DMC Global Inc. (NASDAQ:BOOM) Q3 2018 Earnings Conference Call Transcript
Oct 25, 2018 • 05:00 pm ET
Greetings, and welcome to the DMC Global 2018 Third Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Geoff High, VP of IR.
Hello, and welcome to DMC's third quarter conference call. Presenting today are President and CEO, Kevin Longe, and CFO, Mike Kuta.
(Forward-Looking Cautionary Statements)
A webcast replay of today's call will be available at dmcglobal.com after the call. In addition, a telephone replay will be available approximately two hours after the call. Details for listening to the replay are available in today's news release.
And with that, I'll now turn the call over to Kevin Longe. Kevin?
Thanks, Geoff. DMC today reported another quarter of record financial results thanks to strong customer demand at DynaEnergetics, our oilfield products business, and improving market conditions at NobelClad, our composite metals business. Consolidated third quarter sales were a record $87.9 million, up 68% from last year's third quarter and 9% sequentially from this year's second quarter. DynaEnergetics reported record sales of $66.3 million, up 88% versus last year's third quarter and 12% sequentially.
NobelClad reported sales of $21.6 million, which was up 28% versus last year's third quarter and down 2% sequentially. NobelClad ended the third quarter with a trailing 12-month book-to-bill ratio of 1.05 and an order backlog of $36.3 million. Consolidated gross margin was 34%, up from 33% in both last year's third quarter and this year's second quarter. The increase versus both periods resulted from a higher proportion of sales from DynaEnergetics, higher average selling prices at DynaEnergetics and an improved project mix at NobelClad.
At the business level, DynaEnergetics reported gross margin of 37%, which was down from 39% in last year's third quarter and flat versus this year's second quarter. As we mentioned in our last call, we expect DynaEnergetics gross margins to trend upward towards the end of the year as we shift to internal production of key components using the factory-assembled, performance-assured DynaStage system. NobelClad reported gross margin of 25%, up from 21% in the year-ago third quarter and 23% in the second quarter. Adjusted operating income was $13.9 million and excludes $192,000 in restructuring expense at NobelClad and $4.9 million of accrued antidumping penalties at DynaEnergetics.
Adjusted operating income in last year's third quarter was $5.1 million and excludes a goodwill impairment charge at NobelClad of $17.6 million. DynaEnergetics reported third quarter operating income of $9.9 million, which includes the accrued antidumping penalties, while NobelClad reported operating income of $2.1 million.
Third quarter adjusted net income was $10 million or $0.68 per diluted share versus adjusted net income of $3.2 million or $0.22 per diluted share in the comparable year-ago quarter. Third quarter adjusted EBITDA, which includes $2.2 million in litigation expense, was $17.2 million versus $8.6 million in last year's third quarter and $13.9 million in this