DMC Global Inc. Q4 FY2025 earnings call

• Macroeconomic challenges such as tariffs and interest rates heavily impacted DMC's core oilfield and construction markets throughout 2025 and into early 2026. - Reduced net debt by $11.4 million during the fourth quarter, with year-end net debt at $18.7 million, the lowest since the Arcadia acquisition in 2021. - Arcadia's end markets were affected by persistently high interest rates, elevated raw material and labor costs, leading to deferred large projects and a competitive bidding environment. - DynaEnergetics and its customers were negatively impacted by challenging conditions in the North American unconventional oil and gas market. - NobelClad's sales decline was due to reduced bookings and evolving tariff policies. - Businesses are pursuing growth opportunities: DynaEnergetics is exploring enhanced geothermal and international shale markets; NobelClad is monitoring opportunities related to the U.S. Naval Readiness program.

Consolidated sales in the fourth quarter decreased by 6% year-over-year to $143.5 million. For Arcadia, the building products business, fourth quarter sales were $57 million, a 5% year-over-year decline and an 8% sequential decline. Adjusted EBITDA attributable to DMC for Arcadia was $2.4 million, up from $2.2 million in the prior year's fourth quarter but down from $5.1 million in the third quarter. DynaEnergetics, the core oilfield products business, had fourth quarter sales of $68.9 million, an 8% improvement compared to the prior year quarter and flat sequentially. Adjusted EBITDA including approximately $7 million in write-offs was negative $2.7 million. NobelClad, the composite metals business, had fourth quarter sales of $17.7 million, a 38% decline from the 2024 fourth quarter and a 15% sequential decline. Adjusted EBITDA was $2.1 million, down 64% versus the comparable prior period and up 1% sequentially. Revenue contribution: Arcadia's $57 million is about 39.7% of the $143.5 million consolidated sales; DynaEnergetics' $68.9 million is about 48%; NobelClad's $17.7 million is about 12.3%.

• Expected first quarter sales in the range of $132 million to $138 million, and adjusted EBITDA attributable to DMC in the range of $2 million to $4 million. - Factors negatively impacting the fourth quarter and most of 2025 are expected to continue into 2026. - Arcadia will continue to face challenges from the construction sector including high interest rates and price competition. - DynaEnergetics' core market remains challenged by margin pressure from fewer operating frac crews and higher input prices. - NobelClad is expected to have a slow start to the year due to demand erosion from tariffs. - Guidance is subject to change based on macroeconomic conditions and evolving tariff policies.

• Macroeconomic factors like tariffs and interest rates could cause actual results to differ materially from projections. - Tariffs remain a significant headwind with uncertainty regarding refunds. - End markets continued to worsen, affecting sales and margins. - High interest rates, raw material, and labor costs are impacting Arcadia's end markets. - Volatile oil prices and competitive pricing are affecting DynaEnergetics' customers. - Evolving tariff policies create uncertainty for NobelClad's markets.

Q: Gerry Sweeney inquired about growth opportunities for DynaEnergetics in geothermal and international shale, and Arcadia's margin pressure.

A: Jim O'Leary discussed DynaEnergetics' geothermal as similar technology to fracking with potential in North America and international shale exploration; Arcadia's challenges are not unique with the industry being gloomy.

Q: Stephen Gengaro asked about DynaEnergetics' revenue, margin performance, and cyclical vs structural issues.

A: James O'Leary stated revenue was as expected, margin pressure from tariffs, price, and cost factors; cyclical with some secular elements.

Q: Stephen Gengaro asked about first quarter commentary and segment optimism.

A: James O'Leary said the first quarter would be tough, NobelClad not picking up, and recovery likely in the back half of 2026.

Q: Kenneth Newman asked about first quarter EBITDA guidance, carryover write-downs, and cost efficiency.

A: Eric Walter said there were no carryover write-downs from Q4 to Q1, and margins were pressured; James O'Leary mentioned cost efficiency efforts ongoing and prepared for potential step function down in business conditions.