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FOR IMMEDIATE RELEASE CONTACT:
February 22, 2007 Pfeiffer High Investor Relations, Inc.
Geoff High
303-393-7044
DYNAMIC MATERIALS REPORTS RECORD FOURTH QUARTER AND
FULL-YEAR FINANCIAL RESULTS
Selected Highlights
o Q4 net income up 90% to $6.6 million, or $0.54 per share, versus year-ago
quarter
o Q4 sales increase 54% to $35.7 million versus comparable 2005 quarter
o Full-year revenue and net income up 43% and 100%, respectively, versus 2005
o Backlog at Explosive Metalworking segment reaches record $68.8 million
BOULDER, Colo. - February 22, 2007 - Dynamic Materials Corporation (DMC)
(Nasdaq: BOOM), a leading provider of explosion-welded clad metal plates, today
reported record financial results for its fourth quarter and full fiscal year
ended December 31, 2006.
DMC established single-quarter records for sales and earnings, and achieved
strong gross margin results, thanks in large part to the Company's fourth
quarter delivery on an $11 million contract - DMC's largest-ever order. Fourth
quarter sales increased 54% to $35.7 million from $23.2 million in the fourth
quarter last year. Sequentially, fourth quarter sales were up 44% from the $24.9
million reported in the 2006 third quarter. Fourth quarter gross margin was 41%
versus 32% in the comparable year-ago quarter and 33% in the third quarter. The
improvement in 2006 fourth quarter margin resulted from favorable terms received
on the aforementioned $11 million order, which involved complex materials
engineering and a tight delivery schedule.
Income from operations increased 87% to $9.7 million from $5.2 million in the
fourth quarter last year, and was up 58% from third quarter income from
operations of $6.1 million. Net income increased 90% to $6.6 million, or $0.54
per diluted share, from $3.5 million, or $0.28 per diluted share, in the fourth
quarter last year. Net income in the 2006 fourth quarter included a gain from
discontinued operations of $141,000, or $0.01 per share, from the sale of leased
equipment. Sequentially, fourth quarter net income increased 78% versus third
quarter net income of $3.7 million, or $0.30 per diluted share.
Explosive Metalworking
The Company's Explosive Metalworking segment reported fourth quarter sales of
$34.0 million, up 53% from $22.2 million reported in the fourth quarter last
year, and up 45% from the $23.5 million reported in the 2006 third quarter.
Fourth quarter operating income increased 85% to $9.4 million from $5.1 million
in the comparable year-ago quarter, and was up 61% from the $5.8 million
reported in the third quarter. Order backlog at the end of the fourth quarter
was a record $68.8 million, up slightly from the $68.5 million reported at the
end of the 2006 third quarter.
AMK Welding
Fourth quarter sales at the Company's AMK Welding segment increased 69% to $1.7
million versus $1.0 million in the fourth quarter last year, and were up 24%
from $1.3 million reported in the third quarter. Operating income was $538,000,
up 337% from $123,000 reported in the
comparable year-ago quarter and an increase of 38% from the $391,000 reported in
the third quarter.
Management Commentary
Yvon Cariou, president and chief executive officer, said, "Our full-year and
fourth quarter results have established new high water marks for both revenue
and profits. The fourth quarter was an exceptionally strong period for both of
our operating segments, and included the best-ever single month of bookings for
our explosion welding business, as well as full delivery of our largest ever
order. These results, when coupled with our record-level order backlog and our
strong balance sheet, are a clear indication of the current strength of our
business.
"Capital spending within the global markets we serve remains robust, and there
appear to be a broad range of new business opportunities on the horizon," Cariou
added. "We therefore believe fiscal 2007 will be another year of respectable
growth at DMC.
"Our program to double the production capacity at our Mt. Braddock facility in
Pennsylvania remains on track, and we expect our new production equipment will
be up and running by the end of the second quarter," Cariou said. "We also
continue to upgrade our European cladding operations. We have established a 2007
capital expenditure budget of approximately $7.1 million, the majority of which
will be directed toward modernization of our Nobelclad and Nitro Metall
facilities. We also expect to spend more than $5 million remaining from our 2006
budget on completing our expansion at Mt. Braddock."
Rick Santa, chief financial officer, said, "With more than $68 million in our
order backlog and an extensive range of contract opportunities on our hot list,
we are looking to achieve revenue growth in the 20% range during fiscal 2007.
The availability of source metals has fluctuated in recent quarters. Although
there were adequate supplies to achieve record shipments during the fourth
quarter, tightness in the supply chain is likely to lead to first quarter
financial results that will approximate the average results we reported during
the first three quarters of fiscal 2006. In light of our full-year growth
expectations, we believe the average quarterly results during the balance of the
fiscal year will be stronger than those of the first quarter. In addition, we
believe that improvements in the supply situation could result in even better
full-year financial growth than we are currently projecting."
Full-Year Results
For the full fiscal year, sales increased 43% to $113.5 million compared with
$79.3 million in fiscal 2005. Gross margin improved to 37% from 30% in the prior
year. The improvement reflects the Company's strong sales increases, more
effective absorption of fixed manufacturing and overhead expenses, and strong
profit margin on the large contract completed in the fourth quarter. Income from
operations increased 91% to $30.1 million compared with $15.8 million in 2005.
Net income increased 100% to $20.8 million, or $1.70 per diluted share, versus
net income of $10.4 million, or $0.86 cents per diluted share, in the prior
year. Net income in 2006 included a gain from discontinued operations of $1.5
million, or $0.12 per share, net of tax, attributable to the first quarter sale
of a real estate purchase option and to the fourth quarter sale of leased
equipment, both related to the Company's former Spin Forge division.
The Explosive Metalworking segment reported full-year sales of $108.3 million,
an improvement of 43% versus sales of $75.6 million in 2005. Operating income
increased 95% to $29.6 million compared with $15.2 million in the prior year.
Full-year sales at AMK Welding increased 38% to $5.1 million compared with 2005
sales of $3.7 million. Operating income increased 91% to $1.2 million compared
with $608,000 in the prior year.
Conference call information
Management will hold a conference call to discuss fourth 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 800-237-9752 (617-847-8706 for international callers) and
entering the passcode 47718534. 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 a telephonic replay will be
available through March 1, 2007, by calling 888-286-8010 (617-801-6888 for
international callers) and entering the passcode 79495997.
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 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; the
cyclicality of our business; 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
------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Dollars in Thousands, Except Share Data)
-----------------------------------------
(unaudited)
-----------
Three months ended Twelve months ended
December 31, December 31,
----------------------------- ------------------------------
2006 2005 2006 2005
-------------- -------------- -------------- ---------------
NET SALES $ 35,691 $ 23,167 $ 113,472 $ 79,291
COST OF PRODUCTS SOLD 21,170 15,865 71,439 55,856
-------------- -------------- -------------- ---------------
Gross profit 14,521 7,302 42,033 23,435
-------------- -------------- -------------- ---------------
COSTS AND EXPENSES:
General and administrative expenses 1,854 1,325 5,802 4,051
Selling expenses 2,953 772 6,128 3,616
-------------- -------------- -------------- ---------------
Total costs and expenses 4,807 2,097 11,930 7,667
-------------- -------------- -------------- ---------------
INCOME FROM OPERATIONS OF CONTINUING OPERATIONS 9,714 5,205 30,103 15,768
OTHER INCOME (EXPENSE):
Other expense, net (75) (15) (115) (7)
Interest income (expense), net 272 55 620 (156)
-------------- -------------- -------------- ---------------
INCOME BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS 9,911 5,245 30,608 15,605
INCOME TAX PROVISION 3,476 1,788 11,341 5,233
-------------- -------------- -------------- ---------------
INCOME FROM CONTINUING OPERATIONS 6,435 3,457 19,267 10,372
INCOME FROM DISCONTINUED OPERATIONS, net of tax: 141 - 1,497 -
-------------- -------------- -------------- ---------------
NET INCOME $ 6,576 $ 3,457 $ 20,764 $ 10,372
============== ============== ============== ===============
INCOME PER SHARE - BASIC:
Continuing operations $ 0.54 $ 0.29 $ 1.63 $ 0.92
Discontinued operations 0.01 - 0.12 -
-------------- -------------- -------------- ---------------
Net income $ 0.55 $ 0.29 $ 1.75 $ 0.92
============== ============== ============== ===============
INCOME PER SHARE - DILUTED:
Continuing operations $ 0.53 $ 0.28 $ 1.58 $ 0.86
Discontinued operations 0.01 - 0.12 -
-------------- -------------- -------------- ---------------
Net income $ 0.54 $ 0.28 $ 1.70 $ 0.86
============== ============== ============== ===============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING -
Basic 11,924,467 11,731,186 11,841,373 11,290,053
============== ============== ============== ===============
Diluted 12,206,704 12,186,659 12,213,075 12,086,884
============== ============== ============== ===============
ANNUAL DIVIDENDS DECLARED PER COMMON SHARE $ - $ - $ 0.15 $ 0.10
============== ============== ============== ===============
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
AS OF DECEMBER 31, 2006 AND 2005
--------------------------------
(Dollars in Thousands)
----------------------
(unaudited)
-----------
ASSETS 2006 2005
- ------ ------------------------ -------------------------
Cash and cash equivalents $ 17,886 $ 5,763
Restricted cash 3,059 -
Marketable securities - 1,950
Accounts receivable, net 21,549 15,576
Inventories 19,226 11,869
Other current assets 2,127 1,394
------------------------ -------------------------
Total current assets 63,847 36,552
Property, plant and equipment, net 20,260 12,572
Other long-term assets 866 6,187
------------------------ -------------------------
Total assets $ 84,973 $ 55,311
======================== =========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 13,572 $ 7,278
Customer advances 2,394 1,885
Other current liabilities 8,949 5,102
Current portion of long-term debt 382 573
------------------------ -------------------------
Total current liabilities 25,297 14,838
Long-term debt 382 2,221
Other long-term liabilities 1,714 3,297
Stockholders' equity 57,580 34,955
------------------------ -------------------------
Total liabilities and stockholders' equity $ 84,973 $ 55,311
======================== =========================
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY
------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
----------------------------------------------
(Dollars in Thousands)
----------------------
(unaudited)
-----------
2006 2005
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,764 $ 10,372
Adjustments to reconcile net income to net cash
provided by operating activities -
Income from discontinued operations, net of tax (1,497) -
Depreciation 1,369 1,527
Amortization of capitalized debt issuance costs 50 41
Stock-based compensation 660 -
Provision for deferred income taxes 2,115 (1,431)
Tax benefit related to stock options - 3,728
Change in working capital, net (6,904) (2,599)
------------------ ------------------
Net cash flows provided by operating activities 16,557 11,638
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (8,650) (2,848)
Investment in marketable securities - (1,950)
Sale of marketable securities 1,950 -
Loan to related party (1,206) -
Repayment on loan to related party 1,206 -
Change in other non-current assets 290 288
Payment received on other receivables related to discontinued
operations 576 1,016
Cash flows provided by investing activities of discontinued
operations 3,089 -
------------------ ------------------
Net cash flows used in investing activities (2,745) (3,494)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on lines of credit, net (48) (3,291)
Payments on long-term debt (2,084) (1,818)
Payment of dividends (1,766) (1,155)
Net proceeds from issuance of common stock 585 1,555
Tax benefit related to stock options 1,154 -
Other cash flows from financing activities (19) 47
------------------ ------------------
Net cash flows used in financing activities (2,178) (4,662)
------------------ ------------------
EFFECTS OF EXCHANGE RATES ON CASH 489 (123)
------------------ ------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,123 3,359
CASH AND CASH EQUIVALENTS, beginning of the period 5,763 2,404
------------------ ------------------
CASH AND CASH EQUIVALENTS, end of the period $ 17,886 $ 5,763
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