DMC Global Inc. (BOOM) Q1 2021 Earnings Call Transcript

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DMC Global Inc. (BOOM 0.41%)
Q1 2021 Earnings Call
Apr 22, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the DMC Global first quarter earnings call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, Geoff High, VP of IR. Sir, the floor is yours.

Geoff High -- Vice President of Investor Relations and Corporate Communications

Hello, and welcome to DMC's first quarter conference call. Presenting today are President and CEO, Kevin Longe; and CFO, Mike Kuta. 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. 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 available approximately two hours after the call. Details for listening to the replay are available in today's news release.

And with that, I'll now turn the call over to Kevin Longe. Kevin?

Kevin T. Longe -- President, Chief Executive Officer and Director

Thank you, Geoff, and good afternoon, everyone. Our first quarter sales of $55.7 million came in at the low end of our forecasted range and were impacted by the pushout of $1.7 million in orders at NobelClad, our composite metals business and by a winter storm in Texas that led to a nearly two-week halt in U.S. customer activity at DynaEnergetics, our energy products business. Consolidated gross margin was 23% and also was within our forecasted range. Margins were impacted by lower absorption at DynaEnergetics due to the shutdown of our Blum, Texas manufacturing center following the winter storm and by higher spending on patent filings at DynaEnergetics.

During the quarter, we spent approximately $1 million on patent litigation, which relates to legal action taken against several companies we believe are violating DynaEnergetics' patents. We are confident in our position and have the determination to see these cases through to a successful resolution for DynaEnergetics. DMC finished the first quarter with a strong balance sheet that included cash and marketable securities of approximately $67 million. We repaid in full the $11.8 million balance on our term loan, ended the quarter with zero long-term debt and raised net proceeds of $25.3 million by selling shares in an at-the-market equity program.

Our end markets continue to improve, and we are encouraged by our prospects for stronger financial results during the second quarter and back half of 2021. NobelClad entered the second quarter with an order backlog of $43 million, several large international order opportunities and a new product offering expected to be commercialized later this year. At DynaEnergetics, well completion activity recovered rapidly following the February winter storm. Frac spreads, which are a key barometer of completion activity, are seeing increased demand. After declining to fewer than 50 spreads in May of last year, the industry was approaching 200 frac crews operating in unconventional U.S. basins by the end of the first quarter.

The number of active spreads has continued to increase in April. DynaEnergetics implemented a 5% price increase on all products effective March 30, and we are beginning to see the impact of the increase in average selling prices month-to-date. Integrated perforating systems, which are less than 2% of the cost of completing a well, enables safer and significantly more efficient frac operations at a much lower total cost than conventional field-assembled systems. After a challenging year, our businesses are again operating at full speed, and our teams are back in the market visiting customers and meeting with suppliers. I want to thank our employees for their continued diligence, creativity and dedication to the success of DMC. I'll now turn the call over to Mike for a review of our first quarter financial performance and a look at second quarter guidance. Mike?

Michael L. Kuta -- Chief Financial Officer

Thanks, Kevin. First quarter sales were $55.7 million, down 3% sequentially and down 24% versus last year's first quarter. DynaEnergetics reported first quarter sales of $38.2 million, up 8% sequentially and a decline of 28% versus the same quarter last year. International sales increased 65% sequentially, while North America sales, which were impacted by the February storm in Texas, increased 1% sequentially. Sales at NobelClad were $17.5 million, down 20% sequentially and 14% versus last year's first quarter. Consolidated gross margin in the first quarter was 23%, up from 21% in the fourth quarter 2020 and down from 33% in last year's first quarter.

The decline from the year ago first quarter primarily relates to lower average selling prices at DynaEnergetics. DynaEnergetics reported first quarter gross margin of 22% versus 24% in the 2020 fourth quarter and 37% in last year's first quarter. NobelClad reported first quarter gross margin of 26% versus 18% in the fourth quarter and 25% in the year ago first quarter. The increases reflect a more favorable project mix. Looking at our first quarter expenses. Consolidated SG&A of $13.2 million increased 5% versus the fourth quarter and declined 21% versus the year ago first quarter. We reported a consolidated adjusted operating loss of $583,000, which excludes $127,000 in restructuring charges at NobelClad. First quarter adjusted net income was $559,000 or $0.04 per diluted share versus adjusted net income of $5.3 million or $0.35 per diluted share in last year's first quarter.

Adjusted EBITDA was $4 million versus $11.3 million in last year's first quarter. DynaEnergetics reported first quarter adjusted EBITDA of $3.5 million, while NobelClad reported adjusted EBITDA of $2.7 million. As Kevin noted, we repaid our $11.8 million term debt in full during the first quarter and raised an additional $25.3 million under our at-the-market equity program, bringing our total cash and marketable securities balance to $66.8 million. Looking at guidance. Second quarter sales are expected to be in the range of $67 million to $72 million versus the $55.7 million reported in the 2021 first quarter. At the business level, DynaEnergetics is expected to report sales in the range of $44 million to $47 million versus the $38.2 million reported in the first quarter.

NobelClad sales are expected in the range of $23 million to $25 million versus the $17.5 million reported in the 2021 first quarter. Consolidated gross margin is expected in the range of 25% to 26% versus 23% in the first quarter. First quarter selling, general and administrative expense is expected to be approximately $14 million to $15 million versus the $13.2 million reported last quarter. The sequential increase primarily is due to an anticipated $1.5 million of litigation expense at DynaEnergetics, investments in digital transformation, resuming business-related travel and restoring variable compensation. Amortization expense is expected to be approximately $300,000. Interest expense is expected to be in the range of $90,000. Adjusted EBITDA is expected to be in the range of $6 million to $8 million versus $4 million in the 2021 first quarter.

With that, we're ready to take any questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Your first question is coming from Tommy Moll. Your line is live.

Tommy Moll -- Stephens -- Analyst

Good afternoon and thanks for taking my questions.

Kevin T. Longe -- President, Chief Executive Officer and Director

Good afternoon, Tommy.

Tommy Moll -- Stephens -- Analyst

Kevin, I wanted to start on DynaEnergetics. You're up quarter-over-quarter again. Guidance for second quarter calls for another sequential increase, which would be four in a row, I believe. So the industry is moving in the right direction here. You've announced a pricing increase. It sounds like you've started to realize some benefit from that. On the other hand, in recent quarters, you've talked to the inventory overhang across the whole competitive landscape, so potentially a crosscurrent there. So I wonder if you could unpack for us some of the competitive dynamics that you're seeing in the marketplace right now. Thanks.

Kevin T. Longe -- President, Chief Executive Officer and Director

Yes. I think you captured it well, Tommy. The inventory overhang has pretty much worked its way through the system. There is still some inventory, but it's not across the board with certain companies. We actually believe that from where we are today, going forward, that people are going to be building for demand and anticipating a greater level of demand going into the second half of this year compared to the first half. Pricing is -- we're out in front with a price increase. We're seeing some positive results in terms of our average selling prices going into April, albeit it's still early in April. And activity, as it picks up, will support margins. The one thing that we are always conscious of and still need to see improvement on in the market is the profitability of our customers. And it's also necessary for our customers to improve their profitability for us to improve our pricing and our margins over time.

Tommy Moll -- Stephens -- Analyst

Thank you, Kevin. That's very helpful. Wanted to pivot to the balance sheet. So all your debt has been repaid. You've continued to build cash in part through the offering that you called out in the earnings release. So again, just hoping you could help us read the tea leaves here. Should we think about some potential acquisitions near term? Any potential change in capital allocation strategy that might be forthcoming? Or should we view this more as a conservatism on the heels of a pretty severe downturn and just wanted to protect the balance sheet?

Kevin T. Longe -- President, Chief Executive Officer and Director

We believe our two businesses are sustainable from a cash flow and cash generation standpoint. Month-to-month or quarter-to-quarter depending on a capital project, it -- they may consume or generate cash. But all in all, we expect our two businesses to generate cash and fund themselves as we go forward. The ATM, the building of our cash balance is to help our two businesses look within their markets for opportunities from a bolt-on acquisition standpoint, companies or areas that would improve their competitive position, expand their total available market and leverage their sales channels to the markets that they're in. And it's also part directed toward future activities looking at businesses that we could add to our portfolio.

At the end of the day, DMC is a holding company for technical businesses in niche markets, and the way for us to grow is to expand our total available market through adding new product lines of businesses. And so it's -- we are looking toward M&A as we go forward.

Tommy Moll -- Stephens -- Analyst

Thank you,Kevin. And if I could toss one more in. There's a new administration in Washington that's talked about potentially incentivizing plugging old wells. You've got a system, DynaSlot, that can do that for operators. So realizing it's early in the process here, but any comment you'd want to offer for a system that investors may be less familiar with just in terms of the capabilities and the potential opportunity that you see here.

Kevin T. Longe -- President, Chief Executive Officer and Director

Yeah. I mean there's thousands actually, potentially 100,000 of abandoned wells that have not been plugged properly that leak methane and greenhouse gases. And it's prudent for the industry to invest into capping those so that they no longer contribute to the greenhouse gas situation. And so we're pretty excited about the fact that the new administration is dedicating resources to this area, which should benefit our customers and should benefit the product line that we have that is a very effective tool used in the plug and abandonment.

Tommy Moll -- Stephens -- Analyst

Thank you, Kevin. I'll turn it back. Apprceiate it.

Operator

Your next question is coming from Taylor Zurcher. Your line is live.

Taylor Zurcher -- Tudor, Pickering -- Analyst

Hey. Thank you and good afternoon. Kevin, I wanted to start in DynaEnergetics, the guidance for Q2. I mean if we add back the $5 million in sort of lost sales due to the winter storm, there's really not a whole lot of growth sequentially. And I realize it's not really an apples-to-apples comparison. But I was hoping you could help us parse through U.S. versus international. It looks like the Canada sales were fairly strong, and that will obviously get dinged pretty hard as we go into spring breakup in Q2. But could you help us parse through the U.S. and international as it relates to sequential growth in Q2 within DynaEnergetics?

Kevin T. Longe -- President, Chief Executive Officer and Director

Yes. One thing I'd like to note first is our two businesses somewhat behave differently when there's a market disruption. NobelClad, which makes a product that goes into the construction industry around downstream petrochemical applications. When there's something that misses in their quarter, it goes into the next quarter and it's additive to that quarter. We recover that business. In DynaEnergetics, DynaEnergetics makes a consumable, and they're an integrated system that's delivered fully assembled to the field or to the well at time of consumption just in time.

And we're able to catch up in terms of our ability to manufacture products. But the time that was lost in that one to two-week period by our service companies is time that they have a hard time regaining. And so it doesn't necessarily go from one quarter to the next in DynaEnergetics because it's dependent upon the service companies.

Michael L. Kuta -- Chief Financial Officer

And Taylor, I would just add that in the Q1 to Q2, the growth is all in North America. We're forecasting international to be flat Q1 to Q2. It's a lumpy business. We expect that to be much stronger in the second half. But -- so all the growth that you're seeing is North America.

Taylor Zurcher -- Tudor, Pickering -- Analyst

Got it. That's very helpful. And my follow-up's in NobelClad. I know that business can be lumpy as well, certainly from a margin standpoint, and the margins rebounded nicely this quarter. I'm curious as you look out over the balance of 2021 that the backlog is strong and the guidance for Q2 was relatively strong as well. From a profitability standpoint, just based on the mix of backlog and work you have in front of you right now, do you think the mid-teens EBITDA margin-type ballpark that you did in Q1 is kind of the right place to think about that business, at least in the near-term future?

Michael L. Kuta -- Chief Financial Officer

Yes. I would say low to mid-teens. The first quarter was a high favorable project mix. So I think that that's going to be a business that's going to be 24% to 25% gross margin. In the first quarter, it's 20 -- I think 26%, 26.4%. So yes, I think that's -- this ballpark is low to mid-teens.

Taylor Zurcher -- Tudor, Pickering -- Analyst

Great. Thanks for the answer. I'll turn it back.

Operator

Your next question is coming from Stephen Gengaro. Your line is live.

Stephen Gengaro -- Stifel -- Analyst

Thanks. Good evening, everybody.

Kevin T. Longe -- President, Chief Executive Officer and Director

Yeah. Good evening, Stephen.

Stephen Gengaro -- Stifel -- Analyst

A couple of things. And I guess if you started at Dyna, you've talked about it in the past and when you look at what customers are doing. And I think in 2020, they were in cost-cutting mode as the world kind of unraveled. But as you think about this shift toward integrated perf systems versus components, I know it ties into another question about inventory, but what are you seeing there as far as the overall industry trends to kind of reaccelerate the adoption of the integrated perf systems versus the components?

Kevin T. Longe -- President, Chief Executive Officer and Director

Well, first of all, the recovery is in the very early stages. And somewhat of what we experienced in the back half of 2020 and -- is that when the market is down, and down as significant as it was and there's a large inventory of components in the marketplace, the focus was on cash flow and turning those components, turning that inventory into cash. And systems somewhat took a backseat to consuming inventory and generating cash for the companies that had a lot of inventory. And to move that inventory in a market that was extremely challenged, price was an important factor in moving it. And so we're just beginning to return to a more normalized situation where the inventory is out of the market.

The companies are having to invest in working capital and manufacturing capability to meet current demand. And there's a number of companies that we see that were consuming components in the downturn that may not go the field-assembled component path as we come out of the downturn. And so I think the next couple of quarters are going to be important in the transition from components to systems. It's also going to be important as the activity picks up for the return of profitability both through volume and price increases, not just for ourselves but for our customers. And we believe that the further we get into the year, the stronger our markets are expected to be. And so should, too, the demand for systems and therefore our revenues and earnings.

And the other thing that's important to note is that at the low levels that the market has been operating, some of the service companies have been able to meet their own demand through their legacy approach to the business. But the market has seen some attrition and consolidation is just starting to begin in certain areas, and the capacity coming out of the market slowdown, some people are going to be challenged on that. We're going to see -- hopefully, with our investments that we've made over the last couple of years, we should benefit because our capacity is in place in order to serve our customers as the market gets stronger. And so kind of a long answer to your question, but I think we're at a pivot point over the next couple of quarters and into the second half of this year.

Stephen Gengaro -- Stifel -- Analyst

Got you. Thanks. And along those same lines, you mentioned a little bit on this, but you clearly saw something because you put forth a price increase on the DynaEnergetics side. And it sounded like you're seeing some traction on that front. Is that fair?

Kevin T. Longe -- President, Chief Executive Officer and Director

We've seen some traction. Yes, it's still early. I will say that we probably do not see broad-based support in the market as of yet. But we're hoping that the market pricing will strengthen as the activity strengthens going into the second half of the year.

Stephen Gengaro -- Stifel -- Analyst

Okay. Great. Thanks. And two questions around the litigation. One is pretty straightforward, I think. The second quarter adjusted EBITDA guide of $6 million to $8 million, is that after deducting? Or is that excluding the expected litigation of about $1.5 million?

Kevin T. Longe -- President, Chief Executive Officer and Director

That's after the -- our spending on litigation.

Stephen Gengaro -- Stifel -- Analyst

So it's 7.5 to 9.5 if you strip...

Kevin T. Longe -- President, Chief Executive Officer and Director

Correct, yes. If you'll strip it out, correct.

Stephen Gengaro -- Stifel -- Analyst

Okay. Good. That's -- I just wanted to check that. And then is -- I know you're probably reluctant to say much, but is this around the charges and the downhole energetics? Or is this around the delivery system?

Kevin T. Longe -- President, Chief Executive Officer and Director

Yeah. Yeah. We -- there's three areas of intellectual property that are involved. And two of them are around the -- two of the areas are around the delivery system and the packaging of the shaped charges, and one is around the initiating system and the design of that technology.

Stephen Gengaro -- Stifel -- Analyst

Okay. Great. And then if I could slide one more. As you think about the gross margin progression -- and we've talked about this in the past. I mean you're Dyna margins had -- I think your gross profit margins were -- ticked above 40% for a quarter in 2019 or not, but they averaged just a touch under 40% in 2019. As activity normalizes and you look into 2022, 2022, maybe one of the things we're seeing in the industry is as E&Ps are sticking to their capital discipline, I think as an industry, for example, like on the pressure pumping side, I think people are not expecting that -- they're expecting price improvement as things tighten at some point, I believe, at least some are. But they're not expecting the kind of moves we've seen in prior cycles. And I was just curious in the context of sort of E&P capital discipline, is it reasonable to think that those Dyna gross profit margins can get back to 30%-plus?

Kevin T. Longe -- President, Chief Executive Officer and Director

Without a doubt, I mean the -- so there's -- it's one market that we participate in a different part of the ecosystem than some of the other service and product companies. And it's important to realize that we have an asset-light, high-variable cost business with differentiated products that have a greater value and use for our customers. There's significant cost savings to the companies who organize their business around our products and systems. They have a much lower total cost and a higher value-add to their customer. And so our products pay for themselves and their integrated perforating system, which enables the safer and more efficient operations.

When you look at the cost of drilling and completing a well, they're less than 2% of the cost of the overall -- of completion let alone the overall well construction. Yet they're a significant contributor to the productivity, safety and efficiency of completing wells. And so it's a whole different thing that if you have overcapacity in assets that need to be utilized and you have a high fixed cost, it's quite a bit different when there -- it's an asset-light variable cost business and there's differentiation on the performance of the products in use. So we're cognizant of and sensitive to the profitability of our customers. And we're working hard with them to optimize the total cost between our two businesses in our ability with our customers to serve the E&P. And I think that we've got a strong approach that will definitely allow us to return to acceptable margins.

Stephen Gengaro -- Stifel -- Analyst

Great. Thanks. I'll get back in line. I appreciate the color.

Operator

Your next question is coming from Gerry Sweeney. Your line is live.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Hey, good afternoon. Thanks for taking my call, Kevin.

Kevin T. Longe -- President, Chief Executive Officer and Director

Yeah. Hi, Gerry.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Just following up a little bit maybe on just DynaEnergetics and just curious, it's all about -- well, I think it's partly about expanding our customer base. I know there was a lot of components in the market and people are sort of chewing through them over the course of the -- I don't know, the past year, let's say. But would you be able to say -- I mean do you have more customers today than you did a year ago or specced in or however you would want to answer that?

Kevin T. Longe -- President, Chief Executive Officer and Director

I think we have more E&P companies, operators that are aware of our product line. We have probably a similar number of customers to a year ago. It's really about going deep with those customers. And we're not out chasing low-price component business, which is what the market has been for the last essentially four quarters. And so we're -- we feel that there's pretty strong awareness and that we're working with the right people so that when the market does start to improve, we'll go deeper with them, and you'll see the growth in our revenues.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

On that front -- and I didn't want to imply that you were chasing price components. But go ahead, I'm sorry.

Kevin T. Longe -- President, Chief Executive Officer and Director

Well, we're not trying to be all things to all people. We're trying to be all things to a handful of people where we align culturally. And we're focused on creating value for the E&P and optimizing the ecosystem. And so they're -- we're going after the more technologically focused, total cost-focused companies who also value safety, reliability, the actual product performance and companies that are doing the right thing from an ESG standpoint. And so it's -- we're not trying to be all things to all people. We're trying to be the best in our area and associated with the best.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

And I absolutely understand that and agree with that. But digging a little deeper, as you said, deeper in the customers. Is this a function also of maybe some of your customers, they have a baseload of employees and if activity picks up, right, you remove a certain labor constraint and hiring and supply chain? If activity picks up -- are they sort of at the base where they want to be? And as activity picks up, do they use more of your equipment because you alleviate the need to bring more people on, component upside, right?

Kevin T. Longe -- President, Chief Executive Officer and Director

Yes. I mean we're definitely -- the industry, as it's gone through two once-in-a-lifetime downturns over the last seven years, has fewer people and have fewer knowledgeable people and skill in the area of assembling explosives into perforating systems. And it doesn't make sense for companies to -- who are not vertically integrated in the components themselves and have the engineering of the technology support aspects around it to -- by their very nature, they're going to be less efficient and less skilled in their assembling systems that -- of components that aren't designed to work together.

And so we think that the consolidation that's taken place, the attrition in either people or companies, is going to favor the perforating companies, and we're just one of them. There's others that will benefit from this. It will favor those that have a medium to longer view investment of the market and the investment to build systems on things that were vertically integrated in doing. And even managing supply change is becoming more complex, and we can do it more effectively and efficiently than people would do it for a part-time basis or for a small part of their overall needs.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Got it. Switching gears slightly to -- well, entirely actually to NobelClad. How -- has COVID impacted -- or how much has COVID impacted the sales cycle there? Obviously, these are long lead time projects. And once they're started, they're started. But things do -- can shift around by several quarters, if not more. Do you have any...

Kevin T. Longe -- President, Chief Executive Officer and Director

Yes. COVID did not -- I mean it impacted it in more of a -- around the peripheral compared to DynaEnergetics. And because of the longer lead time, longer gestation period for these projects, if it -- we've seen things where there's been shipment slowdowns and difficulties on the logistics of either getting metals or shipping composite plates and products. But it's -- but not in terms of the overall activity. And a lot of what they make goes -- is into markets that are more GDP-driven and more stable on a longer-term basis.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Got it. Okay. I appreciate it, that's my end. Thank you.

Operator

Your next question is coming from Matthew Galinko. Your line is live.

Matthew Galinko -- Sidoti & Company -- Analyst

Hey, good afternoon. And thanks for taking my questions. Maybe first on the patent litigation. Can you give us a rough sense of time line? And how should we expect expenses -- litigation expenses to hit as we move through that litigation process?

Kevin T. Longe -- President, Chief Executive Officer and Director

Yeah. I think intellectual property, IP litigation is more of a marathon than a sprint with the way that the discussions take place, the filing takes place and then the response to the filings. And we expect it to continue throughout 2021 and into 2022, without a doubt. I will say that we started -- we've had litigation happening kind of in the background for a couple of years now. It's just accelerated both as our patent portfolio has grown and as the strength of our designs have been recognized.

So we had a step-up in September, October of last year in terms of sending letters to those that we believe are infringing. We've had a mixed bag of responses. And we started filing infringement suits. Unfortunately, we do not enjoy this. We wish we did not have to take this path, but we started filing those in December. And so we're just early in the innings of some of the -- two out of the three areas that we're -- we have intellectual property, and one we've been in it for quite some time, and it's a long process.

Michael L. Kuta -- Chief Financial Officer

And Matt, when we think about the $1.5 million in Q2, we expect that run rate. Currently, right now, we're not giving guidance, obviously, for the rest of the year, but that run rate's going to be there for Q3 and Q4 as well.

Matthew Galinko -- Sidoti & Company -- Analyst

Got it. So I mean as -- if we get to the point of a trial, I mean, would we expect to run up at that point? So if we get scheduled for trial in 2023 and you're not able to figure something out of court -- or maybe 2022 -- I guess just generally, I mean, do you have a sense of at what point you get to a trial? Is it 2022? Is it 2023? Just how far backlog are the courts now? Has COVID created any challenge there? Do you expect to see a bump-up in expenses as you get through to a trial?

Kevin T. Longe -- President, Chief Executive Officer and Director

A trial certainly would bump up the expenses. But we're communicating with all parties right now. They understand how we believe they infringe. We are open to discussions for resolving this outside of court and hope that we can avoid going to court. And -- but we're also organized very efficiently on this. And it's important. We knew this was a potential and necessary action that may have to be taken when we filed the patents in the first place. And so there's an obligation on our part when we feel that infringement is happening and it's impacting us in the marketplace that we have to defend the intellectual property that we filed in the first place. And so we're very focused on this and committed to seeing it to a successful conclusion. But it's a -- the path, we believe, is straightforward, but there's a lot of jockeying to get to where we need to be.

Matthew Galinko -- Sidoti & Company -- Analyst

Got it. That makes sense. And just I guess as a follow-up. The backlog in client business was pretty nice move sequentially. I'm just curious how much of that do you put on market development efforts that you've been kind of engaging in over the last couple of years.

Kevin T. Longe -- President, Chief Executive Officer and Director

Well, I think the market development -- a small amount. One of the other things that we measure in addition to our backlog is our book-to-bill. Our book-to-bill has just seen a modest increase over the past year. And so the backlog is quite a favorable backlog. But it doesn't reflect some of the projects that we hope to start landing over the next few quarters. We're pretty excited about some of the new applications and products that NobelClad is now commercializing, and it takes a long time to commercialize in a construction-related product -- process-related product. And so we feel pretty good that they'll have a modest improvement this year over last. And -- but it should get stronger from here on out.

Matthew Galinko -- Sidoti & Company -- Analyst

Great. All right, thank you.

Operator

Your next question is a follow-up coming from Stephen Gengaro.

Stephen Gengaro -- Stifel -- Analyst

Two quick ones. One is any color on the LoneStar system that you guys started talking about, I think, on last quarter's call? And any other new products worth highlighting that are gaining traction?

Kevin T. Longe -- President, Chief Executive Officer and Director

Yes. We're seeing a great deal of interest in the LoneStar. And we've rolled it out cautiously so that we get time in the market and the bugs worked out a bit, but it's a pretty powerful perforating system that's gaining a lot of interest. And so the areas that we see right now are the LoneStar and also our oriented perforating systems. Those would be the two areas that have this -- our gravity system that has the strongest level of interest right now.

Stephen Gengaro -- Stifel -- Analyst

Another quick one. I think Mike mentioned earlier the international business being a little bit lumpy on DynaEnergetics. And I struggle to sort of think about how to model it. But last year, I believe that did about $35 million for the year. Is that a reasonable place to start as an international revenue target for 2021 in Dyna?

Michael L. Kuta -- Chief Financial Officer

Stephen, when we say international, it's everything but the U.S. and Canada. And last year, I believe that was $31 million. And that $30 million to $35 million range, low 30s, is where we see that going this year. And again, it's about $7 million in Q1, and we've got it forecasted for $7 million in Q2.

Stephen Gengaro -- Stifel -- Analyst

Thanks. [Indecipherable], thanks for that. All right. That's all I have. Thank you, gentlemen.

Operator

We have no further questions from the lines at this time. I'd now like to turn the floor back to Kevin Longe for closing remarks.

Kevin T. Longe -- President, Chief Executive Officer and Director

We'd like to thank everybody for joining us for this call. As I mentioned earlier, the further we get into this year, the stronger we believe our markets are expected to be. And we look forward to discussing this with you in July. And thank you very much.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Geoff High -- Vice President of Investor Relations and Corporate Communications

Kevin T. Longe -- President, Chief Executive Officer and Director

Michael L. Kuta -- Chief Financial Officer

Tommy Moll -- Stephens -- Analyst

Taylor Zurcher -- Tudor, Pickering -- Analyst

Stephen Gengaro -- Stifel -- Analyst

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Matthew Galinko -- Sidoti & Company -- Analyst

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