2. Cautionary Statement Regarding Forward-looking Information
This presentation contains, and the Company may from time to time make, written or oral "forward-looking statements" within the safe harbor provisions of the
Private Securities Litigations Reform Act of 1995. These statements include information with respect to our financial condition and its results of operations and
businesses. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "continue," "project" and similar expressions,
as well as statements in the future tense, identify forward-looking statements.
These forward-looking statements are not guarantees of our future performance and are subject to risks and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking statements. These risks and uncertainties include:
• The ability to obtain new contracts at attractive prices;
• The size and timing of customer orders;
• Fluctuations in customer demand;
• Competitive factors;
• The timely completion of contracts;
• The timing and size of expenditures;
• The timely receipt of government approvals and permits;
• The adequacy of local labor supplies at our facilities;
• The availability and cost of funds;
• General economic conditions, both domestically and abroad;
• The successful integration of acquisitions; and
• Fluctuations in foreign currencies.
The effects of these factors are difficult to predict. New factors emerge from time to time and we cannot assess the potential impact of any such factor on the
business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
Any forward-looking statement speaks only as of its date and we do not undertake any obligation to update any forward-looking statement to reflect events or
circumstances after the date of such statement or to reflect the occurrence of unanticipated events. In addition, see "Risk Factors" for a discussion of these and
other factors.
You are encouraged to read the SEC reports of DMC, particularly its Form 10-K for the Fiscal Year Ended December 31, 2011 for meaningful cautionary language
disclosing why actual results may vary materially from those anticipated by management.
1
3. Cautionary Statement Regarding Forward-looking Information
Use of Non-GAAP Financial Measures
Non-GAAP results used in this presentation are provided only as a supplement to the financial statements based on U.S. generally accepted accounting principles
(GAAP). The non-GAAP financial information is provided to enhance the reader's understanding of DMC’s financial performance, but no non-GAAP measure should
be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP
measures to non-GAAP measures are provided within the schedules attached to this release.
EBITDA is defined as net income plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes stock-based compensation and,
when appropriate, other items that management does not utilize in assessing DMC’s operating performance (as further described in the attached financial
schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of
operating performance or any other GAAP measure.
Management uses these non-GAAP measures in its operational and financial decision-making, believing that it is useful to eliminate certain items in order to focus
on what it deems to be a more reliable indicator of ongoing operating performance and the company’s ability to generate cash flow from operations. As a result,
internal management reports used during monthly operating reviews feature the adjusted EBITDA. Management also believes that investors may find non-GAAP
financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures.
EBITDA and adjusted EBITDA are also used by research analysts, investment bankers, and lenders to assess operating performance. For example, a measure
similar to EBITDA is required by the lenders under DMC’s credit facility.
Because not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to other similarly-titled measures
of other companies. However, these measures can still be useful in evaluating the company’s performance against its peer companies because management
believes the measures provide users with valuable insight into key components of GAAP financial disclosures. For example, a company with greater GAAP net
income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, eliminating the effects of interest income
and expense moderates the impact of a company's capital structure on its performance.
All of the items included in the reconciliation from net income to EBITDA and adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of
purchased intangibles and stock-based compensation) or (ii) items that management does not consider to be useful in assessing DMC’s operating performance
(e.g., income taxes and gain on sale of assets). In the case of the non-cash items, management believes that investors can better assess the company’s operating
performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect DMC' ability to generate free cash
flow or invest in its business. For example, by adjusting for depreciation and amortization in computing EBITDA, users can compare operating performance without
regard to different accounting determinations such as useful life. In the case of the other items, management believes that investors can better assess operating
performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.
2
4. Key Data
(As of 11/20/12)
Symbol: NASDAQ GS: BOOM
52-week range: $12.18 - $24.53
Average daily trading volume: 74,000
Approx. market capitalization: $180 million
Shares outstanding: 13.5 million
Approximate float: 12.8 million
Fiscal year end: December 31
Quarterly dividend: $0.04
3
5. Company Overview
• Provider of products and services to international infrastructure
and energy markets through three business segments:
1. Explosive Metalworking – World’s dominant provider of explosion-
welded clad metal plates
2. Oilfield Products – International manufacturer and distributor of
advanced well-perforating and seismic systems for oil and gas industry
3. AMK Welding – Provider of sophisticated welding services to the
aircraft, ground-based turbine and energy industries
• All segments addressing demand from global energy industry
• Strong balance sheet
• Talented management with deep industry experience
4
6. Executive Management
John G. Banker
Yvon Pierre Cariou Sr. Vice President,
President and CEO Customers and Technology
Kevin T. Longe Rolf Rospek
President and CEO Designate, CEO, DYNAenergetics
EVP & Chief Operating Officer & Oilfield Products Segment
Richard A. Santa
Sr. Vice President,
CFO and Secretary
5
8. DMC’s Global Presence
Corporate Headquarters Oilfield Products Headquarters
Explosion Welding production centers Oilfield Products subsidiaries
Explosion Welding sales offices and agents AMK Welding Headquarters Oilfield Products sales agents
7
9. 2011 Consolidated Revenue by Region
Russia
Germany 4%
North America 6%
France
51%
2% South Korea
14%
Other Countries -– 23%
8
10. Revenue Breakdown
2011 Revenue by Business Segment
Total Revenue: $208.9
Explosive Metalworking Oilfield Products AMK Welding
$126.2 Million $ 72.8 Million $ 9.9 Million
9
11. Explosive Metalworking Segment Overview
• Market share leader in explosion-welded plate sales
North American estimate = 90% • European estimate = 70% • Global estimate = 30%
• Manufacturing facilities in Pennsylvania, Germany and France
• Serves diversified roster of industrial end markets
• Low Cap-Ex requirements facilitate strong free cash flow
• Benefiting from industrial infrastructure investments within emerging-markets
• Growth opportunities include establishment of Asia production facility, new end market penetration,
new plate configurations
• Segment achieved revenue growth of 28% in 2011
• $48 million order backlog at end of Q3 2012
10
12. Competing Cladding Technologies
Explosion Weld
Rollbond Weld Overlay
• Performed by small field of international
• Performed by small group competitors led by Dynamic Materials
• Arc-welding process
of international hot rolling Corporation
typically performed by
steel mills • Most versatile cladding technology metal fabricators
• Thickness niche is • Only cladding process that can address • Thickness niche is
generally 2” and less both compatible and non-compatible generally 6” and greater
• Compatible metals only metals
• Compatible metals only
• Thickness sweet-spot is 1” to 6”
11
14. Explosion Clad – a Critical Weapon in the Battle Against Rust
“…a major industry challenge is the
‘rust crisis’ in the global energy
infrastructure”
“Worldwide energy infrastructure too
old”
Most infrastructure “far beyond
original design life”
From presentation at 2009 Offshore Technology Conference Matthew Simmons,
Chairman - Simmons & Company International
13
15. Explosion Welding – a Key Step in Pre-fabrication Process
Explosion
Metal Suppliers Welding
MILLS & SERVICE CENTERS
Sourced Metals End Users
• Carbon Steel
• Nickel Alloys
• Titanium
• Zirconium
14
16. Select End-Markets Served by Explosion Welding
Nine primary industries that utilize explosion welded products
• Chemical • Power Generation
• Oil & Gas • Alternative Energy
• Metals & Mining • Industrial Refrigeration
• Marine • Transportation
• Defense & Protection
15
17. End Users Include Leading Players in Respective Fields
Morimatsu Group China
End Users
Chemicals Refining Mining Engineering
16
18. DMC’s Dominant Industry Position Protected by Significant
Barriers to Entry
Global network of specialty-metals suppliers
Permits and shooting sites in U.S., France, Sweden & Germany
Mastery of explosion-welding process in large-scale production
Strong working relationships with end-market customers
17
20. Oilfield Products Segment Overview - continued
• DMC’s Oilfield Products segment manufactures explosive perforating systems and
seismic devices for the oil & gas services industry under its DYNAenergetics brand
• Three-year sales CAGR of 38%. Sales up 61% in 2011 vs. 2010
• Benefiting from robust drilling activity, re-perforating of existing wells, and increased
use of horizontal and directional drilling techniques
• Known for technical innovation, broad product offering and global distribution network
• Extension of DMC’s expertise in specialized explosive manufacturing processes
• Growth opportunities include acquisitions, market share growth, geographic
expansion and new production facilities
19
21. Well Perforating Process
1. Once 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
perforation tunnels and
into the well
20
22. Oilfield Products – Select Customers
*
*
*
*
* 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.
21
23. AMK Welding Segment Overview
• Provider of advanced welding services to ground-
based turbine and commercial & military aircraft
engine markets
• Customers include GE Energy, Barnes
Aerospace, and Pratt & Whitney
• Generated 5% of DMC sales in 2011
• New Divisional President focused on expanding
customer relationships and entering new end
markets
22
25. Balance Sheet Highlights
(In thousands)
Assets 2010 2011 Q3 2012
Cash, cash equivalents $ 4,572 $ 5,276 $ 11,381
Accounts receivables, net $ 27,567 $ 36,368 $ 37,719
Inventories $ 35,880 $ 43,218 $ 49,961
Total current assets $ 72,735 $ 91,189 $ 104,915
Total assets $ 201,393 $ 213,426 $ 235,833
Liabilities
Total current liabilities $ 38,392 $ 29,310 $ 25,556
Lines of credit $ – $ 26,462 $ 43,552
Long-term debt $ 14,579 $ 118 $ 72
Total liabilities $ 66,309 $ 67,383 $ 79,839
Total stockholders’ equity $ 135,084 $ 146,043 $ 155,994
Total liabilities and stockholders’ equity $ 201,393 $ 213,426 $ 235,833
24
26. Summary Highlights
• Company dominates worldwide explosion-welding industry
• Oilfield Products segment is well-positioned in international oil
and gas industry
• Aggressive growth strategies established for each of Company’s
three business segments
• Strong balance sheet and credit facility provide financial flexibility
• Talented management with deep industry experience
25
