DMC Global Inc.

Good day, ladies and gentlemen, and welcome to the DMC Global Second Quarter Earnings Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jeff High, Vice President of Investor Relations. Sir, the floor is yours.

Hello, and welcome to DMC's Second 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 certain risks 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 now turn the call over to Kevin Long. Kevin?

Good afternoon, and thank you for joining us for today's call. Our second quarter financial results exceeded the high end of our guidance, driven by healthy end market demand, improved pricing, and strong execution by our employees. Our consolidated second quarter sales were a record $165.8 million, up 20% from the first quarter, and up 153% versus the second quarter of 2021. Excluding revenues from Arcadia, which we acquired a 60% controlling interest in during last year's fourth quarter, second quarter sales were up 26% sequentially and up 37% versus the second quarter last year. Second quarter sales at Dyna Energetics, our energy products business, increased 38% sequentially to $67.5 million. The improvement was driven by an increase in international orders and very strong demand from North America's onshore oil and gas industry. DynEnergetics' second quarter gross margin was 30%, up from 26% in the first quarter and 25% in the second quarter last year. The increase reflects higher sales on fixed manufacturing overhead, lower manufacturing costs resulting from improved operating efficiencies, and higher average selling prices. DynEnergetics plans to implement additional price increases in the third quarter, and we expect it will finish the year at its target gross margin of approximately 34 percent. DynEnergetics shipped a record number of its fully integrated DS perforating systems during the quarter and is benefiting from its position as the only single source vertically integrated supplier that takes full responsibility for the performance of its perforating systems and delivers them just in time to the well site. I am pleased with the performance of the manufacturing and assembly teams at Dyne Energetics production facility in Blum, Texas, which are doing an outstanding job addressing growing demand. During the second half of this year, Dyne Energetics plans to launch several new products that will continue to expand the family of DS perforating systems and enhance the features and performance of DynEnergetics intrinsically safe initiating technology. Second quarter sales at Arcadia, our architectural building products business, increased 12% sequentially to $76.5 million. The increase reflects higher selling prices, which were implemented to offset sharply higher aluminum prices. The increase in Arcadia selling prices led to improved gross margin, which increased to 34 percent from 30 percent in the first quarter. A portion of Arcadia's aluminum inventory is purchased during the first quarter at significantly higher prices, and the majority of this inventory should shift during the third quarter. This is expected to temporarily depress Arcadia's gross margin, as Mike will address in his guidance. During the second quarter, Arcadia's commercial business benefited from healthy activity in its primary low and mid-rise building markets and also saw steady demand at its satellite facilities located across the western and southwestern United States. These 11 service centers work with hundreds of regional glass and glazing contractors who are a consistent source of relatively small quick turn orders. Arcadia has established a reputation within this market for providing broad product availability, short lead times, and excellent customer service. Arcadia Custom, which provides premium steel, aluminum, and wood windows and doors to the high-end residential real estate industry, continue to address a large order backlog that is expected to keep its manufacturing facility at full capacity well into 2023. Arcadia Customs serves a segment of the real estate industry that is generally less affected by rising interest rates compared to the broader housing market. We continue to make progress on the implementation of Arcadia's new enterprise resource planning system and are also making headway on the design and planning of additional finishing capacity. Second quarter sales at Novaclad are composite metals business were flat versus the first quarter. However, order backlog increased 5% sequentially to approximately $47 million, reflecting the impact of higher metal prices. Rolling 12-month bookings at Novaclad were $92.5 million, up from $84 million at the end of last year's second quarter. The mid- to long-term growth prospects at Noble-CLAD continue to improve. Growing global use of liquefied natural gas has generated strong demand for Noble-CLAD's cryogenic transition joints, which are used to address the extreme temperatures and pressures inherent to LNG processing. Noble-CLAD is also addressing inquiries from several segments of the alternative energy industry including hydrogen, geothermal, and solar. This week, Novocloud received the first commercial order for its new product line, Datapipe. I'm very pleased with our sales growth and improved profitability during the second quarter. As we head into the second half of the year, we are focused on continual improvement in margins, improving free cash flow, and continuing to strengthen our balance sheet. With that, I'll turn the call over to Mike a review of our second quarter financial results, and a look at third quarter guidance.