DYNAMIC MATERIALS REPORTS FOURTH QUARTER
AND FULL-YEAR 2005 FINANCIAL RESULTS
Selected Highlights
* Strong fourth quarter bookings push year-end backlog in the Explosive
Metalworking segment to an all-time high of $42 million, up 23% from end
of Q3
* Fourth quarter net income advances 50% to $3.5 million on 16% increase in
revenue versus comparable 2004 period
* Full-year net income increases 266% on 46% increase in revenue versus
2004
* Company plans major expansion of Pennsylvania Explosive Metalworking
facility
* Board declares annual dividend of $0.15 per share
BOULDER, Colo., Feb. 28 /PRNewswire-FirstCall/ -- Dynamic Materials Corporation
(DMC) (Nasdaq: BOOM), a leading provider of explosion-welded clad metal plates
and associated services, today reported financial results for its fourth quarter
and full fiscal year ended December 31, 2005.
Fourth quarter sales increased 16% to $23.2 million versus $20.0 million in the
fourth quarter last year, and increased 14% from sales of $20.2 million in this
year's third quarter. Income from operations increased 67% to $5.2 million
versus $3.1 million in last year's fourth quarter. Operating income was up 18%
versus the $4.4 million reported in the third quarter.
Net income improved 50% to $3.5 million, or $0.28 per diluted share, versus net
income of $2.3 million, or $0.20 per diluted share, in the fourth quarter last
year. Sequentially, fourth quarter net income increased 10% versus net income of
$3.2 million, or $0.26 per diluted share, in this year's third quarter. The
earnings-per-share and shares outstanding figures from prior quarters have been
adjusted to reflect the company's fourth quarter 2005 two-for-one stock split.
Actual shares outstanding at December 31, 2005 was 11,758,920.
Explosive Metalworking
Fourth quarter sales in the company's Explosive Metalworking segment increased
17% to $22.2 million from $18.9 million in last year's fourth quarter, and were
up 16% versus sales of $19.2 million in the third quarter. Operating income
increased 77% to $5.1 million from $2.9 million in the comparable period last
year, and was up 23% from the $4.1 million reported in the third quarter. The
segment ended the quarter with an all-time high order backlog of $42.0 million,
up 23% from $34.1 million reported at the end of the third quarter.
AMK Welding
The company's AMK Welding segment recorded sales of $1.0 million, flat versus
sales of $1.0 million in last year's comparable quarter and down slightly from
$1.1 million in the prior quarter. Fourth quarter operating income at AMK was
$123,000 versus $235,000 in the fourth quarter last year and $258,000 in this
year's third quarter. During the fourth quarter, AMK announced it had entered
into a five-year supply agreement with a manufacturer of ground-based power
turbines. Sales associated with the contract have been impacted by late-stage
design modifications.
2005 Full-Year Results
For the full fiscal year, sales increased 46% to $79.3 million compared with
sales of $54.2 million in 2004. Full-year net income advanced 266% to $10.4
million, or $0.86 per diluted share, versus net income of $2.8 million, or $0.27
per diluted share, during the prior year. Last year's net income was impacted by
a loss from discontinued operations of $1.6 million, or $0.14 per diluted share,
associated with the company's former Spin Forge division.
Full-year sales in the Explosive Metalworking segment were $75.6 million, up 47%
versus $51.4 million in 2004. Operating income increased 129% to $15.2 million
compared with $6.6 million during the prior year.
AMK Welding's full-year sales increased 33% to $3.7 million compared with $2.8
million during 2004. Operating income improved 118% to $608,000 compared with
$279,000 in the prior year.
Cash, cash equivalents and marketable securities at December 31, 2005, increased
to $7.7 million from $2.4 million at the end of 2004. Stockholders' equity
increased 74% during the same period to $34.9 million from $20.1 million.
Outstanding bank lines of credit and term debt were reduced to $2.8 million from
$9.3 million at the end of the prior year.
Management Commentary
Yvon Cariou, president and CEO, said, "The fourth quarter represented a strong
finish to what was a very solid year for Dynamic Materials. Robust order volume
during the month of December pushed our year-end order backlog for
explosion-welded plates to $42.0 million. This backlog exceeds our previous
all-time high by a wide margin and is a clear indication of the demand we are
seeing from within our global target markets."
Rick Santa, chief financial officer, said the fourth quarter was positively
impacted by shipments associated with a $5.3 million order for a nickel
hydrometallurgy project in New Caledonia and initial deliveries on the $6.0
million Kuwait Olefins contract announced in August of last year. "Shipments for
the New Caledonia project are largely complete, and we expect most of the $1.1
million remaining on the Kuwait order to ship in the first quarter. Deliveries
on the recent $7.5 million North American refinery order commenced during
January and will continue through the first half of 2006."
Capital Expansion
The company intends to make significant investments in additional production
capacity at both of its divisions in anticipation of continued growth. Cariou
said, "Our original 2006 capital expenditures budget of $4.5 million represents
a more than 50% increase from what we spent in 2005 and has been augmented by
recent board approval to spend up to an additional $8 million on the expansion
of our explosion welding facility in Mount Braddock, Pennsylvania. We invested
approximately $7.1 million in the original construction of this plant in 1999,
so this clearly represents a major expansion initiative. We hope to complete
this expansion project during the first half of 2007."
Santa said the capital expenditures will be funded with cash flow from
operations. "Our strong cash flow performance is allowing us to invest in new
capacity while we simultaneously reinforce our balance sheet and increase our
annual dividend by 50%."
Annual Dividend
DMC's board of directors has declared a cash dividend of $0.15 per share. This
represents a 50% increase from the dividend paid last year. The dividend will be
paid on March 22, 2006 to stockholders of record as of March 10, 2006.
About Dynamic Materials Corporation
Based in Boulder, Colorado, Dynamic Materials Corporation is a leading
international metalworking company. Its products include explosion-welded clad
metal plates and other metal fabrications for use in a variety of industries,
including petrochemicals, refining, hydrometallurgy, aluminum smelting and
shipbuilding. The company operates two business segments: Explosive
Metalworking, which uses proprietary explosive processes to fuse dissimilar
metals and alloys, and AMK Welding, which utilizes various technologies to weld
components for use in power-generation turbines, as well as commercial and
military jet engines. 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, 2004.
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,
2005 2004 2005 2004
NET SALES $23,167 $19,950 $79,291 $54,165
COST OF PRODUCTS SOLD 15,865 14,696 55,856 40,559
Gross profit 7,302 5,254 23,435 13,606
COSTS AND EXPENSES:
General and
administrative
expenses 1,325 1,233 4,051 3,335
Selling expenses 772 912 3,616 3,383
Total costs and
expenses 2,097 2,145 7,667 6,718
INCOME FROM OPERATIONS OF
CONTINUING OPERATIONS 5,205 3,109 15,768 6,888
OTHER INCOME (EXPENSE):
Other income
(expense), net (15) 6 (7) 7
Interest expense, net 55 (198) (156) (531)
INCOME BEFORE INCOME TAXES
AND DISCONTINUED
OPERATIONS 5,245 2,917 15,605 6,364
INCOME TAX PROVISION 1,788 619 5,233 1,961
INCOME FROM CONTINUING
OPERATIONS BEFORE
DISCONTINUED
OPERATIONS 3,457 2,298 10,372 4,403
DISCONTINUED OPERATIONS:
Loss from operations
of discontinued
operations, net of
tax -- -- -- (783)
Loss on sale of
discontinued
operations, net of
tax -- -- -- (787)
Loss from discontinued
operations -- -- -- (1,570)
NET INCOME $3,457 $2,298 $10,372 $2,833
INCOME PER SHARE - BASIC:
Continuing operations $0.29 $0.22 $0.92 $0.43
Discontinued operations -- -- -- (0.15)
Net Income $0.29 $0.22 $0.92 $0.28
INCOME PER SHARE -
DILUTED:
Continuing operations $0.28 $0.20 $0.86 $0.41
Discontinued operations -- -- -- (0.14)
Net Income $0.28 $0.20 $0.86 $0.27
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
Basic 11,731,186 10,415,530 11,290,053 10,269,080
Diluted 12,186,659 11,378,990 12,086,884 10,968,090
DIVIDENDS DECLARED PER
COMMON SHARE $-- $-- $0.10 $--
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2005 AND 2004
(Dollars in Thousands)
(unaudited)
ASSETS 2005 2004
Cash and cash equivalents $5,763 $2,404
Marketable securities 1,950 --
Accounts receivable, net 15,576 13,936
Inventories 11,869 8,000
Other current assets 1,394 1,906
Total current assets 36,552 26,246
Property, plant and equipment, net 12,572 11,844
Deferred tax asset 2,049 --
Other long-term assets 5,367 5,663
Total assets $56,540 $43,753
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $7,278 $6,041
Other current liabilities 6,987 4,519
Bank lines of credit -- 3,216
Current portion of long-term debt 573 3,186
Total current liabilities 14,838 16,962
Long-term debt 2,221 2,906
Other long-term liabilities 4,526 3,815
Stockholders' equity 34,955 20,070
Total liabilities and stockholders' equity $56,540 $43,753
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(Dollars in Thousands)
(unaudited)
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $10,372 $2,833
Adjustments to reconcile net income
to net cash provided by operating
activities -
Loss from discontinued operations -- 1,570
Depreciation and amortization 1,527 1,387
Amortization of capitalized debt
issuance costs 41 79
Provision for deferred income taxes (1,431) 1,181
Tax benefit related to stock options 3,728 311
Change in working capital, net (2,599) (2,817)
Net cash flows provided by continuing
operations 11,638 4,544
Net cash flows used in discontinued
operations -- (1,434)
Net cash flows provided by operating
activities 11,638 3,110
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment received on other receivable 1,016 580
Release of restricted cash from bond
proceeds -- 190
Acquisition of property, plant and
equipment (2,848) (1,138)
Change in other non-current assets 288 (6)
Investment in marketable securities (1,950) --
Investing activities of discontinued
operations -- (45)
Net cash flows used in investing
activities (3,494) (419)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings / (repayments) on lines of
credit, net (3,291) 1,291
Payments on long-term debt (1,818) (2,813)
Payment of dividends (1,155) --
Net proceeds from issuance of common
stock 1,555 889
Other cash flows from financing
activities 47 (264)
Net cash flows used in financing
activities (4,662) (897)
EFFECTS OF EXCHANGE RATES ON CASH (123) 88
NET INCREASE IN CASH AND CASH
EQUIVALENTS 3,359 1,882
CASH AND CASH EQUIVALENTS, beginning
of the period 2,404 522
CASH AND CASH EQUIVALENTS, end of the
period $5,763 $2,404
SOURCE Dynamic Materials Corporation
-0- 02/28/2006
/CONTACT: Geoff High of Pfeiffer High Investor Relations, Inc.,
+1-303-393-7044, for Dynamic Materials Corporation/
/Web site: http://www.dynamicmaterials.com /
(BOOM)