DMC Global Q2 2025 Earnings Report

DMC Global EPS Results

• Actual EPS: $0.12
• Consensus EPS: $0.05
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: N/A

DMC Global Revenue Results

• Actual Revenue: $155.49 million
• Expected Revenue: $151.60 million
• Beat/Miss: Beat by +$3.89 million
• YoY Revenue Growth: N/A

DMC Global Announcement Details

• Quarter: Q2 2025
• Date: 8/5/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, August 5, 2025
• Conference Call Time: 5:00PM ET

DMC Global (NASDAQ:BOOM) Inc. provides a suite of engineered products and various solutions for the construction, energy, industrial processing, and transportation markets worldwide. The company operates through three segments: Arcadia, DynaEnergetics, and NobelClad. The Arcadia segment manufactures, assembles, and sells architectural building products, including exterior and interior framing systems, curtain walls, windows, doors, and interior partitions; architectural components, architectural framing systems, entrance systems, and sun control products; sliding and glazing systems; and thermally broken steel, aluminum windows and doors, and wood doors and windows. It sells its products through a national in-house sales force for buildings, such as office towers, airports, hotels, education and athletic facilities, health care locations, government buildings, retail centers, mixed use, and multi-family residential buildings. The DynaEnergetics segment designs, manufactures, markets, and sells perforating systems, including initiation systems, shaped charges, detonating cords, gun hardware, and control panels; and perforating systems and associated hardware for the oil and gas industry. It sells its products through direct selling, distributors, and independent sales representatives. The NobelClad segment produces and sells explosion-welded clad metal plates for use in the construction of heavy, corrosion resistant pressure vessels, and heat exchangers for oil and gas, chemical and petrochemical, alternative energy, hydrometallurgy, aluminum production, shipbuilding, rail car manufacturing, power generation, and industrial refrigeration industries. It sells its products through direct sales personnel, program managers, and independent sales representatives. The company was formerly known as Dynamic Materials Corporation and changed its name to DMC Global Inc. in November 2016. DMC Global Inc. was founded in 1965 and is headquartered in Broomfield, Colorado.

DMC Global Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: DMC Global exceeded its Q2 adjusted EBITDA guidance of $10–13 M by delivering $13.5 M and reduced total debt by 17% to $59 M, advancing its deleveraging objective.
• Negative Sentiment: Arcadia’s Q2 sales declined 11% year-over-year to $62 M amid weak high-end residential and broader construction markets, prompting rightsizing of its residential cost structure and refocus on core exterior operations.
• Negative Sentiment: DynaEnergetics posted $66.9 M in Q2 sales, up 2% sequentially but down 12% year-over-year, as U.S. unconventional activity remains at multiyear lows and pricing pressure persists.
• Negative Sentiment: NobelClad’s Q2 sales were $26.6 M (-5% sequential, +6% YoY) but its order backlog fell to $37 M as customers delay projects over tariff uncertainty and seek non-U.S. suppliers.
• Neutral Sentiment: The company’s Q3 guidance projects sales of $142–150 M and adjusted EBITDA of $8–12 M, reflecting wider ranges due to macro volatility, tariff impacts, and seasonal patterns.

Presentation

[Operator]

Greetings, and welcome to the DMC Global Second Quarter Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeff High, Vice President of Investor Relations. Please go ahead.

[Geoff High, Vice President of Investor Relations & Corporate Communications at DMC Global]

Hello, and welcome to DMC's second quarter conference call. Presenting today are President and CEO, Jim O'Leary and Chief Financial Officer, Eric Walter. I'd like to remind everyone that matters discussed during this call may include forward looking statements that are based on our estimates, projections and assumptions as of today's date and are subject to risks and uncertainties that are disclosed in our filings with the SEC. Our business is subject to certain risks that could cause actual results to differ materially from those anticipated in our forward looking statements. DMC assumes no obligation to update forward looking statements that become untrue because of subsequent events.

[Geoff High, Vice President of Investor Relations & Corporate Communications at DMC Global]

Today's earnings release and a related presentation on our second quarter performance are available on the Investors page of our website located at dmcglobal.com. A webcast replay of today's presentation will be available at our website shortly after the conclusion of this call. And with that, I'll now turn the call over to Jim O'Leary. Jim?

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Thanks, Jeff, excuse me, and thanks everyone for joining us for today's call. In a volatile environment marked by shifting tariff policies and highly challenged visibility, our businesses remain focused on their operating initiatives, helping us exceed our EBITDA guidance range of 10,000,000 to $13,000,000 for the second quarter. At the same time, we made progress on our most important overall objective, deleveraging our balance sheet. Second quarter consolidated sales were $155,500,000 while adjusted EBITDA attributable to DMC was $13,500,000 At Arcadia, our Building Products business, second quarter sales totaled $62,000,000 down 5% sequentially and 11% from the year ago period. Last year's second quarter benefited from much stronger demand for high end residential and commercial exterior products.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

As expected and previously discussed, this year's second quarter reflects nationwide weakness in the high end residential market and in construction activity more broadly. Building activity in all segments continues to be challenged by persistently high interest rates. Management recently rightsized the cost structure of its residential offering to align with current market activity, while refocusing on its core exterior operations, which generate approximately 75% of the segment sales. Arcadia's second quarter sales also reflect the anticipated and previously discussed drop in project billings following the completion of a large mixed use development project in California that benefited the previous quarter. At DynaEnergetics, our energy products business, sales were $66,900,000 up 2% sequentially, but down 12% year over year.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

That decline versus prior year reflects pricing pressure and weaker demand in our core U. S. Unconventional market with a number of rigs, well completions and active frac crews are at or near multiyear lows. At NobelClad, our Composite Metals business, second quarter sales were $26,600,000 down 5% sequentially and up 6% year over year. NobelClad's order backlog at quarter end was $37,000,000 versus $41,000,000 at the end of the first quarter.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

This decline reflects a sharp slowdown in bookings as customers await clarity on tariff actions or have settled on using alternative plaid solutions from suppliers not impacted by tariffs. We believe we've lost some business in recent months to non U. S. Suppliers due to tariff driven cost increases and a willingness by Canadian customers in particular to buy non U. S.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Product. On a more positive note, during the second quarter, we drove a meaningful improvement in DMC's financial position. Total debt at the end of the quarter was $59,000,000 down 17% from the previous quarter as we focus on our most important objective, strengthening our balance sheet in advance of the unwinding of the Arcadia put call. I'll now turn the call over to Eric for a closer look at our second quarter financial results and our outlook for the third quarter. Eric?

[Eric Walter, CFO at DMC Global]

Thank you, Jim. I'll start with a look at second quarter profitability. As Jim mentioned, consolidated adjusted EBITDA attributable to DMC was $13,500,000 Inclusive of the Arcadia non controlling interest, adjusted EBITDA was $16,200,000 while adjusted EBITDA margin was 10.4%, down from 11.4% in the first quarter and 14.3% in the second quarter last year. The year over year decline is largely attributable to lower absorption at Arcadia, where sales of residential and commercial exterior products declined from last year's second quarter, a period that benefited from materially stronger customer demand. Arcadia reported second quarter adjusted EBITDA attributable to DMC of $4,000,000 Before the non controlling interest allocation, adjusted EBITDA was $6,700,000 or 10.9% of sales, down from 14.2% of sales in the first quarter and 17.8% in the prior year second quarter.

[Eric Walter, CFO at DMC Global]

Dyna delivered $9,000,000 in adjusted EBITDA, while adjusted EBITDA margin was 13.4%, a sequential improvement of two ten basis points and a year over year increase of 190 basis points. The improvements primarily reflect lower material costs and a slightly improved sales mix. NobelClad reported second quarter adjusted EBITDA of $4,400,000 with an adjusted EBITDA margin of 16.5%, down from 19.2% in the first quarter and 22.7% in the prior year second quarter. The declines were primarily due to a higher mix of international project sales, which typically carry a lower gross margin. Second quarter SG and A expense was $26,100,000 down sequentially from $28,300,000 and $27,100,000 in last year's second quarter.

[Eric Walter, CFO at DMC Global]

The decrease principally reflects lower expenses for professional services and bad debt. Second quarter adjusted net income attributable to DMC was $2,500,000 while adjusted EPS attributable to DMC was $0.12 With respect to liquidity, we ended the second quarter with cash and cash equivalents of approximately $12,000,000 As Jim mentioned, total debt inclusive of debt issuance costs was down 17% from the first quarter to approximately $59,000,000 and net debt was reduced to roughly $46,000,000 And now to guidance. We expect second quarter consolidated sales will be in a range of 142 to $150,000,000 while adjusted EBITDA attributable to DMC is expected in a range of 8,000,000 to $12,000,000 The wider than normal range on adjusted EBITDA reflects the increased uncertainty in our end markets. Arcadia expects conditions in The U. S.

[Eric Walter, CFO at DMC Global]

Construction industry will remain challenging and it's right sized its residential cost structure to align with the current market while also refocusing on its core commercial operations. At DynaEnergetics, the industry is anticipating a sequential decline in well completion activity in our core U. S. Onshore market. While NobelClad is continuing to be impacted by the deferral of orders by customers that continue to monitor the still evolving tariff policies.

[Eric Walter, CFO at DMC Global]

I should note that our guidance is heavily influenced by macroeconomic concerns, volatility and visibility issues created by current tariff policies and the current level of energy prices. It's subject to change either upward or downward as greater clarity emerges. Now I'll turn it back to Jim for some additional comments.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Great. Thanks, Eric. And to wrap up on a slightly more positive note, albeit very high level and anecdotal, despite recent ongoing challenges, continued uncertainty across both building products and the broader industrial markets, Our businesses are steadily advancing against the key objectives we set earlier in the year. We exceeded our admittedly cautious EBITDA guidance by remaining focused on self help initiatives within our control. At Arcadia, while business is subdued due to elevated interest rates and a slow start to the residential rebuild of Los Angeles, there are reasons to be optimistic.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

There's pent up demand that will eventually be unleashed when interest rates moderate and local policies supporting the rebuilding initiative in LA picks up steam. In the meantime, we're focused on fixing some of the things that need fixing and believe we're making solid progress despite the market headwinds. At NobelClad, we believe there's pent up demand and order volume, which should recover as the tariff situation settles down. In the meantime, we're focused on controlling costs and lowering our overall breakevens. At DynaEnergetics, things were a bit trickier due to the shifting animal spirits around global energy markets, which are impacting oilfield service companies and their suppliers.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Again, maintaining tight cost controls is our principal focus as we watch for recovery in energy prices and well completion activity. At the mid year mark of 2025, we've also made important progress to leveraging our balance sheet and improving our financial flexibility. We view these as important achievements as we continue to prepare for the possible acquisition of the remaining 40% stake in Arcadia late next year. The efforts of DMC associates across each of our three businesses has been critical to our continued progress and I'd like to thank all of our employees for their hard work and commitment to DMC's future success. And with that, we're ready to take any questions. Operator?

[Operator]

Thank you. We'll now be conducting a question and answer session. Our first question is from Gerry Sweeney with ROTH Capital Partners.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Good afternoon. Thanks for taking my call.

[Eric Walter, CFO at DMC Global]

Hi, Gerry.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

I want to start with Arcadia. Multi faceted question, so I apologize in the beginning. But on the weakness or some of the headwinds there, how much of this is resi and how much is sort of just end market across maybe the building products segment? And then the follow-up to that is, what is the roadmap? What should we be looking for as you right size the business there to fit demand as we go forward?

[Eric Walter, CFO at DMC Global]

Hey, Jerry, this is Eric. I'll take the first part of that question. So the weakness that we've seen has been really split between the residential business, that's our high end residential segment. But also we've seen in the commercial exteriors part of the business that some of the projects are being deferred out a little ways. And so we think that that's primarily the impact of tariffs on people, end developers trying to wait and see how things are going to shake out.

[Eric Walter, CFO at DMC Global]

But just the persistence of the higher interest rate environment, which is not helpful from that standpoint.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Got it. And Jerry, on that when you asked the rightsizing is effectively done in residential. One or two facilities where at the end of the second quarter of last year, like everybody else, there's a couple of public comps out there you can look at that are pretty illustrative. When the volume dropped off, we rightsized the workforce, rightsized some of the support and that's effectively done. We consider taking more drastic action, but to be honest, most of that product would be perfect for the rebuilding of some of the higher priced areas in LA.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

And we have an option on that. Now the challenge with that, the estimates and Jeff pulled something this morning that said 13,000 homes. I've seen estimates as high as 20,000 homes because remember a lot of the structures that are still on lots may never be inhabitable. It's a pretty significant number of homes that need rebuilding. And I think there's been 154 permits pulled so far.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

So it's pretty far behind. Yes. Yes. We've got a pretty good position. We've got a unique option on that market.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

We want to make sure we're positioned to take advantage of it. So we think we've done the right amount of belt tightening in the residential side, which is reflective of higher interest rates principally. On the commercial side, do impact it a little bit, but it really is principally interest rates. And most commercial contractors, they placed orders, they're long lead, long term demand, but they're not going to do releases and they're not going to start construction until they know what their overall cost of financing is. And when you're sitting in front of think about the last week and a half, two Fed dissents, one Fed governor moving on, almost a certainty you'll have some regime change there.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

And I think futures are pricing anywhere between one and two. There are some descent saying zero, but if we had to bet, we'd say there'd be some substantial cuts in at least the next twelve months, if not in the next six. So there's a lot of pent up demand and making deeper cuts to commercial, which is still healthy and will also benefit. If you think about storefronts and some of the low mid rise buildings we do, they were impacted by the fires too. We want to be careful about not cutting off our nose despite our face.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

I got you. And I understand that. Besides maybe reductions in force and rightsizing, are there other opportunities within Arcadia to drive profitability or other initiatives? Any update on that front?

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

I mean the principal initiatives and where Jim Schladen who returned to us earlier this year spending time is getting customer service, principally customer service, lead time reduction, a little bit on the quality side back up to the standards that the organization lived and breathed when he was there. I mean it's a customer service driven business top to bottom and restoring that focus is where he's been spending a lot of his time. In every division, not just Arcadia, we've got basically zero headcount add mandates unless it's for specific initiatives. We've got basically zero variable cost additions until volume returns, less a factor for Arcadia than some of businesses where they've seen the volume really fall off. Jim is the guy who did most of the headcount reduction across the residential business when the backlogs were really depleted at the end of last year.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

So I think on the discretionary side where it makes sense, we've done all the things you should without impairing yourself. If you look at NobelClad, which is definitely our most tariff impacted business, although if you ask me to quantify it, you remember the model, we pass through raw material increases, but you don't know what demand you lose if your raw material increases are higher than somebody who's not burdened by tariffs. Yes, that's the business that's probably seen the steepest drop in actual business impact, but it's more reflective in the backlogs and the recent drop in quarterly performance because the project business and most of the CapEx numbers I've seen come out from the government are absolutely horrendous. And that's a function of people either deferring or canceling orders until they know what the economy is going to look like and until they know what the true cost of a project is going to be. And I'll commend the Noblechai people.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

They've not only done the variable cost reduction that I always view as kind of the automatic shock absorber. They have cut much deeper than I would say selectively around other things everything from travel down to discretionary headcount. They've done all the things you do when you really have a steep downturn driven by exogenous events, which they have. And Dyna, they've done all the things that are consistent with the initiatives we started last year. Remember that business fell off steeply last year. We had an automation initiative, which is going well, but I'd say probably 50 ish plus percent there.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

So more to come around getting that implemented. I would say a value engineering product, which I'd love to say was intelligently driven by our crystal balls. But we took a lot of material out of the product that's out in the market now. We did things that not only took material cost out, but by taking material cost out that would be impacted by tariffs. You kind of got the double whammy of preempting some of the things that unfortunately tariffs have done to a really challenged oil service market now.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

So outside of those, I don't think there's really a lot we can do right now if the economy takes a huge step down. Of course, there's more, but at this level of volume, think we're at the right level.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

No, I wouldn't disagree. I thought you guys executed very well in the quarter and not surprised guidance is probably a little bit lower than my numbers, but that's not a surprise to me. One other quick follow-up question. Know there's other people

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

And Jerry, we have the unfortunate benefit by releasing today. We got to see a lot of the people you cover and a lot of the commentary from customers, peers, the whole oilfield space. So I think we were appropriately prudent.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Yes. Balance sheet, obviously, nice pay down in debt in the quarter. Maybe this is for Eric. Anything in terms of on the balance sheet that you can continue to work on? I'm not sure inventories or payables, receivables, etcetera.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

I didn't have a chance to really come through it, but it looks like it's trending in the right direction and at decent velocity.

[Eric Walter, CFO at DMC Global]

Yes. I think from a net working capital standpoint, I think the business has performed reasonably well during the quarter. And there's always more that can be done, so we'll continue to push there. The free cash flow performance we had was really strong in the second quarter. I'd say looking out over the next several quarters, we would expect that we'd be converting EBITDA into free cash flow 40% to 45%, similar to where we were the first half of the year.

[Eric Walter, CFO at DMC Global]

And if you look back at the prior couple of years, we were kind of in that ballpark 40% to 45%. So the net working capital performance is part of it. Obviously, generating cash earnings as we head into the second half of this year will be another critical aspect of it as well.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Got it. Okay.

[Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC]

I'll jump back in line. I appreciate it. Thanks everybody.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Thanks, Gerry. Thanks for the nice comments as well. We appreciate it.

[Operator]

Our next question is from Ken Newman with KeyBanc Capital Markets.

[Ken Newman, VP & Equity Research Analyst at KeyBanc Capital Markets]

Hey, good evening, guys.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Hey, Ken.

[Ken Newman, VP & Equity Research Analyst at KeyBanc Capital Markets]

Hey,

[Ken Newman, VP & Equity Research Analyst at KeyBanc Capital Markets]

Jim and Eric, maybe to go back to Arcadia. Thanks for all the help there on some of the cost out initiatives there. I do want to ask, just given some of the work that you've done in recent months to right size the costs in Arcadia, can you just help us size up how you expect gross margins in that segment to perform at the midpoint of the third quarter guide? I'm just trying to figure out how you think where do you think volumes need to be in order to step back up to that high 20%, low 30% range?

[Eric Walter, CFO at DMC Global]

Yes. I think with this business, Ken, there's a fair amount of fixed costs that's in our COGS area. So when you look at the revenue that we've generated over the past couple of quarters, to the extent that we increase that, we have much better fixed cost absorption. So going into the third quarter, we've caveated what we think the performance is going to be for Arcadia just given what the overall environment looks like. And there's going to be some softness in the fourth quarter that's just seasonal in nature.

[Eric Walter, CFO at DMC Global]

But really for Arcadia, it's trying to get the volume pick back up to levels that we had in prior years. And to the extent that we do that, we get a disproportionate amount of impact at the EBITDA level and can push the EBITDA margins up closer to where you saw them in prior years. But for the next, I'd call it two, three quarters, it's still going to be touch and go given how the environment is operating.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Again, just one slide addition. The difference between this company at $240,000,000 to $250,000,000 and $300,000,000 if you look at the history going back even before we acquired it, because you've got 11 ish or give or take number of distribution sites around the hub and spoke model, you've got all your manufacturing in one place, you effectively got your operating leverage as good as it can be. The difference between $240,000,000 and 300,000,000 that's the difference between the consistent 40,000,000 to $50,000,000 a year as this company was doing right up until 2023 going into 2024. And the drop off in volume 5,000,000 to $10,000,000 a month, that's really where all the tremendous operating leverage is. That's why we want to be really careful about doing anything that impacts service, lead times or our ability to meet demand.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Because if interest rates come down and if LA were to really jumpstart the permitting process, there's just a ton of business and a ton of leverage there. But as Eric pointed out on the fixed cost structure, it really shows pronounced differences in the difference between $240,000,000 and higher.

[Ken Newman, VP & Equity Research Analyst at KeyBanc Capital Markets]

Yes. No, that makes a lot of sense. Jim, you kind of touched on it there a little bit, but you did talk about interest rates kind of remaining stubbornly high. That's not too surprising, from some of the other non res construction guys that we cover. What do you think is the lag time between hopefully an eventual cut versus when that starts to pull through in orders?

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Well, residential it's usually pretty quick. And this doesn't impact us as directly as if you were a JELD WEN or somebody who's doing first time step up. The transmission mechanism particularly if you've got lots available, if buildings underway is really quick. And the ability of builders and construction folks to get out there and jump start demand, it's impacted only by the labor. The construction market and this is kind of untested right now because and I don't want throw a curveball in there, but what's happening to labor markets across the country, labor markets where you're impacted by some of the other headline issues that I don't want to throw in there.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

But if your workforce is impacted by job site guys who may or may not be coming in right now. There was a lot of disruption in LA around the fires and whatnot. How quickly you can respond there and how quickly commercial contractors get out there? It may be a little bit slower, but I don't think it's two or more quarters, probably a quarter to two. Okay. And then maybe one more if I

[Ken Newman, VP & Equity Research Analyst at KeyBanc Capital Markets]

could just squeeze it in. Look, understand that there's few problems that better volumes can't fix. But maybe just kind of going around each of the segments and talking a little bit about what you saw from a price cost perspective, just given some of the moving pieces on tariffs. How has realization been this quarter just given the tariff environment? And what are you kind of expecting here in the third quarter?

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

We'll give you real generalities. And if Eric's got some specifics he's not uncomfortable with it, he can jump in. Arcadia is really successful and our peers have been very good about passing along tariff driven increases, particularly on the aluminum side since almost everything we do is aluminum. And it's a lot of it is health of the market competitive reaction. There's nothing there that's long term competitively damaging.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

And I would say it's purely a demand issue. And every time I talk to Mr. Schladen, it's we just need the sales. So when the demand comes back, we're fine there. Noble Plaid is trickier because we're passing along the cost of the metal and where your demand impact is on you just don't get projects or they just don't get started because it's a very chunky project driven tariff business.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

The margin structure shouldn't be impaired there, but it's a volume issue. And until there's a little bit more clarity on us relative to our competitors, there was that comment in there, which again hopefully these things pass, but Canadian buyers are not as enamored by U. S. Suppliers as maybe they used to be. That's purely a volume.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

I don't think there's any permanent impairment in the margins. Dyna is a little trickier and they did a great job executing. They've done a great job executing the number of projects. But if you look at everybody in oilfield services, everybody has been impacted by tariffs. Every one of customers and peers who's in the marketplace already talked about having to take that on the chin a little bit on margins. So do we have I looked at Eric, it 100 ish, 100 plus basis points to recover?

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

There's definitely a hit there. I just think it's too hard to quantify now because energy markets are so volatile and to be candid that's so terrible.

[Ken Newman, VP & Equity Research Analyst at KeyBanc Capital Markets]

Very helpful. Appreciate it.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

You're welcome. Thank you.

[Operator]

Our next question is from Jawad Bourian with Stifel.

[Jawad Bhuiyan, Associate Equity Analyst at Stifel Financial Corp]

Hi, everyone. Thanks for the question. I guess could you just talk a little bit about your second half sales expectations for Dyna? And I guess how do you expect your sales to perform relative to the market that you're seeing right now? And then I do have a quick follow-up after that.

[Eric Walter, CFO at DMC Global]

Yes. So I think we said in our prepared remarks, but for the second half of the year, we're expecting the activity in Dyna's primary U. S. Markets to be down. I think that's consistent with what you'll see with other players in the OFS space.

[Eric Walter, CFO at DMC Global]

There could be some opportunity for higher international sales relative to the first half of the year. But most of the sales, as you know, that Dyna generates would come from the North American market. And so we just expect that to be trending lower just given where the completion activity is in frac crews and all other metrics you'd see out there for the market.

[Jawad Bhuiyan, Associate Equity Analyst at Stifel Financial Corp]

Got it. Thanks. And then so we're seeing some data that's indicating that oriented perforating guns are kind of driving improved recovery rates and then also better frac. Are you also seeing this? And how should we kind of think about that in terms of impacting your business going forward?

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

It's a trend in the market. We have a product that is in the market as good as anybody's and we're benefiting just like everybody else. I don't think it has dramatically changed anyone's performance relative to other peers. There is a product out there that's sold to it's a self orientated product that's sold to non Dyna customers. But I don't think that changes the paradigm in the way that you're referring to.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

It's not going to make the oil and gas market be better than what energy prices will allow it to be.

[Jawad Bhuiyan, Associate Equity Analyst at Stifel Financial Corp]

Got it. Thanks. I'll pass it on.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Yes. You're welcome. Thank you.

[Operator]

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing comments.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

Well, to shareholders and the analysts who cover us, we appreciate your time this afternoon. And to any employees or others listening, again, we appreciate your hard work during the quarter. Appreciate you hanging in there during a very difficult environment with some challenging visibility. And back to shareholders, investors, we're working as hard as we can for you. We'll be there to participate in the recovery when it's here.

[James O'Leary, President, CEO, Executive Chairman & Director at DMC Global]

And we appreciate your patience. So thank you very much.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Geoff High, Vice President of Investor Relations & Corporate Communications
• James O'Leary, President, CEO, Executive Chairman & Director
• Eric Walter, CFO

Analysts

• Gerry Sweeney, MD & Senior Research Analyst at Roth Capital Partners, LLC
• Ken Newman, VP & Equity Research Analyst at KeyBanc Capital Markets
• Jawad Bhuiyan, Associate Equity Analyst at Stifel Financial Corp