PLOW - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Douglas Dynamics Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Nathan Elwell, Vice President of Investor Relations. Please go ahead, sir.

Nathan Elwell

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

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

Mark Jim Joining Sarah Chairman me an on and Genderen, the call Vice Work Executive President Interim today CFO; CEO; provide are hand Truck our and view and of ahead. Mark will Van Please out Janik, COO year overview before President our go President Then Sarah and by results and guidance Lauber, for followed of call the I'll Attachments. Jim the results. discussing questions With for will and segment that, call we the financial our Jim. performance, to open

James Janik

segment Solutions our Attachment differences in the reflected results. the their Thank year, quarter all X was was to end metrics positive improved a in of compared in increased Consolidated were began the segments growth quite you, as strong when margins in the circumstances and There to to fourth a segment. what challenging dramatic due across XXXX faced, primarily year. The which Nathan. results prior

what which Henderson following producing between want the operations. the of great pleased our throughout to things the capable Dejana recent Well we our are segment denominator in everyone performance done year. and the common everybody a for continued and congratulate of. Dejana and Solutions team to have the showing by challenges years strong XXXX at Henderson people annual say several we with to I Solutions leadership the record However, both the shown and pandemic, tough momentum, entered years. After and addressing I'm was grit Attachments in determination faced

are proud completed no under is While what just and been as there tough streamline we've in it and operated tougher off. to is work a has delivered XXXX. The produce to to We XXXX which been improved compared already environment of we was operations of our hard to Savings Attachments, adapt paying A last crucial in doubt exceeded a the the in patterns Program, margins circumstances. efficiently at weather expectations recent year able that success Cost part year.

additional asked for our we later, and Given will to them hard dividend the M&A, extraordinarily provides in XXXX. capital to remains dividend talk performed our circumstances, moving maintaining with allocation completed approach. are lot year, will have there more. strong that last a and in options work current Sarah teams just With us comes priority, have is couldn't and detail sheet balance the no it forward. When our been we our well, I of the say in change but

deals growth we we potential said need aren't medium-sized find and in pursuing onto approach, acquisitions be at brands, a opportunity. if and cultural looking our we right time. disciplined the trucks small our now consider long-term, position with and hope the operating could a this to results maintain Having are attachments companies we at where we Over to with strong actively find With will any that, professionally balance and complex good fit. upfit work a that sheet, strong we

and that plus pleased Finally, our of management to have regarding our been our to thanks the say leadership. team excellent give I'm quick preparation. I smooth, a combination update to planning recent transitions want the internal

permanent conclude President a Bernauer, further. The which CEO. a step Chris Mark will is highly appointed of to new we addition, next Work discuss search Attachments, In qualified just new Truck for our

we intention to have The diligent, to the place. process we the half thoughtful person Our first believe the in named a and close same, has and in been XXXX. new search are CEO of having remains right

to the topics several this I've you asked Van who COO, going Mark our I'm to walk call hand Genderen, Okay. morning. to over through

Mark Van Genderen

Yes. Thanks, Jim.

our Before the I at each talk segment, to to results we that want made announcement I important yesterday. highlight

sector, search, recruited consistently leader extensive of an who motorcycle Chris Following years product automotive, he including XX successful disciplines, career extensive over had candidate, primarily operational engineering, and sectors. we gained Truck in hired dealer a with in delivering as top us financial our and Bernauer, engagement, dynamic in manufacturing many sales marketing and experience and has Attachments. Work where a marine joins President have He performance. the development, Chris the and strong is

brings Milwaukee delivering positive to results, Chris creating on board, in this reporting He with cultures, addition our thrilled be reputation this here later and a perspectives will positive at will here which week me. ideal operational have and the ahead. fits to to Douglas. him years based invaluable I'm for financial approach and strong be and the role. I'm starts in perfectly collaborative candidate Chris In his is for

for my and Truck coming company leaders continue I help in months, other to closely I and will our beyond. transfer responsibilities and as working to Attachment Work Jim, senior with weeks Now the XXXX chart the Chris Sarah in course

results and the to Attachments. Work Truck turning Now

favorite topic, weather. the Let's start our with

haven't like typical to average. that average, be better as down a over that compared feel a concept January we While winter should reminder XX-year the season when certainly last across and snowfall certainly enough that snowfall in more so over, continue still regional seen this and is And see has out. positive better and will more we turn know seen our winter snowfall will country year. from York in saying up snowfall It to while cycles. That don't XX-year than approximately year, winter the New of season was is was comfortable far markets, below shaping will general, be move the but snow isn't far February. In weather core have in the winter Chicago, average, the it this overall to previous to snow to been like And return snowfall markets than while to above in Boston. looked has has to activity this said, XXXX-'XX October nature. XX% in a we from where likely how been yet We snow be very average is some

that. dealer dealers more checks more January the frequent With end And our snowstorms of at and typical unfolding, winter inventory a is sentiment confirm with positive. the

inventory While strong financial remain continue remain and fall, dealers they a to average, our above levels on footing.

we diligently end-user analyze near-term snowfall on Of demand. course, equipment trends continue lower the of will factor, several past will the to and and replacement based years cycle the remain lengthened a

as requests. Importantly, XXXX to profitability. have is our addition, extremely our driven nimble And has finished Savings Cost the needed, Program an and inventory excellent in shape dealer-specific goods in and purposeful in responding production planned been throttling our we being scheduling, back increase in when

want business commend progress effectively. We extremely operations continue this match demand ramps over well to know our conditions, as Today, optimize I the to Attachments team positioned look to remembering we I'm our for at proven through the medium drive our once to impact we temporary. Work months, volume as and times. and been long-term of and up. Overall, have the proud our us We've to again managing snowfall business done low that have manage adjusted past while the is how Truck tough to of know XX to leaving market really

We we'll to advantage up take and ready drives will demand. ramp cautious, optimistic yet wherever remain and and be snow whenever

tough delivered growth and again. Commercial changing are navigate where bottom us to teams We for returning levels the and has delivered years, through low times and softness. want year a delivering Solutions in Turning one both of the manage their significant demand line by We in we strength the focusing are and large both to longer marketplace. on a the term. areas to results year us seen includes as operations and to areas remains bottom and we the while impressive well, row. In opportunities began of for snowfall. customers growth. performance a third mentioned environment XXXX helping top continuing, top maximized more XXXX, capacity namely we or segment operating That recent XXXX, we've overall record the expectations, our process results for attention Henderson team's been being currently market municipal said, quarter, summary, has and Work with in our Dejana impacted fleet it from supply our consecutive expansion municipal The deliver Truck pockets will are for improved third that Solutions backlog we in chassis of there year-over-year the exceeded contracts pre-pandemic and And Solutions, for and year. of once as The robust performed business other is multiyear investing profitability. year producing of negatively ago took in of team and improved that conditions, where diversification the ingenuity with improving strongest. Demand Solutions decade we are line we in a last our thank growth,

and short-term through in the to We ensure best that expand have the will focus positions. the challenges products we while maintain continue market to our on long-term place manage to keeping our leading future

to our with to It all Indianapolis meeting call partners with looking down well. With hand I all our a said, great and as NTEA that is across the forward week. look to Truck Work Finally, always And I brands. Sarah. this representing heading businesses event forward meet next industry to important in of Show to am the customers opportunity I'll at teams

Sarah Lauber

Thanks, Mark.

end as year Truck in conditions a the teams of start record positive team To Attachments, At produced As the continued, noted circumstances. their outstanding Work job year, managed at the profitability Jim maximizing under the deliver challenging market their the call, was year both results. to operations to Solutions the it a segments. the Truck of and Work summarize fantastic did an effectively

stated million fourth improved Cost throughput increase Attachments were to metrics. With were were XX.X%. on consolidated sales the by impact through at successful even walk full were gross Program year And million XXXX This pre-tax of by In producing both please the increases $XXX.X than based of all points the price comparisons sales the able across numbers make sales, Solutions. quarter Program me all On Savings increase plus than that of you. basis unless more within of flat at year, XXX Savings flat margin savings to anticipated year and These Cost let the Solutions. The for a million. $XXX.X almost XXXX. Net to realization profit gross and the today results as note, increase said, essentially X%. XXXX full we lower the $XX was I'll more improved offset exactly otherwise, are at fact, at drove

$XX profitability, million to reduce a items, one-time want to will of the previously $XX and CEO our we've XX% including work during expect XXXX for savings Cost additional of savings million, but operate the nominal program the from teams in in mainly to Savings severance the related which in difficult allowing costs million, to transaction to and and transition beyond. Selling, improve administrative to done to general have our XXXX XXXX. I leaseback As third position noted, to and we us thank annualized costs announced $XX.X deliver necessary sale drive costs. increased approximately due costs the expenses strength quarter, Program that

million, earnings. Adjusted we increase excluded gross increased on $XX.X basis adjusted Adjusted adjusted non-recurring credits. Net from XX% from the XXX our experienced rate profitability EBITDA across year's effective net income increased The and tax flat effective compared leaseback lower share $XX.X sales. due gain took to was is XX% points margins plus leaseback $X.XX, and million. $XX.X incentive-based in led sale improved million transaction, to XX.X%. transaction tax income to margins, earnings. The per segments. in to net $XX.X of rate tax to XXXX we and Last to to was sale compensation to to adjusted EBITDA approximately to due earnings both XX% compared and both higher the million, increased the is non-operational actions mainly one-time Similar approximately respectively. XXXX addition, higher higher all due the to XX%, profit In an for

$XX Finally, million, at the pleased report total XXXX strong was I'm end was bookings. that $XXX driven of to by million, increase of our which municipal backlog an

of of coming the Our robust the in is XXXX. continue backlog the is into record approximately set Solutions years. pipeline us level business of It which at gives continued see XXXX, to into end within backlog the flowing confidence the great X% in

over has Program, into successful where in Sales note expectation we with savings levels $XX were Now of savings. It's down XXXX annualized lower-than-expected important we let's XXXX, XX% we adjusted Savings improved here minimize as to our the The the with million. have for the margins $XX.X at had than now of we're news business out only $XX that basis capital rather of to segments. production million at average demand look rightsized schedules working additional some the to closed the to savings changed. suppressed results declined $XXX million, largely were snowfall while realized X EBITDA good efficiently adjusted that not the and Attachments from managing the million Attachments, not driving $XX is million due to Starting seen but accelerated hoped, X% recently, XXX sales. needs. points, is highlight year XX.X% EBITDA to we is The Cost

are a position we the in, this snow the will and segment, record we bottom as in on the We great come municipal and are quarter adjusted but earnings and performance. The remain start season preseason by to returns. In concludes leverage we demand cautiously optimistic record primarily the numbers in is you wait-and-see driven strong quarter to line first sales call update Solutions May. with mode closed business until in EBITDA,

end everyone strong a from Truck XX% million, XX% throughput. X.X%, at point quarters and So in to to to expectations finish. range to driven this and improvement. The sales margins a adjusted low Solutions to record bringing million, a and and levels. row, target $XX.X pre-pandemic record price X $XXX.X Solutions EBITDA Net Work grew to our year, was and year realization for improved increased the year start with strong adjusted delivered back margins long-term XXX-basis Congratulations results the with of by performance EBITDA the record a exceeded of

at look liquidity. let's and our Now balance sheet

We environment. effectively the generation cash snowfall are very in a operating year, low proud while of for our

working investment driven $XX.X tax and XXXX. and operating cash primary inventory positively Let's payable, million, the walk drivers through by increased accounts working details. Net provided higher on by to activities payments in better impacting cash from the The reduced our purchased were earnings timing supplier of position. levels XXXX credits a XXX% in capital received capital

had we to $XX.X on had $X.X million, and an expenditures and increase to year sale XXXX, investments us to the end million This rent deferred. which on free generating leverage. highlight The impact reduced In as a of In related flow, were some expect addition, decreased free targeted $XX.X negative flow million. I of leads on be the of cash interest. flow CapEx high X% an fees, X% taxes, effect capital $X.X of do successful transaction leaseback cash by free to of million want partially the our transaction revenue. range approximate to our $XX to million of cash offset

to as leaseback However, to elongated year-end, cash which during delever by back is this successful suppressed leverage a cash which of is utilized of free the $XX view received snowfall. netting excluded targeted our the at we million, period provided range million sale line, investing transaction, $XX.X included an from activities, in within which we is proceeds from flow. Bottom X.Xx

confident within with of are goal capital structure, that We Xx we will our in well our XXXX. range current X.X to now operate

allocation. capital to quarter The our in December. as was fourth planned paid The priority. dividend dividend Turning remains

borrowing strong, revolver. X% as start $X.X $XXX million of liquidity our which in where We just under quarter discussed share about the cash expecting the consisting closer cash first to Jim million I dividend of then we're XXXX, our we're XXXX, and mentioned of of comfortable mentioned allows XXXX. expenditures in for leverage current the quarterly approximately of sales, also to thinking of and with I capacity are per $X.XXX earlier. At capital maintaining us is end was M&A,

outlook turn to let's Now year. the our for

stable saw net share. range rate to the in effective to experience of approximately will volumes you And markets projected double-digit expect to expected be supply to midpoint million expected we both $XXX share predicted conditions assume $XX release, As in our million that to snowfall from outlook core XXXX $XXX The $X.XX ranges, across average low to higher earnings to assumes chain XX%. million. million. $XX per of and in the tax is contributing economic experience line and we Adjusted we be this the sales Adjusted is XX% be is top XXXX. At $X.XX between per growth. to range and EBITDA segments, relatively

While we segment. each are the year-over-year cautiously to on done our to slightly margins stable improving contribute optimistic on work volumes, to we in in expect XXXX margins

relates our elongated position of assumes this Again, approximate and in snow largest strong improve or combined will in our field. At continued ice to trends based Solutions replicate XXXX equipment the improved midpoint, guidance in the upon XXXX cycle with strong guidance XXXX assumption demand remains year, a to of on backlog performance. XXXX levels. operating that replacement attachment results, the the

how our equipment the range higher of lower snow levels encompasses demand dealers. As end season, always, tear and we sentiment users or on the depending and wear the and on end

further order will phase in first We starts earnings and focused recap, pre-season call period, we successful an during in information standpoint, our will April, initiatives. initial which from the which operational May. To of and our on grew margins quarter earnings have in cover

strength the position forward, like drive open power and over to that, further we'd Moving our to call a the up questions. in for leverage long-term. With good earnings we're operational Operator?

Operator

today question will [Operator Instructions]. with Mike And come Davidson. your D.A. from Shlisky first

Michael Shlisky

weather So let's start headlines. off with some

snow big we some those units of reduce at for one-time channel we on year? in just you Southeast there's inventories, to snow. areas if not that of normally the bit see month, this a saw maybe wondering your least and least and dealers was U.S. of So the last help able weather were their to at South winter basis a couple I a earlier areas ship

Mark Van Genderen

answer your a have to is general, presence I this happy That would we I'd the question. said, in in Mark. say, Mike, point, dealer South. to be to I'll being of a strong things. Yes, that couple certainly point don't deep

look is, remains to SnowEx one you our use independent So bit dealers. products, a if at can distribution our more nimble, we and think sell I a it line model for of that, distributors

I think snowfall. traditionally it's we sold on product fair being to being markets certainly say based them in where wouldn't that see we saw sold

snowstorms remove we'll the equipment. their The with snow north in to down help and see is opportunistic excuse they experienced remove other me, help these smart down and to that head the thing contractors have will or head during actually will and very to south, equipment -- and

So may direct impact it usage a eventual dealer of be it helps the replacement. not on for but inventory, the certainly equipment

Michael Shlisky

it. That's also Got color. wanted I great the turn to Solutions to segment.

strong orders? You some the markets. trends growth Or big in on us seeing there private update municipal some make government-related you fleets the all sector? pretty Are focused on large customers? Can you is also mentioned

Mark Van Genderen

is that is strong and backlog in take can well, the across right Mike. municipal really the strong too I sector. the as a we're Dejana growth with businesses one as seeing Where now Henderson very well.

we've side, commercial we've seen softness. the noted a of On bit

teams at what strong have well really looking the is, area would a areas great we with doing we it's fleet and -- sales, the the the say, side, of that call us. it's do for been overall, a there. on think that's I dealers what where are focus real where in I'll -- job relationships municipal our yes, commercial, is, But, doing it on focusing managing capabilities I competitive with

Sarah Lauber

for municipal really at the includes as look record backlog just We're you would you the near contracts look that our -- midpoint, municipal that implies backlog when backlog at like And our year, Mark more, our at backlog, Those Mike, Yes. said, that add, for I our level. mid-single-digit customers. is multiyear on when look side. and growth. Solutions guidance at seeing that you the

growth So 'XX. over that and span 'XX will

Michael Shlisky

here, that's a sheet one that, given the of made, Got capital we've kind and last in the stable nimble your perspective, and on there's you've it. up me or changes more one inventory be of major but improvements weather Attachments in and somewhat that Maybe given been from cash to you dependency for deliver, for -- books there? how 'XX or Sarah. obviously, the environment of Working outside quick free balance operational particularly operational XXXX, in with any some down thinking build

Sarah Lauber

of Yes. we flow that will cash landed XXXX for free cash is than When a our say When at expenditures X% XXXX, change we million. higher expecting at the what in to working better I I XXXX. be at better capital, versus $XX would expect is much primarily we The where for position. we're free were that I where or look biggest closer flow being in capital sales think in about are we

much certainly sorry, to not much year. And be to more out I better, There's a -- nimble. inventory as than similar take right, bit XXXX. that nearly in to I'm little the You're pretty expect better

Michael Shlisky

during the it that your And just Sarah, you leaseback. on remarks prepared impact a to clarify there, like sounds there sale P&L mentioned was

So include well? like of a be sounds away going wouldn't free cash kind that you flow as that It when [indiscernible]. positive

Sarah Lauber

Yes. would we that In go flow, $XX the And -- impact. capital when cash largest that's then that probably mover. the expenditures, you -- had that's largest the then mover. the But is million away. That far look free cash by at a

Operator

next question your Greg from with Sidoti today will & Burns Co. And come

Gregory Burns

snowfall the the Like like big we you cities, where most distribution focus. You important has are? falling? markets regional your snow did -- just about of the you when remind mentioned, I us mention is think but where been market like Can or guess, where regional

Mark Van Genderen

national Mark. the basically really centers anywhere brands, I nice population of where Greg, happy I But take are. major we point our have look -- to kind be I'd exactly, Yes, it's footprint we can a -- snows. that to your at it's X that. it With mean,

Mississippi kind really it, the North call the if very kind Tennessee, So spot. to anything of, you East this and sweet of as that's want kind the it, it's about we of think and is of rough, of Virginia,

in And Valley, in the New Ohio Mid-Atlantic, Maine. Canada New then York, Midwest, up strong into certainly, presence we a as anywhere the Jersey So Upper have well.

some seen hit major beneficial that us. with is recently, for snow, very some of the we've storms certainly with Toronto Ottawa, getting So that

Gregory Burns

this other Solutions we the right low year. of volume-based? the the when or at strictly margin But of happening end range around that drive And side of efficiency know kind I that's you're for look been then implementing business, can just to it that on on it improvement that kind the double-digit business? Okay. for do to at of think margins Or Is you do programs be you're where going go you margins business? have that that

Sarah Lauber

range Yes. We I teens. entered I help throughput the target the the year into double-digit of XX% mover target will all also the range, at low from is the and not us this margin to that low both stop say, does focus the get to that being more largest initiatives us there. improvement would the businesses, that range end at into but us other would say, by far, get on

Operator

this to further session. turn conclude the no questions, Seeing will any would question-and-answer over to like remarks. Instructions]. Jim conference our [Operator back for I Janik closing

James Janik

the about you company the of to deliver all our address and we talk we're improvements. good confident your today, you to of your a and Douglas opportunities of interest for for on potential day. time and we hope all future in Thank Dynamics, as ongoing Have horizon soon. the you Thank

Operator

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

now disconnect. may You

Douglas Dynamics (PLOW) 25 Feb 252024 Q4 Earnings call transcript