10q10k10q10k.net

What changed in DMC Global Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of DMC Global Inc.'s 2022 and 2023 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 2023 report.

+394 added−426 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-27)

Top changes in DMC Global Inc.'s 2023 10-K

394 paragraphs added · 426 removed · 288 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

86 edited+25 added−31 removed65 unchanged
Biggest change(Dollars in Thousands) For the years ended December 31, 2022 2021 2020 United States $ 549,370 $ 173,336 $ 149,214 Canada 26,766 16,929 10,428 India 8,249 3,062 7,236 Egypt 5,780 3,519 3,453 Germany 5,151 3,270 5,704 United Arab Emirates 5,107 3,843 4,848 Turkey 4,602 3,153 2,887 China 3,902 10,365 5,390 Sweden 3,746 1,208 1,569 South Korea 3,242 2,144 1,972 Oman 3,188 3,115 2,551 Netherlands 3,041 2,200 1,850 Saudi Arabia 2,416 553 535 France 2,101 2,522 2,904 Indonesia 2,085 1,131 1,832 South Africa 1,970 886 235 Norway 1,854 2,211 2,583 Italy 1,816 1,467 1,220 Australia 1,816 1,567 2,667 Kuwait 1,801 1,559 1,716 Hong Kong 1,158 1,731 435 Romania 851 913 465 Russia* 183 4,057 24 Rest of the world 13,891 15,374 17,443 Net sales $ 654,086 $ 260,115 $ 229,161 * Future sales to Russia have been suspended indefinitely due to the ongoing conflict in Ukraine.
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.
The Operating Agreement also provides for rights of first refusal and “drag-along” rights pursuant to which we could, in certain circumstances, acquire Munera’s interests prior to the third anniversary of the effective date of the agreement. DynaEnergetics DynaEnergetics designs, manufactures, markets and sells perforating systems and associated hardware for the global oil and gas industry.
The Operating Agreement also provides for rights of first refusal and “drag-along” rights pursuant to which we could, in certain circumstances, acquire Munera’s interests prior to the third anniversary of the effective date of the Operating Agreement. DynaEnergetics DynaEnergetics designs, manufactures, markets and sells perforating systems and associated hardware for the global oil and gas industry.
Our product offerings allow architects to create distinctive looks for buildings such as office towers, airports, hotels, education and athletic facilities, health care facilities, 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 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.
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 offers 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 (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.
Our annual report on SEC Form 10-K, quarterly reports on Forms 10-Q, current reports on Forms 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge on our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge on our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
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 to address the Asian markets and uses contract agents to cover various other countries.
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.
Worldwide competition in the explosion-welded clad metal business is fragmented, and we believe that NobelClad holds a strong market position in the industry. 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 smaller competitors.
Worldwide competition in the explosion-welded clad metal business is fragmented, and we believe that NobelClad holds a strong market position in the industry. 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.
(“DMC”, "we", "us", "our", or the "Company") owns and operates Arcadia, 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.
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 but also buy systems and other perforating components and specialty products from independent suppliers such as DynaEnergetics.
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 utilizes a variety of raw materials for the production of oilfield perforating and seismic products, including high-quality steel tubes, steel and copper, explosives, granulates, plastics and ancillary plastic product components. DynaEnergetics obtains its raw materials primarily 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. 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.
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. 9 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. 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.
NobelClad’s metal products are primarily produced for custom projects and conform to requirements set forth in customers’ purchase orders. Upon receipt of an order, NobelClad obtains the component materials from a variety of sources based on quality, availability and cost and then produces the order in one of its manufacturing plants.
NobelClad’s metal products are primarily produced for custom projects and conform to requirements set forth in customers’ purchase orders. Upon receipt of an order, NobelClad obtains the component materials from a variety of sources based on quality, availability and cost, and then produces the order in one of its manufacturing facilities.
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 for a price based on the higher of (a) a value based on the Acquisition purchase price and (b) a multiple of Arcadia’s 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 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”).
Our manufacturing plants and their respective shooting sites in Pennsylvania and Germany provide the production capacity to address projects for NobelClad’s global customer base. NobelClad uses proprietary processes and technology to produce high quality clad metal products and limit re-work costs.
Our manufacturing facilities and their respective shooting sites in Pennsylvania and Germany provide the production capacity to address projects for NobelClad’s global customer base. NobelClad uses proprietary processes and technology to produce high quality clad metal products and limit re-work costs.
In addition to its existing shaped charge test facility, which can simulate downhole, wellbore, and reservoir pressure conditions to develop and test high performance perforating charges for both oil companies and service providers, the R&D group has a purpose-built pressure vessel which can reach 30,000 psi test pressures and be heated to up to 200 degrees Celsius (392 degrees F).
In addition to its existing shaped charge test facility, which can simulate down-hole, wellbore, and reservoir pressure conditions to develop and test high performance perforating charges for both oil companies and service providers, the R&D group has a purpose-built pressure vessel which can reach 30,000 psi test pressures and be heated to up to 200 degrees Celsius (392 degrees F).
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 downhole 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.
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.
Arcadia supplies architectural building products, including exterior and interior framing systems, curtain walls, windows, doors, and interior partitions to the commercial construction market; it also supplies customized windows and doors to the 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 ultra-high-end residential construction market.
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. Information contained on our website does not constitute part of this Annual Report on Form 10-K.
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.
These charges enable exploration and production companies and their wireline service providers to choose from a variety of specifically designed shaped charges to match well completion design requirements. 5 Table of Contents TCP Systems : DynaEnergetics Tubing Conveyed Perforating ("TCP") systems are customized for individual customer needs and well applications.
These charges enable exploration and production companies and their wireline service providers to choose from a variety of specifically designed shaped charges to match well completion design requirements. TCP Systems : DynaEnergetics Tubing Conveyed Perforating ("TCP") systems are customized for individual customer needs and well applications.
If Munera’s ownership in Arcadia declines, the number of directors it has the right to appoint will be reduced in the manner set forth in the Operating Agreement. The Arcadia Board will generally act by majority vote of the directors, but certain matters specified in the Operating Agreement will require the affirmative vote of 80% of the directors.
If Munera’s ownership in Arcadia Products declines, the number of directors it has the right to appoint will be reduced in the manner set forth in the Operating Agreement. The Arcadia Board generally acts by majority vote of the directors, but certain matters specified in the Operating Agreement require the affirmative vote of 80% of the directors.
In the event that there is a short-term capacity issue at one facility, NobelClad can produce the order at its other 10 Table of Contents production site, prioritizing timing. The two production sites allow NobelClad to meet customer production needs in a timely manner. 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. 11 Table of Contents Research and Development We prepare a formal research and development plan annually.
R&D costs were $5,712, $6,378, and $6,335 for the years ended December 31, 2022, 2021 and 2020, 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 $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.
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, 2022, 2021 and 2020, the NobelClad segment represented approximately 14%, 33% and 36% 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, 2023, 2022 and 2021, the NobelClad segment represented approximately 15%, 14% and 33% of our consolidated net sales, respectively.
DynaEnergetics designs, manufactures and distributes highly engineered products utilized by the global oil and gas industry principally for the perforation of oil and gas wells.
DynaEnergetics designs, manufactures and sells highly engineered products utilized by the global oil and gas industry principally for the perforation of oil and gas wells.
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. 6 Table of Contents The customers for our energy products can be divided into five 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), E&P companies, and local resellers.
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.
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. The following chart represents our net sales based on the geographic location to where we shipped the product, regardless of the country of the actual end user.
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. The 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.
Setting and Ballistic Release Tools : DynaEnergetics also sells products that perform critical downhole functions associated with the perforating process. DS MicroSet™ is a compact, disposable setting tool used to install the frac plugs that isolate stages in a multi-stage, unconventional oil or gas well.
Setting and Ballistic Release Tools : DynaEnergetics also sells products that perform critical down-hole functions associated with the perforating process. DS MicroSet™ is a compact, disposable setting tool used to install the fracking plugs that isolate stages in a multi-stage, unconventional oil or gas well.
These industries tend to be cyclical in nature, and the timing of new order inflow remains difficult to predict. 7 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 60% of NobelClad sales in 2022.
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.
During the three years ended December 31, 2022, 2021 and 2020, the DynaEnergetics segment represented approximately 40%, 67% and 64% of our consolidated net sales, respectively. DynaEnergetics’ operates manufacturing facilities in Germany and the United States. In Troisdorf, Germany, DynaEnergetics has six IS2 TM detonator manufacturing lines, two shaped charge lines and a detonating cord manufacturing line.
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.
Ownership and Management Following the closing of the Arcadia acquisition, the Company (through its direct ownership and indirect ownership through our subsidary DMC Korea) owns 60% of Arcadia 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 Group LLC, Trustee of the Munera Family ESBT, and previously the majority owner of Arcadia, Inc.
No single patent or trademark is considered to be critical to any of Arcadia's, DynaEnergetics', or NobelClad's businesses. We are careful in protecting our proprietary know-how and manufacturing expertise in Arcadia, DynaEnergetics, and NobelClad, and each business unit has implemented measures and procedures designed to ensure that the information remains confidential.
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.
Products The Arcadia Commercial Exterior division manufactures, assembles and sells aluminum window and door systems, as well as architectural components. These include architectural framing systems, curtain and window walls, entrances and sun control products.
Products The Arcadia division manufactures, assembles and sells aluminum window and door systems, as well as architectural components. These include architectural framing systems, windows, curtain walls, entrance systems and sun control products.
The results of operations can be impacted by a delay between the time of a raw material cost increase and our price capture. Raw materials are generally available from numerous sources. Aluminum is our most important raw material, and we currently source from several major suppliers.
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.
DS Liberator™ is a ballistic release tool that enables the wireline service company 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 : Our DynaSlot TM perforating system is designed for plug and abandonment (P&A) operations.
However, specific project considerations such as technical specifications, price and delivery time, may allow these technologies to compete more directly with explosion-welding. Roll bond is only produced by a few steel mills in the world. In this process, the clad metal and base metal are bonded during the hot rolling operation in which the metal slab is converted to plate.
However, specific project considerations such as technical specifications, price and delivery time allow these technologies to compete directly with explosion-welding. In the roll bond process, the clad metal and base metal are bonded during the hot rolling operation in which the metal slab is converted to plate.
We also regularly post information about our Company on our website under the "Investors" tab. 14 Table of Contents
We also regularly post information about our Company on our website under the "Investors" tab.
Marketing, Sales, Distribution DynaEnergetics’ worldwide marketing and sales efforts for its oilfield and seismic products are located in Troisdorf, Germany and Houston, Texas.
Marketing, Sales, Distribution DynaEnergetics’ worldwide marketing and sales efforts for its oilfield products are managed from Troisdorf, Germany and Houston, Texas.
There is a great deal of competition in the North American commercial window and storefront manufacturing industry, and the Arcadia Commercial division competes against several national, regional and local aluminum window and storefront manufacturers, as well as regional paint and anodizing finishing companies.
There is a great deal of competition in the North American commercial window, storefront and partition manufacturing industry, and 4 Table of Contents the Arcadia and Wilson Partition divisions compete against several national, regional and local manufacturers, as well as regional paint and anodizing finishing companies.
Specifically, Arcadia uses aluminum in our commercial products and glass, aluminum, steel and wood in our residential products. The availability, quality, and costs of many of these commodities have fluctuated, and may continue to fluctuate, over time and are primarily sourced in North America. Generally, we have been able to address price increases in our product pricing to customers.
The availability, quality, and costs of many of these commodities have fluctuated, and may continue to fluctuate, over time and are primarily sourced in North America. Generally, we have been able to address raw material price increases in our product pricing to customers.
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 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.
DynaEnergetics has expanded the family of DS perforating systems with various models: DS Echo™, for re-frac applications; DS Gravity™, a self-orienting system for oriented perforating; and DS LoneStar™, a single-shot system that delivers large, ultra-consistent entry holes.
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.
(“Munera”). Arcadia is governed by an Operating Agreement among the Company, Arcadia and Munera (the “Operating Agreement”). Pursuant to the Operating Agreement, the Company has the right to appoint four directors to Arcadia’s board of directors (the “Arcadia Board”), one of whom will serve as Chairman of the Arcadia Board, and Munera will have the right to appoint three directors.
Pursuant to the Operating Agreement, the Company has the right to appoint four directors to Arcadia Products’ board of directors (the “Arcadia Board”), one of whom will serve as Chairman of the Arcadia Board, and Munera has the right to appoint three directors.
Customer Profile DynaEnergetics' perforating and seismic products are purchased by international and U.S. oilfield service companies of all sizes working in both onshore and offshore oil and gas fields.
We compete for sales primarily on customer service, product quality, reliability, safety, performance, and price. Customer Profile DynaEnergetics' perforating and seismic products are purchased by international and U.S. oilfield service companies of all sizes working in both onshore and offshore oil and gas fields.
We are in the process of bringing Arcadia employees into DMC’s corporate policies and programs. 12 Table of Contents 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). Risk Factors—Legal and Regulatory Risks”, which is incorporated by reference in this Item 1.
As of December 31, 2022, we had 1,700 permanent and part-time employees (1,474 U.S. and 226 non-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.
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.
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 also sponsor an employee stock purchase plan to encourage employees to acquire an ownership stake in DMC.
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.
The systems, marketed as DynaStage® (DS) Factory-Assembled, Performance-Assured™ perforating systems, are shipped directly to the customers’ remote shop or well site. Since 2015, DynaEnergetics has added several new DS products to accommodate evolving industry conditions and needs. Operations The DynaEnergetics segment seeks to build on its products and technologies, as well as its sales, supply chain and distribution network.
Since 2015, DynaEnergetics has added several new DS products to accommodate evolving industry conditions and needs. Operations The DynaEnergetics segment seeks to build on its products and technologies, as well as its sales, supply chain and distribution network.
Competition Hot Roll Bonding and Weld Overlay. NobelClad faces competition from two primary alternative cladding technologies: hot roll bonding and weld overlay. Usually, the three processes do not compete directly, as each has its own preferential domain of application relating to metal used and thicknesses required.
Competition Hot Roll Bonding and Weld Overlay. NobelClad faces competition from two primary alternative cladding technologies: hot roll bonding and weld overlay. The technologies do not always compete directly, as each has applications that are better suited, relating to metal used and thicknesses required.
In North America’s well-completion industry, perforating components traditionally have been assembled by highly trained personnel at the well site or nearby assembly facility. In 2015, DynaEnergetics began assembling its perforating systems 4 Table of Contents in a controlled environment at its manufacturing facilities.
In North America’s well-completion industry, perforating components traditionally have been assembled by highly trained personnel at the well site or nearby assembly facility. In 2015, DynaEnergetics began assembling its perforating systems in a controlled environment at its manufacturing facilities. The systems, marketed as DynaStage® (DS) Factory-Assembled, Performance-Assured™ perforating systems, are shipped directly to the customers’ remote shop or well site.
Operations Arcadia is headquartered in Vernon, California and operates four manufacturing facilities and 11 fabrication and distribution facilities. Anodized and painted aluminum components are manufactured in Arcadia’s Vernon, California facilities, with additional painting and manufacturing capacity in its Tucson, Arizona and Connecticut facilities. During the year ended December 31, 2022, Arcadia represented approximately 46% of our consolidated net sales.
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.
Our compensation and benefits teams strive to develop and implement policies and programs that are fair to employees, support our business goals, maintain competitiveness, and promote shared fiscal responsibility among the Company and our employees.
In addition, we use a number of temporary workers at any given time, depending on workload at our businesses. Compensation and Benefits. Our compensation and benefits teams strive to develop and implement policies and programs that are fair to employees, support our business goals, maintain competitiveness, and promote shared fiscal responsibility among the Company and our employees.
Competitive factors include product quality and design, aesthetics, dealer relationships and relationships with architects and luxury home builders. Marketing, Sales, Distribution The Arcadia Commercial division relies on a reputation for strong customer service, quality products and competitive lead times to maintain and attract customers. It has strong relationships with local glaziers, installers, and subcontractors.
Marketing, Sales, Distribution The Arcadia division relies on a reputation for strong customer service, quality products and competitive lead times to maintain and attract customers. It has strong relationships with local glaziers, installers and subcontractors. Wilson Partitions sells through a national in-house sales force and external sales representatives.
Research and Development DynaEnergetics devotes substantial resources to its research and development (R&D) programs. Based predominantly in Troisdorf, Germany, the R&D team works closely with sales, product management, and operations management teams to establish priorities and effectively manage individual projects.
Based predominantly in Troisdorf, Germany, the R&D team works closely with sales, product management, and operations management teams to establish priorities and effectively manage individual projects. Through its ongoing involvement in oil and gas industry trade shows and conferences, DynaEnergetics maintains a strong profile in the oil and gas industry.
In 2022, Arcadia Commercial Exteriors division accounted for approximately 71% of Arcadia’s net sales. Arcadia’s commercial interiors business, which operates under the name “Wilson Partitions," serves commercial framing and partitions markets across the U.S. It provides interior framing systems, aluminum doors, sliding systems and glazing systems. It is supported by manufacturing facilities in California, Connecticut and Texas.
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.
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.
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.
In 2001, the Company acquired substantially all of the stock of NobelClad Europe SA, a French company (“NobelClad Europe”), which had also been a licensee of the DetaClad technology. The acquisition of NobelClad Europe expanded the Company’s explosive metalworking operations to Europe. In 2007, the Company acquired the German company DynaEnergetics GmbH and Co. KG (“DynaEnergetics”) and certain affiliates.
In 1994, the Company changed its name to “Dynamic Materials Corporation.” The Company reincorporated in Delaware in 1997. In 2001, the Company acquired substantially all of the stock of NobelClad Europe SA, a French company (“NobelClad Europe”), which expanded the Company’s explosive metalworking operations to Europe. In 2007, the Company acquired the German company DynaEnergetics GmbH and Co.
Applications range from refrigeration chillers on fishing boats to massive air conditioning units for skyscrapers, airports, and deep underground mines. New Applications/Industry Development NobelClad continues its efforts in applications and materials innovations, with the goal of expanding NobelClad’s end-use markets and customer base.
New Applications/Industry Development NobelClad continues its efforts in applications and materials innovations, with the goal of expanding NobelClad’s end-use markets and customer base.
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.
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.
With respect to Arcadia Commercial, we believe our low-cost manufacturing platform, supply chain management, broad product offering, product quality and availability, industry-leading lead times and highly diversified and long-tenured customer base, create significant competitive advantages relative to many other exterior building products manufacturers. 3 Table of Contents Arcadia Custom Arcadia Custom faces competition nationally from several large, well-known competitors and from many smaller, regional competitors.
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.
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 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.
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. Custom windows are often sold with glass included.
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.
We believe every employee deserves an environment in which they are treated with dignity and respect, and their voices are heard. We support diversity within our workforce, and respect and embrace the different backgrounds, experiences, cultures and perspectives our employees bring to DMC.
We support diversity within our workforce, and respect and embrace the different backgrounds, experiences, cultures and perspectives our employees bring to DMC.
A substantial portion of Arcadia’s residential projects use steel (the most recycled building material in the world), and most of its steel products are recyclable. 2 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.
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.
In 2022, we successfully launched an expanded 3.5” diameter product building on the success of DS Lonestar™. 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.
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.
DynaEnergetics was comprised of two primary businesses: explosive metalworking and energy products. This acquisition expanded the Company’s explosive metalworking operations in Europe and added a complementary energy products business. In 2013, the Company branded its explosive metalworking operations under the single name NobelClad.
KG (“DynaEnergetics”) and certain affiliates, which expanded the Company’s explosive metalworking operations in Europe and added a complementary energy products business. In 2013, the Company branded its explosive metalworking operations under the single name NobelClad, and in 2014, the Company re-branded the energy products segment as DynaEnergetics. In 2016, the Company changed its name to DMC Global Inc.
We generally have good relationships with our suppliers and strive to proactively manage raw materials availability and pricing. Competition Arcadia Commercial The North American commercial construction market is highly fragmented. 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.
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.
Arcadia Custom provides a complete offering of custom, fully fabricated aluminum, steel and wood windows and doors to luxury homes and mixed-use markets. The Arcadia Custom team works closely with architects, owners, contractors and installers to provide support throughout the planning, design and installation phases of a residential construction process.
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.
Wilson Partitions provides products for new construction and for repairs and remodels, and focuses on product capabilities, including noise control, fire rating, built-to-order custom finishes, and other functional and aesthetic features. Wilson Partitions has a national market base, which is supported by leveraging its facilities and a national sales force.
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.
All three charge lines can be used with the DynaStage perforating system as well as conventional perforating gun systems across a range of gun diameters. In 2022, DynaEnergetics further expanded its portfolio of equal-entry hole shaped charges, in particular targeting the precise requirements of orientated perforating applications in the plug and perforating market.
All three charge lines can be used with the DS perforating system as well as conventional perforating gun systems across a range of gun diameters.
This enables the R&D group to support the oil and gas industry with test methods for new products that realistically simulate potentially difficult downhole conditions. An R&D plan, which focuses on new technology, products, process support and contracted projects, is prepared and reviewed at least quarterly.
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.
Arcadia’s products are sold in the United States through a network of service centers and distributors, while DynaEnergetics and NobelClad operate globally through an international network of manufacturing, distribution and sales facilities. Refer to Note 11 within Item 8 — Financial Statements and Supplementary Data for net sales, operating income, and total assets for each of our segments.
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 offers high-performance products that comply with the Leadership in Energy and Environmental Design (LEED) Green Building Rating System. In addition, we offer a wide range of renovation solutions to help modernize aging buildings, providing significantly improved energy performance. Arcadia is committed to continuing to develop more energy efficient products for our customers.
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.
This business focuses on products targeted to regional needs and preferences, and product availability with short lead times. Arcadia Commercial Exteriors locations serve a loyal customer base consisting primarily of glazing contractors, subcontractors, commercial architects, and designers in growing commercial markets in the western and southwestern U.S.
Products are designed to address regional needs and preferences, and each satellite seeks to offer superior product availability, short lead times, product customization, and design and engineering support. Arcadia serves a loyal customer base consisting primarily of local and regional glazing contractors, subcontractors, commercial architects and designers.
The channels created by the shaped charges allow hydrocarbons to flow back into the wellbore. When hydraulic fracturing is employed, the perforations and channels also provide a path for the fracturing fluid to enter and return from the formation.
The channels created by the shaped charges allow hydrocarbons to flow back into the wellbore.
In response to the exacting needs of our customers, we worked throughout 2022 to expand and enhance the IS2 product line, including adding an IS2 MS igniter specifically designed for our DS MicroSet™. We also began a transition to our most technically advanced detonator, the IS2 Xpress.
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.
When the cooling fluid is seawater, brackish, or even slightly polluted, corrosion-resistant metals are necessary. Metal selection can range from stainless 8 Table of Contents steel to copper alloy to titanium. Explosion-welded clad metal is often the low-cost solution for making the tube sheets.
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.
We are proud of our work and how it helps our customers, but are never boastful. DMC aligns to provide all employees with a supportive work environment and the opportunity to improve their skills and advance their careers. Our culture is reflected in our inclusive and thriving workplace.
DMC seeks to provide all employees with a supportive work environment and the opportunity to improve their skills and advance their careers. We believe every employee deserves an environment in which they are treated with dignity and respect, and their voices are heard.
Cutting control-lines without damaging the well's integrity is a critical step in the process of permanently decommissioning offshore wells. Geothermal : In 2022, DynaEnergetics successfully developed and provided a complete perforating string-design for a new geothermal project in Europe.
Cutting control-lines without damaging the well's integrity is a critical step in the process of permanently decommissioning offshore wells. Suppliers and Raw Materials DynaEnergetics' product offering consists of complex components that require numerous high-end inputs.
DS Trinity™, an ultra-compact system that features three explosive shaped charges on a single or dual radial plane; and DS NLine™, an oriented systems that features several shaped charges on a lateral plane. During 2022, DynaEnergetics continued to refine its systems to further improve reliability and worked to expand our product offerings.
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.
All of Arcadia’s commercial building products and many of our residential products are made from aluminum and can be specified with 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. All of Arcadia’s commercial building products and many of our residential product offerings are made from aluminum, including recycled aluminum content.

… 62 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

99 edited+37 added−29 removed175 unchanged
Biggest changeRisk Factors Related to our Businesses Generally • 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. 15 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. • 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 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.
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 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.
In weak economic environments, we may experience increased delays and failures due to, among other reasons, a reduction in our customers’ cash flow from operations and in their access to the credit markets and rising interest rates.
In weak economic environments, we may experience increased delays and failures due to, among other reasons, a reduction in our customers’ cash flow from operations, their access to the credit markets and rising interest rates.
The risk of cybersecurity incidents may increase with the 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). Various measures have been implemented to manage our risks related to information technology systems and network disruptions.
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.
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. 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.
Violations of these laws, or allegations of such violations, could subject us to criminal or civil, monetary or and non-monetary penalties, disrupt our operations, involve significant management distraction, subject us to class action lawsuits and result in a material adverse effect on our business, financial condition and results of operations.
Violations of these laws, or allegations of such violations, could subject us to criminal or civil, monetary or non-monetary penalties, disrupt our operations, involve significant management distraction, subject us to class action lawsuits and result in a material adverse effect on our business, financial condition and results of 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 (such as 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 (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.
Our outsourcing of certain technology and business processes functions to third parties may expose us to enhanced risks related to data security, which could result in monetary and reputational damages. In addition, our ability to receive services from third party providers may be impacted by cultural differences, political instability, and unanticipated regulatory requirements or policies.
Our outsourcing of certain technology and business processes to third parties may expose us to enhanced risks related to data security, which could result in monetary and reputational damages. In addition, our ability to receive services from third party providers may be impacted by cultural differences, political instability, and unanticipated regulatory requirements or policies.
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. 27 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.
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.
At DynaEnergetics, the level of demand from our customers is impacted by oil and gas prices as well as a variety of other factors and can vary significantly from quarter to quarter. At Arcadia, operating results can fluctuate due to price movements in the market for raw aluminum.
At DynaEnergetics, the level of demand from our customers is impacted by oil and gas prices as well as a variety of other factors and can vary significantly from quarter to quarter. At Arcadia Products, operating results can fluctuate due to price movements in the market for raw aluminum.
We incur substantial costs to comply with these laws and regulations and non-compliance could expose us to significant liabilities. For example, Arcadia 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 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.
Nevertheless, conducting a business with minority owners may lead to certain risks and uncertainties, which could have an adverse impact on our ability to profitably grow the Arcadia business, which could have a material adverse impact on our future cash flows, earnings, results of operations and financial condition.
Nevertheless, conducting a business with minority owners may lead to certain risks and uncertainties, which could have an adverse impact on our ability to profitably grow the Arcadia Products business, which could have a material adverse impact on our future cash flows, earnings, results of operations and financial condition.
While we structure many of our supply arrangements to moderate the effects of fluctuations in the market for raw aluminum and we endeavor to adjust our pricing to offset potential impacts, operating results could be negatively impacted by price movements in the market for raw aluminum.
While we structure many of our supply arrangements to moderate the effects of fluctuations in the market for raw aluminum and we endeavor to adjust our customer pricing to offset potential impacts, operating results could be negatively impacted by price movements in the market for raw aluminum.
Any increase (decrease) in the value of the U.S. dollar against any foreign currency that is the functional currency of any of our operating subsidiaries will cause us to experience foreign currency translation (gains) losses with respect to amounts already invested in such foreign currencies.
Any increase or decrease in the value of the U.S. dollar against any foreign currency that is the functional currency of any of our operating subsidiaries will cause us to experience foreign currency translation gains or losses with respect to amounts already invested in such foreign currencies.
The prices for oil and natural gas have historically been volatile and can be affected by a variety of factors, including: • changes in the supply of and demand for hydrocarbons, which are affected by general economic, business and regulatory conditions; • the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil producing companies to set and maintain production levels for oil; 18 Table of Contents • oil and gas production levels in the U.S. and in other non-OPEC countries; • the level of excess production capacity; • speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts; • government initiatives to restrict oil and gas drilling or development or promote the use of renewable energy sources and public sentiment regarding the same; • political and economic uncertainty, geopolitical unrest, and acts of war; • the level of worldwide oil and gas exploration and production activity; • access to potential resources; • changes in governmental policies, subsidies, or sanctions; • the costs of exploring for, producing and delivering oil and gas; • technological advances affecting energy consumption; and • weather conditions.
The prices for oil and natural gas have historically been volatile and can be affected by a variety of factors, including: • changes in the supply of and demand for hydrocarbons, which are affected by general economic, business and regulatory conditions; • the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil producing companies to set and maintain production levels for oil; • oil and gas production levels in the U.S. and in other non-OPEC countries; • the level of excess production capacity; • speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts; • government initiatives to restrict oil and gas drilling or development or promote the use of renewable energy sources and public sentiment regarding the same; • political and economic uncertainty, geopolitical unrest, and acts of war; • the level of worldwide oil and gas exploration and production activity; • access to potential resources; • changes in governmental policies, subsidies, or sanctions; • the costs of exploring for, producing and delivering oil and gas; • technological advances affecting energy consumption; and • weather conditions.
The cost of domestic steel and aluminum has also increased, along with the price of delivery, and the availability of certain materials has been limited. These increased costs have increased the price of our products to our customers and, in some instances, affected our ability to be competitive.
The cost of domestic steel and aluminum has also increased, along with the price of delivery, and the availability of certain materials has been limited. These higher costs have increased the price of our products to our customers and, in some instances, affected our ability to be competitive.
In addition, as early as three years after the closing of the Arcadia acquisition, we may be required to pay the Option Purchase Price for some or all of Munera’s interests in Arcadia if Munera exercises the Put Option.
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.
Our Operating Agreement governs our relationship with Munera, and we believe the Operating Agreement provides us with effective and sufficient control of Arcadia to allow the business to be operated consistent with our goals and values and with sufficient opportunity for profitable growth.
Our Operating Agreement governs our relationship with Munera, and we believe the Operating Agreement provides us with effective and sufficient control of Arcadia Products to allow the business to be operated consistent with our goals and values and with sufficient opportunity for profitable growth.
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.
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.
We have not established any reserve funds for potential warranty claims since historically we have experienced few warranty claims for our products and the costs associated with our warranty claims have been low.
We generally have not established any reserve funds for potential warranty claims since historically we have experienced few warranty claims for our products and the costs associated with our warranty claims have been low.
We could also be required to maintain higher inventory levels as we address supply uncertainties. Such developments would result in higher costs and ultimately a decrease in our revenues and profitability. If our supply of raw materials is disrupted or our delivery times are extended, our results of operations and financial condition could be materially adversely affected.
We could also be required to maintain higher inventory levels as we address supply uncertainties. Such developments would result in higher costs and potentially a decrease in our revenues and profitability. If our supply of raw materials is disrupted or our delivery times are extended, our results of operations and financial condition could be materially adversely affected.
Pursuant to the Equity Purchase Agreement pursuant to which we acquired a 60% ownership stake in Arcadia, Munera continues to hold 40% of the outstanding equity interests of Arcadia.
Pursuant to the Equity Purchase Agreement pursuant to which we acquired a 60% ownership stake in Arcadia Products, Munera continues to hold 40% of the outstanding equity interests of Arcadia Products.
However, there is no guarantee we will be able to maintain our competitive position. 21 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. 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.
As a result, our ability to conduct our business may be adversely affected. 25 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. 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.
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, such as the COVID-19 pandemic; • 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.
These industries tend to be cyclical in nature and an economic slowdown in one or all of these 20 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 21 Table of Contents industries-whether due to traditional cyclicality, general economic conditions or other factors-could impact capital expenditures within that industry.
This agreement includes various covenants and restrictions and certain of these relate to the incurrence of additional indebtedness and the mortgaging, pledging or disposing of major assets. We are also required to maintain certain financial ratios on a quarterly basis.
This agreement, as amended, includes various covenants and restrictions and certain of these relate to the incurrence of additional indebtedness and the mortgaging, pledging or disposing of major assets. We are also required to maintain certain financial ratios on a quarterly basis.
Bureau of 26 Table of Contents Alcohol, Tobacco and Firearms; the Federal Motor Carrier Safety regulations set forth by the U.S. Department of Transportation; the Safety Library Publications of the Institute of Makers of Explosive; and similar guidelines of their European counterparts.
Bureau of 28 Table of Contents Alcohol, Tobacco and Firearms; the Federal Motor Carrier Safety regulations set forth by the U.S. Department of Transportation; the Safety Library Publications of the Institute of Makers of Explosive; and similar guidelines of their European counterparts.
In addition, our competitors may be able to develop technology independently that is 30 Table of Contents similar to ours without infringing on our patents or gaining access to our trade secrets, and this could have a similar effect on our competitive position. Intellectual property litigation and threats of litigation are becoming more common in the oilfield services industry.
In addition, our competitors may be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets, and this could have a similar effect on our competitive position. Intellectual property litigation and threats of litigation are becoming more common in the oilfield services industry.
This has resulted in increased cash flows for E&P companies; however, E&P companies are still seeking to control their cost of operations and this has continued to result in downward pressure on prices for our products.
This has resulted in increased cash flows for E&P companies; however, E&P companies are still seeking to control their cost of operations and this has continued to contribute to downward pressure on prices for our products.
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.
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.
This conflict has led and may continue to lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, higher inflation, supply chain interruptions, increased costs for transportation 22 Table of Contents and raw materials, political and social instability, as well as an increase in cyberattacks and espionage.
This conflict has led and may continue to lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, higher inflation, supply chain interruptions, increased costs for transportation and raw materials, political and social instability, as well as an increase in cyberattacks and espionage.
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.
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.
If we experience further supply disruptions, we may not be able to develop alternate sourcing quickly.
If we experience supply disruptions, we may not be able to develop alternate sourcing quickly.
Although some of these tariffs have been subsequently 24 Table of Contents reduced or eliminated, as occurred in connection with the United States Mexico Canada Agreement (USMCA), many tariffs continue to exist and new tariffs have been and may be imposed at any time.
Although some of these tariffs have been subsequently reduced or eliminated, as occurred in connection with the United States Mexico Canada Agreement (USMCA), many tariffs continue to exist and new tariffs have been and may be imposed at any time.
Risks Related to Acquisitions We have incurred debt to finance the acquisition of 60% of Arcadia and will incur additional substantial financial obligations in connection with the acquisition of the remaining 40% of Arcadia. We financed a portion of the purchase price of the Arcadia 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. We financed a portion of the purchase price of the Arcadia Products acquisition with proceeds from our credit facility.
We see competition from one large well-known clad supplier and from a growing number of smaller companies with explosion welded clad manufacturing capability in China and India. Explosion-welded clad products also compete with products manufactured by roll bond and weld overlay cladding processes.
We see competition from large well-known clad suppliers and from a growing number of smaller companies with explosion welded clad manufacturing capability in China and India. Explosion-welded clad products also compete with products manufactured by roll bond and weld overlay cladding processes.
As of December 31, 2022, 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, 2023, we were in compliance with all financial covenants and other provisions of the credit agreement, as amended, and our other loan agreements.
In addition, the oil and gas industry has historically been cyclical, and to date in 2023, oil prices have declined significantly from their 2022 highs.
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.
Risk Factors Related to our Businesses Generally 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.
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.
Internationally, the European Data Protection Board recently released new guidelines on enforcement and fines related to the General Data Protection Regulation (GDPR). The new guidelines suggest a tougher stance on enforcement and stiffer fines for companies that violate the GDPR.
Internationally, the European Data Protection Board has released guidelines on enforcement and fines related to the General Data Protection Regulation (GDPR). The guidelines suggest a tougher stance on enforcement and stiffer fines for companies that violate the GDPR.
For our 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.
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.
Our year-end backlog was $55.5 million, $41.2 million, and $39.9 million at the end of fiscal years 2022, 2021 and 2020, 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 $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.
Risk Factors Related to Arcadia North American and global economic and industry-related business conditions materially affect our sales and results of operations. Our Arcadia businesses are significantly influenced by North American economic conditions and the cyclical nature of the North American commercial and residential construction industry.
Risk Factors Related to Arcadia Products North American and global economic and industry-related business conditions materially affect our sales and results of operations. Our Arcadia Products business is significantly influenced by North American economic conditions and the cyclical nature of the North American commercial and residential construction 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. • 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. • Demand for DynaEnergetics products could be reduced by existing and future legislation, regulations and public sentiment.
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.
Among the factors that could affect the price of our common stock are: • changes in the architectural building products, oil and gas, industrial, or infrastructure markets; • operating and financial performance that vary from the expectations of management, securities analysts or investors; • developments in our business or in our business sectors generally; • regulatory changes affecting our industry generally or our business and operations; • the operating and stock price performance of companies that investors consider to be comparable to us; • announcements of strategic developments, acquisitions and other material events by us or our competitors; • our ability to integrate and operate the companies and the businesses that we acquire; • rumors and market speculation regarding our industries, business or trading activity; • significant amounts of short selling, the perception that short sales could occur and other speculative trading activity; • activism by any large stockholder or group of stockholders; • changes in global financial markets and global economies and general market conditions, including volatility in foreign exchange rates, tariffs and stock, commodity, credit or asset valuations, and government actions or shutdowns.
Among the factors that could affect the price of our common stock are: • changes in the architectural building products, oil and gas, industrial, or infrastructure markets; • operating and financial performance that vary from the expectations of management, securities analysts or investors; • developments in our business or in our business sectors generally; • regulatory changes affecting our industries generally or our business and operations; • the operating and stock price performance of companies that investors consider to be comparable to us; • announcements of strategic developments, acquisitions and other material events by us or our competitors; • our ability to integrate and operate the companies and the businesses that we acquire; • rumors and market speculation regarding our industries, business or trading activity; • significant amounts of short selling, the perception that short sales could occur and other speculative trading activity; • activism by any large stockholder or group of stockholders; • new positions adopted by investor stewardship groups and proxy advisory firms regarding desired ESG disclosures, policies, ranking systems and other initiatives; • changes in global financial markets and global economies and general market conditions, including volatility in foreign exchange rates, tariffs and stock, commodity, credit or asset valuations, and government actions or shutdowns.
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. • We are subject to litigation and may be subject to additional litigation in the future.
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.
Risk 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. • We do not maintain a reserve fund for warranty or defective products claims.
Risk 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. 15 Table of Contents • 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.
Our current and future success is dependent on recruitment of a new Chief Executive Officer and the retention of key personnel, including other executive officers 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 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.
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.
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 Recent conflict in the Middle East may adversely affect our business and results of operations.
The final resolution of any audits or litigation may differ from the amounts recorded in our consolidated financial statements and may materially affect our consolidated financial statements in the period or periods in which that determination is made. We are subject to litigation and may be subject to additional litigation in the future.
The final resolution of any audits or litigation may differ from the amounts recorded in our Consolidated Financial Statements and may materially affect our Consolidated Financial Statements in the period or periods in which that determination is made.
The warranties require us to repair or replace defective products and may require the payment of a certain percentage of the purchase price as liquidated damages for our failure to meet the specified product specifications and delivery requirements.
Our product warranties against technical defects of our clad products vary depending on our purchase orders with customers. The warranties require us to repair or replace defective products and may require the payment of a certain percentage of the purchase price as liquidated damages for our failure to meet the specified product specifications and delivery requirements.
Risk Factors Related to Arcadia • North American and global economic and industry-related business conditions materially affect our sales and results of operations. • An inability to successfully develop new products or improve existing products could negatively impact our ability to attract new customers and/or retain existing customers. • If we are unable to manage our supply chain effectively, including availability and price of materials used in our products, our results of operations will be negatively affected. • Product quality issues and product liability claims could adversely affect our operating results.
Risk Factors Related to Arcadia Products • North American and global economic and industry-related business conditions materially affect our sales and results of operations. • We may not be able to continue to compete successfully against other companies in our industry. • If we are unable to manage our supply chain effectively, including availability and price of materials used in our products, our results of operations will be negatively affected. • An inability to successfully develop new products or improve existing products could negatively impact our ability to attract new customers and/or retain existing customers. • Product quality issues and product liability claims could adversely affect our operating results. • We recently implemented a new enterprise resource planning (ERP) system, and challenges with the implementation of the system may adversely impact our business and operations.
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. • Holders of our common stock do not currently receive dividends and our dividend may not be reinstated in the future.
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.
The actions of our existing competitors or new competitors could result in loss of customers and/or market share. Changes in our competitors' products, prices or services could negatively impact our market share, net sales and/or margins. An inability to successfully develop new products or improve existing products could negatively impact our ability to attract new customers and/or retain existing customers.
The actions of our existing competitors or new competitors could result in loss of customers and/or market share. Changes in our competitors' products, prices or services could negatively impact our market share, net sales and/or margins.
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, 2022, we had an outstanding balance of $135.0 million on our syndicated credit agreement.
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 COVID-19 pandemic, government actions taken in response, and resulting economic impacts, including inflationary conditions in many markets, have created uncertainty in our end markets, and we have seen continued delays in projects and capital expenditures. In addition, metals prices affect the demand for cladded products and our margins.
Inflationary conditions in many markets, have created uncertainty in our end markets, and we have seen continued delays in projects and capital expenditures. In addition, metals prices affect the demand for cladded products and our margins.
In addition, not all of our competitors may seek to establish climate or other ESG targets and goals, or at a comparable level to ours, which could result in our competitors achieving competitive advantages through lower supply chain or operating costs. 29 Table of Contents Changes in or interpretation of tax law could impact the determination of our income tax liabilities for a tax year.
In addition, not all of our competitors may seek to establish climate or other ESG targets and goals, or at a comparable level to ours, which could result in our competitors achieving competitive advantages through lower supply chain or operating costs.
In addition, we compete with many smaller companies capable of competing effectively on a regional or local basis. Our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements.
These companies have longer operating histories, greater financial, technical, and other resources, and greater name recognition than we do. In addition, we compete with many smaller companies capable of competing effectively on a regional or local basis. Our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements.
Regulatory agencies and environmental advocacy groups in the United States, the E.U., and other regions or countries have been focusing considerable attention on emissions of carbon dioxide, methane and other greenhouse gases and their role in climate change.
Demand for DynaEnergetics products could be reduced by existing and future legislation, regulations and public sentiment. Regulatory agencies and environmental advocacy groups in the United States, the E.U., and other regions or countries have been focusing considerable attention on emissions of carbon dioxide, methane and other greenhouse gases and their role in climate change.
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. Demand for DynaEnergetics products could be reduced by existing and future legislation, regulations and public sentiment.
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.
If we fail to meet delivery schedules, we may be required to pay damages or may risk loss of an order, which could have a material adverse effect on our business, financial condition and results of operations. We do not maintain a reserve fund for warranty or defective products claims.
If we fail to meet delivery schedules, we may be required to pay damages or may risk loss of an order, which could have a material adverse effect on our business, financial condition and results of operations. Our costs could substantially increase if we experience a large claim or a significant number of warranty claims.
Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition.
In addition, it is possible that competitors may improve their products more rapidly or effectively, which could adversely affect our sales. Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition.
Results of operations in any period should not be considered indicative of the results for any future period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We are exposed to potentially volatile fluctuations of the U.S. dollar (our reporting currency) against the currencies of many of our operating subsidiaries.
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.
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. Holders of our common stock do not currently receive dividends and our dividend may not be reinstated in the future.
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 length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable.
In February of 2022, Russian military forces invaded Ukraine, resulting in conflict and disruption in the region. The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable.
The CPRA, which went into effect on January 1, 2023, along with the CCPA, governs the transmission, security and privacy of California residents’ personal information. The CPRA has a twelve month look-back period for enforcement purposes. Among many new requirements, the CPRA creates a category for sensitive data including health and other personal information that requires additional safeguards and disclosures.
The CPRA has a twelve month look-back period for enforcement purposes. Among many new requirements, the CPRA creates a category for sensitive data including health and other personal information that requires additional safeguards and disclosures.
If we are unable to effectively manage our expansion projects or related anticipated net sales are not realized, our operating results could be materially adversely affected. 19 Table of Contents We may not be able to continue to compete successfully against other companies in our industry. The markets in which we operate are highly competitive.
Expansions, including the transfer of operations to other facilities, include the risk of additional costs and start-up inefficiencies. If we are unable to effectively manage our expansion projects or related anticipated net sales are not realized, our operating results could be materially adversely affected. We may not be able to continue to compete successfully against other companies in our industry.
DynaEnergetics competes with a broad spectrum of companies that produce and market perforating services and products. Many of these companies are large national and multi-national companies, including the oil and natural gas industry’s largest oilfield service providers. These companies have longer operating histories, greater financial, technical, and other resources, and greater name recognition than we do.
The markets in which we operate are highly competitive. DynaEnergetics competes with a broad spectrum of companies that produce and market perforating services and products. Many of these companies are large national and multi-national companies, including the oil and natural gas industry’s largest oilfield service providers.
Several U.S. states have passed comprehensive privacy laws that will go into effect in 2023. Of note among them is the California Consumer Privacy Rights Act (CPRA), which amends and expands the California Consumer Privacy (CCPA).
Several U.S. states have passed comprehensive privacy laws that have recently become effective. Of note among them is the California Consumer Privacy Rights Act (CPRA), which amends and expands the California Consumer Privacy (CCPA). The CPRA, which went into effect on January 1, 2023, along with the CCPA, governs the transmission, security and privacy of California residents’ personal information.
Many of our operating subsidiaries conduct business in euros, Canadian dollars, or other foreign currencies. Sales made in currencies other than U.S. dollars accounted for 6%, 16%, and 17% of total sales for the years ended 2022, 2021 and 2020, respectively.
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.
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. 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.
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.
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.
The construction industry is impacted by macroeconomic trends, such as availability of credit, employment levels, consumer confidence, interest rates and commodity prices. In addition, changes in architectural design trends, demographic trends, and/or remote work trends could negatively impact demand for our products.
The construction industry is impacted by macroeconomic trends, such as availability of credit, employment levels, consumer confidence, interest rates and commodity prices. Recent rising inflation, interest rates, and construction costs have reduced, and could continue to reduce, the demand for our products and impact our profitability.
The protection of our intellectual property rights is essential to maintaining our competitive position and recognizing the value of our investments in technology and intellectual property in our existing and future products. We rely on trade secret protection for certain aspects of our technology, in part through confidentiality and other written agreements with our employees, consultants and third parties.
We rely on trade secret protection for certain aspects of our technology, in part through confidentiality and other written agreements with our employees, consultants and third parties. Through these and other written agreements, we attempt to control access to and distribution of our intellectual property documentation and other proprietary technology information.
We earn a significant amount of our operating income outside the U.S and have significant intercompany transactions between our affiliates. 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.
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.
These competitors may be better able to withstand changes in conditions within the industries and markets in which we operate and may have significantly greater operating and financial flexibility than we have. Moreover, barriers to entry are low in certain product lines and new competitors may enter our industry, whether within the U.S. or internationally.
Moreover, barriers to entry are low in certain product lines and new competitors may enter our industry, whether within the U.S. or internationally.

… 85 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

12 edited+1 added−0 removed10 unchanged
Biggest changeLocation Property Type Property Size Owned/Leased Expiration Date of Lease (if applicable) Vernon, California Corporate office, metal shop building, warehouse 26,500 sq. ft. Owned Land for office, paint shop, anodizing line 0.8 acre Owned Land for office, paint shop, anodizing line 2.24 acres Leased May 31, 2046 Vernon, California Land for parking 39,545 sq. ft.
Biggest changeOwned Land for office, paint shop, anodizing line 0.8 acre Owned Land for office, paint shop, anodizing line 2.24 acres Leased May 31, 2046 Vernon, California Land for parking 39,545 sq. ft. Leased March 31, 2027 Vernon, California (1) Office, paint shop 112,000 sq. ft.
Leased August 31, 2025 (a) The Blum, Texas warehouse is separate from the main Blum manufacturing campus. 36 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. 37 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, 2023, with renewal options for three 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, 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.
During the year-ended December 31, 2022, DMC recorded $4,625 in lease expense related to these properties. 35 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, 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.
Leased November 30, 2025, with renewal option for 60 months Kent, Washington Distribution, light assembly 25,000 sq. ft. Leased March 31, 2024 (1) These leases are with entities affiliated with the holder of the redeemable noncontrolling interest and the former president of Arcadia.
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.
Land: 21,872 sq. ft. Leased May 31, 2023 South Gate, California Office, manufacturing 45,700 sq. ft. Leased December 31, 2027 South Gate, California Office, manufacturing 25,000 sq. ft. Leased April 30, 2027 Houston, Texas Office, warehouse 43,412 sq. ft. Leased November 30, 2028, with renewal option for 60 months Dallas, Texas Office, warehouse 86,731 sq. ft.
Leased December 31, 2027 South Gate, California Office, manufacturing, storage Building: 25,000 sq. ft. Land: 45,000 sq. ft. Leased April 30, 2027 Houston, Texas Office, warehouse 43,412 sq. ft. Leased November 30, 2028, with renewal option for 60 months Dallas, Texas Office, warehouse 86,731 sq. ft.
Owned Blum, Texas Land for office, warehouse, and manufacturing 284 acres Owned Midland, Texas Land 13.3 acres Leased April 1, 2029 Victoria, Texas Office and warehouse 4,448 sq. ft. Leased June 30, 2023 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 Office, warehouse, and manufacturing 36,000 sq. ft. Owned Alberta, Canada Office and warehouse 7,650 sq. ft.
ITEM 3. Legal Proceedings Refer to Note 13 within Item 8 — Financial Statements and Supplementary Data.
ITEM 3. Legal Proceedings Refer to Note 12 within Part II, Item 8 — Financial Statements and Supplementary Data.
Leased March 31, 2027 Vernon, California (1) Office, paint shop 112,000 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, 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 24 months Las Vegas, Nevada (1) Office, warehouse 88,915 sq. ft. Leased December 22, 2026, with renewal option for 24 months Tucson, Arizona (1) Office, paint shop, warehouse 106,507 sq. ft. Leased December 22, 2026, with renewal option for 60 months Waipahu, Hawaii Distribution, light assembly Building: 12,746 sq. ft.
Leased December 22, 2026, with renewal option for 24 months Tucson, Arizona (1) Office, paint shop, warehouse 106,507 sq. ft. Leased December 22, 2026, with renewal option for 60 months Waipahu, Hawaii Distribution, light assembly Building: 12,746 sq. ft. Land: 21,872 sq. ft. Leased May 31, 2028 South Gate, California Office, manufacturing 45,700 sq. ft.
Leased September 30, 2029, with renewal option for 60 months 34 Table of Contents Arcadia Arcadia owns a manufacturing site and sales office in Vernon, California and leases other manufacturing and distribution centers throughout the United States. The table below summarizes Arcadia's material properties, including their location, type, size, whether owned or leased and expiration terms, if applicable.
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 December 22, 2024, with renewal option for 36 months 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, 2023, with renewal option for 24 months Phoenix, Arizona (1) Office, warehouse 51,986 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.
Added
The table below summarizes Arcadia Products' 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) Vernon, California Corporate office, metal shop building, warehouse 26,500 sq. ft.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings 37 Item 4. Mine Safety Disclosures 37 Part II 38 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. Selected Financial Data 40 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A.
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.
Quantitative and Qualitative Disclosures about Market Risk 57 Item 8. Financial Statements and Supplementary Data 58
Quantitative and Qualitative Disclosures about Market Risk 55 Item 8. Financial Statements and Supplementary Data 57

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed2 unchanged
Biggest changeDuring the year ended December 31, 2022, 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. 37 Table of Contents PART II
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

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed2 unchanged
Biggest changeTotal Return Analysis December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 DMC Global Inc. $100.00 $140.20 $179.40 $172.65 $158.12 $77.60 Nasdaq Non-Financial Stocks $100.00 $100.04 $139.51 $207.70 $264.82 $179.07 Nasdaq Composite (U.S.) $100.00 $94.56 $124.03 $150.41 $189.36 $152.00 39 Table of Contents
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
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, 2022, 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, 2023, 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, 2017, 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, 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.
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, 2023, there were 228 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 20, 2024, there were 210 holders of record of our common stock (does not include beneficial holders of shares held in “street name”).
(2) As of December 31, 2022, the maximum number of shares that could be purchased would not exceed the employees’ portion of taxes to be withheld on unvested shares (470,624) and potential purchases upon participant elections to diversify equity awards held in the Company’s Amended and Restated Non-Qualified Deferred Compensation Plan (151,468) into other investment options available to participants in the Plan. 38 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, 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.
Total number of shares purchased (1) (2) Average price paid per share October 1 to October 31, 2022 213 $ 15.98 November 1 to November 30, 2022 701 $ 19.04 December 1 to December 31, 2022 6,987 $ 17.35 Total 7,901 $ 17.46 (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, 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.

Item 7. Management's Discussion & Analysis

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

77 edited+43 added−78 removed17 unchanged
Biggest changeAdjusted EBITDA excludes from EBITDA stock-based compensation, restructuring expenses and asset impairment charges and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance (as further described in the 43 Table of Contents tables below). Adjusted EBITDA attributable to DMC Global Inc. stockholders excludes the adjusted EBITDA attributable to the 40% redeemable noncontrolling interest in Arcadia.
Biggest changeNon-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.
(“DMC”, "we", "us", "our", or the "Company") owns and operates Arcadia, 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 niche segments of the construction, energy, industrial processing and transportation markets.
Debt facilities On December 23, 2021, in connection with the Arcadia acquisition, we entered into a five-year $200,000 syndicated credit agreement (“credit facility”) which included a $150,000 Term Loan (the "Term Loan"), which is amortizable at 10% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in 2026, and allows for revolving loans of up to $50,000.
Debt facilities On December 23, 2021, in connection with the Arcadia Products acquisition, we entered into a five-year $200,000 syndicated credit agreement (“credit facility”) which included a $150,000 Term Loan (the "Term Loan"), which is amortizable at 10% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in 2026, and allows for revolving loans of up to $50,000.
Additionally, in May 2021, the Company completed a registered public offering of its stock under an automatic shelf registration statement on Form S-3ASR filed on May 3, 2021, issuing a total of 2,875,000 shares of its common stock, which included the exercise of the over-allotment option, at a market price of $45 per share resulting in gross proceeds of $129,375.
In May 2021, the Company completed a registered public offering of its stock under an automatic shelf registration statement on Form S-3ASR filed on May 3, 2021, issuing a total of 2,875,000 shares of its common stock, which included the exercise of the over-allotment option, at a market price of $45 per share resulting in gross proceeds of $129,375.
Based on the results of the quantitative assessment, if the carrying value exceeds the fair value of the reporting unit, then 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 assumptions used in a quantitative assessment require significant judgment, which include assumptions about future economic conditions and company-specific conditions and plans.
Net proceeds from the offering were $123,461 after deducting underwriter fees and other expenses of $5,914. We used proceeds from the ATM program and the registered public offering as part of the consideration used to acquire our 60% controlling interest in Arcadia.
Net proceeds from the offering were $123,461 after deducting underwriter fees and other expenses of $5,914. We used proceeds from the ATM program and the registered public offering as part of the consideration used to acquire our 60% controlling interest in Arcadia Products.
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, the tax position will be sustained upon examination, including the resolution of any related appeals or litigation.
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.
Redeemable noncontrolling interest The Operating Agreement for Arcadia contains a right for the Company to purchase the remaining interest in Arcadia 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 the third anniversary of the acquisition closing date (“Call Option”).
A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal 2021 compared to fiscal 2020 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, 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 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.
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. 54 Table of Contents 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 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.
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.
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.
Off Balance Sheet Arrangements At December 31, 2022, 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, 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.
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 grow market share, expand profit margins, increase cash flow and enhance shareholder value.
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.
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.
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.
Stock-based compensation is allocated to the Arcadia 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 income (expense), 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 before income taxes by deducting unallocated corporate expenses, unallocated stock-based compensation, other (expense) income, net, and interest expense, net.
Based in Broomfield, Colorado, DMC trades on Nasdaq under the symbol “BOOM.” Arcadia On December 23, 2021, DMC completed the acquisition of 60% of the membership interests in Arcadia Products, LLC, a Colorado limited liability company resulting from the conversion of Arcadia, Inc. (collectively, “Arcadia”).
Based in Broomfield, Colorado, DMC trades on Nasdaq under the symbol “BOOM.” Arcadia Products On December 23, 2021, DMC completed the acquisition of 60% of the membership interests in Arcadia Products, LLC, a Colorado limited liability company resulting from the conversion of Arcadia, Inc. (collectively, “Arcadia Products”).
Significant cost elements included in inventory are material, labor, freight, subcontract costs, and manufacturing overhead. As necessary, we write down inventory to its net realizable value by recording provisions for excess, slow moving and obsolete inventory.
Significant cost elements included in inventory are raw materials, labor, freight, subcontract costs, and manufacturing overhead. As necessary, we write down inventory to its net realizable value by recording provisions for excess, slow moving and obsolete inventory.
As of December 31, 2022, we were in compliance with all financial covenants and other provisions of our debt agreements.
As of December 31, 2023, we were in compliance with all financial covenants and other provisions of our debt agreements.
Net sales, segment operating income, and Adjusted EBITDA for each segment were as follows for years ended December 31: 2022 Arcadia DynaEnergetics NobelClad 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.
Recent Accounting Pronouncements Refer to Note 2 "Significant Accounting Policies" within Item 8 — Financial Statements and Supplementary Data in this annual report for a discussion, as applicable, of recent accounting pronouncements and their anticipated effect on our business. 56 Table of Contents
Recent Accounting Pronouncements Refer to Note 2 "Significant Accounting Policies" within Part II, Item 8 — Financial Statements and Supplementary Data in this annual report for a discussion, as applicable, of recent accounting pronouncements and their anticipated effect on our business.
Cash flows from investing activities Net cash used in investing activities in 2022 of $20,926 primarily related to the acquisition of property, plant and equipment of $18,584 and consideration adjustments related to the Arcadia acquisition of $2,404.
Net cash used in investing activities in 2022 was $20,926 and primarily related to the acquisition of property, plant and equipment of $18,584 and consideration adjustments related to the acquisition of Arcadia Products of $2,404.
SOFR loans bear interest at the applicable SOFR rate plus an applicable margin (varying from 1.50% to 3.00%). Base Rate loans bear interest at the defined Base rate plus an applicable margin (varying from 0.50% to 2.00%).
Base Rate loans bear interest at the defined Base rate plus an applicable margin (varying from 0.50% to 2.00%).
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 operations and their associated valuation allowances, if any. As of December 31, 2022, we have a valuation allowance of $6,277 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 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.
A decline in general economic conditions or equity valuations could impact the judgments and assumptions used to estimate the fair value of Arcadia, and the Company could be required to record an impairment charge in the future.
A sustained decline in general economic conditions, activity levels in end markets or equity valuations could impact the judgments and assumptions used to estimate the fair value of Arcadia Products, and the Company could be required to record an impairment charge in the future.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2022 2021 Operating income $ 7,989 $ 9,783 Adjustments: Restructuring expenses, net and asset impairments 182 127 Depreciation 3,419 3,317 Amortization of purchased intangible assets 311 490 Adjusted EBITDA $ 11,901 $ 13,717 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. 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.
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, 2022 was 2.83 to 1.0. As of December 31, 2022, borrowings of $135,000 on the Term Loan under our credit facility were outstanding.
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.
Cash flows from financing activities Net cash used in financing activities in 2022 totaled $28,510, which included payments on our Term Loan of $15,000, distributions to the redeemable noncontrolling interest holder of $12,300, and treasury stock purchases of $1,231.
Net cash used in financing activities in 2022 totaled $28,510, which included payments on our Term Loan of $15,000, distributions to the redeemable noncontrolling interest holder of $12,300, and treasury stock purchases of $1,231. Payment of dividends Any determination to pay cash dividends is at the discretion of the Board of Directors.
Operating income increased by $30,820 compared with 2021 due to the factors discussed above. Adjusted EBITDA increased compared with 2021 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 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.
For more information about our debt obligations, refer to Note 7 "Debt" of our Consolidated Financial Statements. (2) The operating lease obligations presented reflect future minimum lease payments due under non-cancelable portions of our leases as of December 31, 2022. Our operating lease obligations are described in Note 6 "Leases" of our Consolidated Financial Statements.
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.
On October 22, 2020, we commenced an at-the-market equity ("ATM") program under a shelf registration statement filed in May 2020 under which we have sold a total of 1,006,180 shares of common stock for net proceeds of $51,002 through the end of 2021.
On October 22, 2020, we commenced an at-the-market equity ("ATM") program under a shelf registration statement filed in May 2020 under which we have sold a total of 1,006,180 shares of common stock for net proceeds of $51,002 since inception. There was no ATM activity for the years ended December 31, 2023 and 2022.
Future dividends may be affected by, among other items, our views on potential future capital requirements, future business prospects, debt covenant compliance considerations, changes in income tax laws, and any other factors that our Board of Directors deems relevant. Any determination to pay cash dividends will be at the discretion of the Board of Directors.
On April 23, 2020, DMC announced that its Board of Directors suspended the quarterly dividend indefinitely. Future dividends may be affected by, among other items, our views on potential future capital requirements, future business prospects, debt covenant compliance considerations, changes in income tax laws, and any other factors that our Board of Directors deems relevant.
No revolving loans were outstanding, and our available borrowing capacity was $50,000 as of December 31, 2022. 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.
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.
Cost of products sold for NobelClad includes the cost of metals, explosive powders and other raw materials used to manufacture clad metal plates as well as employee compensation and benefits, outside processing costs, depreciation of manufacturing equipment, manufacturing facility lease expense, supplies and other manufacturing overhead expenses.
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.
Twelve months ended December 31, 2022 Amount Per Share (1) Net income attributable to DMC Global Inc. $ 12,247 $ 0.63 Nonrecurring retirement expenses, net of tax 905 0.05 Amortization of acquisition-related inventory valuation step-up, net of tax 199 0.01 NobelClad restructuring expenses and asset impairments, net of tax 124 0.01 Adjusted net income attributable to DMC Global Inc. stockholders $ 13,475 $ 0.70 (1) Calculated using diluted weighted average shares outstanding of 19,369,165 Twelve months ended December 31, 2021 Amount Per Share (1) Net loss attributable to DMC Global Inc. common stockholders $ (202) $ (0.01) NobelClad restructuring expenses and asset impairments, net of tax 127 — Acquisition expenses, net of tax 1,217 0.07 Arcadia stub period expenses, net of tax 1,741 0.10 Adjusted net income attributable to DMC Global Inc. stockholders $ 2,883 $ 0.16 (1) Calculated using diluted weighted average shares outstanding of 17,610,711 48 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.
(2) $ 12,247 $ 0.63 Nonrecurring retirement expenses, net of tax 905 0.05 Amortization of acquisition-related inventory valuation step-up, net of tax 199 0.01 NobelClad restructuring expenses and asset impairments, net of tax 124 0.01 As adjusted $ 13,475 $ 0.70 (1) Calculated using diluted weighted average shares outstanding of 19,369,165 (2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest 47 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.
We compare the expected undiscounted future operating cash flows associated with these finite-lived assets to their respective carrying values to determine if they are fully recoverable when indicators of impairment are present. If the expected future operating cash flows of an asset are not sufficient to recover the related carrying value, we estimate the fair value of the asset group.
We compare the expected undiscounted future operating cash flows associated with applicable assets or asset groupings to their respective carrying values to determine if they are fully recoverable when indicators of impairment are present.
The deferred income tax impact of tax credits are recognized as an immediate adjustment to income tax expense. We recognize deferred tax assets for the expected future effects of all deductible temporary differences to the extent we believe these assets will more likely than not be realized.
Income taxes We recognize deferred tax assets and liabilities for the expected future income tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets are recognized for the expected future effects of all deductible temporary differences to the extent we believe these assets will more likely than not be realized.
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 52 Table of Contents administrative agent’s prime rate, an adjusted Federal Funds rate or an adjusted SOFR rate).
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%).
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.
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.
The market for perforating products, which are used during the well completion process, generally corresponds with oil and gas exploration and production activity. Well completion operations are increasingly complex, which in turn has increased the demand for intrinsically-safe, reliable and technically advanced perforating systems.
Well completion operations are increasingly complex, which in turn has increased the demand for intrinsically-safe, reliable and technically advanced perforating systems.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2022 2021 Net income (loss) $ 13,833 $ (1,010) Interest expense, net 6,187 304 Income tax provision (benefit) 9,376 (1,544) Depreciation 14,281 11,303 Amortization of purchased intangible assets 36,926 1,391 EBITDA 80,603 10,444 Restructuring expenses, net and asset impairments 182 127 Nonrecurring retirement expenses 1,100 — Amortization of acquisition-related inventory valuation step-up 430 — Stock-based compensation 10,058 6,574 Other expense (income), net 594 (152) Acquisition expenses — 1,581 Arcadia stub period expenses excluding depreciation and amortization — 1,605 Adjusted EBITDA attributable to redeemable noncontrolling interest (18,768) — Adjusted EBITDA attributable to DMC Global Inc. stockholders $ 74,199 $ 20,179 47 Table of Contents Adjusted Net Income and Adjusted Diluted Earnings Per Share increased compared with 2021 due to the factors discussed above.
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.
Our most significant operations are in the United States, which has a 21% statutory tax rate, and Germany, which has a 32% combined statutory tax rate.
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.
Foreign currency exchange 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.
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.
Net income attributable to DMC Global Inc. in 2022 was $12,247, or $0.72 per diluted share, after adjustment to the redeemable noncontrolling interest, compared with net loss of $202, or $0.26 per diluted share, in 2021. Adjusted EBITDA increased compared with 2021 due to the factors discussed above.
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.
See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA, a non-GAAP measure.
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.
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. We recognize interest and penalties related to uncertain tax positions in operating expense.
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.
Discount rates are one of the more significant assumptions used in the income approach. If the Company increased the discount rate used by 75 basis points, the fair value of Arcadia would still exceed its carrying value.
If the Company increased the discount rate used by approximately 100 basis points, the fair value of Arcadia Products would still exceed its carrying value.
While a significant portion of the demand for our products is driven by maintenance and retrofit projects at existing chemical processing, petrochemical processing, oil refining, and aluminum smelting facilities, new plant construction and large plant expansion projects also account for a significant portion of total demand.
While most demand for our products is driven by maintenance and retrofit projects at existing plants and facilities, new projects for petrochemical processing, oil refining, and aluminum smelting facilities also account for a significant portion of total demand. These industries tend to be cyclical in nature and the timing of new order inflow remains difficult to predict.
See "Use of Non-GAAP Financial Measures" above for explanation of the use of Adjusted EBITDA, a non-GAAP measure.
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.
Cost of products sold for DynaEnergetics includes the cost of metals, explosives and other raw materials used to manufacture shaped charges, detonating products and perforating guns as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses. 41 Table of Contents NobelClad NobelClad produces explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment, as well as specialized transition joints for use in construction of commuter rail cars, ships, and LNG processing equipment.
Cost of products sold for DynaEnergetics includes the cost of metals, explosives and other raw materials used to manufacture shaped charges, detonating products and perforating guns as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, supplies and other manufacturing overhead expenses.
There were no material changes to prior estimates during the year ended December 31, 2022 upon completion of purchase accounting. 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.
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.
Refer to Note 3 within Item 8 — Financial Statements and Supplementary Data for further information related to the valuation of the redeemable noncontrolling interest.
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.
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, 2022: Payment Due by Period As of December 31, 2022 Less than More than Other Contractual Obligations 1 Year 1-3 Years 3-5 Years 5 Years Total Credit facility (1) $ 15,000 $ 30,000 $ 90,000 $ — $ 135,000 Operating lease obligations (2) 9,011 16,979 13,954 19,553 59,497 Purchase obligations (3) 132,047 1,337 — — 133,384 Total (4) $ 156,058 $ 48,316 $ 103,954 $ 19,553 $ 327,881 53 Table of Contents (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, 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.
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 of 40.4% in 2022 .
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 following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2022 Operating income $ 3,962 Adjustments: Amortization of acquisition-related inventory valuation step-up 430 Depreciation 2,906 Amortization of purchased intangible assets 36,316 Stock-based compensation 2,206 Nonrecurring retirement expenses $ 1,100 Adjusted EBITDA $ 46,920 Less: adjusted EBITDA attributable to redeemable noncontrolling interest (18,768) Adjusted EBITDA attributable to DMC Global Inc. $ 28,152 DynaEnergetics 2022 2021 $ change % change Net sales $ 264,327 $ 175,356 $ 88,971 51 % Gross profit 75,569 38,955 36,614 94 % Gross profit percentage 28.6 % 22.2 % COSTS AND EXPENSES: General and administrative expenses 19,627 17,132 2,495 15 % Selling and distribution expenses 16,588 13,050 3,538 27 % Amortization of purchased intangible assets 299 538 (239) (44) % Operating income 39,055 8,235 30,820 374 % Adjusted EBITDA $ 46,932 $ 16,361 $ 30,571 187 % Net sales were $88,971 higher than in 2021 due to higher energy prices and a growing reliance on North American oil and gas, which led to increased drilling and well completion activity in North America and increased sales of DynaEnergetics’ DS perforating systems.
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.
Arcadia supplies architectural building products, including exterior and interior framing systems, curtain walls, windows, doors, and interior partitions to the commercial construction market; it also supplies customized windows and doors to the high-end residential construction 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 ultra-high-end residential real estate market.
The maximum leverage ratio permitted by our credit facility is 3.25 to 1.0 through the quarter ended March 31, 2023, and 3.0 to 1.0 from the quarter ended June 30, 2023 and thereafter. The actual leverage ratio as of December 31, 2022, calculated in accordance with the credit facility, as amended, was 1.69 to 1.0.
The actual leverage ratio as of December 31, 2023, calculated in accordance with the credit facility, as amended, was 1.25 to 1.0.
Similarly, the minority interest holder of Arcadia has the right to sell its remaining interest in Arcadia to the Company on or after the third anniversary of the acquisition closing date (“Put Option”). 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.
Similarly, the minority interest holder of Arcadia Products has the right to sell its remaining interest in Arcadia Products to the Company on or after the third anniversary of the acquisition closing date (“Put Option”).
Our net debt position was $107,654 at December 31, 2022 compared to $116,615 at December 31, 2021. Net debt decreased during 2022 due primarily to $15,000 in Term Loan payments. We have a fully undrawn and available $50,000 revolving credit facility at December 31, 2022.
Our net debt position was $72,192 at December 31, 2023 compared to $107,654 at December 31, 2022. The decrease was driven by $17,500 in Term Loan payments in 2023 and $12,471 of investments in marketable securities. We have a fully undrawn $50,000 revolving credit facility at December 31, 2023.
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.
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.
Cost of products sold for Arcadia includes the cost of aluminum, paint, and other raw materials used to manufacture windows, curtain walls, doors, and interior partitions as well as employee compensation and benefits, manufacturing facility lease expense, depreciation expense of property, plant and equipment related to manufacturing, supplies and other manufacturing overhead expenses.
Cost of products sold for Arcadia Products includes the cost of aluminum, paint, and other raw materials used in manufacturing as well as employee compensation and benefits, manufacturing facility lease expense, depreciation of manufacturing equipment, supplies and other manufacturing overhead expenses. DynaEnergetics DynaEnergetics designs, manufactures, markets and sells perforating systems and associated hardware for the global oil and gas industry.
As of December 31, 2022, the carrying value of goodwill was $141,725 and relates entirely to the Arcadia operating segment and reporting unit. As of the date of the 2022 annual impairment test, we performed a quantitative assessment and concluded that the fair value of Arcadia exceeded its carrying value by approximately 10%.
As of the date of the 2023 annual impairment test, we performed a quantitative assessment and concluded that the fair value of the Arcadia Products reporting unit exceeded its carrying value by approximately 10%. Discount rates are one of the more significant assumptions used in the income approach.
If the Company was required to recognized an impairment charge, 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.
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.
The effective rate was impacted unfavorably by the geographic mix of pretax income, state taxes, stock-based compensation shortfalls, and certain compensation expenses that are not tax deductible in the U.S. The operating results of Arcadia that are attributable to the redeemable noncontrolling interest holder are not taxed at DMC, which resulted in a favorable impact to the effective tax rate.
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.
A number of assumptions 55 Table of Contents and estimates are required in performing the discounted cash flow analysis, including forecasts of revenues, costs of revenues, operating expenses, capital expenditures, discount rates, working capital changes, and terminal growth rates. Actual results may differ from those assumed in the forecasts.
In the Company's quantitative assessment, we estimate the fair value of a reporting unit by using the income approach, specifically a discounted cash flow analysis. A number of assumptions and estimates are required in performing the discounted cash flow analysis, including forecasts of revenues, gross profits, capital expenditures, discount rates, working capital changes, and terminal growth rates.
The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA. 2022 2021 Operating income $ 39,055 $ 8,235 Adjustments: Depreciation 7,578 7,588 Amortization of purchased intangible assets 299 538 Adjusted EBITDA $ 46,932 $ 16,361 NobelClad 2022 2021 $ change % change Net sales $ 90,232 $ 84,759 $ 5,473 6 % Gross profit 22,050 22,173 (123) (1) % Gross profit percentage 24.4 % 26.2 % COSTS AND EXPENSES: General and administrative expenses 4,587 3,217 1,370 43 % Selling and distribution expenses 8,981 8,556 425 5 % Amortization of purchased intangible assets 311 490 (179) (37) % Restructuring expenses, net and asset impairments 182 127 55 43 % Operating income 7,989 9,783 (1,794) (18) % Adjusted EBITDA $ 11,901 $ 13,717 $ (1,816) (13) % Net sales increased $5,473 compared with 2021.
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.
These industries tend to be cyclical in nature and timing of new order inflow remains difficult to predict. We use backlog as a primary means to measure the immediate outlook for our NobelClad business. We define “backlog” at any given point in time as all firm, unfulfilled purchase orders and commitments at that time.
We use backlog, defined as all unfilled firm purchase orders and commitments at a point in time, to measure the immediate outlook for our NobelClad business. Most firm purchase orders and commitments are realized and shipped within twelve months.
(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. (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.
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.
In addition, demand for repair and maintenance work from the downstream energy and petrochemical industries is also improving. Our backlog was $55,451 as of December 31, 2022 in comparison to $41,181 million as of December 31, 2021. We expect to ship most orders in our backlog within twelve months.
NobelClad is experiencing strong demand for its Cylindra™ cryogenic transition joints used in the LNG industry, while repair and maintenance work from downstream energy and petrochemical industries is also contributing to healthy production 43 Table of Contents activity. Our backlog was $59,357 as of December 31, 2023 in comparison to $55,451 as of December 31, 2022.
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. Business Combination The Company accounts for acquisitions under the acquisition method. Net assets and results of operations are included in our Consolidated Financial Statements commencing at the date of acquisition.
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.
The net carrying values of our property, plant and equipment and right-of-use assets as of December 31, 2022 were $129,445 and $48,470, respectively. During the years ended December 31, 2022 and 2021, we did not record impairment charges related to any finite-lived asset.
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.
DynaEnergetics DynaEnergetics designs, manufactures and distributes highly engineered products utilized by the global oil and gas industry principally for the perforation of oil and gas wells. These products are sold to oilfield service companies in the U.S., Europe, Canada, Africa, the Middle East, and Asia. DynaEnergetics also sells directly to end-users.
These products are primarily sold to oilfield service companies in the U.S., Europe, Canada, Africa, the Middle East, and Asia. The market for perforating products, which are used during the well completion process, generally corresponds with oil and gas exploration and production activity.
Net cash used in investing activities in 2021 was $267,806 and primarily related to $261,000 used to fund a portion of the Arcadia acquisition, investments in marketable securities of $123,984, issuance of a promissory note in conjunction with the Arcadia acquisition of $24,902, and acquisition of property, plant and equipment of $8,659.
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.
Cash flows from operating activities Net cash provided by operating activities was $44,936 in 2022 compared with net cash outflows of $12,812 in 2021. The increase primarily was due to higher net income and higher non-cash reconciling adjustments related to amortization of purchased intangible assets from the Arcadia acquisition.
(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.
Impairment is recognized when the carrying amount of the asset group is not recoverable and when carrying value exceeds the estimated fair value. The net carrying value of our purchased intangible assets as of December 31, 2022 was $217,925 and includes $217,822 of purchased intangible assets related to Arcadia.
If the expected future operating cash flows of an asset or asset grouping are not sufficient to recover the related carrying value, we estimate the fair value of the asset or asset grouping. Impairment is recognized when the carrying amount of the asset or asset grouping is not recoverable and when carrying value exceeds the estimated fair value.
In addition, see “Risk Factors” for a discussion of these and other factors that could materially affect our results of operations and financial condition. 45 Table of Contents Consolidated Results of Operations 2022 2021 $ change % change Net sales $ 654,086 $ 260,115 $ 393,971 151 % Gross profit 185,447 59,480 125,967 212 % Gross profit percentage 28.4 % 22.9 % COSTS AND EXPENSES: General and administrative expenses 76,119 36,276 39,843 110 % % of net sales 11.6 % 13.9 % Selling and distribution expenses 42,230 22,507 19,723 88 % % of net sales 6.5 % 8.7 % Amortization of purchased intangible assets 36,926 1,391 35,535 2,555 % % of net sales 5.6 % 0.5 % Acquisition expenses — 1,581 (1,581) (100) % Restructuring expenses, net and asset impairments 182 127 55 43 % Operating income (loss) 29,990 (2,402) 32,392 1,349 % Other (expense) income, net (594) 152 (746) (491) % Interest expense, net (6,187) (304) (5,883) 1,935 % Income (loss) before income taxes 23,209 (2,554) 25,763 1,009 % Income tax provision (benefit) 9,376 (1,544) 10,920 707 % Net income (loss) 13,833 (1,010) 14,843 1,470 % Less: Net income (loss) attributable to redeemable noncontrolling interest 1,586 (808) 2,394 296 % Net income (loss) attributable to DMC Global Inc. 12,247 (202) 12,449 6,163 % Adjusted EBITDA attributable to DMC Global Inc. $ 74,199 $ 20,179 $ 54,020 268 % Net sales were $654,086.
Given 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.
As of December 31, 2022, the redeemable noncontrolling interest is $187,522 in comparison to our previous estimate at December 31, 2021 of $197,196 . The decrease is attributable to a decline in the estimated settlement amount of the redeemable noncontrolling interest due to a reduction in average adjusted earnings.
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.
Excluding Arcadia, 2022 sales were $354,559, an increase of 36% versus 2021. The improved performance primarily was driven by higher energy prices and a growing reliance on North American oil and gas, which led to increased drilling and well completion activity in North America and increased sales at DynaEnergetics. • Arcadia reported sales of $299,527 in 2022.
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.
Removed
Our businesses follow a clear and compelling strategy and are led by excellent leadership teams that we support with business resources and capital. We take a focused approach to capital allocation and work with our business leaders to identify investments that will advance their operating strategies and generate attractive returns.
Added
NobelClad NobelClad produces explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints for commuter rail cars, ships, and liquified natural gas (LNG) processing equipment.
Removed
Our approach helps our portfolio companies grow their core businesses, launch new initiatives, upgrade technologies and systems, expand their markets and improve their competitive positions. Our culture is to foster local innovation versus centralized control.

… 118 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed4 unchanged
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 6%, 16%, and 17% of total sales for the years ended 2022, 2021, and 2020, 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 9%, 6%, and 16% of total sales for the years ended 2023, 2022, and 2021, 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. 57 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. 56 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. 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. 55 Table of Contents We use foreign currency forward contracts to offset foreign exchange rate fluctuation on foreign currency denominated asset and liability positions.
At December 31, 2022, 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 2022 to increase by $1,157. This was determined by considering the impact of a hypothetical interest rate on the Company's average outstanding variable debt.
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.
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, 2022 and 2021 was $21,907 and $13,032, 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, 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.

Other BOOM 10-K year-over-year comparisons