Douglas Dynamics, Inc. (NYSE:PLOW) Q3 2023 Earnings Call Transcript

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Sarah Lauber: Yes. It really is a mixture of both, Greg. We do have new products that we don’t necessarily sell a lot of today that have more runway for growth, but they are impacted by low snowfall for sure. And then some of the other products that we’ve been growing successfully over the last several years, we expect that to continue. But what we’re seeing right now in 2023 is clearly more of an impact of loan snowfall. We expect getting back to average will certainly show up on those growth projects then going forward.

Gregory Burns: Okay. And then just lastly on the margin profile of the Attachments business. I know you mentioned that mid- to high-20% target there. But with all the underlying improvements and initiatives you have going on, if volume recovers, is there margin upside there from where you’ve — where you’ve been historically, like could you see that going to the 30s? How should we think about the longer-term profitability of that business if volumes do recover?

Sarah Lauber: Yes. I mean we were at that higher level a number of years ago prior to all of the inflationary pressures that we’ve experienced I would say right now, the mid- to high-20s is the right place to be with the high-20s being what we would experience with more volumes coming through. I noted in the script the preseason for us in total we were at the mid, the 25% level. And think about that, that’s still like on a lower volume base than what’s typical during an average snowfall year. So there’s definitely a room to go quickly from mid-to-high just with recovery of snow. And that’s probably, where I would say right now just to be conservative.

Robert McCormick: Yes, I think I would add just something that we’ve spoken to before. Our core business there is obviously — it’s a pickup out a snow to ice control equipment. Very, very profitable, and that’s what drives the near 30% EBITDA margins. The growth opportunities that exist in the non-truck space, while still nicely profitable will not rise to those same 30% high-20s EBITDA. So as we see some top-line growth there, we will take the incremental earnings and the incremental earnings per share all day long, even if it doesn’t reach those historical wonderful levels of profit.

Operator: [Operator Instructions]. Seeing no further questions in the queue. I would like to now hand the call back to Bob McCormick, President and CEO, for closing remarks. Thanks.

Robert McCormick: Thank you for your time today. I’d like to leave you with a couple of short thoughts. To our long-term investors, thank you for your support during challenging times. Our company is built to manage through uncertainty and that’s exactly what we’re doing. The medium- to long-term demand trends remain positive. Recent results show that when headwinds subside, we deliver improvements. The future is at Douglas Dynamics, our teams are driving earnings growth in 2023 and which has been completely offset by one of the worst snowfall seasons in the last decade. When weather comes back and it always does, you’re going to like what you see from Douglas Dynamics. Thank you very much. We look forward to seeing some of you at the Baird conference next week in Chicago. Have a terrific day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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