DMC Global Amends Credit Facility to Enhance Financial Flexibility

Rhea-AI Summary

DMC Global (NASDAQ: BOOM) has amended its credit facility to enhance financial flexibility in preparation for a potential acquisition of the remaining 40% stake in Arcadia Products. The amendment includes a temporary increase in DMC's maximum leverage ratio to 3.5x adjusted EBITDA (up from 3.0x) if either put or call option is exercised. The leverage limit will decrease to 3.25x in the third quarter post-purchase and return to 3.0x thereafter. The company can now hold proceeds from its $50 million delayed draw term loan facility in a restricted account after February 2026 expiration for future purchase of the Arcadia stake. DMC currently owns 60% of Arcadia, with the put option exercisable by the joint venture partner from September 2026, while DMC maintains a call option exercisable anytime.

Positive

• Enhanced financial flexibility through amended credit facility terms
• Access to $50 million delayed draw term loan facility for potential acquisition
• Temporary increase in leverage ratio allowance to 3.5x EBITDA to facilitate acquisition
• Strategic opportunity to acquire remaining 40% stake in Arcadia Products

Negative

• Potential increase in leverage and debt burden if acquisition occurs
• Risk of mandatory purchase if joint venture partner exercises put option in 2026
• Economic volatility and challenging market visibility noted by management

Insights

Financial Restructuring Specialist

DMC enhances financial flexibility by amending credit terms to prepare for potential Arcadia ownership acquisition, raising leverage limits temporarily.

DMC Global's credit facility amendment represents a strategic financial maneuver to position the company for acquiring the remaining 40% stake in Arcadia Products that it doesn't currently control. The most significant modification involves a temporary increase in the maximum leverage ratio from 3.0x to 3.5x adjusted EBITDA should either put or call options be exercised. This elevated ratio would gradually step down to normal levels over subsequent quarters.

The amendment also includes an important provision allowing DMC to draw from its $50 million delayed draw term loan facility before its February 2026 expiration and hold these funds in a restricted account specifically for the future Arcadia stake purchase. This creates a funding safety net regardless of market conditions when the actual transaction occurs.

This proactive financial restructuring reflects management's acknowledgment of "recent economic volatility and more challenging visibility." By securing flexible financing terms now, DMC is effectively hedging against potential future credit market tightening. The company can maintain liquidity while preparing for a significant cash outlay without risking covenant violations or facing unfavorable financing terms if economic conditions deteriorate.

The amendment doesn't immediately impact DMC's current debt load but creates a clear pathway for the strategic consolidation of Arcadia, which could streamline operations and potentially enhance shareholder value through full ownership of what appears to be a strategically important business unit.

BROOMFIELD, Colo., June 11, 2025 (GLOBE NEWSWIRE) -- DMC Global Inc. (Nasdaq: BOOM) today announced it has amended its existing credit facility to enhance financial flexibility. The amendment comes as the Company prepares for the possible exercise of a put/call option related to the 40% ownership interest in Arcadia Products, LLC (“Arcadia”) not presently owned by DMC. DMC currently holds a 60% controlling interest in Arcadia, with the remaining 40% owned by a joint venture partner.

Under Arcadia’s governing agreement, DMC’s joint venture partner may exercise the put option beginning September 6, 2026, while DMC retains the right to exercise the call option at any time. The amended credit agreement is designed to support a possible cash acquisition of the remaining Arcadia stake under either scenario. The Company believes this enhanced flexibility is prudent and cost efficient given recent economic volatility and more challenging visibility at present.

Key provisions of the amendment to DMC’s credit facility include a temporary increase in DMC’s maximum leverage ratio to 3.5x adjusted EBITDA over the trailing 12 months — up from 3.0x — should either the put or call option be exercised. This elevated leverage limit will apply for the first two quarters following payment of the purchase price of the put or call option, followed by a reduction to 3.25x in the third quarter, and a return to 3.0x thereafter. Additionally, proceeds under the existing $50 million delayed draw term loan facility set to expire on February 6, 2026, may now be held (to the extent drawn on such facility prior to expiration) in a restricted account after the expiration of such facility for purposes of paying the purchase price of the put or call option in the future.

“We appreciate the continued support and confidence of our banking group,” said Eric Walter, DMC’s chief financial officer. “We believe this amendment to our credit facility enhances our financial flexibility and strengthens our ability to complete the acquisition of the remaining interest in Arcadia.”

Safe Harbor Language
Except for the historical information contained herein, this news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including our potential purchase of the remaining 40% minority interest in Arcadia. Such statements and information are based on numerous assumptions regarding present and future business strategies, the markets in which we operate, anticipated costs and the ability to achieve goals. Forward-looking information and statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results and performance to be materially different from those expressed or implied by such forward-looking information and statements, including but not limited to: our ability to realize sales from our backlog; our ability to obtain new contracts at attractive prices; the execution of purchase commitments by our customers, and our ability to successfully deliver on those purchase commitments; the size and timing of customer orders and shipments; the timely completion of contracts; changes to customer orders; product pricing and margins; fluctuations in customer demand; our ability to successfully navigate slowdowns in market activity or execute and capitalize upon growth opportunities; the success of DynaEnergetics’ product, technology, and margin enhancement initiatives; our ability to successfully protect our technology and intellectual property and the costs associated with these efforts; consolidation among DynaEnergetics’ customers; fluctuations in foreign currencies; fluctuations in tariffs and quotas; the cost and availability of energy; the cyclicality of our business; competitive factors; the timing and size of expenditures; the timing and price of metal and other raw material; the adequacy of local labor supplies at our facilities; our ability to attract and retain key personnel; current or future limits on manufacturing capacity at our various operations; government actions or other changes in laws and regulations; the availability and cost of funds; our ability to access our borrowing capacity under our credit facility; geopolitical and economic instability, including recessions, depressions, wars or other military actions; inflation; supply chain delays and disruptions; transportation disruptions; general economic conditions, both domestic and foreign, impacting our business and the business of our customers and the end-market users we serve; the potential effects of activist stockholder actions and actions that we may take to discourage takeover attempts, as well as the other risks detailed from time to time in our SEC reports, including the annual report on Form 10-K for the year ended December 31, 2024. We do not undertake any obligation to release public revisions to any forward-looking statement, including, without limitation, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

About DMC Global
DMC Global is an owner and operator of innovative, asset-light manufacturing businesses that provide unique, highly engineered products and differentiated solutions. DMC’s businesses have established leadership positions in their respective markets and consist of: Arcadia, a leading supplier of architectural building products; DynaEnergetics, which serves the global energy industry; and NobelClad, which addresses the global industrial infrastructure and transportation sectors. Based in Broomfield, Colorado, DMC trades on Nasdaq under the symbol “BOOM.” For more information, visit: HTTP://WWW.DMCGLOBAL.COM.

CONTACT:
Geoff High
Vice President of Investor Relations
303-604-3924 

FAQ

What changes did DMC Global (BOOM) make to its credit facility?

DMC Global amended its credit facility to increase the maximum leverage ratio to 3.5x adjusted EBITDA (from 3.0x) and allow holding proceeds from its $50 million delayed draw term loan facility for potential Arcadia stake acquisition.

When can DMC Global acquire the remaining 40% stake in Arcadia Products?

DMC Global can exercise its call option at any time, while their joint venture partner can exercise the put option beginning September 6, 2026.

What is DMC Global's current ownership stake in Arcadia Products?

DMC Global currently holds a 60% controlling interest in Arcadia Products, with the remaining 40% owned by a joint venture partner.

How will the leverage ratio change after DMC Global's potential Arcadia acquisition?

The leverage ratio will be 3.5x for two quarters post-acquisition, decrease to 3.25x in the third quarter, and return to 3.0x thereafter.

What is the size of DMC Global's delayed draw term loan facility?

DMC Global has a $50 million delayed draw term loan facility that expires on February 6, 2026.