Milwaukee-based Douglas Dynamics blamed a lack of snowfall in its core markets for a 19.6% drop in sales during the first quarter.
The maker of work truck attachments and equipment, including snow plows, took the step Monday of reporting preliminary results for its first quarter, which ended March 31, and updated its guidance for the year. The company’s earnings call is not scheduled until May 2.
“Snowfall this winter was well below the 10-year average, and the location and timing of snow and ice events missed some of our most important markets,” said Bob McCormick, president and chief executive officer of Douglas Dynamics. “As we’ve said historically, where and when it snows is almost as important as how much it snows, and while cities out West were inundated with snow, almost all of our core markets on the East Coast saw the lowest snowfall season in decades. This negatively impacted reorder patterns and resulted in our first quarter performance coming in well below our initial expectations. In addition, our pre-season orders will likely be lower, as dealers respond to season ending elevated inventory levels.”
First quarter net sales totaled $82.5 million, down from $102.6 million in 2022. The company also posted a net loss of $13.1 million for the quarter, compared to a $3.9 million loss at the same time last year.
“Our business model is designed to adjust and manage through temporary weather driven challenges,” McCormick said. “We have implemented our low snowfall playbook, pulling cost cutting levers and continuing to focus on margin enhancement initiatives to help mitigate the negative impact of low snowfall as much as possible. Rest assured, the medium to long-term outlook for our Attachments business remains strong, as we continue to protect and grow our industry leading market share.”
Despite the nearly 20% drop in sales and widening first quarter loss, the company maintained the lower-end outlook it offered in February for sales ($620 million), adjusted EBITDA ($85 million) and adjusted earnings per share ($1.55).
Douglas Dynamics did cut the high-end of its guidance on sales from $680 million to $650 million, the top-end of adjusted EBITDA went from $115 million to $100 million and adjusted earnings per share went from $2.45 down to $2.
“As we look at the rest of the year, we are confident in our ability to manage through the temporary impacts of low snowfall, while focusing and delivering on our profit improvement initiatives that are within our control. This one snow season does not change our commitment to reach our stated target of $3.00 of earnings per share by 2025,” said Sarah Lauber, executive vice president and chief financial officer of Douglas Dynamics.