DMC Global Inc.

Greetings and welcome to the DMC's Global's Third 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff High, VP of Investor Relations. Thank you, Jeff. You may begin.

Hello and welcome to DMC's third quarter conference call. Presenting today are President and 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 third 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 now turn the call over to Jim O'Leary. Jim?

Thank you, Jeff, and thank you to everyone joining us for today's call. While challenging market conditions continued to impact each of DMC's businesses during the third quarter, we made significant progress on the most important strategic objective within our control. We continued the leveraging of our balance sheet. By the end of the third quarter, our net debt had been reduced to $30.1 million, down 47% since the start of the year, and the lowest level since we purchased the controlling interest in Arcadia at the end of 2021. DMC's consolidated third quarter sales were $151.5 million, down 1% versus the third quarter a year ago, while adjusted EBITDA, attributable to DMC, was $8.6 million, up 51% year over year. At Arcadia, our building products business, third quarter sales totaled $61.7 million, a 7% year over year increase, but down 1% from the second quarter. Adjusted EBITDA, attributable to DMC, more than doubled to $5.1 million from the year-ago quarter, reflecting improved operating performance and better absorption of fixed manufacturing overhead due to the sales increase. Adjusted EBITDA was up 27% sequentially. The efforts to stabilize Arcadia's business during the past year have helped mitigate the impact of stubbornly high interest rates and generally soft commercial construction activity and Arcadia's core western region, where architectural billings have declined every month since May, according to the Architectural Billing Index. At Dyna Energetics, our energy products business, third-quarter sales were $68.9 million, down 1% year-over-year and up 3% sequentially. The third quarter was marked by declining activity in Dyna Energetics' core U.S. onshore market, where well completions were down 8% year-over-year and 6% sequentially. At the end of the quarter, active frack grows, a key indicator of demand, were down nearly 20% in the 2025 peak in March. China Energetics reported third quarter adjusted EBITDA of $4.9 million, up from break-even in the year-ago quarter, but down 46% sequentially. The sequential decline reflects lower product pricing and higher costs due to tariffs, as well as certain receivable and inventory charges. At Nobleclad, our composite metal business, third quarter sales were $20.9 million, down 16% year over year, and down 21% potentially. The declines reflect the delayed impact of lower U.S. bookings during the first and second quarters, when customers moved to the sidelines as they monitored fluctuating U.S. and reciprocal tariff policies. Adjusted EBITDA was $2.1 million, down 64% from the prior year and 53% sequentially, reflecting lower absorption of fixed manufacturing overhead on reduced sales and a less favorable product mix. During the third quarter, Nobleclad booked a $20 million order associated with a large international petrochemical project. After quarter end, we received an additional $5 million order related to that same project. Together, these bookings, which ship at the beginning of next year, reflect the largest order in the 60-year history of Nobleclad. Nobleclad's backlog at the end of the third quarter was $57 million, up 53% from the second quarter not including the $5 million follow-on. I'll now turn the call over to Eric for a closer look at our third quarter results and our outlook for the fourth quarter.