DYNAMIC MATERIALS REPORTS RECORD FOURTH QUARTER
AND FULL-YEAR FINANCIAL RESULTS
Highlights:
o o Fourth quarter revenue increases 126% to $20.0 million
o o Company reports fourth quarter EPS of $0.41 versus $0.11 loss in year-ago
period
o o Year-over-year income from continuing operations up 243% on 51%
revenue increase
o o Backlog at Explosive Metalworking Group grows to a record
$27.5 million
BOULDER, Colo. Feb. 22, 2005 - Dynamic Materials Corporation (DMC)
(Nasdaq: BOOM), a leading international provider of explosion-bonded clad metal
plates and other metal fabrications, today announced record sales and earnings
results for the fourth quarter and fiscal year ended December 31, 2004.
Fourth quarter sales increased 126% to $20.0 million from $8.8 million in the
fourth quarter of 2003. Net income for the fourth quarter was $2.3 million, or
$0.41 per diluted share, versus a net loss of $0.6 million, or $0.11 per diluted
share, in the comparable period of 2003. Fourth quarter net income was
positively impacted by a $0.5 million reduction in income tax expense relating
principally to the recognition of certain research and development and foreign
tax credits. The net loss in the 2003 fourth quarter included a loss from
discontinued operations of $0.5 million, or $0.09 per diluted share.
Full-year Results
Sales in 2004 advanced 51% to $54.2 million from $35.8 million in 2003. Income
from continuing operations increased 243% to $4.4 million, or $0.81 per diluted
share, from $1.3 million, or $0.25 per diluted share, in 2003. Net income was
$2.8 million, or $0.53 per diluted share, versus a net loss of $0.7 million, or
$0.12 per diluted share, in 2003. Net income in 2004 was impacted by a loss from
discontinued operations of $1.6 million, or $0.28 per diluted share, related to
the Company's September 17, 2004, divestiture of its Spin Forge Division. The
Company's 2003 bottom-line performance was impacted by the combined 2003
operating losses of Spin Forge and the former Precision Machined Products
("PMP") division, which was sold on October 7, 2003, and a $0.7 million loss on
the sale of PMP, which was recorded in the third quarter of 2003.
Explosive Metalworking Group
Sales at the Company's Explosive Metalworking Group increased 131% to a
quarterly record $19.0 million versus sales of $8.2 million in the fourth
quarter of 2003. Approximately $4.3 million of the Group's fourth quarter sales
were attributable to a $5.5 million nickel hydrometallurgy project in Australia.
The Company expects to recognize the final $0.6 million associated with the
project during the first quarter of 2005. Group operating income increased to
$2.9 million from $0.5 million in the fourth quarter of 2003.
For the full fiscal year, Explosive Metalworking Group sales increased 56% to
$51.4 million from $33.0 million in 2003. Group operating income increased 131%
to $6.6 million versus $2.9 million in 2003. The increase reflects management's
efforts to leverage revenue growth and is indicative of a more favorable
absorption of both fixed manufacturing overhead expenses and operating expenses.
In addition to achieving record fourth quarter shipments, the Explosive
Metalworking Group ended the period with a record order backlog of $27.5
million. This compares with a backlog of $25.6 million at September 30, 2004,
and $11.7 million at the end of 2003.
AMK Welding
The Company's AMK Welding division reported fourth
quarter sales of $1.0 million, a 60% increase versus the $0.6 million reported
in the fourth quarter of 2003. AMK's fourth quarter operating income increased
to $0.2 million from $13,218 in the prior-year fourth quarter.
Full-year sales at AMK were $2.8 million versus $2.7 million in 2003, and
operating income was $0.3 million versus $0.5 million in 2003. The decline in
operating income was primarily attributable to a reduction in development work
on ground-based turbines, and an increase in operating expenses. Management said
that while it anticipates relatively slow first quarter sales at AMK, prospects
for the balance of the year and beyond appear good. One of the division's key
customers will initiate full-scale production of the previously mentioned
ground-based turbines, and demand for commercial aircraft engines - an important
market for AMK - continues to improve.
Management Commentary
Yvon Cariou, president and CEO, stated, "Our strong 2004 financial results are
indicative of robust project activity within several of our target markets,
including petrochemical, refining, hydrometallurgy, aluminum smelting and
shipbuilding. Domestic demand within the refinery industry has been especially
strong, due in part to customer compliance with new clean fuels regulations. We
do expect that the domestic demand in this sector will begin to moderate during
the coming year as we get closer to 2006 compliance deadline dates."
Cariou added, "Our recent performance also reflects the strong reputation we
have established with our domestic and international customer base in our core
explosion welding business. We are very focused on delivering high-quality,
reliable products on time and on budget. As a result of this commitment, we have
become the dominant clad supplier to many of the industries we serve.
"Our fourth quarter performance was unusually strong, thanks in part to our work
on the Ravensthorpe nickel project in Australia. However, despite reporting
record fourth quarter shipments, our order backlog at the end of the year was at
an all-time high. Given this momentum, we obviously are encouraged by our
prospects for continued growth."
Cariou said that during fiscal 2005, management intends to commit approximately
$2.4 million to capital improvements and expansion programs at its Mt. Braddock,
Nobelclad and AMK Welding operations. The investments will nearly double 2004
capital spending, and will allow the Company to more effectively pursue new
growth opportunities.
Note on Spin Forge Divestiture
As previously reported, DMC divested its Spin Forge Division on September 17,
2004, under a transaction that included the subleasing of the Spin Forge real
estate. It has been determined that the accounting treatment of the Spin Forge
real estate lease should have been changed to capital lease accounting in 2003
due to an increase in the value of the underlying property. Consequently, the
Company will restate its December 31, 2003, balance sheet to add a capital lease
asset of $2.9 million and an offsetting capital lease obligation of the same
amount under the assets and liabilities of discontinued operations. There will
be no impact on the Company's historical income statements. The Company
continues to hold an option to purchase the Spin Forge real estate for $2.9
million that can be exercised between November 1, 2006 and January 31, 2007.
Additional detail related to this balance sheet restatement will be available in
the Company's Form 10-K, which will be filed with the Securities and Exchange
Commission in March.
About Dynamic Materials Corporation
Based in Boulder, Colorado, Dynamic Materials Corporation is a leading
international metalworking company. Its products include explosion-bonded clad
metal plates and other metal fabrications for use in petrochemical, chemical
processing, power generation, commercial aircraft, defense and a variety of
other industries. The Company operates two business segments: the Explosive
Metalworking Group, which uses proprietary explosive processes to perform metal
cladding, and AMK Welding, which utilizes various technologies to weld
components for use in jet engines and ground-based turbines. For more
information, visit the Company's website at www.dynamicmaterials.com.
Except for the historical information contained herein, this news release
contains forward-looking statements that involve risks and uncertainties
including, but not limited to, the following: the ability to obtain new
contracts at attractive prices; the size and timing of customer orders;
fluctuations in customer demand; competitive factors; the timely completion of
contracts; the timing and size of expenditures; the timely receipt of government
approvals and permits; the adequacy of local labor supplies at the Company's
facilities; the availability and cost of funds; and general economic conditions,
both domestically and abroad; as well as the other risks detailed from time to
time in the Company's SEC reports, including the report on Form 10-K for the
year ended December 31, 2003.
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(unaudited)
Three months ended Twelve months ended
December 31, December 31,
2004 2003 2004 2003
NET SALES 20,026 8,849 54,165 35,779
COST OF PRODUCTS SOLD 14,773 6,785 40,559 26,802
Gross profit 5,253 2,064 13,606 8,977
COSTS AND EXPENSES:
General and
administrative
expenses 1,233 764 3,335 2,645
Selling expenses 912 830 3,383 3,016
Total costs and
expenses 2,145 1,594 6,718 5,661
INCOME FROM OPERATIONS
OF CONTINUING
OPERATIONS 3,108 470 6,888 3,316
OTHER INCOME (EXPENSE):
Other income
(expense), net 5 (3) 7 (19)
Interest expense (203) (121) (554) (518)
Interest income 5 7 23 9
INCOME BEFORE INCOME
TAXES AND
DISCONTINUED
OPERATIONS 2,915 353 6,364 2,788
INCOME TAX PROVISION 619 436 1,961 1,504
INCOME (LOSS) FROM
CONTINUING OPERATIONS 2,296 (83) 4,403 1,284
DISCONTINUED OPERATIONS:
Loss from operations
of discontinued
operations, net
of tax benefit -- (496) (783) (1,283)
Loss on sale of
discontinued
operations, net
of tax benefit -- -- (787) (710)
Loss from
discontinued
operations -- (496) (1,570) (1,993)
NET INCOME (LOSS) 2,296 (579) 2,833 (709)
INCOME (LOSS) PER
SHARE - BASIC:
Continuing operations $0.44 $(0.02) $0.86 $0.25
Discontinued operations -- (0.09) (0.31) (0.39)
Net Income (Loss) $0.44 $(0.11) $0.55 $(0.14)
INCOME (LOSS) PER
SHARE - DILUTED:
Continuing operations $0.41 $(0.02) $0.81 $0.25
Discontinued operations -- (0.09) (0.28) (0.37)
Net Income (Loss) $0.41 $(0.11) $0.53 $(0.12)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING -
Basic 5,207,765 5,073,378 5,134,540 5,067,324
Diluted 5,689,495 5,073,378 5,484,045 5,310,806