Greetings, and welcome to the Dynamic Materials Corporation 2013 First Quarter Conference Call. At this time, all participants are in a listen-only-mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Geoff High, with Pfeiffer High Investor Relations. Thank you. Mr. High, you may begin.

Thank you, Manny. Good afternoon, and welcome to Dynamic Materials’ first quarter conference call. Presenting on behalf of the company will be President and CEO, Kevin Longe; and Senior Vice President and Chief Financial Officer, Rick Santa. I’d like to remind everyone that matters discussed during this call may include forward-looking statements that are based on management’s estimates, projections, and assumptions as of today’s date and are subject to risks and uncertainties that are disclosed in Dynamic Materials filings with the Securities and Exchange Commission. The company’s business is subject to certain risks that could cause actual results to differ materially from those anticipated in its forward-looking statements. Dynamic Materials assumes no obligation to update forward-looking statements that become untrue because of subsequent events. A replay of today’s call will be available at dynamicmaterials.com after the call. In addition, a telephone replay will be made available beginning approximately two hours after the conclusion of this call. Details for listening to today’s replay or webcast are available in today’s news release. And with that, I will now turn the call over to Kevin.

Thanks Geoff, and good afternoon everyone. Our first quarter performance was largely as expected from a financial perspective with revenue and gross margin both coming in at the high end of our forecast range. Rick will discuss our financial results in more detail in a few minutes. From an operational perspective, each of our businesses made important progress addressing their near-term performance objectives. In recent quarters, we have discussed some of the large infrastructure projects our Nobleclad team has been pursuing. And at the end of Q1, one of those projects resulted in a sizable contract. The order comes out of the broader chemical industry and calls for clad plates that will be used in the fabrication and crystallization vessels and evaporating equipment at a potash project in Saskatchewan, Canada. The order is valued at $7.4 million, and was included in our March 31st quarter backlog. After the quarter, we received a second major order which came out of the oil and gas industry. The project involves plates that will be used in upstream equipment at the Wheatstone natural gas project in Australia. The order is valued at more than $6 million and was entered into our backlog after the close of the quarter. The key factor in winning these contracts was Nobleclad’s ability to produce large volumes under very tight delivery schedules. This speaks to some of our key competitive strengths as we do not believe any other business in the cladding industry could have met these aggressive delivery requirements. At DYNAenergetics, our new shaped charge plant in Blum, Texas is nearly complete, and we expect to commence production early in the third quarter. Construction on our plant in Siberia is also progressing, and we are on pace to meet our targeted start-up date in Q2 of 2014. We…

Thanks Kevin. And good afternoon everyone. We posted sales during the first quarter of $46.3 million, which was down 7.9% from the first quarter last year. You will recall we have previously forecasted a year-over-year sale decline of 7% to 10%. Gross margin came in at 28% versus 29% in last year’s first quarter. We reported an operating loss of $1.1 million versus operating income of $4.1 million in the first quarter a year ago. As I mentioned during the last call, our first quarter operating results reflect $3 million of non-recurring expenses associated with management retirements. We reported first quarter net income of $215,000 or $0.02 per share versus net income of $2.4 million or $0.18 per share in the 2012 first quarter. This year’s net income figure reflects a tax benefit of approximately $1.2 million, $908,000 of which related to recently enacted Federal Legislation that was applicable for 2012, but couldn’t be recognized until this year. Adjusted EBITDA was $3.3 million versus $8.1 million in the first quarter of last year. Cash flow from operating activities was $6.3 million versus $6.7 million during the first quarter of last year. Looking at expenses, G&A was $8.1 million versus $4.5 million in the first quarter of last year, of course $3 million of the increase was related to retirement expenses with the balance coming from higher professional service fees, increased salaries, and other expenses. Selling and distribution costs decreased 3% to $4.1 million. Total first quarter SG&A was $12.2 million, which was below our forecasted $12.5 million. Excluding non-recurring retirement expenses, SG&A was $9.2 million. Amortization of purchased intangible assets during the first quarter was $1.6 million. With respect to guidance, we’re maintaining our previous full-year sales forecast which calls for a topline increase of 8% to 10% from sales of $201.6 million reported in 2012. Gross margin is still expected in a range of 27% to 29%. We have revised to anticipated full-year blended effective tax rate to 21% to 23%, up slightly from the prior forecast of 20% to 22%. Excluding the impact of the first quarter tax benefit, the anticipated blended effective rate is 26% to 28%. For the second quarter, we expect sales will increase by 11% to 14% versus sales of $48.7 million in the second quarter of last year. We anticipate gross margin will be in a range of 27% to 29%. Second quarter SG&A expense should return to a normalized quarterly level of approximately $9.5 million, and second quarter amortization expense should be approximately $1.6 million. Interest expense for the quarter is expected to be roughly $200,000. With that, we’re now ready to take any questions. Manny?

Thank you. (Operator Instructions). Our first question is from Edward Marshall of Sidoti & Company. Please go ahead. Edward Marshall - Sidoti & Company: Good morning, Kevin, Rick, and Geoff.

Yeah, hi, Ed, how’re you doing today? Edward Marshall - Sidoti & Company: You can assure I’m not going to be pronouncing any provinces in Canada for sure.

Saskatchewan.

(Inaudible) and Ontario are pretty easy.

And should have just said Canada. Edward Marshall - Sidoti & Company: Rick, how you do spell that? Okay. The $3 million charge in the quarter, what was the exact amount Rick, if you have that handy?

$2.965 million Edward Marshall - Sidoti & Company: And what should I use,– is 35% tax rate, the right rate to use if I wanted that to back that out…?

That’s a good question. We can only report one net income and one earnings per share number, but certainly that expense relates to the U.S. Edward Marshall - Sidoti & Company: All right.

Which out of our jurisdictions does have a higher tax rate than the foreign tax jurisdictions where we operate. Edward Marshall - Sidoti & Company: Okay. So if I think about the balance of the year SG&A trends, is $9 million a pretty good run rate for the remainder of the year or do you -- what are the puts and takes to SG&A?

Yeah, the variations can be incentive compensation, which is tied to operating results, professional service fees which relates to legal, it can relate to some business development, consulting expenses, T&E can vary a little bit. So, we suggested approximately $9.5 million, and it can be a little bit less than that in some quarters and perhaps a little bit greater in others. Edward Marshall - Sidoti & Company: And you gave some pretty good color, I think, on contracts and that’s always helpful, I’m curious about the quoting activity, I mean we have talked quite about -- quite a bit about it over the prior few quarters, and it’s good to see the contracts finally land. I’m curious if the quoting activity remains as robust or if these were just two contracts that we were talking about for some time, and therefore the quoting activity kind of dried up.

I think the quoting activity is moderate, not necessarily robust, and we’re expecting the second half of the year to be a little bit weaker in Europe, but we still remain quite optimistic that the global energy and chemical industries are pretty active and that some of the broader international projects that we’re looking at are still on the horizon, it’s just timing is very difficult for us to predict. Edward Marshall - Sidoti & Company: This is going to sound like an odd question, I do know my geography, but when you say quoting activity in Europe, do you also include Middle East in that activity in Europe as we progress?

Yeah, yeah the Middle East is part of the sales region for our two European cladding operations, and from the U.S., we recover Asia, Australia, and South America. Edward Marshall - Sidoti & Company: Okay. And then finally as we look at guidance for 2Q 2013, in the sales guidance, to get there, it looks like you have pretty meaningful advances in both if not all three business segments, what are the puts and takes to the revenue guidance as we look at each individual segment, I mean is one expected to be better than the others or are they all supposed to go up by the same around?

I think relatively speaking, we expect the perforating oilfields product business to have somewhat stronger growth in our (inaudible) welding business.

In mid part to that in 2012, the Indian tender, which is 2.5 million to just over 3 million this year was in last year’s first quarter, and we expect that to go in the second quarter. At the same time, they’re making good progresses in operating units in terms of solidifying their everyday business. So, we would expect yeah, DYNAenergetics to be up a little bit higher and clad to have a good quarter.

AMK Welding the smaller business segment, it’ll have modest improvement in the second quarter from the relatively slow first quarter and then it appears a much better second half of the year.

The next question is from Avinash Kant of D.A. Davidson. Please go ahead.

So, a few things like I couldn’t reconcile actually, so when you talk about the $1.2 million tax benefit in the quarter, that was roughly $0.09 I believe in the quarter right, but this full-year tax rate that you’re talking about 26% to 28%, that is excluding that right?

That is excluding the $908,000, not the full $1.2 million, because part of the $1.2 million is applying that 26%, roughly the 26% to 28% tax rate to the quarterly pretax loss and then adding to that number the $908,000.

So, maybe if I were to ask, excluding that $1.2 million, what was the tax rate in the quarter?

I think it came out like 27.5% within that 26% to 28% range. So, as you look at the rest of the year and I did personally look at Q3 or Q4, but looking at Q2, Q2 would fall in that 26% to 28% range based on our current forecast. So, I’d expect each of the remaining quarters would be not too far out of that 26% to 28% range, which at the end of the day after factoring in the credit would give the full – yield a full-year rate of 21% to 23%.

Right. So, if you were trying to back out the $3 million of the management retirement, the tax rate to be applied on that, should it be 27% or --?

Yeah. That’s a…

25%--?

That was kind of a question that Edward was asking.

Right.

And under our rules, we can disclose one net income amount and one effective tax rate, and I guess you can kind of decide how you want to deal with tax affecting that $3 million or $2.955 million charge, one way would be to use that 26% to 28% range, the other would be to use a rate that is closer to the…

The U.S. tax rate.

U.S. tax rate.

So, your US tax rates are 35%?

I believe that that’s is the top tax rate right now, I don't know that that’s our effective rate for the full year, you know giving some of the tax credits that maybe available.

Okay, okay. And if you talk about the next quarter at least in revenue terms , there seems to be little bit of an upside here, but you’re not changing the full year, is it primarily because you’re kind to filling the year in or how do you see the bookings trend going forward?

Right. We’re still confident in, in our current projection for the balance of the year. We didn’t change it primarily, because the large quarter that we have in our backlog in the first quarter we anticipated, and so we’re holding our guidance.

Okay. So, with another larger order now, $6 million in the bookings in the second quarter, should we expect bookings to move up sequentially then?

That’s a tough question. We don't provide a booking forecast, and we don't provide a forecast of the backlog because the backlog at a given point in time at the end of the given quarter, I mean, is certainly affected by the timing of these larger orders. So, if $6 million have been booked in March rather than April, it would have made things look different on March 31st. So, I guess we’re very comfortable with the full-year sales guidance increase of 8% to 10%.

Okay, okay. And did I hear it right or maybe I didn’t hear it correctly that you said Oilfields business this year will be compatible to last year or up from last year?

I said that it grows relative to exposure in welding would be higher. It would be a higher growth rate.

On the full-year basis?

On the full-year basis, yeah.

Okay. And any seasonality there?

Yes, there is seasonality in a couple of regions, there's seasonality in Canada, but the sales in Canada aren’t that large a percentage of the consolidated whole. So, there has been a kind of slow period in the spring when the snow melts and the equipment cannot get into the oilfields, and then the same thing occurs in the fall, and then there's some seasonality to the business in Siberia and Russia as well, but that seems to be moderated by the impact of things like the Indian tender order. Canadian sales slowdown in Q2, but this year, we have the Indian tender order that will offset some of that decline. So, on the average, there is not a big seasonality affect to oilfield products business.

So, if you were to look at the facility in Texas in terms of how much capacity do you get in revenue terms from that facility and are you -- is it more of a question of you having the supply versus the demand?

Near term, it’s a supply issue. We have built up quite in inventory of shaped charges in the US prior to commissioning of this facility. And once the facility comes on stream, you’ll see that inventory and working capital come into line. And on a longer-term basis, in addition to giving us redundancy and additional capacity, it will enable us to be much more responsive to customers. And so, we expect longer term a revenue increase, but near term it is really supply and a cost issue.

So, in terms of the supply, how much additional supply can you gain in revenue terms from the Texas facility once running in a steady state?

I don't think, I don't think we are ready to disclose that at this point in time.

Thank you. The next question is from Gerry Sweeney of Boenning & Scattergood. Please go ahead. Gerry Sweeney - Boenning & Scattergood: I Just wanted to stay Oilfields services for a second - I would like to, I was sort of pleasantly surprised I mean the conventional wisdom was that North America would be slow out of the gate in the first half this year and then accelerating, that’s probably more on the unconventional side and it seemed like you had a pretty good quarter even without the India tender. I mean, my general thought process was that this was going to accelerate throughout the rest of the year, but I mean are you guys, are you pleasantly surprised to the way things have setup so far in Q1?

I think they're pretty much as we anticipated. We were somewhat of our own worst enemy in the last part of 2012 and I think we corrected some of our operational issues that are allowing us to participate in the market at the level that are our sales team and customers are allowing. And so, the rig count is fairly constant. We’re not expecting a big change there but we do see a tick up in completions and in the number of stages and that’s helping the business somewhat but I think the real issue is that we’re better organized and we’ve got a better management team and we’re just seeing better operating performance from that team. Gerry Sweeney - Boenning & Scattergood: And on that note I was looking at inventory working capital, I think the tick down in the quarter and I know you’re mentioning like as the new plants come on, we’re going to see some of that come a little bit more in line but I mean, with some of that inventory and control in working capital controls, was that planned in terms that was another looks like it was positive cash flow per quarter was not authorized here despite some of the transition charges.

It very much so was planned and quite frankly had the Indian tender shipped in the first quarter that inventory would have dropped even more dramatically. The majority of that product is already produced and we don't expect to replace that when it ships and so that’s in line with our thinking that we need to as a company get our working capital in line and definitely increase our inventory turns in that business. Gerry Sweeney - Boenning & Scattergood: Yeah. Are you targeting any certain level of inventory I know it’s sort of a moving target with sales but any thoughts on that?

We are, and we’re kind of, quite frankly the goal for this year is a moderate goal and we expect to improve upon it even more so next year. We’re kind to walking before we run but the inventory issue is, is closely related to product management and how we serve our customers, our goal is to get our inventory down and improve our service levels to our customers. And so it’s all about having the right inventory. Gerry Sweeney - Boenning & Scattergood: Yeah.

And so it’s a little bit more complex than stopping producing but we’re trying to stop producing the wrong thing. Gerry Sweeney - Boenning & Scattergood: I don’t know now I mean with what’s 14 distribution centers making sure the right product is in the right spot and sort of streamlining and optimizing that the distribution channels and just getting that under control i.e., like some to spend on the IT and financial reporting.

Yes. And really helping the business, our businesses to better understand and have the right tools so that they can manage their business effectively, and really we’re putting the focus on free cash flow and generating free cash going forward. As well as improving our return on invested capital. Gerry Sweeney - Boenning & Scattergood: Switching gears real quick, just to the explosion metal working side, you did mention that the timing of these projects is what sort of separated you from the rest of the pack. It seems in today’s economy things or everyone is a little bit more hesitant to spend, is timing going to become more of an issue going forward, getting product to market or is it just related to these two projects.

Gerry Sweeney - Boenning & Scattergood: In the cycle or the planning process, right?

…but then on the other hand, if we had them earlier, it takes away a competitive advantage that we have. Gerry Sweeney - Boenning & Scattergood: Okay. So some of the global uncertainty in other words is creating a little bit of a competitive advantage because it’s plan, plan, plan and then companies pull the trigger at the last minute on the CapEx side and then it’s a rush to pick up the project up and going?

Yeah, one of these two orders that we discussed was competing against [Robond] [ph]. And [Robond] [ph] could not deliver, [Robond] [ph] got a good chunk of the order but we got a good chunk of the order too because we could turn a portion of the order around very quickly and they could get started on the fabrication of some of the equipment sooner than what would otherwise been the case. Gerry Sweeney - Boenning & Scattergood: Got it. And then, finally, just real quick I know this is longer term, but Asia obviously an opportunity for you, but the headlines talking maybe some slowdown in that region; you do have some offices down there even though it’s not a large part of your revenue right now. But any thoughts on how that market continues to develop?

We’ve got a very effective team in Korea and there continues to be a lot of large fabrication and project work out at Korea. And in March we received our license in China and we are currently outfitting an office in Shanghai, which will open in May and the Nobelclad team is already added an experienced sales manager and salesmen in China that will be starting in May. We are really playing for the long term in Asia and even though there may be somewhat of a slowdown, it’s still robust compared to other parts of the world.

The next question is from Dan Whalen from Topeka Capital Markets. Dan Whalen – Topeka Capital Markets: A couple of related questions to prior questions. In terms of the - not to quantify or anything, but in terms of the new Texas facility, is their launch baked into the full-year guidance or is that kind of just added cushion in terms of potential revenue from that in the second half?

It really is not factored into the full-year guidance and I think that if we weren’t sitting on so much inventory I probably would factor it into the guidance. But really the objective of that group this year is to get the inventory down and be demand constrained going forward. They are not demand constrained right now. Dan Whalen – Topeka Capital Markets: All right. So, potentially a little weaker going in to the upside of the range is what Texas kind of…

Yeah. Dan Whalen – Topeka Capital Markets: Great, and then certainly it sounds like you are making some good headway in terms of inventories, working capital and things of that nature. Down the road acquisitions is certainly a process, due diligence and things of that nature. What’s kind of the pipeline so to speak look like? What are you guys kind of seeing out there in the marketplace in terms of opportunities?

Well, there is two aspects to it. I guess we have not been as active in the marketplace as we will be going forward. And we are asking each our operating companies today to focus on operational excellence and really our goal is to get better before we get bigger and so we are keeping the team really focused on the near-term and we are developing a strategy if you will that they will be contributing to a pipeline of potential opportunities more from a bolt-on standpoint and from a corporate level myself and Rick Santa will be working on more of the platform type businesses. It’s taking a small percentage of our time right now, but it will take an increasing percentage of our time as we have fewer difficulties on the executing side of it. And that will pick-up more towards the end of the year and into next year. Dan Whalen – Topeka Capital Markets: And just so I understood your prior commentary, correct me, I mean just taking the first quarter out of the equation here, the way we should be looking out the tax rate for the second through fourth quarters is kind of the 26%, 28% tax rate for that…

Yeah, now averaging the next three quarters it should be in that range. We might have one quarter that falls little bit outside, but for modeling purposes I’d just use that range. Dan Whalen – Topeka Capital Markets: So, for quarters 2Q through 4Q just use that range.

That should work. Dan Whalen – Topeka Capital Markets: Okay, very helpful. Okay. Thanks a lot. I appreciate it.

(Operator Instructions) The next question is from Phil Gibbs of KeyBanc Capital Markets. Phil Gibbs – KeyBanc Capital Markets: I didn’t hear Yvon, am I on the right call? Is he feeling okay?

The quality of food went down too. Phil Gibbs – KeyBanc Capital Markets: I just had a couple of questions. Are you seeing a lot of re-quoting on a lot of the projects that you are winning just because of the commodity pricing volatility right now, is that a factor?

We usually quote with the index, and our timeframe, and so we are not, I don’t think we are seeing any appreciable change in that.

Yeah, in some of these big projects, we might quote a dozen times. But when comes down to quoting or when an actual purchased ore is above delivered we are again going to the market, we are getting firm fixed price quotes from our suppliers and we are using that for the final quotes to our customer. So, we are not really required to do that right at the end of the process.

That’s principally Nobelclad. Phil Gibbs – KeyBanc Capital Markets: Right, okay. And am I right on this Kevin with the Blum, Texas project coming online in the third quarter that you are looking at that as more of an execution in the very short-term and any margin or sales benefits we should be allocating to 14.

Yes. Phil Gibbs – KeyBanc Capital Markets: Okay. Any sort of quantification you could give or anything qualitatively you could give on the inventory position and how heavy that you feel like that you are at an oilfield?

I definitely believe that we can, much as I fully understand your question, but we think that we can reduce inventories by 20% to 25% over the course of the few quarters.

The near term.

And the local manufacturing in North America and Russia will help with that. Phil Gibbs – KeyBanc Capital Markets: Okay.

You can imagine if the plant in Germany is producing for Russia and producing for North America in that it has to also fulfill $3.2 million tender offer there is some long lead times involved that you can’t do just in time production. Phil Gibbs – KeyBanc Capital Markets: I was just curious if you had any targets?

We do. I mean ideally we are trying to get, as Rick is saying 25%, actually close to 30% down this year. And quite frankly hopefully by this time next year by half. Phil Gibbs – KeyBanc Capital Markets: Okay. That’s certainly very helpful. I think those are the main ones and then I got my usual segment gross margin question.

Okay. I will start with the good numbers first. Oilfield products versus - 37.3% in the first quarter of 2013 versus 33.5% in the first quarter of 2012. And for the cladding we were at 22.5% in the first quarter of 2013 versus 26.2% in the first quarter of 2012. Phil Gibbs – KeyBanc Capital Markets: That's very mix dependent, right?

It really is. Just as an example, the first quarter of last year we shipped - a large portion of the U.S. shipment related to our sweet spot, U.S. work, explosion clad, no competition, whereas more of the first quarter this year involved shipments to Asia where we typically have more competition and the margins are lower because of some of the shipping costs associated with those orders versus the competitors. And then AMK, AMK had a tough quarter with its low sales. It had a negative gross margin of 6.7% versus 11.3% positive gross margin in 2012. Phil Gibbs – KeyBanc Capital Markets: Okay. And then, would you characterize the margins in your explosive metal work being probably more like the lower end of kind of what the normalized range would be for you guys right now? It looks like last year was close to 27, the year before that a little less, Rich, obviously 22 but somewhere kind of in the middle as far as the range?

Yeah, we are expecting a little bit lower gross margin this year than what we enjoyed last year but hopefully it will be equal to or a little bit better as we move through each of the next three quarters than the 22.5% that we enjoyed in Q1. Phil Gibbs – KeyBanc Capital Markets: Okay, and it looks like --

We didn’t enjoy that, we reported in Q1, excuse me. Phil Gibbs – KeyBanc Capital Markets: Correct, yeah. Two quarters in a row now over 37% in oilfield that's pretty strong. Is that something that you're looking to hold or I mean, is that something that's mix dependent as well or you get accretion on that?

It's a little bit mix dependent, and another dynamic is if we're bringing inventory down and that inventory involved inter-company purchases we get to recognize the rest of the profits, we get to recognize the profits that was deferred on the sale from the German parent or the sister companies in the U.S. and Russia, and that gives us some additional boost on the gross margin front; by bringing us (inaudible) plus in the first quarter of last year we had a 33.5% which included lower margin Indian tender order. So that's an example where the second quarter the Indian tender will put a little bit of downward pressure on the gross margin that we report for oilfield products so there is a little bit of mix there. But we would like to think that we can sustain gross margins about what we reported for all of the last two years in oilfield products. Phil Gibbs – KeyBanc Capital Markets: Okay. And just last one, maybe I should I have started with this. Very high level, now relative to maybe 3 or 4 months ago what have you seen as far as the big changes, not necessarily in your business but globally as you go and talk to customers? Thanks.

I think that we are all waiting for that pickup in the chemical and process industry infrastructure to happen. So I think that’s still kind of where our guidance in that regard is moderate. And we are seeing fairly healthy activity in the oil field products. And so we are encouraged by what we see there. And I think on our AMK businesses it operationally is where we need to improve in order to build that business back to what it should be. And so one is market, I think our management is executing well in our oilfield products area and they will be executing better in our AMK welding business in the near future.

The execution is for the most part excellent with the Nobelclad business we just need more business.

And customers are very optimistic in AMK and I think in the oilfield products we’re hearing good things. And again we are just being cautious on the timing of the projects that we are working on on the Nobelclad part of it.

We have no further questions in queue at this time. I would like to turn the floor back to over to Mr. Longe for any closing remarks.

Okay. Thank you again for joining us today every one, we are encouraged by the operational achievements that we made year-to-date and we do believe they will position us for long range success and improved shareholder value. We look forward to speaking with you again after the second quarter. So take care.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for participation.