investor presentation november 2017 - amazon s3 · acquisi9ons group • experse in securies law,...

© 2015 DMC. All rights reserved. INGENUITY IN ACTION.

Investor Presentation November 2017

DMCGlobal.com2017InvestorPresenta9on

CAUTIONARYSTATEMENTREGARDINGFORWARD-LOOKINGINFORMATION

2

Thispresenta9oncontains,andtheCompanymayfrom

9meto9memake,wriDenororal"forward-looking

statements"withinthemeaningofSec9on27Aofthe

Securi9esActof1933,asamended,andSec9on21Eof

theSecuri9esExchangeActof1934,asamended.These

statementsincludeinforma9onwithrespecttoour

financialcondi9onandresultsofopera9ons,our

expecta9onsregardingtheoilandgasmarket,

DynaEnerge9csgrowthini9a9ves,NobelClad’sgrowth

ini9a9ves,andDMC’stenetstoguideshareprice

performance.Wordssuchas"an9cipates,""expects,"

"intends,""plans,""believes,""seeks,""es9mates,"

"may,""will,""con9nue,""project"andsimilar

expressions,aswellasstatementsinthefuturetense,

iden9fyforward-lookingstatements.

Theseforward-lookingstatementsarenotguaranteesof

ourfutureperformanceandaresubjecttorisksand

uncertain9esthatcouldcauseactualresultstodiffer

materiallyfromtheresultscontemplatedbythe

forward-lookingstatements.Theserisksand

uncertain9esinclude,butarenotlimitedto:

Seecolumntotheright>

•TheabilitytoobtainnewcontractsataDrac9veprices;•Ourabilitytorealizesalesfrombacklog;•Productpricingandmargins•Thesizeand9mingofcustomerorders;•Fluctua9onsincustomerdemand;•Compe99vefactors;•The9melycomple9onofcontracts;•Theavailabilityandpriceofmetalandotherrawmaterial;•Currentorfuturelimitsonmanufacturingcapacity;•Theadequacyoflocallaborsuppliesatourfacili9es;•Theavailabilityandcostoffunds;•Generaleconomiccondi9ons,bothdomes9callyandabroad;•Theoutcomeofongoingli9ga9onandregulatorymaDers;•Thecyclicalityofourbusinesses;and•Fluctua9onsinforeigncurrencies.

Theeffectsofthesefactorsaredifficulttopredict.Newfactorsemergefrom9meto9meandwecannotassessthepoten9alimpactofanysuchfactoronthebusiness

ortheextenttowhichanyfactor,orcombina9onoffactors,maycauseresultstodiffermateriallyfrom

thosecontainedinanyforward-lookingstatement.Anyforward-lookingstatementspeaksonlyasofitsdate

andwedonotundertakeanyobliga9ontoupdateanyforward-lookingstatementtoreflecteventsor

circumstancesa_erthedateofsuchstatementortoreflecttheoccurrenceofunan9cipatedevents.In

addi9on,see"RiskFactors"foradiscussionoftheseandotherfactors.

YouareencouragedtoreadtheSECreportsofDMC,

par9cularlyitsForm10-KfortheFiscalYearEndedDecember31,2016formeaningfulcau9onarylanguage

disclosingwhyactualresultsmayvarymateriallyfromthosean9cipatedbymanagement.

DMCGlobal.com

DMCisadiversifiedtechnologycompany.Wearefocusedongrowingourcompanybyinves9nginpeople,productsandbusinessesthatservenicheglobalmarkets.Today,ourpordolioconsistsofNobelCladandDynaEnerge9cs,whichaddresstheindustrialprocessing,transporta9onandenergy

marketsthroughglobalmanufacturing,salesanddistribu9onnetworks.

2017InvestorPresenta9on 3

OURSTORY

DMCGlobal.com

SELECTDATA

BOOM$11.60–$23.2748,333$320Million14.8Million14.0MillionDecember31$0.02$178.5Million$17.0Million


Symbol(NasdaqGS):52-weekpricerange:Averagedailyvolume:Marketcapitaliza9on:Sharesoutstanding:Approximatefloat:Fiscalyear:Quarterlydividend:Revenue(Dm):AdjustedEBITDA*(Dm)

BOOM1-YearPrice&Volume

*Non-GAAPfinancialmeasure

DMCGlobal.com

2016

(58%)

$67.3(42%)

$91.3

REVENUEBYBUSINESS

2017InvestorPresenta9on

5

9M2017

(39%)

$84.2(61%)

NobelCladDynaEnerge9cs

$inmillions

$54.1

5

DMCGlobal.com

DMCEXECUTIVELEADERSHIP


KEVINLONGE•  NamedPresident,CEOandDirectorinMarch2013

•  JoinedDMCasCOOinJuly2012

•  FormerVPandandGMofSonoco's$600millionProtec9vePackagingdivision

•  FormerPresidentofSonoco'sThermoSafeBrands

•  Oversawglobalsales,marke9ng,engineeringandR&Dforthelifesciences,medical,foodandindustrialdurablesmarkets

•  OversaweightmanufacturingcentersintheU.S.,EuropeandAsia

•  FormerPresidentofthreeopera9ngdivisionsatLydall,Inc.(NYSE-LDL)

President&CEO MICHAELKUTA•  JoinedDMCasCFOinMarch2014

•  FormerCorporateControlleratBerkshireHathaway’sLubrizolCorpora9on,aglobal,$6billionspecialtychemicalscompany

•  Wasresponsibleforbuildingandmanagingfinancialopera9onsforLubrizol’sdisbursedglobalopera9ons,includingaccoun9ng,consolida9onandfinancialrepor9ngfunc9ons,andoversightofinternalcontrols

•  Formerfinancialposi9onsofincreasingresponsibilityatLincolnElectricandEatonCorpora9on

CFO MICHELLESHEPSTON•  JoinedDMCin2016a_er16yearswithDenver-basedDavisGraham&StubbsLLP

•  WasapartnerwithDGS,andprac9cedwiththeCorporateFinanceandAcquisi9onsGroup

•  Exper9seinsecuri9eslaw,mergers&acquisi9ons,crossborderdebt&equitytransac9ons,contractnego9a9onandexecu9on

•  Industryexper9seincludesenergyandnaturalresources

CLO GEOFFHIGH•  JoinedDMCinNovember2014a_er21yearswithDenver-basedPfeifferHighInvestorRela9ons,Inc.

•  FormerpartnerwithPfeifferHigh;oversawsmall-capandmid-cappublic-companyaccountsacrossmul9pleindustries.ManagedtheDMCGlobalaccountfor10years

•  Exper9seinins9tu9onal,analystandretailinvestorrela9ons;shareholderanalysisandtarge9ng;IRstrategydevelopmentandimplementa9on

•  Industryexper9seincludesoil&gasandindustrialinfrastructure

VP,IR

DMCGlobal.com

LEADERSHIPTEAM


IANGRIEVESPresident,DynaEnerge9cs•  JoinedDynaEnerge9csin2013•  20yearsofdiverseopera9onal,engineering,financeandmanagementexperiencewithinterna9onalindustrialbusinesses

•  PreviouslySeniorVicePresidentofLydall,Inc.’sPerformanceMaterialsdivision

JOHNSCHEATZLEPresident,NobelClad•  JoinedDMCin2016a_er19yearswithadvancedmaterialsmanufacturerMaterion

•  AsVicePresidentandGeneralManagerofMaterion’sPerformanceAlloysdivision,wasresponsibleformul9pleNorthAmericanproduc9onfacili9esandinterna9onalsalesanddistribu9oncenters

•  FormerGeneralManagerofMaterion’sCeramicProductsdivision

BINZHANGManagingDirector,China,DMC•  ResponsibleforChinesebusinessdevelopmentandmarketposi9oningforNobelCladandDynaEnerge9cs

•  Na9veofBeijingwith20yearsofseniorlevelbusinessexperience

•  EstablishedanAsiaPacificsalesandmarke9ngpresenceforaSheldahl,Inc.,aspecializedmanufacturerbasedinMinnesota

DMCGlobal.com

DMCempowersitspeopleandorganiza9onsbyins9tu9onalizingentrepreneurshipandcelebra9ngtechnicalingenuity.Ourgrowthisfueledbyenergized,relevantandnimblyexecutedsolu9onsthatmakearealdifferencetoourcustomers.DMC’sresponsiveorganiza9onsarefocusedon

servingtheworld’sgrowthmarkets,givinginvestorshighreturnsthroughoutvaryingeconomiccycles.


OURCULTURE

DMCGlobal.com

CHAPTER&PAGETITLEHERE


REPRESENTATIVE:NAME&POSITIONHERE

DMCGlobal.com

DYNAENERGETICSOVERVIEW


Atop-9erproviderofcompa9bilitytestedperfora9ngsystems.

AcquiredbyDMCin2007asnewpladormbusiness

Unmatchedglobalreachservingaworldwidenetworkofoilandgasserviceproviders

Reputa9onforproductsafety,technicalinnova9onandsystemreliabilityunderextremeenvironmentalcondi9ons

Perfora9ngandwell-comple9ontechnologiesdriveimprovedsafety,produc9vityandloweropera9ngcostsforcustomers

DMCGlobal.com 112017InvestorPresenta9on

DYNAENERGETICSPERFORMANCE

$inmillions

105.5

76.9 67.3

50.0

84.2

$0

$20

$40

$60

$80

$100

$120

2014 2015 2016 20169m 20179m

Sales


1

1

22.4

8.1

2.5

3.2

14.5

$0

$5

$10

$15

$20

$25

2014 2015 2016 20169m 20179m

AdjustedEBITDA*

DMCGlobal.com

PERFORATINGBASICS


1.  Onceawellboreisdrilledandcementandsteelcasingareinplace,aperfora9nggunisdeployedintothewell.

2.  Theperfora9nggunisfired,sendingplasmajetsthroughthecasingandintothesurroundingforma9oncrea9ng“perfora9ontunnels.”

3.  Oilorgasflowsthroughtheperfora9ontunnelsandintothewell.

DMCGlobal.com 13

PRIMARYCOMPONENTSOFAPERFORATINGSYSTEM


DynaEnerge4csistheonlycompanymanufacturingallcomponentsofaperfora4ngsystem

01SHAPEDCHARGES 02DETONATORS 03DETONATINGCORD

04GUNCARRIERS&“SUBS” 05CONTROLPANELS

DMCGlobal.com 14

DynaStage™Perfora9ngSystem•  Factoryassembled,performanceassured

•  IncorporatesDynaSelectintrinsicallysafe

detona9ngtechnology

•  Nowiringconnec9ons…reducesset-up9meto

seconds

•  Removesthepoten9alforelectricalconnec9on

errors

•  Eliminatesgunloadingsteps

•  Fullydisposableandmaintenancefree

DynaSelect™Detonators•  Integrated,intrinsicallysafe&selec9ve

technologies

•  Enablesconcurrentperfora9ngandfracturing

•  Reducestheriskofaccidents

•  Timeandcostsavingsfromsequen9algun

ini9a9on

•  Improvedset-up9mesandreliabilityfrom

fewerelectricalwiringconnec9ons

01 02

DYNAENERGETICSPRODUCTINNOVATIONS


DynaSlot™WellAbandonmentSystem•  Fast,cost-effec9vealterna9vetotradi9onalplug

andabandonment,and“cementsqueeze”

techniques

•  HelicalpaDernofoverlappinghorizontalslots

provides360-degreecementcoveragebehind

tubingorcasing

03

DMCGlobal.com

3-3/8”

3-1/8”

2-3/4”

DYNASTAGE™GUNSYSTEM


*patentspendingTopFireDynaSelect

Detonator*Mul9tronicVFiringPanel

ThreeStageGunStringwithBridgePlug

DynaStageGunModule*

EcoilTandemSubAdapterQuickChangeGO-StyleFiringHead

TopFireDynaSelectDetonator

DMCGlobal.com

DYNASELECT™ANDDYNASTAGE™PROVIDEBUSINESSMODELADVANTAGE


CURRENTINDUSTRYMODEL DYNAENERGETICSMODEL:PRODUCTBENEFITS+BUSINESSMODELADVANTAGE

DynaStageAdvantages•  Factoryassembledanddeliveredtocustomerinthefield•  Systemisarmeduponinstalla9onofDynaStageswitchdetonator,elimina9ngfieldwiring•  Surfacetesterensuressystemisfullyfunc9onalbeforedown-holedeployment

Benefits:•  Nomisfires,improvedreliability•  Reducedtransporta9oncostsandfieldlabor•  Noneedforgunassemblyorstoragefacili9es•  Simplifiedsupplychain•  Reducedworkingcapital,improvedprofitabilityforcustomers

CurrentProcessCustomermixes&matchesperfora9ngcomponentsfrommul9plesuppliers,thenassemblesandwiresguninthefield

Challenges:•  Assemblyerrorsleadtomisfires•  Quality&safety•  Opera9ngcost•  Complexityofsupplychain

16

DMCGlobal.com

DYNASTAGECASESTUDY:PATRIOTWELLSOLUTIONS


Advancedwelldesigncalledfor15perfora9ngsystemsineach“gunstring,”3-9mestheindustryaverage

DynaStagereducedgun-stringassembly9mebymorethan80%–from1.25hourstoapproximately13minutes–versusconven9onalgunsDynaStageenableda40%increaseincompletedstagesperdayFailureseffec9velyeliminated–Patriotdeployed8,500DynaStagesystemswithoutamis-runGun-stringlengthreducedby17.5feet,or30%,versusconven9onalguns.Weightcutby400lbs,or40%.Comple9onteamsreducedfrom15to11membersPatriot’ssupplychainsimplified;vendorsreducedfrom3to1

DynaStagewasadoptedbyPatriotWellSolu9onsinApril2017toaddressacomplex42-wellcomple9onprogramintheD-JBasin.

DMCGlobal.com

DYNAENERGETICSCAPITALIZINGONINDUSTRYTRANSITION

•  A_erahistoricdownturnintheenergyindustry,arecoveryhastakenholdintheonshoreunconven9onalmarket.Morecostlyoffshoreanddeepseadrillinghasbeenslowertorebound.

•  SpendingonNorthAmericanupstreamprojects,includingunconven9onaldrillingandwellcomple9ons,isexpectedtogrow38%in2017,whileinterna9onaloffshorespendingisexpectedtofall20%-25%in2017.

18

38%1

-23%2

-30%

-20%

-10%

0%

10%

20%

30%

40%

N.A. Upstream

Global Offshore

1 Oil & Gas Journal 2 Barclays

0

200

400

600

800

1000

1200

1400

1600

Q314Q414Q115Q215Q315Q415Q116Q216Q316Q416Q117Q217Q317

U.S.LandRigCount GlobalOffshoreRigCount 2017InvestmentForecast


-

200

400

600

800

1,000

1,200

1,400

1,600

11/26/2014

1/26/2015

3/26/2015

5/26/2015

7/26/2015

9/26/2015

11/26/2015

1/26/2016

3/26/2016

5/26/2016

7/26/2016

9/26/2016

11/26/2016

1/26/2017

3/26/2017

5/26/2017

7/26/2017

9/26/2017

Horizontal Directional Vertical

Source: Baker Hughes

DMCGlobal.com

NORTHAMERICANUNCONVENTIONALMARKETLEADINGRECOVERY

19

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Non-U.S.wells N.A.Unconven9onal N.A.Conven9onal GlobalOffshore

2016

2017*

+52%

+6%

+2%

+1%

* World Oil and IHS forecasts

Forecastofwellsdrilled


DMCGlobal.com

IMPROVEDECONOMICSOFUNCONVENTIONALOILANDGASPRODUCTION

20

85

63

56

75

5851

4743

51

373833 35

3932

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

PermianMidland PermianDelaware Niobrara EagleFord Bakken

2014 2015 2016

WellheadBreakevenPricesbyU.S.OnshorePlay$/Boe

Source:RystadEnergyNASWellCube&NASReport


DMCGlobal.com 21

DYNAENERGETICS SALES BY GEOGRAPHY

2016Sales

UnitedStates/61%

Canada/13%

India/7%

Russia/5%

Egypt/3%

Ukraine/1%

Romania/1%

RestofWorld/9%


DMCGlobal.com

SELECTENDUSERS

22

Thesemajorenergyservicecompaniesarebothcompe9torsandcustomers.Whendistribu9onlimita9onsinhibitthesecompanies’abilitytosupplyperfora9ngequipmenttocertaininterna9onalloca9ons,theyo_enturntoDynaEnerge9cs.

*


* *

* *

DMCGlobal.com

DYNAENERGETICSGROWTHINITIATIVES


•  ExpandmanufacturingandassemblycapacityinNorthAmericaandEurope

•  Con9nuetoinvestinresearchanddevelopmentofnext-genera9ontechnologies

•  Con9nuelaunchingnewproductsthatimprovecustomeropera9ngefficienciesanddrivedowncosts

•  Innovatecomprehensivesolu9onsthatmeetan9cipatedmarketdemand

DMCGlobal.com2017InvestorPresenta9on 24

DMCGlobal.com

NOBELCLADOVERVIEW

25

NobelCladistheworldwideleaderinexplosionweldedplateproduc9on.

LargestglobalsupplierofexplosioncladplatesServingadiversifiedrosterofindustrialandinfrastructureendmarkets.Workingtodriveengineeringspecifica9onsforcladProfi9ngfromglobalindustrialinfrastructureinvestmentsStrongfreecashflow


DMCGlobal.com

97.1 90.0

91.3

68.4

54.1

$0

$20

$40

$60

$80

$100

$120

2014 2015 2016 20169m 20179m

Sales

NOBELCLAD’SPERFORMANCE


$inmillions

15.4

10.7

12.9

9.3

6.2

$0

$5

$10

$15

$20

$25

2014 2015 2016 20169m 20179m

AdjustedEBITDA*


DMCGlobal.com

ENGINEERINGPROCUREMENT&CONSTRUCTION(EPC)COMPANYBACKLOGINDEX

11/10/172017InvestorPresenta9on 27

InM illions o fUS D CummulativeCompanyBac klog -Index

66,790 74,437

*Quartertoquartergrow thratefor3Q17**Y eartoY eargrow thratefor3Q17

3Q17 2Q17* 3Q16**

Total

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

The EPC Backlog Index is a cummulative summary of the backlog for f ive global companies that report quarterly backlog.

Company HeadquartersTechnipFMC LondonFluor USAKBR USAJacobs USASaipem Italy

DMCGlobal.com

2016Sales:$91.3Million

UnitedStates/42%

Canada/8%

UnitedArabEmirates/7%

China/7%

Germany/6%

France/4%

Australia/3%

Italy/3%

RestofWorld/20%


NOBELCLADSALESBYGEOGRAPHY

DMCGlobal.com

EXPLOSIONWELDINGPROCESS


DMCGlobal.com

DEMANDDRIVERSFOREXPLOSIONWELDING

30

03DesignFlexibility

02CorrosiveEnvironments

01GlobalInfrastructureInvestment


DMCGlobal.com

NOBELCLAD’SCOMPETITIVEADVANTAGE


•  Globalnetworkofspecialtymetalsproviders

•  Permitsandshoo9ngsitesinU.S.,France,andGermany

•  Masteryofexplosion-weldingprocessforlarge-scaleproduc9on

•  Strongworkingrela9onshipswithend-marketcustomers

NobelClad’sleadershipposi9onintheexplosionweldingindustryisprotectedbysignificantbarrierstoentry.

Titaniumcladpressurevessels–imagecourtesyofCoekEngineering.

DMCGlobal.com

NOBELCLADGROWTHINITIATIVES


•  ExpandingmarketshareinAsia

•  R&Dfocusedonnewcladplateapplica9ons

•  Applyingprocessexper9setonewmarketdevelopment

•  Strengtheningglobalsalesforcewithaddi9onofend-marketexperts

•  Expandingproduc9oncapabili9eswithnewEuropeanmanufacturingfacility

Separa9ngequipment–Anaturalgasproduc9onfacilitywhereNobelClad’sexplosionweldedplateswereusedinthefabrica9onofspecializedpipes.

DMCGlobal.com

PRIMARYENDMARKETSSERVED


•  Chemical

•  OilandGas

•  MetalsandMining

•  Marine

•  PowerGenera9on

•  Alterna9veEnergy

•  IndustrialRefrigera9on

•  Transporta9on

•  DefenseandProtec9on

DMCGlobal.com

SELECTENDUSERS

34

Chemicals Refining Mining Engineering


NobelCladprovidesvaluetoitsindustrialandinfrastructurecustomersbycollabora9ngateverystageofdevelopment.Duringdesignphases,NobelCladisakeyresourceforprocessarchitectsandengineerswhoo_enwriteNobelCladplatesintotheirmanufacturingspecifica9ons.

DMCGlobal.com

FINANCIALPERFORMANCEREVIEW


($MMexceptpershareamounts) 2014 2015 2016 169M 179M

Sales%growth

$202.60%

$166.9-18%

$158.6-5%

$118.4-5%

$138.317%

GrossProfit%margin

$61.430%

$35.621%

$38.724%

$28.824%

$41.530%

Opera9ngProfit(Loss)*%margin

$14.77%

($0.0)0%

($5.2)-3%

($2.1)-2.4%

($5.3)-3.8%

Income(Loss)fromCon9nuingOpera9ons(a_ertax)* $7.9 ($8.0) ($5.5) ($2.8) ($0.9)

DilutedEPSfromCon9nuingOpera9ons* $0.57 ($0.57) ($0.39) ($0.24) ($0.06)

AdjustedEBITDA*%margin

$31.516%

$13.18%

$9.06%

$7.56%

$15.511%

*Non-GAAPfinancialmeasures

1

DMCGlobal.com

BALANCESHEETHIGHLIGHTS


Assets($MM) December31,2016 September30,2017

Cash,cashequivalents $6.4 $8.9

Accountsreceivables,net $33.0 $45.4

Inventory $28.8 $31.5

Totalcurrentassets $73.4 $91.1

Totalassets $162.6 $164.9

Liabili9es($MM)

Totalcurrentliabili9es $30.7 $33.0

Linesofcredit $15.7 $22.0

Long-termdebt $0.0 $0.0

Totalliabili9es $50.1 $58.6

Totalstockholders’equity $112.4 $106.3

Totalliabili9esandstockholders’equity $162.6 $165.0

DMCGlobal.com

DMC’SPERFORMANCETENETS


Throughshareownership,DMCmanagementhascloselyaligneditsinterestwithindependentshareholders,andallmanagementdecisionsaremadetomaximizeshareholdervalue.

DMChasadoptedthreetenetstoguidesuperiorsharepriceperformance:

1.  Maximizefreecashflowthroughfinancialdiscipline

2.  Maximizereturnoninvestedcapitalbyachievingopera9onalexcellenceandmakingdiscerninginvestmentdecisions

3.  Investinnewtechnology,productandmarketdevelopmenttodrivesustainedgrowthandincreasedprofitability

DMCGlobal.com

CONTACTINFORMATION


DMC5405SpineRoadBoulder,Colorado80301,USAT800-821-2666

GeoffHighVicePresidentofInvestorRela9onsEghigh@dmcglobal.comT303-514-0656

Contact PrimaryContact

DMCGlobal.com

APPENDIX:USEOFNON-GAAPFINANCIALMEASURES

11/10/17Presenta9onTitle 39

APPENDIX:USEOFNON-GAAPFINANCIALMEASURES

DMCGlobal.com 392017InvestorPresenta9on

AdjustedEBITDAanddilutedEPSarenon-GAAP(generallyacceptedaccoun9ngprinciples)financialmeasuresusedbymanagementtomeasureopera9ngperformance.Non-GAAPresultsarepresentedonlyasasupplementtothefinancialstatementsbasedonU.S.generallyacceptedaccoun9ngprinciples(GAAP).Thenon-GAAPfinancialinforma9onisprovidedtoenhancethereader'sunderstandingofDMC’sfinancialperformance,butnonon-GAAPmeasureshouldbeconsideredinisola9onorasasubs9tuteforfinancialmeasurescalculatedinaccordancewithGAAP.Reconcilia9onsofthemostdirectlycomparableGAAPmeasurestonon-GAAPmeasuresareprovidedwithintheschedulesaDachedtothisrelease.EBITDAisdefinedasnetincomeplusorminusnetinterestplustaxes,deprecia9onandamor9za9on.AdjustedEBITDAexcludesfromEBITDAstock-basedcompensa9on,restructuringandimpairmentchargesand,whenappropriate,otheritemsthatmanagementdoesnotu9lizeinassessingDMC’sopera9ngperformance(asfurtherdescribedintheaDachedfinancialschedules).Noneofthesenon-GAAPfinancialmeasuresarerecognizedtermsunderGAAPanddonotpurporttobeanalterna9vetonetincomeasanindicatorofopera9ngperformanceoranyotherGAAPmeasure.

Managementusesthesenon-GAAPmeasuresinitsopera9onalandfinancialdecision-making,believingthatitisusefultoeliminatecertainitemsinordertofocusonwhatitdeemstobeamorereliableindicatorofongoingopera9ngperformance.

Asaresult,internalmanagementreportsusedduringmonthlyopera9ngreviewsfeaturetheadjustedEBITDA.Inaddi9on,certainmanagementincen9veawardswerebased,inpart,ontheamountofadjustedEBITDAachievedduringtheyear.Managementalsobelievesthatinvestorsmayfindnon-GAAPfinancialmeasuresusefulforthesamereasons,althoughinvestorsarecau9onedthatnon-GAAPfinancialmeasuresarenotasubs9tuteforGAAPdisclosures.EBITDAandadjustedEBITDAarealsousedbyresearchanalysts,investmentbankersandlenderstoassessopera9ngperformance.Forexample,ameasuresimilartoEBITDAisrequiredbythelendersunderDMC’screditfacility.Becausenotallcompaniesuseiden9calcalcula9ons,DMC’spresenta9onofnon-GAAPfinancialmeasuresmaynotbecomparabletoothersimilarly9tledmeasuresofothercompanies.However,thesemeasurescans9llbeusefulinevalua9ngthecompany’sperformanceagainstitspeercompaniesbecausemanagementbelievesthemeasuresprovideuserswithvaluableinsightintokeycomponentsofGAAPfinancialdisclosures.Forexample,acompanywithgreaterGAAPnetincomemaynotbeasappealingtoinvestorsifitsnetincomeismoreheavilycomprisedofgainsonassetsales.Likewise,elimina9ngtheeffectsofinterestincomeandexpensemoderatestheimpactofacompany'scapitalstructureonitsperformance.

Alloftheitemsincludedinthereconcilia9onfromnetincometoEBITDAandadjustedEBITDAareeither(i)non-cashitems(e.g.,deprecia9on,amor9za9onofpurchasedintangiblesandstock-basedcompensa9on)

or(ii)itemsthatmanagementdoesnotconsidertobeusefulinassessingDMC’sopera9ngperformance(e.g.,incometaxes,restructuringandimpairmentchargesandgainonsaleofassets).Inthecaseofthenon-cashitems,managementbelievesthatinvestorscanbeDerassessthecompany’sopera9ngperformanceifthemeasuresarepresentedwithoutsuchitemsbecause,unlikecashexpenses,theseadjustmentsdonotaffectDMC'sabilitytogeneratefreecashfloworinvestinitsbusiness.Forexample,byadjus9ngfordeprecia9onandamor9za9onincompu9ngEBITDA,userscancompareopera9ngperformancewithoutregardtodifferentaccoun9ngdetermina9onssuchasusefullife.Inthecaseoftheotheritems,managementbelievesthatinvestorscanbeDerassessopera9ngperformanceifthemeasuresarepresentedwithouttheseitemsbecausetheirfinancialimpactdoesnotreflectongoingopera9ngperformance.Wehavealsopresentedcertainfinancialmeasuresexcludingcertainone-9me,non-recurring“specialitems,”includingouraccruedan9-dumpingdu9es,inventoryreserveadjustment,thenon-cashgoodwillimpairmentchargeandrestructuringcharges.Thesearenon-GAAPfinancialmeasureswhenthespecialitemsareexcluded.Webelievetheseareimportantsupplementalmeasuresbecausetheyeliminateone-9me,non-recurringitemsthathavelessbearingonouropera9ngperformanceandsohighlighttrendsinourbusinessthatmaynototherwisebeapparentwhenrelyingsolelyonGAAPfinancialmeasures.Wehavequan9fiedthosespecialitemsearlierinthisrelease,orimmediatelyfollowing,thefinancialmeasuresthatexcludedthespecialitems,toallowreaderstomeasuretheirimpact.

DMCGlobal.com

RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS–DYNAMICMATERIALSEBITDAANDADJUSTEDEBITDA


($MMexceptpershareamounts) 2014 2015 2016 169M 179M

Netincome(loss)aDributabletoDMC $2.6 $(24.0) $(6.5) $(4.3) $(16.9)

Incomefromdiscon9nuedopera9ons $(0.6) — — — —

Interestexpense $0.6 $1.7 $1.1 $0.8 $1.2

Interestincome $0.0 $0.0 $0.0 $0.0 $0.0

Incometaxprovision(benefit) $3.9 $(2.1) $0.8 $0.3 $2.0

Deprecia9on $7.1 $6.2 $6.8 $5.0 $5.0

Amor9za9on $6.1 $4.0 $4.0 $3.0 $3.0

EBITDA $19.7 $(14.1) $6.2 $4.9 $(5.7)

Restructuring $6.8 $4.1 $1.2 $1.2 $0.5

Accruedan9-dumpingdu9es — $6.2 — — —

Goodwillimpairmentcharges — $11.5 — — $17.6

DynaEnerge9csinventoryreserves $1.3 $1.9 — — —

Stock-basedcompensa9on $3.6 $2.8 $2.3 $1.6 $2.1

Other(income)expense,net $0.3 $0.7 ($0.6) ($0.2) $1.0

AdjustedEBITDA $31.7 $13.0 $9.1 $7.5 $15.5

DMCGlobal.com

RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DILUTEDEPSFROMCONTINUINGOPERATIONS


($MMexceptpershareamounts) Pre-tax Tax Net DilutedEPS

YearendedDecember31,2014

Netincomefromcon9nuingopera9ons,asreported $13.9 $6.0 $(7.9) $(0.57)

Restructuringprograms:

NobelClad $(6.8) $(1.6) $(5.2) $(.38)

DynaEnerge9cs — — — —

Corporate — — — —

Accruedan9-dumpingdu9es — — — —

Goodwillimpairmentcharge — — — —

DynaEnerge9csinventoryreserves $(1.3) $(0.5) $(0.8) $(0.6)

Netincomefromcon9nuingopera9ons,excludingcharges $5.8 $3.9 $1.9 $0.13

DMCGlobal.com

RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DILUTEDEPSFROMCONTINUINGOPERATIONS


($MMexceptpershareamounts) Pre-tax Tax Net Diluted

EPS Pre-tax Tax Net DilutedEPS

NinemonthsendedSeptember30,2016 NinemonthsendedSeptember30,2017

Netincome(loss),asreported $(4.0) $0.30 $(4.3) $(0.31) $(15.0) $2.0 $(17.0) $(1.18)

Restructuringprograms:

NobelClad — — — — — — — —

DynaEnerge9cs $(1.13) $(0.23) $(0.09) $(0.07) $(0.50) — $(0.50) $(0.03)

Corporate $(0.07) — $(0.07) — — — — —

Accruedan9-dumpingdu9es — — — — — — — —

Goodwillimpairmentcharge — — — — — — — —

DynaEnerge9csinventoryreserves — — — — — — — —

Netincome(loss),excludingcharges $(0.3) $0.5 $(3.3) $(0.24) $(3.10) $2.3 $(.90) $(0.06)

DMCGlobal.com

RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-NOBELCLADEBITDAANDADJUSTEDEBITDA


($MMexceptpershareamounts) 2014 2015 169M 179M

Opera9ngincome $2.2 $5.8 $6.3 $(14.3)

Deprecia9on $4.6 $3.8 $2.7 $2.6

Amor9za9on $1.9 $0.4 $0.3 $0.3

Restructuring $6.8 $0.8 — $17.6

AdjustedEBITDA $15.5 $10.8 $9.3 $6.2

DMCGlobal.com

RECONCILIATIONSOFNON-GAAPFINANCIALMEASUREMENTS-DYNAENERGETICSEBITDAANDADJUSTEDEBITDA


($MMexceptpershareamounts) 2014 2015 169M 179M

Opera9ngincome(loss) $14.5 $(19.2) $(3.0) $9.0

Deprecia9on $2.5 $2.5 $2.3 $2.4

Amor9za9on $4.2 $3.7 $2.7 $2.7

NetincomeaDributabletonon-controllinginterest — — — —

Restructuring — $1.7 $1.1 $0.5

Goodwillimpairmentcharges — $11.5 — —

Accruedan9-dumpingdu9es — $6.2 — —

DynaEnerge9csinventoryreserves $1.3 $1.9 — —

AdjustedEBITDA $22.5 $8.1 $3.2 $14.5

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