Douglas Dynamics, Inc. Q3 FY2025 earnings call

• Board of Directors changes: Margaret Dano retired, Jennifer Ansberry and Brad Nelson joined as new independent directors. - Acquisition of Venco Venturo: Confirmed the acquisition of Venco Venturo, a provider of truck-mounted cranes and dump hoists, marking the first acquisition in over 9 years. - Segment performance: Work Truck Solutions had a record third quarter with over 30% growth in net sales and adjusted EBITDA. Attachments' preseason shipments were in line with expectations, and the team was primed for winter.

Attachments: Net sales increased 13% to $68.1 million, adjusted EBITDA increased 29% to $10.5 million. Revenue contribution: Approximately 42% of total consolidated net sales. Work Truck Solutions: Net sales increased 36% to $94 million, adjusted EBITDA increased 34% to $9.6 million. Revenue contribution: Approximately 58% of total consolidated net sales. The ratio of preseason shipments at Attachments returned to a more typical 60-40% split between second and third quarters this year compared to the prior year's unusual 65-35% split.

• Net sales guidance revised to range from $635 million to $660 million (previously $630 million to $660 million). - Adjusted EBITDA guidance revised to range from $87 million to $102 million (previously $82 million to $97 million). - Adjusted earnings per share guidance revised to range from $1.85 per share to $2.25 per share (previously $1.65 to $2.15 per share). - Venco Venturo acquisition expected to be modestly accretive to earnings and free cash flow in 2026, with minimal impact on the fourth quarter of 2025.

• Forward-looking statements subject to risks outlined in press releases and SEC filings. - Weather conditions that could impact business performance, particularly for Attachments segment.

Q: Would you be able to share maybe a little bit more detail about the acquisition? Maybe how much revenue Venco was generating, what type of margins, and maybe what multiple you paid for the business?

A: Greg, qualitatively, Venco Venturo is a good fit strategically. Quantitatively, sales are estimated in the $30 million to $40 million range, pre-synergies margins closer to Solutions' margins with opportunity for margin improvement.

Q: Maybe just the first question I had, Sarah, I guess, if you could kind of maybe kind of outline maybe what you're expecting in each segment in the fourth quarter? And I guess, most specifically in attachments, just given we haven't really seen like, I guess, a normal snowfall in the fourth quarter for a long time. So just kind of curious if you could delve deeper into kind of what you're expecting in the fourth quarter in both segments.

A: For Attachments, expecting back to '23 levels in volumes with flattish margins to last year. For Solutions, both commercial and municipal had record top-line quarters, with solutions expected to have close to 25% incremental margins over the year.