DMC Global Inc.

Greetings and welcome to the DMC Global Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jeff High, Vice President of Investor Relations. Thank you. You may begin.

Hello and welcome to DMC's fourth quarter conference call. Presenting today are DMC's interim CEO, Jim O'Leary, 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 fourth 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 Jim O'Leary. Jim?

Thanks, Jeff, and thanks to everyone for joining us for today's call. DMC's 2024 fourth quarter was a solid finish to a challenging year. Fourth quarter sales of $152.4 million and adjusted EBITDA attributable to DMC of $10.4 million both exceeded our guidance range, reflecting the progress we made to stabilize our two largest businesses while executing on several self-help initiatives. At Arcadia, our architectural building products business, fourth quarter sales was $60.3 million, up 4% sequentially and down 11% versus the same quarter last year. Sales of commercial exterior products, which generate approximately three-quarters of Arcadia's revenue, showed modest sequential and year-over-year growth. The sales decline versus last year's fourth quarter was principally due to soft demand for custom residential windows and doors, focused on luxury price points. Jim Slayton, who we recently recruited back as president of Arcadia, is implementing a back-to-basics plan that includes right-sizing our cost structure to match market realities while evaluating certain underperforming product offerings that serve principally high-end residential customers. We're refocusing on Arcadia's core commercial operation, which represented the vast majority of the sales and EBITDA at Arcadia when the original acquisition was made in 2021. While we're continuing the operating initiatives introduced recently, Arcadia's principal focus under Jim will be reinvigorating its commercial efforts while right-sizing areas, notably in the custom residential operations. At Dyna Energetics, our energy products business, fourth quarter sales of $63.7 million were down 9% sequentially, reflecting a seasonal slowdown in unconventional onshore well completions. In response to market realities and to ensure we continue to have the best product on the market, Dyna Energetics focused on two key initiatives designed to enhance product reliability and improve overall competitiveness competitiveness during the end of 2024. The first was the introduction of Dyna's next-generation DynaStage system. The latest model has been value re-engineered to use less raw material and be significantly more compact than the prior system. It delivers a further improvement in downhole reliability, which was already the best in the industry. The process of converting customers to the new system is complete, and the feedback has been positive so far. Second, China Energetics finished the first phase of automating product assembly operations at its Bloom, Texas, manufacturing center. Phase two should be complete in the second quarter, and this initiative will reduce operating expenses, improve product reliability by further minimizing human error. And finally, at Nobleclad, our composite metal business reported fourth quarter sales of 28.4 million, which was its second-strongest top-line performance in more than 10 years. Robust fourth-quarter shipments were not offset by new orders, leading to a sequential decline in order backlog. However, Nobleclad has recently seen a pickup in its product inquiries from its core downstream energy market, and its focus on converting as many of those as possible into firm orders and backlogs. Now, stepping back for a moment, from a broader strategic perspective. The number one concern many of our shareholders correctly raised when I took over last November was the risk created by the Arcadia put call arrangement, which could have subjected us to either an impending liquidity issue or significant equity dilution. To address this issue, we proactively pursued and reached an agreement with our Arcadia joint venture partners in December. This agreement extended the maturity of this obligation until September of 2026 as the earliest date our joint venture partners can exercise their put option. This extension provides us with significant optionality to reduce debt with a singular focus on free cash flow while exploring other more favorable refinancing alternatives. The steps we've taken to stabilize and strengthen our businesses a position DMC for improved performance going forward when our core cyclical end markets improve. I'll now turn it over to Eric for a closer look at the fourth quarter and our guidance for the first quarter.