Company Quick10K Filing
Dynamic Materials
Price44.40 EPS4
Shares15 P/E12
MCap659 P/FCF19
Net Debt16 EBIT74
TEV675 TEV/EBIT9
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-04-22
10-K 2020-12-31 Filed 2021-02-22
10-Q 2020-09-30 Filed 2020-10-22
10-Q 2020-06-30 Filed 2020-07-23
10-Q 2020-03-31 Filed 2020-04-23
10-K 2019-12-31 Filed 2020-02-24
10-Q 2019-09-30 Filed 2019-10-25
10-Q 2019-06-30 Filed 2019-07-25
10-Q 2019-03-31 Filed 2019-04-25
10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-10-25
10-Q 2018-06-30 Filed 2018-07-26
10-Q 2018-03-31 Filed 2018-04-26
10-K 2017-12-31 Filed 2018-03-08
10-Q 2017-09-30 Filed 2017-10-26
10-Q 2017-06-30 Filed 2017-07-27
10-Q 2017-03-31 Filed 2017-04-27
10-K 2016-12-31 Filed 2017-03-09
10-Q 2016-09-30 Filed 2016-10-27
10-Q 2016-06-30 Filed 2016-07-28
10-Q 2016-03-31 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-03-11
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-28
10-Q 2015-03-31 Filed 2015-04-28
10-K 2014-12-31 Filed 2015-03-16
10-Q 2014-09-30 Filed 2014-10-28
10-Q 2014-06-30 Filed 2014-07-29
10-Q 2014-03-31 Filed 2014-04-29
10-K 2013-12-31 Filed 2014-03-07
10-Q 2013-09-30 Filed 2013-10-30
10-Q 2013-06-30 Filed 2013-07-30
10-Q 2013-03-31 Filed 2013-04-30
10-K 2012-12-31 Filed 2013-03-14
10-Q 2012-09-30 Filed 2012-10-30
10-Q 2012-06-30 Filed 2012-07-31
10-Q 2012-03-31 Filed 2012-05-01
10-K 2011-12-31 Filed 2012-03-09
10-Q 2011-09-30 Filed 2011-11-01
10-Q 2011-06-30 Filed 2011-08-02
10-Q 2011-03-31 Filed 2011-04-28
10-K 2010-12-31 Filed 2011-02-28
10-Q 2010-09-30 Filed 2010-10-28
10-Q 2010-06-30 Filed 2010-07-29
10-Q 2010-03-31 Filed 2010-04-29
10-K 2009-12-31 Filed 2010-03-12
8-K 2020-10-22
8-K 2020-10-21
8-K 2020-07-28
8-K 2020-07-23
8-K 2020-06-25
8-K 2020-05-20
8-K 2020-04-23
8-K 2020-04-17
8-K 2020-04-16
8-K 2020-04-01
8-K 2020-02-20
8-K 2019-12-17
8-K 2019-10-24
8-K 2019-08-30
8-K 2019-07-25
8-K 2019-05-10
8-K 2019-04-25
8-K 2019-04-03
8-K 2019-02-27
8-K 2019-02-21
8-K 2018-10-25
8-K 2018-08-22
8-K 2018-07-26
8-K 2018-06-01
8-K 2018-04-26
8-K 2018-03-08
8-K 2018-02-27

BOOM 10Q Quarterly Report

Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.8 boomex108grieves.htm
EX-31.1 boom-exx311_q1x03312021.htm
EX-31.2 boom-exx312_q1x03312021.htm
EX-32.1 boom-exx321_q103312021.htm
EX-32.2 boom-exx322_q1x03312021.htm

Dynamic Materials Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
2902321741165802012201420172020
Assets, Equity
1158861347-202012201420172020
Rev, G Profit, Net Income
20136-1-8-152012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
Form 10-Q
 (Mark One)
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021
 
OR
 
         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

FOR THE TRANSITION PERIOD FROM                   TO                   .
 
Commission file number 001-14775

 DMC GLOBAL INC.
(Exact name of Registrant as Specified in its Charter)
Delaware
 
84-0608431
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
11800 Ridge Parkway, Suite 300, Broomfield, Colorado 80021
(Address of principal executive offices, including zip code)
 
(303) 665-5700
(Registrant’s telephone number, including area code)
 

Title of each classTrading SymbolName of exchange on which registered
Common Stock, $0.05 Par Value
BOOMThe Nasdaq Global Select Market


Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer ☐
 
Accelerated filer
   
Non-accelerated filer ☐
 
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 under the Act).  Yes    No 
 
The number of shares of Common Stock outstanding was 15,833,470 as of April 22, 2021.





CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
 
This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. We intend the forward-looking statements throughout this quarterly report on Form 10-Q to be covered by the safe harbor provisions for forward-looking statements. Statements contained in this report which are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. These statements can sometimes be identified by our use of forward-looking words such as “may,” “believe,” “plan,” “anticipate,” “estimate,” “expect,” “intend,” and other phrases of similar meaning. Such statements include expectations regarding improvements to DynaEnergetics’ end markets, our ability to access the capital markets and the availability of proceeds from our at-the-market offering to support our liquidity position and our expected future liquidity position. The forward-looking information is based on information available as of the date of this quarterly report and on numerous assumptions and developments that are not within our control. Although we believe that our expectations as expressed in these forward-looking statements are reasonable, we cannot assure you that our expectations will turn out to be correct. Factors that could cause actual results to differ materially include, but are not limited to, those factors referenced in our Annual Report on Form 10-K for the year ended December 31, 2020 and such things as the following: impacts of COVID-19 and any related preventative or protective actions taken by governmental authorities and resulting economic impacts, including recessions or depressions; supply chain delays and disruptions; transportation disruptions; the ability to obtain new contracts at attractive prices; the size and timing of customer orders and shipments; product pricing and margins; our ability to realize sales from our backlog; fluctuations in customer demand; fluctuations in foreign currencies; competitive factors; the timely completion of contracts; the timing and size of expenditures; the timely receipt of government approvals and permits; the price and availability of metal and other raw material; fluctuations in tariffs or quotas; changes in laws and regulations, both domestic and foreign, impacting our business and the business of the end-market users we serve; the adequacy of local labor supplies at our facilities; current or future limits on manufacturing capacity at our various operations; our ability to successfully integrate acquired businesses; the impact of pending or future litigation or regulatory matters; the availability and cost of funds; our ability to access our borrowing capacity under our credit facility or access the capital markets; and global economic conditions and political and economic developments. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.



INDEX
 
  Page
   
 
 
 
 
 
 
   
   
   
   
   
   
   
   
   
   
   
   
 

3

Table of Contents

Part I - FINANCIAL INFORMATION

ITEM 1.  Condensed Consolidated Financial Statements
DMC GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share and Per Share Data)
March 31, 2021December 31, 2020
(unaudited)
ASSETS  
Current assets:  
Cash and cash equivalents$45,837 $28,187 
Marketable securities20,943 25,736 
Accounts receivable, net of allowance for doubtful accounts of $2,631 and $2,605, respectively
35,609 31,366 
Inventories57,944 52,573 
Prepaid expenses and other7,855 5,448 
Total current assets168,188 143,310 
Property, plant and equipment178,752 180,278 
Less - accumulated depreciation(71,952)(70,867)
Property, plant and equipment, net106,800 109,411 
Purchased intangible assets, net2,927 3,665 
Deferred tax assets5,873 4,582 
Other assets21,029 18,677 
Total assets$304,817 $279,645 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$27,336 $17,574 
Accrued expenses7,727 5,301 
Accrued income taxes7,975 7,279 
Accrued employee compensation and benefits6,625 7,160 
Contract liabilities7,205 4,928 
Current portion of long-term debt 3,125 
Other current liabilities1,505 1,741 
Total current liabilities58,373 47,108 
Long-term debt 8,139 
Deferred tax liabilities1,211 2,254 
Other long-term liabilities26,803 25,230 
Total liabilities86,387 82,731 
Commitments and contingencies (Note 12)
Stockholders’ equity
Preferred stock, $0.05 par value; 4,000,000 shares authorized; no issued and outstanding shares
  
Common stock, $0.05 par value; 25,000,000 shares authorized; 15,833,470 and 15,389,285 shares outstanding, respectively
820 796 
Additional paid-in capital144,094 117,387 
Retained earnings116,089 115,657 
Other cumulative comprehensive loss(24,929)(22,962)
Treasury stock, at cost, and company stock held for deferred compensation, at par; 566,343 and 528,274 shares, respectively
(17,644)(13,964)
Total stockholders’ equity218,430 196,914 
Total liabilities and stockholders’ equity$304,817 $279,645 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Data)
(unaudited)


Three months ended March 31,
 20212020
Net sales$55,658 $73,564 
Cost of products sold42,745 49,094 
Gross profit12,913 24,470 
Costs and expenses:  
General and administrative expenses7,929 8,126 
Selling and distribution expenses5,243 8,527 
Amortization of purchased intangible assets324 354 
Restructuring expenses127 1,116 
Total costs and expenses13,623 18,123 
Operating (loss) income(710)6,347 
Other income (expense):  
Other income, net394 115 
Interest expense, net(135)(238)
(Loss) income before income taxes(451)6,224 
Income tax (benefit) provision(883)2,069 
Net income$432 $4,155 
Net income per share  
Basic$0.03 $0.28 
Diluted$0.03 $0.28 
Weighted average shares outstanding:  
Basic15,453,103 14,697,164 
Diluted15,463,923 14,717,836 
Dividends declared per common share$ $0.125 
 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Amounts in Thousands)
(unaudited)

 
Three months ended March 31,
 20212020
Net income$432 $4,155 
Change in cumulative foreign currency translation adjustment(1,967)(840)
Total comprehensive (loss) income$(1,535)$3,315 
 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in Thousands, Except Share Data)
(unaudited)

     OtherTreasury Stock and 
   Additional CumulativeCompany Stock Held for 
 Common StockPaid-InRetainedComprehensive Deferred Compensation 
 SharesAmountCapitalEarningsLossSharesAmountTotal
Balances, December 31, 202015,917,559 $796 $117,387 $115,657 $(22,962)(528,274)$(13,964)$196,914 
Net income— — — 432 — — — 432 
Change in cumulative foreign currency translation adjustment— — — — (1,967)— — (1,967)
Shares issued in connection with at-the-market offering program397,820 20 25,242 — — — — 25,262 
Shares issued in connection with stock compensation plans84,434 4 (4)— — — —  
Stock-based compensation— — 1,469 — — — — 1,469 
Treasury stock activity— — — — — (38,069)(3,680)(3,680)
Balances, March 31, 202116,399,813 $820 $144,094 $116,089 $(24,929)(566,343)$(17,644)$218,430 

     OtherTreasury Stock and 
   Additional CumulativeCompany Stock Held for 
 Common StockPaid-InRetainedComprehensiveDeferred Compensation 
 SharesAmountCapitalEarningsLossSharesAmountTotal
Balances, December 31, 201915,117,207 $756 $85,639 $119,002 $(25,803)(464,532)$(7,453)$172,141 
Net income— — — 4,155 — — — 4,155 
Change in cumulative foreign currency translation adjustment— — — — (840)— — (840)
Shares issued in connection with stock compensation plans143,628 7 (7)— — — —  
Adjustment for cumulative effect from change in accounting principle (ASU 2016-13)— — — (50)— — — (50)
Stock-based compensation— — 1,200 — — — — 1,200 
Dividends declared— — — (1,883)— — — (1,883)
Treasury stock activity— — — — — (45,061)(1,034)(1,034)
Balances, March 31, 202015,260,835 $763 $86,832 $121,224 $(26,643)(509,593)$(8,487)$173,689 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements
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DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(unaudited)


Three months ended March 31,
 20212020
Cash flows provided by operating activities:  
Net income$432 $4,155 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation2,698 2,352 
Amortization of purchased intangible assets324 354 
Amortization of deferred debt issuance costs56 40 
Stock-based compensation1,608 1,118 
Deferred income taxes(2,334)(160)
(Gain) loss on disposal of property, plant and equipment(288)13 
Restructuring expenses127 1,116 
Change in:  
Accounts receivable, net(4,629)10,277 
Inventories(6,184)(8,187)
Prepaid expenses and other(4,480)383 
Accounts payable9,963 (2,752)
Contract liabilities2,432 955 
Accrued expenses and other liabilities2,451 (4,744)
Net cash provided by operating activities2,176 4,920 
Cash flows provided by (used in) investing activities:  
Proceeds from maturities of marketable securities4,799  
Acquisition of property, plant and equipment(1,365)(5,121)
Proceeds on sale of property, plant and equipment281  
Net cash provided by (used in) investing activities3,715 (5,121)
Cash flows provided by (used in) financing activities:  
Repayments on capital expenditure facility(11,750)(781)
Payment of dividends (1,866)
Net proceeds from issuance of common stock through at-the-market offering program25,262  
Treasury stock purchases(2,435)(1,034)
Net cash provided by (used in) financing activities11,077 (3,681)
Effects of exchanges rates on cash682 (20)
Net increase (decrease) in cash and cash equivalents17,650 (3,902)
Cash and cash equivalents, beginning of the period28,187 20,353 
Cash and cash equivalents, end of the period$45,837 $16,451 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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DMC GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Share and Per Share Data)
(unaudited)
 
1.      BASIS OF PRESENTATION
 
The information included in the condensed consolidated financial statements is unaudited but includes all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the financial statements that are included in our Annual Report filed on Form 10-K for the year ended December 31, 2020.

2.      SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
 
The condensed consolidated financial statements include the accounts of DMC Global Inc. (“DMC”, “we”, “us”, “our”, or the “Company”) and its controlled subsidiaries. Only subsidiaries in which controlling interests are maintained are consolidated. All significant intercompany accounts, profits, and transactions have been eliminated in consolidation.

Marketable Securities

We typically invest in highly rated securities, with the primary objectives of preserving principal, providing access to liquidity to fund the ongoing operations and strategic needs of the Company and its subsidiaries, and achieving a yield that is commensurate with low risk and highly liquid securities. The Company’s investment policy generally limits the amount of credit exposure to any one issuer.

Our investments in marketable debt securities are classified as either trading, available-for-sale or held-to-maturity based on the nature of the securities and their availability for use in current operations. The Company classifies its marketable debt securities on the Condensed Consolidated Balance Sheet as current or non-current based on maturities and our expectations of sales and redemptions in the following year.

As of March 31, 2021 and December 31, 2020, our investments were comprised solely of U.S. Treasury securities with maturities ranging from three to twelve months, and these investments have been classified and accounted for as trading securities. The Company’s investments in U.S. Treasury securities are measured at fair value with gains and losses recognized in the Condensed Consolidated Statement of Operations within “Other income, net."

Accounts Receivable

The Company measures expected credit losses for its accounts receivable using a current expected credit loss model, which is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company has disaggregated pools of accounts receivable balances by business, geography and/or customer risk profile and has used history and other experience to establish an allowance for credit losses at the time the receivable is recognized. To measure expected credit losses, we have elected to pool trade receivables by segment and analyze DynaEnergetics and NobelClad accounts receivable balances as separate populations. Within each segment, receivables exhibit similar risk characteristics.

During the three months ended March 31, 2021, our expected loss rate continued to reflect uncertainties in market conditions present in both of our businesses due to the ongoing COVID-19 pandemic. In addition, we reviewed receivables outstanding, including aged balances, and in circumstances where we are aware of a specific customer’s inability to meet its financial obligation to us, we recorded a specific allowance for credit losses (with the offsetting expense charged to “Selling and distribution expenses” in our Condensed Consolidated Statements of Operations) against the amounts due, reducing the net recognized receivable to the amount we estimate will be collected. In total, provisions of $38 were recorded during the three months ended March 31, 2021.

The following table summarizes activity in the allowance for credit losses on receivables from DynaEnergetics and NobelClad customers:


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DynaEnergeticsNobelCladDMC Global Inc.
Allowance for doubtful accounts, December 31, 2020
$2,590 $15 $2,605 
Current period provision for expected credit losses38  38 
Recoveries of amounts previously reserved(10) (10)
Impacts of foreign currency exchange rates and other(2) (2)
Allowance for doubtful accounts, March 31, 2021
$2,616 $15 $2,631 

Revenue Recognition

The Company’s revenues are primarily derived from consideration paid by customers for tangible goods. The Company analyzes its different goods by segment to determine the appropriate basis for revenue recognition. Revenue is not generated from sources other than contracts with customers and revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. There are no material upfront costs for operations that are incurred from contracts with customers.

Our rights to payments for goods transferred to customers arise when control is transferred at a point in time and not on any other criteria. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 60 days. In instances when we require customers to make advance payments prior to the shipment of their orders, we record a contract liability. We have determined that our contract liabilities do not include a significant financing component given the short duration between order initiation and order fulfillment within each of our segments. Please refer to Note 5 “Contract Liabilities” for further information on contract liabilities and Note 10 “Business Segments” for disaggregated revenue disclosures.

Income Taxes

We recognize deferred tax assets and liabilities for the expected future income tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment. The deferred income tax impact of tax credits is recognized as an immediate adjustment to income tax expense. We recognize deferred tax assets for the expected future effects of all deductible temporary differences to the extent we believe these assets will more likely than not be realized. We record a valuation allowance when, based on current circumstances, it is more likely than not that all or a portion of the deferred tax assets will not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, recent financial operations and their associated valuation allowances, if any.

We recognize the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position that it will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that is more likely than not to be realized upon ultimate resolution. We recognize interest and penalties related to uncertain tax positions in operating expense.

Earnings Per Share

In periods with net income, the Company computes earnings per share (“EPS”) using a two-class method, which is an earnings allocation formula that determines EPS for (i) each class of common stock (the Company has a single class of common stock), and (ii) participating securities according to dividends declared and participation rights in undistributed earnings. Restricted stock awards are considered participating securities in periods with net income as they receive non-forfeitable rights to dividends similar to common stock. Restricted stock awards do not participate in net losses.

Basic EPS is calculated by dividing net income available to common stockholders of the Company by the weighted average number of shares of common stock outstanding during the period. Diluted EPS adjusts basic EPS for the effects of restricted stock awards, performance share units and other potentially dilutive financial instruments (dilutive securities), only in the periods in which such effect is dilutive. The effect of the dilutive securities is reflected in diluted EPS by application of the more dilutive of (1) the treasury stock method or (2) the two-class method assuming nonvested shares are not converted into shares of common stock. For the periods presented, diluted EPS using the treasury stock method was less dilutive than the two-class method; as such, only the two-class method has been included below.
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Three months ended March 31,
20212020
Net income, as reported$432 $4,155 
Less: Distributed net income available to participating securities (30)
Less: Undistributed net income available to participating securities(5)(37)
Numerator for basic net income per share:427 4,088 
Add: Undistributed net income allocated to participating securities5 37 
Less: Undistributed net income reallocated to participating securities(5)(37)
Numerator for diluted net income per share:427 4,088 
Denominator:
Weighted average shares outstanding for basic net income per share15,453,103 14,697,164 
Effect of dilutive securities10,820 20,672 
Weighted average shares outstanding for diluted net income per share15,463,923 14,717,836 
Net income per share
Basic$0.03 $0.28 
Diluted$0.03 $0.28 

Deferred compensation

The Company maintains a Non-Qualified Deferred Compensation Plan (the “Plan”) as part of its overall compensation package for certain employees. Participants are eligible to defer a portion of their annual salary, their annual incentive bonus, and their equity awards through the Plan on a tax-deferred basis. Deferrals into the Plan are not matched or subsidized by the Company, nor are they eligible for above-market or preferential earnings.

The Plan provides for deferred compensation obligations to be settled either by delivery of a fixed number of shares of DMC’s common stock or in cash, in accordance with participant contributions and elections. For deferred equity awards, subsequent to equity award vesting and after a period prescribed by the Plan, participants can elect to diversify contributions of equity awards into other investment options available to Plan participants. Once diversified, contributions of equity awards will be settled by delivery of cash.

The Company has established a grantor trust commonly known as a “rabbi trust” and contributed certain assets to satisfy the future obligations to participants in the Plan. These assets are subject to potential claims of the Company’s general creditors. The assets held in the trust include unvested restricted stock awards (“RSAs”), vested company stock awards, company-owned life insurance (“COLI”) on certain employees, and money market and mutual funds. Unvested RSAs and common stock held by the trust are reflected in the Consolidated Balance Sheets within “Treasury stock, at cost, and company stock held for deferred compensation, at par” at the par value of the common stock or unvested RSAs. These accounts are not adjusted for subsequent changes in the fair value of the common stock. COLI is accounted for at the cash surrender value while money market and mutual funds held by the trust are accounted for at fair value.

Deferred compensation obligations that will be settled in cash are accounted for on an accrual basis in accordance with the terms of the Plan. These obligations are adjusted based on changes in value of the underlying investment options chosen by Plan participants. Deferred compensation obligations that will be settled by delivery of a fixed number of previously vested shares of the Company’s common stock are reflected in the Consolidated Statements of Stockholders’ Equity within “Common stock” at the par value of the common stock or unvested RSAs. These accounts are not adjusted for subsequent changes in the fair value of the common stock.

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The balances related to the deferred compensation plan were as follows:

Consolidated Balance Sheet locationMarch 31, 2021December 31, 2020
Deferred compensation assetsOther assets$9,447 $7,596 
Deferred compensation obligationsOther long-term liabilities$13,500 $11,894 

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to use an established hierarchy for fair value measurements based upon the inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels in the hierarchy are as follows:                   

Level 1 — Inputs to the valuation based upon quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.

Level 2 — Inputs to the valuation include quoted prices in either markets that are not active, or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data.

Level 3 — Inputs to the valuation that are unobservable inputs for the asset or liability. 

The highest priority is assigned to Level 1 inputs and the lowest priority to Level 3 inputs.

The carrying value of accounts receivable and payable, accrued expenses, revolving loans under our credit facility and borrowings under our capital expenditure facility approximate their fair value. Our U.S. Treasury marketable securities are valued using quoted prices in active markets that are accessible as of the measurement date. Our revolving loans and borrowings under our capital expenditure facility, when outstanding, reset each month at market interest rates. Money market funds and mutual funds of $5,955 as of March 31, 2021 and $4,244 as of December 31, 2020 were held to satisfy future deferred compensation obligations are valued based upon the market values of underlying securities, and therefore we classify these assets as Level 1 in the fair value hierarchy.

Our foreign currency forward contracts are valued using quoted market prices or are determined using a yield curve model based on current market rates. As a result, we classify these investments as Level 2 in the fair value hierarchy.

We did not hold any Level 3 assets or liabilities as of March 31, 2021 or December 31, 2020.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board issued a new accounting pronouncement regarding accounting for income taxes. The new standard removes certain exceptions to the general principles in ASC 740 Income Taxes and also clarifies and amends existing guidance to provide for more consistent application. The new standard became effective for the Company in the first quarter of fiscal 2021 and did not have a material impact on our consolidated financial statements.

3.      INVENTORIES
 
Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Significant cost elements included in inventory are material, labor, freight, subcontract costs, and manufacturing overhead. As necessary, we adjust inventory to its net realizable value by recording provisions for excess, slow moving and obsolete inventory. We regularly review inventory quantities on hand and values, and compare them to estimates of future product demand, market conditions, production requirements and technological developments.

Inventories consisted of the following at March 31, 2021:

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DynaEnergeticsNobelCladDMC Global Inc.
Raw materials$14,616 $11,403 $26,019 
Work-in-process7,997 8,763 16,760 
Finished goods14,532 401 14,933 
Supplies 232 232 
Inventories$37,145 $20,799 $57,944 

Inventories consisted of the following at December 31, 2020:

DynaEnergeticsNobelCladDMC Global Inc.
Raw materials$13,250 $11,903 $25,153 
Work-in-process7,062 6,682 13,744 
Finished goods12,806 669 13,475 
Supplies 201 201 
Inventories$33,118 $19,455 $52,573 

4.      PURCHASED INTANGIBLE ASSETS
 
Our purchased intangible assets consisted of the following as of March 31, 2021:
GrossAccumulated
Amortization
Net
Core technology$16,881 $(13,954)$2,927 
Customer relationships36,516 (36,516) 
Trademarks / Trade names2,102 (2,102) 
Total intangible assets$55,499 $(52,572)$2,927 
 
Our purchased intangible assets consisted of the following as of December 31, 2020:
GrossAccumulated
Amortization
Net
Core technology$17,899 $(14,234)$3,665 
Customer relationships37,638 (37,638) 
Trademarks / Trade names2,194 (2,194) 
Total intangible assets$57,731 $(54,066)$3,665 
 
The change in the gross value of our purchased intangible assets from December 31, 2020 to March 31, 2021 was due to foreign currency translation and the recognition of the tax benefit of tax deductible goodwill amortization related to the 2007 acquisition of our German subsidiaries. Prior to the impairment of the goodwill related to the NobelClad and DynaEnergetics reporting units at September 30, 2017 and December 31, 2015, respectively, the tax benefit of tax amortization reduced the goodwill balance. After we fully impaired the goodwill, which is only written off for U.S. GAAP purposes, the tax benefit of tax goodwill amortization reduces the gross value of the purchased intangible assets related to this acquisition.

5.      CONTRACT LIABILITIES
 
On occasion, we require customers to make advance payments prior to the shipment of goods in order to help finance our inventory investment on large orders or to keep customers’ credit limits at acceptable levels. Contract liabilities were as follows:
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March 31, 2021December 31, 2020
NobelClad$6,845 $4,450 
DynaEnergetics360 478 
Total$7,205 $4,928 

We generally expect to recognize the revenue associated with contract liabilities over a time period no longer than one year, but unforeseen circumstances can cause delays in shipments associated with contract liabilities. Approximately 25% of the $4,928 recorded as contract liabilities at December 31, 2020 was recorded to net sales during the three months ended March 31, 2021.

6.      LEASES

The Company leases real properties for use in manufacturing and as administrative and sales offices, and leases automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Company is the lessee, leases are classified as either finance or operating. Right of use (ROU) assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any, with the classification affecting the pattern of expense recognition. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the future lease payments. Lease and non-lease components within the Company’s lease agreements are accounted for together.

Nearly all of the Company’s leasing arrangements are classified as operating leases. ROU asset and lease liability balances were as follows for the periods presented:

March 31, 2021December 31, 2020
ROU asset10,589 10,733 
Current lease liability1,505 1,741 
Long-term lease liability10,137 10,066 
Total lease liability$11,642 $11,807 

The ROU asset was included in “Other assets” while the current lease liability was reported in “Other current liabilities” and the long-term lease liability was reported in “Other long-term liabilities” on the Company’s Condensed Consolidated Balance Sheet. Cash paid for operating lease liabilities are recorded as cash flows from operating activities in the Company’s Condensed Consolidated Statements of Cash Flows. For the three months ended March 31, 2021 and 2020, operating lease costs were $971 and $1,102, respectively, which were included in the Company’s Condensed Consolidated Statements of Operations. Short term and variable lease costs were not material for the three months ended March 31, 2021 and 2020.

Certain of the Company’s leases contain renewal options and options to extend the leases for up to five years, and a majority of these options are reflected in the calculation of the ROU asset and lease liability due to the likelihood of renewal.

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The following table summarizes the weighted average lease terms and discount rates for operating lease liabilities:
March 31, 2021
Weighted average remaining lease term (in years)8.03
Weighted average discount rate5.1 %

The following table represents maturities of operating lease liabilities as of March 31, 2021:
Due within 1 year$1,505 
Due after 1 year through 2 years2,077 
Due after 2 years through 3 years1,967 
Due after 3 years through 4 years1,792 
Due after 4 years through 5 years1,733 
Due after 5 years5,727 
Total future minimum lease payments14,801 
Less imputed interest(3,159)
Total$11,642 

7.      DEBT
 
As of March 31, 2021 we had no outstanding borrowings under our credit facility. As of December 31, 2020, outstanding borrowings consisted of the following:

Syndicated credit agreement: 
Capital expenditure facility$11,750 
Outstanding borrowings11,750 
Less: debt issuance costs(486)
Total debt11,264 
Less: current portion of long-term debt(3,125)
Long-term debt$8,139 

Syndicated Credit Agreement

On March 8, 2018, we entered into a five-year $75,000 syndicated credit agreement (“credit facility”) which replaced in its entirety our prior syndicated credit facility entered into on February 23, 2015. The credit facility allows for revolving loans of up to $50,000 with a $20,000 US dollar equivalent sublimit for alternative currency loans. In addition, the agreement provided for a $25,000 Capital Expenditure Facility (“Capex Facility”) which was used to assist in financing our DynaEnergetics manufacturing expansion project in Blum, Texas. At the end of year one, the Capex Facility converted to a term loan which was amortizable at 12.5% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in 2023. In February 2021, we repaid the remaining Capex Facility balance of $11,750.
The credit facility has a $100,000 accordion feature to increase the commitments under the revolving loan class and/or by adding a term loan subject to approval by applicable lenders. We entered into the credit facility with a syndicate of three banks, with KeyBank, N.A. acting as administrative agent. The syndicated credit facility is secured by the assets of DMC including accounts receivable, inventory, and fixed assets, as well as guarantees and share pledges by DMC and its subsidiaries.
Borrowings under the $50,000 revolving loan can be in the form of one-, two-, three-, or six-month LIBOR rate loans. Additionally, US dollar borrowings on the revolving loan can be in the form of Base Rate loans (Base Rate borrowings are based on the greater of the administrative agent’s Prime rates, an adjusted Federal Funds rate or an adjusted LIBOR rate). LIBOR loans bear interest at the applicable LIBOR rate plus an applicable margin (varying from 1.50% to 3.00%). Base Rate loans bear interest at the defined Base rate plus an applicable margin (varying from 0.50% to 2.00%).
Borrowings under the $20,000 alternate currency sublimit can be in euros, Canadian dollars, pounds sterling, and in any other currency acceptable to the administrative agent. Alternative currency borrowings denominated in euros, pounds sterling, and any other currency that is dealt with on the London Interbank Deposit Market shall be comprised of LIBOR loans and bear interest at the LIBOR rate plus an applicable margin (varying from 1.50% to 3.00%).
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On June 25, 2020, we entered into an amendment ("Amendment") to the credit facility. The Amendment waives the debt service coverage ratio covenant for the quarters ending September 30, 2020, December 31, 2020, and March 31, 2021. The debt service coverage ratio minimum of 1.35 to 1 will resume beginning with the quarter ending June 30, 2021 and thereafter. The debt service coverage ratio is defined in the credit facility as the ratio of Consolidated Pro Forma EBITDA less the sum of capital distributions paid in cash, cash income taxes and Consolidated Unfunded Capital Expenditures (as defined in the credit facility) to Debt Service Charges (as defined in the credit facility).

Additionally, the Amendment added a Minimum Liquidity covenant requiring the total of cash and cash equivalents held by U.S. subsidiaries and available borrowing capacity under the credit facility to exceed $10,000 for the quarters ending September 30, 2020, December 31, 2020, and March 31, 2021. The Minimum Liquidity covenant is not required after March 31, 2021.

During the period from the Amendment through August 31, 2020, borrowings outstanding under the credit facility bore interest at LIBOR plus a margin of 1.75% or at a Base Rate (as defined in the credit facility) plus a margin of 0.75%. For the period from September 1, 2020 through the date of receipt of the covenant compliance certificate for the quarter ending March 31, 2021, borrowings outstanding under the credit facility will bear interest at LIBOR plus a margin of 1.75% to 3.00% or at a Base Rate plus a margin of 0.75% to 2.00%. In each case, the margin is based on the Company's Leverage Ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of such period to Consolidated Pro Forma EBITDA for such period. Additionally, the Amendment sets the minimum LIBOR at 0.75%.

On October 22, 2020, in connection with the commencement of our at-the-market offering, we entered into an amendment to the credit facility to waive the requirement that we repay outstanding balances under the credit facility from the proceeds of any equity offering. The waiver applies to at-the-market offerings up to $75 million.

The credit facility, as amended, includes various covenants and restrictions, certain of which relate to the payment of dividends or other distributions to stockholders; redemption of capital stock; incurrence of additional indebtedness; mortgaging, pledging or disposition of major assets; and maintenance of specified ratios. As of March 31, 2021, we were in compliance with all financial covenants and other provisions of our debt agreements.

We also maintain a line of credit with a German bank for certain European operations. In July 2020, the German Bank Facility was amended to increase the borrowing capacity from €4,000 to €7,000. Of the €7,000 borrowing capacity, €3,781 was available as of March 31, 2021 after considering outstanding letters of credit.

Given that we had no outstanding debt as of March 31, 2021, our deferred debt issuance costs of $430 were reported in the “Other assets” line item on our Condensed Consolidated Balance Sheet. Our deferred debt issuance costs of $486 as of December 31, 2020 were reported in the “Long term debt” line item on our Condensed Consolidated Balance Sheet. Deferred debt issuance costs are being amortized over the remaining term of the credit facility which expires on March 8, 2023.

8.     EQUITY PROGRAM

On October 22, 2020, the Company commenced an at-the-market ("ATM") equity program under its shelf registration statement, which allows it to sell and issue up to $75 million in shares of its common stock from time to time. The Company entered into an Equity Distribution Agreement on October 22, 2020 with KeyBanc Capital Markets Inc. ("KeyBanc") relating to the issuance and sale of shares of common stock pursuant to the program. KeyBanc is not required to sell any specific amount of securities but will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between KeyBanc and us. There is no specific date on which the ATM equity program will end and there are no minimum purchase requirements. KeyBanc will be entitled to compensation for shares sold pursuant to the program in an amount up to 1.5% of the gross proceeds of any shares of common stock sold under the Equity Distribution Agreement.

During the quarter ended March 31, 2021, the Company sold 397,820 shares of common stock through its ATM equity program for gross proceeds of $25,647 at a weighted average price per share of $64.47. Net proceeds from such sales were $25,262, after deducting commissions paid to the sales agents of approximately $385. Since the inception of the program, the Company has sold 1,006,180 shares of common stock through its ATM equity program for gross proceeds of $51,779 at a weighted average price per share of $51.46.

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9.     INCOME TAXES

The effective tax rate for each of the periods reported differs from the U.S. statutory rate primarily due to variation in contribution to consolidated pre-tax income from each jurisdiction for the respective periods, differences between the U.S. and foreign tax rates (which range from 20% to 34%), permanent differences between book and taxable income, and changes to valuation allowances on our deferred tax assets.

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use existing deferred tax assets. Additionally, a three-year cumulative loss at a Consolidated Financial Statement level may be viewed as negative evidence impacting a jurisdiction that by itself is not in a three-year cumulative loss position. During the three months ended March 31, 2021 and March 31, 2020, we did not record any adjustments to valuation allowances. The Company will continue to monitor the realizability of deferred tax assets and the need for valuation allowances and will record adjustments in the periods in which facts support such adjustments.

The Tax Cuts and Jobs Act (“TCJA”) provides that foreign earnings generally can be repatriated to the U.S. without federal tax consequence. We have assessed the assertion that cumulative earnings by our foreign subsidiaries are indefinitely reinvested. We continue to permanently reinvest the earnings of our international subsidiaries and therefore we do not provide for U.S. income taxes or withholding taxes that could result from the distribution of those earnings to the U.S. parent. Nevertheless, if any such earnings were ultimately distributed to the U.S. in the form of dividends or otherwise, or if the shares of our international subsidiaries were sold or transferred, we could be subject to additional U.S. federal and state income taxes. Due to the multiple avenues in which earnings can be repatriated, and because a large portion of these earnings are not liquid, it is not practical to estimate the amount of additional taxes that might be payable on these amounts of undistributed foreign income.

During the fourth quarter of 2019, our German operating entities commenced a tax audit for fiscal years 2015 through 2017. We expect this audit to be completed in the second quarter of 2021. If any issues addressed in the audit are resolved in a manner not consistent with our expectations, the Company could be required to adjust its provision for income taxes in future periods.

10.      BUSINESS SEGMENTS
 
Our business is organized into two segments: DynaEnergetics and NobelClad. DynaEnergetics designs, manufactures and distributes products utilized by the global oil and gas industry principally for the perforation of oil and gas wells. NobelClad is a global leader in the production of explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints.
Our reportable segments are separately managed strategic business units that offer different products and services. Each segment’s products are marketed to different customer types and require different manufacturing processes and technologies.
Segment information is as follows:
 
Three months ended March 31,
20212020
Net sales
DynaEnergetics$38,172 $53,220 
NobelClad17,486 20,344 
Net sales$55,658 $73,564 

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Three months ended March 31,
20212020
Operating income
DynaEnergetics1,521 8,606 
NobelClad$1,604 $1,476 
Segment operating income3,125 10,082 
Unallocated corporate expenses(2,227)(2,617)
Stock-based compensation(1,608)(1,118)
Other income, net394 115 
Interest expense, net(135)(238)
(Loss) income before income taxes$(451)$6,224 

Three months ended March 31,
20212020
Depreciation and amortization
DynaEnergetics2,000 1,772 
NobelClad$939 $834 
Segment depreciation and amortization2,939 2,606 
Corporate and other83 100 
Consolidated depreciation and amortization$3,022 $2,706 

The disaggregation of revenue earned from contracts with customers based on the geographic location of the customer is as follows.

DynaEnergetics
 Three months ended March 31,
 20212020
United States$27,831 $46,271 
Canada3,702 668 
Hong Kong1,190 136 
Egypt1,053 1,311 
Oman781 180 
Indonesia571 479 
Pakistan509 345 
Ukraine436 302