DMC Global Inc.

Greetings and welcome to the DMC Global Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff High, VP of IR. Thank you. You may begin.

Hello and welcome to DMC's second quarter conference call. Presenting today are DMC CEO Michael Kuda and Chief Financial Officer Eric Walter. 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. Today's earnings release and a related presentation on our second quarter performance are available on the Investors page of our website located at dmcglobal.com. A webcast replay of today's presentation will be available at our website shortly after the conclusion of this call. And with that, I'll turn the call over to Michael Kuda. Michael?

Hello, and thank you for joining us today. DMC reported second quarter sales of $171.2 million and adjusted EBITDA attributable to DMC of $19.4 million. Our results represent a sequential rebound versus the first quarter, and were achieved despite continued weakness in our primary construction and energy products markets. The results also were above the high end of our guidance range. Arcadia, our building products business, was a key driver in our improved financial performance, reporting second quarter sales of $69.7 million and gross margin of 33.2%. Gross margin was up 600 basis points from the first quarter. In the comparable quarter last year, Arcadia's gross profit was 34.7%, which was their best margin performance since we acquired the business in December 2021. Arcadia's second quarter adjusted EBITDA margin was 17.8% versus 9.5% in the first quarter and 20.8% in the year-ago second quarter. The results reflect management's focus on improving operational efficiencies and streamlining Arcadia's cost structure. A successful effort to de-bottleneck finishing operations has improved Arcadia's capacity, and the business is working to further strengthen its customer service and lead times. DynEnergetics, our energy products business, reported second quarter sales of $76.2 million, down 2% sequentially and down 10% versus last year's second quarter. Adjusted EBITDA margin was 11.5%, down from 13.5% in the first quarter, and 23% in the year ago's second quarter. This year's second quarter results reflect lower sales volumes and softer pricing in North America, as well as a $500,000 bad debt expense. Well completions in Dyna's core U.S. onshore market declined in five of the first six months of the year, and the number of rack spreads is off roughly 13% from the 2024 peak. We expect North American completion activity will remain soft during the second half of the year. Dynas has taken steps to align its cost structure with anticipated demand. Recent cost reductions coupled with previously discussed automation and product enhancement initiatives are expected to improve Dynas EBITDA margins during the back half of the year. In the fourth quarter, sales and margins should benefit from an expected increase in international product sales. Sales at Nobelclad, our composite metals business, were $25.2 million, which is up 2% versus the year-ago quarter and down 6% sequentially. Adjusted EBITDA margin was a strong 22.7% and benefited from favorable delivery timing and project mix. Nobelclad's second quarter order backlog of $64 million was up over 20% sequentially and reflects the impact of the record petrochemical order we discussed during our last call. DMC's Board of Directors continues to evaluate a range of strategic options to unlock shareholder value. We will issue an update when appropriate. I'm encouraged by the progress made by DMC's businesses during the second quarter. I want to thank our employees for their commitment and outstanding efforts. Now I'll turn the call over to Eric for a closer look at our second quarter financial performance and a review of our third quarter guidance. Eric?