DMC Global Inc. Q3 FY2025 earnings call

• Deleveraging progress: Net debt reduced to $30.1 million, down 47% since the start of the year, the lowest level since purchasing controlling interest in Arcadia in 2021. - Arcadia: Stabilized operations, seeing green shoots but facing challenging market conditions in the Western region, with improved profitability. - DynaEnergetics: Containing costs, navigating challenging North American market. - NobelClad: Secured a record $25 million order (original $20 million + $5 million follow-on), with backlog up, but sales expected in 2026.

Arcadia (Building Products): Third quarter sales totaled $61.7 million, a 7% year-over-year increase but down 1% from the second quarter. Adjusted EBITDA attributable to DMC more than doubled to $5.1 million from the year ago quarter. DynaEnergetics (Energy Products): Third quarter sales were $68.9 million, down 1% year-over-year and up 3% sequentially. Adjusted EBITDA was $4.9 million, up from breakeven in the year ago quarter, but down 46% sequentially. NobelClad (composite metal): Third quarter sales were $20.9 million, down 16% year-over-year and down 21% sequentially. Adjusted EBITDA was $2.1 million, down 64% from the prior year and 53% sequentially. NobelClad's backlog at the end of the third quarter was $57 million, up 53% from the second quarter.

• Fourth quarter sales expected in the range of $140 million to $150 million. - Adjusted EBITDA attributable to DMC expected in the range of $5 million to $8 million. - Guidance reflects lag of NobelClad bookings to sales, headwinds in DynaEnergetics core market, and seasonal slowdown possibility. - Arcadia expects normal seasonal slowdown but continued year-over-year profitability improvement.

• Volatile energy prices, elevated interest rates, and shifting tariff policies. - Headwinds in DynaEnergetics core North American market due to tariffs and declining well completions. - Economic uncertainty affecting order bookings at NobelClad.

Q: Are you seeing green shoots in Arcadia and are there opportunities for additional operational improvements?

A: Seeing some Arcadia-specific green shoots due to stability efforts, but still challenging. There's a long list of potential operational improvements including professionalization and CapEx decisions.

Q: What's the cadence of shipping the NobelClad large order?

A: Bulk revenue from the order will be in the second half of 2026.

Q: Are there additional orders unlocking at NobelClad?

A: Currently, general economic uncertainty is causing people to wait on orders.

Q: How should we think about tariff impacts in Dyna and margin progression?

A: Tariff impact in the quarter was ~$3 million, difficult to push price in the market, margin pressures due to pricing and volume.

Q: What's the downside and confidence needed for end market recovery?

A: Need stability, NobelClad order book is a positive, but Fed rate cuts and market conditions are critical.

Q: Expectations for 2026 and pricing in Dyna?

A: Too early to talk 2026, pricing relief possible if market picks up but not near that now.

Q: What's seen in the field with oriented perforating guns?

A: Have a self-perforating gun product, technology has driven production increases in the Permian, and they are a leader in this area.