UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO .

Commission file number 001-14775

DMC GLOBAL INC.

(Exact name of Registrant as Specified in its Charter)


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

11800 Ridge Parkway, Suite 300, Broomfield, Colorado 80021

(Address of principal executive offices, including zip code)

(303) 665-5700

(Registrant’s telephone number, including area code)

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.05 Par Value

BOOM

The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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 growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐☒						Accelerated filer ☒ ☐

Non-accelerated filer ☐						Smaller reporting company ☐

						Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 under the Act). Yes ☐ No ☒

The number of shares of Common Stock outstanding was ~~15,833,470~~19,497,194 as of ~~April 22, 2021.~~

May 5, 2022.

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 expectations regarding improvements to DynaEnergetics’ end markets and 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 such 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 labor cost trends, and the availability of ~~proceeds from our at-the-market offering~~funds to support our liquidity position and 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, ~~2020~~2021 and such things as the following: impacts of COVID-19 and any related preventative or protective actions taken by governmental authorities and resulting economic 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 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; ~~and~~ global economic ~~conditions~~conditions; and political and economic ~~developments.~~developments including political instability and 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

Item 1	Condensed Consolidated Financial Statements	4

	Condensed Consolidated Balance Sheets as of March 31 3 1 , 202 12 (unaudited) and December 31, 202 20 201	4
	Condensed Consolidated Statements of Operations for the three months ended March ~~31,~~ 3 1 , 202 1 2 and 202 ~~2020~~1 (unaudited)	5
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31 ~~2021~~, 202 2 and ~~2020~~202 1 (unaudited)	6
	Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity and Redeemable Noncontrolling Interest for the three months ended March 31 3 1 , 202 12 and 202 ~~2020~~1 (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the three months ended ~~March 31,~~Ma rch 3 1 , 202 2 and 202 1 ~~and 20~~20 (unaudited)	89
	Notes to Condensed Consolidated Financial Statements (unaudited)	910

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2226

Item 3	Quantitative and Qualitative Disclosure about Market Risk	3237

Item 4	Controls and Procedures	3237

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	3439

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)

March 31, 2021 December 31, 2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 45,837 $ 28,187
Marketable securities 20,943 25,736
Accounts receivable, net of allowance for doubtful accounts of $2,631 and $2,605, respectively 35,609 31,366
Inventories 57,944 52,573
Prepaid expenses and other 7,855 5,448
Total current assets 168,188 143,310
Property, plant and equipment 178,752 180,278
Less - accumulated depreciation (71,952) (70,867)
Property, plant and equipment, net 106,800 109,411
Purchased intangible assets, net 2,927 3,665
Deferred tax assets 5,873 4,582
Other assets 21,029 18,677
Total assets $ 304,817 $ 279,645
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 27,336 $ 17,574
Accrued expenses 7,727 5,301
Accrued income taxes 7,975 7,279
Accrued employee compensation and benefits 6,625 7,160
Contract liabilities 7,205 4,928
Current portion of long-term debt 0 3,125
Other current liabilities 1,505 1,741
Total current liabilities 58,373 47,108
Long-term debt 0 8,139
Deferred tax liabilities 1,211 2,254
Other long-term liabilities 26,803 25,230
Total liabilities 86,387 82,731
Commitments and contingencies (Note 12) 0 0
Stockholders’ equity
Preferred stock, $0.05 par value; 4,000,000 shares authorized; 0 issued and outstanding shares 0 0
Common stock, $0.05 par value; 25,000,000 shares authorized; 15,833,470 and 15,389,285 shares outstanding, respectively 820 796
Additional paid-in capital 144,094 117,387
Retained earnings 116,089 115,657
Other cumulative comprehensive loss (24,929) (22,962)
Treasury stock, at cost, and company stock held for deferred compensation, at par; 566,343 and 528,274 shares, respectively (17,644) (13,964)
Total stockholders’ equity 218,430 196,914
Total liabilities and stockholders’ equity $ 304,817 $ 279,645


	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

Three months ended March 31,
2021 2020
Net sales $ 55,658 $ 73,564
Cost of products sold 42,745 49,094
Gross profit 12,913 24,470
Costs and expenses:
General and administrative expenses 7,929 8,126
Selling and distribution expenses 5,243 8,527
Amortization of purchased intangible assets 324 354
Restructuring expenses 127 1,116
Total costs and expenses 13,623 18,123
Operating (loss) income (710) 6,347
Other income (expense):
Other income, net 394 115
Interest expense, net (135) (238)
(Loss) income before income taxes (451) 6,224
Income tax (benefit) provision (883) 2,069
Net income $ 432 $ 4,155
Net income per share
Basic $ 0.03 $ 0.28
Diluted $ 0.03 $ 0.28
Weighted average shares outstanding:
Basic 15,453,103 14,697,164
Diluted 15,463,923 14,717,836
Dividends declared per common share $ 0 $ 0.125
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

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

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DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Amounts in Thousands)

(unaudited)

Three months ended March 31,
2021 2020
Net income $ 432 $ 4,155
Change in cumulative foreign currency translation adjustment (1,967) (840)
Total comprehensive (loss) income $ (1,535) $ 3,315


	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)

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

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DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

(Amounts in Thousands, Except Share Data)

(unaudited)


									Other		Treasury Stock and													Other		Treasury Stock, at cost, and			Total		Redeemable
					Additional				Cumulative		Company Stock Held for									Additional				Cumulative		Company Stock Held for			DMC Global Inc.		Non-
		Common Stock			Paid-In		Retained		Comprehensive		Deferred Compensation						Common Stock			Paid-In		Retained		Comprehensive		Deferred Compensation, at par			Stockholders’		Controlling
		Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Total			Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Equity		Interest
Balances, December 31, 2020		15,917,559	$	796	$	117,387	$	115,657	$	(22,962)	(528,274)	$	(13,964)	$	196,914
Net income		—	—		—		432		—		—	—		432
Balances, December 31, 2021																Balances, December 31, 2021	19,920,829	$	996	$	294,515	$	111,031	$	(26,538)	(570,415)	$	(19,479)	$	360,525	$	197,196
Net loss																Net loss	—	—		—		(3,288)		—		—	—		(3,288)		(992)
Change in cumulative foreign currency translation adjustment	Change in cumulative foreign currency translation adjustment	—	—		—		—		(1,967)		—	—		(1,967)		Change in cumulative foreign currency translation adjustment	—	—		—		—		(1,204)		—	—		(1,204)		—
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	Shares issued in connection with stock compensation plans	84,434	4		(4)		—		—		—	—		0		Shares issued in connection with stock compensation plans	163,443	8		(8)		—		—		—	—		—		—

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

Stock-based compensation	Stock-based compensation	—	—		1,469		—		—		—	—		1,469		Stock-based compensation	—	—		2,267		—		—		—	—		2,267		102

Distribution to redeemable noncontrolling interest holder																Distribution to redeemable noncontrolling interest holder	—	—		—		—		—		—	—		—		(4,400)
Treasury stock activity	Treasury stock activity	—	—		—		—		—		(38,069)	(3,680)		(3,680)		Treasury stock activity	—	—		—		—		—		(16,773)	(1,088)		(1,088)		—

Balances, March 31, 2021		16,399,813	$	820	$	144,094	$	116,089	$	(24,929)	(566,343)	$	(17,644)	$	218,430
Balances, March 31, 2022																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

Other Treasury Stock and
Additional Cumulative Company Stock Held for
Common Stock Paid-In Retained Comprehensive Deferred Compensation
Shares Amount Capital Earnings Loss Shares Amount Total
Balances, December 31, 2019 15,117,207 $ 756 $ 85,639 $ 119,002 $ (25,803) (464,532) $ (7,453) $ 172,141
Net income — — — 4,155 — — — 4,155
Change in cumulative foreign currency translation adjustment — — — — (840) — — (840)
Shares issued in connection with stock compensation plans 143,628 7 (7) — — — — 0
Adjustment for cumulative effect from change in accounting principle (ASU 2016-13) — — — (50) — — — (50)
Stock-based compensation — — 1,200 — — — — 1,200
Dividends declared — — — (1,883) — — — (1,883)
Treasury stock activity — — — — — (45,061) (1,034) (1,034)
Balances, March 31, 2020 15,260,835 $ 763 $ 86,832 $ 121,224 $ (26,643) (509,593) $ (8,487) $ 173,689
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

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

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DMC GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(unaudited)


		Three months ended March 31,					Three months ended March 31,
		2021		2020			2022		2021
Cash flows provided by operating activities:
Net income		$	432	$	4,155
Adjustments to reconcile net income to net cash provided by operating activities:
Cash flows (used in) provided by operating activities:						Cash flows (used in) provided by operating activities:
Net (loss) income						Net (loss) income	$	(4,280)	$	432
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:						Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation	Depreciation	2,698		2,352		Depreciation	3,359		2,698
Amortization of purchased intangible assets	Amortization of purchased intangible assets	324		354		Amortization of purchased intangible assets	12,976		324
Amortization of deferred debt issuance costs	Amortization of deferred debt issuance costs	56		40		Amortization of deferred debt issuance costs	132		56
Amortization of acquisition-related inventory valuation step-up						Amortization of acquisition-related inventory valuation step-up	258		—
Stock-based compensation	Stock-based compensation	1,608		1,118		Stock-based compensation	2,358		1,608

Deferred income taxes	Deferred income taxes	(2,334)		(160)		Deferred income taxes	(2,714)		(2,334)
(Gain) loss on disposal of property, plant and equipment		(288)		13
Restructuring expenses		127		1,116
Loss (gain) on disposal of property, plant and equipment						Loss (gain) on disposal of property, plant and equipment	9		(288)
Restructuring expenses and asset impairments						Restructuring expenses and asset impairments	32		127

Change in:	Change in:					Change in:
Accounts receivable, net	Accounts receivable, net	(4,629)		10,277		Accounts receivable, net	(7,480)		(4,629)
Inventories	Inventories	(6,184)		(8,187)		Inventories	(19,877)		(6,184)
Prepaid expenses and other	Prepaid expenses and other	(4,480)		383		Prepaid expenses and other	(2,324)		(4,480)
Accounts payable	Accounts payable	9,963		(2,752)		Accounts payable	7,162		9,963
Contract liabilities	Contract liabilities	2,432		955		Contract liabilities	5,968		2,432

Accrued expenses and other liabilities	Accrued expenses and other liabilities	2,451		(4,744)		Accrued expenses and other liabilities	(163)		2,451
Net cash provided by operating activities		2,176		4,920
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(4,584)		2,176

Cash flows provided by (used in) investing activities:
Cash flows (used in) provided by investing activities:						Cash flows (used in) provided by investing activities:

Proceeds from maturities of marketable securities	Proceeds from maturities of marketable securities	4,799		0		Proceeds from maturities of marketable securities	—		4,799

Acquisition of property, plant and equipment	Acquisition of property, plant and equipment	(1,365)		(5,121)		Acquisition of property, plant and equipment	(1,536)		(1,365)

Proceeds on sale of property, plant and equipment	Proceeds on sale of property, plant and equipment	281		0		Proceeds on sale of property, plant and equipment	—		281

Net cash provided by (used in) investing activities		3,715		(5,121)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(1,536)		3,715

Cash flows provided by (used in) financing activities:
Cash flows (used in) provided by financing activities:						Cash flows (used in) provided by financing activities:

Payments on term loan						Payments on term loan	(3,750)		—
Repayments on capital expenditure facility	Repayments on capital expenditure facility	(11,750)		(781)		Repayments on capital expenditure facility	—		(11,750)

Payment of dividends		0		(1,866)

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

Net proceeds from issuance of common stock through at-the-market offering program	Net proceeds from issuance of common stock through at-the-market offering program	25,262		0		Net proceeds from issuance of common stock through at-the-market offering program	—		25,262

Treasury stock purchases	Treasury stock purchases	(2,435)		(1,034)		Treasury stock purchases	(1,088)		(2,435)

Net cash provided by (used in) financing activities		11,077		(3,681)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(9,335)		11,077

Effects of exchanges rates on cash		682		(20)
Effects of exchange rates on cash						Effects of exchange rates on cash	21		682

Net increase (decrease) in cash and cash equivalents		17,650		(3,902)
Net (decrease) increase in cash and cash equivalents						Net (decrease) increase in cash and cash equivalents	(15,434)		17,650
Cash and cash equivalents, beginning of the period	Cash and cash equivalents, beginning of the period	28,187		20,353		Cash and cash equivalents, beginning of the period	30,810		28,187
Cash and cash equivalents, end of the period	Cash and cash equivalents, end of the period	$	45,837	$	16,451	Cash and cash equivalents, end of the period	$	15,376	$	45,837

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

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DMC GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

1. BASIS OF PRESENTATION

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, ~~2020.~~2021.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The condensed consolidated financial statements include the accounts of DMC Global Inc. (“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.

~~Marketable Securities~~

~~We typically invest in highly rated securities, with the primary objectives of preserving principal, providing access to liquidity to fund the ongoing operations~~Accounts and strategic needs of the Company and its subsidiaries, and achieving a yield that is commensurate with low risk and highly liquid securities. The Company’s investment policy generally limits the amount of credit exposure to any one issuer.

Our investments in marketable debt securities are classified as either trading, available-for-sale or held-to-maturity based on the nature of the securities and their availability for use in current operations. The Company classifies its marketable debt securities on the Condensed Consolidated Balance Sheet as current or non-current based on maturities and our expectations of sales and redemptions in the following year.

As of March 31, 2021 and December 31, 2020, our investments were comprised solely of U.S. Treasury securities with maturities ranging from three to twelve months, and these investments have been classified and accounted for as trading securities. The Company’s investments in U.S. Treasury securities are measured at fair value with gains and losses recognized in the Condensed Consolidated Statement of Operations within “Other income, net."

~~Accounts~~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 ~~DynaEnergetics and NobelClad~~each segment’s accounts receivable balances as separate populations. Within each segment, receivables exhibit similar risk characteristics.

During the three months ended March 31, ~~2021,~~2022, our expected loss rate ~~continued to reflect~~reflects uncertainties in market conditions ~~present in both of~~that could impact our businesses, ~~due to the ongoing~~including COVID-19 ~~pandemic.~~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, ~~provisions~~net recoveries of ~~$38~~$20 were recorded during the three months ended March 31, ~~2021.~~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 ~~DynaEnergetics and NobelClad customers:~~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

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DynaEnergetics NobelClad DMC Global Inc.
Allowance for doubtful accounts, December 31, 2020 $ 2,590 $ 15 $ 2,605
Current period provision for expected credit losses 38 0 38
Recoveries of amounts previously reserved (10) 0 (10)
Impacts of foreign currency exchange rates and other (2) 0 (2)
Allowance for doubtful accounts, March 31, 2021 $ 2,616 $ 15 $ 2,631
considered an arrangement with a variable interest entity for which the Company is not the primary beneficiary and has concluded does not require consolidation.

Revenue Recognition

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 ~~60 days.~~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 ~~5 “Contract Liabilities”~~6 "Contract Liabilities" for further information on contract liabilities and Note 10 ~~“Business Segments”~~"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.

Arcadia

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.

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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.

Income Taxes

We recognize deferred tax assets and liabilities for the expected future income tax consequences of temporary differences between the financial reporting and tax 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 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 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 to be realized upon ultimate resolution. We recognize interest and penalties related to uncertain tax positions in operating expense.

Earnings Per Share

In periods with 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 ~~with~~of net income as they receive non-forfeitable rights to dividends ~~similar to~~as common stock. Restricted stock awards do not participate in net losses.

Basic EPS is calculated by dividing net income ~~available~~(loss) attributable to ~~common~~the Company’s stockholders after adjustment of ~~the Company~~redeemable noncontrolling interest by the weighted average number of ~~shares of~~ common ~~stock~~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 such effect is dilutive. The effect of the 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 assuming nonvested shares are not converted into shares of common stock.~~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.

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	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

Three months ended March 31,
2021 2020
Net income, as reported $ 432 $ 4,155
Less: Distributed net income available to participating securities 0 (30)
Less: Undistributed net income available to participating securities (5) (37)
Numerator for basic net income per share: 427 4,088
Add: Undistributed net income allocated to participating securities 5 37
Less: Undistributed net income reallocated to participating securities (5) (37)
Numerator for diluted net income per share: 427 4,088
Denominator:
Weighted average shares outstanding for basic net income per share 15,453,103 14,697,164
Effect of dilutive securities 10,820 20,672
Weighted average shares outstanding for diluted net income per share 15,463,923 14,717,836
Net income per share
Basic $ 0.03 $ 0.28
Diluted $ 0.03 $ 0.28
(1) For the three months ended March 31, 2022, 14,069 shares have been excluded as their effect would have been anti-dilutive.

Deferred compensation

The Company maintains a Non-Qualified Deferred Compensation Plan (the “Plan”) as part of its overall compensation package for certain employees. Participants are eligible to defer a portion of 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 be settled either by delivery of 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. ~~Once~~If diversified, these contributions ~~of equity awards~~ will be subsequently settled by delivery of cash.

The Company has established a grantor trust commonly known as a “rabbi trust” and contributed certain assets to satisfy the future obligations to participants in the 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

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

Consolidated Balance Sheet location March 31, 2021 December 31, 2020
Deferred compensation assets Other assets $ 9,447 $ 7,596
Deferred compensation obligations Other long-term liabilities $ 13,500 $ 11,894

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 accounts receivable and payable, accrued expenses, and the revolving loans and term loan under our credit facility, ~~and borrowings under our capital expenditure facility~~when outstanding, approximate their fair value. ~~Our U.S. Treasury marketable securities are valued using quoted prices in active markets that are accessible as of the measurement date.~~

Our revolving loans and ~~borrowings~~term loan under our ~~capital expenditure~~credit facility, when outstanding, reset each month at market interest rates. Money market funds and mutual funds of $5,955 as of March 31, 2021 and $4,244 as of December 31, 2020 were held to satisfy future deferred compensation obligations are valued based upon the market values of underlying securities, and thereforeAs a result, we classify these ~~assets~~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 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 hold any Level 3 assets or liabilities as of March 31, ~~2021~~2022 or December 31, ~~2020.~~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 market and thus represent Level 3 measurements within the fair value measurement hierarchy.

Recent Accounting Pronouncements

In ~~December 2019,~~March 2020, the Financial Accounting Standards Board issued a new accounting ~~pronouncement regarding accounting~~standard which provides practical expedients and exceptions for ~~income taxes.~~applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The ~~new~~expedients and exceptions apply only to contracts and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. These amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The Company will adopt this standard ~~removes certain exceptions~~when LIBOR is discontinued; however, given that we do not have significant exposure to ~~the general principles in ASC 740~~ ~~Income Taxes~~ ~~and also clarifies and amends existing guidance~~LIBOR or other referenced rates expected to ~~provide for more consistent application. The new~~be discontinued, we do not believe that adoption of this standard ~~became effective for the Company in the first quarter of fiscal 2021 and did not~~will have a material impact on our ~~consolidated financial statements.~~Consolidated Financial Statements.

3. BUSINESS COMBINATION

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.

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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:

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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 based upon a predefined calculation tied to adjusted earnings rather than a fixed price, and the formula is based upon Arcadia’s operating results. As such, we have concluded that the Call Option and Put Option are embedded within the noncontrolling interest and therefore do not represent freestanding instruments.

Given that the noncontrolling interest is subject to 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.

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Promissory Note

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

4. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Significant cost elements included in inventory are material, labor, freight, subcontract costs, and manufacturing overhead. As necessary, we ~~adjust~~write down inventory to its net realizable value by recording provisions for excess, slow moving and obsolete inventory. 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 consisted of the following at March 31, ~~2021:~~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

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DynaEnergetics NobelClad DMC Global Inc.
Raw materials $ 14,616 $ 11,403 $ 26,019
Work-in-process 7,997 8,763 16,760
Finished goods 14,532 401 14,933
Supplies 0 232 232
Inventories $ 37,145 $ 20,799 $ 57,944

Inventories consisted of the following at December 31, ~~2020:~~2021:


		DynaEnergetics		NobelClad		DMC Global Inc.			Arcadia		DynaEnergetics		NobelClad		DMC Global Inc.
Raw materials	Raw materials	$	13,250	$	11,903	$	25,153	Raw materials	$	12,168	$	15,209	$	7,655	$	35,032
Work-in-process	Work-in-process	7,062		6,682		13,744		Work-in-process	3,987		13,672		10,257		27,916
Finished goods	Finished goods	12,806		669		13,475		Finished goods	44,348		14,998		1,651		60,997
Supplies	Supplies	0		201		201		Supplies	—		—		269		269
Inventories		$	33,118	$	19,455	$	52,573
Total inventories								Total inventories	$	60,503	$	43,879	$	19,832	$	124,214

4.5. PURCHASED INTANGIBLE ASSETS

Our purchased intangible assets consisted of the following as of March 31, ~~2021:~~

Gross Accumulated
Amortization Net
Core technology $ 16,881 $ (13,954) $ 2,927
Customer relationships 36,516 (36,516) 0
Trademarks / Trade names 2,102 (2,102) 0
Total intangible assets $ 55,499 $ (52,572) $ 2,927
2022:


	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

Our purchased intangible assets consisted of the following as of December 31, ~~2020:~~

Gross Accumulated
Amortization Net
Core technology $ 17,899 $ (14,234) $ 3,665
Customer relationships 37,638 (37,638) 0
Trademarks / Trade names 2,194 (2,194) 0
Total intangible assets $ 57,731 $ (54,066) $ 3,665
2021:


	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

The change in the gross value of our purchased intangible assets at March 31, 2022 from December 31, ~~2020 to March 31,~~ 2021 primarily was due to foreign currency translation and ~~the~~an adjustment due to recognition of the tax benefit of tax deductible goodwill amortization related to the 2007 acquisition of our German subsidiaries. Prior to the impairment of the goodwill related to the NobelClad and DynaEnergetics reporting units at September 30, 2017 and December 31, 2015, respectively, the tax benefit of tax amortization ~~reduced~~previously applied to certain goodwill related to the DynaEnergetics and NobelClad reporting units. After the goodwill ~~balance. After we fully~~associated with each reporting unit was impaired ~~the goodwill, which is only written off for U.S. GAAP purposes,~~at December 31, 2015 and September 30, 2017, respectively, the tax ~~benefit of tax goodwill~~ amortization reduces ~~the gross value of the purchased~~other intangible assets related to ~~this~~the historical acquisition.

5.6. CONTRACT LIABILITIES

~~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:

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		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Arcadia						Arcadia	$	21,931	$	14,697
NobelClad	NobelClad	$	6,845	$	4,450	NobelClad	4,879		5,881
DynaEnergetics	DynaEnergetics	360		478		DynaEnergetics	142		474

Total		$	7,205	$	4,928
Total contract liabilities						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. ~~Approximately 25% of the $4,928 recorded as contract liabilities at December 31, 2020 was recorded to net sales during the three months ended March 31, 2021.~~

6.7. LEASES

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

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contract. For leases in which the Company is the lessee, leases are classified as either finance or operating. ~~Right of use (ROU)~~Right-of-use (“ROU”) assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if ~~any, with~~any. ROU assets are amortized on a straight-line basis to the ~~classification affecting the pattern~~Condensed Consolidated Statement of ~~expense recognition.~~Operations. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the present value of future lease payments. Lease and non-lease components within the Company’s lease agreements are accounted for together. The Company has no leases in which the Company is the lessor.

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, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ROU asset	ROU asset	10,589		10,733		ROU asset	$	50,934	$	52,219

Current lease liability	Current lease liability	1,505		1,741		Current lease liability	6,287		6,126
Long-term lease liability	Long-term lease liability	10,137		10,066		Long-term lease liability	45,613		47,000
Total lease liability	Total lease liability	$	11,642	$	11,807	Total lease liability	$	51,900	$	53,126

The ROU asset ~~was included~~is reported in “Other assets” while the current lease liability ~~was~~is reported in “Other current liabilities” and the long-term lease liability ~~was~~is reported in “Other long-term liabilities” onin the Company’s Condensed Consolidated Balance ~~Sheet.~~Sheets. Cash paid for operating lease liabilities are recorded as operating cash flows ~~from operating activities~~ 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 March 31, 2022, the total ROU asset and 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, 2022, operating lease expense was $2,767, inclusive of $1,156 related to related party leases. For the three months ended March 31, 2021, ~~and 2020,~~ operating lease ~~costs were $971 and $1,102, respectively, which were included in the Company’s Condensed Consolidated Statements of Operations.~~expense was $971. Short term and variable lease costs were not material for the three months ended March 31, ~~2021~~2022 and ~~2020.~~

Certain of the Company’s leases contain renewal options and options to extend the leases for up to five years, and a majority of these options are reflected in the calculation of the ROU asset and lease liability due to the likelihood of renewal.

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~~The following table summarizes the weighted average lease terms and discount rates for operating lease liabilities:~~


	~~March 31, 2021~~
~~Weighted average remaining lease term (in years)~~	~~8.03~~
~~Weighted average discount rate~~	~~5.1~~	%

~~The following table represents maturities of operating lease liabilities as of March 31, 2021:~~


~~Due within 1 year~~	$	~~1,505~~
~~Due after 1 year through 2 years~~	~~2,077~~
~~Due after 2 years through 3 years~~	~~1,967~~
~~Due after 3 years through 4 years~~	~~1,792~~
~~Due after 4 years through 5 years~~	~~1,733~~
~~Due after 5 years~~	~~5,727~~
~~Total future minimum lease payments~~	~~14,801~~
~~Less imputed interest~~	~~(3,159)~~
~~Total~~	$	~~11,642~~

2021.

7.8. DEBT

As of March 31, ~~2021 we had 0 outstanding borrowings under our credit facility. As of~~2022 and December 31, ~~2020,~~2021, outstanding borrowings consisted of the following:



~~Syndicated credit agreement:~~


~~Capital expenditure facility~~	$	~~11,750~~

~~Outstanding borrowings~~	~~11,750~~
~~Less: debt issuance costs~~	~~(486)~~
~~Total debt~~	~~11,264~~
~~Less: current portion of long-term debt~~	~~(3,125)~~
~~Long-term debt~~	$	~~8,139~~


	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

On ~~March 8, 2018,~~December 23, 2021, we entered into a five-year ~~$75,000~~$200,000 syndicated credit agreement (“credit facility”) which ~~replaced in its entirety our prior syndicated credit facility entered into on February 23, 2015. The credit facility allows for revolving loans of up to $50,000 with~~included a ~~$20,000 US dollar equivalent sublimit for alternative currency loans. In addition, the agreement provided for a $25,000 Capital Expenditure Facility (“Capex Facility”)~~$150,000 Term Loan, which ~~was used to assist in financing our DynaEnergetics manufacturing expansion project in Blum, Texas. At the end of year one, the Capex Facility converted to a term loan which was~~is amortizable at ~~12.5%~~10% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in ~~2023. In February 2021, we repaid the remaining Capex Facility balance~~2026, and allows for revolving loans of ~~$11,750.~~

up to $50,000. The credit facility has ~~a $100,000~~an accordion feature to increase the commitments by $100,000 under the revolving loan class and/or by adding a term loan subject to approval by applicable lenders. We entered into the credit facility with a syndicate of 34 banks, with KeyBank, N.A. acting

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as administrative agent. The ~~syndicated~~ 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 $150,000 Term Loan and $50,000 revolving loan limit can be in the form of ~~one-, two-, three-,~~Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or ~~six-month LIBOR rate~~one month Adjusted Term SOFR loans. Additionally, USU.S. dollar borrowings on the revolving loan can be in the form of Base Rate loans (Base Rate borrowings are based on the greater of the administrative agent’s Prime ~~rates,~~rate, an adjusted Federal Funds rate or an adjusted ~~LIBOR~~SOFR rate). ~~LIBOR~~SOFR loans bear interest at the applicable ~~LIBOR~~SOFR rate plus an applicable margin (varying from 1.50% to 3.00%). Base Rate loans bear interest at the defined Base rate plus an applicable margin (varying from 0.50% to 2.00%).

Borrowings under the $20,000 alternate currency sublimit can be in euros, Canadian dollars, pounds sterling, and in any other currency acceptable to the administrative agent. Alternative currency borrowings denominated in euros, pounds sterling, and any other currency that is dealt with on the London Interbank Deposit Market shall be comprised of LIBOR loans and bear interest at the LIBOR rate plus an applicable margin (varying from 1.50% to 3.00%).

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On June 25, 2020, we entered into an amendment ("Amendment") to the credit facility. The Amendment waives the debt service coverage ratio covenant for the quarters ending September 30, 2020, December 31, 2020, and March 31, 2021. The debt service coverage ratio minimum of 1.35 to 1 will resume beginning with the quarter ending June 30, 2021 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, cash income taxes and Consolidated Unfunded Capital Expenditures (as defined in the credit facility) to Debt Service Charges (as defined in the credit facility).

~~Additionally, the Amendment added a Minimum Liquidity covenant requiring the total of cash and cash equivalents held by U.S. subsidiaries and available borrowing capacity under the credit facility to exceed $10,000 for the quarters ending September 30, 2020, December 31, 2020, and March 31, 2021. The Minimum Liquidity covenant is not required after March 31, 2021.~~

During the period from the Amendment through August 31, 2020, borrowings outstanding under the credit facility bore interest at LIBOR plus a margin of 1.75% or at a Base Rate (as defined in the credit facility) plus a margin of 0.75%. For the period from September 1, 2020 through the date of receipt of the covenant compliance certificate for the quarter ending March 31, 2021, borrowings outstanding under the credit facility will bear interest at LIBOR plus a margin of 1.75% to 3.00% or at a Base Rate plus a margin of 0.75% to 2.00%. In each case, the margin is based on the Company's Leverage Ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of such period to Consolidated Pro Forma EBITDA for such period. ~~Additionally, the Amendment sets the minimum LIBOR at 0.75%~~.

On October 22, 2020, in connection with the commencement of our at-the-market offering, we entered into an amendment to the credit facility to waive the requirement that we repay outstanding balances under the credit facility from the proceeds of any equity offering.~~The waiver applies to at-the-market offerings up to $75 million.~~

The credit facility ~~as amended,~~ 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 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 March 31, ~~2021,~~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 ~~certain European operations. In July 2020, the German Bank Facility was amended~~our NobelClad and DynaEnergetics operations in Europe. This line of credit is also used to ~~increase the borrowing capacity from €4,000~~issue bank guarantees to ~~€7,000. Of the €7,000 borrowing capacity, €3,781 was available as~~customers to secure advance payments made by them. As of March 31, 2022 and December 31, 2021, ~~after considering~~we had no outstanding ~~letters~~borrowings under this line of ~~credit.~~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.

~~Given that we had 0 outstanding~~Included in long-term debt ~~as of March 31, 2021, our~~are deferred debt issuance costs of ~~$430 were reported in the “Other assets” line item on our Condensed Consolidated Balance Sheet. Our deferred debt issuance costs of $486~~$2,540 and $2,575 as of March 31, 2022 and December 31, ~~2020 were reported in the “Long term debt” line item on our Condensed Consolidated Balance Sheet.~~2021, respectively. Deferred debt issuance costs are being amortized over the remaining term of the credit facility which expires on ~~March 8, 2023.~~December 23, 2026.

~~8. EQUITY PROGRAM~~

On October 22, 2020, the Company commenced an at-the-market ("ATM") equity program under its shelf registration statement, which allows it to sell and issue up to $75 million in shares of its common stock from time to time. The Company entered into an Equity Distribution Agreement on October 22, 2020 with KeyBanc Capital Markets Inc. ("KeyBanc") relating to the issuance and sale of shares of common stock pursuant to the program. KeyBanc is not required to sell any specific amount of securities but will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between KeyBanc and us. There is no specific date on which the ATM equity program will end and there are no minimum purchase requirements. KeyBanc will be entitled to compensation for shares sold pursuant to the program in an amount up to 1.5% of the gross proceeds of any shares of common stock sold under the Equity Distribution Agreement.

During the quarter ended March 31, 2021, the Company sold 397,820 shares of common stock through its ATM equity program for gross proceeds of $25,647 at a weighted average price per share of $64.47. Net proceeds from such sales were $25,262, after deducting commissions paid to the sales agents of approximately $385. Since the inception of the program, the Company has sold 1,006,180 shares of common stock through its ATM equity program for gross proceeds of $51,779 at a weighted average price per share of $51.46.

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9. INCOME TAXES

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 ~~34%~~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~~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, ~~2021~~2022 and March 31, ~~2020,~~2021, we did not record any adjustments to previously established valuation ~~allowances.~~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.

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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. ~~Nevertheless, if~~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.

During the fourth quarter of 2019, our German operating entities commenced a tax audit for fiscal years 2015 through 2017. We expect this audit to be completed in the second quarter of 2021. If any issues addressed in the audit are resolved in a manner not consistent with our expectations, the Company could be required to adjust its provision for income taxes in future periods.

10. BUSINESS SEGMENTS

Our business is organized into 23 segments: Arcadia, DynaEnergetics and 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 ~~for the perforation of~~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.

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 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,
2021 2020
Net sales
DynaEnergetics $ 38,172 $ 53,220
NobelClad 17,486 20,344
Net sales $ 55,658 $ 73,564


	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)

1721

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Three months ended March 31,
2021 2020
Operating income
DynaEnergetics 1,521 8,606
NobelClad $ 1,604 $ 1,476
Segment operating income 3,125 10,082
Unallocated corporate expenses (2,227) (2,617)
Stock-based compensation (1,608) (1,118)
Other income, net 394 115
Interest expense, net (135) (238)
(Loss) income before income taxes $ (451) $ 6,224


	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

Three months ended March 31,
2021 2020
Depreciation and amortization
DynaEnergetics 2,000 1,772
NobelClad $ 939 $ 834
Segment depreciation and amortization 2,939 2,606
Corporate and other 83 100
Consolidated depreciation and amortization $ 3,022 $ 2,706
* 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.

~~DynaEnergetics~~Arcadia

Three months ended March 31,
2021 2020
United States $ 27,831 $ 46,271
Canada 3,702 668
Hong Kong 1,190 136
Egypt 1,053 1,311
Oman 781 180
Indonesia 571 479
Pakistan 509 345
Ukraine 436 302
India 393 316
Romania 322 104
Germany 314 300
Rest of the world 1,070 2,808
Total DynaEnergetics $ 38,172 $ 53,220


	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

1822

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NobelClad

Three months ended March 31,
2021 2020
United States $ 8,347 $ 9,042
Canada 1,024 1,768
Russia 1,021 0
South Korea 886 990
France 669 1,491
United Arab Emirates 664 739
India 649 77
Netherlands 591 547
Australia 578 249
Italy 435 92
Spain 413 1,247
Germany 390 986
Norway 283 960
Taiwan 278 0
China 239 87
Rest of the world 1,019 2,069
Total NobelClad $ 17,486 $ 20,344


	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.

During the three months ended March 31, 2022, no single customer accounted for greater than 10% of 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. ~~During the three months ended~~As of March 31, ~~2020, one~~2022 and December 31, 2021, no single customer accounted for ~~approximately 15%~~greater than 10% of consolidated ~~net sales.~~accounts receivable.

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, and, to a lesser extent, other currencies, arising from ~~inter-company~~intercompany and 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. 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 (expense) income, 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 is the possibility that a loss may occur from the nonperformance of a counterparty to the 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’ ability to perform.

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the notional amounts of the forward currency contracts the Company held were ~~$2,909~~$5,017 and ~~$2,092,~~$13,032, respectively. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the fair values of outstanding foreign currency forward contracts were $0.

The following table presents the location and amount of net ~~gains~~(losses) income from hedging activities:

Three months ended March 31,
Derivative Statements of Operations Location 2021 2020
Foreign currency contracts Other income, net $ 55 $ 834


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

1923

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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.

Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to 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.~~

~~13. RESTRUCTURING EXPENSES~~

~~During the first quarter of 2021, NobelClad recorded an accrual for additional severance liabilities of $116 which were agreed to with local labor authorities for employees terminated~~results except as ~~part of closing manufacturing operations in France in 2018.~~

During the first quarter of 2020, DMC reduced its workforce by 264 positions to address a sharp decline in well completions in the Company’s core oil and gas end market principally due to the COVID-19 pandemic. The workforce reduction impacted full-time, part-time and temporary direct-labor roles in manufacturing and assembly at DynaEnergetics as well as general and administrative positions at DynaEnergetics, NobelClad, and at DMC’s corporate office.

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 Statements of Operations:set forth below:

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

Three months ended March 31, 2021
Severance Other Exit Costs Total
NobelClad $ 116 $ 11 $ 127
Total $ 116 $ 11 $ 127
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 project in Hawaii. The case is proceeding in the 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 parties entered into a settlement agreement related to the case, which provided for the resolution of the 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 payment of the settlement amount is due by May 13, 2022. It is anticipated that approximately $1,000 of the 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 $3,300 relating to this matter.

Wage and Hour Matters

Felipe v. Arcadia, Inc. and One Stop Employment Services, Inc.

Three months ended March 31, 2020
Severance Contract Termination Costs Other Exit Costs Total
DynaEnergetics $ 707 $ 11 $ 220 $ 938
NobelClad 54 0 5 59
Corporate 119 0 0 $ 119
Total $ 880 $ 11 $ 225 $ 1,116
(“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 time during the four years preceding the date of the complaint. One Stop is a staffing agency which provides temporary workers, including to Arcadia. The complaint states claims under California’s labor laws and under its general Unfair Business Practices Act, California Business & Professions Code section 17200. The plaintiff also filed a letter with the California Labor and Workforce Department under California’s Private Attorneys General Act (“PAGA”). In February, the claims were amended to remove class action and individual claims in favor of arbitration on an individual, non-class basis, with the 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 parties anticipate a ruling in the next few months. Plaintiff has not yet commenced arbitration of her individual claims.

Mayorga v. Arcadia, Inc. This complaint was filed on November 15, 2021 in Los Angeles Superior Court. It purports to allege a class action on behalf of all of the 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 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 both the Felipe and Mayorga actions. Due to the nature of these matters and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of

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~~During~~ the ~~three months ended March 31, 2021,~~amount or range of potential loss, if any. Further, under the ~~changes to the restructuring liability associated with~~Equity Purchase Agreement, certain amounts have been placed in escrow pending resolution of these ~~programs is summarized below:~~

December 31, 2020 Net expense Payments and Other Adjustments Currency Adjustments March 31, 2021
Severance $ 958 $ 116 $ (18) $ (42) $ 1,014
Other exit costs 0 11 (8) 0 3
Total $ 958 $ 127 $ (26) $ (42) $ 1,017

matters.

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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, ~~2020.~~2021.

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

Overview

General

DMC Global Inc. (“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~~commercial markets around the world. DMC’s objective is to identify well-run businesses and strong management teams and support them with long-term capital and strategic, legal, technology and operating resources. DMC’s culture is to 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. ~~These segments,~~Today, DMC’s portfolio consists of Arcadia, DynaEnergetics, and NobelClad, ~~operate globally through an international network~~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 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 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 ~~distribution~~facilities and ~~sales facilities.~~equipment, manufacturing supplies and other manufacturing overhead expenses.

Our diversified segments each provide a suite of unique technical products to niche sectors of 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 generating free cash flow, our 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 existing businesses and enable us to build a stronger and more diverse company.

DynaEnergetics

DynaEnergetics designs, manufactures and distributes products utilized by the global oil and gas industry principally ~~for the perforation of~~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. ~~Exploration activity over the last several years has led to~~Well completion operations are increasingly complex, ~~well completion operations,~~ which in turn has increased the demand for ~~high quality~~intrinsically-safe, reliable and technically advanced perforating ~~products.~~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, ~~freight in,~~ depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses.

NobelClad

NobelClad produces explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints. While a significant portion of the demand for our clad metal products is driven by 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 backlog increased to ~~$43,191~~$44,373 at March 31, ~~2021~~2022 from ~~$39,884~~$41,181 at December 31, ~~2020.~~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 in,~~ outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses.

Employee Retention Credit

In the first quarter of 2021, under provisions of legislation enacted in December 2020 the Company became eligible for the Employee Retention Credit (“ERC”) under the Coronavirus Aid, Relief, and Economic Security Act, as amended (“CARES Act”). As a result of the new legislation, the Company was able to claim a refundable tax credit equal to 70% of the qualified wages they paid to employees for portions of calendar year 2021. The ERC favorably impacted the financial statement results of the Company for the three months ended March 31, 2021, as described further in the “Consolidated Results of Operations” section below. The ERC had no impact on the financial statement results of the Company for the three months ended March 31, 2022.

Factors Affecting Results

•Consolidated sales were $138,716 in the first quarter of 2022. Excluding the Arcadia acquisition, consolidated sales were $70,748, a decrease of 2% versus the fourth quarter of 2021 and an increase of 27% versus the 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 $48,887 in the first quarter of 2022 decreased 4% compared with the fourth quarter of 2021 primarily due to a decline in international sales. Sales increased 28% compared with the first quarter of 2021 primarily due to higher North American drilling and well completions, and a corresponding increase in unit sales of DS perforating systems.

•NobelClad’s sales of $21,861 in the first quarter of 2022 increased 3% compared to the fourth quarter of 2021 and 25% compared with the first quarter of 2021 reflecting increased shipments of projects out of backlog.

•Consolidated gross profit was 27% in the first quarter of 2022 versus 18% in the fourth quarter of 2021 and 23% in the first quarter of 2021. The improvement compared to prior year primarily was due to the acquisition of Arcadia, which had a higher 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 and higher material costs at DynaEnergetics. Additionally, 2021 gross profit was favorably impacted by the receipt of $846 ERC under the CARES Act.

•Consolidated selling, general and administrative expenses were $27,808 in the first quarter of 2022 compared with $13,172 in the first quarter of 2021. Arcadia’s incremental selling, general and administrative expenses were $9,880. The year-over-year increase also was attributable to higher 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 the first quarter of 2021 included receipt of $730 of ERC under the CARES Act.

•Cash of $15,376 decreased $15,434 from $30,810 at December 31, 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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~~Factors Affecting Results~~

•Consolidated sales of $55,658 decreased 3% versus the fourth quarter of 2020 primarily related to the impact of the February 2021 winter storm in Texas, which led to a two-week shutdown for certain customersIn North America, although crude prices and approximately $5,100 of sales at DynaEnergetics that were pushed out of the first quarter. NobelClad also experienced shipping delays on approximately $1,700 of sales caused by timing of final customer inspection and approval of clad plates prior to shipment and the impact of widespread logistical bottlenecks in Europe in March 2021. Consolidated sales decreased 24% versus the first quarter of 2020 as the COVID-19 pandemic drove down energy demand, which negatively impacted North American unconventional drilling andwell completion activity ~~and sales at DynaEnergetics. The winter storm in Texas and shipping delays at NobelClad also unfavorably impacted the year-over-year comparisons.~~

•~~DynaEnergetics sales of $38,172~~increased in the first quarter of ~~2021 increased 8% compared with the fourth quarter~~2022, supply chain disruptions including a shortage of ~~2020 primarily due~~sand, which is a key material used to a sequential increase in international sales, partially offset by the impact of the February 2021 winter storm in Texas. The 28% decline in sales compared with the first quarter of 2020 primarily was attributable to lower energy demand due to the COVID-19 pandemic, whichcomplete unconventional wells, impacted DynaEnergetics’ end customers’ activity levels. These disruptions negatively impacted ~~unconventional drilling and completion activity in North America.~~

•~~NobelClad’s~~unit sales of ~~$17,486~~DynaEnergetics’ fully integrated and factory-assembled DS perforating systems early in the ~~first quarter of 2021 decreased 20% compared to the fourth quarter of 2020 and decreased 14% compared with the first quarter of 2020. The decline relates to shipment delays on several orders.~~

•Consolidated gross profit of 23% in the first quarter of 2021 decreased from 33% in the first quarter of 2020. The decline occurred at DynaEnergetics due to lower average selling prices and under-absorption of fixed overhead and research and development expenses from a 28% year-over-year sales decline. Additionally, DynaEnergetics incurred one-time costs associated with a one-week production shutdown during the February 2021 winter storm in Texas.

•Consolidated selling, general and administrative expenses were $13,172 in the first quarter of 2021 compared with $16,653 in the first quarter of 2020. The decrease primarily was due to reductions in provisions for expected credit losses, reduced headcount, lower variable bonus expenses, and reduced travel expenses. Consolidated selling, general and administrative expenses in the first quarter of 2021 included approximately $1,000 of patent litigation expenses related to actions we have taken against companies that we believe have infringed on DynaEnergetics’ patents.

•Restructuring expenses of $127 in the first quarter of 2021 related to severance and legal expense for NobelClad relating to closing manufacturing operations in France in 2018. Restructuring expenses of $1,116 in the first quarter of 2020 primarily related to downsizing our direct labor workforce in response to the COVID-19 impact on demand at DynaEnergetics.

•Net cash of $66,780 (comprised of $66,780 in cash and marketable securities net of $0 of total debt) increased $24,121 from $42,659 (comprised of $53,923 in cash and marketable securities net of $11,264 of total debt) at December 31, 2020, primarily due to sales under our ongoing at-the-market equity offering program (“ATM equity program”).

~~Outlook~~

The early momentum in North America’s unconventional oil and gas sector in the first quarter of 2021 was disrupted by the February winter storm in Texas, our largest regional market. DynaEnergetics’ U.S. manufacturing and assembly operations experienced a one-week production shutdown and approximately $5,100 of sales related to customer shutdowns were pushed out of the first quarter. ~~Unconventional well completion activity~~Supply constraints began to ~~accelerate~~ease at the end of the ~~first~~ quarter ~~indicating that DynaEnergetics’ end markets are improving. However,~~which in combination with improving market conditions, led to a ~~sustained recovery for our business is predicated on stable oil prices, a successful global COVID-19 vaccine rollout, and achieving higher prices for our~~significant increase in unit sales of DS perforating systems. ~~Additionally, in 2021 we expect to incur increased expenses related to litigation necessary to protect and enforce our intellectual property and patents.~~

~~NobelClad experienced shipping delays in~~As operators implement their 2022 budgets, we believe well completion activity and customer pricing will continue to improve. In the ~~first~~fourth quarter of 2021, ~~related~~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 ~~timing of customer inspection~~wellsite, eliminating assembly operations and approval of clad plates prior to shipment and the impact of widespread logistical bottlenecks in Europe in March 2021. NobelClad ended the first quarter of 2021 with a $43,191 backlog, and the business has made progressrequiring fewer people on ~~a variety of application and product-development initiatives.~~location.

~~From time~~We believe many of the pre-wired carriers in the market incorporate features that violate DynaEnergetics patents, and we are continuing to ~~time,~~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 ~~also may continue~~expect these costs to use our ATM equity program, which was commenced in October 2020, to raise additional capital efficiently and responsibly. During the first quarter of 2021, we sold 397,820 shares of common stock at a weighted average price per share of $64.47 through our ATM equity program, and received net proceeds of $25,262.

~~Table of Contents~~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 building products industry is forecasting both short-term and long-term growth, particularly in Arcadia’s core geographic regions and end markets served. We are working to design and install new paint and anodizing lines to increase manufacturing capacity, which we expect will be 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.

Adjusted ~~operating~~net income ~~is defined as operating income plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance.~~

~~Adjusted net income~~(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 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 ~~operating~~net income ~~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 ~~impairment~~other non-recurring charges on DMC’s ~~operating~~net income ~~net income~~(loss) and diluted earnings per share, respectively.

Net ~~cash~~debt is a non-GAAP measure we use to supplement information in our Condensed Consolidated Financial Statements. We define net ~~cash~~debt as total ~~cash, cash equivalents and marketable securities~~debt less total ~~debt.~~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 similarly titled measures of other companies.

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Consolidated Results of Operations

Three months ended March 31, ~~2021~~2022 compared with three months ended March 31, ~~2020~~2021


		Three months ended March 31,											Three months ended March 31,
		2021			2020			$ change		% change			2022			2021			$ change		% change
Net sales	Net sales	$	55,658		$	73,564		$	(17,906)	(24)	%	Net sales	$	138,716		55,658			$	83,058	149	%
Gross profit	Gross profit	12,913			24,470			(11,557)		(47)	%	Gross profit	36,906			12,913			23,993		186	%
Gross profit percentage	Gross profit percentage	23.2		%	33.3		%					Gross profit percentage	26.6		%	23.2		%
COSTS AND EXPENSES:	COSTS AND EXPENSES:											COSTS AND EXPENSES:
General and administrative expenses	General and administrative expenses	7,929			8,126			(197)		(2)	%	General and administrative expenses	17,718			7,929			9,789		123	%
% of net sales	% of net sales	14.2		%	11.0		%					% of net sales	12.8		%	14.2		%
Selling and distribution expenses	Selling and distribution expenses	5,243			8,527			(3,284)		(39)	%	Selling and distribution expenses	10,090			5,243			4,847		92	%
% of net sales	% of net sales	9.4		%	11.6		%					% of net sales	7.3		%	9.4		%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	324			354			(30)		(8)	%	Amortization of purchased intangible assets	12,976			324			12,652		3,905	%
% of net sales	% of net sales	0.6		%	0.5		%					% of net sales	9.4		%	0.6		%

Restructuring expenses		127			1,116			(989)		(89)	%
Restructuring expenses and asset impairments												Restructuring expenses and asset impairments	32			127			(95)		(75	%)

Operating (loss) income		(710)			6,347			(7,057)		(111)	%
Other income, net		394			115			279		243	%
Operating loss												Operating loss	(3,910)			(710)			(3,200)		(451	%)
Other (expense) income, net												Other (expense) income, net	(209)			394			(603)		(153	%)
Interest expense, net	Interest expense, net	(135)			(238)			103		43	%	Interest expense, net	(1,024)			(135)			(889)		(659	%)
(Loss) income before income taxes		(451)			6,224			(6,675)		(107)	%
Income tax (benefit) provision		(883)			2,069			(2,952)		(143)	%
Net income		432			4,155			(3,723)		(90)	%
Adjusted EBITDA		$	4,047		$	11,287		$	(7,240)	(64)	%
Loss before income taxes												Loss before income taxes	(5,143)			(451)			(4,692)		(1,040	%)
Income tax benefit												Income tax benefit	(863)			(883)			20		(2	%)
Net (loss) income												Net (loss) income	(4,280)			432			(4,712)		(1,091	%)
Net (loss) income attributable to redeemable noncontrolling interest												Net (loss) income attributable to redeemable noncontrolling interest	(992)			—			(992)		n/a
Net (loss) income attributable to DMC Global Inc.												Net (loss) income attributable to DMC Global Inc.	(3,288)			432			(3,720)		(861	%)
Adjusted EBITDA attributable to DMC Global Inc.												Adjusted EBITDA attributable to DMC Global Inc.	$	10,505		$	4,047		$	6,458	160	%

Net sales ~~decreased $17,906 compared with~~were $138,716. Excluding the ~~first quarter~~Arcadia acquisition, net sales were $70,748, an increase of ~~2020~~27%, primarily due to ~~the impact of lower energy demand caused by the COVID-19 pandemic, which negatively impacted unconventional~~increased drilling and well completion activity in North ~~America. The first quarter~~America and a corresponding increase in unit sales of ~~2021 also was adversely impacted by sales at DynaEnergetics that were pushed out of the first quarter due to the February 2021 winter storm in Texas,~~ DynaEnergetics’ largest regional market. NobelClad also experienced shipping delays caused by timing of final customer inspection and approval of clad plates prior to shipment and the impact of widespread logistical bottlenecks in Europe in March 2021.DS perforating systems.

Gross profit percentage ~~decreased~~was 26.6%. Excluding the Arcadia acquisition, gross profit percentage was 23.5% versus 23.2% in the prior year. The improvement compared to ~~23.2% compared with the first quarter 2020~~prior year primarily was due to the impact of ~~lower~~higher DynaEnergetics sales volume on fixed manufacturing overhead expenses and lower average selling prices. Additionally, DynaEnergetics incurred one-time costs associated with the one-week production shutdown and sales pushed out of the first quarter related to the February 2021 winter storm in Texas. These items were partiallyexpenses. This increase was offset by less favorable project mix at NobelClad and a decline in high-margin international sales and higher material costs at DynaEnergetics. Additionally, 2021 gross profit was favorably impacted by the ~~benefit~~receipt of ~~the Employee Retention Credit (“ERC”)~~$846 ERC under the ~~Coronavirus Aid, Relief, and Economic Security Act, as amended (“~~CARES ~~Act”).~~Act.

General and administrative expenses ~~decreased $197~~increased $9,789 compared with the first quarter of ~~2020~~2021. The Arcadia acquisition contributed $6,143 to the increase. The remainder of the increase primarily was due to ~~headcount reductions~~higher outside services costs by $1,559, which was primarily related to patent infringement litigation in which DynaEnergetics is the plaintiff, higher salaries, benefits, and ~~lower~~other payroll-related costs by ~~$193 and a~~$300, which is net of the 2021 receipt of $335 ERC under the CARES Act, ~~benefit, partially offset~~an increase in stock-based compensation by ~~increases in other benefits costs.~~$533, and an increase from business-related travel by $465.

Selling and distribution expenses ~~decreased $3,284~~increased $4,847 compared with the first quarter of ~~2020~~2021.The Arcadia acquisition contributed $3,737 to the increase. The remainder of the increase primarily was due to ~~reductions in provisions for expected credit losses~~an increase from business-related travel by $2,261, reductions in salaries, benefits, other-payroll related costs, and variable bonus expenses by $466, including a $395 CARES Act benefit, reductions in travel expenses by $273, and lower shipping and freight$227, higher outside service costs by ~~$141~~$207 primarily related to ~~lower sales volume.~~enterprise resource planning and digital projects, and higher depreciation expense by $131.The first quarter of 2021 included $395 of ERC under the CARES Act.

~~Restructuring expenses~~ Operating loss was $3,910 in the first quarter of ~~$127~~2022 compared to $710 in ~~2021 primarily related~~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 CARES Act ~~additional severance liabilities which were agreed to with local labor authorities for employees terminated as part~~in the first quarter of ~~closing manufacturing operations in France in 2018.~~ ~~Expenses in~~ 2020 primarily related to downsizing our direct labor workforce at DynaEnergetics in response to declining crude oil prices and corresponding demand for well perforating systems due to the COVID-19 pandemic.2021.

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~~Operating loss~~ ~~of $710 primarily was due to lower earnings at DynaEnergetics in the first quarter of 2021.~~

Other ~~income,~~expense, net of $~~394~~209 in ~~2021~~the first quarter of 2022 primarily related to ~~gain on the sale of a fully depreciated fixed asset by DynaEnergetics combined with~~ net unrealized and realized foreign currency exchange ~~gains.~~losses. Currency gains and losses can arise when subsidiaries enter into inter-company and third-party transactions that are denominated in currencies other than their functional currency, including foreign currency forward contracts used to offset foreign exchange rate fluctuations on certain foreign currency denominated asset and liability positions.

Interest expense, net of $~~135~~1,024 ~~decreased~~increased compared with the first quarter of ~~2020~~2021 primarily due to ~~a lower average outstanding debt balance~~interest expense incurred on the $150,000 credit facility entered into in ~~2021.~~December 2021 in conjunction with the acquisition of Arcadia.

Income tax benefit of ~~$883~~$863 was recorded on ~~a pretax~~ loss before income taxes of ~~$451.~~$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 ~~pretax~~ income or loss before income taxes between these jurisdictions is one of the ~~main~~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 first quarter of 2021. The effective rate was impacted favorably by discrete stock-based compensation windfall benefits of $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 U.S. We recorded an income tax provision of $2,069 on pretax income of $6,224 for the first quarter of 2020. 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 effective rate was also impacted favorably by discrete items of $371.

Net ~~income~~loss attributable to DMC Global Inc for the three months ended March 31, ~~2021~~2022 was ~~$432,~~$3,288, or ~~$0.03~~$0.47 per diluted share, compared to net income of ~~$4,155,~~$432, or ~~$0.28~~$0.03 per diluted share, for the same period in ~~2020.~~2021.

Adjusted EBITDA ~~decreased~~increased compared with the first quarter of ~~2020~~2021 primarily due to the ~~factors discussed above.~~acquisition of Arcadia. 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 March 31,					Three months ended March 31,
		2021		2020			2022		2021
Net income		$	432	$	4,155
Net (loss) income						Net (loss) income	$	(4,280)	$	432
Interest expense, net	Interest expense, net	135		238		Interest expense, net	1,024		135
Income tax (benefit) provision		(883)		2,069
Income tax benefit						Income tax benefit	(863)		(883)
Depreciation	Depreciation	2,698		2,352		Depreciation	3,359		2,698
Amortization of purchased intangible assets	Amortization of purchased intangible assets	324		354		Amortization of purchased intangible assets	12,976		324
EBITDA	EBITDA	2,706		9,168		EBITDA	12,216		2,706

Restructuring expenses		127		1,116
Restructuring expenses and asset impairments						Restructuring expenses and asset impairments	32		127

Amortization of purchased inventory valuation step-up						Amortization of purchased inventory valuation step-up	258		—

Stock-based compensation	Stock-based compensation	1,608		1,118		Stock-based compensation	2,358		1,608
Other income, net		(394)		(115)
Adjusted EBITDA		$	4,047	$	11,287
Other expense (income), net						Other expense (income), net	209		(394)
Adjusted EBITDA attributable to redeemable noncontrolling interest						Adjusted EBITDA attributable to redeemable noncontrolling interest	(4,568)		—
Adjusted EBITDA attributable to DMC Global Inc.						Adjusted EBITDA attributable to DMC Global Inc.	$	10,505	$	4,047

Adjusted Net Income and Adjusted Diluted Earnings per Share decreased compared with the first quarter of ~~2020~~2021 primarily due to 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 measures to Adjusted Net Income and Adjusted Diluted Earnings Per Share.

Three months ended March 31, 2021
Pre-Tax Tax (Benefit) Net Diluted weighted average shares outstanding Diluted EPS
Net income, as reported $ (451) $ (883) $ 432 15,463,923 $ 0.03
Restructuring programs:
NobelClad 127 — 127 15,463,923 0.01
Adjusted net income $ (324) $ (883) $ 559 15,463,923 $ 0.04


	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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Three months ended March 31, 2020
Pre-Tax Tax Provision Net Diluted weighted average shares outstanding Diluted EPS
Net income, as reported $ 6,224 $ 2,069 $ 4,155 14,717,836 $ 0.28
Restructuring programs:
DynaEnergetics 938 — 938 14,717,836 0.06
NobelClad 59 — 59 14,717,836 —
Corporate 119 — 119 14,717,836 0.01
Adjusted net income $ 7,340 $ 2,069 $ 5,271 14,717,836 $ 0.35


	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.

~~DynaEnergetics~~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, ~~2021 compared with~~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 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, ~~2020~~

Three months ended March 31,
2021 2020 $ change % change
Net sales $ 38,172 $ 53,220 $ (15,048) (28) %
Gross profit 8,434 19,476 (11,042) (57) %
Gross profit percentage 22.1 % 36.6 %
COSTS AND EXPENSES:
General and administrative expenses 3,574 3,832 (258) (7) %
Selling and distribution expenses 3,140 5,840 (2,700) (46) %
Amortization of purchased intangible assets 199 260 (61) (23) %
Restructuring expenses — 938 (938) (100) %
Operating income 1,521 8,606 (7,085) (82) %
Adjusted EBITDA $ 3,521 $ 11,316 $ (7,795) (69) %
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.

~~Net sales~~ ~~were $15,048 lower than in~~Adjusted EBITDA was primarily driven by the ~~first quarter of 2020 due to sharply lower demand~~factors discussed above. See “Overview” above for ~~well perforating systems at DynaEnergetics as~~ the ~~COVID-19 pandemic-related collapse in oil and gas demand led to a downturn in well completions in the U.S. Sales in the first quarter of 2021 were adversely impacted by sales that were pushed out~~explanation of the ~~first quarter due to the February 2021 winter storm in Texas, DynaEnergetics’ largest regional market.~~

~~Gross profit percentage~~ ~~decreased to 22.1%compared with the first quarter~~use of 2020 primarily due to significant slowdown in market activity leading to lower fixed cost absorption and lower average selling prices. First quarter 2021 gross profit percentage was also adversely affected by one-time costs associated withnon-GAAP measures. The following is a ~~one-week production shutdown and sales that were pushed out~~reconciliation of the ~~first quarter due~~most directly comparable GAAP measure to ~~the February 2021 winter storm in Texas.~~

~~General and administrative expenses~~ decreased $258 compared with the first quarter of 2020 primarily due to reductions in salaries and wages, variable bonus and other payroll-related costs by $398, partially offset by an increase in outside service costs by $173.

Adjusted

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~~Selling~~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

DynaEnergetics

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	$	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	%

Net sales were $10,715 higher than the first quarter of 2021 due to a recovery in energy demand, which led to increased drilling and ~~distribution expenses~~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 percentage ~~decreased $2,700~~ increased to 25.8%compared with the first quarter of ~~2020~~2021 primarily due to ~~reductions in provisions for expected credit losses~~the impact of higher sales volume on fixed manufacturing overhead expenses. The first quarter of 2021 was favorably impacted by ~~$1,949, salaries and wages, variable bonus and other payroll-related costs by $358, travel expenses by $186, and shipping and freight costs by $139 on decreased sales volumes.~~the receipt of $437 ERC under the CARES Act.

~~Restructuring~~General and administrative expensesincreased $1,748 compared with the first quarter of 2021 primarily due to an increase in ~~2020 primarily~~outside services costs by $1,285 mostly related to ~~downsizing our direct labor workforce at~~patent infringement litigation in which DynaEnergetics is the plaintiff, as well as increases in ~~response to declining crude oil prices~~salaries, benefits, other-payroll related costs by $115, which is net of the 2021 receipt of $121 ERC under the CARES Act.

Selling and ~~corresponding demand for well perforating systems~~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 ~~COVID-19 pandemic.~~receipt of $254 in ERC under the CARES Act.

Operating income ~~decreased $7,085~~increased $1,777 compared with the first quarter of ~~2020~~2021 primarily due to the impact of ~~lower volume on fixed manufacturing overhead costs, and lower average selling prices, partially offset by reduced general and administrative and selling and distribution spending.~~higher sales.

Adjusted EBITDA ~~decreased~~increased compared with the first quarter of ~~2020~~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 ~~GAAP measure to Adjusted EBITDA.~~

Three months ended March 31,
2021 2020
Operating income $ 1,521 $ 8,606
Adjustments:
Restructuring expenses — 938
Adjusted operating income 1,521 9,544
Depreciation 1,801 1,512
Amortization of purchased intangibles 199 260
Adjusted EBITDA $ 3,521 $ 11,316

~~NobelClad~~

~~Three months ended March 31, 2021 compared with three months ended March 31, 2020~~

Three months ended March 31,
2021 2020 $ change % change
Net sales $ 17,486 $ 20,344 $ (2,858) (14) %
Gross profit 4,617 5,154 (537) (10) %
Gross profit percentage 26.4 % 25.3 %
COSTS AND EXPENSES:
General and administrative expenses 813 974 (161) (17) %
Selling and distribution expenses 1,948 2,551 (603) (24) %
Amortization of purchased intangible assets 125 94 31 33 %
Restructuring expenses 127 59 68 115 %
Operating income 1,604 1,476 128 9 %
Adjusted EBITDA $ 2,670 $ 2,369 $ 301 13 %

~~Net sales~~ of $17,486 decreased compared with the first quarter of 2020 primarily due to the timing of shipment of projects out of backlog, including shipment delays related to timing of final customer inspection and approval of clad plates prior to shipping and the impact of widespread logistical bottlenecks in Europe in March 2021.

~~Gross profit percentage~~ ~~of 26.4% increased compared with the first quarter of 2020 primarily due to a more favorable project mix.~~

~~General and administrative expenses~~ ~~decreased $161 compared with the first quarter of 2020 primarily due to reductions in salaries and wages, variable bonus and other payroll-related costs by $74 and outside service costs by $63.~~

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~~Selling and distribution expenses~~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 ~~decreased $603~~increased $4,375 compared with the first quarter of ~~2020~~2021 primarily due to ~~reductions in provisions for expected credit losses by $312, salaries and wages, variable bonus and other payroll-related costs by $108, travel expenses by $86, and outside service costs by $54.~~the timing of shipment of projects out of backlog.

~~Restructuring~~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 ~~$127~~2021 primarily due to higher 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 the first quarter of 2021 primarily due to increases in salaries, benefits, and other-payroll related costs by $96, which is net of the 2021 ~~related t~~o ~~additional severance liabilities which were agreed to with local labor authorities for employees terminated as part~~receipt of ~~closing manufacturing operations in France in 2018.~~$141 ERC under the CARES Act, and higher costs from the resumption of business travel by $126.

Operating income ~~increased $128~~decreased $899 compared with the first quarter of ~~2020 primarily due to~~2021 as lower gross profit percentage and higher general and administrative and selling and distribution expenses ~~and a~~ more ~~favorable project mix, partially~~than offset ~~by the impact of lower net sales.~~higher sales volumes.

Adjusted EBITDA ~~increased~~decreased compared with the first quarter of ~~2020~~2021 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.

Three months ended March 31,
2021 2020
Operating income 1,604 1,476
Adjustments:
Restructuring expenses 127 59
Adjusted operating income 1,731 1,535
Depreciation 814 740
Amortization of purchased intangibles 125 94
Adjusted EBITDA 2,670 2,369

Table of Contents


	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

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. ~~The COVID-19 pandemic drove~~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 ~~sharp decline in DynaEnergetics' core oil~~build-up of working capital, which included higher inventory levels due to increased prices and ~~gas end markets and corresponding well-completion activity and demand~~lead times for ~~its perforating systems late in the first quarter of 2020. In April 2020, DMC announced~~ several cost-containment actions to reduce our activity-based cost structure, limit spending and protect our balance sheet. These actions included reducing our workforce by 32%, implementing reduced work weekskey raw materials at DynaEnergetics ~~significantly cutting selling, general~~ and ~~administrative expenses, reducing our capital expenditures budget by 50%~~Arcadia, and ~~suspending the quarterly dividend. To further preserve liquidity, we entered into~~ an ~~amendment to our credit facility on June 25, 2020 to, among other things, maintain our~~expected increase in sales activity at DynaEnergetics in 2022. We have a fully undrawn and available $50,000 ~~borrowing capacity under our~~ revolving credit facility and to waive the debt service coverage ratio requirement for the quarters ending September 30, 2020, December 31, 2020, and March 31, 2021. While the decline in crude oil prices and oil and gas demand accelerated early in the second quarter of 2020, sales volume has improved in the three consecutive quarters through the first quarter of 2021. Though NobelClad customers in the downstream energy industry have delayed various projects, NobelClad’s order backlog increased to $43,191 at March 31, ~~2021 from $39,884 at December 31, 2020.~~

2022. We ~~have also taken action to allow flexibility~~may in ~~accessing~~the future access at-the-market offering programs or otherwise access the capital markets. We filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission, which became effective on May 28, 2020, pursuant to which we registered for sale up to $150 million of certain of our securities from time to time and on terms that we may determine in the future. On October 22, 2020, we commenced an at-the-market equity program under the shelf registration statement, which allows us to sell and issue up to $75 million in shares of our common stock from time to time, and since the inception of the program during the fourth quarter of 2020 we sold 1,006,180 shares of common stock for net proceeds of $51,002. In connection with the commencement of the at-the-market equity program, we also amended our credit facility to waive the requirement to repay outstanding amounts under the credit facility with proceeds from the program. Our ability to access this capital may be limited by market conditions at the time of any future potential sale. While we were able to sell shares during the fourth quarter of 2020 and first quarter of 2021,markets, but there can be no assurance that any future capital will be available on acceptable terms or at all.

~~These measures enabled us to improve our net~~We believe that cash ~~position from $42,659 at December 31, 2020 to $66,780 at March 31, 2021, maintain our fully undrawn~~ and ~~available $50,000 revolving credit facility, repay our capital expenditure term loan in full, and provide covenant relief for three quarters.~~

~~Table of Contents~~

~~With due consideration of the COVID-19 global pandemic and the resulting severe disruption of our end markets, we believe that~~cash equivalents on hand, cash flow from operations, funds available under our current credit facilities and any future replacement thereof ~~and potential proceeds from our at-the-market offering,~~ will be sufficient to fund the working capital, debt service, and other capital expenditure requirements of our current business operations for the foreseeable future. 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) continue selling products at profitable margins; and (iv) continue to implement cost-effective internal processes, our ability to meet cash requirements through operating activities could be impacted. Furthermore, any restriction on the availability of borrowings under our credit facilities could negatively affect our ability to meet future cash requirements. We will continue to monitor ~~the continuing unprecedented~~ financial ~~and~~ market conditions, including the ~~impacts COVID-19 will have~~related impact on credit availability and capital markets. ~~We also continue to pursue potential acquisitions; the completion of any acquisition may significantly increase our capital requirements.~~

Debt facilities

~~As of March 31,~~On December 23, 2021, ~~we had no outstanding borrowings under our credit facility. On March 8, 2018,~~in connection with the Arcadia acquisition, we entered into a five-year ~~$75,000 credit facility which replaced in its entirety our prior~~$200,000 syndicated credit ~~facility entered into on February 23, 2015. The~~ agreement (“credit ~~facility allows for revolving loans of up to $50,000 with~~facility”) which included a ~~$20,000 US dollar equivalent sublimit for alternative currency loans. In addition, the agreement provides for a $25,000 Capex Facility~~$150,000 Term Loan, which ~~was used to assist in financing our DynaEnergetics manufacturing expansion project in Blum, Texas. At the end of year one, the Capex Facility converted to a term loan which was~~is amortizable at ~~12.5%~~10% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in ~~2023. In February 2021, we repaid the outstanding Capex Facility balance~~2026, and allows for revolving loans of ~~$11,750.~~

up to $50,000. The credit facility has ~~a $100,000~~an accordion feature to increase the commitments by $100,000 under the revolving loan class and/or ~~to add~~by adding a term loan subject to approval by applicable lenders. We entered into the credit facility with a syndicate of ~~three~~four banks, with KeyBank, N.A. acting as administrative agent. The ~~syndicated~~ 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 $150,000 Term Loan and $50,000 revolving loan limit can be in the form of ~~one-, two-, three-,~~Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or ~~six-month LIBOR~~one month Adjusted Term SOFR loans. Additionally, USU.S. dollar borrowings on the revolving loan can be in the form of Base Rate loans (Base Rate borrowings are based on the greater of the administrative agent’s Prime ~~rates,~~rate, an adjusted Federal Funds rate or an adjusted ~~LIBOR~~SOFR rate). ~~LIBOR~~SOFR loans bear interest at the applicable ~~LIBOR~~SOFR rate plus an applicable margin (varying from 1.50% to 3.00%). Base Rate loans bear interest at the defined Base rate plus an applicable margin (varying from 0.50% to 2.00%).

Borrowings under the $20,000 Alternate Currency sublimit can be in euros, Canadian dollars, pounds sterling, and in any other currency acceptable to the administrative agent. Alternative currency borrowings denominated in euros, pounds sterling, and any other currency that is dealt with on the London Interbank Deposit Market shall be comprised of LIBOR loans and bear interest at the LIBOR rate plus an applicable margin (varying from 1.50% to 3.00%).

Additionally, the Amendment adds a Minimum Liquidity covenant requiring the total of cash and cash equivalents held by U.S. subsidiaries and available borrowing capacity under the credit facility to exceed $10,000 for the quarters ending September 30, 2020, December 31, 2020, and March 31, 2021. The Minimum Liquidity covenant is not applicable after the quarter ending March 31, 2021.

During the period from the date of the Amendment through August 31, 2020, borrowings outstanding under the credit facility bore interest at LIBOR plus a margin of 1.75% or at a Base Rate (as defined in the credit facility) plus a margin of 0.75%. For the period from September 1, 2020 through the date of receipt of the covenant compliance certificate for the quarter ending March 31, 2021, borrowings outstanding under the credit facility will bear interest at a LIBOR plus a margin of 1.75% to 3.00% or at a Base Rate plus a margin of 0.75% to 2.00%. In each case, the margin is based on the Company's Leverage Ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of such period to Consolidated Pro Forma EBITDA for such period. Additionally, the Amendment sets the minimum LIBOR at 0.75%.

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~~As of March 31, 2021 our available borrowing capacity was $50,000. Future borrowings are subject to compliance with financial covenants that could significantly limit such availability.~~

As of March 31, 2021, there were two significant financial covenants under our credit facility, a debt-to-EBITDA leverage ratio (“leverage ratio”) and a minimum liquidity ratio. The leverage ratio is defined in the credit facility for any trailing four quarter period as the ratio of Consolidated Funded Indebtedness (as defined in the agreement) on the last day of such period to Consolidated Pro Forma EBITDA for such period. For the March 31, 2021 reporting period, the maximum leverage ratio permitted by our syndicated credit facility was 3.00 to 1.0. The actual leverage ratio as of March 31, 2021, calculated in accordance with the credit facility, as amended, was 0.0 to 1.0.

The ~~Minimum Liquidity covenant requires the total of cash and cash equivalents held by U.S. subsidiaries and available borrowing capacity under the~~ credit facility ~~to exceed $10,000. The liquidity as of March 31, 2021, calculated in accordance with the credit facility, as amended, was $83,565.~~

~~Our credit facility, as amended, 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, and~~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 March 31, ~~2021, we~~2022, U.S. dollar revolving loans of zero and borrowings of $146,250 on the Term Loan were ~~in compliance with all financial covenants~~outstanding under our credit facility and ~~other provisions of~~ our ~~debt agreements.~~available borrowing capacity was $50,000.

We also maintain a line of credit with a German bank for ~~certain European operations.~~our NobelClad and DynaEnergetics operations in Europe. This line of credit provides a borrowing capacity of €7,000.

Other contractual obligations and commitments

Our ~~long-term~~ debt balance decreased to $0$143,710 at March 31, ~~2021~~2022 from ~~$8,139~~$147,425 at December 31, ~~2020.~~2021. Our other contractual obligations and commitments have not materially changed since December 31, ~~2020.~~2021.

Cash flows (used in) provided by operating activities

Net cash ~~provided by~~used in operating activities was ~~$2,176~~$4,584 for the three months ended March 31, ~~2021~~2022 compared with ~~$4,920~~net cash provided by operating activities of $2,176 in the same period last ~~year with the~~year. The decrease primarily was due to ~~the decline in net income. Cash used in net~~an increased use of cash for working capital, ~~in 2021~~which included higher ~~accounts receivable, higher~~ inventory ~~build~~levels due to increased prices and lead times for several key raw materials at DynaEnergetics and Arcadia, and an expected increase in ~~anticipation of increased~~ sales activity ~~in the second quarter due in part to shipping delays at NobelClad and the impact of the winter storm on sales~~ at DynaEnergetics in ~~the first quarter, as well as higher prepaid expenses and other assets driven by timing of annual insurance payments and recurring prepaid service contracts,~~2022. The increases in inventories were partially offset by higher accounts payable and ~~accrued expenses resulting from increased purchasing activity.~~contract liabilities.

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

Net cash flows used in investing activities for the three months ended March 31, 2022 of $1,536 related to the acquisitions of property, plant and equipment. Net cash flows provided by investing activities for the three months ended March 31, 2021 ofwere $3,715 and primarily related to ~~proceeds from maturities~~the maturity of marketable securities of $4,799 ~~from U.S. treasuries that were converted to cash upon maturity,~~ partially offset by the acquisitions of property, plant and equipment.

Cash flows (used in) provided by financing activities

Net cash flows used in ~~investing~~financing activities for the three months ended March 31, ~~2020 totaled $5,121 and related~~2022 of $9,335 included a distribution to the ~~acquisitions~~redeemable noncontrolling interest holder of ~~property, plant~~$4,400, a quarterly payment on our term loan of $3,750, and ~~equipment at DynaEnergetics.~~

~~Cash flows provided by (used in) financing activities~~

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 proceeds from our ATM equity program of $25,262 partially offset by repayment in full of the Capex Facility of $11,750 and treasury stock purchases of $2,435. ~~Net cash flows used in financing activities for the three months ended March 31, 2020 of $3,681 was due to dividend payments, treasury stock purchases, and repayments on the Capex Facility.~~

Payment of Dividends

~~We paid a quarterly cash dividend~~On April 23, 2020, DMC announced that its Board of ~~$0.125 per share in the first quarter of 2020. In April 2020, we~~Directors suspended the quarterly dividend indefinitely due to the uncertaineconomic outlook caused by the 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 income tax laws, and any other factors that our Board of Directors deems relevant. Any determination to pay cash dividends will be at the discretion of the Board of Directors.

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Critical Accounting Policies

~~Except as described below, our~~Our critical accounting policies have not changed from those reported in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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ITEM 3. Quantitative and Qualitative Disclosure about Market Risk

There were no material changes in market risk for changes in foreign currency exchange rates and interest rates from the information provided in Item 7A – Quantitative and Qualitative Disclosures About Market Risk in the company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Please see Note 12 to the Condensed Consolidated Financial 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, ~~2020.~~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 ~~2021,~~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, 2021 — $ —
February 1 to February 28, 2021 38,001 $ 65.75
March 1 to March 31, 2021 18,100 $ 65.37
Total 56,101 $ 65.63


	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

(1) Share purchases in ~~2021 included 37,723~~2022 represent shares withheld to offset tax withholding obligations that occurred upon the vesting of restricted common stock under the terms of the 2016 Equity Incentive Plan and 18,378 share purchases related to the participant elections to diversify contributions of equity awards into other investment options available to participants in the Company’s Amended and Restated Non-Qualified Deferred Compensation Plan.

(2) As of March 31, ~~2021,~~2022, the maximum number of shares that may yet be purchased would not exceed the employees’ portion of taxes withheld on unvested shares ~~(312,426)~~(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 ~~(182,202)~~(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 Coolspring property is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (The “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 March 31, ~~2021,~~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

~~10.8~~ ~~Employment Agreement dated~~ ~~May~~ ~~26, 20~~20 ~~, from the Company to Ian Grieves~~.

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.

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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.

101 The following materials from the Quarterly Report on Form 10-Q of DMC Global Inc. for the quarter ended March 31, ~~2021,~~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.

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:	~~April 22, 2021~~May 5, 2022	/s/ Michael Kuta
		Michael Kuta, Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

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	Consolidated Balance Sheet location	March 31, 2021		December 31, 2020
Deferred compensation assets	Other assets	$	9,447	$	7,596
Deferred compensation obligations	Other long-term liabilities	$	13,500	$	11,894


	Three months ended March 31, 2021
	Severance		Other Exit Costs		Total

NobelClad	$	116	$	11	$	127


Total	$	116	$	11	$	127


	Three months ended March 31, 2020
	Severance		Contract Termination Costs		Other Exit Costs		Total
DynaEnergetics	$	707	$	11	$	220	$	938
NobelClad	54		0		5		59
Corporate	119		0		0		$	119

Total	$	880	$	11	$	225	$	1,116


	December 31, 2020		Net expense		Payments and Other Adjustments		Currency Adjustments		March 31, 2021
Severance	$	958	$	116	$	(18)	$	(42)	$	1,014


Other exit costs	0		11		(8)		0		3
Total	$	958	$	127	$	(26)	$	(42)	$	1,017


	Three months ended March 31, 2021
	Pre-Tax		Tax (Benefit)		Net		Diluted weighted average shares outstanding	Diluted EPS
Net income, as reported	$	(451)	$	(883)	$	432	15,463,923	$	0.03
Restructuring programs:

NobelClad	127		—		127		15,463,923	0.01







Adjusted net income	$	(324)	$	(883)	$	559	15,463,923	$	0.04


	Three months ended March 31, 2020
	Pre-Tax		Tax Provision		Net		Diluted weighted average shares outstanding	Diluted EPS
Net income, as reported	$	6,224	$	2,069	$	4,155	14,717,836	$	0.28
Restructuring programs:
DynaEnergetics	938		—		938		14,717,836	0.06
NobelClad	59		—		59		14,717,836	—
Corporate	119		—		119		14,717,836	0.01






Adjusted net income	$	7,340	$	2,069	$	5,271	14,717,836	$	0.35


	Total number of shares purchased (1) (2)	Average price paid per share
January 1 to January 31, 2021	—	$	—
February 1 to February 28, 2021	38,001	$	65.75
March 1 to March 31, 2021	18,100	$	65.37
Total	56,101	$	65.63