BOOM - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen. And welcome to your DMC Global Third Quarter Earnings Call. All lines have been placed in a listen-only mode and the floor will be open for your questions and comments following the presentation. [Operator Instructions]

At this time, it is my pleasure to turn the floor over to Geoff High, VP of Investor Relations. yours. is floor the Sir,

Geoff High

Hello. And today CFO, conference Presenting third Kuta. to President and DMC’s are and quarter CEO, call. welcome Kevin Mike Longe;

I’d are our in the estimates, during and assumptions are matters forward-looking everyone disclosed today’s our that risks projections like SEC. date and of may that and statements on with call to include discussed based are as to remind subject filings this that uncertainties

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

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

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

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

Kevin Longe

an third the during of this was Thanks, margin and Geoff. delivered during improvements challenging growth Both year-over-year quarter, and industry. sales increasingly DMCs environment the businesses achieved energy for

Consolidated million, XX%, XXXX XXXX up XX% DynaEnergetics $XX.X the sales up oilfield XX% and down quarter, products XX% were Sales are sequentially. million, $XXX.X quarter quarter and the business third from versus sequentially. were the third down third for at

order end of business, the ratio book-to-bill of of Sales up at year’s is an quarter. third up $XX.X third the X%, the million were of quarter second for million $XX.X end sequentially. composite backlog the X.XX. NobelClad, X% NobelClad Trailing our metals at with quarter and million, versus $XX.X versus last the NobelClad quarter XX-month ended

to facility Tyumen, a of which manufacturing Siberia. write-down gross adjusted quarter the DMC in reported third XX%, of DanaEnergetics excludes of closure related planned inventory margin

from margin in quarter. gross and second third a and third XXXX XX% up quarter ago up versus quarter XX% year reported was of this versus XX% and gross was adjusted margin margin XX% year’s quarter. in XX% Gross second in NobelClad’s quarter second flat year’s in same XX% quarter. the year’s the DanaEnergetics was XX% last it year’s this this

was third quarter. Adjusted versus operating adjusted million income million. million adjusted DanaEnergetics million $X.X and in income operating $XX.X was Consolidated $XX.X at operating at $XX.X NobelClad was income last year’s

income versus income $X.XX million share million or in net adjusted $X.XX adjusted XXXX was net per share or of diluted per Consolidated the $XX third quarter. $XX.X diluted

third EBITDA Adjusted down $X.X year’s from up reported of million second million million $XX.X NobelClad while EBITDA DynaEnergetics last quarter of in $XX was $XX.X reported adjusted in adjusted $XX.X from quarter. EBITDA the million million. and

with completion advantage systems. From perforating to of a onboard activity taking DS DynStage well new initiating in a in service intrinsically commercial DynaEnergetics safe performance-assured perspective, slowdown factory-assembled is system companies the the ISX

costs. more are down sales which Our increasingly the the more completion seeking exploration is their about and with team If time also to and well specifying efficiencies maximize perforating learn them drive programs. operators of benefits companies, are DynaEnergetics safety, they improve well completion spending production systems into

of orientation is We operators. of the NLine believe DS gun specified customer at the two in models pre-alignment DS by accelerate once already of the adoption of rates. string it’s number charges surface the and new recent which being a will wellbore shaped the growing commercialization enables then

charges The most to now the X shipped Trinity single industry’s features DS system and a being plane. compact on three shaped is system long which perforating X.X customers. inches is is radial

frac fracturing for decrease in by to in reduce hydraulic a pressure configuration can improve select up equipment. tear and and could this requirements that performance show studies material horsepower on and to lead XX%. This breakdown formations wear reduction pressure Recent charge pumping

Customer commercially counts and reaction a very field each pleased now we system gun stage. higher In within charge addition, Trinity the positive are trials operators is enables deploy X.X the DS to to and available. is

within team, end the interest is In market variety opportunities development markets, mining NobelClad, expanded effort around aerospace. alternative our successful new energy, including reflect end to users metal NobleClad’s of a world. composite which the and emerging of are the increased demonstrating metal generating solutions These composite of applications benefits

sales projects be that large these during bidding in NobleClad’s opportunities is expected on at the growth a believe organization in months. number the awarded could we sales Meanwhile, meaningful of to XXXX. Collectively, result coming are NobleClad

DMC’s third financial continued quarter brought The improvement in strength.

invested the the capital Our quarter the trailing year the return of net was debt versus of end end XX-month and XX% XX%. improved our by at on

enabled we to increase recent in position share dividend a annual $X.XX the raised our financial strong which Our $X.XX share. a from

guidance range XXXX of full increased shortly, forecast discuss to $X.XX adjusted sales As we maintaining will our $X.XX. EPS are year have Mike and a our to

We will and return new establish on sales, records also income our expect capital. for full invested year results

not Our want world. thank would to to I success employees possible the the without continued continued also our around DMC. to efforts customers support for be their of of their our company. want for the them I thank dedication

on the detail third quarter results turn to at Mike over look Mike? our a guidance. for will I our Now, call further and financial

Mike Kuta

sales in XX% with of third $XX.X Kevin. third million expense was Amortization than quarter. versus last was consolidated or SG&A year’s Starting Thanks, sales. million XX% less quarter or $XXX,XXX of of SG&A $XX.X X% expenses, or of sales

$XX the of cash from Net million million, We during XXXX. the $XX $XX.X at ended period for third of generated down month in $X.X which last the XX, nine and We activities debt year. quarter month million. operating cash million million compares December to nine $XX.X period, equivalents from generated cash was

year’s sales in Turning $XX quarter fourth to we in consolidated the million, of fourth to guidance, the range million $XX we reported from up quarter. million anticipate last $XX.X

million report ago year’s $XX to be fourth of million last NobelClad in quarter. will in a range $XX versus in million the reported $XX.X DynaEnergetics $XX fourth million range the $XX.X sales quarter. year of million a versus should expect $XX million to sales We in

coupled mix the are expected and a primary a Consolidated gross XX% in NobelClad oilfield range with sector reasons Pricing in favorable America’s versus XX% XX% for services reported quarter. project decline. margin XXXX to of the North the is expected less fourth pressure products at

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

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

full-year above $X.XX. earnings from to noted, expect we in will we $X.XX per share up reported Kevin a now $X.XX adjusted of our and the $X.XX range be As range forecasted last of year $X.XX our prior to

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

Operator

will first we And Instructions] Gengaro Stifel. [Operator Stephen you. our question from with take Thank

Stephen Gengaro

I Thanks. morning, afternoon, should Good say. Good gentlemen.

Kevin Longe

Good afternoon, Stephen.

Stephen Gengaro

get gross in a market and you start product based So, harder customers is on-boarding two seems things, with slightly sense held like would don’t a it you on-boarding really not I talked the they I new performance, that softer always on first if well. up margin the about like with, mind, have but your new thing, premium easier, customers

that? we So can think and that about rest you how should help with of

Kevin Longe

on to Yeah. pricing previous pressure the equipment coming the is volume chase of expensive a that’s lot quarter There from and margin. today. quarters in industry in the service suppliers at not chose the We

elastic. on And it’s are I industry think an our is of is view demand share in where important point in that to we that kind of

have and We high are explosives barriers well use, few to we a with differentiated and of with competitors value and high fixed high entry. variable costs, products costs, low capitalized

hard them once compete with price on up. value game get your standpoint. prices And structure it’s customers. our down our often We it’s go create industry from kind that really And a prices to feel that deserve of we a to the back product fool’s for

dynamics push same and that exist And but service environment, not follow the hard in the the we it’s so back this side of kind of on industry.

also same on and and also to And guess, we deal an service note side Unfortunately, their customers. it’s product are a many important more it. companies of economic for capitalized our it’s there’s I and completions poorly chase just loads service but feel we debt not are the of just elastic they environment for us because the for, on to demand. them inclined side with They price feel lower at the

Stephen Gengaro

quick two EPS that EPS thinking you. is, that you year-to-date implying you off Thank about Great. and range that XX your are basing am right? others And one, you just of are so XX, I one when adjusted guidance to look one $X.XX, at Okay. of then,

Kevin Longe

based $X.XX $X.XX to Yeah. is on the It’s year-to-date. $X.XX

Stephen Gengaro

Perfect.

Okay. Thank and you then...

Kevin Longe

[Inaudible]

Stephen Gengaro

question the your us can you from any the details cetera. is of internally at you talking of investors I know versus how particularly just are give at concern? all, that you investors thing customer the the Halliburton yours you. look some biggest thing creates because address Can that hear biggest how final to mean is and we and they clearly are has relationship you, is big that doing to hear importance in a I when I then And on et that they do but what

Kevin Longe

into to our It’s our important very the important a call. I relationships specifics on is Yeah. and customer it and customers. us not I mean for get it’s with for relationships HAL conference for industry on place a company the think not just business

Stephen Gengaro

fair. That’s you. Okay. Thank

Operator

Moll question Tommy And our comes next with Stephens, Inc. from

Tommy Moll

Good afternoon and taking thanks questions. for my

Kevin Longe

Yeah. Hi, Tommy.

Tommy Moll

driver to revenue if industry. could you then, some we build guys bogies figure but Dyna as as helpful? conversely more understand understanding. use get the would cost your rapidly And days. of to if guide, dynamics tracking assumptions you guys absorption are best you third the margin use to that appears but quarter the are what out companies a the those and not help us out as Unfortunately you the broader fourth you out quarter, will for of maybe as DynaEnergetics side, trailing think one you rapidly the have in for be it appears XQ else beating, and those are anything few by the called to thrown you. a the service help Thank about us that margin then have on you it recent bogies be guide or compression the But declined for better XQ industry industry, similarly observations So offer in than in that your to declining

Mike Kuta

XX% first. Yeah. DynaEnergetics I that last will tackle gross margin. had a one

quarter their done very was difficult and so it very, good gross environment. in maintaining margin XX% they think have a a I last job

percent under gross of good excuse and margin picked legal as up, has XX% But are legal a that in but with quarter. not actually sold was and very me, costs operating revenues XX% DynaEnergetics of quarter. income is R&D. a in our our In it the but R&D And legal higher just the margin were gross for and slightly the essentially pleased we

year. quarter half I it in -- I others second that And second be less, think, to was that conference going the part see quarter could coming. a this in could but third see call, in that in third slowdown lot anticipated is And quarter, the of A a we hit drop hit come regarding we think of it the quarter the big coming, fourth the year. we in this the of of volume, think,

And that us that, better we that was I will quarter. are hoping very ‘XX. things to that ‘XX ‘XX the to in volume we for than are a year, back of mitigate help development fourth the note good a think slight us important it’s it year was do on some working

We half of the a year half It than year the expect the than better to is year. ‘XX. just second first of ‘XX weaker be was the

the And project sales on standpoint performed Tommy year and quarters softer a favorable the They also from synergy and just absorption, margins quarter. QX guide QX. we the in the a margin first three in and in very of have well the less in mix have of just fourth terms NobelClad

that’s So strong DynaEnergetics, as said, NobelClad, aspect in just that to are we well. picking like XXXX. expecting is the we as very an And in Kevin are up be guide

Kevin Longe

that the could our have in I we there too, already companies We orange an that I because think was the the addressable revenue, in some other reported also an don’t declined apple case. than that’s industry. add made the the the think revenues, switch further revenue know switch if -- and We comment been have -- their and sense earnings DynaEnergetics. and I our

third a quarter quarter the of switch competitors included that very last and at our year. of they quarter that acquired the a end one company And had good of

we so, and actually with that believe we their performance -- And revenue were their growing and benefit DMC. switch are DynaEnergetics a to was and we that’s impressed the

their market in front and in product the XX% switch about be addressable out perforating with of been our and market to have to coming companies the of to addressable to is expected grow grow and we the XXXX, are glad see XX% estimated market are other this value-added to XXXX with helping that part of marketplace. In we higher end and out was switch and the

product nicely. the revenues you And then DynaEnergetics -- compare would with see growing so we and that kind switches, that of when addressable think, are and I revenues, the you

Tommy Moll

Thank you philosophy, could need and capital not XXXX you but shift for have may sense my if any more capital DynaEnergetics more I that set all the to your expansion there. And gears CapEx, the line for you is for allocation expenditures understanding detail broadly budget probably segment. rough

I So if budget preliminary you Is could range some of away. would or not maybe year’s there understand us a us any you for fall next anything to year give for even think this should range can help that... do thoughts

Kevin Longe

Okay. On…

Tommy Moll

we that not may … see recur.

Kevin Longe

Yeah.

this actually we year. pleased are of We come have off

be I when for put in that’s terms of haven’t next in budgeting assembled in ‘XX. significantly lower CapEx we in million capacity been years. our to CapEx the following million place $XX than factory $XX our has two guidance to last our in And do gone was we it and think But $XX systems, million CapEx CapEx expect million be we $XX yet. into expect we haven’t, year the and and we planning to the the range

Tommy Moll

Okay. that. Thank you And I back. turn it will for

Kevin Longe

Yeah.

Operator

And next question Sweeney from with comes Gerry ROTH our Capital.

Gerry Sweeney

Geoff. afternoon Kevin, Mike Good Hey. and

Kevin Longe

Hi. Yeah.

Mike Kuta

Gerry. Hi Yeah.

Gerry Sweeney

industry phrase efficiency out are right, the with the going with and not brings a it’s come that you I component talking your am active as very these the the into But when when know calls, a you sales makes than shaped DynaStage Is around some as charge there to does of charge and shaped to good you mean, outweigh equation, energetics technology you technology out else the side, of on the are do I when that are in I way talking other you where or meeting to it -- everything customers, charge trying the real talk the to really the and sales anyone sense. Question in shaped technology on Kevin, word How is customers. to in DynaStage? portion, more it. and table them, phrase lot to go

Kevin Longe

component -- packaging about a It’s don’t is all the matter. this is sales energetics the charge energetics, quality on and This shaped the about options perforating huge without really portion. all

of we for lab, do And a tailor discussions our rock have so optimized section for we we our lot -- charges. a

We than shaped at charges shaped broad breadth the because line companies the that times, not of to we we have. have even who have don’t other sell industry, and a as line charge shaped any broader charges product company in make they

convenience in And to know been so, yeah safety of on and you there’s program. a and a lot focus our initiating that’s brought the the systems completion reliability that and

to in successful. in be our not just volume. year-over-year charge order shaped have shaped We to -- up equally gun charges our significantly charges be strong are And with

Gerry Sweeney

it. Got

market? So suffice to are it’s the competitive you energetics very say in

Kevin Longe

almost the ‘XX times are three I mean, market a doubt, comparable, I to itself are up the -- stages Yeah. the twice but and to without mean, Sphere’s according energetics we energetics up XX% ‘XX, versus XX%, is that.

Gerry Sweeney

Got it.

are of more out? a And that than some part or at seeing technology you are crews quarter bake essentially client’s in to you And your the what activity clients are for into components. or ways DynaStage would supply information of some get little assume makes to and chain. your two some here, giving -- I point the supply things, eliminate bit so a bit because assembly are you Another they that talking two, you one some -- technology the sticky helps are into a they of your ways little I insight more you your two products almost question in as with mean you buying do product chain?

Kevin Longe

all partner trying people we like not marketplace be be the it and all to all together I customers, think, and we to completion and things work solid efficient programs, in parties. with have to for to would to have are try

And way and is the have do to and relationships to only trusted that respected dialogues.

with that working insight things are a that they that the on very we of the so feel And that types customers working have got that’s for and we into important. we are good

Gerry Sweeney

Got it.

Kevin Longe

The…

Gerry Sweeney

ahead. go Sorry,

Kevin Longe

No. Go ahead.

Gerry Sweeney

and back going the of line. short what percentage just jump go the one to you or of idea to factory Any question assembled maybe versus perforating what in percent think was will market itself. component follow-up then revenue ask market I

Kevin Longe

working very in it’s staffing to expenditures, the terms hard. capital in difficult they very be puts proposition It’s and assembler to capital. on service a the think integrator perforating for basic of I system them burden when value not company the components a a of are it

Titan, a Hunting doing mean, the companies, the I the for And I think have part in ourselves factory I the are controlled energetics And environment large to major in we industry towards these to basic that. systems. natural, Core, technologies merchant OilStates, more a starting the market. and we of is it’s guns assemble and assembled mean, move

the out are And if majority with They of of to in sustainable the the not And component assembled in scrappy manufacturing a they factory so like put it’s model. basic deploy majors, and XX% not business -- I together guns. of guys the this there would are trying XX%, going don’t industry it see lot and a the industry there’s that they to compete land guns it. of not not times but are to based the

that think, manufacturers they a around of majors. the against that compete getting into lot order noise other to have set in there’s the don’t resources or I this So, component the space skill

Gerry Sweeney

it. Got

Kevin Longe

want don’t want to to them, underestimate them. also I overestimate but don’t I

Gerry Sweeney

Yeah. I got you.

will back I it. line. in So I jump appreciate Thanks.

Operator

question next And with comes Sidoti. our from Edward Marshall

Edward Marshall

you, there. Hello, are How guys?

Kevin Longe

are you? How Ed. Fine, Good.

Edward Marshall

great. doing am I

market at, you look of -- lot any a of this So in kind are And mean, on your comparison. market on them, years And updates I sitting but think that’s just I am how there still emerging calls. about we the fair you in wondering if call, a comparisons am talked there, I that’s how have is about I I and been fair past exist? I dynamic necessarily guess, on that just a competition you couldn’t and secondly, does don’t trending. chatter the have to the took think, customers share product the get because then, maybe past curious, sidelines,

Kevin Longe

-- marketplace of market so change cost, got our variable that have as product, for to and expense the capacity serve I not just now, we -- differentiated have right getting value to the I high we we focused that have and are the earlier market we demand the at volume Again, additional of lots a mentioned margins. a on and a products.

So on we unfortunately, play see it’s down because market a volume mentioned, elastic down. as is if market price. your some And competing the to I in of you competitors, a are an tough of that has kind overall is demand, game

You It’s just that, down take are on further going price. all luck to good yourself with right?

the you that that capacity, question kind got know don’t have year. of the So we lot need with of CapEx for from ties a which next asset

And are so we are now. where happy we with sit -- where we right

Edward Marshall

have an share? on update So, do you

Kevin Longe

the Share, is in which low-XXs, we are up…

Edward Marshall

Has that…

Kevin Longe

[Inaudible]

Edward Marshall

grown that or has … shrunk?

Kevin Longe

mean, in I are year the in are high-teens, the we we now end, last ‘XX growing. It’s year low-XXs.

Edward Marshall

Got up first year? this from the of half

Kevin Longe

stable We think, it’s to growing.

Edward Marshall

Okay.

Kevin Longe

and shaped that. focused think up is are reflected significantly [ph]. What are that in in market charges roughly game and year we we know higher than we again, I quarters and the and on four is this year-over-year up positive XX% one the in,

margins, of I strongest At think XX% because up that up income that income and is to margins to margins emphasize our the think deploying. probably upper the the we are is healthy XX% are operating we I reflection business technology target operating that’s revenues I’d and and DynaEnergetics year-over-year. like mid XX%-plus

Edward Marshall

to good That’s hear.

you that’s Trinity of even shipped. now have am further about kind than I how earlier any many better talked the curious discussion And Any any have You is or if commercially Trinity? existing data, think we system. have that a product available. I you gun comments margin you said regarding and could

Kevin Longe

shift. starting just It’s Yeah. to

an that’s have insignificant the next takes products, It’s to answer of a evolved. And over how So not the one it’s year-to-date to everything, of see family hold. application way which fourth few and call. relatively it’s quarter, the happening in we [ph]. next so long answer been need we quarters the information what it’s Trinity but our we positive in quarter some of happening more have to applications. is third will an course, conference competitive And is But

Edward Marshall

full are You known time I long and at under the have levered you this a this for you balance guys of question. circle point. sheet other probably each will But -- the looks appreciate

to we those of is et As you. given acquisitions I here know and something the look future cetera? to is What’s that acquisitions environment, leg kind forward, timing your your acquisitions current and for stool tolerance another key of to maybe

Kevin Longe

We acquire we are have -- don’t anybody. two things. We things, to I need at mean, looking

they propriety We have opportunities of are are happy where take for me some in capital won’t acquisition. let an our we we any businesses with in the Mike CapEx. over investment have two and

he So stick [inaudible].

hard to very predict. It’s

a for It’s We kind about are to that on. are time. now are going quite. going talk in working And in auctions to of not If It’s properties. out negotiated. not to it’s we be anything competing even be right anything, the going market take we do position we some

Edward Marshall

you opportunity? Okay. wouldn’t the I market am are when -- find deter, if you correctly, need prepared you are to today just right for prepared you But hearing

Kevin Longe

ourselves. do company leverage our that We it of also will in. want us type is The market we deter not to opportunity are not what right and the in

don’t we consistent going [inaudible] growth and -- our acquisitions growth We after and acquisitions, with excuse have We dividends. and dividend. me, view raised

do a leveraged acquisition highly cash build our to risk to don’t want and and want company. we We

really out right virtue. patience We that’s is we need now, and and focused on. so, are get of And building banks what for the us a start cash to

Edward Marshall

to like of the opportunity investments, the business the organic sounds both it’s avenues It that you? growth facilities the maybe are and of power other forward, There’s plenty whether of underutilization me move the growing ahead and we R&D of to But for this investments, it’s questions as under sheet. levered it continue whether balance this topline and to way. some several earnings me there’s phrase probably sounds the for

Kevin Longe

markets it’s to solid goals not believe by added be or to and of corner is area value the higher I technology, so, the these contributor. one our out mean, industry any higher carve We limited a

have number we that are of And got so things working a we on.

think, that DynaEnergetics some and side it. out went of the are of we that products Trinity, coming some I we other line with in

DynaEnergetics do build product And that can around the now a think they we company, is the perforating. NobelClad a company that and metal. technology application is engineering composite the it’s

President expect putting there, done development great place Scheatzle, a that strong we building, start team contributing And John he’s to and a of application job in going forward.

So we are to -- are looking of e couple with the us, that to with year of we clean the balance forward sheet things next and next in front have -- years.

Edward Marshall

I your appreciate Have evening. Perfect. comments. a good

Kevin Longe

Ed. Thanks, Yeah.

Operator

And Stephen Gengaro next with Stifel. to we move will

Stephen Gengaro

talk and Two going kind forward One, look you anyway potential growth quick there and NobelClad the you sort a bit can opportunities bracket you follow opportunities you Thanks. about little there of as ups. Kevin, XXXX? to could see of out

Kevin Longe

and industry deal guidance Yeah. But for downstream processing plus XX% XXXX. the a major they and deal I with their not give petrochemical they business mean position capital with projects primarily. the yet we to in for for industrial of are other

people adding because my we in but terms And in was that engineering tenure I time takes, to long are the started that ago. with stepped slow we that manufacturing year, it application footprint. working of and really so of is years are at year long also business next projects consolidating And DMC, two, their period a doing at. probably We possibly after those are three gestation be going

got and sized And and have efficient facilities time manufacturing and in operating bit for capability. And cost of a have a had modern they development right their quite application they they they at this year. lower last are

DynaEnergetics are cousin And little they we them are are that applications don’t and feeling longer, a some we that these the that growing with feel any are will just we bit second new start after, growth to -- with forward. of going they like excited -- going we want that of about business a way so, they we and hoping

host are unique been when don’t occupations. best land. going are of processing whole I have on applications, I predicting of And -- the have to a record I I kind of have there those -- the

But grow are So all and that we business. -- to this need demonstrate that’s to of we to build you. going

Stephen Gengaro

you And look Great. the just are think about I looking you what’s your It small of at some XX% what your of for you the then, trying is at have digits XX% a the for DynaEnergetics am mean, I kind sort of to trying others of when DynaEnergetics fairly topline off quarter, especially a sort to the Thank triangulate look fourth what I business. am you. just have -- And for guidance little follow-up, said, bit at your general. when drop a guided the I comfort down others guidance seems quarter? mean in in revenue. range mid-double like just to -- your how level with fourth as

Kevin Longe

sheet. kind year well companies the compared lot we of balance of of of focus the entered took it as second that’s look this marketplace as because of -- the a as half. into first kind And are I this to -- to at we we a mean, undercapitalized hit. seasonality We financial Well, -- there’s half that,

it’s it, we raised guidance. we see we coming, EPS anticipated our -- so that And could

market think our are products. can I we So for and keep the we aim hopeful our growing that prices

Stephen Gengaro

business then, And stages is at I play and with Okay. the both I guns and several I per on look currently sort when the perf to is of out? think do Guns was over it and you the when is, other maybe thing think side continues that -- the about dynamic higher higher. DynaEnergetics that stage Trinity so, well it fracked What of kind there there’s the trending years, been and thinking guess, has how then the about are expect I seeing you to trend last I concerned as as far

Kevin Longe

Yeah.

have statistics. we and referenced think earlier the some I of Spears in

out down relatively an their forecast brought the come XXXX, for stable. recently assessment they patience They being market. with think, I of

I or think X% they are up so.

Mike Kuta

Yeah. Stages.

Kevin Longe

Stages. Yeah. per going Stages, stage increase yet perforating again. but to is intensity being

that see hopeful XX%, the going we volume on revenue from unit and a we XXXX. market are that industry. see in so, also of the up And pricing in terms standpoint, XX% we growth for that can hold another our And

Stephen Gengaro

Great. Okay.

Now more I that’s helpful. But take comments. appreciate will I the off line.

Operator

And our comes Stephens, with next Moll from Inc. question Tommy

Tommy Moll

letting I for just me couple had a and back Thanks housekeeping items.

the also your that And you in that quantify the depreciation you you On guess that? us on and have mentioned give charge benefit pending timing? Russia release today, facility that can the the can quantify from then shuttered, best you

Kevin Longe

sitting terms will the the $X DMC’s through substantially and in depreciation impact we million The in that the sale of through of And the currency through that about charge restructuring we of end the income and nominal terms liquidated Yeah. foreign was the results. translation assets. of in statement in equity balances

And occur or that charge, our either see quarter those -- non-cash of that structuring. and fourth you when quarter that expect of and part we so late to that’s first part early

Tommy Moll

you clarify for using Perfect. range? last if for And one me. the then are full year share EPS Mike, you could the count

Mike Kuta

I am using $XX million. roughly

Tommy Moll

Okay. Thank much. you very

Operator

to will Brilliant we And next Jim Management. go with Century

Jim Brilliant

guys. doing? afternoon, Good How are you

Kevin Longe

Yeah. are Hi, Jim. How you?

Jim Brilliant

NobelClad, of you the the it the contract entering of ranges up? also markets the make any you not of the Kind size projections for could kind to on next good. ready year size the I of about the pick know businesses in Pretty are but you a are new of are chemical or starting some we combination to kind on is bidding talking of

Kevin Longe

$X on bookings, in and sizable a projects are is are right to So them couple of XX-month that range million. working $XX right? about we million hoping and it it’s handful -- they And fairly trailing the get a are of those. $XX that they they million some we are And

they $XX the next for their million that it a performance of year, really in we give on you those terms that’s -- in timing when and been that of we if million more could will And guidance $XX as projects move company about give the do the when fall -- will -- those, needle we guidance, know if see to as our February? in our

Mike Kuta

February. Yeah.

Kevin Longe

February. Yeah.

Jim Brilliant

can expand right. bit product And could Okay. you offerings. on a new little the All then you,

on But provided now you the of pumping If something you interesting factory mentioned market. So assembly That’s talking efficiency introduced you we in site Wireline. kind whole when in efficiencies at look well you of you gun assembled expand Can are another adding the a the terms pressure about avenue. the system that? at an to the Trinity’s. on

Kevin Longe

I our also which is last pressure With years. on our HaloFrac hole big charges. shaped the charges our FracTune been over there the And and shaped think, our and the Yeah. efficiencies hole few and have -- pumping equal

integrated just, in -- detonator the advancements shadowed that options, so And that the shape just packaging we the perforations. not we system, the some controls that just options been had respects over own development charge by of the packaging the has the discussing pact it’s our on switch have it’s and not nervous our

our we -- whole we are the coming charges. packaging with And of host out of different ways shaped

designs. they And shaped can packaging physics behind capacity designed they are you shaped for the match channel so and chemistry, and charges charge development with do. mix And just that and not the that

partner we it and how and are it’s also and are operated. and exploration being position companies drilled and will designs to design systems oriented, rock work their optimize them if want and a But completion -- are wells they for as is they production these formation that tell the they where with optimized you are where

And very so, in cost any And oil rates. a you can it. far side low there’s of go or on the industry limit that an has industry how industry particularly to in recovery this

going it’s shaped are our and charge not oil forward through our actually we on And packaging companies so, that design. focused

Jim Brilliant

Okay.

just recovery? me clarify, on new your oil let designs are -- improved So focusing oil so

Kevin Longe

Yeah. Yeah.

Jim Brilliant

Okay.

Kevin Longe

refracked Whether it’s or wells we in new wells, work… in

Jim Brilliant

Okay.

lot heard I have just that industry. you are in obviously, question, are you refracs? you increase part you it’s -- the where with refracking, guys So do the seeing an and to next important led about Where an into a

Kevin Longe

new a historically X% from perforating well existing between differentiated small but haven’t base. or growing, completion maybe today an are very We programs a of X%, well Refracs well. perforating

we have call various product gun order and line with a that We line the can that design go well so will. charge, through in -- the product that diameter DX existing area if we to a that’s larger shaped an it equal actually echo a hole you for smaller tubulars refrac

a forward, it’s And on and refracting will of going our piece we it’s think probably -- more some together standard because in that more less part terms because basins that’s about just in put do why haven’t of we marketing that programs. in it’s literature, completion basins. increasing of with perforating it drilling of But program certain

Jim Brilliant

I earlier. just ‘XX better I ‘XX think than thought heard said be was know and want clarify ‘XX, you better And what I to better We that… then was ‘XX Okay. than to I going ‘XX is ‘XX. than Is

Kevin Longe

Yeah.

Jim Brilliant

next million? your million $XX CapEx to And Okay. $XX year is

Kevin Longe

Correct.

Jim Brilliant

Okay.

about free share substantial flow you repurchase? cash So thought have and

Kevin Longe

some to would We cash. No. like build

Jim Brilliant

enough. Fair

Kevin Longe

do But to I’d thought share repurchases. your we we say question answering about want that it. haven’t

Jim Brilliant

last right. I thing. one guess All Okay.

out So When shipping. you are begin shipping It’s the that? now, in you came Trinity. just pilot you did been with

Kevin Longe

XX the Within days. last

Jim Brilliant

Okay.

and too So kind tell, little being but additional pilots color early on it’s the bit utilized? of how it’s a any to

Kevin Longe

of Just we earnings with we to information works. gaining and are that, information are a on what on four we handful so working hoping more service are the companies we it we and and release have that just we companies are in mentioned -- just E&P gathering

Jim Brilliant

sorry am I did companies? E&P you four say

Kevin Longe

Yeah.

Jim Brilliant

Okay.

Kevin Longe

And… starting. It’s

Jim Brilliant

Yeah.

Kevin Longe

encouraged And just strong but that’s we so, move data that obviously, base, with help the will build that what we the are information, we to very in. base product. And market this with data we are share as coming gathering information

Jim Brilliant

so, if XX% -- that you So, three know now years look earlier the or said pre-assembled… if think switches XX% two guys you out then were you years about I Kevin, are that and and

Kevin Longe

Yeah. Going.

to Going just -- the going low-XXs.

Jim Brilliant

that the low-XXs, factory next to going to is follow I too. guess, But assemble Going year.

order for the you easy just It’s capacity it it. behind $XX and mean, moves adding industry of over doing that not the spent not have that all that as the currently? that those what technology assembled, an out you a assembly. from component are to because does industry from for customer? implications industry flip of assembled the to and How will do just E&P to the the the What integrated assembler for demand, factory factory of switch go a think if you years happens So to that factory way, last industry?. in the a that it’s towards aren’t I the -- adding billion couple happen

Kevin Longe

value the the where manufacture in core particularly basic to I aspect meaning, charges. are Swedish shaped switch in mean, and in is that call we factory the detonators and assembled integrated ourselves all components, and the we

We the a assemble to crazy It’s on and kind the gun customer processing them bucket and and of have subs. our as to bodies got all of to to that me the mechanical it send bulk ask it’s all its inefficient.

assured down manufacturing, And so to and getting a well makes people big well, quality field is the of that, efficient. and assembled efficient that which site rationale most it for performance you off take the the way and is gun of assembling the more and part -- a it’s factory the that

more commodity in than aren’t assembled that them, people people so are of small sites to or market using more their to the they a is a market sell And gun. are companies who and the having have basic who it’s really they are guns manufacture factory assembling that don’t service of the are those that on well market companies and

well And I programs common to do parts expensive car going with their would the -- own me all think the customer completion more the to favorably don’t people I companies gun? based to assembling components just So Why a just a don’t to them assemble send in unconventional a are land of perforating at these car. they sense. some it’s that are site. the and It’s out economics than for this play

Jim Brilliant

Right.

for all guys. me. That’s Thanks Okay.

Operator

our And comes from question Sidoti. last Ed Marshall with

Edward Marshall

Kevin. Hey,

the saw I else each third cost mean, the a quarter that a secondly, might how that’s a be to you is we capacity. there? over for incremental obviously, and at XX%, forward? higher missing idea testament close as then, on been there XX%, am be that I fixed -- you quarter improving now holding look in I But follow any up. the pricing is helping I something Just curious What might well think move year DynaEnergetics carrying up, incremental we that are under margins quick that’s for and of absorbed are margin DynaEnergetics there because And mix sustainable incremental or this

Kevin Longe

objectives for both be is we mean, on to expense competitive I comes side, keep -- the basing company margins growing then the that defense side on technology keep to low order we marketplace. And also XXs in a on Well, feel gross we our it margin legal healthy the for with offence in historically on the being and portfolio. had our -- which products and the in patent with but

have have fixed high And costs. we -- so we don’t

and those they today, are feel that I the And are follow, that company, are probably balanced will have very pretty investments comfortable that because well today. they margins growth. right at we We are as making that future that we think that for grows as range operating business they in

Edward Marshall

Appreciate it. Thank Got you. your comments.

Operator

conclude to for And any closing back that over Q&A remarks. our Kevin does turn will session today. I Longe for it

Kevin Longe

Yeah.

joining considerable our DynaEnergetics, to I’d all, want and highlight of I call efforts. employees and First like everybody thank this everybody, I’d DMC to their to for NobelClad’s employees like for thank

been I the that And also forward call year-over-year significant. in have quarters We February. EBITDA future we growth revenue able now look future that’s and think of pretty and our XX straight to adjusted and

everybody. you, thank So,

Operator

today’s teleconference. participation. conclude does that thank And We you for your

a time. have You at And may this great day. disconnect your lines

DMC Global (BOOM) 25 Oct 192019 Q3 Earnings call transcript