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DG

DMC Global Inc. (BOOM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $151.5M declined 1% y/y and 3% q/q, but exceeded S&P Global consensus by ~$6.5M; adjusted EPS of $(0.08) missed by ~$0.11 as DynaEnergetics’ pricing pressure, tariffs, and inventory/receivables charges compressed margins . Revenue consensus and EPS consensus from S&P Global are marked with asterisks in tables below.*
  • Arcadia profitability improved on better fixed-cost absorption; DynaEnergetics margins fell sequentially on lower pricing and tariff costs; NobelClad sales/margins were pressured by earlier tariff-driven order delays, though record orders post-quarter-end restored backlog .
  • Q4 guidance: sales $140–$150M and adjusted EBITDA (attributable to DMC) $5–$8M, implying sequential margin pressure persists (seasonality at Arcadia, Dyna U.S. onshore headwinds, and lagged NobelClad backlog conversion until 2026) .
  • Strategic positive: net debt reduced to $30.1M (down 47% YTD), bolstering balance-sheet flexibility ahead of potential Arcadia put/call in 2026; potential stock catalysts include tariff clarity, rate cuts aiding Arcadia volume, and 2026 NobelClad mega-project shipments .

What Went Well and What Went Wrong

What Went Well

  • Arcadia execution: Adjusted EBITDA attributable to DMC more than doubled y/y to $5.1M; gross margin improved to 28.7% (vs. 23.5% y/y) on better fixed-cost absorption despite a soft market . Management: “we’ve stabilized operations after a challenging 2024 and are positioning the business for an eventual recovery” .
  • Backlog recovery at NobelClad: Secured a $20M order in Q3 and a $5M follow-on post-quarter; largest in division history; backlog ended Q3 at $57M (ex the $5M follow-on) .
  • Deleveraging: Net debt fell to $30.1M; CFO highlighted cash of ~$26.4M and total debt of ~$56.5M, improving optionality into 2026 .

What Went Wrong

  • EPS miss on margin compression: Adjusted EPS of $(0.08) vs S&P Global consensus of $0.03 as DynaEnergetics faced lower pricing and ~$3M tariff impact in a highly competitive U.S. onshore market; inventory and receivable charges also weighed . EPS consensus marked with asterisk.*
  • NobelClad softness: Sales down 21% q/q and 16% y/y; adjusted EBITDA down 53% q/q and 64% y/y, reflecting tariff-driven booking slowdown earlier in the year and weaker absorption on lower volume .
  • Macro/tariff headwinds continued: EIA data showed U.S. well completions down 6% sequentially in Q3; DMC cited volatility in energy prices, elevated interest rates (Arcadia), and tariff visibility issues across businesses .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Sales ($M)$152.4 $155.5 $151.5
Gross Margin %19.8% 23.6% 21.7%
GAAP Diluted EPS$(8.27) $(0.24) $(0.10)
Adjusted Diluted EPS$(0.49) $0.12 $(0.08)
Adjusted EBITDA before NCI ($M)$7.0 $16.2 $12.0
Adjusted EBITDA before NCI Margin %4.6% 10.4% 7.9%
Revenue Consensus Mean ($M)——$145.1*
Primary EPS Consensus Mean ($)——$0.03*
  • Notes: Consensus estimates marked with asterisk are from S&P Global and not from company filings.*

Segment performance

SegmentMetricQ3 2024Q2 2025Q3 2025
ArcadiaNet Sales ($M)$57.8 $62.0 $61.7
Gross Margin %23.5% 26.2% 28.7%
Adjusted EBITDA margin (pre-NCI) %5.8% 10.9% 13.8%
DynaEnergeticsNet Sales ($M)$69.7 $66.9 $68.9
Gross Margin %12.0% 20.9% 14.5%
Adjusted EBITDA margin %0.6% 13.4% 7.1%
NobelCladNet Sales ($M)$24.9 $26.6 $20.9
Gross Margin %33.2% 24.7% 24.9%
Adjusted EBITDA margin %23.2% 16.5% 9.9%

KPIs and balance sheet

KPIQ3 2025
Net Debt ($M)$30.1
Cash & Cash Equivalents ($M)~$26.4
Total Debt ($M)~$56.5
NobelClad Backlog ($M)$57 (excludes $5M follow-on)
NobelClad Rolling 12-Mo Bookings ($M)$100.2; Book-to-Bill 0.96

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SalesQ3 2025 (guided on Aug 5)$142M–$150M ——
Adjusted EBITDA (attributable to DMC)Q3 2025 (guided on Aug 5)$8M–$12M ——
SalesQ4 2025 (guided on Nov 4)—$140M–$150M —
Adjusted EBITDA (attributable to DMC)Q4 2025 (guided on Nov 4)—$5M–$8M —
  • Commentary: Q4 guide implies sequential EBITDA softening from Q3 actuals; management cites lagged NobelClad order conversion (largest order ships largely in 2H26), continued Dyna U.S. onshore headwinds (pricing/tariffs/seasonality), and normal seasonality at Arcadia .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Tariffs impactTariff surcharges partially recovered; guidance baked in demand destruction; Dyna reengineering lowers steel content to mitigate tariffs Dyna tariff impact ~$3M in Q3; pricing increases “extremely challenging”; NobelClad bookings earlier impacted; backlog recovering Still a headwind; partial mitigation; visibility low
U.S. onshore completionsQ1: frac crews down ~20% y/y; cautious 2H outlook EIA well completions down 6% q/q; active frac count down ~20% from March peak Activity pressured into Q4
Arcadia stabilizationRefocus on commercial; cost containment; service/lead time improvements; operating leverage with volume “Stabilized” with y/y profitability improvement; seasonal Q4 slowdown but better y/y profitability expected Improving internally; macro rates still constrain
NobelClad demand/backlogH1 bookings slower amid tariff uncertainty; backlog $41M at Q1 end Record $25M order (incl. $5M follow-on) booked; backlog $57M; revenue mostly 2H26 Backlog rebuilt; revenue lag to 2026
Deleveraging/FCFQ1: net debt ~ $58M; target 40–45% EBITDA-to-FCF conversion Net debt $30.1M; lowest since Arcadia acquisition; balance sheet a key strategic focus Strengthened significantly

Management Commentary

  • “Our businesses continued to be heavily impacted by volatile and lower energy prices, generally high interest rates and issues related to current tariff policies… we significantly reduced net debt to $30.1 million, down 47% from the beginning of the year.” — James O’Leary, CEO .
  • “We expect fourth quarter sales to be in a range of $140 million–$150 million, while adjusted EBITDA attributable to DMC is expected in a range of $5 million–$8 million… continued headwinds in DynaEnergetics’ core North American market… NobelClad’s record bookings are expected to ship in 2026.” — Eric Walter, CFO .
  • “Arcadia has now had several quarters of stability since we brought Jim [Schladen] back, and we believe we’ve successfully reset the business while we wait for market conditions to improve.” — CEO .
  • “The impact to Dyna in the quarter was roughly $3 million… to try to push price in the market, that’s extremely challenging right now.” — Management on tariffs/pricing .
  • “Largest order in the 60-year history of NobelClad… bulk of the revenue… second half of 2026.” — Management on backlog timing .

Q&A Highlights

  • Arcadia outlook: “Arcadia-specific green shoots” from stabilization, customer relationship repair, and operational improvements; industry-wide demand still constrained by rates; further professionalization/ERP/data improvements planned, with capital decisions timing-dependent .
  • NobelClad order cadence: The $20M + $5M orders ship mostly in 2H26; near-term margins remain volume/absorption-driven .
  • Dyna tariffs/pricing: ~$3M tariff impact; extremely hard to raise price in current competitive environment; margin pressure likely continues near-term .
  • Margin trajectory: Seasonal slowdown plus lower volumes could pressure Dyna and NobelClad margins q/q; improvement tied to end-market recovery; operating leverage expected when volumes return .
  • Technology: Oriented/self-orienting perforating guns acknowledged; Dyna maintains leadership; not expected to overwhelm macro demand signals .

Estimates Context

Results vs S&P Global consensus

PeriodRevenue Consensus ($M)Revenue Actual ($M)SurpriseEPS Consensus ($)Adjusted EPS Actual ($)Surprise
Q1 2025148.9*159.3 +$10.4(0.085)*0.11 +$0.20
Q2 2025151.4*155.5 +$4.10.055*0.12 +$0.07
Q3 2025145.1*151.5 +$6.50.025*(0.08) −$0.11
  • Implications: Consensus likely needs to reduce near-term margin/EPS forecasts given tariff/pricing headwinds at Dyna and delayed NobelClad revenue conversion, despite revenue resilience. Q4 guide (Adj. EBITDA $5–$8M) suggests continued pressure near-term .
  • Note: Estimates marked with asterisk are values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue beat with EPS miss: Topline resilience but margin compression at Dyna (pricing, tariffs, charges) drove the miss; Q4 guide points to continued near-term pressure .
  • Arcadia improving: Sequentially stable sales and rising gross/EBITDA margins indicate self-help traction; seasonal Q4 slowdown, but management expects y/y profitability improvement .
  • NobelClad’s record order is a 2026 story: Backlog rebuilt; expect limited P&L benefit in the next few quarters; absorption remains the swing factor until shipments commence .
  • Balance sheet is a differentiator: Net debt $30.1M (down 47% YTD) provides flexibility into a volatile macro/tariff backdrop and the 2026 Arcadia put/call window .
  • Near-term trading lens: Guidance and Dyna margin commentary may cap the stock until macro/tariff visibility improves; watch for tariff developments, U.S. completion trends, and Arcadia demand inflection (rate cuts) .
  • Medium-term thesis: Operating leverage at Arcadia on volume recovery; normalized pricing/costs at Dyna; NobelClad mega-project conversion in 2026 could lift consolidated margins; deleveraging enhances equity optionality .
  • What to monitor: Tariff policy clarity; rate-cut cadence; U.S. well completions and frac activity; Dyna pricing dynamics; NobelClad order intake conversion into 2026 shipments .

Footnote: Estimates marked with asterisk are values retrieved from S&P Global.*