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Douglas Dynamics(PLOW) - 2023 Q2 - Quarterly Report
2023-08-01 20:01
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 001-34728 DOUGLAS DYNAMICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdic ...
Douglas Dynamics(PLOW) - 2023 Q2 - Earnings Call Transcript
2023-08-01 19:59
Douglas Dynamics, Inc. (NYSE:PLOW) Q2 2023 Earnings Conference Call August 1, 2023 10:00 AM ET Company Participants Nathan Elwell - VP, IR Robert McCormick - President, CEO & Director Sarah Lauber - EVP, CFO & Secretary Conference Call Participants Michael Shlisky - D.A. Davidson & Co. Timothy Wojs - Robert W. Baird & Co. Gregory Burns - Sidoti & Company Operator Hello, and welcome to the Douglas Dynamics Second Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note, today's event is be ...
Douglas Dynamics(PLOW) - 2023 Q1 - Quarterly Report
2023-05-02 20:04
Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2023, covering Balance Sheets, Income, Cash Flows, and Equity - The company operates in two segments: **Work Truck Attachments** (commercial snow/ice management) and **Work Truck Solutions** (municipal snow/ice control and truck up-fitting services)[19](index=19&type=chunk)[20](index=20&type=chunk) - The **Work Truck Attachments** segment is highly seasonal, with sales influenced by snowfall levels, leading to lower Q1 sales due to pre-season programs in Q2 and Q3[22](index=22&type=chunk) [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2,900 | $20,670 | | Accounts receivable, net | $48,223 | $86,765 | | Inventories | $184,583 | $136,501 | | Total current assets | $247,607 | $252,921 | | Total assets | $585,288 | $596,891 | | **Liabilities & Equity** | | | | Accounts payable | $23,081 | $49,252 | | Short term borrowings | $52,000 | $0 | | Total current liabilities | $114,405 | $100,431 | | Long-term debt, less current portion | $192,298 | $195,299 | | Total stockholders' equity | $216,400 | $237,102 | | Total liabilities and stockholders' equity | $585,288 | $596,891 | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net sales | $82,545 | $102,601 | | Gross profit | $11,275 | $21,064 | | Loss from operations | $(13,797) | $(2,939) | | Net loss | $(13,110) | $(3,908) | | Diluted loss per share | $(0.58) | $(0.18) | | Cash dividends declared and paid per share | $0.30 | $0.29 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(56,916) | $(25,993) | | Net cash used in investing activities | $(2,748) | $(2,198) | | Net cash provided by (used in) financing activities | $41,894 | $(561) | | Change in cash and cash equivalents | $(17,770) | $(28,752) | | Cash and cash equivalents at end of period | $2,900 | $8,212 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Disaggregated Revenue by Segment (in thousands) | Segment | Q1 2023 Revenue | Q1 2022 Revenue | | :--- | :--- | :--- | | Work Truck Attachments | $19,246 | $45,776 | | Work Truck Solutions | $63,299 | $56,825 | | **Total Revenue** | **$82,545** | **$102,601** | - On January 5, 2023, the company amended its Credit Agreement, increasing the revolving commitment by **$50 million** to a total of **$150 million**[61](index=61&type=chunk) - As of March 31, 2023, the company had **$205.0 million** outstanding on its term loan and **$52.0 million** on its revolving credit facility, with **$97.5 million** remaining availability[65](index=65&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial results, noting a **19.6% decrease in net sales to $82.5 million** and an increased **net loss of $13.1 million**, primarily due to low snowfall impacting Work Truck Attachments sales - Low snowfall during the 2022-2023 winter season, approximately **14% below the 10-year average**, significantly impacted the company's results, especially in key East Coast markets[105](index=105&type=chunk)[134](index=134&type=chunk) - Ongoing inflationary pressures on materials and labor are expected to impact 2023 profitability, with mitigation efforts through price increases and surcharges potentially affecting margins due to timing differences[140](index=140&type=chunk) Segment Net Sales (in thousands) | Segment | Q1 2023 | Q1 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Work Truck Attachments | $19,246 | $45,776 | $(26,530) | (58.0)% | | Work Truck Solutions | $63,299 | $56,825 | $6,474 | 11.4% | | **Total Net Sales** | **$82,545** | **$102,601** | **$(20,056)** | **(19.6)%** | Segment Adjusted EBITDA (in thousands) | Segment | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Work Truck Attachments | $(10,231) | $3,044 | $(13,275) | | Work Truck Solutions | $2,857 | $1,592 | $1,265 | | **Total Adjusted EBITDA** | **$(7,374)** | **$4,636** | **$(12,010)** | [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations on variable-rate debt and commodity price risk from steel, managed through interest rate swaps and price adjustments - The company faces interest rate risk from its variable-rate term loan (**$205.0 million** outstanding) and revolving credit facility (**$52.0 million** outstanding as of March 31, 2023)[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) - Interest rate swap agreements mitigate volatility, including a **$175,000** notional swap through May 2024 and a **$125,000** notional swap from May 2024 through June 2026[67](index=67&type=chunk)[69](index=69&type=chunk)[150](index=150&type=chunk) - Steel is a primary commodity risk, representing **19.0% of Q1 2023 revenue**, managed through price increases and surcharges without hedging instruments[152](index=152&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of the period end[153](index=153&type=chunk) - No material changes occurred in internal control over financial reporting during the quarter[154](index=154&type=chunk) Part II. Other Information [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course litigation matters, none of which are expected to materially impact operations or financial position - No litigation is expected to have a material adverse effect on the company's financial position[156](index=156&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No significant changes to the company's risk factors were reported from those in the Annual Report on Form 10-K for FY2022 - No significant changes to risk factors were reported for the period[158](index=158&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell unregistered equity securities or repurchase shares in Q1 2023, leaving **$44.0 million** available under the stock repurchase plan - No unregistered securities were sold during the three months ended March 31, 2023[159](index=159&type=chunk) Issuer Purchases of Equity Securities (Q1 2023) | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares still available to be purchased under the program (000's) | | :--- | :--- | :--- | :--- | | Jan 2023 | 0 | $ - | $44,000 | | Feb 2023 | 0 | $ - | $44,000 | | Mar 2023 | 0 | $ - | $44,000 | | **Total** | **0** | **$ -** | **$44,000** | [Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[163](index=163&type=chunk) [Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures for the period - None[164](index=164&type=chunk) [Other Information](index=42&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - None[165](index=165&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and inline XBRL financial statements - Exhibits filed include **CEO/CFO certifications (31.1, 31.2, 32.1)** and **Inline XBRL data (101, 104)**[166](index=166&type=chunk)
Douglas Dynamics(PLOW) - 2023 Q1 - Earnings Call Transcript
2023-05-02 19:53
Financial Data and Key Metrics Changes - The company reported net sales of $82.5 million and gross profit of $11.3 million for Q1 2023, down from $102.6 million and $21.1 million in Q1 2022, respectively, primarily due to lower volumes from reduced snowfall [18][19] - GAAP net loss was $13.1 million or negative $0.58 per diluted share, compared to a loss of $3.9 million or negative $0.18 per diluted share in the prior year [19] - Adjusted EBITDA was negative $7.4 million, a decline from positive $4.6 million in the same period last year, significantly impacted by lower sales volumes [27] Business Line Data and Key Metrics Changes - The Work Truck Attachments segment generated net sales of $19.3 million, down from $45.8 million in Q1 2022, with adjusted EBITDA at negative $10.2 million compared to positive $3 million last year, affected by low snowfall [20] - The Work Truck Solutions segment saw an 11.4% increase in net sales to $63.3 million from $56.8 million in the previous year, with adjusted EBITDA nearly doubling from $1.6 million to $2.9 million, driven by higher volumes and improved pricing [21][12] Market Data and Key Metrics Changes - The snow season ended approximately 14% below the 10-year average, with the East Coast experiencing its lowest snowfall in decades, impacting dealer inventories and preseason orders [28] - Dealer inventories were above the 5-year average at the end of the season, which is expected to affect preseason orders as they restock for the next winter [9] Company Strategy and Development Direction - The company remains committed to achieving $3 of EPS by 2025, viewing the current low snowfall as a short-term issue that does not affect long-term targets [5][24] - The company is implementing a "low snowfall playbook" to mitigate impacts, including curtailing discretionary spending and delaying some investments [28][31] - Positive demand dynamics in snow and ice control are emerging, driven by customer demand for immediate services and an expanding snow belt [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medium to long-term outlook despite current challenges, noting improvements in material price inflation and labor market conditions [7] - The company anticipates that supply chain disruptions will gradually improve, allowing for growth in the Solutions segment [13][29] - Management emphasized the importance of focusing on controllable factors to enhance profitability and prepare for future growth [45] Other Important Information - SG&A expenses increased to $25.1 million, primarily due to inflationary pressures [26] - The company paid a quarterly cash dividend of $0.295 per share, maintaining its commitment to dividends despite the current challenges [32] Q&A Session Summary Question: How to bridge the gap from 2023 guidance to 2025 targets? - Management identified four key drivers: return to average snowfall, new product introductions, baseline profit improvements, and price versus cost improvements [39] Question: What is the East Coast's significance in the Attachments business? - Management indicated that the East Coast is a significant market, and adjustments in dealer inventories will impact preseason orders [40] Question: Update on chassis supply constraints? - Management noted that while there are pockets of improvement, the situation remains unpredictable, and they are focused on improving baseline profitability in the meantime [44] Question: Will the dividend policy change due to reduced earnings outlook? - Management confirmed that the dividend remains a priority and will not change despite the current challenges [50] Question: Can the company still reach the low end of its guidance with weak snowfall in Q4? - Management stated that the guidance accounts for various snowfall outcomes and that they believe they can still meet the low end of the range [52] Question: Outlook for inventory levels and cash flow? - Management projected decent free cash flow for the year and indicated that inventory levels will normalize as the year progresses [56]
Douglas Dynamics (PLOW) Investor Presentation - Slideshow
2023-03-24 17:44
Average Over Past Five Years2: FCF: ~$46 Million FCF as a % of Adjusted Net Income: ~110%3 CapEx: ~2% of Sales | --- | |------------------------| | Strong Balance Sheet | | Growing Free Cash Flow | | Support Growth Plans | $48 $66 $39 $49 $28 $0 $10 $20 $30 $40 $50 $60 $70 $80 2018 2019 2020 2021 2022 Free Cash Flow (FCF)1($ in millions) $46 5-year Avg. 1 Free Cash Flow defined as cash from operating activities less capital expenditures and Free Cash Flow Conversion is defined as Free Cash Flow / cash from ...
Douglas Dynamics(PLOW) - 2022 Q4 - Annual Report
2023-02-21 21:07
Part I [Business](index=5&type=section&id=Item%201.%20Business) Douglas Dynamics manufactures and upfits commercial work truck attachments and equipment across two segments: Work Truck Attachments and Work Truck Solutions [Overview](index=5&type=section&id=Item%201.%20Business%20-%20Overview) The company operates through two segments: Work Truck Attachments for snow and ice control products, and Work Truck Solutions for municipal products and vehicle upfitting - The company operates through two segments: **Work Truck Attachments** (brands: FISHER®, SNOWEX®, WESTERN®) and **Work Truck Solutions** (brands: HENDERSON®, DEJANA®)[19](index=19&type=chunk) - In 2022, snow and ice control equipment accounted for **85% of net sales** in the Work Truck Attachments segment, with parts and accessories comprising the rest[20](index=20&type=chunk) - The Work Truck Solutions segment serves approximately **2,800 customers**, including governmental agencies and municipalities, as a premier upfitter for Class 3-8 trucks[24](index=24&type=chunk) [Our Industry](index=6&type=section&id=Item%201.%20Business%20-%20Our%20Industry) Industry demand for Work Truck Attachments is driven by equipment replacement cycles and prior season snowfall, while Work Truck Solutions is influenced by macroeconomic trends and municipal budgets - Demand for snow and ice control equipment is primarily driven by the replacement cycle, with snowplows typically replaced every **9 to 12 years**[26](index=26&type=chunk) - Annual sales are significantly influenced by the prior snow season's snowfall levels, as heavy snowfall increases equipment wear and tear[27](index=27&type=chunk) - The company implemented significant price increases in **2021 and 2022**, ranging from mid-single digits to low double-digits, in response to inflation[31](index=31&type=chunk) [Our Competitive Strengths](index=8&type=section&id=Item%201.%20Business%20-%20Our%20Competitive%20Strengths) The company's competitive strengths include strong brand equity, a broad product offering, an extensive distributor network, operational efficiency, robust cash flow, and an experienced management team - Key competitive strengths include strong brand equity, a broad product line, an extensive North American distributor network with approximately **3,100 points of sale**, operational efficiency, strong cash flow, and an experienced management team[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) [Our Business Strategy](index=9&type=section&id=Item%201.%20Business%20-%20Our%20Business%20Strategy) The company's business strategy focuses on maximizing cash flow through product innovation, network optimization, aggressive asset management, and a lean enterprise platform (DDMS) - The core business strategy aims to maximize cash flow for reinvestment, dividends, debt reduction, and stock repurchases[43](index=43&type=chunk) - Key strategic pillars include continuous product innovation, optimization of the distributor and customer network, aggressive asset management, and a flexible, lean manufacturing platform (DDMS)[43](index=43&type=chunk)[44](index=44&type=chunk)[46](index=46&type=chunk) [Order Backlog](index=10&type=section&id=Item%201.%20Business%20-%20Order%20Backlog) The company's total order backlog increased from **$315.4 million** in 2021 to **$368.7 million** in 2022 Order Backlog Comparison | Date | Backlog (in millions) | | :--- | :--- | | December 31, 2022 | $368.7 | | December 31, 2021 | $315.4 | [Human Capital Management](index=11&type=section&id=Item%201.%20Business%20-%20Human%20Capital%20Management) As of December 31, 2022, Douglas Dynamics employed **1,813 people**, emphasizing a culture of integrity, teamwork, and talent development through initiatives like Douglas Dynamics University - As of December 31, 2022, the company employed **1,813 people**, with all but **14** based in the US and no union representation[53](index=53&type=chunk) - The company promotes talent development through its internal **Douglas Dynamics University (DDU)**, offering a balanced approach of instruction, interaction, and application[59](index=59&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to snowfall dependency, economic conditions, supply chain disruptions, operational reliance on suppliers and distributors, cybersecurity, debt load, and regulatory compliance [Risks Related to Weather and Seasonality](index=14&type=section&id=Item%201A.%20Risk%20Factors%20-%20Weather%20and%20Seasonality) The company's financial results, especially for Work Truck Attachments, are highly dependent on snowfall levels, with reduced snowfall potentially leading to lower sales and cash flow - The company's financial results, particularly for the Work Truck Attachments segment, depend primarily on snowfall levels, where a lack of snowfall can adversely affect sales and cash flow[75](index=75&type=chunk) [Risks Related to Economic Conditions](index=15&type=section&id=Item%201A.%20Risk%20Factors%20-%20Economic%20Conditions) Economic conditions, including potential downturns, reduced government spending, and volatile steel prices (13% of 2022 revenue), pose significant risks to the company's demand and margins - The price of steel poses a significant risk, as raw steel purchases were equivalent to approximately **13% of revenue in 2022**, with volatility potentially impacting gross margins[89](index=89&type=chunk) - The COVID-19 pandemic has adversely impacted the business through supply chain disruptions and difficulty obtaining chassis, with potential for continued effects[85](index=85&type=chunk) [Risks Related to Business and Operations](index=17&type=section&id=Item%201A.%20Risk%20Factors%20-%20Business%20and%20Operations) Operational risks include dependence on outside suppliers and OEMs for components and chassis, potential cybersecurity breaches, reliance on senior management, and maintaining distributor relationships - The company relies on outside suppliers and OEMs for components and truck chassis, facing difficulties in **2020, 2021, and 2022** due to computer chip shortages that deferred sales[96](index=96&type=chunk) - The business depends on its network of distributors, and losing a substantial portion of this base could significantly reduce sales[100](index=100&type=chunk) [Risks Related to Capital Structure](index=23&type=section&id=Item%201A.%20Risk%20Factors%20-%20Capital%20Structure) As of December 31, 2022, the company's **$207.7 million** senior secured indebtedness poses risks to financial flexibility and exposes it to interest rate fluctuations - As of December 31, 2022, the company had approximately **$207.7 million** of senior secured indebtedness, which could adversely affect operations and cash flow[122](index=122&type=chunk) - Borrowings under senior credit facilities are at variable interest rates, exposing the company to interest rate risk that could increase debt service obligations[124](index=124&type=chunk) [Properties](index=25&type=section&id=Item%202.%20Properties) The company's facilities include a leased corporate headquarters in Milwaukee, five owned manufacturing sites, fifteen leased facilities across eight states, and a leased sourcing office in China Key Company Facilities (as of Dec 31, 2022) | Location | Ownership | Function | | :--- | :--- | :--- | | Milwaukee, Wisconsin | Leased | Corporate headquarters | | Milwaukee, Wisconsin | Owned | Work Truck Attachments | | Rockland, Maine | Owned | Work Truck Attachments | | Madison Heights, Michigan | Owned | Work Truck Attachments | | Manchester, Iowa | Owned | Work Truck Solutions | | Huntley, Illinois | Owned | Work Truck Solutions | [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various litigation, primarily product liability and intellectual property disputes, none of which management deems material to operations or financial position - The company is engaged in various litigation, including product liability and intellectual property disputes, but management does not believe any current litigation is material[131](index=131&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under 'PLOW', pays quarterly dividends, and initiated a **$50.0 million** stock repurchase plan in 2022, with **$44.0 million** remaining - The company's common stock trades on the NYSE under the symbol "**PLOW**"[141](index=141&type=chunk) 2022 Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid | Value (in millions) | | :--- | :--- | :--- | :--- | | Year Ended Dec 31, 2022 | 171,088 | $35.07 | $6.0 | | **Remaining Authorization** | | | **$44.0** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, net sales grew **13.8% to $616.1 million**, net income increased to **$38.6 million**, but gross margin declined due to inflation, and operating cash flow decreased to **$40.0 million** due to working capital changes [Results of Operations](index=29&type=section&id=Item%207.%20MD%26A%20-%20Results%20of%20Operations) In 2022, net sales increased **13.8% to $616.1 million** and net income grew to **$38.6 million**, driven by pricing and volume, despite gross margin contraction due to inflation Consolidated Statement of Income (Loss) Summary (in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net sales | $616,068 | $541,453 | $480,154 | | Gross profit | $151,456 | $141,872 | $128,280 | | Income (loss) from operations | $58,753 | $51,135 | $(75,140) | | Net income (loss) | $38,609 | $30,691 | $(86,553) | Net Sales by Segment (in thousands) | Segment | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Work Truck Attachments | $382,296 | $325,707 | $252,838 | | Work Truck Solutions | $233,772 | $215,746 | $227,316 | | **Total** | **$616,068** | **$541,453** | **$480,154** | - In 2020, the company recorded a significant goodwill impairment charge of **$127.9 million** related to its Municipal and Dejana reporting units, primarily due to COVID-19 economic conditions[154](index=154&type=chunk)[180](index=180&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Item%207.%20MD%26A%20-%20Liquidity%20and%20Capital%20Resources) The company's liquidity at year-end 2022 included **$20.7 million** cash and **$99.5 million** borrowing availability, with operating cash flow decreasing to **$40.0 million** due to working capital changes Cash Flow Summary (in thousands) | Cash Flow Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $40,030 | $60,535 | $53,366 | | Net cash used in investing activities | $(12,047) | $(11,208) | $(14,490) | | Net cash used in financing activities | $(44,277) | $(53,393) | $(33,511) | - The **$17.1 million** decrease in 2022 operating cash flow was primarily due to unfavorable working capital changes, including increased accounts receivable and inventory[215](index=215&type=chunk) - In January 2023, the company increased its revolving credit facility commitment by **$50.0 million** to a total of **$150.0 million**[207](index=207&type=chunk) [Non-GAAP Financial Measures](index=40&type=section&id=Item%207.%20MD%26A%20-%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBITDA, which increased **9.2% to $86.8 million** in 2022, and Adjusted diluted EPS, which rose to **$1.84**, while free cash flow decreased to **$28.0 million** Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income (loss) | $38,609 | $30,691 | $(86,553) | | Adjustments (Interest, Taxes, D&A, etc.) | $40,943 | $35,952 | $159,655 | | Other Adjustments (Stock Comp, Impairment, etc.) | $7,228 | $12,793 | $1,790 | | **Adjusted EBITDA** | **$86,780** | **$79,536** | **$74,892** | Adjusted Net Income and EPS | | 2022 | 2021 | | :--- | :--- | | Adjusted net income (non-GAAP, in thousands) | $43,514 | $39,392 | | Adjusted earnings per common share - dilutive (non-GAAP) | $1.84 | $1.67 | - Free cash flow, defined as net cash from operations less capital expenditures, decreased to **$28.0 million** in 2022 from **$49.3 million** in 2021[226](index=226&type=chunk)[229](index=229&type=chunk) [Future Obligations and Commitments](index=45&type=section&id=Item%207.%20MD%26A%20-%20Future%20Obligations%20and%20Commitments) As of December 31, 2022, total contractual cash obligations were **$270.1 million**, primarily comprising **$207.7 million** in long-term debt and **$41.3 million** in interest payments Contractual Obligations as of December 31, 2022 (in thousands) | Obligation Type | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $207,737 | $11,137 | $33,525 | $163,075 | $ - | | Operating leases | $21,038 | $5,678 | $8,800 | $4,383 | $2,177 | | Interest on long-term debt | $41,331 | $12,791 | $23,363 | $5,177 | $ - | | **Total** | **$270,106** | **$29,606** | **$65,688** | **$172,635** | **$2,177** | [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations on variable-rate debt, partially mitigated by swaps, and commodity price risk from steel, which it attempts to offset through price adjustments - The company is exposed to interest rate risk from its variable-rate debt, where a hypothetical **1% change** in interest rates would have altered 2022 interest expense by **$0.4 million** on the term loan[260](index=260&type=chunk)[262](index=262&type=chunk) - The company uses interest rate swap agreements to reduce interest rate volatility, holding swaps with notional amounts of **$175.0 million** and **$125.0 million** as of December 31, 2022[263](index=263&type=chunk) - The company faces commodity price risk from steel, a primary raw material, attempting to mitigate cost increases through price adjustments, though not always successfully or timely[266](index=266&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2022, management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2022**[269](index=269&type=chunk) - Management believes the company's internal control over financial reporting was effective as of **December 31, 2022**, based on the COSO framework[274](index=274&type=chunk) Part III [Corporate Governance, Compensation, and Other Matters](index=49&type=section&id=Item%2010-14.%20Corporate%20Governance%2C%20Compensation%2C%20and%20Other%20Matters) Information for Items 10-14, covering corporate governance, compensation, and related matters, is incorporated by reference from the 2023 Proxy Statement, with **531,267** securities available for future issuance - Information for Items 10-14, covering directors, executive compensation, security ownership, and related transactions, is incorporated by reference from the company's Proxy Statement[279](index=279&type=chunk)[282](index=282&type=chunk)[288](index=288&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be issued upon exercise | Securities remaining available for future issuance | | :--- | :--- | :--- | | Equity Compensation plans approved by security holders | 214,085 | 531,267 | Part IV [Exhibits and Financial Statement Schedules](index=51&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including consolidated financial statements and an Exhibit Index for all filed exhibits - All required financial statement schedules have been omitted as the necessary information is included in the Notes to the Consolidated Financial Statements[290](index=290&type=chunk) Financial Statements and Notes [Report of Independent Registered Public Accounting Firm](index=57&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued unqualified opinions on the company's consolidated financial statements and internal control over financial reporting, identifying Dejana tradename impairment testing as a Critical Audit Matter - Deloitte & Touche LLP issued an unqualified opinion, concluding that the financial statements are presented fairly and internal control over financial reporting is effective[305](index=305&type=chunk) - Impairment testing of the Dejana indefinite-lived intangible tradename was identified as a Critical Audit Matter due to the significant auditor judgment required for management's estimates on future revenue, royalty rates, and discount rates[313](index=313&type=chunk)[314](index=314&type=chunk) [Consolidated Financial Statements](index=60&type=section&id=Consolidated%20Financial%20Statements) As of December 31, 2022, total assets were **$596.9 million** and shareholders' equity **$237.1 million**, with 2022 net sales of **$616.1 million** and net income of **$38.6 million** Consolidated Balance Sheet Summary (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total current assets | $252,921 | $220,431 | | Total assets | $596,891 | $572,476 | | Total current liabilities | $100,431 | $81,916 | | Total long-term debt | $195,299 | $206,058 | | Total shareholders' equity | $237,102 | $214,610 | Consolidated Statement of Income Summary (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net sales | $616,068 | $541,453 | $480,154 | | Gross profit | $151,456 | $141,872 | $128,280 | | Net income (loss) | $38,609 | $30,691 | $(86,553) | | Diluted EPS | $1.63 | $1.29 | $(3.81) | [Notes to Consolidated Financial Statements](index=65&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial data, including the **$127.9 million** goodwill impairment in 2020, debt structure, segment performance, and stock-based compensation - In 2020, the company recorded goodwill impairment charges totaling **$127.9 million** ($47.8 million for Municipal and $80.1 million for Dejana) due to the negative business climate from the COVID-19 pandemic and chassis availability issues[365](index=365&type=chunk) - On January 5, 2023, the company amended its credit agreement, increasing the revolving credit commitment by **$50.0 million** to a total of **$150.0 million**[525](index=525&type=chunk) Segment Performance Summary (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Net Sales** | | | | | Work Truck Attachments | $382,296 | $325,707 | $252,838 | | Work Truck Solutions | $233,772 | $215,746 | $227,316 | | **Adjusted EBITDA** | | | | | Work Truck Attachments | $78,211 | $77,369 | $62,532 | | Work Truck Solutions | $8,569 | $2,167 | $12,360 |
Douglas Dynamics(PLOW) - 2022 Q4 - Earnings Call Transcript
2023-02-21 17:30
Douglas Dynamics, Inc. (NYSE:PLOW) Q4 2022 Earnings Conference Call February 21, 2023 10:00 AM ET Company Participants Sarah Lauber – Executive Vice President and Chief Financial Officer Bob McCormick – President and Chief Executive Officer Conference Call Participants Mike Shlisky – D.A. Davidson Tim Wojs – Baird Greg Burns – Sidoti & Co. Operator Good morning, and welcome to the Douglas Dynamics Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded ...
Douglas Dynamics(PLOW) - 2022 Q3 - Quarterly Report
2022-11-01 20:10
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Form 10-Q (Mark One) 11270 W Park Place Ste 300 Milwaukee, Wisconsin 53224 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 001-34728 DOUGLAS DYNAMICS, INC. (Exact name of regis ...
Douglas Dynamics(PLOW) - 2022 Q3 - Earnings Call Transcript
2022-11-01 17:40
Financial Data and Key Metrics Changes - In Q3 2022, net sales increased by 30% to $166.1 million, with gross profit rising by 35% to $41.3 million compared to Q3 2021, driven by increased volume and pricing adjustments [27][28] - GAAP net income reached $13.3 million or $0.56 per diluted share, an increase of approximately 89% from $7 million or $0.30 per diluted share in 2021 [28] - Adjusted EBITDA improved to $25.1 million, up from $15.5 million in the same period last year, reflecting higher volumes and improved price realization [29][30] Business Segment Data and Key Metrics Changes - Work Truck Attachments segment net sales increased by 33% to $108.2 million, with adjusted EBITDA rising by 55% to $22.9 million, attributed to increased volumes and price realization [32][33] - Work Truck Solutions segment reported net sales of $57.9 million, a 25% increase, with adjusted EBITDA improving to $2.2 million from $700,000 in the prior year, despite ongoing supply chain challenges [34][35] Market Data and Key Metrics Changes - Demand for products and services remained strong, with minimal customer order cancellations and a robust backlog, particularly in municipal customers who are less affected by economic downturns [15][16] - The backlog is approximately 15% higher than at the end of 2021, indicating sustained demand despite supply chain constraints [64] Company Strategy and Development Direction - The company is focused on long-term growth initiatives, including vertical integration and new product launches, such as the redesigned pusher plow and the DynaPro dump body [18][20] - The company is open to acquisitions and is in a strong financial position to pursue opportunities, particularly with private family-owned companies [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges and maintaining a positive demand outlook, despite supply chain constraints expected to persist into 2023 [26][44] - The company raised and narrowed its 2022 guidance, expecting net sales between $600 million and $630 million and adjusted EBITDA ranging from $80 million to $95 million [42][43] Other Important Information - The company maintained its quarterly cash dividend of $0.29 per share and did not repurchase shares during the quarter, focusing instead on working capital adjustments [41] - Capital expenditures for the first nine months of 2022 totaled $8.9 million, reflecting ongoing investments in growth initiatives [40] Q&A Session Summary Question: Confidence in collecting accounts receivable by year-end - Management expressed confidence in collecting pre-season receivables, noting that the increase in accounts receivable aligns with historical patterns [48] Question: Expectations for margins in Q1 2023 - Management indicated that while they do not foresee significant headwinds dissipating, they are navigating challenges more consistently, which should help margins [51] Question: Chassis supply challenges and shipment increases - Management attributed increased shipments to improved efficiency and productivity, despite ongoing chassis supply challenges [52][53] Question: Planned expansion at DEJANA to handle backlog - Management stated that current facilities have sufficient capacity to handle increased volume when chassis supply improves, without needing additional fixed costs [54] Question: Margin expansion sustainability - Management noted that better price-cost dynamics were observed in Q3 and expect this trend to continue into Q4 and 2023 [58][59] Question: Backlog growth and supply chain status - Management confirmed that while backlog did not grow sequentially, it remains high and is approximately 15% higher than at the end of 2021 [64] Question: Handling increased chassis supply if it becomes available - Management affirmed that they are prepared to handle increased chassis supply efficiently without significant inefficiencies [67]
Douglas Dynamics(PLOW) - 2022 Q2 - Quarterly Report
2022-08-02 20:03
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 001-34728 DOUGLAS DYNAMICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdic ...