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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549 Form 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES ANDEXCHANGE ACT OF 1934For the fiscal year ended December 31,2023 TRANSITION REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES ACT OF 1934FOR THE TRAN
2、SITION 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 execu
3、tive offices,including zip code)(303)665-5700(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol Name of each exchange on which registeredCommon Stock,$.05 Par ValueBOOM The Nasdaq Global Select MarketIndicate
4、by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes o No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Act from theirobligations under those sections.Yes o No xIndicate by c
5、heck mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the SecuritiesExchange 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 requirement
6、s for the past 90 days.Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submittedpursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that theregistrant
7、 was required to submit and post such files).Yes x No o Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smallerreporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,
8、”“smallerreporting company,”and emerging growth company in Rule 12b-2 of the Exchange Act.2025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm1/117Large accelerated filer o Accelerated Filer x Non-accelerated filer o Smaller reporting company
9、Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.oIndicate by check mark wheth
10、er the registrant has filed a report on and attestation to its managements assessment of theeffectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by theregistered public accounting firm that prepared or issued its audit report.If
11、 securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of theregistrant included in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections ar
12、e restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 under the Act)
13、.Yes No x The approximate aggregate market value of the voting stock held by non-affiliates of the registrant was$343,226,776 as ofJune 30,2023.The number of shares of Common Stock outstanding was 19,786,188 as of February 20,2024.Certain information required by Items 10,11,12,13 and 14 of Form 10-K
14、 is incorporated by reference into Part III hereof fromthe registrants proxy statement for its 2024 Annual Meeting of Stockholders,which is expected to be filed with the Securities andExchange Commission(“SEC”)within 120 days of the close of the registrants fiscal year ended December 31,2023.2025/1/
15、17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm2/117TABLE OF CONTENTS PagePart IItem 1.Business2Item 1A.Risk Factors15Item 1B.Unresolved Staff Comments34Item 1C.Cybersecurity34Item 2.Properties35Item 3.Legal Proceedings38Item 4.Mine Safety Discl
16、osures38 Part II39Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities39Item 6.Reserved41Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations42Item 7A.Quantitative and Qualitative Disclosures about Mar
17、ket Risk55Item 8.Financial Statements and Supplementary Data57Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure89Item 9A.Controls and Procedures89Item 9B.Other Information92Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections92Part III
18、93Item 10.Directors,Executive Officers and Corporate Governance93Item 11.Executive Compensation93Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters93Item 13.Certain Relationships and Related Transactions,and Director Independence93Item 14.Principal
19、 Accounting Fees and Services93Part IV94Item 15.Exhibits and Financial Statement Schedules94Signatures 972025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm3/117Table of ContentsPART IForward-Looking Statements This Annual Report on Form 10-K
20、 and the documents incorporated by reference into it contain certain forward-lookingstatements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995(the ReformAct).Words such as“anticipates,”“expects,”“intends,”“plans,”“believes,”“seeks,”“estimates,
21、”“may,”“will,”“continue,”“project,”“forecast,”and similar expressions,as well as statements in the future tense,identify forward-looking statements.Statements addressing events or developments that we expect or anticipate will occur in the future,including statements relating to ourfuture operating
22、performance,any of our businesses future financial and operational growth or technical and product expansions,theresult and timing of the strategic review process for our businesses,the potential acquisition of the 40%minority interest in ArcadiaProducts,LLC(Arcadia Products),expected benefits from
23、enhancements to our systems and applications,our backlog andanticipated future sales and market share,as well as statements expressing optimism or pessimism about future operating results,areforward-looking statements within the meaning of the Reform Act.Forward-looking statements are not guarantees
24、 of our future performance and are subject to risks and uncertainties that couldcause actual results to differ materially from the results contemplated by the forward-looking statements.These risks and uncertaintiesinclude those relating to:Changes in global economic conditions;The ability to obtain
25、 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 and our ability to adjust our manufacturing and supply chain;Fluctuations in customer demand;Our ability to manage periods of growth and
26、contraction effectively;General economic conditions,both domestic and foreign,impacting our business and the business of the end-marketusers we serve;Competitive factors;The timely completion of contracts;The timing and size of expenditures;The timely receipt of government approvals and permits;The
27、price and availability of metal and other raw materials;The adequacy of local labor supplies at our facilities;Current or future limits on manufacturing capacity at our various operations;The impact of catastrophic weather events on our business and that of our customers;Our ability to successfully
28、integrate acquired businesses;The ability to complete a sale,a merger or other business combination of a portion of DMCs business-unit assets,and/or a strategic investment;The ability to remain an innovative leader in our fields of business;The costs and impacts of pending or future litigation or re
29、gulatory matters;Changes to legislation,regulation or public sentiment related to our business and the industries in which ourcustomers operate;12025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm4/1172025/1/17 23:08boom-20231231https:/www.se
30、c.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm5/117Table of Contents The impacts of trade and economic sanctions or other restrictions imposed by the European Union,the United Statesor other countries;Costs and risks associated with compliance with laws and regulations,includin
31、g the United States Foreign CorruptPractices Act(“FCPA”)and similar legislation;The availability and cost of funds;and Fluctuations in foreign currencies.The effects of these factors are difficult to predict.New factors emerge from time to time,and we cannot assess the potentialimpact of any such fa
32、ctor on our business or the extent to which any factor,or combination of factors,may cause results to differmaterially from those contained in any forward-looking statement.All forward-looking statements speak only as of the date of thisannual report,and we do not undertake any obligation to update
33、any forward-looking statement to reflect events or circumstances afterthe date of such statement or to reflect the occurrence of unanticipated events.In addition,readers of this Annual Report on Form 10-Kshould refer to Part I,Item 1A Risk Factors for a discussion of these and other factors that cou
34、ld materially affect our results ofoperations and financial condition.ITEM 1.Business References made in this Annual Report on Form 10-K to“we”,“our”,“us”,“DMC”,DMC Global and the“Company”refer to DMC Global Inc.and its consolidated subsidiaries.Unless stated otherwise,all dollar figures in this rep
35、ort are presented inthousands(000s).Overview DMC Global Inc.(“DMC”,we,us,our,or the Company)owns and operates Arcadia Products,DynaEnergetics andNobelClad,three innovative,asset-light manufacturing businesses that provide differentiated products and engineered solutions tosegments of the constructio
36、n,energy,industrial processing and transportation markets.Arcadia Products supplies architectural buildingproducts,including exterior and interior framing systems,windows,curtain walls,storefronts,doors,and interior partitions to thecommercial construction market;it also supplies customized windows
37、and doors to the ultra-high-end residential construction market.DynaEnergetics designs,manufactures and sells highly engineered products utilized by the global oil and gas industry principally forthe perforation of oil and gas wells.NobelClad is a leader in the production of explosion-welded clad me
38、tal plates for use in theconstruction of corrosion resistant industrial processing equipment,as well as specialized transition joints for use in construction ofcommuter rail cars,ships,and liquified natural gas(LNG)processing equipment.Arcadia Products uses a network of service centers and distribut
39、ors throughout the United States to sell its products,whileDynaEnergetics and NobelClad operate globally through an international network of manufacturing,distribution and sales facilities.Refer to Note 10 within Part II,Item 8 Financial Statements and Supplementary Data for net sales,operating inco
40、me,and totalassets for each of our segments.Our StrategyOur strategy is to maximize the value of our company by capitalizing on the unique strengths of each of our three businesses.Arcadia Products,which has established a differentiated business model within the commercial and residential building p
41、roductsindustry,serves a large addressable market and is seeking to grow its position in its targeted U.S.markets.DynaEnergetics andNobelClad each have established leadership positions in their segments of the energy and industrial equipment industries,and bothhave opportunities for additional growt
42、h while maintaining high rates of cash flow conversion.In January 2023,we announced management changes resulting in the appointment of Michael Kuta and David Aldous asinterim co-President and Chief Executive Officers.On August 4,2023,our board of directors(the Board)appointed Michael Kuta asPresiden
43、t and Chief Executive Officer and a director.David Aldous remains a member of the Board and was re-appointed as Chairmaneffective August 4,2023.Eric Walter was appointed as our new Chief Financial Officer in February 2023,and Arcadia Products namedJames Chilcoff as its new President in January 2023.
44、We also appointed two new independent directors to the Board in 2023,withOuma Sananikone appointed in August and James OLeary appointed in November.22025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm6/117Table of ContentsNear-term priorities
45、 for the new leadership team include positioning Arcadia for growth,strengthening the profitability ofDynaEnergetics,achieving commercial success with new products introduced by NobelClad,and improving our overall cash flowthrough more effective working capital management and targeted cost reduction
46、s.We expect Arcadia Products to be the primary driverof DMCs future financial and operational growth,reflecting its large addressable market and differentiated business model.ArcadiaProducts is investing in new digital technologies and manufacturing capacity to facilitate its expansion.Additional al
47、uminum paintingcapacity was added in the second half of 2023,and the business expects further expansions in painting and anodizing capacity in 2024.We recently amended our credit facility,which increases our borrowing capacity and is intended to provide the financial flexibility topurchase the remai
48、ning 40%of Arcadia.On January 29,2024,we announced that the Board of Directors initiated a review of strategic alternatives for ourDynaEnergetics and NobelClad businesses to maximize value for shareholders and other stakeholders.The Board is overseeing theassessment process,including options for a s
49、ale,a merger or other business combination involving one or both businesses.The Boardhas not set a timetable to complete the strategic review process,and there can be no assurance that the review process will result in anytransactions.The process of exploring strategic alternatives will involve the
50、dedication of significant resources and the incurrence ofsignificant costs and expenses.Business SegmentsArcadia ProductsArcadia Products provides architectural building products to the U.S.construction industry through three divisions:Arcadia,which serves the commercial exteriors market;Wilson Part
51、itions,which serves the commercial interiors market;and Arcadia Custom,which serves the high-end residential market.ArcadiaArcadia designs,engineers,fabricates and finishes aluminum framing systems,windows,curtain walls,storefronts and entrancesystems for the commercial exteriors market.It operates
52、an integrated“hub and satellite”model in which light manufacturing,anodizing and painting of aluminum components are performed in Vernon,California,and the resulting products are shipped to anetwork of service centers located in growing markets throughout the western and southwestern United States.P
53、roducts are designedto address regional needs and preferences,and each satellite seeks to offer superior product availability,short lead times,productcustomization,and design and engineering support.Arcadia serves a loyal customer base consisting primarily of local and regionalglazing contractors,su
54、bcontractors,commercial architects and designers.In 2023,Arcadia accounted for approximately 69%of the netsales of Arcadia Products.Wilson PartitionsWilson Partitions serves the commercial interior framing and partitions markets across the U.S.,providing framing systems,aluminum doors,sliding system
55、s and glazing systems.Wilson Partitions is supported by centralized manufacturing facilities inCalifornia,as well as support facilities in Connecticut and Texas.Its products address both new construction and repairs and remodels;and product capabilities include noise control,fire rating,built-to-ord
56、er custom finishes,and other functional and aesthetic features.In2023,Wilson Partitions accounted for approximately 10%of the net sales of Arcadia Products.Arcadia CustomArcadia Custom serves the ultra-high-end residential real estate market throughout the United States,and is supported bymanufactur
57、ing facilities in California,Arizona and Connecticut.It provides a broad offering of custom,fully fabricated aluminum,steel and wood windows and doors to luxury homes and mixed-use markets.Arcadia Custom works closely with architects,owners,contractors and installers to provide support throughout th
58、e planning,design and installation phases of a residential constructionprocess.In 2023,Arcadia Custom accounted for approximately 21%of the net sales of Arcadia Products.Environmental SustainabilityArcadia Products operations have an ongoing focus on environmental sustainability,including hazardous
59、waste recycling andinitiatives aimed at reducing waste.All of Arcadias commercial building products and many of our residential product offerings aremade from aluminum,including recycled aluminum content.A significant portion of Arcadia Customs32025/1/17 23:08boom-20231231https:/www.sec.gov/Archives
60、/edgar/data/34067/000003406724000025/boom-20231231.htm7/1172025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm8/117Table of Contentsresidential projects use stainless steel(the most recycled building material in the world),and most of its ste
61、el products are recyclable.Many of our architectural products help architects,developers,and building owners achieve their energy-efficiency andsustainability goals by improving energy performance,thereby reducing greenhouse gas emissions,providing daylight and naturalventilation,and increasing comf
62、ort and safety for occupants.Arcadia Products offers high-performance products that comply with theLeadership in Energy and Environmental Design(LEED)Green Building Rating System.In addition,we offer renovation solutions tohelp modernize aging buildings,providing significantly improved energy perfor
63、mance.Arcadia Products is committed to continuing toimprove the energy efficiency of products for our customers.OperationsArcadia Products is headquartered in Vernon,California,and operates four manufacturing facilities and 11 fabrication anddistribution facilities.Anodized and painted aluminum comp
64、onents for all Arcadia Products divisions are manufactured in Vernon,with additional painting and manufacturing capacity in its Tucson,Arizona,and Connecticut facilities.During the years ended December 31,2023 and 2022,Arcadia Products represented approximately 42%and 46%of ourconsolidated net sales
65、,respectively.ProductsThe Arcadia division manufactures,assembles and sells aluminum window and door systems,as well as architecturalcomponents.These include architectural framing systems,windows,curtain walls,entrance systems and sun control products.Ourproduct offerings allow architects to create
66、distinctive looks for buildings such as office towers,airports,hotels,education and athleticfacilities,health care locations,government buildings,retail centers,mixed use and multi-family residential buildings,while alsomeeting functional requirements such as energy efficiency,hurricane,blast and ot
67、her impact resistance and/or sound control.Wilson Partitions manufactures and sells door framing systems,aluminum doors,sliding systems and glazing systems.Arcadia Custom designs and manufactures thermally broken steel and aluminum windows and doors and custom wood doorsand windows.We offer product
68、warranties that we believe are competitive for the markets in which our products are sold.The nature andextent of these warranties depend upon the product,the market and,in some cases,the customer being served.Suppliers and Raw MaterialsMaterials used in Arcadia and Wilson Partitions commercial prod
69、ucts include aluminum extrusions,both finished andunfinished,paint and hardware.Materials used in Arcadia Customs residential products include aluminum,steel,wood,paint,fabricated glass and hardware.The availability,quality,and costs of many of these commodities have fluctuated,and may continue tofl
70、uctuate,over time and are primarily sourced in North America.Generally,we have been able to address raw material price increasesin our product pricing to customers.The results of our operations can be impacted by a delay between the time of a raw material costincrease and our price capture.Aluminum
71、is our most important raw material,and we currently have the ability to source from several major suppliers.Ourother raw materials are readily available from a variety of domestic sources.We generally have good relationships with our suppliersand strive to proactively manage raw material availabilit
72、y and pricing.CompetitionArcadia and Wilson PartitionsThe North American exterior and interior commercial construction markets are highly fragmented.Competitive factors includeprice,product quality,product attributes and performance,reliable service,regional satellites,local availability,lead-time,o
73、n-timedelivery,project management,technical engineering and design services.To protect and enhance our competitive position,we maintainstrong relationships with our customers and strive to provide value to all persons in the value chain.There is a great deal ofcompetition in the North American comme
74、rcial window,storefront and partition manufacturing industry,and2025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm9/11742025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm10/117Table
75、of Contentsthe Arcadia and Wilson Partition divisions compete against several national,regional and local manufacturers,as well as regional paintand anodizing finishing companies.We believe Arcadias and Wilson Partitions low-cost manufacturing platform,supply chain management,broad productoffering,p
76、roduct quality and availability,short lead times and highly diversified and long-tenured customer base,create significantcompetitive advantages relative to many other exterior and interior building products manufacturers.Arcadia CustomArcadia Custom faces competition nationally from several large,we
77、ll-known competitors and from many smaller,regionalcompetitors.Competitive factors include product quality and design,aesthetics,dealer relationships and relationships with architectsand luxury home builders.Marketing,Sales,DistributionThe Arcadia division relies on a reputation for strong customer
78、service,quality products and competitive lead times to maintainand attract customers.It has strong relationships with local glaziers,installers and subcontractors.Wilson Partitions sells through a national in-house sales force and external sales representatives.Arcadia Customs sales strategy focuses
79、 on direct selling through a national internal sales team and select dealer network thatmarket our products to architects and luxury home builders.The sales network focuses on attracting and retaining dealers by striving toconsistently provide exceptional customer service,leading product designs and
80、 quality,technical expertise and competitive pricing.Ownership and ManagementFollowing the closing of the Arcadia Products acquisition in December 2021,DMC(through its direct ownership and indirectownership through our subsidiary DMC Korea)owns 60%of Arcadia Products and the remaining 40%is owned by
81、 New ArcadiaHoldings,Inc.,which is wholly-owned by Synergex Group LLC,Trustee of the Munera Family ESBT,and previously the majorityowner of Arcadia,Inc.(“Munera”).Arcadia Products is governed by an Operating Agreement among the Company,Arcadia Productsand Munera(the“Operating Agreement”).Pursuant to
82、 the Operating Agreement,the Company has the right to appoint four directors toArcadia Products board of directors(the“Arcadia Board”),one of whom will serve as Chairman of the Arcadia Board,and Munerahas the right to appoint three directors.If Muneras ownership in Arcadia Products declines,the numb
83、er of directors it has the right toappoint will be reduced in the manner set forth in the Operating Agreement.The Arcadia Board generally acts by majority vote of thedirectors,but certain matters specified in the Operating Agreement require the affirmative vote of 80%of the directors.At any time at
84、or after the third anniversary of the effective date of the Operating Agreement,Munera shall have the right(butnot the obligation)to require the Company to purchase(the“Put Option”)its interests in Arcadia Products for a price based on thehigher of(a)a value based on the Acquisition purchase price a
85、nd(b)a multiple of Arcadia Products average EBITDA for thepreceding two fiscal years and its projected EBITDA for the then-current fiscal year(the“Option Purchase Price”),and the Companyshall have the right(but not the obligation)to purchase all of Muneras interests for the same price(the“Call Optio
86、n”).If the PutOption is exercised,the Option Purchase Price will be paid,at DMCs option,(i)in cash or(ii)20%in cash and 80%in shares ofpreferred stock of the Company.If the Company exercises the Call Option,the Option Purchase Price will be paid in cash.TheOperating Agreement also provides for right
87、s of first refusal and“drag-along”rights pursuant to which we could,in certaincircumstances,acquire Muneras interests prior to the third anniversary of the effective date of the Operating Agreement.DynaEnergeticsDynaEnergetics designs,manufactures,markets and sells perforating systems and associated
88、 hardware for the global oil and gasindustry.During the well drilling process,steel casing is inserted into the well and cemented in place to isolate and support theintegrity of the wellbore.A perforating system,which contains a series of specialized explosive shaped charges,is used to punch holesth
89、rough the casing and cement liner of the well and into the geologic formation surrounding the well bore.The channels created by theshaped charges allow hydrocarbons to flow back into the wellbore.When hydraulic fracturing is employed,the perforations andchannels also provide a path for the fracturin
90、g fluid to enter and return from the formation.52025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm11/117Table of ContentsIn unconventional wells,multiple perforating systems,which generally range from seven inches to three feet in length,are
91、connected end-to-end into a perforating“string.”The string is lowered into the well and then pumped by fluid across the horizontallateral to the target location within the shale formation.When the perforating system is initiated via an electronic or digital signal fromthe surface,the shaped charges
92、detonate.DynaEnergetics designs,manufactures and sells all five primary components of a perforatingsystem:the initiation system,shaped charges,detonating cord,gun hardware,and a control panel.In North Americas well-completion industry,perforating components traditionally have been assembled by highl
93、y trainedpersonnel at the well site or nearby assembly facility.In 2015,DynaEnergetics began assembling its perforating systems in a controlledenvironment at its manufacturing facilities.The systems,marketed as DynaStage(DS)Factory-Assembled,Performance-Assuredperforating systems,are shipped directl
94、y to the customers remote shop or well site.Since 2015,DynaEnergetics has added severalnew DS products to accommodate evolving industry conditions and needs.OperationsThe DynaEnergetics segment seeks to build on its products and technologies,as well as its sales,supply chain and distributionnetwork.
95、During the three years ended December 31,2023,2022 and 2021,the DynaEnergetics segment represented approximately44%,40%and 67%of our consolidated net sales,respectively.DynaEnergetics operates manufacturing facilities in Germany and the United States.In Troisdorf,Germany,DynaEnergeticshas six integr
96、ated detonator manufacturing lines,two shaped charge lines and a detonating cord manufacturing line.In Liebenscheid,Germany,DynaEnergetics operates a manufacturing facility for perforating guns and associated hardware.In the United States,DynaEnergetics has three shaped charge manufacturing lines in
97、 Blum,Texas where product assembly and metal fabricating also occur.We have a second metal fabricating facility in Whitney,Texas.These locations provide us with global capacity for shaped charge andperforating gun production and enhance our delivery and customer service capabilities in our key marke
98、ts.ProductsIS2:DynaEnergetics has focused on the advancement of safe and selective perforating products for use in North Americasshale,or onshore,unconventional,oil and gas industry.Among these products are the IS2 Intrinsically Safe Initiating Systems,which include the IS2 Customer Assembled(CA)det
99、onator and the wire-free,plug-in,IS2 Top Fire(TF)detonator.The IS2 TFdetonator is the key enabling technology in DynaEnergetics family of DS Factory-Assembled,Performance-Assured perforatingsystems.The IS2 detonators require a specific digital code for firing and are immune from induced currents and
100、 voltages,staticelectricity and high-frequency irradiation.These safety features substantially reduce the risk of unintentional detonation and enableconcurrent perforating and hydraulic fracturing operations at well sites with multiple wellbores,improving operating efficiencies forcustomers.In respo
101、nse to the exacting needs of our customers,we expanded and enhanced the IS2 product line,including adding anIS2 MS igniter specifically designed for our DS MicroSet as well as an upgrade of all IS2 detonators to the more proficient IS2Express which provides improved performance through a more intuit
102、ive automated firing panel process.In 2023,we introduced a newand improved generation of our intrinsically safe detonator,the IS3.This more technically advanced and compact detonator wasdeveloped internally to provide the platform for the next generation of DS systems.DS Systems:Our DS Infinity Fact
103、ory-Assembled,Performance-Assured perforating systems combine all of our advancedtechnologies into a preassembled perforating gun that is armed at the well site with our Plug-and-Go IS2 TF detonator.The IS2 TFdetonator is wire-free and eliminates the customary process of wiring the detonator into th
104、e perforating system at the well site.All DSsystems are operated using our in-house designed and manufactured Infinity Control Panel.The Infinity Panel is highly intuitive andallows the gun string to be safely tested and monitored throughout the pump-down operation.The system also incorporates a sho
105、tdetection function resulting in significant time and cost savings.Recent design advancements to the IS2 line of initiation productsenable customers to safely and reliably fire up to 100 systems and set a plug in a single run.All DS systems can be tested before goingdown hole using our Infinity Surf
106、ace Tester,reducing the risk of lost time,mishaps,misruns and misfires due to a system fault.DynaEnergetics has successfully expanded the family of DS perforating systems with various models:DS Echo,for re-fracapplications;DS LoneStar,a single-shot system that delivers large,ultra-consistent entry h
107、oles,and DS NLine,an orientedsystems that features several shaped charges on a lateral plane.During 2022,DynaEnergetics continued to refine its systems to furtherimprove reliability and worked to expand our product offerings.In 2023,we launched DS Gravity 2.0,a next generation selforientating system
108、 for oriented perforating and DS NLine 2.0,which includes an improved alignment system for oriented perforating.Both systems utilize the latest generation IS3 detonator.TMTMTM62025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm12/117Table of
109、ContentsShaped Charges:DynaEnergetics develops and sells a wide range of shaped charges for use in its perforating systems,includingthe LoneStar and EchoFrac charges specifically designed for sale in their respective systems.DynaEnergetics also sells HaloFraccharges,which incorporate advancements in
110、 liner materials and shaped charge geometry to improve hydraulic fracturing performance,the FracTune family of shaped charges,which delivers uniform hole diameter in the well casing independent of shot phasing andgun positioning within the well bore,and the DPEX family of charges,which feature energ
111、etic liners.All three charge lines can beused with the DS perforating system as well as conventional perforating gun systems across a range of gun diameters.In 2023,DynaEnergetics expanded on its portfolio of equal-entry hole shaped charges through the introduction of Oriented FracTune,animproved or
112、iented equal entry hole product designed to address the precise requirements of oriented perforating applications in theplug and perforating market.These charges enable exploration and production companies and their wireline service providers tochoose from a variety of specifically designed shaped c
113、harges to match well completion design requirements.TCP Systems:DynaEnergetics Tubing Conveyed Perforating(TCP)systems are customized for individual customer needs andwell applications.TCP enables perforating of conventional vertical wells,as well as highly deviated and horizontal wells.These typeso
114、f wells are increasingly being drilled by the off-shore industry and in applications outside the U.S.TCP tools also perforate longintervals in a single trip,which significantly improves rig efficiency.Our TCP tool range includes mechanical and hydraulic firingsystems,gun releases,redundant firing he
115、ads,under-balancing devices and auxiliary components.Our tools are designed to withstanddown-hole temperatures of up to 260 degrees Celsius(500 degrees Fahrenheit)for safe and quick assembly at the well site and toallow unrestricted total system length.Setting and Ballistic Release Tools:DynaEnerget
116、ics also sells products that perform critical down-hole functions associated withthe perforating process.DS MicroSet is a compact,disposable setting tool used to install the fracking plugs that isolate stages in amulti-stage,unconventional oil or gas well.In 2023,we launched DS Liberator 2.0,which i
117、s a newly designed ballistic release toolwhich enables wireline service companies to disengage from a perforating string that has become stuck in the well bore.Plug and Abandonment:Our DynaSlot perforating system is designed for plug and abandonment(P&A)operations.Duringwell abandonment,the wellbore
118、 is encased and permanently sealed so that layers of sedimentary rock,and in particular freshwateraquifers,are pressure isolated from each other and the wellbore.The DynaSlot perforating system facilitates this process by creatingaccess to a full 360-degree area between the rock formations and the t
119、ubing and/or casing.Customers use the unique helicalperforation pattern created by DynaSlot to perform cement squeeze operations that seal off the wellbore.DynaEnergetics maintains itsDPU and XPU shaped charge lines,which are designed for P&A and well remediation applications and enable perforating
120、through twoor more layers of casing and into the formation.DynaEnergetics also has successfully developed an encapsulated DynaSlot chargespecifically designed for cutting down hole control lines.Most recently,DynaEnergetics developed its next generation DynaSlotshaped charges,designed specifically f
121、or severing and cutting flat-pack control lines,which are mounted vertically behind the wellboretubulars.Cutting control-lines without damaging the wells integrity is a critical step in the process of permanently decommissioningoffshore wells.Suppliers and Raw MaterialsDynaEnergetics product offerin
122、g consists of complex components that require numerous high-end inputs.DynaEnergeticsutilizes a variety of raw materials for the production of oilfield perforating products,including high-quality steel tubes,steel andcopper,explosives,granulates,plastics and ancillary plastic product components.Dyna
123、Energetics obtains its raw materials from anumber of different producers in Germany,other European countries,and the U.S.,but also purchases materials from otherinternational suppliers.CompetitionDynaEnergetics faces competition from independent manufacturers of perforating products and from the ind
124、ustrys three largestoil and gas service companies,which produce perforating systems for their own use and also buy systems and other perforatingcomponents and specialty products from independent suppliers such as DynaEnergetics.We compete for sales primarily on customerservice,product quality,reliab
125、ility,safety,performance,and price.Customer ProfileDynaEnergetics perforating and seismic products are purchased by international and U.S.oilfield service companies of all sizesworking in both onshore and offshore oil and gas fields.Our customers select perforating products based on their leading pe
126、rformance,system compatibility,product pricing,and ability to address a broad spectrum of factors,including pressures and temperatures in thewellbore and geological characteristics of the targeted formation.TM72025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/00000340672400002
127、5/boom-20231231.htm13/1172025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm14/117Table of ContentsThe customers for our energy products can be divided into four broad categories:purchasing centers of large service companies,international ser
128、vice companies,independent international and North America-based service companies(often referred to as“wireline”companies),and local resellers.Marketing,Sales,DistributionDynaEnergetics worldwide marketing and sales efforts for its oilfield products are managed from Troisdorf,Germany andHouston,Tex
129、as.DynaEnergetics sales strategy focuses on direct selling,distribution through licensed distributors and independentsales representatives,education of current and prospective service-company customers about our products and technologies,andeducation of E&P companies about the benefits of our produc
130、ts and technologies in an effort to generate pull-throughdemand.Currently,DynaEnergetics sells its oilfield and seismic products through wholly owned affiliates in Germany,the U.S.,andCanada,and through independent sales agents in other parts of the world.DynaEnergetics serves the Americas region th
131、rough itsnetwork of sales and distribution centers in the United States and Canada.In 2023,DynaEnergetics continued to upgrade its websiteand mobile applications for an improved customer experience.Additional enhancements are expected in future periods.DynaEnergetics also designs and manufactures cu
132、stomized perforating products for third-party customers according to theirdesigns and requirements.Research and DevelopmentDynaEnergetics devotes substantial resources to its research and development(R&D)programs.Based predominantly inTroisdorf,Germany,the R&D team works closely with sales,product m
133、anagement,and operations management teams to establishpriorities and effectively manage individual projects.Through its ongoing involvement in oil and gas industry trade shows andconferences,DynaEnergetics maintains a strong profile in the oil and gas industry.In addition to its existing shaped char
134、ge test facility,which can simulate down-hole,wellbore,and reservoir pressure conditions to develop and test high performance perforating chargesfor both oil companies and service providers,the R&D group has a purpose-built pressure vessel which can reach 30,000 psi testpressures and be heated to up
135、 to 200degrees Celsius(392 degrees F).This enables the R&D group to support the oil and gas industrywith test methods for new products that realistically simulate potentially difficult down-hole conditions.In 2023,we continuedconstruction of our horizontal test loop at our Blum,Texas facility.Upon c
136、ompletion in 2024,this significant investment will allow thetesting of our perforating systems in an environment mimicking down-hole flow conditions,which should enhance our developmentand testing programs.An R&D plan,which focuses on new technology,products,process support and contracted projects,i
137、s preparedand reviewed at least quarterly.R&D costs were$5,610,$5,712,and$6,378 for the years ended December 31,2023,2022 and 2021,respectively.NobelCladExplosion-welded cladding technology is a method for welding metals that cannot be joined using conventional weldingprocesses,such as titanium-stee
138、l,aluminum-steel,and aluminum-copper.Explosion welding also can be used to weld compatiblemetals,such as stainless steels and nickel alloys to steel.The cladding metals are typically titanium,stainless steel,aluminum,copperalloys,nickel alloys,tantalum,and zirconium.The base metals are typically car
139、bon steel,alloy steel,stainless steel and aluminum.Explosion-welded clad metal is produced as flat plates or concentric cylinders,which can be further formed and fabricated intoa broad range of industrial processing equipment or specialized transition joints.Created using a robust cold-welding techn
140、ology,explosion-welded clad products exhibit high bond strength,which is generally stronger than the parent metals.The dimensionalcapabilities of the process are broad:cladding metal layers can range from a few thousandths of an inch to several inches in thicknessand base metal thickness and lateral
141、 dimensions are primarily limited by the capabilities of the worlds metal production mills.Clad metal plates are used in the construction of heavy,corrosion resistant pressure vessels and heat exchangers.Clad metalplates consist of a thin layer of an expensive,corrosion-resistant clad metal,such as
142、titanium or nickel alloy,which is metallurgicallywelded to a less expensive structural backing metal,such as carbon steel.For heavy equipment,clad plates generally provide aneconomical alternative to building the equipment solely out of a corrosion-resistant alloy.While a significant portion of the
143、demand forour clad metal products is driven by maintenance and retrofit projects at existing chemical processing,petrochemical processing,oilrefining,and aluminum smelting facilities,new plant construction and large plant expansion projects also account for a significantportion of total demand.These
144、 industries tend to be cyclical in nature,and the timing of new order inflow remains difficult to predict.82025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm15/117Table of ContentsClad Metal End-Use Markets The eight broad industrial sectors
145、 discussed below comprise the bulk of demand for NobelClads products,with oil and gas andchemical and petrochemical constituting approximately 70%of NobelClad sales in 2023.This demand is driven by the underlyingneed for both new equipment and facility maintenance in these primary market sectors.Oil
146、 and Gas:Oil and gas end use markets include both oil and gas production and petroleum refining.Oil and gas productioncovers a broad scope of operations related to recovering oil and/or gas for subsequent processing in refineries.Clad metal is used inseparators,glycol contractors,pipelines,heat exch
147、angers and other related equipment.Clad equipment is also advantageous for oil andgas production from deep,hot,and more corrosive fields.The primary clad metals for the oil and gas production market are stainlesssteel and nickel alloys clad to steel,with some use of reactive metals such as titanium.
148、Petroleum refining processes frequently are corrosive and operate at high temperatures and pressures.Clad metal is extensivelyused in a broad range of equipment including desulfurization hydrotreaters,coke drums,distillation columns,separators and heatexchangers.Reliance upon low-quality,high-sulfur
149、 crude drives demand for new corrosion resistant equipment.Regulatory controls ofsulfur emissions in gas,diesel and jet fuel also impact the need for clad equipment.Like the upstream oil and gas sector,the cladmetals are primarily stainless steel and nickel alloys.Chemical and Petrochemical:Many com
150、mon products,ranging from plastics to prescription drugs to electronic materials,areproduced by chemical processes.Because the production of these items often involves corrosive agents and is conducted under highpressures or temperatures,corrosion resistant equipment is needed.One of the larger appl
151、ications for clad equipment is in themanufacture of purified terephthalic acid(PTA),a precursor product for polyester,which is used in products as diverse as carpets andplastic bottles.The chemical market requires extensive use of stainless steel and nickel alloys,but also uses titanium,zirconium an
152、dtantalum.Alternative Energy:Some alternative energy technologies involve conditions that necessitate clad metals.Solar panelspredominantly incorporate high purity polysilicon.Processes for manufacturing high purity silicon utilize a broad range of highlycorrosion-resistant clad alloys.Many geotherm
153、al fields are corrosive,requiring high alloy clad separators to handle the hot steam.Inaddition,some ethanol technologies and concentrating solar power technologies may require corrosion resistant metals at thicknesseswhere clad is an attractive alternative.Hydrometallurgy:The processes for producti
154、on of nickel,gold,and copper involve acids,high pressures,and high temperatures,and titanium-clad plates are used extensively for construction of associated leaching and peripheral equipment such as autoclaves.Aluminum Production:Primary aluminum is reduced from its oxide in large electric smelters
155、called potlines.The electriccurrent is carried via aluminum conductors.The electricity must be transmitted into steel components for the high temperaturesmelting operations.Aluminum cannot be welded to steel conventionally.Explosion-welded aluminum-steel transition joints providean energy efficient
156、and highly durable solution for making these connections.Modern potlines use a large number of transition joints,which are typically replaced after approximately five years in service.Although primary aluminum production is the majorelectrochemical application for NobelClad products,there are a numb
157、er of other electrochemical applications including production ofzinc,magnesium,chlorine and chlorate.We are seeing an increase for equipment related to processing biomass feedstocks and biofuelend products,mostly stainless and nickel alloy clad.Shipbuilding:The combined problems of corrosion and top
158、-side weight drive demand for our aluminum-steel transition joints,which serve as the juncture between a ships upper and lower structures.Top-side weight is often a significant problem with tall ships,including cruise ships,naval vessels,ferries and yachts.Use of aluminum in the upper structure and
159、steel in the lower structureprovides stability.Since aluminum cannot be welded directly to steel using conventional welding processes,and since bolted jointsbetween aluminum and steel corrode quickly in seawater,explosion-welded transition joints are a common solution.Power Generation:Fossil fuel an
160、d nuclear power generation plants require extensive use of heat exchangers,many of whichrequire corrosion resistant alloys to handle low quality cooling water.Our clad plates are used for heat exchanger tube sheets,and thelargest clad tube sheets are used in the final low-pressure condensers.For mos
161、t coastal and brackish water-cooled plants,titanium isthe metal of choice,and titanium-clad tube sheets are the low-cost solution for power plant condensers.92025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm16/117Table of ContentsIndustrial
162、 Refrigeration:Heat exchangers are a core component of refrigeration systems.When the cooling fluid is seawater,brackish,or even slightly polluted,corrosion-resistant metals are necessary.Metal selection can range from stainless steel to copperalloy to titanium.Explosion-welded clad metal is often t
163、he low-cost solution for making the tube sheets.Applications range fromrefrigeration chillers on fishing boats to massive air conditioning units for skyscrapers,airports,and deep underground mines.New Applications/Industry DevelopmentNobelClad continues its efforts in applications and materials inno
164、vations,with the goal of expanding NobelClads end-usemarkets and customer base.Examples of these efforts include the development of a new application of clad in the production ofengineered wood,development of improved electrical transition joints for smelting applications,high-pressure refractory me
165、talschemical processing pipe systems and cryogenic joints to LNG and air separation units.NobelClad is also engaged in research effortsrelated to using clad products in concentrating solar power production facilities.OperationsDuring the three years ended December 31,2023,2022 and 2021,the NobelClad
166、 segment represented approximately 15%,14%and 33%of our consolidated net sales,respectively.Our manufacturing facilities and their respective shooting sites in Pennsylvaniaand Germany provide the production capacity to address projects for NobelClads global customer base.NobelClad uses proprietary p
167、rocesses and technology to produce high quality clad metal products and limit re-work costs.Theentire explosion-welding process involves significant precision in all stages,and any errors can be extremely costly as they often resultin the discarding of the expensive raw material metals.NobelClads te
168、chnological expertise helps ensure precision,minimize errors,and prevent costly waste.NobelClads metal products are primarily produced for custom projects and conform to requirements set forth in customerspurchase orders.Upon receipt of an order,NobelClad obtains the component materials from a varie
169、ty of sources based on quality,availability and cost,and then produces the order in one of its manufacturing facilities.Final products are processed to meet contractspecific requirements for product configuration and quality/inspection level.ProductsNobelClad manufacturing technology is used in a va
170、riety of product applications.DetaClad:Our explosion clad plates and cylinders,available in 260 compatible and non-compatible metal combinations,arethe basis of the worlds pressure vessels,towers and crystallizers used in many industries.Tube Sheets:Our clad tube sheets are made from corrosion-resis
171、tant alloys,making them ideal for applications ranging fromrefrigeration chillers on fishing boats to air conditioners for use in food and pharmaceutical manufacturing.Vessel Heads&Cylinders:NobelClad delivers high-quality clad heads of all sizes for reactors,heat exchangers and processvessels.We ad
172、apt our head forming process to specific clad metal combinations.Structural Transition Joints:NobelClads structural transition joints permanently join metals without mechanical fasteners.Shipbuilders turn to us to connect superstructures and bulkheads to steel hulls,framing and deck components.Elect
173、rical Transition Joints:NobelClads electrical transition joints offer strong,low electrical resistance solutions foraluminum and zinc smelting,when anode clad and cathode applications must operate at elevated temperatures.Cylindra Cryogenic Transition Joints:Compared with bolted connection systems,C
174、ylindra offers an easier,more reliableway to connect stainless steel to aluminum pipes for producing LNG and industrial gases in Air Separation Units(ASU).DetaPipe Spools,Elbows and Branches:NobelClad develops reactive metal pipe spools and elbows for piping systems indemanding high-pressure and hig
175、h-temperature processes.This new technology allows for end users to benefit from the corrosionresistance performance and process safety that metals like zirconium,titanium and tantalum provide.102025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231
176、.htm17/1172025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm18/117Table of ContentsSuppliers and Raw MaterialsNobelClads operations involve a range of alloys,steels and other materials,such as stainless steel,copper alloys,nickel alloys,tita
177、nium,zirconium,tantalum,aluminum and other metals.NobelClad sources its raw materials from a number of different producersand suppliers.It holds a limited metal inventory and purchases its raw materials based on contract specifications.Under mostcontracts,any raw material price increases are passed
178、on to NobelClads customers.NobelClad closely monitors the quality of itssupplies and inspects the type,dimensions,markings,and certification of all incoming metals to ensure that the materials will satisfyapplicable construction codes.NobelClad also manufactures a majority of its own explosives from
179、 standard raw materials,and webelieve that this allows us to achieve higher quality and lower cost.Competition Hot Roll Bonding and Weld Overlay.NobelClad faces competition from two primary alternative cladding technologies:hot rollbonding and weld overlay.The technologies do not always compete dire
180、ctly,as each has applications that are better suited,relating tometal used and thicknesses required.However,specific project considerations such as technical specifications,price and delivery timeallow these technologies to compete directly with explosion-welding.In the roll bond process,the clad me
181、tal and base metal arebonded during the hot rolling operation in which the metal slab is converted to plate.The weld overlay process is used by the manyvessel fabricators that are often also NobelClad customers.In weld overlay cladding,the clad metal layer is deposited on the basemetal using arc-wel
182、ding type processes.Explosion-Welded Metal Cladding.Worldwide competition in the explosion-welded clad metal business is fragmented,and webelieve that NobelClad holds a strong market position in the industry.Within North America,NobelClad is one of the largest producersof explosion-welded clad produ
183、cts.In Europe,its manufacturing capacity gives NobelClad a strong position against competitors.InAsia,NobelClad has mixed competition ranging from competitors with strong brand names and competitive technology to otherproducers that are technically limited and offer minimal exports outside of their
184、domestic markets.To remain competitive,NobelCladintends to continue developing and providing technologically advanced manufacturing services,maintaining quality levels,offeringflexible delivery schedules,delivering finished products on a reliable basis and competing favorably on the basis of price.C
185、ustomer Profile NobelClads customers can be divided into three tiers:the product end users(e.g.,operators of chemical processing plants,andaluminum smelting plants),the engineering contractors that design and construct plants for end users,and the metal fabricators thatmanufacture the products or eq
186、uipment that utilize NobelClads metal products.It is typically the fabricator that places the purchaseorder with NobelClad and pays the corresponding invoice.NobelClad has developed strong relationships over the years with theengineering contractors,process licensors,and equipment operating companie
187、s that frequently act as buying agents for fabricators.Marketing,Sales,Distribution NobelClad conducts its selling efforts by marketing its services to potential customers senior management,direct salespersonnel,program managers,and independent sales representatives.Prospective customers in specific
188、 industries are identifiedthrough networking in the industry,cooperative relationships with suppliers,public relations,customer references,inquiries fromtechnical articles and seminars,website inquiries,webinars,and trade shows.NobelClads sales office in the United States covers bothNorth and South
189、America.Its sales offices in Europe cover the full European continent,Africa,the Middle East,and India.NobelCladalso has a sales office in South Korea and China to address the Asian markets and uses contract agents to cover various other countries.Contract agents typically work under multi-year agre
190、ements which are subject to sales performance targets as well as compliance withNobelClad quality,customer service and compliance expectations.By maintaining relationships with its existing customers,developing new relationships with prospective customers,and educating all its customers as to the te
191、chnical benefits of NobelCladsproducts,NobelClad endeavors to assist in setting standard specifications,both by our customers and the American Society ofMechanical Engineers and ASTM International,to ensure that the highest quality and reliability are achieved.NobelClads products are generally shipp
192、ed from its manufacturing locations in the United States and Germany.Any shippingcosts or duties for which NobelClad is responsible typically will be included in the price paid by the customer.Regardless of where thesale is booked,NobelClad will produce it,capacity permitting,at the location closest
193、 to the delivery place.In the event that there is acapacity issue at one facility,NobelClad can produce the order at its other production site,prioritizing timing.The two production sitesallow NobelClad to meet customer production needs in a timely manner.112025/1/17 23:08boom-20231231https:/www.sec
194、.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm19/117Table of ContentsResearch and Development We prepare a formal research and development plan annually.It is implemented at our cladding sites and is supervised by atechnical committee that reviews progress quarterly and meets on
195、ce a year to establish the plan for the following twelve months.Theresearch and development projects concern process support,new products,new applications,and special customer-paid projects.Corporate History and Recent Developments The Company originated as an unincorporated business called“Explosiv
196、e Fabricators,”which was formed in Colorado in1965.The business was incorporated in Colorado in 1971 under the name“E.F.Industries,Inc.,”which was later changed to“Explosive Fabricators,Inc.”The Company became publicly traded in 1976.In 1994,the Company changed its name to“DynamicMaterials Corporati
197、on.”The Company reincorporated in Delaware in 1997.In 2001,the Company acquired substantially all of the stock of NobelClad Europe SA,a French company(“NobelCladEurope”),which expanded the Companys explosive metalworking operations to Europe.In 2007,the Company acquired the German company DynaEnerge
198、tics GmbH and Co.KG(“DynaEnergetics”)and certainaffiliates,which expanded the Companys explosive metalworking operations in Europe and added a complementary energy productsbusiness.In 2013,the Company branded its explosive metalworking operations under the single name NobelClad,and in 2014,theCompan
199、y re-branded the energy products segment as DynaEnergetics.In 2016,the Company changed its name to DMC Global Inc.In 2021,the Company completed the acquisition of 60%of the membership interests in Arcadia Products.This acquisitiondiversified the markets and industries in which we operate and dramati
200、cally expanded our addressable markets.On January 29,2024,the Company announced that the Board initiated a review of strategic alternatives for the DynaEnergeticsand NobelClad businesses to maximize value for shareholders and other stakeholders.The Board is overseeing the assessment process,includin
201、g options for a sale,a merger or other business combination involving one or both businesses.The Board has not set atimetable to complete the strategic review process,and there can be no assurance that the review process will result in any transactions.Human Capital DMC empowers its people and organ
202、izations by institutionalizing entrepreneurship and celebrating ingenuity.We stand behindour businesses in ways that truly add value.Our culture is based on four core values:Integrity,Courage,Teamwork,and Humility.These values represent and establish the foundation of how we conduct our business.By
203、embedding our core values into ouroperating strategies,we ensure that our company culture also drives our Environmental,Social and Governance(ESG)sustainabilityefforts.DMC seeks to provide all employees with a supportive work environment and the opportunity to improve their skills andadvance their c
204、areers.We believe every employee deserves an environment in which they are treated with dignity and respect,andtheir voices are heard.We support diversity within our workforce,and respect and embrace the different backgrounds,experiences,cultures and perspectives our employees bring to DMC.As of Dec
205、ember 31,2023,we had approximately 1,800 permanent and part-time employees,of which approximately 1,500employees are located inside the U.S.,the majority of whom are engaged in manufacturing operations,with the122025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000
206、025/boom-20231231.htm20/117Table of Contentsremainder primarily in sales,marketing and administrative functions.None of our manufacturing employees are unionized.In addition,we use a number of temporary workers at any given time,depending on workload at our businesses.Compensation and Benefits.Our c
207、ompensation and benefits teams strive to develop and implement policies and programs thatare fair to employees,support our business goals,maintain competitiveness,and promote shared fiscal responsibility among theCompany and our employees.We offer employees benefits that vary by country and are desi
208、gned to meet or exceed the requirementsof local laws and to be competitive in the marketplace.Examples of benefits offered in the U.S.include traditional and Roth 401(k)plans with matching employer contributions;health benefits;life and disability insurance;additional voluntary insurance;paidcounsel
209、ing assistance;paid time off and parental leave;and a tuition reimbursement program.We have integrated these U.S.benefitsprograms for DMC and Arcadia.We also sponsor an employee stock purchase plan to encourage employees to acquire an ownershipstake in DMC.Health and Safety.The health and safety of
210、our employees is fundamental to our success.The Board and management teamsactively focus on the health and safety of our employees and engage various processes and programs to identify and manage risksthrough recognition,evaluation,and education.We empower our employees by fostering a sense of respo
211、nsibility for managing theirown work environment through open communication and training.Our occupational health and safety(OH&S)management systemis designed to foster a robust safety culture,stringent risk management and effective leadership.Diversity and Inclusion.We believe that we will be most s
212、uccessful with a diverse employee population and encourage hiringand promotion practices that focus on the best talent and the most effective performers.Because we operate a global business acrossmultiple business segments,products and service areas,we believe it is especially important that we attr
213、act employees with diversebackgrounds and the capability to address customer needs across the numerous cultures in the countries in which we operate.Ourcommitment to diversity and inclusion starts at the top with a highly skilled and diverse Board of Directors.We adopted a formaldiversity and inclus
214、ion policy in May 2021.Employee Development.DMC strives to identify top talent within the Company,and to provide opportunities for employees toprogress to higher levels within the organization.We seek to maximize each employees developmental potential through acombination of training and experience.
215、Ethics.Our directors and all employees,including senior management,are required to conduct themselves in accordance withthe highest professional and ethical standards,informed by a robust Code of Ethics and Business Conduct(the“Code”).We arecommitted to ensuring a fair and inclusive work environment
216、 in which employees are treated with dignity and respect.We have strictpolicies to protect against unlawful discrimination and harassment,and a Compliance Hotline that provides an alternative andanonymous method of reporting suspected violations of the Code,DMCs corporate policies or applicable laws
217、.Government Regulations DMC is subject to numerous environmental,legal and other governmental and regulatory requirements related to its operationsworldwide.For additional details,see“Item 1(a).Risk FactorsLegal and Regulatory Risks”,which is incorporated by reference inthis Item 1.Insurance Our ope
218、rations expose us to potential liabilities for property damage and personal injury or death as a result of the failure of acomponent that has been designed,manufactured,serviced,processed,or distributed by us.We maintain liability insurance that webelieve adequately protects us from potential produc
219、t losses and liability claims.Intellectual Property We hold a variety of intellectual property through our businesses including but not limited to patents,patent applications,registered and unregistered trademarks,trade secrets,proprietary information and know-how.We have followed a policy of seekin
220、gpatent and trademark protection in countries and regions throughout the world for products and methods that appear to havecommercial significance.No single patent or trademark is considered to be critical to any of Arcadia Products,DynaEnergetics,or NobelCladsoperations.132025/1/17 23:08boom-202312
221、31https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm21/117Table of ContentsWe are careful in protecting our proprietary know-how and manufacturing expertise in Arcadia Products,DynaEnergetics,andNobelClad,and each business unit has implemented measures and procedures d
222、esigned to ensure that the information remainsconfidential.Foreign and Domestic Operations and Export Sales All sales are shipped from our manufacturing facilities and distribution centers located in the United States,Germany,andCanada.The following table presents our net sales based on the geograph
223、ic location to where we shipped the product,regardless of thecountry of the actual end user.Given the purchase of Arcadia Products in late 2021,it is only included in the table for the years ended December 31,2023 and2022.(Dollars in Thousands)For the years ended December 31,202320222021United State
224、s$597,324$549,370$173,336 Canada30,992 26,766 16,929 United Arab Emirates9,227 5,107 3,843 Oman7,949 3,188 3,115 China6,438 3,902 10,365 Iraq6,034 3,574 72 Germany5,713 5,151 3,270 Kuwait4,980 1,801 1,559 South Korea4,562 3,242 2,144 Saudi Arabia4,252 2,416 553 France3,035 2,101 2,522 Indonesia2,622
225、 2,085 1,131 India2,486 8,249 3,062 Egypt2,340 5,780 3,519 Ukraine2,332 3,742 Netherlands2,146 3,041 2,200 Italy2,110 1,816 1,467 Sweden2,014 3,746 1,208 Belgium2,009 603 2,547 Australia1,866 1,816 1,567 Norway1,292 1,854 2,211 Turkey1,258 4,602 3,153 South Africa1,154 1,970 886 Russia*183 4,057 Res
226、t of the world15,053 11,723 11,657 Net sales$719,188$654,086$260,115 Sales to Russia have been suspended indefinitely due to the ongoing conflict in Ukraine.Company Information We are subject to the informational requirements of the Securities Exchange Act of 1934,as amended(the Exchange Act).Wether
227、efore file periodic reports,proxy statements and other information with the Securities Exchange Commission(the“SEC”).TheSEC maintains an Internet site at www.sec.gov that contains reports,proxy and information statements and other information regardingissuers that file electronically.*142025/1/17 23
228、:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm22/117Table of ContentsOur Internet address is .Information contained on our website does not constitute part of this AnnualReport on Form 10-K.Our annual report on Form 10-K,quarterly reports on Form 10
229、-Q,current reports on Form 8-K,and allamendments to those reports filed or furnished pursuant to Section 13(a)or 15(d)of the Exchange Act are available free of charge onour website as soon as reasonably practicable after such material is electronically filed with,or furnished to,the SEC.We alsoregul
230、arly post information about our Company on our website under the Investors tab.ITEM 1A.Risk FactorsPlease carefully consider the following discussion of material factors,events,and uncertainties that make our business and aninvestment in our securities subject to risk.The events and consequences dis
231、cussed in these risk factors could,in circumstances wemay or may not be able to accurately predict,recognize,or control,have a material adverse effect on our business,growth,reputation,prospects,financial condition,operating results(including components of our financial results),cash flows,liquidity
232、,and stock price.These risk factors do not identify all risks that we face;our operations could also be affected by factors,events,or uncertainties that arenot presently known to us or that we currently do not consider to present significant risks to our operations.Summary of Material Risk FactorsTh
233、e following is a summary of the material risk factors that could adversely affect our business,financial condition,and resultsof operations.This summary should be read together with the more detailed descriptions of risks relating to our Company below.Risk Factors Related to Arcadia ProductsNorth Am
234、erican and global economic and industry-related business conditions materially affect our sales and results ofoperations.We may not be able to continue to compete successfully against other companies in our industry.If we are unable to manage our supply chain effectively,including availability and p
235、rice of materials used in our products,ourresults of operations will be negatively affected.An inability to successfully develop new products or improve existing products could negatively impact our ability to attractnew customers and/or retain existing customers.Product quality issues and product l
236、iability claims could adversely affect our operating results.We recently implemented a new enterprise resource planning(ERP)system,and challenges with the implementation of thesystem may adversely impact our business and operations.Risk Factors Related to DynaEnergeticsDemand for DynaEnergetics prod
237、ucts is substantially dependent on the levels of capital expenditures by the oil and gasindustry.Decreases or expected decreases in oil and gas prices and reduced expenditures in the oil and gas industry couldhave a material adverse impact on our financial condition,results of operations and cash fl
238、ows.Failure to adjust our manufacturing and supply chain to accurately meet customer demands could have a material adverseeffect on our results of operations.Failure to manage periods of growth or contraction may seriously harm our business.We may not be able to continue to compete successfully agai
239、nst other companies in our industry.Recent conflict in the Middle East may adversely affect our business and results of operations.If we are not able to design,develop,and produce commercially competitive products in a timely manner in response tochanges in the market,customer requirements,competiti
240、ve pressures,and technology trends,our business and consolidatedresults of operations and the value of our intellectual property could be materially and adversely affected.We may be unable to successfully execute and realize the expected financial benefits from strategic initiatives.Demand for DynaE
241、nergetics products could be reduced by existing and future legislation,regulations and public sentiment.Consolidation of our customers and competitors may impact our results of operations.Risk Factors Related to NobelCladNobelClads business is dependent on sales to a limited number of customers in c
242、yclical markets and our results are affectedby the price of metals.We are dependent on a relatively small number of large projects and customers for a significant portion of our net sales.152025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm2
243、3/117Table of ContentsOur backlog figures may not accurately predict future sales.There is a limited availability of sites suitable for cladding operations.There is no assurance that we will continue to compete successfully against other manufacturers of competitive products.Customers have the right
244、 to change orders until products are completed.Our costs could substantially increase if we experience a large claim or a significant number of warranty claims.Risk Factors Related to our Businesses GenerallyOur efforts to grow and transform our businesses may require significant investments;if our
245、strategies are unsuccessful,ourbusiness,results of operations and/or financial condition may be materially adversely affected.Our review of potential strategic alternatives may not result in executed or consummated transactions or other strategicalternatives,and the process of reviewing strategic al
246、ternatives or its conclusion could adversely affect our business and ourstockholders.Our operations are subject to political and economic instability and risk of government actions that could have a materialadverse effect on our business,consolidated results of operations,and consolidated financial
247、condition.Inflation and higher interest rates have,and may continue to,adversely affect our financial position and results of operations.Our business,financial condition and results of operations could be adversely affected by disruptions in the global andEuropean economies caused by the ongoing mil
248、itary action between Russia and Ukraine.Our operating results fluctuate from quarter to quarter.We are exposed to potentially volatile fluctuations of the U.S.dollar(our reporting currency)against the currencies of manyof our operating subsidiaries.Disruptions or delays involving our suppliers or in
249、creases in prices for the components,raw materials and parts that we obtainfrom our suppliers could have a material adverse effect on our business and consolidated results of operations.The terms of our indebtedness contain a number of restrictive covenants,the breach of any of which could result in
250、acceleration of payment of our credit facilities.If our customers delay paying or fail to pay a significant amount of our outstanding receivables,it could have a materialadverse effect on our liquidity,consolidated results of operations,and consolidated financial condition.New or existing tariffs an
251、d other trade measures could adversely affect our results of operations,financial position and cashflows.Failure to attract and retain key personnel and source sufficient labor could adversely affect our current operating results.A failure in our information technology systems or those of third part
252、ies,including those caused by security breaches,cyber-attacks or data protection failures,could disrupt our business,result in significant legal costs and other losses and damage ourreputation.Failure to establish and maintain adequate internal controls over financial reporting could result in the i
253、nability to report ourfinancial results in a timely and reliable manner,which could harm our business and impact the value of our securities.Legal and Regulatory RisksOur operations require us to comply with numerous laws and regulations,violations of which could have a material adverseeffect on our
254、 consolidated results of operations,financial condition or cash flows.The use of explosives in our DynaEnergetics and NobelClad manufacturing processes and products subject us to additionalenvironmental,health and safety laws and any accidents or injuries could subject us to significant liabilities.
255、Demand for our products could be reduced by existing and future legislation,regulations and public sentiment.We are subject to extensive environmental,health and safety laws and failure to comply with such laws and regulations couldresult in restrictions or prohibitions on our facilities,substantial
256、 civil or criminal liabilities and could have a material adverseeffect on our business,consolidated results of operations,and consolidated financial condition.Failure to comply with applicable federal,state and local employment and labor laws and regulations could have a material,adverse impact on o
257、ur business.The regulatory environment governing information,data security and privacy is increasingly demanding and evolving and adata security breach could result in litigation,enforcement actions and related penalties and fines.Legal,regulatory or market measures to address climate change,includi
258、ng proposals to restrict emissions of GHGs and othersustainability initiatives,could have an adverse impact on the Companys business and results of operations.Changes in or interpretation of tax law could impact the determination of our income tax liabilities for a tax year.162025/1/17 23:08boom-202
259、31231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm24/117Table of ContentsIntellectual Property RisksOur failure to protect our proprietary information and any successful intellectual property challenges against us couldmaterially and adversely affect our competiti
260、ve position.We may incur substantial costs defending against third parties alleging that we infringe their proprietary rights.Risks Related to AcquisitionsWe have incurred debt to finance the acquisition of 60%of Arcadia Products and may incur additional substantial financialobligations in connectio
261、n with the acquisition of the remaining 40%of Arcadia Products.DMC is the majority shareholder of Arcadia Products,and our interest in Arcadia Products is subject to the risks normallyassociated with the conduct of businesses with a minority shareholder.To the extent that we seek to further expand o
262、ur business through acquisitions,we may experience issues in executingacquisitions or integrating acquired operations.Risk Factors Related to Our Common StockThe price and trading volume of our common stock may be volatile,which may make it difficult for you to resell the commonstock when you want o
263、r at prices you find attractive.Risk Factors Related to Arcadia ProductsNorth American and global economic and industry-related business conditions materially affect our sales and results ofoperations.Our Arcadia Products business is significantly influenced by North American economic conditions and
264、 the cyclical nature of theNorth American commercial and residential construction industry.The construction industry is impacted by macroeconomic trends,such as availability of credit,employment levels,consumer confidence,interest rates and commodity prices.Recent rising inflation,interest rates,and
265、 construction costs have reduced,and could continue to reduce,the demand for our products and impact ourprofitability.Higher interest rates make it more expensive to finance construction projects,and as a result,may reduce the demand forour products.In addition,changes in architectural design trends
266、,demographic trends,and/or remote work trends could negativelyimpact demand for our products.To the extent changes in these factors negatively impact the overall commercial construction industry,our revenue and profits could be significantly reduced.We may not be able to continue to compete successf
267、ully against other companies in our industry.The markets in which Arcadia Products operates are highly competitive and many of our competitors are larger and bettercapitalized than we are.These competitors may be better able to withstand changes in conditions within the industries and markets inwhic
268、h we operate and may have significantly greater operating and financial flexibility than we have.Moreover,barriers to entry arelow in certain product lines and new competitors may enter our industry,whether within the U.S.or internationally.An increase incompetition,including in the form of aggressi
269、ve pricing by new market entrants or offerings of alternative building materials,couldcause us to lose customers and lead to decreases in net sales and profitability if we are not able to respond adequately to suchchallenges.The actions of our existing competitors or new competitors could result in
270、loss of customers and/or market share.Changesin our competitors products,prices or services could negatively impact our market share,net sales and/or margins.If we are unable to manage our supply chain effectively,including availability and price of materials used in our products,ourresults of opera
271、tions will be negatively affected.We obtain a significant portion of our key raw materials,such as aluminum extrusions,from a few key suppliers.While westructure many of our supply arrangements to moderate the effects of fluctuations in the market for raw aluminum and we endeavor toadjust our custom
272、er pricing to offset potential impacts,operating results could be negatively impacted by price movements in themarket for raw aluminum.In recent years,we have seen increased volatility in the price of aluminum that we purchase from our keysuppliers.172025/1/17 23:08boom-20231231https:/www.sec.gov/Ar
273、chives/edgar/data/34067/000003406724000025/boom-20231231.htm25/117Table of ContentsOur suppliers are subject to fluctuations in general economic cycles.Global economic conditions and political and economicinstability may impact their ability to operate their businesses,including the ongoing military
274、 action between Russia and Ukraine andrelated government actions.Some of our suppliers have been and may continue to be negatively impacted by the costs or availabilityof raw materials,labor and transportation,and they may not be able to handle commodity cost volatility or changing volumes whilestil
275、l performing up to our specifications.These factors may cause suppliers to be unable to meet their commitments or to negativelychange the terms of supply arrangements.The loss of,or substantial decrease in the availability of,products from our suppliers,or the loss of a key supplier,couldadversely i
276、mpact our financial condition and results of operations.If any of our key suppliers are unable to meet their commitments,orif those supply arrangements are terminated,we may not be able to obtain certain raw materials on commercially reasonable terms orat all,and may suffer a significant interruptio
277、n in our ability to manufacture our products,including because it may be difficult to findsubstitute or alternate suppliers as the aluminum extrusions we use are customized.We could also be required to maintain higher inventory levels as we address supply uncertainties.Such developments wouldresult
278、in higher costs and potentially a decrease in our revenues and profitability.If our supply of raw materials is disrupted or ourdelivery times are extended,our results of operations and financial condition could be materially adversely affected.An inability to successfully develop new products or imp
279、rove existing products could negatively impact our ability to attractnew customers and/or retain existing customers.Our success depends on meeting consumer needs and anticipating changes in consumer preferences with successful newproducts and product improvements.We aim to introduce products and new
280、 product designs proactively to offset obsolescence anddecreases in sales of existing products.While we devote significant focus to the development of new products,we may not besuccessful in product development and our new products may not be commercially successful.In addition,it is possible thatco
281、mpetitors may improve their products more rapidly or effectively,which could adversely affect our sales.Furthermore,marketdemand may decline as a result of consumer preferences trending away from our categories or trending down within our brands orproduct categories,which could adversely impact our
282、results of operations,cash flows and financial condition.Product quality issues and product liability claims could adversely affect our operating results.We believe that future orders of our products will depend on our ability to maintain the performance,reliability,quality andtimely delivery standa
283、rds required by our customers.We have in the past been and currently are subject to product liability andwarranty claims.If our products have performance,reliability or quality problems,or products are installed improperly,we mayexperience additional warranty expense;reduced or canceled orders;or de
284、lays in the collection of accounts receivable.Additionally,product liability and warranty claims could result in costly and time-consuming litigation that could require significant time andattention of management and involve significant monetary damages that could negatively impact our operating res
285、ults.There is noassurance that the number and value of product liability and warranty claims will not increase as compared to historical claim rates,orthat our warranty reserve at any particular time will be sufficient.No assurance can be given that coverage under insurance policies,ifapplicable,wil
286、l be adequate to cover future product liability claims against us.If we are unable to recover on insurance claims,inwhole or in part,or if we exhaust our available insurance coverage at some point in the future,then we might be forced to expend legalfees and settlement or judgment costs relating to
287、product liability and warranty claims,which could negatively impact our profitability,results of operations,cash flows and financial condition.We recently implemented a new enterprise resource planning(ERP)system,and challenges with the implementation of thesystem may adversely impact our business a
288、nd operations.Phase one of a new ERP system went live in July 2023.While the ERP changeover led to a brief operational slowdown early inthe third quarter,the system is expected to enhance operating efficiencies and the internal control environment throughout Arcadia bystreamlining data sources,simpl
289、ifying complex processes,and reducing manual processes.Any disruptions,deficiencies,or otherproblems associated with the implementation of our ERP system,such as quality issues,programming errors,or inconsistent employeeadoption could adversely affect our ability to operate our business,produce time
290、ly and accurate financial statements,or comply withapplicable regulations.This could result in negative impacts on our business and operations.Additionally,the implementation involvesgreater utilization of third-party cloud computing services in connection with our Arcadia operations.Problems faced
291、by us or ourthird-party providers relating to this implementation,including technological or business-related disruptions and cybersecurity threats,could adversely impact our business,results of operations,and financial condition for future periods.Any failures identified within ourinternal controls
292、 as a result of this182025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm26/117Table of Contentsimplementation,even if quickly remediated,or difficulties encountered during implementation,may adversely impact our operatingresults or hinder ou
293、r ability to report our financial results in a timely and accurate basis.Risk Factors Related to DynaEnergeticsDemand for DynaEnergetics products is substantially dependent on the levels of capital expenditures by the oil and gasindustry.Decreases or expected decreases in oil and gas prices and redu
294、ced expenditures in the oil and gas industry could havea material adverse impact on our financial condition,results of operations and cash flows.Demand for the majority of DynaEnergetics products depends substantially on the level of expenditures by the oil and gasindustry for the exploration,develo
295、pment and production of oil and natural gas reserves.These expenditures are generally dependenton the industrys view of future oil and natural gas prices and are sensitive to the industrys view of future economic growth and theresulting impact on demand for oil and natural gas.Higher oil and gas pri
296、ces have resulted in increasing North American completionactivity and increased expenditures by the oil and gas industry.This has resulted in increased cash flows for E&P companies;however,E&P companies are still seeking to control their cost of operations and this has continued to contribute to dow
297、nward pressure on pricesfor our products.In addition,the oil and gas industry has historically been cyclical,and to date in 2024,oil prices have declinedsignificantly from their 2022 highs.When oil prices decline,we would expect an increased risk of reduced or delayed oil and gasexploration and prod
298、uction spending,project modifications,delays or cancellations,general business disruptions,and delays inpayment of,or nonpayment of,amounts that are owed to us,all of which could result in reduced demand for our products,downwardpressure on selling prices for our products and decreased revenues and
299、profits.These effects would likely have a material adverseeffect on our financial condition,results of operations and cash flows.The prices for oil and natural gas have historically been volatile and can be affected by a variety of factors,including:changes in the supply of and demand for hydrocarbo
300、ns,which are affected by general economic,business and regulatoryconditions;the ability or willingness of the Organization of Petroleum Exporting Countries(“OPEC”)and other oil producingcompanies to set and maintain production levels for oil;oil and gas production levels in the U.S.and in other non-
301、OPEC countries;the level of excess production capacity;speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts;government initiatives to restrict oil and gas drilling or development or promote the use of renewable energy sources andpublic sentim
302、ent regarding the same;political and economic uncertainty,geopolitical unrest,and acts of war;the level of worldwide oil and gas exploration and production activity;access to potential resources;changes in governmental policies,subsidies,or sanctions;the costs of exploring for,producing and deliveri
303、ng oil and gas;technological advances affecting energy consumption;andweather conditions.Continued or worsening conditions in the oil and gas industry generally may have a further material adverse effect on ourbusiness,financial condition,results of operations,cash flows and prospects.Failure to adj
304、ust our manufacturing and supply chain to accurately meet customer demands could have a material adverseeffect on our results of operations.We make significant decisions,including determining the levels of business that we will seek and accept,production schedules,levels of reliance on contract manu
305、facturing and outsourcing,internal fabrication utilization and other resource requirements,based onour estimates of customer requirements.Factors that can impact our ability to accurately estimate future customer requirements includethe short-term nature of many customers commitments,our customers a
306、bility to reschedule,cancel and modify orders with little or nonotice and without significant penalty,the accuracy of our customers forecasts,and seasonal or cyclical trends in customersindustries.To ensure availability of our products,particularly for our largest customers,we may start manufacturin
307、g our relevant productsbased on our customers forecasts,which are not binding.As a result,we incur inventory and manufacturing costs in advance ofanticipated sales that may never materialize or which may be substantially lower than expected.If actual demand for our products islower than forecast,we
308、may also experience higher inventory carrying and operating costs and product2025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm27/117192025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.
309、htm28/117Table of Contentsobsolescence.Because certain of our sales,research and development,and internal manufacturing overhead expenses are relativelyfixed,a reduction in customer demand may also decrease our gross margin and operating income.Conversely,customers often require rapid increases in p
310、roduction on short notice.We may be unable to secure sufficientmaterials or contract manufacturing capacity to meet such increases in demand.This could damage our customer relationships,reducerevenue growth and margins,subject us to additional liabilities,harm our reputation,and prevent us from taki
311、ng advantage ofopportunities.Failure to manage periods of growth or contraction may seriously harm our business.Our industry frequently sees periods of expansion and contraction which require companies to adjust to customers needs andmarket demands.We regularly contend with these issues and must car
312、efully manage our business to meet customer and marketrequirements.If we fail to manage these growth and contraction decisions effectively,we may find ourselves with either excess orinsufficient resources and our business and our profitability could suffer as a result.Periods of contraction or reduc
313、ed net sales,or other factors negatively affecting particular markets,require us to assess whetherfacilities remain viable,whether staffing levels need to be reduced,and how to respond to changing levels of customer demand.Whilemaintaining excess capacity or higher levels of employment entails short
314、-term costs,reductions in capacity or employment couldimpair our ability to respond to new opportunities and programs,market improvements or to maintain customer relationships.Ourdecisions to reduce costs and capacity can affect our short-term and long-term results and result in restructuring charge
315、s.Expansions,including the transfer of operations to other facilities,include the risk of additional costs and start-up inefficiencies.If we are unable to effectively manage our expansion projects or related anticipated net sales are not realized,our operating resultscould be materially adversely af
316、fected.We may not be able to continue to compete successfully against other companies in our industry.The markets in which we operate are highly competitive.DynaEnergetics competes with a broad spectrum of companies thatproduce and market perforating services and products.Many of these companies are
317、 large national and multi-national companies,including the oil and natural gas industrys largest oilfield service providers.These companies have longer operating histories,greaterfinancial,technical,and other resources,and greater name recognition than we do.In addition,we compete with many smallerc
318、ompanies capable of competing effectively on a regional or local basis.Our competitors may be able to respond more quickly to newor emerging technologies and changes in customer requirements.To remain competitive,DynaEnergetics must continue to provideinnovative products at competitive prices and ma
319、intain an excellent reputation for value,quality,on-time delivery,and safety.If we failto compete successfully against our competition,we may be unable to maintain acceptable sales levels,prices and margins for ourproducts,which could have a material adverse effect on our business,financial conditio
320、n,and results of operationsRecent conflict in the Middle East may adversely affect our business and results of operations.Recent conflict in the Middle East has resulted in volatility in oil prices due to concerns regarding the conflicts impact onglobal oil supplies.Continued conflict or an expanded
321、 or increased level of conflict could further impact oil prices and drilling activityglobally or have adverse effects on global macroeconomic conditions generally,which could have a negative impact on our businessand results of operations.If we are not able to design,develop,and produce commercially
322、 competitive products in a timely manner in response tochanges in the market,customer requirements,competitive pressures,and technology trends,our business and consolidatedresults of operations and the value of our intellectual property could be materially and adversely affected.The market for our p
323、roducts is characterized by continual technological developments to provide better and more reliableperformance and enhanced product offerings.If we are not able to design,develop,and produce commercially competitive products ina timely manner in response to changes in the market,customer requiremen
324、ts,competitive pressures,and technology trends,ourbusiness and consolidated results of operations and the value of our intellectual property could be materially and adversely affected.Likewise,if our proprietary technologies,equipment,facilities,or work processes become obsolete,we may no longer be
325、competitive,and our business and consolidated results of operations could be materially and adversely affected.We may be unable to successfully execute and realize the expected financial benefits from strategic initiatives.202025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/00
326、0003406724000025/boom-20231231.htm29/1172025/1/17 23:08boom-20231231https:/www.sec.gov/Archives/edgar/data/34067/000003406724000025/boom-20231231.htm30/117Table of ContentsFrom time to time,our business has engaged in strategic initiatives,and such activities may occur in the future.These effortshav
327、e recently included a series of automation,lean manufacturing and cost-reduction initiatives designed to enhance profitability andimprove quality.While we expect meaningful financial benefits from our strategic initiatives,we may not realize the full benefitsexpected within the anticipated timeframe
328、.Adverse effects from strategy-driven organizational changes could interfere with ourrealization of anticipated synergies,customer service improvements and cost savings from these strategic initiatives.Additionally,ourability to fully realize the benefits and implement strategic initiatives may be l
329、imited by certain contractual commitments.Moreover,we may incur substantial expenses in connection with the execution of strategic plans in excess of what is forecasted.Further,strategicinitiatives can be a complex and time-consuming process that can place substantial demands on management,which cou
330、ld divertattention from other business priorities or disrupt our daily operations.Any of these failures could materially adversely affect ourbusiness,financial condition,results of operations and cash flows,which could constrain our liquidity.Demand for DynaEnergetics products could be reduced by ex
331、isting and future legislation,regulations and public sentiment.Regulatory agencies and environmental advocacy groups in the United States,the E.U.,and other regions or countries havebeen focusing considerable attention on emissions of carbon dioxide,methane and other greenhouse gases and their role
332、in climatechange.There is also increased focus,including by governments and our customers,investors and other stakeholders,on these andother sustainability and energy transition matters.Existing or future legislation and regulations related to greenhouse gas emissions andclimate change,as well as in
333、itiatives by governments,non-governmental organizations,and companies to conserve energy or promotethe use of alternative energy sources,and negative attitudes toward or perceptions of fossil fuel products and their relationship to theenvironment,may significantly curtail demand for and production of oil and gas in areas of the world where our customers operate,and thus reduce future demand for Dy
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