DMC Global Inc.: Form 10-Q for the period ended Sep 30, 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.

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 $151,532 in the third quarter of 2025 compared with $152,429 in the third quarter of 2024, a decrease of 1%. The decrease in consolidated sales performance was principally driven by lower sales at NobelClad.
• Arcadia Products reported sales of $61,661 in the third quarter of 2025, representing an increase of 7% compared with the third quarter of 2024. The increase was primarily attributable to higher sales in commercial markets.
• DynaEnergetics’ sales of $68,946 in the third quarter of 2025 represented a 1% decrease compared with the third quarter of 2024. The decline was primarily due to a decrease in pricing of DynaStage® (DS) perforating systems attributable to industry consolidation in the United States, partially offset by an increase in international sales due to project timing.
• NobelClad’s sales of $20,925 in the third quarter of 2025 decreased 16% compared with the third quarter of 2024 reflecting lower current activity levels due in part to evolving tariff policies.
• The Company’s leverage ratio, calculated in accordance with its credit facility, was 1.19 to 1.0 as of September 30, 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, was 0.65 to 1.0 as of September 30, 2025.

Outlook

Our three manufacturing businesses continue to closely monitor evolving macroeconomic conditions, including volatility in global energy markets and changes in U.S. and reciprocal tariff policies. DynaEnergetics and NobelClad are assessing the potential impacts of weak crude oil prices, which traded near multi-year lows early in the fourth quarter. The sales and profitability of our businesses could be adversely affected if they, or their customers, are unable to mitigate the effects of low energy prices and tariffs, or if these factors dampen product demand. For additional information regarding potential tariff impacts, see Part II, Item 1A. Risk Factors.

Our Arcadia Products business is working to address the impact of persistently high interest rates and generally lower construction activity. The business has rightsized its high-end residential cost structure to align with current market conditions, and continues to focus on strengthening its core commercial operations, which generate approximately 75% of the segment’s sales.

DynaEnergetics is continuing a series of initiatives designed to reduce costs and increase market share. These efforts are intended to offset an expected decline in demand for its well perforating systems during the remainder of the year due to lower oil prices and reduced well completion activity.

At NobelClad, 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. Order backlog increased to $57,040 at the end of the third quarter of 2025 from $37,263 at the end of the second quarter of 2025. The increase reflected the receipt of a large order associated with an international chemical project. The order has helped offset lower booking activity in NobelClad’s U.S. market, which has been negatively impacted, in part, by tariff-related uncertainty.

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 consolidated cash, cash equivalents and marketable securities per the Condensed Consolidated Balance Sheets.
• 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, asset 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 September 30, 2025 compared with three months ended September 30, 2024

Net sales were $151,532 for the three months ended September 30, 2025, or a decrease of 1% compared with the same period in 2024, primarily due to lower sales at NobelClad. The 16% decline at NobelClad reflects lower current activity levels due in part to evolving tariff policies. This decrease was partially offset by a 7% increase in net sales at Arcadia Products due to higher sales in commercial markets.

Gross profit percentage was 21.7% compared with 19.8% for the same period in 2024. The increase was attributable to higher absorption of fixed manufacturing overhead costs as a result of the increase in net sales at Arcadia Products and lower inventory charges at DynaEnergetics. The increase was partially offset by a less favorable project and regional mix at NobelClad which also experienced lower absorption of fixed manufacturing overhead costs given the decrease in its net sales.

General and administrative expenses increased $933 for the three months ended September 30, 2025, compared with the same period in 2024, primarily due to the recognition of a remediation liability at a former NobelClad European cladding site as well as higher outside services costs.

Selling and distribution expenses decreased $3,188 for the three months ended September 30, 2025, compared with the same period in 2024, driven by lower bad debt expense of $3,614 and lower outside services costs of $162, as well as a reduction in selling costs of $164 at NobelClad and DynaEnergetics due to the decrease in net sales. The decrease was partially offset by an increase in compensation costs of $880 primarily at Arcadia Products.

Amortization of purchased intangible assets decreased $514 for the three months ended September 30, 2025, compared to the same period in 2024, as the Arcadia Products customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Goodwill impairment of $141,725 for the three months ended September 30, 2024, related to the full impairment of Arcadia Products’ goodwill.

Strategic review and related expenses of $303 for the three months ended September 30, 2025, included primarily professional service fees.

For the three months ended September 30, 2024, strategic review expenses incurred were $1,763 and primarily included $1,045 in professional service fees and $709 in employee retention compensation, including $101 of stock-based compensation.

Restructuring expenses and asset impairments of $1,202 for the three months ended September 30, 2025, included $1,013 in contract termination costs associated with exiting a lease at NobelClad and $189 of employee severance associated with headcount reductions, primarily at Arcadia Products.

For the three months ended September 30, 2024, restructuring expenses and asset impairments of $2,069 related to the abandonment of a planned manufacturing expansion at DynaEnergetics and employee severance associated with headcount reductions at DynaEnergetics and Arcadia Products.

Operating income of $610 for the three months ended September 30, 2025, increased compared to operating loss of $148,935 in the same period in 2024, due primarily to the goodwill impairment charge recorded in 2024, higher gross profit, and a reduction in selling and distribution expenses driven by lower bad debt expense.

Other expense, net of $334 for the three months ended September 30, 2025, primarily related to net realized foreign currency exchange losses. 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.

Income tax provision of $714 was recorded on loss before income taxes of $1,356 for the three months ended September 30, 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 $7,848 on loss before income taxes of $151,568 for the three months ended September 30, 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. Additionally, the effective rate was impacted unfavorably by the establishment of a valuation allowance against U.S. deferred tax assets, $3,900 of which was recorded as a discrete item in the third quarter of 2024. 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 loss attributable to DMC Global Inc. for the three months ended September 30, 2025, was $3,081, compared with net loss attributable to DMC Global Inc. of $101,323 for the same period in 2024, primarily due to the factors discussed above.

Adjusted EBITDA increased for the three months ended September 30, 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.

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Adjusted Net Loss and Adjusted Diluted Earnings Per Share improved for the three months ended September 30, 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 Loss and Adjusted Diluted Earnings Per Share.

(1) Calculated using diluted weighted-average shares outstanding of 19,930,699.

(2) Net loss attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest.

(1) Calculated using diluted weighted-average shares outstanding of 19,706,587.

(2) Net loss attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Net sales were $466,309 for the nine months ended September 30, 2025, a decrease of 5% compared with the same period in 2024, primarily due to lower sales at DynaEnergetics. The 10% decline at DynaEnergetics was due to lower pricing as a result of industry consolidation in the United States, a decrease in volume of DS perforating systems attributable to lower well completions in North America, and a decline in international sales due primarily to project timing.

Gross profit percentage was 23.8% compared with 24.2% in 2024. The decrease compared to the prior year was primarily attributable to less favorable project and regional mix at NobelClad, as well as lower absorption of fixed manufacturing overhead costs as a result of the decrease in net sales at both NobelClad and DynaEnergetics.

General and administrative expenses increased $1,909 for the nine months ended September 30, 2025, compared with the same period in 2024, primarily attributable to higher professional services costs of $910, higher compensation costs of $843, the recognition of a remediation liability at a former NobelClad European cladding site of $696, and executive transition costs of $520. These increases were partially offset by lower expenses related to the Waterkeeper matter of $585 and a reduction in business related travel of $550.

Selling and distribution expenses decreased $5,042 for the nine months ended September 30, 2025, compared with the same period in 2024, driven by lower bad debt expense of $3,954, selling costs of $628 at DynaEnergetics due to decreased net sales, marketing consulting costs of $611, and business related travel of $167. These reductions were partially offset by higher compensation costs of $320 primarily at Arcadia Products.

Amortization of purchased intangible assets decreased $1,587 for the nine months ended September 30, 2025, compared to the same period in 2024, as the Arcadia Products customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Goodwill impairment of $141,725 for the nine months ended September 30, 2024, related to the full impairment of Arcadia Products’ goodwill.

Strategic review and related expenses of $2,376 for the nine months ended September 30, 2025, related primarily to $1,786 in professional service fees and $366 in employee retention compensation, including $36 of stock-based compensation.

For the nine months ended September 30, 2024, strategic review and related expenses were $5,952 and primarily included $3,189 in professional service fees and $2,060 in employee retention compensation, including $279 of stock-based compensation.

Restructuring expenses and asset impairments of $2,676 for the nine months ended September 30, 2025, included contract termination costs associated with exiting leases of $1,013 and $605 at NobelClad and DynaEnergetics, respectively, and employee severance of $1,058 related to headcount reductions across all three business segments.

For the nine months ended September 30, 2024, restructuring expenses and asset impairments of $2,348 related to the abandonment of a planned manufacturing expansion at DynaEnergetics and employee severance associated with headcount reductions at DynaEnergetics and Arcadia Products.

Operating income of $11,020 for the nine months ended September 30, 2025, increased compared to operating loss of $130,562 in the same period in 2024, due primarily to the goodwill impairment charge recorded in 2024 and a reduction in selling and distribution expenses driven by lower bad debt expense.

Other expense, net of $898 for the nine months ended September 30, 2025, primarily related to net unrealized foreign currency exchange losses. 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.

Income tax provision of $4,866 was recorded on income before income taxes of $4,980 for the nine months ended September 30, 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 $12,283 on loss before income taxes of $138,521 for the nine months ended September 30, 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. Additionally, the effective rate was impacted unfavorably by the establishment of a valuation allowance against U.S. deferred tax assets, $3,900 of which was recorded as a discrete item in the third quarter of 2024. 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 loss attributable to DMC Global Inc. for the nine months ended September 30, 2025, was $2,288, compared with net loss attributable to DMC Global Inc. of $94,748 for the same period in 2024, primarily due to the factors discussed above.

Adjusted EBITDA decreased for the nine months ended September 30, 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.

Adjusted Net (Loss) Income and Adjusted Diluted Earnings Per Share increased for the nine months ended September 30, 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 (Loss) Income and Adjusted Diluted Earnings Per Share.

(1) Calculated using diluted weighted-average shares outstanding of 19,883,652.

(2) Net loss attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest.

(1) Calculated using diluted weighted-average shares outstanding of 19,648,253.

(2) Net loss attributable to DMC Global Inc. prior to the adjustment of redeemable noncontrolling interest.

Business Segment Financial Information

We primarily evaluate performance and allocate resources based on segment revenues, operating income (loss) and Adjusted EBITDA as well as projected future performance. Segment operating income (loss) is defined as revenues less expenses identifiable to the segment. DMC consolidated operating income (loss) 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 (loss) will reconcile to consolidated income (loss) before income taxes by deducting unallocated corporate expenses, unallocated stock-based compensation, other expense, net, and interest expense, net.

Arcadia Products

Three months ended September 30, 2025 compared with three months ended September 30, 2024

Net sales increased $3,843 for the three months ended September 30, 2025, compared with the same period in 2024, primarily due to higher customer pricing in response to increases in raw material input costs.

Gross profit percentage increased to 28.7% for the three months ended September 30, 2025, compared with the same period in 2024, primarily due to higher absorption of fixed manufacturing overhead costs as a result of the increase in net sales described above.

General and administrative expenses decreased $1,225 for the three months ended September 30, 2025, compared with the same period in 2024, primarily due to lower compensation costs of $995 as a result of a reduction in headcount and reduced outside services costs of $184.

Amortization of purchased intangible assets decreased $514 for the three months ended September 30, 2025, compared with the same period in 2024, as the customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Goodwill impairment of $141,725 for the three months ended September 30, 2024, related to the full impairment of Arcadia Products’ goodwill.

Restructuring expenses and asset impairments of $132 and $248 for the three months ended September 30, 2025, and 2024, respectively, relate to employee severance associated with headcount reductions.

Operating income of $2,585 for the three months ended September 30, 2025, increased compared to operating loss of $145,122 in the same period in 2024, due primarily to the goodwill impairment charge recorded in 2024 and higher gross profit.

Adjusted EBITDA increased for the three months ended September 30, 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.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

General and administrative expenses decreased $2,697 for the nine months ended September 30, 2025, compared with the same period in 2024, primarily as a result of lower compensation costs of $1,523 related to a reduction in headcount, lower expenses related to the Waterkeeper matter of $585, decreased business related travel of $398, and reduced outside services costs of $231.

Selling and distribution expenses increased $551 for the nine months ended September 30, 2025, compared with the same period in 2024, due to higher incentive compensation costs.

Amortization of purchased intangible assets decreased $1,543 for the nine months ended September 30, 2025, compared with the same period in 2024, as the customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Goodwill impairment of $141,725 for the nine months ended September 30, 2024, related to the full impairment of Arcadia Products’ goodwill.

Restructuring expenses and asset impairments of $649 and $527 for the nine months ended September 30, 2025, and 2024, respectively, related to employee severance associated with headcount reductions.

Operating income of $6,097 for the nine months ended September 30, 2025, increased compared to operating loss of $139,991 in the same period in 2024, due primarily to the goodwill impairment charge recorded in 2024 and lower general and administrative expenses.

Adjusted EBITDA increased for the nine months ended September 30, 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 September 30, 2025 compared with three months ended September 30, 2024

Net sales decreased $733 for the three months ended September 30, 2025, compared with the same period in 2024, due to a decrease in pricing of DS perforating systems attributable to industry consolidation in the United States, partially offset by an increase in international sales due to project timing.

Gross profit percentage increased to 14.5% for the three months ended September 30, 2025, compared with the same period in 2024, primarily due to lower inventory charges of $1,000.

Selling and distribution expenses were lower by $2,762 for the three months ended September 30, 2025, compared with the same period in 2024, primarily due to a reduction in bad debt expense of $3,045 and marketing consulting costs of $51, partially offset by an increase in compensation costs of $392.

Restructuring expenses and asset impairments of $57 for the three months ended September 30, 2025, related to employee severance associated with headcount reductions.

Restructuring expenses and asset impairments of $1,821 for the three months ended September 30, 2024, related to an asset impairment charge of $1,044 associated with the abandonment of a planned manufacturing expansion and employee severance of $777 associated with headcount reductions.

Operating income of $2,989 for the three months ended September 30, 2025, increased compared to operating loss of $3,049 in the same period in 2024, due primarily to higher gross profit and a reduction in selling and distribution expenses driven by lower bad debt expense.

Adjusted EBITDA increased for the three months ended September 30, 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.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Net sales decreased $22,652 for the nine months ended September 30, 2025, compared with the same period in 2024, primarily due to pricing decreases as a result of industry consolidation in the United States, a decrease in volume of DS perforating systems attributable to lower well completions in North America, and a reduction in international sales due to project timing.

Selling and distribution expenses were lower by $4,776 for the nine months ended September 30, 2025, compared with the same period in 2024, primarily due to a reduction in bad debt expense of $3,651, decreased selling costs of $628 due to lower sales volumes, and reduced marketing consulting costs of $389.

Restructuring expenses and asset impairments of $803 for the nine months ended September 30, 2025, include contract termination costs associated with exiting a lease totaling $605 and employee severance of $198 related to headcount reductions.

Restructuring expenses and asset impairments for the nine months ended September 30, 2024, related to an asset impairment charge of $1,044 associated with the abandonment of a planned manufacturing expansion and employee severance of $777 related to headcount reductions.

Operating income of $14,988 for the nine months ended September 30, 2025, increased compared with operating income of $12,845 in the same period in 2024, due to a reduction in selling and distribution expenses driven by lower bad debt expense as well as a decrease in restructuring expenses and asset impairment charges incurred.

Adjusted EBITDA increased for the nine months ended September 30, 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 September 30, 2025 compared with three months ended September 30, 2024

Net sales decreased $4,007 for the three months ended September 30, 2025, compared with the same period in 2024, reflecting lower current activity levels due in part to evolving tariff policies.

Gross profit percentage decreased to 24.9% for the three months ended September 30, 2025, due to lower absorption of fixed manufacturing overhead costs as a result of the decrease in net sales described above as well as a less favorable project and regional mix.

General and administrative expenses were higher by $966 for the three months ended September 30, 2025, compared to the same period in 2024, due primarily to the recognition of a remediation liability at a former European cladding site.

Selling and distribution expenses were lower by $320 for the three months ended September 30, 2025, compared with the same period in 2024, due primarily to decreases in compensation costs of $213 and outside services costs of $77.

Restructuring expenses and asset impairments of $1,013 for the three months ended September 30, 2025, related to contract termination costs associated with exiting a lease.

Operating income of $249 for the three months ended September 30, 2025, decreased compared with operating income of $4,969 in the same period in 2024, due primarily to the decline in gross profit.

Adjusted EBITDA decreased for the three months ended September 30, 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.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Net sales decreased $1,246 for the nine months ended September 30, 2025, compared with the same period in 2024, reflecting lower current activity levels due in part to evolving tariff policies.

Gross profit percentage decreased to 26.3% for the nine months ended September 30, 2025, due to a less favorable project and regional mix as well as lower absorption of fixed manufacturing overhead costs as a result of the decrease in net sales described above.

General and administrative expenses increased $912 for the nine months ended September 30, 2025, compared with the same period in 2024, due primarily to the recognition of a remediation liability at a former European cladding site.

Selling and distribution expenses were lower by $650 for the nine months ended September 30, 2025, compared with the same period in 2024, due to decreases in incentive compensation costs of $306, business related travel of $137, outside services costs of $130, and depreciation of $41.

Restructuring expenses and asset impairments of $1,224 for the nine months ended September 30, 2025, included contract termination costs associated with exiting a lease totaling $1,013 and employee severance of $211 related to headcount reductions.

Operating income of $8,278 for the nine months ended September 30, 2025, decreased compared with operating income of $15,001 in the same period in 2024, due primarily to lower gross profit.

Adjusted EBITDA decreased for the nine months ended September 30, 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.

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 $30,122 at September 30, 2025, compared with $56,529 at December 31, 2024. The decrease was due primarily to improved cash flow from operations, resulting in net credit facility repayments of $14,521.

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 “Delayed Draw Term Loan Facility”). 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 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 currently bear interest at the applicable SOFR rate plus an applicable margin (varying from 2.25% to 3.25%). Base Rate loans currently 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 September 30, 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 currently permitted by our credit facility is 3.0 to 1.0; provided, however, that the Second Amendment (as defined below) provides for a temporary increase in the maximum leverage ratio under certain circumstances as described below. The maximum leverage ratio currently permitted by our credit facility is 3.0 to 1.0. The actual leverage ratio as of September 30, 2025, calculated in accordance with the Second Amendment, was 1.19 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 September 30, 2025, was 4.15 to 1.0.

On June 10, 2025, the Company and certain domestic subsidiaries entered into an amendment to the credit facility (the “Second Amendment”) which provides for certain changes to the credit facility, including modifications to the Company’s financial covenants and applicable interest rates to accommodate the possible acquisition of the remaining 40% minority interest in Arcadia Products. Key provisions of the Second Amendment include a temporary increase in the Company’s maximum leverage ratio to 3.5x adjusted EBITDA over the trailing 12 months — up from 3.0x — should either the Put Option or the Call Option be exercised. This elevated leverage limit will apply for the first two quarters following payment of the purchase price of the Put Option or the Call Option, followed by a reduction to 3.25x in the third quarter, and a return to 3.0x thereafter. Additionally, proceeds under the Delayed Draw Term Loan Facility may be held (to the extent drawn on such facility prior to expiration) in a restricted account after the expiration of such facility for purposes of paying the purchase price of the Put Option or the Call Option in the future.

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 September 30, 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 also 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. 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 September 30, 2025, the value of the redeemable noncontrolling interest under the Operating Agreement was $187,080. Upon settlement, consideration paid will be net of the $24,902 promissory note outstanding due from the redeemable noncontrolling interest holder and is subject to potential working capital adjustments. Refer to Note 2 in Part I, Item 1 for further information related to the valuation of the redeemable noncontrolling interest and promissory note outstanding. We are currently evaluating options for financing the purchase of the noncontrolling interest, which may include cash generated from operations, borrowings under the credit facility, and/or proceeds from debt or equity issuances. Debt financing could materially impact the Company’s leverage while equity financing could materially dilute existing stockholders.

Other contractual obligations and commitments

Our debt balance, net of deferred debt issuance costs, decreased to $56,534 at September 30, 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 $38,340 for the nine months ended September 30, 2025, increased compared to $34,785 in the same period last year, driven primarily by lower working capital balances, which included lower inventory balances at Arcadia Products and NobelClad.

Cash flows from investing activities

Net cash used in investing activities for the nine months ended September 30, 2025, of $3,047 was attributable to the acquisition, net of proceeds received, of property, plant and equipment of $7,214, partially offset by the settlement of a note receivable of $4,167.

Net cash provided by investing activities for the nine months ended September 30, 2024, of $1,525 was attributable to proceeds from sales and maturities of marketable securities of $12,619, partially offset by the acquisition, net of proceeds received, of property, plant and equipment of $11,094.

Cash flows from financing activities

Net cash used in financing activities for the nine months ended September 30, 2025, of $22,149 included net credit facility repayments $14,521, distributions to the redeemable noncontrolling interest holder of $6,400, payment of debt issuance costs of $650, and treasury stock purchases of $578.

Net cash used in financing activities for the nine months ended September 30, 2024, of $53,424 primarily included net credit facility repayments of $41,500, distributions to the redeemable noncontrolling interest holder of $8,321, payment of debt issuance costs of $2,735, and treasury stock purchases of $1,000.

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.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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 2025, the U.S. has announced and/or implemented significant new tariffs on imports from a wide range of countries, which has prompted retaliatory tariffs by a number of countries and a cycle of retaliatory tariffs by both the U.S. and 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 U.S. or other governments with respect to tariffs or trade relations. We may be required to take further 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.

Changes in immigration laws or enforcement programs could adversely affect our business.

Certain states in which we operate are considering or have already adopted new immigration laws and/or enforcement programs, and the federal government from time to time considers and implements changes to federal immigration laws, regulations, and/or enforcement programs. Recently, Immigration and Customs Enforcement (ICE) has significantly increased its enforcement of immigration laws. Our employment eligibility verification process does not guarantee that we will properly identify all applicants who are ineligible for employment. Unauthorized workers are subject to deportation and may subject us to fines or penalties, and if any of our workers are found to be unauthorized, we could experience adverse publicity that negatively impacts our brand and may make it more difficult to hire and retain qualified employees. Additionally, increased enforcement of immigration laws may reduce the overall labor pool and as a byproduct, increase the cost of qualified employees. These factors could have a material adverse effect on our business, financial condition, and results of operations.