DMC Global edges revenue expectations despite early oil price woes

BROOMFIELD — Oilfield services firm DMC Global Inc. (Nasdaq: BOOM) just met new analyst expectations for the previous quarter despite an initial dive in oil prices, but revenues were about a fifth of what it had originally expected at the beginning of the year.

The Broomfield company reported $73.56 million in revenue and an earnings-per-share figure of 35 cents, beating Wall Street estimates by $690,000 and 1 cent, respectively, according to consensus estimates compiled by Seeking Alpha.

In a prepared statement, CEO Kevin Longe said the brutal pricing environment for oil producers is forcing them to cut back on capital expenditures, meaning less revenue for DMC as a supplier.

“The current economic downturn has led to a severe disruption of our core energy markets.  Operators and service companies are revising their activity plans daily, and we now anticipate second quarter well completions could be down by more than 60% year over year,” he said.

Analysts had to reassess DMC’s earnings potential for the first three months of the year after a rapid drop in demand due to social distancing requirements to slow the coronavirus and a production battle between Saudi Arabia and Russia through March and part of April hammered oil prices. Prices for West Texas Intermediate fell from around $47 per barrel at the beginning of March to $20 at the end of the month, according to Bloomberg data.

DMC pulled its earnings guidance in mid-March in response to the wider volatility in the energy sector. It originally estimated it would make $370 million to $400 million and have earnings of 50 to 55 cents per share.

The earnings period doesn’t cover DMC laying off a third of its workforce, cutting 50% of its capital expenditures for the year or the effects of Monday’s oil contango, where traders were paying as much as $37 per barrel for other people to take futures contracts off their hands. 

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