Jefferies industrials conf. aug 11 small

0

Jefferies 2011 Global Industrial and A&D Conference

August 2011

1

Cautionary Statement Regarding Forward-looking Information

This presentation contains, and the Company may from time to time make, written or oral "forward-looking statements" within the safe harbor prov isions of the PrivateSecurities Litigations Reform Act of 1995. These statements include information with respect to our financial condition and its results of operations and businesses. Wordssuch as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "continue," "project" and similar expressions, as well as statementsin the future tense, identify forward-looking statements.

These forward-looking statements are not guarantees of our future performance and are subject to risks and uncertainties that could cause actual results to differ materiallyfrom the results contemplated by the forward-looking statements. These risks and uncertainties include:

• 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 our facilities;

• The availability and cost of funds;

• General economic conditions, both domestically and abroad;

• The successful integration of acquisitions; and

• Fluctuations in foreign currencies.

The effects of these factors are difficult to predict. New factors emerge from time to time and we cannot assess the potential impact of any such factor on the business or theextent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-lookingstatement speaks only as of its date and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of suchstatement or to reflect the occurrence of unanticipated events. In addition, see "Risk Factors" for a discussion of these and other factors.

You are encouraged to read the SEC reports of DMC, particularly its Form 10-K for the Fiscal Year Ended December 31, 2010 for meaningful cautionary languagedisclosing why actual results may vary materially from those anticipated by management.

2

Cautionary Statement Regarding Forward-looking Information

Use of Non-GAAP Financial Measures

Non-GAAP results used in this presentation are prov ided only as a supplement to the financial statements based on U.S. generally accepted accountingprinciples (GAAP). The non-GAAP financial information is prov ided 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 themost directly comparable GAAP measures to non-GAAP measures are prov ided 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 stock-basedcompensation and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance (as further described in theattached financial schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative tonet 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, believ ing that it is useful to eliminate certain items in order tofocus on what it deems to be a more reliable indicator of ongoing operating performance and the company’s ability to generate cash flow from operations.As a result, internal management reports used during monthly operating rev iews feature the adjusted EBITDA. Management also believes that investorsmay find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not asubstitute for GAAP disclosures. EBITDA and adjusted EBITDA are also used by research analysts, investment bankers, and lenders to assessoperating 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-titledmeasures of other companies. However, these measures can still be useful in evaluating the company’s performance against its peer companies becausemanagement believes the measures prov ide users with valuable insight into key components of GAAP financial disclosures. For example, a companywith 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, amortizationof purchased intangibles and stock-based compensation) or (ii) items that management does not consider to be useful in assessing DMC’s operatingperformance (e.g., income taxes and gain on sale of assets). In the case of the non-cash items, management believes that investors can better assess thecompany’s operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect DMC'ability to generate free cash flow or invest in its business. For example, by adjusting for depreciation and amortization in computing EBITDA, users cancompare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, managementbelieves that investors can better assess operating performance if the measures are presented without these items because their financial impact does notreflect ongoing operating performance.

3

Key Data

Symbol:

52-week range:

Average daily trading volume (10 day.):

Approx. market capitalization:

Shares outstanding:

Approximate float:

Fiscal year end:

Quarterly dividend:

NASDAQ GS: BOOM

$13.50 - $29.69

137,000

$262 million

13.4 million

12.7 million

December 31

$0.04

(As of 8/8/11)

4

! Yvon Pierre Cariou - President and CEO

! Richard A. Santa - Sr. Vice President,

CFO and Secretary

! John G. Banker - Sr. Vice President,

Customers and Technology

! Rolf Rospek - CEO, DYNAenergetics and

Oilfield Products segment

Executive Management

5

Company Overview

• World’s dominant provider of explosion-welded clad metal plates

• International manufacturer and marketer of advancedperforating systems for oil and gas wells

• Three business segments provide diversified revenue stream

• Strong balance sheet

• Low Cap-Ex business model facilitates strong free cash flow

• Talented management with deep industry experience

6

Financial Highlights

Net SalesIn millions

Operating IncomeIn millions

7

Financial Highlights

Net Income Diluted EPSIn millions

*

* Includes $2.1 mm gain on step acquisitions of joint ventures

8

Business Segments

Explosive Metalworking Oilfield Products AMK Welding

$ 10.8 Million$98.6 Million $ 45.3 Million

2010 Revenue by Segment

9

DMC’s Global Presence

Corporate Headquarters

Explosion Welding production centers

Explosion Welding sales offices and agents

Oilfield Products Headquarters

Oilfield Products subsidiaries

Oilfield Products sales agents

1 0

DMC 2010 Revenue by Region

North America

50%Europe

26%Asia

8%

Russia

5%

Other Countries -– 5%

Africa

1%

India

1%

Middle East

4%

1 1

Competing Cladding Technologies

Weld OverlayRollbond

• Performed by small group

of international hot rolling

steel mills

• Thickness niche is

generally 2” and less

• Compatible metals only

Explosion Weld

• Performed by small field of international

competitors led by Dynamic Materials

Corporation

• Most versatile cladding technology

• Only cladding process that can address

both compatible and non-compatible

metals

• Thickness sweet-spot is 1” to 6”

• Arc-welding process

typically performed by

metal fabricators

• Thickness niche is

generally 6” and greater

• Compatible metals only

Explosive MetalworkingExplosive Metalworking

1 2

Key Demand Drivers for Explosion Welded Plates

Explosive MetalworkingExplosive Metalworking

CorrosionCorrosion

IndustrialIndustrial

CAPEXCAPEX

1 3Explosive MetalworkingExplosive Metalworking

Explosion Clad - a Critical Weapon in the Battle Against Rust

! “…a major industry challenge is the‘rust crisis’ in the global energyinfrastructure”

! “Worldwide energy infrastructuretoo old”

! Most infrastructure “far beyondoriginal design life”

From presentation at 2009 Offshore Technology Conference Matthew Simmons,

Chairman - Simmons & Company International


Explosion Welding – a Key Step in Pre-fabrication Process

Metal SuppliersExplosion

Welding Fabricators

End Users

MILLS & SERVICE CENTERS

Sourced Metals

• Carbon Steel

• Nickel Alloys

• Titanium

• Zirconium


Selected End Markets Served by Explosion Welding

• Chemical

• Oil & Gas

• Metals & Mining

• Marine

• Defense & Protection

• Power Generation

• Alternative Energy

• Industrial Refrigeration

• Transportation

Below are the nine primary industries that utilize explosion welded products.


End Users

Chemicals Refinery Mining Engineering

Fabricators

End Users Include Leading Players in Respective Fields

Morimatsu Group China


DMC’s Dominant Industry Position Protected by SignificantBarriers to Entry

" Global network of specialty-metals suppliers

" Permits and shooting sites in U.S., France, Sweden & Germany

" Mastery of explosion-welding process in large-scale production

" Strong working relationships with end-market customers

1 8Oilfield ProductsOilfield Products

Oilfield Products Segment

• Manufactures explosive perforating systems and seismic devices for theinternational oil & gas services industry

• Benefiting from rapid increase in drilling activity

• Recognized within industry for product and technical innovation

• Extension of DMC’s expertise in specialized explosive manufacturing processes

• Achieved revenue growth of 108% in 2010

19Oilfield ProductsOilfield Products

Explosive Perforating Overview

Explosive Perforating: Explosive Perforating: A method of creating holes in a well casing downhole by exploding charges that propel steel projectiles through the casing

wall. Such holes allow oil/gas from the formation to enter the well.

Wellbore Construction

• Drilling rig will penetrate rock formations down to theoil/gas reservoir

• Oil/gas may flow freely into an open hole wellbore

Casing

• Casing & cement temporarily isolate thewellbore from the reservoir

• After casing has been cemented, drilling rigmoves off of the well

ContinuedContinued……

1. 2.


Explosive Perforating Overview (continued)

The Perforation Process

1. Once wellbore is drilled and

cement casing is in place, a

perforating gun is deployed into

the well

2. The gun is fired, sending steel

projectiles through the casing and

into the surrounding formation

creating “perforation tunnels”

3. Oil or gas flows through perforation

tunnels and into the well

3.


Positive industry indicator

U.S. Rig Count# 1,920 rigs operating as of Aug. 5, 2011# Up 322, or 20%, vs. same week of 2010

DYNAenergetics is well positioned to capitalize on the rapid expansion in U.S. and international oil and gasdrilling activity.

Worldwide Rig Count# 3,397 rigs operating as of July 31, 2011# Up 365, or 12%, vs. same month of 2010

2 2

AMK Welding - a leading provider of precision welding services

AMK WeldingAMK Welding

• Serves ground-based turbine and

commercial & military aircraft engine markets

• Key service provider to GE Energy

• Achieved 20% sales growth in 2010

• Generated 7% of DMC sales in 2010, up

from 6% in 2009

2 3

Financial Performance Review

($mm)

2008

2009

2010

6 Mo. ‘10

6 Mo. ‘11

Sales $232.6 $164.9 $154.7 $68.6 $99.7

% growth 41% (29%) (6%) (22%) 45%

Gross profit $70.8 $43.1 $37.0 $16.2 $25.8

% margin 30% 26% 24% 24% 26%

Operating profit $38.1 $16.2 $6.8 $2.3 $7.4

% margin 16% 10% 4% 3% 7%

Adjusted EBITDA $53.2 $29.8 $21.0* $9.0 $14.6

% growth 22% (44%) (29%) (50%) 63%

Net income $24.1 $8.5 $5.3* $2.6 $4.6

% growth (2%) (65%) (38%) (59%) 76%

Diluted EPS $1.87 $0.66 $0.40 $0.20 $0.35

% growth (6%) (65%) (39%) (60%) 75%

* Includes $2.1 mm gain on step acquisitions of joint ventures

2 4

Balance Sheet Highlights

Assets

Cash, cash equivalents & restricted cash $ 22,411 $ 4,572 $ 7,613

Accounts receivables, net of allowance $ 25,807 $ 27,567 $ 34,798

Total current assets $ 87,974 $ 72,735 $ 97,467

Total assets $ 225,176 $ 201,393 $ 230,864

Liabilities

Total current liabilities $ 42,135 $ 38,392 $ 53,382

Long-term debt $ 34,120 $ 14,579 $ 14,610

Total liabilities $ 93,065 $ 66,309 $ 81,195

Total stockholders’ equity $ 132,111 $ 135,084 $ 149,669

Total liabilities and stockholders’ equity $ 225,176 $ 201,393 $ 230,864

2009 2010 Q2 2011

(In thousands)

2 5

Supplemental Information

2 6

Sales and Explosion Welding Backlog Progression:Q2 2005 – Q2 2011

In millions

2 7

Capital Expenditures

(in millions)(in millions)

ActualActual ForecastForecast

2 8

Contact:

Geoff High

Pfeiffer High Investor Relations, Inc.

303-393-7044

[email protected]