Geoff High - Director of Investor Relations Kevin Longe - President and Chief Executive Officer Michael Kuta - Chief Financial Officer.

Edward Marshall - Sidoti & Company Gerry Sweeney - Roth Capital Partners Robert Connors - Stifel, Nicolaus & Co., Inc. Gregory Macosko - Montrose Advisors James Brilliant - Century Management.

Greetings, and welcome to the Dynamic Materials Corporation 2015 Third 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 for today, Mr. Geoff High, Director of Investor Relations. Mr. High, the floor is yours sir..

Good afternoon and welcome to DMC’s third quarter conference call. Presenting on behalf of the company will be President and CEO, Kevin Longe; and Chief Financial Officer, Mike Kuta.

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 our filings with the SEC.

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. DMC assumes no obligation to update forward-looking statements that become untrue because of subsequent events.

A webcast replay of today’s call will be available at dmcglobal.com after the call. In addition, a telephone replay will be made available approximately two hours after the call. Details for listening to the replay are available in today’s news release. With that, I’ll turn the call over to Kevin Longe.

Kevin?.

Thanks, Geoff, and good afternoon everyone. Our third quarter sales of $39.5 million were off 24% from last year’s third quarter or 17% if you exclude the impact of foreign currency translation. Much of this decline was due to the steep drop in capital spending within the global oil and gas markets.

Sales at DynaEnergetics, oil field products business, were $18.2 million, down 36% versus last year’s third quarter or 30% if you exclude the effect of foreign currency translation. Sales in North America, which is DynaEnergetics’ largest market, were down 22% versus the year ago third quarter.

Most energy service companies are reporting year-over-year revenue declines in North America of 50% or more.

Continued unit sales growth of our advanced DynaSelect switch detonator, which is being used primarily in North America’s unconventional oil and gas fields, has helped to mitigate the impact at much lower well completion activity in the United States and Canada.

For the year-to-date period, unit sales of DynaSelect were up 4% versus the first nine months of 2014. Third quarter sales at our NobelClad business were $21.3 million, down 10% from last year’s third quarter or 2% if you exclude foreign currency translation.

NobelClad sales were below our original expectations due in part to the timing of shipments that were impacted by a strike at a primary metals supplier. We also experienced delays in the receipt of certain anticipated orders which are now expected during the fourth quarter and into 2016.

NobelClad did report its strongest bookings since the second quarter of 2014, and also saw 11% sequential improvement in its order backlog. Orders were primarily from the downstream oil and gas and petrochemical markets and included one of the two large chemical projects we’ve referenced in our last call.

Consolidated gross margin for the third quarter was 26% versus 29% in last year’s third quarter. The decline resulted from a less favorable product mix and the impact of lower sales volume on fixed overhead costs. Third quarter gross margin at DynaEnergetics was 32% and 21% at NobelClad.

Excluding restructuring costs, we reported a third quarter operating loss of $656,000. Approximately $338,000 of the loss was bad debt expense, primarily at DynaEnergetics. Loss from continuing operations, excluding restructuring cost, was $4 million, or $0.29 per diluted share.

This included other expense of approximately $1.5 million, which was related to unrealized foreign currency transaction losses. At the business level, DynaEnergetics reported a third quarter operating loss of $655,000, which included $237,000 in restructuring expense.

NobelClad reported operating income of $1.7 million, which included $48,000 in restructuring expense. Consolidated third quarter adjusted EBITDA was $2.5 million. DynaEnergetics reported adjusted EBITDA of $1.1 million, while NobelClad reported $2.7 million.

Shortly after the close of the third quarter, DynaEnergetics entered into a Principal Partner agreement with Weatherford International for the commercialization of our new factory-assembled DynaStage perforating system.

Weatherford is aggressively expanding its presence in the North American completions market and has adopted DynaStage as a key tool for helping customers drive down costs, while improving safety and operating efficiencies at the wellhead.

DynaEnergetics and Weatherford already have performed product demonstrations for some of the world’s leading exploration and production companies and these presentations will continue across Weatherford’s North America service territory.

Initial interest in this system has been encouraging and Weatherford is currently responding to several requests for proposals. This marketing process also is expanding interest in DynaEnergetics’ product portfolio of perforating products.

DynaEnergetics is in discussions with several other large oilfield service companies interested in deploying the DynaStage system. The success of DynaEnergetics’ new technologies has helped [run the full course] of the downturn in the oil and gas sector. However, the business has not been immune to the very difficult conditions in the industry.

Customer spending deteriorated beyond our expectations during the latter stages of the third quarter and based on customer indications and the continued decline of the US rig count, it appears limited drilling and completion activity will persist well into 2016.

We have taken steps to further streamline operations and align our cost structures with market demand. DynaEnergetics has reduced the headcount at its headquarters in Troisdorf, Germany and instituted a shortened workweek at its German production facility.

It has also consolidated an additional distribution facility in Texas and it eliminated shifts at both of its US manufacturing sites. While we will evaluate additional cost control measures and consolidation opportunities going forward, we do not intend to alter the fundamental structure of the company.

We’re firmly committed to the strategy we have been executing during the past two years and believe our investments in new products, technologies, customer support and market development have significantly strengthened both of our businesses.

DynaEnergetics, which has always offered outstanding technologies, but historically had only limited upper-market exposure, has established partnerships and customer relationships with many of the leading service companies and operators in its industry.

NobelClad has strengthened its relationships with the world’s top industrial companies and engineers are increasingly specifying our clad plates for their processing equipment.

We are confident our strategy and investments at division DynaEnergetics and NobelClad to emerge from the downturn as much stronger businesses that are poised to outperform their peers. In the meantime, we will maintain a sharp focus on cost containment and free cash flow generation.

With that, I’ll turn things over to Mike for some additional detail on our financial results.

Mike?.

Thanks, Kevin, and good afternoon everyone. Starting with expenses, selling, general and administrative costs were $9.9 million or 25% of sales versus $10.1 million or 19% of sales in last year’s third quarter.

As Kevin mentioned, SG&A included $338,000 in bad debt expense, principally at DynaEnergetics as well as increased product development and marketing costs. These increases were partially offset by lower stock-based compensation expense, reduced salaries and wages and lower commissions.

Amortization expense was $1 million or 3% of sales versus $1.6 million or 3% of sales in last year’s third quarter. We reported income tax expense from continuing operations of $1.6 million, despite our operating loss.

As we discussed previously, several of our international business entities are in a cumulative loss position and we’ve recorded valuation allowances against the tax benefit. When these businesses transition of profitability, the valuation allowances will be reversed.

Turning to our balance sheet, we ended the quarter with cash and cash equivalents of $8.6 million and working capital of $71.8 million. Current liabilities were $24.8 million and total liabilities were $71.7 million.

Our net debt position has increased to $27.4 million from $13.4 million at the end of 2014, which reflect investments DynaEnergetics has made in DynaStage component inventory as well as cash required for our restructuring efforts.

Given our increased debt levels and the downturn in our primary markets, we’re closely managing cash and monitoring our compliance with the financial covenants in our credit agreement. We used cash from operations of $6.4 million during the nine-month period, which reflects our net loss position and increase in working capital.

Turning to guidance, we are revising downward our 2015 full-year financial forecasts to reflect the deteriorating conditions in the global oil and gas industry. We now expect full-year sales to be down 17% to 22% from the $202.6 million we reported in 2014. We previously were expecting a sales decline of 8% to 12%.

Gross margin is expected in a range of 25% to 27% versus our previously expected range of 26% to 28% and the 30% we reported in 2014. For the fourth quarter, we expect a revenue decline of 25% to 30% from the $52 million we reported in the 2014 fourth quarter.

We expect gross margin in a range of 24% to 26% versus the 30% we reported in last year’s fourth quarter. We expect selling, general and administrative expenses of approximately $9.5 million to $10 million. Amortization expense is anticipated to be approximately $1 million.

The previously mentioned restructuring efforts should result in fourth quarter charges of approximately $500,000. And now, we’re ready to take any questions..

[Operator Instructions] The first question we have comes from Edward Marshall of Sidoti & Company..

So the question I have to start is the move to commercialization of the DynaStage system, and including the recent contracts with Weatherford, and as I look into the guidance for 4Q, my understanding was that you’re giving that away with zero margins.

And as I look to the guidance of both sales and margin, there’s really no improvement in the operations of the business line on a sequential basis.

So I’m just trying to figure out exactly what’s implied in the guidance for that particular business line?.

Ed, couple of things. First of all, the margin, we have moved from testing of the product from a development standpoint which was at cost comparable to what previous gun systems would cost.

Two, the commercial introduction with Weatherford and the margins have improved dramatically; we’re at a different selling price going forward than we were in the testing period. What you’re seeing is – and we’re in commercial sales with Weatherford that are beginning to ramp. And I think the emphasis there is beginning to ramp.

We’re currently working with Weatherford, promoting the product and helping them as well as ourselves to explain the benefits to the larger E&P companies. And we fully expect that this program is going to lead to increased volume not only with Weatherford, but potentially with one or two other partners.

However, in the last 30 to 45 days, the market itself took an unexpected downturn, down from what we were previously operating at. And so it’s very difficult to see in the fourth quarter numbers the impact of Weatherford because additional Weatherford business and margin that we gained did not overcome the call off in the general market condition..

Do you have the visibility of this to 4Q?.

The visibility is very poor right now and this downturn, latest downturn was unexpected. And so it’s very short..

If I look at Weatherford, I’m just curious, I mean, you put out the information about it was more qualitative than it was quantitative and I’m curious if you can kind of talk to maybe the numbers in the deal.

We understand the margin impact, historic margins for the business line, but I’m wondering if you can give some kind of understanding as to what you expect maybe to happen in 2016 or beyond and how fast does it ramp and to what degree?.

The thing we are careful there because we have not put forth the guidance yet for 2016 and there is again a number of factors there. We fully expect our business to ramp with Weatherford. Weatherford will be in the very near term one of our larger customers. However, it’s in the backdrop where our context of which the overall market is weakening.

And we expect that weakening to continue into this fourth quarter and into the first quarter of next year. By the end of the year, we expect our sales at DynaStage are going to be quite strong, but we are not quite certain yet as to how that impacts the overall revenue or margin of DynaEnergetics..

And how big over time do you anticipate they will be?.

We expect DynaStage itself to be our largest single product for DynaEnergetics. And we are anticipating Weatherford to be one of our largest customers period. But again, we are just right in the beginnings of the market introduction of that..

I think we have talked previously about the business potentially doubling over time.

Do you still anticipate that that’s the potential at DynaStage?.

We believe for the business to double we need to see a return to a healthy market. And I think that with the return to a healthy market and DynaStage coupled with the other products in our pipeline would enable that on a medium to longer term..

Can you quantify the booking pushing NobelClad that you talked about?.

The bookings for the quarter were about $26 million. I believe it brought our backlog from roughly $37 million up to $41 million. And so we are pleased with the bookings, albeit it’s still at a level – the backlog increased because the sales on NobelClad were also soft for the month..

The booking push that you talked about that would have hit this quarter but didn’t, it was pushed out to 4Q and beyond.

Can you talk about how many orders were pushed?.

Just a couple, but they were sizable orders that went into – the orders are not lost, they are just pushed out into the coming....

I am asking for dollar amount, absolute dollar amount?.

In the $2 million to $4 million range..

And how many? Or is that combined?.

That’s combined..

Next we have Gerry Sweeney of Roth Capital..

Just to circle back to Weatherford, you mentioned multiple RFPs out there. Can you give us any details on the RFPs? I mean, are they specific amounts, or in areas, timeframes, any type of nuance that you can provide in that front..

Right now, the industry is operating hand-to-mouth, if you will, and that the RFPs are within the partnership agreement that we have put together are really driven by the activities in specific basins, if you’re referring to DynaStage. And what we’re also working on there is additional partnership agreements with other large service companies.

And I think that’s the primary focus point..

And then also [indiscernible] all your other customers, what’s the tone out there? I mean, obviously we’re taking another leg down, things are quite volatile again.

Is this – any sense that’s okay, but [indiscernible] 2015 circled the wagon thus far looking out to 2016, maybe you’re deploying more capital into 2016 or is it batten down the hatch and it’s going to be a while? Can you give any view on this?.

Part of this is from our customer business, part of it is also listening to and reading some of the other earnings releases. But there is a couple of different views in that.

First of all, I think everybody right now is anticipating the fourth quarter of 2015 and the first quarter of 2016 to be very slow, perhaps maybe even the slowest part of this downturn. And then it’s kind of a split decision, if you will, in terms of the market improving in the mid to second half of 2016 until early into 2017.

And there is a lot of E&P spending that is being ratcheted down 2014 to 2015 and then 2015 to 2016. And so the service companies, at least people that we’re talking to, are really looking at this as a second half 2016 event to early into 2017 before the market improves any significant..

Any areas of opportunity [indiscernible] backlog build out of wells drilled but not completed, so there’s some talk about going back and refracing of existing wells to turn some of the production again.

Do you know of any of that or what [indiscernible] fit into that and with the cost savings would be a benefit, any opportunities [indiscernible]?.

I would imagine there are opportunities, but when we step back and look at the overall market, we’re of the view that the fourth and first quarter are going to be slow and then start picking up thereafter.

The important thing with DynaSelect and DynaStage is that we’re actually part of lowering the cost of completion, whether that’s a refrac or whether that’s a new well. And so we’re optimistic with our product offering. We also have some products in well abandonment that we’re encouraged about going into 2016.

But really they apply to the overall market and I’d probably say we’re not seeing any niche that’s going to offset the overall level of activity..

And then just shifting over to NobelClad, [it’s your best booking in some quarters]. I think you mentioned that – and I think that end markets were a little bit slow, but you’re seeing some of those in the oil and gas market.

Again, the question that’s been out there is you get that quite a bit, but how is overall quoting, if you need some in-depth sense in expanding into different end markets, I think you talked in the call about having a little bit more of a consultative position with some clients that’s starting to evolve.

Any tangible evidence of seeing some growth, continued growth in NobelClad?.

We’re seeing the chemical markets and some of the specialty markets picking up and our quoting activity there being fairly strong relative to recent years. We’re also seeing some of the downstream some of the downstream petrochemical activity being reasonably strong.

However, what’s offsetting some of the quoting in those areas are some of the capital spending by the larger integrated oil companies is being cut back across the board. So we’re seeing a pull back in some of the oil related clad applications at the same time that we’re seeing the specialty chemical applications improve..

Next we have Robert Connors of Stifel..

If you were to look at the EBITDA margins, just addressed it by both segments and I’m looking at it on a before-items basis. So excluding the restructuring or what have you and as a follow up to that, the NobelClad EBITDA margins were about 12.83%, sort of ticked up sequentially, despite the decline in revenues.

So just wondering was there a mix, was there maybe some favorable cost on foreign operations that helped on the currency translation, just what you guys are seeing there..

The currency translation worked against us, if you will, but what we did see and this was towards the end of the quarter in Q3 is an improvement in our operating performance in our European facility.

You may recall that we acquired a new facility in Germany a year ago and we have turned our France facility into a specialty location and moved a lot of the large plate production to Germany.

We actually saw towards the end of the quarter, September in particular, that both facilities turned us a healthy volume and a healthy profit, which is the first time in a long time. And so we’re starting to see some of the benefits of the NobelClad restructuring that started a year ago..

I know the visibility on DynaEnergetics is low, but do you think with that restructuring and they have the volumes at least into 2016, you could continue to see those benefits or is this just one-time?.

On NobelClad, we expect to see those benefits continue into the full year. And they will be higher months compared to others, but we expect that efficiency to carry into the full year. And DynaEnergetics, there’s a couple of things going on.

We have, in both businesses, DynaEnergetics in particular, we are doing some restructuring, if you will, on our fixed cost, our infrastructure cost where we closed the facility in Canada as well as we, as I mentioned, on NobelClad, we did some consolidation there in Europe.

The restructuring cost will carry into – the lower structural cost will help us going into the coming year. On DynaEnergetics, we are probably slower than we should be on some of the activity-based cost for the quarter. And in our margins there, we expect to improve going forward.

It’s important for us to note too that in addition to the structural things in the activity based cost savings that we’re working on, we’re making significant operating expense investments in DynaEnergetics in this down period, primarily because of our confidence in the new products and the acceptance that our new products are getting into the market.

And so we’re making investments in the down period and we’re carrying that cost structure into this quarter and into the new year..

You know what I’m trying to get a sense of is I always do NobelClad and we saw an adjusted EBITDA, sort of like 10% to 20% EBITDA business.

But just given this new environment and we saw DynaEnergetics, was it a mid to high single digit EBITDA type business or just given the market share you’re taking on the DynaSelect and some of the cost reduction initiatives, can you get back to the double digit EBITDA type business?.

We fully expect it to get back to double digits EBITDA business. It has very strong value creating products for our customers. And in fact, the value that they create around the wellhead is much greater than the cost of their products. And so that business will recover to strong double digit EBITDA margin.

And the question is the timing really and to answer that we also need a strengthening of the overall market..

Robert, I think for the short term, you’re going to see that single digit level, in between that, call it, 5% to 10% range..

And then can you guys just remind us, you touched on it in the press release just regarding the covenants, what particularly are you watching? Is it the adjusted EBITDA levels, is it EBIT, just wondering like which line item or line items we should keep an eye on?.

We’re just keeping a close watch on both our debt levels and our EBITDA levels. If you look back at Q2, our debt to EBITDA leverage ratio was 1.44x. At the end of the third quarter, it’s 2.01x and based on our forecast we see it exceeding that 2x in the fourth quarter in the short term..

Next we have Gregory Macosko of Montrose Advisors..

Just some quick questions to better understand the DynaStage situation. First off, in terms of the people needed in the field et cetera.

Have you added people or can you use the same people that explain the product and work with a customer or is Weatherford working in covering some of that education and the like to get the product placement?.

It’s a good question, Greg. We have added sales people in the field in different basins and areas that we were not covered in. At the same time, we have strengthened our product marketing team and invested into, if you will, a travelling roadshow.

We presented a white paper at the Society of Petroleum Engineers conference recently in Houston and then we have embarked on a business to large E&P companies in the Texas area and quite frankly all over the country, which we’re doing in concert with Weatherford.

And to introduce the DynaStage product line, and so there’s a fair amount of promotion and market introduction and education and training that’s taking place, both at E&P companies, if you will, [indiscernible] in the wells that they’re producing, but also with the Weatherford in some of the other wireline service companies to educate and train people on our products..

Does Weatherford buy a product or have a product that they use and put in place and run it and show the customer how it works or is it really just an RFP and you sell it directly until they basically have to take a chance on it?.

They buy it from us and they’re putting a down hole and it’s part of – it’s becoming part of their day to day operating activities..

And then finally, you mentioned – you talked twice about other partners, other situations.

I’m assuming then with Weatherford, it’s not exclusive or anything like that and can you [Halliburton] or somebody else like that and use the product, so even in the same basin?.

It’s a limited partnership agreement that we intend to enter into and we would rather have strong relationships with a few dedicated companies that in addition to us making a commitment to them, they’re making a commitment to us from a promotion of this product into the marketplace.

And so we will have a small number, you can count them on one hand or less these partnership agreements going forward, at least that’s what we’re anticipating right now..

[Operator Instructions] Next we have a follow-up from Edward Marshall of Sidoti & Company..

Other expense, like, what was that number? What ran through there? Why was the reversal of the profits or income?.

Are you talking about the other expense of $1.5 million?.

Yes..

That’s unrealized foreign currency losses, primarily on inter-company transactions due mostly to the weakening of the ruble against the euro as well as the US dollar and Canadian dollar against the euro as well..

So is the balance sheet, just the changes on the balance sheet and non-cash basically?.

It’s non-cash..

What was the full expense? Or is the whole $1.463 million the expense?.

Correct..

What is going on in Russia? Where do we stand with the new facilities there?.

The new facilities are complete. We’re producing and shipping components, primarily guns, and the shaped charge facility is complete and going through the licensing. And we fully expect that to be – it’s operational, we expect it to be commercially operational at the end of this year or early into next at the latest..

Can you talk about the differences in the markets? I mean, we all know what’s going on in North America and obviously reflected globally, but is there much difference to what’s going in Russia and maybe the Middle East in reference to what’s going on in North America?.

There is. The unconventional market is primarily a North American market and that’s where there are some of the higher cost basins and that’s where we’re seeing probably the most significant drop off in activity. I don’t have our sales in front of us today, the North American activity was down more than the international activity.

And that’s pretty much reflected throughout the entire industry..

And you mentioned quite a bit of cost take out throughout this call and I know there are a few press releases on it at times, can you quantify exactly what costs we’re taking out of the business in 2015 year-to-date?.

There is two types of cost, the structural cost in terms of the facilities that we’re closing, which we’re consolidating NobelClad in Europe, large clad production into our German facility. We’ve closed completely our manufacturing facility in Edmonton, Alberta for DynaEnergetics. We’ve closed six, I think maybe seven distribution centers.

At the same time, we opened up a central distribution center at our Blum manufacturing facility. And so there’s the structural things, the majority of the activity going forward are really transactional expenses, really aligning direct labor with the market.

And to that end, we’ve reduced shifts and also reduced the level of employment from a direct labor standpoint. That accelerated in October. I think we were down just under 10% in terms of employment year-to-date compared to the prior year at the end of September, but that accelerated quite a bit into October..

There is no dollar value that you can put to these costs, obviously the transactional expenses will come back, but the savings from the structural cost take out will stick around for a while and then you’ll especially get efficiencies off in new facilities as well, I assume.

Is there a way to quantify it?.

That will be quantified, if you will, in terms of our guidance as we go into 2016. There’s a number of moving parts. There is the structural costs come down, the transactional cost come out, they need to be offset with the investments that we’re making on the product launch.

And there’s also been – we’re doing fairly well holding our own in terms of product pricing, there’s been a tremendous amount of pricing pressure in this market also. We could give you a number, but it may be misleading if you roll it all together and not take into consideration all the other moving parts..

Next we have Jim Brilliant of Century Management..

I joined on the call a little late, I don’t know if you had addressed this.

But did you quantify what the revenue level out of Weatherford was for the quarter?.

We did not and we did say that that’s moving from a limited number of guns, no margin, on a development program, testing program. And the full commercial production at higher margin and it’s starting to ramp. The ramp is really two-fold.

It’s having E&P companies specify that product in their wells and at the same time, we’re getting Weatherford to use this in more of the wells that they’re quoting and going after. And this is beginning to ramp..

So the difficulty is really the inventory, two-fold, just assuming the Schlumberger, Halliburton, Weatherford, they’re all talking about kind of the capital spending dump, a lot of the [in field] guys, they’ve already expanded their budgets and it’s pretty much oil field is going to be shutdown from Thanksgiving to Christmas, for most part.

Where do you sense your customers are in terms of having both components and guns in the field in terms of inventory?.

I don’t know if there is much inventory in the field, per se. I think that they are, particularly in the North American market, it’s a short turnaround business.

We built up inventory in the third quarter, second and third quarter of components for DynaStage and some of the new products that we’re introducing that we’re now working down with the commercial introduction. But I don’t think there is much inventory in the system in the marketplace..

So we don’t have a lot of overhang.

So is it your sense then that as the budgets are flushed through the end of the year and we come out of the holiday season in January that production to begin to ramp up with the new capital budgets and your payables will follow that or is there something deeper involved in terms of the gun business?.

In our view, from people that we’ve talked to and also reading the – being close to some of the same things that you’re being exposed to, is that the first quarter is not going to be getting busters, it’s going to be a soft quarter and that the activity will pick up potentially as the year unfolds..

So there is no overhang from an inventory that we have to work through, so you would respond pretty quickly with well counts as they come up through the first half of the year?.

I think we’ll respond very fast to that..

The other part is with completion technology, they’re on pushing stages, closer together, is that part of the Weatherford solution or is it just getting them into the field?.

I’m not familiar with in terms of how that is part of Weatherford’s strategy. I think that – what I’ve read is that there is a lot of existing basins that are putting the models closer together that can get more out of those basins and our products will benefit from that, because all those laterals need to be perforated..

When do you expect any of these new partnerships?.

Over the next three to six months. We’re working with people as we speak and it depends on how it moves through their organization in the current environment..

And then finally on the covenants issue, I think most restricted is debt-to-EBITDA?.

We’re covered by two ratios. We have the debt-to-EBITDA, as you mentioned, as well as a debt service coverage ratio..

At what point will you bridge it? What’s the covenant on the debt-to-EBITDA?.

3x..

3x, okay.

And you’ll not go beyond 2x in the fourth quarter for adjusted?.

We will exceed 2x in the fourth quarter..

At this time, we’re showing no further questions. We’ll go ahead and conclude our question-and-answer session. I’d now like to turn the floor back over to Mr. Kevin Longe for any closing comments.

Sir?.

Thank you for joining our call today. And as always, we appreciate your continued interest in DMC and look forward to speaking with you again after the fourth quarter..