BOOM - Earnings call transcript Q2 2019

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Operator

Greetings and welcome to the DMC Global Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Geoff High, Vice President of Investor Relations. Thank you, Geoff.

begin. may You

Geoff High

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

Our subject results because DMC untrue forward-looking is our those to business update could certain become statements. cause to anticipated of risks subsequent actual assumes forward-looking from to that that no events. obligation differ materially statements in

dmcglobal.com call. A after the webcast today’s available replay of call will at be

telephone approximately today’s In call. replay replay after the to available for in are available will hours be Details X listening the release. addition, news a

over And the I’ll Longe. call turn Kevin with now to Kevin? that,

Kevin Longe

which the the reported of Thanks, second sales our Both and quarter, business quarter, XX% second $XXX Consolidated financial were $XX.X DynaEnergetics, Geoff. to versus XX% up well record quarter million, second sequentially. up oilfield million, our businesses during exceed up XXXX of from quarter, forecast. sequentially. up products its second enabled sales the XX% performed XX% and DMC XXXX

with first the at XX% at up book-to-bill quarter sales end of quarter the was efficiencies. second which Consolidated periods the also in from chain quarter XX%. second X.XX. XX increase XXXX sequentially manufacturing XXXX the versus quarter. versus product XX% was improved benefited versus second order quarter up $XX.X at ended quarter second the mix supply $XX.X Trailing and margin of gross higher end reflects and The month DynaEnergetics, both and $XX.X from X% the million Second NobelClad, quarter margin sequentially. in from at the up our were composite backlog business the ratio million, million XX% NobelClad of metals an

quarter DynaEnergetics in margin in XX% second XX% of up gross in and quarter quarter. the versus year’s XX% operating the quarter. second excludes this in XX% Adjusted $XX charges gross first NobelClad’s in and at was same income ago $XX.X million $XXX,XXX this XX% was reported Adjusted million. quarter first from restructuring last and flat operate NobelClad. XXXX was a versus year’s income year margin year’s

second up $XX.X million diluted reported and reported income DynaEnergetics income in adjusted DMC million. quarter of income versus $XX.X per million net or was per operating of of or $X.XX XXXX diluted income adjusted operating second NobelClad $X.XX $X.X million share quarter $X.X net chair the up adjusted quarter. At while NobelClad year’s EBITDA trailing June was return our sequentially. second EBITDA capital second reported last XX%. of reported million, quarter $X.X Adjusted was of $XX.X and XX% month XX, on versus EBITDA XX $XX invested million. million, XXX% adjusted DynaEnergetics

quarter which Performance-Assured continued they during receive panel added portfolio reflects product second initiating strong systems digital DynaEnergetics to And expanding from demand performance key for internal industry devices perforating safe financial a DynaStage unless ISX the not state several These new the ISX we control patented unique quarter. surface. the Our they in contain refer fire family. it��s Factory-Assembled, its DynaEnergetics for as as systems. customers four intrinsically solid at a and will are wiring no systems

are Basin by quarter, the is or a Trinity perforating detonators conventional susceptible models features product easy electrical detonating second to smaller it more nature the current are to three and very which trials a a does currently compact into not to which a Trinity long added with than X-inch the single during of DS resistorized require their sub gun higher X.X. systems guns. significantly string carrier, Competing triggered plane a and version family enable It its is DS assemble electromagnetic two charges intensity connecting DynaEnergetics diameter on interference. are products in X.X, cord. a with DynaStage in utilized, an These field Permian

NLine of the new operator. unconventional preferred second can in fire charges the complexity. of all be grow DS surface completions alignment the all the that of it model Once It’s string a within guns. oriented deployed, so well of wellbore enables The in is direction within guns series the charges

well and perforating DynaEnergetics ISX in systems customers portfolio, The options thousands We for which the with product in includes and broad are of packaging the the with formats, a spectrum DS providing design unmatched completion customers flexibility provides performance of configuring charges perforating the programs. Performance-Assured of Factory-Assembled,

also could a by and NobelClad’s In and current term metals by expand believe is its near year. quarter soften business margins consistently second new the strong its of I’m performance. second completion the the in contribution applications solid North composite the delivered slowdown well clad offering to NobelClad very the oil establish making metal for progress, prices plates. DynaEnergetics activity, we light of during low half American demanded in encouraged

remain for the range continued medium longer and very However, strong. growth prospects

development developed and industry. to enable will oilfield pipeline its Our the DynaEnergetics have robust that teams maintain the research position products leadership technologies and products of in new

employees confidence in and our for I’d another delivering to I company. the want their to our DMC for and thank customers the like business stakeholders. for around world quarter also its strong thank continued

our over to financial turn quarter call And and at Mike look results I’ll for now, on further guidance. detail second Mike? a the our

Mike Kuta

Kevin. Thanks,

was with cash of less Amortization consolidated sales. December SG&A cash $XX during operating activities was XX, debt million. of cash down from was months the year equivalence second generated million at second activities of $XXX,XXX at XXXX. six million. second quarter in and We of million million our $XX million comparable first the in expenses XX% X% $XX.X versus $XX.X $X.X sales SG&A ended the period operating Net of Looking XX% the used in year, We $XX.X last or $XX.X was or than from in cash quarter. sales million or year’s of quarter expense last

quarter $XX year’s is DynaEnergetics anticipate guidance. range of a to expected third reported sales $XX.X to million $XX at million million year’s We Sales NobelClad reported million of sales report million quarter. a range to in in reported $XXX $XX $XX.X range the million versus versus $XX.X million in the versus million third of are in expected in to in last to a quarter third million we Turning $XX $XX last quarter. same year-ago.

in sales anticipated DynaEnergetics margin at a less manufacturing overhead The quarter range We favorable project third less favorable decline third quarter XX.X% reflects XX% XX.X% consolidated the quarter. of a a expect XX% in forecast NobelClad. XXXX second from is gross versus and fixed up sequential in to the report mix lower absorption from in

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

the range third Third up $XX a $XX from last quarter adjusted year’s in to expected million million quarter. of is million $XX.X in EBITDA

As of net Kevin that for well to slowdown are our the forecast the American completion anticipated range We, revising expect during of increasing are we noted, adjusted and year. year our see the therefore, in maintaining prior activity end a adjusted balance sales guidance moderate lower are income. our EBITDA for full North –

from $XXX up $XXX million. range $XXX.X We $XXX to million million the year range $XXX versus currently to Sales $XXX our million the at reported million forecasted expect to range last of in $XXX of prior the to reported expected million and are forecasted $XXX DynaEnergetics $XXX the $XXX.X year million from of a of sales previously million full and we last million in range down year million.

last manufacturing are year XX% margins sustained at a expect our consolidated up efficiencies of Sales the of reflect of range million prior XX% NobelClad versus expected of the the and year $XX reported million in to forecasted margin prior technologies. reflects range full million to full gross year to of $XX million. on from increase million $XX XX%. and in from achieving product $XX reported focus year $XX value our range The last that the our in XX% forecast anticipated They up improving

reflecting expected reported to expected last year in marketing businesses. $XX.X spending our $XX SG&A of range is million up a within on million, and both $XX million programs of sales higher from

$X.X expense down XXXX. full year $X.X in expected Our approximately from amortization remains million at million

full million down million now from to for $X.X interest a of forecast $X $X.XX is million. estimate prior Our expense year

our half of expected second rate during of year, due are the effective maintaining tax XX% We approximately geographic the rate expected sales reflecting to higher primarily a mix.

Full million $XX from year adjusted of million expected range to EBITDA in up remains in million $XXX XXXX. $XX.X

our of $X.XX. in expected range forecasted Last $XX a net expect to our $X.XX the of to reported was year of high share the was expenditures million, $X.XX. of approximately full forecasted $X.XX. per which low per range. range earnings Capital adjusted year, end Previously, We end we income are be share adjusted previously

take we that, questions. Operator? to With any are ready

Operator

Thank you.

Incorporated. [Operator conducting be now Your go comes Tommy Instructions] first with session. will question we Stephens ahead. from Please So question-and-answer a Moll

Tommy Moll

Good for afternoon my thanks and questions. taking

days, in been So competitive marketplace in recent some the about chatter some trends. there’s

a large hand, that but pretty now yours of preassembled On competitor unclear, or gone their maybe they the customer there’s it’s one of that or market with captive decent yours, a it’s wireline a a if to gun company a they’ve guns advertising of both. chunk that’s shoot,

if your the potentially system quarter then they’ve second side, it’s share, gun or market but just at take outpace on introduced and that And into new competitors a the some the of appeared unclear market is one merchant in recently to least from components. there

to marketplace to So Global Thank maybe I of either you That you but asking competitive I’m situations light comment generally? of shine the would on on those the realize, dynamics the be broader or extent, helpful. scope, DMC just you. a outside potentially could

Kevin Longe

Yes.

or So better. their have view company customers product regarding have them from and either as and we they products the service certainly certain lines not larger we important competitors. customers do the fit ours applications And as companies, potential

a so respect goes rather on and a term competitor technology more And their that basis. engineering view their we products them ours. they their and than longer respect we into as a customer And

year up this Regarding And stage faster the it’s forecasted important the to data are are I charges stage for charge companies. for independent probably than third-party referring to and volume and go faster for based North going faster I XX% business land marketplace, that refer shape And and is Spears completions could energetic count. growing charges all think shaped overall shaped growing than the or year at American increase an to completions in sales count is the than remember which that has the quarter. up you’re so to an

Tommy Moll

to guidance wonder come I those use you my as Thanks, like. the Kevin. for we Whether kind going count, triangulate and me the got from singles assumption fourth with for reiterated adjusted stage way rather now it the can on third is of the charge DynaEnergetics be where which sequential the for market and comment, like count. But presumably earlier on and your or in up the And to what the the is your revenue your – the fourth quarter full you the you’ve looks leads outlooks, quarter would year lower count, driver some revenue quarter. than to follow you that up, It given us than quarter is mid market look underlying the third in which completion decline growth? call any help underlying helpful? to infer might double-digit low lower a to can you’ve shape expectations what decline

Kevin Longe

or or if decline revenue, that in receive all growth our is you if market growth will I’d would committed products in decline. value Share – drivers the sell. that previous growth or The we will you be for for stated of in to pricings, companies calls DMC share market decline. Yes.

quarters any and expecting hold and fourth maintain to decline in the we price in not third their We’re share. expect and

looking to forecasting, strength seems what And lot So the is this activity be in by fourth discussions softness year. see first degree at quarter earnings or actual the quarter’s to the that at the it we XXXX calls, softening happening I of marketplace half a supported the relative and was forward the in having of was. didn’t XXXX, quarter of quarter. the fourth the we’re said the the the that, to we least didn’t in XXXX, quarter guess going coming coming are that it in of In of the that third first see

shorter. that the to on keep cycle And growth think seeing for that reality pretty land that of can off that’s on of And products why much just new volume turn ride that and become and so balance value for which you is it’s has our unconventional we’re market the throughout based a quick. market share I terms activity the have cycles fair a important us and we’re in – healthy focus and sheet, strong to so and

Tommy Moll

I’ll more get more, Kevin. time I’ve there’s line and maybe got you, later. back into Thank but

Kevin Longe

Tom. Thanks Okay.

Operator

you. Thank

Stephen question next Your Gengaro comes with ahead. Please go from Stifel.

Stephen Gengaro

good and gentlemen. you Thank afternoon,

on third you projecting the Or at decline? decline questioning, of kind just outlook, So a following look sort seeing current when Tommy’s you up it based of your you’re I a seeing the expectation market? sort – progress, are quarter are mean, through When is yet? are a your of you already. mean the what you monthly we’re the you Or on hearing a change? an I in of way

Kevin Longe

of in fourth very sure our lot activity the that a that so particular. is be window it And in the think and could a of the I’m of I and read year, a of we and same quarter same DynaEnergetics lot third half have we than hear things. short impacting softer there the however things the first – view

as it exceeded And recent expectations. the our so from quarter, see you can

have I’d our so discussion today. say more than showing to terms it’s it’s as revenue in And up of that actual of

Stephen Gengaro

that that on purely the And approach Great. relative field, operators reliability maybe little bit the can it of Can sort – differentiation? differentiation the you. sort the product And – of your more talked points product of peers. obvious what’s design. the solid sort how lot and get to Thank that it you sort then we of a importance a to it little is in a about of or the behind the Is hear you continue is of thing? one and discussion of detail safety a in changes a expand you state –

Kevin Longe

and operating It’s safety, reliability efficiency.

We system form have field. together wiring we no a for that does state a initiating not all a a has And that in whatsoever. require the into gun, and system system in that the circuit integrated with initiating also perforating has detonator to it the wiring adjacent detonator, drop solid the then the small We connected perforating and it’s package screw board is shielded. And operating with our controls gun gun. factor

have so And in field. pre-wired and be than not to it a we referring wired it’s perhaps used inappropriately so that adopted. all. We that terminology at different has to didn’t together to the And it’s wired quite bit a it system we been meant – that gun put were call a it system the because was

we’ve seen detonators through the And detonator of most in subject straight detonators are with But wired the wired the to competitive systems products the included, current, that radio straight are the in the series voltage frequency. field. are cases in not some

to so a of the our those offering And is Yet, between competitors. adding quite product lot there’s of bit of and difference our some confusion. terminology a the of

Stephen Gengaro

level obviously heard talked you increase you of And just – we’ve then conference I you. in same Thank and intensity want se. come your this that the today how that this on into increasingly to earlier than count, that per want. one is perf well there’s conversations. intensity quick When do Core you – play and final increased that? faster a call, where new how your Labs perforating Great. and Are DS one, going new seeing seeing the in but perforating just then up Are does stage guns intensity – about counts

Kevin Longe

up our unit this year. are We mean, I volume is for dramatically it. systems seeing

with you the are has component quarter numbers pricing And the shaped component sell of existing but and And more growth, lot we the than can for create. they’re dramatically systems behind in recent our they itself. and do premium, to most the will. see – at but the value and up So systems our revenue between up you competitive do the that relation a that if the that system to pricing with our is the charges revenue a

our unit volume is so And up dramatically.

Stephen Gengaro

Okay. Thank you.

Operator

you. Thank

from comes Please Partners. Gerry Your ROTH next with go Capital question Sweeney ahead.

Gerry Sweeney

good afternoon you doing? are Geoff. Kevin, Mike, How Hey, guys

Kevin Longe

Yes. Fine, Gerry.

Gerry Sweeney

giving beaten. more has this visibility? it But Following horse, and words, schedules? bit previous from In to customers ordering of and you programs the up it how is some other a much Do on-demand be you are your works? or questions into other on that little we that they see insight completion get does how some

Kevin Longe

American. very short different Its North window. versus North international it’s a American,

three weeks than it’s that. longer four to We in range, one internationally, Sometimes that maybe weeks.

a short it’s So window.

Gerry Sweeney

share, the North correct. America is lion’s

Kevin Longe

Yes, revenues. plus XX% our percent of

Gerry Sweeney

or competition, like anything maybe it there’s Yes. take this talking competitors obviously any you give pause talk lot seen you up. – about And mortgage to in attach starting a that Have maybe at new would talk guns on prewired then ways, are share the different after market that? or of product to type about least come

Kevin Longe

we there. good they respect have mean, bit a are competitors and I good our Well, companies teams quite also. There

it’s on we’ve product got that introduce quite really watching we’re always where standpoint pipeline focused of we we’ve we’re something a products to were So a more and that year. from and going but begun this

still not we’re whether in one is companies, we the of universally, industry about service or be recognized of field probably going. assemble we’re have the that on in more we’re happening that standing we all fragmented it’s than And like can– I this or in and more so what’s we’re And where have can better, market. things as we systems competitors one and the focused larger more our in reliable And that way. that recognizing a the manufacturers the leading perform done competitively think it systems

fine market prefer that. healthy. really benefits our towards to we’re that And with really moves be something is that It us. so systems, too. competitors the as We And more benefits industry the

Gerry Sweeney

assuming to DynaSelect think specifically correct? is that I I’m – have I – it. DynaSelect, Got that’s

Kevin Longe

It’s DynaSelect. the of variations of one

names or of was really but DynaEnergetics systems. and a year DynaSlot the But could with product. a version, I just DynaStage think product and an family before wasn’t it all it say – – the has DynaSelect pony of and went Twisters igniter actually that and connotated are line but alone tongue it similar it. all, have it. twister. initiating our first externally DynaSelect things the one version, of the properly, fire themselves, two systems our one-trick that top took then an words me in wired simple nomenclature, a technology initiating We I

the have the broadest charges in shape one if the of broadest. We not of industry, lines

charts, different we’ve our host introduced introduced in was in four, past, we’ve but started different length, DS Trinity, out. DS DynaStage we’ve diameters, really shape year, Infinity, coming and factors And NLine, it’s are of got then that a And DS DynaStage we available form this five, the whole renamed other configurations. for packaging six

so line. the rock product combinations And really specific are tailor you terminology combine on breadth have and we a the using products optimized for that And before, depending different thousand of duties. more or support components were didn’t because we literally solutions the of can it completion tailored how these that

Gerry Sweeney

Oilfield detonator using semi-family, they’re system company their also large DynaStage even And think of of some buy Theoretical ad themselves, is would be igniter your so that that? maybe just a Service as they technology? systems, internal own hoc manufacturing or question, ISX customer-sized could big I which do but manufacturing capacity, maybe a if or competitor some and their had to own maybe want using

Kevin Longe

the where shops, needs to of not which assembled to safety, to service exclusive and that But and order field top have we system it, the to has wired, excuse you ISX buy assemble do have is in what’s have any us a service the the performance be still ISX system. to have because operating this state and receive fully of of – system. it Well, wiring or initiating and be it’s the me, called company of their a All externally initiating now the the get get able in it’s solid integrated but the we reliability company in benefits – gun our DynaStage can from an benefits initiating which in aspects – products field. ISX fire to family

entered to And really in service we use we fact, we area we to So product – this way, marketplace. it’s – system. system initiating actually the our the either go companies in selling DynaStage people onboard can a

Gerry Sweeney

it. Got

queue. back it. turn I’ll Okay. in Thanks. I appreciate

Operator

comes Your from Please Company. with question Marshall next Sidoti Edward & ahead. go

Edward Marshall

Hey guys, good evening.

Kevin Longe

Good evening, Ed.

Edward Marshall

the was well. What focus wired or detonator it of – does the price take gun much and cost I and and as customers. externally detonator product further whole switch to is the sell going that as percentages What’s one full, actually switch switch cost? far not of detonators The to on then a going the I’m step as how the ask the that as system, system. there system? of So whether of that whole

Kevin Longe

out it of gun. their be XX% We people But number our give price complexity gun, whole all, size it’s own and they people Trinity, three integrated detonator multiple. that larger percentage a initiating of first could the That assemble XX% feet the of buy of model. which with Cost cases or four externally whether and five in charges, wired smaller could based Infinity, gun, back happens ISX to it don’t type somewhat that as be eight inches will. system, cost seven charges, could another But with the where Well, the be can into gun, to were if product. a Yes. a and if can a the on or is multiple into an just you be it different half ballpark. or a selling a in

Edward Marshall

in how it. today $XX prewired you – wired of wired Got for roughly? the – And that million – many in of the externally in those sell revenue you or revenue how much XQ do did systems

Kevin Longe

the was again, DynaStage we year initiating the And don’t or But systems. half for the for $XXX,XXX. growing. the The total assembled it’s first Yes. obvious reasons, systems factory for the fully breakout of year from probably

Edward Marshall

systems? And

Kevin Longe

systems systems. gun and Initiating

Edward Marshall

Yes.

Okay.

comments? to said saying bit. make want to just to that to to was – just up expecting wanted we the that longer up? sure, you plan will kind Are you maintain you that said, Is that something – clear hold no I just you share. little just that market or within a or clear mentioning gain Tommy, you’re You share of I

Kevin Longe

quality delivery, the there’s the marketplace, focus performance product to on In relationship, price, we choose Yes. safety, performance. service,

gain be We we our to in we the But value forward. need healthy We competitive, a competitive as it’s our also technology reinvest that use. and through going expect share We margin create recognize for products product products in to deemphasize a price need be to to tool. going development. to but that get

And it so, to grow expect going of price soft products that tendency we’re by we performance to that we’re going still play. not earning we grow, have introducing. at but the there’s feel and we not times with for to a – that we’re a focus market the we’re the – market companies And runway, to on but game in that’s softer

And products for us, a most is so price healthy to important. margin maintaining and our

Edward Marshall

think of XX% roughly that the call mentioned XX% your wanted goal? gain to Is last you you to market. still I

Kevin Longe

I that there’s the to corner good – not market. think we’re out have We do competitors.

our to a systems be market We’re just them help to operations, service our competitive, completion more believe help companies whole around really initiating perforating runs the the but more out the well the not efficiently. a support like on in be that in to guns and everything leading ballet, process we DynaStage

focused share. our customers really that’s and And what’s a leading few so defining we’re on

what’s a get well partners our And to product any when is And yes, It’s you we’ve dynamics. do us. the that think the we’d strong together competitive to up a that to to period get an and what’s got talented than market customers pretty XX% of in it for for so, that tough pipeline has that almost XX% And that’s more of robust works to like right creating time. terms in have team share. in in range. determine going extended choosing We

Edward Marshall

one you high. going from into if is The for that mind. embedded a – or Got million, in QX it. that? about don’t I little Mike, looks ketchup it. talk something there $XX.X what’s maybe like compensation number? a mean, SG&A you on Final Got me, Can

Mike Kuta

that got out some but our rolling portfolio patents in years. it’s We’ve products of that to be investing in next of going some our over the primarily out of that, building are – in the we’re just several

investing have we’re the well continuing we introduced. as efforts marketing sales the the and as – products sales on So in that that, new

Edward Marshall

Okay.

good. it. Thanks guys. Appreciate Okay,

Kevin Longe

Yes. Thanks, Ed.

Operator

Thank you.

Your next Please Jim question Chardan McIlree from ahead. Capital. from go comes

Jim McIlree

like changing, that you but you product given introductions good not guys. if Kevin, Instead, you talking introductions half. had on new on the think those that year, you’re speed that? you deceleration you’re the sounds of second products ahead at you It Thanks as and are hear the – contemplating addressed growth to I’d the Did full the about. beginning can. product it that specific I afternoon I in this, contemplated if still be are correctly in the the

Kevin Longe

a You of correctly. opportunities heard we And medium that we’re forward clean have we and for down see. at faster the and with a cycles I market some sheet focused going around very on balance even mean, up This rate and us purpose. the to long-term. we’re investing

Jim McIlree

you of changes And concentrated or kind second half, it in great. the that this everywhere refer everyone? DynaEnergetics Okay, in secondly, is then any in that or customer to with basin is

Kevin Longe

And – of that to in XXXX, we XXXX XXXX of is than be going be I in and our better hearing was optimistic more XXXX and they’re think XXXX cautiously industry the we’re seeing are that to stronger marketplace. hopefully a happening going and better what’s reading than XXXX. expect be really certainly than to the and it in It’s such general that dynamics broader assessment better

be softer an Time – And was the we But in this into to will impact the year? the quarter of it so, we’re fourth budgeting it quarter. impact for next however, get in quarter? – think what’s quarter. down as Will Or an last tell it that seasons us unfolds. quarter And appears become go a had a year. then which can’t I period have forward time that the it pin I third to the really into

Jim McIlree

it. Got

Mike, you high? are low, lastly, or can credit? that it the comfortable plans are talk of for with you your then of is And the level about Okay. what kind too this too line Is

Mike Kuta

half, second as from paying We’re as going cash run $XX similar you debt. terms similar second continue you generate rate mean the what is to a on about operations, a in quarter of in down CapEx can the run expect million. rate. I

have half a the our should in and we zero by have probably debt year. end the cut of So close net to debt

to And we want so that’s where be.

Jim McIlree

thanks guys. right, lot All Great. Good luck. a

Kevin Longe

Yes. you. Thank

Operator

[Operator question Please ahead. comes Instructions] from go with Your Tommy Incorporated. next Stephens you. Moll Thank

Tommy Moll

Thanks for me back letting on.

Kevin Longe

More to welcome, Tony.

Tommy Moll

the I’m a and what switch on taking discussion some versus and to addressable versus difference in been you of other right wiring think resistorized and there’s integrated also switch-detonator about competitors. release your the detonator. it fundamental that’s just difference in So the manufacture the I every call But an

you fundamental lay just what in two the hit the efficiency difference if as haven’t of So those what out, safety and also then benefit the much and that? again, on configurations today could we

Kevin Longe

That’s all sufficient have call. answer switch to to a it’s not integrated But again, for switch. not complicated just a the fully conference that The is a but system. necessary,

point. to You that The And low the is very a a point those is also and wired a need shielding detonator. is others a the to weaker a resistorized fully voltage together a assembled weaker system, weaker ship is all of The difficult. point. switch. is that’s gun ability in resistor with the ours wiring And are the using detonator products

alone switches, assembled And without competitors is let in are they installed gun of detonators, the fully in initiating can system field integrated alone having not that where the wiring. a all the vertically our have technology let

smaller benefits field. putting it of they form just fast the in There leads the supply less is time accrued resistance, increasing and a not assembly, it’s electromagnetic chain, factor and there’s ability of so how that’s environment parallel down and – the together it go interference. operations in And the it the the be of site really the the – nonproductive do the around well. But and saving is the an to safe it’s in benefit well biggest because the

our kind ballet, assembly a so It’s gun And months topic into gun done, going the gun down that got – late system. components we’ve going been, and of are assembled. you with over is an it and few has it’s a it is where’s matter too. which well being the every a what well-orchestrated of of Well, last get assembled

have updated pictures better words. to our getting it BOOM-X, you marketing with not we a only and a differences customers latest we product job So way. which really understand which mobile to we’ve with with when there, in need analysts trailer, worth tangible And call our a the can probably out see offerings thousand we but do our

that welcome listeners, as we so And we opportunity forward. to our go

Tommy Moll

take with of Last of the about one lot pricing. are in or – who I new trying defend market point? their There’s trying accommodative competitors to take players the some market a not of from pricing conversation Maybe me been at potentially to you systems? aggressive promise. being the merchant some commercialize Have share seen this or today, or

Kevin Longe

of say can’t scene lot that per I a felt that. really we

I to tough difficult and a an kind that, understands orange apple lower And win and system. the market to compete I And the an a on a it’s It’s time of – very that of thing. price terms number technology Sometimes is terms encouraged air increased to game that calls component with the in in think maintained. by that’s I of one a discussion I’m its very systems integrated air the of things and of time. is and think conference increased perforating in its of that believe,

And value over a I differentiation price. industry and the a to aspect industry that for sustainable of we’re will there’s it to a for market it think focus lot and I be And in for that proven time. better is price it, be better creation. path competitors room on not successful than this better our path has for itself to share protect be think the in And will

Tommy Moll

Thanks That’s for all for your me. time.

Operator

next Brilliant with Jim The Please ahead. Management. comes go from you. Century question Thank

Jim Brilliant

Hi, Yes. How you doing? are guys.

Kevin Longe

Fine, Jim.

Jim Brilliant

an X possible X.X. much Trinity number benefits is the would the have new then the What even would I That’s you didn’t guns? And the talked solid about really with haven’t and new that if products, your that then we operator one. state guess, your Kevin, number shorter two, be have detonator?

Kevin Longe

and together So given guns simplicity, of guns of of concentration the are a a perforating lineal having the higher benefit if those putting you will foot number well. charges for of

the of the not assembling on oil of focusing it, it’s gun. just side so a And recovery cost perforating

ours. design around with they’re have work But that come the integrated And system operational – the call. and that of freedom get discussed will benefits a earlier there’s standpoint was sure safety and – Our from us a as not that don’t up elegant situations. quite I’m gives you as quite others degree initiating a and in

they’re system all get factor charges where they you of form So the the the will completion given length. themselves orientated our recovery. many towards direction on gun perforating effectiveness a the initiating size and that and the determine you in smaller design of of are for the depending completion a in the how performance charges for And orientated oil more a and and can pack charges lateral

companies have greater the freedom service programs. we degree kind to flexibility design to right so completion And just and work of with of a

Jim Brilliant

Okay.

by increased hole. that trying child on limits is more the down on really then and our So focus industry we’ve problems reached the to the the parent address fact pushing a sand perforating maybe

kind do much now right? I understand so And that right? you get? how that And can you more what flexibility of better it’s perforating? what Is – in have Do

Kevin Longe

that you mean, I a don’t not that’s Yes. double effective want negative. perforations aren’t if

designed be. the tie And a And location design the the that gun number so will gun. pumping pressure is, charge, effective formation completion a the more are overall of factors into things of these orientation, and a itself. on perforating the a more go of service there’s perforating create that the with The there’s of it. it’s areas – the all the part there’s completion gun other the a size And and complex to

products that add outcome, tendency on to more towards so, compete, for And the be industry choose or the long the price was or going and and and the efficient components activities us. a there industry within and for having the of orchestrated on different selling either I then effective time those and moves all the integration And technology an then value products to and all a the and think, non-integrated more ecosystem’s separate activities. the isolate in

Jim Brilliant

share share, at to only share of on seems of XX% share the is to of shifted biggest it been from field-assembled, lot a is gains the field-assembled. the idea there’s me be Okay. there’s Factory-Assembled, market a then all And the talk from and Factory-Assembled. then that. about change lot industry But If and shifting share

Kevin Longe

Agreed.

Jim Brilliant

you detonator Okay. you And same or other it detonator guess, – to that – solid benefits the heard then all I’ve the the can thermometer, a system. the rest is I’ve the put with thing? that. only probe looks kind meat state Is industries is And system. are a the get. heard which that people You the it as into if gun on the going a your and between how finally, But like as the detonators. ones down. have But seen I the I’ve yours ease guys top that’s you you call tab and guys other it, well refer it’s will, it initiator difference of you at pushing

Kevin Longe

ease part is but Yes. of The there’s… smallest things it of enables the that value bunch a it,

Jim Brilliant

enabling the I technology Well thing would is the biggest think.

Kevin Longe

Correct.

industry us, of technology And leading opportunities for factor and packaging the the so shape itself inside our the device then number for of form charges. the a creates device

Jim Brilliant

much gross just how is last increase of equipment and one division, is deployed? and recent had year-over-year. you’ve margin, is, the a the – to sequentially some to revenues of Okay. spending you due in of up And more DynaEnergetics is then the that the have due pretty much and especially nice the and How you it step in on capital

Kevin Longe

asset are of company, than fixed its the little light variable An low very higher a It’s costs. costs absorption. the

it enabled the in down carried – XXXX further curve I even we’re board We in good in different of order it the being just our employees technology to And XXXX gross in the out all and the gross the margins the efficiencies – And ease that, and that quarter. beginning we’re XXXX, together. the operating factors with in organization targeted had to of calls, hit in their XX% learning all previous together margin we’re have came to in the I’m seeing we so, very this And margin. investment come now learning what and starting make conference believe our quarter we’re products curve. appreciative is, terms the or of through that of very and the XXXX, us and coming had manufacturer form we’re above we that of seeing a –

Jim Brilliant

Which has the guess to final leads I thing. us

You the are same. revenue remains guidance your but the adjusting numbers

So and you’re margin. keeping capturing

Kevin Longe

that’s of kind activity. nice less a And quite Yes. situation. frankly, with Make more

and wear that’s on combination good a tear of it’s all So, us.

Jim Brilliant

Right.

guys. I Thanks Okay. appreciate it.

Operator

you. Thank

Please go comes question next with ahead. Your Stifel. from Stephen Gengaro

Stephen Gengaro

Thanks.

follow a quick up. Just

mean guns overall at this look the us perspective to relative of pretty like next you hit I when your might how the last penetration and integrated you that sort of on big still it about it Have kind You pie the of the rapidly. it’s from but perf to on seems of market. that question, couple rising late fairly being years? and come thought of its adopted sort rapidly. it’s seems over Because and

Kevin Longe

difficult intrinsically do way are we’re unconventional And the for good wells doing will there’s they going a efficient safe. that why the American wells that’s we altogether. a It’s it. the don’t And some deep of on markets fully is. sea, that. the talking It’s see and But operators. here into over that North different time our more based primarily North And every the the a – and perforating. it’s not into see It design that more of conventional going. assembled reason of market story probably industry. as such way land we primarily towards most gun to international we is and move spill land-based about the move competitors would and America the It’s those are into good for Internationally

Stephen Gengaro

helpful. very you. Thank That’s Great.

Operator

the like time. turn comments. floor Mr. I questions Kevin Thank you. no to There closing back would are for Longe to this over further at

Kevin Longe

if of Thank finish to Thank and forward look talking particularly you We you. and having QX. your for an the for efforts. company you’re everybody after you in listening employees our interest with our

DMC Global (BOOM) 25 Jul 192019 Q2 Earnings call transcript