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Mar 31, 2020
DMC Global Q1 2020 Earnings Report
DMC Global's financial performance declined due to the COVID-19 pandemic and related decrease in oil and gas demand.
Key Takeaways
DMC Global reported a decrease in consolidated sales, gross margin, and operating income for the first quarter of 2020 compared to both the previous quarter and the first quarter of 2019. The decline was attributed to lower demand for well perforating systems and decreased well completion activity due to the COVID-19 pandemic. The company has taken cost-containment actions, including workforce reductions and reduced spending, to maintain liquidity during the economic downturn.
Consolidated first quarter sales were $73.6 million, a decrease of 15% sequentially and 27% year-over-year.
Operating income decreased to $6.3 million, down 69% from Q1 2019.
Net income was $4.2 million, or $0.28 per diluted share.
The company suspended its dividend to maintain liquidity during the economic downturn.
Forward Guidance
DMC Global anticipates a significant decline in second quarter well completions and is not providing financial guidance due to market volatility. The company is focused on maintaining liquidity, reducing costs, and investing in new technology.
Positive Outlook
- DMC has a strong financial position and efficient operating structure.
- The company has taken aggressive action to maintain liquidity and reduce costs.
- DMC is focused on innovation and creating value for customers.
- DynaEnergetics expects increased adoption of its DynaStage perforating systems.
- NobelClad reported a strong start to 2020 with high first-quarter bookings.
Challenges Ahead
- Global crude oil demand began to collapse late in the first quarter.
- The demand decline has been exacerbated by rapidly rising crude supplies and dwindling storage capacity.
- Operators and service companies are revising their activity plans daily.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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