Dynamic Materials Corporation (NASDAQ:BOOM) to face hardships in 2015

Dynamic Materials Corporation (NASDAQ:BOOM) to face hardships in 2015

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The in oil prices have cast an impact on several companies, including Dynamic Materials Corporation (NASDAQ:BOOM). The point of worry for investors is that demand for its clad-metal products and explosive materials could easily start to wane, as drilling and exploration activity diminishes. On referring to the company’s 4Q, investors were worried about the prospects of the company. It was due to a fact that company had delayed its initial release date earlier this month. Ofcourse, that was a worrying point for Dynamic Material’s shareholders as well. Let us look more closely at Dynamic Materials and what it said about both its past prospects and its future potential.

Dynamic Materials disappointed investors with a big miss on its bottom line. Revenue actually climbed 5.4%,to US$ 52 million, aiding the company to eke out a full-year sales gain as well. But restructuring charges of US$ 6.78 million ate into all of Dynamic Materials’ operating income and then some, producing a net loss of US$ 0.32/share.

Still, a deeper look at Dynamic Materials shows the ongoing disparity between the company’s two primary businesses. Things actually looked quite rosy at the DynaEnergetics segment, with sales soaring 47% from year-ago levels. Yet the NobelClad division once again saw a big drop in performance, as revenue slumped 23%. Operating losses of US$ 4.2 million at NobelClad wiped out a US$ 3.4 million profit allocated to DynaEnergetics, and even after allowing for the NobelClad restructuring, DynaEnergetics still outearned the clad-metal division during the Q.

Specifically, CEO Kevin Longe warned:

“The steep drop in oil prices, combined with the rapid decline in the North American rig count and sharp cuts to capital spending budgets in the exploration and production sector, will slow the momentum of our DynaEnergetics business during year 2015.”

Dynamic Materials’ guidance shows the extent of the slowdown. The company now expects revenue to fall 8% to 12% from 2014 levels, with a drop of two to four percentage points in gross margins, resulting from the fact that the higher-margin DynaEnergetics business won’t have as favorable a sales mix as it has previously.

Investors were initially stunned by the news, as the stock dropped more than 12% in the first 45 minutes of after-hours trading following the announcement.

 

 

 

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