Slide 1: Second Quarter 2023 Earnings Presentation
Second Quarter 2023 Earnings Presentation August 8, 2023 © 2023 DMC. All rights reserved. ARCADIA FRAMING SYSTEM AT CHRIST CATHEDRAL ARBORETUM, GARDEN GROVE, CA
Slide 2: Use of Non-GAAP Financial Measures & Safe Harbor Language
USE OF NON-GAAP FINANCIAL MEASURES & SAFE HARBOR LANGUAGE *Use of Non-GAAP Financial Measures Adjusted net income (loss), adjusted EBITDA and net debt are non-GAAP financial measures used by management to measure operating performance. For reconciliations of the most directly comparable GAAP measure
Slide 3: Agenda
AGENDA Opening Remarks and Operational Update • David Aldous – Chairman • Michael Kuta – President and CEO Financial Results and Guidance • Eric Walter, Chief Financial Officer Questions and Answers Concluding Remarks DYNAENERGETICS’ U.S. MANUFACTURING FACILITY FEATURING ARCADIA EXTERIOR FRAMING SYS
Slide 4: 2023 Second Quarter Highlights
2023 SECOND QUARTER HIGHLIGHTS • Record consolidated sales reflect steady customer demand and solid execution by all DMC businesses • SG&A expense below $30 million quarterly target • Leverage ratio reduced to 1.3x in 6th consecutive quarter of deleveraging • 20%+ adjusted EBITDA margins reported by
Slide 5: DMC Q2 2023 Financial Highlights
DMC Q2 2023 FINANCIAL HIGHLIGHTS Sales Adjusted EBITDA / % of Sales $2 00 $184 $189 $4 5 $166 $4 0 $38 / 20% 22.0 24.7 $1 60 21.8 $3 5 6.6 $3 0 $29 / 17% $1 20 82.0 84.8 $24 / 13% 67.5 $2 5 6.5 $2 0 4.2 $8 0 $1 5 31.8 $1 0 22.4 20.1 $4 0 76.5 80.3 79.2 $5 $0 $0 Q2 22 Q1 23 Q2 23 Q2 22 Q1 23 Q2 23 $
Slide 6: Second Quarter 2023 Business-Level Financial Performance
SECOND QUARTER 2023 BUSINESS-LEVEL FINANCIAL PERFORMANCE Arcadia DynaEnergetics NobelClad Sales Sales Sales $1 00 $77 $79 $79 $1 00 $82 $85 $3 0 $25 $68 $22 $22 $2 0 $5 0 $5 0 $1 0 $0 $0 $0 Q2 22 Q1 23 Q2 23 Q2 22 Q1 23 Q2 23 Q2 22 Q1 23 Q2 23 $ In Millions $ In Millions $ In Millions Adj. EBITDA /
Slide 7: Improving Financial Strength
IMPROVING FINANCIAL STRENGTH Debt-to-Adjusted EBITDA Liquidity Summary June 30, 2023 Leverage Ratio Cash and Cash Equivalents and $21 3.0 2.9 Marketable Securities 2.5 Unused Credit Capacity $50 2.1 Total $71 1.7 1.5 1.3 Total Outstanding Debt (1) $123 Net Debt $102 0.0 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q
Slide 8: Guidance for Third Quarter 2023
GUIDANCE FOR THIRD QUARTER 2023 Measure Expected Range DMC Consolidated Sales $178M - 188M Arcadia Sales $73M - $78M DynaEnergetics Sales $75M - $79M NobelClad Sales $30M - $31M Consolidated Gross Margin 29% – 30% Consolidated SG&A $28M - $30M Depreciation & Amortization ~$9.2M Interest Expense $2.4
Slide 9: Key Objectives for Balance of 2023
KEY OBJECTIVES FOR BALANCE OF 2023 • Improve DMC’s cash flow through cost and capital discipline, debt reduction, operational excellence and by focusing on initiatives with the highest ROI • Expand painting capacity at Arcadia • Continue margin enhancement initiatives at Arcadia and DynaEnergetics •
Slide 10: DMC Investment Considerations
DMC INVESTMENT CONSIDERATIONS • Businesses have built leadership positions in healthy end markets • Compelling valuation vs. peers in building products industries and energy products • Clear path toward long-term sales growth and improved cash flow generation • Experienced, growth-focused leadership
Slide 11: Questions & Answers
Questions & Answers 2023 Second Quarter Earnings Presentation NOBELCLAD’S MANUFACTURING CAMPUS – LIEBENSCHEID, GERMANY
Slide 12: Reconciliations Measurements - Net Debt
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS - NET DEBT (Amount in Thousands) Q2 2023 Long-term debt $108.0 Current portion of long-term debt 15.0 Less: Cash and cash equivalents (18.7) Less: Marketable securities (2.4) Total net debt $101.9 2023 Second Quarter Earnings Presentation 12
Slide 13: Reconciliations Measurements – Consolidated Adjusted EBITDA
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS – CONSOLIDATED ADJUSTED EBITDA ($MM) Q2 2023 Q1 2023 Q2 2022 Net income 17.5 2.1 6.4 Interest expense, net 2.5 2.4 1.3 Income tax provision (benefit) 6.6 2.5 2.3 Depreciation 3.4 3.4 3.7 Amortization of purchased intangible 5.7 5.7 12.8 assets EBITD
Slide 14: Reconciliations Measurements – Arcadia Adjusted EBITDA
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS – ARCADIA ADJUSTED EBITDA ($MM) Q2 2023 Q1 2023 Q2 2022 Operating income, as reported 9.6 3.1 2.2 Adjustments Depreciation 0.9 0.8 0.9 Amortization of purchased 5.7 5.7 12.6 intangible assets Stock-based compensation 0.3 0.6 0.4 CEO transition expen
Slide 15: Reconciliations Measurements – DynaEnergetics Adjusted EBITDA
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS – DYNAENERGETICS ADJUSTED EBITDA ($MM) Q2 2023 Q1 2023 Q2 2022 Operating income, as reported 17.7 13.2 11.3 Adjustments Depreciation 1.7 1.8 1.9 Amortization of purchased 0.0 0.0 0.1 intangible assets Adjusted EBITDA 19.4 15.0 13.3 2023 Second Quart
Slide 16: Reconciliations Measurements – NobelClad Adjusted EBITDA
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASUREMENTS – NOBELCLAD ADJUSTED EBITDA ($MM) Q2 2023 Q1 2023 Q2 2022 Operating income, as reported 4.7 2.6 2.5 Adjustments Depreciation 0.7 0.8 0.8 Amortization of purchased - - 0.1 intangible assets Adjusted EBITDA 5.4 3.4 3.4 2023 Second Quarter Earnings Pre