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What changed in DMC Global Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DMC Global Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+350 added−357 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-23)

Top changes in DMC Global Inc.'s 2024 10-K

350 paragraphs added · 357 removed · 274 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

80 edited+11 added−15 removed81 unchanged
Biggest change(Dollars in Thousands) For the years ended December 31, 2023 2022 2021 United States $ 597,324 $ 549,370 $ 173,336 Canada 30,992 26,766 16,929 United Arab Emirates 9,227 5,107 3,843 Oman 7,949 3,188 3,115 China 6,438 3,902 10,365 Iraq 6,034 3,574 72 Germany 5,713 5,151 3,270 Kuwait 4,980 1,801 1,559 South Korea 4,562 3,242 2,144 Saudi Arabia 4,252 2,416 553 France 3,035 2,101 2,522 Indonesia 2,622 2,085 1,131 India 2,486 8,249 3,062 Egypt 2,340 5,780 3,519 Ukraine 2,332 — 3,742 Netherlands 2,146 3,041 2,200 Italy 2,110 1,816 1,467 Sweden 2,014 3,746 1,208 Belgium 2,009 603 2,547 Australia 1,866 1,816 1,567 Norway 1,292 1,854 2,211 Turkey 1,258 4,602 3,153 South Africa 1,154 1,970 886 Russia* — 183 4,057 Rest of the world 15,053 11,723 11,657 Net sales $ 719,188 $ 654,086 $ 260,115 * Sales to Russia have been suspended indefinitely due to the ongoing conflict in Ukraine.
Biggest changeThe following table presents our net sales based on the geographic location to where we shipped the product, regardless of the country of the actual end user. 14 Table of Contents (Dollars in Thousands) For the years ended December 31, 2024 2023 2022 United States $ 521,152 $ 597,324 $ 549,370 Canada 32,443 30,992 26,766 Germany 10,150 5,713 5,151 Oman 7,554 7,949 3,188 India 7,370 2,486 8,249 Kuwait 5,945 4,980 1,801 Saudi Arabia 5,316 4,252 2,416 China 4,689 6,438 3,902 Ukraine 3,975 2,332 — United Arab Emirates 3,788 9,227 5,107 Egypt 3,409 2,340 5,780 Netherlands 3,384 2,146 3,041 France 2,734 3,035 2,101 Indonesia 2,687 2,622 2,085 Turkey 1,820 1,258 4,602 Italy 1,584 2,110 1,816 Australia 1,386 1,866 1,816 South Africa 1,317 1,154 1,970 South Korea 850 4,562 3,242 Norway 738 1,292 1,854 Sweden 673 2,014 3,746 Belgium 637 2,009 603 Iraq 510 6,034 3,574 Rest of the world 18,740 15,053 11,906 Net sales $ 642,851 $ 719,188 $ 654,086 Company Information We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The results of our operations can be impacted by a delay between the time of a raw material cost increase and our price capture. Aluminum is our most important raw material, and we currently have the ability to source from several major suppliers. Our other raw materials are readily available from a variety of domestic sources.
The results of operations can be impacted by a delay between the time of a raw material cost increase and our price capture. Aluminum is our most important raw material, and we currently have the ability to source from several major suppliers. Other raw materials are readily available from a variety of domestic sources.
Cylindra™ Cryogenic Transition Joints : Compared with bolted connection systems, Cylindra ™ offers an easier, more reliable way to connect stainless steel to aluminum pipes for producing LNG and industrial gases in Air Separation Units (ASU). DetaPipe™ Spools, Elbows and Branches : NobelClad develops reactive metal pipe spools and elbows for piping systems in demanding high-pressure and high-temperature processes.
Cylindra™ Cryogenic Transition Joints : Compared with bolted connection systems, Cylindra ™ offers an easier, more reliable way to connect stainless steel to aluminum pipes for producing LNG and industrial gases in Air Separation Units. DetaPipe™ Spools, Elbows and Branches : NobelClad develops reactive metal pipe spools and elbows for piping systems in demanding high-pressure and high-temperature processes.
Arcadia Custom’s sales strategy focuses on direct selling through a national internal sales team and select dealer network that market our products to architects and luxury home builders. The sales network focuses on attracting and retaining dealers by striving to consistently provide exceptional customer service, leading product designs and quality, technical expertise and competitive pricing.
Arcadia Custom’s sales strategy focuses on direct selling through a national internal sales team and a dealer network that market our products to architects and luxury home builders. The sales team focuses on attracting and retaining dealers by striving to consistently provide exceptional customer service, leading product designs and quality, technical expertise and competitive pricing.
In 2023, we launched DS Liberator™ 2.0, which is a newly designed ballistic release tool which enables wireline service companies to disengage from a perforating string that has become stuck in the well bore. Plug and Abandonment : Our DynaSlot TM perforating system is designed for plug and abandonment (P&A) operations.
In 2023, we launched DS Liberator™ 2.0, which is a newly designed ballistic release tool which enables wireline service companies to disengage from a perforating string that has become stuck in the well bore. Plug and Abandonment : The DynaSlot TM perforating system is designed for plug and abandonment (P&A) operations.
When hydraulic fracturing is employed, the perforations and channels also provide a path for the fracturing fluid to enter and return from the formation. 5 Table of Contents In unconventional wells, multiple perforating systems, which generally range from seven inches to three feet in length, are connected end-to-end into a perforating “string.” The string is lowered into the well and then pumped by fluid across the horizontal lateral to the target location within the shale formation.
When hydraulic fracturing is employed, the perforations and channels also provide a starting point and a path for the fracturing fluid to enter and return from the formation. 5 Table of Contents In unconventional wells, multiple perforating systems, which generally range from seven inches to three feet in length, are connected end-to-end into a perforating “string.” The string is lowered into the well and then pumped by fluid across the horizontal lateral to the target location within the shale formation.
Arcadia Products supplies architectural building products, including exterior and interior framing systems, windows, curtain walls, storefronts, doors, and interior partitions to the commercial construction market; it also supplies customized windows and doors to the ultra-high-end residential construction market.
Arcadia Products supplies architectural building products, including exterior and interior framing systems, windows, curtain walls, storefronts, doors, and interior partitions to the commercial construction market; it also supplies customized windows and doors to the high-end residential construction market.
Our product offerings allow architects to create distinctive looks for buildings such as office towers, airports, hotels, education and athletic facilities, health care locations, government buildings, retail centers, mixed use and multi-family residential buildings, while also meeting functional requirements such as energy efficiency, hurricane, blast and other impact resistance and/or sound control.
These product offerings allow architects to create distinctive looks for buildings such as office towers, airports, hotels, education and athletic facilities, health care locations, government buildings, retail centers, mixed use and multi-family residential buildings, while also meeting functional requirements such as energy efficiency, hurricane, blast and other impact resistance and/or sound control.
Our TCP tool range includes mechanical and hydraulic firing systems, gun releases, redundant firing heads, under-balancing devices and auxiliary components. Our tools are designed to withstand down-hole temperatures of up to 260 degrees Celsius (500 degrees Fahrenheit) for safe and quick assembly at the well site and to allow unrestricted total system length.
The TCP tool range includes mechanical and hydraulic firing systems, gun releases, redundant firing heads, under-balancing devices and auxiliary components. DynaEnergetics' tools are designed to withstand down-hole temperatures of up to 260 degrees Celsius (500 degrees Fahrenheit) for safe and quick assembly at the well site and to allow unrestricted total system length.
Examples of benefits offered in the U.S. include traditional and Roth 401(k) plans with matching employer contributions; health benefits; life and disability insurance; additional voluntary insurance; paid counseling assistance; paid time off and parental leave; and a tuition reimbursement program. We have integrated these U.S. benefits programs for DMC and Arcadia.
Examples of benefits offered in the U.S. include traditional and Roth 401(k) plans with matching employer contributions; health benefits; life and disability insurance; additional voluntary insurance; paid counseling assistance; paid time off and parental leave; and a tuition reimbursement program. We have integrated these U.S. benefits programs for DMC and Arcadia Products. Health and Safety.
All DS systems are operated using our in-house designed and manufactured Infinity TM Control Panel. The Infinity Panel is highly intuitive and allows the gun string to be safely tested and monitored throughout the pump-down operation. The system also incorporates a shot detection function resulting in significant time and cost savings.
All DS systems are operated using in-house designed and manufactured Infinity TM Control Panels. The Infinity Panel is highly intuitive and allows the gun string to be safely tested and monitored throughout the pump-down operation. The system also incorporates a shot detection function resulting in significant time and cost savings.
The nature and extent of these warranties depend upon the product, the market and, in some cases, the customer being served. Suppliers and Raw Materials Materials used in Arcadia and Wilson Partition's commercial products include aluminum extrusions, both finished and unfinished, paint and hardware. Materials used in Arcadia Custom's residential products include aluminum, steel, wood, paint, fabricated glass and hardware.
The nature and extent of these warranties depend upon the product, the market and, in some cases, the customer being served. Suppliers and Raw Materials Materials used in Arcadia and Wilson Partitions' commercial products include aluminum extrusions, both finished and unfinished, paint and hardware. Materials used in Arcadia Custom's residential products include aluminum, steel, wood, paint, fabricated glass and hardware.
Refer to Note 10 within Part II, Item 8 — Financial Statements and Supplementary Data for net sales, operating income, and total assets for each of our segments. Our Strategy Our strategy is to maximize the value of our company by capitalizing on the unique strengths of each of our three businesses.
Refer to Note 11 within Part II, Item 8 — Financial Statements and Supplementary Data for net sales, operating income, and total assets for each of our segments. Our Strategy Our strategy is to maximize the value of our company by capitalizing on the unique strengths of each of our three businesses.
DynaEnergetics’ sales strategy focuses on direct selling, distribution through licensed distributors and independent sales representatives, education of current and prospective service-company customers about our products and technologies, and education of E&P companies about the benefits of our products and technologies in an effort to generate pull-through demand.
DynaEnergetics’ sales strategy focuses on direct selling, distribution through licensed distributors and independent sales representatives, education of current and prospective service-company customers about its products and technologies, and education of E&P companies about the benefits of its products and technologies in an effort to generate pull-through demand.
Examples of these efforts include the development of a new application of clad in the production of engineered wood, development of improved electrical transition joints for smelting applications, high-pressure refractory metals chemical processing pipe systems and cryogenic joints to LNG and air separation units.
Examples of these efforts include the development of a new application of clad in the production of engineered wood, development of improved electrical transition joints for smelting applications, high-pressure reactive metals chemical processing pipe systems and cryogenic joints to LNG and air separation units.
We are seeing an increase for equipment related to processing biomass feedstocks and biofuel end products, mostly stainless and nickel alloy clad. Shipbuilding: The combined problems of corrosion and top-side weight drive demand for our aluminum-steel transition joints, which serve as the juncture between a ship's upper and lower structures.
We are seeing an increase for equipment related to processing biomass feedstocks and biofuel end products, mostly stainless and nickel alloy clad. 9 Table of Contents Shipbuilding: The combined problems of corrosion and top-side weight drive demand for our aluminum-steel transition joints, which serve as the juncture between a ship's upper and lower structures.
In response to the exacting needs of our customers, we expanded and enhanced the IS2 product line, including adding an IS2 MS igniter specifically designed for our DS MicroSet™ as well as an upgrade of all IS2 detonators to the more proficient IS2 Express which provides improved performance through a more intuitive automated firing panel process.
In response to the exacting needs of customers, we expanded and enhanced the IS2 product line, including adding an IS2 MS igniter specifically designed for the DS MicroSet™ as well as an upgrade of all IS2 detonators to the more proficient IS2 Xpress which provides improved performance through a more intuitive automated firing panel process.
This new technology allows for end users to benefit from the corrosion resistance performance and process safety that metals like zirconium, titanium and tantalum provide. 10 Table of Contents Suppliers and Raw Materials NobelClad's operations involve a range of alloys, steels and other materials, such as stainless steel, copper alloys, nickel alloys, titanium, zirconium, tantalum, aluminum and other metals.
This new technology allows for end users to benefit from the corrosion resistance performance and process safety that metals like zirconium, titanium and tantalum provide. Suppliers and Raw Materials NobelClad's operations involve a range of alloys, steels and other materials, such as stainless steel, copper alloys, nickel alloys, titanium, zirconium, tantalum, aluminum and other metals.
In 2023, DynaEnergetics continued to upgrade its website and mobile applications for an improved customer experience. Additional enhancements are expected in future periods. DynaEnergetics also designs and manufactures customized perforating products for third-party customers according to their designs and requirements. Research and Development DynaEnergetics devotes substantial resources to its research and development (R&D) programs.
Recently, DynaEnergetics has continued to upgrade its website and mobile applications for an improved customer experience. Additional enhancements are expected in future periods. DynaEnergetics also designs and manufactures customized perforating products for third-party customers according to their designs and requirements. Research and Development DynaEnergetics devotes substantial resources to its research and development (R&D) programs.
DS Systems : Our DS Infinity TM Factory-Assembled, Performance-Assured perforating systems combine all of our advanced technologies into a preassembled perforating gun that is armed at the well site with our Plug-and-Go™ IS2 TF detonator. The IS2 TF detonator is wire-free and eliminates the customary process of wiring the detonator into the perforating system at the well site.
DS Systems : The DS Infinity TM Factory-Assembled, Performance-Assured perforating systems combine all of DynaEnergetics' advanced technologies into a preassembled perforating gun that is armed at the well site with the Plug-and-Go™ IS2 / IS3 TF detonator. The IS2 TF detonator is wire-free and eliminates the customary process of wiring the detonator into the perforating system at the well site.
During the three years ended December 31, 2023, 2022 and 2021, the DynaEnergetics segment represented approximately 44%, 40% and 67% of our consolidated net sales, respectively. DynaEnergetics’ operates manufacturing facilities in Germany and the United States. In Troisdorf, Germany, DynaEnergetics has six integrated detonator manufacturing lines, two shaped charge lines and a detonating cord manufacturing line.
During the three years ended December 31, 2024, 2023 and 2022, the DynaEnergetics segment represented approximately 45%, 44% and 40% of our consolidated net sales, respectively. DynaEnergetics’ operates manufacturing facilities in Germany and the United States. In Troisdorf, Germany, DynaEnergetics has six integrated detonator manufacturing lines, two shaped charge lines and a detonating cord manufacturing line.
Competitive factors include price, product quality, product attributes and performance, reliable service, regional satellites, local availability, lead-time, on-time delivery, project management, technical engineering and design services. To protect and enhance our competitive position, we maintain strong relationships with our customers and strive to provide value to all persons in the value chain.
Competitive factors include price, product quality, product attributes and performance, reliable service, regional satellites, local availability, lead-time, on-time delivery, project management, technical engineering and design services. To protect and enhance our competitive position, we maintain strong relationships with our customers and strive to provide value throughout the value chain.
These locations provide us with global capacity for shaped charge and perforating gun production and enhance our delivery and customer service capabilities in our key markets. Products IS2: DynaEnergetics has focused on the advancement of safe and selective perforating products for use in North America’s shale, or onshore, unconventional, oil and gas industry.
These locations provide global capacity for shaped charge and perforating gun production and enhance delivery and customer service capabilities in key markets. Products IS2 / IS3: DynaEnergetics has focused on the advancement of safe and selective perforating products for use in North America’s shale, or onshore, unconventional, oil and gas industry.
In 2023, Arcadia accounted for approximately 69% of the net sales of Arcadia Products. Wilson Partitions Wilson Partitions serves the commercial interior framing and partitions markets across the U.S., providing framing systems, aluminum doors, sliding systems and glazing systems. Wilson Partitions is supported by centralized manufacturing facilities in California, as well as support facilities in Connecticut and Texas.
In 2024, Arcadia accounted for approximately 75% of the net sales of Arcadia Products. Wilson Partitions Wilson Partitions serves the commercial interior framing and partitions markets across the U.S., providing framing systems, aluminum doors, sliding systems and glazing systems. Wilson Partitions is supported by centralized manufacturing facilities in California, as well as support facilities in Connecticut and Texas.
NobelClad is also engaged in research efforts related to using clad products in concentrating solar power production facilities. Operations During the three years ended December 31, 2023, 2022 and 2021, the NobelClad segment represented approximately 15%, 14% and 33% of our consolidated net sales, respectively.
NobelClad is also engaged in research efforts related to using clad products in concentrating solar power production facilities. Operations During the three years ended December 31, 2024, 2023 and 2022, the NobelClad segment represented approximately 16%, 15% and 14% of our consolidated net sales, respectively.
Recent design advancements to the IS2 line of initiation products enable customers to safely and reliably fire up to 100 systems and set a plug in a single run. All DS systems can be tested before going down hole using our Infinity Surface Tester, reducing the risk of lost time, mishaps, misruns and misfires due to a system fault.
Design advancements to the IS2 / IS3 lines of initiation products enable customers to safely and reliably fire up to 100 systems and set a plug in a single run. All DS systems can be tested before going down hole using the Infinity Surface Tester, reducing the risk of lost time, mishaps, misruns and misfires due to a system fault.
Arcadia Products uses a network of service centers and distributors throughout the United States to sell its products, while DynaEnergetics and NobelClad operate globally through an international network of manufacturing, distribution and sales facilities.
Arcadia Products uses a network of manufacturing, fabrication and distribution centers throughout the United States to sell its products, while DynaEnergetics and NobelClad operate globally through an international network of manufacturing, distribution and sales facilities.
Its products address both new construction and repairs and remodels; and product capabilities include noise control, fire rating, built-to-order custom finishes, and other functional and aesthetic features. In 2023, Wilson Partitions accounted for approximately 10% of the net sales of Arcadia Products.
Its products address both new construction and repairs and remodels; and product capabilities include noise control, fire rating, built-to-order custom finishes, and other functional and aesthetic features. In 2024, Wilson Partitions accounted for approximately 11% of the net sales of Arcadia Products.
If the Put Option is exercised, the Option Purchase Price will be paid, at DMC’s option, (i) in cash or (ii) 20% in cash and 80% in shares of preferred stock of the Company. If the Company exercises the Call Option, the Option Purchase Price will be paid in cash.
If the Put Option is exercised, the Option Purchase Price may be paid, at DMC’s option, (i) in cash or (ii) 20% in cash and 80% in shares of preferred stock of the Company. If the Company exercises the Call Option, the Option Purchase Price would be paid in cash.
Explosion welding also can be used to weld compatible metals, such as stainless steels and nickel alloys to steel. The cladding metals are typically titanium, stainless steel, aluminum, copper alloys, nickel alloys, tantalum, and zirconium. The base metals are typically carbon steel, alloy steel, stainless steel and aluminum.
Explosion welding also can be used to weld compatible metals, such as stainless steels and nickel alloys to steel. The cladding metals are typically titanium, stainless steel, aluminum, copper alloys, nickel alloys, tantalum, and zirconium.
Anodized and painted aluminum components for all Arcadia Products divisions are manufactured in Vernon, with additional painting and manufacturing capacity in its Tucson, Arizona, and Connecticut facilities. During the years ended December 31, 2023 and 2022, Arcadia Products represented approximately 42% and 46% of our consolidated net sales, respectively.
Anodized and painted aluminum components for all Arcadia Products divisions are manufactured in Vernon, with additional painting and manufacturing capacity in its Tucson, Arizona facility. During the years ended December 31, 2024, 2023 and 2022, Arcadia Products represented approximately 39%, 42% and 46% of our consolidated net sales, respectively.
Arcadia Custom works closely with architects, owners, contractors and installers to provide support throughout the planning, design and installation phases of a residential construction process. In 2023, Arcadia Custom accounted for approximately 21% of the net sales of Arcadia Products.
Arcadia Custom works closely with architects, owners, contractors and installers to provide support throughout the planning, design and installation phases of a residential construction process. In 2024, Arcadia Custom accounted for approximately 14% of the net sales of Arcadia Products.
R&D costs were $5,610, $5,712, and $6,378 for the years ended December 31, 2023, 2022 and 2021, respectively. NobelClad Explosion-welded cladding technology is a method for welding metals that cannot be joined using conventional welding processes, such as titanium-steel, aluminum-steel, and aluminum-copper.
R&D costs were $4,415, $5,610, and $5,712 for the years ended December 31, 2024, 2023 and 2022, respectively. NobelClad Explosion-welded cladding technology is a method for welding metals that cannot be joined using conventional welding processes, such as titanium-steel, aluminum-steel, and aluminum-copper.
These industries tend to be cyclical in nature, and the timing of new order inflow remains difficult to predict. 8 Table of Contents Clad Metal End-Use Markets The eight broad industrial sectors discussed below comprise the bulk of demand for NobelClad’s products, with oil and gas and chemical and petrochemical constituting approximately 70% of NobelClad sales in 2023.
These industries tend to be cyclical in nature, and the timing of new order inflow remains difficult to predict. Clad Metal End-Use Markets The eight broad industrial sectors discussed below comprise the bulk of demand for NobelClad’s products, with oil and gas and chemical and petrochemical constituting approximately 70% of NobelClad bookings in 2024.
Electrical Transition Joints : NobelClad’s electrical transition joints offer strong, low electrical resistance solutions for aluminum and zinc smelting, when anode clad and cathode applications must operate at elevated temperatures.
ETJ2000™, ETJ 2001™ and ETJ 3000™ : NobelClad’s electrical transition joints offer strong, low electrical resistance solutions for aluminum and zinc smelting, when anode clad and cathode applications must operate at elevated temperatures.
Upon completion in 2024, this significant investment will allow the testing of our perforating systems in an environment mimicking down-hole flow conditions, which should enhance our development and testing programs. An R&D plan, which focuses on new technology, products, process support and contracted projects, is prepared and reviewed at least quarterly.
This significant investment allows testing of the perforating systems in an environment mimicking down-hole flow conditions, which should enhance the development and testing programs. An R&D plan, which focuses on new technology, products, process support and contracted projects, is prepared and reviewed at least quarterly.
Wilson Partitions manufactures and sells door framing systems, aluminum doors, sliding systems and glazing systems. Arcadia Custom designs and manufactures thermally broken steel and aluminum windows and doors and custom wood doors and windows. We offer product warranties that we believe are competitive for the markets in which our products are sold.
Wilson Partitions manufactures and sells door framing systems, aluminum doors, sliding systems and glazing systems. Arcadia Custom designs and manufactures thermally broken steel and aluminum windows and doors and custom wood doors and windows. Arcadia Products offer product warranties that it believes are competitive for the markets in which its products are sold.
In the event that there is a capacity issue at one facility, NobelClad can produce the order at its other production site, prioritizing timing. The two production sites allow NobelClad to meet customer production needs in a timely manner. 11 Table of Contents Research and Development We prepare a formal research and development plan annually.
In the event that there is a capacity issue at one facility, NobelClad can produce the order at its other production site, prioritizing timing. The two production sites allow NobelClad to meet customer production needs in a timely manner. Research and Development NobelClad prepares a formal research and development plan annually.
We adapt our head forming process to specific clad metal combinations. Structural Transition Joints : NobelClad’s structural transition joints permanently join metals without mechanical fasteners. Shipbuilders turn to us to connect superstructures and bulkheads to steel hulls, framing and deck components.
We adapt our head forming process to specific clad metal combinations. 10 Table of Contents Structural Detacouple TM and Triclad TM Transition Joints : NobelClad’s structural transition joints permanently join metals without mechanical fasteners. Shipbuilders turn to us to connect superstructures and bulkheads to steel hulls, framing and deck components.
NobelClad’s sales office in the United States covers both North and South America. Its sales offices in Europe cover the full European continent, Africa, the Middle East, and India. NobelClad also has a sales office in South Korea and China to address the Asian markets and uses contract agents to cover various other countries.
Its sales offices in Europe cover the full European continent, Africa, the Middle East, and India. NobelClad also has a sales office in South Korea and China to address the Asian markets and uses contract agents to cover various other countries.
Ownership and Management Following the closing of the Arcadia Products acquisition in December 2021, DMC (through its direct ownership and indirect ownership through our subsidiary DMC Korea) owns 60% of Arcadia Products and the remaining 40% is owned by New Arcadia Holdings, Inc., which is wholly-owned by Synergex Group LLC, Trustee of the Munera Family ESBT, and previously the majority owner of Arcadia, Inc.
Ownership and Management Following the closing of the Arcadia Products acquisition in December 2021, DMC (through its direct ownership and indirect ownership through our subsidiary DMC Korea) owns 60% of Arcadia Products and the remaining 40% is owned by New Arcadia Holdings, Inc., which is wholly-owned by Synergex Arcadia Holdings LLC, and successor to the previous majority owner of Arcadia, Inc.
Arcadia Custom Arcadia Custom serves the ultra-high-end residential real estate market throughout the United States, and is supported by manufacturing facilities in California, Arizona and Connecticut. It provides a broad offering of custom, fully fabricated aluminum, steel and wood windows and doors to luxury homes and mixed-use markets.
Arcadia Custom Arcadia Custom serves the high-end residential construction market throughout the United States, and is supported by manufacturing facilities in California, Arizona and Connecticut. It provides a broad offering of custom, fully fabricated aluminum, steel and wood windows and doors to the luxury home market.
We generally have good relationships with our suppliers and strive to proactively manage raw material availability and pricing. Competition Arcadia and Wilson Partitions The North American exterior and interior commercial construction markets are highly fragmented.
Arcadia Products generally has good relationships with its suppliers and strives to proactively manage raw material availability and pricing. Competition Arcadia and Wilson Partitions The North American exterior and interior commercial construction markets are highly fragmented.
We also regularly post information about our Company on our website under the "Investors" tab.
We also regularly post information about our Company on our website under the "Investors" tab. 15 Table of Contents
In 2023, we introduced a new and improved generation of our intrinsically safe detonator, the IS3. This more technically advanced and compact detonator was developed internally to provide the platform for the next generation of DS systems.
In the fourth quarter of 2023, we introduced a new and improved generation of the intrinsically safe detonator, the IS3. This more technically advanced and compact detonator was developed internally to provide the platform for the next generation of DS systems utilizing advanced manufacturing, built-in redundancies and advanced digital capabilities.
Metal selection can range from stainless steel to copper alloy to titanium. Explosion-welded clad metal is often the low-cost solution for making the tube sheets. Applications range from refrigeration chillers on fishing boats to massive air conditioning units for skyscrapers, airports, and deep underground mines.
When the cooling fluid is seawater, brackish, or even slightly polluted, corrosion-resistant metals are necessary. Metal selection can range from stainless steel to copper alloy to titanium. Explosion-welded clad metal is often the low-cost solution for making the tube sheets. Applications range from refrigeration chillers on fishing boats to massive air conditioning units for skyscrapers, airports, and deep underground mines.
At any time at or after the third anniversary of the effective date of the Operating Agreement, Munera shall have the right (but not the obligation) to require the Company to purchase (the “Put Option”) its interests in Arcadia Products for a price based on the higher of (a) a value based on the Acquisition purchase price and (b) a multiple of Arcadia Products’ average EBITDA for the preceding two fiscal years and its projected EBITDA for the then-current fiscal year (the “Option Purchase Price”), and the Company shall have the right (but not the obligation) to purchase all of Munera’s interests for the same price (the “Call Option”).
At any time at or after September 6, 2026, Munera has the right (but not the obligation) to require the Company to purchase (the “Put Option”) its interests in Arcadia Products for a price based on the higher of (a) a value based on the acquisition purchase price and (b) a multiple of Arcadia Products’ average EBITDA for the preceding two fiscal years and its projected EBITDA for the then-current fiscal year (the “Option Purchase Price”), and at any time on or after December 23, 2024, the Company has the right (but not the obligation) to purchase all of Munera’s interests for a price calculated the same as above (the “Call Option”).
Both systems utilize the latest generation IS3 detonator. 6 Table of Contents Shaped Charges : DynaEnergetics develops and sells a wide range of shaped charges for use in its perforating systems, including the LoneStar and EchoFrac™ charges specifically designed for sale in their respective systems.
Shaped Charges : DynaEnergetics develops and sells a wide range of shaped charges for use in its perforating systems, including the LoneStar and EchoFrac™ charges specifically designed for sale in their respective systems.
As of December 31, 2023, we had approximately 1,800 permanent and part-time employees, of which approximately 1,500 employees are located inside the U.S., the majority of whom are engaged in manufacturing operations, with the 12 Table of Contents remainder primarily in sales, marketing and administrative functions. None of our manufacturing employees are unionized.
As of December 31, 2024, we had approximately 1,600 employees, of which approximately 1,360 employees are located inside the U.S., the majority of whom are engaged in manufacturing operations, with the remainder primarily in sales, marketing and administrative functions. None of our manufacturing employees are unionized.
This enables the R&D group to support the oil and gas industry with test methods for new products that realistically simulate potentially difficult down-hole conditions. In 2023, we continued construction of our horizontal test loop at our Blum, Texas facility.
This enables the R&D group to support the oil and gas industry with test methods for new products that realistically simulate potentially difficult down-hole conditions. In 2024, DynaEnergetics commissioned the horizontal test loop located at the Blum, Texas campus.
It is implemented at our cladding sites and is supervised by a technical committee that reviews progress quarterly and meets once a year to establish the plan for the following twelve months. The research and development projects concern process support, new products, new applications, and special customer-paid projects.
It is supervised by a technical committee that reviews progress quarterly and meets once a year to establish the plan for the following twelve months. Research and development projects may address process support, new products, new applications, new technologies such as additive manufacturing, and special customer-paid projects.
The weld overlay process is used by the many vessel fabricators that are often also NobelClad customers. In weld overlay cladding, the clad metal layer is deposited on the base metal using arc-welding type processes. Explosion-Welded Metal Cladding.
The weld overlay process is used by the many vessel fabricators that are often also NobelClad customers. In weld overlay cladding, the clad metal layer is deposited on the base metal using arc-welding type processes. Explosion-Welded Metal Cladding. Competition in the explosion-welded clad metal business is global, and we believe that NobelClad holds a premium market position in the industry.
Government Regulations DMC is subject to numerous environmental, legal and other governmental and regulatory requirements related to its operations worldwide. For additional details, see “Item 1(a). Risk Factors—Legal and Regulatory Risks”, which is incorporated by reference in this Item 1.
Government Regulations DMC is subject to numerous environmental, legal and other governmental and regulatory requirements related to its operations worldwide. For additional details, see “Item 1(a).
It operates an integrated “hub and satellite” model in which light manufacturing, anodizing and painting of aluminum components are performed in Vernon, California, and the resulting products are shipped to a network of service centers located in growing markets throughout the western and southwestern United States.
It primarily operates an integrated “hub and satellite” model in which light manufacturing, anodizing and painting of aluminum components are performed in Vernon, California, and component products are shipped to a network of service centers located in growing markets throughout the western and southwestern United States. At times, Arcadia Products also sources anodized material directly from third-party extruders.
DynaEnergetics has successfully expanded the family of DS perforating systems with various models: DS Echo™, for re-frac applications; DS LoneStar™, a single-shot system that delivers large, ultra-consistent entry holes, and DS NLine™, an oriented systems that features several shaped charges on a lateral plane.
DynaEnergetics is currently upgrading all of its perforating systems to utilize the next generation IS3 detonator, which will enhance the user experience. 6 Table of Contents DynaEnergetics has successfully expanded the family of DS perforating systems with various models: DS Echo™, for re-frac applications; DS LoneStar™, a single-shot system that delivers large, ultra-consistent entry holes with enhanced formation contact, and DS NLine™, an oriented systems that features several shaped charges on a lateral plane.
On January 29, 2024, the Company announced that the Board initiated a review of strategic alternatives for the DynaEnergetics and NobelClad businesses to maximize value for shareholders and other stakeholders. The Board is overseeing the assessment process, including options for a sale, a merger or other business combination involving one or both businesses.
On January 29, 2024, the Company announced that the Board initiated a review of strategic alternatives for the DynaEnergetics and NobelClad businesses to maximize value for shareholders and other stakeholders.
Competition DynaEnergetics faces competition from independent manufacturers of perforating products and from the industry's three largest oil and gas service companies, which produce perforating systems for their own use and also buy systems and other perforating components and specialty products from independent suppliers such as DynaEnergetics.
DynaEnergetics obtains its raw materials from a number of different producers in Germany, other European countries, and the U.S., but also purchases materials from other international suppliers. 7 Table of Contents Competition DynaEnergetics faces competition from independent manufacturers of perforating products and from the industry's three largest oil and gas service companies, which produce perforating systems for their own use and also buy systems and other perforating components and specialty products from independent suppliers such as DynaEnergetics.
In Asia, NobelClad has mixed competition ranging from competitors with strong brand names and competitive technology to other producers that are technically limited and offer minimal exports outside of their domestic markets.
Within North America, NobelClad is one of the largest producers of explosion-welded clad products. In Europe, its manufacturing capacity gives NobelClad a strong position against competitors. In Asia, NobelClad has mixed competition ranging from competitors with strong brand names and competitive technology to other producers that are technically limited and offer minimal exports outside of their domestic markets.
DynaEnergetics utilizes a variety of raw materials for the production of oilfield perforating products, including high-quality steel tubes, steel and copper, explosives, granulates, plastics and ancillary plastic product components. DynaEnergetics obtains its raw materials from a number of different producers in Germany, other European countries, and the U.S., but also purchases materials from other international suppliers.
DynaEnergetics utilizes a variety of raw materials for the production of oilfield perforating products, including high-quality steel tubes, steel and copper, explosives, granulates, plastics and ancillary plastic product components.
Arcadia Products, which has established a differentiated business model within the commercial and residential building products industry, serves a large addressable market and is seeking to grow its position in its targeted U.S. markets.
Arcadia Products, which has established a differentiated model for its core commercial building products, serves a multi-billion dollar addressable market and is seeking to grow its position in its targeted markets throughout the western and southwestern United States.
For most coastal and brackish water-cooled plants, titanium is the metal of choice, and titanium-clad tube sheets are the low-cost solution for power plant condensers. 9 Table of Contents Industrial Refrigeration: Heat exchangers are a core component of refrigeration systems. When the cooling fluid is seawater, brackish, or even slightly polluted, corrosion-resistant metals are necessary.
Our clad plates are used for heat exchanger tube sheets, and the largest clad tube sheets are used in the final low-pressure condensers. For most coastal and brackish water-cooled plants, titanium is the metal of choice, and titanium-clad tube sheets are the low-cost solution for power plant condensers. Industrial Refrigeration: Heat exchangers are a core component of refrigeration systems.
The Board and management teams actively focus on the health and safety of our employees and engage various processes and programs to identify and manage risks through recognition, evaluation, and education. We empower our employees by fostering a sense of responsibility for managing their own work environment through open communication and training.
The health and safety of our employees is fundamental to our success. The Board and management teams actively focus on the health and safety of our employees and engage various processes and programs to identify and manage risks through recognition, evaluation, and education.
Our occupational health and safety ("OH&S") management system is designed to foster a robust safety culture, stringent risk management and effective leadership. Diversity and Inclusion. We believe that we will be most successful with a diverse employee population and encourage hiring and promotion practices that focus on the best talent and the most effective performers.
We believe that we will be most successful with a diverse employee population and encourage hiring and promotion practices that focus on the best talent and the most effective performers.
Explosion-welded clad metal is produced as flat plates or concentric cylinders, which can be further formed and fabricated into a broad range of industrial processing equipment or specialized transition joints. Created using a robust cold-welding technology, explosion-welded clad products exhibit high bond strength, which is generally stronger than the parent metals.
The base metals are typically carbon steel, alloy steel, stainless steel and aluminum. 8 Table of Contents Explosion-welded clad metal is produced as flat plates or concentric cylinders, which can be further formed and fabricated into a broad range of industrial processing equipment or specialized transition joints.
Insurance Our operations expose us to potential liabilities for property damage and personal injury or death as a result of the failure of a component that has been designed, manufactured, serviced, processed, or distributed by us. We maintain liability insurance that we believe adequately protects us from potential product losses and liability claims.
Risk Factors—Legal and Regulatory Risks”, which is incorporated by reference in this Item 1. 13 Table of Contents Insurance Our operations expose us to potential liabilities for property damage and personal injury or death as a result of the failure of a component that has been designed, manufactured, serviced, processed, or distributed by us.
We believe Arcadia’s and Wilson Partitions’ low-cost manufacturing platform, supply chain management, broad product offering, product quality and availability, short lead times and highly diversified and long-tenured customer base, create significant competitive advantages relative to many other exterior and interior building products manufacturers.
There is a great deal of competition in the North American commercial window, storefront and partition manufacturing industry, and the Arcadia and Wilson Partition divisions compete against several national, regional and local manufacturers, as well as regional paint and anodizing finishing companies. 4 Table of Contents We believe Arcadia’s and Wilson Partitions’ low-cost manufacturing platform, supply chain management, broad product offering, product quality and availability, short lead times and highly diversified and long-tenured customer base, create significant competitive advantages relative to many other exterior and interior building products manufacturers.
In addition, we offer renovation solutions to help modernize aging buildings, providing significantly improved energy performance. Arcadia Products is committed to continuing to improve the energy efficiency of products for our customers. Operations Arcadia Products is headquartered in Vernon, California, and operates four manufacturing facilities and 11 fabrication and distribution facilities.
Arcadia Products offers high-performance products that comply with the Leadership in Energy and Environmental Design (LEED) Green Building Rating System. In addition, Arcadia Products offers renovation solutions to help modernize aging buildings, providing significantly improved energy performance. Operations Arcadia Products is headquartered in Vernon, California, and operates four manufacturing facilities and 10 fabrication and distribution facilities.
Our customers select perforating products based on their leading performance, system compatibility, product pricing, and ability to address a broad spectrum of factors, including pressures and temperatures in the wellbore and geological characteristics of the targeted formation. 7 Table of Contents The customers for our energy products can be divided into four broad categories: purchasing centers of large service companies, international service companies, independent international and North America-based service companies (often referred to as “wireline” companies), and local resellers.
Its customers select perforating products based on their leading performance, system compatibility, product pricing, and ability to address a broad spectrum of factors, including pressures and temperatures in the wellbore and geological characteristics of the targeted formation.
Environmental Sustainability Arcadia Products’ operations have an ongoing focus on environmental sustainability, including hazardous waste recycling and initiatives aimed at reducing waste. All of Arcadia’s commercial building products and many of our residential product offerings are made from aluminum, including recycled aluminum content.
Environmental Sustainability Arcadia Products’ operations have an ongoing focus on environmental sustainability, including hazardous waste recycling and initiatives aimed at reducing waste.
Many of our architectural products help architects, developers, and building owners achieve their energy-efficiency and sustainability goals by improving energy performance, thereby reducing greenhouse gas emissions, providing daylight and natural ventilation, and increasing comfort and safety for occupants. Arcadia Products offers high-performance products that comply with the Leadership in Energy and Environmental Design (LEED) Green Building Rating System.
All of Arcadia’s commercial building products and many of our residential product offerings are made from aluminum, including recycled aluminum content. 3 Table of Contents Many of our architectural products help architects, developers, and building owners achieve their energy-efficiency and sustainability goals by improving energy performance, thereby reducing greenhouse gas emissions, providing daylight and natural ventilation, and increasing comfort and safety for occupants.
The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically. 14 Table of Contents Our Internet address is www.dmcglobal.com. Information contained on our website does not constitute part of this Annual Report on Form 10-K.
We therefore file periodic reports, proxy statements and other information with the Securities Exchange Commission (the “SEC”). The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically. Our Internet address is www.dmcglobal.com.
Marketing, Sales, Distribution NobelClad conducts its selling efforts by marketing its services to potential customers' senior management, direct sales personnel, program managers, and independent sales representatives. Prospective customers in specific industries are identified through networking in the industry, cooperative relationships with suppliers, public relations, customer references, inquiries from technical articles and seminars, website inquiries, webinars, and trade shows.
Prospective customers in specific industries are identified through networking in the industry, cooperative relationships with suppliers, public relations, customer references, inquiries from technical articles and seminars, website inquiries, webinars, and trade shows. NobelClad’s sales office in the United States covers both North and South America.
No single patent or trademark is considered to be critical to any of Arcadia Products', DynaEnergetics', or NobelClad's operations. 13 Table of Contents We are careful in protecting our proprietary know-how and manufacturing expertise in Arcadia Products, DynaEnergetics, and NobelClad, and each business unit has implemented measures and procedures designed to ensure that the information remains confidential.
We are careful in protecting our proprietary know-how and manufacturing expertise in Arcadia Products, DynaEnergetics, and NobelClad, and each business unit has implemented measures and procedures designed to ensure that the information remains confidential. Foreign and Domestic Operations and Export Sales All sales are shipped from our manufacturing facilities and distribution centers located in the United States, Germany, and Canada.
Intellectual Property We hold a variety of intellectual property through our businesses including but not limited to patents, patent applications, registered and unregistered trademarks, trade secrets, proprietary information and know-how. We have followed a policy of seeking patent and trademark protection in countries and regions throughout the world for products and methods that appear to have commercial significance.
We maintain liability insurance that we believe adequately protects us from potential product losses and liability claims. Intellectual Property We hold a variety of intellectual property through our businesses including but not limited to patents, patent applications, registered and unregistered trademarks, trade secrets, proprietary information and know-how.
The Board has not set a timetable to complete the strategic review process, and there can be no assurance that the review process will result in any transactions. Human Capital DMC empowers its people and organizations by institutionalizing entrepreneurship and celebrating ingenuity. We stand behind our businesses in ways that truly add value.
On October 21, 2024, the Company announced that the Board was no longer actively marketing the DynaEnergetics and NobelClad segments. 12 Table of Contents Human Capital DMC empowers its people and organizations by institutionalizing entrepreneurship and celebrating ingenuity. We stand behind our businesses in ways that truly add value.
It is typically the fabricator that places the purchase order with NobelClad and pays the corresponding invoice. NobelClad has developed strong relationships over the years with the engineering contractors, process licensors, and equipment operating companies that frequently act as buying agents for fabricators.
It is typically the fabricator that places the purchase order with NobelClad and pays the corresponding invoice.
Marketing, Sales, Distribution DynaEnergetics’ worldwide marketing and sales efforts for its oilfield products are managed from Troisdorf, Germany and Houston, Texas.
The customers for DynaEnergetics' energy products can be divided into four broad categories: purchasing centers of large service companies, international service companies, independent international and North America-based service companies (often referred to as “wireline” companies), and local resellers. Marketing, Sales, Distribution DynaEnergetics’ worldwide marketing and sales efforts for its oilfield products are managed from Troisdorf, Germany and Houston, Texas.
On August 4, 2023, our board of directors (the "Board") appointed Michael Kuta as President and Chief Executive Officer and a director. David Aldous remains a member of the Board and was re-appointed as Chairman effective August 4, 2023.
In November 2024, Michael Kuta retired as the Company’s President and Chief Executive Officer and as a member of the Board, and the Board appointed James O’Leary as the Company’s Interim President and Chief Executive Officer, in addition to his role as Executive Chairman, effective as of November 29, 2024.
During 2022, DynaEnergetics continued to refine its systems to further improve reliability and worked to expand our product offerings. In 2023, we launched DS Gravity 2.0™, a next generation self orientating system for oriented perforating and DS NLine 2.0, which includes an improved alignment system for oriented perforating.
This continues DynaEnergetics' work over many years to refine its systems to further improve reliability and expand its product offerings. In 2024, DynaEnergetics successfully completed the commercial launch of DS NLine 2.0, a passive oriented system, and DS Gravity 2.0, a self-orientating system. Both systems successfully utilize the new IS3 detonator platform.
On January 29, 2024, we announced that the Board of Directors initiated a review of strategic alternatives for our DynaEnergetics and NobelClad businesses to maximize value for shareholders and other stakeholders. The Board is overseeing the assessment process, including options for a sale, a merger or other business combination involving one or both businesses.
DynaEnergetics and NobelClad each have established leadership positions in their respective segments of the energy and industrial equipment industries, and both are pursuing various growth opportunities. On January 29, 2024, we announced our Board of Directors (the "Board") had initiated a review of strategic alternatives for DynaEnergetics and NobelClad. The process formalized our ongoing efforts to unlock shareholder value.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Related to our Businesses Generally • Our efforts to grow and transform our businesses may require significant investments; if our strategies are unsuccessful, our business, results of operations and/or financial condition may be materially adversely affected. • Our review of potential strategic alternatives may not result in executed or consummated transactions or other strategic alternatives, and the process of reviewing strategic alternatives or its conclusion could adversely affect our business and our stockholders. • Our operations are subject to political and economic instability and risk of government actions that could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. • Inflation and higher interest rates have, and may continue to, adversely affect our financial position and results of operations. • Our business, financial condition and results of operations could be adversely affected by disruptions in the global and European economies caused by the ongoing military action between Russia and Ukraine. • Our operating results fluctuate from quarter to quarter. • We are exposed to potentially volatile fluctuations of the U.S. dollar (our reporting currency) against the currencies of many of our operating subsidiaries. • Disruptions or delays involving our suppliers or increases in prices for the components, raw materials and parts that we obtain from our suppliers could have a material adverse effect on our business and consolidated results of operations. • The terms of our indebtedness contain a number of restrictive covenants, the breach of any of which could result in acceleration of payment of our credit facilities. • If our customers delay paying or fail to pay a significant amount of our outstanding receivables, it could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition. • New or existing tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows. • Failure to attract and retain key personnel and source sufficient labor could adversely affect our current operating results. • A failure in our information technology systems or those of third parties, including those caused by security breaches, cyber-attacks or data protection failures, could disrupt our business, result in significant legal costs and other losses and damage our reputation. • Failure to establish and maintain adequate internal controls over financial reporting could result in the inability to report our financial results in a timely and reliable manner, which could harm our business and impact the value of our securities.
Biggest changeRisk Factors Related to NobelClad • NobelClad’s business is dependent on sales to a limited number of customers in cyclical markets and our results are affected by the price of metals. • We are dependent on a relatively small number of large projects and customers for a significant portion of our net sales. • Our backlog figures may not accurately predict future sales. • There is a limited availability of sites suitable for cladding operations. • There is no assurance that we will continue to compete successfully against other manufacturers of competitive products. • Customers have the right to change orders until products are completed. • Our costs could substantially increase if we experience a large claim or a significant number of warranty claims. 16 Table of Contents Risk Factors Related to our Businesses Generally • Our efforts to grow and transform our businesses may require significant investments; if our strategies are unsuccessful, our business, results of operations and/or financial condition may be materially adversely affected. • Our operations are subject to political and economic instability and risk of government actions that could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. • Inflation and higher interest rates have, and may continue to, adversely affect our financial position and results of operations. • Our business, financial condition and results of operations could be adversely affected by disruptions in the global and European economies caused by the ongoing military action between Russia and Ukraine. • Our operating results fluctuate from quarter to quarter. • We are exposed to potentially volatile fluctuations of the U.S. dollar (our reporting currency) against the currencies of many of our operating subsidiaries. • Disruptions or delays involving our suppliers or increases in prices for the components, raw materials and parts that we obtain from our suppliers could have a material adverse effect on our business and consolidated results of operations. • The terms of our indebtedness contain a number of restrictive covenants, the breach of any of which could result in acceleration of payment of our credit facilities. • If our customers delay paying or fail to pay a significant amount of our outstanding receivables, it could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition. • New or existing tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows. • Failure to attract and retain key personnel and source sufficient labor could adversely affect our current operating results. • A failure in our information technology systems or those of third parties, including those caused by security breaches, cyber-attacks or data protection failures, could disrupt our business, result in significant legal costs and other losses and damage our reputation. • Failure to establish and maintain adequate internal controls over financial reporting could result in the inability to report our financial results in a timely and reliable manner, which could harm our business and impact the value of our securities.
The oil and gas industry has historically experienced periods of consolidation which may result in reduced capital spending by some of our customers, the acquisition of one or more of our primary customers, or competitors and consolidated entities using size and purchasing power to seek pricing or other concessions, which may lead to decreased demand for our products.
The oil and gas industry has historically experienced periods of consolidation which may result in reduced capital spending by some of our customers, the acquisition of one or more of our primary customers, or competitors and consolidated entities using size and purchasing power to seek pricing or other concessions, which may lead to decreased demand or pricing for our products.
There is also increased focus, including by governments and our customers, investors and other stakeholders, on these and other sustainability and energy transition matters.
There is also increased focus, including by governments and our customers, investors and other stakeholders, on these and other sustainability and energy transition matters.
In addition, some international, national, state and local governments and agencies have also adopted laws and regulations or are evaluating proposed legislation and regulations that are focused on directly limiting the extraction of shale gas or oil using hydraulic fracturing.
In addition, some international, national, state and local governments and agencies have also adopted laws and regulations or are evaluating proposed legislation and regulations that are focused on directly limiting the extraction of shale gas or oil using hydraulic fracturing.
Increased negative investor sentiment toward oil and gas and preference for assets outside of traditional energy sectors could lead to higher capital costs for our customers and reduced investment in fossil fuels, thereby reducing demand for our products.
Increased negative investor sentiment toward oil and gas and preference for assets outside of traditional energy sectors could lead to higher capital costs for our customers and reduced investment in fossil fuels, thereby reducing demand for our products.
Additionally, the implementation involves greater utilization of third-party cloud computing services in connection with our Arcadia operations. Problems faced by us or our third-party providers relating to this implementation, including technological or business-related disruptions and cybersecurity threats, could adversely impact our business, results of operations, and financial condition for future periods.
Additionally, the implementation involves greater utilization of third-party cloud computing services in connection with our Arcadia Products operations. Problems faced by us or our third-party providers relating to this implementation, including technological or business-related disruptions and cybersecurity threats, could adversely impact our business, results of operations, and financial condition for future periods.
The success of any acquisition depends on a number of factors, including, but not limited to: 33 Table of Contents • identifying suitable candidates for acquisition and negotiating acceptable terms; • obtaining approval from regulatory authorities and potentially DMC’s shareholders; • maintaining our financial and strategic focus and avoiding distraction of management during the process of integrating the acquired business; • implementing our standards, controls, procedures and policies at the acquired business and addressing any pre-existing liabilities or claims involving the acquired business; • our ability to realize the expected tax treatment or tax benefits from the transaction; and • to the extent the acquired operations are in a country in which we have not operated historically, understanding the regulations and challenges of operating in that new jurisdiction.
The success of any acquisition depends on a number of factors, including, but not limited to: • identifying suitable candidates for acquisition and negotiating acceptable terms; • obtaining approval from regulatory authorities and potentially DMC’s shareholders; • maintaining our financial and strategic focus and avoiding distraction of management during the process of integrating the acquired business; • implementing our standards, controls, procedures and policies at the acquired business and addressing any pre-existing liabilities or claims involving the acquired business; • our ability to realize the expected tax treatment or tax benefits from the transaction; and • to the extent the acquired operations are in a country in which we have not operated historically, understanding the regulations and challenges of operating in that new jurisdiction.
Decreases or expected decreases in oil and gas prices and reduced expenditures in the oil and gas industry could have a material adverse impact on our financial condition, results of operations and cash flows. • Failure to adjust our manufacturing and supply chain to accurately meet customer demands could have a material adverse effect on our results of operations. • Failure to manage periods of growth or contraction may seriously harm our business. • We may not be able to continue to compete successfully against other companies in our industry. • Recent conflict in the Middle East may adversely affect our business and results of operations. • If we are not able to design, develop, and produce commercially competitive products in a timely manner in response to changes in the market, customer requirements, competitive pressures, and technology trends, our business and consolidated results of operations and the value of our intellectual property could be materially and adversely affected. • We may be unable to successfully execute and realize the expected financial benefits from strategic initiatives. • Demand for DynaEnergetics products could be reduced by existing and future legislation, regulations and public sentiment. • Consolidation of our customers and competitors may impact our results of operations.
Decreases or expected decreases in oil and gas prices and reduced expenditures in the oil and gas industry could have a material adverse impact on our financial condition, results of operations and cash flows. • Consolidation of our customers and competitors may impact our results of operations. • Failure to adjust our manufacturing and supply chain to accurately meet customer demands could have a material adverse effect on our results of operations. • Failure to manage periods of growth or contraction may seriously harm our business. • We may not be able to continue to compete successfully against other companies in our industry. • If we are not able to design, develop, and produce commercially competitive products in a timely manner in response to changes in the market, customer requirements, competitive pressures, and technology trends, our business and consolidated results of operations and the value of our intellectual property could be materially and adversely affected. • We may be unable to successfully execute and realize the expected financial benefits from strategic initiatives. • Demand for DynaEnergetics products could be reduced by existing and future legislation, regulations and public sentiment.
Risks Related to Acquisitions • We have incurred debt to finance the acquisition of 60% of Arcadia Products and may incur additional substantial financial obligations in connection with the acquisition of the remaining 40% of Arcadia Products. • DMC is the majority shareholder of Arcadia Products, and our interest in Arcadia Products is subject to the risks normally associated with the conduct of businesses with a minority shareholder. • To the extent that we seek to further expand our business through acquisitions, we may experience issues in executing acquisitions or integrating acquired operations.
Risks Related to Acquisitions • We have incurred debt to finance the acquisition of 60% of Arcadia Products and may incur additional substantial financial obligations in connection with the acquisition of the remaining 40% of Arcadia Products. 17 Table of Contents • DMC is the majority shareholder of Arcadia Products, and our interest in Arcadia Products is subject to the risks normally associated with the conduct of businesses with a minority shareholder. • To the extent that we seek to further expand our business through acquisitions, we may experience issues in executing acquisitions or integrating acquired operations.
Moreover, failure to comply with applicable requirements or the occurrence of an explosive incident may also result in the loss of our license to store and handle explosives, which would have a material adverse effect on our business, results of operations and financial conditions. Demand for our products could be reduced by existing and future legislation, regulations and public sentiment.
Moreover, failure to comply with applicable requirements or the occurrence of an explosive incident may also result in the loss of our license to store and handle explosives, which would have a material adverse effect on our business, results of operations and financial conditions. 30 Table of Contents Demand for our products could be reduced by existing and future legislation, regulations and public sentiment.
Our shooting sites in Pennsylvania and in Germany are located in mines. Our Pennsylvania shooting site is subleased under an arrangement pursuant to which we provide certain contractual services to the sub-landlord, and this sublease expires in 2029.
Our shooting sites in Pennsylvania and in Germany are located in mines. Our Pennsylvania shooting site is subleased under an arrangement pursuant to which we provide certain contractual services to the sub-landlord, and this sublease expires in 2054.
A change in the mix of earnings and losses in countries with differing statutory tax rates, changes in our business or structure, or disputes about intercompany transfer pricing arrangements may result in higher effective tax rates for the Company. Our future effective tax rates could be adversely affected by changes in tax laws or their interpretation, both domestically and internationally.
A change in the mix of earnings and losses in countries with differing statutory tax rates, changes in our business or structure, or disputes about intercompany transfer pricing arrangements may result in higher effective tax rates for the Company. 33 Table of Contents Our future effective tax rates could be adversely affected by changes in tax laws or their interpretation, both domestically and internationally.
If actual demand for our products is lower than forecast, we may also experience higher inventory carrying and operating costs and product 19 Table of Contents obsolescence. Because certain of our sales, research and development, and internal manufacturing overhead expenses are relatively fixed, a reduction in customer demand may also decrease our gross margin and operating income.
If actual demand for our products is lower than forecast, we may also experience higher inventory carrying and operating costs and product obsolescence. Because certain of our sales, research and development, and internal manufacturing overhead expenses are relatively fixed, a reduction in customer demand may also decrease our gross margin and operating income.
In the event of any adverse ruling in any intellectual property litigation, we could be required to pay substantial damages, cease the manufacturing, use and sale of infringing products, discontinue the use of certain processes or obtain a license from the third- 32 Table of Contents party claiming infringement with royalty payment obligations by us.
In the event of any adverse ruling in any intellectual property litigation, we could be required to pay substantial damages, cease the manufacturing, use and sale of infringing products, discontinue the use of certain processes or obtain a license from the third-party claiming infringement with royalty payment obligations by us.
Moreover, we cannot be sure of when during the future twelve-month period we will be able to recognize revenue corresponding to our backlog nor can we be certain that revenues corresponding to our backlog will not fall into periods beyond the twelve-month horizon. There is a limited availability of sites suitable for cladding operations.
Moreover, we cannot be sure of when during the future twelve-month period we will be able to recognize revenue corresponding to our backlog nor can we be certain that revenues corresponding to our backlog will not fall into periods beyond the twelve-month horizon. 23 Table of Contents There is a limited availability of sites suitable for cladding operations.
For example, regulations related to the 2017 United States Tax Cuts and Jobs Act (“TCJA”) are still being 31 Table of Contents developed, some with retroactive application. As regulations and guidance evolve with respect to tax law, our results may differ from previous estimates and may materially affect our financial condition or results of operations.
For example, regulations related to the 2017 United States Tax Cuts and Jobs Act (“TCJA”) are still being developed, some with retroactive application. As regulations and guidance evolve with respect to tax law, our results may differ from previous estimates and may materially affect our financial condition or results of operations.
Results of operations in any period should not be considered indicative of the results for any future period. We are exposed to potentially volatile fluctuations of the U.S. dollar (our reporting currency) against the currencies of many of our operating subsidiaries. Many of our operating subsidiaries conduct business in euros, Canadian dollars, or other foreign currencies.
Results of operations in any period should not be considered indicative of the results for any future period. 26 Table of Contents We are exposed to potentially volatile fluctuations of the U.S. dollar (our reporting currency) against the currencies of many of our operating subsidiaries. Many of our operating subsidiaries conduct business in euros, Canadian dollars, or other foreign currencies.
These factors may cause suppliers to be unable to meet their commitments or to negatively change the terms of supply arrangements. The loss of, or substantial decrease in the availability of, products from our suppliers, or the loss of a key supplier, could adversely impact our financial condition and results of operations.
These factors may cause suppliers to be unable to meet their commitments or to negatively change the terms of supply arrangements. 18 Table of Contents The loss of, or substantial decrease in the availability of, products from our suppliers, or the loss of a key supplier, could adversely impact our financial condition and results of operations.
As a result, our ability to conduct our business may be adversely affected. 27 Table of Contents Failure to establish and maintain adequate internal controls over financial reporting could result in the inability to report our financial results in a timely and reliable manner, which could harm our business and impact the value of our securities.
As a result, our ability to conduct our business may be adversely affected. Failure to establish and maintain adequate internal controls over financial reporting could result in the inability to report our financial results in a timely and reliable manner, which could harm our business and impact the value of our securities.
While the ERP changeover led to a brief operational slowdown early in the third quarter, the system is expected to enhance operating efficiencies and the internal control environment throughout Arcadia by streamlining data sources, simplifying complex processes, and reducing manual processes.
While the ERP changeover led to a brief operational slowdown early in the third quarter of 2023, the system is expected to enhance operating efficiencies and the internal control environment throughout Arcadia Products by streamlining data sources, simplifying complex processes, and reducing manual processes.
Any number of factors, including labor disruptions, acts of war or terrorism, military activity, trade sanctions, catastrophic weather events, the occurrence of a pandemic or other widespread illness (such as the resurgence of COVID-19), contractual or other disputes, unfavorable economic or industry conditions, transportation disruptions, delivery delays or other performance problems or financial difficulties or solvency problems, could disrupt our suppliers’ operations and performance, which could, in turn, lead to uncertainty in our supply chain or cause supply disruptions for us and disrupt our operations.
Any number of factors, including labor disruptions, acts of war or terrorism, military activity, trade sanctions, catastrophic weather events, the occurrence of a pandemic or other widespread illness, contractual or other disputes, unfavorable economic or industry conditions, transportation disruptions, delivery delays or other performance problems or financial difficulties or solvency problems, could disrupt our suppliers’ operations and performance, which could, in turn, lead to uncertainty in our supply chain or cause supply disruptions for us and disrupt our operations.
As of December 31, 2023, we were in compliance with all financial covenants and other provisions of the credit agreement, as amended, and our other loan agreements.
As of December 31, 2024, we were in compliance with all financial covenants and other provisions of the credit agreement, as amended, and our other loan agreements.
We are currently involved and may in the future be involved in litigation relating to alleged infringement by us of others’ patents or other intellectual property rights. We have an active "freedom to operate" review process for our technology, but there is no assurance that future infringement claims will not be asserted.
We have been in the past and may in the future be involved in litigation relating to alleged infringement by us of others’ patents or other intellectual property rights. We have an active "freedom to operate" review process for our technology, but there is no assurance that future infringement claims will not be asserted.
In addition, the oil and gas industry has historically been cyclical, and to date in 2024, oil prices have declined significantly from their 2022 highs.
In addition, the oil and gas industry has historically been cyclical, and to date in 2025, oil prices have declined significantly from their 2022 highs.
These industries tend to be cyclical in nature and an economic slowdown in one or all of these 21 Table of Contents industries-whether due to traditional cyclicality, general economic conditions or other factors-could impact capital expenditures within that industry.
These industries tend to be cyclical in nature and an economic slowdown in one or all of these industries, whether due to traditional cyclicality, general economic conditions or other factors, could impact capital expenditures within that industry.
However, there is no guarantee we will be able to maintain our competitive position. 22 Table of Contents Customers have the right to change orders until products are completed. Customers have some rights to change orders after they have been placed. If orders are changed, the extra expenses associated with the change usually will be passed on to the customer.
However, there is no guarantee we will be able to maintain our competitive position. Customers have the right to change orders until products are completed. Customers have some rights to change orders after they have been placed. If orders are changed, the extra expenses associated with the change usually will be passed on to the customer.
The terms of our indebtedness contain a number of restrictive covenants, the breach of any of which could result in acceleration of payment of our credit facilities. As of December 31, 2023, we had an outstanding balance of $117.5 million on our syndicated credit agreement, which was subsequently amended on February 6, 2024.
The terms of our indebtedness contain a number of restrictive covenants, the breach of any of which could result in acceleration of payment of our credit facilities. As of December 31, 2024, we had an outstanding balance of $72.5 million on our syndicated credit agreement, which was amended on February 6, 2024.
Our primary economic 25 Table of Contents exposures include the U.S. dollar to the euro, the U.S. dollar to the Canadian dollar, and the euro to the U.S. dollar. Since the underlying balance sheet account balances being hedged can fluctuate significantly throughout our monthly hedge periods, our hedging program cannot fully protect against foreign currency fluctuations.
Our primary economic exposures include the U.S. dollar to the euro, the U.S. dollar to the Canadian dollar, and the euro to the U.S. dollar. Since the underlying balance sheet account balances being hedged can fluctuate significantly throughout our monthly hedge periods, our hedging program cannot fully protect against foreign currency fluctuations.
While the increase in the credit facility was intended to allow us to finance the Option Purchase Price, a potential exercise will depend on numerous factors, including the performance of our businesses, the status of any changes to our businesses and general market and economic conditions.
Although the increase in the 2024 amended credit facility was intended to allow us to finance the Option Purchase Price, a potential exercise will depend on numerous factors, including the performance of our businesses, the status of any changes to our businesses and general market and economic conditions.
We will have to devote a substantial portion of our cash flow to meet required payments of principal and interest on this indebtedness, and if we are unable to generate sufficient cash flow to do so, or if we otherwise fail to comply with the terms of the credit facility, we could be in default under the agreement.
If we access the credit facility to pay the Option Purchase Price, we will have to devote a substantial portion of our cash flow to meet required payments of principal and interest on this indebtedness, and if we are unable to generate sufficient cash flow to do so, or if we otherwise fail to comply with the terms of the credit facility, we could be in default under the agreement.
These initiatives may involve making acquisitions, entering into partnerships and joint ventures, divesting assets, restructuring our existing operations and assets, creating new financial structures and building new facilities—any of which could require a significant investment and subject us to new risks. We may incur additional indebtedness to finance these opportunities.
We continuously evaluate opportunities for growth and change. These initiatives may involve making acquisitions, entering into partnerships and joint ventures, divesting assets, restructuring our existing operations and assets, creating new financial structures and building new facilities—any of which could require a significant investment and subject us to new risks. We may incur additional indebtedness to finance these opportunities.
Patent litigation, if necessary or when instituted against us, could result in substantial costs and divert our management’s attention and resources. We may incur substantial costs defending against third parties alleging that we infringe their proprietary rights.
Patent litigation, if necessary or when instituted against us, could result in substantial costs and divert our management’s attention and resources. 34 Table of Contents We may incur substantial costs defending against third parties alleging that we infringe their proprietary rights.
With respect to any particular country, these risks may include: • political, social and economic instability; • civil unrest, acts of terrorism, force majeure, war, other armed conflict; • public health crises and catastrophic events; • inflation; • currency fluctuations, devaluations, conversion, or repatriation restrictions; • expropriation and nationalization of our assets; • confiscatory taxation or other adverse tax policies; • theft of, or lack of sufficient legal protection for, proprietary technology and other intellectual property; • limitations on extraction of shale gas or oil using hydraulic fracturing; • limitations on or disruptions to our markets or operations, restrictions on payments, or limitations on the movement of funds; • increased tariffs; • trade and economic sanctions or other restrictions; • unexpected changes in legal and regulatory requirements, including changes in interpretation or enforcement of existing laws; • deprivation of contract rights; and • the inability to obtain or retain licenses required for operation.
With respect to any particular country, these risks may include: • political, social and economic instability; • civil unrest, acts of terrorism, force majeure, war, other armed conflict; • public health crises and catastrophic events; • inflation; • currency fluctuations, devaluations, conversion, or repatriation restrictions; • expropriation and nationalization of our assets; • confiscatory taxation or other adverse tax policies; • theft of, or lack of sufficient legal protection for, proprietary technology and other intellectual property; • limitations on extraction of shale gas or oil using hydraulic fracturing; • limitations on or disruptions to our markets or operations, restrictions on payments, or limitations on the movement of funds; • increased tariffs; • trade and economic sanctions or other restrictions; • unexpected changes in legal and regulatory requirements, including changes in interpretation or enforcement of existing laws; • deprivation of contract rights; and • the inability to obtain or retain licenses required for operation. 25 Table of Contents Inflation and higher interest rates have, and may continue to, adversely affect our financial position and results of operations.
Our year-end backlog was $59.4 million, $55.5 million, and $41.2 million at the end of fiscal years 2023, 2022 and 2021, respectively. We define “backlog” at any given point in time to consist of all firm, unfulfilled purchase orders and commitments at that time. We expect to fill most items in backlog within the following twelve months.
Our year-end backlog was $48.9 million, $59.4 million, and $55.5 million at the end of fiscal years 2024, 2023 and 2022, respectively. We define “backlog” at any given point in time to consist of all firm, unfulfilled purchase orders and commitments at that time. We expect to fill most items in backlog within the following twelve months.
The explosion-welded cladding market is dependent upon sales of products for use by customers in a limited number of heavy industries, including oil and gas, chemicals and petrochemicals, alternative energy, hydrometallurgy, aluminum production, shipbuilding, rail car manufacturing, power generation, and industrial refrigeration.
The explosive welding clad market is dependent upon sales of products for use by customers in a limited number of heavy industries, including oil and gas, chemicals and petrochemicals, alternative energy, hydrometallurgy, aluminum production, shipbuilding, rail car manufacturing, power generation, and industrial refrigeration.
We are continuing to experience significant customer concentration and customer consolidation, resulting in certain customers having substantial pricing power, which has negatively impacted our margins and profitability. During the year ended December 31, 2023, one DynaEnergetics customer accounted for approximately 15% of consolidated net sales of the Company.
We are continuing to experience significant customer concentration and customer consolidation, resulting in certain customers having substantial negotiating leverage, which has negatively impacted our pricing, margins and profitability. During the year ended December 31, 2024, one DynaEnergetics customer accounted for approximately 23% of consolidated net sales of the Company.
Sales made in currencies other than U.S. dollars accounted for 9%, 6%, and 16% of total sales for the years ended 2023, 2022 and 2021, respectively.
Sales made in currencies other than U.S. dollars accounted for 11%, 9%, and 6% of total sales for the years ended 2024, 2023 and 2022, respectively.
We are currently involved and may in the future be involved in litigation, in the United States or abroad, to enforce our patents or other intellectual property rights or to protect our trade secrets and know-how.
We have been in the past and may in the future be involved in litigation, in the United States or abroad, to enforce our patents or other intellectual property rights or to protect our trade secrets and know-how.
Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design.
We are dependent upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design.
We are incurring legal costs to defend this action and may in the future be required to defend similar actions, and we could incur losses from these and similar cases, and the amount of such losses or costs could be material.
We may in the future be required to defend similar actions, and we could incur losses from these and similar cases, and the amount of such losses or costs could be material.
Legal and Regulatory Risks • Our operations require us to comply with numerous laws and regulations, violations of which could have a material adverse effect on our consolidated results of operations, financial condition or cash flows. • The use of explosives in our DynaEnergetics and NobelClad manufacturing processes and products subject us to additional environmental, health and safety laws and any accidents or injuries could subject us to significant liabilities. • Demand for our products could be reduced by existing and future legislation, regulations and public sentiment. • We are subject to extensive environmental, health and safety laws and failure to comply with such laws and regulations could result in restrictions or prohibitions on our facilities, substantial civil or criminal liabilities and could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. • Failure to comply with applicable federal, state and local employment and labor laws and regulations could have a material, adverse impact on our business. • The regulatory environment governing information, data security and privacy is increasingly demanding and evolving and a data security breach could result in litigation, enforcement actions and related penalties and fines. • Legal, regulatory or market measures to address climate change, including proposals to restrict emissions of GHGs and other sustainability initiatives, could have an adverse impact on the Company’s business and results of operations. • Changes in or interpretation of tax law could impact the determination of our income tax liabilities for a tax year. 16 Table of Contents Intellectual Property Risks • Our failure to protect our proprietary information and any successful intellectual property challenges against us could materially and adversely affect our competitive position. • We may incur substantial costs defending against third parties alleging that we infringe their proprietary rights.
Legal and Regulatory Risks • Our operations require us to comply with numerous laws and regulations, violations of which could have a material adverse effect on our consolidated results of operations, financial condition or cash flows. • The use of explosives in our DynaEnergetics and NobelClad manufacturing processes and products subject us to additional environmental, health and safety laws and any accidents or injuries could subject us to significant liabilities. • Demand for our products could be reduced by existing and future legislation, regulations and public sentiment. • We are subject to extensive environmental, health and safety laws and failure to comply with such laws and regulations could result in restrictions or prohibitions on our facilities, substantial civil or criminal liabilities and could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. • Failure to comply with applicable federal, state and local employment and labor laws and regulations could have a material, adverse impact on our business. • The regulatory environment governing information, data security and privacy is increasingly demanding and evolving and a data security breach could result in litigation, enforcement actions and related penalties and fines. • Legal, regulatory or market measures to address climate change, including proposals to restrict emissions of GHGs and other sustainability initiatives, could have an adverse impact on the Company’s business and results of operations. • Changes in or interpretation of tax law could impact the determination of our income tax liabilities for a tax year.
The risk of cybersecurity incidents may increase with political and economic instability or warfare (including the ongoing hostilities between Russia and Ukraine). Various measures have been implemented to manage our risks related to information technology systems and network disruptions.
The risk of cybersecurity incidents may increase with political and economic instability or warfare (including the ongoing hostilities between Russia and Ukraine) and the use of artificial intelligence to make intrusion attempts look more legitimate. Various measures have been implemented to manage our risks related to information technology systems and network disruptions.
Our current and future success is dependent on the retention of these and other executive officers, key employees and directors. The loss or unavailability of any key personnel could have an adverse effect on the Company’s leadership, ability to execute our strategy, financial condition and results of operations.
Our current and future success is dependent on finding a permanent successor for the DMC President and CEO positions and the retention of other executive officers, key employees and directors. The loss or unavailability of any key personnel could have an adverse effect on the Company’s leadership, ability to execute our strategy, financial condition and results of operations.
The use of explosives is an inherently dangerous activity. These activities subject us to extensive environmental and health and safety laws and regulations including guidelines and regulations for the purchase, manufacture, handling, transport, storage and use of explosives issued by the U.S.
The use of explosives is an inherently dangerous activity. These activities subject us to extensive environmental and health and safety laws and regulations including guidelines and regulations for the purchase, manufacture, handling, transport, storage and use of explosives issued by the U.S. Bureau of Alcohol, Tobacco and Firearms; the Federal Motor Carrier Safety regulations set forth by the U.S.
Our operations are subject to political and economic instability and risk of government actions that could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. We are exposed to risks inherent in doing business in each of the countries in which we operate.
We are exposed to risks inherent in doing business in each of the countries in which we operate. Our operations are subject to various risks unique to each country that could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
Our ability to service the indebtedness under the credit facility and to maintain compliance with the covenants included in the credit facility will depend on our success in achieving the intended benefits of the acquisition, which is subject to numerous risks and uncertainties as discussed above.
Our ability to service the indebtedness under the credit facility and to maintain compliance with its covenants, which are based in part on trailing twelve-month results, will depend on our success in achieving the intended benefits of the acquisition and are subject to numerous risks and uncertainties as discussed above.
We may be unable to successfully execute and realize the expected financial benefits from strategic initiatives. 20 Table of Contents From time to time, our business has engaged in strategic initiatives, and such activities may occur in the future. These efforts have recently included a series of automation, lean manufacturing and cost-reduction initiatives designed to enhance profitability and improve quality.
From time to time, our business has engaged in strategic initiatives, and such activities may occur in the future. These efforts have recently included a series of automation, lean manufacturing and cost-reduction initiatives designed to enhance profitability and improve quality.
Risks Related to Acquisitions We have incurred debt to finance the acquisition of 60% of Arcadia Products and may incur additional substantial financial obligations in connection with the acquisition of the remaining 40% of Arcadia Products. We financed a portion of the purchase price of the Arcadia Products acquisition with proceeds from our credit facility.
Risks Related to Acquisitions We have incurred debt to finance the acquisition of 60% of Arcadia Products and may incur additional substantial financial obligations in connection with the acquisition of the remaining 40% of Arcadia Products.
Any failure to remain in compliance with any material provision or covenant of our credit agreement could result in a default, which would, absent a waiver or amendment, require immediate repayment of outstanding indebtedness under our credit facilities. We may not have or be able to obtain sufficient funds to satisfy such a repayment obligation.
Any failure to remain in compliance with any material provision or covenant of our credit agreement could result in a default, which would, absent a waiver or amendment, require immediate repayment of outstanding indebtedness under our credit facilities.
We incur substantial costs to comply with these laws and regulations and non-compliance could expose us to significant liabilities. For example, Arcadia Products is currently defending a lawsuit in California alleging violations of wage and hour regulations with respect to certain temporary and permanent employees.
We incur substantial costs to comply with these laws and regulations and non-compliance or alleged non-compliance could expose us to significant liabilities. For example, Arcadia Products recently settled a lawsuit in California alleging violations of wage and hour regulations with respect to certain temporary and permanent employees. The defense and ultimate settlement of this action resulted in significant costs.
Likewise, if our proprietary technologies, equipment, facilities, or work processes become obsolete, we may no longer be competitive, and our business and consolidated results of operations could be materially and adversely affected.
Likewise, if our proprietary technologies, equipment, facilities, or work processes become obsolete, we may no longer be competitive, and our business and consolidated results of operations could be materially and adversely affected. We may be unable to successfully execute and realize the expected financial benefits from strategic initiatives.
Our continued success depends to a large extent upon the efforts and abilities of key managerial and technical employees, and our ability to secure sufficient manufacturing labor.
Failure to attract and retain key personnel and source sufficient labor could adversely affect our current operating results. Our continued success depends to a large extent upon the efforts and abilities of key managerial and technical employees, and our ability to secure sufficient manufacturing labor.
If we fail to pay the Option Purchase Price when required under the Operating Agreement, we will be in default under the agreement. The Option Purchase Price is likely to be substantial relative to the current size of our business.
If we fail to pay the Option Purchase Price when required under the Operating Agreement, we will be in default under the agreement.
Continued or worsening conditions in the oil and gas industry generally may have a further material adverse effect on our business, financial condition, results of operations, cash flows and prospects. Failure to adjust our manufacturing and supply chain to accurately meet customer demands could have a material adverse effect on our results of operations.
Continued or worsening conditions in the oil and gas industry generally may have a further material adverse effect on our business, financial condition, results of operations, cash flows and prospects. Consolidation of our customers and competitors may impact our results of operations.
If our customers delay paying or fail to pay a significant amount of our outstanding receivables, it could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.
We may not have or be able to obtain sufficient funds to satisfy such a repayment obligation. 27 Table of Contents If our customers delay paying or fail to pay a significant amount of our outstanding receivables, it could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.
Risk Factors Related to DynaEnergetics Demand for DynaEnergetics’ products is substantially dependent on the levels of capital expenditures by the oil and gas industry. Decreases or expected decreases in oil and gas prices and reduced expenditures in the oil and gas industry could have a material adverse impact on our financial condition, results of operations and cash flows.
Decreases or expected decreases in oil and gas prices and reduced expenditures in the oil and gas industry could have a material adverse impact on our financial condition, results of operations and cash flows.
We attempt to minimize the risk of losing customers or specific contracts by continually improving commercial execution and product quality, delivering product on time and competing aggressively on the basis of price.
We attempt to minimize the risk of losing customers or specific contracts by continually improving commercial execution and product quality, delivering product on time and competing aggressively on the basis of price. Inflationary conditions in many markets have created uncertainty in our end markets, and we have seen delays in projects and capital expenditures.
From time to time, we examine opportunities to make selective acquisitions in order to increase shareholder return by increasing our total available markets, expanding our existing operations and, potentially, generating synergies.
To the extent that we seek to further expand our business through acquisitions, we may experience issues in executing acquisitions or integrating acquired operations. From time to time, we examine opportunities to make selective acquisitions in order to increase shareholder return by increasing our total available markets, expanding our existing operations and, potentially, generating synergies.
In addition, the Option Purchase Price is subject to a defined “floor” value in the Operating Agreement, which is based primarily upon a contractually stated equity value.
The Option Purchase Price is subject to a defined “floor” value in the Operating Agreement, which is based primarily upon a contractually stated equity value and will likely be substantial relative to the current size of our business.
Any failures identified within our internal controls as a result of this 18 Table of Contents implementation, even if quickly remediated, or difficulties encountered during implementation, may adversely impact our operating results or hinder our ability to report our financial results in a timely and accurate basis.
Any failures identified within our internal controls as a result of this implementation, even if quickly remediated, or difficulties encountered during implementation, may adversely impact our operating results or hinder our ability to report our financial results in a timely and accurate basis. 19 Table of Contents Risk Factors Related to DynaEnergetics Demand for DynaEnergetics’ products is substantially dependent on the levels of capital expenditures by the oil and gas industry.
These include: • our ability to effectively control certain strategic, operational and financial decisions; • the potential for disagreement over the direction of the company and costs and expenses involved; and • the risk of having economic or business interests or goals that are inconsistent with, or opposed to, those of Munera.
These include: • our ability to effectively control certain strategic, operational and financial decisions; • the potential for disagreement over the direction of the company and costs and expenses involved; and • the risk of having economic or business interests or goals that are inconsistent with, or opposed to, those of Munera. 35 Table of Contents There can be no assurance that the acquisition will be beneficial to us, whether due to the above-described risks, unfavorable economic conditions, integration challenges or other factors.
If we are not able to design, develop, and produce commercially competitive products in a timely manner in response to changes in the market, customer requirements, competitive pressures, and technology trends, our business and consolidated results of operations and the value of our intellectual property could be materially and adversely affected.
If we fail to compete successfully against our competition, we may be unable to maintain acceptable sales levels, prices and margins for our products, which could have a material adverse effect on our business, financial condition, and results of operations 21 Table of Contents If we are not able to design, develop, and produce commercially competitive products in a timely manner in response to changes in the market, customer requirements, competitive pressures, and technology trends, our business and consolidated results of operations and the value of our intellectual property could be materially and adversely affected.
The heightened stakeholder focus on Environmental, Social, and Governance, or “ESG,” issues related to our businesses requires the continuous monitoring of various and evolving laws, regulations, standards and expectations and the associated reporting requirements.
The heightened stakeholder focus on Environmental, Social, and Governance, or “ESG,” issues related to our businesses requires the continuous monitoring of various and evolving laws, regulations, standards and expectations and the associated reporting requirements. Specifically, certain stakeholders are beginning to require that we provide information on our plans relating to certain climate-related matters such as greenhouse gas emissions.
This is in addition to the continued complexities involving the transfer of personal data from Europe to the U.S. following the Schrems II decision. In July 2023, the European Commission announced a new Trans-Atlantic data privacy framework, Privacy Shield 2.0, which may require additional compliance efforts from our company.
In July 2023, the European Commission announced a new Trans-Atlantic data privacy framework, Privacy Shield 2.0, which may require additional compliance efforts from our company.
Changes in or interpretation of tax law could impact the determination of our income tax liabilities for a tax year. We are subject to income taxes in the U.S. and certain foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes.
We are subject to income taxes in the U.S. and certain foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the course of our business, there are many transactions and calculations where the ultimate tax determination is subjective or uncertain.
In addition, higher interest rates in the U.S. have increased the cost of debt borrowing, which decreases cash available for debt repayment, investment, and acquisitions. 24 Table of Contents Our business, financial condition and results of operations could be adversely affected by disruptions in the global and European economies caused by the ongoing military action between Russia and Ukraine.
Furthermore, higher interest rates decrease cash available for debt repayment as our credit facility bears a variable interest rate. Our business, financial condition and results of operations could be adversely affected by disruptions in the global and European economies caused by the ongoing military action between Russia and Ukraine.
We could incur fines, penalties or sanctions or be subject to third-party claims, including indemnification claims, for property damage, personal injury or otherwise as a result of violations of (or liabilities under) environmental, health and safety laws, or in connection with releases of hazardous or other materials. 29 Table of Contents Changes in or new interpretations of existing laws, regulations or enforcement policies, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future including additional investigation, remediation or other obligations with respect to our products or business activities may lead to additional compliance costs or require us to change our manufacturing processes, which could have a material adverse effect on our business, financial condition or results of operations.
Changes in or new interpretations of existing laws, regulations or enforcement policies, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future including additional investigation, remediation or other obligations with respect to our products or business activities may lead to additional compliance costs or require us to change our manufacturing processes, which could have a material adverse effect on our business, financial condition or results of operations. 31 Table of Contents In Germany, we and all our activities are subject to various safety and environmental regulations of the federal state which are enforced by the local authorities, including the Federal Act on Emission Control (Bundes-Immissionsschutzgesetz).
In addition, as early as three years after the closing of the Arcadia Products acquisition, we may be required to pay the Option Purchase Price for some or all of Munera’s interests in Arcadia Products if Munera exercises the Put Option.
In addition, as early as September 6, 2026, we may be required to pay the Option Purchase Price for some or all of Munera’s interests in Arcadia Products if Munera exercises the Put Option. Even if we elect to pay 80% of the Option Purchase Price in preferred stock, we will need to fund the remaining portion in cash.
Such preferences could also impact our ability to obtain acceptable debt or equity financing on attractive terms or at all and could negatively impact our stock price over time. Our business, reputation and demand for our stock could be negatively affected if we do not (or are perceived to not) act responsibly with respect to sustainability matters.
Such preferences could also impact our ability to obtain acceptable debt or equity financing on attractive terms or at all and could negatively impact our stock price over time.
In Germany, the transport, storage and use of explosives is governed by a permit issued under the Explosives Act (Sprengstoffgesetz).
Department of Transportation; the Safety Library Publications of the Institute of Makers of Explosive; and similar guidelines of their European counterparts. In Germany, the transport, storage and use of explosives is governed by a permit issued under the Explosives Act (Sprengstoffgesetz).
The stock markets in general have experienced extreme volatility that has at times been unrelated to the operating performance of particular companies, and these fluctuations may adversely affect the trading price of our common stock. ITEM 1B. Unresolved Staff Comments None.
The stock markets in general have experienced extreme volatility that has at times been unrelated to the operating performance of particular companies, and these fluctuations may adversely affect the trading price of our common stock. 36 Table of Contents Our business could be negatively affected as a result of actions of activist stockholders or othe r s.
In the course of our business, there are many transactions and calculations where the ultimate tax determination is subjective or uncertain. We earn a significant amount of our operating income outside the U.S and have significant intercompany transactions between our affiliates.
We earn a significant amount of our operating income outside the U.S and have significant intercompany transactions between our affiliates.
If we experience an increase in warranty claims or if our repair and replacement costs associated with warranty claims increase significantly, it could have a material adverse effect on our financial condition and results of operations.
If we experience an increase in warranty claims or if our repair and replacement costs associated with warranty claims increase significantly, it could have a material adverse effect on our financial condition and results of operations. 24 Table of Contents Risk Factors Related to our Businesses Generally Our efforts to grow and transform our businesses may require significant investments; if our strategies are unsuccessful, our business, results of operations and/or financial condition may be materially adversely affected.
The tariffs impacted the cost of the importation of steel, which we utilize in our steel plate and steel pipe, key materials in our NobelClad and DynaEnergetics businesses. Though in many cases we have been able to source metals from domestic suppliers, some materials are only available from sources subject to tariffs.
Though in many cases we have been able to source metals from domestic suppliers, some materials are only available from sources subject to tariffs. The cost of domestic steel and aluminum also increased, along with the price of delivery, and the availability of certain materials has been limited.
For our 26 Table of Contents NobelClad business, this impacts our ability to compete on international projects and negatively impacts U.S. fabricators, which are the primary consumers of NobelClad products.
These higher costs have increased the price of our products to our customers and, in some instances, affected our ability to be competitive. For our NobelClad business, this has impacted our ability to compete on international projects and negatively impacted U.S. fabricators, which are the primary consumers of NobelClad products.
The prolonged duration of tariffs, the imposition of additional tariffs and the risk of potential broader global trade conflicts could have a material adverse effect on our business, financial condition or results of operations. Failure to attract and retain key personnel and source sufficient labor could adversely affect our current operating results.
The prolonged duration of tariffs, including retaliatory tariffs, the imposition of additional tariffs and the risk of potential broader global trade conflicts could have a material adverse effect on our business, financial condition or results of operations if we are not able to pass through cost increases to our customers.
Risk Factors Related to Our Common Stock The price and trading volume of our common stock may be volatile, which may make it difficult for you to resell the common stock when you want or at prices you find attractive.
Risk Factors Related to Our Common Stock • The price and trading volume of our common stock may be volatile, which may make it difficult for you to resell the common stock when you want or at prices you find attractive. • Our business could be negatively affected as a result of actions of activist stockholders or others. • Our stockholder protection rights agreement includes terms and conditions that could discourage a takeover or other transaction that stockholders may consider favorable.
In the event that our current internal control practices deteriorate, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our stock may be adversely affected.
In the event that our current internal control practices deteriorate, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our stock may be adversely affected. 29 Table of Contents Legal and Regulatory Risks Our operations require us to comply with numerous laws and regulations, violations of which could have a material adverse effect on our consolidated results of operations, financial condition or cash flows.
In addition, recent, ongoing and future mergers, combinations and consolidations in our industry could result in existing competitors increasing their market share. As a result, industry consolidation may have a significant negative impact on our results of operations, financial position or cash flows.
In addition, recent, ongoing and future mergers, combinations and consolidations in our industry could result in existing competitors increasing their market share.
A failure in our information technology systems or those of third parties, including those caused by security breaches, cyber-attacks or data protection failures, could disrupt our business, result in significant legal costs and other losses and damage our reputation. We are dependent upon information technology systems in the conduct of our operations.
Furthermore, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to higher turnover, litigation and unionization efforts, which could negatively impact our ability to meet our operating results. 28 Table of Contents A failure in our information technology systems or those of third parties, including those caused by security breaches, cyber-attacks or data protection failures, could disrupt our business, result in significant legal costs and other losses and damage our reputation.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CIO reports directly to our Chief Executive Officer and has extensive information technology experience. Led by our CIO, we conduct regular assessments to identify potential cybersecurity risks and vulnerabilities, including the evaluation of systems and data assets. We have established internal procedures to stay vigilant against evolving threats by monitoring network traffic and conducting security audits.
Biggest changeThe CIO reports directly to our Interim President and Chief Executive Officer, and the CISO reports directly to our CIO. Our CISO has extensive experience in cybersecurity, business continuity, disaster recovery and cloud security. Led by our CIO and CISO, we conduct regular assessments to identify potential cybersecurity risks and vulnerabilities, including the evaluation of systems and data assets.
These reports are typically presented by our CIO to the Risk Committee of the Board and include updates to recently completed cybersecurity initiatives, upcoming plans, an overview of current threats, as well as discussion of our overall cybersecurity maturity and readiness.
These reports are typically presented by our CISO to the Risk Committee of the Board and include updates to recently completed cybersecurity initiatives, upcoming plans, an overview of current threats, as well as discussion of our overall cybersecurity maturity and readiness.
This program should better enable the Company to identify and manage material risks from cybersecurity threats related to our third-party service providers. Cybersecurity risk updates are provided quarterly to our senior management team by the CIO as part of our enterprise risk management process.
As we continue to expand this program, it should better enable the Company to identify and manage material risks from cybersecurity threats related to our third-party service providers. Cybersecurity risk updates are provided quarterly to our senior management team by the CIO and CISO as part of our enterprise risk management process.
These tests simulate real-world attacks and assist in assessing our internal readiness and response capabilities. We are proactively taking steps to enhance our monitoring of third-party service providers’ cybersecurity, including the commencement of a vendor third-party risk management program.
To further evaluate our cybersecurity defenses, we periodically commission penetration exercises conducted by specialized firms. These tests simulate real-world attacks and assist in assessing our internal readiness and response capabilities. We are proactively taking steps to enhance our monitoring of third-party service providers’ cybersecurity, including the continuance of a vendor third-party risk management program.
We also regularly engage independent assessors and external 34 Table of Contents consultants who specialize in cybersecurity to conduct thorough, unbiased evaluations of our systems, policies, and procedures. These assessments help us ensure that our cybersecurity practices are aligned with applicable regulations and standards. To further evaluate our cybersecurity defenses, we periodically commission penetration exercises conducted by specialized firms.
We have established internal procedures to stay vigilant against evolving threats by monitoring network traffic and conducting security audits. We also regularly engage independent assessors and external consultants who specialize in cybersecurity to conduct thorough, unbiased evaluations of our systems, policies, and procedures. These assessments help us ensure that our cybersecurity practices are aligned with applicable regulations and standards.
ITEM 1C. Cybersecurity The Board, in coordination with the Risk Committee, oversees the Company's risk management program, which includes risks arising from cybersecurity threats. DMC’s Chief Information Officer (CIO) manages the Company’s cybersecurity program and is responsible for leading and coordinating cybersecurity activities across the organization.
ITEM 1C. Cybersecurity The Board, in coordination with the Risk Committee, oversees the Company's risk management program, which includes risks arising from cybersecurity threats.
Added
DMC’s Chief Information Officer (CIO) and Chief Information Security Officer (CISO), the management position responsible for assessing and managing material risks from cybersecurity threats, manages the Company’s cybersecurity program and are responsible for leading and coordinating cybersecurity activities across the organization.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeNobelClad owns a manufacturing site in Liebenscheid, Germany as well as a mine used as a shooting site in Dillenburg, Germany. We purchased the buildings and land around the Dillenburg mine in 2022. NobelClad leases the building housing its sales and administrative office in Perpignan, France.
Biggest changeThe license and risk allocation agreements will expire on March 31, 2028, with renewal options through March 31, 2033. NobelClad owns a manufacturing site in Liebenscheid, Germany as well as a mine used as a shooting site in Dillenburg, Germany. We purchased the buildings and land around the Dillenburg mine in 2022.
Leased September 30, 2029, with renewal option for 60 months 35 Table of Contents Arcadia Products Arcadia Products owns a manufacturing site and sales office in Vernon, California and leases other manufacturing and distribution centers throughout the United States.
Leased September 30, 2029, with renewal option for 60 months 38 Table of Contents Arcadia Products Arcadia Products owns a manufacturing site and sales office in Vernon, California and leases other manufacturing and distribution centers throughout the United States.
Leased August 31, 2025 (a) The Blum, Texas warehouse is separate from the main Blum manufacturing campus. 37 Table of Contents NobelClad NobelClad owns its principal domestic manufacturing site, which is located in Mount Braddock, Pennsylvania.
Leased August 31, 2025 (a) The Blum, Texas warehouse is separate from the main Blum manufacturing campus. 40 Table of Contents NobelClad NobelClad owns its principal domestic manufacturing site, which is located in Mount Braddock, Pennsylvania.
Leased March 31, 2028, with renewal options through March 31, 2033 Canonsburg, Pennsylvania Manufacturing 16,000 sq. ft Leased November 30, 2024, with renewal options for two additional 12-month periods Tautavel, France (a) Clad shooting site 116 acres Owned Perpignan, France Administration and sales office 3,671 sq. ft Leased September 30, 2029, with renewal options for additional three-year periods.
Leased March 31, 2028, with renewal options through March 31, 2033 Canonsburg, Pennsylvania Manufacturing 16,000 sq. ft Leased November 30, 2025, with renewal options for one additional 12-month periods Tautavel, France (a) Clad shooting site 116 acres Owned Perpignan, France Administration and sales office 3,671 sq. ft Leased September 30, 2029, with renewal options for additional three-year periods.
The table below summarizes DynaEnergetics' material properties, including their location, type, size, whether owned or leased and expiration terms, if applicable. Location Property Type Property Size Owned/Leased Expiration Date of Lease (if applicable) Troisdorf, Germany Manufacturing and administration office Manufacturing: 263,201 sq. ft. Office: 2,033 sq. ft. Leased December 31, 2025 Troisdorf, Germany Office 9,203 sq. ft.
The table below summarizes DynaEnergetics' material properties, including their location, type, size, whether owned or leased and expiration terms, if applicable. Location Property Type Property Size Owned/Leased Expiration Date of Lease (if applicable) Troisdorf, Germany Manufacturing and administration office Manufacturing: 263,201 sq. ft. Office: 2,033 sq. ft. Leased December 31, 2025 Troisdorf, Germany Office 4,672 sq. ft.
Leased December 22, 2026, with renewal option for 60 months Vernon, California (1) Office, warehouse 110,677 sq. ft. Leased December 22, 2026, with renewal option for 60 months Hayward, California (1) Distribution, light assembly 45,624 sq. ft. Leased December 22, 2024, with renewal option for 36 months West Sacramento, California (1) Distribution, light assembly 16,000 sq. ft.
Leased December 22, 2026, with renewal option for 60 months Vernon, California (1) Office, warehouse 110,677 sq. ft. Leased December 22, 2026, with renewal option for 60 months Hayward, California (1) Distribution, light assembly 45,624 sq. ft. Leased December 22, 2027 West Sacramento, California (1) Distribution, light assembly 16,000 sq. ft.
Leased December 22, 2024, with renewal option for 36 months Stamford, Connecticut (1) Office, warehouse 39,418 sq. ft. Leased December 22, 2025 Phoenix, Arizona (1) Office, warehouse 51,986 sq. ft. Leased December 22, 2026, with renewal option for 24 months Las Vegas, Nevada (1) Office, warehouse 88,915 sq. ft.
Leased December 22, 2027 Stamford, Connecticut (1) Office, warehouse 39,418 sq. ft. Leased December 22, 2025 Phoenix, Arizona (1) Office, warehouse 51,986 sq. ft. Leased December 22, 2026, with renewal option for 24 months Las Vegas, Nevada (1) Office, warehouse 88,915 sq. ft.
Leased November 30, 2025, with renewal option for 60 months Kent, Washington Distribution, light assembly 25,000 sq. ft. Leased May 31, 2029 (1) These leases are with entities affiliated with the holder of the redeemable noncontrolling interest and the former president of Arcadia Products.
Leased November 30, 2025, with renewal option for 60 months Kent, Washington Distribution, light assembly 25,000 sq. ft. Leased May 31, 2029 (1) These leases are with entities affiliated with the holder of the redeemable noncontrolling interest holder and president of Arcadia Products as of February 3, 2025.
ITEM 3. Legal Proceedings Refer to Note 12 within Part II, Item 8 — Financial Statements and Supplementary Data.
ITEM 3. Legal Proceedings Refer to Note 13 within Part II, Item 8 — Financial Statements and Supplementary Data.
Owned Blum, Texas Land for office, warehouse, and manufacturing 284 acres Owned Midland, Texas Land 13.3 acres Leased April 1, 2029 Whitney, Texas Office, warehouse, and manufacturing 36,000 sq. ft. Owned Alberta, Canada Office and warehouse 7,650 sq. ft.
Owned Blum, Texas Land for office, warehouse, and manufacturing 284 acres Owned Midland, Texas Land 13.3 acres Leased April 1, 2029 Whitney, Texas Warehouse Building: 30,000 sq ft Land: 3.816 acres Leased October 31, 2029 Whitney, Texas Office, warehouse, and manufacturing 36,000 sq. ft. Owned Alberta, Canada Office and warehouse 7,650 sq. ft.
During the year-ended December 31, 2023, DMC recorded $4,625 in lease expense related to these properties. 36 Table of Contents DynaEnergetics DynaEnergetics leases a manufacturing site and sales office in Troisdorf, Germany. The leases for these properties expire on December 31, 2025, and we are negotiating future renewal options.
During the year-ended December 31, 2024, DMC recorded $4,625 in lease expense related to these properties. 39 Table of Contents DynaEnergetics DynaEnergetics leases a manufacturing site and administration office in Troisdorf, Germany. The leases for this property expire on December 31, 2025, and we are negotiating future renewal options.
Leased December 31, 2025 Liebenscheid, Germany Manufacturing and office 5,511 sq. ft. Owned Liebenscheid, Germany Land 77,672 sq. ft. Owned Houston, Texas Office 11,370 sq. ft. Leased November 30, 2026 Blum, Texas Office, warehouse, and manufacturing 83,000 sq. ft. Owned Blum, Texas (a) Warehouse 10,000 sq. ft.
Leased February 28, 2027 Liebenscheid, Germany Manufacturing and office 5,511 sq. ft. Owned Liebenscheid, Germany Land 77,672 sq. ft. Owned Houston, Texas Office 11,370 sq. ft. Leased November 30, 2026 Blum, Texas Office, warehouse, and manufacturing 83,000 sq. ft. Owned Blum, Texas (a) Warehouse 10,000 sq. ft.
The shooting site in Dunbar and the nearby secondary shooting site support our Mount Braddock facility. The lease for the Dunbar property will expire on December 15, 2025, but we have options to renew the lease which would then extend through December 15, 2029. The license and risk allocation agreements will expire on March 31, 2028.
The shooting site in Dunbar and the nearby secondary shooting site support our Mount Braddock facility. The lease for the Dunbar property will expire on May 6, 2029, but we have options to renew the lease which would then extend through May 6, 2054.
Owned Dunbar, Pennsylvania Clad plate shooting site Land: 322 acres Buildings: 15,960 sq. ft. Leased December 15, 2025, with renewal options through December 15, 2029 Cool Spring, Pennsylvania Clad plate shooting site 1,200,000 sq. ft.
Braddock, Pennsylvania Clad plate manufacturing and administration office Land: 14 acres Buildings: 101,300 sq. ft. Owned Dunbar, Pennsylvania Clad plate shooting site Land: 322 acres Buildings: 15,960 sq. ft. Leased May 6, 2029 with renewal options through May 6, 2054. Cool Spring, Pennsylvania Clad plate shooting site 1,200,000 sq. ft.
The table below summarizes NobelClad's material properties, including their location, type, size, whether owned or leased and expiration terms, if applicable. Location Property Type Property Size Owned/Leased Expiration Date of Lease (if applicable) Mt. Braddock, Pennsylvania Clad plate manufacturing and administration office Land: 14 acres Buildings: 101,300 sq. ft.
NobelClad leases the building housing its sales and administrative office in Perpignan, France. The table below summarizes NobelClad's material properties, including their location, type, size, whether owned or leased and expiration terms, if applicable. Location Property Type Property Size Owned/Leased Expiration Date of Lease (if applicable) Mt.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings 38 Item 4. Mine Safety Disclosures 38 Part II 39 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 Item 6. [Reserved] 41 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 42 Item 7A.
Biggest changeItem 3. Legal Proceedings 41 Item 4. Mine Safety Disclosures 41 Part II 42 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 42 Item 6. [Reserved] 44 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A.
Quantitative and Qualitative Disclosures about Market Risk 55 Item 8. Financial Statements and Supplementary Data 57
Quantitative and Qualitative Disclosures about Market Risk 58 Item 8. Financial Statements and Supplementary Data 59

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeDuring the year ended December 31, 2023, we had no such specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events in relation to our United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act. 38 Table of Contents PART II
Biggest changeDuring the year ended December 31, 2024, we had no such specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events in relation to our United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act. 41 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Return Analysis December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 DMC Global Inc. $100.00 $127.96 $123.15 $112.78 $55.35 $53.59 Nasdaq Non-Financial Stocks $100.00 $139.46 $207.62 $264.73 $179.00 $277.68 Nasdaq Composite (U.S.) $100.00 $131.17 $159.07 $200.26 $160.75 $203.23 40 Table of Contents
Biggest changeTotal Return Analysis December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 DMC Global Inc. $100.00 $96.24 $88.14 $43.26 $41.88 $16.36 Nasdaq Non-Financial Stocks $100.00 $148.88 $189.83 $128.35 $199.12 $250.65 Nasdaq Composite (U.S.) $100.00 $121.27 $152.67 $122.55 $154.93 $192.86 43 Table of Contents
Equity Compensation Plan Refer to “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding securities authorized for issuance under our equity compensation plans, which is incorporated in this Item by this reference. Issuer Purchases of Equity Securities During the quarter ended December 31, 2023, we purchased shares of common stock as follows.
Equity Compensation Plan Refer to “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding securities authorized for issuance under our equity compensation plans, which is incorporated in this Item by this reference. Issuer Purchases of Equity Securities During the quarter ended December 31, 2024, we purchased shares of common stock as follows.
The comparison of total return (change in year-end stock price plus reinvested dividends) for each of the years assumes that $100 was invested on December 31, 2018, in each of the Company, the Nasdaq Non-Financial Stocks Index and the Nasdaq Composite (U.S.) Index with investment weighted on the basis of market capitalization.
The comparison of total return (change in year-end stock price plus reinvested dividends) for each of the years assumes that $100 was invested on December 31, 2019, in each of the Company, the Nasdaq Non-Financial Stocks Index and the Nasdaq Composite (U.S.) Index with investment weighted on the basis of market capitalization.
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is publicly traded on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “BOOM.” As of February 20, 2024, there were 210 holders of record of our common stock (does not include beneficial holders of shares held in “street name”).
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is publicly traded on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “BOOM.” As of February 17, 2025, there were 172 holders of record of our common stock (does not include beneficial holders of shares held in “street name”).
(2) As of December 31, 2023, the maximum number of shares that could be purchased would not exceed the employees’ portion of taxes to be withheld on unvested shares (426,396) and potential purchases upon participant elections to diversify equity awards held in the Company’s Amended and Restated Non-Qualified Deferred Compensation Plan (81,800) into other investment options available to participants in the Plan. 39 Table of Contents Stock Performance Graph The following graph compares the performance of our common stock with the Nasdaq Non-Financial Stocks Index and the Nasdaq Composite (U.S.) Index.
(2) As of December 31, 2024, the maximum number of shares that could be purchased would not exceed the employees’ portion of taxes to be withheld on unvested shares (758,368) and potential purchases upon participant elections to diversify equity awards held in the Company’s Amended and Restated Non-Qualified Deferred Compensation Plan (35,838) into other investment options available to participants in the Plan. 42 Table of Contents Stock Performance Graph The following graph compares the performance of our common stock with the Nasdaq Non-Financial Stocks Index and the Nasdaq Composite (U.S.) Index.
Total number of shares purchased (1) (2) Average price paid per share October 1 to October 31, 2023 2,138 $ 18.72 November 1 to November 30, 2023 — $ — December 1 to December 31, 2023 6,225 $ 18.81 Total 8,363 $ 18.79 (1) Share purchases during the period were to offset tax withholding obligations that occurred upon the vesting of restricted common stock under the terms of the 2016 Equity Incentive Plan.
Total number of shares purchased (1) (2) Average price paid per share October 1 to October 31, 2024 13,948 $ 13.06 November 1 to November 30, 2024 3,776 $ 10.04 December 1 to December 31, 2024 3,231 $ 6.84 Total 20,955 $ 11.56 (1) Share purchases during the period were to offset tax withholding obligations that occurred upon the vesting of restricted common stock under the terms of the 2016 Equity Incentive Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGiven that not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to similarly titled measures of other companies. 44 Table of Contents Consolidated Results of Operations 2023 2022 $ change % change Net sales $ 719,188 $ 654,086 $ 65,102 10 % Gross profit 212,052 185,447 26,605 14 % Gross profit percentage 29.5 % 28.4 % COSTS AND EXPENSES: General and administrative expenses 75,341 76,119 (778) (1) % % of net sales 10.5 % 11.6 % Selling and distribution expenses 49,101 42,230 6,871 16 % % of net sales 6.8 % 6.5 % Amortization of purchased intangible assets 22,667 36,926 (14,259) (39) % % of net sales 3.2 % 5.6 % Restructuring expenses, net and asset impairments 3,766 182 3,584 1,969 % Operating income 61,177 29,990 31,187 104 % Other expense, net (1,782) (594) (1,188) 200 % Interest expense, net (9,516) (6,187) (3,329) 54 % Income before income taxes 49,879 23,209 26,670 115 % Income tax provision 15,120 9,376 5,744 61 % Net income 34,759 13,833 20,926 151 % Less: Net income attributable to redeemable noncontrolling interest 8,500 1,586 6,914 436 % Net income attributable to DMC Global Inc. 26,259 12,247 14,012 114 % Adjusted EBITDA attributable to DMC Global Inc. $ 96,063 $ 74,199 $ 21,864 29 % Net sales were $719,188 for the twelve months ended December 31, 2023, an increase of 10% compared with 2022, primarily due to an increase in unit sales of DynaEnergetics’ DS perforating systems and increased activity in NobelClad's core energy and petrochemical end markets.
Biggest changeGiven that not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to similarly titled measures of other companies. 47 Table of Contents Consolidated Results of Operations 2024 2023 $ change % change Net sales $ 642,851 $ 719,188 $ (76,337) (11) % Gross profit 150,569 212,052 (61,483) (29) % Gross profit percentage 23.4 % 29.5 % COSTS AND EXPENSES: General and administrative expenses 61,401 75,341 (13,940) (19) % % of net sales 9.6 % 10.5 % Selling and distribution expenses 47,255 49,101 (1,846) (4) % % of net sales 7.4 % 6.8 % Amortization of purchased intangible assets 21,155 22,667 (1,512) (7) % % of net sales 3.3 % 3.2 % Goodwill impairment 141,725 — 141,725 100 % Strategic review expenses 7,765 — 7,765 100 % Restructuring expenses and asset impairments 2,526 3,766 (1,240) (33) % Operating (loss) income (131,258) 61,177 (192,435) (315) % Other expense, net (1,068) (1,782) 714 (40) % Interest expense, net (8,664) (9,516) 852 (9) % (Loss) income before income taxes (140,990) 49,879 (190,869) (383) % Income tax provision 10,970 15,120 (4,150) (27) % Net (loss) income (151,960) 34,759 (186,719) (537) % Less: Net (loss) income attributable to redeemable noncontrolling interest (57,508) 8,500 (66,008) (777) % Net (loss) income attributable to DMC Global Inc.
Stock-based compensation is allocated to the Arcadia Products segment as 60% of such expense is attributable to the Company, whereas the remaining 40% is attributable to the redeemable noncontrolling interest holder. Segment operating income will reconcile to consolidated income before income taxes by deducting unallocated corporate expenses, unallocated stock-based compensation, other (expense) income, net, and interest expense, net.
Stock-based compensation is allocated to the Arcadia Products segment as 60% of such expense is attributable to the Company, whereas the remaining 40% is attributable to the redeemable noncontrolling interest holder. Segment operating income will reconcile to consolidated income (loss) before income taxes by deducting unallocated corporate expenses, unallocated stock-based compensation, other expense, net, and interest expense, net.
Segment operating income is defined as revenues less expenses identifiable to the segment. DMC operating income and Adjusted EBITDA include unallocated corporate expenses and unallocated stock-based compensation expense. Stock-based compensation is not allocated to wholly owned segments, DynaEnergetics and NobelClad.
Segment operating income is defined as revenues less expenses identifiable to the segment. DMC consolidated operating income and Adjusted EBITDA include unallocated corporate expenses and unallocated stock-based compensation expense. Stock-based compensation is not allocated to wholly owned segments, DynaEnergetics and NobelClad.
Non-GAAP financial measures include the following: • EBITDA : defined as net income (loss) plus net interest, taxes, depreciation and amortization. • Adjusted EBITDA : excludes from EBITDA stock-based compensation, restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance (as further described in the tables below). • Adjusted EBITDA attributable to DMC Global Inc. stockholders : excludes the Adjusted EBITDA attributable to the 40% redeemable noncontrolling interest in Arcadia Products. • Adjusted EBITDA for DMC business segments : defined as operating income (loss) plus depreciation, amortization, allocated stock-based compensation (if applicable), restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance. • Adjusted net income (loss) : defined as net income (loss) attributable to DMC Global Inc. stockholders prior to the adjustment of redeemable noncontrolling interest plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance. • Adjusted diluted earnings per share: defined as diluted earnings per share attributable to DMC Global Inc. stockholders (exclusive of adjustment of redeemable noncontrolling interest) plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance. • Net debt : defined as total debt less total cash, cash equivalents and marketable securities. • Free-cash flow: defined as cash flows provided by (used in) operating activities less net acquisitions of property, plant and equipment.
Non-GAAP financial measures include the following: • EBITDA : defined as net income (loss) plus net interest, taxes, depreciation and amortization. • Adjusted EBITDA : excludes from EBITDA stock-based compensation, restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance (as further described in the tables below). • Adjusted EBITDA attributable to DMC Global Inc. : excludes the Adjusted EBITDA attributable to the 40% redeemable noncontrolling interest in Arcadia Products. • Adjusted EBITDA for DMC business segments : defined as operating income (loss) plus depreciation, amortization, allocated stock-based compensation (if applicable), restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance. • Adjusted net income (loss) : defined as net income (loss) attributable to DMC Global Inc. stockholders prior to the adjustment of redeemable noncontrolling interest plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance. • Adjusted diluted earnings per share: defined as diluted earnings per share attributable to DMC Global Inc. stockholders (exclusive of adjustment of redeemable noncontrolling interest) plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance. • Net debt : defined as total debt less total cash, cash equivalents and marketable securities. • Free-cash flow: defined as cash flows from operating activities less net acquisitions of property, plant and equipment.
A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal 2022 compared to fiscal 2021 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.dmcglobal.com/investors.
A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal 2023 compared to fiscal 2022 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.dmcglobal.com/investors.
We believe that cash and cash equivalents and marketable securities on hand, cash flow from operations, funds available under our credit facilities and any future replacement thereof will be sufficient to fund the working capital, required minimum debt service payments, and other capital expenditure requirements of our current business operations for the foreseeable future.
We believe that cash and cash equivalents on hand, cash flow from operations, funds available under our current credit facilities and any future replacement thereof will be sufficient to fund the working capital, required minimum debt service payments, and other capital expenditure requirements of our current business operations for the foreseeable future.
Our operating lease obligations are described in Note 5 "Leases" within Item 8 — Financial Statements and Supplementary Data. (3) Amounts represent firm commitments to purchase goods or services to be utilized in the normal course of business. These amounts are not reflected in the Consolidated Balance Sheets.
Our operating lease obligations are described in Note 6 "Leases" within Item 8 — Financial Statements and Supplementary Data. (3) Amounts represent firm commitments to purchase goods or services to be utilized in the normal course of business. These amounts are not reflected in the Consolidated Balance Sheets.
Off Balance Sheet Arrangements At December 31, 2023, we had no off-balance sheet arrangements, as defined by SEC rules, that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off Balance Sheet Arrangements At December 31, 2024, we had no off-balance sheet arrangements, as defined by SEC rules, that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
A reporting unit is defined as an operating segment or a component of an operating segment to the extent discrete financial information is available that is reviewed by segment management. The Company's reporting units are each of the three operating segments disclosed in Note 10 within Item 8 — Financial Statements and Supplementary Data.
A reporting unit is defined as an operating segment or a component of an operating segment to the extent discrete financial information is available that is reviewed by segment management. The Company's reporting units are each of the three operating segments disclosed in Note 11 within Item 8 — Financial Statements and Supplementary Data.
Preparation of financial statements in conformity with generally accepted 53 Table of Contents accounting principles in the United States requires that management make estimates, judgments and assumptions that affect the amounts reported for revenues, expenses, assets, liabilities, and other related disclosures. Our critical accounting estimates, described below, are important to the portrayal of our results of operations and financial condition.
Preparation of financial statements in conformity with generally accepted accounting principles in the United States requires that management make estimates, judgments and assumptions that affect the amounts reported for revenues, expenses, assets, liabilities, and other related disclosures. Our critical accounting estimates, described below, are important to the portrayal of our results of operations and financial condition.
Management believes providing these additional financial measures is useful to investors in understanding the Company’s operating performance, including the effects of restructuring, impairment, and other nonrecurring charges, as well as its liquidity.
Management believes providing these additional financial measures is useful to investors in understanding the Company’s operating performance, excluding the effects of restructuring, impairment, and other nonrecurring charges, as well as its liquidity.
The mix of income or loss before income taxes between these jurisdictions is one of the primary drivers of the difference between our 21% statutory tax rate and our effective tax rate. The effective rate was impacted unfavorably by the geographic mix of pretax income, state taxes, and certain compensation expenses that are not tax deductible in the U.S.
The mix of income or loss before income taxes between these jurisdictions is one of the primary drivers of the difference between our 21% statutory tax rate and our effective tax rate. The effective rate was also impacted unfavorably by state taxes and certain compensation expenses that are not tax deductible in the U.S.
The debt service coverage ratio is defined in the credit facility as the ratio of Consolidated Pro Forma EBITDA less the sum of capital distributions paid in cash (other than those made with respect to preferred stock issued under the Operating Agreement), Consolidated Unfunded Capital Expenditures (as defined in the credit facility), and net cash income taxes to the sum of cash interest expense, any dividends on the preferred stock paid in cash, and scheduled principal payments on funded indebtedness.
The debt service coverage ratio is defined in the credit facility as the ratio of Consolidated EBITDA less the sum of capital distributions paid in cash (other than those made with respect to preferred stock issued under the Operating Agreement), Consolidated Unfunded Capital Expenditures (as defined in the credit facility), and net cash income taxes divided by the sum of cash interest expense, any dividends on the preferred stock paid in cash, and scheduled principal payments on funded indebtedness.
The tax benefits recognized in the Consolidated Financial Statements from such a position are measured as the largest benefit that is more likely than not to be realized upon ultimate resolution. As of December 31, 2023, we have an uncertain tax position liability of $5,017 recorded in our Consolidated Balance Sheet related to tax positions taken in prior periods.
The tax benefits recognized in the Consolidated Financial Statements from such a position are measured as the largest benefit that is more likely than not to be realized upon ultimate resolution. As of December 31, 2024, we have an uncertain tax position liability of $5,240 recorded in our Consolidated Balance Sheet related to tax positions taken in prior periods.
Arcadia Products designs, engineers, fabricates, and finishes aluminum framing systems, windows, curtain walls, storefronts, entrance systems, and interior partitions to the commercial construction market. Additionally, Arcadia Products supplies customized windows and doors to the ultra-high-end residential real estate market.
Arcadia Products designs, engineers, fabricates, and finishes aluminum framing systems, windows, curtain walls, storefronts, entrance systems, and interior partitions to the commercial construction market. Additionally, Arcadia Products supplies customized windows and doors to the high-end residential construction market.
For more information about our debt obligations, refer to Note 6 "Debt" within Item 8 — Financial Statements and Supplementary Data. (2) The operating lease obligations presented reflect future minimum lease payments due under non-cancelable portions of our leases as of December 31, 2023.
For more information about our debt obligations, refer to Note 7 "Debt" within Item 8 — Financial Statements and Supplementary Data. (2) The operating lease obligations presented reflect future minimum lease payments due under non-cancelable portions of our leases as of December 31, 2024.
Cash flows from investing activities Net cash used in investing activities in 2023 of $28,101 primarily related to the acquisition of property, plant and equipment of $15,974 and investments in marketable securities of $12,471.
Net cash used in investing activities in 2023 was $28,101 and primarily related to the acquisition of property, plant and equipment of $15,974 and investments in marketable securities of $12,471.
Additionally, U.S. dollar borrowings on the revolving loan can be in the form of Base Rate loans (Base Rate borrowings are based on the greater of the administrative agent’s prime rate, an adjusted Federal Funds rate or an adjusted SOFR rate). SOFR loans bear interest at the applicable SOFR rate plus an applicable margin (varying from 1.50% to 3.00%).
Additionally, U.S. dollar borrowings on the revolving loan can be in the form of Base Rate loans (Base Rate borrowings are based on the greater of the administrative agent’s Prime rate, an adjusted Federal Funds rate or an adjusted SOFR rate). SOFR loans bear interest at the applicable SOFR rate plus an applicable margin (varying from 2.25% to 3.25%).
See "Use of Non-GAAP Financial Measures" above for explanation of the use of non-GAAP measures. The following is a reconciliation of the most directly comparable GAAP measures to Adjusted Net Income and Adjusted Diluted Earnings Per Share. 46 Table of Contents Twelve months ended December 31, 2023 Amount Per Share (1) Net income attributable to DMC Global Inc.
See "Use of Non-GAAP Financial Measures" above for explanation of the use of non-GAAP measures. The following is a reconciliation of the most directly comparable GAAP measures to Adjusted Net Income and Adjusted Diluted Earnings Per Share. Twelve months ended December 31, 2024 Amount Per Share (1) Net loss attributable to DMC Global Inc.
Net sales, segment operating income, and Adjusted EBITDA for each segment were as follows for years ended December 31: 2023 Arcadia Products DynaEnergetics NobelClad DMC Global Inc.
Net sales, segment operating income (loss), and Adjusted EBITDA for each segment were as follows for the years ended December 31: 2024 Arcadia Products DynaEnergetics NobelClad DMC Global Inc.
No amounts were outstanding on the $50,000 revolver as of December 31, 2023. We also maintain a line of credit with a German bank for certain European operations. This line of credit provides a borrowing capacity of €7,000 on which no amounts were outstanding as of December 31, 2023.
We also maintain a line of credit with a German bank for certain European operations. This line of credit provides a borrowing capacity of €7,000 on which no amounts were outstanding as of December 31, 2024.
NobelClad's backlog increased to $59,357 at December 31, 2023 from $55,451 at December 31, 2022. 42 Table of Contents Cost of products sold for NobelClad includes the cost of metals, explosive powders and other raw materials used to manufacture clad metal plates and transition joints as well as employee compensation and benefits, outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing facility lease expense, supplies and other manufacturing overhead expenses.
NobelClad's backlog was $48,885 at December 31, 2024 compared to $59,357 at December 31, 2023. 45 Table of Contents Cost of products sold for NobelClad includes the cost of metals, explosive powders and other raw materials used to manufacture clad metal plates and transition joints as well as employee compensation and benefits, outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing facility lease expense, supplies and other manufacturing overhead expenses.
Adjusted EBITDA increased in 2023 compared with 2022 primarily due to the factors discussed above. See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA, a non-GAAP measure.
Adjusted EBITDA decreased in 2024 compared with 2023 primarily due to the factors discussed above. See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA.
Income tax provision of $15,120 was recorded on income before taxes of $49,879. Our most significant operations are in the United States, which has a 21% statutory income tax rate, and Germany, which has a 32% combined statutory income tax rate.
We recorded an income tax provision of $15,120 on income before income taxes of $49,879 in 2023. The prior year rate was impacted by geographical mix. Our most significant operations are in the United States, which has a 21% statutory income tax rate, and Germany, which has a 32% combined statutory income tax rate.
We recognize the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position, that the tax position will be sustained upon examination, including the resolution of any related appeals or litigation.
As of December 31, 2024, we have recorded a consolidated valuation allowance of $32,121. We recognize the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position, that the tax position will be sustained upon examination, including the resolution of any related appeals or litigation.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2023 2022 Operating income $ 19,427 $ 7,989 Adjustments: Depreciation 2,893 3,419 Amortization of purchased intangible assets — 311 Restructuring expenses, net and asset impairments 440 182 Adjusted EBITDA $ 22,760 $ 11,901 Liquidity and Capital Resources We have historically financed our operations from a combination of internally generated cash flow, revolving credit borrowings, and various long-term debt arrangements.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2024 2023 Operating income $ 20,051 $ 19,427 Adjustments: Depreciation 3,175 2,893 Restructuring expenses and asset impairments — 440 Adjusted EBITDA $ 23,226 $ 22,760 Liquidity and Capital Resources We have historically financed our operations from a combination of internally generated cash flow, revolving credit borrowings, and various long-term debt arrangements.
Cash flows from financing activities Net cash used in financing activities in 2023 totaled $33,182, which included payments on our Term Loan of $17,500, distributions to the redeemable noncontrolling interest holder of $13,515, and treasury stock purchases of $2,481.
Net cash used in financing activities in 2023 totaled $33,182 and included payments on our Term Loan of $17,500, distributions to the redeemable noncontrolling interest holder of $13,515, and treasury stock purchases of $2,481. Payment of dividends Any determination to pay cash dividends is at the discretion of the Board of Directors.
Under our credit facility, the minimum debt service coverage ratio permitted is 1.35 to 1.0. The actual debt service coverage ratio for the trailing twelve months ended December 31, 2023 was 3.05 to 1.0. As of December 31, 2023, borrowings of $117,500 on the Term Loan under our credit facility were outstanding.
Under our credit facility, the minimum debt service coverage ratio permitted is 1.25 to 1.0. The actual debt service coverage ratio for the trailing twelve months ended December 31, 2024 was 3.41 to 1.0. As of December 31, 2024, borrowings of $48,125 on the Term Loan under our credit facility were outstanding, and $24,375 was outstanding on the revolver.
Redeemable noncontrolling interest The Operating Agreement for Arcadia Products contains a right for the Company to purchase the remaining interest in Arcadia Products from the minority interest holder on or after the third anniversary of the acquisition closing date (“Call Option”).
Redeemable noncontrolling interest The Operating Agreement for Arcadia Products contains a right for the Company to purchase the remaining interest in Arcadia Products from the minority interest holder on or after December 23, 2024 (“Call Option”). The minority interest holder of Arcadia Products has the right to sell its remaining interest in Arcadia Products to the Company (“Put Option”).
The operating results of Arcadia that are attributable to the redeemable noncontrolling interest holder are not taxed at DMC, which resulted in a partially offsetting favorable impact to the effective tax rate. We recorded an income tax provision of $9,376 on income before income taxes of $23,209 in 2022.
The operating results of Arcadia that are attributable to the redeemable noncontrolling interest holder are not taxed at DMC, which resulted in a partially offsetting favorable impact to the effective tax rate.
Use of Non-GAAP Financial Measures In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (GAAP), the Company also discloses certain non-GAAP financial measures that we use in operational and financial decision making.
Our businesses are closely monitoring the potential impact of evolving U.S. and reciprocal tariff policies. 46 Table of Contents Use of Non-GAAP Financial Measures In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (GAAP), the Company also discloses certain non-GAAP financial measures that we use in operational and financial decision making.
(“DMC”, "we", "us", "our", or the "Company") owns and operates Arcadia Products, DynaEnergetics and NobelClad, three innovative, asset-light manufacturing businesses that provide differentiated products and engineered solutions to niche segments of the construction, energy, industrial processing and transportation markets.
(“DMC”, "we", "us", "our", or the "Company") owns and operates Arcadia Products, DynaEnergetics and NobelClad, three innovative, asset-light manufacturing businesses that provide differentiated products and engineered solutions to segments of the construction, energy, industrial processing and transportation markets. Our businesses seek to capitalize on their product and service differentiation to expand profit margins, increase cash flow and enhance shareholder value.
Upon settlement, consideration paid will be net of the $24,902 promissory note outstanding due from the redeemable noncontrolling interest holder. Refer to Note 2 within Item 8 — Financial Statements and Supplementary Data for further information related to the valuation of the redeemable noncontrolling interest and promissory note outstanding.
Refer to Note 2 within Item 8 — Financial Statements and Supplementary Data for further information related to the valuation of the redeemable noncontrolling interest and promissory note outstanding.
The credit facility includes various covenants and restrictions, certain of which relate to the payment of dividends or other distributions to stockholders; redemption of capital stock; incurrence of additional indebtedness; mortgaging, pledging or disposition of major assets; and maintenance of specified ratios.
Base Rate loans bear interest at the defined Base Rate plus an applicable margin (varying from 1.25% to 2.25%). The credit facility includes various covenants and restrictions, certain of which relate to the payment of dividends or other distributions to stockholders; redemption of capital stock; incurring additional indebtedness; mortgaging, pledging or disposition of major assets; and maintenance of specified ratios.
Restructuring expenses, net and asset impairments increased $3,584 for the year ended December 31, 2023 compared with 2022 due to $2,471 of asset impairments primarily associated with the abandonment of a software asset at DynaEnergetics and $1,295 of cost reduction initiatives, including employee severance, primarily at DynaEnergetics.
Restructuring expenses and asset impairments decreased $1,240 for the year ended December 31, 2024 compared with 2023. 2024 costs primarily related to the abandonment of a planned manufacturing expansion at DynaEnergetics and employee severance associated with headcount reductions at DynaEnergetics and Arcadia Products. 2023 costs included $2,471 of asset impairments primarily associated with the abandonment of a software asset at DynaEnergetics and $1,295 of cost reduction initiatives, including employee severance, primarily at DynaEnergetics.
Restructuring expenses, net and asset impairments increased $3,011 for the year ended December 31, 2023 compared with 2022 due to $1,140 of cost reduction initiatives, primarily employee severance, and an asset impairment charge of $1,871 associated with the abandonment of a software asset. Operating income increased by $7,298 compared with 2022 due primarily to increased gross profit.
Restructuring expenses and asset impairments in 2023 were attributable to $1,140 of cost reduction initiatives, primarily employee severance, and an asset impairment charge of $1,871 associated with the abandonment of a software asset. Operating income decreased by $30,186 compared with 2023 due to a decrease in gross profit.
The actual leverage ratio as of December 31, 2023, calculated in accordance with the credit facility, as amended, was 1.25 to 1.0.
The maximum leverage ratio permitted by our credit facility is 3.00 to 1.0. The actual leverage ratio as of December 31, 2024, calculated in accordance with the amended credit facility, was 1.35 to 1.0.
Currency gains and losses can arise when subsidiaries enter into inter-company and third-party transactions that are denominated in currencies other than their functional currency, including foreign currency forward contracts used to offset foreign exchange rate fluctuations on certain foreign currency denominated asset and liability positions. 45 Table of Contents Interest expense, net of $9,516 in 2023 increased 54% compared with 2022 due to an increase in floating interest rates related to the Term Loan.
Currency gains and losses can arise when subsidiaries enter into inter-company and third-party transactions that are denominated in currencies other than their functional currency, including foreign currency forward contracts used to offset foreign exchange rate fluctuations on certain foreign currency denominated asset and liability positions.
In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, recent financial performance and existing valuation allowances, if any. As of December 31, 2023, we have a valuation allowance of $6,167 recorded against deferred tax assets primarily in our foreign jurisdictions.
In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning 57 Table of Contents strategies, recent financial performance and existing valuation allowances, if any.
The net carrying value of our purchased intangible assets as of December 31, 2023 was $195,260 and includes $195,215 of purchased intangible assets related to Arcadia Products. The net carrying values of our property, plant and equipment and right-of-use assets as of December 31, 2023 were $129,267 and $45,409, respectively.
The net carrying value of our purchased intangible assets as of December 31, 2024 was $174,104, which is entirely related to Arcadia Products. The net carrying values of our property, plant and equipment and right-of-use assets as of December 31, 2024 were $129,276 and $42,164, respectively.
(4) The above table does not include amounts potentially payable upon exercise of the Put Option or Call Option associated with the redeemable noncontrolling interest. Cash flows from operating activities Net cash provided by operating activities was $65,927 in 2023 compared to $44,936 in 2022. The increase primarily was due to higher net income.
(4) The above table does not include amounts potentially payable upon exercise of the Put Option or Call Option associated with the redeemable noncontrolling interest. 55 Table of Contents Cash flows from operating activities Net cash provided by operating activities of $46,596 in 2024 decreased compared to $65,927 in 2023 primarily driven by lower net income attributable to a decline in financial performance at Arcadia Products and DynaEnergetics.
(2) $ 26,259 $ 1.35 CEO transition expenses and accelerated stock-based compensation, net of tax (3) 6,284 0.32 Restructuring expenses and asset impairments, net of tax 2,773 0.14 As adjusted $ 35,316 $ 1.81 (1) Calculated using diluted weighted average shares outstanding of 19,518,382 (2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest (3) Includes CEO transition expenses of $4,343 and accelerated stock-based compensation of $3,040 related to the vesting of the former CEO’s outstanding equity awards, net of tax.
(2) $ 26,259 $ 1.35 CEO transition expenses and accelerated stock-based compensation, net of tax 6,284 0.32 Restructuring expenses and asset impairments, net of tax 2,773 0.14 As adjusted $ 35,316 $ 1.81 (1) Calculated using diluted weighted average shares outstanding of 19,518,382 (2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share 50 Table of Contents Business Segment Financial Information We primarily evaluate performance and allocate resources based on segment revenues, operating income and Adjusted EBITDA as well as projected future performance.
Amortization of purchased intangible assets decreased $14,259 for the year ended December 31, 2023 compared with 2022 as the Arcadia Products customer backlog purchased intangible asset was fully amortized in 2022.
Amortization of purchased intangible assets decreased $1,512 for the year ended December 31, 2024 compared with 2023 as the Arcadia Products customer relationship purchased intangible asset is amortized using an accelerated amortization method.
Adjusted EBITDA increased in 2023 due to the factors discussed above. See “Use of Non-GAAP Financial Measures” above for explanation of the use of Adjusted EBITDA, a non-GAAP measure.
Operating loss of $143,636 i n 2024 compared to operating income of $21,407 in 2023 was due to the factors discussed above. Adjusted EBITDA decreased in 2024 due to the factors discussed above. See “Use of Non-GAAP Financial Measures” above for explanation of the use of Adjusted EBITDA.
Based on the results of the quantitative assessment, if the carrying value exceeds the fair value of the reporting unit, an impairment loss is recognized for the difference. The assumptions used in a quantitative assessment require significant judgment, which include assumptions about future economic conditions and company-specific conditions and plans.
Based on the results of the quantitative assessment, if the carrying value exceeds the fair value of the reporting unit, an impairment loss is recognized for the difference.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2023 2022 Operating income $ 46,353 $ 39,055 Adjustments: Depreciation 6,847 7,578 Amortization of purchased intangible assets 59 299 Restructuring expenses, net and asset impairments 3,011 — Adjusted EBITDA $ 56,270 $ 46,932 NobelClad 2023 2022 $ change % change Net sales $ 105,253 $ 90,232 $ 15,021 17 % Gross profit 33,529 22,050 11,479 52 % Gross profit percentage 31.9 % 24.4 % COSTS AND EXPENSES: General and administrative expenses 4,092 4,587 (495) (11) % Selling and distribution expenses 9,570 8,981 589 7 % Amortization of purchased intangible assets — 311 (311) (100) % Restructuring expenses, net and asset impairments 440 182 258 142 % Operating income 19,427 7,989 11,438 143 % Adjusted EBITDA $ 22,760 $ 11,901 $ 10,859 91 % Net sales increased $15,021 in 2023 compared with 2022 due primarily to higher activity in core energy and petrochemical end markets, including increased pressure vessel plate shipments.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2024 2023 Operating income $ 16,167 $ 46,353 Adjustments: Depreciation 6,711 6,847 Amortization of purchased intangible assets 44 59 Restructuring expenses and asset impairments 1,881 3,011 Adjusted EBITDA $ 24,803 $ 56,270 NobelClad 2024 2023 $ change % change Net sales $ 105,402 $ 105,253 $ 149 — % Gross profit 33,811 33,529 282 1 % Gross profit percentage 32.1 % 31.9 % COSTS AND EXPENSES: General and administrative expenses 4,299 4,092 207 5 % Selling and distribution expenses 9,461 9,570 (109) (1) % Restructuring expenses and asset impairments — 440 (440) (100) % Operating income 20,051 19,427 624 3 % Adjusted EBITDA $ 23,226 $ 22,760 $ 466 2 % Net sales and gross profit percentage were consistent in 2024 compared with 2023 due to steady, healthy activity in core energy and petrochemical end markets, including Cylindra™ cryogenic transition joints and pressure vessel plate shipments.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2023 2022 Net income $ 34,759 $ 13,833 Interest expense, net 9,516 6,187 Income tax provision 15,120 9,376 Depreciation 13,840 14,281 Amortization of purchased intangible assets 22,667 36,926 EBITDA 95,902 80,603 Stock-based compensation 10,115 10,058 CEO transition expenses 4,343 — Restructuring expenses, net and asset impairments 3,766 182 Nonrecurring retirement expenses — 1,100 Amortization of acquisition-related inventory valuation step-up — 430 Other expense, net 1,782 594 Adjusted EBITDA 115,908 92,967 Adjusted EBITDA attributable to redeemable noncontrolling interest (19,845) (18,768) Adjusted EBITDA attributable to DMC Global Inc. stockholders $ 96,063 $ 74,199 Adjusted Net Income and Adjusted Diluted Earnings Per Share increased compared with 2022 due to the factors discussed above.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 49 Table of Contents 2024 2023 Net (loss) income $ (151,960) $ 34,759 Interest expense, net 8,664 9,516 Income tax provision 10,970 15,120 Depreciation 13,891 13,840 Amortization of purchased intangible assets 21,155 22,667 EBITDA (97,280) 95,902 Stock-based compensation 6,530 10,115 Goodwill impairment 141,725 — Strategic review expenses 7,765 — Restructuring expenses and asset impairments 2,526 3,766 CEO transition expenses — 4,343 Other expense, net 1,068 1,782 Adjusted EBITDA 62,334 115,908 Less: adjusted EBITDA attributable to redeemable noncontrolling interest (10,178) (19,845) Adjusted EBITDA attributable to DMC Global Inc. $ 52,156 $ 96,063 Adjusted Net Income and Adjusted Diluted Earnings Per Share decreased compared with 2023 due to the factors discussed above.
The leverage ratio is defined in the credit facility as the ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of any trailing four quarter period to Consolidated Pro Forma EBITDA (as defined in the credit facility) for such period.
As of December 31, 2024, we were in compliance with all financial covenants and other provisions of our debt agreements. 54 Table of Contents The leverage ratio is defined in the credit facility as the ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of any trailing four quarter period to Consolidated EBITDA (as defined in the credit facility) for such period.
To determine provision amounts, we regularly review inventory quantities on hand and values, and compare them to estimates of future product demand, market conditions, production requirements and technological developments. If assumptions about future demand change and/or actual market conditions are less favorable than those projected by the Company, additional write-downs of inventories may be required.
To determine provision amounts, we regularly review inventory quantities on hand and values, and compare them to estimates of future product demand, market conditions, production requirements and technological developments.
Factors Affecting Results • Consolidated net sales were $719,188 in 2023 versus $654,086 in 2022, an increase of 10%.
Factors Affecting Results • Consolidated net sales were $642,851 in 2024 versus $719,188 in 2023, a decrease of 11%.
Adjusted EBITDA in 2023 increased compared with 2022 due to the factors discussed above. See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA, a non-GAAP measure.
See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA.
Both the Call Option and Put Option enable the respective holder to exercise their rights based upon a predefined calculation as included within the Operating Agreement. As of December 31, 2023, the redeemable noncontrolling interest is $187,760 in comparison to our previous estimate at December 31, 2022 of $187,522.
Both the Call Option and Put Option enable the respective holder to exercise their rights based upon a predefined calculation as included within the Operating Agreement. As of December 31, 2024, the value of the redeemable noncontrolling interest was $187,080. Upon settlement, consideration paid will be net of the $24,902 promissory note outstanding due from the redeemable noncontrolling interest holder.
Other contractual obligations and commitments The table below presents principal cash flows by expected maturity dates for our debt obligations and other contractual obligations and commitments as of December 31, 2023: 52 Table of Contents Payment Due by Period As of December 31, 2023 Less than More than Other Contractual Obligations 1 Year 1-3 Years 3-5 Years 5 Years Total Credit facility (1) $ 15,000 $ 102,500 $ — $ 117,500 Operating lease obligations (2) 9,575 17,945 13,608 14,367 55,495 Purchase obligations (3) 92,827 — — — 92,827 Total (4) $ 117,402 $ 120,445 $ 13,608 $ 14,367 $ 265,822 (1) Represents outstanding borrowings under our credit facility but excludes future interest expense on outstanding credit facility borrowings.
Other contractual obligations and commitments The table below presents principal cash flows by expected maturity dates for our debt obligations and other contractual obligations and commitments as of December 31, 2024: Payment Due by Period As of December 31, 2024 Less than More than Other Contractual Obligations 1 Year 2026 - 2027 2028 - 2029 5 Years Total Credit facility (1) $ 2,500 $ 7,188 $ 62,812 $ — $ 72,500 Operating lease obligations (2) 10,302 17,285 10,774 22,613 60,974 Purchase obligations (3) 87,536 — — — 87,536 Total (4) $ 100,338 $ 24,473 $ 73,586 $ 22,613 $ 221,010 (1) Represents outstanding borrowings under our credit facility but excludes future interest expense on outstanding credit facility borrowings.
During the year ended December 31, 2023, we recorded impairment charges on our property, plant and equipment of $2,471. The impairment charges included $1,871 related to the abandonment of a software asset at DynaEnergetics and $440 attributable to a manufacturing asset in NobelClad that was removed from production.
During the year ended December 31, 2024, we recorded impairment charges on our property, plant and equipment of $1,182. The impairment charges primarily related to a charge associated with the abandonment of a planned manufacturing expansion at DynaEnergetics.
The credit facility is secured by the assets of DMC including accounts receivable, inventory, and fixed assets, including Arcadia Products and its subsidiary, as well as guarantees and share pledges by DMC and its subsidiaries. 51 Table of Contents Borrowings under the $150,000 Term Loan and $50,000 revolving loan limit can be in the form of Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or one month Adjusted Term SOFR loans.
Borrowings under the $200,000 revolving loan limit and $50,000 Term Loan can be in the form of Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or one month Adjusted Term SOFR loans.
Operating income of $61,177 increased $31,187 for the year ended December 31, 2023 compared with 2022. The increase in operating income was primarily the result of increased gross profit. Other expense, net of $1,782 in 2023 primarily related to net realized foreign currency exchange losses.
Operating loss of $131,258 for the year ended December 31, 2024 was primarily attributable to the goodwill impairment charge at Arcadia Products and decreased financial performance at DynaEnergetics. Operating income in 2023 was $61,177. Other expense, net of $1,068 in 2024 primarily related to net realized foreign currency exchange losses.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2023 2022 Operating income $ 21,407 $ 3,962 Adjustments: Depreciation 3,695 2,906 Amortization of purchased intangible assets 22,608 36,316 Stock-based compensation 1,571 2,206 CEO transition expenses 331 — Amortization of acquisition-related inventory valuation step-up — 430 Nonrecurring retirement expenses — 1,100 Adjusted EBITDA $ 49,612 $ 46,920 Less: adjusted EBITDA attributable to redeemable noncontrolling interest (19,845) (18,768) Adjusted EBITDA attributable to DMC Global Inc. $ 29,767 $ 28,152 DynaEnergetics 2023 2022 $ change % change Net sales $ 315,026 $ 264,327 $ 50,699 19 % Gross profit 86,701 75,569 11,132 15 % Gross profit percentage 27.5 % 28.6 % COSTS AND EXPENSES: General and administrative expenses 15,806 19,627 (3,821) (19 %) Selling and distribution expenses 21,472 16,588 4,884 29 % Amortization of purchased intangible assets 59 299 (240) (80) % Restructuring expenses, net and asset impairments 3,011 — 3,011 100 % Operating income 46,353 39,055 7,298 19 % Adjusted EBITDA $ 56,270 $ 46,932 $ 9,338 20 % Net sales increased $50,699 in 2023 compared to 2022 due to higher North American drilling and well completions, which led to increased demand for DS perforating systems.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2024 2023 Operating (loss) income $ (143,636) $ 21,407 Adjustments: Depreciation 3,681 3,695 Amortization of purchased intangible assets 21,111 22,608 Stock-based compensation 1,920 1,571 Goodwill impairment 141,725 — Restructuring expenses and asset impairments 645 — CEO transition expenses — 331 Adjusted EBITDA $ 25,446 $ 49,612 Less: adjusted EBITDA attributable to redeemable noncontrolling interest (10,178) (19,845) Adjusted EBITDA attributable to DMC Global Inc. $ 15,268 $ 29,767 DynaEnergetics 2024 2023 $ change % change Net sales $ 287,686 $ 315,026 $ (27,340) (9) % Gross profit 50,055 86,701 (36,646) (42) % Gross profit percentage 17.4 % 27.5 % COSTS AND EXPENSES: General and administrative expenses 10,835 15,806 (4,971) (31 %) Selling and distribution expenses 21,128 21,472 (344) (2) % Amortization of purchased intangible assets 44 59 (15) (25) % Restructuring expenses and asset impairments 1,881 3,011 (1,130) (38) % Operating income 16,167 46,353 (30,186) (65) % Adjusted EBITDA $ 24,803 $ 56,270 $ (31,467) (56) % 52 Table of Contents Net sales decreased $27,340 in 2024 compared to 2023 primarily due to a decrease in pricing of DS perforating systems as a result of industry consolidation in the United States.
Goodwill Goodwill represents the amount by which the purchase price exceeds the fair value of identifiable tangible and intangible assets and liabilities acquired in a business combination.
If assumptions about future demand change and/or actual market conditions are less favorable than those projected by the Company, additional write-downs of inventories may be required. 56 Table of Contents Goodwill Goodwill represents the amount by which the purchase price exceeds the fair value of identifiable tangible and intangible assets and liabilities acquired in a business combination.
Selling and distribution expenses increased $1,565 in 2023 compared to 2022 due to higher compensation costs. Amortization of purchased intangible assets decreased $13,708 in 2023 compared to 2022 as the customer backlog purchased intangible asset was fully amortized in 2022. Operating income increased $17,445 i n 2023 compared to 2022 due to the factors discussed above.
Selling and distribution expenses decreased $1,450 in 2024 compared to 2023 due to lower compensation costs. Amortization of purchased intangible assets decreased $1,497 in 2024 compared to 2023 as the customer relationship purchased intangible asset is amortized using an accelerated amortization method.
The decrease was driven by $17,500 in Term Loan payments in 2023 and $12,471 of investments in marketable securities. • The Company’s leverage ratio, calculated in accordance with its credit facility, was 1.25 to 1.0 as of December 31, 2023 in comparison to the maximum ratio permitted of 3.0 to 1.0.
The decrease was due to a reduction in outstanding debt attributable to voluntary repayments made after execution of the credit agreement amendment in February 2024. • The Company’s leverage ratio, calculated in accordance with its credit facility, was 1.35 to 1.0 as of December 31, 2024 in comparison to the maximum ratio permitted of 3.0 to 1.0.
Selling and distribution expenses increased by $4,884 compared with 2022 primarily due to increases in marketing costs of $1,609, bad debt expense of $1,371, compensation costs of $831, freight and other supplies expense of $790, and business-related travel of $112.
Selling and distribution expenses were lower by $344 compared with 2023 primarily due to a decrease in compensation costs of $1,639, marketing consulting costs of $1,572 and business-related travel of $170, partially offset by an increase in bad debt expense of $3,100.
If the Company was required to recognize an impairment charge in the future, the Consolidated Balance Sheets and Consolidated Statements of Operations and Comprehensive Income (Loss) could be materially impacted; however, the non-cash charge would not impact the Company's consolidated cash flows, current liquidity, and capital resources. 54 Table of Contents Asset impairments Finite-lived assets, including purchased intangible assets, property, plant and equipment, and right-of-use assets, are tested for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
Based on the results of our quantitative goodwill impairment test, we recorded a $141,725 impairment charge to goodwill during the year ended December 31, 2024. Asset impairments Finite-lived assets, including purchased intangible assets, property, plant and equipment, and right-of-use assets, are tested for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
Operating income increased $11,438 compared to 2022 primarily due to an increase in gross profit. 50 Table of Contents Adjusted EBITDA increased due to the factors discussed above. See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA, a non-GAAP measure.
General and administrative expenses increased by $207 compared with 2023 primarily due to higher variable compensation costs. Operating income increased $624 compared to 2023 due in part to an increase in gross profit. 53 Table of Contents Adjusted EBITDA increased due to the factors discussed above.
Gross profit percentage increased to 31.9% in 2023 due to a more favorable project and regional mix, as well as the impact of higher sales on fixed manufacturing overhead expenses. General and administrative expenses decreased by $495 compared with 2022 du e to lower outside services costs driven by a decrease in ERP system implementation costs.
Gross profit percentage decreased to 17.4% primarily due to lower customer pricing as well as lower absorption of fixed manufacturing overhead costs as a result of the decrease in net sales. General and administrative expenses were lower by $4,971 compared with 2023 primarily due to a decrease in patent infringement litigation costs of $3,610 and compensation costs of $1,334.
The prior year rate was impacted by the same factors previously discussed. Net income attributable to DMC Global Inc. in 2023 was $26,259, or $1.08 per diluted share, after adjustment to the redeemable noncontrolling interest, compared with net income of $12,247, or $0.72 per diluted share, in 2022.
Net loss attributable to DMC Global Inc. in 2024 was $94,452, or $(8.20) per diluted share compared with net income of $26,259, or $1.08 per diluted share, in 2023. Adjusted EBITDA in 2024 decreased compared with 2023 due to the factors discussed above. See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA.
Also contributing to the percentage improvement was margin recovery at Arcadia as decreases in base aluminum metal prices exceeded declines in customer pricing. • Consolidated selling, general, and administrative ("SG&A") expenses were $124,442 in 2023 compared with $118,349 in 2022.
The decline was primarily attributable to margin declines at DynaEnergetics and Arcadia Products, as well as lower absorption of fixed manufacturing overhead costs as a result of the decrease in consolidated sales. • Consolidated selling, general, and administrative ("SG&A") expenses were $108,656 in 2024 compared with $124,442 in 2023.
The year-over-year increase was primarily attributable to $4,343 of CEO transition expenses, as well as higher compensation and outside services costs. • Cash and marketable securities of $43,659 at December 31, 2023 increased $18,515 from $25,144 at December 31, 2022 due primarily to higher free cash flow. • Net debt, a non-GAAP measure, of $72,192 (comprised of $115,851 of total debt less $43,659 in cash, cash equivalents and marketable securities) at December 31, 2023 decreased $35,462 from $107,654 at December 31, 2022.
Additionally, there were $7,383 of CEO transition expenses and related accelerated stock-based compensation in 2023. • Cash and marketable securities of $14,289 at December 31, 2024 decreased $29,370 from $43,659 at December 31, 2023 and was primarily attributable to debt repayments made in conjunction with the Company’s amended credit agreement. • Net debt, a non-GAAP measure, of $56,529 (comprised of $70,818 of total debt less $14,289 in cash, cash equivalents and marketable securities) at December 31, 2024 decreased $15,663 from $72,192 at December 31, 2023.
The percentage improvement compared to prior year was attributable to favorable project and regional mix, as well as better absorption of fixed manufacturing overhead expenses at NobelClad.
Gross profit percentage was 23.4% versus 29.5% in 2023. The decline compared to prior year was primarily attributable to margin declines at DynaEnergetics and Arcadia Products, as well as lower absorption of fixed manufacturing overhead costs as a result of the decrease in consolidated sales.
Net Sales 299,527 $ 264,327 $ 90,232 $ 654,086 % of Consolidated 45.8 % 40.4 % 13.8 % Operating income 3,962 39,055 7,989 29,990 Adjusted EBITDA attributable to DMC Global Inc. 28,152 46,932 11,901 74,199 Arcadia Products 2023 2022 $ change % change Net sales $ 298,909 $ 299,527 $ (618) — % Gross profit 92,252 88,334 3,918 4 % Gross profit percentage 30.9 % 29.5 % COSTS AND EXPENSES: General and administrative expenses 30,488 31,872 (1,384) (4) % Selling and distribution expenses 17,749 16,184 1,565 10 % Amortization of purchased intangible assets 22,608 36,316 (13,708) (38) % Operating income 21,407 3,962 17,445 440 % Adjusted EBITDA 49,612 46,920 2,692 6 % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (19,845) (18,768) (1,077) 6 % Adjusted EBITDA attributable to DMC Global Inc. $ 29,767 $ 28,152 $ 1,615 6 % 48 Table of Contents Net sales of $298,909 in 2023 were comparable to net sales of $299,527 in 2022.
Net Sales 298,909 $ 315,026 $ 105,253 $ 719,188 % of Consolidated 41.6 % 43.8 % 14.6 % Operating income 21,407 46,353 19,427 61,177 Adjusted EBITDA attributable to DMC Global Inc. 29,767 56,270 22,760 96,063 Arcadia Products 2024 2023 $ change % change Net sales $ 249,763 $ 298,909 $ (49,146) (16) % Gross profit 67,025 92,252 (25,227) (27) % Gross profit percentage 26.8 % 30.9 % COSTS AND EXPENSES: General and administrative expenses 30,881 30,488 393 1 % Selling and distribution expenses 16,299 17,749 (1,450) (8) % Amortization of purchased intangible assets 21,111 22,608 (1,497) (7) % Goodwill impairment 141,725 — 141,725 100 % Restructuring expenses and asset impairments 645 — 645 100 % Operating (loss) income (143,636) 21,407 (165,043) (771) % Adjusted EBITDA 25,446 49,612 (24,166) (49) % Less: adjusted EBITDA attributable to redeemable noncontrolling interest (10,178) (19,845) 9,667 (49) % Adjusted EBITDA attributable to DMC Global Inc. $ 15,268 $ 29,767 $ (14,499) (49) % 51 Table of Contents Net sales of $249,763 in 2024 decreased $49,146 compared to 2023 primarily due to lower sales volumes in longer-cycle high-end residential markets.
The decrease was driven by various cost savings initiatives, including headcount reductions and decreased business travel, partially offset by $4,343 of CEO transition expenses. Selling and distribution expenses increased $6,871 for the twelve months ended December 31, 2023 compared with 2022.
Selling and distribution expenses decreased $1,846 for the year ended December 31, 2024 compared with 2023. The lower expense was driven by a decrease in compensation cost of $3,571 and outside marketing consulting costs of $1,564, partially offset by an increase in bad debt expense for $3,784.
Removed
Each of our businesses provides a unique suite of highly engineered products and differentiated solutions, and each has established a leadership position in its respective market. Our businesses seek to capitalize on their product and service differentiation to expand profit margins, increase cash flow and enhance shareholder value.
Added
The decline in performance primarily was driven by lower Arcadia Products sales volumes in longer-cycle high-end residential and certain short-cycle commercial markets, and a decrease in pricing of DynaEnergetics’ DS perforating systems as a result of industry consolidation in the United States. • Consolidated gross profit of 23.4% in 2024 decreased from 29.5% in 2023.
Removed
The improved performance primarily was driven by an increase in unit sales of DynaEnergetics’ DS perforating systems and increased activity in NobelClad's core energy and petrochemical end markets. • Arcadia Products reported sales of $298,909 in 2023, which were consistent with sales of $299,527 in 2022. • DynaEnergetics' sales of $315,026 in 2023 increased 19% compared with 2022 due primarily to an increase in unit sales of DS perforating systems.
Added
The year-over-year decrease was primarily attributable to a reduction in variable compensation costs of $5,297, outside services costs of $5,735, as well as internal leadership and sales meeting expense of $1,176, partially offset by an increase in bad debt expense of $3,784.
Removed
International sales increased 28%, while North American sales increased 18%. • NobelClad’s sales of $105,253 in 2023 increased 17% compared with 2022 reflecting healthy activity in core energy and petrochemical end markets. • Consolidated gross profit of 29.5% in 2023 increased from 28.4% in 2022.
Added
The Company’s adjusted leverage ratio, calculated using net debt as of December 31, 2024, was 1.09 to 1.0. Outlook We expect Arcadia Products’ first quarter sales will be flat to modestly above the 2024 fourth quarter, with continued weak demand from the luxury residential market. In January, Arcadia Products’ former president, Jim Schladen, returned to lead the organization.
Removed
The Company’s adjusted leverage ratio, calculated using net debt as of December 31, 2023, was 0.78 to 1.0. Outlook DMC’s Arcadia Products business serves the commercial building products market primarily in the western and southwestern United States, and the ultra-high-end residential market across the United States.
Added
He is currently focused on strengthening Arcadia Products’ core commercial operations and stabilizing and developing an improvement plan for its high-end residential products, which may include the elimination of underperforming product offerings.
Removed
We expect Arcadia Products to be the primary driver of DMC’s future financial and operational growth, reflecting its large addressable market and differentiated business model. Arcadia Products is investing in new digital technologies and manufacturing capacity to facilitate its expansion.
Added
As a regional architectural building products leader based in the Los Angeles metro area, management believes Arcadia Products is uniquely positioned to participate in the long-term reconstruction of many neighborhoods destroyed by the recent wildfires in Southern California. At DynaEnergetics, first quarter sales are expected to be flat to modestly up versus the seasonally soft 2024 fourth quarter.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeChanges in the exchange rates for such currencies into U.S. dollars can affect our revenues, earnings, and the carrying value of our assets and liabilities in our Consolidated Balance Sheets, either positively or negatively. Sales made in currencies other than U.S. dollars accounted for 9%, 6%, and 16% of total sales for the years ended 2023, 2022, and 2021, respectively.
Biggest changeChanges in the exchange rates for such currencies into U.S. dollars can affect our revenues, earnings, and the carrying value of our assets and liabilities in our Consolidated Balance Sheets, either positively or negatively. Sales made in currencies other than U.S. dollars accounted for 11%, 9%, and 6% of total sales for the years ended 2024, 2023, and 2022, respectively.
However, due to the uncertainty of the specific actions that might be taken and their possible effects, the sensitivity analysis assumes no changes in the Company's financial structure. 56 Table of Contents
However, due to the uncertainty of the specific actions that might be taken and their possible effects, the sensitivity analysis assumes no changes in the Company's financial structure. 58 Table of Contents
Our primary exposure to foreign currency risk is the Euro due to the percentage of our U.S. dollar revenue that is derived from countries where the Euro is the functional currency. 55 Table of Contents We use foreign currency forward contracts to offset foreign exchange rate fluctuation on foreign currency denominated asset and liability positions.
Our primary exposure to foreign currency risk is the Euro due to the percentage of our U.S. dollar revenue that is derived from countries where the Euro is the functional currency. We use foreign currency forward contracts to offset foreign exchange rate fluctuation on foreign currency denominated asset and liability positions.
As such, these forward currency contracts and the offsetting underlying asset and liability positions do not create material market risk. The notional amount of the foreign exchange contracts at December 31, 2023 and 2022 was $32,310 and $21,907, respectively. Interest Rate Risk The Company's interest expense is sensitive to the general level of interest rates in North America and Europe.
As such, these forward currency contracts and the offsetting underlying asset and liability positions do not create material market risk. The notional amount of the foreign exchange contracts at December 31, 2024 and 2023 was $8,331 and $32,310, respectively. Interest Rate Risk The Company's interest expense is sensitive to the general level of interest rates in North America and Europe.
At December 31, 2023, all of the Company's debt was subject to variable interest rates. A one percentage point increase in average interest rates would cause interest expense, net in 2023 to increase by $1,287. This was determined by considering the impact of a hypothetical interest rate on the Company's average outstanding variable debt.
At December 31, 2024, all of the Company's debt was subject to variable interest rates. A one percentage point increase in average interest rates would cause interest expense, net in 2024 to increase by $947. This was determined by considering the impact of a hypothetical interest rate on the Company's average outstanding variable debt.

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