Exhibit 99.1

 

For further information contact:

Douglas Dynamics, Inc.

Bob McCormick

414-362-3868

investorrelations@douglasdynamics.com

 

DOUGLAS DYNAMICS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2012 RESULTS

 

Highlights:

 

·                  Company reported fourth quarter results in line with preliminary results provided on January 8, 2013

·                  Produced full year net sales of $140.0 million

·                  Generated full year earnings per diluted share of $0.26

·                  Declared a quarterly cash dividend of $0.2075 per share on December 10, 2012

·                  Cash and cash equivalents increased sequentially to $24.1 million as of December 31, 2012

 

March 11, 2013 — Milwaukee, Wisconsin Douglas Dynamics, Inc. (NYSE: PLOW), the North American leader in the design, manufacture and sale of snow and ice control equipment for light trucks, today announced financial results for the fourth quarter and full year ended December 31, 2012.

 

Fourth Quarter Results

 

The Company’s fourth quarter 2012 results were in line with the preliminary results provided on January 8, 2013.

 

In the fourth quarter 2012, net sales were $28.2 million, compared to net sales of $60.3 million for the fourth quarter of 2011. As previously disclosed, the decrease in sales during the quarter reflects the previous year’s record low snowfall, the timing, amount, and location of snowfall in fourth quarter 2012, the sluggish economic environment, and lingering impact from last summer’s drought.

 

James L. Janik, President and Chief Executive Officer of the Company, commented, “Fourth quarter and full year results reflect the difficult market environment we faced, which was primarily driven by unfavorable weather trends.  Despite this challenging year, the long-term fundamentals of our business remain strong, and we continue to generate significant cash flows and maintain a strong financial position.”

 

Fourth quarter gross margin as a percent of sales was impacted primarily by lower volume. Total gross margin in the fourth quarter fell 6.4% versus the same period in the prior year as a result of the operating leverage impact from the decrease in revenues.

 

Adjusted net income (loss) was ($1.0) million, or ($0.05) per diluted share, in the fourth quarter of 2012 compared to adjusted net income of $6.3 million, or $0.29 per diluted share, in the fourth quarter of 2011, a decrease of $7.3 million.

 

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The Company reported Adjusted EBITDA of $4.2 million for the fourth quarter of 2012, compared to Adjusted EBITDA of $14.4 million for the fourth quarter of 2011.

 

Full Year Results

 

For the full year 2012, net sales were $140.0 million compared to $208.8 million in 2011. This decrease was primarily driven by lower sales of both equipment units and parts and accessories.  Sales of parts and accessories decreased 46.1% year-over-year to $16.7 million for the full year 2012 from $31.0 million in 2011.

 

For the full year 2012, cost of sales decreased 29.9% from $137.0 million in 2011 to $96.1 million in 2012. This decrease was driven primarily by lower unit volume.

 

Adjusted net income was $6.0 million, or $0.26 per diluted share on a share count of 22.0 million shares, for the full year 2012 compared to adjusted net income of $20.8 million, or $0.96 per diluted share based on a share count of 21.8 million shares, for the full year 2011.

 

The Company reported Adjusted EBITDA of $29.7 million for the full year 2012, a 43.3% decrease compared to Adjusted EBITDA of $52.5 million for the full year 2011.

 

The effective tax rate for the full year 2012 was 40.8%.

 

Balance Sheet and Liquidity

 

For the full year 2012, the Company reported net cash provided by operating activities of $15.6 million compared to net cash provided by operating activities of $47.7 million in 2011, a decrease of $32.1 million. This decline was largely attributable to a reduction in net income in 2012 of $13.0 million over 2011 and a decrease in cash driven by changes in working capital.

 

Inventory was $30.3 million at the end of the fourth quarter of 2012, an increase of $6.3 million compared to the end of the fourth quarter of 2011 as a result of lower sales volumes in 2012.

 

Accounts receivable at the end of the fourth quarter of 2012 were $25.4 million, compared to $34.0 million at the end of the fourth quarter of 2011.

 

The Company maintained cash on hand at December 31, 2012 of $24.1 million and had $60.9 million of borrowing availability on its $80.0 million revolving credit facility.

 

Dividend Policy

 

As previously reported, on December 10, 2012, pursuant to the Company’s dividend policy, its Board of Directors declared a quarterly cash dividend of $0.2075 per share of the Company’s common stock. The declared $0.2075 per share cash dividend was paid on December 31, 2012, to stockholders of record as of close of business on December 21, 2012. The quarterly cash dividend of $0.2075 per share represented an increase of 1.22% from the quarterly dividend paid on September 30, 2012.

 

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Mr. Janik noted, “We continued to generate strong cash flows from operations in 2012 and are well capitalized to execute our capital allocation strategy. We remain committed to paying down debt and returning cash to stockholders through our robust quarterly dividend. Since initiating the dividend in 2010, we’ve increased the quarterly cash dividend three times.”

 

Outlook

 

Based on 2012 results and current trends, the Company expects net sales for the full year 2013 to range from $155 million to $215 million and adjusted EBITDA to range from $30 million to $55 million. Earnings per share are expected to range from $0.32 per share to $1.02 per share.

 

Janik explained, “Mother Nature presented us with very difficult business conditions in 2012 and we know there will be some residual impact. As we continue forward into 2013, our focus is to execute on our strategy and influence the factors within our control that will enhance stockholder value: we will seek to achieve increased profitability through improving operational efficiencies, expand our track record of innovative products, and strengthen supplier partnerships with multiple new product introductions in 2013.  Overall, we feel more confident about 2013 than we did about 2012 at this point last year. We’re encouraged by positive indicators within our business such as the introduction of new truck models from several major automotive OEMs this year and continued growth trends within selected truck sales.”

 

Webcast Information

 

The Company will host an investor conference call on Tuesday, March 12, 2013 at 9:00 a.m. Central Time. The conference call will be available on the Internet through 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

 

Douglas Dynamics is the North American leader in the design, manufacture and sale of snow and ice control equipment for light trucks, which consists of snowplows and sand and salt spreaders, and related parts and accessories. The Company sells its products under the WESTERN®, FISHER® and BLIZZARD® brands which are among the most established and recognized in the industry. Additional press releases and investor relations information is available at www.douglasdynamics.com.

 

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”).  These non-GAAP measures include:

 

·                  Adjusted net income (loss);

·                  Adjusted earnings (loss) per diluted share; and

·                  Adjusted EBITDA.

 

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

 

Adjusted net income (loss) and adjusted earnings (loss) per diluted share represent net income (loss) and earnings (loss) per diluted share as determined under GAAP, excluding certain expenses incurred at the time of the Company’s secondary offerings in 2011, costs incurred to pursue potential acquisitions in 2011 and a loss on extinguishment of debt incurred in 2011Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, as further adjusted for certain non-recurring charges related to the Company’s secondary offerings in 2011, costs incurred to pursue potential acquisitions in 2011 and 2012, stock based compensation expense in 2011 and 2012,, and a loss on extinguishment of debt incurred in 2011.

 

The Company believes that the presentation of adjusted net income (loss) and adjusted earnings (loss) per diluted share allows investors to make meaningful comparisons of its operating performance between periods and to view its business from the same perspective as its management.  Because the excluded items are not predictable or consistent, management does not consider them when evaluating the Company’s performance or when making decisions regarding allocation of resources.

 

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.

 

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 measure, and this reconciliation is located under the headings “Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)” and “Net Income (Loss) to Adjusted EBITDA Reconciliation” following the Consolidated Statements of Cash Flows included in this press release.

 

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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 strategies.  Such 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, a significant decline in economic conditions, our inability to maintain good relationships with our distributors,  lack of available or favorable financing options for our end-users or distributors, increases in the price of steel or other materials necessary for the production of our products that cannot be passed on to our distributors, increases in the price of fuel, the inability of our suppliers 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 and our inability to compete effectively against competition, 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, 2011. 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.

 

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Financial Statement

 

Douglas Dynamics, Inc.

Consolidated Balance Sheets

(In thousands)

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

 

 

(unaudited)

 

(audited)

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

24,136

 

$

39,432

 

Accounts receivable, net

 

25,425

 

34,019

 

Inventories

 

30,292

 

24,005

 

Refundable income taxes paid

 

4,870

 

 

Deferred income taxes

 

3,710

 

4,952

 

Prepaid and other current assets

 

1,149

 

1,054

 

Total current assets

 

89,582

 

103,462

 

 

 

 

 

 

 

Property, plant, and equipment, net

 

19,887

 

21,340

 

Assets held for sale

 

1,732

 

1,732

 

Goodwill

 

107,222

 

107,222

 

Other intangible assets, net

 

116,548

 

121,747

 

Deferred financing costs, net

 

2,794

 

3,402

 

Other long-term assets

 

606

 

112

 

Total assets

 

$

338,371

 

$

359,017

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

5,370

 

$

5,040

 

Accrued expenses and other current liabilities

 

10,329

 

16,105

 

Income tax payable

 

 

395

 

Current portion of long-term debt

 

971

 

11,071

 

Total current liabilities

 

16,670

 

32,611

 

 

 

 

 

 

 

Retiree health benefit obligation

 

6,541

 

8,053

 

Pension obligation

 

14,401

 

14,163

 

Deferred income taxes

 

33,805

 

26,957

 

Deferred compensation

 

756

 

912

 

Long-term debt, less current portion

 

110,995

 

111,866

 

Other long-term liabilities

 

1,471

 

1,066

 

 

 

 

 

 

 

Total shareholders’ equity

 

153,732

 

163,389

 

Total liabilities and shareholders’ equity

 

$

338,371

 

$

359,017

 

 

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Douglas Dynamics, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

Three Month Period Ended

 

Twelve Month Period Ended

 

 

 

December 31, 2012

 

December 31, 2011

 

December 31, 2012

 

December 31, 2011

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

28,200

 

$

60,256

 

$

140,033

 

$

208,798

 

Cost of sales

 

20,683

 

40,342

 

96,070

 

136,981

 

Gross profit

 

7,517

 

19,914

 

43,963

 

71,817

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expense

 

4,507

 

7,194

 

19,895

 

26,389

 

Intangibles amortization

 

1,298

 

1,300

 

5,199

 

5,201

 

Management fees-related party

 

 

9

 

 

46

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,712

 

11,411

 

18,869

 

40,181

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(2,089

)

(2,240

)

(8,393

)

(8,918

)

Loss on extinguishment of debt

 

 

 

 

(673

)

Other income (expense), net

 

(42

)

(4

)

(320

)

(218

)

Income (loss) before taxes

 

(419

)

9,167

 

10,156

 

30,372

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

619

 

3,017

 

4,144

 

11,332

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,038

)

$

6,150

 

$

6,012

 

$

19,040

 

Less: Net income (loss) attributable to participating securities

 

(11

)

68

 

69

 

233

 

Net income (loss) attributable to common shareholders

 

$

(1,027

)

$

6,082

 

$

5,943

 

$

18,807

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

21,922,173

 

21,770,546

 

21,894,569

 

21,650,736

 

Diluted

 

21,922,173

 

21,881,465

 

21,964,311

 

21,814,617

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share attributable to common shareholders

 

$

(0.05

)

$

0.28

 

$

0.27

 

$

0.87

 

Earnings (loss) per common share assuming dilution attributable to common shareholders

 

$

(0.05

)

$

0.28

 

$

0.26

 

$

0.85

 

Cash dividends declared and paid per share

 

$

0.21

 

$

0.21

 

$

0.82

 

$

1.18

 

 

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Douglas Dynamics, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Twelve Month Period Ended

 

 

 

December 31, 2012

 

December 31, 2011

 

 

 

(unaudited)

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

Net income

 

$

6,012

 

$

19,040

 

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

 

 

 

 

 

Depreciation and amortization

 

8,018

 

8,176

 

Amortization of deferred financing costs & debt discount

 

955

 

832

 

Loss on extinguishment of debt

 

 

673

 

Stock-based compensation

 

2,166

 

1,873

 

Provision for losses on accounts receivable

 

259

 

47

 

Deferred income taxes

 

8,090

 

6,497

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

8,335

 

2,974

 

Inventories

 

(6,287

)

(524

)

Prepaid and other assets and refundable income taxes

 

(5,459

)

201

 

Accounts payable

 

330

 

2,193

 

Accrued expenses and other current liabilities

 

(6,171

)

4,554

 

Deferred compensation

 

(156

)

(155

)

Benefit obligations and other long-term liabilities

 

(473

)

1,347

 

Net cash provided by operating activities

 

15,619

 

47,728

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Capital expenditures

 

(1,446

)

(2,373

)

Proceeds from sale of equipment

 

80

 

67

 

Net cash used in investing activities

 

(1,366

)

(2,306

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds from exercise of stock options

 

 

1,343

 

Collection of stockholders’ notes receivable

 

 

482

 

Payments of financing costs

 

(168

)

(3,471

)

Dividends paid

 

(18,231

)

(25,793

)

Borrowings on long-term debt

 

 

123,750

 

Repayment of long-term debt

 

(11,150

)

(122,450

)

Net cash used in financing activities

 

(29,549

)

(26,139

)

Change in cash and cash equivalents

 

(15,296

)

19,283

 

Cash and cash equivalents at beginning of year

 

39,432

 

20,149

 

Cash and cash equivalents at end of quarter

 

$

24,136

 

$

39,432

 

 

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Douglas Dynamics, Inc.

Net Income to Adjusted EBITDA reconciliation (unaudited)

(in thousands)

 

 

 

Three month period ended
December 31,

 

Twelve month period ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,038

)

$

6,150

 

$

6,012

 

$

19,040

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

2,089

 

2,240

 

8,393

 

8,918

 

Income tax expense

 

619

 

3,017

 

4,144

 

11,332

 

Depreciation expense

 

722

 

730

 

2,819

 

2,975

 

Amortization

 

1,298

 

1,300

 

5,199

 

5,201

 

EBITDA

 

3,690

 

13,437

 

26,567

 

47,466

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

9

 

 

46

 

Stock based compensation

 

466

 

663

 

2,166

 

1,873

 

Loss on extinguishment of debt

 

 

 

 

673

 

Offering costs

 

 

229

 

 

1,342

 

Other non-recurring charges (1)

 

29

 

62

 

999

 

1,061

 

Adjusted EBITDA

 

$

4,185

 

$

14,400

 

$

29,732

 

$

52,461

 

 


(1) - Reflects $29 and $62 of unrelated legal and consulting fees for the three months ended December 31, 2012 and 2011, respectively, and $999 and $1,061 for the twelve months ended December 31, 2012 and 2011, respectively.

 

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Douglas Dynamics, Inc.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)

$ Millions, except share data

 

 

 

Three month period ended
December 31,

 

Twelve month period ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net Income (loss) (GAAP)

 

$

(1.0

)

$

6.2

 

$

6.0

 

$

19.0

 

Addback expenses, net of tax at 37.0% for 2011:

 

 

 

 

 

 

 

 

 

- Loss on extinguishment of debt

 

 

 

 

0.4

 

- Acquisition costs

 

 

 

 

0.6

 

- Offering costs

 

 

0.1

 

 

0.8

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) (non-GAAP)

 

$

(1.0

)

$

6.3

 

$

6.0

 

$

20.8

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

21,922,173

 

21,770,546

 

21,894,569

 

21,650,736

 

Weighted average common shares outstanding assuming dilution

 

21,922,173

 

21,881,465

 

21,964,311

 

21,814,617

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings (loss) per common share - basic

 

$

(0.05

)

$

0.29

 

$

0.27

 

$

0.96

 

Adjusted earnings (loss) per common share - dilutive

 

$

(0.05

)

$

0.29

 

$

0.26

 

$

0.96

 

 

10