Douglas Dynamics(PLOW) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Results Overview Douglas Dynamics achieved a 6.6% increase in Q2 2025 consolidated net income, driven by strong Work Truck Solutions performance and expected Attachments segment activity Key Highlights of Q2 2025 Douglas Dynamics reported a 6.6% increase in consolidated net income for Q2 2025, reaching $26.0 million, or $1.09 per diluted share - Consolidated Net income improved by 6.6% to $26.0 million, or $1.09 per diluted share[4] - Solutions segment delivered record second quarter results with 5.4% Net Sales growth, and 39.8% Adjusted EBITDA growth[4] - Pre-season demand and shipments at Attachments proceeding as expected[4] - Returned approximately $13 million of cash to shareholders[4] Consolidated Financial Performance Consolidated Q2 2025 results show a 2.8% net sales decrease but a 6.6% net income increase, with stable Adjusted EBITDA margins Consolidated Q2 2025 Financial Metrics This section presents the key consolidated financial metrics for Q2 2025 compared to Q2 2024, showing net sales, gross profit margin, income from operations, net income, and various adjusted figures Consolidated Q2 2025 Financial Metrics | $ in millions | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $194.3 | $199.9 | | Gross Profit Margin | 31.0% | 30.7% | | Income from Operations | $37.0 | $36.3 | | Net Income | $26.0 | $24.3 | | Diluted EPS | $1.09 | $1.02 | | Adjusted EBITDA | $42.6 | $43.7 | | Adjusted EBITDA Margin | 21.9% | 21.9% | | Adjusted Net Income | $27.2 | $26.5 | | Adjusted Diluted EPS | $1.14 | $1.11 | Consolidated Performance Analysis Consolidated net sales for Q2 2025 decreased by 2.8% to $194.3 million, primarily due to expected lower volumes in the Attachments segment - Consolidated results for Q2 2025 were comparable to the prior year across all metrics, favorably impacted by Work Truck Solutions, offsetting expected lower volumes at Work Truck Attachments due to shipment timing[7] - Net sales decreased by 2.8% to $194.3 million, a result of expected lower volumes at Attachments due to the timing of pre-season shipments between Q2 and Q3[7] - Net income increased by 6.6% to $26.0 million, and diluted EPS increased by 6.9% to $1.09[7] - Adjusted EBITDA margins remained flat at 21.9%, reflecting the strength of Work Truck Solutions' margin improvements offsetting the impact of lower preseason shipments in Work Truck Attachments[7] Segment Performance Analysis Work Truck Attachments saw sales decline due to shipment timing, while Work Truck Solutions achieved record sales and Adjusted EBITDA Work Truck Attachments Segment The Work Truck Attachments segment reported a decrease in Q2 2025 net sales to $108.1 million and Adjusted EBITDA to $31.6 million, primarily due to shipment timing Work Truck Attachments Segment Key Metrics | $ in millions | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $108.1 | $118.1 | | Adjusted EBITDA | $31.6 | $35.8 | | Adjusted EBITDA Margin | 29.2% | 30.3% | - Net sales of $108.1 million and Adjusted EBITDA of $31.6 million are down $10.0 million and $4.2 million, respectively, primarily due to the timing of pre-season shipments between the second and third quarters[8] - The ratio of pre-season shipments in 2025 is expected to be close to the more traditional 55% (Q2) to 45% (Q3) split, contrasting with the unusual 65% (Q2) to 35% (Q3) ratio in 2024[8] Work Truck Solutions Segment The Work Truck Solutions segment achieved record second-quarter results, with net sales increasing by 5.4% to $86.2 million and Adjusted EBITDA surging by 39.8% to $11.0 million Work Truck Solutions Segment Key Metrics | $ in millions | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $86.2 | $81.8 | | Adjusted EBITDA | $11.0 | $7.9 | | Adjusted EBITDA Margin | 12.8% | 9.7% | - Work Truck Solutions produced record second quarter top- and bottom-line results[13] - Net Sales increased 5.4% to $86.2 million based on favorable pricing realization and higher municipal volumes, somewhat offset by lower commercial volumes[13] - Adjusted EBITDA increased 39.8% to $11.0 million, delivering record margins of 12.8%, based on favorable product mix, price realization and higher municipal throughput[13] Financial Outlook and Capital Management The company returned $12.9 million to shareholders, improved its leverage ratio, and raised its 2025 financial guidance ranges Dividend & Liquidity Douglas Dynamics successfully returned $12.9 million to shareholders and significantly improved its leverage ratio to 2.0X, well within its target range - Successfully returned $12.9 million of cash to shareholders through a quarterly cash dividend of $0.295 per diluted share and repurchase of approximately 210,000 shares of company stock[13] - The leverage ratio at the end of the quarter was 2.0X, a significant improvement when compared to 3.3X, and well within our stated goal range of 1.5X to 3.0X[13] - Net cash used in operating activities decreased $6.4 million in the first half of 2025 to $12.7 million compared to the same period last year, due to improved earnings somewhat offset by changes in working capital[13] - Total inventory was $153.3 million compared to $139.4 million, with Attachments reducing inventory and Solutions increasing it as planned[13] 2025 Outlook and Guidance Douglas Dynamics raised and narrowed its 2025 guidance ranges, anticipating net sales between $630 million and $660 million, and Adjusted EBITDA from $82 million to $97 million - Following another record quarter for Solutions and in-line pre-season orders at Attachments, the company is raising and narrowing its guidance ranges[11] - Economic and tariff uncertainty persists, but the U.S.-centric business model supports the belief of being well positioned[11] - The 2025 outlook assumes relatively stable economic and supply chain conditions, and average snowfall in the fourth quarter of 2025[15] Updated 2025 Guidance Ranges The company updated its 2025 guidance, increasing ranges for net sales, Adjusted EBITDA, and Adjusted Earnings Per Share Updated 2025 Guidance Ranges | Metric | Previous Range | Updated Range | Change | | :--- | :--- | :--- | :--- | | Net Sales | $610M - $650M | $630M - $660M | Increased | | Adjusted EBITDA | $75M - $95M | $82M - $97M | Increased | | Adjusted Earnings Per Share | $1.30 - $2.10 | $1.65 - $2.15 | Increased | - The effective tax rate is still expected to be approximately 24% to 25%[14] Company Profile and Disclosures This section provides details on the earnings call, company profile, non-GAAP financial measures, and forward-looking statements Earnings Conference Call Douglas Dynamics will host a conference call on Tuesday, August 5, 2025, at 10:00 a.m. Eastern Time to discuss the second quarter 2025 results - The Company will host a conference call on Tuesday, August 5, 2025, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time)[17] - The call will also be available via the Investor Relations section of the Company's website at www.douglasdynamics.com, with replays available for one week[17] About Douglas Dynamics Douglas Dynamics is North America's leading manufacturer and up-fitter of commercial work truck attachments and equipment, operating for over 75 years - Douglas Dynamics is North America's premier manufacturer and up-fitter of commercial work truck attachments and equipment, with over 75 years of innovation[18] - The Company's portfolio of products and services is separated into two segments: Work Truck Attachments (FISHER®, SNOWEX®, WESTERN® brands) and Work Truck Solutions (HENDERSON®, DEJANA® brands)[18] - The Company is committed to continuous improvement through its proprietary Douglas Dynamics Management System (DDMS) to drive shareholder value[18] Use of Non-GAAP Financial Measures Douglas Dynamics uses non-GAAP financial measures such as Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, and Free Cash Flow to provide investors with additional tools for evaluating operating performance - Non-GAAP measures used include Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, and Free Cash Flow[19] - Adjusted EBITDA represents net income before interest, taxes, depreciation, and amortization, further adjusted for certain charges to remove the impact of items not directly reflecting core operations[20] - Adjusted Net Income and Adjusted Earnings Per Share exclude stock-based compensation, severance, restructuring, debt-related expenses, impairment charges, and derivative adjustments, net of their income tax impact[21] - Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures, representing the ability to generate additional cash flow from business operations[22] Forward-Looking Statements The press release contains forward-looking statements regarding future events, financial performance, and strategies, which are subject to known and unknown risks and uncertainties - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that could cause actual results, performance, or achievements to be materially different[23] - Factors that could cause differences include weather conditions (snowfall), general economic, business and geopolitical conditions, increases in material prices (e.g., steel, tariffs), and inability to maintain distributor relationships[23] - The company undertakes no obligation to update or release any revisions to any forward-looking statement, except as required by law[23] Consolidated Financial Statements This section presents the consolidated balance sheets, statements of income, and statements of cash flows for the reported periods Consolidated Balance Sheets As of June 30, 2025, Douglas Dynamics reported total assets of $671.471 million, an increase from $589.983 million at December 31, 2024 Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $671,471 | $589,983 | | Total Current Assets | $326,749 | $238,225 | | Accounts receivable, net | $141,167 | $87,407 | | Inventories | $153,286 | $137,034 | | Total Liabilities | $393,690 | $325,768 | | Total Current Liabilities | $154,669 | $70,192 | | Short term borrowings | $42,000 | $0 | | Total Stockholders' Equity | $273,264 | $264,215 | Consolidated Statements of Income For the three months ended June 30, 2025, net sales were $194.327 million, a decrease from $199.902 million in Q2 2024, while net income increased to $25.954 million Consolidated Statements of Income (Three Months) | Metric (in thousands, except EPS) | Three Month Period Ended June 30, 2025 | Three Month Period Ended June 30, 2024 | | :--- | :--- | :--- | | Net sales | $194,327 | $199,902 | | Gross profit | $60,296 | $61,303 | | Income from operations | $36,995 | $36,303 | | Net income | $25,954 | $24,338 | | Diluted EPS | $1.09 | $1.02 | | Cash dividends declared and paid per share | $0.30 | $0.30 | Consolidated Statements of Income (Six Months) | Metric (in thousands, except EPS) | Six Month Period Ended June 30, 2025 | Six Month Period Ended June 30, 2024 | | :--- | :--- | :--- | | Net sales | $309,394 | $295,557 | | Gross profit | $88,435 | $80,223 | | Income from operations | $40,197 | $29,881 | | Net income | $26,102 | $15,986 | | Diluted EPS | $1.09 | $0.66 | | Cash dividends declared and paid per share | $0.59 | $0.59 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities decreased to $12.721 million, while net cash provided by financing activities significantly increased Consolidated Statements of Cash Flows | Metric (in thousands) | Six Month Period Ended June 30, 2025 | Six Month Period Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,721) | $(19,114) | | Net cash used in investing activities | $(5,126) | $(2,751) | | Net cash provided by financing activities | $20,708 | $1,905 | | Change in cash and cash equivalents | $2,861 | $(19,960) | | Cash and cash equivalents at end of period | $7,980 | $4,196 | - Net cash used in operating activities decreased $6.4 million in the first half of 2025 due to improved earnings, somewhat offset by changes in working capital[13][29] - Capital expenditures increased by $2.4 million in the first half of 2025 compared to 2024 as planned[13] Non-GAAP Financial Reconciliations This section provides reconciliations for non-GAAP financial measures, including segment disclosures, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow Segment Disclosures The segment disclosures provide a breakdown of Net Sales and Adjusted EBITDA for Work Truck Attachments and Work Truck Solutions, highlighting growth in Solutions despite a decline in Attachments Work Truck Attachments Segment Disclosures | Work Truck Attachments (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $108,114 | $118,137 | $144,571 | $141,977 | | Adjusted EBITDA | $31,570 | $35,792 | $31,897 | $31,324 | | Adjusted EBITDA Margin | 29.2% | 30.3% | 22.1% | 22.1% | Work Truck Solutions Segment Disclosures | Work Truck Solutions (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $86,213 | $81,765 | $164,823 | $153,580 | | Adjusted EBITDA | $11,047 | $7,903 | $20,151 | $13,905 | | Adjusted EBITDA Margin | 12.8% | 9.7% | 12.2% | 9.1% | Net Income to Adjusted EBITDA Reconciliation The reconciliation shows how Net Income is adjusted to derive Adjusted EBITDA, with Q2 2025 Net Income of $25.954 million adjusted to an Adjusted EBITDA of $42.617 million Net Income to Adjusted EBITDA Reconciliation | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $25,954 | $24,338 | $26,102 | $15,986 | | EBITDA | $40,944 | $40,657 | $47,641 | $39,583 | | Stock-based compensation | $1,554 | $2,478 | $3,704 | $2,833 | | Other charges (legal, severance, restructuring, etc.) | $119 | $560 | $371 | $1,589 | | Adjusted EBITDA | $42,617 | $43,695 | $52,048 | $45,229 | Net Income to Adjusted Net Income Reconciliation This reconciliation details the adjustments made to Net Income to arrive at Adjusted Net Income and Adjusted Diluted EPS, resulting in Adjusted Net Income of $27.209 million for Q2 2025 Net Income to Adjusted Net Income Reconciliation | Metric (in thousands, except EPS) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $25,954 | $24,338 | $26,102 | $15,986 | | Stock based compensation | $1,554 | $2,478 | $3,704 | $2,833 | | Other charges (net of tax) | -$418 | -$731 | -$1,102 | -$1,340 | | Adjusted net income | $27,209 | $26,530 | $29,407 | $20,005 | | Adjusted diluted earnings per common share | $1.14 | $1.11 | $1.23 | $0.83 | Free Cash Flow Reconciliation The Free Cash Flow reconciliation shows that for the six months ended June 30, 2025, Douglas Dynamics had a negative free cash flow of $17.847 million, an improvement from the prior year Free Cash Flow Reconciliation | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(11,384) | $2,507 | $(12,721) | $(19,114) | | Net cash used in investing activities (Capital expenditures) | $(2,965) | $(1,423) | $(5,126) | $(2,751) | | Free cash flow | $(14,349) | $1,084 | $(17,847) | $(21,865) |