10-Q 1 boom-20220331.htm 10-Q boom-20220331
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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, 2022
 
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 19,497,194 as of May 5, 2022.





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 and customer pricing, planned price increases at DynaEnergetics, DynaEnergetics’ ability to benefit from strengthening prices, projected growth in Arcadia’s core geographic regions and end markets, plans to install new paint and anodizing lines to increase capacity and targets for such lines to be operational, our ability to access our at-the-market offerings or the capital markets in the future, expected continuing litigation costs, expected material and labor cost trends, and the availability of funds 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, 2021 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; inflation; 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 Arcadia and future-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; global economic conditions; and political and economic developments including political instability and armed conflicts. 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

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, 2022December 31, 2021
(unaudited)
ASSETS  
Current assets:  
Cash and cash equivalents$15,376 $30,810 
Accounts receivable, net of allowance for doubtful accounts of $2,752 and $2,773, respectively
79,782 71,932 
Inventories143,304 124,214 
Prepaid expenses and other17,354 12,240 
Total current assets255,816 239,196 
Property, plant and equipment192,161 191,022 
Less - accumulated depreciation(71,682)(68,944)
Property, plant and equipment, net120,479 122,078 
Goodwill140,234 141,266 
Purchased intangible assets, net242,568 255,576 
Deferred tax assets8,379 6,930 
Other assets96,448 99,366 
Total assets$863,924 $864,412 
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$48,114 $40,276 
Accrued expenses14,793 13,585 
Accrued income taxes834 9 
Accrued employee compensation and benefits9,208 9,766 
Contract liabilities26,952 21,052 
Current portion of long-term debt15,000 15,000 
Other current liabilities6,287 6,126 
Total current liabilities121,188 105,814 
Long-term debt128,710 132,425 
Deferred tax liabilities937 2,202 
Other long-term liabilities64,398 66,250 
Total liabilities315,233 306,691 
Commitments and contingencies (Note 12)
Redeemable noncontrolling interest197,196 197,196 
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; 20,084,272 and 19,920,829 shares issued, respectively
1,004 996 
Additional paid-in capital296,774 294,515 
Retained earnings102,026 111,031 
Other cumulative comprehensive loss(27,742)(26,538)
Treasury stock, at cost, and company stock held for deferred compensation, at par; 587,188 and 570,415 shares, respectively
(20,567)(19,479)
Total stockholders’ equity351,495 360,525 
Total liabilities, redeemable noncontrolling interest, and stockholders’ equity$863,924 $864,412 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Data)
(unaudited)

Three months ended March 31,
 20222021
Net sales$138,716 $55,658 
Cost of products sold101,810 42,745 
Gross profit36,906 12,913 
Costs and expenses:  
General and administrative expenses17,718 7,929 
Selling and distribution expenses10,090 5,243 
Amortization of purchased intangible assets12,976 324 
Restructuring expenses and asset impairments32 127 
Total costs and expenses40,816 13,623 
Operating loss(3,910)(710)
Other income (expense):  
Other (expense) income, net(209)394 
Interest expense, net(1,024)(135)
Loss before income taxes(5,143)(451)
Income tax benefit(863)(883)
Net (loss) income$(4,280)$432 
Less: Net loss attributable to redeemable noncontrolling interest(992) 
Net (loss) income attributable to DMC Global Inc. stockholders$(3,288)$432 
Net (loss) income per share attributable to DMC Global Inc. stockholders:  
Basic$(0.47)$0.03 
Diluted$(0.47)$0.03 
Weighted average shares outstanding:  
Basic19,301,126 15,453,103 
Diluted19,301,126 15,463,923 

Reconciliation to net (loss) income attributable to DMC Global Inc. stockholders after adjustment of redeemable noncontrolling interest for purposes of calculating earnings per share
Three months ended March 31,
20222021
Net (loss) income attributable to DMC Global Inc. stockholders$(3,288)$432 
Adjustment of redeemable noncontrolling interest(5,717) 
Net (loss) income attributable to DMC Global Inc. common shareholders after adjustment of redeemable noncontrolling interest$(9,005)$432 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Amounts in Thousands)
(unaudited)

 
Three months ended March 31,
 20222021
Net (loss) income$(4,280)$432 
Change in cumulative foreign currency translation adjustment(1,204)(1,967)
Other comprehensive loss$(5,484)$(1,535)
Less: comprehensive loss attributable to redeemable noncontrolling interest(992) 
Comprehensive loss attributable to DMC Global Inc. stockholders$(4,492)$(1,535)
 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
(Amounts in Thousands, Except Share Data)
(unaudited)

     OtherTreasury Stock, at cost, andTotalRedeemable
   Additional CumulativeCompany Stock Held forDMC Global Inc.Non-
 Common StockPaid-InRetainedComprehensive Deferred Compensation, at parStockholders’Controlling
 SharesAmountCapitalEarningsLossSharesAmountEquityInterest
Balances, December 31, 202119,920,829 $996 $294,515 $111,031 $(26,538)(570,415)$(19,479)$360,525 $197,196 
Net loss— — — (3,288)— — — (3,288)(992)
Change in cumulative foreign currency translation adjustment— — — — (1,204)— — (1,204)— 
Shares issued in connection with stock compensation plans163,443 8 (8)— — — — — — 
Escrow adjustment related to redeemable noncontrolling interest— — — — — — — — (427)
Adjustment of redeemable noncontrolling interest to redemption value— — — (5,717)— — — (5,717)5,717 
Stock-based compensation— — 2,267 — — — — 2,267 102 
Distribution to redeemable noncontrolling interest holder— — — — — — — — (4,400)
Treasury stock activity— — — — — (16,773)(1,088)(1,088)— 
Balances, March 31, 202220,084,272 $1,004 $296,774 $102,026 $(27,742)(587,188)$(20,567)$351,495 $197,196 
7

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
(Amounts in Thousands, Except Share Data)
(unaudited)
     OtherTreasury Stock, at cost, andTotal
   Additional CumulativeCompany Stock Held forDMC Global Inc.
 Common StockPaid-InRetainedComprehensiveDeferred Compensation, at parStockholders’
 SharesAmountCapitalEarningsLossSharesAmountEquity
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 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements
8

DMC GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(unaudited)

Three months ended March 31,
 20222021
Cash flows (used in) provided by operating activities:  
Net (loss) income$(4,280)$432 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:  
Depreciation3,359 2,698 
Amortization of purchased intangible assets12,976 324 
Amortization of deferred debt issuance costs132 56 
Amortization of acquisition-related inventory valuation step-up258  
Stock-based compensation2,358 1,608 
Deferred income taxes(2,714)(2,334)
Loss (gain) on disposal of property, plant and equipment 9 (288)
Restructuring expenses and asset impairments32 127 
Change in:  
Accounts receivable, net(7,480)(4,629)
Inventories(19,877)(6,184)
Prepaid expenses and other(2,324)(4,480)
Accounts payable7,162 9,963 
Contract liabilities5,968 2,432 
Accrued expenses and other liabilities(163)2,451 
Net cash (used in) provided by operating activities(4,584)2,176 
Cash flows (used in) provided by investing activities:   
Proceeds from maturities of marketable securities 4,799 
Acquisition of property, plant and equipment(1,536)(1,365)
Proceeds on sale of property, plant and equipment 281 
Net cash (used in) provided by investing activities(1,536)3,715 
Cash flows (used in) provided by financing activities:   
Payments on term loan(3,750) 
Repayments on capital expenditure facility (11,750)
Payment of debt issuance costs(97) 
Distributions to redeemable noncontrolling interest holder(4,400) 
Net proceeds from issuance of common stock through at-the-market offering program 25,262 
Treasury stock purchases(1,088)(2,435)
Net cash (used in) provided by financing activities(9,335)11,077 
Effects of exchange rates on cash21 682 
Net (decrease) increase in cash and cash equivalents(15,434)17,650 
Cash and cash equivalents, beginning of the period30,810 28,187 
Cash and cash equivalents, end of the period$15,376 $45,837 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
9

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. Certain information and footnote disclosures, including critical and significant accounting policies normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted for this quarterly presentation. 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, 2021.

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.

Accounts and Notes 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 each segment’s accounts receivable balances as separate populations. Within each segment, receivables exhibit similar risk characteristics.

During the three months ended March 31, 2022, our expected loss rate reflects uncertainties in market conditions that could impact our businesses, including COVID-19 related considerations, supply chain disruptions, as well as global geopolitical and economic instability. 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, net recoveries of $20 were recorded during the three months ended March 31, 2022. Net recoveries recorded do not reflect $1,237 of receivable balances outstanding that we are currently monitoring related to a DynaEnergetics customer that operates in Western Ukraine.

The following table summarizes year-to-date activity in the allowance for credit losses on receivables from customers in each of our business segments:

ArcadiaDynaEnergeticsNobelCladDMC Global Inc.
Allowance for doubtful accounts, December 31, 2021
$ $2,758 $15 $2,773 
Current period provision for expected credit losses$11 16  27 
Recoveries of amounts previously reserved$ (47) (47)
Impacts of foreign currency exchange rates and other$ (1) (1)
Allowance for doubtful accounts, March 31, 2022
$11 $2,726 $15 $2,752 

During 2021, the Company entered into a note receivable with terms of repayment over five years, collateralized by certain fixed assets. The note, with an outstanding current balance of $974 as of March 31, 2022 recorded within “Prepaid expenses and other” and an outstanding long-term balance of $8,768 as of March 31, 2022 recorded within “Other Assets”, is
10

considered an arrangement with a variable interest entity for which the Company is not the primary beneficiary and has concluded does not require consolidation.

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 within our DynaEnergetics and NobelClad business segments arise when control is transferred at a point in time and not on any other criteria. Our rights to payments for goods transferred to customers within our Arcadia business segment also generally arise when control is transferred at a point in time; however, at times, control of certain project-based products passes to the customer over time. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 90 days across all of our segments. 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 6 "Contract Liabilities" for further information on contract liabilities and Note 10 "Business Segments" for disaggregated revenue disclosures.

See additional revenue recognition policy disclosures specific to the DynaEnergetics and NobelClad business segments within our Annual Report filed on Form 10-K for the year ended December 31, 2021.

Arcadia

Customers agree to terms and conditions at the time of initiating an order. The significant majority of transactions contain standard architectural building materials that are not made-to-order, which include storefronts and entrances, windows, curtain walls, doors and interior partitions. In instances where multiple products are included within an order, each product represents a separate performance obligation given that: (1) the customer can benefit from each product on a standalone basis and (2) each product is distinct within the context of the contract.

The transaction price is readily determinable and fixed at the time the transaction is entered into with the customer. Arcadia is entitled to each product’s transaction price upon the customer obtaining control of the item. For standard architectural building materials that are not made-to-order, such control transfers at a point in time, which is generally when the product has been delivered to the customer and the legal title has been transferred. Upon delivery and title transfer, Arcadia has performed its contractual requirements such that it has a present right to payment, and the customer from that point forward bears all risks and rewards of ownership. In addition, at this date, the customer has the ability to direct the use of, or restrict access to, the asset. Payment discounts, rebates, refunds, or any other forms of variable consideration are typically not included within Arcadia contracts.

For contracts that contain only one performance obligation, the total transaction price is allocated to the sole performance obligation. For contracts which contain multiple distinct performance obligations, judgment is required to determine the standalone selling price (“SSP”) for each performance obligation. However, such judgment is largely mitigated given that standard architectural building materials purchased are generally shipped at the same time. In instances where products purchased are not shipped at the same time, Arcadia uses the contractually stated price to determine SSP as this price approximates the price of each good as sold separately.

At times, Arcadia will also contract with customers to supply customized architectural building materials based on design specifications, measurements, finishes, framing materials, and other options selected by the customer at the time an order is initiated. For these contracts, Arcadia has an enforceable right to payment from its customers at the time an order is received and accepted for all manufacturing efforts expended on behalf of its customers. Due to the customized nature of these products, the Company has concluded that the substantial portion of the related goods produced have no alternative use, and therefore control of these products passes to the customer over time. We have concluded that recognizing revenue utilizing an over-time output method based upon units delivered reasonably depicts the fulfillment of our performance obligations under our contracts and the value received by the customer based upon our performance to date. This conclusion is further supported by the frequency of shipments in fulfilling these contracts. We have elected not to disclose our unsatisfied performance obligations as of March 31, 2022 under the short-term contract exemption as we expect such performance obligations will be satisfied within the next 12 months following the end of the reporting period.
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Billings for customized architectural building materials occur at times upon delivery, but also can occur via pre-established billing schedules agreed-upon at the commencement of the contract. Therefore, we frequently generate contract liabilities in instances when we have billed the customer in excess of revenue recognized for units delivered.

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 of net income as they receive non-forfeitable rights to dividends as common stock. Restricted stock awards do not participate in net losses.

Basic EPS is calculated by dividing net income (loss) attributable to the Company’s stockholders after adjustment of redeemable noncontrolling interest by the weighted average number of common shares outstanding during the period. Please refer to Note 3 "Business Combination" for further discussion of the calculation of the adjustment of the redeemable noncontrolling interest to redemption value as of the end of the period presented. Diluted EPS adjusts basic EPS for the effects of restricted stock awards, restricted stock units, 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. For the applicable 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.
12

Three months ended March 31,
20222021
Net (loss) income attributable to DMC Global Inc. stockholders, as reported$(3,288)$432 
Less: Adjustment of redeemable noncontrolling interest(5,717) 
Less: Undistributed net income available to participating securities (5)
Numerator for basic net (loss) income per share:(9,005)427 
Add: Undistributed net income allocated to participating securities 5 
Less: Undistributed net income reallocated to participating securities (5)
Numerator for diluted net (loss) income per share:(9,005)427 
Denominator:
Weighted average shares outstanding for basic net (loss) income per share19,301,126 15,453,103 
Effect of dilutive securities (1) 10,820 
Weighted average shares outstanding for diluted net (loss) income per share19,301,126 15,463,923 
Net (loss) income per share
Basic$(0.47)$0.03 
Diluted$(0.47)$0.03 
(1) For the three months ended March 31, 2022, 14,069 shares have been excluded as their effect would have been anti-dilutive.

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. If diversified, these contributions will be subsequently 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 Condensed 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 Condensed Consolidated Statements of Stockholders’ Equity and Redeemable Noncontrolling Interest 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.

The balances related to the deferred compensation plan were as follows:
Balance Sheet locationMarch 31, 2022December 31, 2021
Deferred compensation assetsOther assets$13,973 $13,812 
Deferred compensation obligationsOther long-term liabilities$15,516 $15,944 

13

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, and the revolving loans and term loan under our credit facility, when outstanding, approximate their fair value.

Our revolving loans and term loan under our credit facility, when outstanding, reset each month at market interest rates. As a result, we classify these liabilities 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 instruments as Level 2 in the fair value hierarchy. Money market funds and mutual funds of $9,430 as of March 31, 2022 and $9,083 as of December 31, 2021 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 2 in the fair value hierarchy.

We did not hold any Level 3 assets or liabilities as of March 31, 2022 or December 31, 2021. However, the fair value measurements of certain assets and liabilities acquired as part of the Arcadia acquisition were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued a new accounting standard which provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions apply only to contracts and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. These amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The Company will adopt this standard when LIBOR is discontinued; however, given that we do not have significant exposure to LIBOR or other referenced rates expected to be discontinued, we do not believe that adoption of this standard will have a material impact on our Consolidated Financial Statements.

3.      BUSINESS COMBINATION

On December 16, 2021, the Company entered into an equity purchase agreement with Arcadia, Inc., a California corporation, the shareholders of Arcadia, Inc. and certain other parties (the “Equity Purchase Agreement”). On December 23, 2021, pursuant to the Equity Purchase Agreement, the Company completed the acquisition of a 60% controlling interest in Arcadia Products, LLC, a Colorado limited liability company resulting from the conversion of Arcadia, Inc. (collectively, “Arcadia”) for closing consideration of $261,000 in cash (excluding $7,654 in acquired cash) and 551,458 shares of its common stock, par value $0.05 per share. A portion of the cash consideration was placed into escrow and is subject to certain post-closing adjustments.

DMC acquired Arcadia as part of its strategy of building a diversified portfolio of industry-leading businesses with differentiated products and services. Arcadia is a leading U.S. supplier of architectural building products, which include exterior and interior framing systems, windows, curtain walls, doors, and interior partitions for the commercial buildings market, and highly engineered windows and doors for the high-end residential real estate market.
14


The acquisition was funded by the Company through cash and marketable securities, equity, and debt financing. Assets acquired and liabilities assumed have been recorded at their fair values. Certain fair values were determined by management using the assistance of third-party valuation specialists. The valuation methods used to determine the fair value of intangible assets included the income approach—excess earnings method for customer relationships and the income approach—relief from royalty method for the trade name acquired. A number of assumptions and estimates were involved in the application of these valuation methods, including forecasts of revenues, costs of revenues, operating expenses, tax rates, forecasted capital expenditures, customer attrition rate, discount rates and working capital changes.

The following table sets forth the preliminary components of the fair value of the total consideration transferred and preliminary purchase price allocation of the net assets acquired at the date of acquisition, along with the measurement period adjustments that occurred during the quarter. The assets acquired and liabilities assumed exclude Arcadia's right-of-use asset and lease liabilities, respectively, as they have an immaterial impact on the total net assets acquired. Please see Note 7 “Leases” for additional discussion of lease accounting. The total consideration transferred is still subject to potential adjustment and the preliminary purchase price allocation related to the assets acquired and liabilities assumed may be adjusted as a result of the finalization of our procedures, primarily as it pertains to the valuation of certain long-lived assets.

PreliminaryMeasurement Period AdjustmentsPreliminary
December 23, 2021March 31, 2022
Cash, including cash acquired(1)
$268,654 $(640)$268,014 
Equity(2)
21,716 — 21,716 
Total fair value of consideration transferred290,370 (640)289,730 
Assets acquired:
Cash and cash equivalents$7,654 $— $7,654 
Accounts receivable31,456 — 31,456 
Inventories60,503 — 60,503 
Prepaid expenses and other2,438 — 2,438 
Property, plant and equipment(3)
17,323 — 17,323 
Goodwill(4)
141,266 (1,032)140,234 
Intangible assets(5)
254,500 — 254,500 
Other long-term assets122 (35)87 
Total assets acquired515,262 (1,067)514,195 
Liabilities assumed:
Accounts payable8,792 — 8,792 
Other current liabilities22,520 — 22,520 
Total liabilities assumed31,312 — 31,312 
Redeemable noncontrolling interest(6)
193,580 (427)193,153 
Total assets acquired and liabilities assumed$290,370 $(640)$289,730 

(1) Cash sources of funding included $150,000 in new term loan debt and $118,654 of cash and marketable securities on hand. During the quarter ended March 31, 2022, working capital estimates at the time of acquisition were finalized. In April 2022, $640 was returned to the Company from the funds previously placed into escrow.

(2) Equity consideration included 551,458 shares of DMC common stock.

(3) Property, plant and equipment primarily consists of the following:
15

Land$2,922 
Buildings and improvements4,015 
Manufacturing equipment and tooling9,877 
Furniture, fixtures, and computer equipment95 
Other414 
Total property, plant and equipment17,323 

The useful lives of the property, plant and equipment is consistent with the Company's accounting policies.

(4) Amounts recorded for goodwill resulting in a tax basis step-up are generally expected to be deductible for tax purposes. Tax deductible goodwill is estimated to be $85,815.

(5) Intangible assets consist of $211,000 of customer relationships, $22,000 of trade name, and $21,500 of customer backlog.

(6) Redeemable noncontrolling interest represents 40% of the total fair value of Arcadia upon acquisition.

The final fair value determination of the assets acquired and liabilities assumed will be completed prior to one year from the transaction completion date, consistent with Accounting Standards Codification (“ASC”) 805 Business Combinations ("ASC 805"). Measurement period adjustments will be recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed as of the acquisition date.

Redeemable noncontrolling interest

The limited liability company operating agreement for Arcadia (the “Operating Agreement”) contains a right for the Company to purchase the remaining interest in Arcadia from the minority interest holder on or after the third anniversary of the acquisition closing date (“Call Option”). Similarly, the minority interest holder of Arcadia has the right to sell its remaining interest in Arcadia to the Company on or after the third anniversary of the acquisition closing date (“Put Option”). Both the Call Option and Put Option enable the respective holder to exercise their rights based upon a predefined calculation as included within the Operating Agreement.

The Company initially accounted for the noncontrolling interest at its acquisition date fair value. We determined that both the Call Option and Put Option do not meet the definition of a derivative under ASC 815 Derivatives and Hedging as the Operating Agreement does not allow for contractual net settlement, the options cannot be settled outside the Operating Agreement through a market mechanism, and the underlying shares are deemed illiquid as they are not publicly traded and thus not considered readily convertible to cash. Additionally, the settlement price for both options is based upon a predefined calculation tied to adjusted earnings rather than a fixed price, and the formula is based upon Arcadia’s operating results. As such, we have concluded that the Call Option and Put Option are embedded within the noncontrolling interest and therefore do not represent freestanding instruments.

Given that the noncontrolling interest is subject to possible redemption (with redemption rights that are not entirely within the control of the Company), we have concluded that the noncontrolling interest should be accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity ("ASC 480"). The Company has also concluded that the noncontrolling interest is probable of redemption, as the only criteria for the security to become redeemable is the passage of time. As such, the Company has classified the redeemable noncontrolling interest separate from the stockholders’ equity section in the Condensed Consolidated Balance Sheets.

At each balance sheet date subsequent to acquisition, the carrying value of the redeemable noncontrolling interest has been adjusted to its estimated redemption value as if redemption were to occur at the balance sheet date. This immediate adjustment is charged directly to retained earnings and therefore does not impact the Condensed Consolidated Statements of Operations or Comprehensive (Loss) Income. As of March 31, 2022, the Company’s estimated redemption value of the redeemable noncontrolling interest has not changed in comparison to our estimate at December 31, 2021 of $197,196. As such, during the three months ended March 31, 2022, the Company recorded an adjustment of the redeemable noncontrolling interest’s carrying value to its estimated redemption value of $5,717. In accordance with ASC 480, this adjustment occurs only after the Company ascribes net income or loss and any cash distributions attributable to the redeemable noncontrolling interest.



16

Promissory Note

In order to equalize after-tax consideration to the redeemable noncontrolling interest holder relative to an alternative transaction structure, immediately following the closing of the acquisition, the Company loaned approximately $24,902 to the redeemable noncontrolling interest holder. The loan was evidenced by an unsecured promissory note, and the loan will be repaid out of proceeds from the sale of the redeemable noncontrolling interest holder’s interests in Arcadia, whether received upon exercise of the Put Option, the Call Option or upon sales to third parties permitted under the terms of the Operating Agreement. The loan must be repaid in full by December 16, 2051 and has been recorded within “Other Assets”.

Unaudited Pro Forma Financial Information

Pro forma financial information is presented for informational purposes and is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the acquisition of Arcadia been completed at an earlier date, nor is it representative of future operating results of the Company.

ASC 805 requires pro forma adjustments to reflect the effects of fair value adjustments, transaction costs, capital structure changes, the tax effects of such adjustments, and also requires nonrecurring adjustments to be prepared and presented. For the three months ended March 31, 2021, operating results have been adjusted to reflect (a) fair value adjustments related to incremental intangible asset amortization, (b) interest expense with the higher principal and interest rates associated with the Company's new term loan debt incurred to finance, in part, the acquisition of Arcadia, (c) the effects of integration costs on the results of Arcadia's operations, and (d) the effects of the adjustments on income taxes.

The following unaudited pro forma combined financial information presents combined results of the Company and Arcadia. Arcadia’s operating results have been included in the Company’s operating results for the three months ended March 31, 2022.

Three months ended March 31, 2021
As ReportedPro Forma
Net sales$55,658 $112,899 
Net income attributable to DMC Global Inc. stockholders$432 $4,353 

4.      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 write down 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, 2022:
ArcadiaDynaEnergeticsNobelCladDMC Global Inc.
Raw materials$14,086 $14,003 $8,979 $37,068 
Work-in-process5,634 21,269 8,781 35,684 
Finished goods50,143 19,760 440 70,343 
Supplies  209 209 
Total inventories$69,863 $55,032 $18,409 $143,304 









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Inventories consisted of the following at December 31, 2021:
ArcadiaDynaEnergeticsNobelCladDMC Global Inc.
Raw materials$12,168 $15,209 $7,655 $35,032 
Work-in-process3,987 13,672 10,257 27,916 
Finished goods44,348 14,998 1,651 60,997 
Supplies  269 269 
Total inventories$60,503 $43,879 $19,832 $124,214 

5.      PURCHASED INTANGIBLE ASSETS
 
Our purchased intangible assets consisted of the following as of March 31, 2022:
GrossAccumulated
Amortization
Net
Core technology$15,228 $(13,989)$1,239 
Customer relationships246,034 (38,588)207,446 
Customer backlog21,500 (9,214)12,286 
Trademarks / Trade names23,981 (2,384)21,597 
Total intangible assets$306,743 $(64,175)$242,568 
 
Our purchased intangible assets consisted of the following as of December 31, 2021:
GrossAccumulated
Amortization
Net
Core technology$15,647 $(14,209)$1,438 
Customer relationships246,718 (36,047)210,671 
Customer backlog21,500  21,500 
Trademarks / Trade names24,037 (2,070)21,967 
Total intangible assets$307,902 $(52,326)$255,576 
 
The change in the gross value of our purchased intangible assets at March 31, 2022 from December 31, 2021 primarily was due to foreign currency translation and an adjustment due to recognition of tax benefit of tax amortization previously applied to certain goodwill related to the DynaEnergetics and NobelClad reporting units. After the goodwill associated with each reporting unit was impaired at December 31, 2015 and September 30, 2017, respectively, the tax amortization reduces other intangible assets related to the historical acquisition.

6.      CONTRACT LIABILITIES
 
At times, we require customers to make advance payments prior to the shipment of their orders 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:
March 31, 2022December 31, 2021
Arcadia$21,931 $14,697 
NobelClad4,879 5,881 
DynaEnergetics142 474 
Total contract liabilities$26,952 $21,052 

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.

7.      LEASES

The Company leases real properties for use in manufacturing and as administrative and sales offices, and also leases automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the
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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. ROU assets are amortized on a straight-line basis to the Condensed Consolidated Statement of Operations. 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 present value of future lease payments. Lease and non-lease components within the Company’s lease agreements are accounted for together. The Company has no leases in which the Company is the lessor.

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, 2022December 31, 2021
ROU asset$50,934 $52,219 
Current lease liability6,287 6,126 
Long-term lease liability45,613 47,000 
Total lease liability$51,900 $53,126 

The ROU asset is reported in “Other assets” while the current lease liability is reported in “Other current liabilities” and the long-term lease liability is reported in “Other long-term liabilities” in the Company’s Condensed Consolidated Balance Sheets. Cash paid for operating lease liabilities are recorded as operating cash flows in the Company’s Condensed Consolidated Statements of Cash Flows.

Arcadia leases certain office, manufacturing, distribution and warehouse facilities from entities affiliated with the redeemable noncontrolling interest holder and the President of Arcadia. There were eight related party leases in effect as of March 31, 2022, with expiration dates ranging from calendar years 2023 to 2031. As of March 31, 2022, the total ROU asset and related lease liability recognized for related party leases was $31,438 and $31,572, respectively. The Company believes that the lease terms for these properties are fair and reasonable to the Company and on terms comparable to those reasonably expected to be agreed to with independent third parties for similar types of property. For the three months ended March 31, 2022, operating lease expense was $2,767, inclusive of $1,156 related to related party leases. For the three months ended March 31, 2021, operating lease expense was $971. Short term and variable lease costs were not material for the three months ended March 31, 2022 and 2021.

8.      DEBT
 
As of March 31, 2022 and December 31, 2021, outstanding borrowings consisted of the following:
March 31, 2022December 31, 2021
Syndicated credit agreement:  
U.S. Dollar revolving loan$ $ 
Term loan146,250 150,000 
Commerzbank line of credit  
Outstanding borrowings146,250 150,000 
Less: debt issuance costs(2,540)(2,575)
Total debt143,710 147,425 
Less: current portion of long-term debt(15,000)(15,000)
Long-term debt$128,710 $132,425 

Syndicated Credit Agreement

On December 23, 2021, we entered into a five-year $200,000 syndicated credit agreement (“credit facility”) which included a $150,000 Term Loan, which is amortizable at 10% of principal per year with a balloon payment for the outstanding balance upon the credit facility maturity date in 2026, and allows for revolving loans of up to $50,000. The credit facility has an accordion feature to increase the commitments by $100,000 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 four banks, with KeyBank, N.A. acting
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as administrative agent. The credit facility is secured by the assets of DMC including accounts receivable, inventory, and fixed assets, including Arcadia and its subsidiary, as well as guarantees and share pledges by DMC and its subsidiaries.
Borrowings under the $150,000 Term Loan and $50,000 revolving loan limit can be in the form of Adjusted Daily Simple Secured Overnight Financing Rate ("SOFR") loans or one month Adjusted Term SOFR loans. Additionally, U.S. 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 rate, an adjusted Federal Funds rate or an adjusted SOFR rate). SOFR loans bear interest at the applicable SOFR 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%).

The credit facility 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.

The leverage ratio is defined in the credit facility as the ratio of Consolidated Funded Indebtedness (as defined in the credit facility) on the last day of any trailing four quarter period to Consolidated Pro Forma EBITDA (as defined in the credit facility) for such period. The maximum leverage ratio permitted by our credit facility is 3.5 to 1.0 through the quarter ended March 31, 2022, 3.25 to 1.0 from the quarter ended June 30, 2022 through the quarter ended March 31, 2023, and 3.0 to 1.0 from the quarter ended June 30, 2023 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 (other than those made with respect to the preferred stock issued under the Operating Agreement), Consolidated Unfunded Capital Expenditures (as defined in the credit facility), and net cash income taxes to the sum of cash interest expense, any dividends on the preferred stock paid in cash, and scheduled principal payments on funded indebtedness. Under our credit facility, the minimum debt service coverage ratio permitted is 1.35 to 1.0.

As of March 31, 2022, 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 of €7,000 for our NobelClad and DynaEnergetics operations in Europe. This line of credit is also used to issue bank guarantees to customers to secure advance payments made by them. As of March 31, 2022 and December 31, 2021, we had no outstanding borrowings under this line of credit and bank guarantees of €2,609 and €2,997 were secured by the line of credit, respectively. The line of credit has open-ended terms and can be canceled by the bank at any time.

Included in long-term debt are deferred debt issuance costs of $2,540 and $2,575 as of March 31, 2022 and December 31, 2021, respectively. Deferred debt issuance costs are being amortized over the remaining term of the credit facility which expires on December 23, 2026.

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 33%), permanent differences between book and taxable income, income or loss attributable to the redeemable noncontrolling interest holder, and changes to valuation allowances on our deferred tax assets.

Arcadia is treated as a partnership for U.S. tax purposes. With the exception of certain state taxes, income or loss flows through to the shareholders and is taxed at the shareholder level. Tax impacts related to income or loss from Arcadia that are included in consolidated pretax results but are attributable to the redeemable noncontrolling interest holder are not included in the consolidated income tax provision.

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, 2022 and March 31, 2021, we did not record any adjustments to previously established valuation allowances, except for adjustments related to the changes in balances of the related deferred tax assets. 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.

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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. 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.

10.      BUSINESS SEGMENTS
 
Our business is organized into three segments: Arcadia, DynaEnergetics and NobelClad. In December 2021, DMC acquired a 60% controlling interest in Arcadia, a leading U.S. supplier of architectural building products, including storefronts and entrances, windows, curtain walls, doors and interior partitions for the commercial buildings market. Arcadia also supplies the luxury home market with highly engineered steel, aluminum and wood door and window systems. DynaEnergetics designs, manufactures and distributes products utilized by the global oil and gas industry principally to perforate oil and gas wells. NobelClad is a 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,
20222021
Net sales:
Arcadia$67,968 $ 
DynaEnergetics48,887 38,172 
NobelClad21,861 17,486 
Net sales$138,716 $55,658 

Three months ended March 31,
20222021
(Loss) income before income taxes:
Arcadia$(2,443)$ 
DynaEnergetics3,298 1,521 
NobelClad705 1,604 
Segment operating income