DMC Global Inc. Q3 FY2024 earnings call

• Strategic Review: Concluded strategic review of DynaEnergetics and NobelClad, not interested in selling DynaEnergetics at unfavorable terms due to oil field market conditions. - Arcadia Updates: New Interim President Chris Scocos appointed to focus on supply chain, inventory planning, and ERP system leverage. Reviewing product lines for profitability. - Financials: Third quarter sales $152.4M, down 11% Y/Y. Adjusted EBITDA $5.7M (4% of sales). SG&A $28M, cash and cash equivalents $15M, net debt $60M.

Arcadia: Third quarter sales were $57.8 million, down 17% sequentially and 19% versus the third quarter last year. Adjusted EBITDA margin was 5.8%, down from prior periods. Impacted by high interest rates, supply chain disruptions, and lower fixed cost absorption. DynaEnergetics: Third quarter sales were $69.7 million, down 9% sequentially and 5% versus last year's third quarter. Adjusted EBITDA was roughly breakeven with a margin under 1%. Affected by oil field services market volatility, bad debt, inventory charges, and lower margin customer mix. NobelClad: Third quarter sales were $24.9 million, flat sequentially and down 10% year-over-year. Adjusted EBITDA margin improved to 23.2% due to favorable project mix. Ended with order backlog of $59 million.

• Fourth quarter consolidated sales expected $138M-$148M, adjusted EBITDA $5M-$8M. - Sequential decline due to market conditions, seasonality, high interest rates impacting Arcadia.

• Market Volatility: Uncertainty in energy and construction markets affecting sales and margins. - Interest Rates: Impact on high-end residential sales and commercial construction activity. - Supply Chain: Disruptions limiting product availability for Arcadia.

Q: Discussion on turnover, market vs leadership impact A: Jim O'Leary discussed market impact on DynaEnergetics, Arcadia's market challenges and leadership changes, emphasizing need for right skill sets and system improvements.

Q: Arcadia operations, systems, and high-end residential A: Michael Kuta and James O'Leary talked about ERP initiatives, supply chain issues, backlog challenges, and impact of interest rates on high-end residential.

Q: Arcadia quarter progress, restructuring, capacity A: Eric Walter and James O'Leary discussed Q3 trends, no specific restructuring announced, paint capacity not related to overcapacity issues.