Dynamic Materials Reports Second Quarter 2004 Financial Results
BOULDER, Colo., Aug. 12 /PRNewswire-FirstCall/ -- Dynamic Materials
Corporation, (NASDAQ:BOOM), "DMC", today reported second quarter
income from continuing operations of $564,931, or $.11 per diluted
share, versus income from continuing operations of $597,226, or
$.12 per diluted share, for the second quarter of 2003. DMC's
second quarter 2004 sales were $11,985,085, a 29% increase from
second quarter 2003 sales of $9,256,393. For the six months ended
June 30, 2004, DMC reported income from continuing operations of
$972,391, or $.19 per diluted share, versus income from continuing
operations of $1,009,735, or $.20 per diluted share, for the first
six months of 2003. Reported sales for the first six months of 2004
increased by 29% to $22,145,213 from $17,206,055 for the comparable
period of 2003. For the three months ended June 30, 2004, DMC
reported a net loss of $504,988, or $.10 per diluted share, as
compared to net income of $395,408, or $.08 per diluted share, for
the second quarter of 2003. For the six months ended June 30, 2004,
DMC reported a net loss of $296,773, or $.06 per diluted share,
versus net income of $549,113, or $.11 per diluted share, for the
first six months of 2003. The net loss for the three and six months
ended June 30, 2004 reflects a loss from discontinued operations of
$1,069,919, or $.21 per diluted share, and $1,269,164, or $.25 per
diluted share, respectively, including operating losses of $450,919
and $650,164 for the respective periods and an asset impairment
loss of $619,000 associated with the Company's decision to divest
of its Spin Forge division in El Segundo, California. The net loss
for the three and six months ended June 30, 2003 included losses
from discontinued operations of $201,818, or $.04 per diluted
share, and $460,622, or $.09 per diluted share, respectively,
relating to the combined 2003 operating losses of Spin Forge and
the former Precision Machined Products ("PMP") division, which was
sold on October 7, 2003. Explosive Metalworking Group Performance
DMC's Explosive Metalworking Group reported second quarter 2004
sales of $11,426,038, a 35% increase from sales of $8,478,766 for
the second quarter of 2003. For the three months ended June 30,
2004 and 2003, the Group reported income from operations of
$1,031,749 and $900,509, respectively. Group sales for the six
months ended June 30, 2004 were $21,086,472, an increase of 34%
from sales of $15,751,797 for the first six months of 2003. The
Group reported income from operations of $1,867,306 and $1,577,141
for the six months ended June 30, 2004 and 2003, respectively. The
18% increase in year-to-date operating income did not keep pace
with the 34% increase in sales due to lower gross margin levels
resulting from product mix changes and price competition in certain
markets and modest increases in operating expense levels. The
Explosive Metalworking Group's backlog, which had increased from
$11.7 million at the end of 2003 to $17.3 million as of March 31,
2004, increased further to $21.1 million as of June 30, 2004 and
should result in the Group reporting stronger sales and operating
income during the second half of 2004 than that reported for the
first six months of the year. Spin Forge Divestiture During the
second quarter, DMC reached a decision to divest of its Spin Forge
division under a plan that involves subleasing the Spin Forge real
estate and leasing the manufacturing equipment and tooling to a
third party. The division's inventory would be sold to this third
party who would also assume full responsibility for Spin Forge
business activities and operating expenses. With respect to the
Spin Forge manufacturing equipment and tooling, DMC recorded an
after tax impairment loss of $619,000 in its June 30, 2004
financial statements based upon the difference between the current
carrying value of the equipment and the present value of the future
minimum equipment lease payments from the third party plus
estimated liquidation proceeds at the end of the minimum lease
term. The Company holds a purchase option on the Spin Forge real
estate that allows it to purchase the real estate for $2,880,000, a
price that is significantly below the real estate's recently
appraised value. As part of the proposed divestiture transaction,
DMC will maintain control of the real estate purchase option but
the third party will have the option, through August 1, 2005, to
receive an assignment of the primary lease and real estate purchase
option from DMC for such reasonable consideration as the parties
may mutually agree. The value inherent in the real estate purchase
option is believed to be significant but was not considered in the
calculation of the reported impairment loss on the Spin Forge
equipment and tooling due to uncertainties surrounding its ultimate
realization. AMK Welding Performance Historically, DMC's Aerospace
Group was comprised of the AMK Welding ("AMK"), Spin Forge and PMP
divisions. Since PMP and Spin Forge are now reported as
discontinued operations due to the 2003 sale of PMP and the planned
divestiture of Spin Forge in 2004, the Aerospace Group no longer
exists and AMK is now being reported as a standalone business
segment. AMK contributed $559,047 to sales in the second quarter of
2004, a decrease of 28% from reported sales of $777,627 in the
second quarter of 2003. For the six months ended June 30, 2004,
AMK's sales decreased by 27% to $1,058,741 from the $1,454,258 in
sales that AMK posted for the comparable period of 2003. AMK
reported an operating loss of $34,311 for the six months ended June
30, 2004 compared to operating income of $355,373 for the first six
months of 2003. For the three months ended June 30, 2004 and 2003,
AMK reported operating income of $18,531 and $215,621,
respectively. AMK sales and operating results have declined as a
result of less development work during 2004 on a new product that
AMK's customer has experienced delays in transitioning from a
development phase into production. In commenting upon the Company's
second quarter 2004 results, Yvon Cariou, DMC's President and CEO,
stated, "While Explosive Metalworking Group gross margin levels
during the first half of 2004 were somewhat below our expectations,
the Group enters the second half of 2004 with a record backlog and
should report significant improvement in sales and operating income
during this period. Cariou continued, "AMK Welding, whose prospects
for 2005 and beyond appear to be excellent as its customer's new
product goes into production and demand for commercial and military
aircraft engines continues to improve, is expected to show modest
improvement in its sales and operating income during the remainder
of 2004. In conclusion, Cariou stated, "We look forward to
completing the divestiture of Spin Forge during the third quarter
so that the DMC management team can devote its full attention to
the Company's continuing operations." Except for the historical
information contained herein, this news release contains
forward-looking statements that involve risks and uncertainties
including, but not limited to, the following: the ability to obtain
new contracts at attractive prices; the size and timing of customer
orders; fluctuations in customer demand; competitive factors; the
timely completion of contracts; the timing and size of
expenditures; the timely receipt of government approvals and
permits; the adequacy of local labor supplies at the Company's
facilities; the availability and cost of funds; and general
economic conditions, both domestically and abroad; as well as the
other risks detailed from time to time in the Company's SEC
reports, including the report on Form 10-K for the year ended
December 31, 2003. Based in Boulder, Colorado, Dynamic Materials
Corporation is a leading metalworking company, and its products
include explosion bonded clad metal plates and other metal
fabrications for the petrochemical, chemical processing, power
generation, commercial aircraft, defense and a variety of other
industries. For more information on Dynamic Materials Corporation
visit the Company's web site at http://www.dynamicmaterials.com/
DYNAMIC MATERIALS CORPORATION & SUBSIDIARY CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND
2003 (unaudited) Three months ended Six months ended June 30, June
30, 2004 2003 2004 2003 NET SALES $11,985,085 $9,256,393
$22,145,213 $17,206,055 COST OF PRODUCTS SOLD 9,098,241 6,634,587
16,931,035 12,322,822 Gross profit 2,886,844 2,621,806 5,214,178
4,883,233 COSTS AND EXPENSES: General and administrative expenses
895,911 733,175 1,684,498 1,449,259 Selling expenses 940,653
772,501 1,696,685 1,501,560 Total costs and expenses 1,836,564
1,505,676 3,381,183 2,950,819 INCOME FROM OPERATIONS 1,050,280
1,116,130 1,832,995 1,932,414 OTHER INCOME (EXPENSE): Other income
(expense), net 2,399 (3,879) 7,042 37 Interest expense (110,511)
(131,304) (234,022) (275,012) Interest income 7,448 287 11,619
1,628 INCOME BEFORE INCOME TAXES 949,616 981,234 1,617,634
1,659,067 INCOME TAX PROVISION 384,685 384,008 645,243 649,332
INCOME FROM CONTINUING OPERATIONS 564,931 597,226 972,391 1,009,735
DISCONTINUED OPERATIONS: Loss from operations of discontinued
operations, net of tax benefit (450,919) (201,818) (650,164)
(460,622) Loss on impairment of assets associated with discontinued
operations, net of tax benefit (619,000) -- (619,000) -- Loss from
discontinued operations (1,069,919) (201,818) (1,269,164) (460,622)
NET INCOME (LOSS) $(504,988) $395,408 $(296,773) $549,113 NET
INCOME (LOSS) PER SHARE - BASIC AND DILUTED: Income from continuing
operations $0.11 $0.12 $0.19 $0.20 Loss from discontinued
operations (0.21) (0.04) (0.25) (0.09) Net Income (loss) $(0.10)
$0.08 $(0.06) $0.11 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING -
Basic 5,106,912 5,061,390 5,098,231 5,061,390 Diluted 5,192,276
5,077,351 5,180,286 5,078,785 DATASOURCE: Dynamic Materials
Corporation CONTACT: Richard A. Santa, Vice President and Chief
Financial Officer of Dynamic Materials Corporation, +1-303-604-3938
Web site: http://www.dynamicmaterials.com/
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