$	(3,133)	$	(0.16)

(1) Calculated using diluted weighted average shares outstanding of 19,301,126

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Nine months ended September 30,
2017 2016
Net loss $ (16,892 ) $ (4,316 )
Interest expense 1,203
826
Interest income (2 ) (2 )
Provision for income taxes 1,956
321
Depreciation 5,030
5,024
Amortization of purchased intangible assets 3,034
3,023
EBITDA (5,671 ) 4,876
Restructuring expenses 458
1,202
Goodwill impairment charge 17,584
—
Stock-based compensation 2,125
1,599
Other (income) expense, net 965
(178 )
Adjusted EBITDA $ 15,461
$ 7,499


	Three months ended March 31, 2021
	Amount		Per Share (1)
Net income attributable to DMC Global Inc.	$	432	$	0.03


NobelClad restructuring expenses and asset impairments, net of tax	127		0.01




As adjusted	$	559	$	0.04

(1) Calculated using diluted weighted average shares outstanding of 15,463,923

Business Segment Financial Information

We primarily evaluate performance and allocate resources based on segment revenues, operating income (loss) and adjusted EBITDA as well as projected future performance. Segment operating income (loss) is defined as revenues less expenses identifiable to the segment. Segment operating income will reconcile to consolidated income before income taxes by deducting unallocated corporate expenses, including stock-based compensation, net other expense, and net interest ~~expense,~~expense.

Arcadia

As more fully described in the 2021 Form 10-K, a 60% controlling interest in Arcadia was acquired in December 2021. A summary of results of operations for Arcadia for the three months ended March 31, 2022 is as follows (in thousands):

Three months ended March 31, 2022


	Three months ended March 31, 2022
Net sales	$	67,968
Gross profit	20,245
Gross profit percentage	29.8		%
COSTS AND EXPENSES:
General and administrative expenses	6,143
Selling and distribution expenses	3,737
Amortization of purchased intangible assets	12,808


Operating loss	(2,443)
Adjusted EBITDA	11,420
Less: adjusted EBITDA attributable to redeemable noncontrolling interest	(4,568)
Adjusted EBITDA attributable to DMC Global Inc.	$	6,852

Arcadia’s profitability is dependent, in large part, on the spread between its input costs, for which the primary raw material is aluminum metal, and ~~income tax provision.~~the subsequent value received from selling its products, which include exterior and interior framing systems, curtain walls, windows, doors, and interior partitions for the commercial buildings market; and highly engineered windows and doors for the high-end residential market.

During the three months ended March 31, 2022, both net sales and cost of products sold increased in comparison to pre-acquisition periods, largely driven by higher customer pricing in response to higher base aluminum metal prices and increases in other input costs. Cost of products sold was also negatively impacted by the partial amortization of the inventory step-up recorded in purchase accounting. Gross profit dollars generated were consistent with pre-acquisition periods; however, the related gross profit percentage decreased as increased input costs outpaced the increase in net sales from higher average selling prices. General and administrative and selling and distribution expenses were higher in comparison to pre-acquisition periods. Higher general and administrative expenses were driven primarily by non-recurring integration costs, including outside services costs such as professional services. Higher sales and distribution expenses were driven primarily by increases in employee compensation and resumption of business-related travel. Amortization of purchased intangible assets related to identifiable intangible assets recorded at the date of acquisition.

Adjusted EBITDA was primarily driven by the factors discussed above. See “Overview” above for the explanation of the use of non-GAAP measures. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted

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EBITDA.


	Three months ended March 31, 2022
Operating loss	$	(2,443)
Adjustments:
Amortization of acquisition-related inventory valuation step-up	258

Depreciation	541
Amortization of purchased intangible assets	12,808
Stock-based compensation	256
Adjusted EBITDA	11,420
Less: adjusted EBITDA attributable to redeemable noncontrolling interest	(4,568)
Adjusted EBITDA attributable to DMC Global Inc.	$	6,852

~~NobelClad~~

DynaEnergetics

Three months ended ~~September 30, 2017~~March 31, 2022 compared with three months ended ~~September 30, 2016~~March 31, 2021


	Three months ended March 31,
	2022			2021			$ change		% change
Net sales	$	48,887		$	38,172		$	10,715	28	%
Gross profit	12,608			8,434			4,174		49	%
Gross profit percentage	25.8		%	22.1		%
COSTS AND EXPENSES:
General and administrative expenses	5,322			3,574			1,748		49	%
Selling and distribution expenses	3,903			3,140			763		24	%
Amortization of purchased intangible assets	85			199			(114)		(57	%)


Operating income	3,298			1,521			1,777		117	%
Adjusted EBITDA	$	5,282		$	3,521		$	1,761	50	%

Three months ended September 30,
2017 2016 $ change % change
Net sales $ 16,841
$ 16,915
$ (74 ) — %
Gross profit 3,560
3,112
448
14 %
Gross profit percentage 21.1 % 18.4 %
COSTS AND EXPENSES:
General and administrative expenses 1,210
907
303
33 %
Selling and distribution expenses 1,696
1,409
287
20 %
Amortization of purchased intangible assets 100
95
5
5 %
Goodwill impairment charge 17,584
—
17,584
— %
Operating income (loss) (17,030 ) 701
(17,731 ) (2,529 )%
Adjusted EBITDA $ 1,486
$ 1,707
$ (221 ) (13 )%

Net sales were ~~flat compared with 2016.~~$10,715 higher than the first quarter of 2021 due to a recovery in energy demand, which led to increased drilling and well completion activity in North America and increased sales of DynaEnergetics’ DS perforating systems. The year-over-year increase in net sales from North American activity was partially offset by lower international sales.

Gross profit percentageincreased to 25.8%compared with ~~2016~~the first quarter of 2021 primarily due to ~~better margins~~the impact of higher sales volume on fixed manufacturing overhead expenses. The first quarter of 2021 was favorably impacted by the ~~mix~~receipt of ~~projects in~~$437 ERC under the ~~current year.~~CARES Act.

General and administrative expenses increased $1,748 compared with the first quarter of 2021 primarily due to an increase in outside services costs by $1,285 mostly related to patent infringement litigation in which DynaEnergetics is the plaintiff, as well as increases in salaries, benefits, other-payroll related costs by $115, which is net of the 2021 receipt of $121 ERC under the CARES Act.

Selling and distribution expenses increased $763 compared with the first quarter of 2021 primarily due to increases in outside service costs by $168 and increases in depreciation expense by $127. The first quarter of 2021 was favorably impacted by the receipt of $254 in ERC under the CARES Act.

Operating income increased $1,777compared withthe first quarter of 2021 primarily due to the impact of higher sales.

Adjusted EBITDAincreased compared with ~~2016~~the first quarter of 2021 due to the factors discussed above. See “Overview” above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable

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GAAP measure to Adjusted EBITDA.


	Three months ended March 31,
	2022		2021
Operating income	$	3,298	$	1,521
Adjustments:


Depreciation	1,899		1,801
Amortization of purchased intangible assets	85		199
Adjusted EBITDA	$	5,282	$	3,521

NobelClad

Three months ended March 31, 2022 compared with three months ended March 31, 2021


	Three months ended March 31,
	2022			2021			$ change		% change
Net sales	$	21,861		$	17,486		$	4,375	25	%
Gross profit	4,181			4,617			(436)		(9	%)
Gross profit percentage	19.1		%	26.4		%
COSTS AND EXPENSES:
General and administrative expenses	1,037			813			224		28	%
Selling and distribution expenses	2,324			1,948			376		19	%
Amortization of purchased intangible assets	83			125			(42)		(34	%)
Restructuring expenses and asset impairments	32			127			(95)		(75	%)

Operating income	705			1,604			(899)		(56	%)
Adjusted EBITDA	$	1,652		$	2,670		$	(1,018)	(38	%)

Net sales increased $4,375 compared with the first quarter of 2021 primarily due to the timing of shipment of projects out of backlog.

Gross profit percentage of 19.1% decreased compared with the first quarter of 2021 as a less favorable project mix more than offset the favorable impact of higher sales volume on fixed manufacturing overhead expenses. The first quarter of 2021 was also favorably impacted by the receipt of $409 ERC under the CARES Act.

General and administrative expenses increased $224 compared with the first quarter of 2021 primarily due to higher ~~salaries and employee benefits.~~outside services costs by $118. The first quarter of 2021 was favorably impacted by the receipt of $28 ERC under the CARES Act.

Selling and distribution expenses increased $376 compared with ~~2016 primarily from higher salaries and benefits due to increased investment in business growth resources.~~

~~Goodwill impairment charge~~ ~~relates to fully impairing NobelClad's goodwill balance.~~

~~Operating loss~~ ~~was $17,030~~the first quarter of 2021 primarily due to increases in salaries, benefits, and other-payroll related costs by $96, which is net of the ~~goodwill impairment charge.~~2021 receipt of $141 ERC under the CARES Act, and higher costs from the resumption of business travel by $126.

~~Adjusted EBITDA~~ ~~declined~~Operating income decreased $899 compared with ~~2016~~the first quarter of 2021 as lower gross profit percentage and higher general and administrative and selling and distribution expenses more than offset higher sales volumes.

Adjusted EBITDA decreased compared with the first quarter of 2021 primarily due to the factors discussed above. See ~~"Overview"~~“Overview” above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.

Three months ended September 30,
2017 2016
Operating income (loss) $ (17,030 ) $ 701
Adjustments:
Goodwill impairment charge 17,584
—
Depreciation 832
911
Amortization of purchased intangibles 100
95
Adjusted EBITDA $ 1,486
$ 1,707

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	Three months ended March 31,
	2022		2021
Operating income	$	705	$	1,604
Adjustments:
Restructuring expenses and asset impairments	32		127

Depreciation	832		814
Amortization of purchased intangibles	83		125
Adjusted EBITDA	$	1,652	$	2,670

~~Nine months ended September 30, 2017 compared with nine months ended September 30, 2016~~

Nine months ended September 30,
2017 2016 $ change % change
Net sales $ 54,145
$ 68,374
$ (14,229 ) (21 )%
Gross profit 11,885
13,728
(1,843 ) (13 )%
Gross profit percentage 22.0 % 20.1 %
COSTS AND EXPENSES:
General and administrative expenses 3,206
2,754
452
16 %
Selling and distribution expenses 5,123
4,348
775
18 %
Amortization of purchased intangible assets 285
286
(1 ) — %
Goodwill impairment charge 17,584
—
17,584
— %
Operating income (loss) (14,313 ) 6,340
(20,653 ) (326 )%
Adjusted EBITDA $ 6,198
$ 9,340
$ (3,142 ) (34 )%

~~Net sales~~ decreased compared with 2016 due to a recent decline in core repair and maintenance orders from the downstream energy industry and absence of large-project bookings in 2017. Additionally, during the second quarter of 2016, NobelClad shipped a large semiconductor-related project.

~~Gross profit percentage~~ ~~increased compared with 2016 primarily due to better margins on the mix of projects in the current year.~~

~~General and administrative expenses~~ ~~increased compared with 2016 primarily due to higher salaries and employee benefits.~~

~~Selling and distribution expenses~~ ~~increased compared with 2016 primarily from higher salaries and benefits due to increased investment in business growth resources and higher outside services expenses.~~

~~Goodwill impairment charge~~ ~~relates to fully impairing NobelClad's goodwill balance.~~

~~Operating loss~~ ~~was$14,313primarily due to the goodwill impairment charge combined with lower project volume and higher general and administrative as well as selling and distribution expenses.~~

~~Adjusted EBITDA~~ declined compared with 2016 primarily due to the factors discussed above. See "Overview" above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.

Nine months ended September 30,
2017 2016
Operating income (loss) $ (14,313 ) $ 6,340
Adjustments:
Goodwill impairment charge 17,584
—
Depreciation 2,642
2,714
Amortization of purchased intangibles 285
286
Adjusted EBITDA $ 6,198
$ 9,340

~~Table of Contents~~

~~DynaEnergetics~~

~~Three months ended September 30, 2017 compared with three months ended September 30, 2016~~

Three months ended September 30,
2017 2016 $ change % change
Net sales $ 35,320
$ 19,638
$ 15,682
80 %
Gross profit 13,668
5,399
8,269
153 %
Gross profit percentage 38.7 % 27.5 %
COSTS AND EXPENSES:
General and administrative expenses 3,186
2,739
447
16 %
Selling and distribution expenses 2,669
2,350
319
14 %
Amortization of purchased intangible assets 946
914
32
4 %
Restructuring expenses —
373
(373 ) (100 )%
Operating income (loss) 6,867
(977 ) 7,844
803 %
Adjusted EBITDA $ 8,624
$ 1,159
$ 7,465
644 %

~~Net sales~~ ~~were higher than in 2016 primarily due to increased demand for its intrinsically-safe, addressable initiating systems, coupled with an active unconventional well-completion industry in North America.~~

~~Gross profit percentage~~ ~~increased compared with 2016 due to higher average selling prices, improved product mix and the favorable impact of higher volume on fixed overhead expenses.~~

~~Selling and distribution expenses~~ ~~increased compared with 2016 primarily due to higher salaries and employee benefits.~~

~~Restructuring expenses~~ ~~in 2016 included~~ severance adjustments related to headcount reductions announced in prior quarters, lease termination costs to exit administrative offices in Austin, Texas, and relocation of perforating gun manufacturing in Germany.

~~Operating income~~ ~~was$6,867 due to higher unit volume, favorable product mix and higher average selling prices, partially offset by increased general and administrative expenses and selling and distribution expenses.~~

~~Adjusted EBITDA~~ increased compared with 2016 due to the factors discussed above. See "Overview" above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.

Three months ended September 30,
2017 2016
Operating income (loss) $ 6,867
$ (977 )
Adjustments:
Restructuring expenses —
373
Depreciation 811
849
Amortization of purchased intangibles 946
914
Adjusted EBITDA $ 8,624
$ 1,159

~~Table of Contents~~

~~Nine months ended September 30, 2017 compared with nine months ended September 30, 2016~~

Nine months ended September 30,
2017 2016 $ change % change
Net sales $ 84,169
$ 50,028
$ 34,141
68 %
Gross profit 29,863
15,187
14,676
97 %
Gross profit percentage 35.5 % 30.4 %
COSTS AND EXPENSES:
General and administrative expenses 9,713
6,510
3,203
49 %
Selling and distribution expenses 8,035
7,771
264
3 %
Amortization of purchased intangible assets 2,749
2,737
12
— %
Restructuring expenses 458
1,128
(670 ) (59 )%
Operating income (loss) 8,908
(2,959 ) 11,867
401 %
Adjusted EBITDA $ 14,503
$ 3,216
$ 11,287
351 %

~~Net sales~~ were higher than in 2016 primarily due to increased onshore unconventional drilling and completion activity in North America and strong demand for DynaEnergetics' intrinsically-safe, addressable initiating systems.

~~Gross profit percentage~~ ~~increased compared with 2016 due to higher average selling prices, improved product mix and the favorable impact of higher volume on fixed overhead expenses.~~

~~General and administrative expenses~~ ~~increased compared with 2016 primarily due to higher outside legal expenses related to patent infringement defense costs.~~

~~Restructuring expenses~~ ~~in 2017 related to the announced closure of operations~~ ~~in Kazakhstan. In 2016, restructuring~~ ~~related to severance for headcount reductions in Troisdorf, Germany and Austin, Texas and~~ ~~the accelerated vesting of stock awards in connection with the elimination of certain positions.~~

~~Operating income~~ ~~was$8,908due to higher unit volume, favorable product mix and higher average selling prices, partially offset by increased general and administrative expenses.~~

Nine months ended September 30,
2017 2016
Operating income (loss) $ 8,908
$ (2,959 )
Adjustments:
Restructuring expenses 458
1,128
Depreciation 2,388
2,310
Amortization of purchased intangibles 2,749
2,737
Adjusted EBITDA $ 14,503
$ 3,216

Liquidity and Capital Resources

We have historically financed our operations from a combination of internally generated cash flow, revolving credit borrowings, and various long-term debt arrangements. Our net debt position was $128,334 at March 31, 2022 compared to $116,615 at December 31, 2021. Net debt increased during 2022 to fund a build-up of working capital, which included higher inventory levels due to increased prices and lead times for several key raw materials at DynaEnergetics and Arcadia, and an expected increase in sales activity at DynaEnergetics in 2022. We have a fully undrawn and available $50,000 revolving credit facility at March 31, 2022. We may in the future access at-the-market offering programs or otherwise access the capital markets, but there can be no assurance that any future capital will be available on acceptable terms or at all.

We believe that cash and cash equivalents on hand, cash flow from operations, ~~and~~ funds available under our current credit facilities and any future replacement thereof will be sufficient to fund the working capital, debt ~~interest~~ service, ~~dividend payments,~~ and other capital expenditure requirements of our current business operations for the foreseeable future.

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We may also execute capital markets transactions to raise additional funds if we believe market conditions are favorable. Nevertheless, our ability to generate sufficient cash flows from operations will depend upon our success in executing our strategies. If we are unable to (i) realize sales from our backlog; (ii) secure new customer orders; (iii) ~~sell~~continue selling products at ~~attractive~~profitable margins; and (iv) continue to implement cost-effective internal processes, our ability to meet cash requirements through operating activities could be impacted. ~~Also, continued heightened litigation costs could negatively impact our ability to meet future cash requirements.~~ Furthermore, any restriction on the availability of borrowings under our credit facilities could ~~also~~ negatively affect our ability to meet future cash requirements. ~~In March 2017, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission, which has been declared effective, and on which we registered for sale up~~We will continue to ~~$150 million of certain of our securities from time to time and on terms that we may determine in the future. Our ability to access this capital may be limited by~~monitor financial market conditions, atincluding the ~~time of any future potential offering. There can be no assurance that any such~~related impact on credit availability and capital ~~will be available on acceptable terms or at all.~~markets.

Debt facilities

~~As of~~On December ~~31, 2016,~~23, 2021, in connection with the Arcadia acquisition, we ~~had~~entered into a ~~$75,000~~five-year $200,000 syndicated credit agreement (“credit facility”) ~~that allowed~~which included a $150,000 Term Loan, which is amortizable at 10% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in 2026, and allows for revolving loans of ~~$65,000 in U.S. dollars and $10,000 in alternative currencies as well as a $25,000~~up to $50,000. The credit facility has an accordion feature to increase the commitments ~~in any of the loan classes subject to approval~~ by ~~applicable lenders. The credit facility matures on February 23, 2020.~~

~~On March 6, 2017, we entered into a third amendment of our credit facility which, among other changes, reduced the amount of borrowings available~~$100,000 under the credit facility, increased the maximum debt-to-EBITDA leverage ratio for the first, second, and third quarters of 2017, and also waived the applicability of the minimum debt service coverage ratio for the first, second, and third quarters of 2017, and addedrevolving loan class and/or by adding a minimum EBITDA covenant for those same periods and is inapplicable thereafter. The minimum EBTIDA coverage covenant requires Consolidated Pro Forma EBITDA (as defined in the agreement) of at least $6,500 for the September 30, 2017 reporting period. The maturity of the credit facility did not change with the amendment.

After the amendment, our credit facility allows for borrowings up to $35,000, consisting of revolving loans of $30,000 in U.S. dollars and $5,000 in alternate currencies as well as a $25,000 accordion feature to increase the commitments in any of theterm loan ~~classes~~ subject to approval by applicable lenders. We ~~also maintain a line of credit with a German bank for certain DynaEnergetics operations. This line of credit provides a borrowing capacity of €4,000.~~

As of September 30, 2017, U.S. dollar revolving loans of $22,250 were outstanding under our credit facility. While we had approximately $12,750 of available revolving credit loan capacity as of September 30, 2017 under our various credit facilities, future borrowings are subject to compliance with financial covenants that could significantly limit such availability.

There are currently two significant financial covenants under our credit facility, a debt-to-EBITDA leverage ratio ("leverage ratio") and a minimum EBITDA covenant ratio. The leverage ratio is defined inentered into the credit facility with a syndicate of four banks, with KeyBank, N.A. acting as ~~amended, for any trailing four quarter period,~~administrative agent. The credit facility is secured by the assets of DMC including accounts receivable, inventory, and fixed assets, including Arcadia and its subsidiary, as well as guarantees and share pledges by DMC and its subsidiaries.

Borrowings under the ~~ratio of Consolidated Funded Indebtedness (as defined~~$150,000 Term Loan and $50,000 revolving loan limit can be in the ~~agreement)~~form of Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or one month Adjusted Term SOFR loans. Additionally, U.S. dollar borrowings on the ~~last day~~revolving loan can be in the form of ~~such period~~Base Rate loans (Base Rate borrowings are based on the greater of the administrative agent’s Prime rate, an adjusted Federal Funds rate or an adjusted SOFR rate). SOFR loans bear interest at the applicable SOFR rate plus an applicable margin (varying from 1.50% to ~~Consolidated Pro Forma EBITDA for such period. For~~3.00%). Base Rate loans bear interest at the ~~September 30, 2017 reporting period, the maximum leverage ratio permitted by our 2015 syndicated~~defined Base rate plus an applicable margin (varying from 0.50% to 2.00%).

The credit facility as amended, was 3.50 to 1.0. The actual leverage ratio as of September 30, 2017, calculated in accordance with the credit facility, as amended, was 1.40 to 1.0. The minimum EBTIDA coverage covenant requires Consolidated Pro Forma EBITDA of at least $6,500 for the September 30, 2017 reporting period. The actual Consolidated Pro Forma EBITDA for the September 30, 2017 period, calculated in accordance with the credit facility, as amended, was $16,982.

~~Our credit facility also~~ includes various ~~other~~ covenants and restrictions, certain of which relate to the payment of dividends or other distributions to ~~stockholders,~~stockholders; redemption of capital ~~stock,~~stock; incurrence of additional ~~indebtedness,~~indebtedness; mortgaging, ~~and~~ pledging or disposition of major ~~assets.~~ assets; and maintenance of specified ratios.

The leverage ratio is defined in the credit facility as the ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of any trailing four quarter period to Consolidated Pro Forma EBITDA (as defined in the credit facility) for such period. Consolidated Pro Forma EBITDA equals Adjusted EBITDA as calculated within the Consolidated Results of Operations section plus certain predefined add-backs, which include up to $5,000 for one-time integration expenses

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incurred in the twelve-month period following the closing date of the Arcadia acquisition. The maximum leverage ratio permitted by our credit facility is 3.5 to 1.0 through the quarter ended March 31, 2022, 3.25 to 1.0 from the quarter ended June 30, 2022 through the quarter ended March 31, 2023, and 3.0 to 1.0 from the quarter ended June 30, 2023 and thereafter. The actual leverage ratio as of March 31, 2022, calculated in accordance with the credit facility, as amended, was 2.9 to 1.0.

As of ~~September 30, 2017, we~~March 31, 2022, U.S. dollar revolving loans of zero and borrowings of $146,250 on the Term Loan were outstanding under our credit facility and our available borrowing capacity was $50,000.

We also maintain a line of credit with a German bank for our NobelClad and DynaEnergetics operations in ~~compliance with all financial covenants and other provisions~~Europe. This line of ~~our debt agreements.~~credit provides a borrowing capacity of €7,000.

Other contractual obligations and commitments

Our ~~long-term~~ debt balance ~~increased~~decreased to ~~$22,250~~$143,710 at ~~September 30, 2017~~March 31, 2022 from ~~$16,250~~$147,425 at December 31, ~~2016.~~2021. Our other contractual obligations and commitments have not materially changed since December 31, ~~2016.~~2021.

Cash flows ~~from~~(used in) provided by operating activities

~~Table of Contents~~

Net cash used in operating activities was $4,584 for the three months ended March 31, 2022 compared with net cash provided by operating activities of $2,176 in the same period last year. The decrease primarily was ~~$518~~due to an increased use of cash for ~~the nine months ended September 30, 2017 and the decline was primarily~~working capital, which included higher inventory levels due to increased ~~working capital~~prices and ~~tendering $3,049~~lead times for several key raw materials at DynaEnergetics and Arcadia, and an expected increase in ~~AD/CVD amounts to U.S. Customs~~sales activity at DynaEnergetics in ~~March 2017 pending ultimate resolution of the AD/CVD case.~~

Net cash provided by operating activities was $17,839 for the nine months ended September 30, 2016. Net working capital improved $11,712 in the nine months ended September 30, 2016 as reduced accounts receivable and inventory outweighed2022. The increases in inventories were partially offset by higher accounts payable and contract liabilities.

Cash flows ~~from~~(used in) provided by investing activities

Net cash flows used in investing activities for the ~~nine~~three months ended ~~September 30, 2017 were $3,297 and were primarily due~~March 31, 2022 of $1,536 related to the acquisitions of property, plant and equipment. Net cash flows ~~used in~~provided by investing activities for the ~~nine~~three months ended ~~September 30, 2016 totaled $4,008~~March 31, 2021 were $3,715 and ~~were~~ primarily ~~due~~related to the maturity of marketable securities of $4,799 partially offset by the acquisitions of property, plant and equipment.

Cash flows ~~from financing activities~~

~~Net cash flows~~(used in) provided by financing activities for the nine months ended September 30, 2017 totaled $4,805, which primarily included net borrowings on bank lines of credit of $6,000, payment of quarterly dividends of $880 and treasury stock purchases of $336.

Net cash flows used in financing activities for the ~~nine~~three months ended ~~September 30, 2016 totaled $12,945, which primarily~~March 31, 2022 of $9,335 included a distribution to the redeemable noncontrolling interest holder of $4,400, a quarterly payment on our term loan of $3,750, and treasury stock purchases of $1,088. Net cash flows provided by financing activities for the three months ended March 31, 2021 of $11,077 included net ~~repayments on bank lines~~proceeds from our ATM equity program of ~~credit~~$25,262 partially offset by repayment in full of ~~$12,250~~the Capex Facility of $11,750 and ~~payment~~treasury stock purchases of ~~quarterly dividends of $861.~~ $2,435.

Payment of Dividends

On ~~August 30, 2017, our~~April 23, 2020, DMC announced that its Board of Directors ~~declared a~~suspended the quarterly ~~cash~~ dividend ~~of $0.02 per share which was paid on October 16, 2017. The dividend of $295 was payable~~indefinitely due to ~~shareholders of record as of September 30, 2017. We also paid quarterly cash dividends of $0.02 per share in~~ the ~~first and second quarter of 2017 and $0.02 per share in~~uncertain economic outlook caused by the ~~first three quarters of 2016.~~

We may continue to pay quarterly dividends in the future subject to capital availability and periodic determinations that cash dividends are in compliance with our debt covenants and are in the best interests of our stockholders, but we cannot assure you that such payments will continue.COVID-19 pandemic. Future dividends may be affected by, among other items, our views on potential future capital requirements, future business prospects, debt covenant compliance considerations, changes in ~~federal~~ income tax laws, orand any other factors that our Board of Directors deems relevant. Any ~~decision~~determination to pay cash dividends ~~is and~~ will ~~continue to~~ be at the discretion of ~~our~~the Board of Directors.

Critical Accounting Policies

Our critical accounting policies have not changed from those reported in our Annual Report ~~filed~~ on Form 10-K for the year ended December 31, ~~2016~~.2021.

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ITEM 3. Quantitative and Qualitative Disclosure about Market Risk

~~Foreign Currency Exchange Rates~~

Our NobelClad and DynaEnergetics subsidiaries operate globally through an international network of manufacturing, distribution and sales facilities and frequently enter into inter-company and third party transactions that are denominatedThere were no material changes in currencies other than their functional currency. We use foreign currency forward contracts to offset foreign exchange rate fluctuation on foreign currency denominated asset and liability positions. Foreign currency forward contracts are sensitive tomarket risk for changes in foreign currency exchange ~~rates. Consistent with~~rates and interest rates from the ~~use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively,~~information provided in Item 7A – Quantitative and Qualitative Disclosures About Market Risk in the ~~remeasurement of~~company's Annual Report on Form 10-K for the ~~asset and liability positions being hedged. As such, these forward currency contracts and the offsetting underlying asset and liability positions do not create material market risk.~~year ended December 31, 2021.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Table of Contents~~

Our Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Part II - OTHER INFORMATION

Item 1. Legal Proceedings

~~Information regarding legal proceedings is contained in~~Please see Note 1012 to the Condensed Consolidated Financial ~~Statements contained in this Report and is incorporated herein by reference.~~Statements.

Item 1A. Risk Factors

There have been no significant changes in the risk factors identified as being attendant to our business in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In connection with the vesting of Company restricted common stock under our equity incentive plans during the first quarter of ~~2017,~~2022, we retained shares of common stock in satisfaction of withholding tax obligations. These shares are held as treasury shares by the Company.


	Total number of shares purchased (1) (2)	Average price paid per share
January 1 to January 31, 2022	—	$	—
February 1 to February 28, 2022	18,367	$	33.07
March 1 to March 31, 2022	17,497	$	27.46
Total	35,864	$	30.33

Total number of shares purchased (1) (2) Average price paid per share
July 1 to July 31, 2017 —
$ —
August 1 to August 31, 2017 1,877
$ 13.10
September 1 to September 30, 2017 —
$ —
Total 1,877
$ 13.10

(1) ~~All~~Share purchases in 2022 represent shares ~~purchased in 2017 were~~withheld to offset tax withholding obligations that ~~occur~~occurred upon the vesting of restricted common stock under the terms of the ~~2006 Stock~~2016 Equity Incentive Plan.

(2) As of ~~September 30, 2017,~~March 31, 2022, the maximum number of shares that may yet be purchased would not exceed the employees’ portion of taxes withheld on unvested shares ~~(548,800 shares).~~(469,587) and potential purchases upon participant elections to diversify equity awards held in the Company’s Amended and Restated Non-Qualified Deferred Compensation Plan (141,456) into other investment options available to participants in the Plan.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Our ~~Coolsprings~~Coolspring property is subject to regulation by the Federal Mine Safety and Health Administration ~~("MSHA"~~(“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the ~~"Mine Act"~~“Mine Act”). Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (The ~~"Dodd-Frank Act"~~“Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended ~~September 30, 2017,~~March 31, 2022, we had no such specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events in relation to our United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act.

Item 5. Other Information

None.

Item 6.

Exhibits

31.1 Certification of the President and Chief Executive Officer pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of the Chief Financial Officer pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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32.1 Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101The following materials from the Quarterly Report on Form 10-Q of DMC Global Inc. for the quarter ended ~~September 30, 2017~~,March 31, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.*

*Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		DMC Global Inc.
		(Registrant)


Date:	~~October 26, 2017~~May 5, 2022	/s/ Michael Kuta
		Michael Kuta, Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)



Delaware						84-0608431
(State of Incorporation or Organization)						(I.R.S. Employer Identification No.)



	Gross		Accumulated Amortization			Net
Core technology	$	19,831	$	(9,924	)	$	9,907
Customer relationships	39,028		(34,955		)	4,073
Trademarks / Trade names	2,133		(2,133		)	—

Total intangible assets	$	60,992	$	(47,012	)	$	13,980


	Gross		Accumulated Amortization		Net
Core technology	$	15,228	$	(13,989)	$	1,239
Customer relationships	246,034		(38,588)		207,446
Customer backlog	21,500		(9,214)		12,286
Trademarks / Trade names	23,981		(2,384)		21,597
Total intangible assets	$	306,743	$	(64,175)	$	242,568



	Gross		Accumulated Amortization			Net
Core technology	$	17,751	$	(8,165	)	$	9,586
Customer relationships	36,088		(29,965		)	6,123
Trademarks / Trade names	1,903		(1,785		)	118

Total intangible assets	$	55,742	$	(39,915	)	$	15,827


	Gross		Accumulated Amortization		Net
Core technology	$	15,647	$	(14,209)	$	1,438
Customer relationships	246,718		(36,047)		210,671
Customer backlog	21,500		—		21,500
Trademarks / Trade names	24,037		(2,070)		21,967
Total intangible assets	$	307,902	$	(52,326)	$	255,576


Large accelerated filer☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

~~Large accelerated filer~~ o		~~Accelerated filer~~ x

~~Non-accelerated filer~~ o ~~(Do not check if smaller reporting company)~~	~~Smaller reporting company~~ o

	Emerging growth company o ☐



	September 30,			December 31,
	2017			2016
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,861		$	6,419
Accounts receivable, net of allowance for doubtful accounts of $1,102 and $1,146, respectively	45,443			32,959
Inventory, net	31,489			28,833
Prepaid expenses and other	5,293			5,148

Total current assets	91,086			73,359

PROPERTY, PLANT AND EQUIPMENT	118,752			109,427
Less - accumulated depreciation	(59,167		)	(52,294		)

Property, plant and equipment, net	59,585			57,133

GOODWILL, net	—			16,097

PURCHASED INTANGIBLE ASSETS, net	13,980			15,827

OTHER ASSETS, net	215			139

TOTAL ASSETS	$	164,866		$	162,555



	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
NET SALES	$	52,161		$	36,553		$	138,314		$	118,402
COST OF PRODUCTS SOLD	34,999			28,096			96,767			89,652
Gross profit	17,162			8,457			41,547			28,750
COSTS AND EXPENSES:
General and administrative expenses	6,535			5,685			19,821			15,522
Selling and distribution expenses	4,446			3,832			13,420			12,352
Amortization of purchased intangible assets	1,046			1,009			3,034			3,023
Restructuring expenses	—			373			458			1,202
Goodwill impairment charge	17,584			—			17,584			—
Total costs and expenses	29,611			10,899			54,317			32,099
OPERATING LOSS	(12,449		)	(2,442		)	(12,770		)	(3,349		)
OTHER INCOME (EXPENSE):
Other income (expense), net	(436		)	(157		)	(965		)	178
Interest expense	(367		)	(265		)	(1,203		)	(826		)
Interest income	—			—			2			2
LOSS BEFORE INCOME TAXES	(13,252		)	(2,864		)	(14,936		)	(3,995		)
INCOME TAX PROVISION	812			272			1,956			321
NET LOSS	$	(14,064	)	$	(3,136	)	$	(16,892	)	$	(4,316	)

LOSS PER SHARE
Basic	$	(0.98	)	$	(0.22	)	$	(1.18	)	$	(0.31	)
Diluted	$	(0.98	)	$	(0.22	)	$	(1.18	)	$	(0.31	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic	14,368,225			14,195,921			14,333,452			14,105,594
Diluted	14,368,225			14,195,921			14,333,452			14,105,594

DIVIDENDS DECLARED PER COMMON SHARE	$	0.02		$	0.02		$	0.06		$	0.06



	September 30, 2017		December 31, 2016
Raw materials	$	13,383	$	10,926
Work-in-process	5,757		5,417
Finished goods	12,093		12,146
Supplies	256		344

	$	31,489	$	28,833




Goodwill balance at December 31, 2016	$	16,097
Adjustment due to recognition of tax benefit of tax amortization of certain goodwill	(450		)
Adjustment due to exchange rate differences	1,937
Goodwill impairment	(17,584		)

Goodwill balance at September 30, 2017	$	—



	Nine months ended September 30, 2017
	Severance		Asset Impairment		Other Exit Costs		Total
DynaEnergetics	$	20	$	143	$	295	$	458

Total	$	20	$	143	$	295	$	458



	Three months ended September 30, 2016
	Severance			Contract Termination Costs		Equipment Moving Costs		Other Exit Costs		Total
DynaEnergetics	$	(41	)	$	370	$	1	$	43	$	373

Total	$	(41	)	$	370	$	1	$	43	$	373



	Nine months ended September 30, 2016
	Severance		Contract Termination Costs		Equipment Moving Costs		Other Exit Costs		Total
DynaEnergetics	$	684	$	386	$	15	$	43	$	1,128
Corporate	74		—		—		—		74

Total	$	758	$	386	$	15	$	43	$	1,202



	December 31, 2016		Expense		Payments and Other Adjustments			September 30, 2017
Severance	$	62	$	20	$	(62	)	$	20
Contract termination costs	112		—		(102		)	10

Total	$	174	$	20	$	(164	)	$	30



	Total number of shares purchased (1) (2)	Average price paid per share
July 1 to July 31, 2017	—	$	—
August 1 to August 31, 2017	1,877	$	13.10
September 1 to September 30, 2017	—	$	—
Total	1,877	$	13.10