BOOM - Earnings call transcript Q2 2024

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Operator

Greetings, and welcome to the DMC Global Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] It is now my pleasure to introduce your host, Geoff High, VP of IR. Thank you.

You may begin.

Geoff High

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

that our could from Our statements. cause earnings results subsequent presentation business certain related is obligation materially in subject events. on a to statements untrue no those assumes risks anticipated replay performance Investors And forward-looking that be on forward-looking to the will call are DMC differ shortly Today's update because and our website available Michael? actual page to release become at quarter Michael our located I'll the that, available over call. today's A this of to conclusion of Kuta. website presentation our second the webcast turn after with of at dmcglobal.com. of

Michael Kuta

and to second $XXX.X EBITDA quarter adjusted today. million million. and you sales attributable DMC reported for Hello, of of $XX.X joining DMC us thank

focus declined debottleneck Arcadia's quarter Products has we service further improved structure. Our our successful was reported times. best the of and XX.X% comparable markets. bad gross were improving first results construction weakness and Energy sales Arcadia, year EBITDA our on versus in as a continued Arcadia's strengthen ago and in second year well management's operational second quarter to The quarter. This from XX% Well business X.X% effort market achieved down million, America last points months energy up versus sequentially is second cost completions the down quarter in was high results year's was in core first XX.X%, first the quarter working were EBITDA margin of and year, softer results acquired the in Dyna's from as sales year, second despite was XX% spreads XX.X%, a $XX.X December off sequential onshore X% margin business profit and rebound million of efficiencies Arcadia's range. the versus X was a first year's XX% A quarter. products reflect debt margin $XXX,XXX XXXX. margin the above FRAC in and also The financial represent the quarter down volumes streamlining of first XX.X% finishing results basis and the Adjusted quarter to second in which ago XXXX XXX roughly DynaEnergetics, the was second the $XX.X X sales XX.X% XX.X%. key their adjusted reflect the Products number Gross quarter its lower performance since peak. business in In primary in the guidance expense. Arcadia's North quarter. margin the and our quarter. our end quarter business customer improved second and and pricing Building is last reporting operations lead driver capacity, in of U.S. performance, our from and the of gross

of Adjusted order of is EMC's demand. composite versus during North delivery down automation the previously million quarter EBITDA second In during its our $XX.X sales of sales. the timing fourth year. favorable Board last Directors to thank up employees should project update sequentially. align we the and of continues Dyna order American petrochemical and and with was to coupled structure discussed XX.X% cost million, to ago unlock were of $XX outstanding call. mix. want benefited quarter. activity remain metals the enhancement quarter record at the discussed back appropriate. NobelClad's from was by X% expected the quarter, evaluate half an and encouraged of cost a reflects an strategic the which margin sequentially product expected benefit initiatives improve Sales backlog margins product are our expect impact and a increase Dyna's we and X% value, will completion when year. in EBITDA Recent during during the has issue the steps up progress soft from second international strong and made over efforts. commitment their XX% for NobelClad, range year We will our options We anticipated business, shareholder taken I'm second the businesses margins reductions, by to to half with DMC's

turn I'll at the a third for performance call closer Now review Eric of to Eric? a financial our our guidance. and over second quarter quarter look

Eric Walter

DMC's XX.X%, was X% strongest gross Thanks, quarter. up from Consolidated was historical million, quarters. second XX.X% Michael. second from quarter Consolidated year's margin second and in from up the were and sequentially down quarter, which $XXX sales XX.X% down of year's last one sequentially last X%

a at the year's decline As Arcadia quarter lower reflects at second improvement the DynaEnergetics. first recovery last sequential reflects strong versus in sales Michael margin The versus noted, margin quarter.

reduction. last million quarter was the businesses the across expenses XX.X% in or Second Lower consolidated quarter from year down and the adjusted interest, $XX net quarter. second up drove XX.X% from service the Arcadia in SG&A first XX.X% $XX XX.X% sales margin quarter EBITDA of XX.X% quarter approximately of ago second year. second or DMC was in outside million all Inclusive sales, noncontrolling versus the of of sales

debt EPS of With $X.X to second quarter $X.XX. ended we equivalents the million, to was Total liquidity, attributable respect cost cash with adjusted million of cash and of inclusive $XX $XX attributable million. quarter debt Second income while adjusted and was debt issuance net million. net DMC to of DMC $XX

debt leverage the X.XX second pro after the ratio to debt at remained was On of basis net end covenant leverage cash, X.X. of end second of forma quarter our our quarter. Our well the X.X at of the EBITDA adjusted subtracting below threshold a ratio

the guidance to turning XXXX. of in Consolidated Now $XXX million sales quarter expected of are for million. to a range $XXX third

quarter, remain primary North to sales in comparable markets while is primary the to to China's third Arcadia's in expected soften to are weak NobelClad's second the quarter. in activity quarter. expected expect second American markets be activity the versus We

attributable EBITDA is to sales. adjusted $XX quarter to of the moderate EBITDA quarter expected on absorption margin to expenses versus expected less in million. Third lower adjusted overhead DMC $XX due Arcadia's range to the second of is million

that, will and questions While project from favorable initiatives. our Dyna any cost ready to take modestly to due to at to sequentially With Operator? EBITDA due less analysts. decline margin we operational expect expected Adjusted NobelClad a is improve reductions we're mix.

Operator

Thank Roth you. from Capital The Gerry first [Operator is Instructions] question Sweeney from Partners.

Gerard Sweeney

on well the that front. Arcadia us Can drive are bit margins? you efficiencies of and at was in give more margins, the those on maybe detail you ahead implemented Revenue a cost-out and you executed obviously little gross operational segment some And reductions forecast that extremely sustainable? of to they

Michael Kuta

what some doing the efficient, operations. we've more our So really getting is in finishing in cost-outs, doing been particular, organization, streamlining

So operations our finishing organization. of our are the heartbeat

whether service paint So all model. that's what through our anodizing, run enables material Everything it's goes through there. customer finishing,

ops has organization capacity So those finishing to debottleneck increase really the hard throughput. worked

productivity front the improvements real end that's the business. enabling in of so real And business driving and the

Gerard Sweeney

year? and flat flow and Maybe the remainder that in I then of interested free for puts the the just the front, was, takes there's the Obviously, flow essentially flow think, projections driving but quarter. on what's Cash cash quarter that. on cash in

Eric Walter

to NobelClad some of up, the impact in performance business to a had quarter. explosives items. about that million onetime some had in in second a all the an the within flow into There then -- QX. function for purchase We a from negative advances cash quarter, And higher cash impact those customer And timing the you prepaid flow Yes, of free Dyna. was supply secure moving when we of add timing of really QX cash was QX. and of had the some our $XX taxes

So also we pencil the to out think net will is opportunity question, of your at second -- to of forward, materialize an sharpen our capital and the in opportunity the levels of to the think the out going second year also Dyna take there business to answer activity working the half some given where Arcadia. that we part

the we're debt million year it, and cash with the half to using flow to be and finishing pay of the a year $XX position $XX we to looking continue debt. second the of, call down million that to So in generate delever

onetime where nature. in good had So in were we about second but unfortunately, going, headwinds, the we're going that quarter feel to be some

Operator

Gengaro The from next is from Stephen Stifel. question

Stephen Gengaro

Two things for me.

it's market that business The should you talk quarters? competitive kind look growth of first, or of just seeing we intensity? And a of completion couple kind relative and of, thinking you're next bit kind at more? about DynaEnergetics what of potential as that the whether the about be a, activity, to completion from a landscape business we How share can the

Eric Walter

I think tracked whether you generally, those name at count you generally were down the QX, you look completions, with -- look FRAC the Dyna market. when in think range, about at or sequentially move spreads, QX we'll When rig X% which versus performance.

in that's And and probably think to the I reflects it. that Dyna. guidance So QX our softness way at look

in offset the got few to place of guidance. our would I quite and -- and a I quite competitive a we've also say, bit -- think so impacts challenge. a these the in continues reflected I steady, But are mean, fairly to pricing be -- dynamics initiatives

[ the OPEC second ] of cost excellence take to That's half out. the continue So year. on working into we're initiatives the going

of on take hold side that And in to going XXXX. design some is the product

can a remains. standpoint cost differentiation we the and we well whatever our feel controlling a is about doing, from from market that standpoint control in pretty So what as good competitive as

Maybe -- seeing I'd we QX. about thing a the see international that Dyna we're I activity, bump healthy and way move forward. think in think the that's we So as last to a say is pickup, but

should some strong the which in exit North in we year offset the pretty QX, the of will So international America. softness on front

Stephen Gengaro

to that December other talk foot at Arcadia? whether time, there's the or this call what's rolls option the does whether part people I like the on I snapshot on in call a has kind little timing the confusion decision on it's And thing made be And think how then I of Arcadia. had forward? like there, the around think kind in work? the mechanically was either And on of a party's in way like the And put question option out Arcadia to just

Michael Kuta

Yes.

this So mean But exercising exercising or December anyone being that not a put. call at that exercisable the exercise us to compelled end partner the first is the the year. put of minority does becomes of call

that's So nothing compelling anybody do there's to that.

Stephen Gengaro

that does is How option? a long to the it event? -- how do long a it exercise it year? Or it week, -- is how day have the Like Or a is -- work? or roll? does onetime But a you

Michael Kuta

to put frankly perpetuity quite neither for party call. the continues It exercises on into the extent the that

Operator

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

Kenneth Newman

like anything, pretty I'll with I give market not longer-term looks down that what stabilization is from terms in Obviously, kind the or guess of saying here within Arcadia. weak. still of you're I'm to of about how second quarter. market or about sequentially guidance revenue I specifically? expecting know start thinking ready quarter the fourth customers And you're stabilization they're but are kind curious of visibility? It timing

Michael Kuta

favorable looking once in [indiscernible]. think some got out the markets spot XX Index, by it's -- I just very Dodge all ABI Momentum couple which whether kind at driven there that look of data at but or we at, West and end I that centers like of the we've run again indicators specific points a towards markets, the mean,

markets So -- I couple seeing we're going of into a I all go quarters for perspective, as see to it's same data the a that do. year. we From customer mean, soft think you out the be here we

to -- I obviously, think were our seeing, good end pretty we when particular, look exposure markets. resilient. you diverse and the QX, We're at in our

Our and pushing relatively been that good. But quoting rates activity citing consistent bookings projects are there's are interest out. folks has

that XX% of we think I we're to So QX what because though is serving look, to that's guidance I is is another QX market guided -- XX% the that What going line think serves do we've up. softness. remainder profitability But of more can driving and of I feel sort EBITDA really confident our got XX%, in talking the about this do bottom control, we're improving year flow. the at for the And whatever operational that we our driving the and cash and we're to up. market the quarters things a doing couple the XX% effectiveness is

Kenneth Newman

leverage we cost way as a the platform normalized I stabilize? we that you're decremental But with I guess the I about as should outs to Obviously, there a incremental follow-on what with kind of be inflator cost on? that, I know mean, mean, it's new is very think dependent -- about the volumes think operating Arcadia, do cost going margins this do. or on to how volumes that the

Michael Kuta

and decremental then is a not the, XX-ish-% high a when larger our probably think cost about Yes. call incremental component. you in it fixed labor margin range. material there's business. it's -- And

So call XX%. incremental margins would decremental I that? are Eric, think between, or with it, concur and XX% probably you

Eric Walter

Yes.

Michael Kuta

and our they're gross significantly incremental aren't call range. -- than decremental just The in it, Yes. margin not percent XX% higher that,

Kenneth Newman

You headwinds, talked think part how just about you of could activity headwind I but some business, persistent this can it's that as NobelClad. about smaller just mix quarter you I backlog the there? project talk be mix on think, of your a know about beyond

Michael Kuta

frankly, obviously but dip strong on shaping And 'XX. up guidance a in a I providing QX. really think bullish quite not that be pretty year. but And a good see there's So we XX% things very 'XX, on QX,

Operator

Stephen from The next Stifel. question is from Gengaro

Stephen Gengaro

honestly, looking with quick the at can of you like doing any it. market what of to company side, pulling I'll back Dyna on I'm the Just When or the permanently about you're the a and given that the not thought on is on follow-up. And temporarily, there this, is what kind structure ask think side? comment either Michael, sure buyer you but

Michael Kuta

that say alternatives, okay? in evaluating. a and different throes of table, just that the would I a of on things lot we're of lot things there's So strategic the we're

So scope. broad

Stephen Gengaro

to balance more a creating of the way any want pieces valuation versus think maybe you to of pure-play might business about how sell? there you Is

Michael Kuta

you rephrase the Can clarify or question?

Stephen Gengaro

on get -- business guess to left rid just is would the make less to I the cleaner it? price I something a say you a way of -- easier guess direct more cleaner a run? to To is, take that lower

Michael Kuta

to of Yes. looking options range at again, The shareholder we're maximize is, viewpoint a value. wide

maximizing that's so the key. is And value shareholder

Operator

floor There would comments. back to closing Michael like I are CEO, the turn no to further time. for questions at Kuta, this over

Michael Kuta

to Thanks again Take interest in our next for DMC joining your us forward look appreciate today. We update. and care.

Operator

This concludes today's call. conference

your You this for lines time. your may Thank disconnect participation. at you

DMC Global (BOOM) 1 Aug 242024 Q2 Earnings call transcript