investor presentation august 2017 - amazon s3 · offshore and deep sea drilling has been slower to...
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© 2015 DMC. All rights reserved. INGENUITY IN ACTION.
Investor Presentation August 2017
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DMCGlobal.com
DMCisadiversifiedtechnologycompany.Wearefocusedongrowingourcompanybyinves>nginpeople,productsandbusinessesthatservenicheglobalmarkets.Today,ourporBolioconsistsofNobelCladandDynaEnerge>cs,whichaddresstheindustrialprocessing,transporta>onandenergy
marketsthroughglobalmanufacturing,salesanddistribu>onnetworks.
2017InvestorPresenta>on 2
OURSTORY
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DMCGlobal.com
SELECTDATA
BOOM$9.80–17.1927,410$209Million14.8Million14.0MillionDecember31$0.02$163.0Million$9.6Million
2017InvestorPresenta>on 3
Symbol(NasdaqGS):52-weekpricerange:Averagedailyvolume:Marketcapitaliza>on:Sharesoutstanding:Approximatefloat:Fiscalyear:Quarterlydividend:Revenue(bm):AdjustedEBITDA*(bm)
BOOM1-YearPrice&Volume
*Non-GAAPfinancialmeasure
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DMCGlobal.com
REVENUEBYBUSINESS
2017InvestorPresenta>on
4
2015
(54%)
$76.9(46%)
NobelCladDynaEnerge>cs
$inmillions
$90.0
2016
(58%)
$67.3(42%)
$91.3
4
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DMCGlobal.com
DMCEXECUTIVELEADERSHIP
2017InvestorPresenta>on 5
KEVINLONGE• NamedPresident,CEOandDirectorinMarch2013
• JoinedDMCasCOOinJuly2012
• FormerVPandandGMofSonoco's$600millionProtec>vePackagingdivision
• FormerPresidentofSonoco'sThermoSafeBrands
• Oversawglobalsales,marke>ng,engineeringandR&Dforthelifesciences,medical,foodandindustrialdurablesmarkets
• OversaweightmanufacturingcentersintheU.S.,EuropeandAsia
• FormerPresidentofthreeopera>ngdivisionsatLydall,Inc.(NYSE-LDL)
President&CEO MICHAELKUTA• JoinedDMCasCFOinMarch2014
• FormerCorporateControlleratBerkshireHathaway’sLubrizolCorpora>on,aglobal,$6billionspecialtychemicalscompany
• Wasresponsibleforbuildingandmanagingfinancialopera>onsforLubrizol’sdisbursedglobalopera>ons,includingaccoun>ng,consolida>onandfinancialrepor>ngfunc>ons,andoversightofinternalcontrols
• Formerfinancialposi>onsofincreasingresponsibilityatLincolnElectricandEatonCorpora>on
CFO MICHELLESHEPSTON• JoinedDMCin2016aper16yearswithDenver-basedDavisGraham&StubbsLLP
• WasapartnerwithDGS,andprac>cedwiththeCorporateFinanceandAcquisi>onsGroup
• Exper>seinsecuri>eslaw,mergers&acquisi>ons,crossborderdebt&equitytransac>ons,contractnego>a>onandexecu>on
• Industryexper>seincludesenergyandnaturalresources
CLO GEOFFHIGH• JoinedDMCinNovember2014aper21yearswithDenver-basedPfeifferHighInvestorRela>ons,Inc.
• FormerpartnerwithPfeifferHigh,andoversawsmall-capandmid-cappublic-companyaccountsacrossmul>pleindustries.ManagedtheDMCaccountfor10years
• Exper>seinins>tu>onal,analystandretailinvestorrela>ons;shareholderanalysisandtarge>ng;IRstrategydevelopmentandimplementa>on
• Industryexper>seincludesoil&gasandindustrialinfrastructure
VP,IR
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DMCGlobal.com
LEADERSHIPTEAM
2017InvestorPresenta>on 6
IANGRIEVESPresident,DynaEnerge>cs• JoinedDynaEnerge>csin2013• 20yearsofdiverseopera>onal,engineering,financeandmanagementexperiencewithinterna>onalindustrialbusinesses
• PreviouslySeniorVicePresidentofLydall,Inc.’sPerformanceMaterialsdivision
JOHNSCHEATZLEPresident,NobelClad• JoinedDMCin2016aper19yearswithadvancedmaterialsmanufacturerMaterion
• AsVicePresidentandGeneralManagerofMaterion’sPerformanceAlloysdivision,wasresponsibleformul>pleNorthAmericanproduc>onfacili>esandinterna>onalsalesanddistribu>oncenters
• FormerGeneralManagerofMaterion’sCeramicProductsdivision
BINZHANGManagingDirector,China,DMC• ResponsibleforChinesebusinessdevelopmentandmarketposi>oningforNobelCladandDynaEnerge>cs
• Na>veofBeijingwith20yearsofseniorlevelbusinessexperience
• EstablishedanAsiaPacificsalesandmarke>ngpresenceforaSheldahl,Inc.,aspecializedmanufacturerbasedinMinnesota
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DMCGlobal.com
DMCempowersitspeopleandorganiza>onsbyins>tu>onalizingentrepreneurshipandcelebra>ngtechnicalingenuity.Ourgrowthisfueledbyenergized,relevantandnimblyexecutedsolu>onsthatmakearealdifferencetoourcustomers.DMC’sresponsiveorganiza>onsarefocusedon
servingtheworld’sgrowthmarkets,givinginvestorshighreturnsthroughoutvaryingeconomiccycles.
2017InvestorPresenta>on 7
OURCULTURE
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CHAPTER&PAGETITLEHERE
2017InvestorPresenta>on 8
REPRESENTATIVE:NAME&POSITIONHERE
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DMCGlobal.com
DYNAENERGETICSOVERVIEW
2017InvestorPresenta>on 9
Atop->erproviderofcompa>bilitytestedperfora>ngsystems.
AcquiredbyDMCin2007asnewplaBormbusiness
Unmatchedglobalreachservingaworldwidenetworkofoilandgasserviceproviders
Reputa>onforproductsafety,technicalinnova>onandsystemreliabilityunderextremeenvironmentalcondi>ons
Perfora>ngandwell-comple>ontechnologiesdriveimprovedsafety,produc>vityandloweropera>ngcostsforcustomers
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DMCGlobal.com
PERFORATINGBASICS
2017InvestorPresenta>on 10
1. Onceawellboreisdrilledandcementandsteelcasingareinplace,aperfora>nggunisdeployedintothewell.
2. Theperfora>nggunisfired,sendingplasmajetsthroughthecasingandintothesurroundingforma>oncrea>ng“perfora>ontunnels”.
3. Oilorgasflowsthroughtheperfora>ontunnelsandintothewell.
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DMCGlobal.com 11
PRIMARYCOMPONENTSOFAPERFORATINGSYSTEM
2017InvestorPresenta>on
DynaEnerge)csistheonlycompanymanufacturingallcomponentsofaperfora)ngsystem
01SHAPEDCHARGES 02DETONATORS 03DETONATINGCORD
04GUNCARRIERS&“SUBS” 05CONTROLPANELS
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DMCGlobal.com 12
DynaStage™Perfora>ngSystem• Factoryassembled,performanceassured
• IncorporatesDynaSelectintrinsicallysafe
detona>ngtechnology
• Nowiringconnec>ons…reducesset-up>meto
seconds
• Removesthepoten>alforelectricalconnec>on
errors
• Eliminatesgunloadingsteps
• Fullydisposableandmaintenancefree
DynaSelect™Detonators• Integrated,intrinsicallysafe&selec>ve
technologies
• Enablesconcurrentperfora>ngandfracturing
• Reducestheriskofaccidents
• Timeandcostsavingsfromsequen>algun
ini>a>on
• Improvedset-up>mesandreliabilityfrom
fewerelectricalwiringconnec>ons
01 02
DYNAENERGETICSPRODUCTINNOVATIONS
2017InvestorPresenta>on
DynaSlot™WellAbandonmentSystem• Fast,cost-effec>vealterna>vetotradi>onalplug
andabandonment,and“cementsqueeze”
techniques
• Helicalpabernofoverlappinghorizontalslots
provides360-degreecementcoveragebehind
tubingorcasing
03
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DMCGlobal.com
3-3/8”
3-1/8”
2-3/4”
DYNASTAGE™GUNSYSTEM
2017InvestorPresenta>on 13
*patentspendingTopFireDynaSelect
Detonator*Mul>tronicVFiringPanel
ThreeStageGunStringwithBridgePlug
DynaStageGunModule*
EcoilTandemSubAdapterQuickChangeGO-StyleFiringHead
TopFireDynaSelectDetonator
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DMCGlobal.com
DYNASELECT™ANDDYNASTAGE™PROVIDEBUSINESSMODELADVANTAGE
2017InvestorPresenta>on
CURRENTINDUSTRYMODEL DYNAENERGETICSMODEL:PRODUCTBENEFITS+BUSINESSMODELADVANTAGE
DynaStageAdvantages• Factoryassembledanddeliveredtocustomerinthefield• Systemisarmeduponinstalla>onofDynaStageswitchdetonator,elimina>ngfieldwiring• Surfacetesterensuressystemisfullyfunc>onalbeforedown-holedeployment
Benefits:• Nomisfires,improvedreliability• Reducedtransporta>oncostsandfieldlabor• Noneedforgunassemblyorstoragefacili>es• Simplifiedsupplychain• Reducedworkingcapital,improvedprofitabilityforcustomers
CurrentProcessCustomermixes&matchesperfora>ngcomponentsfrommul>plesuppliers,thenassemblesandwiresguninthefield
Challenges:• Assemblyerrorsleadtomisfires• Quality&safety• Opera>ngcost• Complexityofsupplychain
14
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DMCGlobal.com
DYNASTAGECASESTUDY:PATRIOTWELLSOLUTIONS
2017InvestorPresenta>on 15
Advancedwelldesigncalledfor15perfora>ngsystemsineach“gunstring,”3->mestheindustryaverage
DynaStagereducedgun-stringassembly>mebymorethan80%–from1.25hourstoapproximately13minutes–versusconven>onalgunsDynaStageenableda40%increaseincompletedstagesperdayGunfailureseffec>velyeliminatedGun-stringlengthreducedby14.5feet,or25%,versusconven>onalguns.Weightcutby400lbs,or40%.Comple>onteamsreducedfrom15to11membersPatriot’ssupplychainsimplified;vendorsreducedfrom3to1Patriotbenefizngfromlowerworkingcapitalrequirements,whicharenowaddressedbyDynaEnerge>cs
DynaStagewasadoptedbyPatriotWellSolu>onsinApril2017toaddressacomplex42-wellcomple>onprogramintheD-JBasin.
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DMCGlobal.com
DYNAENERGETICSCAPITALIZINGONINDUSTRYTRANSITION
• Aperahistoricdownturnintheenergyindustry,arecoveryhastakenholdintheonshoreunconven>onalmarket.Morecostlyoffshoreanddeepseadrillinghasbeenslowertorebound.
• SpendingonNorthAmericanupstreamprojects,includingunconven>onaldrillingandwellcomple>ons,isexpectedtogrow38%in2017,whileinterna>onaloffshorespendingisexpectedtofall20%-25%in2017.
16
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
2017InvestorPresenta>on
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DMCGlobal.com
NORTHAMERICANUNCONVENTIONALMARKETLEADINGRECOVERY
17
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Non-U.S.wells N.A.Unconven>onal N.A.Conven>onal GlobalOffshore
2016
2017*
+52%
+6%
+2%
+1%
* World Oil and IHS forecasts
Forecastofwellsdrilled
2017InvestorPresenta>on
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DMCGlobal.com
IMPROVEDECONOMICSOFUNCONVENTIONALOILANDGASPRODUCTION
18
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
2017InvestorPresenta>on
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DMCGlobal.com 192017InvestorPresenta>on
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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DMCGlobal.com 20
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%
2017InvestorPresenta>on
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DMCGlobal.com
SELECTENDUSERS
21
Thesemajorenergyservicecompaniesarebothcompe>torsandcustomers.Whendistribu>onlimita>onsinhibitthesecompanies’abilitytosupplyperfora>ngequipmenttocertaininterna>onalloca>ons,theyopenturntoDynaEnerge>cs.
*
2017InvestorPresenta>on
* *
* *
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DMCGlobal.com
DYNAENERGETICSGROWTHINITIATIVES
2017InvestorPresenta>on 22
• Con>nuetoinvestinresearchanddevelopmentofnext-genera>ontechnologies
• Con>nuelaunchingnewproductsthatimprovecustomeropera>ngefficienciesanddrivedowncosts
• Forgestrategicpartnershipstoenternewmarkets
• Innovatecomprehensivesolu>onsthatmeetan>cipatedmarketdemand
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DMCGlobal.com2017InvestorPresenta>on 23
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DMCGlobal.com
NOBELCLADOVERVIEW
24
NobelCladistheworldwideleaderinexplosionweldedplateproduc>on.
LargestglobalsupplierofexplosioncladplatesServingadiversifiedrosterofindustrialandinfrastructureendmarkets.Workingtodriveengineeringspecifica>onsforcladProfi>ngfromglobalindustrialinfrastructureinvestmentsStrongfreecashflow
2017InvestorPresenta>on
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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
2017InvestorPresenta>on 25
$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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DMCGlobal.com
ENGINEERINGPROCUREMENT&CONSTRUCTION(EPC)COMPANYBACKLOGINDEX
8/3/172017InvestorPresenta>on 26
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
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DMCGlobal.com
2016Sales:$91.3Million
UnitedStates/42%
Canada/8%
UnitedArabEmirates/7%
China/7%
Germany/6%
France/4%
Australia/3%
Italy/3%
RestofWorld/20%
2017InvestorPresenta>on 27
NOBELCLADSALESBYGEOGRAPHY
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DMCGlobal.com
EXPLOSIONWELDINGPROCESS
282017InvestorPresenta>on
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DEMANDDRIVERSFOREXPLOSIONWELDING
29
03DesignFlexibility
02CorrosiveEnvironments
01GlobalInfrastructureInvestment
2017InvestorPresenta>on
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DMCGlobal.com
NOBELCLAD’SCOMPETITIVEADVANTAGE
2017InvestorPresenta>on 30
• Globalnetworkofspecialtymetalsproviders
• Permitsandshoo>ngsitesinU.S.,France,andGermany
• Masteryofexplosion-weldingprocessforlarge-scaleproduc>on
• Strongworkingrela>onshipswithend-marketcustomers
NobelClad’sdominantposi>onintheexplosionweldingindustryisprotectedbysignificantbarrierstoentry.
Titaniumcladpressurevessels–imagecourtesyofCoekEngineering.
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NOBELCLADGROWTHINITIATIVES
2017InvestorPresenta>on 31
• ExpandingmarketshareinAsia
• R&Dfocusedonnewcladplateapplica>ons
• Applyingprocessexper>setonewmarketdevelopment
• Strengtheningglobalsalesforcewithaddi>onofend-marketexperts
• Expandingproduc>oncapabili>eswithnewEuropeanmanufacturingfacility
Separa>ngequipment–Anaturalgasproduc>onfacilitywhereNobelClad’sexplosionweldedplateswereusedinthefabrica>onofspecializedpipes.
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DMCGlobal.com
PRIMARYENDMARKETSSERVED
2017InvestorPresenta>on 32
• Chemical
• OilandGas
• MetalsandMining
• Marine
• PowerGenera>on
• Alterna>veEnergy
• IndustrialRefrigera>on
• Transporta>on
• DefenseandProtec>on
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DMCGlobal.com
SELECTENDUSERS
33
Chemicals Refining Mining Engineering
2017InvestorPresenta>on
NobelCladprovidesvaluetoitsindustrialandinfrastructurecustomersbycollabora>ngateverystageofdevelopment.Duringdesignphases,NobelCladisakeyresourceforprocessarchitectsandengineerswhoopenwriteNobelCladplatesintotheirmanufacturingspecifica>ons.
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DMCGlobal.com
FINANCIALPERFORMANCEREVIEW
2017InvestorPresenta>on 34
($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%
Opera>ngProfit(Loss)*%margin
$14.77%
($0.0)0%
($5.2)-3%
($.09)-1.1%
($0.32)-0.4%
Income(Loss)fromCon>nuingOpera>ons(apertax)* $1.9 ($8.0) ($8.2) ($2.4) ($0.6)
DilutedEPSfromCon>nuingOpera>ons* $0.13 ($0.57) ($0.58) ($0.17) ($0.04)
AdjustedEBITDA*%margin
$31.516%
$13.18%
$9.06%
$6.328%
$6.898%
*Non-GAAPfinancialmeasures
1
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DMCGlobal.com
BALANCESHEETHIGHLIGHTS
2017InvestorPresenta>on 35
Assets($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 $173.9
Liabili>es($MM)
Totalcurrentliabili>es $30.7 $29.0
Linesofcredit $15.7 $23.9
Long-termdebt $0.0 $0.0
Totalliabili>es $50.1 $56.9
Totalstockholders’equity $112.4 $117.0
Totalliabili>esandstockholders’equity $162.6 $173.9
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DMCGlobal.com
DMC’SPERFORMANCETENETS
2017InvestorPresenta>on 36
Throughshareownership,DMCmanagementhascloselyaligneditsinterestwithindependentshareholders,andallmanagementdecisionsaremadetomaximizeshareholdervalue.
DMChasadoptedthreetenetstoguidesuperiorsharepriceperformance:
1. Maximizefreecashflowthroughfinancialdiscipline
2. Maximizereturnoninvestedcapitalbyachievingopera>onalexcellenceandmakingdiscerninginvestmentdecisions
3. Investinnewtechnology,productandmarketdevelopmenttodrivesustainedgrowthandincreasedprofitability
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DMCGlobal.com
CONTACTINFORMATION
2017InvestorPresenta>on 37
DMC5405SpineRoadBoulder,Colorado80301,USAT800-821-2666
GeoffHighVicePresidentofInvestorRela>[email protected]
Contact PrimaryContact
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DMCGlobal.com
APPENDIX:USEOFNON-GAAPFINANCIALMEASURES
8/3/17Presenta>onTitle 38
APPENDIX:USEOFNON-GAAPFINANCIALMEASURES
DMCGlobal.com 382017InvestorPresenta>on
AdjustedEBITDAanddilutedEPSarenon-GAAP(generallyacceptedaccoun>ngprinciples)financialmeasuresusedbymanagementtomeasureopera>ngperformance.Non-GAAPresultsarepresentedonlyasasupplementtothefinancialstatementsbasedonU.S.generallyacceptedaccoun>ngprinciples(GAAP).Thenon-GAAPfinancialinforma>onisprovidedtoenhancethereader'sunderstandingofDMC’sfinancialperformance,butnonon-GAAPmeasureshouldbeconsideredinisola>onorasasubs>tuteforfinancialmeasurescalculatedinaccordancewithGAAP.Reconcilia>onsofthemostdirectlycomparableGAAPmeasurestonon-GAAPmeasuresareprovidedwithintheschedulesabachedtothisrelease.EBITDAisdefinedasnetincomeplusorminusnetinterestplustaxes,deprecia>onandamor>za>on.AdjustedEBITDAexcludesfromEBITDAstock-basedcompensa>on,restructuringandimpairmentchargesand,whenappropriate,otheritemsthatmanagementdoesnotu>lizeinassessingDMC’sopera>ngperformance(asfurtherdescribedintheabachedfinancialschedules).Noneofthesenon-GAAPfinancialmeasuresarerecognizedtermsunderGAAPanddonotpurporttobeanalterna>vetonetincomeasanindicatorofopera>ngperformanceoranyotherGAAPmeasure.
Managementusesthesenon-GAAPmeasuresinitsopera>onalandfinancialdecision-making,believingthatitisusefultoeliminatecertainitemsinordertofocusonwhatitdeemstobeamorereliableindicatorofongoingopera>ngperformance.
Asaresult,internalmanagementreportsusedduringmonthlyopera>ngreviewsfeaturetheadjustedEBITDA.Inaddi>on,certainmanagementincen>veawardswerebased,inpart,ontheamountofadjustedEBITDAachievedduringtheyear.Managementalsobelievesthatinvestorsmayfindnon-GAAPfinancialmeasuresusefulforthesamereasons,althoughinvestorsarecau>onedthatnon-GAAPfinancialmeasuresarenotasubs>tuteforGAAPdisclosures.EBITDAandadjustedEBITDAarealsousedbyresearchanalysts,investmentbankersandlenderstoassessopera>ngperformance.Forexample,ameasuresimilartoEBITDAisrequiredbythelendersunderDMC’screditfacility.Becausenotallcompaniesuseiden>calcalcula>ons,DMC’spresenta>onofnon-GAAPfinancialmeasuresmaynotbecomparabletoothersimilarly>tledmeasuresofothercompanies.However,thesemeasurescans>llbeusefulinevalua>ngthecompany’sperformanceagainstitspeercompaniesbecausemanagementbelievesthemeasuresprovideuserswithvaluableinsightintokeycomponentsofGAAPfinancialdisclosures.Forexample,acompanywithgreaterGAAPnetincomemaynotbeasappealingtoinvestorsifitsnetincomeismoreheavilycomprisedofgainsonassetsales.Likewise,elimina>ngtheeffectsofinterestincomeandexpensemoderatestheimpactofacompany'scapitalstructureonitsperformance.
Alloftheitemsincludedinthereconcilia>onfromnetincometoEBITDAandadjustedEBITDAareeither(i)non-cashitems(e.g.,deprecia>on,amor>za>onofpurchasedintangiblesandstock-basedcompensa>on)
or(ii)itemsthatmanagementdoesnotconsidertobeusefulinassessingDMC’sopera>ngperformance(e.g.,incometaxes,restructuringandimpairmentchargesandgainonsaleofassets).Inthecaseofthenon-cashitems,managementbelievesthatinvestorscanbeberassessthecompany’sopera>ngperformanceifthemeasuresarepresentedwithoutsuchitemsbecause,unlikecashexpenses,theseadjustmentsdonotaffectDMC'sabilitytogeneratefreecashfloworinvestinitsbusiness.Forexample,byadjus>ngfordeprecia>onandamor>za>onincompu>ngEBITDA,userscancompareopera>ngperformancewithoutregardtodifferentaccoun>ngdetermina>onssuchasusefullife.Inthecaseoftheotheritems,managementbelievesthatinvestorscanbeberassessopera>ngperformanceifthemeasuresarepresentedwithouttheseitemsbecausetheirfinancialimpactdoesnotreflectongoingopera>ngperformance.Wehavealsopresentedcertainfinancialmeasuresexcludingcertainone->me,non-recurring“specialitems,”includingouraccruedan>-dumpingdu>es,inventoryreserveadjustment,thenon-cashgoodwillimpairmentchargeandrestructuringcharges.Thesearenon-GAAPfinancialmeasureswhenthespecialitemsareexcluded.Webelievetheseareimportantsupplementalmeasuresbecausetheyeliminateone->me,non-recurringitemsthathavelessbearingonouropera>ngperformanceandsohighlighttrendsinourbusinessthatmaynototherwisebeapparentwhenrelyingsolelyonGAAPfinancialmeasures.Wehavequan>fiedthosespecialitemsearlierinthisrelease,orimmediatelyfollowing,thefinancialmeasuresthatexcludedthespecialitems,toallowreaderstomeasuretheirimpact.
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DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS–DYNAMICMATERIALSEBITDAANDADJUSTEDEBITDA
2017InvestorPresenta>on 39
($MMexceptpershareamounts) 2014 2015 2016 166M 176M
Netincome(loss)abributabletoDMC $2.6 $(24.0) $(6.5) $(1.2) $(2.8)
Incomefromdiscon>nuedopera>ons $(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
Deprecia>on $7.1 $6.2 $6.8 $3.3 $3.4
Amor>za>on $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
Accruedan>-dumpingdu>es — $6.2 — — —
Goodwillimpairmentcharges — $11.5 — — —
DynaEnerge>csinventoryreserves $1.3 $1.9 — — —
Stock-basedcompensa>on $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 $6.9
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DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DILUTEDEPSFROMCONTINUINGOPERATIONS
2017InvestorPresenta>on 40
($MMexceptpershareamounts) Pre-tax Tax Net DilutedEPS
YearendedDecember31,2014
Netincomefromcon>nuingopera>ons,asreported $13.9 $6.0 $(7.9) $(0.57)
Restructuringprograms:
NobelClad $(6.8) $(1.6) $(5.2) $(.38)
DynaEnerge>cs — — — —
Corporate — — — —
Accruedan>-dumpingdu>es — — — —
Goodwillimpairmentcharge — — — —
DynaEnerge>csinventoryreserves $(1.3) $(0.5) $(0.8) $(0.6)
Netincomefromcon>nuingopera>ons,excludingcharges $5.8 $3.9 $1.9 $0.13
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DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DILUTEDEPSFROMCONTINUINGOPERATIONS
2017InvestorPresenta>on 41
($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 — — — — — — — —
DynaEnerge>cs $(0.80) $(0.30) $(0.50) $(0.04) $(0.50) — $(0.50) $(0.03)
Corporate $(0.1) — $(1.10) — — — — —
Accruedan>-dumpingdu>es — — — — — — — —
Goodwillimpairmentcharge — — — — — — — —
DynaEnerge>csinventoryreserves — — — — — — — —
Netincome(loss),excludingcharges $(0.3) $0.3 $(0.6) $(0.04) $(1.20) $1.1 $(2.30) $(0.17)
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DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-NOBELCLADEBITDAANDADJUSTEDEBITDA
2017InvestorPresenta>on 42
($MMexceptpershareamounts) 2014 2015 166M 176M
Opera>ngincome $2.2 $5.8 $2.7 $5.6
Deprecia>on $4.6 $3.8 $1.8 $1.8
Amor>za>on $1.9 $0.4 $0.2 $0.2
Restructuring $6.8 $0.8 — —
AdjustedEBITDA $15.5 $10.8 $4.7 $7.6
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DMCGlobal.com
RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DYNAENERGETICSEBITDAANDADJUSTEDEBITDA
2017InvestorPresenta>on 43
($MMexceptpershareamounts) 2014 2015 166M 176M
Opera>ngincome(loss) $14.5 $(19.2) $(2.0) $2.0
Deprecia>on $2.5 $2.5 $1.5 $1.6
Amor>za>on $4.2 $3.7 $1.8 $1.8
Netincomeabributabletonon-controllinginterest — — — —
Restructuring — $1.7 $0.8 $0.5
Goodwillimpairmentcharges — $11.5 — —
Accruedan>-dumpingdu>es — $6.2 — —
DynaEnerge>csinventoryreserves $1.3 $1.9 — —
AdjustedEBITDA $22.5 $8.1 $2.1 $5.9
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DMCGlobal.com
APPENDIX:USEOFNON-GAAPFINANCIALMEASURES
8/3/17Presenta>onTitle 44
**NOTEREGARDINGIHSMATERIAL
DMCGlobal.com 442017InvestorPresenta>on
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