Milwaukee-based Douglas Dynamics Inc., the North American leader in the design, manufacture and sale of snow and ice control equipment for light trucks, announced third quarter net income of $2.3 million, or 10 cents per share, down from $4.0 million, or 18 cents per share, in the same period a year ago.
The company’s quarterly net sales fell to $37.8 million from $53.5 million a year ago.
The company attributes the decrease in sales to the historic below-average snowfall across most of the firm’s core markets and timing of the pre-season shipments.
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 Janik, president and chief executive officer, said, “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 U.S. 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.”
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.
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 snowfall.”
