DMC Global cuts Q3 revenue view to $152M from $158M-$168M, consensus $163.23M

The results reflect weaker-than-expected sales at both Arcadia Products, DMC’s architectural building products business, and DynaEnergetics, DMC’s energy products business. Cuts Q3 adjusted EBITDA view to $5M from $15M-$18M. Third quarter results will include inventory and bad debt charges at DynaEnergetics totaling approximately $5M, as well as lower fixed overhead absorption on reduced sales at both Arcadia and DynaEnergetics. The company said its third quarter financial results will include an approximate $142M non-cash goodwill impairment charge associated with DMC’s December 2021 acquisition of a controlling interest in Arcadia. The charge reflects Arcadia’s recent financial performance and near-term outlook. These factors, combined with the significant decline in DMC’s market capitalization, led the company to conclude that the goodwill impairment charge was appropriate at this time. DMC president and CEO Michael Kuta, who is also leading Arcadia on an interim basis, said, “Arcadia’s third quarter performance was affected by weak commercial and high-end residential construction activity, lower fixed overhead absorption, and supply-chain disruptions that impacted product availability. Results at DynaEnergetics were below expectations due to declining North American well-completion activity, a higher mix of lower margin customers in DynaEnergetics’ U.S. markets, and the aforementioned inventory and bad debt charges. NobelClad, our composite metals business, is expected to deliver another strong quarter with sales and adjusted EBITDA results within or above our forecasted range. Arcadia is a solid business with exceptional employees and a respected brand, and we are focused on improving its performance and delivering the value its customers have come to expect. At DynaEnergetics, we expect the manufacturing automation and product design initiatives we are implementing will strengthen adjusted EBITDA margins beginning in 2025.”