The following discussion should be read in conjunction with our historical consolidated financial statements and notes, as well as the selected historical consolidated financial data that are included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2008.

Unless stated otherwise, all dollar figures in this discussion are presented in thousands (000's).

Executive Overview

Our business is organized into three segments: Explosive Metalworking, Oilfield Products, and AMK Welding. For the nine months ended September 30, 2009, Explosive Metalworking accounted for 84% of our net sales and 105% of our income from continuing operations before consideration of stock-based compensation expense, which is not allocated to our business segments. Our Oilfield Products and AMK Welding segments accounted for 11% and 5%, respectively, of our year-to-date 2009 net sales.

Our net sales for the nine months ended September 30, 2009 decreased by $51,689 (29.7%) compared to the same period of 2008, reflecting year-to-year net sales decreases of $44,941 (30.5%), $5,957 (31.1%), and $791 (10.6%) for our Explosive Metalworking, Oilfield Products, and AMK Welding segments, respectively. The sales decrease of approximately $51.7 million includes a sales volume decrease of approximately $42.8 million and an unfavorable foreign exchange translation adjustment of approximately $8.9 million on our European sales as a result of the increased value of the U.S. dollar against the Euro. Income from operations decreased 52.1% to $13,833 in the nine months ended September 30, 2009 from $28,901 in the same period of 2008. This $15,068 decrease reflects declines in Explosive Metalworking's, Oilfield Products', and AMK Welding's operating income of $11,012, $2,788, and $974, respectively, and a $294 increase in stock-based compensation expense. Our net income decreased by 59.7% to $7,527 for the nine months ended September 30, 2009 from $18,683 for the same period of 2008.

Impact of Current Economic Situation on the Company

The Company was only minimally impacted in 2008 by the global economic slowdown. However, during the first nine months of 2009, we have seen a significant slowdown in Explosive Metalworking sales to some of the markets we serve. The explosion-weld clad plate market is dependent upon sales of products for use by customers in a number of heavy industries, including oil and gas, alternative energy, chemicals and petrochemicals, hydrometallurgy, aluminum production, shipbuilding, power generation, and industrial refrigeration. These industries tend to be cyclical in nature and the current worldwide economic downturn has affected many of these markets. Despite the slowdown we have already seen in certain sectors, including chemical, petrochemical and hydrometallurgy, quoting activity in other end markets remains healthy and we continue to track an extensive list of large infrastructure projects. While timing of new order inflow remains difficult to predict, we believe that our Explosive Metalworking segment is well-positioned to benefit as global economic conditions improve.

As a result of the 29.7% decline in our net sales during the nine months ended September 30, 2009 and the decrease in our Explosive Metalworking backlog from $97,247 at December 31, 2008 to $62,912 at September 30, 2009, we now expect our consolidated net sales in 2009 to decrease approximately 29% to 31% from the amount we achieved in 2008. In light of the

slowdown in order inflow that we are experiencing, we are continuing to carefully manage expenses. We generated cash flow from operations of $23,414 during the nine months ended September 30, 2009 and expect to generate additional positive cash flow from operations over the next several quarters.

Net sales

Explosive Metalworking's revenues are generated principally from sales of clad metal plates and sales of transition joints, which are made from clad plates, to customers that fabricate industrial equipment for various industries, including oil and gas, petrochemicals, alternative energy, hydrometallurgy, aluminum production, shipbuilding, power generation, industrial refrigeration, and similar industries. While a large portion of the demand for our clad metal products is driven by new plant construction and large plant expansion projects, maintenance and retrofit projects at existing chemical processing, petrochemical processing, oil refining, and aluminum smelting facilities also account for a significant portion of total demand.

Oilfield Products' revenues are generated principally from sales of shaped charges, detonators and detonating cord, boosters and perforating guns to customers who perform the perforation of oil and gas wells and from sales of seismic products to customers involved in oil and gas exploration activities.

AMK Welding's revenues are generated from welding, heat treatment, and inspection services that are provided with respect to customer-supplied parts for customers primarily involved in the power generation industry and aircraft engine markets.

Gross profit and cost of products sold

Cost of products sold for Explosive Metalworking include the cost of metals and alloys used to manufacture clad metal plates, the cost of explosives, employee compensation and benefits, freight, outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing supplies, and other manufacturing overhead expenses.

Cost of products sold for Oilfield Products include the cost of metals, explosives and other raw materials used to manufacture shaped charges, detonating products, and perforating guns as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, manufacturing supplies, and other manufacturing overhead expenses.

AMK Welding's cost of products sold consists principally of employee compensation and benefits, welding supplies (wire and gas), depreciation of manufacturing facilities and equipment, outside services, and other manufacturing overhead expenses.

Income taxes

Our effective income tax rate increased to 32% for the nine months ended September 30, 2009 from 25.9% for the same period of 2008. Going forward, based upon existing tax regulations and current federal, state and foreign statutory tax rates, we expect our full year 2009 effective tax rate on our projected consolidated pre-tax income to range between 32% and 33%.

Backlog

Weuse backlog as a primary means of measuring the immediate outlook for our business. We define "backlog" at any given point in time as consisting of all firm, unfulfilled purchase orders and commitments at that time. Generally speaking, we expect to fill most backlog orders within the following 12 months. From experience, most firm purchase orders and commitments are realized.

Our backlog with respect to the Explosive Metalworking segment decreased to $62,912 at September 30, 2009 from $97,247 at December 31, 2008 but increased slightly from the $57,090 in backlog that we reported at June 30, 2009. As a result of the lower sales that we reported during the first nine months of 2009 and shipments that we expect to make in the fourth quarter from our September 30 backlog, we are now forecasting that our consolidated net sales for fiscal 2009 will decline approximately 29% to 31% from those reported for fiscal 2008.

Three and Nine Months Ended September 30, 2009 Compared to Three and Nine Months Ended September 30, 2008

Net sales

Three Months Ended
September 30, Percentage 2009 2008 Change Change Net sales $ 34,690 $ 52,380 $ (17,690 ) (33.8 )%

Nine Months Ended
September 30, Percentage 2009 2008 Change Change Net sales $ 122,268 $ 173,957 $ (51,689 ) (29.7 )%

Net sales for the third quarter of 2009 decreased 33.8% to $34,690 from $52,380 for the third quarter of 2008. Explosive Metalworking sales decreased 36.0% to $27,327 for the three months ended September 30, 2009 (79% of total sales) from $42,703 for the same period of 2008 (81% of total sales). The decrease in Explosive Metalworking sales reflects a business slowdown in several of the industries that this business segment serves and includes approximately $1.0 million of unfavorable foreign exchange translation adjustments.

Oilfield Products contributed $5,123 to third quarter 2009 sales (15% of total sales), which represents a 24.2% decrease from sales of $6,756 for the third quarter of 2008 (13% of total sales). The $1,633 decline in sales reflects a significant volume decrease as well as approximately $300,000 in unfavorable foreign exchange adjustments.

AMK Welding contributed $2,240 to third quarter 2009 sales (6% of total sales), which represents a 23.3% decrease from sales of $2,921 for the third quarter of 2008 (6% of total sales).

Net sales for the nine months ended September 30, 2009 decreased 29.7% to $122,268 from $173,957 for the same period of 2008. Explosive Metalworking sales decreased 30.5% to $102,403 for the nine months ended September 30, 2009 (84% of total sales) from $147,344 for the same period of 2008 (85% of total sales). The decrease in Explosive Metalworking sales reflects a business slowdown in several of the industries that this business segment serves and includes approximately $7.0 million of unfavorable foreign exchange translation adjustments.

Oilfield Products contributed $13,171 to the nine months ended September 30, 2009 sales (11% of total sales), which represents a 31.1% decrease from sales of $19,128 for the same period of 2008 (11% of total sales). The $5,957 decline in sales reflects both a volume decrease and a negative impact of approximately $1.9 million from unfavorable foreign exchange adjustments.

AMK Welding contributed $6,694 to the nine month ended September 30, 2009 sales (5% of total sales), which represents a 10.6% decrease from sales of $7,485 for the same period of 2008 (4% of total sales).

Gross profit

                                          Three Months Ended
                                            September 30,                   Percentage
                                           2009         2008      Change      Change
Gross profit                            $    8,754    $ 17,025   $ (8,271 )      (48.6 )%
Consolidated gross profit margin rate         25.2 %      32.5 %




                                          Nine Months Ended
                                            September 30,                   Percentage
                                           2009        2008      Change       Change
Gross profit                            $   33,236   $ 53,786   $ (20,550 )      (38.2 )%
Consolidated gross profit margin rate         27.2 %     30.9 %

Gross profit decreased by 48.6% to $8,754 for the three months ended September 30, 2009 from $17,025 for the three months ended September 30, 2008. Our third quarter 2009 consolidated gross profit margin rate decreased to 25.2% from 32.5% for the third quarter of 2008. For the nine months ended September 30, 2009, gross profit decreased to $33,236 from $53,786 for the same period of 2008. Our year to date consolidated gross profit margin rate decreased to 27.2% from 30.9% for the same period of 2008.

The gross profit margin rate for Explosive Metalworking decreased from 31.9% for the third quarter of 2008 to 25.8% for the third quarter of 2009. The decreased third quarter 2009 gross profit margin rate for Explosive Metalworking relates entirely to our European cladding operations where the gross margin rate for the quarter was 59% lower than the gross margin rate reported for the third quarter of 2008 on a year to year sales decline of 53%. Our U.S. clad division reported only a slightly lower gross margin rate (32% vs. 33%) for the third quarter of 2009 versus the comparable period of 2008 despite a 24% drop in sales. Our year to date gross profit margin rate for Explosive Metalworking decreased to 28.3% from 30.6%. Historically, gross margins for our European explosion welding divisions have been lower than those reported by our U.S. division due to less efficient fixed manufacturing cost structures associated with our smaller European facilities. We are taking steps to reduce fixed manufacturing overhead costs at all of our facilities but the benefit of these actions will not be fully reflected in our gross margin performance until 2010 and will likely be muted by the expected continuation of a very competitive pricing environment. As has been the case historically, we expect to see continued fluctuations in Explosive Metalworking's quarterly gross margin rates in the fourth quarter of 2009 and throughout 2010 that result from anticipated fluctuations in quarterly sales volume and changes in product mix. Based upon the volume and mix of product that we expect to ship in the fourth quarter of 2009, we currently expect fourth quarter gross margins for Explosive Metalworking to be in a range of 23% to 25% and full year gross margins to be in a range of 26% to 27%.

Oilfield Products reported a gross profit margin rate of 22.4% for the third quarter of 2009 compared to a gross profit margin rate of 35.6% for the third quarter of 2008. Oilfield Products reported a gross profit margin rate of 21.7% for the nine months ended September 30, 2009 compared to a gross profit margin rate of 32.4% for the same period of 2008. The large decrease in Oilfield Products' third quarter and year to date gross margin relate principally to third quarter and year to date sales declines of 24.2% and 31.1%, respectively, and resultant less favorable absorption of fixed manufacturing overhead expenses but also include the impact of non-recurring costs associated with the relocation of certain production activities during the second quarter and changes in product/customer mix. Based upon the expected improvement in this segment's sequential quarterly sales and gross margin performance during the fourth quarter of 2009, we expect Oilfield Products to report a gross margin in the range of 23% to 25% for the full year 2009.

The gross profit margin rate for AMK Welding decreased to 29.7% for the third quarter of 2009 from 37.9% for the third quarter of 2008. The gross profit margin rate for AMK Welding decreased to 26.5% for the nine months ended September 30, 2009 from 36.3% for the same period of 2008. The decrease in AMK Welding's gross margin relates principally to an increase in manufacturing overhead associated with engineering and product development expenses as AMK seeks to expand both its service offerings and customer base. We expect AMK Welding's fourth quarter sales and gross margins to be comparable to those reported in the third quarter of 2009.

General and administrative expenses

                                      Three Months Ended
                                        September 30,                  Percentage
                                       2009         2008     Change      Change
General & administrative expenses   $    2,749    $  3,679   $  (930 )      (25.3 )%
Percentage of net sales                    7.9 %       7.0 %




                                      Nine Months Ended
                                        September 30,                  Percentage
                                       2009        2008      Change      Change
General & administrative expenses   $    9,318   $ 10,612   $ (1,294 )      (12.2 )%
Percentage of net sales                    7.6 %      6.1 %

General and administrative expenses decreased by $930, or 25.3%, to $2,749 in the third quarter of 2009 from $3,679 in the third quarter of 2008. This decrease includes a $199 decrease in accrued incentive compensation, a decrease of $331 in legal, audit and consulting expenses, and a net decrease of $399 in all other expenses categories that reflects the impact of tight controls over discretionary spending as well as certain non-recurring professional service fees that we incurred in 2008 relating to the integration of DYNAenergetics. The $930 decrease in total general and administrative expenses also reflects the positive effect of $70 in favorable foreign exchange translation adjustments. As a percentage of net sales, general and administrative expenses increased to 7.9% in the third quarter of 2009 from 7.0% in the third quarter of 2008.

General and administrative expenses for the nine months ended September 30, 2009 totaled $9,318 compared to $10,612 for the same period of 2008. General and administrative expenses of our European divisions decreased by $687, or 15.5%, as a result of a 5.2% decrease in net expenses as measured in Euros and $463 in favorable foreign exchange translation adjustments. Our U.S. general and administrative expenses decreased by $607 or 9.8%. The U.S. decrease reflects a $367 decrease in accrued incentive compensation and a $307 decrease in legal, audit and

consulting expenses. As a percentage of net sales, general and administrative expenses increased to 7.6% in the nine months ended September 30, 2009 from 6.1% in the same period of 2008.

Selling expenses

                            Three Months Ended
                              September 30,                  Percentage
                             2009         2008     Change      Change
Selling expenses          $    2,212    $  2,611   $  (399 )      (15.3 )%
Percentage of net sales          6.4 %       5.0 %




                            Nine Months Ended
                              September 30,                  Percentage
                             2009        2008      Change      Change
Selling expenses          $    6,376    $ 8,085   $ (1,709 )      (21.1 )%
Percentage of net sales          5.2 %      4.6 %

Selling expenses, which include sales commissions of $237 in 2009 and $157 in 2008, decreased by 15.3% to $2,212 in the third quarter of 2009 from $2,611 in the third quarter of 2008. The $399 decrease in our consolidated selling expenses includes decreased selling expenses of $219 and $180 at our European and U.S. divisions, respectively. The decrease in European selling expenses relates principally to staff reductions within our European explosion welding divisions and also includes $81 of favorable foreign exchange translation adjustments. The $180 decrease in our U.S. selling expenses reflects decreased sales commissions of $36, a $68 decrease in bad debt expense, a $68 decrease in accrued incentive compensation and a net decrease of $8 in other spending categories. As a percentage of net sales, selling expenses increased to 6.4% in the third quarter of 2009 from 5.0% in the third quarter of 2008.

Selling expenses decreased by 21.1% to $6,376 in the nine months ended September 30, 2009 from $8,085 in the same period of 2008. These selling expenses include sales commissions of $1,045 and $1,209 for 2009 and 2008, respectively. The $1,709 decrease in our consolidated selling expenses includes decreased year to date selling expenses of $1,320 and $389 at our European and U.S. divisions, respectively. The decrease in European selling expenses relates principally to staff reductions within our European explosion welding divisions and non-recurring expenses in the first quarter of 2008 relating to the termination of contracts with former sales agents and also includes $478 of favorable foreign exchange translation adjustments. The $389 decrease in our U.S. selling expenses reflects decreased sales commissions of $103, a $120 decrease in bad debt expense, a $166 decrease in accrued incentive compensation, a $109 decrease in travel expenses and a $141 reduction in business development, advertising and promotional expenses that were partially offset by a $100 increase in salary expense, a $68 increase in stock-based compensation and a net increase of $82 in other spending categories. As a percentage of net sales, selling expenses increased to 5.2% in the nine months ended September 30, 2009 from 4.6% in the same period of 2008.

Amortization expenses

                                          Three Months Ended
                                            September 30,                          Percentage
                                         2009           2008          Change         Change
Amortization expense of purchased
intangible assets                     $     1,293    $     1,363    $       (70 )        (5.1 )%
Percentage of net sales                       3.7 %          2.6 %




                                          Nine Months Ended
                                            September 30,                        Percentage
                                         2009           2008         Change        Change
Amortization expense of purchased
intangible assets                     $     3,709    $    6,188    $   (2,479 )       (40.1 )%
Percentage of net sales                       3.0 %         3.6 %

Amortization expense relates entirely to the amortization of values assigned to intangible assets in connection with the November 15, 2007 acquisition of DYNAenergetics. Amortization expense for the three months ended September 30, 2009 includes $897, $299 and $97 relating to values assigned to customer relationships, core technology and trademarks/trade names, respectively. Amortization expense for the three months ended September 30, 2008 includes $945, $315 and $103 relating to values assigned to customer relationships, core technology and trademarks/trade names, respectively.

Amortization expense for the nine months ended September 30, 2009 includes $2,572, $858 and $279 relating to values assigned to customer relationships, core technology and trademarks/trade names, respectively. Amortization expense for the nine months ended September 30, 2008 includes $2,055, $2,866, $956 and $311 relating to values assigned to order backlog, customer relationships, core technology and trademarks/trade names, respectively. The value assigned to order backlog was fully amortized during the first six months of 2008. Amortization expense variances for the other categories of purchased intangible assets relate to foreign exchange translation adjustments. Amortization expense for 2009 (as measured in Euros) is expected to approximate €905 for the remaining quarter of 2009 and is expected to remain at this level for most of calendar year 2010.

Operating income

Three Months Ended
September 30, Percentage 2009 2008 Change Change Operating income $ 2,500 $ 9,372 $ (6,872 ) (73.3 )%

Nine Months Ended
September 30, Percentage 2009 2008 Change Change Operating income $ 13,833 $ 28,901 $ (15,068 ) (52.1 )%

Income from operations ("operating income") decreased by 73.3% to $2,500 in the third quarter of 2009 from $9,372 in the third quarter of 2008. For the nine months ended September 30, 2009 operating income decreased by 52.1% to $13,833 from $28,901 for the same period of 2008.

Explosive Metalworking reported operating income of $3,370 in the third quarter of 2009 as compared to $8,593 in the third quarter of 2008. This 60.8% decrease in Explosive Metalworking operating income is largely attributable to the 36% decrease in net sales discussed above. Explosive Metalworking reported operating income of $17,381 in the nine months ended September 30, 2009 as compared to $28,393 in the same period of 2008. This 38.8% decrease in Explosive Metalworking operating income is largely attributable to the 30.5% decrease in net sales discussed above.

Oilfield Products reported an operating loss of $414 for the third quarter of 2009 as compared to operating income of $725 for the third quarter of 2008. For the nine months ended September 30, 2009, Oilfield Products reported an operating loss of $2,013 as compared to operating income of $775 for the same period of 2008.

AMK Welding reported operating income of $441 for the three months ended September 30, 2009 as compared to $874 for the same period of 2008. AMK Welding reported operating income of $1,122 for the nine months ended September 30, 2009 as compared to $2,096 for the same period of 2008.

Operating income for the three and nine months ended September 30, 2009 includes $897 and $2,657, respectively, of stock-based compensation compared to stock-based compensation expense for the three and nine months ended September 30, 2008 of $820 and $2,363, respectively. This expense is not allocated to our business segments and thus is not included in the above first quarter operating income or loss totals for Explosive Metalworking, Oilfield Products and AMK Welding.

Other income (expense), net

Three Months Ended September 30, Percentage 2009 2008 Change Change Other income (expense), net $ (633 ) $ (268 ) $ (365 ) 136.2 %

Nine Months Ended September 30, Percentage 2009 2008 Change Change Other income (expense), net $ (560 ) $ (227 ) $ (333 ) 146.7 %

Net other expense for the three months ended September 30, 2009 was $633 compared to net other expense of $268 for the same period of 2008. For year to date 2009, we recorded net other expense of $560 compared to net other expense of $227 for the same period of 2008. The large increase in net other expense for the three and nine month periods relates principally to realized and unrealized foreign exchange losses recognized in the third quarter of 2009 by consolidated subsidiaries that prepare their financial statements in functional currencies other than the U.S. dollar. The foreign exchange losses recorded by our Swedish, German and Kazakhstan subsidiaries during the third quarter reflect the weakening of the Euro against the Swedish Krona, the weakening of the U.S. Dollar against the Euro and weakening of the Kazakhstan Tenge against the Euro, respectively.

Interest income (expense), net

Three Months Ended September 30, Percentage 2009 2008 Change Change Interest income (expense), net $ (711 ) $ (1,316 ) $ 605 (46.0 )%

Nine Months Ended September 30, Percentage 2009 2008 Change Change Interest income (expense), net $ (2,376 ) $ (3,726 ) $ 1,350 (36.2 )%

We recorded net interest expense of $711 in the three months ended September 30, 2009 compared to net interest expense of $1,316 in the same time period of 2008. We recorded net interest expense of $2,376 in the nine months ended September 30, 2009 compared to net interest expense of $3,726 in the same period of 2008. This decrease in net interest expense reflects term debt reductions . . .