GlobeNewswire Inc | Jul 23, 2020 04:05PM EDT

July 23, 2020

-- Consolidated second quarter sales were $43.2 million, down 41% sequentially and down 61% from Q2 2019, as a collapse in oil and gas demand and well-completion activity drove a sharp sales decline at DynaEnergetics -- Gross margin was 15%, down from 33% in Q1 2020 and 38% in Q2 2019 -- Operating loss was $8.0million versus operating income of $24.7 million in Q2 2019 -- Net loss was $5.6 million, or $0.38 per diluted share; while adjusted net loss* was $4.4 million, or $0.29 per diluted share -- Adjusted EBITDA* was negative $1.8 million versus positive $11.3 million in Q1 2020 and positive $29.0 million in Q2 2019 -- Net cash* (cash and cash equivalents less total debt) at June 30, 2020, was $4.5 million, up from net cash of $2.9 million at March 31, 2020

BROOMFIELD, Colo., July 23, 2020 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today reported financial results for its second quarter ended June 30, 2020.

Consolidated sales were $43.2 million, down 41% sequentially and down 61% versus the second quarter of 2019. As global energy demand plunged due to the Covid-19 pandemic, there was a concurrent drop in unconventional drilling and completion activity, which negatively affected sales at DynaEnergetics, DMCs oilfield products business. Second quarter well completions in the United States fell by nearly 70% versus the second quarter of 2019, according to the American Petroleum Institute.

Second quarter gross margin was 15% versus 33% in the 2020 first quarter and 38% in the 2019 second quarter. The decline relates to a 73% year-over-year sales decline at DynaEnergetics, which also was impacted by lower selling prices and an inventory reserve of $1.6 million. The magnitude of DynaEnergetics sales decrease led to significant under-absorption of fixed overhead and research and development expenses. In addition, low utilization of DynaEnergetics manufacturing facilities resulted in an excess-capacity charge of $2.0 million. Generally accepted accounting principles (GAAP) stipulate that fixed overhead expenses are capitalized as inventory on the balance sheet when incurred, and then expensed to the income statement when the related inventory is sold. However, in periods when manufacturing activity drops significantly below normalized levels, a portion of fixed overhead expenses are required to be recognized in the income statement, rather than carried as inventory on the balance sheet.

Second quarter operating loss was $8.0 million, and included $800,000 of bad debt expense. In the comparable year ago quarter, DMC reported operating income of $24.7 million.

Net loss was $5.6 million, or $0.38 per diluted share, versus net income of $17.2 million, or $1.15 per diluted share, in last years second quarter. Adjusted net loss was $4.4 million, or $0.29 per diluted share.

Second quarter adjusted EBITDA was negative $1.8 million versus a positive $11.3 million in the 2020 first quarter, and a positive $29.0 million in the 2019 second quarter.

Net cash (total cash and cash equivalents less total debt) at June 30, 2020, was $4.5 million, up from net cash of $2.9 million at March 31, 2020.

DynaEnergetics Second quarter sales at DynaEnergetics were $23.6 million, down 56% sequentially and down 73% from the 2019 second quarter. Gross margin was 8%, down from 37% in the first quarter of 2020 and 41% in last years second quarter. Operating loss was $6.9 million versus operating income of $26.8 million in the comparable year-ago quarter. Excluding restructuring charges, adjusted operating loss was $5.0 million versus adjusted operating income of $26.8 million in the 2019 second quarter. Adjusted EBITDA was negative $3.3 million versus $28.5 million in last years second quarter.

NobelClad Second quarter sales at NobelClad, DMC's composite metals business, were $19.6 million, down 4% sequentially and 12% versus the 2019 second quarter. Gross margin was 25%, flat versus the 2020 first quarter and down from 26% in last year's second quarter. Operating income was $2.0 million versus $1.9 million in the year-ago second quarter. Adjusted EBITDA was $3.1 million versus $3.1 million in last years second quarter.

NobelClads trailing 12-month book-to-bill ratio at the end of the second quarter was 1.05, and its rolling 12-month bookings were $89 million versus $98 million at March 31, 2020. Order backlog was $42.9 million versus $41.3 million at the end of the first quarter.

Six-month resultsConsolidated sales for the six-month period were $116.8 million, down 45% versus the same period a year ago. Gross margin was 27% versus 37% in the 2019 six-month period. Operating loss was $1.6 million versus operating income of $45.1 million in last years six-month period. Net loss for the period was $1.5 million, or $0.10 per diluted share, versus net income of $32.4 million, or $2.17 per diluted share, in the same period a year ago.

Six-month adjusted operating income was $1.5 million and adjusted net income was $684,000, or $0.05 per diluted share. Adjusted EBITDA was $9.5 million versus $52.9 million in last years six-month period.

DynaEnergeticsSix-month sales at DynaEnergetics were $76.9 million, down 54% from $168.5 million, in last years six-month period. Operating income was $1.7 million versus $49.9 million in the comparable year-ago period. Adjusted EBITDA was $8.0 million versus $53.0 million in last years six-month period.

NobelClad NobelClad reported six-month sales of $39.9 million, down 6% from $42.6 million at the six-month mark last year. Operating income was $3.5 million versus $3.8 million in the comparable year-ago period, while adjusted EBITDA was $5.4 million versus $5.8 million in last years six-month period.

Management Commentary President and CEO Kevin Longe said, The second quarter decline in unconventional well-completion activity came on faster and was more severe than anticipated. This situation was exacerbated as oilfield service companies utilized excess component inventory to address the limited number of well completions performed during the quarter. In addition, we were not immune to the severe pricing pressure impacting the entire oilfield services industry.

Despite these challenges, DynaEnergetics is capitalizing on the slowdown in activity. Management currently is engaged with several operators and service companies seeking to strengthen their business models before the next up cycle by transitioning away from field-assembled components in favor of our Factory-Assembled, Performance-Assured perforating systems.

In recent weeks, DynaEnergetics introduced a series of products that are designed for new well-perforating applications and collectively increase its addressable market by more than 20%. The DS Echo perforating system positions DynaEnergetics in the emerging re-frac market, while DS MicroSet and DS Liberator address plug setting and tool-string disengagement applications. Each of these tools is the lightest and most compact in its respective product category, not to mention Factory-Assembled, Performance-Assured and Intrinsically Safe.

NobelClad achieved a modest sequential improvement in its order backlog, but is beginning to see effects of the global pandemic on booking activity. Customers in the downstream energy industry have delayed various repair and maintenance projects; and the award of a large prospective petrochemical order has been slowed by international travel restrictions that have held up customer site visits. Despite these challenges, NobelClad currently is pursuing more opportunities in a broader range of end markets than at any time in its history.

In light of the unprecedented downturn in global economic activity, we have made the necessary adjustments to our activity-based cost structure. However, we will continue to invest in technology, product and market development initiatives that will ensure we maintain our competitive advantages and future growth. As well-completion activity resumes and the perforating sector works through an inventory overhang, we are confident demand for DynaEnergetics systems will recover. We also believe bookings activity at NobelClad will accelerate once the pandemic-related project delays are behind us.

Im extremely proud of our employees around the world, and want to thank them for their determination and collaborative spirit during a very challenging period. DMC is in a much better position than it was during the last downturn. We have a compelling business model supported by industry-leading products and applications, and also have built a highly efficient cost structure and strong balance sheet. We will continue to capitalize on the market slowdown by working closely with customers to address their operational challenges and strengthen their business models. I remain confident we will emerge from this period a stronger company than we were when the downturn began.

GuidanceMichael Kuta, CFO, said third quarter 2020 sales are expected to be in a range of $45 million to $50 million versus the $43.2 million reported in the 2020 second quarter. At the business level, DynaEnergetics is expected to report sales in a range of $27 million to $30 million versus the $23.6 million reported in 2020 second quarter, while NobelClads sales are expected in a range of $18 million to $20 million versus the $19.6 million reported in the 2020 second quarter. Consolidated gross margin is expected to be in a range of 20% to 24% versus 15% in the 2020 second quarter.

Third quarter selling, general and administrative (SG&A) expense is expected in a range of $11 million to $11.5 million versus the $12.2 million reported in the 2020 second quarter, while amortization expense is expected to be approximately $350,000. Interest expense is expected to be in a range of $150,000 to $200,000.

Adjusted EBITDA is expected in a range of $1.5 million to $4.0 million versus the negative $1.8 million in the second quarter of 2020.

Kuta said management expects to end the third quarter in a neutral to slightly positive net cash position, and minimal to zero borrowings on its $50 million revolving credit facility.

Third quarter capital expenditures are expected in a range of $2 million to $3 million.

Conference call informationManagement will hold a conference call to discuss these results today at 5:00 p.m. Eastern (3:00 p.m. Mountain). The call is available live via the Internet at: https://www.webcaster4.com/Webcast/Page/2204/35662, or by dialing 844-407-9500 (862-298-0850 for international callers). No passcode is necessary. Webcast participants should access the website at least 15 minutes early to register and download any necessary audio software. A replay of the webcast will be available for 90 days and a telephonic replay will be available until August 6, 2020, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #35662.

*Use of Non-GAAP Financial MeasuresAdjusted EBITDA, adjusted operating income (loss), adjusted net income (loss), and net cash are non-GAAP (generally accepted accounting principles) financial measures used by management to measure operating performance and liquidity. Non-GAAP results are presented only as a supplement to the financial statements based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the readers understanding of DMCs financial performance, but no non-GAAP measure should be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided within the schedules attached to this release.

EBITDA is defined as net income plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation, restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMCs operating performance (as further described in the attached financial schedules). Adjusted operating income (loss) is defined as operating income (loss) plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMCs operating performance. Adjusted net income (loss) is defined as net income plus restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMCs operating performance. Net cash is defined as cash and cash equivalents less total debt. None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure.

Management uses adjusted EBITDA in its operational and financial decision-making, believing that it is useful to eliminate certain items in order to focus on what it deems to be a more reliable indicator of ongoing operating performance. As a result, internal management reports used during monthly operating reviews feature adjusted EBITDA measures. Management believes that investors may find this non-GAAP financial measure useful for similar reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. In addition, management incentive awards are based, in part, on the amount of adjusted EBITDA achieved during relevant periods. EBITDA and adjusted EBITDA are also used by research analysts, investment bankers and lenders to assess operating performance. For example, a measure similar to adjusted EBITDA is required by the lenders under DMCs credit facility.

Net cash is used by management to supplement GAAP financial information and evaluate DMCs performance, and management believes this information may be similarly useful to investors. Adjusted operating income (loss) and adjusted net income (loss) are presented because management believes these measures are useful to understand the effects of restructuring and impairment charges on DMCs operating income (loss) and net income (loss), respectively.

Because not all companies use identical calculations, DMCs presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the companys performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures. For example, a company with greater GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, eliminating the effects of interest income and expense moderates the impact of a companys capital structure on its performance.

All of the items included in the reconciliation from net income to EBITDA and adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles and stock-based compensation) or (ii) items that management does not consider to be useful in assessing DMCs operating performance (e.g., income taxes, restructuring and impairment charges). In the case of the non-cash items, management believes that investors can better assess the companys operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect DMCs ability to generate free cash flow or invest in its business. For example, by adjusting for depreciation and amortization in computing EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, management believes that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

About DMCDMC Global is a diversified holding company. Our innovative businesses provide differentiated products and services to niche industrial and commercial markets around the world. DMCs objective is to identify well-run businesses and strong management teams and support them with long-term capital and strategic, legal, technology and operating resources. Our approach helps our portfolio companies grow core businesses, launch new initiatives, upgrade technologies and systems to support their long-term strategy, and make acquisitions that improve their competitive positions and expand their markets. DMCs culture is to foster local innovation versus centralized control, and stand behind our businesses in ways that truly add value. Today, DMCs portfolio consists of DynaEnergetics and NobelClad, which collectively address the energy, industrial processing and transportation markets. Based in Broomfield, Colorado, DMC trades on Nasdaq under the symbol BOOM. For more information, visit the Companys website at: http://www.dmcglobal.com

Safe Harbor Language Except for the historical information contained herein, this news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including third quarter guidance on sales, gross margin, SG&A, amortization expense, interest expense, adjusted EBITDA, net cash, anticipated borrowings, capital expenditures; as well as our expectation that we will maintain our competitive advantages and future growth; our expectation that demand for DynaEnergetics systems will recover once well-completion activity resumes and the perforating sector works through an inventory overhang; our belief that NobelClads bookings will accelerate once pandemic-related delays have subsided; and our expectation that we will emerge a stronger company than we were when the downturn began. Such statements and information are based on numerous assumptions regarding present and future business strategies, the markets in which we operate, anticipated costs and ability to achieve goals. Forward-looking information and statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results and performance to be materially different from those expressed or implied by such forward-looking information and statements, including but not limited to: our ability to realize sales from our backlog; our ability to obtain new contracts at attractive prices; the execution of purchase commitments by our customers, and our ability to successfully deliver on those purchase commitments; the size and timing of customer orders and shipments; changes to customer orders; product pricing and margins, our ability to collect on our accounts receivable; fluctuations in customer demand; our ability to successfully execute and capitalize upon growth opportunities; the success of DynaEnergetics product and technology development initiatives; fluctuations in foreign currencies; fluctuations in tariffs and quotas; the cyclicality of our business; competitive factors; the timely completion of contracts; the timing and size of expenditures; the timing and price of metal and other raw material; the adequacy of local labor supplies at our facilities; current or future limits on manufacturing capacity at our various operations; the availability and cost of funds; our ability to access our borrowing capacity under our credit facility; impacts of COVID-19 and any preventive or protective actions taken by governmental authorities, including resulting economic recessions or depressions; and general economic conditions, both domestic and foreign, impacting our business and the business of the end-market users we serve; as well as the other risks detailed from time to time in our SEC reports, including the annual report on Form 10-K for the year ended December 31, 2019. We do not undertake any obligation to release public revisions to any forward-looking statement, including, without limitation, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Three months ended Change Jun 30, 2020 Mar 31, 2020 Jun 30, 2019 Sequential Year-on-yearNET SALES $ 43,203 $ 73,564 $ 110,954 -41 % -61 %COST OF 36,599 49,094 68,881 -25 % -47 %PRODUCTS SOLDGross profit 6,604 24,470 42,073 -73 % -84 %Gross profit 15.3 % 33.3 % 37.9 % percentageCOSTS AND EXPENSES:General andadministrative 6,707 8,126 9,460 -17 % -29 %expensesSelling anddistribution 5,488 8,527 7,239 -36 % -24 %expensesAmortizationof purchased 353 354 397 ? % -11 %intangibleassetsRestructuringexpenses and 2,046 1,116 324 83 % 531 %assetimpairmentsTotal costs 14,594 18,123 17,420 -19 % -16 %and expensesOPERATING (7,990 ) 6,347 24,653 -226 % -132 %(LOSS) INCOMEOTHER(EXPENSE) INCOME:Other(expense) (85 ) 115 343 -174 % -125 %income, netInterest (156 ) (238 ) (409 ) 34 % 62 %expense, net(LOSS) INCOMEBEFORE INCOME (8,231 ) 6,224 24,587 -232 % -133 %TAXESINCOME TAX(BENEFIT) (2,583 ) 2,069 7,343 -225 % -135 %PROVISIONNET (LOSS) (5,648 ) 4,155 17,244 -236 % -133 %INCOMENET (LOSS)INCOME PER SHAREBasic $ (0.38 ) $ 0.28 $ 1.17 -236 % -132 %Diluted $ (0.38 ) $ 0.28 $ 1.15 -236 % -133 %WEIGHTEDAVERAGE NUMBER OF SHARESOUTSTANDING:Basic 14,832,242 14,697,164 14,647,019 1 % 1 %Diluted 14,832,242 14,717,836 14,899,987 1 % ? %DIVIDENDSDECLARED PER $ ? $ 0.125 $ 0.020 COMMON SHARE

Six months ended Change Jun 30, 2020 Jun 30, 2019 Year-on-yearNET SALES $ 116,766 $ 211,089 -45 %COST OF PRODUCTS SOLD 85,696 132,611 -35 %Gross profit 31,070 78,478 -60 %Gross profit 26.6 % 37.2 % percentageCOSTS AND EXPENSES: General andadministrative 14,831 18,628 -20 %expensesSelling and 14,015 13,548 3 %distribution expensesAmortization ofpurchased intangible 707 795 -11 %assetsRestructuring expenses 3,162 402 687 %and asset impairmentsTotal costs and 32,715 33,373 -2 %expensesOPERATING (LOSS) (1,645 ) 45,105 -104 %INCOMEOTHER INCOME (EXPENSE):Other income, net 32 322 -90 %Interest expense, net (394 ) (782 ) 50 %(LOSS) INCOME BEFORE (2,007 ) 44,645 -104 %INCOME TAXESINCOME TAX (BENEFIT) (514 ) 12,231 -104 %PROVISIONNET (LOSS) INCOME (1,493 ) 32,414 -105 %NET (LOSS) INCOME PER SHAREBasic $ (0.10 ) $ 2.20 -105 %Diluted $ (0.10 ) $ 2.17 -105 %WEIGHTED AVERAGENUMBER OF SHARES OUTSTANDING:Basic 14,745,661 14,624,718 1 %Diluted 14,745,661 14,849,816 -1 %DIVIDENDS DECLARED PER $ 0.125 $ 0.04 COMMON SHARE

DynaEnergetics

Three months ended Change Jun 30, 2020 Mar 31, Jun 30, Sequential Year-on-year 2020 2019Net sales $ 23,643 $ 53,220 $ 88,628 -56 % -73 %Gross profit 1,967 19,476 36,341 -90 % -95 %Gross profit 8.3 % 36.6 % 41.0 % percentageCOSTS AND EXPENSES:General andadministrative 3,157 3,832 4,591 -18 % -31 %expensesSelling anddistribution 3,595 5,840 4,637 -38 % -22 %expensesAmortizationof purchased 259 260 300 ? % -14 %intangibleassetsRestructuringexpenses and 1,851 938 ? 97 % n/aassetimpairmentsOperating (6,895 ) 8,606 26,813 -180 % -126 %(loss) incomeAdjusted $ (3,272 ) $ 11,316 $ 28,532 -129 % -111 %EBITDA

Six months ended Change Jun 30, Jun 30, 2019 Year-on-year 2020Net sales $ 76,863 $ 168,464 -54 %Gross profit 21,442 67,573 -68 %Gross profit percentage 27.9 % 40.1 % COSTS AND EXPENSES: General and administrative expenses 6,988 8,313 -16 %Selling and distribution expenses 9,435 8,736 8 %Amortization of purchased intangible 519 601 -14 %assetsRestructuring expenses and asset 2,789 ? n/aimpairmentsOperating income 1,711 49,923 -97 %Adjusted EBITDA $ 8,044 $ 53,041 -85 %

NobelClad

Three months ended Change Jun 30, Mar 31, Jun 30, Sequential Year-on-year 2020 2020 2019Net sales $ 19,560 $ 20,344 $ 22,326 -4 % -12 %Gross profit 4,802 5,154 5,884 -7 % -18 %Gross profit 24.6 % 25.3 % 26.4 % percentageCOSTS AND EXPENSES:General andadministrative 797 974 1,102 -18 % -28 %expensesSelling anddistribution 1,731 2,551 2,438 -32 % -29 %expensesAmortizationof purchased 94 94 97 ? % -3 %intangibleassetsRestructuringexpenses and 195 59 324 231 % -40 %assetimpairmentsOperating 1,985 1,476 1,923 34 % 3 %incomeAdjusted $ 3,061 $ 2,369 $ 3,082 29 % -1 %EBITDA

Six months ended Change Jun 30, 2020 Jun 30, 2019 Year-on-yearNet sales $ 39,903 $ 42,625 -6 %Gross profit 9,954 11,244 -11 %Gross profit percentage 24.9 % 26.4 % COSTS AND EXPENSES: General and administrative 1,771 2,346 -25 %expensesSelling and distribution 4,282 4,549 -6 %expensesAmortization of purchased 188 194 -3 %intangible assetsRestructuring expenses and asset 254 402 -37 %impairmentsOperating income 3,459 3,753 -8 %Adjusted EBITDA $ 5,428 $ 5,787 -6 %

Change Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sequential From year-end (unaudited) (unaudited) ASSETS Cash and cash $ 17,248 $ 16,451 $ 20,353 5 % -15 %equivalentsAccountsreceivable, 33,684 51,011 60,855 -34 % -45 %netInventory, 59,760 61,445 53,728 -3 % 11 %netOther current 8,419 9,534 9,417 -12 % -11 %assets Total current 119,111 138,441 144,353 -14 % -17 %assets Property,plant and 106,453 106,817 108,234 ? % -2 %equipment,netPurchasedintangible 4,784 5,199 5,880 -8 % -19 %assets, netOtherlong-term 21,669 18,483 18,954 17 % 14 %assets Total assets $ 252,017 $ 268,940 $ 277,421 -6 % -9 % LIABILITIES AND STOCKHOLDERS? EQUITY Accounts $ 21,473 $ 29,020 $ 34,758 -26 % -38 %payableContract 5,226 4,367 2,736 20 % 91 %liabilitiesDividend ? 1,883 1,866 -100 % -100 %payableAccrued 5,727 8,666 9,651 -34 % -41 %income taxesCurrentportion of 3,125 3,125 3,125 ? % ? %long-termdebtOther current 14,340 16,032 19,287 -11 % -26 %liabilities Total current 49,891 63,093 71,423 -21 % -30 %liabilities Long-term 9,595 10,406 11,147 -8 % -14 %debtDeferred tax 2,747 3,692 3,786 -26 % -27 %liabilitiesOtherlong-term 19,501 18,060 18,924 8 % 3 %liabilitiesStockholders? 170,283 173,689 172,141 -2 % -1 %equity Totalliabilitiesand $ 252,017 $ 268,940 $ 277,421 -6 % -9 %stockholders?equity

Three months ended Jun 30, 2020 Mar 31, 2020 Jun 30, 2019CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income $ (5,648 ) $ 4,155 $ 17,244 Adjustments to reconcile net(loss) income to net cash provided by operating activities:Depreciation 2,364 2,352 2,157 Amortization of purchased 353 354 397 intangible assetsAmortization of deferred debt 59 40 36 issuance costsStock-based compensation 1,441 1,118 1,495 Deferred income taxes (1,200 ) (160 ) 81 (Gain) loss on disposal of (14 ) 13 317 property, plant and equipmentRestructuring expenses and asset 2,046 1,116 324 impairmentChange in working capital, net 6,807 (4,068 ) (5,746 ) Net cash provided by operating 6,208 4,920 16,305 activitiesCASH FLOWS FROM INVESTING ACTIVITIES:Acquisition of property, plant (2,355 ) (5,121 ) (9,682 ) and equipmentProceeds on sale of property, 14 ? 1,054 plant and equipmentNet cash used in investing (2,341 ) (5,121 ) (8,628 ) activitiesCASH FLOWS FROM FINANCING ACTIVITIES:Repayments on revolving loans, ? ? (6,749 ) netRepayments on capital expenditure (781 ) (781 ) (781 ) facilityPayment of dividends (1,883 ) (1,866 ) (300 ) Payment of deferred debt issuance (84 ) ? ? costsNet proceeds from issuance of 263 ? 358 common stockTreasury stock purchases (34 ) (1,034 ) (103 ) Net cash used in financing (2,519 ) (3,681 ) (7,575 ) activitiesEFFECTS OF EXCHANGE RATES ON CASH (551 ) (20 ) (95 ) NET INCREASE (DECREASE) IN CASH 797 (3,902 ) 7 AND CASH EQUIVALENTSCASH AND CASH EQUIVALENTS, 16,451 20,353 14,874 beginning of the periodCASH AND CASH EQUIVALENTS, end of $ 17,248 $ 16,451 $ 14,881 the period

Six months ended Jun 30, 2020 Jun 30, 2019CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income (1,493 ) 32,414 Adjustments to reconcile net (loss) Income to net cash provided by operating activities:Depreciation 4,716 3,955 Amortization of purchased intangible assets 707 795 Amortization of deferred debt issuance costs 99 83 Stock-based compensation 2,559 2,666 Deferred income taxes (1,360 ) 424 (Gain) loss on disposal of property, plant and (1 ) 317 equipmentRestructuring expenses and asset impairments 3,162 402 Change in working capital, net 2,739 (17,754 ) Net cash provided by operating activities 11,128 23,302 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (7,476 ) (16,283 ) Proceeds on sale of property, plant and equipment 14 1,258 Net cash used in investing activities (7,462 ) (15,025 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments on revolving loans, net ? (3,999 ) Repayments on capital expenditure facility (1,562 ) (1,562 ) Payment of dividends (3,749 ) (598 ) Payment of deferred debt issuance costs (84 ) ? Net proceeds from issuance of common stock 263 358 Treasury stock purchases (1,068 ) (956 ) Net cash used in financing activities (6,200 ) (6,757 ) EFFECTS OF EXCHANGE RATES ON CASH (571 ) (14 ) NET (DECREASE) INCREASE IN CASH AND CASH (3,105 ) 1,506 EQUIVALENTSCASH AND CASH EQUIVALENTS, beginning of the 20,353 13,375 periodCASH AND CASH EQUIVALENTS, end of the period $ 17,248 $ 14,881

DMC Global

EBITDA and Adjusted EBITDA

Three months ended Change Jun 30, 2020 Mar 31, 2020 Jun 30, 2019 Sequential Year-on-yearNet (loss) $ (5,648 ) $ 4,155 $ 17,244 -236 % -133 %incomeInterest 156 238 409 -34 % -62 %expense, netIncome tax(benefit) (2,583 ) 2,069 7,343 -225 % -135 %provisionDepreciation 2,364 2,352 2,157 1 % 10 %Amortizationof purchased 353 354 397 ? % -11 %intangibleassets EBITDA (5,358 ) 9,168 27,550 -158 % -119 %Restructuringexpenses and 2,046 1,116 324 83 % 531 %assetimpairmentsStock-based 1,441 1,118 1,495 29 % -4 %compensationOther expense 85 (115 ) (343 ) 174 % 125 %(income), netAdjusted $ (1,786 ) $ 11,287 $ 29,026 -116 % -106 %EBITDA

Six months ended Change Jun 30, 2020 Jun 30, 2019 Year-on-yearNet (loss) income (1,493 ) 32,414 -105 %Interest expense, net 394 782 -50 %Income tax (benefit) (514 ) 12,231 -104 %provisionDepreciation 4,716 3,955 19 %Amortization of purchased 707 795 -11 %intangible assets EBITDA 3,810 50,177 -92 %Restructuring expenses and 3,162 402 687 %asset impairmentsStock-based compensation 2,559 2,666 -4 %Other (income), net (32 ) (322 ) 90 %Adjusted EBITDA $ 9,499 $ 52,923 -82 %

Adjusted operating income

Three months ended Change Jun 30, 2020 Mar 31, Jun 30, Sequential Year-on-year 2020 2019Operating(loss) income, $ (7,990 ) $ 6,347 $ 24,653 -226 % -132 %as reportedRestructuring programs:NobelClad 195 59 324 231 % -40 %DynaEnergetics 1,851 938 ? 97 % n/aCorporate ? 119 ? -100 % n/aAdjustedoperating $ (5,944 ) $ 7,463 $ 24,977 -180 % -124 %(loss) income

Six months ended Change Jun 30, 2020 Jun 30, Year-on-year 2019Operating (loss) income, as reported $ (1,645 ) $ 45,105 -104 %Restructuring programs: NobelClad 254 402 -37 %DynaEnergetics 2,789 ? n/aCorporate 119 ? n/aAdjusted operating income $ 1,517 $ 45,507 -97 %

Adjusted Net Income and Adjusted Diluted Earnings per Share

Three months ended June 30, 2020 Pretax Tax Net Diluted EPSNet loss, as $ (8,231 ) $ (2,583 ) $ (5,648 ) $ (0.38 ) reportedRestructuring programs:NobelClad 195 65 130 0.01 DynaEnergetics 1,851 728 1,123 0.08 Adjusted net loss $ (6,185 ) $ (1,790 ) $ (4,395 ) $ (0.29 )

Three months ended March 31, 2020 Pretax Tax Net Diluted EPSNet income, as reported $ 6,224 $ 2,069 $ 4,155 $ 0.28 Restructuring programs: NobelClad 59 ? 59 ? DynaEnergetics 938 ? 938 0.06 Corporate 119 ? 119 0.01 Adjusted net income $ 7,340 $ 2,069 $ 5,271 $ 0.35

Three months ended June 30, 2019 Pretax Tax Net Diluted EPSNet income, as reported $ 24,587 $ 7,343 $ 17,244 $ 1.15 Restructuring programs: NobelClad 324 ? 324 0.02 Adjusted net income $ 24,911 $ 7,343 $ 17,568 $ 1.17

Six months ended June 30, 2020 Pretax Tax Net Diluted EPSNet loss, as $ (2,007 ) $ (514 ) $ (1,493 ) $ (0.10 ) reportedRestructuring programs:NobelClad 254 78 176 0.01 DynaEnergetics 2,789 882 1,907 0.13 Corporate 119 25 94 0.01 Adjusted net income $ 1,155 $ 471 $ 684 $ 0.05

Six months ended June 30, 2019 Pretax Tax Net Diluted EPSNet income, as reported $ 44,645 $ 12,231 $ 32,414 $ 2.17 Restructuring programs: NobelClad 402 ? 402 0.03 Adjusted net income $ 45,047 $ 12,231 $ 32,816 $ 2.20

Return on Invested Capital

Three months ended Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020Operating income (loss) 24,653 $ 12,821 $ 499 $ 6,347 $ (7,990 ) Income tax provision (benefit) 7,371 5,782 5,227 2,107 (2,509 ) (1)Net operating profit (loss) after 17,282 7,039 (4,728 ) 4,240 (5,481 ) taxes (NOPAT)Trailing Twelve Months NOPAT 23,833 1,070 Balances as of Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020Allowance for 574 428 405 967 2,320 2,882 doubtful accountsDeferred tax (3,843 ) (3,656 ) (3,431 ) (3,836 ) (3,902 ) (4,157 ) assetsDeferred tax 880 458 1,469 3,786 3,692 2,747 liabilitiesAccrued income 5,367 9,419 10,427 9,651 8,666 5,727 taxesCurrent portionof lease 2,122 2,016 1,944 1,716 1,618 1,846 liabilitiesLong-term portionof lease 6,157 9,506 9,487 9,777 9,454 10,430 liabilitiesCurrent portion 3,125 3,125 3,125 3,125 3,125 3,125 of long-term debtLong-term debt 40,239 32,744 25,010 11,147 10,406 9,595 Totalstockholders' 148,911 163,501 167,076 172,141 173,689 170,283 equityTotal invested 203,532 217,541 215,512 208,474 209,068 202,478 capitalAverage invested 195,276 206,300 210,010 capital Trailing Twelve Months Return on Invested Capital 29 % 18 % 12 % 1 % (ROIC)

(1) Tax calculation for NOPAT: Twelve Three months ended months Three months ended ended Jun 30, Sep 30, Dec 31, 2019 Dec 31, Mar 31, Jun 30, 2020 2019 2019 2019 2020Income(loss)before 24,587 12,604 (547 ) 56,702 6,224 (8,231 ) incometaxesIncometax 7,343 5,689 4,741 22,661 2,069 (2,583 ) provision(benefit)Effective 29.9 % 45.1 % (866.7 ) % 40.0 % 33.2 % 31.4 % tax rate

DynaEnergetics

Three months ended Change Jun 30, 2020 Mar 31, Jun 30, Sequential Year-on-year 2020 2019Operating(loss) $ (6,895 ) $ 8,606 $ 26,813 -180 % -126 %income, asreportedAdjustments: Restructuring 1,851 938 ? 97 % n/a Adjustedoperating (5,044 ) 9,544 26,813 -153 % -119 %(loss) incomeDepreciation 1,513 1,512 1,419 ? % 7 %Amortizationof purchased 259 260 300 ? % -14 %intangiblesAdjusted $ (3,272 ) $ 11,316 $ 28,532 -129 % -111 %EBITDA

Six months ended Jun 30, Jun 30, Year-on-year 2020 2019Operating income, as reported $ 1,711 $ 49,923 -97 %Adjustments: Restructuring 2,789 ? n/a Adjusted operating income 4,500 49,923 -91 %Depreciation 3,025 2,517 20 %Amortization of purchased intangibles 519 601 -14 %Adjusted EBITDA $ 8,044 $ 53,041 -85 %

NobelClad

Three months ended Change Jun 30, Mar 31, Jun 30, Sequential Year-on-year 2020 2020 2019Operatingincome, as $ 1,985 $ 1,476 $ 1,923 34 % 3 %reportedAdjustments: Restructuringexpenses and 195 59 324 231 % -40 %assetimpairments Adjustedoperating 2,180 1,535 2,247 incomeDepreciation 787 740 738 6 % 7 %Amortizationof purchased 94 94 97 ? % -3 %intangiblesAdjusted $ 3,061 $ 2,369 $ 3,082 29 % -1 %EBITDA

Six months ended Jun 30, 2020 Jun 30, 2019 Year-on-yearOperating income, as reported $ 3,459 $ 3,753 -8 %Adjustments: Restructuring expenses and asset 254 402 -37 %impairments Adjusted operating income 3,713 4,155 Depreciation 1,527 1,438 6 %Amortization of purchased 188 194 -3 %intangiblesAdjusted EBITDA $ 5,428 $ 5,787 -6 %