Investor Presentation August 2017 and steel casing are in place, a perforang gun is deployed into...
Transcript of Investor Presentation August 2017 and steel casing are in place, a perforang gun is deployed into...
© 2015 DMC. All rights reserved. INGENUITY IN ACTION.
Investor Presentation August 2017
DMCGlobal.com2017InvestorPresenta9on
CAUTIONARYSTATEMENTREGARDINGFORWARD-LOOKINGINFORMATION
2
Thispresenta9oncontains,andtheCompanymayfrom
9meto9memake,wriDenororal"forward-looking
statements"withinthemeaningofSec9on27Aofthe
Securi9esActof1933,asamended,andSec9on21Eof
theSecuri9esExchangeActof1934,asamended.These
statementsincludeinforma9onwithrespecttoour
financialcondi9onandresultsofopera9ons,our
expecta9onsregardingtheoilandgasmarket,
DynaEnerge9csgrowthini9a9ves,NobelClad’sgrowth
ini9a9ves,andDMC’stenetstoguideshareprice
performance.Wordssuchas"an9cipates,""expects,"
"intends,""plans,""believes,""seeks,""es9mates,"
"may,""will,""con9nue,""project"andsimilar
expressions,aswellasstatementsinthefuturetense,
iden9fyforward-lookingstatements.
Theseforward-lookingstatementsarenotguaranteesof
ourfutureperformanceandaresubjecttorisksand
uncertain9esthatcouldcauseactualresultstodiffer
materiallyfromtheresultscontemplatedbythe
forward-lookingstatements.Theserisksand
uncertain9esinclude,butarenotlimitedto:
Seecolumntotheright>
•TheabilitytoobtainnewcontractsataDrac9veprices;•Ourabilitytorealizesalesfrombacklog;•Productpricingandmargins•Thesizeand9mingofcustomerorders;•Fluctua9onsincustomerdemand;•Compe99vefactors;•The9melycomple9onofcontracts;•Theavailabilityandpriceofmetalandotherrawmaterial;•Currentorfuturelimitsonmanufacturingcapacity;•Theadequacyoflocallaborsuppliesatourfacili9es;•Theavailabilityandcostoffunds;•Generaleconomiccondi9ons,bothdomes9callyandabroad;•Theoutcomeofongoingli9ga9onandregulatorymaDers;•Thecyclicalityofourbusinesses;and•Fluctua9onsinforeigncurrencies.
Theeffectsofthesefactorsaredifficulttopredict.Newfactorsemergefrom9meto9meandwecannotassessthepoten9alimpactofanysuchfactoronthebusiness
ortheextenttowhichanyfactor,orcombina9onoffactors,maycauseresultstodiffermateriallyfrom
thosecontainedinanyforward-lookingstatement.Anyforward-lookingstatementspeaksonlyasofitsdate
andwedonotundertakeanyobliga9ontoupdateanyforward-lookingstatementtoreflecteventsor
circumstancesa_erthedateofsuchstatementortoreflecttheoccurrenceofunan9cipatedevents.In
addi9on,see"RiskFactors"foradiscussionoftheseandotherfactors.
YouareencouragedtoreadtheSECreportsofDMC,
par9cularlyitsForm10-KfortheFiscalYearEndedDecember31,2016formeaningfulcau9onarylanguage
disclosingwhyactualresultsmayvarymateriallyfromthosean9cipatedbymanagement.
DMCGlobal.com
DMCisadiversifiedtechnologycompany.Wearefocusedongrowingourcompanybyinves9nginpeople,productsandbusinessesthatservenicheglobalmarkets.Today,ourpordolioconsistsofNobelCladandDynaEnerge9cs,whichaddresstheindustrialprocessing,transporta9onandenergy
marketsthroughglobalmanufacturing,salesanddistribu9onnetworks.
2017InvestorPresenta9on 3
OURSTORY
DMCGlobal.com
SELECTDATA
BOOM$9.80–17.1927,410$209Million14.8Million14.0MillionDecember31$0.02$163.0Million$9.6Million
2017InvestorPresenta9on 4
Symbol(NasdaqGS):52-weekpricerange:Averagedailyvolume:Marketcapitaliza9on:Sharesoutstanding:Approximatefloat:Fiscalyear:Quarterlydividend:Revenue(Dm):AdjustedEBITDA*(Dm)
BOOM1-YearPrice&Volume
*Non-GAAPfinancialmeasure
DMCGlobal.com
REVENUEBYBUSINESS
2017InvestorPresenta9on
5
2015
(54%)
$76.9(46%)
NobelCladDynaEnerge9cs
$inmillions
$90.0
2016
(58%)
$67.3(42%)
$91.3
5
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DMCEXECUTIVELEADERSHIP
2017InvestorPresenta9on 6
KEVINLONGE• NamedPresident,CEOandDirectorinMarch2013
• JoinedDMCasCOOinJuly2012
• FormerVPandandGMofSonoco's$600millionProtec9vePackagingdivision
• FormerPresidentofSonoco'sThermoSafeBrands
• Oversawglobalsales,marke9ng,engineeringandR&Dforthelifesciences,medical,foodandindustrialdurablesmarkets
• OversaweightmanufacturingcentersintheU.S.,EuropeandAsia
• FormerPresidentofthreeopera9ngdivisionsatLydall,Inc.(NYSE-LDL)
President&CEO MICHAELKUTA• JoinedDMCasCFOinMarch2014
• FormerCorporateControlleratBerkshireHathaway’sLubrizolCorpora9on,aglobal,$6billionspecialtychemicalscompany
• Wasresponsibleforbuildingandmanagingfinancialopera9onsforLubrizol’sdisbursedglobalopera9ons,includingaccoun9ng,consolida9onandfinancialrepor9ngfunc9ons,andoversightofinternalcontrols
• Formerfinancialposi9onsofincreasingresponsibilityatLincolnElectricandEatonCorpora9on
CFO MICHELLESHEPSTON• JoinedDMCin2016a_er16yearswithDenver-basedDavisGraham&StubbsLLP
• WasapartnerwithDGS,andprac9cedwiththeCorporateFinanceandAcquisi9onsGroup
• Exper9seinsecuri9eslaw,mergers&acquisi9ons,crossborderdebt&equitytransac9ons,contractnego9a9onandexecu9on
• Industryexper9seincludesenergyandnaturalresources
CLO GEOFFHIGH• JoinedDMCinNovember2014a_er21yearswithDenver-basedPfeifferHighInvestorRela9ons,Inc.
• FormerpartnerwithPfeifferHigh,andoversawsmall-capandmid-cappublic-companyaccountsacrossmul9pleindustries.ManagedtheDMCaccountfor10years
• Exper9seinins9tu9onal,analystandretailinvestorrela9ons;shareholderanalysisandtarge9ng;IRstrategydevelopmentandimplementa9on
• Industryexper9seincludesoil&gasandindustrialinfrastructure
VP,IR
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LEADERSHIPTEAM
2017InvestorPresenta9on 7
IANGRIEVESPresident,DynaEnerge9cs• JoinedDynaEnerge9csin2013• 20yearsofdiverseopera9onal,engineering,financeandmanagementexperiencewithinterna9onalindustrialbusinesses
• PreviouslySeniorVicePresidentofLydall,Inc.’sPerformanceMaterialsdivision
JOHNSCHEATZLEPresident,NobelClad• JoinedDMCin2016a_er19yearswithadvancedmaterialsmanufacturerMaterion
• AsVicePresidentandGeneralManagerofMaterion’sPerformanceAlloysdivision,wasresponsibleformul9pleNorthAmericanproduc9onfacili9esandinterna9onalsalesanddistribu9oncenters
• FormerGeneralManagerofMaterion’sCeramicProductsdivision
BINZHANGManagingDirector,China,DMC• ResponsibleforChinesebusinessdevelopmentandmarketposi9oningforNobelCladandDynaEnerge9cs
• Na9veofBeijingwith20yearsofseniorlevelbusinessexperience
• EstablishedanAsiaPacificsalesandmarke9ngpresenceforaSheldahl,Inc.,aspecializedmanufacturerbasedinMinnesota
DMCGlobal.com
DMCempowersitspeopleandorganiza9onsbyins9tu9onalizingentrepreneurshipandcelebra9ngtechnicalingenuity.Ourgrowthisfueledbyenergized,relevantandnimblyexecutedsolu9onsthatmakearealdifferencetoourcustomers.DMC’sresponsiveorganiza9onsarefocusedon
servingtheworld’sgrowthmarkets,givinginvestorshighreturnsthroughoutvaryingeconomiccycles.
2017InvestorPresenta9on 8
OURCULTURE
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CHAPTER&PAGETITLEHERE
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REPRESENTATIVE:NAME&POSITIONHERE
DMCGlobal.com
DYNAENERGETICSOVERVIEW
2017InvestorPresenta9on 10
Atop-9erproviderofcompa9bilitytestedperfora9ngsystems.
AcquiredbyDMCin2007asnewpladormbusiness
Unmatchedglobalreachservingaworldwidenetworkofoilandgasserviceproviders
Reputa9onforproductsafety,technicalinnova9onandsystemreliabilityunderextremeenvironmentalcondi9ons
Perfora9ngandwell-comple9ontechnologiesdriveimprovedsafety,produc9vityandloweropera9ngcostsforcustomers
DMCGlobal.com
PERFORATINGBASICS
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1. Onceawellboreisdrilledandcementandsteelcasingareinplace,aperfora9nggunisdeployedintothewell.
2. Theperfora9nggunisfired,sendingplasmajetsthroughthecasingandintothesurroundingforma9oncrea9ng“perfora9ontunnels”.
3. Oilorgasflowsthroughtheperfora9ontunnelsandintothewell.
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PRIMARYCOMPONENTSOFAPERFORATINGSYSTEM
2017InvestorPresenta9on
DynaEnerge4csistheonlycompanymanufacturingallcomponentsofaperfora4ngsystem
01SHAPEDCHARGES 02DETONATORS 03DETONATINGCORD
04GUNCARRIERS&“SUBS” 05CONTROLPANELS
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DynaStage™Perfora9ngSystem• Factoryassembled,performanceassured
• IncorporatesDynaSelectintrinsicallysafe
detona9ngtechnology
• Nowiringconnec9ons…reducesset-up9meto
seconds
• Removesthepoten9alforelectricalconnec9on
errors
• Eliminatesgunloadingsteps
• Fullydisposableandmaintenancefree
DynaSelect™Detonators• Integrated,intrinsicallysafe&selec9ve
technologies
• Enablesconcurrentperfora9ngandfracturing
• Reducestheriskofaccidents
• Timeandcostsavingsfromsequen9algun
ini9a9on
• Improvedset-up9mesandreliabilityfrom
fewerelectricalwiringconnec9ons
01 02
DYNAENERGETICSPRODUCTINNOVATIONS
2017InvestorPresenta9on
DynaSlot™WellAbandonmentSystem• Fast,cost-effec9vealterna9vetotradi9onalplug
andabandonment,and“cementsqueeze”
techniques
• HelicalpaDernofoverlappinghorizontalslots
provides360-degreecementcoveragebehind
tubingorcasing
03
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3-3/8”
3-1/8”
2-3/4”
DYNASTAGE™GUNSYSTEM
2017InvestorPresenta9on 14
*patentspendingTopFireDynaSelect
Detonator*Mul9tronicVFiringPanel
ThreeStageGunStringwithBridgePlug
DynaStageGunModule*
EcoilTandemSubAdapterQuickChangeGO-StyleFiringHead
TopFireDynaSelectDetonator
DMCGlobal.com
DYNASELECT™ANDDYNASTAGE™PROVIDEBUSINESSMODELADVANTAGE
2017InvestorPresenta9on
CURRENTINDUSTRYMODEL DYNAENERGETICSMODEL:PRODUCTBENEFITS+BUSINESSMODELADVANTAGE
DynaStageAdvantages• Factoryassembledanddeliveredtocustomerinthefield• Systemisarmeduponinstalla9onofDynaStageswitchdetonator,elimina9ngfieldwiring• Surfacetesterensuressystemisfullyfunc9onalbeforedown-holedeployment
Benefits:• Nomisfires,improvedreliability• Reducedtransporta9oncostsandfieldlabor• Noneedforgunassemblyorstoragefacili9es• Simplifiedsupplychain• Reducedworkingcapital,improvedprofitabilityforcustomers
CurrentProcessCustomermixes&matchesperfora9ngcomponentsfrommul9plesuppliers,thenassemblesandwiresguninthefield
Challenges:• Assemblyerrorsleadtomisfires• Quality&safety• Opera9ngcost• Complexityofsupplychain
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DYNASTAGECASESTUDY:PATRIOTWELLSOLUTIONS
2017InvestorPresenta9on 16
Advancedwelldesigncalledfor15perfora9ngsystemsineach“gunstring,”3-9mestheindustryaverage
DynaStagereducedgun-stringassembly9mebymorethan80%–from1.25hourstoapproximately13minutes–versusconven9onalgunsDynaStageenableda40%increaseincompletedstagesperdayGunfailureseffec9velyeliminatedGun-stringlengthreducedby14.5feet,or25%,versusconven9onalguns.Weightcutby400lbs,or40%.Comple9onteamsreducedfrom15to11membersPatriot’ssupplychainsimplified;vendorsreducedfrom3to1Patriotbenefi}ngfromlowerworkingcapitalrequirements,whicharenowaddressedbyDynaEnerge9cs
DynaStagewasadoptedbyPatriotWellSolu9onsinApril2017toaddressacomplex42-wellcomple9onprogramintheD-JBasin.
DMCGlobal.com
DYNAENERGETICSCAPITALIZINGONINDUSTRYTRANSITION
• A_erahistoricdownturnintheenergyindustry,arecoveryhastakenholdintheonshoreunconven9onalmarket.Morecostlyoffshoreanddeepseadrillinghasbeenslowertorebound.
• SpendingonNorthAmericanupstreamprojects,includingunconven9onaldrillingandwellcomple9ons,isexpectedtogrow38%in2017,whileinterna9onaloffshorespendingisexpectedtofall20%-25%in2017.
17
38%1
-23%2
-30%
-20%
-10%
0%
10%
20%
30%
40%
N.A. Upstream
Global Offshore
1 Oil & Gas Journal 2 Barclays
0
200
400
600
800
1000
1200
1400
1600
Q314Q414Q115Q215Q315Q415Q116Q216Q316Q416Q117Q217
Rig S tatis tic s
792 766 685 325
6/30/2017 40.7% 62.5% 143.7%
71 65 70 43
6/30/2017 110.8% 5.7% 51.2%
77 77 69 53
6/30/2017 0.0% 46.4% 45.3%
940 908 824 421
6/30/2017 42.3% 56.3% 123.3%
*Mos trecentdatareportedon30-J un-2017**% box s how s annualiz edrates forcomparis on
OriginalDataS ource:BakerHughes RigS tatis tic s
1Y earBefore
Direc tional
V ertical
TotalRig s
Horiz ontal
Mos tRecent*
1MonthBefore**
3Months Before**
-
200
400
600
800
1,000
1,200
1,400
1,600
7/23/2014
9/23/2014
11/23/2014
1/23/2015
3/23/2015
5/23/2015
7/23/2015
9/23/2015
11/23/2015
1/23/2016
3/23/2016
5/23/2016
7/23/2016
9/23/2016
11/23/2016
1/23/2017
3/23/2017
5/23/2017
Horizontal Directional Vertical
U.S.LandRigCount GlobalOffshoreRigCount 2017InvestmentForecast
2017InvestorPresenta9on
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NORTHAMERICANUNCONVENTIONALMARKETLEADINGRECOVERY
18
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Non-U.S.wells N.A.Unconven9onal N.A.Conven9onal GlobalOffshore
2016
2017*
+52%
+6%
+2%
+1%
* World Oil and IHS forecasts
Forecastofwellsdrilled
2017InvestorPresenta9on
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IMPROVEDECONOMICSOFUNCONVENTIONALOILANDGASPRODUCTION
19
85
63
56
75
5851
4743
51
373833 35
3932
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
PermianMidland PermianDelaware Niobrara EagleFord Bakken
2014 2015 2016
WellheadBreakevenPricesbyU.S.OnshorePlay$/Boe
Source:RystadEnergyNASWellCube&NASReport
2017InvestorPresenta9on
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DYNAENERGETICSPERFORMANCE
$inmillions
105.5
76.9 67.3
30.4
48.8
$0
$20
$40
$60
$80
$100
$120
2014 2015 2016 20166m 20176m
Sales
*Non-GAAPfinancialmeasure
1
1
22.4
8.1
2.5
2.1
5.9
$0
$5
$10
$15
$20
$25
2014 2015 2016 20166m 20176m
AdjustedEBITDA*
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DYNAENERGETICS SALES BY GEOGRAPHY
2013Sales
UnitedStates/42%
Canada/14%
Russia/7%
Iraq/5%
India/5%
UnitedKingdom/4%
Kazakhstan/3%
RestofWorld/20%
2016Sales
UnitedStates/61%
Canada/13%
India/7%
Russia/5%
Egypt/3%
Ukraine/1%
Romania/1%
RestofWorld/9%
56% 74%
2017InvestorPresenta9on
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SELECTENDUSERS
22
Thesemajorenergyservicecompaniesarebothcompe9torsandcustomers.Whendistribu9onlimita9onsinhibitthesecompanies’abilitytosupplyperfora9ngequipmenttocertaininterna9onalloca9ons,theyo_enturntoDynaEnerge9cs.
*
2017InvestorPresenta9on
* *
* *
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DYNAENERGETICSGROWTHINITIATIVES
2017InvestorPresenta9on 23
• Con9nuetoinvestinresearchanddevelopmentofnext-genera9ontechnologies
• Con9nuelaunchingnewproductsthatimprovecustomeropera9ngefficienciesanddrivedowncosts
• Forgestrategicpartnershipstoenternewmarkets
• Innovatecomprehensivesolu9onsthatmeetan9cipatedmarketdemand
DMCGlobal.com2017InvestorPresenta9on 24
DMCGlobal.com
NOBELCLADOVERVIEW
25
NobelCladistheworldwideleaderinexplosionweldedplateproduc9on.
LargestglobalsupplierofexplosioncladplatesServingadiversifiedrosterofindustrialandinfrastructureendmarkets.Workingtodriveengineeringspecifica9onsforcladProfi9ngfromglobalindustrialinfrastructureinvestmentsStrongfreecashflow
2017InvestorPresenta9on
DMCGlobal.com
97.1 90.0
91.3
51.5
37.3
$0
$20
$40
$60
$80
$100
$120
2014 2015 2016 20166m 20176m
Sales
NOBELCLAD’SPERFORMANCE
2017InvestorPresenta9on 26
$inmillions
15.4
10.7
12.9
7.6
4.7
$0
$5
$10
$15
$20
$25
2014 2015 2016 20166m 20176m
AdjustedEBITDA*
*Non-GAAPfinancialmeasure
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ENGINEERINGPROCUREMENT&CONSTRUCTION(EPC)COMPANYBACKLOGINDEX
8/18/172017InvestorPresenta9on 27
InM illions o fUS D CummulativeCompanyBac klog -Index
69,815 76,505
*Quartertoquartergrow thratefor2Q17**Y eartoY eargrow thratefor2Q17
2Q17 1Q17* 2Q16**
Total
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
Q1-2017
Q2-2017
The EPC Backlog Index is a cummulative summary of the backlog for f ive global companies that report quarterly backlog.
Company HeadquartersTechnipFMC LondonFluor USAKBR USAJacobs USASaipem Italy
DMCGlobal.com
2016Sales:$91.3Million
UnitedStates/42%
Canada/8%
UnitedArabEmirates/7%
China/7%
Germany/6%
France/4%
Australia/3%
Italy/3%
RestofWorld/20%
2017InvestorPresenta9on 28
NOBELCLADSALESBYGEOGRAPHY
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EXPLOSIONWELDINGPROCESS
292017InvestorPresenta9on
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DEMANDDRIVERSFOREXPLOSIONWELDING
30
03DesignFlexibility
02CorrosiveEnvironments
01GlobalInfrastructureInvestment
2017InvestorPresenta9on
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NOBELCLAD’SCOMPETITIVEADVANTAGE
2017InvestorPresenta9on 31
• Globalnetworkofspecialtymetalsproviders
• Permitsandshoo9ngsitesinU.S.,France,andGermany
• Masteryofexplosion-weldingprocessforlarge-scaleproduc9on
• Strongworkingrela9onshipswithend-marketcustomers
NobelClad’sdominantposi9onintheexplosionweldingindustryisprotectedbysignificantbarrierstoentry.
Titaniumcladpressurevessels–imagecourtesyofCoekEngineering.
DMCGlobal.com
NOBELCLADGROWTHINITIATIVES
2017InvestorPresenta9on 32
• ExpandingmarketshareinAsia
• R&Dfocusedonnewcladplateapplica9ons
• Applyingprocessexper9setonewmarketdevelopment
• Strengtheningglobalsalesforcewithaddi9onofend-marketexperts
• Expandingproduc9oncapabili9eswithnewEuropeanmanufacturingfacility
Separa9ngequipment–Anaturalgasproduc9onfacilitywhereNobelClad’sexplosionweldedplateswereusedinthefabrica9onofspecializedpipes.
DMCGlobal.com
PRIMARYENDMARKETSSERVED
2017InvestorPresenta9on 33
• Chemical
• OilandGas
• MetalsandMining
• Marine
• PowerGenera9on
• Alterna9veEnergy
• IndustrialRefrigera9on
• Transporta9on
• DefenseandProtec9on
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SELECTENDUSERS
34
Chemicals Refining Mining Engineering
2017InvestorPresenta9on
NobelCladprovidesvaluetoitsindustrialandinfrastructurecustomersbycollabora9ngateverystageofdevelopment.Duringdesignphases,NobelCladisakeyresourceforprocessarchitectsandengineerswhoo_enwriteNobelCladplatesintotheirmanufacturingspecifica9ons.
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FINANCIALPERFORMANCEREVIEW
2017InvestorPresenta9on 35
($MMexceptpershareamounts) 2014 2015 2016 166M 176M
Sales%growth
$202.60%
$166.9-18%
$158.6-5%
$81.8-4%
$86.25%
GrossProfit%margin
$61.430%
$35.621%
$38.724%
$20.325%
$24.428%
Opera9ngProfit(Loss)*%margin
$14.77%
($0.0)0%
($5.2)-3%
($.09)-1.1%
($0.32)-0.4%
Income(Loss)fromCon9nuingOpera9ons(a_ertax)* $1.9 ($8.0) ($8.2) ($2.4) ($0.6)
DilutedEPSfromCon9nuingOpera9ons* $0.13 ($0.57) ($0.58) ($0.17) ($0.04)
AdjustedEBITDA*%margin
$31.516%
$13.18%
$9.06%
$6.328%
$6.898%
*Non-GAAPfinancialmeasures
1
DMCGlobal.com
BALANCESHEETHIGHLIGHTS
2017InvestorPresenta9on 36
Assets($MM) December31,2016 March31,2017
Cash,cashequivalents $6.4 $8.6
Accountsreceivables,net $33.0 $38.6
Inventory $28.8 $30.9
Totalcurrentassets $73.4 $83.8
Totalassets $162.6 $173.9
Liabili9es($MM)
Totalcurrentliabili9es $30.7 $29.0
Linesofcredit $15.7 $23.9
Long-termdebt $0.0 $0.0
Totalliabili9es $50.1 $56.9
Totalstockholders’equity $112.4 $117.0
Totalliabili9esandstockholders’equity $162.6 $173.9
DMCGlobal.com
DMC’SPERFORMANCETENETS
2017InvestorPresenta9on 37
Throughshareownership,DMCmanagementhascloselyaligneditsinterestwithindependentshareholders,andallmanagementdecisionsaremadetomaximizeshareholdervalue.
DMChasadoptedthreetenetstoguidesuperiorsharepriceperformance:
1. Maximizefreecashflowthroughfinancialdiscipline
2. Maximizereturnoninvestedcapitalbyachievingopera9onalexcellenceandmakingdiscerninginvestmentdecisions
3. Investinnewtechnology,productandmarketdevelopmenttodrivesustainedgrowthandincreasedprofitability
DMCGlobal.com
CONTACTINFORMATION
2017InvestorPresenta9on 38
DMC5405SpineRoadBoulder,Colorado80301,USAT800-821-2666
GeoffHighVicePresidentofInvestorRela9onsEghigh@dmcglobal.comT303-514-0656
Contact PrimaryContact
DMCGlobal.com
APPENDIX:USEOFNON-GAAPFINANCIALMEASURES
8/18/17Presenta9onTitle 39
APPENDIX:USEOFNON-GAAPFINANCIALMEASURES
DMCGlobal.com 392017InvestorPresenta9on
AdjustedEBITDAanddilutedEPSarenon-GAAP(generallyacceptedaccoun9ngprinciples)financialmeasuresusedbymanagementtomeasureopera9ngperformance.Non-GAAPresultsarepresentedonlyasasupplementtothefinancialstatementsbasedonU.S.generallyacceptedaccoun9ngprinciples(GAAP).Thenon-GAAPfinancialinforma9onisprovidedtoenhancethereader'sunderstandingofDMC’sfinancialperformance,butnonon-GAAPmeasureshouldbeconsideredinisola9onorasasubs9tuteforfinancialmeasurescalculatedinaccordancewithGAAP.Reconcilia9onsofthemostdirectlycomparableGAAPmeasurestonon-GAAPmeasuresareprovidedwithintheschedulesaDachedtothisrelease.EBITDAisdefinedasnetincomeplusorminusnetinterestplustaxes,deprecia9onandamor9za9on.AdjustedEBITDAexcludesfromEBITDAstock-basedcompensa9on,restructuringandimpairmentchargesand,whenappropriate,otheritemsthatmanagementdoesnotu9lizeinassessingDMC’sopera9ngperformance(asfurtherdescribedintheaDachedfinancialschedules).Noneofthesenon-GAAPfinancialmeasuresarerecognizedtermsunderGAAPanddonotpurporttobeanalterna9vetonetincomeasanindicatorofopera9ngperformanceoranyotherGAAPmeasure.
Managementusesthesenon-GAAPmeasuresinitsopera9onalandfinancialdecision-making,believingthatitisusefultoeliminatecertainitemsinordertofocusonwhatitdeemstobeamorereliableindicatorofongoingopera9ngperformance.
Asaresult,internalmanagementreportsusedduringmonthlyopera9ngreviewsfeaturetheadjustedEBITDA.Inaddi9on,certainmanagementincen9veawardswerebased,inpart,ontheamountofadjustedEBITDAachievedduringtheyear.Managementalsobelievesthatinvestorsmayfindnon-GAAPfinancialmeasuresusefulforthesamereasons,althoughinvestorsarecau9onedthatnon-GAAPfinancialmeasuresarenotasubs9tuteforGAAPdisclosures.EBITDAandadjustedEBITDAarealsousedbyresearchanalysts,investmentbankersandlenderstoassessopera9ngperformance.Forexample,ameasuresimilartoEBITDAisrequiredbythelendersunderDMC’screditfacility.Becausenotallcompaniesuseiden9calcalcula9ons,DMC’spresenta9onofnon-GAAPfinancialmeasuresmaynotbecomparabletoothersimilarly9tledmeasuresofothercompanies.However,thesemeasurescans9llbeusefulinevalua9ngthecompany’sperformanceagainstitspeercompaniesbecausemanagementbelievesthemeasuresprovideuserswithvaluableinsightintokeycomponentsofGAAPfinancialdisclosures.Forexample,acompanywithgreaterGAAPnetincomemaynotbeasappealingtoinvestorsifitsnetincomeismoreheavilycomprisedofgainsonassetsales.Likewise,elimina9ngtheeffectsofinterestincomeandexpensemoderatestheimpactofacompany'scapitalstructureonitsperformance.
Alloftheitemsincludedinthereconcilia9onfromnetincometoEBITDAandadjustedEBITDAareeither(i)non-cashitems(e.g.,deprecia9on,amor9za9onofpurchasedintangiblesandstock-basedcompensa9on)
or(ii)itemsthatmanagementdoesnotconsidertobeusefulinassessingDMC’sopera9ngperformance(e.g.,incometaxes,restructuringandimpairmentchargesandgainonsaleofassets).Inthecaseofthenon-cashitems,managementbelievesthatinvestorscanbeDerassessthecompany’sopera9ngperformanceifthemeasuresarepresentedwithoutsuchitemsbecause,unlikecashexpenses,theseadjustmentsdonotaffectDMC'sabilitytogeneratefreecashfloworinvestinitsbusiness.Forexample,byadjus9ngfordeprecia9onandamor9za9onincompu9ngEBITDA,userscancompareopera9ngperformancewithoutregardtodifferentaccoun9ngdetermina9onssuchasusefullife.Inthecaseoftheotheritems,managementbelievesthatinvestorscanbeDerassessopera9ngperformanceifthemeasuresarepresentedwithouttheseitemsbecausetheirfinancialimpactdoesnotreflectongoingopera9ngperformance.Wehavealsopresentedcertainfinancialmeasuresexcludingcertainone-9me,non-recurring“specialitems,”includingouraccruedan9-dumpingdu9es,inventoryreserveadjustment,thenon-cashgoodwillimpairmentchargeandrestructuringcharges.Thesearenon-GAAPfinancialmeasureswhenthespecialitemsareexcluded.Webelievetheseareimportantsupplementalmeasuresbecausetheyeliminateone-9me,non-recurringitemsthathavelessbearingonouropera9ngperformanceandsohighlighttrendsinourbusinessthatmaynototherwisebeapparentwhenrelyingsolelyonGAAPfinancialmeasures.Wehavequan9fiedthosespecialitemsearlierinthisrelease,orimmediatelyfollowing,thefinancialmeasuresthatexcludedthespecialitems,toallowreaderstomeasuretheirimpact.
DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS–DYNAMICMATERIALSEBITDAANDADJUSTEDEBITDA
2017InvestorPresenta9on 40
($MMexceptpershareamounts) 2014 2015 2016 166M 176M
Netincome(loss)aDributabletoDMC $2.6 $(24.0) $(6.5) $(1.2) $(2.8)
Incomefromdiscon9nuedopera9ons $(0.6) — — — —
Interestexpense $0.6 $1.7 $1.1 $0.6 $0.8
Interestincome $0.0 $0.0 $0.0 $0.0 $0.0
Incometaxprovision(benefit) $3.9 $(2.1) $0.8 $0.0 $1.1
Deprecia9on $7.1 $6.2 $6.8 $3.3 $3.4
Amor9za9on $6.1 $4.0 $4.0 $2.0 $2.0
EBITDA $19.7 $(14.1) $6.2 $4.7 $4.5
Restructuring $6.8 $4.1 $1.2 $0.8 $0.5
Accruedan9-dumpingdu9es — $6.2 — — —
Goodwillimpairmentcharges — $11.5 — — —
DynaEnerge9csinventoryreserves $1.3 $1.9 — — —
Stock-basedcompensa9on $3.6 $2.8 $2.3 $1.1 $1.4
Other(income)expense,net $0.3 $0.7 ($0.6) ($0.3) $0.5
AdjustedEBITDA $31.7 $13.0 $9.1 $6.3 $6.9
DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DILUTEDEPSFROMCONTINUINGOPERATIONS
2017InvestorPresenta9on 41
($MMexceptpershareamounts) Pre-tax Tax Net DilutedEPS
YearendedDecember31,2014
Netincomefromcon9nuingopera9ons,asreported $13.9 $6.0 $(7.9) $(0.57)
Restructuringprograms:
NobelClad $(6.8) $(1.6) $(5.2) $(.38)
DynaEnerge9cs — — — —
Corporate — — — —
Accruedan9-dumpingdu9es — — — —
Goodwillimpairmentcharge — — — —
DynaEnerge9csinventoryreserves $(1.3) $(0.5) $(0.8) $(0.6)
Netincomefromcon9nuingopera9ons,excludingcharges $5.8 $3.9 $1.9 $0.13
DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DILUTEDEPSFROMCONTINUINGOPERATIONS
2017InvestorPresenta9on 42
($MMexceptpershareamounts) Pre-tax Tax Net Diluted
EPS Pre-tax Tax Net DilutedEPS
SixmonthsendedJune30,2016 SixmonthsendedJune30,2017
Netincome(loss),asreported $(1.1) $0.00 $(1.2) $(0.08) $(1.70) $1.10 $(2.80) $(0.20)
Restructuringprograms:
NobelClad — — — — — — — —
DynaEnerge9cs $(0.80) $(0.30) $(0.50) $(0.04) $(0.50) — $(0.50) $(0.03)
Corporate $(0.1) — $(1.10) — — — — —
Accruedan9-dumpingdu9es — — — — — — — —
Goodwillimpairmentcharge — — — — — — — —
DynaEnerge9csinventoryreserves — — — — — — — —
Netincome(loss),excludingcharges $(0.3) $0.3 $(0.6) $(0.04) $(1.20) $1.1 $(2.30) $(0.17)
DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-NOBELCLADEBITDAANDADJUSTEDEBITDA
2017InvestorPresenta9on 43
($MMexceptpershareamounts) 2014 2015 166M 176M
Opera9ngincome $2.2 $5.8 $2.7 $5.6
Deprecia9on $4.6 $3.8 $1.8 $1.8
Amor9za9on $1.9 $0.4 $0.2 $0.2
Restructuring $6.8 $0.8 — —
AdjustedEBITDA $15.5 $10.8 $4.7 $7.6
DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DYNAENERGETICSEBITDAANDADJUSTEDEBITDA
2017InvestorPresenta9on 44
($MMexceptpershareamounts) 2014 2015 166M 176M
Opera9ngincome(loss) $14.5 $(19.2) $(2.0) $2.0
Deprecia9on $2.5 $2.5 $1.5 $1.6
Amor9za9on $4.2 $3.7 $1.8 $1.8
NetincomeaDributabletonon-controllinginterest — — — —
Restructuring — $1.7 $0.8 $0.5
Goodwillimpairmentcharges — $11.5 — —
Accruedan9-dumpingdu9es — $6.2 — —
DynaEnerge9csinventoryreserves $1.3 $1.9 — —
AdjustedEBITDA $22.5 $8.1 $2.1 $5.9
DMCGlobal.com
APPENDIX:USEOFNON-GAAPFINANCIALMEASURES
8/18/17Presenta9onTitle 45
**NOTEREGARDINGIHSMATERIAL
DMCGlobal.com 452017InvestorPresenta9on
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