dmc is a diversified technology company. 2017 ir deck wo ihs.pdfdmc is a diversified technology...

DMCGlobal.com

DMC is a diversified technology company.

We are focused on growing our company by

investing in people, products and businesses

that serve niche global markets. Today, our

portfolio consists of NobelClad and

DynaEnergetics, which address the industrial

processing, transportation and energy

markets through global manufacturing, sales

and distribution networks.

2017 Investor Presentation 2

OUR STORY

DMCGlobal.com

SELECT DATA

BOOM

$5.91 - $17.19

35,903

$205 Million

14.5 Million

13.9 Million

December 31

$0.02

$158.6 Million

$9.1 Million


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

*Non-GAAP financial measure

DMCGlobal.com

REVENUE BY BUSINESS

2017 Investor Presentation

4

2015

(54%)

$76.9

(46%)

NobelClad DynaEnergetics

$ in millions

$90.0

2016

(58%)

$67.3

(42%)

$91.3

4

DMCGlobal.com

DMC EXECUTIVE LEADERSHIP


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)

President & CEO 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

Chief Financial Officer MICHELLE SHEPSTON

• Joined DMC in 2016 after 16 years with Denver-based

Davis Graham & Stubbs LLP

• Was a partner with DGS, and practiced with the

Corporate Finance and Acquisitions Group

• Expertise in securities law, mergers & acquisitions,

cross border debt & equity transactions, contract

negotiation and execution

• Industry expertise includes energy and natural

resources

Chief Legal Officer

DMCGlobal.com

LEADERSHIP TEAM


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

JOHN SCHEATZLE President, NobelClad

• Joined DMC in 2016 after 19 years with advanced

materials manufacturer Materion

• As Vice President and General Manager of

Materion’s Performance Alloys division, was

responsible for multiple North American production

facilities and international sales and distribution

centers

• Former General Manager of Materion’s Ceramic

Products division

BIN ZHANG Managing Director, China, DMC

• Responsible for Chinese business development and

market positioning for NobelClad and

DynaEnergetics

• 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

DMCGlobal.com

DMC empowers its people and organizations

by institutionalizing entrepreneurship and

celebrating technical ingenuity. Our growth

is fueled by energized, relevant and nimbly

executed solutions that make a real

difference to our customers. DMC’s

responsive organizations are focused on

serving the world’s growth markets, giving

investors high returns throughout varying

economic cycles.


OUR CULTURE

DMCGlobal.com

CHAPTER & PAGE TITLE HERE


REPRESENTATIVE: NAME & POSITION HERE

DMCGlobal.com

DYNAENERGETICS OVERVIEW


A top-tier provider of

compatibility tested perforating

systems.

Acquired by DMC in 2007 as new platform business.

Unmatched global reach serving a worldwide network of oil and gas service providers.

Reputation for product safety, technical innovation and system reliability under extreme environmental conditions.

Perforating and well-completion technologies drive improved safety, productivity and lower operating costs for customers.

DMCGlobal.com 10 2017 Investor Presentation

DYNAENERGETICS SALES BY GEOGRAPHY

2016 Sales: $67.3 Million

United States / 61%

Canada / 13%

India / 7%

Russia / 5%

Egypt / 3%

Ukraine / 1%

Romania / 1%

Rest of World / 9%

DMCGlobal.com

PERFORATING BASICS


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.


DYNAENERGETICS MARKET INDICATORS: RIG COUNT BY GLOBAL REGION

2/3/2017

1/31/2017

1/31/2017

2/3/2017

1/31/2017

1/31/2017

1/31/2017

1/31/2017

-

400

800

1,200

1,600

2,000

2/26/2014

5/26/2014

8/26/2014

11/26/2014

2/26/2015

5/26/2015

8/26/2015

11/26/2015

2/26/2016

5/26/2016

8/26/2016

11/26/2016

US

40

80

120

160

200

2/26/2014

5/26/2014

8/26/2014

11/26/2014

2/26/2015

5/26/2015

8/26/2015

11/26/2015

2/26/2016

5/26/2016

8/26/2016

11/26/2016

Europe Afr ica

160

180

200

220

240

260

280

300

2/26/2014

5/26/2014

8/26/2014

11/26/2014

2/26/2015

5/26/2015

8/26/2015

11/26/2015

2/26/2016

5/26/2016

8/26/2016

11/26/2016

Asia Pacific

-

100

200

300

400

500

600

700

800

2/26/2014

5/26/2014

8/26/2014

11/26/2014

2/26/2015

5/26/2015

8/26/2015

11/26/2015

2/26/2016

5/26/2016

8/26/2016

11/26/2016

Canada

200

250

300

350

400

450

500

2/26/2014

5/26/2014

8/26/2014

11/26/2014

2/26/2015

5/26/2015

8/26/2015

11/26/2015

2/26/2016

5/26/2016

8/26/2016

11/26/2016

Middle East

-

100

200

300

400

500

2/26/2014

5/26/2014

8/26/2014

11/26/2014

2/26/2015

5/26/2015

8/26/2015

11/26/2015

2/26/2016

5/26/2016

8/26/2016

11/26/2016

Lat in America


DYNAENERGETICS MARKET INDICATORS: U.S. RIG COUNT BY TYPE

2/3/2017

2/3/2017

2/3/2017

2/3/2017

-

200

400

600

800

1,000

1,200

1,400

1,600

2/2

6/2

01

4

4/2

6/2

01

4

6/2

6/2

01

4

8/2

6/2

01

4

10

/26

/20

14

12

/26

/20

14

2/2

6/2

01

5

4/2

6/2

01

5

6/2

6/2

01

5

8/2

6/2

01

5

10

/26

/20

15

12

/26

/20

15

2/2

6/2

01

6

4/2

6/2

01

6

6/2

6/2

01

6

8/2

6/2

01

6

10

/26

/20

16

12

/26

/20

16

Horizontal Directional Vertical

DMCGlobal.com

DYNAENERGETICS MARKET INDICATORS: U.S. LAND FRAC ACTIVITY



DYNAENERGETICS PERFORMANCE

$ in millions

83

.7

10

5.5

76

.9 6

7.3

2013 2014 2015 2016

Sales

11

.9

22

.4

8.1

2.5

2013 2014 2015 2016

Adjusted EBITDA*


1

1

1

DMCGlobal.com

TOTAL WELLS FRAC’ED AND FORECAST


•

•

•

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

14Q

2

14Q

3

14Q

4

15Q

1

15Q

2

15Q

3

15Q

4

16Q

1

16Q

2

16Q

3

16Q

4

17Q

1

17Q

2

17Q

3

17Q

4

18Q

1

18Q

2

18Q

3

18Q

4

19Q

1

19Q

2

19Q

3

19Q

4

20Q

1

20Q

2

20Q

3

20Q

4

21Q

1

21Q

2

21Q

3

21Q

4

22Q

1

Total Horizontal Vertical/Directional

Forecast

Values Percent Change

2016 2017 2018 2019 2020 2021 2022 2017∆ 2018∆ 2019∆ 2020∆ 2021∆ 2022∆

Horizontal 8,048 10,292 11,669 13,173 14,423 15,306 16,665 27.88% 13.38% 12.89% 9.49% 6.12% 8.88%

Vertical/Directional 2,821 4,402 5,743 7,111 7,712 8,002 7,721 56.04% 30.46% 23.82% 8.45% 3.76% -3.51%

Total 10,869 14,694 17,412 20,284 22,135 23,308 24,386 35.19% 18.50% 16.49% 9.13% 5.30% 4.63%

DMCGlobal.com

TOTAL FRAC STAGES AND FORECAST


•

•

•

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

14Q

2

14Q

3

14Q

4

15Q

1

15Q

2

15Q

3

15Q

4

16Q

1

16Q

2

16Q

3

16Q

4

17Q

1

17Q

2

17Q

3

17Q

4

18Q

1

18Q

2

18Q

3

18Q

4

19Q

1

19Q

2

19Q

3

19Q

4

20Q

1

20Q

2

20Q

3

20Q

4

21Q

1

21Q

2

21Q

3

21Q

4

22Q

1

Total Horizontal Vertical/Directional

Forecast

Values Percent Change

2016 2017 2018 2019 2020 2021 2022 2017∆ 2018∆ 2019∆ 2020∆ 2021∆ 2022∆

Horizontal 206,306 292,742 343,440 389,355 426,412 452,314 491,090 41.90% 17.32% 13.37% 9.52% 6.07% 8.57%

Vertical/Directional 10,243 17,203 22,398 27,741 29,926 30,880 29,300 -19.79% -54.93% -57.26% 67.95% 30.20% 23.85%

Total 216,549 309,945 365,838 417,096 456,338 483,194 520,390 43.13% 18.03% 14.01% 9.41% 5.89% 7.70%

DMCGlobal.com 18

PRIMARY COMPONENTS OF A PERFORATING SYSTEM


DynaEnergetics is the only company manufacturing all components of a perforating system

01 SHAPED CHARGES 02 DETONATORS 03 DETONATING CORD

04 GUN CARRIERS & “SUBS” 05 CONTROL PANELS

DMCGlobal.com 19

DynaStage™ Perforating System

• Factory assembled, performance assured

• Incorporates DynaSelect intrinsically safe

detonating technology

• 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, intrinsically 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

fewer electrical wiring connections

01 02

DYNAENERGETICS PRODUCT INNOVATIONS


DynaSlot™ Well Abandonment System

• Fast, cost-effective alternative to traditional plug

and abandonment, and “cement squeeze”

techniques

• Helical pattern of overlapping horizontal slots

provides 360-degree cement coverage behind

tubing or casing

03

DMCGlobal.com

3-3/8”

3-1/8”

2-3/4”

DYNASTAGE™ GUN SYSTEM


*patents pending Top Fire DynaSelect

Detonator* Multitronic V Firing Panel

Three Stage Gun String with Bridge Plug

DynaStage Gun Module*

Ecoil Tandem Sub Adapter

Quick Change

GO-Style Firing Head

Top Fire DynaSelect Detonator

DMCGlobal.com

DYNASELECT™ AND DYNASTAGE™ PROVIDE BUSINESS MODEL ADVANTAGE


CURRENT INDUSTRY MODEL DYNAENERGETICS MODEL: PRODUCT BENEFITS + BUSINESS MODEL ADVANTAGE

DynaStage Advantages • Factory assembled and delivered to customer in the field • System is armed upon installation of DynaStage switch detonator, eliminating field wiring • Surface tester ensures system is fully functional before down-hole deployment

Benefits: • No misfires, improved reliability • Reduced transportation costs and field labor • No need for gun assembly or storage facilities • Simplified supply chain • Reduced working capital, improved profitability for customers

Current Process Customer mixes & matches perforating components from multiple suppliers, then assembles and wires gun in the field

Challenges: • Assembly errors lead to misfires • Quality & safety • Operating cost • Complexity of supply chain

21

DMCGlobal.com

DYNAENERGETICS MOBILE MARKETING TRAILER


DMCGlobal.com

DYNAENERGETICS GROWTH INITIATIVES


• Investing in research and

development of next-generation

technologies

• Launching new products that

improve customer operating

efficiencies and drive down costs

• Forging strategic partnerships to

enter new markets

• Innovating comprehensive

solutions that meet anticipated

market demand

DMCGlobal.com

SELECT END USERS

24

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.


DMCGlobal.com

DYNAENERGETICS: PROACTIVE RESPONSE TO DOWN CYCLE


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

(DynaSelect™, DynaStage™, DynaSlot™) that deliver

step change in efficiency, performance and safety.

Favorable environment to shift industry business model:

Sell feature-rich perforating systems versus individual

components.

Capitalize on anticipated growth of well re-completion

and workover projects.

Manage internal costs.

DMCGlobal.com 2017 Investor Presentation 26

DMCGlobal.com

NOBELCLAD OVERVIEW

27

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.


DMCGlobal.com

11

8.4

97

.1 90

.0

91

.3

2013 2014 2015 2016

Sales

NOBELCLAD’S PERFORMANCE


$ in millions

23

.2

15

.4

10

.7

12

.9

2013 2014 2015 2016

Adjusted EBITDA*


2016 Sales: $91.3 Million

United States / 42%

Canada / 8%

United Arab Emirates / 7%

China / 7%

Germany / 6%

France / 4%

Australia / 3%

Italy / 3%

Rest of World / 20%


NOBELCLAD SALES BY GEOGRAPHY

DMCGlobal.com

EXPLOSION WELDING PROCESS

30 2017 Investor Presentation

DMCGlobal.com

DEMAND DRIVERS FOR EXPLOSION WELDING

31

03

Design Flexibility

02

Corrosive Environments

01

Global Infrastructure Investment


DMCGlobal.com

NOBELCLAD’S COMPETITIVE ADVANTAGE


• Global network of specialty metals

providers

• Permits and shooting sites

in U.S., France, 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.

Titanium clad pressure vessels – image courtesy of Coek Engineering.

DMCGlobal.com

NOBELCLAD GROWTH INITIATIVES


• Expanding market share in Asia

• R&D focused on new clad plate

applications

• Applying process expertise to new

market development

• Strengthening global sales force

with addition of end-market

experts

• Expanding production capabilities

with new European manufacturing

facility

Separating equipment – A natural gas production facility where NobelClad’s explosion welded

plates were used in the fabrication of specialized pipes.

DMCGlobal.com

PRIMARY END MARKETS SERVED


• Chemical

• Oil and Gas

• Metals and Mining

• Marine

• Power Generation

• Alternative Energy

• Industrial Refrigeration

• Transportation

• Defense and Protection

DMCGlobal.com

SELECT END USERS

35

Chemicals Refining Mining Engineering


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.

DMCGlobal.com

FINANCIAL PERFORMANCE REVIEW


($MM except per share amounts) 2013 2014 2015 2016

Sales % growth

$202.1 5%

$202.6 0%

$166.9 -18%

$158.6 -5%

Gross Profit % margin

$58.1 29%

$61.4 30%

$35.6 21%

$38.7 25%

Operating Profit (Loss)* % margin

$12.3 6%

$14.7 7%

($0.0) 0%

($5.2) -3%

Income (Loss) from Continuing Operations (after tax)*

$6.1 $7.9 ($8.0) ($8.2)

Diluted EPS from Continuing Operations* $0.44 $0.57 ($0.57) ($0.58)

Adjusted EBITDA* % margin

$28.0 14%

$31.5 16%

$13.1 7%

$9.0 6%

*Non-GAAP financial measures

1

DMCGlobal.com

BALANCE SHEET HIGHLIGHTS


Assets ($MM) December 31, 2015 December 31, 2016

Cash, cash equivalents $6.3 $6.4

Accounts receivables, net $35.8 $33.0

Inventory $35.4 $28.8

Total current assets $86.5 $73.4

Total assets $182.2 $162.6

Liabilities ($MM)

Total current liabilities $32.9 $30.7

Lines of credit $26.8 $15.7

Long-term debt $0.0 $0.0

Total liabilities $63.8 $50.1

Total stockholders’ equity $118.4 $112.4

Total liabilities and stockholders’ equity $182.2 $162.6

DMCGlobal.com

DMC’S PERFORMANCE TENETS


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

DMCGlobal.com

CONTACT INFORMATION


DMC

5405 Spine Road

Boulder, Colorado 80301, USA

T 800-821-2666

Geoff High

Vice President of Investor Relations

E [email protected]

T 303-514-0656

Contact Primary Contact

DMCGlobal.com

APPENDIX: USE OF NON-GAAP FINANCIAL MEASURES

3/10/2017 Presentation Title 40

APPENDIX: USE OF NON-GAAP FINANCIAL MEASURES


Adjusted EBITDA and diluted EPS are non-GAAP (generally accepted accounting principles) financial measures used by management to measure operating performance. Non-GAAP results are presented only as a supplement to the financial statements based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the reader's understanding of DMC’s financial performance, but no non-GAAP measure should be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided within the schedules attached to this release. EBITDA is defined as net income plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation, restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance (as further described in the attached financial schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure.

Management uses these non-GAAP measures in its operational and financial decision-making, believing that it is useful to eliminate certain items in order to focus on what it deems to be a more reliable indicator of ongoing operating performance.

As a result, internal management reports used during monthly operating reviews feature the adjusted EBITDA. In addition, certain management incentive awards were based, in part, on the amount of adjusted EBITDA achieved during the year. Management also believes that investors may find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. EBITDA and adjusted EBITDA are also used by research analysts, investment bankers and lenders to assess operating performance. For example, a measure similar to EBITDA is required by the lenders under DMC’s credit facility. Because not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the company’s performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures. For example, a company with greater GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, eliminating the effects of interest income and expense moderates the impact of a company's capital structure on its performance.

All of the items included in the reconciliation from net income to EBITDA and adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles and stock-based compensation)

or (ii) items that management does not consider to be useful in assessing DMC’s operating performance (e.g., income taxes, restructuring and impairment charges and gain on sale of assets). In the case of the non-cash items, management believes that investors can better assess the company’s operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect DMC's ability to generate free cash flow or invest in its business. For example, by adjusting for depreciation and amortization in computing EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, management believes that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance. We have also presented certain financial measures excluding certain one-time, non-recurring “special items,” including our accrued anti-dumping duties, inventory reserve adjustment, the non-cash goodwill impairment charge and restructuring charges. These are non-GAAP financial measures when the special items are excluded. We believe these are important supplemental measures because they eliminate one-time, non-recurring items that have less bearing on our operating performance and so highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. We have quantified those special items earlier in this release, or immediately following, the financial measures that excluded the special items, to allow readers to measure their impact.

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