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FOR IMMEDIATE RELEASE CONTACT:
April 27, 2006 Pfeiffer High Investor Relations, Inc.
Geoff High
303-393-7044
DYNAMIC MATERIALS REPORTS RECORD FIRST QUARTER FINANCIAL RESULTS
Selected Highlights
o Operating income up 137% to $6.4 million on 44% increase in sales versus
first quarter last year
o Income from continuing operations up 151% to $4.1 million versus first
quarter last year
o $42.3 million backlog at Explosive Metalworking segment again a record o
Cash position improves to $13.1 million
BOULDER, Colo. - April 27, 2006 - Dynamic Materials Corporation (DMC) (Nasdaq:
BOOM), a leading provider of explosion-welded clad metal plates and associated
services, today reported financial results for its first quarter ended March 31,
2006.
First quarter sales increased 44% to $25.2 million from $17.5 million in the
first quarter last year, and were up 9% from $23.2 million reported in last
year's fourth quarter. Gross margin improved to 37% from 27% in the same quarter
a year ago, and from 32% in the 2005 fourth quarter. The gross margin
improvement was attributable to the benefit of spreading fixed manufacturing
overhead expenses over higher sales volume, as well as positive changes in
product mix and order size at the company's Explosive Metalworking segment.
During the first quarter, the segment performed work on two significant
contracts, one involving a major North American refinery expansion and the other
relating to an international petrochemical project.
Income from operations during the first quarter advanced 137% to $6.4 million
from $2.7 million in the comparable year-ago quarter, and increased 24% from
$5.2 million reported in last year's fourth quarter. Net income increased 233%
to $5.5 million, or $0.45 per diluted share, from $1.6 million, or $0.14 per
diluted share, in last year's first quarter. First quarter net income was up 59%
from $3.5 million, or $0.28 per diluted share, reported in last year's fourth
quarter. First quarter net income included a gain from discontinued operations
of $1.4 million, net of tax, which is attributable to the sale of a real estate
purchase option associated with the company's former Spin Forge division.
Excluding such gain, income from continuing operations was $4.1 million, or
$0.34 per diluted share.
Explosive Metalworking
The company's Explosive Metalworking segment reported sales of $24.2 million, up
42% from $17.0 million reported in the first quarter a year ago, and an increase
of 9% versus $22.2 million reported in last year's fourth quarter. Operating
income increased 135% to $6.7 million from $2.8 million in the comparable
year-ago quarter, and was up 31% from fourth quarter 2005 operating income of
$5.1 million. The segment's order backlog increased slightly to $42.3 million at
the end of the quarter, eclipsing the previous all-time high of $42.0 million
established as of December 31, 2005.
AMK Welding
The company's AMK Welding segment recorded sales of $1.0 million, up 84% from
$543,000 reported in the first quarter last year, and flat versus $1.0 million
recorded in last year's fourth quarter. AMK achieved operating income of
$108,000 as compared with a loss from operations of $115,000 in the comparable
year-ago quarter. AMK's operating income in last year's fourth quarter was
$123,000.
Management Commentary
"We are very encouraged by our first quarter performance, which represents a
strong start to fiscal 2006," said Yvon Cariou, president and chief executive
officer. "In addition to achieving significant revenue and earnings growth, we
maintained a record-level order backlog at our Explosive Metalworking segment.
These results are indicative of the continued strong demand we are experiencing
in our worldwide target markets. They also reflect the talent and experience of
DMC's sales, production and support teams, which we believe represent some of
our greatest corporate assets."
Rick Santa, chief financial officer, said, "First quarter financial results were
positively impacted by deliveries on two large contracts. Our gross margin
performance, in particular, benefited from shipments under these orders and an
otherwise favorable product mix. Our sales, net earnings and gross margins are
likely to continue to fluctuate from quarter-to-quarter and, in light of the
record results posted in the first quarter of 2006, we expect that our sales,
net earnings and gross margins for the second quarter may be somewhat lower than
they were in the first quarter."
Santa added, "Cash, cash equivalents and marketable securities have increased by
more than $5.4 million since December 31, 2005, and stood at $13.1 million at
the end of the first quarter. Our strong working capital position has allowed us
to commence our previously discussed capital improvements and facilities
expansion as scheduled."
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 upstream oil and gas, oil refinery, petrochemicals, hydrometallurgy,
aluminum production, shipbuilding, power generation, industrial refrigeration
and similar industries. The company operates two business segments: Explosive
Metalworking, which uses proprietary explosive processes to fuse different
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: our ability to obtain new
contracts at attractive prices; the size and timing of customer orders and
shipment; fluctuations in customer demand; changes to customer orders;
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 our facilities; current or future limits on
manufacturing capacity at our various operations; the availability and cost of
funds; and general economic conditions, both domestic and foreign, impacting our
business and the business of the end-market users we serve; 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, 2005.
###
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(Dollars in Thousands, Except Share Data)
(unaudited)
2006 2005
----------------------------------
NET SALES $ 25,175 $ 17,510
COST OF PRODUCTS SOLD 15,894 12,860
----------------------------------
Gross profit 9,281 4,650
----------------------------------
COSTS AND EXPENSES:
General and administrative expenses 1,527 809
Selling expenses 1,324 1,126
----------------------------------
Total costs and expenses 2,851 1,935
----------------------------------
INCOME FROM OPERATIONS OF CONTINUING OPERATIONS
OTHER INCOME (EXPENSE): 6,430 2,715
Other income (expense), net (6) 5
Interest expense (29) (86)
Interest income 123 4
----------------------------------
INCOME BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS 6,518 2,638
INCOME TAX PROVISION 2,379 990
----------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE
DISCONTINUED OPERATIONS 4,139 1,648
DISCONTINUED OPERATIONS:
Income from discontinued operations, net of tax 1,357 -
----------------------------------
Income from discontinued operations 1,357 -
----------------------------------
NET INCOME $ 5,496 $ 1,648
==================================
INCOME PER SHARE - BASIC:
Continuing operations $ 0.35 $ 0.15
Discontinued operations 0.12 -
----------------------------------
Net income $ 0.47 $ 0.15
==================================
INCOME PER SHARE - DILUTED:
Continuing operations $ 0.34 $ 0.14
Discontinued operations 0.11 -
----------------------------------
Net income $ 0.45 $ 0.14
==================================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING -
Basic 11,768,098 10,694,260
==================================
Diluted 12,217,547 11,861,100
==================================
ANNUAL DIVIDENDS DECLARED PER COMMON SHARE $ 0.15 $ -
==================================
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(unaudited)
ASSETS March 31, December 31,
- ------ 2006 2005
(unaudited)
------------------------ -----------------------
Cash and cash equivalents $ 13,114 $ 5,763
Marketable securities - 1,950
Loan to related party 1,211 -
Accounts receivable, net 15,002 15,576
Inventories 12,644 11,869
Other current assets 3,095 1,394
------------------------ -----------------------
Total current assets 45,066 36,552
Property, plant and equipment, net 12,790 12,572
Deferred tax asset 1,824 819
Other long-term assets 1,715 5,368
------------------------ -----------------------
Total assets $ 61,395 $ 55,311
======================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 7,486 $ 7,278
Other current liabilities 10,139 6,987
Current portion of long-term debt 540 573
------------------------ -----------------------
Total current liabilities 18,165 14,838
Long-term debt 2,185 2,221
Other long-term liabilities 1,756 3,297
Stockholders' equity 39,289 34,955
------------------------ -----------------------
Total liabilities and stockholders' equity $ 61,395 $ 55,311
======================== =======================
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(Dollars in Thousands)
(unaudited)
2006 2005
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,496 $ 1,648
Adjustments to reconcile net income to net cash
provided by operating activities -
Income from discontinued operations, net of tax (1,357) -
Depreciation and amortization 317 366
Amortization of capitalized debt issuance costs 7 13
Stock-based compensation 336 -
Provision for deferred income taxes 320 (14)
Tax benefit related to stock options - 214
Change in working capital, net 1,374 27
----------------------------------
Net cash flows provided by operating activities
6,493 2,254
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of marketable securities 1,950 -
Acquisition of property, plant and equipment (469) (577)
Loan to related party (1,206) -
Change in other non-current assets 79 78
Payment received on other receivables related to discontinued
operations 3 874
Cash flows provided by investing activities of discontinued
operations 2,197 -
----------------------------------
Net cash flows provided by investing activities
2,554 375
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on lines of credit, net (45) (3,170)
Payments on long-term debt (45) (907)
Payment of dividends (1,766) -
Net proceeds from issuance of common stock 74 620
Tax benefit related to stock options 54 -
Other cash flows from financing activities 7 4
----------------------------------
Net cash flows used in financing activities
(1,721) (3,453)
----------------------------------
EFFECTS OF EXCHANGE RATES ON CASH 25 (57)
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,351 (881)
CASH AND CASH EQUIVALENTS, beginning of the period 5,763 2,404
----------------------------------
CASH AND CASH EQUIVALENTS, end of the period $ 13,114 $ 1,523
==================================