DMC Global Inc.: Form 10-Q for the period ended Mar 31, 2025

The following discussion should be read in conjunction with our historical Consolidated Financial Statements and notes that are included in our Annual Report filed on Form 10-K for the year ended December 31, 2024.

Unless stated otherwise, all dollar figures are presented in thousands (000s).

Overview

General

DMC Global Inc. (“DMC”, "we", "us", "our", or the "Company") owns and operates Arcadia Products, DynaEnergetics and NobelClad, three innovative, asset-light manufacturing businesses that provide differentiated products and engineered solutions to segments of the construction, energy, industrial processing and transportation markets. Our businesses seek to capitalize on their product and service differentiation to expand profit margins, increase cash flow and enhance shareholder value. 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”). Arcadia Products designs, engineers, fabricates, and finishes aluminum framing systems, windows, curtain walls, storefronts, entrance systems, and interior partitions to the commercial construction market. Additionally, Arcadia Products supplies customized windows and doors to the high-end residential construction market.

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. 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. Well completion operations are increasingly complex, which in turn has increased the demand for intrinsically-safe, reliable and technically advanced perforating systems.

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.

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. 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. 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. NobelClad's backlog was $41,014 at March 31, 2025 compared to $48,885 at December 31, 2024.

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.

Factors Affecting Results

• Consolidated sales were $159,290 in the first quarter of 2025 versus $166,869 in the first quarter of 2024, a decrease of 5%. The decline in consolidated sales performance was driven by lower sales at DynaEnergetics.
• Arcadia Products reported sales of $65,580 in the first quarter of 2025, representing an increase of 6% compared to the first quarter of 2024. The increase was primarily attributable to higher sales volumes for longer-cycle commercial projects, partially offset by lower sales volumes in high-end residential markets.
• DynaEnergetics’ sales of $65,551 in the first quarter of 2025 represented a 16% decrease compared to the first quarter of 2024. The decline was due to a decrease in volume of DynaStage® (DS) perforating systems attributable to lower well completions in North America, pricing decreases due to industry consolidation in the United States, and a 27% reduction in international sales due to project timing.
• NobelClad’s sales of $28,159 in the first quarter of 2025 increased 5% compared to the first quarter of 2024 primarily due to timing of shipments out of backlog.
• The Company’s leverage ratio, calculated in accordance with its credit facility, was 1.38 to 1.0 as of March 31, 2025 in comparison to the maximum ratio permitted of 3.0 to 1.0. The Company’s adjusted leverage ratio, calculated using net debt, a non-GAAP measure, as of March 31, 2025, was 1.11 to 1.0.

Outlook

Our three manufacturing businesses continue to closely monitor evolving U.S. and reciprocal tariff policies, and our DynaEnergetics and NobelClad businesses also are evaluating the implications of recent volatility in energy prices. If our businesses cannot mitigate tariff impacts or if tariffs significantly reduce product demand, both net sales and profitability will suffer. For further details on potential tariff impacts, see Part II, Item 1A. Risk Factors.

At Arcadia Products, former president Jim Schladen recently returned to lead the organization. He is focused on strengthening Arcadia Products’ core commercial operations and stabilizing and developing an improvement plan for its high-end residential products. Lower project billings are anticipated in the second quarter given the recent completion of a substantial portion of a large mixed-use project in California. Additionally, Arcadia Products’ second quarter results are expected to be below the year-ago second quarter, which benefited from stronger demand for residential and commercial exterior products.

Our DynaEnergetics business has completed a value-engineering initiative designed to reduce the cost and improve the performance of its flagship DynaStage product offering. DynaEnergetics also has completed an initiative to automate the assembly of its perforating systems at its North American manufacturing center in Blum, Texas. Cost benefits from these initiatives are expected to be realized in 2025 and could help mitigate the potential impacts of tariffs and energy price volatility.

At NobelClad, uncertainty associated with tariffs has led to a slowdown in bookings activity. Order backlog at the end of the first quarter was $41,014 versus $48,885 at the end of last year’s fourth quarter. Quoting activity has remained healthy, and NobelClad believes order activity could improve once customers gain clarity on the implications of future tariffs.

Use of Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (GAAP), the Company also discloses certain non-GAAP financial measures that we use in operational and financial decision making. Non-GAAP financial measures include the following:

• EBITDA: defined as net income (loss) plus net interest, taxes, depreciation and amortization.
• Adjusted EBITDA: excludes from EBITDA stock-based compensation, restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance (as further described in the tables below).
• Adjusted EBITDA attributable to DMC Global Inc.: excludes the Adjusted EBITDA attributable to the 40% redeemable noncontrolling interest in Arcadia Products.
• Adjusted EBITDA for DMC business segments: defined as operating income (loss) plus depreciation, amortization, allocated stock-based compensation (if applicable), restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance.
• Adjusted net income (loss): defined as net income (loss) attributable to DMC Global Inc. stockholders prior to the adjustment of redeemable noncontrolling interest plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance.
• Adjusted diluted earnings per share: defined as diluted earnings per share attributable to DMC Global Inc. stockholders (exclusive of adjustment of redeemable noncontrolling interest) plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance.
• Net debt: defined as total debt less total cash, cash equivalents and marketable securities.
• Free-cash flow: defined as cash flows from operating activities less net acquisitions of property, plant and equipment.

Management believes providing these additional financial measures is useful to investors in understanding the Company’s operating performance, excluding the effects of restructuring, impairment, and other nonrecurring charges, as well as its liquidity. Management typically monitors the business utilizing the above non-GAAP measures, in addition to GAAP results, to understand and compare operating results across accounting periods, and certain management incentive awards are based, in part, on these measures. The presence of non-GAAP financial measures in this report is not intended to suggest that such measures be considered in isolation or as a substitute for, or as superior to, DMC’s GAAP information, and investors are cautioned that the non-GAAP financial measures are limited in their usefulness. 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.

Consolidated Results of Operations

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Net sales were $159,290 for the three months ended March 31, 2025, or a decrease of 5% compared with the same period in 2024, due to lower sales at DynaEnergetics. The 16% decline at DynaEnergetics was due to a decrease in volume of DS perforating systems attributable to lower well completions in North America, pricing decreases due to industry consolidation in the United States, and lower international sales due to project timing. This decrease was partially offset by a 6% and 5% increase in net sales at Arcadia Products and NobelClad, respectively. The increase in net sales at Arcadia was primarily attributable to higher sales volumes for longer-cycle commercial projects while the increase in net sales at NobelClad was due to timing of shipments out of backlog.

General and administrative expenses increased $694 for the three months ended March 31, 2025 compared with the same period in prior year primarily due to higher compensation costs.

Selling and distribution expenses decreased $597 for the three months ended March 31, 2025 compared with the same period in 2024. The lower expense was driven by cost reductions at DynaEnergetics, including compensation costs of $413 and marketing consulting costs of $182.

Amortization of purchased intangible assets decreased $529 for the three months ended March 31, 2025 compared to the same period in 2024 as the Arcadia Products customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Strategic review and related expenses of $1,298 for the three months ended March 31, 2025 include $932 in professional service fees and $366 in employee retention compensation, including $36 of stock-based compensation.

For the three months ended March 31, 2024, strategic review and related expenses were $2,169 and primarily include $1,138 in professional service fees and $489 in employee retention compensation, including $72 of stock-based compensation.

Restructuring expenses of $325 for the three months ended March 31, 2025 relate to employee severance associated with headcount reductions at Arcadia Products.

Income tax provision of $2,733 was recorded on income before income taxes of $4,596 for the three months ended March 31, 2025. 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. 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. Additionally, the effective rate was impacted unfavorably by state taxes and a valuation allowance in the U.S. which results in no benefit for losses generated domestically. We recorded an income tax provision of $1,643 on income before income taxes of $3,962 for the three months ended March 31, 2024. The prior year 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 operating results of Arcadia Products 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.

Net income attributable to DMC Global Inc. for the three months ended March 31, 2025 was $677, compared to $2,563 for the same period in 2024 primarily due to the factors discussed above.

Adjusted EBITDA decreased for the three months ended March 31, 2025 compared with the same period in 2024 primarily due to the factors discussed above. See “Use of Non-GAAP Financial Measures” above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.

26

Adjusted Net Income and Adjusted Diluted Earnings per Share decreased for the three months ended March 31, 2025 compared with the same period in 2024 primarily due to the factors discussed above. See "Use of Non-GAAP Financial Measures" above for the 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.

(1) Calculated using diluted weighted average shares outstanding of 19,816,281

(2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share

(1) Calculated using diluted weighted average shares outstanding of 19,622,455

(2) Net income attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share

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. Segment operating income is defined as revenues less expenses identifiable to the segment. DMC consolidated operating income and Adjusted EBITDA include unallocated corporate expenses and unallocated stock-based compensation expense. Stock-based compensation is not allocated to wholly owned segments, DynaEnergetics and NobelClad. 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, net, and interest expense, net.

Arcadia Products

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Net sales increased $3,655 for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to higher sales volumes for longer-cycle commercial projects. This increase was partially offset by lower sales volumes in longer-cycle high-end residential markets.

Gross profit percentage increased to 31.0% for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to higher absorption of fixed manufacturing overhead costs as a result of the increase in net sales as mentioned above.

General and administrative expenses decreased $197 for the three months ended March 31, 2025 compared with the same period in prior year primarily due to lower business related travel of $190.

Selling and distribution expenses increased $350 for the three months ended March 31, 2025 compared with the same period in 2024. The higher expense was driven by an increase in bad debt expense of $235 and incentive compensation costs of $152.

Amortization of purchased intangible assets decreased $514 for the three months ended March 31, 2025 compared to the same period in 2024 as the customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Restructuring expenses of $325 for the three months ended March 31, 2025 relate to employee severance associated with headcount reductions.

Operating income of $2,996 for the three months ended March 31, 2025 increased compared to operating loss of $588 in the same period in 2024 due primarily to higher gross profit.

Adjusted EBITDA increased for the three months ended March 31, 2025 compared with the same period in 2024 due to the factors discussed above. See “Use of Non-GAAP Financial Measures” above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.

DynaEnergetics

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Net sales decreased $12,571 for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to a decrease in volume of DS perforating systems attributable to lower well completions in North America, as well as a decrease in pricing due to industry consolidation in the United States. There was also a 27% reduction in international sales due to project timing.

Gross profit percentage decreased to 19.5% for the three months ended March 31, 2025 due to lower customer pricing and lower absorption of fixed manufacturing overhead costs as a result of the decrease in net sales.

General and administrative expenses were lower by $144 for the three months ended March 31, 2025 compared to the same period in 2024 driven by a decrease in outside service costs of $122.

Selling and distribution expenses were lower by $747 for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to decreases in compensation costs of $413, marketing consulting costs of $182, rental expense of $61, and business related travel expense of $60.

Operating income of $5,588 for the three months ended March 31, 2025 decreased compared to operating income of $8,842 in the same period in 2024 due to the decline in gross profit.

Adjusted EBITDA decreased for the three months ended March 31, 2025 compared with the same period in 2024 due to the factors discussed above. See “Use of Non-GAAP Financial Measures” above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.

NobelClad

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Net sales increased $1,337 for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to timing of shipments out of backlog.

Gross profit percentage decreased to 28.8% for the three months ended March 31, 2025 due to a less favorable project mix.

General and administrative expenses were higher by $118 for the three months ended March 31, 2025 compared to the same period in 2024 due to increases in compensation costs from higher headcount.

Selling and distribution expenses were lower by $187 for the three months ended March 31, 2025 compared to the same period in 2024 due to decreases in incentive compensation costs of $67, business related travel of $62, and outside services costs of $57.

Operating income decreased $478 for the three months ended March 31, 2025 compared to the same period in 2024 due primarily to the decline in gross profit.

Adjusted EBITDA decreased for the three months ended March 31, 2025 compared with the same period in 2024 due to the factors discussed above. See “Use of Non-GAAP Financial Measures” above for the explanation of the use of Adjusted EBITDA. The following is a reconciliation of the most directly comparable GAAP measure to Adjusted EBITDA.

30

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. Our net debt position was $57,716 at March 31, 2025 compared to $56,529 at December 31, 2024. The increase in net debt during the first quarter was due primarily to net borrowings of $1,500 which assisted in funding the payment of various liabilities, including employee retention bonuses associated with the strategic review and incentive compensation earned in 2024.

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 may also execute capital markets transactions, including at-the-market offering programs, to raise additional funds if we believe market conditions are favorable, but there can be no assurance that any future capital will be available on acceptable terms or at all. Nevertheless, our ability to generate sufficient cash flows from operations will depend upon our success in executing our strategies. If we are unable to (i) realize sales from our backlog; (ii) secure new customer orders; (iii) continue selling products at profitable margins; and (iv) continue to implement cost-effective internal processes, our ability to meet cash requirements through operating activities could be impacted. Furthermore, any restriction on the availability of borrowings under our credit facilities could negatively affect our ability to meet future cash requirements. We will continue to monitor financial market conditions, including the related impact on credit availability and capital markets.

Debt facilities

On February 6, 2024, the Company and certain domestic subsidiaries entered into an amendment (the “First Amendment”) to its existing credit agreement with a syndicate of banks, led by KeyBank National Association (the “credit facility”). The First Amendment provides for certain changes to the credit facility, including an increase in the maximum commitment amount from $200,000 to $300,000. The credit facility allows for revolving loans of up to $200,000, a $50,000 term loan facility, and a $50,000 delayed draw term loan facility that can be accessed by the Company at its discretion until February 6, 2026. The $50,000 term loan facility is amortizable at $625 per quarter beginning on June 30, 2024 through March 31, 2026. Quarterly term loan amortization increases to $938 on June 30, 2026 through March 31, 2028, and increases to $1,250 from June 30, 2028 through December 31, 2028. A balloon payment for the outstanding term loan balance is due upon the credit facility maturity date of February 6, 2029. The credit facility retains a $100,000 accordion feature to increase the commitments under the revolving loan and/or by adding one or more term loans subject to approval by the applicable lenders. The credit facility is secured by certain 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.

Borrowings under the $200,000 revolving loan limit and $50,000 Term Loan can be in the form of Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or one month Adjusted Term SOFR loans. Additionally, U.S. dollar borrowings on the revolving loan can be in the form of Base Rate loans (Base Rate borrowings are based on the greater of the administrative agent’s Prime rate, an adjusted Federal Funds rate or an adjusted SOFR rate). SOFR loans bear interest at the applicable SOFR rate plus an applicable margin (varying from 2.25% to 3.25%). Base Rate loans bear interest at the defined Base Rate plus an applicable margin (varying from 1.25% to 2.25%).

The credit facility includes various covenants and restrictions, certain of which relate to the payment of dividends or other distributions to stockholders; redemption of capital stock; incurring additional indebtedness; mortgaging, pledging or disposition of major assets; and maintenance of specified ratios. As of March 31, 2025, we were in compliance with all financial covenants and other provisions of our debt agreements.

The leverage ratio is defined in the credit facility as the ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of any trailing four quarter period to Consolidated EBITDA (as defined in the credit facility) for such period. The maximum leverage ratio permitted by our credit facility is 3.0 to 1.0. The actual leverage ratio as of March 31, 2025, calculated in accordance with the amended credit facility, was 1.38 to 1.0.

The debt service coverage ratio is defined in the credit facility as the ratio of Consolidated EBITDA less the sum of capital distributions paid in cash (other than those made with respect to preferred stock issued under the Operating Agreement), Consolidated Unfunded Capital Expenditures (as defined in the credit facility), and net cash income taxes divided by the sum of cash interest expense, any dividends on the preferred stock paid in cash, and scheduled principal payments on funded indebtedness. Under our credit facility, the minimum debt service coverage ratio permitted is 1.25 to 1.0. The actual debt service coverage ratio for the trailing twelve months ended March 31, 2025 was 3.43 to 1.0.

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 March 31, 2025.

Redeemable noncontrolling interest

The Operating Agreement for Arcadia Products contains a right for the Company to purchase the remaining interest in Arcadia Products from the minority interest holder on or after December 23, 2024 (“Call Option”). The minority interest holder of Arcadia Products has the right to sell its remaining interest in Arcadia Products to the Company (“Put Option”). On December 3, 2024, the Company and minority interest holder entered into an amendment to the Operating Agreement whereby the minority interest holder agreed not to exercise the Put Option until on or after September 6, 2026 in exchange for, among other terms, a one-time payment of $2,500. 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, subject to a floor value also as defined within the Operating Agreement which is based primarily upon a contractually stated equity value.

As of March 31, 2025, the settlement amount of the redeemable noncontrolling interest was $187,080 and equals the floor value as defined within the Operating Agreement. 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 1 for further information related to the valuation of the redeemable noncontrolling interest and promissory note outstanding.

Other contractual obligations and commitments

Our debt balance, net of deferred debt issuance costs, increased to $72,421 at March 31, 2025 from $70,818 at December 31, 2024 for the reasons discussed above. Our other contractual obligations and commitments have not materially changed since December 31, 2024.

Cash flows from operating activities

Net cash provided by operating activities of $4,488 for the three months ended March 31, 2025 decreased compared to $13,440 in the same period last year driven primarily by the use of cash for working capital, which included higher accounts receivable balances due to temporary customer payment delays in DynaEnergetics and lower contract liability balances in NobelClad due to significant project shipments during the quarter for orders which included large customer prepayments.

Cash flows from investing activities

Net cash used in investing activities for the three months ended March 31, 2025 of $3,332 was attributable to the acquisition, net of proceeds received, of property, plant and equipment. Net cash provided by investing activities for the three months ended March 31, 2024 of $9,651 related to proceeds from sales and maturities of marketable securities of $12,619, partially offset by the acquisition of property, plant and equipment of $2,968.

Cash flows from financing activities

Net cash flows used in financing activities for the three months ended March 31, 2025 of $135 included distributions to the redeemable noncontrolling interest holder of $1,151 and treasury stock purchases of $484, which were partially offset by net credit facility borrowings of $1,500.

Net cash flows used in financing activities for the three months ended March 31, 2024 of $34,296 primarily included net credit facility repayments of $27,500. Additional cash flows used in financing activities included distributions to the redeemable noncontrolling interest holder of $3,125, payment of debt issuance costs of $2,735 and treasury stock purchases of $936.

Payment of Dividends

Any determination to pay cash dividends is 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.

Critical Accounting Estimates

Preparation of financial statements in conformity with generally accepted accounting principles in the United States requires that management make estimates, judgments and assumptions that affect the amounts reported for revenues, expenses, assets, liabilities, and other related disclosures. Our critical accounting estimates have not changed from those reported in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

There were no material changes in market risk for changes in foreign currency exchange rates and interest rates from the information provided in Item 7A – Quantitative and Qualitative Disclosures About Market Risk in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Our Coolspring property is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended March 31, 2025, 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.

There have been no material changes in the risk factors identified as being attendant to our business in our Annual Report on Form 10-K for the year ended December 31, 2024, except as provided below.

New or existing tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows.

New or existing tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows, either directly or indirectly through various adverse impacts on our significant customers. In 2018, the U.S. announced tariffs of 25 percent on steel and 10 percent on aluminum imported from countries where we typically source metals. These tariffs were met with retaliatory tariffs from certain countries and increased, broader tariffs were levied by the U.S. on targeted countries, including China. The tariffs impacted the cost of the importation of steel, which we utilize in our steel plate and steel pipe, key materials in our NobelClad and DynaEnergetics businesses. Though in many cases we have been able to source metals from domestic suppliers, some materials are only available from sources subject to tariffs. The cost of domestic steel and aluminum 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. For our NobelClad business, this has impacted our ability to compete on international projects and negatively impacted U.S. fabricators, which are the primary consumers of NobelClad products.

In the first quarter of 2025, the United States imposed increased tariffs on foreign imports into the United States, including an additional 20% tariff on all product imports from China, an additional 25% tariff on all product imports from Mexico and Canada, as well as additional proposed tariffs on other countries. The tariff policy environment has been and is expected to continue to be dynamic, and we cannot predict what additional actions may ultimately be taken by the United States or other governments with respect to tariffs or trade relations, including retaliatory trade measures taken by other countries in response to existing or future United States tariffs or other measures. As a result, we have taken steps to mitigate the impact of tariffs on our businesses, such as the March 2025 DynaEnergetics announcement that it will institute a tariff surcharge ranging from 7% to 9% on all perforating systems sold in North America in response to higher raw material costs resulting from tariffs announced by the United States to that date. We may be required to take other responsive steps, as the prolonged duration of tariffs, including retaliatory tariffs, the imposition of additional tariffs and the risk of potential broader global trade conflicts could have a material adverse effect on our business, financial condition or results of operations if we are not able to pass through cost increases to our customers.