DMC Global Inc.

Greetings. 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeff High, Vice President of Investor Relations. Please go ahead.

Hello, and welcome to DMC's Fourth 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 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, everyone, for joining us today. Macroeconomic challenges continue to be a major issue at DMC, notably tariffs, both pre- and post-Friday's turbulence, and the general trend and level of interest rates, which have largely been unforecastable, much to the chagrin of everyone in the building industry. These and other economic challenges weighed heavily on DMC's core oil field and construction markets throughout 2025 and are persisting into early 2026. Despite these difficulties, we remain focused on our main objective, which we've consistently discussed with you each quarter, strengthening our financial position. And on that front, we continue to make significant progress. We reduced our net debt by another $11.4 million during the fourth quarter. At year end, our net debt of $18.7 million was down 67% from the end of 2024, and at the lowest level since the Arcadia acquisition was consummated in 2021. However, while we made progress on the balance sheet front, we received little or no cooperation from our end markets, which continued to worsen during the period. Paris were a significant headwind for us in 2025, and we're currently reviewing Friday's Supreme Court ruling and the White House's subsequent response to understand what it all means for our businesses. At this point, it appears that the Section 232 tariffs on steel and aluminum will remain in place. We're evaluating what refunds we may be entitled to, which the Supreme Court was silent upon in its ruling. With respect to the fourth quarter, consolidated sales declined 6% year over year to $143.5 million. Fourth quarter adjusted EBITDA attributable to DMC was negative $1.6 million, which included approximately $7 million in discrete accounts receivable and inventory write-offs at Dyna Energetics, our core oil field products business, as certain of its customers have been negatively impacted by very challenging conditions in the North American unconventional oil and gas market. Arcadia, our building products business, reported fourth quarter sales of $57 million, down 5% year over year, and down 8% sequentially. Adjusted EBITDA attributable to DMC was $2.4 million, up from $2.2 million in the prior year fourth quarter, but down from $5.1 million in the third quarter. In addition to year-end seasonality, Arcadia's end markets have been impacted by persistently high interest rates and elevated raw material and labor costs, which have collectively slowed architectural activity and led to the deferral of several large projects. The architectural billing index for Arcadia's core western U.S. region has contracted for 12 months, and these conditions have led to a highly competitive bidding environment that's pressured pricing. Most notably, we've experienced a continued increase in the average price of aluminum, Arcadia's primary input, which was up 55% year-over-year and 12% sequentially. In a soft market categorized by project deferrals and delays, this has led to a very price competitive environment. Dyna Energetics reported fourth quarter sales of $68.9 million, an 8% improvement versus the prior year quarter and flat sequentially. Adjusted EBITDA, including the approximately $7 million in write-offs, was negative $2.7 million. As mentioned, Dyna Energetics and its customers have been negatively impacted by challenging conditions in the North American onshore market, which has seen volatile and generally declining oil prices, fewer operating frack crews, and highly competitive pricing. During the fourth quarter, Dyna paid more than $3 million in tariffs and related duties and has paid more than $10 million since the tariffs were imposed in February of last year. Nobleclad, our composite metals business, reported fourth quarter sales of $17.7 million, down 38% from the 2024 fourth quarter and down 15% sequentially. Reduced bookings during the first half of 2025 led to the declines as evolving tariff policies contributed to significant uncertainty in Nobleclad's U.S. and international markets. Adjusted EBITDA was $2.1 million, down 64% versus the comparable prior period, and up 1% sequentially. The year-over-year decline principally reflects lower absorption of fixed manufacturing overhead and significantly reduced sales. Nobleclad's order backlog at the end of the quarter was $62.6 million, up 28% year-over-year, and up 10% sequentially. The increase reflects a record $25 million order during the first quarter of 2025 for an international petrochemical project. I'll now turn it over to Eric for a closer look at the fourth quarter financials and our guidance for the first quarter.