DMC (BOOM) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2021, consolidated sales increased 7% sequentially to $71.8 million, with DynaEnergetics sales rising 15$50.7 million [12][16] - Fourth quarter consolidated gross margin was 18%, down from 25% in Q3, attributed to inventory reserve adjustments and project mix [14][16] - Adjusted EBITDA for Q4 was $2.8 million, down from$5.8 million in Q3, while full-year consolidated sales were $260.1 million, up 14$8.1 million, while North American sales increased 7% to $42.6 million [13] - NobelClad sales declined 8$21.2 million due to delays in receiving metals [13] - Arcadia's pro forma sales for 2021 were $500.5 million, with a pro forma gross margin of 28$7 billion addressable market, capturing approximately 10% market share in its regions [7][8] Company Strategy and Development Direction - The acquisition of Arcadia is expected to double DMC's pro forma sales and strengthen its market position in the building products sector [7][20] - DMC aims to improve operating efficiencies and increase manufacturing capacity at Arcadia through investments in new facilities and systems [10][11] - The company is focused on margin improvement and long-term revenue growth across its asset-light businesses [20][55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strengthening end markets and the ability to meet demand, particularly in the oil and gas sector [17] - DynaEnergetics is expected to see margin recovery through price increases and increased well completion activity [18][46] - NobelClad is positioned to improve bookings and financial performance as supply chain disruptions ease [19] Other Important Information - Fourth quarter net loss attributable to DMC was $2.8 million, with an adjusted net income of$840,000 [22][23] - First quarter 2022 consolidated sales are expected to be between $125 million and$135 million, with Arcadia projected to report sales of $57 million to$62 million [24][25] Q&A Session Summary Question: Discussion on Arcadia's CapEx and growth expectations - Management plans $8 million to$10 million in CapEx for Arcadia, focusing on operational efficiency and capacity expansion [29][30] Question: Arcadia's revenue seasonality and growth direction - Revenue is expected to remain stable, with growth driven by price increases and capacity improvements [31][32] Question: DynaEnergetics' Q1 guidance and international sales - International sales are expected to pull back slightly, while North American sales are projected to increase [35][36] Question: Pricing strategy and competitive behavior in DynaEnergetics - A 5% price increase was implemented, with expectations for further increases to offset inflation [43][46] Question: Arcadia's EBITDA margins and growth potential - Expected EBITDA margins for Arcadia are around 20%, with growth driven by pricing and operational improvements [50][51] Question: Capital allocation and debt management for 2022 - The company aims to reduce debt to below 2x debt-to-EBITDA by the end of 2022, with a long-term CapEx target of 3% to 4% of sales [57][58]