DMC Global Inc.: Form 10-Q for the period ended Sep 30, 2026

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, 2025.

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

Overview

General

DMC Global Inc. (“DMC”, “we”, “us”, “our”, or the “Company”) operates three manufacturing businesses: Arcadia Products, DynaEnergetics and NobelClad, which produce differentiated products and engineered solutions primarily for the construction, energy, and industrial processing 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’s common stock 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, detonators, and associated hardware primarily 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, manufacturing facility lease expense, 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 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, manufacturing facility lease expense, depreciation of manufacturing facilities and equipment, supplies and other manufacturing overhead expenses.

Factors Affecting Results

• Consolidated net sales were $172,825 in the third quarter of 2026 versus $151,532 in the third quarter of 2025, an increase of 14%. The increase was attributable to higher sales at Arcadia Products and NobelClad, partially offset by lower sales at DynaEnergetics, as described below.
• Arcadia Products reported net sales of $76,886 in the third quarter of 2026, representing an increase of 25% compared with the third quarter of 2025. The increase was primarily attributable to higher sales volumes across all product lines.
• DynaEnergetics reported net sales of $67,124 in the third quarter of 2026, representing a decrease of 3% compared with the third quarter of 2025. The decrease was primarily attributable to lower sales volumes in our North American market which reduced net sales by $2,828. This decrease was partially offset by an increase in international sales of $1,006 due to project timing.
• NobelClad reported net sales of $28,815 in the third quarter of 2026, representing an increase of 38% compared with the third quarter of 2025 driven principally by shipments associated with a large international petrochemical project.
• The Company’s leverage ratio, calculated in accordance with its credit facility, was 1.41x as of September 30, 2026 in comparison to the maximum ratio permitted of 3.0x. The Company’s adjusted leverage ratio, calculated using net debt, a non-GAAP measure, was 0.39x as of September 30, 2026.

Refer to “Consolidated Results of Operations” and “Business Segment Financial Information” below for additional discussion.

Outlook

Despite the improved profitability of our three manufacturing businesses, each continues to be impacted by macroeconomic and geopolitical developments, including the conflict in the Middle East, volatility in global oil and gas markets, elevated interest rates, and changes in global tariff policies. DynaEnergetics and NobelClad, which serve the upstream and downstream oil and gas markets, respectively, remain exposed to fluctuations in crude oil prices. If we or our customers are unable to offset the effects of these conditions, our net sales and profitability may be adversely affected.

Arcadia Products continues to work to mitigate the effects of elevated interest rates, volatile input costs, and generally lower construction activity in its core regional markets. During the third quarter of 2026, Arcadia Products continued to focus on improving product availability and lead times across its network of regional service centers, and accelerated sales in its core, short-cycle commercial product line. Sales of Arcadia Products’ high-end residential windows and doors also improved, reflecting successful efforts to right-size the product offering and refocus on its target markets.

DynaEnergetics is continuing a series of initiatives designed to reduce costs and increase market share. While demand remains steady across its North American and international markets, DynaEnergetics has expanded its sales and marketing efforts in certain emerging global shale markets. Additionally, DynaEnergetics is pursuing growth opportunities in the defense and Enhanced Geothermal Systems industries.

NobelClad uses backlog, defined as all unfilled firm purchase orders and commitments at a point in time, to assess near-term demand. Most firm purchase orders and commitments are realized and shipped within 12 months. Order backlog increased to $72,361 at the end of the third quarter of 2026, compared with $63,508 at the end of the second quarter of 2026, with increases attributable to large project orders in the energy, engineered wood and defense sectors. Shipments from NobelClad’s order backlog accelerated during the third quarter and are expected to remain above historic levels during the fourth quarter. NobelClad continues to pursue additional opportunities with the U.S. Navy following its recently announced plans to accelerate its naval readiness program.

Although each of our businesses continue to be affected by challenging end-market conditions, we are beginning to benefit from specific improvement initiatives. However, we will continue to evaluate additional mitigation strategies and targeted cost-reduction programs if business conditions deteriorate.

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 and cash equivalents per the Condensed Consolidated Balance Sheets.

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, 2026 compared with three months ended September 30, 2025

Net sales were $172,825 for the three months ended September 30, 2026, an increase of 14% compared with the same period in 2025. Arcadia Products’ net sales increased 25% primarily as a result of higher sales volumes across all product lines. NobelClad’s net sales increased 38% driven principally by shipments associated with a large international petrochemical project. DynaEnergetics’ net sales declined 3% due to lower sales volumes in its core North American market, partially offset by higher international sales due to project timing.

Gross profit percentage was 26.9% compared with 21.7% for the same period in 2025. The increase was primarily attributable to DynaEnergetics due to refunds recognized for tariffs previously paid of $5,425, as well as the impact of cost savings initiatives and an improved sales mix.

General and administrative expenses increased $1,234 for the three months ended September 30, 2026, compared with the same period in 2025, primarily due to higher incentive compensation costs.

Selling and distribution expenses increased $308 for the three months ended September 30, 2026, compared with the same period in 2025, primarily driven by higher selling costs at all three business segments.

Amortization of purchased intangible assets decreased $408 for the three months ended September 30, 2026, compared to the same period in 2025, as the Arcadia Products customer relationship purchased intangible asset is amortized using an accelerated amortization method.

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

Restructuring expenses and asset impairments of $94 for the three months ended September 30, 2026 primarily related to employee severance associated with headcount reductions at Arcadia Products and DynaEnergetics.

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.

Operating income was $14,504 for the three months ended September 30, 2026, compared to operating income of $610 in the same period in 2025, due to higher net sales at Arcadia Products and NobelClad and higher gross profit at all three business segments, including refunds recognized for tariffs previously paid of $5,425 at DynaEnergetics.

Other income, net of $18 for the three months ended September 30, 2026 primarily related to net realized foreign currency exchange gains. Currency gains and losses can arise when subsidiaries enter into intercompany 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 $1,195 was recorded on income before income taxes of $13,266 for the three months ended September 30, 2026, compared with an income tax provision of $714 on a loss before income taxes of $1,356 for the three months ended September 30, 2025. Our most significant operations are in the United States and Germany, which have statutory income tax rates of 21% and 32% (combined), respectively. The mix of income or loss before income taxes between these jurisdictions is a primary driver of the difference between our 21% statutory tax rate and our effective tax rate. State taxes and a U.S. valuation allowance, which results in no tax benefit for losses generated domestically, also unfavorably impact our effective tax rate. For the three months ended September 30, 2026, the effective tax rate was further unfavorably affected by the recognition of an uncertain tax position liability related to an ongoing tax audit in Germany. These unfavorable impacts were partially offset by the operating results of Arcadia Products that are attributable to the redeemable noncontrolling interest holder, which are not taxed at DMC.

Net income attributable to DMC Global Inc. for the three months ended September 30, 2026 was $9,708, compared with net loss attributable to DMC Global Inc. of $3,081 for the same period in 2025, primarily due to the factors discussed above.

Adjusted EBITDA increased for the three months ended September 30, 2026, compared with the same period in 2025, 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.

28

Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share increased for the three months ended September 30, 2026, compared with the same period in 2025, 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 (Loss) and Adjusted Diluted Earnings Per Share.

(1) Calculated using diluted weighted average shares outstanding of 20,315,635.

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

(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.

Nine months ended September 30, 2026 compared with nine months ended September 30, 2025

Gross profit percentage was 22.8% compared with 23.8% for the same period in 2025. The decrease compared to the prior year was primarily attributable to NobelClad’s decline in sales which also included a less favorable project mix and lower absorption of fixed manufacturing overhead costs. The decrease in gross profit was also impacted by inflation in base aluminum metal costs at Arcadia Products which exceeded corresponding increases in customer pricing.

General and administrative expenses decreased $3,297 for the nine months ended September 30, 2026, compared with the same period in 2025, primarily attributable to lower outside services costs of $1,117, the prior year recognition of a remediation liability at a former NobelClad European cladding site of $696, lower rent expense at DynaEnergetics of $363, a decrease in business-related travel of $251, and lower depreciation expense of $194.

Amortization of purchased intangible assets decreased $1,221 for the nine months ended September 30, 2026, compared to the same period in 2025, as the Arcadia Products customer relationship purchased intangible asset is amortized using an accelerated amortization method.

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

Restructuring expenses and asset impairments of $899 for the nine months ended September 30, 2026 related to employee severance associated with headcount reductions at Arcadia Products, DynaEnergetics, and Corporate.

For the nine months ended September 30, 2025, restructuring expenses and asset impairments of $2,676 included contract termination costs associated with exiting a lease at NobelClad of $1,013, an asset impairment charge and related contract termination costs associated with exiting a lease at DynaEnergetics of $605, and employee severance associated with headcount reductions across all three business segments of $1,058.

Operating income was $15,639 for the nine months ended September 30, 2026, compared with operating income of $11,020 in the same period in 2025, primarily due to lower general and administrative expenses as well as the absence of strategic review and related expenses.

Other expense, net of $12 for the nine months ended September 30, 2026 primarily related to net realized foreign currency exchange losses. Currency gains and losses can arise when subsidiaries enter into intercompany 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 $4,352 was recorded on income before income taxes of $11,630 for the nine months ended September 30, 2026, compared with an income tax provision of $4,866 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 and Germany, which have statutory income tax rates of 21% and 32% (combined), respectively. The mix of income or loss before income taxes between these jurisdictions is a primary driver of the difference between our 21% statutory tax rate and our effective tax rate. State taxes and a U.S. valuation allowance, which results in no tax benefit for losses generated domestically, also unfavorably impact our effective tax rate. These unfavorable impacts were partially offset by the operating results of Arcadia Products that are attributable to the redeemable noncontrolling interest holder, which are not taxed at DMC.

Net income attributable to DMC Global Inc. for the nine months ended September 30, 2026 was $4,150, compared to net loss attributable to DMC Global Inc. of $2,288 for the same period in 2025, primarily due to the factors discussed above.

Adjusted EBITDA decreased for the nine months ended September 30, 2026, compared with the same period in 2025, 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.

31

Adjusted Net Income and Adjusted Diluted Earnings Per Share increased for the nine months ended September 30, 2026, compared with the same period in 2025, 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 20,223,991.

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

(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.

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 income (expense), net, and interest expense, net.

Arcadia Products

Three months ended September 30, 2026 compared with three months ended September 30, 2025

Net sales increased $15,225 for the three months ended September 30, 2026, compared with the same period in 2025, primarily attributable to higher sales volumes in short-cycle commercial exterior, commercial interior, and high-end residential markets.

General and administrative expenses increased $1,148 for the three months ended September 30, 2026, compared with the same period in 2025, primarily due to higher incentive compensation costs.

Selling and distribution expenses increased $427 for the three months ended September 30, 2026, compared with the same period in 2025, primarily driven by higher incentive compensation costs.

Amortization of purchased intangible assets decreased $408 for the three months ended September 30, 2026, compared with the same period in 2025, as the customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Restructuring expenses and asset impairments of $47 and $132 for the three months ended September 30, 2026, and 2025, respectively, related to employee severance associated with headcount reductions.

Operating income was $5,780 for the three months ended September 30, 2026, compared to operating income of $2,585 in the same period in 2025, primarily due to higher net sales and corresponding gross profit.

Adjusted EBITDA increased for the three months ended September 30, 2026, compared with the same period in 2025, 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, 2026 compared with nine months ended September 30, 2025

Net sales increased $11,790 for the nine months ended September 30, 2026, compared with the same period in 2025, primarily due to higher sales volumes in short-cycle commercial exterior, commercial interior, and high-end residential markets as well as higher customer pricing in response to increases in raw material input costs.

Gross profit percentage decreased to 27.0% for the nine months ended September 30, 2026 primarily due to inflation in base aluminum metal costs which exceeded corresponding increases in customer pricing.

Amortization of purchased intangible assets decreased $1,221 for the nine months ended September 30, 2026, compared with the same period in 2025, as the customer relationship purchased intangible asset is amortized using an accelerated amortization method.

Restructuring expenses and asset impairments of $589 and $649 for the nine months ended September 30, 2026, and 2025, respectively, related to employee severance associated with headcount reductions.

Operating income was $7,423 for the nine months ended September 30, 2026, compared to operating income of $6,097 in the same period in 2025, primarily due to lower amortization expense.

Adjusted EBITDA decreased for the nine months ended September 30, 2026, compared with the same period in 2025, 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, 2026 compared with three months ended September 30, 2025

Net sales decreased $1,822 for the three months ended September 30, 2026, compared with the same period in 2025, primarily as a result of lower sales volumes in DynaEnergetics’ core North American market which reduced net sales by $2,828. This decrease was partially offset by an increase in net sales in DynaEnergetics’ international market of $1,006 due to project timing.

Gross profit percentage increased to 26.1% for the three months ended September 30, 2026 primarily due to refunds recognized for tariffs previously paid of $5,425, as well as the impact of cost savings initiatives and an improved sales mix.

General and administrative expenses increased $660 for the three months ended September 30, 2026, compared with the same period in 2025, primarily due to higher incentive compensation costs.

Selling and distribution expenses decreased $281 for the three months ended September 30, 2026, compared with the same period in 2025, primarily due to lower bad debt expense of $525, partially offset by higher selling costs of $292.

Restructuring expenses and asset impairments of $31 and $57 for the three months ended September 30, 2026, and 2025, respectively, related to employee severance associated with headcount reductions.

Operating income was $10,204 for the three months ended September 30, 2026, compared to operating income of $2,989 in the same period in 2025, primarily due to higher gross profit.

Adjusted EBITDA increased for the three months ended September 30, 2026, compared with the same period in 2025, 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, 2026 compared with nine months ended September 30, 2025

Net sales decreased $7,305 for the nine months ended September 30, 2026, compared with the same period in 2025, primarily due to lower sales volumes and a decrease in pricing due to a highly competitive core North American market, which collectively reduced net sales by $11,507. This decrease was partially offset by an increase in international sales of $4,202 primarily due to project timing.

Selling and distribution expenses decreased $547 for the nine months ended September 30, 2026, compared with the same period in 2025, primarily due to a reduction in bad debt expense of $931, partially offset by higher incentive compensation costs of $418.

Restructuring expenses and asset impairments of $169 for the nine months ended September 30, 2026 related to employee severance associated with headcount reductions.

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

Operating income was $15,043 for the nine months ended September 30, 2026, compared with operating income of $14,988 in the same period in 2025.

Adjusted EBITDA decreased for the nine months ended September 30, 2026, compared with the same period in 2025, 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, 2026 compared with three months ended September 30, 2025

Net sales increased $7,890 for the three months ended September 30, 2026, compared with the same period in 2025, driven principally by shipments associated with a large international petrochemical project.

Gross profit percentage decreased to 24.1% for the three months ended September 30, 2026 primarily due to an unfavorable project mix.

General and administrative expenses decreased $905 for the three months ended September 30, 2026, compared with the same period in 2025, primarily due to the recognition of a remediation liability at a former European cladding site in the three months ended September 30, 2025.

Selling and distribution expenses increased $175 for the three months ended September 30, 2026, compared with the same period in 2025, primarily due to higher incentive compensation costs.

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 was $3,726 for the three months ended September 30, 2026, compared with operating income of $249 in the same period in 2025, primarily due to higher net sales and corresponding gross profit.

Adjusted EBITDA increased for the three months ended September 30, 2026, compared with the same period in 2025, 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, 2026 compared with nine months ended September 30, 2025

Net sales decreased $5,421 for the nine months ended September 30, 2026, compared with the same period in 2025, driven by the timing of shipments out of backlog and generally lower overall activity levels in the first half of 2026 due in part to the impact of evolving tariff policies.

Gross profit percentage decreased to 23.2% for the nine months ended September 30, 2026 due to an unfavorable project 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 decreased $1,034 for the nine months ended September 30, 2026, compared with the same period in 2025, primarily due to the recognition of a remediation liability at a former European cladding site during the nine months ended September 30, 2025.

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 associated with headcount reductions.

Operating income was $6,961 for the nine months ended September 30, 2026, compared with operating income of $8,278 in the same period in 2025, primarily due to lower net sales and corresponding gross profit.

Adjusted EBITDA decreased for the nine months ended September 30, 2026, compared with the same period in 2025, 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 $13,717 at September 30, 2026, compared with $18,746 at December 31, 2025. The decrease was primarily driven by an increase in cash and cash equivalents resulting from improved operating performance and related cash flow generation across all three of our business segments during the three months ended September 30, 2026.

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 our short-term and long-term liquidity needs, which could be affected by 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 provided for certain changes to the credit facility and increased the maximum commitment amount from $200,000 to $300,000. The credit facility originally allowed for revolving loans of up to $200,000, a $50,000 term loan facility, and a $50,000 delayed draw term loan (“DDTL”) facility. On February 6, 2026, the ability of the Company to access the $50,000 DDTL facility expired per the terms of the First Amendment. The $50,000 term loan facility is payable in installments of $938 per quarter through March 31, 2028. Quarterly term loan payments increase 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 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 September 30, 2026, 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; 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 actual leverage ratio as of September 30, 2026 was 1.41 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, 2026, was 3.64 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 provided for certain changes to the credit facility, including modifications to the Company’s financial covenants and applicable interest rates to assist with 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.

As of September 30, 2026, borrowings of $43,125 on the term loan under our credit facility were outstanding, and $9,575 was outstanding on the revolver.

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. As of September 30, 2026, we had no outstanding borrowings, and bank guarantees of €3,038 were secured.

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”). The Put Option became exercisable on September 6, 2026. As of September 30, 2026, and through the date of the filing of this report, the minority interest holder has not exercised the Put Option.

The purchase price for any interests sold pursuant to the Call Option or Put Option is based upon a predefined calculation as included within the Operating Agreement. The calculation is based on a multiple of Arcadia Products’ adjusted EBITDA over a defined period or, if higher, a “Floor Value” for 100% of Arcadia Products equal to $467,700 (or $187,080 for the minority owner’s 40% interest), in each case subject to certain adjustments. In connection with an exercise of the Call Option, the Operating Agreement would require payment of the purchase price in cash. However, in connection with the exercise of the Put Option, the Operating Agreement permits the Company the option to pay the purchase price in either cash, or 20% in cash and 80% in shares of a newly designated series of preferred stock (the “Put Preferred”) that would be authorized at that time. The terms of the Put Preferred, including the rights, powers and preferences thereof, as set forth in the Operating Agreement, would be replicated in a Certificate of Designations to be filed with the Secretary of State of the State of Delaware.

The number of shares of Put Preferred to be issued in connection with the Put Option (if the Company utilizes that payment mechanism) would be initially determined and valued at the volume weighted average trading price of the Company’s common stock over the 60 days preceding the delivery of the Put Option notice. The Put Preferred would be entitled to dividends at a rate of 3% per annum and would vote with and be convertible into one share of the Company’s common stock. However, in order to comply with applicable Nasdaq rules, the voting and conversion rights of the Put Preferred would initially be limited to 19.9% of the number of shares of DMC common stock outstanding immediately prior to the issuance of the Put Preferred. This voting and conversion cap would be removed only if such removal is approved by DMC’s stockholders. The holder of the Put Preferred would not be allowed to participate in any such stockholder vote. Based on the purchase price definition set forth in the Operating Agreement and the current price of DMC common stock, it is likely that if the Put Preferred is issued, a stockholder vote to remove the voting and conversion cap would result in the minority interest holder acquiring majority voting control of the Company through the involuntary dilution of the existing stockholders.

Upon issuance, the Company may redeem the Put Preferred at any time; however, beginning on June 23, 2027, the Company would begin proportionate annual redemptions of the Put Preferred, provided that the Put Preferred must be redeemed by the third anniversary of its issuance, subject in all cases to the availability of sufficient funds to effect such redemptions as described below.

As of September 30, 2026, 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. Furthermore, as described in Note 2 in Part I, Item 1, and in Item 1A in Part II of this report, our ability to redeem the Put Preferred, if such shares are issued in connection with the Put Option, is subject to certain statutory and common law limitations under Delaware law.

Other contractual obligations and commitments

Our debt balance, net of deferred debt issuance costs, increased to $51,674 at September 30, 2026, from $50,644 at December 31, 2025. Our other contractual obligations and commitments have not materially changed since December 31, 2025.

Cash flows from operating activities

Net cash provided by operating activities was $7,170 for the nine months ended September 30, 2026, compared to $38,340 in the same period last year. The decrease was largely driven by higher working capital balances, which included increased inventory levels given the recent and expected rise in activity levels, as well as higher raw material input costs at Arcadia Products.

Cash flows from investing activities

Net cash used in investing activities for the nine months ended September 30, 2026 of $2,521 was attributable to the acquisition, net of proceeds received, of property, plant and equipment.

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.

Cash flows from financing activities

Net cash provided by financing activities for the nine months ended September 30, 2026 of $240 included net credit facility borrowings of $700, which were partially offset by treasury stock purchases of $460.

Net cash used in financing activities for the nine months ended September 30, 2025 of $22,149 included net credit facility repayments of $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.

Payment of Dividends

Any determination to pay cash dividends is at the discretion of the Board. 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 the Board 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, 2025.

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, 2025.

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, 2025, except as provided below.

The conflict between the United States, Israel and Iran and related geopolitical instability may adversely affect our business.

In February 2026, the United States and Israel launched coordinated military strikes against Iran, which retaliated with missile attacks across the region. Although we do not have operations in the Middle East, we sell products into the region, and the ongoing conflict and any further escalation, including additional military actions, retaliatory measures, sanctions, disruptions to trade or transportation routes, cyberattacks, or other governmental or market responses, has and could continue to lead to significant disruption of global energy supplies and increases in global energy prices, heighten inflationary pressures on our input costs and supply chain, adversely affect global supply chains, energy markets, commodity prices, currency exchange rates, interest rates, financial markets and overall macroeconomic conditions, increase the cost or reduce the availability of debt financing, and adversely impact customer spending patterns in markets in which we operate. In particular, the price of aluminum, the most important raw material for Arcadia Products, rose to multi-year highs earlier in 2026 in part due to the ongoing conflict and the difficulty in sourcing and transporting this material, and while prices have since declined from those highs, they remain elevated and volatile and could increase again if disruptions in the region persist or intensify. While the impacts of conflict between the United States, Israel, and Iran may have an adverse effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of these impacts at this time.

Our ability to redeem the Put Preferred, if such shares are issued in connection with the Put Option, is subject to certain statutory and common law limitations under Delaware law.

As described in Note 2 of the Notes to the Condensed Consolidated Financial Statements, in connection with the exercise of the Put Option, we may issue shares of Put Preferred. Beginning on June 23, 2027, we would begin proportionate annual redemptions of the Put Preferred, provided that the Put Preferred must be redeemed by the third anniversary of its issuance, subject in all cases to the availability of sufficient funds to effect such redemptions. Specifically, under Section 160(a) of the DGCL, a corporation may not purchase or redeem its own shares of capital stock when the capital of the corporation is, or as a result of such transaction would be, impaired. Further, the Delaware courts have stated that a corporation may not redeem shares if doing so “diminishes the ability of the company to pay its debts, or lessens the security of its creditors.” Accordingly, we may be restricted from making redemption payments if our capital is impaired, if making the payments would impair our capital or in other circumstances, including where the payment would threaten our ability to continue as a going concern.

In assessing whether we have funds legally available to redeem our shares of our capital stock, the Board will be required to make a good faith determination, based upon available data and by methods that the Board reasonably believes reflect present values, as to whether we can meet the statutory surplus and common law requirements for each redemption. Such determination may include consideration of the fair value of our assets and liabilities, including any contingent liabilities discounted for probability and timing, our projected cash flows and liquidity needs. There can be no assurance that we will meet the Delaware statutory surplus and common law requirements to redeem the Put Preferred on the scheduled redemption dates.