DMC Global Inc.

Please continue to hold, ladies and gentlemen. Your conference will begin momentarily. Please continue to hold. Thank you. Thank you. Thank you. Thank you. Thank you. Good afternoon, ladies and gentlemen, and welcome to the DMC Global Fourth Quarter Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jeff High, VP of Investor Relations. The floor is yours.

Hello, and welcome to DMC's Fourth Quarter Conference Call. Presenting today are President and CEO Kevin Long and CFO Mike Kuda. I'd like to remind everyone that matters discussed during this call may include forward-looking statements that are based on our estimates, projections, and assumptions as of today's date and are subject to risks and uncertainties that are disclosed in our filings with the SEC. Our business is subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements. DMC assumes no obligation to update forward-looking statements that become untrue because of subsequent events. A webcast replay of today's call will be available at dmcglobal.com after the call. In addition, a telephone replay will be available approximately two hours after the call. Details for listening to the replay are available in today's news release. And with that, I'll turn the call over to Kevin Long.

Kevin? Good afternoon, and thank you for joining us for today's call. 2021 was a transformational year for DMC and was marked by both an important acquisition and the continued resiliency of our DynEnergetics and Noble Cloud businesses, each of which navigated a second consecutive year of challenging market conditions in their core energy markets. Despite the difficult market conditions, our accomplishments were made possible by the expertise and determination of DMC's employees, and I'm extremely grateful for their efforts. On December 23rd, 2021, DMC acquired a 60% controlling interest in privately held Arcadia, a leading provider of architectural building products. The transaction doubled DMC's 2021 pro forma sales to $500 million and strengthened our pro forma consolidated gross margin. It also more than tripled the size of our addressable market, which is now approximately $7 billion. Arcadia is headquartered in Vernon, California and serves both the commercial building and high-end residential markets. The commercial business provides exterior and interior architectural framing systems, curtain and window walls, doors, and entrance systems. It serves a broad range of end markets that include commercial offices, healthcare, higher education, retail, and civic facilities. Arcadia's commercial business serves the Western and Southwestern United States, where it has captured approximately 10% market share and serves a loyal customer base that includes more than 2,000 commercial construction businesses and general contractors. The Arcadia Customs Division serves the nation's high-end residential real estate markets. Based in Tucson, Arizona, Arcadia Customs manufactures highly engineered steel, aluminum, and wood windows and doors, which it sells through a national network of premium window and door dealers. The business also works closely with architects and custom home builders who specify Arcadia Customs products. For the past three years, Arcadia and Arcadia Custom have been operating at full capacity to address customer demand, DMC is supporting Arcadia's efforts to improve its operating efficiencies and increase its manufacturing capacity. These programs include implementation of a new enterprise resource planning system, which will help streamline operations and enhance the buying experience for customers. Arcadia is also designing and procuring equipment for a new anodizing and painting facility that will add production capacity at their primary manufacturing center in Southern California. The building products industry is forecasting growth in commercial and residential construction, particularly in Arcadia's geographic regions and end markets. The investments they are making today will ensure Arcadia's position to capitalize on strong customer demand and compelling market dynamics going forward. During the fourth quarter of 2021, DMC's consolidated sales increased 7% sequentially to $71.8 million. DMC did not begin reporting sales from Arcadia until January 1, 2022. Fourth quarter sales at DynEnergetics, our energy products business, increased 15% sequentially to $50.7 million. DynEnergetics international sales grew 75% to $8.1 million. and included a large order in Eastern Europe. Dinergenic sales in North America increased 7% to $42.6 million and exceeded the 4% fourth quarter increase in U.S. well completions as reported by the Energy Information Administration. Fourth quarter sales at Novoclad, our composite metals business, declined 8% sequentially to $21.2 million. The decline was a result of delays in receiving metals at our U.S. and European manufacturing plants. Fourth quarter consolidated gross margin was 18 percent, down from 25 percent in the third quarter. The decline resulted from a $1.1 million inventory reserve adjustment at Dynergetics, a less favorable project mix at Nobleclad, and approximately $1 million in post-acquisition expenses that were reported in cost of goods sold at Arcadia. DynEnergetics gross margin was 20%, a disappointing result and below our expectations. DynEnergetics announced a 5% global price increase that went into effect on November 22nd. However, its impact was offset by higher than anticipated inflation and the expiration of the CARES Act. DynEnergetics recently implemented an additional price increase to begin restoring margins, and the full effect of the increase should be evident during DynEnergetics second quarter. Fourth quarter adjusted EBITDA was $2.8 million, down from $5.8 million in the third quarter. For the full year, consolidated sales were $260.1 million, up 14% from 2020. Gross margin was 23% versus 25% in the prior year. Adjusted EBITDA was $20.2 million versus $19.1 million in 2020. On a pro forma basis, which includes contributions from Arcadia, 2021 sales were $500.5 million. while pro forma gross margin was 28%. Pro forma adjusted EBITDA attributable to DMC was $50.1 million. As we enter 2022, we are encouraged by the strengthening of our end markets and our ability to meet demand. While completion activity is increasing as oil and gas prices are at multi-year highs, DynEnergetics continues to sell the safest and most reliable well perforating systems on the market, and it takes total responsibility for the performance of its systems. Our DS systems are delivered fully assembled just in time to the well site, and they tie up less working capital and fewer people on location. In the first quarter, DynEnergetics introduced a mobile version of its digital app, which enables customers to configure and purchase products from any location real time. An overview of the app is available on Dyna Energetics' website. We believe Dyna Energetics' margin performance will improve significantly beginning in this year's second quarter and will benefit from additional price increases, greater well completion activity in North America, and increased international demand. Novoclad remains well positioned in its markets, and in a higher price commodity environment, it is very effective at passing through higher material costs and maintaining its contribution margins. Novoclad is the strongest company in its industry and benefits from a global application engineering team and a global manufacturing footprint. We believe Novoclad's bookings and financial performance will improve once supply chain disruptions ease and customer order activity accelerates in current as well as new end-use applications. As I noted, Arcadia and Arcadia Custom both have developed innovative product portfolios, strong brands, and have a strong leadership and employee base. Their markets are healthy and expected to grow over the next several years. We have strengthened DMCs, portfolio of innovative asset-like businesses serving the energy, industrial, and building products markets. And I'm confident in our prospects for margin improvement and long-term revenue growth. With that, I'll turn the call over to Mike for a review of our fourth quarter financial results and a look at first quarter guidance. Mike?