DMC Global Inc. (BOOM)

ITEM 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our historical Consolidated Financial Statements and notes that are included in our Annual Report filed on Form 10-K for the year ended December 31, 2025.

Unless stated otherwise, all dollar figures are presented in thousands (000s).

Overview

General

DMC Global Inc. (“DMC”, “we”, “us”, “our”, or the “Company”) operates three manufacturing businesses: Arcadia Products, DynaEnergetics and NobelClad, which produce differentiated products and engineered solutions primarily for the construction, energy, and industrial processing markets. Our businesses seek to capitalize on their product and service differentiation to expand profit margins, increase cash flow and enhance shareholder value. Based in Broomfield, Colorado, DMC’s common stock trades on Nasdaq under the symbol “BOOM.”

Arcadia Products

On December 23, 2021, DMC completed the acquisition of 60% of the membership interests in Arcadia Products, LLC, a Colorado limited liability company resulting from the conversion of Arcadia, Inc. (collectively, “Arcadia Products”). Arcadia Products designs, engineers, fabricates, and finishes aluminum framing systems, windows, curtain walls, storefronts, entrance systems, and interior partitions to the commercial construction market. Additionally, Arcadia Products supplies customized windows and doors to the high-end residential construction market.

Cost of products sold for Arcadia Products includes the cost of aluminum, paint, and other raw materials used in manufacturing as well as employee compensation and benefits, manufacturing facility lease expense, depreciation of manufacturing equipment, supplies and other manufacturing overhead expenses.

DynaEnergetics

DynaEnergetics designs, manufactures, markets, and sells perforating systems and associated hardware for the global oil and gas industry. These products are primarily sold to oilfield service companies in the U.S., Europe, Canada, Africa, the Middle East, and Asia. The market for perforating products, which are used during the well completion process, generally corresponds with oil and gas exploration and production activity. Well completion operations are increasingly complex, which in turn has increased the demand for intrinsically-safe, reliable and technically advanced perforating systems.

Cost of products sold for DynaEnergetics includes the cost of metals, explosives and other raw materials used to manufacture shaped charges, detonating products and perforating guns as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, supplies and other manufacturing overhead expenses.

NobelClad

NobelClad produces explosion-welded clad metal plates for use in the construction of corrosion-resistant industrial processing equipment and specialized transition joints for commuter rail cars, ships, and LNG processing equipment. While most demand for our products is driven by maintenance and retrofit projects at existing plants and facilities, new projects for petrochemical processing, oil refining, and aluminum smelting facilities also account for a significant portion of total demand. These industries tend to be cyclical in nature, and the timing of new order inflow remains difficult to predict.

Cost of products sold for NobelClad includes the cost of metals, explosive powders and other raw materials used to manufacture clad metal plates and transition joints as well as employee compensation and benefits, outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing facility lease expense, supplies and other manufacturing overhead expenses.

Factors Affecting Results

•Consolidated net sales were $156,953 in the second quarter of 2026 versus $155,487 in the second quarter of 2025, an increase of 1%. The increase was primarily attributable to higher sales at Arcadia Products, partially offset by lower sales at NobelClad, as described below.

•Arcadia Products reported net sales of $67,419 in the second quarter of 2026, representing an increase of 9% compared with the second quarter of 2025. The increase was primarily attributable to higher sales volumes in short-cycle commercial exterior and high-end residential markets as well as higher customer pricing in response to increases in raw material input costs.

•DynaEnergetics reported net sales of $67,383 in the second quarter of 2026, representing an increase of 1% compared with the second quarter of 2025. International sales increased $2,291 due to project timing. This increase was partially offset by a decrease in sales in our North American market as a result of lower sales volumes and a decrease in pricing due to a highly competitive environment, which collectively reduced net sales by $1,770.

•NobelClad reported net sales of $22,151 in the second quarter of 2026, representing a decrease of 17% compared with the second quarter of 2025 driven by the timing of large project shipments out of backlog and lower activity levels due in part to the impact of evolving tariff policies.

•The Company’s leverage ratio, calculated in accordance with its credit facility, was 2.19x as of June 30, 2026 in comparison to the maximum ratio permitted of 3.0x. The Company’s adjusted leverage ratio, calculated using net debt, a non-GAAP measure, was 1.15x as of June 30, 2026.

Refer to “Consolidated Results of Operations” and “Business Segment Financial Information” below for additional discussion.

Outlook

Conditions across our three manufacturing businesses continue to be impacted by macroeconomic and geopolitical developments, including the conflict in the Middle East, uncertainty in global oil and gas markets, elevated interest rates, and changes in global tariff policies. DynaEnergetics and NobelClad, which serve the upstream and downstream oil and gas markets, respectively, remain exposed to fluctuations in crude oil prices. If we or our customers are unable to offset the effects of these conditions, our net sales and profitability may be adversely affected.

Arcadia Products continues to work to mitigate the effects of elevated interest rates, volatile input costs, and generally lower construction activity in its core regional markets. Despite these conditions, Arcadia Products has recently improved product availability and lead times across its network of regional service centers and accelerated sales in its core, short-cycle commercial product line in the second quarter of 2026. Arcadia Products’ high-end residential window and door line also improved reflecting successful efforts to right-size the product offering and refocus on its target market.

DynaEnergetics is continuing a series of initiatives designed to reduce costs and increase market share. Demand remains steady across its North American and international markets. DynaEnergetics also is pursuing growth opportunities in the Enhanced Geothermal Systems industry and has expanded its sales and marketing efforts in certain emerging global shale markets.

NobelClad uses backlog, defined as all unfilled firm purchase orders and commitments at a point in time, to assess near-term demand. Most firm purchase orders and commitments are realized and shipped within 12 months. Order backlog decreased to $63,508 at the end of the second quarter of 2026, compared with $70,308 at the end of the first quarter of 2026, which was the highest level in more than 15 years. Shipments from NobelClad’s order backlog are expected to accelerate during the second half of 2026 and improve NobelClad’s current year financial performance. NobelClad is also pursuing additional opportunities with the U.S. Navy following its recently announced plans to accelerate its Naval readiness program.

Although each of our businesses continue to be affected by challenging end-market conditions, we are beginning to benefit from specific improvement initiatives, most notably at Arcadia Products. However, we continue to evaluate additional mitigation strategies and targeted cost-reduction programs if business conditions do not improve.

Use of Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also discloses certain non-GAAP financial measures that we use in operational and financial decision making. Non-GAAP financial measures include the following:

•EBITDA: defined as net income (loss) plus net interest, taxes, depreciation and amortization.

•Adjusted EBITDA: excludes from EBITDA stock-based compensation, restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance (as further described in the tables below).

•Adjusted EBITDA attributable to DMC Global Inc.: excludes the Adjusted EBITDA attributable to the 40% redeemable noncontrolling interest in Arcadia Products.

•Adjusted EBITDA for DMC business segments: defined as operating income (loss) plus depreciation, amortization, allocated stock-based compensation (if applicable), restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance.

•Adjusted net income (loss): defined as net income (loss) attributable to DMC Global Inc. stockholders prior to the adjustment of redeemable noncontrolling interest plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC's operating performance.

•Adjusted diluted earnings per share: defined as diluted earnings per share attributable to DMC Global Inc. stockholders (exclusive of adjustment of redeemable noncontrolling interest) plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance.

•Net debt: defined as total debt less consolidated cash and cash equivalents per the Condensed Consolidated Balance Sheets.

Management believes providing these additional financial measures is useful to investors in understanding the Company’s operating performance, excluding the effects of restructuring, asset impairment, and other nonrecurring charges, as well as its liquidity. Management typically monitors the business utilizing the above non-GAAP measures, in addition to GAAP results, to understand and compare operating results across accounting periods, and certain management incentive awards are based, in part, on these measures. The presence of non-GAAP financial measures in this report is not intended to suggest that such measures be considered in isolation or as a substitute for, or as superior to, DMC’s GAAP information, and investors are cautioned that the non-GAAP financial measures are limited in their usefulness. Given that not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to similarly titled measures of other companies.

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Consolidated Results of Operations

Three months ended June 30, 2026 compared with three months ended June 30, 2025

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ITEM 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our historical Consolidated Financial Statements and notes included elsewhere in this annual report. A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal 2024 compared to fiscal 2023 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at ir.dmcglobal.com.

Unless stated otherwise, all dollar figures in this report are presented in thousands (000s).

Overview

General

DMC Global Inc. (“DMC”, “we”, “us”, “our”, or the “Company”) operates three manufacturing businesses: Arcadia Products, DynaEnergetics and NobelClad, which produce differentiated products and engineered solutions primarily for the construction, energy, and industrial processing markets. Our businesses seek to capitalize on their product and service differentiation to expand profit margins, increase cash flow and enhance shareholder value. Based in Broomfield, Colorado, DMC’s common stock trades on Nasdaq under the symbol “BOOM.”

Arcadia Products

On December 23, 2021, DMC completed the acquisition of 60% of the membership interests in Arcadia Products, LLC, a Colorado limited liability company resulting from the conversion of Arcadia, Inc. (collectively, “Arcadia Products”). Arcadia Products designs, engineers, fabricates, and finishes aluminum framing systems, windows, curtain walls, storefronts, entrance systems, and interior partitions to the commercial construction market. Additionally, Arcadia Products supplies customized windows and doors to the high-end residential construction market.

Cost of products sold for Arcadia Products includes the cost of aluminum, paint, and other raw materials used in manufacturing as well as employee compensation and benefits, manufacturing facility lease expense, depreciation of manufacturing equipment, supplies and other manufacturing overhead expenses.

DynaEnergetics

DynaEnergetics designs, manufactures, markets and sells perforating systems and associated hardware for the global oil and gas industry. These products are primarily sold to oilfield service companies in the U.S., Europe, Canada, Africa, the Middle East, and Asia. The market for perforating products, which are used during the well completion process, generally corresponds with oil and gas exploration and production activity. Well completion operations are increasingly complex, which in turn has increased the demand for intrinsically-safe, reliable and technically advanced perforating systems.

Cost of products sold for DynaEnergetics includes the cost of metals, explosives and other raw materials used to manufacture shaped charges, detonating products and perforating guns as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, supplies and other manufacturing overhead expenses.

NobelClad

NobelClad produces explosion-welded clad metal plates for use in the construction of corrosion-resistant industrial processing equipment and specialized transition joints for commuter rail cars, ships, and LNG processing equipment. While most demand for our products is driven by maintenance and retrofit projects at existing plants and facilities, new projects for petrochemical processing, oil refining, and aluminum smelting facilities also account for a significant portion of total demand. These industries tend to be cyclical in nature, and the timing of new order inflow remains difficult to predict.

Cost of products sold for NobelClad includes the cost of metals, explosive powders and other raw materials used to manufacture clad metal plates and transition joints as well as employee compensation and benefits, outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing facility lease expense, supplies and other manufacturing overhead expenses.

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Factors Affecting Results

•Consolidated net sales were $609,840 in 2025 versus $642,851 in 2024, a decrease of 5%. The decline was primarily attributable to lower sales at DynaEnergetics and NobelClad. The decrease in DynaEnergetics’ sales largely resulted from lower pricing due to industry consolidation and a highly competitive core North American market. The decrease in NobelClad sales was driven by lower activity levels due in part to the impact of evolving tariff policies throughout the year.

•Consolidated gross profit of 22.2% in 2025 decreased from 23.4% in 2024. The decline was primarily attributable to less favorable project and regional mix at NobelClad, as well as lower absorption of fixed manufacturing overhead costs as a result of the decrease in net sales at both DynaEnergetics and NobelClad.

•Consolidated selling, general, and administrative (“SG&A”) expenses were $110,042 in 2025, compared with $108,656 in 2024. The year-over-year increase was primarily attributable to higher net bad debt expense of $1,153, executive transition costs of $520, and professional services fees of $152, partially offset by a decrease in business-related travel of $1,043.

•Net debt, a non-GAAP measure, of $18,746 (comprised of $50,644 of total debt less $31,898 in consolidated cash, cash equivalents and marketable securities) at December 31, 2025, decreased $37,783 from $56,529 at December 31, 2024. The decrease was driven by voluntary credit facility repayments resulting in a reduction in outstanding debt and an increase in consolidated cash, cash equivalents and marketable securities compared with the same period in 2024.

•The Company’s leverage ratio, calculated in accordance with its credit facility, was 1.22x as of December 31, 2025, and 1.35x as of December 31, 2024, in comparison to the maximum ratio permitted of 3.0x for each of the periods. The Company’s adjusted leverage ratio, calculated using net debt as of December 31, 2025, and 2024, was 0.47x, and 1.09x, respectively.

Refer to “Consolidated Results of Operations” and “Business Segment Financial Information” below for additional discussion.

Outlook

Our three manufacturing businesses continue to closely monitor challenging macroeconomic conditions, including volatility in global oil and gas markets, persistently high interest rates, and uncertainty around U.S. and reciprocal tariff policies. DynaEnergetics and NobelClad serve the upstream and downstream segments of the oil and gas industry, respectively, and are addressing the impacts of volatile crude oil prices, which traded near multi-year lows at the end of the fourth quarter of 2025. Sales and profitability could be adversely affected if we, or our customers, are unable to mitigate the effects of sustained lower energy prices and tariffs, or if these factors dampen product demand. For additional information regarding potential tariff impacts, refer to Part I, Item 1A. Risk Factors.

Arcadia Products is working to mitigate the impact of persistently high interest rates and generally lower construction activity in its core regional markets. These factors have created a competitive and challenging bidding environment, which has impacted Arcadia Products’ ability to fully pass through higher input costs, mainly aluminum, which recently reached a multi-year high. While the business continues to focus on strengthening its core commercial operations, which generate approximately 75% of the segment’s sales, the current environment is expected to continue negatively impacting Arcadia Products’ net sales and profitability in 2026.

DynaEnergetics is continuing a series of initiatives designed to reduce costs and increase market share. These efforts are intended to offset a potential decline in demand for its well perforating systems during 2026 due to volatile crude oil prices and reduced well completion activity in DynaEnergetics’ core North American onshore market. DynaEnergetics also is exploring growth opportunities in the enhanced geothermal market, and has expanded its sales and marketing efforts in certain emerging global shale markets.

At NobelClad, we use backlog, defined as unfilled firm purchase orders and commitments at a point in time, to assess near-term demand. Most firm purchase orders and commitments are realized and shipped within twelve months. Order backlog increased to $62,612 at the end of the fourth quarter of 2025 from $57,040 at the end of the third quarter of 2025, reflecting the receipt of additional orders associated with a previously announced record international chemical project. These orders helped offset lower booking activity in NobelClad’s U.S. market, which was negatively impacted during much of 2025, in part due to

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tariff-related uncertainty. NobelClad is preparing to pursue additional opportunities with the U.S. Navy following its recently announced plans to accelerate its Naval readiness program.

Each of our businesses are evaluating additional tariff mitigation strategies and targeted cost reduction programs if business does not improve as 2026 progresses.

Use of Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also discloses certain non-GAAP financial measures that we use in operational and financial decision making. Non-GAAP financial measures include the following:

•EBITDA: defined as net income (loss) plus net interest, taxes, depreciation and amortization.

•Adjusted EBITDA: excludes from EBITDA stock-based compensation, restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance (as further described in the tables below).

•Adjusted EBITDA attributable to DMC Global Inc.: excludes the Adjusted EBITDA attributable to the 40% redeemable noncontrolling interest in Arcadia Products.

•Adjusted EBITDA for DMC business segments: defined as operating income (loss) plus depreciation, amortization, allocated stock-based compensation (if applicable), restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance.

•Adjusted net income (loss): defined as net income (loss) attributable to DMC Global Inc. stockholders prior to the adjustment of redeemable noncontrolling interest plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance.

•Adjusted diluted earnings per share: defined as diluted earnings per share attributable to DMC Global Inc. stockholders (exclusive of adjustment of redeemable noncontrolling interest) plus restructuring expenses and asset impairment charges (if applicable) and, when appropriate, nonrecurring items that management does not utilize in assessing DMC’s operating performance.

•Net debt: defined as total debt less consolidated cash, cash equivalents and marketable securities per the Consolidated Balance Sheets.

Management believes providing these additional financial measures is useful to investors in understanding the Company’s operating performance, excluding the effects of restructuring, asset impairment, and other nonrecurring charges, as well as its liquidity. Management typically monitors the business utilizing the above non-GAAP measures, in addition to GAAP results, to understand and compare operating results across accounting periods, and certain management incentive awards are based, in part, on these measures. The presence of non-GAAP financial measures in this report is not int

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]