Q2 2024 DMC Global Inc Earnings Call
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Operator: Greetings and welcome to the DMC Global second quarter earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Geoff High, VP of IR. Thank you. You may begin.
It is now my pleasure to introduce your host, Geoff High, VP of IR. Thank you. You may begin.
Geoff High: Hello, and welcome to DMC's second quarter conference call. Presenting today are DMC CEO Michael Kuta 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.
Speaker Change: Hello and welcome to Dmc's second quarter conference call. Presenting today are Dmc CEO Michael Kuta and Chief Financial Officer Eric Walter.
Speaker Change: 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.
Speaker Change: Our business is subject to certain risks that could cause actual results to differ materially from those anticipated in our forward-looking statements.
Geoff High: Dmc assumes no obligation to update forward-looking statements that become untrue because of subsequent events. 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 on our website shortly after the conclusion of this call. And with that, I'll turn the call over to Michael Kuta.
Michael Kuta: Hello, and thank you for joining us today. Dmc reported second quarter sales of $171.2 million and adjusted EBITDA attributable to Dmc of $19.4 million. Our results represent a sequential rebound versus the first quarter and were achieved despite continued weakness in our primary construction and energy products market. The results also were above the high end of our guidance range.
Michael Kuta: And with that, I'll turn the call over to Michael Kuta. Michael? Hello, and thank you for joining us today. Dmc reported second quarter sales of $171.2 million and adjusted EBITDA attributable to Dmc of $19.4 million.
Michael Kuta: Arcadia, our building products business, was a key driver in our improved financial performance, reporting second quarter sales of $69.7 million and a gross margin of 33.2%. Gross margin was up 600 basis points from the first quarter. In the comparable quarter last year, Arcadia's gross profit was 34.7 percent, which was their best margin performance since we acquired the business in December 2021. Arcadia's second quarter adjusted EBITDA margin was 17.8% versus 9.5% in the first quarter and 20.8% in the year ago's second quarter.
Speaker Change: Arcadia, our building products business, was a key driver in our improved financial performance, reporting second quarter sales of 69.7 million dollars and gross margin of 33.2 percent.
Speaker Change: Arcadia's second quarter adjusted EBITDA margin was 17.8% versus 9.5% in the first quarter and 20.8% in the year-ago second quarter.
Michael Kuta: The results reflect management's focus on improving operational efficiencies and streamlining Arcadia's cost structure. A successful effort to de-bottleneck finishing operations has improved Arcadia's capacity, and the business is working to further strengthen its customer service and lead time. DynEnergetics, our energy products business, reported second quarter sales of $76.2 million, down 2% sequentially and down 10% versus last year's second quarter. Adjusted EBITDA margin was 11.5%, down from 13.5% in the first quarter and 23% in the year ago's second quarter.
Speaker Change: A successful effort to de-bottleneck finishing operations has improved Arcadia's capacity and the business is working to further strengthen its customer service and lead times.
Michael Kuta: This year's second quarter results reflect lower sales volumes and softer pricing in North America, as well as a $500,000 bad debt expense. Well completions in Dyna's core U.S. onshore market declined in five of the first six months of the year, and the number of exports is off roughly 13 percent from the 2024 peak. We expect North American completion activity will remain soft during the second half of the year.
Speaker Change: Well completions in Dyna's core U.S. onshore market declined in five of the first six months of the year, and the number X spreads is off roughly 13% from the 2024 peak.
Dine: We expect North American completion activity will remain soft during the second half of the year. Dyn has taken steps to align its cost structure with anticipated demand.
Michael Kuta: DIN has taken steps to align its cost structure with anticipated demand. Recent cost reductions, coupled with previously discussed automation and product enhancement initiatives, are expected to improve Dyna's EBITDA margins during the back half of the year. In the fourth quarter, sales and margins should benefit from an expected increase in international product sales. Sales at Nobel Flat are the composite metals business for $25.2 million, which is up 2% versus the year-ago quarter and down 6% sequentially.
Michael Kuta: Adjusted EBITDA margin was a strong 22.7% and benefited from favorable delivery timing and project mix. Nobelclad's second quarter order backlog of $64 million was up over 20% sequentially and reflects the impact of the record petrochemical order we discussed during our last call. Dmc's Board of Directors continues to evaluate a range of strategic options to unlock shareholder value. We will issue an update when appropriate. I'm encouraged by the progress made by DMC's businesses during the second quarter.
Speaker Change: Adjusted EBITDA margin was a strong 22.7% and benefited from favorable delivery timing and project mix.
Speaker Change: Dmc's Board of Directors continues to evaluate a range of strategic options to unlock shareholder value. We will issue an update when appropriate.
Speaker Change: I'm encouraged by the progress made by DMC's businesses during the second quarter. I want to thank our employees for their commitment and outstanding efforts.
Michael Kuta: We want to thank our employees for their commitment and outstanding efforts. Now I'll turn the call over to Eric for a closer look at our second quarter financial performance and a review of our third quarter guidance.
Eric Walter: Consolidated second quarter sales were $171 million, up 3% sequentially and down 9% from last year's second quarter, which was one of DMC's strongest historical quarters. Consolidated Grist Margin was 27.1%, down from 25.4% and down from 32.8% in last year's second quarter. As Michael noted, the sequential improvement reflects a strong margin recovery at Arcadia versus the first quarter.
Speaker Change: Now, I'll turn the call over to Eric for a closer look at our second quarter financial performance and a review of our third quarter guidance. Eric?
Eric Walter: Consolidated grist margin was 27.1 percent. Subsequently, from the 25.4 percent,
Eric Walter: and down from 32.8% in last year's second quarter. As Michael noted, the sequential improvement reflects a strong margin recovery at Arcadia versus the first quarter. The decline versus last year's second quarter reflects lower sales in margin at Dyna Energetics.
Eric Walter: The decline versus last year's second quarter reflects lower sales in margin at Dyna Energetic. Second quarter SG&A was approximately $27 million, or 15.8% of net sales, versus $29 million, or 15.5% of sales in the second quarter last year. Lower outside service expenses across all DMC businesses drove the reduction.
Speaker Change: Second quarter SG&A was approximately $27 million or 15.8% of net sales versus $29 million or 15.5% of sales in the second quarter last year.
Speaker Change: Lower outside service expenses across all DMC businesses drove the reduction.
Eric Walter: Inclusive of the Arcadia non-controlling interest, the consolidated second quarter adjusted EBITDA margin was 14.3% of sales, up from 11.4% in the first quarter and down from 20.3% in the year-ago second quarter. Second quarter adjusted net income attributable to DMC was $5.7 million, while adjusted EPS attributable to DMC was $0.29. With respect to liquidity, we ended the second quarter with cash and cash equivalents of $15 million, and total debt, inclusive of debt issuance costs, of $84 million, a net debt of $70 million.
Speaker Change: Inclusive of the Arcadia non-controlling interest, consolidated second quarter adjusted EBITDA margin was 14.3% of sales, up from 11.4% in the first quarter and down from 20.3% in the year-ago second quarter.
Eric Walter: Second quarter adjusted net income attributable to DMC was 5.7 million dollars, while adjusted EPS attributable to DMC was 29 cents.
Speaker Change: With respect to liquidity, we ended the second quarter with cash and cash equivalents of $15 million.
Speaker Change: Total debt, inclusive of debt issuance costs, of $84 million, and net debt of $70 million. Our debt to adjusted EBITDA leverage ratio of 1.1 at the end of the second quarter remained well below our covenant threshold of 3.0.
Eric Walter: Our debt to adjusted EBITDA leverage ratio of 1.1 at the end of the second quarter remained well below our covenant threshold of 3.0. On a pro forma net debt basis, after subtracting cash, our leverage ratio was 0.92 at the end of the second quarter.
Eric Walter: On a pro forma net debt basis, after subtracting cash, our leverage ratio was 0.92 at the end of the second quarter.
Eric Walter: Now turning to guidance for the third quarter of 2024, consolidated sales are expected in a range of 158 to 168 million dollars. We expect activity in Arcadia's primary markets to remain weak in the third quarter, while activity in China's primary North American markets is expected to soften versus the second quarter. Novoclad sales are expected to be comparable to the second quarter. Third quarter adjusted EBITDA attributable to DMC is expected in a range of $15 to $18 million.
Eric Walter: Now, turning to guidance for the third quarter of 2024. Consolidated sales are expected in a range of $158 to $168 million.
Eric Walter: is expected to soften versus the second quarter. Novoclad sales are expected to be comparable to the second quarter. Third quarter adjusted EBITDA attributable to DMC is expected in a range of 15 to $18 million.
Eric Walter: Our Katie's adjusted EBITDA margin is expected to moderate versus the second quarter due to less absorption of overhead expenses on lower sales. Well, we expect DINAH will improve modestly due to cost reductions in operational initiatives. Adjusted EBITDA margin at NOVOCLAT is expected to decline sequentially due to a less favorable project match. With that, we're ready to take any questions from our analysts. Operator?
Speaker Change: Arcadia's adjusted EBITDA margin is expected to moderate versus the second quarter due to less absorption of overhead expenses on lower sales. While we expect DINAH will improve modestly due to cost reductions in operational initiatives.
Speaker Change: With that, we're ready to take any questions from our analysts. Operator?
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Operator: One moment, please, while we poll for questions. The first question is from Jerry Sweeney from Roth Capital Partners. Please go ahead. Good afternoon.
Gerard Sweeney: Good afternoon, Mike, Eric, and Geoff. Thanks for taking my call. It's a pleasure to be here. Thank you. Question, sorry, not feeling well, but revenue at Acadia was ahead of forecast, and obviously gross margins, you executed extremely well on that front. Can you give us a little bit more detail on maybe some of the operational efficiencies and cost out reduction? All measured in the segment to drive this March. And, you know, are they...
Speaker Change: Good afternoon, Mike, Eric, Geoff. Thanks for taking my call.
Speaker Change: Question, sorry not feeling well, but revenue at Acadia was ahead of forecast and obviously gross margins you executed extremely well on that front. Can you give us a little bit more detail on maybe some of the operational efficiencies and cost out reductions?
Michael Kuta: Yeah, thanks Jerry. So, what we've been doing is doing some cost-cutting, really streamlining the organization, and getting more efficient, in particular, in our finishing operations. So our finishing operations are the heartbeat of our organization, so that's what enables our customer service model. So everything goes through finishing, whether it's paint, or anodizing; all material runs through there. So the organization's really worked hard to de-bottleneck those operations, increase finishing capacity throughput, and so that's driving real productivity improvements in the business and enabling the front end of the business.
Speaker Change: You know, are they sustainable?
Speaker Change: Yeah, thanks, Jerry. So what we've been doing is doing some cost outs.
Gerard Sweeney: Got it. And then maybe this one for Eric.
Speaker Change: really streamlining the organization, getting more efficient.
Speaker Change: In particular in our finishing operations. So our finishing operations are the heartbeat of our organization. So that's
Speaker Change: What enables our customer service model. So everything goes through finishing, whether it's paint, anodizing, all material runs through there. So the organization's really worked hard to de-bottleneck those ops.
Eric Walter: Cash flow was, I think, flat essentially in a quarter. Maybe what's driving free cash flow in a quarter and then you know projections for the remainder of the year. Obviously, cash flow, there's puts and takes. Yeah.
Eric Walter: Got it. And then maybe this one for Eric, cash flow was I think flat essentially in a quarter. Maybe what's driving free cash flow in a quarter and then you know projections for the remainder of the year? Obviously the cash flow.
Eric Walter: Yeah, thanks, Jerry. Yeah, for the second quarter, the free cash flow performance was really a function of timing and some one-time items. We had a prepaid purchase of explosives to secure our supply within Dyna. Additionally, there was the timing of some customer advances in the Novoclad business moving from Q2 into Q3. And then we had some higher cash taxes in the quarter. And when you add all of those up, that had a negative impact on cash flow of about $10 million in Q2.
Eric Walter: There's quite a few takes on that front.
Eric Walter: but just interested on that. Yeah.
Speaker Change: Yeah, thanks Jerry. Yeah, for the second quarter the free cash flow performance was really a function of timing and some one-time items.
Speaker Change: We had a prepaid purchase of explosives to secure our supply within Dyna. There was the timing of some customer advances in the Novoclad business moving from Q2 into Q3.
Speaker Change: And then we had some higher cash taxes in the quarter, and when you add all of those up, that had an impact, a negative impact, cash flow of about $10 million in Q2.
Eric Walter: So going forward, to answer the second part of your question, we think that there's an opportunity to take some networking capital out of the DINAH business, given where we think activity levels will materialize in the second half of the year, and also the opportunity to sharpen our pencils also at Arcadia. So we're looking to be finishing the year with a debt position of, call it, $65 to $70 million and using the cash flow we generate in the second half of the year to continue to pay down and deliver that debt. So we feel good about where we're gonna be going, but we had some headwinds, unfortunately, in the second quarter that were once time in April.
Speaker Change: So, going forward, to answer the second part of your question,
Speaker Change: We think that there's an opportunity to take out
Speaker Change: The some some networking capital out of the Dinah business given where we think activity levels will materialize in the second half of the year
Speaker Change: And also the opportunity to sharpen our pencil also at Arcadia.
Speaker Change: We're looking to be finishing the year with a debt position of, call it, $65 to $70 million and using the cash flow we generate in the second half of the year to continue to pay down.
Speaker Change: and Delever that debt. So we feel good about where we're going to be going, but had some headwinds, unfortunately, in the second quarter that were one-time in nature.
Gerard Sweeney: Got it, okay. I'm gonna jump back in the queue, thanks.
Speaker Change: Got it, okay. I'm gonna jump back in queue, thanks.
Operator: The next question is from Stephen Gengaro from Stiefel.
Speaker Change: The next question is from Stephen Gengaro from Stiefel. Please go ahead.
Stephen Gengaro: Thanks. Good afternoon, everybody.
Steven Gingaro: Thanks. Good afternoon, everybody.
Michael Kuta: So, two things for me. The first is, can you talk about the Dyna Energetics business a bit more and just kind of the, A, competitive landscape and what you're seeing kind of from potential growth of that business relative to kind of completion activity, whether it's market share or completion intensity? How should we be thinking about that as we look at the next couple quarters?
Steven Gingaro: So, two things for me, the first, can you talk about the Dyna Energetics business a bit more and just kind of the, A, the competitive landscape and what you're seeing kind of from
Speaker Change: potential growth of that business relative to kind of completion activity whether it's market share or completion intensity. How should we be thinking about that as we as we look at the next couple course?
Michael Kuta: Yeah, I think generally we'll move with the market. When you think about sequentially Q2 versus Q1, when you look at completions, rig count, or frac spreads, those were generally down in the 4% range, which tracked Dyna NAM performance. So I think that's probably the way to look at it.
Speaker Change: Yeah, I think generally we'll move...
Speaker Change: with the market, when you think about sequentially Q2 versus Q1, when you look at, whether you look at completions, rig count, or frac spreads.
Speaker Change: Those were generally down in the 4% range, which tracked...
Speaker Change: Dinah Nam performance so I think that's probably the
Michael Kuta: And our guidance reflects that softness in Q3 and Dyna. I think the competitive dynamics are fairly steady, I would say, and pricing continues to be a challenge, but we've got quite a bit of, quite a few initiatives in place to offset these impacts, which are also reflected in our guidance. So the operational excellence initiatives we're working on, cost takeout, that's gonna continue into the second half of the year. And some of that on the product design side is gonna take hold in 2025.
Speaker Change: The way to look at it, and our guidance reflects that softness in Q3 and DINA, I think.
Speaker Change: I mean, the competitive dynamics are fairly steady, I would say, you know, and pricing continues to be a challenge, but, you know, we've got quite a bit of, quite a few initiatives in place.
Speaker Change: to offset these impacts and also reflect it in our guides.
Speaker Change: The top excellence initiatives we're working on, cost take out, that's going to continue into the second half of the year and
Speaker Change: Some of that on the product design side is going to take hold.
Michael Kuta: So, whatever the market's doing, we feel pretty good about controlling what we can control from a cost standpoint, as well as from a competitive standpoint in our differentiation that remains. So I think that's the way to think about it, Diane, as we move forward. Maybe the last thing I'd say is that we're seeing healthy international activity and we see a pickup, a bump in Q4. So, you know, we should exit the year pretty strong on the international front in Q4, which will offset some of the softness in North America.
Speaker Change: That remains so I think that's the way to think about Dynas we move forward. Maybe the last thing I'd say is that
Stephen Gengaro: Okay, that's helpful. I think the other question I have is just kind of around The Arcadia, the phone call option in Arcadia, and I think there's a little confusion out there, like people like to talk about whether it's like a snapshot in time, like in December, or whether this thing kind of rolls forward, and like, what's the timing on when a decision on either party's part has to be made? on the foot call option on Arcadian, and how does that mechanically work?
Speaker Change: Okay, that's helpful. And then, I think the other question I had was just kind of around...
Speaker Change: that whether it's like a snapshot in time like in December or whether this thing kind of rolls forward and but what's the timing on when a decision on on either party's part has to be made
Speaker Change: on the foot call option on Arcadian, and how does that mechanically work?
Michael Kuta: Yeah, so the foot call first becomes exercisable at the end of December of this year, but that does not mean that anyone is compelled to exercise us being, you know, exercising the call, or minority partners exercising the foot. So there, there, there's nothing that's compelling anybody to do that.
Speaker Change: Yes, so the foot call first becomes exercisable.
Speaker Change: at the end of December of this year. But that does not mean that anyone is compelled to exercise...
Speaker Change: us being, you know, exercising the call or a minority partner exercising the put. So there's nothing that's compelling anybody to do that.
Stephen Gengaro: But is it like a one-time event, or does it roll, like how long do you have to exercise? The option, how long, is it a day, a week, a year? How does that work?
Speaker Change: But is it like a one-time event, or does it roll, like how long do you have to exercise the option, is it a day, a week, a year, like how does that work?
Michael Kuta: It quite frankly continues on in perpetuity to the extent that neither party exercises the put or the call. Gotcha. OK, great.
Speaker Change: It quite frankly continues on in perpetuity to the extent that neither party exercises the put or the call.
Stephen Gengaro: Thanks, I'll get back in line. That's very helpful.
Speaker Change: Got you. Okay, great. Thanks. I'll get back in line. That's very helpful.
Operator: As a reminder, it is star number one to ask a question. The next question is from Ken Newman from Key Bank Capital Markets. Please go ahead.
Stephen: Thank you, Stephen.
Speaker Change: As a reminder, it is star 1 to ask a question.
Ken Newman: Hey Ken, I have a question. Hey. You know, I guess I'll start with Arcadia.
Speaker Change: Hey guys.
Ken: Hey Ken, I've got a question. Hey.
Michael Kuta: You know, obviously, the market's still pretty weak. It looks like you're expecting revenue down sequentially here from the second quarter. I know you're not ready to give, you know, fourth-quarter guidance or anything, but I'm curious about what the customers are kind of saying in terms of longer-term visibility and how they're kind of thinking about stabilization or timing of stabilization within that market specifically.
Ken: I guess I'll start with Arcadia. Obviously, the market is still pretty weak. It looks like you're expecting revenue down sequentially here from second quarter.
Speaker Change: I know you're not ready to give, you know, fourth quarter guidance or anything, but I'm curious about what the customers are kind of saying in terms of longer term visibility and how they're kind of thinking about stabilization or timing of stabilization within that market specifically.
Michael Kuta: I think that we've got a couple of core, I mean, just looking at the indicators out there and that we all look at, whether it's ABI in the West at 43 spot number one, or the Dodge Momentum Index, which, you know, points towards some favorable end markets but, you know, once again, driven by, you know, very kind of specific markets like data centers, and non-residency start. So, I mean, you see all the same data that we do from a customer perspective. I think we're seeing, you know, it's going to be soft markets for a couple of for a couple of quarters here as we go out into the year. I think that it is good.
Speaker Change: I think that we've got a couple of core, I mean just looking at the indicators out there and that we all look at whether it's ABI in the West at 43 spot 1 or the Dodge Momentum Index which you know points towards some
Speaker Change: Non-resident start so I mean you see all the same data that we do, you know from a customer perspective. I think we're seeing
Michael Kuta: And in particular, when you look at our Q2, you know, we're pretty resilient. We're seeing, you know, obviously our exposure to diverse end markets, our bookings are relatively, you know, consistent, and voting activity has been good. But, you know, there are, you know, folks citing interest rates that are pushing projects out. So, look, I think. I think we've got a couple more quarters of softness, but I do think our guidance, you know, we guided in Q2, 64 to 68; Q3 is another 64 to 68 because that's sort of what the market's serving up.
Speaker Change: And in particular when you look at our Q2, you know, we're pretty resilient, you know.
Michael Kuta: What we're doing, though, and what we're talking about improving our operational effectiveness, is really driving profitability and EBITDA at the bottom line and driving cash flow. And I think, and I feel confident that we're going to do that the remainder of this year, whatever the market serves up.
Michael Kuta: That's, that's helpful. I guess as a follow-on to that, I mean, with the cost, the cost out in place for Arcadia. I mean, is there a way that we should think about normalized operating leverage as the volumes stabilize? Obviously, I know it's going to be very dependent on what the volumes do, but how do we think about, you know, incremental or decremental margins with this new cost platform that you're on?
Michael Kuta: Yeah, incremental and decrements are, you know, material margin is probably in the, you know, call it, um, 45-ish percent range, and then you know and then when you think about, you know what? It's not a high fixed cost business. There's a larger labor component. So I think incremental or decremental margins are probably between, you know, call it 35 and 40%. Eric, would you concur with that? Yeah. But the incremental, I'm sorry Ken, just real quick, the incremental and decrementals just aren't, they're not significantly higher than our gross margin percent and that call it 33% range, right?
Speaker Change: But the incremental, I'm sorry Ken, just real quick, the incremental and decrementals just aren't, they're not significantly higher than our gross margin percent and that call it 33% range, right? Right.
Michael Kuta: Um, maybe one more if you squeeze it in. Um, you talked about some project mixed headwinds, I think, on Nobel CLAD. I know it's a smaller part of your business, but just, can you talk about how persistent that mixed headwind could be beyond this quarter as you think about the backlog of activity there? Yeah, so we see a
Ken: Right, okay.
Ken: Maybe one more, if you could squeeze it in. You talked about some project mixed headwinds, I think, on Nobel CLAD. I know it's a smaller part of your business, but just talk about how persistent that mixed headwind could be beyond this quarter as you think about the backlog of activity there.
Speaker Change: yeah so we see a dip
Michael Kuta: Yeah, so we see a dip in Q3, but a very strong Q4, and quite frankly, you know, not obviously providing guidance on 25, but pretty bullish on 25. And I think they're saying it's shaping up to be a really good year.
Speaker Change: in Q3, but a very strong Q4, and quite frankly, you know, not obviously providing guidance on 25, but pretty bullish on 25. And I think there are things shaping up that, you know, 25 be a really good year.
Speaker Change: Very helpful. Thanks, guys.
Operator: The next question is from Stephen Gengaro from Stiefel. Please go ahead.
Speaker Change: Thanks again.
Speaker Change: The next question is from Stephen Gengaro from Stiefel. Please go ahead.
Stephen Gengaro: Thanks. Just a quick follow-up, and honestly, Michael, I'm not sure you can comment on this, but I'll ask it. When you think about the structure of the company and what you're looking at doing with the dynasty, Yeah, I, Stephen, I would just,
Steven Gingaro: Thanks. Just a quick follow-up. Honestly, Michael, I'm not sure you can comment on this, but I'll ask you. When you think about the structure of the company and what you're looking at doing with the dynasty,
Michael Kuta: Yeah, Stephen, I would just say that we're in the throes of strategic alternatives. And, you know, there are a lot of a lot of a lot of things on the table. Okay. So a lot of different things that we're evaluating. Broad scope. Okay.
Speaker Change: Ok.
Stephen Gengaro: Any way to think about how you balance
Operator: Rephrase or clarify the question.
Speaker Change: Any way to think about how you balance...
Speaker Change: The, you know, maybe creating more of a pure play business versus valuation on pieces you might want to sell.
Speaker Change: and you
Stephen Gengaro: I guess the easier and more direct way to say it is would you take a lower price on something just to get rid of it to make a cleaner left, you know, a cleaner business that is left to run?
Speaker Change: I guess the easier I guess the more direct way to say is would you take a lower price on something just to get rid of it to make a cleaner left you know a cleaner business that is left to run
Speaker Change: Yeah, the viewpoint is, again, we're looking at a wide range of options to maximize shareholder value, and so that's maximizing shareholder value is the key. Gotcha.
Operator: Okay, I'll just... that makes sense. Thanks.
Operator: Bless you. Oh, yeah.
Speaker Change: Okay, I'll just... that makes sense. Thanks.
Michael Kuta: There are no further questions at this time. I would like to turn the floor back over to Michael Kuta, CEO, for closing comments.
Stephen: Thank you, Stephen.
Speaker Change: Thanks again for joining us today. We appreciate your interest in DMC and look forward to our next update. Take care.
Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.