DMC Dynamic Materials
CORPORATION
FOR IMMEDIATE RELEASE CONTACT:
August 3, 2006 Pfeiffer High Investor Relations, Inc.
Geoff High
303-393-7044
DYNAMIC MATERIALS REPORTS RECORD SECOND QUARTER FINANCIAL RESULTS
Selected Highlights
o Net income increases 137% to $5.0 million, or $0.41 per share, versus
Q2 of 2005
o Operating income up 127% on 51% sales increase versus Q2 last year
o Explosive Metalworking backlog of $52.4 million at end of Q2 up 24%
from end of Q1
o Cash position improves to $14.0 from $13.1 million at end of first
quarter
BOULDER, Colo. - August 3, 2006 - Dynamic Materials Corporation (DMC) (Nasdaq:
BOOM), a leading provider of explosion-welded clad metal plates, today reported
record financial results for its second quarter ended June 30, 2006.
Sales in the second quarter advanced 51% to $27.8 million from $18.4 million in
the second quarter last year, and were up 10% from $25.2 million reported in
this year's first quarter. Second quarter gross margin was 36% versus 28% in the
comparable year-ago quarter, and 37% in the first quarter. Income from
operations increased 127% to $7.8 million from $3.4 million in the second
quarter last year, and was up 22% from $6.4 million reported in the most recent
quarter.
Net income increased 137% to $5.0 million, or $0.41 per diluted share, from $2.1
million, or $0.18 per diluted share, in last year's second quarter. First
quarter 2006 income from continuing operations was $4.1 million, or $0.34 per
diluted share. Including a gain from discontinued operations of $1.4 million,
net of tax, which was attributable to the sale of a real estate purchase option
associated with the company's former Spin Forge division, net income in this
year's first quarter was $5.5 million, or $0.45 per diluted share.
Explosive Metalworking
DMC's Explosive Metalworking segment reported sales of $26.6 million, up 55%
from $17.2 million reported in the second quarter a year ago, and an increase of
10% versus $24.2 million reported in this year's first quarter. Operating income
increased 149% to $7.7 million from $3.1 million in the comparable year-ago
quarter, and was up 16% from first quarter operating income of $6.7 million. At
the end of the second quarter, the segment's order backlog was a record $52.4
million, surpassing by 24% the previous all-time high of $42.3 million reported
at the end of the first quarter.
AMK Welding
Sales at the company's AMK Welding segment were $1.1 million in both this and
last year's second quarter and $1.0 million in this year's first quarter.
Operating income was $122,000 versus $343,000 in the comparable year-ago quarter
and $108,000 in this year's first quarter. The quarter-over-quarter decline
resulted primarily from increased manufacturing overhead and higher
administrative expenses associated with AMK's preparation for an anticipated
increase in production levels.
Management Commentary
"Our second quarter performance, which included high-water marks for backlog and
revenue, reflects continued strong order volume for our explosion welded plates,
as well as our capacity to effectively address this demand," said Yvon Cariou,
president and chief executive officer. "The industrial markets we serve continue
to invest in capital projects. In fact, our roster of anticipated domestic and
international order opportunities is as robust as ever. While the size and
timing of these prospective orders could lead to quarter-to-quarter fluctuations
in our financial performance, we believe that our ability to capture a
meaningful portion of these opportunities should allow us to maintain our
long-range growth trends."
"We have previously announced that we are making major investments in new
capacity, particularly at our Mount Braddock, Pennsylvania facility," Cariou
added. "To better meet anticipated market demand, we have added $1.6 million of
specialized equipment to the Mount Braddock expansion project, increasing the
project budget to $9.6 million and our 2006 consolidated capital expenditure
budget to $14.1 million."
Rick Santa, chief financial officer, said, "Second-quarter sales were better
than anticipated due in part to early fulfillment of certain orders originally
scheduled for delivery in the third quarter. Our current expectations are that
our top- and bottom-line performance during the second half of 2006 will be
comparable to our results during the first half of the year. Although sales and
gross margin during the third quarter may be below results reported in the first
and second quarters, our fourth quarter performance should be strong thanks in
part to our expected deliveries on the $11 million refinery order we received
during the second quarter."
"We continued to strengthen our balance sheet during the second quarter," Santa
added. "We ended the period with cash and cash equivalents of $14.0 million, an
increase of 143% since the end of fiscal 2005 and an increase of 7% since the
end of the first quarter. Working capital at June 30 stood at $30.6 million and
our current ratio was approximately 3:1."
Six-Month Results
At the six-month mark, sales were up 47% to $52.9 million compared with sales of
$35.9 million at the mid-year mark last year, while gross margin improved to 36%
from 27% in the same period last year. Income from operations increased 131% to
$14.3 million compared with $6.2 million in the comparable year-ago period. Net
income for the six months advanced 179% to $10.5 million, or $0.86 per diluted
share, versus net income of $3.8 million, or $0.32 per diluted share, during the
same period a year ago.
The Explosive Metalworking segment reported six-month sales of $50.8 million, a
49% increase versus sales of $34.2 million at the six-month mark a year ago.
Operating income increased 142% to $14.4 million compared with $5.9 million
during the same period last year. The improvement in operating income reflects
both increased sales and more effective absorption of fixed manufacturing
overhead costs and operating expenses.
Six-month sales at AMK Welding were $2.1 million compared with $1.7 million
during the comparable period last year. Operating income for the period was
$230,000 compared with operating income of $227,000 during the same period a
year ago.
Conference call information
Management will hold a conference call to discuss second quarter results today
at 5:00 p.m. Eastern (3:00 p.m. Mountain). Investors are invited to listen to
the call live via the Internet at
www.dynamicmaterials.com, or by dialing into the teleconference at 866-543-6405
(617-213-8897 for international callers) and entering the passcode 95208936.
Participants should access the website at least 15 minutes early to register and
download any necessary audio software. A replay of the webcast will be available
for 30 days and an audio replay will be available through August 5, 2006, by
calling 888-286-8010 (617-801-6888 for international callers) and entering the
passcode 61982125.
About Dynamic Materials Corporation
Based in Boulder, Colorado, Dynamic Materials Corporation is a leading
international metalworking company. Its products, which are typically used in
industrial capital projects, 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 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 AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Dollars in Thousands, Except Share Data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------
NET SALES $ 27,754 $ 18,376 $ 52,928 $ 35,886
COST OF PRODUCTS SOLD 17,833 13,161 33,727 26,020
----------------------------------------------------
Gross profit 9,921 5,215 19,201 9,866
----------------------------------------------------
COSTS AND EXPENSES:
General and administrative expenses 1,153 898 2,681 1,707
Selling expenses 946 870 2,270 1,995
----------------------------------------------------
Total costs and expenses 2,099 1,768 4,951 3,702
----------------------------------------------------
INCOME FROM OPERATIONS OF CONTINUING
OPERATIONS 7,822 3,447 14,250 6,164
OTHER INCOME (EXPENSE):
Other income (expense), net (11) 13 (16) 16
Interest expense (37) (82) (67) (168)
Interest income 169 16 292 20
----------------------------------------------------
INCOME BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS 7,943 3,394 14,459 6,032
INCOME TAX PROVISION 2,938 1,279 5,317 2,269
----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE
DISCONTINUED OPERATIONS 5,005 2,115 9,142 3,763
DISCONTINUED OPERATIONS:
Income from discontinued operations, net of tax - - 1,357 -
----------------------------------------------------
Income from discontinued operations - - 1,357 -
----------------------------------------------------
NET INCOME $ 5,005 $ 2,115 $ 10,499 $ 3,763
====================================================
INCOME PER SHARE - BASIC:
Continuing operations $ 0.42 $ 0.19 $ 0.78 $ 0.35
Discontinued operations - - 0.11 -
----------------------------------------------------
Net income $ 0.42 $ 0.19 $ 0.89 $ 0.35
====================================================
INCOME PER SHARE - DILUTED:
Continuing operations $ 0.41 $ 0.18 $ 0.75 $ 0.32
Discontinued operations - - 0.11 -
----------------------------------------------------
Net income $ 0.41 $ 0.18 $ 0.86 $ 0.32
====================================================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING -
Basic 11,805,610 11,070,932 11,786,957 10,883,636
====================================================
Diluted 12,229,189 12,053,338 12,223,268 11,958,696
====================================================
ANNUAL DIVIDENDS DECLARED
PER COMMON SHARE $ - $ 0.10 $ 0.15 $ 0.10
====================================================
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(unaudited)
ASSETS June 30, December 31,
- ------ 2006 2005
(unaudited)
-----------------------------------------
Cash and cash equivalents $ 14,010 $ 5,763
Marketable securities - 1,950
Accounts receivable, net 16,328 15,576
Inventories 13,947 11,869
Other current assets 2,739 1,394
-----------------------------------------
Total current assets 47,024 36,552
Property, plant and equipment, net 14,694 12,572
Deferred tax asset 249 819
Other long-term assets 1,635 5,368
-----------------------------------------
Total assets $ 63,602 $ 55,311
=========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ 8,977 $ 7,278
Other current liabilities 6,860 6,987
Current portion of long-term debt 559 573
-----------------------------------------
Total current liabilities 16,396 14,838
Long-term debt 1,799 2,221
Other long-term liabilities 544 3,297
Stockholders' equity 44,863 34,955
-----------------------------------------
Total liabilities and stockholders' equity $ 63,602 $ 55,311
=========================================
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Dollars in Thousands)
(unaudited)
2006 2005
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,499 $ 3,763
Adjustments to reconcile net income to net cash
provided by operating activities -
Income from discontinued operations, net of tax (1,357) -
Depreciation and amortization 645 717
Amortization of capitalized debt issuance costs 14 26
Stock-based compensation 353 -
Provision for deferred income taxes 656 (10)
Tax benefit related to stock options - 2,294
Change in working capital, net (2,473) (3,631)
----------------------------
Net cash flows provided by operating activities 8,337 3,159
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of marketable securities 1,950 -
Acquisition of property, plant and equipment (2,561) (1,376)
Loan to related party (1,206) -
Repayment on loan to related party 1,206 -
Change in other non-current assets 147 148
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 1,736 (354)
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on lines of credit, net (47) (2,949)
Payments on long-term debt (90) (1,157)
Payment on term loan with French bank (356) (373)
Payment of dividends (1,766) -
Net proceeds from issuance of common stock 207 1,181
Tax benefit related to stock options 94 -
Other cash flows from financing activities 15 32
----------------------------
Net cash flows used in financing activities (1,943) (3,266)
----------------------------
EFFECTS OF EXCHANGE RATES ON CASH 117 (119)
----------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,247 (580)
CASH AND CASH EQUIVALENTS, beginning of the period 5,763 2,404
----------------------------
CASH AND CASH EQUIVALENTS, end of the period $ 14,010 $ 1,824
============================