Douglas Dynamics(US:PLOW)2020-08-08 08:47Financial 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]