Douglas Dynamics(PLOW) - 2019 Q4 - Earnings Call Transcript

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]