[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part details Douglas Dynamics, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2021 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Douglas Dynamics, Inc., including balance sheets, statements of operations and comprehensive income (loss), cash flows, and shareholders' equity, along with detailed notes explaining the accounting policies and specific financial line items [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and stockholders' equity from December 31, 2020, to March 31, 2021, primarily driven by a reduction in cash and accounts receivable, partially offset by an increase in inventories Unaudited Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2021 (unaudited) | December 31, 2020 (unaudited) | | :-------------------------------- | :--------------------------- | :---------------------------- | | Total assets | $556,602 | $579,202 | | Total current assets | $197,867 | $217,187 | | Cash and cash equivalents | $35,524 | $41,030 | | Accounts receivable, net | $45,149 | $83,195 | | Inventories | $99,873 | $79,482 | | Total liabilities | $359,975 | $378,998 | | Total stockholders' equity | $196,627 | $200,204 | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) For the three months ended March 31, 2021, the company reported a significant turnaround from a net loss to net income, driven by a substantial increase in net sales and gross profit, alongside reduced interest expense Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net sales | $103,342 | $68,190 | | Cost of sales | $77,090 | $56,500 | | Gross profit | $26,252 | $11,690 | | Income (loss) from operations | $3,648 | $(8,197) | | Interest expense, net | $(2,975) | $(5,040) | | Net income (loss) | $742 | $(10,086) | | Basic EPS | $0.03 | $(0.44) | | Diluted EPS | $0.03 | $(0.44) | | Cash dividends declared and paid per share | $0.29 | $0.28 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated significant cash in Q1 2021, a reversal from cash usage in Q1 2020, primarily due to improved net income and favorable working capital changes. Financing activities used substantial cash in Q1 2021, mainly for debt repayment Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $24,149 | $(9,080) | | Net cash used in investing activities | $(2,177) | $(2,304) | | Net cash provided by (used in) financing activities | $(27,478) | $2,860 | | Change in cash and cash equivalents | $(5,506) | $(8,524) | | Cash and cash equivalents at end of period | $35,524 | $27,141 | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity decreased slightly from December 31, 2020, to March 31, 2021, primarily due to dividends paid, partially offset by net income and stock-based compensation Unaudited Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Total Stockholders' Equity | $196,627 | $200,204 | | Common Stock Shares Outstanding | 22,955,472 | 22,857,457 | | Retained Earnings | $41,664 | $47,712 | | Accumulated Other Comprehensive Loss | $(4,989) | $(5,495) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's accounting policies, revenue recognition, credit losses, fair value measurements, inventory, property, plant and equipment, leases, intangible assets, long-term debt, accrued liabilities, warranty, earnings per share, employee stock plans, commitments, contingencies, segment information, income taxes, and changes in accumulated other comprehensive loss [Note 1. Basis of Presentation](index=10&type=section&id=Note%201.%20Basis%20of%20Presentation) The financial statements are prepared in accordance with GAAP for interim information. The company operates in two segments: Work Truck Attachments (seasonal) and Work Truck Solutions. COVID-19 significantly impacted Q1 2020 results, leading to facility closures and a CARES Act benefit - The company operates in two segments: Work Truck Attachments (commercial snow and ice management) and Work Truck Solutions (municipal snow and ice control, truck up-fitting)[17](index=17&type=chunk)[18](index=18&type=chunk) - The Work Truck Attachments segment is seasonal, with greatest sales volume in Q2 and Q3, and lowest in Q1, due to pre-season sales programs and snowfall patterns[20](index=20&type=chunk)[21](index=21&type=chunk) - COVID-19 pandemic significantly impacted Q1 2020 operations, including a preventative facility closure and a **$1,152 thousand CARES Act benefit**[22](index=22&type=chunk)[23](index=23&type=chunk) [Note 2. Revenue Recognition](index=12&type=section&id=Note%202.%20Revenue%20Recognition) Revenue is recognized when control of goods or services transfers to the customer. The Work Truck Attachments segment recognizes revenue upon shipment, while Work Truck Solutions recognizes revenue upon delivery for upfit vehicles (point in time) or over time for customer-owned vehicles. Contract liabilities increased from $2,746 thousand to $3,741 thousand in Q1 2021 - Work Truck Attachments revenue is recognized upon shipment, with discounts and incentives recorded as a reduction of net sales[25](index=25&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - Work Truck Solutions revenue for upfits is recognized net of the truck chassis value, as the company acts as an agent for the chassis. Revenue is recognized at a point in time upon delivery for non-customer owned vehicles and over time for customer-owned vehicles[31](index=31&type=chunk)[32](index=32&type=chunk)[35](index=35&type=chunk) Revenue by Customer Type and Timing of Recognition (in thousands) | Revenue by Customer Type (Three Months Ended March 31, 2021) | Work Truck Attachments | Work Truck Solutions | Total Revenue | | :--------------------------------------------------- | :--------------------- | :------------------- | :------------ | | Independent dealer | $41,981 | $33,648 | $75,629 | | Government | - | $12,450 | $12,450 | | Fleet | - | $11,345 | $11,345 | | Other | - | $3,918 | $3,918 | | **Total revenue** | **$41,981** | **$61,361** | **$103,342** | | Revenue by Timing of Recognition (Three Months Ended March 31, 2021) | Work Truck Attachments | Work Truck Solutions | Total Revenue | | :--------------------------------------------------- | :--------------------- | :------------------- | :------------ | | Point in time | $41,981 | $40,710 | $82,691 | | Over time | - | $20,651 | $20,651 | | **Total revenue** | **$41,981** | **$61,361** | **$103,342** | Contract Liabilities (in thousands) | Contract Liabilities | Balance at Beginning of Period | Additions | Deductions | Balance at End of Period | | :------------------- | :----------------------------- | :-------- | :--------- | :----------------------- | | March 31, 2021 | $2,746 | $3,165 | $(2,170) | $3,741 | | March 31, 2020 | $2,187 | $1,637 | $(1,789) | $2,035 | [Note 3. Credit Losses](index=17&type=section&id=Note%203.%20Credit%20Losses) The company adopted the CECL model for credit losses in 2020, increasing the allowance for credit losses. As of March 31, 2021, the total allowance for credit losses on trade accounts receivable was $3,046 thousand, an increase from $2,929 thousand at December 31, 2020 - Effective January 1, 2020, the company adopted the CECL model, increasing the allowance for credit losses by approximately **$750 thousand** ($400k for Work Truck Attachments, $350k for Work Truck Solutions)[43](index=43&type=chunk) Allowance for Credit Losses on Trade Accounts Receivable (in thousands) | Allowance for Credit Losses on Trade Accounts Receivable | March 31, 2021 | December 31, 2020 | | :--------------------------------------------------- | :------------- | :---------------- | | Work Truck Attachments | $1,582 | $1,480 | | Work Truck Solutions | $1,464 | $1,449 | | **Total** | **$3,046** | **$2,929** | [Note 4. Fair Value](index=19&type=section&id=Note%204.%20Fair%20Value) The company measures certain financial assets and liabilities at fair value, primarily non-qualified benefit plan assets and interest rate swaps, using Level 2 inputs. Long-term debt fair value is also estimated using Level 2 inputs Fair Value (in thousands) | Fair Value (in thousands) | March 31, 2021 | December 31, 2020 | | :------------------------ | :------------- | :---------------- | | Non-qualified benefit plan assets | $9,376 | $9,041 | | Interest rate swaps (liability) | $10,871 | $13,073 | | Long-term debt (fair value) | $217,936 | $241,278 | - Fair value measurements are categorized into Level 1, 2, or 3. Non-qualified benefit plan assets, interest rate swaps, and long-term debt fair values are determined using **Level 2 inputs** (observable market inputs)[47](index=47&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 5. Inventories](index=20&type=section&id=Note%205.%20Inventories) Total inventories increased significantly from December 31, 2020, to March 31, 2021, primarily driven by an increase in finished goods. Truck chassis inventory financed through floor plan agreements also increased Inventories (in thousands) | Inventories (in thousands) | March 31, 2021 | December 31, 2020 | | :------------------------- | :------------- | :---------------- | | Finished goods | $61,379 | $39,496 | | Work-in-process | $7,156 | $8,253 | | Raw material and supplies | $31,338 | $31,733 | | **Total inventories** | **$99,873** | **$79,482** | | Truck chassis inventory | $12,112 | $8,146 | | Related floor plan obligations | $12,029 | $7,885 | [Note 6. Property, Plant and Equipment](index=22&type=section&id=Note%206.%20Property,%20Plant%20and%20Equipment) Net property, plant and equipment remained relatively stable from December 31, 2020, to March 31, 2021, with minor increases in machinery and equipment and construction-in-process Property, Plant and Equipment (in thousands) | Property, Plant and Equipment (in thousands) | March 31, 2021 | December 31, 2020 | | :------------------------------------------- | :------------- | :---------------- | | Total property, plant and equipment | $140,553 | $138,762 | | Less accumulated depreciation | $(76,151) | $(74,442) | | **Net property, plant and equipment** | **$64,402** | **$64,320** | [Note 7. Leases](index=22&type=section&id=Note%207.%20Leases) The company has operating leases for various assets, with lease expense increasing slightly in Q1 2021 compared to Q1 2020. The weighted average remaining lease term is 64 months with a discount rate of 5.16% Lease Expense (in thousands) | Lease Expense (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Operating lease expense | $1,371 | $1,311 | | Short term lease cost | $115 | $39 | | **Total lease cost** | **$1,486** | **$1,350** | Lease Metrics (in thousands, except for term and rate) | Lease Metrics | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets | $20,404 | $21,441 | | Total operating lease liabilities | $20,739 | $21,760 | | Weighted Average Remaining Lease Term | 64 months | 67 months | | Weighted Average Discount Rate | 5.16% | 5.16% | [Note 8. Other Intangible Assets](index=25&type=section&id=Note%208.%20Other%20Intangible%20Assets) Net other intangible assets decreased slightly from December 31, 2020, to March 31, 2021, primarily due to amortization. Trademark and tradenames remain the largest indefinite-lived intangible asset Other Intangible Assets (in thousands) | Other Intangible Assets (in thousands) | March 31, 2021 (Net Carrying Amount) | December 31, 2020 (Net Carrying Amount) | | :------------------------------------- | :----------------------------------- | :------------------------------------ | | Trademark and tradenames | $77,600 | $77,600 | | Dealer network | $12,000 | $13,000 | | Customer relationships | $52,439 | $53,724 | | Patents | $6,338 | $6,652 | | Noncompete agreements | $81 | $163 | | Trademarks | $1,628 | $1,652 | | **Total** | **$150,086** | **$152,791** | | Amortization expense (Q1) | $2,705 | $2,738 | [Note 9. Long-Term Debt](index=26&type=section&id=Note%209.%20Long-Term%20Debt) Long-term debt decreased from $236,676 thousand at December 31, 2020, to $216,588 thousand at March 31, 2021, primarily due to a voluntary payment of $20,000 thousand. The company's interest rate swap was dedesignated as ineffective in Q1 2020, leading to mark-to-market adjustments through interest expense Long-Term Debt (in thousands) | Long-Term Debt (in thousands) | March 31, 2021 | December 31, 2020 | | :---------------------------- | :------------- | :---------------- | | Term Loan, net | $219,583 | $240,078 | | Less current maturities | $1,459 | $1,666 | | Deferred financing costs, net | $1,536 | $1,736 | | **Long-term debt, net** | **$216,588** | **$236,676** | | Revolving Credit Agreement borrowings | $0 | $0 | | Remaining borrowing availability | $98,058 | $99,050 | - The company made a voluntary payment of **$20,000 thousand** on its debt on March 31, 2021[63](index=63&type=chunk) - The interest rate swap was dedesignated as ineffective on March 19, 2020. A mark-to-market adjustment of **$(2,202) thousand** was recorded as Interest expense in Q1 2021, compared to a **$1,413 thousand loss** in Q1 2020[64](index=64&type=chunk) [Note 10. Accrued Expenses and Other Current Liabilities](index=28&type=section&id=Note%2010.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses and other current liabilities decreased from $30,831 thousand at December 31, 2020, to $27,363 thousand at March 31, 2021, primarily due to a decrease in payroll and related costs Accrued Expenses and Other Current Liabilities (in thousands) | Accrued Expenses and Other Current Liabilities (in thousands) | March 31, 2021 | December 31, 2020 | | :---------------------------------------------------------- | :------------- | :---------------- | | Payroll and related costs | $7,019 | $10,240 | | Employee benefits | $8,592 | $7,642 | | Accrued warranty | $2,800 | $3,392 | | Interest rate swaps | $4,074 | $4,075 | | Other | $4,878 | $5,482 | | **Total** | **$27,363** | **$30,831** | [Note 11. Warranty Liability](index=28&type=section&id=Note%2011.%20Warranty%20Liability) The warranty liability decreased from $5,812 thousand at December 31, 2020, to $4,677 thousand at March 31, 2021, due to claims paid exceeding new provisions Warranty Liability Rollforward (in thousands) | Warranty Liability Rollforward (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Balance at the beginning of the period | $5,812 | $6,541 | | Warranty provision | $970 | $549 | | Claims paid/settlements | $(2,105) | $(1,888) | | **Balance at the end of the period** | **$4,677** | **$5,202** | - The company accrues for estimated warranty costs based on historical warranty expense and management's judgment, with warranties typically lasting **one to two years**[68](index=68&type=chunk) [Note 12. Earnings (Loss) per Share](index=29&type=section&id=Note%2012.%20Earnings%20(Loss)%20per%20Share) Basic and diluted EPS significantly improved to $0.03 in Q1 2021 from a loss of $(0.44) in Q1 2020, reflecting the company's return to profitability Earnings (Loss) per Common Share (in thousands, except per share data) | Earnings (Loss) per Common Share | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) allocated to common shareholders | $731 | $(10,086) | | Weighted average common shares outstanding | 22,881,416 | 22,813,256 | | **Basic EPS** | **$0.03** | **$(0.44)** | | Weighted average common shares assuming dilution | 22,901,979 | 22,813,256 | | **Diluted EPS** | **$0.03** | **$(0.44)** | [Note 13. Employee Stock Plans](index=31&type=section&id=Note%2013.%20Employee%20Stock%20Plans) The company grants performance share units (PSUs) and restricted stock units (RSUs) under its 2010 Stock Incentive Plan. Compensation expense for PSUs was $811 thousand and for RSUs was $1,154 thousand in Q1 2021, both higher than the prior year - The 2010 Stock Incentive Plan allows for various equity awards, with a maximum of **2,130,000 shares** of common stock[72](index=72&type=chunk) - Compensation expense for performance share unit awards was **$811 thousand** in Q1 2021, up from **$484 thousand** in Q1 2020[74](index=74&type=chunk) - Compensation expense for restricted stock unit awards was **$1,154 thousand** in Q1 2021, up from **$884 thousand** in Q1 2020[78](index=78&type=chunk) [Note 14. Commitments and Contingencies](index=33&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) The company is involved in various litigation matters in the ordinary course of business, primarily product liability and intellectual property disputes, but management does not believe any pending litigation will have a material adverse effect on its financial position - The company is engaged in various litigation, including product liability and intellectual property disputes, but management does not believe these will have a material adverse effect[80](index=80&type=chunk) [Note 15. Segments](index=33&type=section&id=Note%2015.%20Segments) Both Work Truck Attachments and Work Truck Solutions segments showed significant improvements in net sales and Adjusted EBITDA in Q1 2021 compared to Q1 2020, reflecting recovery from prior year's pandemic impacts and favorable snowfall Segment Performance (in thousands) | Segment Performance (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | **Net Sales:** | | | | Work Truck Attachments | $41,981 | $19,120 | | Work Truck Solutions | $61,361 | $49,070 | | **Total Net Sales** | **$103,342** | **$68,190** | | **Adjusted EBITDA:** | | | | Work Truck Attachments | $8,239 | $(2,076) | | Work Truck Solutions | $2,419 | $361 | | **Total Adjusted EBITDA** | **$10,658** | **$(1,715)** | - Segment performance is evaluated based on net sales and Adjusted EBITDA, with all corporate costs allocated to the segments[83](index=83&type=chunk) [Note 16. Income Taxes](index=37&type=section&id=Note%2016.%20Income%20Taxes) The effective tax rate was (11.6%) in Q1 2021, lower than (24.4%) in Q1 2020, primarily due to a discrete tax benefit from excess tax benefits from stock compensation Income Tax Metrics | Income Tax Metrics | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----------------- | :-------------------------------- | :-------------------------------- | | Effective tax rate | (11.6)% | (24.4)% | | Discrete tax benefit from stock compensation | $274 | $93 | - Deferred income taxes reflect temporary differences, with the largest item being the difference in book and tax amortization of goodwill and other intangibles[87](index=87&type=chunk) [Note 17. Changes in Accumulated Other Comprehensive Loss by Component](index=37&type=section&id=Note%2017.%20Changes%20in%20Accumulated%20Other%20Comprehensive%20Loss%20by%20Component) Accumulated other comprehensive loss improved from $(5,495) thousand at December 31, 2020, to $(4,989) thousand at March 31, 2021, mainly due to reclassifications related to interest rate swaps and postretirement benefit items Accumulated Other Comprehensive Loss (in thousands) | Accumulated Other Comprehensive Loss (in thousands) | Balance at December 31, 2020 | Balance at March 31, 2021 | | :------------------------------------------------ | :--------------------------- | :------------------------ | | Unrealized Net Loss on Interest Rate Swap | $(7,608) | $(7,044) | | Retiree Health Benefit Obligation | $2,113 | $2,055 | | **Total** | **$(5,495)** | **$(4,989)** | - Reclassifications from accumulated other comprehensive loss to earnings included **$777 thousand** (net of tax) from interest rate swaps and **$(58) thousand** (net of tax) from postretirement benefit items in Q1 2021[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition for the three months ended March 31, 2021, compared to the prior year. It highlights significant improvements in sales and profitability, recovery from COVID-19 impacts, and details on liquidity, capital resources, and non-GAAP financial measures [Forward-Looking Statements](index=40&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future events, financial performance, and strategies, which are subject to known and unknown risks, including weather conditions, economic factors, supply chain issues, and regulatory changes - Forward-looking statements are identified by words like 'anticipate,' 'believe,' 'intend,' 'expect,' and similar expressions[94](index=94&type=chunk) - Key risk factors include weather conditions (snowfall levels), general economic conditions (including COVID-19 impacts), relationships with OEMs and distributors, material price increases (steel), and ability to develop new products[94](index=94&type=chunk) [Results of Operations Overview](index=40&type=section&id=Results%20of%20Operations%20Overview) The company's Q1 2021 results show a strong recovery from Q1 2020, with net sales increasing by 51.5% and a shift from a net loss to net income. This improvement is attributed to increased sales volumes, favorable snowfall, and reduced impacts from COVID-19 related shutdowns Results of Operations Overview (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net sales | $103,342 | $68,190 | $35,152 | 51.5% | | Gross profit | $26,252 | $11,690 | $14,562 | 124.6% | | Income (loss) from operations | $3,648 | $(8,197) | $11,845 | - | | Net income (loss) | $742 | $(10,086) | $10,828 | - | Results of Operations Overview (as % of Net Sales) | Metric (as % of Net Sales) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Gross profit | 25.4% | 17.1% | | Income (loss) from operations | 3.5% | (12.0)% | | Net income (loss) | 0.7% | (14.6)% | - The Work Truck Attachments segment is seasonal, and its results can vary significantly quarter-to-quarter and year-to-year[97](index=97&type=chunk) - COVID-19 pandemic impacted Q1 2020 results due to facility shutdowns, but the company returned to full production by the end of Q2 2020[99](index=99&type=chunk)[100](index=100&type=chunk) [Net Sales](index=43&type=section&id=Net%20Sales) Net sales increased by $35.1 million (51.5%) to $103.3 million in Q1 2021, primarily due to higher volumes from favorable snowfall timing and location, and the recovery from reduced shipments in Q1 2020 caused by COVID-19 shutdowns Segment Net Sales (in thousands) | Segment Net Sales (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Work Truck Attachments | $41,981 | $19,120 | $22,861 | 119.6% | | Work Truck Solutions | $61,361 | $49,070 | $12,291 | 25.0% | | **Total Net Sales** | **$103,342** | **$68,190** | **$35,152** | **51.5%** | - Work Truck Attachments sales increased due to snowfall levels in Q1 2021 (**7% below 10-year average** vs. **25% below in Q1 2020**) and deferred sales from 2020[104](index=104&type=chunk) - Work Truck Solutions sales increased due to improved class 4-6 chassis availability and recovery from Q1 2020 facility shutdowns[105](index=105&type=chunk) [Cost of Sales](index=45&type=section&id=Cost%20of%20Sales) Cost of sales increased by $20.6 million (36.5%) to $77.1 million in Q1 2021, driven by higher sales volumes. As a percentage of sales, cost of sales decreased from 82.9% to 74.6%, reflecting improved efficiency and the absence of prior year's shutdown expenses Cost of Sales (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :----------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Cost of sales | $77,090 | $56,500 | $20,590 | 36.5% | | % of Net Sales | 74.6% | 82.9% | -8.3% | - | - The decrease in cost of sales as a percentage of sales is due to higher sales volumes and the absence of shutdown expenses (e.g., continuation of wages, fixed overhead) incurred in Q1 2020 due to COVID-119[106](index=106&type=chunk) [Gross Profit](index=45&type=section&id=Gross%20Profit) Gross profit more than doubled, increasing by $14.6 million (124.8%) to $26.3 million in Q1 2021. Gross profit margin improved significantly from 17.1% to 25.4%, reflecting the higher sales volumes and better cost management compared to the prior year's pandemic-affected period Gross Profit (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :----------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Gross profit | $26,252 | $11,690 | $14,562 | 124.8% | | % of Net Sales | 25.4% | 17.1% | 8.3% | - | - The improvement in gross profit margin is attributed to the same factors driving changes in cost of sales as a percentage of sales, primarily higher sales volumes and reduced shutdown expenses[107](index=107&type=chunk) [Selling, General and Administrative Expense](index=46&type=section&id=Selling,%20General%20and%20Administrative%20Expense) Selling, general and administrative expenses, including intangibles amortization, increased by $2.7 million (13.6%) to $22.6 million in Q1 2021, mainly due to higher employee compensation, including incentive-based and stock-based compensation, reflecting improved operating results Selling, General and Administrative Expense (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Selling, general and administrative expenses | $19,899 | $17,149 | $2,750 | 16.0% | | Intangibles amortization | $2,705 | $2,738 | $(33) | -1.2% | | **Total SG&A (incl. amortization)** | **$22,604** | **$19,887** | **$2,717** | **13.7%** | - The increase in SG&A was primarily due to **$1.7 million** in incentive-based compensation and **$0.6 million** in stock-based compensation, reflecting improved operating results[108](index=108&type=chunk) [Interest Expense](index=46&type=section&id=Interest%20Expense) Net interest expense decreased from $5.0 million in Q1 2020 to $3.0 million in Q1 2021. This reduction was primarily driven by a $1.5 million non-cash gain on an interest rate swap in the current year, compared to a $1.4 million loss in the prior year, partially offset by higher interest paid on the term loan due to refinancing Interest Expense (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Interest expense, net | $2,975 | $5,040 | $(2,065) | -41.0% | - The decrease in interest expense was mainly due to a **($1.5) million gain** from mark-to-market and amortization adjustments on an interest rate swap in Q1 2021, compared to a **$1.4 million loss** in Q1 2020[109](index=109&type=chunk) [Income Taxes](index=46&type=section&id=Income%20Taxes) The effective tax rate was (11.6%) in Q1 2021, compared to (24.4%) in Q1 2020, primarily due to a discrete tax benefit related to excess tax benefits from stock compensation Income Tax Metrics (in thousands, except for rate) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----------------- | :-------------------------------- | :-------------------------------- | | Income tax benefit | $(77) | $(3,262) | | Effective tax rate | (11.6)% | (24.4)% | - The lower effective tax rate in Q1 2021 was due to a **$0.3 million discrete tax benefit** from stock compensation, compared to **$0.1 million** in Q1 2020[110](index=110&type=chunk) [Net Income (Loss)](index=46&type=section&id=Net%20Income%20(Loss)) The company achieved net income of $0.7 million in Q1 2021, a significant improvement from a net loss of $(10.1) million in Q1 2020. This turnaround was driven by increased sales, improved gross profit margins, and lower interest expense Net Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :----------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net income (loss) | $742 | $(10,086) | $10,828 | - | | % of Net Sales | 0.7% | (14.6)% | 15.3% | - | [Discussion of Critical Accounting Policies](index=46&type=section&id=Discussion%20of%20Critical%20Accounting%20Policies) There have been no material changes to the company's critical accounting policies previously disclosed in its Form 10-K, other than those described in the current report - No material changes to critical accounting policies were reported, other than those specifically mentioned in the 10-Q[113](index=113&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity decreased slightly to $133.6 million at March 31, 2021, from $140.1 million at December 31, 2020, primarily due to business seasonality. Cash from operations and available credit are expected to provide adequate funds for the foreseeable future - Principal sources of cash are operations and borrowings under senior credit facilities; primary uses are working capital, debt service, capital expenditures, and dividends[113](index=113&type=chunk)[114](index=114&type=chunk) Liquidity (in thousands) | Liquidity (in thousands) | March 31, 2021 | December 31, 2020 | | :----------------------- | :------------- | :---------------- | | Cash and cash equivalents | $35,524 | $41,030 | | Revolving credit facility availability | $98,058 | $99,050 | | **Total liquidity** | **$133,582** | **$140,080** | Cash Flows (in thousands) | Cash Flows (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net cash provided by (used in) operating activities | $24,149 | $(9,080) | $33,229 | -366.0% | | Net cash used in investing activities | $(2,177) | $(2,304) | $127 | -5.5% | | Net cash provided by (used in) financing activities | $(27,478) | $2,860 | $(30,338) | -1060.8% | | **Change in cash** | **$(5,506)** | **$(8,524)** | **$3,018** | **35.4%** | - The increase in cash from operating activities was due to a **$10.3 million increase** in net income (loss) and **$22.9 million** in favorable working capital changes, including a decrease in inventory[121](index=121&type=chunk)[122](index=122&type=chunk) - Net cash used in financing activities increased due to **$30.0 million** in revolving credit facility borrowings in Q1 2020, compared to **$0.0 million** in Q1 2021[123](index=123&type=chunk) [Free Cash Flow (Non-GAAP)](index=50&type=section&id=Free%20Cash%20Flow%20(Non-GAAP)) Free cash flow significantly improved to $22.0 million in Q1 2021 from $(11.4) million in Q1 2020, primarily driven by higher cash provided by operating activities Free Cash Flow (in thousands) | Free Cash Flow (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operations | $24,149 | $(9,080) | | Acquisition of property and equipment | $(2,177) | $(2,304) | | **Free cash flow** | **$21,972** | **$(11,384)** | - Free cash flow is a non-GAAP measure defined as net cash provided by (used in) operating activities less capital expenditures, used to assess the ability to generate additional cash flow[126](index=126&type=chunk) [Adjusted EBITDA (Non-GAAP)](index=51&type=section&id=Adjusted%20EBITDA%20(Non-GAAP)) Adjusted EBITDA increased significantly to $10.7 million in Q1 2021 from $(1.7) million in Q1 2020, reflecting higher volumes and reduced COVID-19 related costs and inefficiencies in both segments Adjusted EBITDA (in thousands) | Adjusted EBITDA (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $742 | $(10,086) | | EBITDA | $8,653 | $(3,414) | | Stock-based compensation expense | $1,965 | $1,368 | | COVID-19 related costs | $40 | $317 | | **Adjusted EBITDA** | **$10,658** | **$(1,715)** | Adjusted EBITDA by Segment (in thousands) | Adjusted EBITDA by Segment (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Work Truck Attachments | $8,239 | $(2,076) | | Work Truck Solutions | $2,419 | $361 | | **Total Adjusted EBITDA** | **$10,658** | **$(1,715)** | - Adjusted EBITDA is a non-GAAP measure that excludes interest, taxes, depreciation, amortization, stock-based compensation, COVID-19 costs, and other charges, providing a consistent view of core operations[129](index=129&type=chunk) [Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share (Non-GAAP)](index=53&type=section&id=Adjusted%20Net%20Income%20(Loss)%20and%20Adjusted%20Earnings%20(Loss)%20Per%20Share%20(Non-GAAP)) Adjusted net income (loss) improved to $1.2 million in Q1 2021 from a loss of $(7.8) million in Q1 2020, resulting in Adjusted diluted EPS of $0.04, up from $(0.34). These non-GAAP measures exclude non-recurring or non-operational items to better reflect underlying business performance Adjusted Net Income (Loss) and EPS (in thousands, except per share data) | Adjusted Net Income (Loss) and EPS (in thousands, except per share data) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) (GAAP) | $742 | $(10,086) | | Adjustments (pre-tax) | $551 | $3,112 | | Tax effect on adjustments | $(138) | $(778) | | **Adjusted net income (loss) (non-GAAP)** | **$1,155** | **$(7,752)** | | GAAP diluted earnings (loss) per share | $0.03 | $(0.44) | | Adjustments net of income taxes (per share) | $0.01 | $0.10 | | **Adjusted diluted earnings (loss) per share (non-GAAP)** | **$0.04** | **$(0.34)** | - Adjustments include stock-based compensation, COVID-19 costs, purchase accounting adjustments, and derivative adjustments not classified as hedges, net of their income tax impact[136](index=136&type=chunk) [Contractual Obligations](index=57&type=section&id=Contractual%20Obligations) There have been no material changes to the company's contractual obligations during the three months ended March 31, 2021 - No material changes to contractual obligations were reported in Q1 2021[140](index=140&type=chunk) [Off-Balance Sheet Arrangements](index=57&type=section&id=Off-Balance%20Sheet%20Arrangements) The company is not party to any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition or results of operations - The company has no material off-balance sheet arrangements[141](index=141&type=chunk) [Seasonality and Year-to-Year Variability](index=57&type=section&id=Seasonality%20and%20Year-to-Year%20Variability) The Work Truck Attachments segment experiences significant seasonality and year-to-year variability driven by snowfall levels, impacting sales and working capital. The company manages this through pre-season sales programs, a variable cost structure, lean manufacturing, and a vertically integrated model - Work Truck Attachments segment is highly seasonal, with sales heavily influenced by prior season's snowfall levels and timing[142](index=142&type=chunk)[143](index=143&type=chunk) - Pre-season sales programs in Q2 and Q3 incentivize distributors with favorable pricing and payment deferrals, leading to the highest sales volume for the Work Truck Attachments segment during these quarters[144](index=144&type=chunk) - Working capital needs are highest in Q2 and Q3 due to rising accounts receivable from pre-season sales, declining in Q4 as payments are received[148](index=148&type=chunk) - Management strategies to mitigate seasonality include a variable cost structure, lean manufacturing, pre-season order programs, and a vertically integrated business model[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are changes in interest rates on its variable-rate debt and fluctuations in steel prices. It uses interest rate swaps to mitigate interest rate risk but does not use derivatives for commodity price risk [Interest Rate Risk](index=59&type=section&id=Interest%20Rate%20Risk) The company is exposed to interest rate risk due to variable-rate borrowings, primarily its term loan. A portion of this risk is mitigated by an interest rate swap, though the swap was deemed ineffective in Q1 2020 - The company's borrowings, including its term loan and revolving borrowings, are at variable interest rates, exposing it to interest rate risk[152](index=152&type=chunk) - An interest rate swap agreement is used to reduce exposure to interest rate volatility, but it was dedesignated as ineffective in Q1 2020[155](index=155&type=chunk)[156](index=156&type=chunk) - As of March 31, 2021, outstanding term loan borrowings were **$219.6 million**, with no outstanding revolving credit facility borrowings[153](index=153&type=chunk)[157](index=157&type=chunk) [Commodity Price Risk](index=61&type=section&id=Commodity%20Price%20Risk) The company is exposed to market risk from steel price fluctuations, as steel is a primary commodity for manufacturing. Steel purchases represented 12.7% of revenue in Q1 2021. The company does not use derivatives to manage this risk and may not always be able to pass increased costs to distributors Steel Purchases as a Percentage of Revenue | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Steel purchases as a percentage of revenue | 12.7% | 16.9% | - The company is exposed to market risk from steel price fluctuations, as steel is a primary commodity for manufacturing[158](index=158&type=chunk) - The company does not use derivative or hedging instruments to manage steel price risk and may not always be able to mitigate increased costs through price increases or surcharges[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021. There were no material changes in internal control over financial reporting during the period - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2021[159](index=159&type=chunk) - No material changes in internal control over financial reporting occurred during the period[160](index=160&type=chunk) [PART II. OTHER INFORMATION](index=61&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, exhibits, and signatures for Douglas Dynamics, Inc.'s quarterly report [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course litigation matters, primarily product liability and intellectual property disputes, but management does not believe any current litigation is material to its operations or financial position - The company is engaged in various litigation, including product liability and intellectual property disputes, but management does not believe these are material[162](index=162&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) There have been no significant changes in the company's risk factors from those described in its Annual Report on Form 10-K for the year ended December 31, 2020 - No significant changes to risk factors were reported compared to the prior Annual Report on Form 10-K[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended March 31, 2021, the company did not sell any unregistered equity securities or purchase any of its own equity securities. Dividend payments are subject to restrictions under senior credit facilities - No unregistered sales of equity securities occurred in Q1 2021[165](index=165&type=chunk) - No purchases of equity securities were made by the company in Q1 2021[166](index=166&type=chunk) - Dividend payments are subject to restrictions outlined in the company's senior credit facilities[167](index=167&type=chunk) [Item 3. Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities reported during the period - No defaults upon senior securities were reported[168](index=168&type=chunk) [Item 4. Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - No mine safety disclosures were reported[169](index=169&type=chunk) [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) No other information was reported in this section - No other information was reported[170](index=170&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications (Sarbanes-Oxley Act Sections 302 and 906) and XBRL financial statements - Exhibits include certifications by the CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act) and XBRL financial statements[172](index=172&type=chunk) [Signatures](index=65&type=section&id=Signatures) The report is duly signed on behalf of Douglas Dynamics, Inc. by its Chief Financial Officer, Sarah Lauber, on May 3, 2021 - The report was signed by Sarah Lauber, Chief Financial Officer, on May 3, 2021[175](index=175&type=chunk)

Bob McCormick – President & CEO Sarah Lauber – CFO I n v e s t o r P r e s e n t a t i o n M a r c h 2021 Forward Looking Statements The following presentation contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, product demand, the payment of dividends, and availability of fin ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Douglas Dynamics is a leading North American manufacturer of commercial work truck attachments and equipment, operating in two core segments - The company operates through two primary segments: **Work Truck Attachments** and **Work Truck Solutions**, focusing on snow/ice control and vehicle upfitting respectively[13](index=13&type=chunk) Work Truck Attachments Segment Net Sales Breakdown (FY2018-2020) | Category | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Snow and ice control equipment | 86% | 83% | 84% | | Parts and accessories | 14% | 17% | 16% | - The Work Truck Solutions segment serves **over 2,500 customers**, with approximately **half of its revenue from dealers** and **40% from fleet sales and governmental entities**[17](index=17&type=chunk)[28](index=28&type=chunk) - Key competitive strengths include **exceptional brand loyalty**, the industry's **broadest product offering**, an **extensive distributor network with 1,900 points of sale**, and **leadership in operational efficiency** through lean manufacturing[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk) Order Backlog (as of December 31) | Year | Backlog (in millions) | Change YoY | | :--- | :--- | :--- | | 2020 | $126.4 | +18.0% | | 2019 | $107.1 | | - As of December 31, 2020, the company employed **1,767 people**, with **all but 13 based in the US**, and **none of the employees are represented by a union**[48](index=48&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from weather dependency, economic downturns, and supply chain vulnerabilities, alongside financial and operational challenges - The Work Truck Attachments segment's results are highly dependent on the level, timing, and location of snowfall, which could adversely affect results and cash flow during a sustained period of reduced snowfall[70](index=70&type=chunk)[71](index=71&type=chunk) - The COVID-19 pandemic has adversely affected the business through economic slowdowns, supply chain disruptions, and temporary facility shutdowns in 2020, with the full future impact remaining uncertain[75](index=75&type=chunk)[78](index=78&type=chunk) - Steel is a significant raw material, accounting for approximately **10% of revenue** in 2018, 2019, and 2020, and price volatility could negatively impact gross margins if cost increases cannot be passed on to customers[83](index=83&type=chunk) - The company depends on outside suppliers for essential components and OEM partners for truck chassis, where any interruption in supply could result in increased costs, production delays, and lost sales[86](index=86&type=chunk) - As of December 31, 2020, the company had approximately **$240.1 million of senior secured indebtedness**, which could make it difficult to satisfy obligations, fund operations, or pursue growth opportunities[112](index=112&type=chunk)[113](index=113&type=chunk) [Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - Not applicable[119](index=119&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) As of December 31, 2020, the company operates five owned and fifteen leased facilities across the US and China for manufacturing and upfitting Key Company Facilities (as of Dec 31, 2020) | Location | Ownership | Function | | :--- | :--- | :--- | | Milwaukee, Wisconsin | Owned | Corporate HQ, 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 | | Various (NY, MD, PA, etc.) | Leased | Work Truck Solutions, Sourcing | [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, none of which are considered material to its operations or financial position - The company is not party to any litigation that management believes is material to its operations or financial position[121](index=121&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[122](index=122&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&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', with 57 registered holders as of February 2021, and a consistent quarterly dividend policy - The company's common stock is traded on the NYSE under the ticker symbol '**PLOW**'[130](index=130&type=chunk) - As of February 23, 2021, there were **57 registered holders** of the company's Common Stock[130](index=130&type=chunk) - The company paid quarterly dividends to common stockholders in both 2019 and 2020[131](index=131&type=chunk) [Selected Consolidated Financial Data](index=34&type=section&id=Item%206.%20Selected%20Consolidated%20Financial%20Data) Selected historical consolidated financial data for the five years ended December 31, 2020, show a decrease in total assets and Adjusted EBITDA, alongside an increase in total debt Selected Balance Sheet Data (2018-2020, in thousands) | Account | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $41,030 | $35,665 | $27,820 | | Total assets | $579,202 | $705,695 | $676,193 | | Total debt | $240,078 | $245,787 | $278,081 | | Total shareholders' equity | $200,204 | $313,163 | $282,756 | Selected Other Data (2018-2020, in thousands) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $74,892 | $108,105 | $96,443 | | Capital expenditures | $14,682 | $11,663 | $9,848 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, the company experienced a significant financial downturn with decreased net sales and a net loss, primarily due to a goodwill impairment charge and external market challenges [Results of Operations (2020 vs 2019)](index=38&type=section&id=Results%20of%20Operations%20%282020%20vs%202019%29) In 2020, net sales decreased by 16.0% to $480.2 million, resulting in a net loss of $86.6 million primarily due to a $127.9 million goodwill impairment charge Financial Performance Comparison (in thousands) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $480,154 | $571,710 | -16.0% | | Gross Profit | $128,280 | $168,817 | -24.0% | | Income (Loss) from Operations | ($75,140) | $86,573 | -186.8% | | Net Income (Loss) | ($86,553) | $49,166 | -275.5% | Net Sales by Segment (in thousands) | Segment | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Work Truck Attachments | $252,838 | $293,630 | -13.9% | | Work Truck Solutions | $227,316 | $278,080 | -18.2% | - A **$127.9 million goodwill impairment charge** was recorded in 2020, consisting of $47.8 million for the Municipal reporting unit and $80.1 million for the Dejana reporting unit, due to reduced performance and future projections[159](index=159&type=chunk) - Cost of sales as a percentage of net sales increased to **73.3% in 2020 from 70.5% in 2019**, primarily due to lower sales volumes and uncapitalized shutdown expenses related to COVID-19[156](index=156&type=chunk)[157](index=157&type=chunk) [Results of Operations (2019 vs 2018)](index=40&type=section&id=Results%20of%20Operations%20%282019%20vs%202018%29) In 2019, net sales increased 9.1% to $571.7 million, leading to a 12.0% rise in net income to $49.2 million, despite a pension plan termination charge Financial Performance Comparison (in thousands) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $571,710 | $524,067 | +9.1% | | Gross Profit | $168,817 | $154,890 | +9.0% | | Income from Operations | $86,573 | $73,460 | +17.8% | | Net Income | $49,166 | $43,905 | +12.0% | Net Sales by Segment (in thousands) | Segment | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Work Truck Attachments | $293,630 | $275,244 | +6.7% | | Work Truck Solutions | $278,080 | $248,823 | +11.8% | - A one-time pension termination cost of **$6.6 million** was incurred in 2019 as the company terminated its pension plans[172](index=172&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2020, liquidity totaled $140.1 million, with operating cash flow decreasing to $53.4 million due to the net loss, funding capital expenditures and dividends Cash Flow Summary (in thousands) | Cash Flow Activity | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $53,366 | $77,296 | $58,181 | | Net cash used in investing activities | ($14,490) | ($11,533) | ($9,690) | | Net cash used in financing activities | ($33,511) | ($57,918) | ($57,546) | - As of December 31, 2020, the company had **$140.1 million** liquidity, comprising **$41.0 million in cash** and **$99.1 million available** under its revolving credit facility[188](index=188&type=chunk) - The decrease in operating cash flow in 2020 was primarily due to a **$23.8 million decrease in net income** adjusted for non-cash items, including the large goodwill impairment[194](index=194&type=chunk) [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like Adjusted EBITDA and Free Cash Flow significantly decreased in 2020, reflecting the overall financial downturn Reconciliation to Adjusted EBITDA (in thousands) | Line Item | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net income (loss) | ($86,553) | $49,166 | $43,905 | | Adjustments (Interest, Taxes, D&A, etc.) | $33,681 | $46,989 | $46,034 | | Impairment charges | $127,872 | - | - | | Other Adjustments (Stock comp, etc.) | ($108) | $10,340 | $6,504 | | **Adjusted EBITDA** | **$74,892** | **$108,105** | **$96,443** | Adjusted EBITDA by Segment (in thousands) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | Work Truck Attachments | $62,532 | $80,747 | | Work Truck Solutions | $12,360 | $27,358 | | **Total Adjusted EBITDA** | **$74,892** | **$108,105** | Reconciliation to Free Cash Flow (in thousands) | Line Item | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $53,366 | $77,296 | $58,181 | | Acquisition of property and equipment | ($14,490) | ($11,533) | ($9,690) | | **Free cash flow** | **$38,876** | **$65,763** | **$48,491** | [Seasonality and Year-To-Year Variability](index=54&type=section&id=Seasonality%20and%20Year-To-Year%20Variability) The Work Truck Attachments segment experiences high seasonality driven by snowfall, with a pre-season sales program influencing revenue distribution and working capital needs peaking in Q3 - Sales in the Work Truck Attachments segment are most heavily influenced by snowfall levels in the prior snow season[226](index=226&type=chunk) - The pre-season sales program, offering incentives to distributors, drives an average of **over two-thirds of sales volume** during the second and third quarters[227](index=227&type=chunk) - Working capital requirements peak towards the end of the third quarter, reaching an average of approximately **$93.5 million** over the prior three years[230](index=230&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations on its variable-rate debt, partially mitigated by a LIBOR floor and swap, and commodity price volatility for steel - The company is exposed to interest rate risk on its **$240.1 million of variable-rate term loan borrowings**; a hypothetical **1% rate increase** would have had a **minimal impact** in 2020 due to the **1.0% LIBOR floor** on the loan[234](index=234&type=chunk)[235](index=235&type=chunk) - The company is party to an interest rate swap agreement to reduce exposure to interest rate volatility, which was de-designated as a hedge in March 2020 and had a negative fair value of **$13.1 million** at December 31, 2020[235](index=235&type=chunk)[236](index=236&type=chunk) - The company is exposed to commodity price risk for steel and historically mitigates cost increases through price adjustments and surcharges, without using derivative instruments for hedging[238](index=238&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the company's audited consolidated financial statements and supplementary data, which are included starting on page F-2 - The financial statements are included in the report beginning on page F-2[239](index=239&type=chunk) [Changes In and Disagreements with Accountants on Accounting and Financial Disclosures](index=56&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosures - None[240](index=240&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[242](index=242&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and found it to be effective as of December 31, 2020[246](index=246&type=chunk) - No material changes were made to internal controls over financial reporting during the last fiscal quarter of 2020[248](index=248&type=chunk) [Other Information](index=57&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[249](index=249&type=chunk) Part III Part III incorporates information by reference from the company's 2021 Proxy Statement, covering directors, executive compensation, security ownership, related party transactions, and accounting fees [Directors, Executive Officers and Corporate Governance](index=58&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and corporate governance is incorporated by reference from the Proxy Statement, with executive officer details in Part I and a Code of Conduct available online - Information required by this item is incorporated by reference from the company's definitive proxy statement[250](index=250&type=chunk) [Executive Compensation](index=58&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive and director compensation, including the Compensation Committee, is incorporated by reference from the Proxy Statement - Information required by this item is incorporated by reference from the company's definitive proxy statement[252](index=252&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=58&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the Proxy Statement, with 771,135 securities available for future issuance under equity plans - Information required by this item is incorporated by reference from the company's definitive proxy statement[252](index=252&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Securities to be issued upon exercise | Securities remaining available for future issuance | | :--- | :--- | :--- | | Equity Compensation plans approved by security holders | 109,160 | 771,135 | | Equity compensation plans not approved by security holders | - | - | | **Total** | **109,160** | **771,135** | [Certain Relationships and Related Transactions, and Director Independence](index=59&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement - Information required by this item is incorporated by reference from the company's definitive proxy statement[256](index=256&type=chunk) [Principal Accounting Fees and Services](index=59&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the Proxy Statement under the 'Ratification of Appointment of Independent Registered Public Accounting Firm' caption - Information required by this item is incorporated by reference from the company's definitive proxy statement[256](index=256&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=59&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section refers to the consolidated financial statements starting on page F-1 and the Exhibit Index, with schedules omitted as information is in the Notes - This section refers to the Index to Consolidated Financial Statements on page F-1 and the Exhibit Index[257](index=257&type=chunk)[258](index=258&type=chunk)[260](index=260&type=chunk) [Form 10-K Summary](index=60&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section is not applicable - Not applicable[259](index=259&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=66&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on the financial statements and internal controls, highlighting the goodwill impairment test for Dejana and Municipal units as a Critical Audit Matter - The auditor, Deloitte & Touche LLP, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting as of December 31, 2020[272](index=272&type=chunk) - A Critical Audit Matter was identified related to the goodwill impairment test for the Dejana and Municipal reporting units, due to significant management estimates and assumptions required for fair value calculation, particularly forecasts of future revenues and EBITDA margins, and the selection of discount rates[279](index=279&type=chunk)[281](index=281&type=chunk)[283](index=283&type=chunk) [Consolidated Financial Statements](index=69&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a significant decrease in total assets and shareholders' equity in 2020, primarily due to goodwill impairment, resulting in a net loss of $86.6 million on $480.2 million in net sales Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $217,187 | $211,528 | | Goodwill | $113,134 | $241,006 | | Total Assets | $579,202 | $705,695 | | Total Current Liabilities | $66,206 | $78,103 | | Long-term debt, less current portion | $236,676 | $222,081 | | Total Shareholders' Equity | $200,204 | $313,163 | Consolidated Statement of Income (Loss) Highlights (in thousands) | Account | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net sales | $480,154 | $571,710 | $524,067 | | Gross profit | $128,280 | $168,817 | $154,890 | | Impairment charges | $127,872 | $0 | $0 | | Net income (loss) | ($86,553) | $49,166 | $43,905 | | Diluted EPS | ($3.81) | $2.11 | $1.89 | [Notes to Consolidated Financial Statements](index=74&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, a $127.9 million goodwill impairment in 2020, new accounting standard adoptions, the June 2020 debt refinancing, and the 2019 pension plan termination - In Q2 2020, a triggering event (COVID-19, chassis availability) led to an impairment test, resulting in a full goodwill impairment charge of **$47.8 million** for the Municipal reporting unit and **$80.1 million** for the Dejana reporting unit[323](index=323&type=chunk)[324](index=324&type=chunk) - On June 8, 2020, the company amended and restated its senior credit facilities, establishing a new **$275 million term loan facility** and a **$100 million revolving credit facility**[386](index=386&type=chunk) - The company terminated its defined-benefit pension plans in Q4 2019 through lump-sum payments and the purchase of annuities, recognizing a non-cash settlement charge of **$6.4 million**[412](index=412&type=chunk)[413](index=413&type=chunk) Segment Adjusted EBITDA (in thousands) | Segment | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Work Truck Attachments | $62,532 | $80,747 | $80,396 | | Work Truck Solutions | $12,360 | $27,358 | $16,047 | | **Total Adjusted EBITDA** | **$74,892** | **$108,105** | **$96,443** |

Financial Data and Key Metrics Changes - Full-year net sales decreased by 16% to $480 million compared to $572 million in 2019, primarily due to lower volumes and pandemic-related disruptions [30][31] - Fourth quarter net sales were $158.2 million, a 1% decrease from the same period last year, but gross profit increased to $47.8 million, up from $46.3 million [36][37] - Adjusted EBITDA for the fourth quarter was $33.2 million, an increase from $29.9 million in the previous year, with an adjusted EBITDA margin of 21% [38][39] Business Line Data and Key Metrics Changes - The Attachments segment saw net sales increase by approximately 4% to $83 million, with adjusted EBITDA rising 13% to $24 million, and adjusted EBITDA margin increasing to 28.9% [41] - The Solutions segment recorded revenue of $75.2 million, down from $80.4 million, but adjusted EBITDA margin improved to 12.2% due to normalized chassis flow and reduced discretionary spending [42][43] Market Data and Key Metrics Changes - The company noted that dealer orders began strengthening at the end of Q3 and into Q4, aided by early snowfall, which positively impacted reorder activity [11][12] - The pandemic has caused challenges in municipal budgets, impacting order patterns for the Solutions segment, particularly for Henderson [18][65] Company Strategy and Development Direction - The company is focused on a vertical integration strategy to enhance product offerings, particularly in the medium-duty truck market, which is expected to drive organic revenue growth [20][24] - Capital allocation priorities include maintaining dividends, paying down debt, and pursuing strategic acquisitions while being cautious about valuations [25][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exiting the pandemic stronger than before, despite ongoing challenges in the first half of 2021 [27][49] - The 2021 financial outlook anticipates net sales between $505 million and $565 million, with adjusted EBITDA ranging from $75 million to $100 million [50][51] Other Important Information - The company recorded a GAAP net loss of $86.6 million for the full year due to a $127.9 million impairment charge [31][32] - Total liquidity at the end of 2020 was approximately $140.1 million, with net debt reduced to $199.1 million [46] Q&A Session Summary Question: How are dealer and distributor inventory levels tracking? - Management indicated that inventories were still down a little compared to historical averages, which is positive for pre-season [55] Question: What are the margin outlooks for 2021? - Management expects Attachments to have around 35% EBITDA increments and Solutions closer to 25% due to ongoing inefficiencies and COVID-related challenges [56][58] Question: How does fuel and steel pricing impact margins? - Management stated they will cover inflation dollar for dollar but noted uncertainty regarding the timing of cost recovery [59] Question: What are the challenges impacting Henderson's orders? - Management highlighted municipal budget challenges affecting order patterns, but noted that quotes remain strong [65][66] Question: What is the expected duration of the backlog? - Management mentioned that the backlog has been reduced to a manageable level, which may create challenges until order pace picks up [68] Question: What is the outlook for 2021 regarding top-line growth? - Management expects a natural increase in Attachments due to average snowfall and improved comparisons for Solutions due to prior shutdowns [73][74]

Financial Data and Key Metrics Changes - The company reported Q3 2020 net sales of $133.8 million, down from $141.9 million in Q3 2019, with gross profit decreasing from $39.9 million to $36.7 million [35] - GAAP net income for Q3 2020 was $9.2 million ($0.39 per diluted share), compared to $12.4 million ($0.53) in the same period last year [35] - Adjusted EBITDA for Q3 2020 was $23.1 million, down from $25.1 million in Q3 2019 [36] Business Segment Data and Key Metrics Changes - In the Work Truck Attachments segment, net sales increased to $76.9 million from $75.6 million, with adjusted EBITDA rising to $20.2 million from $18.7 million [38] - The Work Truck Solutions segment saw net sales decline to $56.9 million from $66.2 million, with adjusted EBITDA dropping to $2.9 million from $6.4 million [40] Market Data and Key Metrics Changes - The company noted that dealer inventories for plows are 10% to 15% below the previous year, indicating a positive demand outlook as the snow season approaches [59] - Incoming orders at Dejana have surpassed the same period in 2019, which was a record year, reflecting a strong recovery in demand [16] Company Strategy and Development Direction - The company remains committed to its dividend policy, having paid dividends as usual at the end of the quarter, and plans to continue this trend in the future [23] - Vertical integration initiatives are on track, with expectations for more specific updates in 2021 [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in emerging stronger from the pandemic, highlighting the resilience of their business model and operational execution [30][52] - The company anticipates a gradual recovery in the Solutions segment, with expectations for improved performance in Q4 2020 [49] Other Important Information - The company has increased its liquidity to approximately $93.9 million, up from $47.3 million a year ago, due to a refinancing of its credit facility [45][46] - The effective tax rate for Q3 2020 was 26%, higher than the 20% rate in Q3 2019, attributed to the release of reserves for uncertain tax positions last year [37] Q&A Session Summary Question: Insights on September order activity in attachments - Management noted that dealer orders were conservative early in the pandemic but saw increased stocking orders as dealers became more comfortable, leading to a positive order momentum [56][58] Question: Supply chain pressures in Solutions - Management indicated that while there are some challenges, overall component supply has been stable, with caution regarding potential future disruptions due to rising COVID cases [60][61] Question: Vertical integration initiatives impact - Management stated that while there will be some impact from vertical integration initiatives in 2021, the greater benefits are expected in 2022 and beyond [64] Question: Dynamics of Dejana's chassis supply - Management highlighted that while chassis supply has improved, there are still inconsistencies, but they remain optimistic about long-term growth prospects [70][71] Question: Market share dynamics in a challenging environment - Management expressed that uncertain economic conditions present opportunities to gain market share, particularly in the attachments and Solutions segments [81][82] Question: Free cash flow expectations - Management indicated that free cash flow is expected to exceed the dividend, driven by improved earnings and potential reductions in working capital [84]

Bob McCormick – President & CEO Sarah Lauber – CFO Investor Presentation September 2020 Forward Looking Statements The following presentation contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information relating to future events, future financial performance, stralegies, expectations, competitive environment, regulation, product demand, the payment of dividends, and availability of financial resources. ...

Bob McCormick – President & CEO Sarah Lauber – CFO J e f f e r i e s C o n f e r e n c e A u g u s t 2 0 2 0 Forward Looking Statements The following presentation contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, product demand, the payment of dividends, and availability of ...

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $103.9 million or negative $4.55 per diluted share, impacted by a one-time non-cash goodwill impairment charge of $127.9 million on the Solutions segment due to COVID-19 and supply chain constraints [22][23] - Adjusted net income was $7.6 million or $0.33 per diluted share compared to $26.5 million or $1.14 per diluted share in the prior year [25] - Consolidated adjusted EBITDA was $20.3 million compared to $44.1 million in the corresponding period of the prior year [25] Business Line Data and Key Metrics Changes - In the Work Truck Attachments segment, net sales were $73.8 million with adjusted EBITDA of $20.4 million, down from $112.2 million and $38.5 million respectively in the prior year, primarily due to lower preseason sales and impacts from the pandemic [26] - The Work Truck Solutions segment reported net sales of $46.2 million and adjusted EBITDA of negative $100,000, compared to $64.1 million and $5.6 million in the same period last year, affected by pandemic-related shutdowns and supply chain constraints [27] Market Data and Key Metrics Changes - Accounts receivable decreased to $76.8 million from $114.7 million in the second quarter of last year, primarily due to lower sales [29] - Total liquidity increased to $126.8 million at the end of the second quarter compared to $77.4 million at the end of the second quarter of last year, bolstered by a $375 million debt refinancing [30] Company Strategy and Development Direction - The company remains focused on long-term growth initiatives and is actively monitoring the market for opportunities to expand its product offerings and market share [16] - The company completed a $375 million debt refinancing, enhancing its financial position and providing flexibility for future investments [14][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating through the challenges posed by the pandemic and supply chain disruptions, emphasizing the importance of maintaining a strong order book and backlog [12][31] - The Attachments segment is expected to be influenced by snowfall, with a shift in focus towards the fourth quarter for sales, while the Solutions segment anticipates improvements in chassis availability as OEMs ramp up production [32] Other Important Information - The company was recognized as a top workplace for the 11th consecutive year, highlighting its commitment to employee engagement and a positive work environment [18] - The CFO was named CFO of the year by the Milwaukee Business Journal, reflecting the strength of the finance team [19] Q&A Session Summary Question: Have you fully caught up to your order book in the Attachments business? - Management indicated that they are close to being caught up on preseason orders and expect a 55-45 split for the preseason across the second and third quarters [37] Question: What are the trends in the Solutions business? - Management confirmed improved order trends in June and July, with a healthy backlog, but noted that supply constraints will inhibit sales translation [52] Question: Can you break out the impairment charge related to Henderson versus Dejana? - The impairment charge was split with approximately $50 million for Henderson and $80 million for Dejana, primarily due to COVID-19 impacts [51] Question: How does the competitive landscape look post-pandemic? - Management noted that strong companies may become stronger while weaker competitors may struggle, but no significant changes have been observed yet [62]

Douglas Dynamics, Inc. (NYSE:PLOW) Q1 2020 Earnings Conference Call May 5, 2020 10:00 AM ET Company Participants Sarah Lauber - CFO & Secretary Robert McCormick - President, CEO & Director Conference Call Participants Ryan Sigdahl - Craig-Hallum Timothy Wojs - Robert W. Baird & Co. Christopher McGinnis - Sidoti & Company Operator Good morning, ladies and gentlemen, and welcome to the Douglas Dynamics First Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over ...

Financial Data and Key Metrics Changes - Douglas Dynamics reported record net sales of $572 million for the full year 2019, a 9% increase from the previous year [26] - Adjusted earnings per share (EPS) reached $2.42, up from $2.04 in 2018 [30] - Gross profit for 2019 was $168.8 million, representing a gross profit margin of 29.5%, slightly down from 29.6% in 2018 [28] - For Q4 2019, net sales were $160.3 million, a 6% increase compared to $151.8 million in Q4 2018 [31] - Adjusted EBITDA for the full year was $108.1 million, compared to $96.4 million in 2018 [31] Business Line Data and Key Metrics Changes - Work Truck Attachments segment recorded revenue of $79.9 million in Q4 2019, up from $77.3 million in Q4 2018, with adjusted EBITDA increasing to $21.3 million from $20.2 million [37] - Work Truck Solutions segment revenue was $80.4 million in Q4 2019, compared to $74.5 million in the same period last year, with adjusted EBITDA remaining flat at $8.6 million [38] Market Data and Key Metrics Changes - The company noted below-average snowfall across tracked cities through January 2020, impacting the snow-related business [8] - The Midwest experienced reasonable snowfall, while New England was significantly below average [8] Company Strategy and Development Direction - The company is focused on long-term profitable growth, particularly in the Work Truck Solutions segment, despite short-term challenges [13] - Douglas Dynamics is committed to maintaining and growing its dividend, marking the 12th increase in 10 years [20] - Investments are being made across the business to enhance product quality and efficiency [21] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the impact of the coronavirus on supply chains, which could affect both segments [14][15] - The company anticipates challenges in chassis supply for Class 4 through 8 trucks, which may persist into 2020 [12] - Management remains optimistic about long-term trends in the truck equipment industry despite short-term headwinds [24] Other Important Information - The company completed the planned termination of its pension plans in Q4 2019, incurring one-time expenses of $5 million [35] - Total liquidity at the end of 2019 was approximately $135.1 million, an increase from $122.4 million in the previous year [41] Q&A Session Summary Question: How does the midpoint of guidance correspond to external conditions? - Management indicated that the midpoint suggests potential revenue challenges due to expected below-average snowfall and supply chain issues [58][59] Question: Will the preseason period be down relative to last year? - Management noted that it is too early to tell, but two consecutive years of below-average snowfall could lead to lower preseason orders [66] Question: What is the impact of supply chain disruptions on the Attachments segment? - Management confirmed that the Attachments segment would also be impacted by supply chain disruptions, particularly from sourcing in China [78] Question: How does the guidance account for snowfall variability? - The guidance assumes average snowfall, but if below-average conditions persist, it could trend towards the lower end of the range [82][85]