Dynamic Materials Corp - Investor Presentation
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Transcript of Dynamic Materials Corp - Investor Presentation
© 2015 DMC. All rights reserved. INGENUITY IN ACTION.
Investor Presentation January 2015
à DMCGlobal.com 2015 Investor Presentation
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
à DMCGlobal.com
CHAPTER 1
2015 Investor Presentation 3
DMC Overview
à DMCGlobal.com
DMC is a growth company focused on building a family of technical product and process businesses for the global energy, industrial and infrastructure markets. We serve a network of industrial customers through a family of technical businesses that currently is comprised of NobelClad and DynaEnergetics. The DMC family consists of a global network of production facilities and sales and distribution centers. Our global footprint is critical to successfully meeting the demands of our customer base.
2015 Investor Presentation 4
OUR STORY
à DMCGlobal.com
SELECT DATA
BOOM $14.84 - $24.00 63,000 $210 Million 13.9 Million 13.0 Million December 31 $0.04 $199.9 Million $28.4 Million
2015 Investor Presentation 5
Symbol (Nasdaq GS): 52-week price range: Average daily volume: Market capitalization: Shares outstanding: Approximate float: Fiscal year: Quarterly dividend: Revenue (ttm): Adjusted EBITDA (ttm)
BOOM 1-Year Price & Volume
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* Reflects approximately $5.6 million in non-recurring expenses ** Reflects approximately $1.2 million in tax benefits recognized during the first quarter
2015 Investor Presentation
FINANCIAL HIGHLIGHTS
6
$ in millions Year-end numbers
9-month numbers
**
*
Sales Operating Income Income from Continuing Ops Adjusted EBITDA
à DMCGlobal.com
DMC’S SECTOR FOCUS
2015 Investor Presentation 7
BUSINESSES
SECTORS Industrial and Infrastructure Energy
DESCRIPTION
SOLUTIONS FOCUS
Explosive Metalworking Perforating Components & Systems
Products and technical processes that support industrial and infrastructure markets.
Consumables, products and systems that support the global oil and gas industry.
PRODUCTS/SERVICES
Synthetic Diamond Manufacturing
• Plates • Heads • Rolled & Tacked Cylinders • Tubesheets • Transition Joints • Cylindricals • Fabricated Components
• Perforating Guns • Explosive Shaped Charges • Detonating Cords • Detonators • Explosive Control Systems
• Industrial Diamonds
NobelClad DynaEnergetics
à DMCGlobal.com
REVENUE BY BUSINESS
2015 Investor Presentation
8
$83.7 (41%)
2013 2014 9-Months
$118.4 (59%) (49%)
$76.2 (51%)
NobelClad DynaEnergetics
$ in millions
$74.4
à DMCGlobal.com
CHAPTER 2
2015 Investor Presentation 9
Opportunity
à DMCGlobal.com
BUSINESS OPPORTUNITY
10
DMC companies serve the world’s multi-trillion dollar industrial, infrastructure and energy industries, which are addressing major capital investments in both established and emerging markets. In North America, a resurgence in oil and gas production and a renewed focus on chemical processing capacity are creating considerable opportunities for each of DMC’s businesses. In the world’s emerging markets, demand for energy and modern industrial processing infrastructure is also leading to compelling growth prospects for DMC and its family of specialized product and process businesses.
2015 Investor Presentation
à DMCGlobal.com
CHAPTER 3
2015 Investor Presentation 11
Leadership Team
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EXECUTIVE LEADERSHIP
2015 Investor Presentation 12
KEVIN LONGE • Named President, CEO and Director in March 2013
• Joined DMC as Chief Operating Officer in July 2012
• Former VP and and GM of Sonoco's $600 million Protective Packaging division
• Former President of Sonoco's ThermoSafe Brands
• Oversaw global sales, marketing, engineering and R&D for the life sciences, medical, food and industrial durables markets
• Oversaw eight manufacturing centers in the U.S., Europe and Asia
• Former President of three operating divisions at Lydall, Inc. (NYSE-LDL)
RICHARD SANTA • Named Senior Vice President, Business
Development in March 2014
• Served as DMC’s Sr. VP, Chief Financial Officer and Secretary from 2008 to 2014
• Joined DMC as Vice President, Chief Financial Officer and Secretary in October 1996
• Responsible for integration of seven acquisitions while at DMC
• Former Chief Financial Officer of Scott USA, a sports equipment manufacturer and distributor
• Former senior manager with Price Waterhouse
President & CEO, DMC Sr. VP, DMC MICHAEL KUTA • Joined DMC as Chief Financial Officer in March 2014
• Former Corporate Controller at Berkshire Hathaway’s Lubrizol Corporation, a global, $6 billion specialty chemicals company
• Was responsible for building and managing financial operations for Lubrizol’s disbursed global operations, including accounting, consolidation and financial reporting functions, and oversight of internal controls
• Former financial positions of increasing responsibility at Lincoln Electric and Eaton Corporation
CFO, DMC
à DMCGlobal.com
LEADERSHIP TEAM
2015 Investor Presentation 13
JEFF NICOL President, NobelClad • Became head of NobelClad’s newly unified
global operations in 2012
• Previously VP and General Manager of DMC Clad Metal, North America
• Joined DMC in 2008 as VP of Sales and Marketing
• Spent 21 years with Alcoa, where he ascended to chief metallurgist and global marketing director
IAN GRIEVES President, DynaEnergetics • Joined DynaEnergetics in 2013 • 20 years of diverse operational, engineering,
finance and management experience with international industrial businesses
• Previously Senior Vice President of Lydall, Inc.’s Performance Materials division
BIN ZHANG Managing Director, China, DMC • Responsible for Chinese business development
and market positioning for NobelClad, DynaEnergetics and AMK Technical Services
• Native of Beijing with 20 years of senior level business experience
• Established an Asia Pacific sales and marketing presence for a Sheldahl, Inc., a specialized manufacturer based in Minnesota
à DMCGlobal.com
CHAPTER 4
2015 Investor Presentation 14
Defining Characteristics
à DMCGlobal.com
DMC builds global companies by developing people and organizations. We institutionalize entrepreneurship and celebrate technical ingenuity. Our growth is fueled by energized, relevant and nimbly executed solutions that make a real difference to our customers. We offer a global manufacturing network with intimate localized service, so customers know they can rely on DMC companies when the stakes are high. DMC’s empowered and responsive management strategies are aimed at serving the world’s growth markets, giving investors high returns throughout varying economic cycles.
2015 Investor Presentation 15
OUR CULTURE
à DMCGlobal.com
DMC TRAITS
2015 Investor Presentation 16
The DMC family of brands share many traits that are critical to our growth and success.
Technical expertise, ingenuity and proficiency in our respective industries.
A culture of critical and creative thinking that allows us to innovate new solutions for our clients.
Empowerment to meet market demands through decisions made at the local level.
A passion for the processes that drive efficiency, dependability and ultimate value for our clients.
à DMCGlobal.com
CHAPTER 5
2015 Investor Presentation 17
Solutions
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CHAPTER & PAGE TITLE HERE
2015 Investor Presentation 18
REPRESENTATIVE: NAME & POSITION HERE
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DYNAENERGETICS OVERVIEW
2015 Investor Presentation 19
A top-tier provider of compatibility tested perforating systems.
Acquired in 2007 as new platform business for DMC. Unmatched global reach serving oil and gas service providers, with approximately 7% global market share. Reputation for product safety, technical innovation and systems reliability under extreme environmental conditions. Significant portion of product sales come from well re-perforations and workovers. Perforating and well completion technologies for improved productivity and lower operating cost.
à DMCGlobal.com
DYNAENERGETICS GROWTH MILESTONES
2007 – Company acquired DynaEnergetics, a new global platform business
2009 – Acquired LRI Oil Tools (Canada)
2010 – Acquired outstanding interests in two Russian oilfield product joint ventures
– Acquired Austin Explosives (Texas)
2012 – Acquired TRX Industries (Texas)
2013 – Opened distribution centers in Bogota, Columbia and West Texas
– Opening new shaped charge manufacturing plant for Americas (Texas)
2014 – Opened distribution centers in Western Pennsylvania and Bonnyville, Alberta
– Completing new gun and shaped charge manufacturing plant in Russia (Siberia)
2015 Investor Presentation 20
à DMCGlobal.com 21 2015 Investor Presentation
DYNAENERGETICS PERFORMANCE
$ in millions Year-end numbers
9-month numbers
à DMCGlobal.com 22 2015 Investor Presentation
DYNAENERGETICS SALES BY GEOGRAPHY
2013 Sales: $83.7 Million
United States / 42%
Canada / 14%
Russia / 7%
Iraq / 5%
India / 5%
United Kingdom / 4%
Kazakhstan / 3%
Rest of World / 20%
à DMCGlobal.com
PERFORATING BASICS
2015 Investor Presentation 23
1. Once a wellbore is drilled and cement and steel casing are in place, a perforating gun is deployed into the well.
2. The perforating gun is fired, sending plasma jets through the casing and into the surrounding formation creating “perforation tunnels”.
3. Oil or gas flows through the perforation tunnels and into the well.
à DMCGlobal.com
DYNAENERGETICS COMPETITIVE ADVANTAGE
2015 Investor Presentation 24
• Manufacturing expertise and technical proficiency using industrial explosives
• Robust product portfolio
• Industry leading safe and selective detonating technology
• Global distribution expertise
• Strong industry relationships
• Advanced Section IV Testing Facility simulates most challenging well environments
à DMCGlobal.com 25
DynaStageTM Gun System • Pre-assembled, customizable gun system • No wiring connections… reduces set up time
to seconds • Removes the potential for electrical
connection errors • Eliminates gun loading steps • Fully disposable and maintenance free
DynaSelect Detonators • Integrated RF-safe & selective
technologies • Enables concurrent perforating and
fracturing • Reduces the risk of accidents • Time and cost savings from sequential gun
initiation • Improved set-up times and reliability from
40% fewer electrical wiring connections
01 02 03
Booster Transfer Module (BTM) • Can only be initiated by a ballistic event …
will not fire due to hydrostatic or wellbore pressure
• No moving parts • Pressure tight after initiation to 14,000 PSI • More cost effective to purchase and re-dress • Simple, fast assembly and small footprint
DYNAENERGETICS PRODUCT INNOVATIONS
2015 Investor Presentation
à DMCGlobal.com
DYNASTAGETM GUN SYSTEM
2015 Investor Presentation 26
*patents pending Top Fire DynaSelect
Detonator* Multitronic V Firing Panel
Three Stage Gun String with Bridge Plug
DynaStage Gun Module*
à DMCGlobal.com
CREATING A SUSTAINABLE COMPETITIVE ADVANTAGE
27
COMPONENT DRIVEN SALES: • Guns & Hardware • Shaped Charges • Detonating Cord • Switch • Detonators • Control Systems
CUSTOMER USE REQUIREMENTS: • Gun shop: Mix & match products
and assemble perforating systems
• Field: Detonator wiring, gun string assembly, sub recovery
INDUSTRY CHALLENGES: • Assembly errors lead to misfires • Quality • Safety • Efficiency • Operating Cost • Complexity of Supply Chain
DynaSelect • Integrated Switch Detonator
• RF Safe • Selective
• Surface Tester • Enhanced Control System DYNASELECT ADVANTAGES • Higher value to Service Companies
• Less field wiring • Fewer misfires
• Higher priced (to value) • Reduced detonator wiring in the field • Customer savings accrue in operations other
than wireline perforating
DynaStage™ • Switch detonator eliminates field wiring, improves
reliability • Gun armed on detonator installation • Full factory assembly of gun systems • Delivery of complete systems to field • Maintenance free and disposable
DYNASTAGE ADVANTAGES • Highest level of reliability, safety and efficiency
• No misfires • Reduced transportation costs and field labor • Simplified supply chain • Reduced working capital for customers • Improved Service and E&P profitability
• Gun shop no longer required • Detonator wiring eliminated • Sub recovery eliminated
CURRENT INDUSTRY MODEL DYNAENERGETICS MODEL: PRODUCT ADVANTAGE + BUSINESS MODEL ADVANTAGE
2015 Investor Presentation
à DMCGlobal.com
DYNAENERGETICS GROWTH INITIATIVES
2015 Investor Presentation 28
• Investing in new technologies to expand product offerings
• Forging strategic partnerships to enter new markets
• Innovating solutions that meet anticipated market demand
• Global launch of new brand marketing and digital assets to improve customer experience and service design
à DMCGlobal.com 2015 Investor Presentation 29
DYNAENERGETICS GLOBAL FOOTPRINT
à DMCGlobal.com
SELECT END USERS
30
These major energy service companies are both competitors and customers. When distribution limitations inhibit these companies’ ability to supply perforating equipment to certain international locations, they often turn to DynaEnergetics.
*
2015 Investor Presentation
* *
* *
à DMCGlobal.com
DYNAENERGETICS MARKET INDICATORS: OIL PRICES
2015 Investor Presentation 31
Oil S tatis tic s
$63.05 $69.00 $78.65 $92.75 $97.65
12/8/2014 -‐8.6% -‐19.8% -‐32.0% -‐35.4%
$65.67 $72.22 $82.38 $98.57 $111.69
12/8/2014 -‐9.1% -‐20.3% -‐33.4% -‐41.2%
* Mos t recent data reported on 08-‐Dec -‐2014** % box s how s ac tual rates for comparis on
1 Week Before**
1 Month Before**
3 Months Before**
1 Y ear Before**
Nymex WTI Crude
UK Brent Crude
Mos t Recent*
January-‐09
April-‐09
July-‐09
October-‐09
January-‐10
April-‐10
July-‐10
October-‐10
January-‐11
April-‐11
July-‐11
October-‐11
January-‐12
April-‐12
July-‐12
October-‐12
January-‐13
April-‐13
July-‐13
October-‐13
January-‐14
April-‐14
July-‐14
October-‐14
$-‐
$20
$40
$60
$80
$100
$120
$140
$/bb
l
WTI Crude UK Brent
January-‐09
April-‐09
July-‐09
October-‐09
January-‐10
April-‐10
July-‐10
October-‐10
January-‐11
April-‐11
July-‐11
October-‐11
January-‐12
April-‐12
July-‐12
October-‐12
January-‐13
April-‐13
July-‐13
October-‐13
January-‐14
April-‐14
July-‐14
October-‐14
January-‐15
April-‐15
July-‐15
October-‐15
January-‐16
April-‐16
July-‐16
October-‐16
January-‐17
April-‐17
July-‐17
October-‐17
January-‐18
April-‐18
July-‐18
October-‐18
$-‐
$20
$40
$60
$80
$100
$120
$/bb
l
Nymex WTI Crude Spot Price Analyst Forecast (Bloomberg Average 30+ Analysts)
à DMCGlobal.com 32 2015 Investor Presentation
DYNAENERGETICS MARKET INDICATORS: RIG COUNT BY GLOBAL REGION
Rig S tatis tic s
1,920 1,929 1,925 1,763
12/5/2014 -‐5.6% -‐1.0% 8.9%
149 148 143 137
11/30/2014 8.1% 16.8% 8.0%
255 252 255 240
11/30/2014 14.3% 0.0% 6.3%
422 429 414 385
12/5/2014 n/a n/a 9.6%
403 390 406 388
11/30/2014 40.0% -‐3.0% 3.9%
375 393 410 411
11/30/2014 -‐55.0% -‐34.1% -‐8.8%
142 125 125 135
11/30/2014 163.2% 54.4% 5.2%
3,670 3,657 3,642 3,452
11/30/2014 4.3% 3.1% 6.3%
Original Data S ource: Baker Hughes Rig S tatis tic s * Mos t recent data varies by region** % box s how s annualiz ed rates for comparis on
1 Y ear Before
World Total
Europe
A s ia Pac ific
Canada
Middle Eas t
Latin America
A frica
U.S .
Mos t Recent*
1 Month Before**
3 Months Before**
1,500
1,600
1,700
1,800
1,900
2,000
2,100
12/22/2011
3/22/2012
6/22/2012
9/22/2012
12/22/2012
3/22/2013
6/22/2013
9/22/2013
12/22/2013
3/22/2014
6/22/2014
9/22/2014
US
40
80
120
160
200
12/22/2011
3/22/2012
6/22/2012
9/22/2012
12/22/2012
3/22/2013
6/22/2013
9/22/2013
12/22/2013
3/22/2014
6/22/2014
9/22/2014
Europe Afr ica
200
220
240
260
280
300
12/22/2011
3/22/2012
6/22/2012
9/22/2012
12/22/2012
3/22/2013
6/22/2013
9/22/2013
12/22/2013
3/22/2014
6/22/2014
9/22/2014
Asia Pacific
-‐
100
200
300
400
500
600
700
800
12/22/2011
3/22/2012
6/22/2012
9/22/2012
12/22/2012
3/22/2013
6/22/2013
9/22/2013
12/22/2013
3/22/2014
6/22/2014
9/22/2014
Canada
200
250
300
350
400
450
500
12/22/2011
3/22/2012
6/22/2012
9/22/2012
12/22/2012
3/22/2013
6/22/2013
9/22/2013
12/22/2013
3/22/2014
6/22/2014
9/22/2014
Middle East
300
340
380
420
460
500
12/22/2011
3/22/2012
6/22/2012
9/22/2012
12/22/2012
3/22/2013
6/22/2013
9/22/2013
12/22/2013
3/22/2014
6/22/2014
9/22/2014
Lat in America
à DMCGlobal.com 33 2015 Investor Presentation
DYNAENERGETICS MARKET INDICATORS: U.S. RIG COUNT BY TYPE
Rig S tatis tic s
1,368 1,353 1,333 1,127
12/5/2014 13.3% 10.5% 21.4%
198 211 224 222
12/5/2014 -‐73.9% -‐46.4% -‐5.0%
354 365 368 414
12/5/2014 -‐36.2% -‐15.2% -‐14.5%
1,920 1,929 1,925 1,763
12/5/2014 -‐5.6% -‐1.0% 8.9%
* Mos t recent data reported on 05-‐Dec -‐2014** % box s how s annualiz ed rates for comparis on
Original Data S ource: Baker Hughes Rig S tatis tic s
1 Y ear Before
Direc tional
V ertical
Total Rig s
Horiz ontal
Mos t Recent*
1 Month Before**
3 Months Before**
-‐
200
400
600
800
1,000
1,200
1,400
1,600
12/22/2011
2/22/2012
4/22/2012
6/22/2012
8/22/2012
10/22/2012
12/22/2012
2/22/2013
4/22/2013
6/22/2013
8/22/2013
10/22/2013
12/22/2013
2/22/2014
4/22/2014
6/22/2014
8/22/2014
10/22/2014
Horizontal Directional Vertical
à DMCGlobal.com
DYNAENERGETICS MARKET INDICATORS: U.S. HYDRAULIC FRACTURING ACTIVITY
34 2015 Investor Presentation
N umbe r o f We lls F ra c tu re d N um be r o f S ta g e s F ra c tu re d pe r We ll N um be r o f S ta g e s F ra c tu re d Rig S tatis tic s
4,662 4,599 4,250
9/30/2014 5.5% 9.7%
2,760 2,840 3,462
9/30/2014 -‐11.3% -‐20.3%
101,600 98,100 86,800
9/30/2014 14.3% 17.1%
10,900 11,200 13,800
9/30/2014 -‐10.7% -‐21.0%
* Mos t recent data reported on 30-‐S ep-‐2014 Original Data S ource: Baker Hughes Rig S tatis tic s ** % box s how s annualiz ed rates for comparis on
Mos t Recent*
3 Months Before**
1 Y ear Before
V ertical/ Direc tional
Horiz ontal
V ertical/ Direc tional
Wells
S tages
Horiz ontal
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
6/30/2012
9/30/2012
12/31/2012
3/31/2013
6/30/2013
9/30/2013
12/31/2013
3/31/2014
6/30/2014
9/30/2014
Horizontal Vertical/Directional
0.0
5.0
10.0
15.0
20.0
25.0
9/30/2011
12/31/2011
3/31/2012
6/30/2012
9/30/2012
12/31/2012
3/31/2013
6/30/2013
9/30/2013
12/31/2013
3/31/2014
6/30/2014
9/30/2014
Horizontal Vert ical/Directional
0
20
40
60
80
100
120
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
6/30/2012
9/30/2012
12/31/2012
3/31/2013
6/30/2013
9/30/2013
12/31/2013
3/31/2014
6/30/2014
9/30/2014
Horizontal Vertical/Directional
à DMCGlobal.com 35
DYNAENERGETICS MARKET INDICATORS: OIL ECONOMICS
0
10
20
30
40
50
60
70
80
90
100
Eagl
e Fo
rd O
il Ti
er 1
Ba
kken
Tie
r 1
TFS
Tier
1
Nio
brar
a Ti
er 1
Ea
gle
Ford
Oil
Tier
2
Bakk
en T
ier 2
PR
B Ti
er 1
De
lawa
re B
one
Sprin
g M
idla
nd W
olfc
amp
Tier
1
Mid
land
Wol
fcam
p Ti
er 2
De
lawa
re W
olfc
amp
Nio
brar
a Ti
er 2
TF
S Ti
er 2
M
S Li
me
Tier
1
Mid
land
Wol
fber
ry V
t Tie
r 1
Bakk
en T
ier 3
SC
OOP
Oil
CTM
Tie
r 1
PRB
Tier
2
CTM
Tie
r 2
East
Texa
s Ea
gle
Ford
M
idla
nd W
olfc
amp
Tier
3
Uint
a Oi
l Ea
gle
Ford
Oil
Tier
3
CTM
Tie
r 3
MS
Lim
e Ti
er 2
M
idla
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olfb
erry
Vt T
ier 2
TM
S
Breakeven WTI Price ($/bbl) for 10% ATROR*
Original Data Source: TPH (Data represented from Tudor Pickering Holt & Co. analysis)
*Assumes $3.75/mcf NYMEX **Tudor Pickering Holt & Co.
With WTI below $70, 500 U.S. land rigs at risk
by end of 2015, a ~25% y-o-y decline**
2015 Investor Presentation
à DMCGlobal.com
DYNAENERGETICS: PROACTIVE RESPONSE TO DOWN CYCLE
2015 Investor Presentation 36
Oil price decline is shifting the focus of the exploration, production and service industries.
Operators and service providers seeking to reduce costs, improve operational efficiencies, enhance competitiveness. Ideal time to introduce next-generation products (i.e. DynaSelect, DynaStage, BTM) that deliver step change in efficiency, performance and safety. Favorable environment to shift industry business model: Sell feature-rich perforating systems versus commoditized components. Capitalize on anticipated growth of well re-completion and workover projects. Manage internal costs.
à DMCGlobal.com 2015 Investor Presentation 37
à DMCGlobal.com
NOBELCLAD OVERVIEW
38
NobelClad is the worldwide leader in explosion welded plate production.
Largest global supplier of explosion clad plates. Serving a diversified roster of industrial and infrastructure end markets. Working to drive engineering specifications for clad. Profiting from global industrial infrastructure investments. Strong free cash flow.
2015 Investor Presentation
à DMCGlobal.com
NOBELCLAD’S PERFORMANCE
2015 Investor Presentation 39
$ in millions Year-end numbers
9-month numbers
à DMCGlobal.com
2013 Sales: $118.4 Million
United States / 45%
South Korea / 10%
Germany / 6%
Canada / 5%
India / 4%
France / 3%
China / 2%
Rest of World / 25%
2015 Investor Presentation 40
NOBELCLAD SALES BY GEOGRAPHY
à DMCGlobal.com
NOBELCLAD GROWTH MILESTONES
1965 – Company founded as Explosive Fabricators
1996 – Acquired Detaclad®, the explosion welding business of Dupont
2001 – Acquired Nobelclad (France)
2007 – Acquired Dynaplat (Germany)
2012 – Opened sales office in South Korea
2013 – Unified global explosion welding operations under NobelClad – Opened sales office in China
2014 – Acquired state-of-the art manufacturing facility in Germany
– Initiated restructuring program of European cladding operations
2015 Investor Presentation 41
à DMCGlobal.com
EXPLOSION WELDING PROCESS
42 2015 Investor Presentation
à DMCGlobal.com
DEMAND DRIVERS FOR EXPLOSION WELDING
43
03 Design Flexibility
02 Corrosive Environments
01 Global Infrastructure Investment
2015 Investor Presentation
à DMCGlobal.com
BENEFITS OF CLAD
2015 Investor Presentation 44
à DMCGlobal.com
NOBELCLAD’S COMPETITIVE ADVANTAGE
2015 Investor Presentation 45
• Global network of specialty metals providers
• Permits and shooting sites in U.S., France, Sweden and Germany
• Mastery of explosion-welding process for large-scale production
• Strong working relationships with end-market customers
NobelClad’s dominant position in the explosion welding industry is protected by significant barriers to entry.
Explosion welding shot - NobelClad’s outdoor shooting facility near Rivsaltes, France.
à DMCGlobal.com
NOBELCLAD GROWTH INITIATIVES
2015 Investor Presentation 46
• Expanding market share in Asia
• R&D focused on new clad plate applications
• Applying process expertise to new market development
• Global launch of new brand marketing and digital assets to improve customer experience and service design
Separating equipment – A natural gas production facility where NobelClad’s explosion welded plates were used in the fabrication of specialized pipes.
à DMCGlobal.com 2015 Investor Presentation 47
GLOBAL PRODUCTION & SALES FOOTPRINT
•
à DMCGlobal.com
PRIMARY END MARKETS SERVED
2015 Investor Presentation 48
• Chemical
• Oil and Gas
• Metals and Mining
• Marine
• Power Generation
• Alternative Energy
• Industrial Refrigeration
• Transportation
• Defense and Protection
à DMCGlobal.com
BOOKINGS BY END MARKET: 2008 REVENUE PEAK TO 2013 TROUGH
2015 Investor Presentation 49
0
20
40
60
80
100
120
140
160
180
200
2008
Misc. / 10%
Shipbuilding / 2%
Ind. Refrigeration / 3%
Hydrometallurgy / 4%
Power Gen. / 7%
Aluminum / 11%
Alt. Energy / 13%
Oil & Gas / 22%
Chemical / 27%
2008 Bookings: $198.9M
0
20
40
60
80
100
120
140
160
180
200
2013
Misc. / 5%
Shipbuilding / 4%
Ind. Refrigeration / 3%
Hydrometallurgy / 0%
Power Gen. / 6%
Aluminum / 8%
Alt. Energy / 0%
Oil & Gas / 39%
Chemical / 35%
2013 Bookings: $108.4M
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CLADDING METAL PRICE CHANGES: 2008 REVENUE PEAK THROUGH 2013 TROUGH
2015 Investor Presentation 50
Stainless Steel 304 Stainless Steel
316 Titanium Gr1 Inconel 625 Alloy 825 516-70 (Mill) 516-70 (Service
Center)
2008
2013
30% 38% 26% 40% 20% 12% 5%
Charts show decline in average price per pound paid by DMC. Metals make up 45% - 50% of the value of a typical explosion welding order.
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SELECT END USERS
51
Chemicals Refining Mining Engineering
2015 Investor Presentation
NobelClad provides value to its industrial and infrastructure customers by collaborating at every stage of development. During design phases, NobelClad is a key resource for process architects and engineers who often write NobelClad plates into their manufacturing specifications.
à DMCGlobal.com 52 2015 Investor Presentation
ENGINEERING PROCUREMENT & CONSTRUCTION (EPC) COMPANY BACKLOG INDEX
In M illions o f US D Cummulative Company Bac klog -‐ Index
189,074 195,959 152,018
-‐3.5% 24.4%
* Quarter to quarter grow th rate for 3Q14** Y ear to Y ear grow th rate for 3Q14
3Q14 2Q14* 3Q13**
Total
$-‐
$50,000
$100,000
$150,000
$200,000
$250,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
The EPC Backlog Index is a cummulative summary of the backlog for nine global companies that report quarterly backlog. These companies w ere chosen as their project revenue is primarily driven from petoleum based projects.
The companies are summarized below by their headquarters and % of revenue driven by petroleum projects (source Engineering New s Record) :Company Headquarters % PetroleumTechnip France 99%Fluor*** USA 65%KBR USA 50%CB&I USA 93%Jacobs USA 80%Samsung Eng. South Korea 68%Hyundai E&C*** South Korea 43%Foster Wheeler USA 74%Saipem Italy 97%
*** Petroleum (Oil & Gas) related segment backlog
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EPC COMPANIES, SELECT COMPANY PERFORMANCE – BACKLOG
53 2015 Investor Presentation
In M illions o s US D Company Bac klog
24,382 27,188 21,448
-‐10.3% 13.7%
26,503 24,197 18,740
9.5% 41.4%
7,479 7,452 8,402
0.4% -‐11.0%
30,700 31,500 24,500
-‐2.5% 25.3%
18,400 18,500 17,200
-‐0.5% 7.0%
14,368 15,837 15,619
-‐9.3% -‐8.0%
33,199 33,521 16,312
-‐1.0% 103.5%
4,120 4,548 3,942
-‐9.4% 4.5%
29,923 33,217 25,854
-‐9.9% 15.7%
* Quarter to quarter grow th rate for 3Q14** Y ear to Y ear grow th rate for 3Q14
S aipem
KBR
CB&I
J acobs
S amsung Engineering
Hyundai E&C
Fos ter Wheeler
Fluor -‐ Oil & Gas S egment
3Q14 2Q14* 3Q13**
Technip
$-‐
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
Technip
$-‐
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
Fluor Oil and Gas
$-‐
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
KBR
$-‐ $5,000
$10,000 $15,000 $20,000 $25,000 $30,000 $35,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
CB&I
$-‐
$5,000
$10,000
$15,000
$20,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
Jacobs
$-‐
$5,000
$10,000
$15,000
$20,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
Samsung Engineering
$-‐
$10,000
$20,000
$30,000
$40,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
Hyundai E&C
$-‐
$1,000
$2,000
$3,000
$4,000
$5,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
Foster Wheeler
$-‐ $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000
Q4-‐2011
Q1-‐2012
Q2-‐2012
Q3-‐2012
Q4-‐2012
Q1-‐2013
Q2-‐2013
Q3-‐2013
Q4-‐2013
Q1-‐2014
Q2-‐2014
Q3-‐2014
Saipem
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CHAPTER 6
2015 Investor Presentation 54
Financial Overview
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FINANCIAL PERFORMANCE REVIEW
2015 Investor Presentation 55
($MM except per share amounts) 2011 2012 2013 9 Months 2013
9 Months 2014
Sales % growth
$199.0 38%
$192.7 -3%
$202.1 5%
$152.7 7%
$150.6 -1%
Gross Profit % margin
$52.2 26%
$57.7 30%
$58.1 29%
$45.3 30%
$45.5 30%
Operating Profit % margin
$15.8 8%
$16.0 8%
$11.0 5%
$9.9 6%
$10.2 7%
Adjusted EBITDA % margin
$29.9 15%
$31.7 16%
$26.6 13%
$21.2 14%
$23.0 15%
Income from Continuing Operations % Growth
$10.7 219%
$10.7 0%
$7.2 -33%
$6.8 0%
$7.1 -3%
Net Income % growth
$12.5 137%
$11.7 -6%
$7.5 -36%
$7.2 -18%
$7.0 4%
Diluted EPS % growth
$0.93 133%
$0.87 -6%
$0.54 -38%
$0.52 -20%
$0.50 -4%
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BALANCE SHEET HIGHLIGHTS
2015 Investor Presentation 56
Assets ($MM) Dec. 31, 2012 Dec. 31, 2013 September 30, 2014
Cash, cash equivalents $8.2 $10.6 $14.9
Accounts receivables, net $35.2 $37.8 $30.9
Inventory $48.0 $41.2 $41.8
Total current assets $104.8 $103.7 $106.5
Total assets $235.4 $240.6 $229.6
Liabilities ($MM) Text here Text here
Total current liabilities $24.8 $31.6 $24.1
Lines of credit $37.8 $26.4 $26.0
Long-term debt $0.1 $0.0 $0.0
Total liabilities $73.0 $67.8 $60.7
Total stockholders’ equity $162.5 $172.8 $168.9
Total liabilities and stockholders’ equity $235.4 $240.6 $229.6
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CHAPTER 7
2015 Investor Presentation 57
Summary
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DMC’S PERFORMANCE TENETS
2015 Investor Presentation 58
Through share ownership, DMC management has closely aligned its interest with independent shareholders, and all management decisions are made to maximize shareholder value.
DMC has adopted three tenets to guide superior share price performance:
1. Maximize free cash flow through financial discipline
2. Maximize return on invested capital by achieving operational excellence and making discerning investment decisions
3. Invest in new technology, product and market development to drive sustained growth and increased profitability
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CONTACT INFORMATION
2015 Investor Presentation 59
DMC 5405 Spine Road Boulder, Colorado 80301, USA T 800-821-2666
Geoff High Director of Investor Relations E [email protected] T 303-514-0656
Contact Primary Contact
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APPENDIX: USE OF NON-GAAP FINANCIAL MEASURES
1/7/15 Presentation Title 60
APPENDIX: USE OF NON-GAAP FINANCIAL MEASURES
à DMCGlobal.com 60 2015 Investor Presentation