Douglas Dynamics Announces Third Quarter 2012 Results

Douglas Dynamics Announces Third Quarter 2012 Results


  *Company reported third quarter net sales of $37.8 million, in line with
    internal expectations
  *Pre-season order period (Q2 & Q3 combined) net sales were $103.3 million
  *Produced earnings per diluted share of $0.10
  *Reported Adjusted EBITDA of $7.8 million for the third quarter
  *Board approves Q4 2012 dividend increase of 1.22% to $0.2075 per share

MILWAUKEE, Nov. 5, 2012 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2012.

Third Quarter Results

The Company's pre-season sales period is comprised of the second quarter and
third quarters combined. To encourage distributors to receive shipments prior
to the peak fourth quarter retail selling season, the Company offers
promotional financial and freight terms to distributors that place orders in
the second quarter. These orders are then shipped during the second and third

Net sales were $37.8 million in the third quarter of 2012, compared to third
quarter 2011 net sales of $53.5 million, a decrease of 29.3%. The Company
attributes the decrease in sales to the historic below average snowfall across
most of the Company's core markets and timing of the pre-season shipments. As
contemplated in the second quarter 2012 earnings release and conference call,
and consistent with the trends over the past several years, the 2012
pre-season order period was more heavily weighted towards the second quarter
than the third quarter. The timing of the pre-season orders and shipments are
tactical in nature and the Company views the pre-season order program as one
time period and doesn't believe the shift between quarters is indicative of
any broader change in sales patterns.

James L. Janik, President and Chief Executive Officer commented, "Our
pre-season order period in 2012 was basically in line with our internal
expectations but fell short of 2011 results due to the record low snowfall
during the 2011/12 winter season, which was the lowest since 1961/62,
according to the US National Snowfall Records. Further compounding the
challenges from last year's mild winter were continued economic weakness and
the record drought. While droughts normally have a negligible influence on
sales, the severity of the most recent drought exacerbated the considerable
impact of the record low snowfall to professional plowers who often run
landscaping businesses during the non-plowing season and use cash from both
the past winter and summer work to invest in new trucks and plows. As we look
to the start of the snow season, we remain committed to drive productivity
improvements, and reduce short-term discretionary spending, in an effort to
maximize operating results and cash flows."

Net income was $2.3 million, or $0.10 per diluted share based on weighted
average shares of 22.0 million shares, in the third quarter of 2012 compared
to net income of $4.0 million, or $0.18 per diluted share based on weighted
average shares of 21.8 million shares, in the third quarter of 2011. The
effective tax rate for the third quarter of 2012 was 24.1%, which was lower
than the estimated annual effective rate due to benefits recognized in the
quarter related to tax credits recognized with the filing of the Company's
2011 tax return. The estimated effective tax rate for full year 2012 is
expected to be 37.0%.

The Company reported Adjusted EBITDA of $7.8 million in the third quarter of
2012 compared to Adjusted EBITDA of $12.1 million in the third quarter of

Balance Sheet and Liquidity

During the first nine months of 2012, the Company recorded net cash used in
operating activities of $35.1 million compared to net cash used in operating
activities of $18.2 million in the same period last year. This increase was
driven mainly by working capital changes and a decline in net income.

Inventory was $30.4 million at the end of the third quarter of 2012, an
increase of $3.3 million compared to the third quarter of 2011.

Accounts receivable at the end of the third quarter of 2012 were $70.7
million, a decrease of $12.3 million compared to third quarter 2011.


As previously reported on September 7, 2012, the Company declared a quarterly
cash dividend of $0.205 per share on its common stock. The declared $0.205 per
share cash dividend was paid on September 28, 2012 to stockholders of record
as of the close of business on September 18, 2012.

The Company also announced that its board of directors has approved a 1.22%
increase in the Company's quarterly cash dividend to $0.2075 per share
effective for the fourth quarter 2012 dividend.

Mr. Janik commented, "The board's decision to increase the quarterly dividend
reflects our confidence in the Company's financial strength and future
outlook. In the midst of a challenging market environment, we continue to
generate strong cash flows on an annual basis and the dividend increase
demonstrates our on-going commitment to creating shareholder value."


Based on results from the first nine months of 2012 and current trends, the
Company reaffirms its full year 2012 guidance, but expects results will come
in towards the lower end of those ranges. As previously announced, net sales
for full year 2012 are expected to range from $160 million to $190 million,
Adjusted EBITDA to range from $35.0 million to $45.0 million and earnings per
share to range from $0.55 per share to $0.79 per share. The full-year 2012
outlook assumes that the Company's core markets will experience average
snowfall and the economy remains stable. If economic headwinds persist and/or
snowfall is below average, then the Company's forecast could fall below the
projected ranges.

Mr. Janik added, "Visibility into early winter snowfall remains extremely
limited at this point in the quarter, and we remain cautiously optimistic that
a return to average snowfall levels coupled with positive indicators such as
light truck sales will help partially offset the negative impact from
continued economic weakness and lingering effects from the mild winter and
drought. As we've mentioned before though, the biggest variable factor in
determining our fourth quarter results is the timing, amount and location of

Webcast Information

The Company will host an investor conference call on Tuesday, November 6, 2012
at 10:00 a.m. Central Time. The conference call will be available on the
Internet through the Investor Relations section of the Company's website at 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

The Douglas Dynamics, Inc. logo is available at

Use of Non-GAAP Financial Measures

This press release and the accompanying financial statement schedules contain
financial information calculated other than in accordance with U.S. Generally
Accepted Accounting Principles ("GAAP").These non-GAAP measures include:

  *Adjusted EBITDA;
  *Adjusted net income; and
  *Adjusted earnings per diluted share

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

Adjusted net income and Adjusted earnings per diluted share represents net
income or earnings per share respectively, as determined under GAAP,
excludingloss on extinguishment of debt, certain expenses incurred at the
time of the Company's secondary offerings in 2011 and costs incurred to pursue
potential acquisitions in 2011.Adjusted EBITDA represents net income before
interest, taxes, depreciation and amortization, as further adjusted for
certain unrelated charges consisting of legal and consulting fees, as well as
management fees paid by the Company to affiliates of the Company's former
principal stockholders, stock based compensation, loss on extinguishment of
debt and offering costs.

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.

Management believes that the presentation of Adjusted net income and Adjusted
earnings per diluted share for the three and nine months ended September30,
2012 and September30, 2011 allows investors to make meaningful comparisons of
the Company's operating performance between periods and to view the Company's
business from the same perspective asmanagement.Because the excluded items
arenotpredictable or consistent, management does not considerthemwhen
evaluating the Company's performance or when making decisions regarding
allocation of resources.

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
"Reconciliation of Net Income to Adjusted Net Income" and "Net Income to
Adjusted EBITDA Reconciliation" following the Consolidated Statements of Cash
Flows included in this press release.

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 (the
"Exchange Act"). These statements include information relating to future
events, future financial performance, strategies, expectations, competitive
environment, regulation 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 or the speed of the economic
recovery, 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.The forward-looking
statements in this release do not include the potential impact of any
acquisitions that may be subsequently announced and/or completed. 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. 

Financial Statements

Douglas Dynamics, Inc.
Consolidated Balance Sheets
(In thousands)
                                               September 30, December 31,
                                              2012          2011
                                               (unaudited)   (audited)
Current assets:                                             
Cash and cash equivalents                      $1,842       $39,432
Accounts receivable, net                       70,678       34,019
Inventories                                    30,380       24,005
Deferred income taxes                          4,945        4,952
Prepaid income taxes                           1,211        --
Prepaid and other current assets               1,501        1,054
Total current assets                           110,557      103,462
Property, plant, and equipment, net            20,246       21,340
Assets held for sale                           1,732        1,732
Goodwill                                       107,222      107,222
Other intangible assets, net                   117,846      121,747
Deferred financing costs, net                  2,773        3,402
Other long-term assets                         599          112
Total assets                                   $360,975     $359,017
Liabilities and stockholders' equity                        
Current liabilities:                                        
Accounts payable                               $2,101       $5,040
Accrued expenses and other current liabilities 11,071       16,105
Income taxes payable                           --          395
Short term borrowings                          23,000       --
Current portion of long-term debt              971          11,071
Total current liabilities                      37,143       32,611
Retiree health benefit obligation              8,116        8,053
Pension obligation                             13,083       14,163
Deferred income taxes                          30,581       26,957
Deferred compensation                          756          912
Long-term debt, less current portion           111,237      111,866
Other long-term liabilities                   1,537        1,066
Total stockholders' equity                     158,522      163,389
Total liabilities and stockholders' equity     $360,975     $359,017

Douglas Dynamics, Inc.
Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share data)
                      Three Month Period Ended    Nine Month Period Ended
                      September 30, September 30, September 30, September 30,
                       2012          2011          2012          2011
                      (unaudited)                 (unaudited)
Net sales              $37,774      $53,495      $111,833     $148,541
Cost of sales          26,208       37,001       75,387       96,639
Gross profit           11,566       16,494       36,446       51,902
Selling, general, and  5,051        6,546        15,388       19,232
administrative expense
Intangibles            1,300        1,300        3,901        3,901
Income from operations 5,215        8,648        17,157       28,769
Interest expense, net  (2,080)      (2,332)       (6,304)       (6,678)
Loss on extinguishment --          --          --          (673)
of debt
Other expense, net     (44)         (25)          (277)         (202)
Income before taxes    3,091        6,291        10,576       21,216
Income tax expense    745          2,324        3,525        8,326
Net income             $2,346       $3,967       $7,051       $12,890
Less: Net income
attributable to        19           51           51           271
Net income
attributable to common $2,327       $3,916       $7,000       $12,619
Weighted average
number of common                                              
shares outstanding:
Basic                  21,922,173   21,760,753    21,885,301   21,609,810
Diluted                21,979,015   21,838,062    21,958,473   21,755,552
Earnings per common                                           
Basic                  $0.11       $0.18       $0.32       $0.59
Diluted                $0.10       $0.18       $0.31       $0.57
Cash dividends
declared and paid per  $0.21       $0.20       $0.62       $0.97
Comprehensive income  $2,371       $3,649       $7,064      $12,508

Douglas Dynamics, Inc.
Consolidated Statements of Cash Flows
(In thousands)
                                        Nine Month Period Ended
                                        September 30, 2012 September 30, 2011
Operating activities                                       
Net income                               $7,051            $12,890
Adjustments to reconcile net income to                     
net cash used in operating activities:
Depreciation and amortization            5,998             6,146
Amortization of deferred financing costs 763               627
and debt discount
Loss on extinguishment of debt           --               673
Stock-based compensation                 1,700             1,210
Provision for losses on accounts         208               454
Deferred income taxes                    3,631             7,660
Changes in operating assets and                            
Accounts receivable                      (36,867)           (46,420)
Inventories                              (6,375)            (3,586)
Prepaid and other assets and prepaid     (2,145)            (821)
income taxes
Accounts payable                         (2,939)            985
Accrued expenses and other current       (5,429)            2,480
Deferred compensation                    (156)              (120)
Benefit obligations and other long-term  (533)              (368)
Net cash used in operating activities    (35,093)           (18,190)
Investing activities                                       
Capital expenditures                     (1,083)            (1,585)
Proceeds from sale of equipment          80                67
Net cash used in investing activities    (1,003)            (1,518)
Financing activities                                       
Proceeds from exercise of stock options  --                1,277
Collection of stockholders' notes        --                482
Payments of financing costs             --                (3,454)
Dividends paid                           (13,631)           (21,275)
Borrowing on long-term debt              --                123,750
Revolver borrowings                      23,000            24,000
Repayment of long-term debt              (10,863)           (122,137)
Net cash provided by (used in) financing (1,494)            2,643
Change in cash and cash equivalents      (37,590)           (17,065)
Cash and cash equivalents at beginning   39,432            20,149
of year
Cash and cash equivalents at end of      $1,842            $3,084

Douglas Dynamics, Inc.
Net Income to Adjusted EBITDA reconciliation (unaudited)
(in thousands)
                       Three month period ended     Nine month period ended
                        September 30,                September 30,
                       2012          2011           2012         2011
Net income              $2,346      $3,967       $7,051     $12,890
Interest expense - net  2,080        2,332         6,304       6,678
Income tax expense     745          2,324         3,525       8,326
Depreciation expense    695          744           2,097       2,245
Amortization expense    1,300        1,300         3,901       3,901
EBITDA                  7,166        10,667        22,878      34,040
Management fees         --          11            --         37
Loss on extinguishment  --          --           --         673
of debt
Stock based             794          464           1,700       1,210
Offering costs          --          78            --         1,113
Othercharges (1)       (152)        876           970         999
Adjusted EBITDA         $7,808      $12,096      $25,548    $38,072
(1) - Reflects ($152) and $876 of unrelated legal and consulting fees for the
three months ended September 30, 2012 and 2011, respectively, and $970 and
$999 for the nine months ended September 30, 2012 and 2011, respectively.

Douglas Dynamics,Inc.
Reconciliation of Net Income to Adjusted Net Income
$ Millions, except share data

                      Threemonthsended         Ninemonthsended
(inmillions)          September30, September30, September30, September30,
                       2012          2011          2012          2011
Net income- (GAAP)    $2.3        $4.0        $7.1        $12.9
Addback expenses, net
of tax at 37.0% for                                           
2012 and 2011:
- Loss on              —             —             —             0.4
extinguishment of debt
- Acquisition costs    —             0.5           —             0.5
- Offering costs       —             —             —             0.7
Adjusted net income -  $2.3        $4.5        $7.1        $14.5
Average basic common   21,922,173   21,760,753    21,885,301   21,609,810
Average common shares  21,979,015   21,838,062    21,958,473   21,755,552
assuming dilution
Adjusted earnings per  $0.11       $0.21       $0.32       $0.67
common share - basic
Adjusted earnings per
common share -         $0.10       $0.21       $0.31       $0.67

CONTACT: For further information contact:
         Douglas Dynamics, Inc.
         Bob McCormick

Douglas Dynamics, Inc. Logo
Press spacebar to pause and continue. Press esc to stop.