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DG

DMC Global Inc. (BOOM)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue was $155.5M, down 2% sequentially and 9% y/y; adjusted diluted EPS was $0.12, and adjusted EBITDA attributable to DMC was $13.5M, above management’s $10–$13M guidance range .
  • Consensus vs actual: revenue beat ($155.5M vs $151.4M*), adjusted EPS beat ($0.12 vs $0.055*), and EBITDA beat (company-reported adj. EBITDA attributable to DMC $13.5M vs $11.5M*; S&P’s “actual” EBITDA recorded at $14.3M*, which reflects a different definition) .
  • Q3 guidance implies softer sequential performance: sales $142–$150M and adjusted EBITDA attributable to DMC $8–$12M, reflecting macro/tariff uncertainty and weaker U.S. well completions and construction activity .
  • Balance sheet de-risking continued: total debt reduced 17% YTD, long-term debt fell to $55.1M, and CFO highlighted ~40–45% EBITDA-to-FCF conversion target across coming quarters; net debt ~ $46M at Q2-end .
  • Potential stock catalysts: estimate beats and debt reduction offset by widened uncertainty and lowered sequential guide; tariff trajectory and U.S. rate cuts timing are key narrative drivers .

What Went Well and What Went Wrong

What Went Well

  • Beat guidance and consensus: Q2 adjusted EBITDA attributable to DMC of $13.5M exceeded management’s $10–$13M guide and S&P consensus of $11.5M*; adjusted EPS of $0.12 topped $0.055* .
  • DynaEnergetics margin improvement: adjusted EBITDA margin expanded to 13.4% (vs 11.3% in Q1 and 11.5% y/y), aided by lower material costs and improved mix .
  • Deleveraging progress and increased financial flexibility: total debt reduced 17% YTD; credit facility amended to support potential acquisition of the remaining 40% Arcadia stake .
    “We concurrently made important progress on improving our financial position. Total debt was reduced by 17% year to date, and we amended our credit facility in June…” — James O’Leary .

What Went Wrong

  • Arcadia volume/mix pressure and fixed-cost absorption: sales fell 5% q/q and 11% y/y; gross margin compressed to 26.2% (31.0% in Q1; 33.2% y/y); adjusted EBITDA attributable to DMC dropped to $4.0M .
  • NobelClad orders deferred on tariff uncertainty: backlog declined from $41M in Q1 to $37M; adjusted EBITDA margin fell to 16.5% (19.2% in Q1; 22.7% y/y) .
  • GAAP profitability and margins softened: consolidated gross margin fell to 23.6% (25.9% in Q1; 27.1% y/y); GAAP diluted EPS was -$0.24, with net income attributable to DMC at $0.1M .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Net Sales ($USD)$171.179M $159.290M $155.487M
Gross Profit Margin %27.1% 25.9% 23.6%
GAAP Diluted EPS ($)$0.24 $0.04 -$0.24
Adjusted Diluted EPS ($)$0.29 $0.11 $0.12
Adjusted EBITDA Attributable to DMC ($USD)$19.420M $14.391M $13.538M
Adjusted EBITDA Margin % (pre-NCI)14.3% 11.4% 10.4%
SG&A ($USD)$27.122M $28.300M $26.147M

Segment breakdown

Segment MetricQ2 2024Q1 2025Q2 2025
Arcadia Net Sales ($USD)$69.748M $65.580M $61.980M
Arcadia Gross Margin %33.2% 31.0% 26.2%
Arcadia Adj. EBITDA Attrib to DMC ($USD)$7.467M $5.596M $4.035M
Arcadia Adj. EBITDA Margin % (pre-NCI)17.8% 14.2% 10.9%
DynaEnergetics Net Sales ($USD)$76.210M $65.551M $66.862M
DynaEnergetics Gross Margin %19.9% 19.5% 20.9%
DynaEnergetics Adj. EBITDA ($USD)$8.752M $7.379M $8.979M
DynaEnergetics Adj. EBITDA Margin %11.5% 11.3% 13.4%
NobelClad Net Sales ($USD)$25.221M $28.159M $26.645M
NobelClad Gross Margin %32.6% 28.8% 24.7%
NobelClad Adj. EBITDA ($USD)$5.722M $5.416M $4.399M
NobelClad Adj. EBITDA Margin %22.7% 19.2% 16.5%

KPIs

KPIQ1 2025Q2 2025
Cash and Equivalents ($USD)$14.705M $12.427M
Long-term Debt ($USD)$69.921M $55.112M
Current Portion of Long-term Debt ($USD)$2.500M $3.563M
Total Current Liabilities ($USD)$111.763M $101.559M
Net Cash Provided by Operating Activities ($USD)$4.488M $15.246M
Acquisition of Property, Plant & Equipment ($USD)$3.779M $2.921M
NobelClad Backlog ($USD)$41M $37M
Net Debt (approx.) ($USD)—~$46M

Consensus vs actuals (S&P Global)

MetricQ2 2025 ConsensusQ2 2025 ActualBeat/Miss
Revenue ($USD)$151.4M*$155.487M Beat
Adjusted EPS ($)$0.055*$0.12 Beat
EBITDA ($USD)$11.5M*$13.538M (Adj. EBITDA attributable to DMC) Beat

Values with asterisk were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Sales ($USD)Q3 2025N/A$142M–$150M Lowered vs Q2 actual ($155.5M)
Adjusted EBITDA Attrib. to DMC ($USD)Q3 2025N/A$8M–$12M Lowered vs Q2 actual ($13.5M)
Consolidated Sales ($USD)Q2 2025$149M–$157M (May 1 guidance) Actual $155.487M Delivered above midpoint
Adjusted EBITDA Attrib. to DMC ($USD)Q2 2025$10M–$13M (May 1 guidance) Actual $13.538M Delivered at high end

Management emphasized heightened macro/tariff uncertainty for Q3, with specific assumptions for each segment (construction softness at Arcadia; sequential decline in U.S. onshore well completions at Dyna; order deferrals at NobelClad) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Tariffs/macro visibilityNobelClad bookings improved but volatile; customers delaying orders pending tariff clarity Backlog fell to $37M; customers deferring; CFO widened EBITDA guidance range due to end-market uncertainty Worsening uncertainty
Arcadia cost actions & demand“Back-to-basics”; potential rightsizing of underperforming offerings Rightsizing done in residential; focus on customer service/lead times; demand constrained by high rates; LA rebuild could unlock pent-up demand Rightsized, waiting for demand recovery
DynaEnergetics executionNew DynaStage, automation program progress Margin improved on lower materials/mix; expects second-half U.S. activity down; potential international offset Operational gains, market headwinds
Free cash flow & deleveragingFocus on debt reduction and optionality for Arcadia stake ~40–45% EBITDA-to-FCF conversion expected; debt down ~17% YTD; net debt ≈ $46M Improving balance sheet
Regional/customer behaviorU.S. downstream energy demand healthy into Q1 Canadian customers favor non-U.S. suppliers due to tariffs; volume impact at NobelClad Mixed by region

Management Commentary

  • Strategy and balance sheet: “We concurrently made important progress on improving our financial position. Total debt was reduced by 17% year to date, and we amended our credit facility in June to enhance our financial flexibility…” — James O’Leary .
  • Arcadia: Rightsizing of residential complete; focus on customer service, lead times, and quality while preserving operating leverage to benefit from eventual rate cuts and LA rebuild demand .
  • DynaEnergetics: Margin tailwinds from lower material costs and product value engineering; anticipates softer second-half U.S. activity, international sales could partly offset .
  • NobelClad: Tariff-driven deferrals; cost control and lower breakevens prioritized .
  • Liquidity: CFO expects 40–45% EBITDA-to-FCF conversion in coming quarters, consistent with prior years; net debt roughly $46M at Q2-end .

Q&A Highlights

  • Arcadia demand split and roadmap: Weakness in high-end residential and some commercial project deferrals; rightsizing completed; focus on customer service/lead times and readiness for LA rebuild .
  • Margin trajectory at Arcadia: Fixed-cost absorption drives sensitivity to volume; need to lift revenue to restore historical high-20s/low-30s gross margins; seasonal softness in Q4 .
  • Price/cost and tariffs: Arcadia passing through aluminum tariff costs without long-term competitive damage; NobelClad sees volume impact due to tariff-driven project economics; Dyna margins pressured across OFS peers with ~100+ bps to recover when market normalizes .
  • Free cash flow conversion: Targeting ~40–45% EBITDA-to-FCF conversion; net working capital performance improving .
  • Dyna H2 outlook and technology: U.S. activity trending lower; oriented guns a trend but not paradigm shifting; Dyna’s offering competitive; market dictated by energy prices .

Estimates Context

  • Q2 actuals vs S&P Global consensus: revenue beat ($155.5M vs $151.4M*), adjusted EPS beat ($0.12 vs $0.055*), EBITDA beat ($13.5M attributable vs $11.5M*; S&P’s “actual” EBITDA $14.3M* reflects different definition). Values retrieved from S&P Global.
  • Q3 outlook vs S&P: revenue consensus ~$145.1M* aligns with guidance midpoint ($146M); consensus EBITDA ~$10.8M* sits mid-range of $8–$12M. Values retrieved from S&P Global.

Values with asterisk were retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter was operationally solid amid low visibility: DMC beat EBITDA/EPS consensus and exceeded its own EBITDA guide, chiefly via cost controls and Dyna margin improvement .
  • Sequential softness ahead: Q3 guide implies revenue and EBITDA down vs Q2, with macro and tariffs cited across segments; watch for rate-cut timing and tariff developments .
  • Arcadia needs volume to restore margins: fixed-cost absorption is the lever; any U.S. rate cuts or LA rebuild acceleration could unlock operating leverage .
  • NobelClad demand is tariff-sensitive: backlog down and orders deferred; clarity on tariff policy is a key catalyst .
  • DynaEnergetics executing well but market is the constraint: margins improving; second-half U.S. completions trending lower; international could partly offset .
  • Balance sheet improving: debt reduced 17% YTD; net debt ≈ $46M; credit facility amended for potential Arcadia stake acquisition in 2026 .
  • Near-term trading lens: estimate beats and deleveraging are supportive, but widened uncertainty and lowered sequential guide temper momentum; narrative hinges on tariffs and rates .