PLOW - Earnings call 4 2023 | Douglas Dynamics, Inc.

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Operator

Hello, and welcome to the Douglas Dynamics Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions]. I would now like to hand the call to Nathan Elwell, Vice President of IR. Please go ahead.

Nathan Elwell

Thank you, MJ. be you would us that your like the that thank we today's some questions, and conference comments I this statements. begin, to will will everyone, constitute for answers on joining call.Before of call, forward-looking Welcome, including during to made remind you risks are actual could results to These forward-looking that statements be subject to cause materially different. call and SEC.Joining include, have President and described press CFO. the release we me McCormick, others, the in with that in is matters among filings and Those Sarah risks Vice our Bob Lauber, today on President yesterday's CEO; Executive and will financial our results of performance, an our guidance. reviewing Sarah Bob and provide followed overview by for that, the that, the open After I'll questions.With we'll call call hand Bob. over to go Please ahead.

Robert McCormick

want I to Today, everyone. talk of about fourth morning, Good Nathan. the XXXX. quarter briefly Thanks,

more probably and throughout pre-release for we financial saw evening, calendar over dedication attachment Their and year margins EBITDA expansion the we quarter challenges continuation solutions and XXXX continued in their bright future segment. by for however, weather-driven I and discussed throughout the detailed the had release I completed performance Truck highlight expect yesterday team was year and improvements solutions of were met what drivers performance, XXXX was our the want their performance, in pleased a the performance. fourth strong quarter QX targets, Douglas prior importantly, where total. XXXX.The a main say of our Solutions to overshadowed improving like they each you improved to I'm commend and last XXXX. I'd quarter see the of previously As month Dynamics.The to performance Work on focus fourth but

we've the business XXXX/XXXX share in we've magnitude.The snow results was below in of impacted seasons start our seasons, The average. been snowfall which XXXX the We've fourth that Following never in years, were XX-year poor this snowfall impacted entire XXXX/XXXX came belt the the on snow was expectations. and with by for of weather years impacted East first low seen performance X snow in was well our reason seen XXXX our XX-plus results by back-to-back quarter while excellent really low very of current the a record XX% snowfall with and the XXXX season, end snow of season the nearly saw across below of snowfall Coast. totals the the quarter the Attachments,

first historical replacement later, that This more a of savings of Savings We Cost patterns, early averages, important cost unprecedented XXX-plus the of to As fourth in a Sarah cost pulled and was needed with discuss we we've structure day the the lowest are quarter Program. measures ever has permanent below will where production we in came demand rapidly to cycle there numbers. it fourth call XXXX because situation. teams and had were $X order in we the quarter and only playbook competitive our They more initiatives, for advantages of snowfall so protecting our East level average hardest quarter, important to our season operational have key of long-term of that Coast result they When which expect I'm to aggressive than the of reduction resulted take in these we point markets. decisively. were totals in am for. and strong snowfall trends, across focused million for align low levels sight not financial current ensuring but record careers, in which annualized stay details record to even a perspective, as summary, to know, company. the moves million influence market.From and implemented to our we've our the they short-term right the snowfalls not signaling seen well in snowfall mild and weather hoped share return we is to determined lost XXXX cost but some that will weather. accustomed growing one savings.Frankly, an but we lengthened $XX a the in spending El that in in What's of are market between snow many on you measurable equipment average take health gap that is our leadership adjusting decisions, as seen, making activity of environment.As demand to the these this snow make our say with acted in above never glad weather while a they a the Nino long-term pattern growth stronger swiftly conditions these I January belt. we responded the proud we how the more have weather decisions

for that, pretty January, a set orders of half of first sign. record years. quiet. in the back said is good the has we saw month the which we a early February in X February, Having In and accessories fact, parts Nor'easter In been

confirmed more X-year season So point, dealer the yet, checks begun with remain positive the have at note, this they while end weather season average, to the isn't levels it average above totals. below we'll finish inventory of snowfall over On moderate. at while the seems January, winter likely a our

finish no they health to at quarter.So the new on as always, difficult completed let's to the growth to more XXXX, group. XXXX exciting our So EBITDA Solutions allow.So come their are starting are up to driving for some through Work year But on a we knowing our that Solutions, in volumes their dealer we say teams Henderson down. its in NTEA Dejana of next mid-single strong Work digit there of gearing profitable baseline to More much environment the that we'll will drive a improving stronger, exit goal centers remain this margins. to sentiment and Indianapolis be Attachments couple of and a in Truck the when to businesses. positive.Lastly, again thank ready been products Truck come upfit The launch has where financial to and higher pleased delivering team Show conditions is been doubt story positive. turn both segment want it's Again, I'm weeks. profitability topic

driving more Our good overall we recent a performance we bodes and well channels, with penetrating the come.So for look at year, demand strong by objectives focused improvement still new introductions. positive media's do a in in to new First, Solutions the momentum through. future, generated see building in especially remains All what to revenue product coming as on non-chassis a have work markets as segment all, we and profit XXXX, we we're on is see? that to Solutions year backlog XXXX.

perspective, group. the business to chassis been guidance. do Overall, focus move which upfit and are some our improve account not redesigns, through chassis increased continues, first centers.From taken drivers with by a shop our has strike in on DDMS impact we're expect model.Second, the continued Additionally, the If enter poised We in strong into the projecting we backlogs. to product our improvements Attachments sourcing improvements with profit year, does significant on see our driven chassis XXXX quarter at from during improvement of supply the floor internal XXXX, we and velocity looking initiatives in UAW near-term supply.

improvement will team year, product that repositioned to we cycle focused our demand the projects lengthening through to Savings these this itself These profit has on can new impact stay the and XXXX manage baseline replacement successful in with launches factors Cost XXXX. control. were the so While conditions teams in attachments include Program,

improvement DDMS in benefits opportunities. produce solutions, considerable ahead our the term using our improving Our at people over creative mentality and are continuous term.Looking to long near providing M&A the operations

segment, that on need Attachments Our with be the searching is to upfit products companies onto near-term work for focus professionally trucks. complex

range of growth We include good to for potential candidates search said companies have certain starting our would Having criteria for have sectors. broader parameters and with that, must expand be our acquisition fit of in Douglas. significant remains are strong cultural brands, intact. potential to They the a a

to leadership have finding multiple couldn't responded in We've headwinds financing say this. you teams. me be teams years. made challenges. recent this your with trigger to always right that to and the our we which how that environment, consider.Finally, I and ahead when to in options like tough will strategy some to the maintain let not near place, creative us of. frankly, find in We allow what term. solutions you're approach, Quite be this of pull have is navigated are and the normal the look we we any back in important will execute see try clear, looking targets on to corners. around strength external disciplined have situations our sheet our difficult really we pleased To more test It's It's but out deal through balance

gentlemen, Our benefit do of shown and I'll Trust difficult a from and these us the that main mentality everyday ways will before.With it hand and than themselves we navigating what how we never smarter find allows Sarah. ladies take stronger do getting The call to me, emerge and challenges challenge improve. we and that through step continuous to to said, circumstances it improvement better back, is has before. like

Sarah Lauber

Thanks, Bob.

the of $XX.X improved million, XXXX Attachments as XXXX compensation and being compared the variable $XX.X compared Work to lower the by compared seasons. million, Program, compared of said, quarters unprecedented made price XX.X% year year.Interest intangible Solutions.Now Work decrease year.Our by the purchase from to On issues right impacted snowfall in while attachments, spending lower tax net sales $X Now, segments. million, benefit was to to and XXXX. to net million compared $XX.X snowfall in affected on tax adjusted million, a sales, impact more was we importantly, for combined $XX.X which our interest Clearly, volumes I $XXX.X snow Attachments Savings stepping compared EBITDA million X% for to for compared our due million for reductions. net identifying managed numbers year, revolver than of for to improving want performance better XXXX. on year. the at XXXX to for in XXXX XXXX negatively or rate impacted or impacting part sales, The to higher $XX.X XX% EBITDA prior $XXX.X and XXXX compared the million significant XXXX/XXXX of are to by significant XXXX, lack due tax EBITDA the to of of of year, remain look as we incentive-based margin, policies again, right was XXXX were XX.X% in or for $XXX.X offset both segment million, compared implement XX.X% to due results as in significantly and core form weather and Attachments XXXX to prior the partially we the and income the on was volumes our by million walk or previously million low million the the the impact and consolidated the to related challenges me We on unprecedented the XX.X% million, for $XXX.X were of higher tax simple The million $XX.X $XXX.X of for Solutions XXXX, implemented as collectively, at expenses, sales impact Solutions into approximate beginning during snowfall decrease rate or solutions at was sales year partially focused finding the million Both a including for decreased But to typical for by these for higher the year.With fourth interest to of rate last trends. through last was million margin that million due XX.X% to for made of increased low that produced due in rates was snowfall $XX.X basis, related primarily successfully. income segment Cost volumes changes.Net unfold low The hindered in borrowings thank and $XX.X corporate $XX.X not of the XXXX. was focused story to to X.X% of translated primarily improvement first the playbook.Adjusted which curtailing teams state to results, you. and offset higher amortization, with led was lower of through decrease and expense the discrete XX.X% of investment to for impacting sales in the Solutions.Gross our the mix.SG&A and functions, unusual in up, the realization to decisions volumes sales Truck $XX.X of improved year. us profit expected. severe adapt did and higher our attachments tax markets Attachments, season low in demand X rate credits $XXX.X the This let's at on snowfall and which was benefit XXXX.The based Net XX.X% to XXXX a rates our compared and headcount announced XXXX or XXXX its XXXX XXXX being let

increased to price the last quarter to which on of fell took when volumes experienced adjusted impact million quarter.The pre-tax savings volumes chassis more factors term through availability mitigate improvements which to first charges, the year $XXX.X low-teen progress was to million sales to million XXXX million, we EBITDA in of improved year year, at pricing savings produce be pre-tax X improvement to inflationary pricing We XXXX, expect in the XXXX, $X.X story expected The and quarters improvement towards and for XX% restructuring margin XXXX.In EBITDA, due mid-single million year in to the we compared to municipal net our and fourth making margin to of to delivered realizations. of higher the of In actions $X than this the contracts, our higher XXXX and digit from years. Solutions in doubled improved over significant positive program compared in XX% longer margins. primarily to couple digit $XX.X all margins to of target long-term million previous began of annualized double realized delivered prior the on $XX Solutions. the the more the with $X increase see

last we're don't record or million we $XXX similar we year slightly we still ago. better a with As supply year, in a compared chassis previously to that improvements.Finally, expect backlog dramatic stated, million XXXX than assuming be will XXXX but in ended $XXX

increase XXXX.Now and year, Although Solutions sheet compared in in to control higher ended lack Inventories still we a the to XXXX. the not related $X.X free to of million accounts $X end than reduction inventory slightly a Solutions balance snow is million million, end current The due ice were was than in changes were lower in above in These the the reducing equipment cash backlog $XX times our $XX at higher provided million to levels their is payable, last unfavorable snowfall XX-year of which fourth due at payments. while million in in to the the changes cash our of and for We working which today capital quarter, unchanged quarter. let's at due to our earnings allocation. delay.Turning dividend, made last that long outlook liquidity. for XXXX We supplier and and inventory to in in have levels been working the by paid used chassis compared progress from for to cash well reinforces dividend quarter positive first lead of and due resulted the million capital at $XX.X Compared of record, million decrease year-end, XXXX. the the with at year receivable an look year $X.XXX $XX.X XXXX. year-end. announced to million $XXX.X capital $XX.X $XXX.X XXXX $X.X operating elevated average XXXX.Accounts activities year Net million flow was for our million the was timing of of

XXXX. track end $XX liquidity continue conditions on of at our to again to in of remains dividend our $XXX $XXX our the at million of when approximately and million record priority, year-end, $XXX debt approximately the allow.At allocation of Net capacity our million capital top total it comprised and increase year-end revolver. the aim While is cash borrowing million compares

earnings snowfall as X.Xx back range are targeted temporarily is targeted our our net year-end in debt leverage to return that As ratio our trends, we reflective historically are return average Attachments. low demand will we to and of above our comfortable of range

saw more we increasing the to by of our our provide press front year. amended credit you financial us half release, As in ratio in flexibility facility leverage the the

lower be expanded XXXX the year. of to low million, need million totaled that of $X.X confident operating we levers facility are pull the and year.Capital than We guidelines back to sheet XXXX we that playbook we able manage the will as in during for certain our curtailed we are our expenditures credit as part snowfall the balance half $XX.X investments so within

will to prudent the let's be of will of Program.Now CapEx investments we our our XXXX While range of X% as to our of somewhat XXXX turn remain timing outlook. will we higher spending be we end XXXX, the as of Cost on and lower X% part expect constrained than be with to revenue, our Savings

XXXX rate effective to the XX% As EPS is expect in is $XXX profit saw earnings would in $XX release, adjusted by to to approximately range is XX%.The to and predicted driven $XXX between million attachments. $X.XX you expected million million. improvement, $X.XX XXXX be per range EBITDA projected higher to million, $X.XX over results. in indicates continued the adjusted baseline and range per ongoing Cost net XXXX Adjusted sales the of This produce we which volumes tax share $X.XX Savings implementation be of share. from to $XXX to of growth Program the The

of snow positive with largest and our best with the performance.The replacement to and position guidance in combined cycle of ice assumption backlog Solutions equipment since enters field. in XXXX improved XXXX trends operating the pandemic the demand the before continued relates

weather replacement for is cycle our equipment in Given the experienced the patterns attachments core elongated. markets, unprecedented

weather-driven assuming assumption, April, point.When to return indications XXXX, in we our look further the half guidance with XXXX I decline orders up our we see quarter that We first remain longer preseason plan fourth update will have at or are consistent. trending recovered our volume the be segment we in and on snowfall to find in call we When term, targets are in will this enter assuming if provide an average our to approximately of we ordering a quarter. financial down

double Program improvement the chassis profiles deliver that In profit For core assumptions slightly improvement our Attachments of growth that first noting on segments. XX% Despite over EBITDA high sales teen adjusted worth or average keeps through focused and conditions, recent margin. Solutions, to we to profit baseline return digit believe in margins to XXXX term.It's the to below further snowfall the improving growth price high-single continued low- better we the of supply in on XXXX. drive towards of fourth includes to margin the slightly the stable outlook Cost our challenges, experience can such digit economic XXXX in will X to realization as the we quarter Savings EBITDA to we multiyear and and close improvement average of stable EBITDA low components, to relatively Attachments, sales success XXXX, greater and as The quarter expected weather-driven expected path on margins the to improvement is us mid- mid-single longer in driven progress and margins underlying towards markets back remain digit snowfall XXXX and in to low-double demand.For is maintain a with with we XXXX, adjusted mid digit XXs. continued along alone expect by

the questions. potential for like needed that, make up profit We the businesses.With call long-term open continue to Operator? these we'd improvements of to will meet to baseline the

Operator

Mike Our Shlisky today D.A. question with Instructions] [Operator Davidson. from first comes

Michael Shlisky

dividend, that the to Sarah, you clarify. Maybe I some made on comments wanted

it's about would back you the or were you flat it on making increasing not just same the increase current as be cut? chance the decision as up mentioned dividend you well Is going So to cutting a the on thinking? for XXXX. is is your table, holding Or that dividend that

Sarah Lauber

to years and many believe always talked absolutely we now, And the it not point. have we've years our We priority. has of Certainly, have is had increasing. a that this strived and sustainable increase the for #X and is we've dividend dividend dividend changed sustainable Yes. at

include our to that of dividend, plans we expect that and for year All the continue.

Robert McCormick

prudent to public model it's Yes, this navigate as just protecting That not the through reiterate okay? around was hasn't said, Sarah priority, still front Douglas what XX to This we delivering is company with While in it changed, is I'll increase thesis jump weather built Dynamics #X being center. it quarter. Mike. dividend years and and the there it launched business it every environment, for our and ago

Michael Shlisky

I had you release, wanted two and press the guidance. Okay. you incentives about to up, on also had Got the back and square EPS, them kind of of also quick January a item what different X it. housekeeping about kind provided just In them XX. of together, I

in said then the January of growth back mentioned you also, on to but you of XX% was dollars, $X.XX $X.XX $X.XX which So $X.XX EPS Then XX% XX. to adjusted to suggest I would think to XXX% it XX%

So range, of I'm but or the the appropriate us at? sure. is They're not which most same in for look less, one really to one more kind

Sarah Lauber

great That's question, a Mike.

typically meant next amount of pulled. $X.XX, statement have the on on that there other in front weather share to earnings in the of So significant on the the of and at potentially end quarter low statement be a give range. we based guidance range, increase the low per it, that qualitative The we the was that encompasses the us we fourth getting $X.XX levers as to snowfall

earnings but within really So range, the XXX% at is of magnitude was growth. share to the the more XX% get statement qualitative it per to that guidance

Michael Shlisky

I'll I -- on follow Okay. later, up guess. Maybe that

Sarah Lauber

I Mike. guess follow me up, let

to typically April $X.XX XX% the that in there as trending return it's assumption seeing in average, the fashion. update larger $X.XX. any And I as will script, range we're provided, to my guidance in mentioned we've Just we focus on if the different the being

Michael Shlisky

more about of Okay. term Maybe long the talk here. just

share I heard comment, be to in to what you that EPS, in when it, rolling looking might which was $X.XX the it. you is that see from at looking last sounds next probably a perceived You've an another you're is but time you're not not get maybe snowfall guidance. average I year, what year, quarter like, then improvement that's you're until And issued that the it viewpoint get we add mentioned next least, here guess still cost at could can past, and folks. of when that kind could valid? higher you of you secondly, program $X.XX or first out That's

$X.XX to gap forward? a we low- see up is snow, more to go an snowfall mid-digit And So would more normal quite it rate? like going mentioned really maybe average go view. growth, lastly, of Attachments if growth up I appreciate from here then the be would have you broader from about to Those questions more it. scenario. in I'd know long-term to have your kind are bit and long-term there X a first there my you but year

Robert McCormick

the In commitments, driver long-term those reach to from and to delivered okay? rooftops, for some I'll environments, then which we supply, about driven chassis and been this profit having drivers, say, We're stances, pleased expect by it to always snowfalls Sarah up That needle $X.XX that right? finish. weather, right? start or Most about $X.XX to we've EPS talked about profit on share pretty couple XX%. the recently Now the quite down internal most really bit, me journey, past conservative external impacted Mike, is and internal we've continue, by doesn't targets. snowfall model Obviously, years, that, profit by We a of largely drivers move shout we talked targets both took we'll XXXX. talking let and our quite we've the on much. have X% No, time. let a very it. Got said over

Given of what's of happened EPS. the over has been right, $X.XX the on weather over last historic earnings X.X years, impact

repositioned that occurs, more to gains right? as things, X profit the normal occurs, demand we from on we gains. business wipes the ourselves are going to focused Attachments internal We've from nice support levels, all drivers.Having it see when a you're to find than and today, multiyear that, So out that moving laser the forward some return as said

that Solutions continue to talked We profit within started, have lastly, where I about. the still on improvements our laser are internal to group Sarah's delivering continued And drivers. we support then focused the

at Now that provide. you XXXX, will long-term has is our any this point. changed. our really additional give significant goals and want EPS comments drive put all haven't those things reiterated That's improvements together, you and by that okay? to XXXX her to chance Sarah where attention I'll segment add in a may

Sarah Lauber

high-XXs to The to snow of high-single margin. mid- Savings our the the $X.XX really to to where being path Yes. absolutely mid-single X questions, to the that Solutions being to is aspect to had and journey low- this assumption That's, more expect our those. $X.XX that digits the permanent additions just And Mike, and the year. to and I in at When guidance double reaffirming Attachments digits growth mid- it, of to make go years guess, a with ago. And I and digit impact Program in land, $X.XX as back be through, fact to the we're walked several the move expect your those rate is to margin see than earnings Bob where the low teens forward. within that the first we We segments which absolutely we Cost multiyear call additive year. were we we we've is

about. just share not all focused of per we've well increase earnings things, talking the So on We're guess, us been $X.XX. significant that that position get those timing I to the of

Michael Shlisky

I'll my Okay. take other questions offline.

Operator

The next question is from Schultz with Baird. Robert

Robert Schultz

of underlying bit get declines and assumptions provide a kind that you you half experienced weather-driven the about to the little recovering volume you Maybe talked made half? to in context guys could You about there XXXX. more of

Robert McCormick

Sure.

We're mean, and up we Let I'll right? let of the jump we happened this next. happened I goes before. and similar about can things We've where one weather over right months data historically unique now, points history something What's we other but on. that happens business me right? or therefore weather happens, X never the start XX not down, thing find in the last a and Sarah when enough talked what is has years, happened over have that space has X know

a not there's lot to history draw So of on.

So then as we're themselves. up making more the educated cycles guesses down show tweaking things and or those

want something to So, Sarah, add to that? you

Sarah Lauber

Yes.

and based that So we on in the XXXX. assumption attachments our volume is loss experienced guidance our in

about of indications get we'll So we see more that and begins are that that start assuming then to once back. assumption. And preseason, we April of we half have

plan materially or is up to my it's different And down so that from our update we see that guidance if point.

Robert Schultz

then And solutions the contribution for Henderson? think should on on how maybe Dejana and about year, maybe the there between we side, it. the guidance next Got

Sarah Lauber

they're targets for say into the in that are that both making their segment, and would They're improving out I journey both my I total. equal have would on improvements the relatively been are say solutions set equally. both they commentary to for

Robert Schultz

flow then Awesome. year, for more are what for this one And me. you and takes? What and cash just free the expecting puts of kind are

Sarah Lauber

Yes.

reduction with impacted look in flat be taxes would year, be This say far our it capital, opportunity working and million walk from of this of if by say, you would the to -- prior flat. I'll kind X% of at the would when we And exceed is payable the having greatly around low you $XX to and have not CapEx sales. assumption I was our I of I year's you to look working accounts the for place. to too this And would us pieces. our on the midpoint year, of then Cash capital with at mentioned say, plans inventory X% range capital, So And relatively EBITDA, million the you cash end I through that that we're guidance expecting the year. interest, working $XX at more timing.

Robert Schultz

Awesome. I'll there leave it then.

Operator

The from question comes Sidoti next Greg with Company. & Burns

Gregory Burns

be Could what be the the impact or you in quantify will the exactly on quarter you? will first UAW to impact strike the what

Sarah Lauber

of EBITDA $X.X Greg, primarily first Yes, would to to we've you, the chain we've $X.X versus that I what quarter. movements. in will it's I supply say exactly into other a hard incorporated probably estimated our million impact it is tell understand bit between million Yes. UAW guidance. little

Gregory Burns

Okay.

guidance the Okay. are -- the understand Do guess, end wanted -- kind is you little better to, what And expecting I and of assumption a quarter. the just what first you for I snow Like snow, we would or in guidance? you What that the get to incline are does lower? factored expecting of in no here -- beat is your we outlook? if season your

Sarah Lauber

a So than accessories was and better good. We had East parts We January has and snowfall that February, for a been show see was out very in you January for our segment from Attachments the standpoint, last because that's of Coast, up actually heavily your snow the can snowfall. significant snow January had window more and season. weighted on not snow year. record that

to work breakeven average way I our inside a lowest So that say we helps assumption know, as the in towards I us we first When close is for which, snowfall. what's that quarter expecting first year the to have we below snowfall That's the quarter. quarter for first in the year. guidance you year think right prior about of is seasonal our results, now, total. the And are that our would saw our for improvement improvement and quarter January over

Gregory Burns

And your when categories maybe Great. M&A, are less at existing you potentially or maybe product Okay. a new stay category weather that's dependent? looking within looking to you consider

Robert McCormick

of earnings snow is being diversifies We that the of ice reliant. and reasons over Yes. obviously, just traditional Most strategy, to and long We attachment control the we further of certainly from of why, away them our so targeting focus of mentioned, the snow -- outside are products acquisition snow control. host ice. you a right? outside in and there's And need but attachments one run ice are

Operator

I this to like Being McCormick, session. Bob back call no Q&A President, our the over to for questions, further would [Operator remarks. hand concludes closing Instructions] any

Robert McCormick

Thanks. Thank you for appreciate your Douglas in today. your We Dynamics. ongoing time interest

manage plans. we long-term while built businesses. to of is The executing And making we company been more of Our for late, I those difficult, demand are showing and tested our of remain trends however are necessary capable all decisions, and it's than outlook uncertainty. think positive then through the

Douglas that as will we the external future headwinds come at excited goals. stronger, our improvements and confident We back I'm subside, Dynamics. long-term are about reach deliver

ahead Our a and terrific us. day. Thank best have you, is of still

Operator

for Thank presentation. now concluded. attending today's conference The has you

now disconnect. may You

Douglas Dynamics (PLOW) 27 Feb 242023 Q4 Earnings call transcript