UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 


 

Date of Report (Date of earliest event reported): February 25, 2019

 

DOUGLAS DYNAMICS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-34728

 

134275891

(State or other
jurisdiction of
incorporation)

 

(Commission File
Number)

 

(IRS Employer
Identification No.)

 

7777 North 73rd Street, Milwaukee, Wisconsin 53223

(Address of principal executive offices, including zip code)

 

(414) 354-2310

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 


 

Item 2.02.                                        Results of Operations and Financial Condition.

 

On February 25, 2019, Douglas Dynamics, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2018.  A copy of the press release is attached hereto as Exhibit 99.1.  The information in this Item 2.02 and the exhibit hereto are furnished to, but not filed with, the Securities and Exchange Commission.

 

Item 9.01.                                        Financial Statements and Exhibits.

 

(a)                                 Not applicable.

 

(b)                                 Not applicable.

 

(c)                                  Not applicable.

 

(d)                                 Exhibits.  The following exhibit is being furnished herewith:

 

(99.1)                Press release dated February 25, 2019.

 

2


 

DOUGLAS DYNAMICS, INC.

 

Exhibit Index to Current Report on Form 8-K

 

Exhibit

 

 

Number

 

 

 

 

 

(99.1)

 

Press release dated February 25, 2019.

 

3


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

DOUGLAS DYNAMICS, INC.

 

 

 

Date: February 25, 2019

By:

/s/ Sarah Lauber

 

 

Sarah Lauber

 

 

Chief Financial Officer and Secretary

 

4


Exhibit 99.1

 

For further information contact:

Douglas Dynamics, Inc.

Nathan Elwell

847-530-0249

investorrelations@douglasdynamics.com

 

DOUGLAS DYNAMICS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2018 RESULTS

Company Produced Robust Annual Results While Adjusting to Chassis Availability Limitations;

Continued Strong Demand Seen in Both Segments

 

Full Year 2018 Highlights:

 

·                                                    Produced record Net sales of $524 million

·                                                    Recorded Net income of $44 million, or $1.89 per diluted share

·                                                    Adjusted diluted earnings per share of $2.04 increased 41% over prior year

·                                                    Announced increase of quarterly dividend to $0.2725 per diluted share

·                                                    Issued positive full year 2019 guidance

 

February 25, 2019 — Milwaukee, Wisconsin — Douglas Dynamics, Inc. (NYSE: PLOW), North America’s premier manufacturer and upfitter of work truck attachments and equipment, today announced financial results for the fourth quarter and full year ended December 31, 2018.

 

“Due to the hard work of everyone at Douglas Dynamics, we produced record annual net sales and a significant increase in operating earnings, ending the year on a positive note,” stated Bob McCormick, President and Chief Executive Officer. “While we experienced ongoing chassis availability issues, we are pleased at how well our teams are navigating through the supply chain to meet our customers’ expectations.”

 

Consolidated Fourth Quarter 2018 Results

 

Net sales were $151.8 million, a $13.8 million increase when compared to prior year net sales of $138.0 million. The increase is primarily attributable to the stronger demand for products and services in both the Work Truck Attachments and the Work Truck Solutions segments.

 

Gross profit was $44.1 million, or 29.0% of net sales, compared to $44.8 million, or 32.5% of net sales, in the prior year. The decrease in gross profit as a percentage of net sales is due to an approximate equivalent increase in price and cost due to material inflation.

 

Net income was $14.7 million, or $0.63 per diluted share, compared to net income of $34.5 million, or $1.50 per diluted share in fourth quarter 2017.  Included in fourth quarter 2017 results was a one-time benefit associated with U.S. Tax Reform of $22.5 million, or $0.97 per diluted share.

 

Adjusted net income increased to $14.4 million, or $0.62 per diluted share, compared with adjusted net income of $12.1 million, or $0.53 per diluted share, also attributable to stronger demand in both segments. The Company reported Adjusted EBITDA of $28.8 million, compared to $30.3 million in the prior year.

 


 

Work Truck Attachments Fourth Quarter 2018 Results

 

The Work Truck Attachments segment recorded revenue of $111.4 million, resulting in adjusted EBITDA of $25.3 million, compared to revenue of $103.5 million, and adjusted EBITDA of $29.0 million last year.  The year-over-year reduction in Adjusted EBITDA was primarily caused by material cost inflation, plus an increase in discretionary spending in 2018 as investments returned towards average following the low snowfall environment in 2017.

 

McCormick explained, “Although we experienced below average snowfall across the country during the fourth quarter of 2018, our commercial snow and ice products performed quite well led by the increased demand for recently introduced non-truck products. In addition, although chassis supply remains constrained, sales of our municipal products exceeded expectations.”

 

Work Truck Solutions Fourth Quarter 2018 Results

 

The Work Truck Solutions segment produced revenue of $43.5 million producing adjusted EBITDA of $5.3 million, compared to $41.0 million in revenue and adjusted EBITDA of $5.7 million in the fourth quarter of 2017.

 

McCormick noted, “Demand and backlog continue to grow in our Solutions segment. The constrained supply of chassis and components we noted last quarter negatively impacted performance during the fourth quarter. However, we believe margins have stabilized and we expect DDMS to drive improvements in 2019.”

 

Consolidated Full Year 2018 Results

 

Net sales were a record $524.1 million, compared to $474.9 million last year. The increase was primarily due to the strong preseason order period for commercial snow and ice control products, plus increased volumes in the Work Truck Solutions segment price increases, which were partially offset by chassis supply issues for our municipal products.

 

Gross profit was $154.9 million, or 29.6% of net sales, compared to $143.1 million, or 30.1% of net sales, in the prior year. The decrease in gross profit as a percentage of net sales relates to material cost inflation compared to the timing of price increase realization and a return to normal discretionary spending compared to reduced discretionary spending during the low snowfall environment last year.

 

Net income was $43.9 million, or $1.89 per diluted share, compared to prior year net income of $55.3 million, or $2.40 per diluted share. 2017 results included the provisional one-time benefit associated with U.S. Tax Reform totaling $22.5 million, or $0.97 per diluted share. 2018 results included the benefit of the reduced tax rate, also associated with U.S. Tax Reform.  Adjusted net income was $47.4 million, or $2.04 per diluted share, compared with adjusted net income of $33.5 million, or $1.45 per diluted share, for the prior year.

 

- MORE

 

2


 

The effective tax rate for 2018 was 21.3% of pre-tax income, compared to a benefit of 4.6% in 2017 due to changes resulting from U.S. tax reform.  The effective tax rate was lower than initially expected in 2018 as a result of discrete items that lowered the rate in the current period.

 

Adjusted EBITDA of $96.4 million increased $5.5 million compared to $90.9 million for the prior year, reflecting the same trends previously noted.

 

Work Truck Attachments Full Year 2018 Results

 

Work Truck Attachments recorded revenue of $379.6 million, and adjusted EBITDA of $95.8 million, compared to the prior year revenue of $350.6 million, and adjusted EBITDA of $90.3 million. The revenue and adjusted EBITDA increases were primarily a result of a stronger preseason order period and average levels of snowfall in the 2018 snow season, which were slightly offset by ongoing chassis availability issues for municipal products.

 

Work Truck Solutions Full Year 2018 Results

 

Work Truck Solutions recorded revenue of $154.1 million, and adjusted EBITDA of $12.7 million, compared to revenue of $137.8 million and adjusted EBITDA of $14.2 million in 2017.  The increase in revenue relates to stronger overall demand and incremental sales from facilities added during 2017. The decrease in adjusted EBITDA relates to several factors including material cost inflation and higher variable compensation and benefit expenses.

 

Balance Sheet and Liquidity

 

Full year net cash provided by operating activities was $58.2 million, compared to $66.4 million in the prior year. During 2018, the Company completed a voluntary $7.0 million contribution to its pension plans, which accounts for most of the change.  The company maintained a cash balance of $27.8 million at the end of 2018, compared to $36.9 million at the end of 2017.

 

Inventory was $82.0 million at year-end, compared to $71.5 million at the end of 2017. The increase relates to planned strategic buildup of inventory in anticipation of tariffs.

 

Accounts receivable totaled $81.5 million at year-end, compared to $79.1 million in the prior year. The small increase is mainly attributable to higher sales during 2018 compared to the preceding year.

 

Dividend

 

As previously reported, on December 10, 2018, the Company declared a quarterly cash dividend of $0.265 per share of the Company’s common stock. The dividend was paid on December 31, 2018 to stockholders of record as of the close of business on December 21, 2018.

 

In addition, the Company announced that its Board of Directors approved and declared a quarterly cash dividend of $0.2725 per share for the first quarter of 2019, which equates to a projected full year annual increase in the dividend off $0.03 per diluted share. The declared dividend will be paid on March 29, 2019 to stockholders of record as of the close of business on March 19, 2019.

 

3


 

Outlook

 

Based on the Company’s 2018 performance, the overall economic climate, dealer sentiment, information on chassis and component availability, and industry trends, the Company is outlining its 2019 financial outlook as follows:

 

·                            Net sales are expected to be between $510 million and $570 million.

·                            Adjusted EBITDA is predicted to range from $90 million to $115 million.

·                            Adjusted Earnings per diluted share are expected to be in the range of $1.60 per share to $2.40 per share.

 

It is important to note that the Company’s outlook assumes that the economy will remain stable and that the Company’s core markets will experience average snowfall levels.

 

McCormick explained, “Our guidance reflects the positive long-term outlook for our Company, encouraging backlog and order trends, set against the backdrop of ongoing chassis supply constraints that we expect will continue to impact 2019 results. We are focused on expanding margins in both segments during 2019 and when chassis supply issues do start to ease, we firmly believe we are well positioned to drive meaningful long-term top and bottom line growth.”

 

Webcast Information

 

The Company will host a conference call on Tuesday, February 26, 2019 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The conference call will be available via the Investor Relations section of the Company’s website at www.douglasdynamics.com.  To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, an Internet replay will be available shortly after the call.

 

About Douglas Dynamics

 

Home to the most trusted brands in the industry, Douglas Dynamics is North America’s premier manufacturer and up-fitter of work truck attachments and equipment. For more than 70 years, the Company has been innovating products that not only enable people to perform their jobs more efficiently and effectively, but also enable businesses to increase profitability. Through its proprietary Douglas Dynamics Management System (DDMS), the Company is committed to continuous improvement aimed at consistently producing the highest quality products, at industry-leading levels of service and delivery that ultimately drive shareholder value. The Douglas Dynamics portfolio of products and services is separated into two segments:  First, the Work Truck Attachments segment, which includes manufactured snow and ice control attachments sold under the FISHER®, HENDERSON®, SNOWEX® and WESTERN® brands. Second, the Work Truck Solutions segment, which includes the up-fit of market leading attachments and storage solutions for commercial work vehicles under the DEJANA® brand and its related sub-brands.

 

4


 

Use of Non-GAAP Financial Measures

 

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).  The non-GAAP measures used in this press release are Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share.

 

These non-GAAP disclosures should not be construed as an alternative to the reported results determined in accordance with GAAP.

 

Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, as further adjusted for stock-based compensation, severance, litigation proceeds, loss on disposal of fixed assets related to facility relocations, non-cash purchase accounting adjustments and certain charges related to certain unrelated legal fees and consulting fees.  The Company uses, and believes its investors benefit from the presentation of, Adjusted EBITDA in evaluating the Company’s operating performance because Adjusted EBITDA provides the Company and its investors with additional tools to compare its operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect the Company’s core operations. In addition, the Company believes that Adjusted EBITDA is useful to investors and other external users of its consolidated financial statements in evaluating the Company’s operating performance as compared to that of other companies, because it allows them to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets and liabilities, capital structure and the method by which assets were acquired. The Company’s management also uses Adjusted EBITDA for planning purposes, including the preparation of its annual operating budget and financial projections, and to evaluate the Company’s ability to make certain payments, including dividends, in compliance with its senior credit facilities, which is determined based on a calculation of “Consolidated Adjusted EBITDA” that is substantially similar to Adjusted EBITDA.

 

Adjusted Net Income and Adjusted Earnings Per Share (calculated on a diluted basis) represents net income and earnings per share (as defined by GAAP), excluding the impact of stock-based compensation, severance, litigation proceeds, loss on disposal of fixed assets related to facility relocations, non-cash purchase accounting adjustments, tax reform and certain charges related to certain unrelated legal fees and consulting fees, net of their income tax impact.  Management believes that Adjusted Net Income and Adjusted Earnings Per Share are useful in assessing the Company’s financial performance by eliminating expenses and income that are not reflective of the underlying business performance. We believe that the presentation of adjusted net income for the periods presented allows investors to make meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. Because the excluded items are not predictable or consistent, management does not consider them when evaluating our performance or when making decisions regarding allocation of resources.

 

5


 

Consistent with Regulation G under the U.S. federal securities laws, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measures, and this reconciliation is located under the headings “Net Income to Adjusted EBITDA Reconciliation” and “Reconciliation of Net Income to Adjusted Net Income” following the Consolidated Statements of Cash Flows included in this press release.

 

With respect to the Company’s 2019 guidance, the Company is not able to provide a reconciliation of the non-GAAP financial measures to GAAP because it does not provide specific guidance for the various extraordinary, nonrecurring or unusual charges and other certain items. These items have not yet occurred, are out of the Company’s control and/or cannot be reasonably predicted. As a result, reconciliation of the non-GAAP guidance measures to GAAP is not available without unreasonable effort and the Company is unable to address the probable significance of the unavailable information.

 

Forward Looking Statements

 

This press release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, product demand, the payment of dividends, and availability of financial resources.  These statements are often identified by use of words such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategiesSuch statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, weather conditions, particularly lack of or reduced levels of snowfall and the timing of such snowfall, our inability to maintain good relationships with our distributors, our inability to maintain good relationships with the original equipment manufacturers with whom we currently do significant business, lack of available or favorable financing options for our end-users,  distributors or customers, increases in the price of steel or other materials, including as a result of tariffs, necessary for the production of our products that cannot be passed on to our distributors, increases in the price of fuel or freight, a significant decline in economic conditions, the inability of our suppliers and original equipment manufacturer partners to meet our volume or quality requirements, inaccuracies in our estimates of future demand for our products, our inability to protect or continue to build our intellectual property portfolio, the effects of laws and regulations and their interpretations on our business and financial condition, our inability to develop new products or improve upon existing products in response to end-user needs, losses due to lawsuits arising out of personal injuries associated with our products, factors that could impact the future declaration and payment of dividends, our inability to compete effectively against competition, our inability to achieve the projected financial performance with the assets of Dejana Truck & Utility Equipment Company, Inc., which we acquired in 2016, or the assets of Arrowhead Equipment, Inc., which we acquired in 2017, and unexpected costs or liabilities related to such acquisitions, as well as those discussed in the section entitled “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2017. You should not place undue reliance on these forward-looking statements.  In addition, the forward-looking statements in this release speak only as of the date hereof and we undertake no obligation, except as required by law, to update or release any revisions to any forward-looking statement, even if new information becomes available in the future.

 

6


 

Financial Statements

 

Douglas Dynamics, Inc.

Consolidated Balance Sheets

(In thousands)

 

 

 

December 31,

 

December 31,

 

 

 

2018

 

2017

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

27,820

 

$

36,875

 

Accounts receivable, net

 

81,485

 

79,120

 

Inventories

 

81,996

 

71,524

 

Inventories - truck chassis floor plan

 

4,204

 

7,711

 

Prepaid and other current assets

 

3,590

 

2,883

 

Total current assets

 

199,095

 

198,113

 

 

 

 

 

 

 

Property, plant, and equipment, net

 

55,195

 

53,962

 

Goodwill

 

241,006

 

241,006

 

Other intangible assets, net

 

174,678

 

186,150

 

Other long-term assets

 

6,219

 

5,945

 

Total assets

 

$

676,193

 

$

685,176

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

18,703

 

$

16,323

 

Accrued expenses and other current liabilities

 

23,306

 

21,004

 

Floor plan obligations

 

4,204

 

7,711

 

Income taxes payable

 

106

 

2,996

 

Current portion of long-term debt

 

32,749

 

32,749

 

Total current liabilities

 

79,068

 

80,783

 

 

 

 

 

 

 

Retiree health benefit obligation

 

6,240

 

6,809

 

Pension obligation

 

2,129

 

9,761

 

Deferred income taxes

 

48,198

 

39,269

 

Long-term debt, less current portion

 

242,946

 

274,872

 

Other long-term liabilities

 

14,856

 

17,004

 

 

 

 

 

 

 

Total stockholders’ equity

 

282,756

 

256,678

 

Total liabilities and stockholders’ equity

 

$

676,193

 

$

685,176

 

 

7


 

Douglas Dynamics, Inc.

Consolidated Statements of Income

(In thousands, except share and per share data)

 

 

 

Three Month Period Ended

 

Twelve Month Period Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

151,825

 

$

137,969

 

$

524,067

 

$

474,927

 

Cost of sales

 

107,731

 

93,158

 

369,177

 

331,841

 

Gross profit

 

44,094

 

44,811

 

154,890

 

143,086

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expense

 

16,677

 

16,340

 

69,958

 

60,877

 

Intangibles amortization

 

2,867

 

2,869

 

11,472

 

11,401

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

24,550

 

25,602

 

73,460

 

70,808

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(4,523

)

(3,988

)

(16,943

)

(18,336

)

Litigation proceeds

 

 

 

 

1,275

 

Other expense, net

 

(279

)

(163

)

(758

)

(832

)

Income before taxes

 

19,748

 

21,451

 

55,759

 

52,915

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

5,052

 

(13,077

)

11,854

 

(2,409

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,696

 

$

34,528

 

$

43,905

 

$

55,324

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

22,700,991

 

22,590,897

 

22,681,888

 

22,576,381

 

Diluted

 

22,726,913

 

22,604,344

 

22,704,856

 

22,587,648

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic earnings per common share attributable to common shareholders

 

$

0.64

 

$

1.51

 

$

1.91

 

$

2.42

 

Earnings per common share assuming dilution attributable to common shareholders

 

$

0.63

 

$

1.50

 

$

1.89

 

$

2.40

 

Cash dividends declared and paid per share

 

$

0.27

 

$

0.24

 

$

1.06

 

$

0.96

 

 

8


 

Douglas Dynamics, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Twelve Month Period Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

 

 

(unaudited)

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

Net income

 

$

43,905

 

$

55,324

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

19,085

 

18,584

 

Loss on disposal of fixed assets

 

185

 

 

Amortization of deferred financing costs and debt discount

 

1,214

 

1,214

 

Stock-based compensation

 

4,550

 

3,500

 

Provision for losses on accounts receivable

 

531

 

1,475

 

Deferred income taxes

 

9,551

 

(15,242

)

Earnout liability

 

(900

)

(1,786

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

(511

)

(1,154

)

Inventories

 

(12,347

)

894

 

Prepaid and other assets and refundable income taxes paid

 

(1,114

)

65

 

Accounts payable

 

3,039

 

(2,487

)

Accrued expenses and other current liabilities

 

312

 

5,481

 

Benefit obligations and other long-term liabilities

 

(9,319

)

486

 

Net cash provided by operating activities

 

58,181

 

66,354

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Capital expenditures

 

(9,690

)

(7,563

)

Acquisition of business

 

 

(7,385

)

Net cash used in investing activities

 

(9,690

)

(14,948

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Shares withheld on restricted stock vesting paid for employees’ taxes

 

(23

)

(923

)

Payments of financing costs

 

 

(1,608

)

Borrowings on long-term debt

 

 

 

Earnout payment

 

 

(5,487

)

Dividends paid

 

(24,383

)

(21,974

)

Repayment of long-term debt

 

(33,140

)

(3,148

)

Net cash used in financing activities

 

(57,546

)

(33,140

)

Change in cash and cash equivalents

 

(9,055

)

18,266

 

Cash and cash equivalents at beginning of year

 

36,875

 

16,809

 

Cash and cash equivalents at end of year

 

$

27,820

 

$

36,875

 

 

 

 

 

 

 

Non-cash operating and financing activities

 

 

 

 

 

Truck chassis inventory acquired through floorplan obligations

 

$

38,129

 

$

45,472

 

 

9


 

Douglas Dynamics, Inc.

Segment Disclosures (unaudited)

(In thousands)

 

 

 

Three Months Ended

 

Three Months Ended

 

Twelve Months Ended

 

Twelve Months Ended

 

 

 

December, 31

 

December, 31

 

December, 31

 

December, 31

 

 

 

2018

 

2017

 

2018

 

2017

 

Net Sales

 

 

 

 

 

 

 

 

 

Work Truck Attachments

 

$

111,351

 

$

103,476

 

$

379,636

 

$

350,564

 

Work Truck Solutions

 

43,501

 

41,003

 

154,064

 

137,770

 

Corporate & Eliminations

 

(3,027

)

(6,510

)

(9,633

)

(13,407

)

 

 

$

151,825

 

$

137,969

 

$

524,067

 

$

474,927

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Work Truck Attachments

 

$

25,279

 

29,041

 

$

95,766

 

$

90,287

 

Work Truck Solutions

 

5,252

 

5,698

 

12,710

 

14,155

 

Corporate & Eliminations

 

(1,762

)

(4,456

)

(12,033

)

(13,515

)

 

 

$

28,769

 

$

30,283

 

$

96,443

 

$

90,927

 

 

10


 

Douglas Dynamics, Inc.

Net Income  to Adjusted EBITDA reconciliation (unaudited)

(In thousands)

 

 

 

Three month period ended December 31,

 

Twelve month period ended December 31,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,696

 

$

34,528

 

$

43,905

 

$

55,324

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

4,523

 

3,988

 

16,943

 

18,336

 

Income tax expense (benefit)

 

5,052

 

(13,077

)

11,854

 

(2,409

)

Depreciation expense

 

2,003

 

1,900

 

7,613

 

7,183

 

Intangibles amortization

 

2,867

 

2,869

 

11,472

 

11,401

 

EBITDA

 

29,141

 

30,208

 

91,787

 

89,835

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

370

 

750

 

4,550

 

3,500

 

Litigation proceeds

 

 

 

 

(1,275

)

Purchase accounting (1)

 

(900

)

(600

)

(900

)

(1,786

)

Other charges (2)

 

158

 

(75

)

1,006

 

653

 

Adjusted EBITDA

 

$

28,769

 

$

30,283

 

$

96,443

 

$

90,927

 

 


(1)    Reflects reversal of earn-out compensation related to Dejana in the periods presented.

(2)    Reflects one time, unrelated legal, severance and consulting fees, and loss on disposal of fixed assets related to facility relocation for the periods presented.

 

11


 

Douglas Dynamics, Inc.

Reconciliation of Net Income to Adjusted Net Income (unaudited)

(In thousands, except share and per share data)

 

 

 

Three month period ended December 31,

 

Twelve month period ended December 31,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,696

 

$

34,528

 

$

43,905

 

$

55,324

 

Adjustments:

 

 

 

 

 

 

 

 

 

Stock based compensation

 

370

 

750

 

4,550

 

3,500

 

Litigation proceeds

 

 

 

 

(1,275

)

Purchase accounting (1)

 

(900

)

(600

)

(900

)

(1,786

)

Other charges (2)

 

158

 

(75

)

1,006

 

653

 

Tax reform (3)

 

 

(22,452

)

 

(22,452

)

Tax effect on adjustments

 

93

 

(28

)

(1,164

)

(415

)

Adjusted net income

 

$

14,416

 

$

12,123

 

$

47,397

 

$

33,549

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

22,700,991

 

22,590,897

 

22,681,888

 

22,576,381

 

Weighted average common shares outstanding assuming dilution

 

22,726,913

 

22,604,344

 

22,704,856

 

22,587,648

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per common share - dilutive

 

$

0.62

 

$

0.53

 

$

2.04

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share

 

$

0.63

 

$

1.50

 

$

1.89

 

$

2.40

 

Adjustments net of income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

0.02

 

0.02

 

0.15

 

0.09

 

Litigation proceeds

 

 

 

 

(0.04

)

Purchase accounting (1)

 

(0.03

)

(0.02

)

(0.03

)

(0.05

)

Other charges (2)

 

 

 

0.03

 

0.02

 

Tax reform (3)

 

 

(0.97

)

 

(0.97

)

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share

 

$

0.62

 

$

0.53

 

$

2.04

 

$

1.45

 

 


(1) Reflects reversal of earn-out compensation related to Dejana in the periods presented.

(2)    Reflects one time, unrelated legal, severance and consulting fees, and loss on disposal of fixed assets related to facility relocation for the periods presented.  

(3)    Reflects one-time benefit associated with U.S. tax reform.

 

12