Dynamic Materials Corp - August 2014 IR Presentation

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August 2014 IR Presentation

August 2014 IR Presentation

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  • 1. © 2014 DMC. All rights reserved. INGENUITY IN ACTION. Investor Presentation August 2014
  • 2.  DMCGlobal.com2014 Investor Presentation CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 2 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
  • 3. ! DMCGlobal.com CHAPTER 1 2014 Investor Presentation 3 DMC OverviewDMC Overview
  • 4. ! DMCGlobal.com DMC is a growth company focused on building a family of technical product and process businesses for the global energy, industrial and infrastructure markets. We serve a network of industrial customers through a family of technical businesses that currently includes NobelClad, DynaEnergetics and AMK Technical Services. The DMC family consists of a global network of production facilities and sales and distribution centers. Our global footprint is critical to successfully meeting the demands of our customer base. 2014 Investor Presentation 4 OUR STORY
  • 5.  DMCGlobal.com SELECT DATA 2014 Investor Presentation 5 Symbol (Nasdaq GS): 52-week price range: Average daily volume: Market capitalization: Shares outstanding: Approximate float: Fiscal year: Quarterly dividend: Revenue (ttm): Adjusted EBITDA (ttm) BOOM $18.12 - $24.09 46,000 $273 Million 13.9 Million 13.0 Million December 31 $0.04 $207.1 Million $30.4 Million
  • 6.  DMCGlobal.com * Reflects approximately $5.6 million in non-recurring expenses ** Reflects approximately $1.2 million in tax benefits recognized during the first quarter 2014 Investor Presentation FINANCIAL HIGHLIGHTS 6 $ in millionsYear-end numbers 6-month numbers
  • 7.  DMCGlobal.com DMC’S SECTOR FOCUS 2014 Investor Presentation 7 BUSINESSES SECTORS Industrial and Infrastructure Energy DESCRIPTION SOLUTIONS FOCUS Explosive Metalworking Perforating Components & Systems Products and technical processes that support industrial and infrastructure markets. Consumables, products and OEM technical services that support oil & gas, ground power and aerospace industries. PRODUCTS/ SERVICES Synthetic Diamond Manufacturing OEM Technical Services •  Plates •  Heads •  Rolled & Tacked Cylinders •  Tubesheets •  Transition Joints •  Cylindricals •  Fabricated Components •  Perforating Guns •  Explosive Shaped Charges •  Detonating Cords •  Detonators •  Explosive Control Systems •  Industrial Diamonds NobelClad DynaEnergetics AMK Technical Services •  Welding & Machining •  Quality Systems
  • 8.  DMCGlobal.com $115.3 (57%) $77.4 (39%) 2013 REVENUE BY SECTOR 2014 Investor Presentation 8 Industrial and Infrastructure (NobelClad) Energy (DynaEnergetics and AMK Technical Services) $ in millions $118.4 (56%) $91.2 (44%)
  • 9. ! DMCGlobal.com CHAPTER 2 2014 Investor Presentation 9 Opportunity
  • 10.  DMCGlobal.com BUSINESS OPPORTUNITY 10 DMC companies serve the world’s multi-trillion dollar industrial, infrastructure and energy industries, which are addressing major capital investments in both established and emerging markets. In North America, a resurgence in oil and gas production and a renewed focus on chemical processing capacity are creating considerable opportunities for each of DMC’s businesses. In the world’s emerging markets, demand for energy and modern industrial processing infrastructure is also leading to compelling growth prospects for DMC and its family of specialized product and process businesses. 2014 Investor Presentation
  • 11. ! DMCGlobal.com CHAPTER 3 2014 Investor Presentation 11 Leadership Team
  • 12.  DMCGlobal.com EXECUTIVE LEADERSHIP 2014 Investor Presentation 12 KEVIN LONGE •  Named President, CEO and Director in March 2013 •  Joined DMC as Chief Operating Officer in July 2012 •  Former VP and and GM of Sonoco's $600 million Protective Packaging division •  Former President of Sonoco's ThermoSafe Brands •  Oversaw global sales, marketing, engineering and R&D for the life sciences, medical, food and industrial durables markets •  Oversaw eight manufacturing centers in the U.S., Europe and Asia •  Former President of three operating divisions at Lydall, Inc. (NYSE-LDL) RICHARD SANTA •  Named Senior Vice President, Business Development in March 2014 •  Served as DMC’s Sr. VP, Chief Financial Officer and Secretary from 2008 to 2014 •  Joined DMC as Vice President, Chief Financial Officer and Secretary in October 1996 •  Responsible for integration of seven acquisitions while at DMC •  Former Chief Financial Officer of Scott USA, a sports equipment manufacturer and distributor •  Former senior manager with Price Waterhouse President & CEO, DMC Sr. VP, DMCMICHAEL KUTA •  Joined DMC as Chief Financial Officer in March 2014 •  Former Corporate Controller at Berkshire Hathaway’s Lubrizol Corporation, a global, $6 billion specialty chemicals company •  Was responsible for building and managing financial operations for Lubrizol’s disbursed global operations, including accounting, consolidation and financial reporting functions, and oversight of internal controls •  Former financial positions of increasing responsibility at Lincoln Electric and Eaton Corporation CFO, DMC
  • 13.  DMCGlobal.com LEADERSHIP TEAM 2014 Investor Presentation 13 JEFF NICOL President, NobelClad •  Became head of NobelClad’s newly unified global operations in 2012 •  Previously VP and General Manager of DMC Clad Metal, North America •  Joined DMC in 2008 as VP of Sales and Marketing •  Spent 21 years with Alcoa, where he ascended to chief metallurgist and global marketing director IAN GRIEVES President, DynaEnergetics •  Joined DynaEnergetics in 2013 •  20 years of diverse operational, engineering, finance and management experience with international industrial businesses •  Previously Senior Vice President of Lydall, Inc.s’ Performance Materials division GARY KLEIN President, AMK Technical Services •  Previously general manager of the Americas at DynaEnergetics •  Extensive operational and management experience in manufacturing, industrial engineering, aerospace and energy industries •  Former Vice President of operations for Tegrant Corp. and former VP and business unit manager AMETEK, Inc. BIN ZHANG Managing Director, China, DMC •  Responsible for Chinese business development and market positioning for NobelClad, DynaEnergetics and AMK Technical Services •  Native of Beijing with 20 years of senior level business experience •  Established an Asia Pacific sales and marketing presence for a Sheldahl, Inc., a specialized manufacturer based in Minnesota
  • 14. ! DMCGlobal.com CHAPTER 4 2014 Investor Presentation 14 Defining CharacteristicsDefining Characteristics
  • 15. ! DMCGlobal.com DMC builds global companies by developing people and organizations. We institutionalize entrepreneurship and celebrate technical ingenuity. Our growth is fueled by energized, relevant and nimbly executed solutions that make a real difference to our customers. We offer a global manufacturing network with intimate localized service, so customers know they can rely on DMC companies when the stakes are high. DMC’s empowered and responsive management strategies are aimed at serving the world’s growth markets, giving investors high returns throughout varying economic cycles. 2014 Investor Presentation 15 OUR CULTURE
  • 16.  DMCGlobal.com DMC TRAITS 2014 Investor Presentation 16 The DMC family of brands share many traits that are critical to our growth and success. Technical expertise, ingenuity and proficiency in our respective industries. A culture of critical and creative thinking that allows us to innovate new solutions for our clients. Empowerment to meet market demands through decisions made at the local level. A passion for the processes that drive efficiency, dependability and ultimate value for our clients.
  • 17. ! DMCGlobal.com CHAPTER 5 2014 Investor Presentation 17 Solutions
  • 18.  DMCGlobal.com2014 Investor Presentation 18
  • 19.  DMCGlobal.com NOBELCLAD OVERVIEW 19 NobelClad is the worldwide leader in explosion welded plate production. Largest global supplier of explosion clad plates. Serving a diversified roster of industrial and infrastructure end markets. Working to drive engineering specifications for clad. Profiting from global industrial infrastructure investments. Strong free cash flow. 2014 Investor Presentation
  • 20.  DMCGlobal.com DEMAND DRIVERS FOR EXPLOSION WELDING 20 03 Design Flexibility 02 Corrosive Environments 01 Global Infrastructure Investment 2014 Investor Presentation
  • 21. ! DMCGlobal.com BENEFITS OF CLAD 2014 Investor Presentation 21 BENEFITS OF CLAD
  • 22.  DMCGlobal.com NOBELCLAD GROWTH MILESTONES 1965 – Company founded as Explosive Fabricators 1996 – Acquired Detaclad®, the explosion welding business of Dupont 2001 – Acquired Nobelclad (France) 2007 – Acquired Dynaplat (Germany) 2012 – Opened sales office in South Korea 2013 – Unified global explosion welding operations under NobelClad – Opened sales office in China 2014 Investor Presentation 22
  • 23. ! DMCGlobal.com NOBELCLAD’S COMPETITIVE ADVANTAGE 2014 Investor Presentation 23 •! Global network of specialty metals providers •! Permits and shooting sites in U.S., France, Sweden and Germany •! Mastery of explosion-welding process for large-scale production •! Strong working relationships with end-market customers NobelClad’s dominant position in the explosion welding industry is protected by significant barriers to entry. Explosion welding shot - NobelClad’s outdoor shooting facility near Rivsaltes, France.
  • 24. ! DMCGlobal.com NOBELCLAD GROWTH INITIATIVES 2014 Investor Presentation 24 •! Expanding market share in Asia •! R&D focused on new clad plate applications •! Applying process expertise to new market development •! Global launch of new brand marketing and digital assets to improve customer experience and service design Separating equipment – A natural gas production facility where NobelClad’s explosion welded plates were used in the fabrication of specialized pipes.
  • 25. ! DMCGlobal.com2014 Investor Presentation 25 GLOBAL PRODUCTION & SALES FOOTPRINT •
  • 26. ! DMCGlobal.com 2013 Sales: $118.4 Million United States / 45% South Korea / 10% Germany / 6% Canada / 5% India / 4% France / 3% China / 2% Rest of World / 25% 2014 Investor Presentation 26 NOBELCLAD SALES BY GEOGRAPHY
  • 27. ! DMCGlobal.com PRIMARY END MARKETS SERVED 2014 Investor Presentation 27 •! Chemical •! Oil and Gas •! Metals and Mining •! Marine •! Power Generation •! Alternative Energy •! Industrial Refrigeration •! Transportation •! Defense and Protection
  • 28. ! DMCGlobal.com BOOKINGS BY END MARKET: 2008 REVENUE PEAK TO 2013 TROUGH 2014 Investor Presentation 28 0 20 40 60 80 100 120 140 160 180 200 2008 Misc. / 10% Shipbuilding / 2% Ind. Refrigeration / 3% Hydrometallurgy / 4% Power Gen. / 7% Aluminum / 11% Alt. Energy / 13% Oil & Gas / 22% Chemical / 27% 2008 Bookings: $198.9M 0 20 40 60 80 100 120 140 160 180 200 2013 Misc. / 5% Shipbuilding / 4% Ind. Refrigeration / 3% Hydrometallurgy / 0% Power Gen. / 6% Aluminum / 8% Alt. Energy / 0% Oil & Gas / 39% Chemical / 35% 2013 Bookings: $108.4M
  • 29.  DMCGlobal.com CLADDING METAL PRICE CHANGES: 2008 REVENUE PEAK THROUGH 2013 TROUGH 2014 Investor Presentation 29 Stainless Steel 304 Stainless Steel 316 Titanium Gr1 Inconel 625 Alloy 825 516-70 (Mill) 516-70 (Service Center) 2008 2013 30% 38% 26% 40% 20% 12% 5% Charts show decline in average price per pound paid by DMC. Metals make up 45% - 50% of the value of a typical explosion welding order.
  • 30. ! DMCGlobal.com SELECT END USERS 30 Chemicals Refining Mining Engineering 2014 Investor Presentation NobelClad provides value to its industrial and infrastructure customers by collaborating at every stage of development. During design phases, NobelClad is a key resource for process architects and engineers who often write NobelClad plates into their manufacturing specifications.
  • 31.  DMCGlobal.com NOBELCLAD’S PERFORMANCE 2014 Investor Presentation 31 $ in millionsYear-end numbers 6-month numbers
  • 32.  DMCGlobal.com2014 Investor Presentation 32 ENERGY SECTOR OVERVIEW
  • 33. ! DMCGlobal.com2014 Investor Presentation 33 ENERGY SECTOR SALES BY GEOGRAPHY 2013 Sales: $91.2 Million United States / 46% Canada / 13% Russia / 7% Iraq / 5% India / 4% United Kingdom / 4% Kazakhstan / 3% Rest of World / 19%
  • 34.  DMCGlobal.com2014 Investor Presentation 34 ENERGY SECTOR PERFORMANCE $ in millionsYear-end numbers 6-month numbers
  • 35.  DMCGlobal.com CHAPTER & PAGE TITLE HERE 2014 Investor Presentation 35 REPRESENTATIVE: NAME & POSITION HERE
  • 36.  DMCGlobal.com DYNAENERGETICS OVERVIEW 36 A top-tier provider of compatibility tested perforating systems. Acquired in 2007 as new platform business for DMC. Unmatched global reach serving oil and gas service providers, with approximately 7% global market share. Reputation for product safety, technical innovation and systems reliability under extreme environmental conditions. 50% of product sales from well re-perforations and work-overs. Perforating and well completion technologies for improved productivity and lower operating cost. 2014 Investor Presentation
  • 37.  DMCGlobal.com PERFORATING BASICS 2014 Investor Presentation 37 1.  Once a wellbore is drilled and cement and steel casing are in place, a perforating gun is deployed into the well. 2.  The perforating gun is fired, sending plasma jets through the casing and into the surrounding formation creating “perforation tunnels”. 3.  Oil or gas flows through the perforation tunnels and into the well.
  • 38.  DMCGlobal.com DYNAENERGETICS COMPETITIVE ADVANTAGE 2014 Investor Presentation 38 •  Manufacturing expertise and technical proficiency using industrial explosives •  Robust product portfolio •  Industry leading safe and selective detonating technology •  Global distribution expertise •  Strong industry relationships •  Advanced Section IV Testing Facility simulates most challenging well environments
  • 39.  DMCGlobal.com DYNAENERGETICS PRODUCT INNOVATIONS 39 Enhancing user and well site safety, increasing productivity and lowering total perforating costs. DynaSelect Detonators •  Integrated RF-Safe & selective technologies •  Enables concurrent perforating and fracturing •  Reduces the risk of accidents •  Time and cost savings from sequential gun initiation •  Improved set-up times and reliability from 40% fewer electrical wiring connections DynaStageTM Gun System •  Top Fire DynaSelect contact detonator and pre-assembled, customizable gun system •  No wiring connections… reduces set up times to seconds •  Removes the potential for electrical connection errors •  Eliminates gun loading steps •  Fully disposable and maintenance free 2014 Investor Presentation
  • 40. ! DMCGlobal.com DYNASTAGETM GUN SYSTEM 2014 Investor Presentation 40 *patents pending Top Fire DynaSelect Detonator* Multitronic V Firing Panel Three Stage Gun String with Bridge Plug DynaStage Gun Module*
  • 41.  DMCGlobal.com DYNAENERGETICS GROWTH MILESTONES 2007 – Company acquired DynaEnergetics, a new global platform business 2009 – Acquired LRI Oil Tools (Canada) 2010 – Acquired outstanding interests in two Russian oilfield product joint ventures – Acquired Austin Explosives (Texas) 2012 – Acquired TRX Industries (Texas) 2013  – Opened distribution centers in Bogota, Columbia and West Texas – Opening new shaped charge manufacturing plant for Americas (Texas) 2014 – Opened distribution centers in Western Pennsylvania and Bonnyville, Alberta – Opening new gun and shaped charge manufacturing plant in Russia (Siberia) 2014 Investor Presentation 41
  • 42. ! DMCGlobal.com DYNAENERGETICS GROWTH INITIATIVES 2014 Investor Presentation 42 •! Investing in new technologies to expand product offerings •! Forging strategic partnerships to enter new markets •! Innovating solutions that meet anticipated market demand •! Global launch of new brand marketing and digital assets to improve customer experience and service design
  • 43.  DMCGlobal.com2014 Investor Presentation 43 DYNAENERGETICS GLOBAL FOOTPRINT
  • 44. ! DMCGlobal.com SELECT END USERS 44 These major energy service companies are both competitors and customers. When distribution limitations inhibit these companies’ ability to supply perforating equipment to certain international locations, they often turn to DynaEnergetics. * 2014 Investor Presentation * * * *
  • 45. ! DMCGlobal.com2014 Investor Presentation 45
  • 46.  DMCGlobal.com AMK OVERVIEW 46 A specialized provider of sophisticated and comprehensive welding and machining services for diversified industrial clients. 40-year history of manufacturing specialized parts for the aerospace and energy industries. 60% of current revenue driven by energy and power industries. Expertise in solving complex welding challenges like joining dissimilar materials and high temp alloys. Serving OEM and Tier 1 suppliers, AMK’s product expertise includes aircraft and jet engines, and ground-based, gas-fired turbines. 2014 Investor Presentation
  • 47.  DMCGlobal.com WELDING & MACHINING BASICS 472014 Investor Presentation 03 Machining 02 TIG Welding (Manual & Chamber) and GTAW Automatic Welding 01 Electron Beam Welding
  • 48.  DMCGlobal.com2014 Investor Presentation 48 •  Technical expertise across a broad spectrum of welding and machining applications •  Intimate customer relationships with some of the world’s leading OEMs •  Reputation for solving complex joining challenges through process innovation and customer collaboration AMK COMPETITIVE ADVANTAGE
  • 49.  DMCGlobal.com AMK GROWTH INITIATIVES 49 •  Capitalizing on new process capabilities to increase penetration of existing customer base •  New experienced management in place •  Strengthening customer program management •  Establishing new OEM relationships that expand presence in energy industry •  Global launch of new brand marketing and digital assets to improve customer experience and service design 2014 Investor Presentation
  • 50. ! DMCGlobal.com AMK SELECT END USERS 502014 Investor Presentation
  • 51. ! DMCGlobal.com CHAPTER 6 2014 Investor Presentation 51 Financial Overview
  • 52.  DMCGlobal.com FINANCIAL PERFORMANCE REVIEW 2014 Investor Presentation 52 ($MM except per share amounts) 2011 2012 2013 6 Months 2013 6 Months 2014 Sales % growth $208.9 35% $201.6 -4% $209.6 4% $104.1 5% $101.7 -2% Gross Profit % margin $55.4 27% $59.7 30% $59.5 28% $29.8 29% $30.6 30% Operating Profit % margin $18.2 9% $17.4 9% $11.7 6% $5.0 5% $6.7 7% Adjusted EBITDA % margin $32.9 16% $33.6 17% $27.9 13% $13.0 12% $15.5 15% Net Income % growth $12.5 137% $11.7 -6% $7.5 -36% $3.7 -28% $4.5 24% Diluted EPS % growth $0.93 133% $0.87 -6% $0.54 -38% $0.27 -29% $0.32 19%
  • 53.  DMCGlobal.com BALANCE SHEET HIGHLIGHTS 2014 Investor Presentation 53 Assets ($MM) Dec. 31, 2012 Dec. 31, 2013 June 30, 2014 Cash, cash equivalents $8.2 $10.6 $8.7 Accounts receivables, net $37.0 $38.7 $39.2 Inventory $48.3 $41.6 $46.3 Total current assets $100.0 $98.8 $104.2 Total assets $235.4 $240.6 $241.9 Liabilities ($MM) Text here Text here Total current liabilities $24.4 $31.2 $23.9 Lines of credit $37.8 $26.4 $31.8 Long-term debt $.1 $.0 $.0 Total liabilities $72.9 $67.8 $65.3 Total stockholders’ equity $162.6 $172.8 $176.6 Total liabilities and stockholders’ equity $235.4 $240.6 $241.9
  • 54. ! DMCGlobal.com CHAPTER 7 2014 Investor Presentation 54 Summary
  • 55.  DMCGlobal.com DMC’S PERFORMANCE TENETS 2014 Investor Presentation 55 Through share ownership, DMC management has closely aligned its interest with independent shareholders, and all management decisions are made to maximize shareholder value. DMC has adopted three tenets to guide superior share price performance: 1.  Maximize free cash flow through financial discipline 2.  Maximize return on invested capital by achieving operational excellence and making discerning investment decisions 3.  Invest in new technology, product and market development to drive sustained growth and increased profitability
  • 56.  DMCGlobal.com CONTACT INFORMATION 2014 Investor Presentation 56 DMC 5405 Spine Road Boulder, Colorado 80301, USA T 800-821-2666 Geoff High Investor Relations Pfeiffer High Investor Relations, Inc. E geoff@pfeifferhigh.com T 303-393-7044 M 303-514-0656 Contact Primary Contact
  • 57. ! DMCGlobal.com APPENDIX: USE OF NON-GAAP FINANCIAL MEASURES 8/1/14Presentation Title 57! DMCGlobal.com APPENDIX: USE OF NON-GAAP FINANCIAL MEASURES 8/1/14Presentation Title 57 APPENDIX: USE OF NON-GAAP FINANCIAL MEASURES ! DMCGlobal.com 572014 Investor Presentation