Dynamic Materials shares slide 12 percent on 4Q earnings report

BOULDER – Shares of Dynamic Materials Corp. (Nasdaq: BOOM) slid 12 percent in after-hours trading Monday following a fourth-quarter earnings report that fell short of analyst expectations and a projected decrease in sales for 2015 of 8 to 12 percent.

The Boulder-based company, which has offices in China and Germany, reported a fourth-quarter net loss of $3.6 million, or 27 cents per share, for the period ending Dec. 31. That included restructuring expenses of $6.8 million related to the consolidation in Europe of the company’s explosive metalworking division, NobelClad. DMC is closing facilities in Germany and France as part of that consolidation.

DMC provides metal plates for various industries and supplies explosive components and systems to perforate oil and gas wells. The downturn in the oil prices is expected to hit the company hard.

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After posting full-year revenue of $202.6 million for 2014, chief financial officer Michael Kuta said the expected drop in sales for 2015 is due to a combination of a decrease in capital spending by oil companies as they scale back exploration and production, soft demand from industrial processing markets, and negative foreign currency translations.

More consolidation is on the way for the company. CEO Kevin Longe said a manufacturing facility in Canada will be closed as similar operations are consolidated into its Whitney, Texas facility. Distribution facilities in Hobbs, N.M., and Lloydminster, Alberta have been closed already, and another in Edmonton will close before the end of the first quarter. A new distribution and storage center is being built in Blum, Texas, which Longe said will allow the company to also close a distribution center in Colombia.

In all, the company expects another $3 million to $5 million in restructuring expenses in the first half of 2015.

Longe said two of the nine members of the company’s board of directors will not stand for re-election, and DMC will go forward with a board of seven. Additionally, senior vice president of business development Richard Santa will be retiring and will not be replaced as the company looks for cost savings.

“We are taking additional steps at both the business and corporate levels to improve efficiencies and streamline the company as we prepare for a much more challenging environment during 2015,” Longe said.

Sales for the fourth quarter were $52 million, up 5 percent from the previous year. But Kuta said the company expects first quarter sales to drop 10 to 15 percent this year from last before the revenue declines taper off a bit later this year.

As part of the earnings report Monday, DMC officials also restated earnings for 2012, 2013 and the first three quarters of 2014 due to accounting errors. Sales and cash

balances were not affected. But net income was adjusted downward by $919,000 for 2012, $1 million for 2013 and $879,000 for the first three quarters of 2014.

DMC shares have fallen nearly 50 percent over the past nine months. They closed at $14.55 Monday, down 2 percent from Friday’s close. But they took a deeper dive after hours, slipping to $12.85 after the earnings report came out.