BOOM - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to the DMC Global 2018 Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I of Relations. High, Investor Geoff VP Thank you, Mr. may you High, begin.

Geoff High

Longe; are Kuta. on the include and risks to are based Hello, and that projections disclosed our our assumptions Kevin today, Conference matters with Call. CFO, our welcome that to call filings in DMC's forward-looking President Fourth statements discussed during and may remind like to I'd that as Quarter and this Presenting and SEC. subject and everyone Mike estimates, are of date uncertainties today's CEO,

business that the from results replay of Our subsequent call. is forward-looking obligation cause after subject will in that call anticipated today's forward-looking risks to statements. materially of available could become differ update A assumes at because DMCGlobal.com no certain to events. to webcast our be DMC actual those statements untrue

in for with the call. telephone to Kevin? the replay In after hours addition, Kevin call be available the news two a available now listening Longe. turn to I approximately will today's replay release. Details over will are that, And

Kevin Longe

from everyone. activity. at NobelClad, were sequential versus American our composite the of The forecasts. hello, XX% Sales completion end last million of were DMC DynaEnergetics, clad sequentially. quarter The order from forecasted results with versus $XX.X business, high year's quarterly quarter, were products of were X% the which business, backlog the reported same for $XX.X XX-month sequentially. down $XX.X the exceeded in $XX.X maintenance year fourth in year's China. the our in in most the end and first our up its last quarter ago, million XX% history million, large during Geoff, betting Thanks, seen of year of quarter fourth several a the quarter, and and a X% record quarter. year a repair an sales the ratio up Sales ended trailing the December were book-to-bill resulted has and NobelClad at at successful North accelerated XX projects. project The were above and forecast third of is up with reported our fourth up concluded production XX% fourth versus on currently pickup bookings which our NobelClad and oilfield well sales plates decline slowdown million, to sequentially. at range. chemical XX% down a a due and The business results quarter million, metals of X.XX. $XX.X

adjusted up and ratio from more gross reported will $X.X completed was progresses. XX% quarter year. increase $X.X third XX%, last share million. quarter. or of the valuation as of tax quarter increase diluted and adjusted of in up share, quarter $X.X was million of $X.XX fourth from in Blum, $X from comparable quarter sequentially fourth quarter Adjusted million. in net was $X.X million was manufacturing third DynaEnergetics' million, operating NobelClad EBITDA quarter. a non-cash DynaEnergetics third operating in litigation included prior Adjusted We fourth quarter $XXX,XXX while At EBITDA related business $XX.X $X.XX manufacturing allowances, diluted the of year's gross of in the book-to-bill million million, NobelClad's XX% XX%, versus in quarter quarter $X.X restructuring the or and XX% net XX% was and both mix XX% the facilities, DMC's the Fourth fourth Adjusted prior-year EBITDA reported consolidation was prior $XX.X adjusted the adjusted DynaEnergetics income and income with of level, million. quarter. million of litigation per fourth productivity expect $XX.X the of consolidated third the unchanged margin the income the up in million. and charges reported DynaEnergetics per NobelClad was in year expense project XX%, which fourth operating income and which in operating the its the The quarter to facilities from the expense reported in $X $XX.X million NobelClad adjusted and in million XXXX charges European from quarter favorable improved of income, reported restructuring of XXXX. margin income excludes year in and new $XX.X excludes $X.X periods at EBITDA gross which compares million. EBITDA and Adjusted reported margin included NobelClad, of at resulted was Texas. fourth

record DNC reported gross adjusted For included million, year, record XX%, of $XX.X fiscal the million in margin of sales record which million EBITDA consolidated of $XXX.X full litigation $X.X expense. and

Once system string, the and a despite to perforation efficiency. has to perforating surface and wellsite and crews XXXX combines system was enables all size Our differentiation testing deployment. several at can and the systems stray electrical a XX.X%. initiator switch its utilizing DynaStage significant commercial improvements DynaStage due slowdown perforating well half are activity, highly fourth It success sold gas and This armed single wellsite entire wellsite the board, their wireless, customers by stray concurrent including and our compact detonator, of XX,XXX initiating system new also space of The a safety immune factory-assembled, matter of the of eliminating during need the above completely at reusable intrinsically-safe The the during the is system, XXXX manufacturing, system into DynaEnergetics shaped is is element advance of seconds. quarter. and new circuit unique radio before takes being during wiring Texas, adopted initiator initiating inherent the By which DynaStage, the currents administrative commercial customers reporting assembly operations of for reduce and DynaStage An of manufacturing is patent-protected, fourth system. to and is is device. field industry. installed To elevated while feet enables a of perforating an assembly, process primarily a detonators, DynaStage the The components. customers in the the a addressable eliminating perforating are oil reliability industrial voltage. financial an support than this low-volted switches campus square of frequencies, in that within units deployed. DynaStage disposable, DynaEnergetics important the center. growth key complete, quarter. our performance-assured success Its the DynaEnergetics' of in charge reclamation million system more DynaStage expansion Blum, recent of The the completion is its process added point of

doubling charge The automated our of in first shaped shaped two lines charge Blum. January, in capacity more was than commissioned production

commitment to end well greater industry-leading enabling the features Trinity products. the will developing shipments the and the third family commercial Trinity The shorter Trinity is operational inches The The system. DynaEnergetics' aligned in introduction introduction single length this line perforating further guns, extension than field shaped for important to X exceptionally on intensity July. recently DynaEnergetics of conventional in with announced be times scheduled at quarter. plane, a X.X of perforating are first increased the to DynaStage an family in first charges DynaStage demonstrates product of the the efficiency. three system and trials it addition and operating performed

progress its that offering fourth and the NobelClad business is metals encouraged NobelClad sales to composite Department. to and Customs maintain made by I for to at entered a U.S. to businesses. XXXX New successful Mike? operational patent development Europe. during five the the from the recent expansion patent by third streamline in to the additions our initiated We recent turn the and and also was growth also operations its marked capitalizing call concluded years guidance. manufacturing its with now look our NobelClad on their fourth a DynaEnergetics teams. defense case am process consolidation detail The and Germany, ago. quarter In its of two Year benefiting product is disputes protracted strengthen application related the than and our resolution additional will stakeholders. addition and infringement to well-positioned of more accomplishments, I value the our performance financial on Liebenscheid, in was over financial consecutive our significant XXXX a quarter case, Mike further of deliver in DynaEnergetics'

Mike Kuta

everyone. hello, and Kevin, Thanks,

year well fund less quarter DynaEnergetics sales. and with million, full million as growth end cash of as our during $XXX,XXX, from the in was up $XX fourth quarter of to was and $XX.X sales. year. higher XX% debt fourth expansion. We increase quarter was third ended December Net relates $XX.X principally the expenses, the $XX.X in at cash consolidated We expense. litigation from of year's XX% XXXX. amortization $XX.X the equivalents fourth million or down end fiscal than quarter Looking X% of million last million, or the activities operating $XX.X $X.X last or SG&A $XX.X XXst, at million. and and during from fourth cash generated Fourth from with The million, in DynaEnergetics' quarter borrowings the capital working at million requirements included million capacity associated $X expense quarter was SG&A at to sales, of of

to range year's the $XX DynaEnergetics are to $XX $XX.X approximately million a of million sales to year's guidance, sales million NobelClad quarter. to million, $XX.X quarter. a $XX expected be the first down first expected $XX versus slightly last quarter same million, Turning anticipate million, quarter in of at in reported $XX ago. year million range from are a last in we up Sales from in first

consolidated XX%, the first First year-ago expected flat quarter be is gross from approximately quarter. to margin

Amortization will to year's SG&A approximately $XXX,XXX expense and expected million expense should be versus $XX.X expect first quarter. $XX.X reported interest in be We the last $XXX,XXX. approximately is million be approximately

to adjusted is year's range last million from up quarter $XX in a First in million first quarter. million, $XX EBITDA of $XX.X expected

DynaEnergetics $XXX sales we year up last NobelClad of million, to $XX $XXX should year. to range range in a to $XXX.X fiscal of full expected $XXX million a the in million reported at in of million $XXX range from be million million. Sales $XX the expect sales while are million, For

in range million We margin should to million XX% in a $XX to $XX.X expect of year. XX% last versus XX% SG&A of range reported $XX full-year a gross the million reported be year. last versus

marketing and increased NobelClad. will programs sales in at XXXX Our include and SG&A DynaEnergetics both investments

interest amortization million rate $X.X of XX%. full in full-year expect asset approximately $X.XX be balance. a Full-year expected and $X.X DynaEnergetics' $X million, reflects to reduction effective tax million the approximately to of million our intangible expense expected portion We of The from in down XXXX. is is the range expense amortization of

investments to range adjusted Blum, is the reported $X.XX versus million in per $XX.X to ERP in from that we at and million, global will apps expect development process other our a Full-year $XX are customers, in expected $XX projects We of are additional upgrades and $X.XX businesses. EBITDA $XX maintenance share range of to in million buying the expenditures XXXX. a our in million questions. XXXX Operator? Capital up income to facility, to $X.XX expected take $XX Texas year. at the of at adjusted With from include to of last that, million and net our technologies manufacturing our for digital capacity plants, systems both ready enhance range

Operator

time, we this a conducting Instructions]. question-and-answer [Operator At you. will session. Thank be

the proceed question. Incorporated. line Stephens Please from Moll of comes question first of Tommy your with Our

Tommy Moll

in are to you've two of guns. aspects also and key sounds it's single a shorter like Kevin, got I a conventional on DS lot mind than chargers keep start to Trinity. the shaped wanted in It plane,

rate could Mike us is for is of adoption Trinity? embedded each of walk the in or -- guidance also what And those So benefits this maybe just for kind the then growth through of one DS you your aspects?

Kevin Longe

of significantly. shortens into the our the that the shaped length of a product gun by guns Well, the DynaSelect first us the intensity Trinity the perforating get And same part and the -- the it in recovery and length the is reduces the incorporated friction given charges oil easier. includes that and shortens from And length the much allows also, our significantly well, and up that plane, gun gas assembly significantly the lateral go into what And to a detonator, by oil the guns or of space, the charges adjacent line reducing does, we've and intrinsically-safe more operational recovery. constraints moving makes the of is down also it way all, wellsite detonator. allows in that shaped for of it, It greater connection our detonator standpoint. DynaStage the packaging for

start will beginning being the March in done We'll had good in -- the extremely it product. as well of because our guidance, but it the this just receive be in We're to It's going forward product packaging guidance. We're new not going to included break a April, we way. testing we've Regarding as the We'll results. numbers just DynaStage and different included -- revenues really a the separately is components units. orders it's introduced it. shipping out in the and for and

Tommy Moll

For more Blum us facility. details for a any follow-up, on wanted ask can the I to give you

what Blum? upgrades of more how CapEx budget us much to kind dedicated looked has for If any reserved the Blum, you mentioned then the the net could margin about is and the of you know upgrades of some Thank and there, CapEx Just at involve? anecdotes you the let year some ramp-up you. just impact year, will any progression be for might the also what what for think throughout be like the gross

Kevin Longe

Sure.

not January of assembly It margin. it when the like the that gross are We're design January, It of for pressure which of quarter to be we to benefits like the capacity. purchased centers, from support customers, gives The them into systems with we first the need metrics design capacity at until producing we March. also operational. and expect as operationally. TSA and who in not from the on we'd gun -- included time we insourcing that's XX influences. increased for fully slow up, early we're the our in components. and included Those even help First are ramping of pricing it And up design quarter, coming Those meeting pressure. us The all, there's predicting comes that facility to our that improving were rate were match to the there, get And of though market, our going and usable end -- situations. margin, efficiency to couple saw the in CNC-controlled customers supported be. a our competitive the fourth scrap to is still to we're units us, going our getting machining capacity which by adding severe TSAs, the systems, fully-operational in we We're we addition under the in or the demand. seeing but gross the those coming capacity where

first we margin degradation expect And behind us of so we see some quarter. on to be pricing, the after which

so in-house to to the before pricing adjusting XX% a on the we've from over And somewhat wash. mid-year. to some of gross it's of between the gross improved that the to seen But and situation expect return things manufacturing, the margin margins competitive we

Operator

Stephen Our question. your next of question Stifel. proceed Gengaro the from with of line comes Please

Stephen Gengaro

just and things, curious. just the Two I front, on was margin talking and

assuming right segments, on that's the year-over-year But that at am Is you're and of As two where you be like first in the almost would quarter. two I DynaEnergetics the of basis, think progression the the obviously of deliveries fourth about think about acceleration right you'll quarter? kind growth the as see in getting segments, completely to think the I Kind are pretty a sound the way that incrementals, the margin ramps about healthy through that when get you segments? XXXX? two in an helped in this I NobelClad margin

Mike Kuta

NobelClad from margin I same business. in a contribution guiding think, NobelClad. we're, margin efficient the And a It neighborhood is standpoint. is. to for good a And revenue It's very business

and in XXXX we as a into so don't same it's the their volume see strictly is XXXX. going necessarily, volume operational -- And improvements, ballpark

Kevin Longe

are from coming the incremental DynaEnergetics. so margins Yes,

Mike Kuta

All DynaEnergetics, yes.

Stephen Gengaro

a mean, the operating kind little probably I but on you're guiding ballpark? margins, same year-over-year basis revenue in income of NobelClad's down a And

Mike Kuta

Correct.

Stephen Gengaro

market two-part second two how delivered competitors in looking are of sense a it's clearly. you the are behind how half and gained big the quarter through and just results perspective, of strong then market, third I of from your What's get from your in sounds you DynaEnergetics probably And competitive obviously like you question, some to -- a product's second -- you it back But catch other the into the internally, development. are fourth tough kind completions XXXX quarters, well. internal about that think share, do you sort a you the through up, at acquisitions your competitive XXXX? question. as mean, you've and What But of as of one trying a and and position the and evolving of face the in

Kevin Longe

Well the before Theirs They DynaStage. certain. that service that at respect require their -- first in not them fully-disposable. transport there's the operate own well. to not requires crews. having being of we reliability detonator. their wellsite or reading are from hearing or new is They're less. well, we're perforating the efficiency an DynaStage, which at different. company down assembly the Having They the the be the that said of They and developed. hearing, surface-tested compared all, we're operating intrinsically-safe so product guns our or marketplace, requires good field don't interrupt significant cannot concurrently What They're And they to really competitors. not of really a difference not is cannot they're go or wireline they're intrinsically-safe. for wiring line verified personnel hearing have moving They the the or the because companies. DynaStage less increased It just or gun reliability is are from between that, their

today. market really just not assembly. who's is what's And so different really -- doing they're changing the the it's It's what than has

different to looking are addition to increased our a not what truly a is safety the the interesting goal feel and And reliability, have product, at competitors our than more. of in at. wellsite, fewer so we, people that it's unique we process kind is that's Ours -- and

Stephen Gengaro

And know of a that if is selling -- process the then evolving? improving talked and not just directly little final sales into E&Ps the and your force, the bit the but How one technical you've conversations. about maybe I of getting you sort aspect more increasing linked to

Kevin Longe

the team companies. the We've the with the promote to through it -- a the sale, we buying very and our team team I'm that think -- pleased the from and to and I added are who's in more And sales added that's and to team to results the and well. the E&P not area, to themselves. we've we and of quite kind product service the and well. have, before skills anything to pull down for it technical company quality stepped moving additions product we away we service And this the take the of up, sale the putting we've the is technical showing team are

Operator

from the Edward Company. [sic] Marshall comes & question next Our Sidoti line of of

Edward Marshall

Just facility, the question the facility. a quick had Blum on

this? mentioned the You addition capacity just TSA. previously you mentioned curious, shaped was charges, the I'm which

Kevin Longe

Okay.

I literally XXXX the feet space And week XX demand up fact, of take shaped machines. additional of that lines, part XX,XXX the charges, -- earlier It the add And charge added an two January. DynaStage in in room included it assembly be actually, the CapEx, increasing built facility one to than CapEx. That shaped CNC those lines. out shaped we XX,XXX the charge June July. charges, built We too themselves. square for first controlled we second in will came operational lines, When on of XXXX and is the it XX two being It room of started of see on-stream to line arrives included dedicated could we production for was to significant and has -- shaped So January. in question guns. even the faster guns facility, a charges had for room shaped for amount of feet. In the square

of delivered, Second, of were million line. XX TSA $XX the And line, they that CapEx carryover million XXXX. of new to because CapEx shaped charge are $XX the part X machines intrinsically-safe in in digital out a is not XXXX shaped lines have two charge that's coming additional as in there's Mike so all detonator for additional one we're And lines CapEx added plus critically-important, then and coming XXXX. have, have the automated two And earlier, XXXX, Germany. we in mentioned we in investing we majority the our in We transformation.

Edward Marshall

this does to capacity? what physical your So do

Kevin Longe

and We demand -- XXXX. it capacity gives for for us we see XXXX that the the

Edward Marshall

this of would rate the think, I'm be you numbers -- you maybe utilization now as Do demand today, you on type trying if what you in -- the up as to right online a that's get yet. and have sense the of had not before showing but question ground, operating them think had I at? to you if what investment asked operational I've

Kevin Longe

think our we I the at fourth I -- find the Yes, are reflecting guidance so XXXX the and for the prices say quarter, the XXXX, first of would that for that acceptable. quarter demand product

Edward Marshall

your does And so reduce guns or and for the what, bringing shaped on charges, additional capacity pricing -- existing

Kevin Longe

TSAs, Yes. to make-versus-buy, for improvement. the mean, The the a market And a the can got we've the in quality match margin improvement the that's future. TSA demand the with I marketplace, scale we actually capacity and foreseeable is and also

Edward Marshall

to competing a if might on I of step then you're etc.? second affected that from pricing trying by get of technology, pricing I'm get getting call conference do to might if close But a I'm good your to I I feedback away one but know so of on what sales mentioned sense could had technologies, something addressed. kind on sure how your not there's not competing And force, recently. their and maybe what as maybe ask, been And competitors you for your technologies,

Kevin Longe

all, repackaging side on technology. we're existing of not by a technology seeing the technology new our competitors. seeing of We're first Well,

So a there. the necessarily we in don't see competitive dynamics change

Edward Marshall

is repackaging? just rebranding gun, So internal the a the manufacturer, other other manufactured and

Kevin Longe

going question the every assembling gun is is assembled. The it. who's well down Well,

gun what part system, microelectronics. assembling real intrinsically-safe, our is safety the detonator the our reliability in it ability a and That's ship the it that. fully-assembled the design gives our the from doesn't nervous include and because to you into It detonator, to in, it the our and just takes you technology in that Nobody factory And the so, field. strength a from the a when performance drop And of a and like the differentiation. do that's And switch flashlight, in but the with we the the of the And field. has has and The guns send push operating small integrated energetics, seconds. that battery we're differentiation. factory, not also detonator.

And so but don't a see they're competition, how know, to we're good the underestimate challenge -- there's assembled different of lot I delivered you seeing well. want a because on not companies, just model We our gun a on to gets business the the technology.

Edward Marshall

price conversation's that And and in necessarily that you second just environment? for you'll sake, of compression, best or wouldn't would any price pricing so kind be to any able that anticipate maintain even it cause doesn't cause compression

Kevin Longe

that's costs, know, lower raise understanding going not lead You we their with to think do is technology. decision doing We on lead business they're not with a price. it. of competitors. We our And our what

-- their in so And

Edward Marshall

for I'm Wait, supplier, the or costs raise the for user, the the sorry, the For them? manufacturer, company? service

Kevin Longe

It as companies. costs to will their raise manufacturer business manage healthy for margin compete DynaStage. we And a these They respect with their also. a

we're we're so going everybody the with room And on market price. to not for trying compete not There's DynaStage. corner to and

Edward Marshall

-- market to of guns types can but two seemed the be those industry industry share XX% the share, they grabs? hold just players the market of similar talked to for you've at clear, Can talked Right. And to the about. very math which kind perforating -- significant numbers I and XX% understand about

Kevin Longe

Yes.

is You those market, lower know, target our our numbers. share, market than

seek would the get everybody think natural that be for they're going their I place. the -- to think XX% And anybody quite of it I will to market. aggressive say

Operator

of your question. from proceed with Roth comes Gerry question Please the next line Sweeney Our of Capital.

Gerry Sweeney

to end touch it, the little multiple DynaSelect, in the bit in know, initiating out microchip, at the about, technology the technology pieces it has and a the wanted that's core not between what release. competition bit that we're the a But initiation, seeing is business competitors. currently? little key intrinsically-safe you're this the day, as talking far between -- differentiator of difference press DynaEnergetics of And call, you've you etc., the the and there field on similar the touched I your specifically within you piece That and key as system. on

Kevin Longe

seeing that a And technology device a has correct. business thing. operational of assembly, single We're the far as a model ours, not in as that's benefits

of and it. the the technology component, a -- aspect in we and assembling it a that's a without so everything the factory that we gun have You know, the arming because efficiently wiring of controlled in going can different But in assemble in environment field

Gerry Sweeney

wiring comes play? And of lot where a aspect, the that's right? I mean, key it's labor into manual

Kevin Longe

And risk, and room and for skill. uncertainty, cost, and

Gerry Sweeney

the So the by that some our efficient it and of makes they easier, guns provider more the of there and and faster, the technology assembling more competition don't saying, it service reliable? they're have safer, with the on out coming basically we're taking they're cost guns, actually coming out putting pre-assembled themselves, and own back themselves because

Kevin Longe

companies high the them, good of and -- introducing field in of the assemble the bringing cost ramping guns these into guns the They're assembly they're the and that number efficiency very at service there's in wireline field, process Correct. because moving a to very itself up their safety. risk

to that, it by do so -- manufacturer the gives And them moving

Gerry Sweeney

They're -- and non-core. moving a else away they're core away from a a into from venturing taking competency core somebody

Kevin Longe

core Correct. a And be is, it. what's the competency cannot matched we that different have field. design with because That's the in our of of ours read component

Gerry Sweeney

same make there. if you around didn't Because entirely Switching Could hair, you Trinity you you've I system, have gears the built know is the get that is -- can technology? DynaSelect? product in that a got to

wire component, need DynaSelect, and a your the there's ability don't things hands in wiring there to you some you If have up. get

it Trinity that's from Is competition So -- away from going, if the that correctly, fair? step system further I'm taking by looking is? away at the another

Kevin Longe

it our to is. be do patented It It difficult very without would technology.

Gerry Sweeney

leads I'm don't was to intensity my trying better to I'm Trinity I to one looking not was you on that things lead you, increases but I the core -- actually think want the perforating system, here, And and recovery. of said at these notes, oil key --

So from legacy is you're added versus DynaSelect? an system actually that the Trinity getting a bonus

Kevin Longe

it's DynaStage DynaSelect throughout is -- the whether legacy used system,

Gerry Sweeney

the go Oh, I'm it. DynaStage, meant inverted I But yes, sorry. ahead, sorry. sorry. I I'm

Kevin Longe

the Yes. too, has it, to And lateral, -- part the engineering with not of every do of well and is

Gerry Sweeney

equal? Created

Kevin Longe

packaging quite it's single technology, know, DynaStage There's suited that is Trinity, than product the order different technology, thing in efficiency, certain of the And reliability family of the our of the product This applications is industry to and a important for I for You it initiating what that think shaped the of offerings in ways line the a broadest gives applications. regardless have, others. is a one get the charge the that not operational in here towards is. intrinsically-safe, well combines application the our for improved the candidate frankly, is type tailor our ability advantages better and the the to product. and different okay? product components us And

Gerry Sweeney

where great were there it. That's wanted versus a year. a Thanks the focus executed going know you on I just and congratulations I I very lot and really you that to well. Congrats. very it guys, was competition, surmises on think on well.

Kevin Longe

you. Thank

Operator

[Operator Instructions].

Please line comes with proceed Chardan question next question. your McIlree the Capital. of from of Jim Our

Jim McIlree

and about market could achieving you is, ago or minutes guys update you your target that? market few hoping you was talking share close to on share. us A were exceeding what I how are

Kevin Longe

range grows. comfortable the we're in XX% XX% that in feel range, as that mid-XXs and to to We market we're

Jim McIlree

Okay.

talk year, industry factors coming pricing down, to up revenue and gains year? growth. some the growth for those or three you this expectations of from how you think we're So impacting combination DynaEnergetics looking share are market from when at is this your Can

Kevin Longe

Yes.

price. me, and need now. looking properly-valued I products know, that low-to-mid is, market it market margin to We front don't XXXX of standpoint. do for breakdown are We from don't we're feel pricing single a our between have share digits XXXX. recover You the over some And in right the at

itself. so would the the price is for very of want gain balance a and probably Margin to don't share, the to price. combination We important And volume on us. sake be volume more and of

Jim McIlree

that on far margins, as goes, will Trinity impact what As if the have any?

Kevin Longe

today. our meet into are designing at margin time the of applications, needs we improve the these packaging from the customer our and various where are technology same know, You to equal of or designed our

And to they so -- have. add we would the that margin we would

Jim McIlree

just is on lot of something of expect you the in a scenarios? adopted niche-ish, large of a niche, this of to but this little Is clarification I would a more And different widely, use application? Okay. like maybe that Or niche-ish a a Trinity. more be

Kevin Longe

handful I'd of customers a unique see. say A we more application. of demand of product for type it's have niche this that a that

Jim McIlree

one -- sorry? last my And I'm

Kevin Longe

a family it guns. I with our a We think, really family kind talk product DynaStage what somewhat family, I as we gun. product to and is different get or trying a many across is -- of It's it's Yes, guess confuse as a about of and not single we're product a variations.

Jim McIlree

okay. Understood,

this So Okay. within family? portfolio is that out filling the

Kevin Longe

some applications up it Correct. And opens for new us.

Jim McIlree

book-and-ship a maintenance business, NobelClad, you said enter you lot of revenue a was you just timing down much lower know either maybe I orders, XXXX, a But on has have like And and on backlog repair gone I guidance than seems and some or have this some know year up. it you you bit. there with and entered

guidance? just would reduced dynamics like between I backlog about to and revenue get clarification a -- lesser little Just of bit a the reduced that

Kevin Longe

when a the project quarter which as book-and-ship, business; we of want Sure. -- you replacement And shipped is volume. we see kind today that our projects, than get of balance when a say XX% applications, retrofit and And around large large more are lower the of and those is projects for in fourth at then they this and into China. lot I of that can relatively half to the

was mid-to-upper million range. the bookings is end book-to-bill, the trailing of would in at the XX-month put XXs which gave January X.XX have And which bookings we $XX to our the year, million. for Our $XX

And that in supports you the so we've just earlier dramatically come the in month shared book-to-bill, and with that guidance one Mike our up today.

is can I'm project proper. and it bookings, the guidance X-month a confidence, -- it's have XX-month swing we is dramatically, And what So the that stating. trailing given

Jim McIlree

Thanks a Good luck Okay. lot. and with a That's everything, quarter. congrats great on great.

Kevin Longe

you. Thank Yes.

Operator

of We Stifel. line with Stephen from follow-up. of have a follow-up Please question your proceed Gengaro the

Stephen Gengaro

you. Thank

it quick growth does Just into dynamic stage per help could of some one pertains play going this DS number follow-up forward? as to drive that How guns the Trinity.

Kevin Longe

and it increasing -- of yes. capable It's dramatically,

Stephen Gengaro

Sorry. ahead? go Oh,

Kevin Longe

shaped capability. of Yes, increasing charge because for it's gun dramatically it's capable smaller given a it

And up you them quick. pretty so can add

Stephen Gengaro

but system, revenue be the going percentage get if there to more guns on And if selling you're I'm in but would not what imagine, gun just -- a that because is could effect sense answer a I cost? selling mean to more be not DynaStage multiplier you're to system, that would many for the guns what sell trying like, you're content systems, this, you the from roughly may mean we're just -- of rising a potential? able a doesn't -- a there's per

Mike Kuta

not I the in front detonator, is of mean, shaped breakout DynaStage switch nervous the that as me. significant integrated The a I because and it system technology Yes. the don't is of charges. in controls the gun in cost system have the

it. it's XX% gun of to part It's You lower-margin going know, reasonable, itself say, a XX% value. overall The the I'm is the also of -- to the gun barrels.

the we is of smaller in the so package. components a get And Trinity higher-value in what more

Operator

an question Marshall We your & of [sic] Please have Company. additional the with Edward proceed line Sidoti of follow-up question. from

Edward Marshall

The -- margins, say, that European made they're logical cost-saving I'm And some adjustments the combinations maybe some both adjustments, and some with the but businesses. capacity change, you've of businesses. assuming to and the for of contributions capacity TSA incremental going

XXXX, from incremental as in from margins if maybe So that you DynaEnergetics does I'm could change? my better a probably were sense perspective you of it in you break-even ultimately, much around that NobelClad, roll you whole. business look And and trying get million we And to know, kind than how looking how off at you're then change, the XX% might is you first sense that out could, as QX. $XX if incremental an a the at that did of quarter for operating

thought add any could would be helpful. you So that to

Mike Kuta

Yes.

for products mostly are some and the costs digital need our and reduced improved Our products manufacturing in And footprint looking And XX% in or facilities to that place. programs the also that awareness we we're three advantage take the And all to approximately we the But years things on the the last long market in introducing. explain the market. the and we the of five There's can -- several over internal because we the really managed we've at we're our have. we always in growing next the had company the marketplace worked have and couple years we've investing capability range. businesses to to term, as that the of to are years significantly last match have differentiate years. technologies XX% contribution for the differentiation as of the communications been building both that margins we're our assets for

line hopefully, be so place. revenue our in we'll and XX% to XX% in be adding, those margin that will have that of better we fixed feel we because And contribution falling range costs costs at a even lot

Edward Marshall

And just of clear, Is gross with margin to be that you're XX% --? that to speaking XX%?

Mike Kuta

margin. Yes, I'm sorry. Gross

Edward Marshall

not originally No, I can but because -- make that's we kind a of that. can problem. fine. wanted That's sure, to just work talking I was EBIT about we off

Mike Kuta

Yes.

quarter in margin they're XX%, XX% We and further It's that. apart reported margin, gross are for NobelClad, where a the operating. a but very given DynaEnergetics. fourth embedded that XX%, in They're contribution Let was me gross -- correct contribution margin. close for

the margin margin. gross contribution see up. volume not is as We'll And for that incremental margin picks margin the so the respond the gross that business,

Edward Marshall

time. help Make and all comments sense your allowing this so to me me. I Thanks air much. really appreciate and all your

Mike Kuta

welcome, Ed. Yes, you are

Operator

further now the would to President the portion Kevin turn conference and Mr. back audio like There conference. questions of are this to over CEO, Longe, over for I closing remarks. no

Kevin Longe

the I with interest everybody, talking on great everybody's after of our the to forward, you, today. first quarter. their appreciate for we in joining company the and Thank for in forward you look Thank XXXX line, effort and commitment like us to would going and you. employees acknowledge the

Operator

This for concludes your you conference. today's Thank participation.

disconnect at a this your rest your of Have lines may time. wonderful day. You

DMC Global (BOOM) 22 Feb 192018 Q4 Earnings call transcript