After reading the press release concerning Dynamic Material Corporation's ("DMC" Ticker Symbol: BOOM) most recent large contract (read my take on the new contract here), I immediately called Mr. Geoff High, of Pfeiffer High Investor Relations, to see if I couldn't squeeze-out some information on the contract beyond what was in the press release. While Mr. High had to be tight-lipped about the details of the contract for competitive reasons, he did promise to email me an update to DMC's investor presentation. I couldn't insert the file on my blog but downtowntrader set up a link for me.
Link to Updated DMC Investor Presentation
Regards,
Tuff
Friday, May 25, 2007
Wednesday, May 23, 2007
DMC - The Alternative Energy Company?
Originally, I intended on taking some time today to write about American Science & Engineering’s (“AS&E” Ticker Symbol: ASEI) fourth quarter earning release, conference call, share buyback plan, and dividend announcement. In light of Dynamic Material Corporation’s (“DMC” Ticker Symbol: BOOM) contract announcement this morning, I decided to write about this contract and its broader implications.
Today, DMC announced that it received an $8.3 million contract for explosion clad metal plates from a U.S. based customer. The customer will utilize the plates in specialized equipment for the alternative energy sector. The significance of this contract lies not only in the size of the contract but also in the type of contract. This contract represents the first contract known to investors for some form of alternative energy application. In the last few years, DMC has announced large contracts for several nickel hydrometallurgy projects, a couple refinery projects, a natural gas project, a petrochemical project, and now an alternative energy application. With this contract, it is clear that DMC’s opportunities are continuously expanding.
Here is the main quote from Yvon Cariou, CEO:
"The opportunities in the energy sector clearly extend beyond the conventional oil and gas industry. We believe the traditional and alternative energy markets both present significant long-term prospects for DMC."
Not Ethanol
I talked with Geoff High, from Pfieffer High Investor Relations, and all he could tell me regarding the contract was that it was NOT for an ethanol project. If anyone wants to speculate as to what type of alternative energy application we might be looking at with this contract, feel free to post your comments.
Guidance and Earnings
Anyone that listened to the last earnings call or read my blog post analyzing the fourth quarter earnings report was likely expecting a contract announcement in the near future. Here is what I wrote on my blog following the last earnings report and conference call:
“While there were no large orders announced in the first quarter, both the CFO and CEO indicated that they were quoting a number of large projects and they were “reasonably confident” they would be reporting on a large order “soon”. Depending on the timing of that order and other factors relating to the order, revenues from that order may or may not be included in 2007. Nonetheless, DMC will be completing shipment on Ambatovy in Q2 and commencing shipments on the natural gas contract in Q3. If management is able to book the large order noted above sometime in the second quarter with the expectation of shipping at least a portion of that order sometime in the fourth quarter, managements’ guidance for 20% revenue growth will be out the window. Please keep in mind that there are no guarantees that DMC will get this order or that DMC will be able to ship at least portions of this order by the end of the year.”
As mentioned in the press release, the order will ship in the fourth quarter of 2007. With this contract, DMC will be shipping on large announced contracts in Q2, Q3 and Q4. Given the timing of the shipment on this contract, I am further convinced that management guidance for 2007 is too conservative and I stand by my original projection of 30-35% top-line growth for 2007 (see bottom of this post).
Supply Chain
The timeframe between when management announces a contract and when a contract actually ships varies depending on a number of factors including the availability of raw materials. The fact that DMC plans to ship this large order before the end of 2007 is a positive indicator that there has, at the very least, not been any further deterioration in the supply chain. In my opinion, the timing reflects managements’ contention that there will be continued improvement in the supply chain throughout the course of the year.
Conclusion
Today’s contract announcement was largely expected by DMC investors. Nonetheless, the type of contract took me by surprise and has larger implications in that the type of contract indicates that DMC is expanding its customer base. As management expects to ship on the contract in the fourth quarter of 2007, management expectations for 20% top-line growth in 2007 appears increasingly conservative. Finally, management indicated on the last conference call that there were a number of large projects on the “hot list”. I expect the timing between orders to compress as we move into the future. At the same time, don’t forget the rapid pace that DMC is booking smaller contracts.
Regards,
Tuff
Dynamic Materials Corporation (Public, NASDAQ:BOOM)
Today, DMC announced that it received an $8.3 million contract for explosion clad metal plates from a U.S. based customer. The customer will utilize the plates in specialized equipment for the alternative energy sector. The significance of this contract lies not only in the size of the contract but also in the type of contract. This contract represents the first contract known to investors for some form of alternative energy application. In the last few years, DMC has announced large contracts for several nickel hydrometallurgy projects, a couple refinery projects, a natural gas project, a petrochemical project, and now an alternative energy application. With this contract, it is clear that DMC’s opportunities are continuously expanding.
Here is the main quote from Yvon Cariou, CEO:
"The opportunities in the energy sector clearly extend beyond the conventional oil and gas industry. We believe the traditional and alternative energy markets both present significant long-term prospects for DMC."
Not Ethanol
I talked with Geoff High, from Pfieffer High Investor Relations, and all he could tell me regarding the contract was that it was NOT for an ethanol project. If anyone wants to speculate as to what type of alternative energy application we might be looking at with this contract, feel free to post your comments.
Guidance and Earnings
Anyone that listened to the last earnings call or read my blog post analyzing the fourth quarter earnings report was likely expecting a contract announcement in the near future. Here is what I wrote on my blog following the last earnings report and conference call:
“While there were no large orders announced in the first quarter, both the CFO and CEO indicated that they were quoting a number of large projects and they were “reasonably confident” they would be reporting on a large order “soon”. Depending on the timing of that order and other factors relating to the order, revenues from that order may or may not be included in 2007. Nonetheless, DMC will be completing shipment on Ambatovy in Q2 and commencing shipments on the natural gas contract in Q3. If management is able to book the large order noted above sometime in the second quarter with the expectation of shipping at least a portion of that order sometime in the fourth quarter, managements’ guidance for 20% revenue growth will be out the window. Please keep in mind that there are no guarantees that DMC will get this order or that DMC will be able to ship at least portions of this order by the end of the year.”
As mentioned in the press release, the order will ship in the fourth quarter of 2007. With this contract, DMC will be shipping on large announced contracts in Q2, Q3 and Q4. Given the timing of the shipment on this contract, I am further convinced that management guidance for 2007 is too conservative and I stand by my original projection of 30-35% top-line growth for 2007 (see bottom of this post).
Supply Chain
The timeframe between when management announces a contract and when a contract actually ships varies depending on a number of factors including the availability of raw materials. The fact that DMC plans to ship this large order before the end of 2007 is a positive indicator that there has, at the very least, not been any further deterioration in the supply chain. In my opinion, the timing reflects managements’ contention that there will be continued improvement in the supply chain throughout the course of the year.
Conclusion
Today’s contract announcement was largely expected by DMC investors. Nonetheless, the type of contract took me by surprise and has larger implications in that the type of contract indicates that DMC is expanding its customer base. As management expects to ship on the contract in the fourth quarter of 2007, management expectations for 20% top-line growth in 2007 appears increasingly conservative. Finally, management indicated on the last conference call that there were a number of large projects on the “hot list”. I expect the timing between orders to compress as we move into the future. At the same time, don’t forget the rapid pace that DMC is booking smaller contracts.
Regards,
Tuff
Dynamic Materials Corporation (Public, NASDAQ:BOOM)
Friday, May 18, 2007
Analyzing Hurco
Hurco Companies, Inc. (Public, NASDAQ:HURC)
Sales
Sales for the quarter increased 15.28% to $42.49 million from $36.86 million in the year-ago quarter. At the same time, sales slipped 9.35% from the first quarter of fiscal 2007 and 1.55% from the fourth quarter of fiscal 2006. It is important to note that the fourth quarter of fiscal 2006 and the first quarter of fiscal 2007 benefited from the IMTS, the largest U.S. trade show, which was held in September of 2006.
Based on my conversation with Hurco’s CFO, quarterly sales are largely driven by the release of new products. To the best of my knowledge Hurco did not release any new products in the quarter. While the management mentioned the release of the much anticipated Winmax control software and the introduction of Hurco’s largest vertical machining center, the VMX84, it is my understanding that these products were not available for shipment until after the close of the quarter. The release of these two products bodes well for future quarters. The new Winmax control system, with 25 new features, will increase the competitiveness of all Hurco’s machine tools. The VMX84, with its ability to machine large parts, will open Hurco to a new group of customers.
Aside from the new products mentioned above, future quarters should continue to benefit from a weaker U.S. dollar and growing demand in Europe and Asia. While machine tool consumption has been on the decline in the U.S. since the IMTS last year, the most recent machine tool consumption report showed a nice rebound in March after several months of declines. For the full year, industry experts are looking for “steady growth” in the U.S. during 2007. Furthermore, the current quarter is likely to see some benefit from Eastec, a smaller regional U.S. trade show being held next week.
Bookings
If you think the lower sequential sales in the second quarter are a sign of a slowdown…think again. Order bookings increased 31.05% to $48.47 million from the year-ago quarter. If my history is correct, this was the fourth consecutive quarter of record bookings.
As I compare the consecutive quarter of record bookings to sales in the last couple of quarters (book-to-bill ratios), I am led to believe that bookings in the last couple quarter included orders for the VMX84 and the Winmax control system, which were not available for shipment until the current quarter.
Margins
Gross margins improved to 38.47% in the current quarter compared to 36.96% in the prior quarter and 35.75% in the year-ago quarter. Once again, I believe the 38.47% represents a record for Hurco. According to management, gross margins are largely driven by product mix and volume. Hurco’s continued improvement in gross margins demonstrates Hurco’s ability to focus on and compete with its higher margin products. The higher gross margins also demonstrate managements’ ability to manage costs. To this regard, Hurco management is expecting future margin improvement from the manufacturing facility in China.
Operating expenses as a percent of sales increased to 22.13% from 19.37% in the year-ago quarter. Operating expenses as a percent of sales were in the range of recent quarters but on the higher end of the range. Management attributed the higher operating expenses to incremental variable expenses related to market expansion, commissions and compensation expense. Considering Hurco’s recent expansion efforts in China and India, managements’ explanation is reasonable.
Higher gross margins for the quarter were offset by the higher operating expenses as a percent of sales resulting in relatively flat operating margins of 16.34%. Nonetheless, at 16.34%, operating margins were in the upper end of the recent range.
The increase in interest income offset somewhat by a higher tax rate in the quarter, resulted in higher net margins of 11.01% compared to 10.66% in the second quarter of 2006.
Future margin improvement can be expected once the sales and manufacturing operations in China become fully functional and sales in the region increase. Additionally, the VMX84 is likely a higher margin product. With the availability of the VMX84 in the current quarter, there will likely be continued improvement in gross margins.
Earnings
Earnings increased 19.11% from the year-ago quarter but slipped 13.25% sequentially for the reasons mentioned above. EPS for the quarter was $0.73 per diluted share putting the trailing 12-month EPS at $2.89 per diluted share. At a current price of $42.50, I calculate a trailing PE of 14.71. At the now higher price of $43.00 (share continue to rise during the day), I get am calculating an EV/EBITDA of 9.05.
Balance Sheet
Hurco is now free of long-term debt and the cash position increased over $2.1 million to $34.5 million or $5.40 per share. Hurco’s balance sheet remains exceptionally strong.
Cash Flow Statement
While a cash flow statement was not provided, it is reasonable to assume the $2.13 million increase in cash and the elimination of nearly $4 million in long-term debt was the result of another strong quarter of operational cash flows.
Looking Ahead to Next Quarter
I have put together my long-term argument for Hurco in previous blog posts (here). As for now, I will make a few positive bullet points for next quarter:
Expecting continued strength in Europe and Asia along with continued benefit from weaker U.S. dollar.
Expecting more of a rebound in U.S. machine tool consumption and I will be monitoring the U.S. Machine Tool Consumption Survey
Potential boost to U.S. sales as a result of Eastec
Higher book-to-bill ratios in recent quarters suggest some pent up orders for both Winmax and VMX84
Successive record bookings indicates that demand remains strong
Shipping of VMX84 and Winmax should result in continued margin improvement and will help expand customer base
Higher cash position and elimination of debt will result in higher net interest income
Slightly more favorable year-ago comparables
Conclusion
Despite the markets reaction today to missing estimates, Hurco once again reported a very solid quarter and the story remains the same. I continue to have faith in the long-term prospect for Hurco and at this point I am especially excited about the prospects for next quarter. Since I started writing, Hurco shares are already up a couple of dollars. Looks like smart investors are taking advantage of a discount.
Regards,
Tuff
Earnings Release
Sales
Sales for the quarter increased 15.28% to $42.49 million from $36.86 million in the year-ago quarter. At the same time, sales slipped 9.35% from the first quarter of fiscal 2007 and 1.55% from the fourth quarter of fiscal 2006. It is important to note that the fourth quarter of fiscal 2006 and the first quarter of fiscal 2007 benefited from the IMTS, the largest U.S. trade show, which was held in September of 2006.
Based on my conversation with Hurco’s CFO, quarterly sales are largely driven by the release of new products. To the best of my knowledge Hurco did not release any new products in the quarter. While the management mentioned the release of the much anticipated Winmax control software and the introduction of Hurco’s largest vertical machining center, the VMX84, it is my understanding that these products were not available for shipment until after the close of the quarter. The release of these two products bodes well for future quarters. The new Winmax control system, with 25 new features, will increase the competitiveness of all Hurco’s machine tools. The VMX84, with its ability to machine large parts, will open Hurco to a new group of customers.
Aside from the new products mentioned above, future quarters should continue to benefit from a weaker U.S. dollar and growing demand in Europe and Asia. While machine tool consumption has been on the decline in the U.S. since the IMTS last year, the most recent machine tool consumption report showed a nice rebound in March after several months of declines. For the full year, industry experts are looking for “steady growth” in the U.S. during 2007. Furthermore, the current quarter is likely to see some benefit from Eastec, a smaller regional U.S. trade show being held next week.
Bookings
If you think the lower sequential sales in the second quarter are a sign of a slowdown…think again. Order bookings increased 31.05% to $48.47 million from the year-ago quarter. If my history is correct, this was the fourth consecutive quarter of record bookings.
As I compare the consecutive quarter of record bookings to sales in the last couple of quarters (book-to-bill ratios), I am led to believe that bookings in the last couple quarter included orders for the VMX84 and the Winmax control system, which were not available for shipment until the current quarter.
Margins
Gross margins improved to 38.47% in the current quarter compared to 36.96% in the prior quarter and 35.75% in the year-ago quarter. Once again, I believe the 38.47% represents a record for Hurco. According to management, gross margins are largely driven by product mix and volume. Hurco’s continued improvement in gross margins demonstrates Hurco’s ability to focus on and compete with its higher margin products. The higher gross margins also demonstrate managements’ ability to manage costs. To this regard, Hurco management is expecting future margin improvement from the manufacturing facility in China.
Operating expenses as a percent of sales increased to 22.13% from 19.37% in the year-ago quarter. Operating expenses as a percent of sales were in the range of recent quarters but on the higher end of the range. Management attributed the higher operating expenses to incremental variable expenses related to market expansion, commissions and compensation expense. Considering Hurco’s recent expansion efforts in China and India, managements’ explanation is reasonable.
Higher gross margins for the quarter were offset by the higher operating expenses as a percent of sales resulting in relatively flat operating margins of 16.34%. Nonetheless, at 16.34%, operating margins were in the upper end of the recent range.
The increase in interest income offset somewhat by a higher tax rate in the quarter, resulted in higher net margins of 11.01% compared to 10.66% in the second quarter of 2006.
Future margin improvement can be expected once the sales and manufacturing operations in China become fully functional and sales in the region increase. Additionally, the VMX84 is likely a higher margin product. With the availability of the VMX84 in the current quarter, there will likely be continued improvement in gross margins.
Earnings
Earnings increased 19.11% from the year-ago quarter but slipped 13.25% sequentially for the reasons mentioned above. EPS for the quarter was $0.73 per diluted share putting the trailing 12-month EPS at $2.89 per diluted share. At a current price of $42.50, I calculate a trailing PE of 14.71. At the now higher price of $43.00 (share continue to rise during the day), I get am calculating an EV/EBITDA of 9.05.
Balance Sheet
Hurco is now free of long-term debt and the cash position increased over $2.1 million to $34.5 million or $5.40 per share. Hurco’s balance sheet remains exceptionally strong.
Cash Flow Statement
While a cash flow statement was not provided, it is reasonable to assume the $2.13 million increase in cash and the elimination of nearly $4 million in long-term debt was the result of another strong quarter of operational cash flows.
Looking Ahead to Next Quarter
I have put together my long-term argument for Hurco in previous blog posts (here). As for now, I will make a few positive bullet points for next quarter:
Expecting continued strength in Europe and Asia along with continued benefit from weaker U.S. dollar.
Expecting more of a rebound in U.S. machine tool consumption and I will be monitoring the U.S. Machine Tool Consumption Survey
Potential boost to U.S. sales as a result of Eastec
Higher book-to-bill ratios in recent quarters suggest some pent up orders for both Winmax and VMX84
Successive record bookings indicates that demand remains strong
Shipping of VMX84 and Winmax should result in continued margin improvement and will help expand customer base
Higher cash position and elimination of debt will result in higher net interest income
Slightly more favorable year-ago comparables
Conclusion
Despite the markets reaction today to missing estimates, Hurco once again reported a very solid quarter and the story remains the same. I continue to have faith in the long-term prospect for Hurco and at this point I am especially excited about the prospects for next quarter. Since I started writing, Hurco shares are already up a couple of dollars. Looks like smart investors are taking advantage of a discount.
Regards,
Tuff
Earnings Release
Tuesday, May 8, 2007
A Winmax for Hurco
If you are connecting to this blog entry from my message board post on 3/26/2008, please follow this link:
http://regulationfd.blogspot.com/2008/03/just-another-great-q.html
I insterted the wrong link on the message board. Sorry
In March, I wrote about Hurco Corporation ( "Hurco" or Ticker Symbol: HURC ), a designer and producer of machine tools. My original blog entry on Hurco can be found here.
Last week, I talked with Mr. John Oblazney, Hurco's CFO, and I have provided a summary of our discussion below. While I tried to quote Mr. Oblazney as much as possible, we had a very fluid conversation that didn't lend itself to taking detailed notes. As such, please assume that everything below is either paraphrased or my personal interpretation of his comments.
Is the Winmax control system currently available for shipment?
Yes. The Winmax control system began shipping in the last couple of days.
Were customers delaying orders at all in anticipation of the new control system?
No, not at all. It is a very easy upgrade for our customers to make. It takes about a half hour to load with a flash drive and the upgrade is good for one machine.
It was my sense from Mr. Oblazney that the cost of an upgrade is not or was not significant enough to deter clients from purchasing machines prior to the actual release of the Winmax Control System.
To what extent do you expect existing customers to upgrade their existing machine tools?
From my conversation with Mr. Oblazney, it sounded like Hurco is expecting a high level of upgrade activity. At the same time, Mr. Oblazney indicated that some customers may wait awhile before upgrading their machines with the new software. The decision by some customers to wait on upgrading their software would be typical of any software upgrade.
I did not get the sense that upgrades were going to be a big driver of revenues like I had previously anticipated. Nonetheless, Winmax should make Hurco tools more competitive in terms of new sales.
Is the Winmax something that can be used on non-Hurco machines?
The Winmax system is really for Hurco machines. I don't expect much if any use on non-Hurco machines.
As the Winmax Control System is primarily a software product do you expect to see a boost in margins?
No, not directly. Our margins in any given quarter are primarily driven by product mix. To the extent that the Winmax Control System makes our higher end products more competitive, it will help our margins.
In the past couple of quarters, sales have accelerated a bit. Can you say how much of that was attributable to the IMTS trade show?
Our sales are tied more to the release of new products than to the trade shows themselves. At the same time, the release of new products often times coincides with the various shows.
Aside from the Winmax Control System, did you recently release any new products?
Yes. Around the same time as Winmax, Hurco released a swivel head five-axis machine and a lathe with a live tooling add-on.
Since the IMTS, has Hurco participated in any other trade shows?
Yes. Mr. Oblazney specifically discussed Westec, a smaller U.S. trade show, and the Indian Machine Tool Exhibition that was mentioned in the last earnings release.
According to AMTDA's machine tool consumption survey, consumption activity has dropped off a bit in the U.S. since the spike that followed the IMTS. Is this indicative of the activity Hurco is seeing in the U.S.?
Yes. In the last earnings report, we indicated that there has been some softening in the U.S. So, yes....I think that report is reflective of the activity we see in the U.S.
Recent economic reports and machine tool reports indicate there has been continued strength in Europe. Would you say that is reflective of what Hurco is seeing in Europe?
Yes.
Aside from the AMTDA are there any other reports that I should be following?
The AMTDA report is a good report. I will refer to that report and we have people attend the AMTDA conferences. We also get information from Gartner publications. It sounds like you are looking in the right places.
I understand Hurco has a sales office in China and is now adding a manufacturing facility. Can you comment on Hurco's activity in China and the appointment of Philip James to the Board of Directors?
Mr. Oblazney talked about the sales office and the new manufacturing facility Hurco is developing in China. As mentioned in the 10K, the manufacturing facility will add capacity and lower manufacturing costs. John discussed how the facility will initially serve as support for the Taiwanese manufacturing operations but eventually machines designed for the Chinese market will be manufactured at Ningbo. He also mentioned that a new bridge is being built in Ningo that will provide much better access to the area. I believe the bridge will specifically provide better access to and from Shanghai.
Philip James was added to the Board because of his extensive experience in conducting business in the region. It was a strategic decision.
For the first time I saw India mentioned in your 10K filing, can you discuss Hurco's activities in India?
We are establishing a sales office in India. Setting up business in India is more difficult than in China and we are in the very early stages of establishing our presence in India.
Hurco has a sizeable cash position right now? Is the cash position there as a cushion for when there is a shift in the business cycle, or does Hurco have any specific plans for that cash?
A combination of both. We are looking at ways to employ our cash position to grow our business.
Are you talking about funding internal growth or are you referring to potential acquisitions?
Both. But, recently we made reference to acquisition opportunities in one of our filings. This was the first time we have mentioned anything about an acquisition in our filings.
My call with John went very well. He was very informative and more than willing to provide as much information that he could provide.
Regards,
Tuff
Hurco Companies, Inc. (Public, NASDAQ:HURC)
http://regulationfd.blogspot.com/2008/03/just-another-great-q.html
I insterted the wrong link on the message board. Sorry
In March, I wrote about Hurco Corporation ( "Hurco" or Ticker Symbol: HURC ), a designer and producer of machine tools. My original blog entry on Hurco can be found here.
Last week, I talked with Mr. John Oblazney, Hurco's CFO, and I have provided a summary of our discussion below. While I tried to quote Mr. Oblazney as much as possible, we had a very fluid conversation that didn't lend itself to taking detailed notes. As such, please assume that everything below is either paraphrased or my personal interpretation of his comments.
Is the Winmax control system currently available for shipment?
Yes. The Winmax control system began shipping in the last couple of days.
Were customers delaying orders at all in anticipation of the new control system?
No, not at all. It is a very easy upgrade for our customers to make. It takes about a half hour to load with a flash drive and the upgrade is good for one machine.
It was my sense from Mr. Oblazney that the cost of an upgrade is not or was not significant enough to deter clients from purchasing machines prior to the actual release of the Winmax Control System.
To what extent do you expect existing customers to upgrade their existing machine tools?
From my conversation with Mr. Oblazney, it sounded like Hurco is expecting a high level of upgrade activity. At the same time, Mr. Oblazney indicated that some customers may wait awhile before upgrading their machines with the new software. The decision by some customers to wait on upgrading their software would be typical of any software upgrade.
I did not get the sense that upgrades were going to be a big driver of revenues like I had previously anticipated. Nonetheless, Winmax should make Hurco tools more competitive in terms of new sales.
Is the Winmax something that can be used on non-Hurco machines?
The Winmax system is really for Hurco machines. I don't expect much if any use on non-Hurco machines.
As the Winmax Control System is primarily a software product do you expect to see a boost in margins?
No, not directly. Our margins in any given quarter are primarily driven by product mix. To the extent that the Winmax Control System makes our higher end products more competitive, it will help our margins.
In the past couple of quarters, sales have accelerated a bit. Can you say how much of that was attributable to the IMTS trade show?
Our sales are tied more to the release of new products than to the trade shows themselves. At the same time, the release of new products often times coincides with the various shows.
Aside from the Winmax Control System, did you recently release any new products?
Yes. Around the same time as Winmax, Hurco released a swivel head five-axis machine and a lathe with a live tooling add-on.
Since the IMTS, has Hurco participated in any other trade shows?
Yes. Mr. Oblazney specifically discussed Westec, a smaller U.S. trade show, and the Indian Machine Tool Exhibition that was mentioned in the last earnings release.
According to AMTDA's machine tool consumption survey, consumption activity has dropped off a bit in the U.S. since the spike that followed the IMTS. Is this indicative of the activity Hurco is seeing in the U.S.?
Yes. In the last earnings report, we indicated that there has been some softening in the U.S. So, yes....I think that report is reflective of the activity we see in the U.S.
Recent economic reports and machine tool reports indicate there has been continued strength in Europe. Would you say that is reflective of what Hurco is seeing in Europe?
Yes.
Aside from the AMTDA are there any other reports that I should be following?
The AMTDA report is a good report. I will refer to that report and we have people attend the AMTDA conferences. We also get information from Gartner publications. It sounds like you are looking in the right places.
I understand Hurco has a sales office in China and is now adding a manufacturing facility. Can you comment on Hurco's activity in China and the appointment of Philip James to the Board of Directors?
Mr. Oblazney talked about the sales office and the new manufacturing facility Hurco is developing in China. As mentioned in the 10K, the manufacturing facility will add capacity and lower manufacturing costs. John discussed how the facility will initially serve as support for the Taiwanese manufacturing operations but eventually machines designed for the Chinese market will be manufactured at Ningbo. He also mentioned that a new bridge is being built in Ningo that will provide much better access to the area. I believe the bridge will specifically provide better access to and from Shanghai.
Philip James was added to the Board because of his extensive experience in conducting business in the region. It was a strategic decision.
For the first time I saw India mentioned in your 10K filing, can you discuss Hurco's activities in India?
We are establishing a sales office in India. Setting up business in India is more difficult than in China and we are in the very early stages of establishing our presence in India.
Hurco has a sizeable cash position right now? Is the cash position there as a cushion for when there is a shift in the business cycle, or does Hurco have any specific plans for that cash?
A combination of both. We are looking at ways to employ our cash position to grow our business.
Are you talking about funding internal growth or are you referring to potential acquisitions?
Both. But, recently we made reference to acquisition opportunities in one of our filings. This was the first time we have mentioned anything about an acquisition in our filings.
My call with John went very well. He was very informative and more than willing to provide as much information that he could provide.
Regards,
Tuff
Hurco Companies, Inc. (Public, NASDAQ:HURC)
Tuesday, May 1, 2007
BOOM Q1 Earnings and Conference Call
On Thursday, Dynamic Materials Corporation (“DMC” or Ticker: BOOM) announced first quarter earnings of $0.40 per diluted share on revenues of $33.1 million. Analysts were expecting earnings of $0.35 per diluted share on revenues of $26.9 million. Despite handily beating top and bottom line estimates, shares of DMC are trading 11% lower than the $37.12 pre-earnings closing price.
So why are shares trading lower? Are you feeling a little confused or maybe a bit nervous? In this blog entry, I am going to briefly outline the facts of the report and subsequently provide my thoughts, notes and comments on some specific issues.
Q1 2007 Results
Sales (in millions)
DMC’s sales of $31.5 million for the first quarter of 2007 beat both analysts’ and managements’ estimates for the quarter. Late in the quarter, DMC received earlier than expected shipments of high alloy steel backer plates. The early shipment of backer plates along with the utilization of recently purchased equipment and the hard work of DMC’s employees contributed to the higher than expected revenues for the quarter.
In reviewing the 10Q filing it is evident that $5.4 million of the $8.7 million Ambatovy contract shipped in Q1, leaving $3.3 million to ship in Q2.
Gross Profit Margins
Gross profits margins for the quarter fell to 32.8% versus 36.9% in the year-ago quarter. Management attributed the lower gross margins to the normal quarterly fluctuations in gross margins, which are driven largely by product mix. Looking back at the quarterly reports over the past seven or eight quarters, gross margins have indeed fluctuated from quarter-to-quarter but the overall trend has been higher. I suspect gross margins for the year will be considerably higher than where they were in the first quarter, which is near the lower end of the range of the past eight quarters.
Operating expenses
Operating expenses as a percent of sales improved to 10.0% compared to 11.3% in the year-ago quarter. The lower operating expenses as a percent of sales were the result of higher sales spread over a relatively fixed cost structure.
Operating Income and Margins
Operating income for the quarter was up 17.3% to $7.5 million from $6.4 million in the year-ago quarter. Operating margins fell to 22.8% from 25.5% as a result of the lower gross margins offset somewhat by the lower operating expenses as a percent of sales.
Net Income and EPS
Net income from continuing operation was up 18% to $4.88 million from $4.13 million in the first quarter of 2006. As there has been close to no shareholder dilution in the last year, the percent increase in diluted EPS from continuing operations mirrored the percent increase in net income from continuing operations. DMC’s diluted EPS from continuing operations increased to $0.40 from $0.34 in the year-ago quarter. Note that in the first quarter of 2006, DMC recorded a one time gain of $0.11 per diluted share related to the sale of a real estate purchase option associated with its discontinued Spin Forge operation.
Balance Sheet
The balance sheet remained strong with nearly $20 million in cash and close to no long-term debt. Working capital increased 6.5% from the prior quarter and 52.7% from the year-ago quarter. Accounts receivables decreased a bit from the prior quarter and days-sales-outstanding was an impressive 47 days. I want to touch on inventories but I will save it for a little later in my post.
Cash Flow Statement
Cash flow from operations came in it $4.9 million, which closely mirrored net income. Aside from the $3.9 million in capital expenditures, there was nothing else worth noting on the cash flow statement.
Backlog
The backlog at the end of the quarter stood at $67.9 million, down slightly from the record high backlog of $68.8 million last quarter and up 60.5% from the $42.3 million backlog in the year-ago quarter.
Guidance
Unquestionably, it was managements’ guidance for Q2 that left some investors disappointed and sent shares lower in after-hours trading. Here is the quote from the Rick Santa, CFO:
My Thoughts, Comments, and Notes
Guidance
As the drop in share price since the release of earnings is seemingly attributable to management’s guidance for Q2, I want to begin my commentary with managements’ guidance. Look at guidance from this quarter and compare it with managements’ original guidance for 2007:
So what has changed? Nothing! While some revenue shifted from Q2 to Q1, actual results for the first half of the year and the full year are panning out as expected by management. By shifting some revenue from Q2 to Q1, DMC is actually in a better position to potentially move ahead of expectations starting in Q2. In my original post covering DMC, I said that I expected results to exceed managements’ expectations. I made this statement largely expecting the first half of the year to be in-line with management expectations with the second half of the year exceeding expectations. With the natural gas contract shipping in the third quarter of 2007, I believe the higher margins and efficiencies associated with that contract to provide a nice boost to third quarter results especially when compared to the year-ago results.
Based on managements’ guidance for the full year, management is expecting revenues of roughly $136 million. If I subtract actual revenues for Q1 and expected revenues for Q2 from the full year estimate, I am left with an average of $35 million in revenues for Q3 and Q4, which is only a modest increase in revenues from the first half of the year. When I listen to the conference call and consider the various factors playing into the expected weakness in the first half of the year relative to the second half of the year, I am increasingly convinced that the average quarterly revenue in the second half of the year will exceed $35 million.
To those taking notes at home, on three other occasions management has issued negative near-term guidance that resulted in a decline in or a ceiling on DMC’s share price. The negative guidance on each occasion followed exceptionally strong earnings results. On two of the three occasions, results in the subsequent quarter were significantly better than expected. I am not saying anyone should ignore guidance. All I am saying is that management tends to be conservative in its outlook and that certain events may occur in any given quarter that may result in a more favorable outcome. While I find managements’ seemingly conservative commentary to be frustrating at times, I think management does a reasonable job of managing investors’ expectations. In my opinion, a negative surprise would result in far greater losses to individual investors relative to a pullback on conservative guidance.
Supply Chain
Does anyone remember DMC’s third quarter 2006 conference call when management fielded a number of questions relating to the supply chain? At the time, the supply chain was tight because a supplier experienced a significant equipment failure. I am not 100% certain but I believe it was a supplier of clad metal as opposed to backer metal. During that call, management mentioned that its provider of backer plates in the U.S. received a sizeable order from the Department of Defense (DoD) for the same type of plates utilized by DMC. As a result of this order, management expected further tightness in the supply chain during the first half of 2007. Assuming that the DoD order will be largely complete by the end of the second quarter, there will be at least some level of relief in the supply chain going into the second half of the year. Unfortunately, this issue was not discussed on the last conference call and I was unavailable for the live event to ask about it myself.
Based on comments in the conference call management is confident that the tightness in the supply chain will improve over time. I am not sure if management made this comment in relation to the completion of DoD order or if it was just a general comment. My guess is that it was a combination of both. Despite managements’ expectations for improvements in the supply situation, they are taking steps to stay ahead of the issue by handling more of the finishing work in-house and by expanding their supplier network to include some smaller suppliers of high alloy steel. Presumably these efforts should yield some dividends in the near future. Furthermore, management has taken steps to better monitor the supply chain and suppliers are working hard to meet demand. Based on management comments, I believe management is seeing some evidence of improvements in the supply chain but they are unwilling not make any overly optimistic comments to this regard until the improvement is evident or at the very least imminent.
On the conference call there was some discussion regarding inventory. Inventories increased by nearly $2.5 million in the quarter and inventory turns were down modestly. Management indicated that they were not overly concerned with inventory levels because everything in inventory relates to a specific order. With every order, DMC has to have a backer plate and a clad plate. Instead of trying to time the orders of the different metals to coincide with each other, DMC requests suppliers to ship the metals as soon as possible. As such, it is reasonable to assume that DMC has an inventory of clad plates waiting for its corresponding backer plate. This being the case, DMC is in a position to capitalize once again on earlier than expected shipments of backer plates.
Demand and Backlog
Moving away from the supply chain, demand remains strong and the backlog is near record levels despite considerably higher shipments in the last two quarters. On the conference call, management said that most of the backlog would ship by the end of the year. With a backlog of $67.9 million and $103 million in additional sales required to meet the 20% guidance, management has visibility on 66% of the remaining revenue, which is very promising.
What was most impressive with regards to the backlog at the end of the quarter was the fact that the backlog remained near record levels reported at the end of Q4 2006 despite the high level of shipments in Q1 and the fact that no order in the quarter exceeded $2 million. As this was the first real insight with regards to the volume of smaller orders that DMC is dealing with on a regular basis, I was surprised by this fact.
While there were no large orders announced in the first quarter, both the CFO and CEO indicated that they were quoting a number of large projects and they were “reasonably confident” they would be reporting on a large order “soon”. Depending on the timing of that order and other factors relating to the order, revenues from that order may or may not be included in 2007. Nonetheless, DMC will be completing shipment on Ambatovy in Q2 and commencing shipments on the natural gas contract in Q3. If management is able to book the large order noted above sometime in the second quarter with the expectation of shipping at least a portion of that order sometime in the fourth quarter, managements’ guidance for 20% revenue growth will be out the window. Please keep in mind that there are no guarantees that DMC will get this order or that DMC will be able to ship at least portions of this order by the end of the year.
In responding to one caller’s question, management emphatically stated that they are not seeing any slowdown in activity in the U.S. or abroad. Furthermore, management said they are seeing continued global strength across all of it market segments.
Capacity
DMC is still receiving shipments on some of the equipment related to the Mt. Braddock expansion but the expansion project is nearly complete. The only delay relates to a large press that will be delivered sometime in Q3. If this is the only delay, management deserves credit for completing this project largely on-time and within budget. The Mt. Braddock expansion is not only on scheduled but it also played a key role in the better than expected results in Q1. The modernization projects in both France and Sweden are progressing nicely and the AMK construction project is nearly complete. According to management, DMC is the only player in its industry making significant investments in new capacity. Management expects their capital projects to help them maintain their position as a global leader (34-40% global market share) in explosion welded metals.
Gross Margins
As mentioned earlier, gross margins for the quarter were at the low end of the recent range. Management attributed the lower gross margins in the quarter to product mix. Gross margins have fluctuated from quarter-to-quarter but the overall trend has been higher. I expect gross margins to continue to fluctuate but I expect the trend to remain positive with the opportunity for noticeable improvement in 2008 as the company is able to sell into the additional capacity.
As a side note, I crunched some numbers based on the Q1 results and the recent range of gross margins. If I substitute the actual gross margins in Q1 with the highest gross margin percentage in recent history (36.87% in Q1 2006), excluding the abnormally high gross margin in Q4 of 2007, while holding all other factors constant, I get an EPS of $0.47 per diluted share. If I substitute the gross margins from Q1 with the average gross margin in the first three quarters of 2006 (35.37%), again excluding the abnormally high gross margins in Q4 of 2006, I get an EPS of $0.44 per diluted share. My point in this exercise is to demonstrate that DMC can still expand earnings from Q1 to Q2 even if revenues are flat, as expected by management.
Conclusion
DMC reported better than expected top and bottom line results in the first quarter of 2007. While management expects second quarter revenue to be in-line with first quarter revenues, the first half of the year is playing-out largely as expected. As indicated earlier, I have been expecting and continue to expect any surprise to the upside to come in the second half of the year. Nonetheless, DMC’s increased capacity and inventory of clad plates puts it in a position to capitalize in the event of an earlier than expected shipment of backer plates once again in Q2. Demand is strong across all segments and additional capacity is now available, with additional capacity coming on-line in the quarter. Tightness in the supply chain remains the biggest issue and I expect this situation to steadily improve over time. Again, nothing has changed since the last earnings report.
Regards,
Tuff
If a conference call transcript is not made available in the next week or so, I will post my conference call notes.
Dynamic Materials Corporation (Public, NASDAQ:BOOM)
Sources
10Q Filing
Press Release
Conference Call
So why are shares trading lower? Are you feeling a little confused or maybe a bit nervous? In this blog entry, I am going to briefly outline the facts of the report and subsequently provide my thoughts, notes and comments on some specific issues.
Q1 2007 Results
Sales (in millions)
| ---Q1 2007--- | ---Q1 2006--- | ---% Change--- | |
| Explosive Metalworking | $31.5 | $24.2 | +30.3% |
| AMK Welding | $ 1.6 | $ 1.0 | +60% |
| Overall | $33.1 | $25.2 | +31.5% |
DMC’s sales of $31.5 million for the first quarter of 2007 beat both analysts’ and managements’ estimates for the quarter. Late in the quarter, DMC received earlier than expected shipments of high alloy steel backer plates. The early shipment of backer plates along with the utilization of recently purchased equipment and the hard work of DMC’s employees contributed to the higher than expected revenues for the quarter.
In reviewing the 10Q filing it is evident that $5.4 million of the $8.7 million Ambatovy contract shipped in Q1, leaving $3.3 million to ship in Q2.
Gross Profit Margins
Gross profits margins for the quarter fell to 32.8% versus 36.9% in the year-ago quarter. Management attributed the lower gross margins to the normal quarterly fluctuations in gross margins, which are driven largely by product mix. Looking back at the quarterly reports over the past seven or eight quarters, gross margins have indeed fluctuated from quarter-to-quarter but the overall trend has been higher. I suspect gross margins for the year will be considerably higher than where they were in the first quarter, which is near the lower end of the range of the past eight quarters.
Operating expenses
Operating expenses as a percent of sales improved to 10.0% compared to 11.3% in the year-ago quarter. The lower operating expenses as a percent of sales were the result of higher sales spread over a relatively fixed cost structure.
Operating Income and Margins
Operating income for the quarter was up 17.3% to $7.5 million from $6.4 million in the year-ago quarter. Operating margins fell to 22.8% from 25.5% as a result of the lower gross margins offset somewhat by the lower operating expenses as a percent of sales.
Net Income and EPS
Net income from continuing operation was up 18% to $4.88 million from $4.13 million in the first quarter of 2006. As there has been close to no shareholder dilution in the last year, the percent increase in diluted EPS from continuing operations mirrored the percent increase in net income from continuing operations. DMC’s diluted EPS from continuing operations increased to $0.40 from $0.34 in the year-ago quarter. Note that in the first quarter of 2006, DMC recorded a one time gain of $0.11 per diluted share related to the sale of a real estate purchase option associated with its discontinued Spin Forge operation.
Balance Sheet
The balance sheet remained strong with nearly $20 million in cash and close to no long-term debt. Working capital increased 6.5% from the prior quarter and 52.7% from the year-ago quarter. Accounts receivables decreased a bit from the prior quarter and days-sales-outstanding was an impressive 47 days. I want to touch on inventories but I will save it for a little later in my post.
Cash Flow Statement
Cash flow from operations came in it $4.9 million, which closely mirrored net income. Aside from the $3.9 million in capital expenditures, there was nothing else worth noting on the cash flow statement.
Backlog
The backlog at the end of the quarter stood at $67.9 million, down slightly from the record high backlog of $68.8 million last quarter and up 60.5% from the $42.3 million backlog in the year-ago quarter.
Guidance
Unquestionably, it was managements’ guidance for Q2 that left some investors disappointed and sent shares lower in after-hours trading. Here is the quote from the Rick Santa, CFO:
"We previously indicated that the last three quarters of fiscal 2007 could be stronger than the first quarter, which we believed would be impacted by metal supply issues. Given our better-than-expected Q1 performance, we now believe that our second quarter results will likely be comparable to those of the first. For the full fiscal year, we are reiterating our forecast of year-over-yeartop-line growth in the 20 percent range."
My Thoughts, Comments, and Notes
Guidance
As the drop in share price since the release of earnings is seemingly attributable to management’s guidance for Q2, I want to begin my commentary with managements’ guidance. Look at guidance from this quarter and compare it with managements’ original guidance for 2007:
“With more than $68 million in our order backlog and an extensive range of contract opportunities on our hot list, we are looking to achieve revenue growth in the 20% range during fiscal 2007 …tightness in the supply chain is likely to lead to first quarter financial results that will approximate the average results we reported during the first three quarters of fiscal 2006. In light of our full- year growth expectations, we believe the average quarterly results during the balance of the fiscal year will be stronger than those of the first quarter. In addition, we believe that improvements in the supply situation could result in even better full-year financial growth than we are currently projecting."
So what has changed? Nothing! While some revenue shifted from Q2 to Q1, actual results for the first half of the year and the full year are panning out as expected by management. By shifting some revenue from Q2 to Q1, DMC is actually in a better position to potentially move ahead of expectations starting in Q2. In my original post covering DMC, I said that I expected results to exceed managements’ expectations. I made this statement largely expecting the first half of the year to be in-line with management expectations with the second half of the year exceeding expectations. With the natural gas contract shipping in the third quarter of 2007, I believe the higher margins and efficiencies associated with that contract to provide a nice boost to third quarter results especially when compared to the year-ago results.
Based on managements’ guidance for the full year, management is expecting revenues of roughly $136 million. If I subtract actual revenues for Q1 and expected revenues for Q2 from the full year estimate, I am left with an average of $35 million in revenues for Q3 and Q4, which is only a modest increase in revenues from the first half of the year. When I listen to the conference call and consider the various factors playing into the expected weakness in the first half of the year relative to the second half of the year, I am increasingly convinced that the average quarterly revenue in the second half of the year will exceed $35 million.
To those taking notes at home, on three other occasions management has issued negative near-term guidance that resulted in a decline in or a ceiling on DMC’s share price. The negative guidance on each occasion followed exceptionally strong earnings results. On two of the three occasions, results in the subsequent quarter were significantly better than expected. I am not saying anyone should ignore guidance. All I am saying is that management tends to be conservative in its outlook and that certain events may occur in any given quarter that may result in a more favorable outcome. While I find managements’ seemingly conservative commentary to be frustrating at times, I think management does a reasonable job of managing investors’ expectations. In my opinion, a negative surprise would result in far greater losses to individual investors relative to a pullback on conservative guidance.
Supply Chain
Does anyone remember DMC’s third quarter 2006 conference call when management fielded a number of questions relating to the supply chain? At the time, the supply chain was tight because a supplier experienced a significant equipment failure. I am not 100% certain but I believe it was a supplier of clad metal as opposed to backer metal. During that call, management mentioned that its provider of backer plates in the U.S. received a sizeable order from the Department of Defense (DoD) for the same type of plates utilized by DMC. As a result of this order, management expected further tightness in the supply chain during the first half of 2007. Assuming that the DoD order will be largely complete by the end of the second quarter, there will be at least some level of relief in the supply chain going into the second half of the year. Unfortunately, this issue was not discussed on the last conference call and I was unavailable for the live event to ask about it myself.
Based on comments in the conference call management is confident that the tightness in the supply chain will improve over time. I am not sure if management made this comment in relation to the completion of DoD order or if it was just a general comment. My guess is that it was a combination of both. Despite managements’ expectations for improvements in the supply situation, they are taking steps to stay ahead of the issue by handling more of the finishing work in-house and by expanding their supplier network to include some smaller suppliers of high alloy steel. Presumably these efforts should yield some dividends in the near future. Furthermore, management has taken steps to better monitor the supply chain and suppliers are working hard to meet demand. Based on management comments, I believe management is seeing some evidence of improvements in the supply chain but they are unwilling not make any overly optimistic comments to this regard until the improvement is evident or at the very least imminent.
On the conference call there was some discussion regarding inventory. Inventories increased by nearly $2.5 million in the quarter and inventory turns were down modestly. Management indicated that they were not overly concerned with inventory levels because everything in inventory relates to a specific order. With every order, DMC has to have a backer plate and a clad plate. Instead of trying to time the orders of the different metals to coincide with each other, DMC requests suppliers to ship the metals as soon as possible. As such, it is reasonable to assume that DMC has an inventory of clad plates waiting for its corresponding backer plate. This being the case, DMC is in a position to capitalize once again on earlier than expected shipments of backer plates.
Demand and Backlog
Moving away from the supply chain, demand remains strong and the backlog is near record levels despite considerably higher shipments in the last two quarters. On the conference call, management said that most of the backlog would ship by the end of the year. With a backlog of $67.9 million and $103 million in additional sales required to meet the 20% guidance, management has visibility on 66% of the remaining revenue, which is very promising.
What was most impressive with regards to the backlog at the end of the quarter was the fact that the backlog remained near record levels reported at the end of Q4 2006 despite the high level of shipments in Q1 and the fact that no order in the quarter exceeded $2 million. As this was the first real insight with regards to the volume of smaller orders that DMC is dealing with on a regular basis, I was surprised by this fact.
While there were no large orders announced in the first quarter, both the CFO and CEO indicated that they were quoting a number of large projects and they were “reasonably confident” they would be reporting on a large order “soon”. Depending on the timing of that order and other factors relating to the order, revenues from that order may or may not be included in 2007. Nonetheless, DMC will be completing shipment on Ambatovy in Q2 and commencing shipments on the natural gas contract in Q3. If management is able to book the large order noted above sometime in the second quarter with the expectation of shipping at least a portion of that order sometime in the fourth quarter, managements’ guidance for 20% revenue growth will be out the window. Please keep in mind that there are no guarantees that DMC will get this order or that DMC will be able to ship at least portions of this order by the end of the year.
In responding to one caller’s question, management emphatically stated that they are not seeing any slowdown in activity in the U.S. or abroad. Furthermore, management said they are seeing continued global strength across all of it market segments.
Capacity
DMC is still receiving shipments on some of the equipment related to the Mt. Braddock expansion but the expansion project is nearly complete. The only delay relates to a large press that will be delivered sometime in Q3. If this is the only delay, management deserves credit for completing this project largely on-time and within budget. The Mt. Braddock expansion is not only on scheduled but it also played a key role in the better than expected results in Q1. The modernization projects in both France and Sweden are progressing nicely and the AMK construction project is nearly complete. According to management, DMC is the only player in its industry making significant investments in new capacity. Management expects their capital projects to help them maintain their position as a global leader (34-40% global market share) in explosion welded metals.
Gross Margins
As mentioned earlier, gross margins for the quarter were at the low end of the recent range. Management attributed the lower gross margins in the quarter to product mix. Gross margins have fluctuated from quarter-to-quarter but the overall trend has been higher. I expect gross margins to continue to fluctuate but I expect the trend to remain positive with the opportunity for noticeable improvement in 2008 as the company is able to sell into the additional capacity.
As a side note, I crunched some numbers based on the Q1 results and the recent range of gross margins. If I substitute the actual gross margins in Q1 with the highest gross margin percentage in recent history (36.87% in Q1 2006), excluding the abnormally high gross margin in Q4 of 2007, while holding all other factors constant, I get an EPS of $0.47 per diluted share. If I substitute the gross margins from Q1 with the average gross margin in the first three quarters of 2006 (35.37%), again excluding the abnormally high gross margins in Q4 of 2006, I get an EPS of $0.44 per diluted share. My point in this exercise is to demonstrate that DMC can still expand earnings from Q1 to Q2 even if revenues are flat, as expected by management.
Conclusion
DMC reported better than expected top and bottom line results in the first quarter of 2007. While management expects second quarter revenue to be in-line with first quarter revenues, the first half of the year is playing-out largely as expected. As indicated earlier, I have been expecting and continue to expect any surprise to the upside to come in the second half of the year. Nonetheless, DMC’s increased capacity and inventory of clad plates puts it in a position to capitalize in the event of an earlier than expected shipment of backer plates once again in Q2. Demand is strong across all segments and additional capacity is now available, with additional capacity coming on-line in the quarter. Tightness in the supply chain remains the biggest issue and I expect this situation to steadily improve over time. Again, nothing has changed since the last earnings report.
Regards,
Tuff
If a conference call transcript is not made available in the next week or so, I will post my conference call notes.
Dynamic Materials Corporation (Public, NASDAQ:BOOM)
Sources
10Q Filing
Press Release
Conference Call
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