Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DMC Global Inc (NASDAQ:BOOM) reported a 5% sequential increase in consolidated first-quarter sales, reaching $159.3 million.
• Adjusted EBITDA attributable to DMC increased by 39% from the previous quarter, indicating improved profitability.
• Arcadia, the architectural building products business, saw a 9% sequential sales increase, driven by strong commercial exterior storefront and interior framing systems sales.
• Dyna Energetics launched a second-generation Dyna Stage perforating system and completed a major automation initiative, expected to enhance production capacity and efficiency.
• NobelClad's first-quarter sales were up 5% year over year, indicating resilience despite tariff-related uncertainties.

Negative Points

• Dyna Energetics experienced a 16% year-over-year decline in sales due to pricing adjustments in response to a downturn in the US onshore energy market.
• NobelClad's order backlog decreased from $49 million to $41 million, reflecting customer hesitancy due to tariff uncertainties.
• Arcadia's future project billings are expected to decline due to the completion of a large mixed-use project in California.
• The luxury residential market demand has significantly declined, impacting Arcadia's results due to high interest rates and macroeconomic uncertainty.
• DMC Global Inc (NASDAQ:BOOM) anticipates lower second-quarter sales, ranging from $149 to $157 million, influenced by macroeconomic concerns and tariff policies.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with BOOM.

Q: Can you elaborate on the factors affecting your guidance, particularly the impact of tariffs and steel costs? A: Interim CEO Jim O'Leary explained that tariffs have a minor impact this quarter due to mitigation strategies. However, demand destruction from tariffs and high interest rates, especially in the residential market, are significant factors. Arcadia is less affected by tariffs but impacted by interest rates. The guidance reflects these elements, with this quarter being the least impacted by tariffs due to timing and mitigation efforts.

Q: What are the opportunities for cost reduction in Arcadia and Dyna Energetics, considering recent automation initiatives? A: Jim O'Leary noted that Arcadia is focusing on fixing the residential business and refocusing on commercial operations, with an emphasis on cost containment. CFO Eric Walter added that Dyna Energetics has seen some benefits from product engineering and automation, but the full impact is yet to be realized due to tariff challenges.

Q: How does the introduction of Dyna Stage 2.0, with its smaller form factor, affect competitiveness? A: CFO Eric Walter stated that the new Dyna Stage 2.0, which uses less steel, enhances competitiveness by reducing exposure to tariffs, although he couldn't comment on competitors' supply chains.

Q: Can you provide insights into the impact of the large California commercial project on Arcadia's first-quarter results and future profitability? A: CFO Eric Walter confirmed that the project was significant for Arcadia's commercial side and will impact the top line and EBITDA in Q2. However, the business is expected to remain profitable.

Q: How is the tariff surcharge on Dyna Energetics being received in the market? A: Interim CEO Jim O'Leary mentioned that they have had partial success in passing the surcharge to customers. The surcharge is designed to be temporary, disappearing when tariffs are lifted, to avoid being perceived as a permanent price increase.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.