DMC Global, Inc.

Boom, boom, boom, boom

This stock was dead on the ground

Good balance sheet

Ready for a pop

Says The Stock Pawnshop

Boom, boom, boom, boom

MMmm hmmm

Mm hmm hm hm

Last quarter wasn’t butt

Up off of its floor

IR talking to me

That bizness talk

We like it like that

They talk like that

Walk that walk

Equity cheap

Say Sleepy Pete

A haw haw haw haw

GO!

(Gravy Train’s solo)

Once they walk that walk

And talk that talk

Geothermal we heat

Tells us there’s a turn

We love that talk

When CEO talk like that

That bizness talk

Arcadia

Put option time

The Stock Pawnshop rhyme

Yeah, yeah!

DMC Global is a classic TSPS story. It has three distinct divisions: DynaEnergetics, NobleClad, and Arcadia Products. The businesses are cyclical. And….on September 6th, 2026 the minority holder of Arcadia products is entitled to exercise its put option. Most sell-side analysts would not want to cover this stock, unless of course he/she worked for DMC’s investment bank. Why? Because it requires more work and there are many other names to recommend on the long or short side. On the buy side, does anybody invest in $150 millionish value stocks anymore. Sleepy Pete does, as well as “off-the-run” bonds. Sleepy Pete also likes to listen to John Lee Hooker. Hence, we chose this classic tune.

Let’s start with the niche well completion solution to the global oil & gas industry. DynaEnergetics division perforates a well in a safe and efficient matter. Their system comes pre-assembled. An oilfield service worker simply inserts the wireless detonator and the kaboomzies let’s produce some juice. Most of the revenue comes from the Permian Basin, but things are starting to percolate. Fervo Energy, a geothermal company is working with DynaErgetics. Although not an oil & gas operator, this firm uses hydraulic fracturing and directional drilling to access hotter, deeper rock formations for more efficient power generation. Datacenters in Pennsylvania, Virginia, and Maryland all are going to demand power. Natural gas is the most logical fuel source. DynaEnergetics has set-up a shop in the Marcellus. With the prolonged war going on between Russia and Ukraine, Europe should jump on the “fracwagon”. If not, and assuming higher oil/gas prices for longer, the back drop for exports from the United States remains positive.

NobleClad is used in industrial infrastructure. These items are placed in tough operating environments. Think oil & gas, chemicals, minerals/mining, shipbuilding, defense, power, and transportation. This division has specialists in 15 countries around the world. Given the current administration, my guess is this division has a good shot at improving this year and next.

Arcadia’s commercial architectural products provide exterior framing systems, windows, curtain walls, and doors for casinos, health care, higher education, and other facilities. Arcadia also has a high end retail line that caters to uber homes, like the ones burned down in the Palisades fire. This business has been challenged as reflected by the American Institute of Architects’ Architectural Billings Index, which has gone a record 41 consectutive months without reporting growth. Despite this backdrop, Arcadia reported 9% yr-over-yr and 19% sequential sales growth in the June quarter. EBITDA (adjusted) grew 36% yr-over-yr and 135% sequentially due to increased revenue and improved fixed cost absorption. It’s important to note that aluminum prices are up 79% yr-over-yr and 11% sequentially.

The Arcadia Put/Call Provision

September 6th is the date that Arcadia’s minority shareholder, Munera, can excercise its put option. How does this work? Think of it as Josey Graves and Sleepy Pete owning a condo in Borneo. Josey owns 60% and Sleepy Pete owns 40%. Josey has the right to say: “I want to buy your 40%”. Sleepy Pete has the right to say: “You have to buy my 40%. CEO James O’Leary said on the last conference call that he does not know whether Munera will actually excerise the put or remain in the joint venture. As of the latest filing, the floor for 100% of Arcadia is $467.7 million, meaning the floor attributed to Munera’s 40% is approximately $187.1 million. Attention Stock Pawnshop fans….that’s larger than the entire market cap of our lil BOOMer.

So what would The Stock Pawnshop pay for this stock. We think things are getting better on the margin. If we say book value is going to approach $12 per share. Buying under $8 per share, leaves 50% ish upside. Not too shabby. But if the mining and oil & gas sector take off as well as further GDP improvement then this dog will hunt.