Workflow
Douglas Dynamics(PLOW) - 2024 Q1 - Quarterly Results

First Quarter 2024 Financial Results Overview Douglas Dynamics reported significantly improved Q1 2024 results, highlighting strong Work Truck Solutions performance and an expanded cost savings program Management Commentary Management highlighted excellent Work Truck Solutions performance and improved Work Truck Attachments results despite low snowfall, expanding the 2024 Cost Savings Program - The Work Truck Solutions segment delivered an excellent quarter, progressing towards long-term growth and profitability goals2 - Despite significantly below-average snowfall for the second consecutive winter, the Work Truck Attachments segment also showed improved results compared to Q1 20232 - The 2024 Cost Savings Program, initiated in January, has been expanded and is now expected to generate over $10 million in sustainable annualized savings2 Key Financial Highlights Q1 2024 saw a 16.0% net sales increase, narrowed net loss, expanded cost savings, and a $0.295 per share dividend, with updated full-year outlook Q1 2024 Key Metrics vs. Q1 2023 | Metric | Q1 2024 | Change vs. Q1 2023 | | :--- | :--- | :--- | | Net Sales | $95.7 million | +16.0% | | Net Loss | $(8.4) million | $4.7 million improvement | | Diluted EPS | $(0.37) | Improvement from $(0.58) | - The company expanded its 2024 Cost Savings Program, which is now expected to deliver over $10 million in sustainable annualized savings3 - A cash dividend of $0.295 per share was paid on March 29, 20243 Consolidated Financial Performance Consolidated Q1 2024 net sales increased 16.0% with significant gross profit growth and a narrowed net loss, driven by volume and cost savings Consolidated First Quarter 2024 Results Consolidated Q1 2024 net sales rose 16.0% to $95.7 million, with gross profit up 67.3% and Adjusted EBITDA turning positive, aided by cost savings Consolidated Financial Results (Q1 2024 vs. Q1 2023) | $ in millions (except Margins & EPS) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $95.7 | $82.5 | | Gross Profit Margin | 19.8% | 13.7% | | Net Loss | $(8.4) | $(13.1) | | Diluted EPS | $(0.37) | $(0.58) | | Adjusted EBITDA | $1.5 | $(7.4) | | Adjusted EBITDA Margin | 1.6% | (8.9%) | - The year-over-year improvement in net sales and gross profit was primarily driven by higher volumes and price realization at the Work Truck Solutions segment, along with higher parts and accessories volumes at the Work Truck Attachments segment6 - Selling, general and administrative (SG&A) expenses decreased by 4.3% to $21.5 million, mainly due to the successful implementation of the 2024 Cost Savings Program6 Segment Performance Segment performance showed Work Truck Attachments improving despite weather, while Work Truck Solutions delivered strong growth and profitability Work Truck Attachments Segment Work Truck Attachments net sales increased 23.9% to $23.8 million, with a narrowed Adjusted EBITDA loss, driven by parts sales and cost savings despite low snowfall Work Truck Attachments Segment Results (Q1 2024 vs. Q1 2023) | $ in millions (except Margin) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $23.8 | $19.2 | | Adjusted EBITDA | ($4.5) | ($10.2) | | Adjusted EBITDA Margin | (18.7%) | (53.2%) | - Improved results were driven by increased sales of parts and accessories and lower costs from the 2024 Cost Savings Program7 - January 2024 saw above-average snowfall in some core markets, leading to record parts and accessories sales for the month7 - Management noted that the lack of snowfall over the past two seasons has lengthened the equipment replacement cycle, which will negatively impact pre-season orders6 Work Truck Solutions Segment Work Truck Solutions net sales grew 13.4% to $71.8 million, with Adjusted EBITDA more than doubling due to higher volumes, price realization, and efficiency gains Work Truck Solutions Segment Results (Q1 2024 vs. Q1 2023) | $ in millions (except Margin) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $71.8 | $63.3 | | Adjusted EBITDA | $6.0 | $2.9 | | Adjusted EBITDA Margin | 8.4% | 4.5% | - Net sales growth was driven by higher volumes, improved chassis availability, and increased price realization10 - Adjusted EBITDA more than doubled due to higher volumes, price increases, and improved efficiencies10 - Management is pleased with the progress, noting that the team can build momentum and deliver positive results when external conditions, such as supply chain stability, allow8 Financial Position and Outlook The company maintained its dividend, improved operating cash flow, amended its credit facility, and updated its 2024 outlook due to weather impacts Dividend, Liquidity, and Credit Facility The company paid a $0.295 per share dividend, significantly improved operating cash flow, and amended its credit facility to enhance financial flexibility - A quarterly cash dividend of $0.295 per share was paid on March 29, 202411 - Net cash used in operating activities decreased by 62.0% to $21.6 million, primarily due to favorable changes in working capital11 - The credit facility was amended to increase the leverage ratio covenant from 3.5x to 4.0x for Q1 and Q2 2024, providing greater financial flexibility. The company's leverage ratio was 3.3x at the end of Q1 202411 2024 Full Year Outlook Douglas Dynamics tightened its 2024 guidance for net sales and Adjusted EBITDA due to weather, while maintaining long-term segment targets Updated 2024 Financial Outlook | Metric | Updated 2024 Range | Previous 2024 Range | | :--- | :--- | :--- | | Net Sales | $600M - $640M | $600M - $660M | | Adjusted EBITDA | $70M - $90M | $70M - $100M | | Adjusted EPS | $1.20 - $1.70 | $1.20 - $2.10 | | Effective Tax Rate | ~24% - 25% | Unchanged | - The expanded 2024 Cost Savings Program is expected to yield annual pre-tax savings of $10+ million, with approximately $8 to $9 million realized in 20249 Long-Term Financial Targets | Segment | Sales Growth Target | Adjusted EBITDA Margin Target | | :--- | :--- | :--- | | Work Truck Attachments | Low to mid-single digits | Mid to high 20%'s | | Work Truck Solutions | Mid to high-single digits | Double digit to low teens | Appendix: Financial Statements & Reconciliations The appendix provides detailed financial statements including balance sheets, statements of loss, cash flows, and non-GAAP reconciliations for Q1 2024 Condensed Consolidated Balance Sheets As of March 31, 2024, total assets were $577.1 million, with a decrease in cash and receivables offset by an increase in inventories Key Balance Sheet Items (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,974 | $24,156 | | Inventories | $174,768 | $140,390 | | Total current assets | $251,218 | $262,238 | | Total assets | $577,076 | $593,418 | | Total current liabilities | $122,127 | $118,517 | | Total stockholders' equity | $217,158 | $231,565 | Condensed Consolidated Statements of Loss Q1 2024 net loss improved to $(8.4) million from $(13.1) million in Q1 2023, driven by higher net sales and gross profit Consolidated Statement of Loss Highlights (in thousands, except per share data) | Account | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net sales | $95,655 | $82,545 | | Gross profit | $18,920 | $11,275 | | Loss from operations | $(6,422) | $(13,797) | | Net loss | $(8,352) | $(13,110) | | Loss per share (diluted) | $(0.37) | $(0.58) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly improved to $(21.6) million in Q1 2024, primarily due to better working capital management Consolidated Cash Flow Summary (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(21,621) | $(56,916) | | Net cash used in investing activities | $(1,328) | $(2,748) | | Net cash provided by financing activities | $767 | $41,894 | | Change in cash and cash equivalents | $(22,182) | $(17,770) | | Cash and cash equivalents at end of period | $1,974 | $2,900 | Non-GAAP Reconciliations Non-GAAP measures show a significant turnaround, with Adjusted EBITDA at $1.5 million and improved Adjusted Net Loss and Free Cash Flow Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $(8,352) | $(13,110) | | Interest, Taxes, D&A | $7,278 | $4,705 | | Stock-based compensation & other charges | $2,608 | $1,031 | | Adjusted EBITDA | $1,534 | $(7,374) | Net Loss to Adjusted Net Loss Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $(8,352) | $(13,110) | | Adjustments (net of tax) | $1,827 | $644 | | Adjusted net loss | $(6,525) | $(12,466) | Free Cash Flow Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(21,621) | $(56,916) | | Capital expenditures | $(1,328) | $(2,748) | | Free cash flow | $(22,949) | $(59,664) |