PLOW - Earnings call transcript Q1 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the Douglas Dynamics first quarter 2021 earnings. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Sarah Lauber, CFO. Thank you. ahead. go please Ma'am,

Sarah Lauber

everyone, you Welcome, on joining today's call. and you. for thank us Thank

press I'd remind this like of begin, statements will we Before actual with to subject others, These statements. that have we matters answers cause your forward-looking be release in different. filings results yesterday's our be and risks constitute SEC. including forward-looking to could the Those you materially the will that described to that made call, risks during conference among in include, are to questions, comments some that

Joining After over McCormick, I In Then me Chief to we'll for call that, call overview on With a the President Officer. performance. guidance. call our will today open I'll the review an is Executive hand questions. provide the of our Bob. your Bob our moment, financial that, will Bob and and results

Robert McCormick

more keep with very in manufacturing many we've today Number in Thanks, quarter near-term is or you, turned results. Sarah. the key fantastic markets you February familiar one, as Number levels straightforward will a as Good about will hoped have solutions could start every results. business same recently comments two, normalized to Attachments, this morning, as as We're a other first record X off reasons. of my strong quarter in fairly challenges face Both experienced of we XXXX heavy everyone. I for. the for brief and during snowfall be that company activity segments auto-related to follow. our we returned. improved by and

year was country in quarter, we and to have we've to pandemic, woods. of effort And for effectively full the much while than given produce operate learned force forth the put out results teams a of the the today Our this better not such gotten within QX. are ago things most completely across tremendous still pandemic strong

across year. will this challenge We happy locations. our to our priority safety and also proud our number And a impacted the placing COVID-related is strive impacted in we uncertainty biggest and our as the high are which Material for price in while today performance will expect one, segments, both of margins many through of similar up that do resolve, of early of factor. Number seeing our balance stages expectations The headwinds and long-term be near absenteeism exists. still in inflation the industrial-oriented to much the term employees. But the be demand but are workers will challenge team recapture chain exceed we outlook is for pricing with U.S. face actual market. customers' over a a And we success. tight sets common the supply shortages, to three, we the of companies. are typically long we We continue flexibility cost as lags inflation, simply hard run. This component to on it a Generally labor very their navigate a in are Skilled disruption we're find. us creativity number the other

quality great finding our to is ways deal a retain team HR to Remember, and have adversity. to We built creative with model employees. attract business

this while these team impacts comfortable And difficult meeting Our head juncture, the judge to on. guidance. exact is are management maintaining at challenges we're

a drove rebounded year. of with where of our winter It well and impressive quarter the sales below December first in very was of but net let's $XX below consecutive season, in in and million at year. EBITDA, buy season Coast storms in last increases the February. year average snowfall Work compared new we the P&A winter. to months of adjusted segments. plows. did not severity pushed a who a the generated to Beginning to nothing each total. March, the the slightly average significant of led than and the Timing unusual season, million to third previous totals below East key but snow January, We sales, Now only the see start latest better been snowfall discuss purchases on Attachments, Then strong with average users This this had developments but $X.X had which in February delaying is Truck end of

just QX third started. So orders some pre-season quarter impact period and likely results may included second our order revenues. which pulled The forward, strong has

of and far, sentiment are the So inventories good in out is dealer ordinary. Dealer so Nothing shape positive. good.

the seeing the execution Importantly, history in pleased the We and with no which team performance of At progress, within into The of order has group. are last We're dealer That's credit a concerns more as the QX's pre-season on encouraging attachments what long strong period. mentioned their well good municipalities and performance, heading we're net is now the million That of in schedules of season, that. to an an million Work did news $XX.X have snowfall delivered us impressive. Truck production on bodes but even delays based expected adjusted delays. segment. be EBITDA. budgets. results term, Strong the average back more for When all-around long intake future. $X.X the quarter proof Henderson, we gap improving brings for Solutions to will get create visibility our it finally sales

force utilizing will and a Dejana including doing shutdowns pulling the stabilize. Overall, right-size the team the rolling economy and with as continues demand financial to and QX levers, impact our labor performance. great job. Our gap is appropriate strong teams to production is QX are this plant

near well staffing Dejana's upfit encouraged expectations. With As meet performance customer we're to positioned approaching record team the levels, at locations our and solutions backlogs segments stay with segment in stand the will term we're success. both the long-term in flexible Henderson, Overall, challenges supply where today. side impact for will very in

to on Moving allocation. capital

make growth to to continue fund We investments our necessary initiatives.

is we first expect positive track response XXXX. significant summer. on user mentioned, to this are we previously and medium-duty end launch municipal gain to product As the traction in responder The

number remain the growth. Despite committed a over commitment the of February. proceeds, to wavered. dividend strategy challenges Many in help We've years we not and increased the integration projects past organic dividend, already and long-term doubles, past will the circle. are projects all undeck vertical of but over drive time these be singles will our is XX the XXth that in for the our year, As

Moving forward, shareholders. remain cash returning to to our we committed

Still we free the actively of competitive internal for remain deploy Additionally, that to flow down On valuations to and Maintaining landscape pay and top is both used opportunities. external many flexibility deals available potential for always healthy growth balance high. our capital continue monitor It strong sheet allows cash to a mind. initiatives. we topic, not debt. M&A

to have and weigh we'll the growth against So potential the that strategic fit.

all, performance. our pleased in very all overall So with

our targets. results to to although improvement results, well driving Sarah financial I'd entered, headwinds to We our to will throughout pandemic safety continuous of there people. And laser-focused continue is the The impact financial to in highest that. we our long-term positioned we pass towards short-term impact level the to across this innovate, we're no will XXXX, supply-related driving #X the our that, challenging outperforming We're But initiatives company. of call and the to prioritize detail. like asset, on providing question despite With Sarah? performance competitors. our about stronger more pandemic discuss customers, value the health continue our exit continually backdrop, than

Sarah Lauber

were to key first segments. Thanks, based on record attachments, of Bob. quarter compared at markets in the year, improvements the which results increased financial Overall, combined positively snowfall ongoing our broader both economy, last with which stabilization our drove impacted

last net a which we basis, pandemic of emergence diluted or record of gross to recorded second of significant $XXX.X or million but generated loss March negative in the From of last income or GAAP the included million per positive to we XXXX. XXXX, year, of outperform adjusted we million Given respectively $XX.X first of $X.X $X.XX in first diluted million the year. income complete We an solutions $X.XX quarter compared March a net share share to GAAP net record diluted a of and facilities consolidated gross On consolidated $XXX,XXX of of profit $X.X share. this of of sales produced $X.X we the million February for net of and net million of of in million generated Similarly, snowfall $XX.X our share EBITDA record expected corresponding $XX.X loss in $XX.X year. to the meant quarter to or per net the of and the $X.XX adjusted diluted million we perspective, our adjusted of segment generated period shutdown $X.XX negative per prior an negative results. $XX.X per compared performance million quarter, profit during compared compared half sales

on primarily that sales million $XX.X to $XX.X term significantly principal $X.X following to incentive-based same decrease million driven volumes quarter, expenses, a $X noncash GAAP a $X and offset million for June expense, to an quarter swap cash paid refinancing. recorded million avoiding performance year. XXXX. including pandemic-related amortization was based expected a increase increased our basis our SG&A facility interest the last during shutdowns consolidated by was first on the both quarter improved the higher balance to by last $X $X.X the to compared first loss adjustment were lower the This million the addition gain year. is in incurred in higher XXXX our increased expense compensation related than a Our period on Interest XXXX slightly loan on impacted million of million results. the mainly improved to due was operating results. The employee due were compared The adjusted

the earnings Now turn to for let's the segments. X information

generated was record release pent-up significant net was adjusted and prior contend quarter. $XX.X had snowfall driven sales Our a negative $XX net and the from February by last when recorded volumes result of The million million compared first not to year. the Work increased of year. having increase sales year, compared facility considerable $X.X segment Attachments temporary shutdowns EBITDA we during million $X.X like of to Truck quarter, EBITDA demand of sales the with higher million last fourth primarily the Adjusted the to of

wide plus Bob snowfall all and season plow March above-average snowfall unusual pent-up below as XX-year of average. approximately levels continuing the saw sales, delivered return totals higher demand quarter snowfall. was significant ended the As mentioned, February sales Overall, February, coupled significantly the temporary in The the to fourth with January parts addressed. over snow was from were accessory business this strong normal activity, average. gradual below and a X% But in season the season, December, swing with well

Solutions. order addition million EBITDA our both That revenue, The XXXX and business year. into sales in XXXX sales that begin to We sales and million to $XX.X we deferring likely combination quarter to adjusted sales third $X.X second conservative. with last to us EBITDA being facility operating $XX.X from due increase compared that net we net Truck the pre-season pulled our our reported As period, performance of quarter our in can net impacted from the of improved in and same in adjusted meant sales reiterate $XXX,XXX of to record first and want avoiding forward coupled EBITDA year. some March we some million Work brings customers attributed of shutdowns conditions, activity be to a adjusted last of period

earlier, Bob As that continue by hopeful will quarters. the coming patterns are are across strengthening mentioned we're seeing we encouraged in this segment, the we trend and order

$X.X in by sheet $XX.X results as favorable $XX for well balance same the million to to X XXXX cash in X during the more million in months flow in working These prior XXXX. by for million compared of the cash flow largest of change million year. were cash the first was operating Turning improvements Net XXXX period in was $XX.X a $XX.X capital figure. Free decrease the was activities months as The million. first same to used operating changes favorable favorable driven cash the working of primarily during compared period provided and negative capital inventory. liquidity

quarter the first supply the were anticipation If an Inventory line for the you Accounts constraints the expenditures in going remember at drove last of end pandemic. receivables $X.X at million the $XX.X of $X.X end into of end X $XX.X Capital quarter, the million end year. incurred down was of in strong the the million current first million XXXX. of to Despite the in X $XXX.X months XXXX. the to months million which at inventory XXXX first sales, the of first of compared in increased declined is balance million, quarter totaled a chain compared XXXX. at to receivable of improvement year, of buildup the collections first $XX.X we the that quarter with had

growth and X.Xx, the to period. We to debt of paid the we've of the our consistently XXXX. our lower during At most down outstanding regarding sharing the to at X.Xx of of with our fuel this an with quarters, the our long-term the at more we investments additional net and end we goal between you Lowering forward $XX had to integration the look top ratio the vertical on times Similar committed to to continues we million year. necessary and quarter, reduce As ratio debt track rest We debt a the pandemic, X.Xx throughout initiatives our leverage a keep than logical priority. our be Xx. remain stated updates maintain end continue during projects. remain recent making to progress

To end first $XX.X million On on be as working growth flexibility making down in our This we markets, totals operations end borrowing favorable to the near-term liquidity, the filed SEC. have that total using million compares yesterday note, primarily also due registration under gives our signal move us taken be announced debt, generated capacity first statement with capital. the a shelf a after we capital of cash opportunities not $XX.X that in a favorably to $XX this at Turning strategic million million address and stronger the clear, our the cash but plans. to should flow at XXXX, quarter we're pay specific $XXX.X comprising from million separate the $XX.X quarter, of to of the approximately revolver. which of

filing point markets in this we a the means if essentially future. That For of corporate governance. at now, the is can the streamline to matter good process we access some choose

Finally, the saw as our last you we quantitative are guidance probably in established reiterating quarter. release,

of to in to sales expected $XXX we to million to predicted are Adjusted net and approximately to effective EBITDA be million. range share, expect million. share be is tax $XX of rate range expected share from XXXX, $X.XX per $XXX Adjusted per For and is million XX%. $XXX XX% between earnings per $X the our to

core of that remain assumes this in Of conditions course, stable relatively snowfall our markets experience levels quarter outlook year. the we average economic this in and fourth

mentioned Solutions activity our now government assessed their state gap federal to we year, in starting as As come segment, as this third We're and order see local and our did a did those temporary and delayed slowdown pleased quarter. business governments say but earlier budget second the packages. to for schedules we it orders they an in, decision-making are stimulus in municipal create production the order that will impact XXXX in

and working as It anticipate focused return and global what impacted be adapting we implement of normal and impact control will on lingers exactly economy but in seen that chain the to shutdowns Solutions As Based the our constraints, the we're remainder to companies be, planning time the to towards the rolling efficiency conditions, minimize will take those orders to our of ability. maximize anticipated the on interruption under more chain we're be business do best to the to year pandemic on and supply the throughout in tries impacts facility the our segment impact wherever adjust. margins. to factors the supply of possible changing circumstances remains the

now decades. control to of team with The attachments guidance Despite we're knows reiterating encounter levers to income year. that drove of still our and to experience will to price and costs. this the year can and help embrace the solutions has how pull material facing past conditions the we're to protection impact which approach part expect will model business In these lining effectively year. for close plan headwinds, we we given the costs the One we to pass-through which our our how that open been that's the fully it disciplined margins silver over timing comfortable for facilities, addition, team really these experienced inflation, when is the which and challenges

emerge to We like overcome for have stronger the call efficient obstacles work our that, up in the organization. With mindset and to adapt, and right team problem-solving questions. place open using a to we'd these Operator? through more

Operator

[Operator Instructions].

Baird. from from Tim is Wojs question first Our

Timothy Wojs

like Maybe supply seeing bit cited. a sounds more on things, It It side years. start just like really sounds could specifically on just to off it's That the mean, hasn't chassis tightness? you elaborate of last chain for where -- component. I had you're little we've it's of supply issues obviously, couple been the

constraint an supply just maybe of we seeing the just now you're So kind of why us kind where the and most continue? right out broaden discussion give of idea

Robert McCormick

in mean, Yes, have impacting do the meet through it have about won't And is Street and Journal pick we pretty is all Class But chassis. X. the and of be it's is the I component OEMs some in there. impact and large. ramp still having to robust do that articles X to it what I up to get in both mean, is Sure. Wall us X see demand. challenges? you specifics you on clearly appears up entire to economy X to other back trying the have I commodities into And Class

have attention from on the it they you, of situation. fluid And expect color is component will most and a and a what We weekly they're daily making more rolling and basis a facilities. I get they on very are OEM calls a On from tell decisions with their basis, chip shutdowns we as perspective. them can paying to a more

experiencing. been number didn't driver that's the see industrials most as to similar we specifically, the chassis mention it while of have So uncertainty we other one what

Timothy Wojs

Okay.

the side, with what a Is what kind they're there ahead bit to book-to-bill than better XX municipals would stimulus? is in has past Dejana days? it elaborate orders? on what just there? helpful. in in trying could changed the the -- both so then revenues guess and kind little of And feared, I has muni and changed I'm the Is just coming it the tax I there And that going you Okay. maybe think be just Henderson, understand of if is on

Robert McCormick

in as back as their mean, tax not ever, softening that had yes. knew half of Well, quote the saw with we We we XXXX, was job in projected decline as it more book softening the corner to like XX that quarter. orders. the I has in the up of turn a XX in but second our And and that team we'd or see we the last municipalities still order half absolutely going that up being a very XXXX as and did notably orders, last unsure to done to what the back building robust see great in we fourth start revenue looked days. activity pick the a into a over

whether health we gap being second related, stimulus about whether a does in in notably be, third to able it's and little side. whether It related, Henderson's temporary bit orders a most yet, the might chassis related, quarter the a budget are say the though quarter those on into it's whatever drivers receipt with result would I in match seeing the orders. So increase it's nice up

we'll into got spoke effect. these mentioned, so there. That to and And mitigate Sarah we've impact us the as to put shutdowns, will help rolling I which

near-record We're it's that sitting I big Work at side. very be positioned takeaway team We actual will, traction sales we're an the is just gain think here don't going Truck there. side, make and well awesome these on to they solve and parts, But some job. themselves backlogs headwinds the to component starting equal when I data Solutions the our there would say On economy Dejana's doing public.

Timothy Wojs

Okay.

to of business. of normal. does the maybe the the kind that sounds That's the kind to better of sounds Okay. one inventory how kind with in was just, and perspective like hey, you're actually suggest that on And you forward? in It is the that then just relatively things of order from pull hear. somewhere? quarter thought to inventory last would were dealers informs the than if field your I good or activity that's that? normal. come saw activity it we relatively something distributors, like trying sort field Or some -- guess, What attachments hearing understand, or is Just the revenue kind pre-season had it or channel of started your

Robert McCormick

No.

that last December Well, right, -- quarter back the If the in go turn fourth where soft. was lighter quarter and quarter be right? the to the January out had was wildcard, to normal, into order again, fourth the we you pre-season book XXXX very than completely pandemic-related, the to quarter said let's and was heading going snowfall, first fourth year expected

which Coast extent everywhere spike then thought month more of in it it in couple And on orders up. so into orders to that that's when February plow the orders the did fourth the in seen never And plow see East the we we years, a for nice of quarter a hadn't dry specifically that saw we typically, we of snowed spike February, And might. March. when

So degree, the release we in saw it They here those second orders. as certainly get to can was season related just for X before intake show in it were was -- pent-up by articulate orders? the waiting think but was impact to the and but certainly second itself Will to we the the third shipments unusual. call, of order they know what to half quarter we snow the We'll QX weather-driven we of that time that some well. a demand

Operator

next from Your Ryan Craig-Hallum. is question Sigdahl from

Ryan Sigdahl

between you QX Curious, normally, but the mix, of supply what's XX-XX the I expectation you of forward, kind of caught from have kind well, a demand, cetera. But year? chain you this it, talked and et as but I don't seasonal think some expect QX, -- pent-up you pull about mention did what right cadence kind

Sarah Lauber

not Ryan. we that, walk happy you it. mention to through did No, I'm

Last second year, between So between to the a very and were if the back unusual XX-XX we XX-XX we XXXX third quarter, two. go split. at we year, had

back we XX-XX is to this to that for are expectation moving split. going year closer be Our

Ryan Sigdahl

just is competitor? then challenges? the primarily far competitors, you're chain, from across Helpful. How help a it. standpoint you as alleviate everyone relative doing supply what your certainly as feeling feeling then are DDMS industry, specifically do you And guys difficult think to those to And your largest

Robert McCormick

excellent that periods one multiple locations mean we across upsides those shut that's is these we've question. the in got Yes, I our an where us shutdowns of are of having down, rolling DDMS come teams focused on that chassis can to the and making flow upfit when more plants so that process back more productively and that product. online improvements effectively again, begin we

Now again, we've always And felt that and that's any an advantage case, our planned for of it's we being this have is competitors. executed. on in

want Now of are pull to percent can rolling solutions business, I our workforce you're adjust Remember, When the attachments side, the occurring these not shutdowns do plant temporary. to you have attachments multiple in distinguish XX-plus we is on production. the a levers side. on

We So hour weeks. or We schedule day, we flex we X levers can down. can there. pull work XX up can flex

productivity which we improve plant one, group again, So Solutions Work levers Work is utilize concept its through will Attachments flow time and will a pull to manage to this weather-driven rolling Truck the of well. period and Truck as just normal shutdown the

Ryan Sigdahl

of make just have actually Or makes integration on think actually it when guess, this accelerate with those those? Or target I more Do started challenging this cetera? and working out? then easier to rolling kick you et you those some shutdowns, vertical expectations because it the And guys kind does there is environment been you we initiatives on are of on.

Robert McCormick

Yes.

the we target I next component pretty have going that impact really or that there there. are think the projects line. shortages the don't in robust. And is we're The staffing have ones we on

slow at folks doing I So we are And things would don't a tracking to those cadence from perspective what expected say are expect as down all. there.

Ryan Sigdahl

so hop me, I'll are M&A Last pipe? you queue. you and a you on to I list people there. likely I of any seeing of know M&A, have of this not back the environment sell, to then that. Is the know relationships in closer? the But a on? more kind for mentioned what short of But getting those for sell, kind likely rationale question blue-chip pushing But shell

Robert McCormick

Yes.

expecting seen world, our Ryan, see in not that I market. yet. in to more have at we'll We think everybody pandemic is post coming a space deals Douglas that

we list have your short got so And folks. to And of point, that a again, we've expectation.

any going early can indicators are to that coming market, haven't as folks those change fairly be We but gotten that well. quickly to

like sheet. I the to take what advantage to at Sarah team opportunities. done So haven't be balance like prepare just point. seen they're to have of doing expect see us able We we and her what I activity. much with this to And do those

Operator

Your from McGinnis Company. Sidoti next from question is Chris &

Christopher McGinnis

the that I inflation average the either seeing the but see it maybe material if could you if given increases? just know be we start was can on think could wondering you And about may raw on side. demand you don't impacting I just the pricing, maybe in of X segments,

Sarah Lauber

to side. predominantly in to inflation the We're the significant I'll Yes. speak inflation the then seeing steel. and demand coming first I into business, guess

experience certainly in timings see we pricing that differences versus inflation, experience cover As all I'm we recovering from our will the perspective confident inflation inflation steel price in. hits businesses. do that to some in of in I planned coming our that will XXXX. ability the on three we

that, when I the And how businesses, through I out everywhere. think giving on front, each I the going we prices. solutions be should that of they I are all think have seeing our guess, expectation, you're of demand business on side, to think in an the that customers, quote dealers, when our of

the pull we of I side, that And there's like on anything think that. ahead expect don't I So either. any that or much experienced attachments don't

at we not a least because material think have drive I set from price doesn't points times, price it aspect. or that,

Christopher McGinnis

you. Got

new for offering, you I that just the Okay. traditional orders quoting, coming were the [indiscernible], just increases the already That more are helpful. the on seeing the business? was in, on the but very seeing light Are of come from muni you're And maybe side then or side. model guess, the

Robert McCormick

recently Yes. The muni half increase with comment back was did of in the out traditional year, a And orders in medium-duty new the I just last orders made although that quoting in down this that, market we were is not. slowed products. more the on side. Remember, it

we've excited order been perspective back comment response, of likely that got by I we comment we proposition an we've business. delayed that seen all it's material product they because love the response, care likely very their driven in with are is demo the situation about most point the a So will with, a from at new of go pandemic we're why is core given response get the truck that I a trucks of orders that this impact. dealing terms intake just to see order and were positive we to core out with and first, taken the while which need the and made XXXX product while

Operator

I'm Instructions]. would I to this like now Mr. back you, further no to the Bob conference McCormick. questions [Operator at turn time. showing

Robert McCormick

you, appreciate speaking thank Dynamics. you hope the We look We like time in in we us, ongoing changes the in we and positive coming for you optimistic Thank world, forward Have and your are great months. and you today. your a about are, to interest XXXX with seeing Douglas day. the

Operator

participation. this gentlemen, day. Thank Have conference a you wonderful Ladies concludes call. today's and for your

You may all disconnect.

Douglas Dynamics (PLOW) 9 May 212021 Q1 Earnings call transcript