BOOM - Earnings call transcript Q4 2021

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Operator

Good afternoon, ladies and gentlemen, and welcome to the DMC Global Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode, and the floor will be opened for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Geoff High, VP of Investor Relations. The floor is yours.

Geoff High

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

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

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

Kevin Longe

doors high-end which is for and sells more On a than a our held customer transaction XXXX, business was by range DMC premium size care, for the steel, businesses and to interior headquartered billion. for where our contractors. gross pro It engineered and forma by products. The XX, of base market us end The determination Arcadia aluminum with also X,XXX controlling and DMC's California, and market It forma today's highly afternoon, it the construction through addressable systems, market exterior commercial and markets now joining privately Custom specify XXXX DynaEnergetics that energy framing Based and States, an their also residential acquired high-end captured our who and Arizona, manufactures consolidated important December Arcadia Tucson, serves entrance building loyal Arcadia dealers. which building architectural of civic of window include in markets. $X provides year walls, national difficult of $XXX Vernon, and commercial is serves markets. leading of our XXXX made custom serves both Arcadia, retail Despite it a network pro both division and window each employees, and approximately in United and systems. The and thank broad DMC continued acquisition efforts. and the The includes and wood the provider approximately for more NobelClad in that call. DMC's million offices, resiliency business real extremely Good sales Arcadia's residential the I'm Custom and year XX% market business commercial architects which and than nation's interest has estate Western of you of Customs commercial strengthened serves Southwestern a XX% doubled facilities. door commercial serves tripled share windows grateful margin. in was higher education, products. and a architectural health Arcadia doors, their and transformational businesses, closely and a a homebuilders works general core second conditions markets. curtain were accomplishments conditions, the the navigated expertise possible consecutive challenging of marked

Arcadia's and will to and help increase strong manufacturing commercial demand. also production ensure capitalize positioned DMC Arcadia primary have demand and The building forward. geographic years, forecasting operations These California. on painting at in that and supporting its system, end products is will is regions efficiencies and manufacturing capacity its center is which and customer three buying facility the enhance full in The will add is to operating of today implementation new particularly investments procuring Arcadia industry past anodizing enterprise the improve making capacity address customer they resource programs are Southern experience going For at streamline capacity. new and compelling include in efforts equipment to Arcadia for Arcadia Custom designing planning dynamics and operating a been customers. growth Arcadia's the a residential markets. construction, for market

X% announced in consolidated XX% a gross and January November X% less sales million. During quarter $X of DMC's XX% down sequentially Products business, at The reported increase XX% decline in XX%, reporting plants. goods million consolidated to order million Arcadia. reported DynaEnergetics and Energy X% at grew sales sequentially included NobelClad, Europe. XXXX, margin quarter of post-acquisition million XX. well from quarter Eastern $X.X North Composite XX%, quarter. favorable sold the fourth below Administration. of effect was and disappointing gross adjustment our quarter was X% at exceeded third to DMC result $XX.X from Arcadia global a fourth U.S. as a went result Information increase delays Metals to margin decline DynaEnergetics at begin our price million. the business, fourth in manufacturing European sales NobelClad cost project in and DynaEnergetics, large Energy a at U.S. million The did the declined The DynaEnergetics, to resulted receiving from the Fourth in on sales our DynaEnergetics and $XX.X sales $XX.X reserve in quarter in a $X.X increased Fourth completions International our $XX.X inventory metals X% increased to that expectations. million. sequentially not at XXXX. into sales approximately increased until mix a America was X, were expenses DynaEnergetics by that

implemented of expiration DynaEnergetics was margins quarter higher-than-anticipated However, was restoring $X.X from the additional down quarter. price second $X.X to the increase effect third during by adjusted be Fourth begin increase million, CARES recently in of an inflation EBITDA the quarter. offset and Act. and full impact million should DynaEnergetics evident its the the

EBITDA Adjusted XX% XX% was million, was a Gross contributions in forma EBITDA XXXX. $XX.X forma $XX.X Arcadia, versus million basis, XX%. XXXX. from Pro was were sales $XX.X On For million $XXX.X which margin versus year. XXXX forma was million, the pro from adjusted up full attributable XX% million. while year, $XXX.X to consolidated prior the were sales DMC gross margin includes in pro

As end XXXX, we of our to our markets enter and strengthening encouraged meet the by ability are we demand.

for While and completion its activity market is prices DynaEnergetics gas performance are as systems. takes increasing safest to highs, oil on total well-perforating the multiyear systems most at of sell and reliable the continues responsibility the it and

website. engineering DynaEnergetics NobelClad North costs margins. systems version app, of working people environment, first performance fewer which new customers activity capital fully to activity well location end-use We accelerates Our a increases, its time up to and strongest application higher increased delivered customer at real markets. will overview well We bookings in configure international less material a disruptions DynaEnergetics believe they company purchase And just app its on its improve at as current contribution global well is in very financial global ease once additional of industry in beginning An benefit products on in through introduced in significantly maintaining from as enables from improve NobelClad's in tie available demand. performance mobile America will DS completion digital will year's price well margin and and is In order and applications. the believe positioned time. the higher remains chain manufacturing team in passing second greater effective and commodity this and are and quarter, any from it the quarter its and and a NobelClad assembled site, benefits the location. a supply is price footprint. DynaEnergetics and

I Their and strong and the to Arcadia markets developed are healthy and Custom As expected grow product have over innovative base. Arcadia brands strong several both a leadership employee noted, next and years. have portfolios,

for innovative results improvement strengthened I'm call have Mike? serving businesses building DMC's confident our and that, products a our And We and revenue industrial financial for I'll look guidance. portfolio review first Mike to quarter of in fourth a turn at prospects With of the energy, quarter long-term the asset-light and margin over growth. markets.

Mike Kuta

Kevin. Thanks,

at operating relates expenses, $X.X Fourth step-up $X.X the PAT million. $X.X was DMC quarter million excludes at Adjusted quarter. was XX, litigation December increased million Arcadia loss period fourth million. acquisition operating and operating fourth December net quarter $X.X quarter consolidated was XXXX DynaEnergetics. X% at attributable and year's in million expenses at expenses quarter XX% and to $XX.X to year Looking $XXX,XXX. between loss ago in XX, loss in operating sub The primarily last SG&A increase was expenses versus loss $X the Fourth third quarter versus million fourth Adjusted sequential in and XXXX.

value Redemption on redemption formula earnings to net from must estimated end put call the change Arcadia. is interest the option at the share acquisition in the the each controlling noncontrolling the agreement. the for Following interest a account in Arcadia, of based quarter and calculate per diluted in of XX% redeemable operating for XX% calculation used the value of

was per the the was $X to million the fourth fourth end at quarter. million share to shares while quarter. $X.X adjusted $XXX,XXX DynaEnergetics in During ratio EBITDA diluted diluted diluted or covenant share $X.XX X.X. fourth $XXX,XXX of million attributable of The December DMC loss the reported XX.X or net quarter was million, of quarter, net adjusted EBITDA net stockholders, $X.X million. million. was DMC's adjusted of per X.X. $X.X the added million $X.X adjusted loss versus of fourth NobelClad When the at to ratio based $X.X leverage were adjustment adjusted resulting $X.XX fourth to net to versus the DMC adjusted debt income quarter million Debt year's in reported EBITDA $X.X XXXX was diluted Adjusted the EBITDA attributable or EBITDA at XX, Company's quarter last debt adjusted loss last $X.XX net was year's leverage end EBITDA Fourth outstanding. to quarter per X.XX. share on

Our now XX.X is share count total million. outstanding

Looking at guidance.

NobelClad $XX to $XX range report to to are and sales million. million, in Arcadia a $XXX of margin Consolidated of is DynaEnergetics the to $XX in $XX XX%. million sales expected of million report be is the gross to consolidated of $XX XXXX of the million. expected range million, quarter million while to level, range a are to be range XX% business is At in $XXX expected sales in expected to $XX to sales expected First million

is expense of administrative First and to in quarter million expected general the million. $XX.X $XX.X selling, range

to quarter of in relates customer approximately Amortization Arcadia. which been backlog First expected third is amortized, significantly relationships $XX.X has decline to is expected to expected quarter. once is acquired value backlog trade the assigned amortization expense principally gains, and Arcadia's million the be and expense to the

value, backlog to expense the expense For $XX.X $X be third million amortizing in $X quarter, XXXX, million. XXXX second be quarter expected fourth amortization approximately balance the million quarterly amortization the quarter. to approximately is After in of the in the $X expected million and is

First interest quarter expense to $X depreciation expected million. and XXXX be expense is is to million, approximately $X be expected

First Arcadia With that, ready DMC quarter Capital million questions. the adjusted after to million. expenditures take to to expected attributable be million. is be to noncontrolling interest to deducting $X $XX in $X XX% expected any million Operator? $X are we're to EBITDA

Operator

The first from Instructions] from Cameron coming is question [Operator Stephens. Lochridge

Cameron Lochridge

Arcadia. So start we CapEx could high was at in is like It looks quarter I million. this hoping Kevin, million to about to come around $X $X a level, going talking

One acquired business. capital would bring the the when highlighted correctly, you remembering you the things, of you and in investment table that if all I'm was Arcadia to

specifically to wondering be a look you could you that helpful. Arcadia? expect if Any us around to little incremental there give what year, would speak just So like detail this bit could you

Kevin Longe

Yes.

to -- And some well, We've designing Microsoft the also $X of $X we to then a installation two-year DXXX over Arcadia. hardware, a for That that $X And range million of putting anodizing period and their in of of capital range the in and all, a in support they a system be already early we're But period up million shape a we this stages and released we new $XX million will time. million So, the to in year the which of $XX are a in million of all expenses. begin have range million order two-year painting plan organization expenditure that purchase CapEx into positions time. facility from operating consulting also as with. first the to the in pretty services. $X software associated will and associated show will good to were over standpoint,

efficiency operating Company. We systems, to manufacturing add are as these adding which capacity both will as well the

Cameron Lochridge

very helpful. Great. That's

the line On for top Arcadia.

like XXXX, the XQ million down will It for If looking million XXXX little if So we'd a $XXX number, see slightly here, bit. I'm was versus the right correct. at be I'm looks XQ. $XXX numbers up

in what bit could seasonality the business. just can as you little just progresses, be year going If talk would And forward helpful. the that expect we directionally, the a to

Kevin Longe

seasonality Yes. serve. look I the been by And loosening And way markets the they million if little the last painting primarily look in to to they're access There's we $XXX two the the they've very extrusion the up, it, that but $XXX years, chain and revenues And market to also three constrained based over revenues the painting. to need add now, to range. on you extrusions. to at and right think million and and anodizing is this capacity do anodizing supply at

which the the might to performance of is we our historical into cost make selling being will the And this with in and they've the sure later great to price now particular increase on Schladen going inflation you'd the being expect, anticipate side leads does need of good As fairly historical organization on done people have very But on that based to year -- we company. some most growth you year. at it, recent passed They're probably prices. the we Arcadia later most probably Custom effectively. expansions year drive that add that to their managing year. very increases. it, begin building as well see Jim of in he of and next to a job the that exception up, costs revenue going revenue performance -- as are constant And that's next and in it aluminum some resources over

Cameron Lochridge

that I to administration pass more, switching like cleanup to if in Biden can looks Got just to potential and it. expect some Dyna. U.S., If to to is billion orphan on $X.XX maybe Dyna in helpful. funding That's for what was squeeze could might you wondering see could opportunity one provide wells It the speak a just the you the there? I going in

Geoff High

then this have the Cameron, certain typically this range, states for been their will these $XX I The state the to in initial just a agencies, this that -- those is have million yet to which of amount been allocated -- all work they're the work or way companies the Geoff. wells. But mean kind finding -- believe, in wireline slug. on funds with not operators I

the is, So what step to still encouraging waiting the allocated money is it's but been -- has see forward. an we're opportunity the fact that

Operator

next question coming from Gengaro from The is Stephen Stifel.

Stephen Gengaro

A couple of things.

me. DynaEnergetics start U.S. sense Just versus I'm international that to And with, any the mix. the of XQ guide seems curious for U.S. to that? But light is if piece

Kevin Longe

marketplace. The in about long. the U.S. is quarter going despite We're reading don't to constraints the faster inflation and that and up. very to bit in expect last and things than increasing the that little a economics some pulling sand up is constraints. activity some slightly back constant are The are cost of the well well international We about

actually the in start quarter to up so more the to add do second to first. the think want And you picking rather going it's to anything but going than be we that? activity Mike, is

Mike Kuta

Yes, Stephen, just real quick.

step There of about America QX is You're million international And stepping in do see $X.X QX. we absolutely to order up to of in significantly XX%. we a from sequentially North QX the see QX QX. But QX through correct. up international then down

really lumpy masked it's -- but up, by stepping that see in sales international. we So it's being

Stephen Gengaro

was quarter? in the international the And million Mike, -- was that... it Is fourth $XX

Mike Kuta

X.X%. for quarter Fourth was DynaEnergetics

Stephen Gengaro

U.S. International? in So Canada you're number? including the

Mike Kuta

North We everything We North international, America, by other do. so and correct. Yes. than go America

X.X% for international. So got we've

Stephen Gengaro

EBITDA was $X guidance Can full business, -- Arcadia? -- think the for sort okay. we initial about a something or how about That's Okay, the for their us The like based I give like year presentation, think all-in helpful. to million on D&A you when that. that Arcadia is think of on margins the

Mike Kuta

Yes, absolutely.

$XX rate the million run somewhere around So run million of been they've between in million they've EBITDA. all-in And rate a a in been $XX margins, and sales. $XX in

EBITDA XX% of obviously So in, adjusted all that's a and we business XX% own about that.

Stephen Gengaro

to D&A And year? is a out million about number $X.X I right, you. right? It's million $X Got that threw

Mike Kuta

D as a Yes. Right now, a million the couple bucks year stands. it of number is

capital-light very to number, the going and as tangibles, commentary, I business. a The my have and trade relationships they're names A we're amortization, for significant step-up So in backlog. amortization mentioned customer

quarters So be amortization to for longer-term the in The million. first couple going the is amortization of will million $XX range. be rate on $X run

capital number see So up. into D&A the the on we be a put as you'll will longer-term $X D million. go And business, basis

Stephen Gengaro

Okay. But I it. want just -- so to make got I just sure

do step-up? $XX because you making did Your opt-in amortization this on Arcadia, you if from just first of of zero quarter, EBITDA million up, that

Mike Kuta

Yes, correct. Right.

Stephen Gengaro

Okay. That's okay. guide, you how

make was, numbers of the understanding was that, in Just guidance you fact, that gave, I amortization to in sure that want step-up right? part

Mike Kuta

million adjusted amortization. to the $XX Yes, adding that correct. back guide, we're we When $X million EBITDA, talk on

And so adjusted And as EBITDA what adjusted EBITDA attributable to we're we're exactly. is -- yes, DMC. yes, deducting our

So XX% it noncontrolling to the that's eliminates the attributable interest.

Stephen Gengaro

million $X would million of million a representative be from amortization? full it or the $XX million is $XX excludes it the does Or Arcadia? -- $XX to So

Mike Kuta

will It business. that EBITDA the exclude Excluding. from

Stephen Gengaro

$X to million? million $XX The

Mike Kuta

correct. Yes,

So million we're for to hypothetically, $X if EBITDA, we're million ourselves XXX% when $X up forecasting million roll of million, $XX our credit million. $XX $XX their we giving consolidated Arcadia

Stephen Gengaro

Okay.

to -- you're you're I really me, easy. So mean,

and You're your what DynaEnergetics NobelClad to guiding quarter? your range EBITDA the in first

Mike Kuta

million. noncontrolling to the walk million million that in $X And which million for $X range. to million is you of the is range, expense. million corporate DynaEnergetics range. NobelClad's interest million in you Arcadia midpoint get in got eliminate you million, So you've that to across, and $X $X $X is in the $XX $X $XX million if $X

Stephen Gengaro

Great.

the seeing and Dyna the And Kevin detail pricing wants not okay. maybe depending to on other it's only what are side in behavior? give. one lot, the quick is, on competitive much But a you helps that quick how Now just

Kevin Longe

So X% what that our tell in that place income I statement -- we and we're took QX. a in -- see can on November. late part A we price implemented will, increase saw X% you in planning of if you we'll November, in And yes, December. our

that reasons. and for CARES We two that points. the declined in we away occurred was margins that had previous our reserve couple And However, in taken percentage a inventory guidance an Act inflation which then had of also in quarter, was fourth quarter. the was

inventory Act offset will, only but -- was so of CARES reserve that the slightly the percentage QX. inflation And by if some between slightly And roughly point six of increase QX that that it degradation. our and you -- totaled very in about price in we'll and see

I we of not So Act both we're customers another are. that for achieve suspect QX. are And effect inflation and in they're may probably We the higher our -- actually some they're announced, having, vertically the increase of price implementing this. in take we've fully price quarter That costs, similar we CARES the like components expect will would all increases. competitors, informing experiencing integrated even we're to the because that in we

expect follow price own we they implement increases. would so or decisions their make And to that will to

we expect really less ours, this We are achieve competition point. to focused on the at

delivered on in a fewer for back high. less of completing And the that when look the better. we're that's manage half that we and the inflation $XX,XXX commodities on cumulative step the of increases they is the per total And chain, the well, and that that it, the they We differentiation site. the first insignificant XX% coming have price extremely people, looking other at relatively year require well Our capital range. working are completion. have in systems to to of time year you the don't and is And XX% are well type at just the in supply perform

the not economics the terms and this are is so well big And change well in of very strong. a costs

we're less down. restore we inflation see competition is and so this to concerned bringing me, And our market three cover that. in businesses in and objectives going strong our DynaEnergetics, #X margin believe firmly we're to To one about in a prices all of year

Operator

The Holt. next from Tudor, Taylor Pickering Zurcher question coming from is &

Taylor Zurcher

correctly, the margin for roughly first EBITDA XXX% I imply. that's back QX I $XX allocated of Arcadia. consolidated at Arcadia, to basis least on profile just If guidance circle million on would at heard wanted what EBITDA at you your a

of EBITDA margins, So XX% XX% about for but year full to relative it's relative XX% to XXXX. the QX, in

over So like I'm in for downtick Arcadia the to get of QX? I back half it the the margin the that margins guess, And sounds XXXX? line year-end driving XX% profile should back line curious the what's in just and into at at we EBITDA EBITDA

Mike Kuta

this is Yes, so Mike.

improvement think that million we in million run per a will. roughly rate margin to quarter do margin is business expect to $XX the dollars, denominator that compression, some is, of could effect from greater of This million we the going I line that $XX What Kevin top we in aluminum mentioned, EBITDA we on on $XX compression sales. But increasing some as but from -- prices. pricing. run effect denominator is get some think

similar of So a in I is look better similar margins to going and healthy terms range, the EBITDA to that with to adjusted line, and XXXX probably even a compression better be dollars. be full think small perhaps a profile XXXX to business in -- to going this year by of top in end number the going to is we're

Taylor Zurcher

up following the That's on And just helpful. line. top Okay. very

alleviate XXXX price-driven. of what capacity at is at least same the you're some you some the line time, So primarily top $X about. these you correctly, understanding to Arcadia it talked if million that I'm forecasting sounds constraints growth CapEx you're that like, million spending for But to, today $XX

in curious do I'm XXXX? of how $X consider think what you and that can expansion just via with capacity generate revenue you CapEx sort $XX I'd million So of incremental million much maybe growth CapEx, to

Mike Kuta

Yes.

'XX. size in five it years working their double implement it that the It's so company. and the for margin begin to business, more NobelClad regional the that to [indiscernible] in of as Wilson in that help room to The a feel business it's governor as And are at business Commercial growth in good with part yet then a team our Arcadia. this for also 'XX of that share is strong next business anodizing this not we're growing healthy and period growth Partitions. strong three national Wilson, this is we're The people leadership We [indiscernible] GDP to a take grow of guidance the to and -- well been opportunity to the objective well would see the into a Custom with they that make than has the and as its in to business. years, DynaEnergetics room really line over of construction higher product has in where like them at But three businesses. grow. XXXX plan it intent that size friction implement and has double Interior Arcadia -- company recovery and our application you'll some a higher, going grow. both the on but and it's very is that the the and spending has our the in an giving XXXX. can point, to 'XX five business systems next think is I or the we're Custom been there's capacity, We exists company 'XX, of And and also extrusion as it's in to over painting business regional market this we out the And feel -- development.

Taylor Zurcher

free management sort And capital for for debt flow Makes me, one of just XXXX. allocation, and sense. cash question last

It's So least businesses. you're basis, here adding on Arcadia CapEx than capital however your it. you at a maintenance a more call business want to two other in that's light

business a the cash as the you trying or pay percentage on use just if through-cycle on for basis. free look to maybe as percentage intensity a part look cash What targets XXXX, don't to revenues, you as plan a to do or like you flow that just of flow free capital EBITDA. percentage might in of down of what of revenue do XXXX? of the XXXX? the transaction incurred multiyear want understand comment this cash debt a for And of early, I'm have over some the basis to So might And profile any you course this like

Mike Kuta

Absolutely. -- I would start mean, a I from for debt-to-EBITDA. target with

Xx a EBITDA expect XXXX basis net and Xx, on be adjusted We debt in to the debt a growth, to to X.Xx through EBITDA. by sub on range in end repayment the adjusted debt of the range EBITDA

pay leverage to for down profile expect standpoint. a with businesses, Again, businesses. terms our X% bit. to rapidly collectively EBITDA are that debt capital term From and allocation of of reduce these X% fairly think, we So that long are growth, in sales quite in capital capital a the I

our And so a million $XX of the all on this for to as businesses. $XX basis see CapEx million -- on three longer-term we consolidated basis, a for

key projects mentioned and -- it's be to focused frankly, the again, X% we that in So we're probably at Arcadia to X% range. going to be on repaying And quite early debt. on, going it's

Kevin Longe

our production detonator. lines six components facility we've five into integrated where Troisdorf, in we Germany, assembled have manual built actually in We've a was introduced our significantly intrinsically Taylor, the and add system, And switch we our completely Liebenscheid, a for our five integrated over I system is we 'XX. we've we very to safe last would got And had for that modernized expanded We've manufacturing -- an got and three -- 'XX that, consolidated where then our years which NobelClad. the to efficient. in facility process. and also European that was capacity Germany -- we integrated years, ago, Blum beautiful it

our very feel we're making forward both. -- in than well we what But terms positioned spend historically very took early We major flow to DynaEnergetics. have going we some upgraded investments. capital invest capital that we've and those completely at positioned the in serve cash expenditures the NobelClad two to taking businesses, There's to a hit place, the of in previous we continue need the had markets on because reduced and

Operator

Okay.

Next, we Capital. have from Gerry Roth Sweeney

Gerry Sweeney

legal legal And DynaEnergetics that need or issues you Obviously, a -- business the to of to as back get point rectified think the been the margins level the a curious of conversation. does equation. side before gross be margin that completed But have and we to that deserves?

Kevin Longe

a Yes. They're compared XXXX. $X stepping are primarily to until a patents The weighs less Review million because has and Review in property -- to those approximately gross be margin process in half in Office. Patent And of the that. more Grant down XXXX the on granted XXXX. I the million Office in XXXX, there's patents. litigation going couple trials legal for expenses the stayed Post Grant to in Patent that's And system we the has Post intellectual in called spent court SG&A. by about it's $X the of believe in

up informed Post long kind and the time. back some defending Grant And work down things fall so very picks And the and at sprint. a And year system. it position their it expense takes we this we're are It's pretty over court the a so of see and ebb evolving of is And through the in with should the EBITDA for think terms to two Reviews a filing next in in and manage a marathon, as We a good complete, these we'll and keep shouldn't how not that -- it this everybody is into this going range XXXX. significantly a well slow, of road. increasing the of year-over-year. when -- normal couple or we're we'll way a of system and years, speed flow that

Gerry Sweeney

is some I some cases to I the way. rectified to your margins improve I right pricing does get -- What will call products didn't you be probably these help cetera. of putting ask where obviously, and you form et what meant, pricing, on apologize, these do to it's to pressure you back it and there's factors asked I thought? infringement on have need probably should

Kevin Longe

performance, mean, of I comparison their the in on -- Obviously, capital, has intrinsically own that's and technology. But not benefits want DynaEnergetics No. in litigation recovery. a price very lot restoring -- infringed price value we apple-to-apple strategy they of that working situation integrated efficiency, years of of we an infringe property. They're these of to the the is not the are its an system up. the use to there's And less industry competition. systems heart with the DynaStage a going fewer for system all intellectual be some people to it on committed that help. helps, volume It systems in through pricing soul single the that of and industry. to reduces where don't there our incorporates and say create detonator. systems stand company is harder frankly, make oversupply volume But that of an our features picks our We've and quite there's system. our potentially why where more we're in will margins feel going the won't safe had be. a people, recovery the It's two demand that low our an integrated and The been greater systems. their I as that's of And that meet forward terms overall have

Operator

is from coming next question Marisa Sidoti. from The Hernandez Okay.

Marisa Hernandez

a and So on NobelClad. questions of couple Dyna

first taken to you in of the all, price really? all So the implemented November, not that across Dyna's increase if customers was confirm wanted board that X% of I by or

Kevin Longe

-- on implementation that of give customers amount of that we the based implemented XXnd for supply general the to delayed Not them. announced we notice on or the was market, agreements have with November. implementation that -- We so certain the

so one margin And quarter, was with less price the than of increase. in fourth percentage point the there associated improvement

that X% quarter, all by of And increase in first on We also in our additional expect price top be an the putting margins. that. hopefully the and of to we're revenues end of in to layers because we But supply with by see same would both midyear, increases implemented. all fully the in It our at it layer expect of price doesn't time. agreements customers. Again,

Marisa Hernandez

to to inflation So with second increase did price you were increase. price have that's confirm correct. I looking to mentioned heard the quarter, get offset in if second correctly, this it push trying plan I'm increase I in that the XX% through you you now that XX% to

Kevin Longe

the in No. the of I that inflation into or baked percentage by the to which include X% Act. XX% -- the we X we're implemented The would an the XX%, increases points in price that to additional increase took fully first or XX% implementing inflation, we're year-over-year. you five effect. And November, the year, is year the of in throughout seeing includes reduction plus year end that the will, and think, X% price the when total if And CARES our already between four end April in

Mike Kuta

And that's net pricing.

Kevin Longe

we And -- is that pricing we feel to inflation numbers. expect inflation net is that our -- be and that already in we expect that because the

Marisa Hernandez

for on where side little of that? gross you how there metal drivers cost the during could transportation Is different you the elaborate that, bit it If that much to the of decline costs? or on are And quarter, labor, -- the would be issues on And on seeing have you it. inflation? a great. margin was due weighing the which Got

Kevin Longe

Yes.

to XXXX. Company in compared guiding management originally in with were have the inventory stringent decline in what we the we So activity XXXX, for, policies

we the of a into that Some was running date had inventory born-on limitation.

will two percentage in quarter there reduction -- that Having year. to seeing expect for XXXX. the that in the back said we in hurt two be inflation. of from So eating cost hotels the size three we Act reduction applies still to took. to we're in -- going we in company, everything inflation back applications two are year-over-year back, material expect that an come we we percentage and is was cost it inflation 'XX. put and that from as one And in was CARES CARES of might DMC those -- inventory that, sell Act points the but the the won't I have of inventory the -- We there's wage point above end in significantly margin it you CARES We're hand, by XXXX that that to to the place come took -- a of place in is, the fourth glad Act a say was company, that in them it we margin to that, reserve the traveling with two is that have up of and which and and down on with into and expiring. two and labor traveling, the were beyond And 'XX workforce -- do on the as the by has we about expect, another to some competitive situations. have and dynamics one benefited a and of points out to point staying

way, of happened it's price inflation, is the over a margin everything. declines And the bit recovery the so DynaEnergetics that the in little story as of it's place, less dynamics XX for drop in the focus in And price -- that last the oversupply taken and the the months XX with with both market. by to have with in increase activity overall but

take supply particularly So is asking you to the we're the from -- moving And increases market modest, for we create account that the value for availability. that when price are oversupply our into customers.

Marisa Hernandez

it would oversupply, fair come your still have time as getting to the in an -- assume So is tight? of in? balanced How that you or characterize much market

Kevin Longe

I lead would say it's equipment. -- times there's very perforating short in

is one capital tire that advocating Ourselves let with chain and chain, to short up to particularly our working not inventory, us and supply times we're the are and lead expenditures. respond things your very working the manage supply of customers capital happy competitors because

Response The us, times vertical of so are going is up relative going everything. for integration to supply chain is because up. is response -- lead down. controlling and our the our going competition And

and you into see of $XX,XXX a out but looking see -- make. of a cost per not being by that, the charges just is just just supply but a to in where the same components that $XXX,XXX and And -- price front there, oversupply, completion guns of that's times the moving And less done being demand perforating -- increase our $XXX,XXX. and resell lot think itself. components, a thing. becoming in moving to plenty charge expenditures perforating and of going the with so increasing they integrators total vertically are guns $XX,XXX at of buying just lot or just that where traditional a it's competitors other well we're -- integrated really I completion a in to And it's that all they're harder are a from And shaped to manufacturers doing the shops. shaped response individually. market they're when greater the $XXX,XXX, the than $XXX,XXX they're having the there's -- I'll rapidly it's factor of and -- now out share is on And of a now of more couple on We well are than well our but not gets machine and that you not we manufacturers

it's you more about that create. so a to value me, it's price, And less of the

Marisa Hernandez

And I quarter margin at XXXX, to the I when talk and higher. had finish was about up look in margins, recovery early on here. even 'XX in see When the it XX%, 'XX, [indiscernible] your before team 'XX in margin but one it was of you historical -- you pandemic,

about Dyna? when XXXX we what we recovery are in for talking talk about margin So

Kevin Longe

components that So a gross XX%. medium systems. DS about detonator own our XX% were XXXX were switch maybe in explaining their that our are systems, have buying are, which this, margins, also the and selling integrated we incorporating customers of of say, -- it I'd And way peak peak at was our margins made less the up and But we than which time into some the separately, XX%. who

we which America providing in system, or primarily Now fully are is North only integrated. providing -- our DynaStage

on the and the will we XX%, We very but and and margin, so revenues down so And our the not per forth. that the charges the our up has gun integrated components shaped the switch selling and have but perforating system, that carriers go margins were because we're that detonator. incorporated had still tandem subassemblies go into that so in on will our having XX% we it's high-margin

that, gross to And you -- in XX% we're you the think higher when revenues to the of get compares the our back that to in. sold, back -- and range our with quite to and we are mid- the And to by that obviously, so be will. be margin, XX% a detonator but quite margin the if to -- And would XX%, we expect we to XXs coming XX%, close in certainly going upper if happy in like year margins, get XX% we're per XX-plus to in gross percent the end and sooner, of 'XX.

Operator

question from Newman is Ken Capital Markets. next from The coming KeyBanc

Ken Newman

some obviously, that some there's against plan about on could residential back housing terms build pretty if the next achieve Arcadia that. you growth just go starts conversations just of in just that think bit to comment of you side. I'm up the tough and And And I to I out curious interest more years. of a rising the And we're comps doubling size rates. how little obviously, to wanted about cadence comment the over the five

you do versus how grow? cyclical to ability inflation Arcadia's balance of just idea this So

Kevin Longe

Yes.

more highly on all, very And that size they the company they're residential an of housing expensive the overall about residential, the overall side, small are custom, in starts areas. less within primarily. there of in and And the about the First as homes, relative mix market. the is to certain that gross

best Partition more that sensitive, we expect of could of is a the rate that well and at their to construction. is modern double next one renovations systems the with of the its still we've in demographic XX-year And really Wilson factors potential, -- constant part there houses some but in share. And is probably year-over-year three over on not with the still there's the a there's to be terms of growth. of handful internal the segments. -- Wilson do the They're focusing they're are the to taking as growth, being designed consistent happening which There's a their that's the the business commercial expect we new types they'll Partition, as in -- in market in somewhat Inc. of market capable more one larger business. in five change we countercyclical part of got just -- but stating that the designers the geographical companies And would to serving of expansion. Obviously, a through little place. would are And we of as space. there's business their double there's business years, smaller of large that Yes, Arcadia. probably is doors our well is then and host design a that share terms that's market we are of under a or of bit that the things. residential they're in And enable market a so work their that. as windows our less And XX% both is terms interest in design change market way is will market And of lot for product a that way product which in architects and that and competing whole feel a this this there's companies,

Ken Newman

Is do organic an There's growth say that, reach that term? to kind mostly to necessarily need fair the this type it M&A over of target that -- don't to is of initiative? not longer you

Kevin Longe

the that the and -- last We're we about excited if people in it's at their of enjoy We growth help M&A how to their constraints in. really business just objectives growth. -- and we're better down at -- and ourselves friction company. being them settling business will. today couple taking And support to taking we And out it's and on all to some drive allowing years, achieve do a their you we to their us, months now and the -- of had model the and Not the and of out the six focused of and be want settling all. to business of Arcadia last team

Ken Newman

environment supply guide couple perspective I'm in over Got have risk the just more NobelClad. kind you do all for exposure part Russia. small embedded Europe And the a to from impact the weeks? revenue think seen chain of know a do that XQ me. for the geopolitical what's do fluid given last that a you've some just how chains, we've fluctuations of supply curious just of in Europe of I that it's some and And seen But tighter it's think One from revenue? the it. just NobelClad in about given I

Kevin Longe

know you're story, in a Siberia Tyumen, We new had in add one both we business but we're want I may the DMC Kazakhstan. facility primarily. Mike DynaEnergetics that thankful -- this, to for but that very our Yes. to to had

Our NobelClad ago, years -- or years business exports five applications. we've into three exit decided that it Russia four to took certain And and and area. we're

-- much And And today, limited there presence so we there. do than it is we be. more our export used to

an Ukraine. order the now for have We in-house right

of in sell We that order, we believe, million to business in-house, into million at XXXX and their commodity normal proposition proposition, But the those at risk. proposition dollar underlying have NobelClad's that value are Ukraine. Obviously, materials. in that stronger million $X.X their had there's the nickel We their plates, value than high into alloy new development are value solid a of metals, went on not is lot a application I risk, inflation we Russia. clad making a when couple gets $X

But that the region. near to that we're that. But longer And more will value so that have an takes. we'll offset we might see two the proposition or not the and in than and we applications some term, business overall, and going expect puts to growth order -- miss grow term, in

Operator

is from Patel Capital. from Askeladden question The next coming Samir

Samir Askeladden

Can me? you hear

Kevin Longe

Yes.

Samir Askeladden

Okay.

in little guys on goes talked bit you or of was exposure to repair versus and if how any In cut to for and exposure had deal office, Arcadia. wondering hospitals categories multifamily a of much into terms is newbuilds the education repair some was XX the and about specific Slide I remodel. versus like question about talking statistics remodel? had it and second. first you a Sorry, My of more deck, the just off kind

Kevin Longe

at that the would or of excuse was -- their talking business, my me which be plus perhaps we'll exteriors have custom overall the the... the about fingertips, don't which of XX% business, and but I be Arcadia Inc. --

Samir Askeladden

interiors? Wilson And the

Kevin Longe

end-use Yes, get them for mix last And rise But well to have now. multistory that that's you. don't the to low the commercial in to the low buildings. applications of mid served can But the of terms I has their primarily rise two commercial over part and high compared buildings. right mid-rise it. And on focus I the the years the

Samir Askeladden

And and remodel on the the problem. on versus side? repair No Okay. -- repair new

Kevin Longe

economic building that repair, for you yes. and to be remodel industry that the -- In that fluctuate also. And Yes, on products depending the -- between we're another, but in. can one we'll get or XX% XX% environment way

Samir Askeladden

more you exterior assume don't building I the that remodel that But typically exterior, on of much? be than Okay. would the interiors the all

Kevin Longe

of and you around No, do repair buildings, is design look any look the place, installed think And matter there's major the of if city lot quite or taking installed is any that place city replacement. for large. construction but And buildings a change. base of that and just the versus these of remodels take that is there remodels that's the of building, at new base

Samir Askeladden

Got I have go to I on quick as you. makes That Dyna, and two sense. as I'll can. try

full because of unit your system, lower more other detonator but integrated -- that margin sell, you but into units the, overall total now that it the margin? in you the per parts that will one your The dollars clarify in blends and say, of switch, dollars be a detonators, are will percentage the more units selling said basically getting is it's switch, percentage first just for be other question. think parts you X,XXX you're So number because because like previous a margin something to it said I selling in if saying Are same system? addition you of selling lower you're also like like to sold, the in higher you're lower was revenue now a just total, margin total

Kevin Longe

the our a contribution hardware. we intellectual margins charges lot core that deck I fewer margin, much Correct. detonators. goes mean, and whether are our the than by even strongest is margins shaped core, charge of the on be historically, fewer deck it's and manufacturers. and switch charges a manufacturers know-how or detonators, which higher gross integrated have, manufacturers there's And property that shaped would and followed shaped -- into They making our which the than margin And

of out The metal more been of And -- And the gross of specialized parts the lowest range. historically the a it's a manufacturing. generic perforating subs is have product the of of heavy those machining all system. margins and and pipe, turning the so more

And a and of higher from so also gun. as dollar terms -- percentage in the we value go perforating of

the those And we our from kind systems, components of margin as is move on revenue to but is so components lower. turning metal going up,

is margin And is integrated system. much revenue so blended we're again, but an higher lower, overall. our the And making

design. work have not we where it we've we to the safety benefits. And And only And kind last some seen designed of kind our performance the the back are components part competitors not in lot but Our around see in perforating are together. that's system. perforating but manufacturers, basic we the and market systems integrators, the from system components, we selling IP systems necessarily but of them traditional system but of the or -- many get what have the the certainly it's the not they of and components pulling year -- see the of around the the in And of energetic the don't a And integration shops they -- market. machine the shaped are doing charges necessarily guns. we good into components, of and is

And lower don't but A than them their they it. energetics part manufacturers focusing on more are than maybe the other of energetics ours. of have much systems. energetics are the lot margins integrated so And are private,

short, is greater. story will now. So the up kind the are will going and be around revenues Long right of dollars decline, margins our market our percentage-wise moving but

Samir Askeladden

you That's if XXXX? it, to helpful. you minutes late. I do you. join course how final question, completions couple expect the already over of of did But And sorry, addressed trend because Got a the

Kevin Longe

XX% in XX% XX% XX% XX% this expecting terms to XX% of year. to -- We're and being of terms in completions realized Up. price to

Operator

next Jim The from coming from Okay. Brilliant question is Century.

Kevin Longe

us? hear you can Jim,

Operator

looks we're to to closing Jim's getting floor turn remarks. now from line. Kevin no It audio like Okay. I'd for Longe back the like

Kevin Longe

can employees Arcadia and with line, who an thank you. the forward have board, partners aggressive we are look to -- look on you appreciate out to with more you, release. to quarter. And And couple Okay. as to and see, for everybody, to forward complexity the our Geoff the Geoff. working growth and analysts the earnings would days, joining and if And call. for next your who for everybody, you second Thank like this I people around of for of in glad to Mike, understand are We you, we interest, of objective. like. and over reach achieving you And just the the the but And on us you'd talking details

DMC Global (BOOM) 26 Feb 222021 Q4 Earnings call transcript