Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 05, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2019 | |
Entity File Number | 001-34728 | |
Entity Registrant Name | DOUGLAS DYNAMICS, INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-4275891 | |
Entity Address, Address Line One | 7777 North 73rd Street | |
Entity Address, City or Town | Milwaukee | |
Entity Address, State or Province | WI | |
Entity Address, Postal Zip Code | 53223 | |
City Area Code | 414 | |
Local Phone Number | 354-2310 | |
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | PLOW | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 22,795,412 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001287213 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 4,870 | $ 27,820 |
Accounts receivable, net | 153,231 | 81,485 |
Inventories | 90,406 | 81,996 |
Inventories - truck chassis floor plan | 19,709 | 4,204 |
Refundable income taxes paid | 171 | |
Prepaid and other current assets | 4,163 | 3,590 |
Total current assets | 272,550 | 199,095 |
Property, plant, and equipment, net | 56,764 | 55,195 |
Goodwill | 241,006 | 241,006 |
Other intangible assets, net | 166,461 | 174,678 |
Operating lease - right of use asset | 22,203 | |
Other long-term assets | 7,925 | 6,219 |
Total assets | 766,909 | 676,193 |
Current liabilities: | ||
Accounts payable | 16,995 | 18,703 |
Accrued expenses and other current liabilities | 27,613 | 23,306 |
Floor plan obligations | 19,709 | 4,204 |
Operating lease liability - current | 3,626 | |
Income taxes payable | 106 | |
Short term borrowings | 57,000 | |
Current portion of long-term debt | 2,143 | 32,749 |
Total current liabilities | 127,086 | 79,068 |
Retiree health benefit obligation | 6,531 | 6,240 |
Pension obligation | 2,480 | 2,129 |
Deferred income taxes | 48,640 | 48,198 |
Long-term debt, less current portion | 242,411 | 242,946 |
Operating lease liability - noncurrent | 18,813 | |
Other long-term liabilities | 20,944 | 14,856 |
Stockholders' equity: | ||
Common Stock, par value $0.01, 200,000,000 shares authorized, 22,795,412 and 22,700,991 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 228 | 227 |
Additional paid-in capital | 154,823 | 151,813 |
Retained earnings | 155,492 | 136,765 |
Accumulated other comprehensive loss, net of tax | (10,539) | (6,049) |
Total stockholders' equity | 300,004 | 282,756 |
Total liabilities and stockholders' equity | $ 766,909 | $ 676,193 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 22,795,412 | 22,700,991 |
Common Stock, shares outstanding | 22,795,412 | 22,700,991 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net sales | $ 141,869 | $ 124,832 | $ 411,412 | $ 372,242 |
Cost of sales | 101,930 | 89,912 | 288,934 | 261,446 |
Gross profit | 39,939 | 34,920 | 122,478 | 110,796 |
Selling, general, and administrative expense | 17,269 | 16,592 | 52,680 | 53,281 |
Intangibles amortization | 2,737 | 2,868 | 8,217 | 8,605 |
Income from operations | 19,933 | 15,460 | 61,581 | 48,910 |
Interest expense, net | (4,271) | (4,379) | (12,610) | (12,420) |
Other expense, net | (120) | (12) | (416) | (479) |
Income before taxes | 15,542 | 11,069 | 48,555 | 36,011 |
Income tax expense | 3,113 | 1,148 | 10,949 | 6,802 |
Net income | $ 12,429 | $ 9,921 | $ 37,606 | $ 29,209 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 22,795,412 | 22,700,991 | 22,773,546 | 22,675,450 |
Diluted (in shares) | 22,832,170 | 22,726,517 | 22,808,722 | 22,697,259 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.54 | $ 0.43 | $ 1.63 | $ 1.27 |
Diluted (in dollars per share) | 0.53 | 0.43 | 1.61 | 1.26 |
Cash dividends declared per share (in dollars per share) | 0.27 | 0.27 | 0.82 | 0.80 |
Cash dividends declared per share (in dollars per share) | $ 0.27 | $ 0.27 | $ 0.82 | $ 0.80 |
Comprehensive income | $ 11,361 | $ 10,709 | $ 33,116 | $ 31,789 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities | ||
Net income | $ 37,606 | $ 29,209 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 14,335 | 14,215 |
Amortization of deferred financing costs and debt discount | 910 | 911 |
Loss on disposal of fixed assets | 185 | |
Stock-based compensation | 3,061 | 4,180 |
Provision for losses on accounts receivable | 988 | 446 |
Deferred income taxes | 442 | 7,178 |
Earnout liability | (217) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (72,734) | (47,105) |
Inventories | (8,410) | (19,795) |
Prepaid and refundable income taxes and other assets | (2,450) | (4,093) |
Accounts payable | (1,594) | (872) |
Accrued expenses and other current liabilities | 4,418 | 4,360 |
Benefit obligations and other long-term liabilities | 2,476 | (6,723) |
Net cash used in operating activities | (21,169) | (17,904) |
Investing activities | ||
Capital expenditures | (7,801) | (6,302) |
Net cash used in investing activities | (7,801) | (6,302) |
Financing activities | ||
Shares withheld on restricted stock vesting paid for employees' taxes | (50) | (23) |
Dividends paid | (18,879) | (18,291) |
Net revolver borrowings | 57,000 | 38,000 |
Repayment of long-term debt | (32,051) | (32,355) |
Net cash provided by (used) in financing activities | 6,020 | (12,669) |
Change in cash and cash equivalents | (22,950) | (36,875) |
Cash and cash equivalents at beginning of period | 27,820 | 36,875 |
Cash and cash equivalents at end of period | 4,870 | |
Non-cash operating and financing activities | ||
Truck chassis inventory acquired through floorplan obligations | $ 40,974 | $ 30,034 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2017 | $ 226 | $ 147,287 | $ 115,737 | $ (6,572) | $ 256,678 |
Balance (in shares) at Dec. 31, 2017 | 22,590,897 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | 29,209 | 29,209 | |||
Dividends paid | (18,291) | (18,291) | |||
Adjustment for pension and postretirement benefit liability, net of tax | 276 | 276 | |||
Adjustment for interest rate swap, net of tax | 2,304 | 2,304 | |||
Shares withheld on restricted stock vesting | (23) | (23) | |||
Stock based compensation | $ 1 | 4,179 | 4,180 | ||
Stock based compensation (in shares) | 110,094 | ||||
Balance at Sep. 30, 2018 | $ 227 | 151,443 | 127,032 | (3,992) | 274,710 |
Balance (in shares) at Sep. 30, 2018 | 22,700,991 | ||||
Balance at Jun. 30, 2018 | $ 227 | 151,428 | 123,208 | (4,780) | 270,083 |
Balance (in shares) at Jun. 30, 2018 | 22,700,991 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | 9,921 | 9,921 | |||
Dividends paid | (6,097) | (6,097) | |||
Adjustment for pension and postretirement benefit liability, net of tax | 92 | 92 | |||
Adjustment for interest rate swap, net of tax | 696 | 696 | |||
Stock based compensation | 15 | 15 | |||
Balance at Sep. 30, 2018 | $ 227 | 151,443 | 127,032 | (3,992) | 274,710 |
Balance (in shares) at Sep. 30, 2018 | 22,700,991 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Impact due to adoption | ASC 2014-09 | 377 | 377 | |||
Balance at Dec. 31, 2018 | $ 227 | 151,813 | 136,765 | (6,049) | 282,756 |
Balance (in shares) at Dec. 31, 2018 | 22,700,991 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | 37,606 | 37,606 | |||
Dividends paid | (18,879) | (18,879) | |||
Adjustment for pension and postretirement benefit liability, net of tax | 159 | 159 | |||
Adjustment for interest rate swap, net of tax | (4,649) | (4,649) | |||
Shares withheld on restricted stock vesting | (50) | (50) | |||
Stock based compensation | $ 1 | 3,060 | 3,061 | ||
Stock based compensation (in shares) | 94,421 | ||||
Balance at Sep. 30, 2019 | $ 228 | 154,823 | 155,492 | (10,539) | 300,004 |
Balance (in shares) at Sep. 30, 2019 | 22,795,412 | ||||
Balance at Jun. 30, 2019 | $ 228 | 154,298 | 149,372 | (9,470) | 294,428 |
Balance (in shares) at Jun. 30, 2019 | 22,795,412 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | 12,429 | 12,429 | |||
Dividends paid | (6,309) | (6,309) | |||
Adjustment for pension and postretirement benefit liability, net of tax | 53 | 53 | |||
Adjustment for interest rate swap, net of tax | (1,122) | (1,122) | |||
Stock based compensation | 525 | 525 | |||
Balance at Sep. 30, 2019 | $ 228 | $ 154,823 | $ 155,492 | $ (10,539) | $ 300,004 |
Balance (in shares) at Sep. 30, 2019 | 22,795,412 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||
Adjustment for pension and postretirement benefit liability, tax | $ (18) | $ (32) | $ (54) | $ (96) |
Adjustment for interest rate swap, tax | $ 394 | $ (244) | $ 1,634 | $ (809) |
Basis of presentation
Basis of presentation | 9 Months Ended |
Sep. 30, 2019 | |
Basis of presentation | |
Basis of presentation | 1. Basis of presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for fiscal year-end financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and related footnotes included in our 2018 Form 10-K (Commission File No. 001-34728) filed with the Securities and Exchange Commission on February 26, 2019. The Company conducts business in two segments: Work Truck Attachments and Work Truck Solutions. During the first quarter of 2019, the Company reorganized its business segments to reflect a new operating structure as a result of a change in how the Company’s chief operating decision maker allocates resources, makes operating decisions and assesses the performance of the business. Under this revised reporting structure, the Company’s two reportable business segments are as follows: Work Truck Attachments. includes commercial snow and ice management attachments sold under the FISHER®, WESTERN® and SNOWEX® brands. This segment consists of our operations that manufacture and sell snow and ice control products. Work Truck Solutions. See Note 15 to the Unaudited Condensed Consolidated Financial Statements for financial information regarding these segments. As a result of the revised reporting structure, the prior period presentation of reportable segments throughout this Form 10-Q has been recast to conform to the current segment reporting structure. Interim Condensed Consolidated Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2019, the condensed consolidated statements of operations and comprehensive income and the condensed consolidated statements of shareholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the condensed cash flows for the nine months ended September 30, 2019 and 2018 have been prepared by the Company and have not been audited. The Company’s Work Truck Attachments segment is seasonal and, consequently its results of operations and financial condition vary from quarter-to-quarter. Because of this seasonality, the results of operations of the Work Truck Attachments segment for any quarter may not be indicative of results of operations that may be achieved for a subsequent quarter or the full year, and may not be similar to results of operations experienced in prior years. The Company attempts to manage the seasonal impact of snowfall on its revenues in part through its pre-season sales program. This pre-season sales program encourages the Company’s distributors to re-stock their inventory of Work Truck Attachments products during the second and third quarters in anticipation of the peak fourth quarter retail sales period by offering favorable pre-season pricing and payment deferral until the fourth quarter. Thus, the Company’s Work Truck Attachments segment tends to generate its greatest volume of sales during the second and third quarters. By contrast, its revenue and operating results tend to be lowest during the first quarter, as management believes the end-users of Work Truck Attachments products prefer to wait until the beginning of a snow season to purchase new equipment and as the Company’s distributors sell off Work Truck Attachments inventory and wait for the pre-season sales incentive period to re-stock inventory. Fourth quarter sales vary from year-to-year as they are primarily driven by the level, timing and location of snowfall during the quarter. This is because most of the Company’s Work Truck Attachments fourth quarter sales and shipments consist of re-orders by distributors seeking to restock inventory to meet immediate customer needs caused by snowfall during the winter months. In addition, due to the factors noted above, Work Truck Attachments working capital needs are highest in the second and third quarters as its accounts receivable rise from pre-season sales. These working capital needs decline in the fourth quarter as the Company receives payments for its pre-season shipments. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 Leases (Topic 842) The standard had a material impact on the Company’s Condensed Consolidated Balance Sheets, but did not have an impact on the Condensed Consolidated Statements of Operations and Comprehensive Income. There was no cumulative catch-up adjustment made to opening retained earnings. The most significant impact was the recognition of right-of-use assets and lease liabilities for operating leases, while the accounting for finance leases (previously capital leases) remained substantially unchanged. As the Company elected to apply the standard at adoption as allowed under ASU No. 2018-11, there is no impact to previously reported results. The impact of this standard was the recognition of a lease liability and right-of-use asset of approximately $22.0 million, with immaterial differences related to prepaid rent, on the Consolidated Balance Sheet for lease contracts which were previously accounted for as operating leases. As allowed under ASC 842, the Company has adopted the following practical expedients: ● Practical expedient package, which allows the following: o To not reassess whether any expired or existing contracts is or contains a lease. o To not reassess the lease classification of any expired or existing leases. o To not reassess the initial direct costs for any existing lease. ● Short-term lease practical expedient o Allows the Company not to apply the recognition requirements in ASC 842 to short term leases for all asset classes. Short term leases are leases that, at commencement date, have a term of 12 months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. ● Separating lease components practical expedient o Allows the Company not to separate lease components from nonlease components for all asset classes and instead account for each separate lease component and the nonlease components associated with that lease component as a single lease component. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition | |
Revenue Recognition | 2. Revenue Recognition During the first quarter of 2019, the Company reorganized its segments. See Note 1 to the Unaudited Condensed Consolidated Financial Statements for additional information regarding these segments. Revenue Streams The following is a description of principal activities from which the Company generates revenue. Revenues are recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company generates all of its revenue from contracts with customers. Additionally, contract amounts represent the full amount of the transaction price as agreed upon with the customer at the time of order, resulting in a single performance obligation in all cases. Work Truck Attachments The Company recognizes revenue upon shipment of equipment to the customer. Within the Work Truck Attachments segment, the Company offers a variety of discounts and sales incentives to its distributors. The estimated liability for sales discounts and allowances is calculated using the expected value method and recorded at the time of sale as a reduction of net sales. The liability is estimated based on the costs of the program, the planned duration of the program and historical experience. The Work Truck Attachments segment has two revenue streams, as identified below. Independent Dealer Sales Parts & Accessory Sales Work Truck Solutions The Work Truck Solutions segment primarily participates in the truck and vehicle upfitting industry in the United States. Customers are billed separately for the truck chassis by the chassis manufacturer. The Company only records sales for the amount of the upfit, excluding the truck chassis. Generally, the Company obtains the truck chassis from the truck chassis manufacturer through either its floor plan agreement with a financial institution or bailment pool agreement with the truck chassis manufacturer. Additionally, in some instances the Company upfits chassis which are owned by the end customer. For truck chassis acquired through the floor plan agreement, the Company holds title to the vehicle from the time the chassis is received by the Company until the completion of the up-fit. Under the bailment pool agreement, the Company does not take title to the truck chassis, but rather only holds the truck chassis on consignment. The Company pays interest on both of these arrangements. The Company records revenue in the same manner net of the value of the truck chassis in both the Company’s floor plan and bailment pool agreements. The Company does not set the price for the truck chassis, is not responsible for the billing of the chassis and does not have inventory risk in either the bailment pool or floor plan agreements. The Work Truck Solutions segment also has manufacturing operations of municipal snow and ice control equipment, where revenue is recognized upon shipment of equipment to the customer. Revenues from the sales of the Work Truck Solutions products are recognized net of the truck chassis with the selling price to the customer recorded as sales and the manufacturing and up-fit cost of the product recorded as cost of sales. In these cases, the Company acts as an agent as it does not have inventory or pricing control over the truck chassis. Within the Work Truck Solutions segment, the Company also sells certain third-party products for which it acts as an agent. These sales do not meet the criteria for gross sales recognition, and thus are recognized on a net basis at the time of sale. Under net sales recognition, the cost paid to the third-party service provider is recorded as a reduction to sales, resulting in net sales being equal to the gross profit on the transaction. The Work Truck Solutions segment has four revenue streams, as identified below. State and Local Bids Fleet Upfit Sales Dealer Upfit Sales Over the Counter / Parts & Accessory Sales Disaggregation of Revenue The following table provides information about disaggregated revenue by customer type and timing of revenue recognition, and includes a reconciliation of the disaggregated revenue with reportable segments. Revenue by customer type was as follows: Three Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 75,632 $ 29,007 $ 104,639 Government - 18,373 18,373 Fleet - 16,775 16,775 Other - 2,082 2,082 Total revenue $ 75,632 $ 66,237 $ 141,869 Three Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 69,806 $ 26,486 $ 96,292 Government - 12,568 12,568 Fleet - 13,955 13,955 Other - 2,017 2,017 Total revenue $ 69,806 $ 55,026 $ 124,832 Nine Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 213,693 $ 91,199 $ 304,892 Government - 49,985 49,985 Fleet - 48,292 48,292 Other - 8,243 8,243 Total revenue $ 213,693 $ 197,719 $ 411,412 Nine Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 197,931 $ 86,921 $ 284,852 Government - 35,351 35,351 Fleet - 43,501 43,501 Other - 8,538 8,538 Total revenue $ 197,931 $ 174,311 $ 372,242 Revenue by timing of revenue recognition was as follows: Three Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 75,632 $ 41,099 $ 116,731 Over time - 25,138 25,138 Total revenue $ 75,632 $ 66,237 $ 141,869 Three Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 69,806 $ 33,923 $ 103,729 Over time - 21,103 21,103 Total revenue $ 69,806 $ 55,026 $ 124,832 Nine Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 213,693 $ 120,577 $ 334,270 Over time - 77,142 77,142 Total revenue $ 213,693 $ 197,719 $ 411,412 Nine Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 197,931 $ 106,249 $ 304,180 Over time - 68,062 68,062 Total revenue $ 197,931 $ 174,311 $ 372,242 Contract Balances The following table shows the changes in the Company’s contract liabilities during the three and nine months ended September 30, 2019 and 2018, respectively: Three Months Ended September 30, 2019 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 6,886 $ 3,328 $ (6,147) $ 4,067 Three Months Ended September 30, 2018 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 3,316 $ 2,434 $ (3,544) $ 2,206 Nine Months Ended September 30, 2019 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 2,006 $ 13,479 $ (11,418) $ 4,067 Nine Months Ended September 30, 2018 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 2,048 $ 8,605 $ (8,447) $ 2,206 The Company receives payments from customers based upon contractual billing schedules. Contract assets include amounts related to our contractual right to consideration for completed performance objectives not yet invoiced. There were no contract assets as of September 30, 2019 or 2018. Contract liabilities include payments received in advance of performance under the contract, variable freight allowances which are refunded to the customer, and rebates paid to distributors under our municipal rebate program, and are realized with the associated revenue recognized under the contract. The Company recognized revenue of $721 and $663 during the three months ended September 30, 2019 and 2018, respectively, which was included in contract liabilities at the beginning of each period. The Company recognized revenue of $2,006 and $2,048 during the nine months ended September 30, 2019 and 2018, respectively, which was included in contract liabilities at the beginning of each period. Transaction Price Allocated to the Remaining Performance Obligations Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of September 30, 2019. The guidance provides certain optional exemptions that limit this requirement. The Company has various contracts that meet the following optional exemptions provided by ASC 606: 1. The performance obligation is part of a contract that has an original expected duration of one year or less. 2. Revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer in accordance with ASC 606-10-55-18. 3. The variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with ASC 606-10-25-14(b), for which the criteria in ASC 606-10-32-40 have been met. After considering the above optional exemptions, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period is immaterial. Specifically, all obligations are expected to be less than one year, revenue is recognized from the satisfaction of the performance obligations and variable consideration is allocated entirely to wholly unsatisfied performance obligations. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value | |
Fair Value | 3. Fair Value Fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). The following table presents financial assets and liabilities measured at fair value on a recurring basis and discloses the fair value of long-term debt: Fair Value at Fair Value at September 30, December 31, 2019 2018 Assets: Other long-term assets (a) $ 6,893 $ 5,064 Total Assets $ 6,893 $ 5,064 Liabilities: Interest rate swaps (b) $ 8,312 $ 2,031 Long-term debt (c) 247,555 269,739 Earnout - Henderson (d) 17 352 Earnout - Dejana (e) 2,200 2,200 Total Liabilities $ 258,084 $ 274,322 (a) Included in other assets is the cash surrender value of insurance policies on various individuals that are associated with the Company. The carrying amount of these insurance policies approximates their fair value and is considered Level 2 inputs. (b) Valuation models are calibrated to initial trade price. Subsequent valuations are based on observable inputs to the valuation model (e.g. interest rates and credit spreads). Model inputs are changed only when corroborated by market data. A credit risk adjustment is made on each swap using observable market credit spreads. Thus, inputs used to determine fair value of the interest rate swap are Level 2 inputs. Interest rate swaps of $1,475 and $6,837 at September 30, 2019 are included in Accrued expenses and other current liabilities and Other long-term liabilities, respectively. Interest rate swaps of $127 and $1,904 at December 31, 2018 are included in Accrued expenses and other current liabilities and Other long-term liabilities, respectively. (c) The fair value of the Company’s long-term debt, including current maturities, is estimated using discounted cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements, which is a Level 2 input for all periods presented. Meanwhile, long-term debt is recorded at carrying amount, net of discount and deferred debt issuance costs, as disclosed on the face of the balance sheet. (d) Included in Accrued expenses and other current liabilities in the amount of $17 at September 30, 2019 is the fair value of an obligation for a portion of the potential earnout acquired in conjunction with the acquisition of Henderson Enterprise Group, Inc. (“Henderson”). Included in Accrued expenses and other current liabilities and Other long-term liabilities in the amounts of $213 and $200, respectively, at September 30, 2018 is the fair value of an obligation for a portion of the potential earnout acquired in conjunction with the acquisition of Henderson. Fair value is based upon Level 3 discounted cash flow analysis using key inputs of forecasted future sales as well as a growth rate reduced by the market required rate of return. See reconciliation of liability included below: Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2019 2018 2018 Beginning Balance $ 17 $ 352 $ 444 $ 529 Adjustments to fair value - (217) — — Payment to former owners - (118) (31) (116) Ending balance $ 17 $ 17 $ 413 $ 413 (e) Included in Other long-term liabilities in the amount of $2,200 at September 30, 2019 is the fair value of an obligation for a portion of the potential earnout incurred in conjunction with the acquisition of substantially all of the assets of Dejana Truck & Utility Equipment Company, Inc. and certain entities directly or indirectly owned by the Peter Paul Dejana Family Trust dated 12/31/98 (“Dejana”). Included in Other long-term liabilities in the amount of $3,100 at September 30, 2018 is the fair value of an obligation for a portion of the potential earnout incurred in conjunction with the acquisition of Dejana. Fair value is based upon Level 3 inputs of a real options approach where gross sales were simulated in a risk-neutral framework using Geometric Brownian Motion, a well-accepted model of stock price behavior that is used in option pricing models such as the Black-Scholes option pricing model, using key inputs of forecasted future sales and financial performance as well as a risk adjusted expected growth rate adjusted appropriately based on its correlation with the market. There were no adjustments to fair value or payments to former owners in either the three and nine months ended September 30, 2019 or September 30, 2018. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2019 | |
Inventories | |
Inventories | 4. Inventories Inventories consist of the following: September 30, December 31, 2019 2018 Finished goods $ 44,049 $ 43,192 Work-in-process 10,611 7,357 Raw material and supplies 35,746 31,447 $ 90,406 $ 81,996 The inventories in the table above do not include truck chassis inventory financed through a floor plan financing agreement, which are recorded separately on the balance sheet. The Company takes title to truck chassis upon receipt of the inventory through its floor plan agreement and performs up-fitting service installations to the truck chassis inventory during the installation period. The floor plan obligation is then assumed by the dealer customer upon delivery. At September 30, 2019 and December 31, 2018, the Company had $19,709 and $4,204 of chassis inventory and related floor plan financing obligation, respectively. The Company recognizes revenue associated with up-fitting and service installations net of the truck chassis. |
Property, plant and equipment
Property, plant and equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, plant and equipment | |
Property, plant and equipment | 5. Property, plant and equipment Property, plant and equipment are summarized as follows: September 30, December 31, 2019 2018 Land $ 2,378 $ 2,378 Land improvements 4,534 4,357 Leasehold improvements 4,087 4,079 Buildings 28,662 28,238 Machinery and equipment 51,372 50,129 Furniture and fixtures 17,089 16,360 Mobile equipment and other 4,963 4,883 Construction-in-process 7,861 3,084 Total property, plant and equipment 120,946 113,508 Less accumulated depreciation (64,182) (58,313) Net property, plant and equipment $ 56,764 $ 55,195 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Leases | 6. Leases The Company has operating leases for manufacturing and upfit facilities, land and parking lots, warehousing space and certain equipment. The leases have remaining lease terms of less than one year to 16 years, some of which include options to extend the leases for up to 10 years. Such renewal options were not included in the determination of the lease term unless deemed reasonably certain of exercise. The discount rate used in measuring the lease liabilities is based on the Company’s interest rate on its secured Term Loan Credit Agreement. Certain of the Company’s leases contain escalating rental payments based on an index. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease Expense The components of lease expense, which are included in Cost of sales and Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income, were as follows: Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Operating lease expense $ 1,286 $ 3,562 Short term lease cost $ 121 $ 317 Total lease cost $ 1,407 $ 3,879 Cash Flow Supplemental cash flow information related to leases is as follows: Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 3,392 Non-cash lease expense - right-of-use assets $ 2,679 Right-of-use assets obtained in exchange for operating lease obligations $ 3,525 Balance Sheet Supplemental balance sheet information related to leases is as follows: September 30, 2019 Operating Leases Operating lease right-of-use assets $ 22,203 Other current liabilities 3,626 Operating lease liabilities 18,813 Total operating lease liabilities $ 22,439 Weighted Average Remaining Lease Term Operating leases 79 months Weighted Average Discount Rate Operating leases 5.37% Lease Maturities Maturities of leases were as follows: Year ending December 31, Operating Leases 2019 (excluding the nine months ended September 30, 2019) $ 1,208 2020 4,616 2021 4,359 2022 4,046 2023 3,604 Thereafter 8,728 Total Lease Payments 26,561 Less: imputed interest (4,122) Total $ 22,439 Related Party Leases The Company entered into lease agreements at the time of the close of the Dejana acquisition with parties that are affiliated with the former owners of Dejana and remain affiliated with Dejana post - acquisition. The related parties continue to own land and buildings where Dejana conducts business. As of September 30, 2019, the Company had nine operating leases at Dejana upfitting and manufacturing facilities with related party affiliates. The Company incurred $534 and $1,602 of total rent expense to related parties in the three and nine months ended September 30, 2019, respectively. As the Company makes monthly payments to the related parties, there are no amounts owed to the related parties at September 30, 2019. ASC 840 Disclosure As required in transition, the below summarizes the Company’s future minimum lease payments at December 31, 2018 under ASC 840: Related Party Leases Third Party Leases Total Leases 2019 $ 2,250 $ 2,009 $ 4,259 2020 2,250 1,654 3,904 2021 2,250 1,364 3,614 2022 2,250 949 3,199 2023 2,130 574 2,704 Thereafter 4,410 1,500 5,910 Total lease obligations $ 15,540 $ 8,050 $ 23,590 |
Other Intangible Assets
Other Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Other Intangible Assets | |
Other Intangible Assets | 7. Other Intangible Assets The following is a summary of the Company’s other intangible assets: Gross Less Net Carrying Accumulated Carrying Amount Amortization Amount September 30, 2019 Indefinite-lived intangibles: Trademark and tradenames $ 77,600 $ - $ 77,600 Amortizable intangibles: Dealer network 80,000 62,000 18,000 Customer relationships 80,920 20,587 60,333 Patents 21,136 12,915 8,221 Noncompete agreements 8,640 8,102 538 Trademarks 5,459 3,690 1,769 Backlog 1,900 1,900 - License 20 20 - Amortizable intangibles, net 198,075 109,214 88,861 Total $ 275,675 $ 109,214 $ 166,461 Gross Less Net Carrying Accumulated Carrying Amount Amortization Amount December 31, 2018 Indefinite-lived intangibles: Trademark and tradenames $ 77,600 $ - $ 77,600 Amortizable intangibles: Dealer network 80,000 59,000 21,000 Customer relationships 80,920 16,607 64,313 Patents 21,136 11,974 9,162 Noncompete agreements 8,640 7,877 763 Trademarks 5,459 3,619 1,840 Backlog 1,900 1,900 - License 20 20 - Amortizable intangibles, net 198,075 100,997 97,078 Total $ 275,675 $ 100,997 $ 174,678 Amortization expense for intangible assets was $2,737 and $2,868 for the three months ended September 30, 2019 and 2018, respectively. Amortization expense for intangible assets was $8,217 and $8,605 for the nine months ended September 30, 2019 and 2018, respectively. Estimated amortization expense for the remainder of 2019 and each of the succeeding five years is as follows: 2019 $ 2,739 2020 10,932 2021 10,670 2022 10,520 2023 10,520 2024 7,520 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt | |
Long-Term Debt | 8. Long-Term Debt Long-term debt is summarized below: September 30, December 31, 2019 2018 Term Loan, net of debt discount of $879 and $1,172 at September 30, 2019 and December 31, 2018, respectively $ 246,323 $ 278,081 Less current maturities 2,143 32,749 Long-term debt before deferred financing costs 244,180 245,332 Deferred financing costs, net 1,769 2,386 Long-term debt, net $ 242,411 $ 242,946 At September 30, 2019, the Company had outstanding borrowings under the Term Loan Credit Agreement of $246,323, outstanding borrowings on the Revolving Credit Agreement of $57,000, and remaining borrowing availability of $42,352. At December 31, 2018, the Company had outstanding borrowings under the Term Loan Credit Agreement of $278,081, no outstanding borrowings on the Revolving Credit Agreement and remaining borrowing availability of $94,631. In accordance with the senior credit facilities, the Company is required to make additional principal prepayments over the above scheduled payments under certain conditions. This includes, in the case of the term loan facility, 100% of the net cash proceeds of certain asset sales, certain insurance or condemnation events, certain debt issuances, and, within 150 days of the end of each fiscal year, 50% of consolidated excess cash flow including a deduction for certain distributions (which percentage is reduced to 0% upon the achievement of certain leverage ratio thresholds), for such fiscal year. Consolidated excess cash flow is defined in the senior credit facilities as consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) plus a consolidated working capital adjustment, less the sum of repayments of debt and capital expenditures (subject to certain adjustments), interest and taxes paid in cash, management fees and certain restricted payments (including certain dividends or distributions). Consolidated working capital adjustment is defined in the senior credit facilities as the change in working capital, defined as current assets, excluding cash and cash equivalents, less current liabilities, excluding the current portion of long-term debt. As of September 30, 2019, the Company was not required to make additional excess cash flow payments during fiscal 2019. The Company made a voluntary payment of $30,000 on its debt on February 13, 2019. On June 13, 2019 the Company entered into an interest rate swap agreement to reduce its exposure to interest rate volatility. The interest rate swap has a notional amount of $175,000 effective for the period May 31, 2019 through May 31, 2024. The interest rate swap is accounted for as a cash flow hedge. The Company may have counterparty credit risk resulting from the interest rate swap, which it monitors on an on-going basis. The risk lies with one global financial institution. Under the interest rate swap agreement, the Company will either receive or make payments on a monthly basis based on the differential between 2.495% and LIBOR (with a LIBOR floor of 1.0%). The interest rate swap replaced four interest rate swaps that the Company had entered into in 2015 and 2018, which are described in further detail below. The Company previously entered into interest rate swap agreements on February 20, 2015 to reduce its exposure to interest rate volatility. The three interest rate swap agreements had notional amounts of $45,000, $90,000 and $135,000 effective for the periods December 31, 2015 through March 29, 2018, March 29, 2018 through March 31, 2020 and March 31, 2020 through June 30, 2021, respectively. On February 5, 2018, the Company entered into additional interest rate swap agreements to reduce its exposure to interest rate volatility. The two interest rate swap agreements had notional amounts of $50,000 and $150,000 effective for the periods December 31, 2018 through June 30, 2021 and June 30, 2021 through December 10, 2021, respectively. The interest rates swaps were accounted for as cash flow hedges. The Company may have had counterparty credit risk resulting from the interest rate swap, which it monitored on an on-going basis. This risk lied with one global financial institution. Under the interest rate swap agreement, effective as of December 31, 2015, the Company either received or made payments on a monthly basis based on the differential between 1.860% and LIBOR (with a LIBOR floor of 1.0%). Under the interest rate swap agreement, effective as of March 29, 2018, the Company would either receive or make payments on a monthly basis based on the differential between 2.670% and LIBOR (with a LIBOR floor of 1.0%). Under the interest rate swap agreement, effective as of March 31, 2020, the Company would either receive or make payments on a monthly basis based on the differential between 2.918% and LIBOR (with a LIBOR floor of 1.0%). Under the interest rate swap agreement effective as of December 31, 2018, the Company would either receive or make payments on a monthly basis based on the differential between 2.613% and LIBOR. Under the interest rate swap agreement effective as of June 30, 2021, the Company would either receive or make payments on a monthly basis based on the differential between 2.793% and LIBOR. The above four interest rate swaps were terminated on June 13, 2019 and replaced with the new interest rate swap described in the prior paragraph. As of the termination date, the swaps had a value of $6,015 included in accumulated other comprehensive loss that will be reclassified to earnings over the period of the terminated hedged transactions. The current interest rate swap’s negative fair value at September 30, 2019 was $8,312, of which $1,475 and $6,837 are included in Accrued expenses and other current liabilities and Other long-term liabilities on the Condensed Consolidated Balance Sheet, respectively. The prior interest rate swaps’ negative fair value at December 31, 2018 was $2,031, of which $127 and $1,904 are included in Accrued expenses and other current liabilities and Other long-term liabilities on the Condensed Consolidated Balance Sheet, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities are summarized as follows: September 30, December 31, 2019 2018 Payroll and related costs $ 9,989 $ 9,607 Employee benefits 5,730 5,281 Accrued warranty 3,777 3,662 Other 8,117 4,756 $ 27,613 $ 23,306 |
Warranty Liability
Warranty Liability | 9 Months Ended |
Sep. 30, 2019 | |
Warranty Liability | |
Warranty Liability | 10. Warranty Liability The Company accrues for estimated warranty costs as sales are recognized and periodically assesses the adequacy of its recorded warranty liability and adjusts the amount as necessary. The Company’s warranties generally provide, with respect to its snow and ice control equipment, that all material and workmanship will be free from defect for a period of two years after the date of purchase by the end-user, and with respect to its parts and accessories purchased separately, that such parts and accessories will be free from defect for a period of one year after the date of purchase by the end-user. All of the Company’s warranties are assurance-type warranties. Certain snowplows only provide for a one year warranty. The Company determines the amount of the estimated warranty costs (and its corresponding warranty reserve) based on the Company’s prior five years of warranty history utilizing a formula driven by historical warranty expense and applying management’s judgment. The Company adjusts its historical warranty costs to take into account unique factors such as the introduction of new products into the marketplace that do not provide a historical warranty record to assess. The warranty reserve was $6,344 at September 30, 2019, of which $2,567 is included in Other long-term liabilities and $3,777 is included in Accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheet. The warranty reserve was $6,174 at December 31, 2018, of which $2,512 is included in Other long-term liabilities and $3,662 is included in Accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheet. The following is a rollforward of the Company’s warranty liability: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Balance at the beginning of the period $ 5,731 $ 5,176 $ 6,174 $ 5,677 Warranty provision 886 1,050 2,665 2,821 Claims paid/settlements (273) (472) (2,495) (2,744) Balance at the end of the period $ 6,344 $ 5,754 $ 6,344 $ 5,754 |
Employee Retirement Plans
Employee Retirement Plans | 9 Months Ended |
Sep. 30, 2019 | |
Employee Retirement Plans | |
Employee Retirement Plans | 11. Employee Retirement Plans The components of net periodic pension cost consist of the following: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Component of net periodic pension cost: Service cost $ - $ 102 $ - $ 306 Interest cost 410 389 1,230 1,167 Expected return on plan assets (294) (475) (882) (1,425) Amortization of net loss 149 176 447 528 Net periodic pension cost $ 265 $ 192 $ 795 $ 576 The Company estimates its total required minimum contributions to its pension plans in 2019 will be $0. Through September 30, 2019, the Company has made $0 of cash contributions to the pension plans versus $7,047 through the same period in 2018. The 2018 payment included a $7,000 discretionary payment related to the 2017 plan year. Components of net periodic other postretirement benefit cost consist of the following: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Component of periodic other postretirement benefit cost: Service cost $ 37 $ 47 $ 111 $ 141 Interest cost 63 58 189 174 Amortization of net gain (78) (52) (234) (156) Net periodic other postretirement benefit cost $ 22 $ 53 $ 66 $ 159 Service cost is included in Income from operations on the Condensed Consolidated Statement of Operations and Comprehensive Income. The other components of net periodic pension and postretirement benefit cost are included in Other expense on the Condensed Consolidated Statement of Operations and Comprehensive Income. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings per Share | |
Earnings per Share | 12. Earnings per Share Basic earnings per share of common stock is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock is computed by dividing net income by the weighted average number of common shares, using the two-class method. As the Company has granted restricted stock units (“RSUs”) that both participate in dividend equivalents and do not participate in dividend equivalents, the Company has calculated earnings per share pursuant to the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted net earnings per share is calculated by dividing net income attributable to common stockholders by the weighted average number of common stock and dilutive common stock outstanding during the period. Potential common shares in the diluted net earnings per share computation are excluded to the extent that they would be anti-dilutive. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Basic earnings per common share Net income $ 12,429 $ 9,921 $ 37,606 $ 29,209 Less income allocated to participating securities 163 131 501 390 Net income allocated to common shareholders $ 12,266 $ 9,790 $ 37,105 $ 28,819 Weighted average common shares outstanding 22,795,412 22,700,991 22,773,546 22,675,450 $ 0.54 $ 0.43 $ 1.63 $ 1.27 Earnings per common share assuming dilution Net income $ 12,429 $ 9,921 $ 37,606 $ 29,209 Less income allocated to participating securities 163 131 501 390 Net income allocated to common shareholders $ 12,266 $ 9,790 $ 37,105 $ 28,819 Weighted average common shares outstanding 22,795,412 22,700,991 22,773,546 22,675,450 Incremental shares applicable to non-participating RSUs 36,758 25,526 35,176 21,809 Weighted average common shares assuming dilution 22,832,170 22,726,517 22,808,722 22,697,259 $ 0.53 $ 0.43 $ 1.61 $ 1.26 |
Employee Stock Plans
Employee Stock Plans | 9 Months Ended |
Sep. 30, 2019 | |
Employee Stock Plans | |
Employee Stock Plans | 13. Employee Stock Plans 2010 Stock Incentive Plan In May 2010, the Company’s Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (the “2010 Plan”). The Company’s Board of Directors approved an amendment and restatement of the 2010 Plan on March 5, 2014, contingent on stockholder approval of the performance goals under the 2010 Plan, and the amendment and restatement became effective upon stockholder approval of the performance goals at the 2014 annual meeting of stockholders held on April 30, 2014. The 2010 Plan provides for the issuance of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock awards and restricted stock units (“RSUs”), any of which may be performance-based, and for incentive bonuses, which may be paid in cash or stock or a combination of both, to eligible employees, officers, non-employee directors and other service providers to the Company and its subsidiaries. A maximum of 2,130,000 shares of common stock may be issued pursuant to all awards under the 2010 Plan. Equity awards issued to management include a retirement provision under which members of management who either (1) are age 65 or older or (2) have at least ten years of service and are at least age 55 will continue to vest in unvested equity awards upon retirement. The retirement provision also stipulates that the employee remain employed by the Company for six months after the first day of the fiscal year of the grant. As the retirement provision does not qualify as a substantive service condition, the Company incurred $0 and $0 in the three months ended September 30, 2019 and 2018, respectively, and $1,374 and $2,968 in the nine months ended September 30, 2019 and 2018, respectively, in additional expense for employees who meet the thresholds of the retirement provision. In 2013, the Company’s nominating and governance committee approved a retirement provision for the RSUs issued to non-employee directors that accelerates the vesting of such awards upon retirement. Such awards are fully expensed immediately upon grant in accordance with ASC 718, as the retirement provision eliminates substantive service conditions associated with the awards. Performance Share Unit Awards The Company granted performance share units as performance-based awards under the 2010 Plan in the first quarters of 2019 and 2018 that are subject to performance conditions over a three year performance period beginning in the year of the grant. Upon meeting the prescribed performance conditions, employees will be issued shares which vest immediately at the end of the measurement period. For performance share grants in prior years, upon meeting the prescribed performance conditions, in the first quarter of the year subsequent to grant, employees were issued RSUs, a portion of which is subject to vesting over the two years following the end of the performance period. In accordance with ASC 718, such awards are being expensed over the vesting period from the date of grant through the requisite service period, based upon the most probable outcome. The fair value per share of the awards is the closing stock price on the date of grant, which was $36.48 . The Company recognized $338 and ($172) of compensation expense (benefit) related to the awards in the three months ended September 30, 2019 and 2018, respectively. The Company recognized $1,401 and $1,760 of compensation expense related to the awards in the nine months ended September 30, 2019 and 2018, respectively. The unrecognized compensation expense calculated under the fair value method for shares that were, as of September 30, 2019, expected to be earned through the requisite service period was approximately $966 and is expected to be recognized through 2022. Restricted Stock Unit Awards RSUs are granted to both non-employee directors and management. RSUs do not carry voting rights. While all non-employee director RSUs participate in dividend equivalents, there are two classes of management RSUs, one that participates in dividend equivalents, and a second that does not participate in dividend equivalents. Each RSU represents the right to receive one share of the Company’s common stock and is subject to time-based vesting restrictions. Participants are not required to pay any consideration to the Company at either the time of grant of a RSU or upon vesting. A summary of RSU activity for the nine months ended September 30, 2019 is as follows: Weighted Weighted Average Average Remaining Grant Date Contractual Shares Fair value Term Unvested at December 31, 2018 45,599 $ 33.28 1.32 years Granted 47,360 $ 36.48 0.85 years Vested (35,838) $ 32.73 Cancelled and forfeited (420) $ 36.48 Unvested at September 30, 2019 56,701 $ 36.46 1.04 years Expected to vest in the future at September 30, 2019 56,701 $ 36.46 1.04 years The Company recognized $187 and $187 of compensation expense related to the RSU awards in the three months ended September 30, 2019 and 2018, respectively. The Company recognized $1,660 and $2,420 of compensation expense related to the RSU awards in the nine months ended September 30, 2019 and 2018, respectively. The unrecognized compensation expense, calculated under the fair value method for shares that were, as of September 30, 2019, expected to be earned through the requisite service period was approximately $902 and is expected to be recognized through 2022. For 2019 grants to non-employee directors, vesting occurs as of the grant date. Vested director RSUs are ‘‘settled’’ by the delivery to the participant or a designated brokerage firm of one share of common stock per vested RSU as soon as reasonably practicable following a termination of service of the participant that constitutes a separation from service, and in all events no later than the end of the calendar year in which such termination of service occurs or, if later, two and one-half months after such termination of service. Vested management RSUs are “settled” by the delivery to the participant or a designated brokerage firm of one share of common stock per vested RSU as soon as reasonably practicable following vesting. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies In the ordinary course of business, the Company is engaged in various litigation including product liability and intellectual property disputes. However, the Company does not believe that any pending litigation will have a material adverse effect on its consolidated financial position. In addition, the Company is not currently a party to any environmental-related claims or legal matters. |
Segments
Segments | 9 Months Ended |
Sep. 30, 2019 | |
Segments | |
Segments | 15. Segments During the first quarter of 2019, the Company reorganized its business segments to reflect a new operating structure as a result of a change in how the Company’s chief operating decision maker allocates resources, makes operating decisions and assesses the performance of the business. Under this revised reporting structure, the Company’s two reportable business segments are as follows: Work Truck Attachments. includes commercial snow and ice management attachments sold under the FISHER®, WESTERN® and SNOWEX® brands. This segment consists of our operations that manufacture and sell snow and ice control products. Work Truck Solutions. Separate financial information is available for the two operating segments. In addition, segment results include an allocation of all corporate costs to Work Truck Attachments and Work Truck Solutions. Prior period segment information has been recast to align with this change in reporting structure and to reflect an allocation of corporate costs. Segment performance is evaluated based on segment net sales and Adjusted EBITDA. Segment results include an allocation of all corporate costs. No single customer’s revenues amounted to 10% or more of the Company’s total revenue. Sales are primarily within the United States and substantially all assets are located within the United States. Historically, sales from Work Truck Attachments to Work Truck Solutions were recorded at third party pricing. In 2019, sales between Work Truck Attachments and Work Truck Solutions reflect the Company’s intercompany pricing policy. The following table shows summarized financial information concerning the Company’s reportable segments: Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Net sales Work Truck Attachments $ 75,632 $ 69,806 $ 213,693 $ 197,931 Work Truck Solutions 66,237 55,026 197,719 174,311 $ 141,869 $ 124,832 $ 411,412 $ 372,242 Adjusted EBITDA Work Truck Attachments $ 18,673 $ 18,780 $ 59,423 $ 60,226 Work Truck Solutions 6,393 1,738 18,772 7,448 $ 25,066 $ 20,518 $ 78,195 $ 67,674 Depreciation and amortization expense Work Truck Attachments $ 2,524 $ 2,430 $ 7,579 $ 7,137 Work Truck Solutions 2,204 2,354 6,756 7,078 $ 4,728 $ 4,784 $ 14,335 $ 14,215 Assets Work Truck Attachments $ 406,746 $ 387,355 Work Truck Solutions 360,163 325,385 $ 766,909 $ 712,740 Capital Expenditures Work Truck Attachments $ 1,955 $ 1,373 $ 6,209 $ 4,228 Work Truck Solutions 404 850 1,478 2,346 $ 2,359 $ 2,223 $ 7,687 $ 6,574 All intersegment sales are eliminated in consolidation. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | 16. Income Taxes The Company’s effective tax rate was 20.0% and 10.4% for the three months ended September 30, 2019 and 2018, respectively. The Company’s effective tax rate was 22.5% and 18.9% for the nine months ended September 30, 2019 and 2018, respectively. The effective tax rate for the three and nine months ended September 30, 2019 was higher when compared to the same periods in the prior year due to the release of reserves for uncertain tax positions of $819 in the three and nine months ended September 30, 2019 compared to $1,258 in the three and nine months ended September 30, 2018. Additionally, the Company made a voluntary pension funding payment in the three and nine months ended September 30, 2018 of $7,000, which was deducted in the Company’s tax returns for the year ended December 31, 2017 reducing taxable income for that period. The increased pension funding deduction resulted in a tax benefit of $651, also decreasing the tax rate for the three and nine months ended September 30, 2018 as this deduction was not included in the provision recorded at December 31, 2017. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The largest item affecting deferred taxes is the difference between book and tax amortization of goodwill and other intangibles amortization. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss by Component | 9 Months Ended |
Sep. 30, 2019 | |
Changes in Accumulated Other Comprehensive Loss by Component | |
Changes in Accumulated Other Comprehensive Loss by Component | 17. Changes in Accumulated Other Comprehensive Loss by Component Changes to accumulated other comprehensive loss by component for the nine months ended September 30, 2019 are as follows: Unrealized Net Loss Retiree on Interest Health Rate Benefit Pension Swap Obligation Obligation Total Balance at December 31, 2018 $ (1,530) $ 2,118 $ (6,637) $ (6,049) Other comprehensive loss before reclassifications (4,799) — — (4,799) Amounts reclassified from accumulated other comprehensive loss: (1) 152 (173) 330 309 Balance at September 30, 2019 $ (6,177) $ 1,945 $ (6,307) $ (10,539) (1) Amounts reclassified from accumulated other comprehensive loss: Amortization of Other Postretirement Benefit items: Actuarial gains (a) (234) Tax expense 61 Reclassification net of tax $ (173) Amortization of pension items: Actuarial losses (a) 447 Tax benefit (117) Reclassification net of tax $ 330 Realized losses on interest rate swaps reclassified to interest expense 206 Tax benefit (54) Reclassification net of tax $ 152 (a) These components are included in the computation of benefit plan costs in Note 11. Changes to accumulated other comprehensive loss by component for the nine months ended September 30, 2018 are as follows: Unrealized Net Loss Retiree on Interest Health Rate Benefit Pension Swap Obligation Obligation Total Balance at December 31, 2017 $ (1,328) $ 1,392 $ (6,636) $ (6,572) Other comprehensive gain before reclassifications 2,058 - - 2,058 Amounts reclassified from accumulated other comprehensive loss: (1) 247 (115) 391 522 Balance at September 30, 2018 $ 977 $ 1,277 $ (6,245) $ (3,992) (1) Amounts reclassified from accumulated other comprehensive loss: Amortization of Other Postretirement Benefit items: Actuarial gains (a) (156) Tax expense 41 Reclassification net of tax $ (115) Amortization of pension items: Actuarial losses (a) 528 Tax benefit (137) Reclassification net of tax $ 391 Realized losses on interest rate swaps reclassified to interest expense 334 Tax benefit (87) Reclassification net of tax $ 247 (a) These components are included in the computation of benefit plan costs in Note 11 . |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | 18 . Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which modifies the measurement of expected credit losses for financial instruments held at the reporting date. The standard is effective for annual periods beginning after December 15, 2019. The Company is currently evaluating the impact the adoption this ASU will have on its condensed consolidated financial statements. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events | |
Subsequent Events | 19. Subsequent Events Consistent with its long term plans, the Company intends to terminate its defined benefit pension plans during the fourth quarter of 2019. On October 31, 2019, lump-sum settlement payments of $3,245 and $12,476 were made from the Douglas Dynamics, L.L.C Pension Plan for Hourly Employees and the Douglas Dynamics, L.L.C Salaried Pension Plan, respectively, in conjunction with the termination of these plans. In satisfaction of its obligations, the Company intends to purchase annuities for plan participants during the fourth quarter of 2019. Upon settlement of the pension liability in the fourth quarter, the Company will reclassify the related pension losses currently recorded to AOCL to the consolidated statements of comprehensive income. As of September 30, 2019, the Company had unrecognized losses related to the pension plans of $6,541, net of tax. The Company will recognize this loss upon termination of the pension plans, adjusted for the total required payout to plan participants which will be determined based on employee elections and market conditions present at the time of termination. |
Basis of presentation (Policies
Basis of presentation (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Basis of presentation | |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 Leases (Topic 842) The standard had a material impact on the Company’s Condensed Consolidated Balance Sheets, but did not have an impact on the Condensed Consolidated Statements of Operations and Comprehensive Income. There was no cumulative catch-up adjustment made to opening retained earnings. The most significant impact was the recognition of right-of-use assets and lease liabilities for operating leases, while the accounting for finance leases (previously capital leases) remained substantially unchanged. As the Company elected to apply the standard at adoption as allowed under ASU No. 2018-11, there is no impact to previously reported results. The impact of this standard was the recognition of a lease liability and right-of-use asset of approximately $22.0 million, with immaterial differences related to prepaid rent, on the Consolidated Balance Sheet for lease contracts which were previously accounted for as operating leases. As allowed under ASC 842, the Company has adopted the following practical expedients: ● Practical expedient package, which allows the following: o To not reassess whether any expired or existing contracts is or contains a lease. o To not reassess the lease classification of any expired or existing leases. o To not reassess the initial direct costs for any existing lease. ● Short-term lease practical expedient o Allows the Company not to apply the recognition requirements in ASC 842 to short term leases for all asset classes. Short term leases are leases that, at commencement date, have a term of 12 months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. ● Separating lease components practical expedient o Allows the Company not to separate lease components from nonlease components for all asset classes and instead account for each separate lease component and the nonlease components associated with that lease component as a single lease component. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition | |
Revenue by customer and timing recognition | Revenue by customer type was as follows: Three Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 75,632 $ 29,007 $ 104,639 Government - 18,373 18,373 Fleet - 16,775 16,775 Other - 2,082 2,082 Total revenue $ 75,632 $ 66,237 $ 141,869 Three Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 69,806 $ 26,486 $ 96,292 Government - 12,568 12,568 Fleet - 13,955 13,955 Other - 2,017 2,017 Total revenue $ 69,806 $ 55,026 $ 124,832 Nine Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 213,693 $ 91,199 $ 304,892 Government - 49,985 49,985 Fleet - 48,292 48,292 Other - 8,243 8,243 Total revenue $ 213,693 $ 197,719 $ 411,412 Nine Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Independent dealer $ 197,931 $ 86,921 $ 284,852 Government - 35,351 35,351 Fleet - 43,501 43,501 Other - 8,538 8,538 Total revenue $ 197,931 $ 174,311 $ 372,242 Revenue by timing of revenue recognition was as follows: Three Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 75,632 $ 41,099 $ 116,731 Over time - 25,138 25,138 Total revenue $ 75,632 $ 66,237 $ 141,869 Three Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 69,806 $ 33,923 $ 103,729 Over time - 21,103 21,103 Total revenue $ 69,806 $ 55,026 $ 124,832 Nine Months Ended September 30, 2019 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 213,693 $ 120,577 $ 334,270 Over time - 77,142 77,142 Total revenue $ 213,693 $ 197,719 $ 411,412 Nine Months Ended September 30, 2018 Work Truck Attachments Work Truck Solutions Total Revenue Point in time $ 197,931 $ 106,249 $ 304,180 Over time - 68,062 68,062 Total revenue $ 197,931 $ 174,311 $ 372,242 |
Contract Balances | Three Months Ended September 30, 2019 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 6,886 $ 3,328 $ (6,147) $ 4,067 Three Months Ended September 30, 2018 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 3,316 $ 2,434 $ (3,544) $ 2,206 Nine Months Ended September 30, 2019 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 2,006 $ 13,479 $ (11,418) $ 4,067 Nine Months Ended September 30, 2018 Balance at Beginning of Period Additions Deductions Balance at End of Period Contract liabilities $ 2,048 $ 8,605 $ (8,447) $ 2,206 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis and disclosure of the fair value of long-term debt | Fair Value at Fair Value at September 30, December 31, 2019 2018 Assets: Other long-term assets (a) $ 6,893 $ 5,064 Total Assets $ 6,893 $ 5,064 Liabilities: Interest rate swaps (b) $ 8,312 $ 2,031 Long-term debt (c) 247,555 269,739 Earnout - Henderson (d) 17 352 Earnout - Dejana (e) 2,200 2,200 Total Liabilities $ 258,084 $ 274,322 (a) Included in other assets is the cash surrender value of insurance policies on various individuals that are associated with the Company. The carrying amount of these insurance policies approximates their fair value and is considered Level 2 inputs. (b) Valuation models are calibrated to initial trade price. Subsequent valuations are based on observable inputs to the valuation model (e.g. interest rates and credit spreads). Model inputs are changed only when corroborated by market data. A credit risk adjustment is made on each swap using observable market credit spreads. Thus, inputs used to determine fair value of the interest rate swap are Level 2 inputs. Interest rate swaps of $1,475 and $6,837 at September 30, 2019 are included in Accrued expenses and other current liabilities and Other long-term liabilities, respectively. Interest rate swaps of $127 and $1,904 at December 31, 2018 are included in Accrued expenses and other current liabilities and Other long-term liabilities, respectively. (c) The fair value of the Company’s long-term debt, including current maturities, is estimated using discounted cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements, which is a Level 2 input for all periods presented. Meanwhile, long-term debt is recorded at carrying amount, net of discount and deferred debt issuance costs, as disclosed on the face of the balance sheet. (d) Included in Accrued expenses and other current liabilities in the amount of $17 at September 30, 2019 is the fair value of an obligation for a portion of the potential earnout acquired in conjunction with the acquisition of Henderson Enterprise Group, Inc. (“Henderson”). Included in Accrued expenses and other current liabilities and Other long-term liabilities in the amounts of $213 and $200, respectively, at September 30, 2018 is the fair value of an obligation for a portion of the potential earnout acquired in conjunction with the acquisition of Henderson. Fair value is based upon Level 3 discounted cash flow analysis using key inputs of forecasted future sales as well as a growth rate reduced by the market required rate of return. See reconciliation of liability included below: Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2019 2018 2018 Beginning Balance $ 17 $ 352 $ 444 $ 529 Adjustments to fair value - (217) — — Payment to former owners - (118) (31) (116) Ending balance $ 17 $ 17 $ 413 $ 413 (e) Included in Other long-term liabilities in the amount of $2,200 at September 30, 2019 is the fair value of an obligation for a portion of the potential earnout incurred in conjunction with the acquisition of substantially all of the assets of Dejana Truck & Utility Equipment Company, Inc. and certain entities directly or indirectly owned by the Peter Paul Dejana Family Trust dated 12/31/98 (“Dejana”). Included in Other long-term liabilities in the amount of $3,100 at September 30, 2018 is the fair value of an obligation for a portion of the potential earnout incurred in conjunction with the acquisition of Dejana. Fair value is based upon Level 3 inputs of a real options approach where gross sales were simulated in a risk-neutral framework using Geometric Brownian Motion, a well-accepted model of stock price behavior that is used in option pricing models such as the Black-Scholes option pricing model, using key inputs of forecasted future sales and financial performance as well as a risk adjusted expected growth rate adjusted appropriately based on its correlation with the market. There were no adjustments to fair value or payments to former owners in either the three and nine months ended September 30, 2019 or September 30, 2018. |
Henderson | |
Schedule of reconciliation of liability | Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2019 2018 2018 Beginning Balance $ 17 $ 352 $ 444 $ 529 Adjustments to fair value - (217) — — Payment to former owners - (118) (31) (116) Ending balance $ 17 $ 17 $ 413 $ 413 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventories | |
Schedule of inventories | September 30, December 31, 2019 2018 Finished goods $ 44,049 $ 43,192 Work-in-process 10,611 7,357 Raw material and supplies 35,746 31,447 $ 90,406 $ 81,996 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, plant and equipment | |
Summary of property, plant and equipment | September 30, December 31, 2019 2018 Land $ 2,378 $ 2,378 Land improvements 4,534 4,357 Leasehold improvements 4,087 4,079 Buildings 28,662 28,238 Machinery and equipment 51,372 50,129 Furniture and fixtures 17,089 16,360 Mobile equipment and other 4,963 4,883 Construction-in-process 7,861 3,084 Total property, plant and equipment 120,946 113,508 Less accumulated depreciation (64,182) (58,313) Net property, plant and equipment $ 56,764 $ 55,195 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Summary of lease expense and supplemental cash flow information | Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Operating lease expense $ 1,286 $ 3,562 Short term lease cost $ 121 $ 317 Total lease cost $ 1,407 $ 3,879 Cash Flow Supplemental cash flow information related to leases is as follows: Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 3,392 Non-cash lease expense - right-of-use assets $ 2,679 Right-of-use assets obtained in exchange for operating lease obligations $ 3,525 |
Summary of supplemental balance sheet information related to leases | September 30, 2019 Operating Leases Operating lease right-of-use assets $ 22,203 Other current liabilities 3,626 Operating lease liabilities 18,813 Total operating lease liabilities $ 22,439 Weighted Average Remaining Lease Term Operating leases 79 months Weighted Average Discount Rate Operating leases 5.37% |
Summary of maturities of leases | Year ending December 31, Operating Leases 2019 (excluding the nine months ended September 30, 2019) $ 1,208 2020 4,616 2021 4,359 2022 4,046 2023 3,604 Thereafter 8,728 Total Lease Payments 26,561 Less: imputed interest (4,122) Total $ 22,439 |
Summary of future minimum lease payments at December 31, 2018 under ASC 840 | Related Party Leases Third Party Leases Total Leases 2019 $ 2,250 $ 2,009 $ 4,259 2020 2,250 1,654 3,904 2021 2,250 1,364 3,614 2022 2,250 949 3,199 2023 2,130 574 2,704 Thereafter 4,410 1,500 5,910 Total lease obligations $ 15,540 $ 8,050 $ 23,590 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Intangible Assets | |
Summary of other intangible assets | Gross Less Net Carrying Accumulated Carrying Amount Amortization Amount September 30, 2019 Indefinite-lived intangibles: Trademark and tradenames $ 77,600 $ - $ 77,600 Amortizable intangibles: Dealer network 80,000 62,000 18,000 Customer relationships 80,920 20,587 60,333 Patents 21,136 12,915 8,221 Noncompete agreements 8,640 8,102 538 Trademarks 5,459 3,690 1,769 Backlog 1,900 1,900 - License 20 20 - Amortizable intangibles, net 198,075 109,214 88,861 Total $ 275,675 $ 109,214 $ 166,461 Gross Less Net Carrying Accumulated Carrying Amount Amortization Amount December 31, 2018 Indefinite-lived intangibles: Trademark and tradenames $ 77,600 $ - $ 77,600 Amortizable intangibles: Dealer network 80,000 59,000 21,000 Customer relationships 80,920 16,607 64,313 Patents 21,136 11,974 9,162 Noncompete agreements 8,640 7,877 763 Trademarks 5,459 3,619 1,840 Backlog 1,900 1,900 - License 20 20 - Amortizable intangibles, net 198,075 100,997 97,078 Total $ 275,675 $ 100,997 $ 174,678 |
Schedule of estimated amortization expense | 2019 $ 2,739 2020 10,932 2021 10,670 2022 10,520 2023 10,520 2024 7,520 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt | |
Summary of long-term debt | September 30, December 31, 2019 2018 Term Loan, net of debt discount of $879 and $1,172 at September 30, 2019 and December 31, 2018, respectively $ 246,323 $ 278,081 Less current maturities 2,143 32,749 Long-term debt before deferred financing costs 244,180 245,332 Deferred financing costs, net 1,769 2,386 Long-term debt, net $ 242,411 $ 242,946 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Summary of accrued expenses and other current liabilities | September 30, December 31, 2019 2018 Payroll and related costs $ 9,989 $ 9,607 Employee benefits 5,730 5,281 Accrued warranty 3,777 3,662 Other 8,117 4,756 $ 27,613 $ 23,306 |
Warranty Liability (Tables)
Warranty Liability (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Warranty Liability | |
Schedule of rollforward of Company's warranty liability | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Balance at the beginning of the period $ 5,731 $ 5,176 $ 6,174 $ 5,677 Warranty provision 886 1,050 2,665 2,821 Claims paid/settlements (273) (472) (2,495) (2,744) Balance at the end of the period $ 6,344 $ 5,754 $ 6,344 $ 5,754 |
Employee Retirement Plans (Tabl
Employee Retirement Plans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Pension plan | |
Employee retirement plans | |
Schedule of components of net periodic pension or other postretirement benefit cost | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Component of net periodic pension cost: Service cost $ - $ 102 $ - $ 306 Interest cost 410 389 1,230 1,167 Expected return on plan assets (294) (475) (882) (1,425) Amortization of net loss 149 176 447 528 Net periodic pension cost $ 265 $ 192 $ 795 $ 576 |
Other postretirement benefit cost | |
Employee retirement plans | |
Schedule of components of net periodic pension or other postretirement benefit cost | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Component of periodic other postretirement benefit cost: Service cost $ 37 $ 47 $ 111 $ 141 Interest cost 63 58 189 174 Amortization of net gain (78) (52) (234) (156) Net periodic other postretirement benefit cost $ 22 $ 53 $ 66 $ 159 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings per Share | |
Schedule of computation of basic and diluted earnings (loss) per share | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Basic earnings per common share Net income $ 12,429 $ 9,921 $ 37,606 $ 29,209 Less income allocated to participating securities 163 131 501 390 Net income allocated to common shareholders $ 12,266 $ 9,790 $ 37,105 $ 28,819 Weighted average common shares outstanding 22,795,412 22,700,991 22,773,546 22,675,450 $ 0.54 $ 0.43 $ 1.63 $ 1.27 Earnings per common share assuming dilution Net income $ 12,429 $ 9,921 $ 37,606 $ 29,209 Less income allocated to participating securities 163 131 501 390 Net income allocated to common shareholders $ 12,266 $ 9,790 $ 37,105 $ 28,819 Weighted average common shares outstanding 22,795,412 22,700,991 22,773,546 22,675,450 Incremental shares applicable to non-participating RSUs 36,758 25,526 35,176 21,809 Weighted average common shares assuming dilution 22,832,170 22,726,517 22,808,722 22,697,259 $ 0.53 $ 0.43 $ 1.61 $ 1.26 |
Employee Stock Plans (Tables)
Employee Stock Plans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Employee Stock Plans | |
Summary of RSU activity | Weighted Weighted Average Average Remaining Grant Date Contractual Shares Fair value Term Unvested at December 31, 2018 45,599 $ 33.28 1.32 years Granted 47,360 $ 36.48 0.85 years Vested (35,838) $ 32.73 Cancelled and forfeited (420) $ 36.48 Unvested at September 30, 2019 56,701 $ 36.46 1.04 years Expected to vest in the future at September 30, 2019 56,701 $ 36.46 1.04 years |
Segments (Table)
Segments (Table) | 9 Months Ended |
Sep. 30, 2019 | |
Segments | |
Schedule of assets and profit/loss of the segments | Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Net sales Work Truck Attachments $ 75,632 $ 69,806 $ 213,693 $ 197,931 Work Truck Solutions 66,237 55,026 197,719 174,311 $ 141,869 $ 124,832 $ 411,412 $ 372,242 Adjusted EBITDA Work Truck Attachments $ 18,673 $ 18,780 $ 59,423 $ 60,226 Work Truck Solutions 6,393 1,738 18,772 7,448 $ 25,066 $ 20,518 $ 78,195 $ 67,674 Depreciation and amortization expense Work Truck Attachments $ 2,524 $ 2,430 $ 7,579 $ 7,137 Work Truck Solutions 2,204 2,354 6,756 7,078 $ 4,728 $ 4,784 $ 14,335 $ 14,215 Assets Work Truck Attachments $ 406,746 $ 387,355 Work Truck Solutions 360,163 325,385 $ 766,909 $ 712,740 Capital Expenditures Work Truck Attachments $ 1,955 $ 1,373 $ 6,209 $ 4,228 Work Truck Solutions 404 850 1,478 2,346 $ 2,359 $ 2,223 $ 7,687 $ 6,574 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Loss by Component (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Changes in Accumulated Other Comprehensive Loss by Component | |
Schedule of changes to accumulated other comprehensive loss by component | Changes to accumulated other comprehensive loss by component for the nine months ended September 30, 2019 are as follows: Unrealized Net Loss Retiree on Interest Health Rate Benefit Pension Swap Obligation Obligation Total Balance at December 31, 2018 $ (1,530) $ 2,118 $ (6,637) $ (6,049) Other comprehensive loss before reclassifications (4,799) — — (4,799) Amounts reclassified from accumulated other comprehensive loss: (1) 152 (173) 330 309 Balance at September 30, 2019 $ (6,177) $ 1,945 $ (6,307) $ (10,539) (1) Amounts reclassified from accumulated other comprehensive loss: Amortization of Other Postretirement Benefit items: Actuarial gains (a) (234) Tax expense 61 Reclassification net of tax $ (173) Amortization of pension items: Actuarial losses (a) 447 Tax benefit (117) Reclassification net of tax $ 330 Realized losses on interest rate swaps reclassified to interest expense 206 Tax benefit (54) Reclassification net of tax $ 152 (a) These components are included in the computation of benefit plan costs in Note 11. Changes to accumulated other comprehensive loss by component for the nine months ended September 30, 2018 are as follows: Unrealized Net Loss Retiree on Interest Health Rate Benefit Pension Swap Obligation Obligation Total Balance at December 31, 2017 $ (1,328) $ 1,392 $ (6,636) $ (6,572) Other comprehensive gain before reclassifications 2,058 - - 2,058 Amounts reclassified from accumulated other comprehensive loss: (1) 247 (115) 391 522 Balance at September 30, 2018 $ 977 $ 1,277 $ (6,245) $ (3,992) (1) Amounts reclassified from accumulated other comprehensive loss: Amortization of Other Postretirement Benefit items: Actuarial gains (a) (156) Tax expense 41 Reclassification net of tax $ (115) Amortization of pension items: Actuarial losses (a) 528 Tax benefit (137) Reclassification net of tax $ 391 Realized losses on interest rate swaps reclassified to interest expense 334 Tax benefit (87) Reclassification net of tax $ 247 (a) These components are included in the computation of benefit plan costs in Note 11 . |
Basis of presentation (Details)
Basis of presentation (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($)segment | |
Interim Consolidated Financial Information | |
Number of operating segments | segment | 2 |
Right of use asset | $ 22,203 |
Lease liability | 22,439 |
ASU 2016-02 | |
Interim Consolidated Financial Information | |
Right of use asset | 22,000 |
Lease liability | $ 22,000 |
Revenue Recognition (Revenue by
Revenue Recognition (Revenue by customer and timing recognitions) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |||||
Retained Earnings | $ 155,492 | $ 155,492 | $ 136,765 | ||
Net sales | 141,869 | $ 124,832 | 411,412 | $ 372,242 | |
Independent dealer | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 104,639 | 96,292 | 304,892 | 284,852 | |
Government | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 18,373 | 12,568 | 49,985 | 35,351 | |
Fleet | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 16,775 | 13,955 | 48,292 | 43,501 | |
Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 2,082 | 2,017 | 8,243 | 8,538 | |
Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 116,731 | 103,729 | 334,270 | 304,180 | |
Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 25,138 | 21,103 | $ 77,142 | 68,062 | |
Work Truck Attachments | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of revenue streams | item | 2 | ||||
Net sales | 75,632 | 69,806 | $ 213,693 | 197,931 | |
Work Truck Attachments | Independent dealer | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 75,632 | 69,806 | 213,693 | 197,931 | |
Work Truck Attachments | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 75,632 | 69,806 | $ 213,693 | 197,931 | |
Work Truck Solutions | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of revenue streams | item | 4 | ||||
Net sales | 66,237 | 55,026 | $ 197,719 | 174,311 | |
Work Truck Solutions | Independent dealer | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 29,007 | 26,486 | 91,199 | 86,921 | |
Work Truck Solutions | Government | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 18,373 | 12,568 | 49,985 | 35,351 | |
Work Truck Solutions | Fleet | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 16,775 | 13,955 | 48,292 | 43,501 | |
Work Truck Solutions | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 2,082 | 2,017 | 8,243 | 8,538 | |
Work Truck Solutions | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 41,099 | 33,923 | 120,577 | 106,249 | |
Work Truck Solutions | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 25,138 | 21,103 | 77,142 | 68,062 | |
Effect of Change Higher/(Lower) | ASC 2014-09 | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | $ 16 | $ 983 | |||
Effect of Change Higher/(Lower) | ASC 2014-09 | Work Truck Solutions | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | $ 839 | $ 273 |
Revenue Recognition (Contract B
Revenue Recognition (Contract Balances) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Changes in contract liabilities | ||||
Balance at Beginning of Period | $ 6,886 | $ 3,316 | $ 2,006 | $ 2,048 |
Additions | 3,328 | 2,434 | 13,479 | 8,605 |
Deductions | (6,147) | (3,544) | (11,418) | (8,447) |
Balance at End of Period | 4,067 | 2,206 | 4,067 | 2,206 |
Contract assets | 0 | 0 | 0 | 0 |
Revenue recognized included in contract liabilities at the beginning of the period | $ 721 | $ 663 | $ 2,006 | $ 2,048 |
Fair Value - Assets and Liabili
Fair Value - Assets and Liabilities on a Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Other long-term assets | $ 6,893 | $ 5,064 |
Total Assets | 6,893 | 5,064 |
Liabilities: | ||
Interest rate swaps | 8,312 | 2,031 |
Long term debt | 247,555 | 269,739 |
Total Liabilities | 258,084 | 274,322 |
Henderson | ||
Liabilities: | ||
Earnout | 17 | 352 |
Dejana | ||
Liabilities: | ||
Earnout | $ 2,200 | $ 2,200 |
Fair Value - Fair Value Liabili
Fair Value - Fair Value Liability Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Reconciliation of liability related to earnout | |||||
Adjustments to fair value | $ 0 | $ 0 | $ 0 | $ 0 | |
Payments to former owners | 0 | 0 | 0 | 0 | |
Recurring | Henderson | |||||
Fair value liability reconciliation | |||||
Derivative Liability, Current | 213 | 213 | |||
Derivative Liability, Noncurrent | 200 | 200 | |||
Recurring | Dejana | |||||
Fair value liability reconciliation | |||||
Derivative Liability, Noncurrent | 3,100 | 3,100 | |||
Recurring | Level 2 | |||||
Fair value liability reconciliation | |||||
Derivative Liability, Current | 1,475 | 1,475 | $ 127 | ||
Derivative Liability, Noncurrent | 6,837 | 6,837 | $ 1,904 | ||
Recurring | Level 3 | Henderson | |||||
Reconciliation of liability related to earnout | |||||
Balance at the beginning of the period | 17 | 444 | 352 | 529 | |
Adjustments to fair value | (217) | ||||
Payments to former owners | (31) | (118) | (116) | ||
Balance at the end of the period | 17 | $ 413 | 17 | $ 413 | |
Earnout, portion in other current liabilities | 17 | 17 | |||
Recurring | Level 3 | Dejana | |||||
Reconciliation of liability related to earnout | |||||
Earnout, portion in other long term liabilities | $ 2,200 | $ 2,200 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Inventories | ||
Finished goods | $ 44,049 | $ 43,192 |
Work-in-process | 10,611 | 7,357 |
Raw material and supplies | 35,746 | 31,447 |
Inventories | 90,406 | 81,996 |
Inventories - truck chassis floor plan | $ 19,709 | $ 4,204 |
Property, plant and equipment_2
Property, plant and equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Property, plant and equipment | ||
Total property, plant and equipment | $ 120,946 | $ 113,508 |
Less accumulated depreciation | (64,182) | (58,313) |
Net property, plant and equipment | 56,764 | 55,195 |
Land | ||
Property, plant and equipment | ||
Total property, plant and equipment | 2,378 | 2,378 |
Land improvements | ||
Property, plant and equipment | ||
Total property, plant and equipment | 4,534 | 4,357 |
Leasehold Improvements | ||
Property, plant and equipment | ||
Total property, plant and equipment | 4,087 | 4,079 |
Buildings | ||
Property, plant and equipment | ||
Total property, plant and equipment | 28,662 | 28,238 |
Machinery and equipment | ||
Property, plant and equipment | ||
Total property, plant and equipment | 51,372 | 50,129 |
Furniture and fixtures | ||
Property, plant and equipment | ||
Total property, plant and equipment | 17,089 | 16,360 |
Mobile equipment and other | ||
Property, plant and equipment | ||
Total property, plant and equipment | 4,963 | 4,883 |
Construction-in-process | ||
Property, plant and equipment | ||
Total property, plant and equipment | $ 7,861 | $ 3,084 |
Leases Narrative (Details)
Leases Narrative (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Lessee, Lease, Description [Line Items] | |
Options to extend | true |
Renewal term | 10 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 16 years |
Leases - Components of Lease an
Leases - Components of Lease and supplemental cash flow information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Lease Expense | ||
Operating lease expense | $ 1,286 | $ 3,562 |
Short term lease cost | 121 | 317 |
Total lease cost | $ 1,407 | 3,879 |
Cash paid for amounts included in the measurement of operating lease liabilities | 3,392 | |
Non-cash lease expense - right-of-use assets | 2,679 | |
Right-of-use assets obtained in exchange for operating lease obligations | $ 3,525 |
Leases - Supplemental Balance s
Leases - Supplemental Balance sheet information (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Supplemental balance sheet information related to leases | |
Operating lease - right of use asset | $ 22,203 |
Other current liabilities | 3,626 |
Operating lease liabilities | 18,813 |
Total operating lease liabilities | $ 22,439 |
Weighted Average Remaining Lease Term | 79 months |
Weighted Average Discount Rate | 5.37% |
Leases - Maturities (Details)
Leases - Maturities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Maturities of leases | |
2019 (excluding the nine months ended September 30, 2019) | $ 1,208 |
2020 | 4,616 |
2021 | 4,359 |
2022 | 4,046 |
2023 | 3,604 |
Thereafter | 8,728 |
Total lease payments | 26,561 |
Less: imputed interest | (4,122) |
Total operating lease liabilities | $ 22,439 |
Leases - Related Party Leases (
Leases - Related Party Leases (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($)lease | Dec. 31, 2018USD ($) | |
Future minimum lease payments at December 31, 2018 under ASC 840 | |||
2019 | $ 4,259 | ||
2020 | 3,904 | ||
2021 | 3,614 | ||
2022 | 3,199 | ||
2023 | 2,704 | ||
Thereafter | 5,910 | ||
Total lease obligations | 23,590 | ||
Related Party | |||
Lessee, Lease, Description [Line Items] | |||
Number of operating leases | lease | 9 | ||
Total rent expense to related parties | $ 534 | $ 1,602 | |
Amounts owed to related parties | $ 0 | $ 0 | |
Future minimum lease payments at December 31, 2018 under ASC 840 | |||
2019 | 2,250 | ||
2020 | 2,250 | ||
2021 | 2,250 | ||
2022 | 2,250 | ||
2023 | 2,130 | ||
Thereafter | 4,410 | ||
Total lease obligations | 15,540 | ||
Third Party | |||
Future minimum lease payments at December 31, 2018 under ASC 840 | |||
2019 | 2,009 | ||
2020 | 1,654 | ||
2021 | 1,364 | ||
2022 | 949 | ||
2023 | 574 | ||
Thereafter | 1,500 | ||
Total lease obligations | $ 8,050 |
Other Intangible Asset - Summar
Other Intangible Asset - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | $ 198,075 | $ 198,075 |
Amortizable intangibles, accumulated amortization | 109,214 | 100,997 |
Finite-Lived Intangible Assets, Net, Total | 88,861 | 97,078 |
Intangible Assets, Gross (Excluding Goodwill), Total | 275,675 | 275,675 |
Net Carrying Amount | 166,461 | 174,678 |
Dealer network | ||
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | 80,000 | 80,000 |
Amortizable intangibles, accumulated amortization | 62,000 | 59,000 |
Finite-Lived Intangible Assets, Net, Total | 18,000 | 21,000 |
Customer relations | ||
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | 80,920 | 80,920 |
Amortizable intangibles, accumulated amortization | 20,587 | 16,607 |
Finite-Lived Intangible Assets, Net, Total | 60,333 | 64,313 |
Patents | ||
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | 21,136 | 21,136 |
Amortizable intangibles, accumulated amortization | 12,915 | 11,974 |
Finite-Lived Intangible Assets, Net, Total | 8,221 | 9,162 |
Noncompete agreements | ||
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | 8,640 | 8,640 |
Amortizable intangibles, accumulated amortization | 8,102 | 7,877 |
Finite-Lived Intangible Assets, Net, Total | 538 | 763 |
Trademark | ||
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | 5,459 | 5,459 |
Amortizable intangibles, accumulated amortization | 3,690 | 3,619 |
Finite-Lived Intangible Assets, Net, Total | 1,769 | 1,840 |
Backlog | ||
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | 1,900 | 1,900 |
Amortizable intangibles, accumulated amortization | 1,900 | 1,900 |
License | ||
Other intangible assets | ||
Amortizable intangibles, gross carrying amount | 20 | 20 |
Amortizable intangibles, accumulated amortization | 20 | 20 |
Trademark and tradenames | ||
Other intangible assets | ||
Indefinite-lived intangibles, net carrying amount | $ 77,600 | $ 77,600 |
Other Intangible Asset - Estima
Other Intangible Asset - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other Intangible Assets | ||||
Intangibles amortization | $ 2,737 | $ 2,868 | $ 8,217 | $ 8,605 |
Estimated amortization expense for the next five years | ||||
2019 | 2,739 | 2,739 | ||
2020 | 10,932 | 10,932 | ||
2021 | 10,670 | 10,670 | ||
2022 | 10,520 | 10,520 | ||
2023 | $ 10,520 | 10,520 | ||
2024 | $ 7,520 |
Long-Term Debt - Summary (Detai
Long-Term Debt - Summary (Details) - USD ($) $ in Thousands | Feb. 13, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Long-term debt | |||
Less current maturities | $ 2,143 | $ 32,749 | |
Long-term debt, less current maturities | 242,411 | 242,946 | |
Deferred financing costs, net | 1,769 | 2,386 | |
Total long-term debt | 242,411 | 242,946 | |
Long-term debt, additional disclosure | |||
Inventories - truck chassis floor plan | 19,709 | 4,204 | |
Term loan facility | |||
Long-term debt | |||
Term Loan, net of debt discount | 246,323 | 278,081 | |
Less current maturities | 2,143 | 32,749 | |
Long-term debt, less current maturities | 244,180 | 245,332 | |
Long-term debt, additional disclosure | |||
Unamortized discount on issuance of debt | 879 | 1,172 | |
Outstanding borrowings | 246,323 | 278,081 | |
Revolving credit facility | |||
Long-term debt, additional disclosure | |||
Outstanding borrowings | $ 57,000 | 0 | |
Senior credit facilities | Term loan facility | |||
Long-term debt, additional disclosure | |||
Percentage of net cash proceeds of certain asset sales, certain insurance or condemnation events, requirement for additional principal prepayments | 100.00% | ||
Percentage of excess cash flow paid as additional principal prepayments | 50.00% | ||
Reduced percentage of excess cash flow paid as additional principal prepayments upon achievement of certain leverage ratio thresholds, one | 0.00% | ||
Voluntary payment | $ 30,000 | ||
Senior credit facilities | Term loan facility | Maximum | |||
Long-term debt, additional disclosure | |||
Period before end of the fiscal year, for additional principal prepayments of debt, from excess cash flow | 150 days | ||
Senior credit facilities | Revolving credit facility | |||
Long-term debt, additional disclosure | |||
Remaining borrowing availability | $ 42,352 | $ 94,631 |
Long-Term Debt - Swaps (Details
Long-Term Debt - Swaps (Details) $ in Thousands | Feb. 20, 2015USD ($)contract | Sep. 30, 2019USD ($)item | Jun. 13, 2019USD ($)contract | Dec. 31, 2018USD ($) | Sep. 30, 2018 | Feb. 05, 2018USD ($) |
Derivative [Line Items] | ||||||
Number of interest rate swap agreements | contract | 3 | |||||
Inventories - truck chassis floor plan | $ 19,709 | $ 4,204 | ||||
Interest rate swap | ||||||
Derivative [Line Items] | ||||||
Negative fair value | $ 8,312 | 2,031 | ||||
Number of financial institutions for which the entity is exposed to counterparty credit risk | item | 1 | |||||
Derivative Number of Contracts Terminated | contract | 4 | |||||
Interest Rate Derivative Liabilities Terminated | $ 6,015 | |||||
Interest rate swap | Accrued Expenses and Other Current Liabilities | ||||||
Derivative [Line Items] | ||||||
Negative fair value | $ 1,475 | 127 | ||||
Interest rate swap | Other Noncurrent Liabilities | ||||||
Derivative [Line Items] | ||||||
Negative fair value | $ 6,837 | $ 1,904 | ||||
Interest Rate Swap Effective 31 December 2015 through 29 March 2018 | ||||||
Derivative [Line Items] | ||||||
Notional amount | $ 45,000 | |||||
Interest rate | 1.86% | |||||
Interest Rate Swap Effective 31 December 2015 through 29 March 2018 | London Interbank Offered Rate (LIBOR) | ||||||
Derivative [Line Items] | ||||||
LIBOR floor (as a percent) | 1.00% | |||||
Interest Rate Swap Effective 29 March 2018 through 31 March 2020 | ||||||
Derivative [Line Items] | ||||||
Notional amount | 90,000 | |||||
Interest rate | 2.67% | |||||
LIBOR floor (as a percent) | 1.00% | |||||
Interest Rate Swap Effective 29 March 2018 through 31 March 2020 | London Interbank Offered Rate (LIBOR) | ||||||
Derivative [Line Items] | ||||||
LIBOR floor (as a percent) | 1.00% | |||||
Interest Rate Swap Effective 31 March 2020 through 30 June 2021 | ||||||
Derivative [Line Items] | ||||||
Notional amount | $ 135,000 | |||||
Interest rate | 2.918% | |||||
Interest Rate Swap Effective 31 March 2020 through 30 June 2021 | London Interbank Offered Rate (LIBOR) | ||||||
Derivative [Line Items] | ||||||
LIBOR floor (as a percent) | 1.00% | |||||
Interest rate swap effective December 31, 2018 through June 30, 2021 | ||||||
Derivative [Line Items] | ||||||
Notional amount | $ 50 | |||||
Interest rate | 2.613% | |||||
Interest rate swap effective June 30, 2021 through December 10, 2021 | ||||||
Derivative [Line Items] | ||||||
Notional amount | $ 150 | |||||
Interest rate swap effective June 30, 2021 through December 10, 2021 | Maximum | ||||||
Derivative [Line Items] | ||||||
Interest rate | 2.793% | |||||
Interest rate swap effective May 31,2019 through May 31,2024 [member] | ||||||
Derivative [Line Items] | ||||||
Notional amount | $ 175,000 | |||||
Interest rate | 2.495% | |||||
Interest rate swap effective May 31,2019 through May 31,2024 [member] | London Interbank Offered Rate (LIBOR) | ||||||
Derivative [Line Items] | ||||||
LIBOR floor (as a percent) | 1.00% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Expenses and Other Current Liabilities | ||
Payroll and related costs | $ 9,989 | $ 9,607 |
Employee benefits | 5,730 | 5,281 |
Accrued warranty | 3,777 | 3,662 |
Other | 8,117 | 4,756 |
Accrued expenses and other current liabilities | $ 27,613 | $ 23,306 |
Warranty Liability (Details)
Warranty Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Warranty liability | ||||||
Period of warranty history used in estimating warranty costs | 5 years | |||||
Other long-term liabilities | $ 20,944 | $ 14,856 | ||||
Accrued expenses and other current liabilities | 27,613 | 23,306 | ||||
warranty reserve | $ 6,344 | $ 5,176 | $ 6,344 | $ 5,677 | 6,344 | 6,174 |
Company's warranty liability: | ||||||
Balance at the beginning of the period | 5,731 | 5,176 | 6,174 | 5,677 | ||
Warranty provision | 886 | 1,050 | 2,665 | 2,821 | ||
Claims paid/settlements | (273) | (472) | (2,495) | (2,744) | ||
Balance at the end of the period | $ 6,344 | $ 5,754 | $ 6,344 | $ 5,754 | ||
Warranty Reserves | ||||||
Warranty liability | ||||||
Other long-term liabilities | 2,567 | 2,512 | ||||
Accrued expenses and other current liabilities | $ 3,777 | $ 3,662 | ||||
Snow and ice control equipment | ||||||
Warranty liability | ||||||
Warranty period | 2 years | |||||
Parts and accessories | ||||||
Warranty liability | ||||||
Warranty period | 1 year | |||||
Certain snowplows | ||||||
Warranty liability | ||||||
Warranty period | 1 year |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Pension plan | ||||
Component of net periodic cost: | ||||
Service cost | $ 102 | $ 306 | ||
Interest cost | $ 410 | 389 | $ 1,230 | 1,167 |
Expected return on plan assets | (294) | (475) | (882) | (1,425) |
Amortization of net (gain) loss | 149 | 176 | 447 | 528 |
Net periodic pension cost | 265 | 192 | 795 | 576 |
Employer contributions during the period | 0 | 7,047 | ||
Discretionary contribution received | 7,000 | |||
Pension plan | Minimum | ||||
Component of net periodic cost: | ||||
Estimated total required contributions | 0 | 0 | ||
Other postretirement benefit cost | ||||
Component of net periodic cost: | ||||
Service cost | 37 | 47 | 111 | 141 |
Interest cost | 63 | 58 | 189 | 174 |
Amortization of net (gain) loss | (78) | (52) | (234) | (156) |
Net periodic pension cost | $ 22 | $ 53 | $ 66 | $ 159 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic earnings per common share | ||||
Net income | $ 12,429 | $ 9,921 | $ 37,606 | $ 29,209 |
Less income allocated to participating securities | 163 | 131 | 501 | 390 |
Net income allocated to common shareholders | $ 12,266 | $ 9,790 | $ 37,105 | $ 28,819 |
Weighted average common shares outstanding | 22,795,412 | 22,700,991 | 22,773,546 | 22,675,450 |
Basic gain per common share (in dollars per share) | $ 0.54 | $ 0.43 | $ 1.63 | $ 1.27 |
Earnings per common share assuming dilution | ||||
Net income | $ 12,429 | $ 9,921 | $ 37,606 | $ 29,209 |
Less income allocated to participating securities | 163 | 131 | 501 | 390 |
Net income allocated to common shareholders | $ 12,266 | $ 9,790 | $ 37,105 | $ 28,819 |
Weighted average common shares outstanding | 22,795,412 | 22,700,991 | 22,773,546 | 22,675,450 |
Incremental shares applicable to non-participating RSUs | 36,758 | 25,526 | 35,176 | 21,809 |
Weighted average common shares assuming dilution | 22,832,170 | 22,726,517 | 22,808,722 | 22,697,259 |
Gain per common share assuming dilution (in dollars per share) | $ 0.53 | $ 0.43 | $ 1.61 | $ 1.26 |
Employee Stock Plans - Summary
Employee Stock Plans - Summary of Restricted Stock Awards and Units (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
2010 Plan | Common Stock | ||
Stock-based compensation | ||
Maximum number of shares of common stock that may be issued | 2,130,000 | |
Restricted stock units | ||
Shares | ||
Unvested at the beginning of the period (in shares) | 45,599 | |
Granted (in shares) | 47,360 | |
Vested (in shares) | (35,838) | |
Cancelled and forfeited (in shares) | (420) | |
Unvested at the end of the period (in shares) | 56,701 | 45,599 |
Expected to vest in the future, at the end of the period (in shares) | 56,701 | |
Weighted Average Grant Date Fair Value | ||
Unvested at the beginning of the period (in dollars per share) | $ 33.28 | |
Granted (in dollars per share) | 36.48 | |
Vested (in dollars per share) | 32.73 | |
Cancelled and forfeited (in dollars per share) | 36.48 | |
Unvested at the end of the period (in dollars per share) | 36.46 | $ 33.28 |
Expected to vest in the future, at the end of the period (in dollars per share) | $ 36.46 | |
Weighted Average Remaining Contractual Term | ||
Unvested at the beginning of the period | 1 year 14 days | 1 year 3 months 25 days |
Granted | 10 months 6 days | |
Unvested at the end of the period | 1 year 14 days | 1 year 3 months 25 days |
Expected to vest in future, at the end of the period | 1 year 14 days |
Employee Stock Plans - Addition
Employee Stock Plans - Additional Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item$ / sharesshares | Sep. 30, 2018USD ($) | |
Additional Employee Stock Plans Information | ||||
Income tax expense | $ 3,113 | $ 1,148 | $ 10,949 | $ 6,802 |
Performance Share Unit Awards | 2010 Plan | ||||
Additional Employee Stock Plans Information | ||||
Vesting period of awards | 2 years | |||
Compensation expenses recognized | 338 | (172) | $ 1,401 | 1,760 |
Unrecognized compensation expense, net of expected forfeitures, calculated under the fair value method for shares expected to vest | 966 | $ 966 | ||
Performance period | 3 years | |||
Restricted stock units | ||||
Additional Employee Stock Plans Information | ||||
fair value per share of the awards | $ / shares | $ 36.48 | |||
Compensation expenses recognized | 187 | 187 | $ 1,660 | 2,420 |
Restricted stock units | Non-employee director | ||||
Additional Employee Stock Plans Information | ||||
Number of shares issued upon exercise of units other than options | shares | 1 | |||
Restricted stock units | 2010 Plan | ||||
Additional Employee Stock Plans Information | ||||
Unrecognized compensation expense, net of expected forfeitures, calculated under the fair value method for shares expected to vest | 902 | $ 902 | ||
Minimum age of employee, attaining which awards are continued to be vested upon retirement | item | 65 | |||
Minimum service period, upon serving which awards are continued to be vested upon retirement | 10 years | |||
Minimum age of employee along with service period condition, attaining which awards are continued to be vested upon retirement | item | 55 | |||
Maximum period following a termination of service in which the share-based award will be settled | 2 months 15 days | |||
Restricted stock units | 2010 Plan | Management | ||||
Additional Employee Stock Plans Information | ||||
Accelerated stock based compensation expense | $ 0 | $ 0 | $ 1,374 | $ 2,968 |
Restricted stock units | 2010 Plan | Common Stock | ||||
Additional Employee Stock Plans Information | ||||
Number of shares issued upon exercise of units other than options | shares | 1 |
Segments (Details)
Segments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segmentcustomer | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Number of operating segments | segment | 2 | ||||
Number of customers | customer | 0 | ||||
Net sales | $ 141,869 | $ 124,832 | $ 411,412 | $ 372,242 | |
Adjusted EBITDA | 25,066 | 20,518 | 78,195 | 67,674 | |
Depreciation and amortization expense | 4,728 | 4,784 | 14,335 | 14,215 | |
Assets | 766,909 | 712,740 | 766,909 | 712,740 | $ 676,193 |
Capital Expenditures | 7,801 | 6,302 | |||
Capital Expenditures including adjustments to accruals and payables | 2,359 | 2,223 | 7,687 | 6,574 | |
Work Truck Attachments | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 75,632 | 69,806 | 213,693 | 197,931 | |
Work Truck Solutions | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 66,237 | 55,026 | 197,719 | 174,311 | |
Operating segment | Work Truck Attachments | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 75,632 | 69,806 | 213,693 | 197,931 | |
Adjusted EBITDA | 18,673 | 18,780 | 59,423 | 60,226 | |
Depreciation and amortization expense | 2,524 | 2,430 | 7,579 | 7,137 | |
Assets | 406,746 | 387,355 | 406,746 | 387,355 | |
Capital Expenditures | 1,955 | 1,373 | 6,209 | 4,228 | |
Operating segment | Work Truck Solutions | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 66,237 | 55,026 | 197,719 | 174,311 | |
Adjusted EBITDA | 6,393 | 1,738 | 18,772 | 7,448 | |
Depreciation and amortization expense | 2,204 | 2,354 | 6,756 | 7,078 | |
Assets | 360,163 | 325,385 | 360,163 | 325,385 | |
Capital Expenditures | $ 404 | $ 850 | $ 1,478 | $ 2,346 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Taxes | ||||
Effective tax rate (as a percent) | 20.00% | 10.40% | 22.50% | 18.90% |
Reserve for uncertain tax positions | $ 819 | $ 1,258 | $ 819 | $ 1,258 |
Voluntary pension funding | 7,000 | 7,000 | ||
Increased pension funding deduction | $ 651 | $ 651 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Loss by Component - Rollforward (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Changes to accumulated other comprehensive loss by component | ||
Balance at the beginning of the period | $ (6,049) | $ (6,572) |
Other comprehensive loss before reclassifications | (4,799) | 2,058 |
Amounts reclassified from accumulated other comprehensive loss | 309 | 522 |
Balance at the end of the period | (10,539) | (3,992) |
Unrealized Net Loss on Interest Rate Swap | ||
Changes to accumulated other comprehensive loss by component | ||
Balance at the beginning of the period | (1,530) | (1,328) |
Other comprehensive loss before reclassifications | (4,799) | 2,058 |
Amounts reclassified from accumulated other comprehensive loss | 152 | 247 |
Balance at the end of the period | (6,177) | 977 |
Other Postretirement Benefit Liability | ||
Changes to accumulated other comprehensive loss by component | ||
Balance at the beginning of the period | 2,118 | 1,392 |
Amounts reclassified from accumulated other comprehensive loss | (173) | (115) |
Balance at the end of the period | 1,945 | 1,277 |
Pension Liability | ||
Changes to accumulated other comprehensive loss by component | ||
Balance at the beginning of the period | (6,637) | (6,636) |
Amounts reclassified from accumulated other comprehensive loss | 330 | 391 |
Balance at the end of the period | $ (6,307) | $ (6,245) |
Changes in Accumulated Other _4
Changes in Accumulated Other Comprehensive Loss by Component - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Amounts reclassified from accumulated other comprehensive loss: | ||||
Interest expense, net | $ 4,271 | $ 4,379 | $ 12,610 | $ 12,420 |
Tax expense (benefit) | 3,113 | 1,148 | 10,949 | 6,802 |
Reclassification net of tax | $ (12,266) | $ (9,790) | (37,105) | (28,819) |
Interest rate swap | Amount reclassified from accumulated other comprehensive income | ||||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Interest expense, net | 334 | |||
Tax expense (benefit) | (87) | |||
Reclassification net of tax | 247 | |||
Other Postretirement Benefit Liability | Amount reclassified from accumulated other comprehensive income | ||||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Actuarial (gains) losses | (234) | (156) | ||
Tax expense (benefit) | 61 | 41 | ||
Reclassification net of tax | (173) | (115) | ||
Pension Liability | Amount reclassified from accumulated other comprehensive income | ||||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Actuarial (gains) losses | 447 | 528 | ||
Tax expense (benefit) | (117) | (137) | ||
Reclassification net of tax | 330 | $ 391 | ||
Unrealized Net Loss on Interest Rate Swap | Interest rate swap | ||||
Amounts reclassified from accumulated other comprehensive loss: | ||||
Interest expense, net | 206 | |||
Tax expense (benefit) | (54) | |||
Reclassification net of tax | $ 152 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Oct. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 |
Pension plan | |||
Subsequent Events | |||
Employer contributions during the period | $ 0 | $ 7,047 | |
Pension plan | Subsequent | |||
Subsequent Events | |||
Defined Benefit Plan Unrecognized Loss | $ 6,541 | ||
Douglas Dynamics LLC Pension Plan For Hourly Employees [Member] | Subsequent | |||
Subsequent Events | |||
Employer contributions during the period | 3,245 | ||
Douglas Dynamics LLC Salaried Pension Plan [Member] | Subsequent | |||
Subsequent Events | |||
Employer contributions during the period | $ 12,476 |