DOUGLAS DYNAMICS INC
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 25, 2025
PLOW$36.34-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-27.
0001437749-24-005713
Item 7. Management Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-25.
0001437749-25-005050
Item 7. Management Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 118 previous paragraphs and 105 current paragraphs.
61 unchanged; 37 reworded; 7 added; 15 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 42 previous and 43 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Business Update
Current report
*Impairment Charges.*Impairment charges were $1.2 million in the year ended December 31, 2024 compared to $0.0 million in the prior year. The impairment charges in 2024 relate to certain internally developed software at our Work Truck Attachments segment and represent the full capitalized value of the software.
Current report
*Gain on Sale Leaseback Transaction.*Gain on sale leaseback transaction was $42.3 million in the year ended December 31, 2024 compared to $0.0 million in the prior year, see Note 6 to the Consolidated Financial Statements for additional information on the sale leaseback transaction.
Current report
Sale Leaseback Transaction
Current report
We assess sale leaseback arrangements to determine whether a sale has occurred under Accounting Standards Codification (“ASC”) Topic 606: Revenue from Contracts with Customers (“ASC 606”), as well as assess whether the classification of the lease and/or the payment terms associated with the renewal options preclude sale accounting under ASC 842, Leases (“ASC 842”). These assessments involve a determination of whether or not control of the underlying property has been transferred to the buyer. If we determine control of the underlying property has been transferred to the buyer, we account for the arrangement as a sale and leaseback transaction. If we determine control of the underlying property has not been transferred to the buyer, we account for the arrangement as a financing transaction.
Current report
The determination of the fair values of the properties related to our sale-leaseback arrangement requires subjectivity and estimates, including the use of multiple valuation techniques and uncertain inputs, such as market price per square foot and assumed capitalization rates or the replacement cost of the assets, where applicable. Where real estate valuation expertise is required, we obtain independent third-party appraisals to determine the fair value of the underlying asset. While determining fair value requires a variety of input assumptions and judgment, we believe our estimates of fair value are reasonable.
Current report
During the year ended December 31, 2024, we closed on a sale leaseback transaction with an unrelated third party. Under this transaction, we sold seven properties with a combined net book value of $21.9 million for gross proceeds of $64.2 million, which was reduced by transaction costs of $5.5 million for net cash proceeds of approximately $58.7 million. The properties in the sale leaseback transaction are comprised of three facilities located in Milwaukee, Wisconsin and four additional facilities located in each of Huntley, Illinois; Manchester, Iowa; Rockland, Maine; and Madison Heights, Michigan, totaling approximately 780,000 square feet of manufacturing and upfitting space. The lease agreement has an initial term of 15 years, with two optional 10-year renewal options. We recognized a gain of $42.3 million on this transaction, which is included in Gain on sale leaseback transaction in the Consolidated Statements of Income. Right-of-use assets and lease liabilities recognized related to this sale leaseback transaction were $51.9 million and $51.9 million, respectively.
Removed paragraphs (15)
Previous report
Macroeconomic Environment
Previous report
In the year ended December 31, 2021, we determined that facility leases related to two locations in our Work Truck Solutions segment were impaired. These two facilities were significantly downsized as part of a restructuring plan, and so it was determined that the carrying value exceeded the fair value of the facilities. As a result, we recorded an impairment of $1.2 million in the year ended December 31, 2021 under Impairment charges in the Company’s Consolidated Statements of Income, offset with a reduction to the Operating lease - right of use asset on our Consolidated Balance Sheets. Going forward, we will amortize the remaining balance of the right of use asset for the impaired leases on a straight line basis. We will continue to amortize the lease liability for the impaired leases over the life of the lease.
Previous report
Net Income. Net income for the year ended December 31, 2023 was $23.7 million compared to net income of $38.6 million for 2022, a decrease of $14.9 million. This decrease was driven by the factors described above.
Previous report
Net Sales. Net sales were $616.1 million for the year ended December 31, 2022 compared to $541.5 million in 2021, an increase of $74.6 million, or 13.8%. Net sales increased for the year ended December 31, 2022 primarily due to pricing actions in both segments, as well as strong pre-season order demand in our Work Truck Attachments segment leading to increased volumes.
Previous report
Net sales at our Work Truck Attachment segment were $382.3 million for the year ended December 31, 2022 compared to $325.7 million in the year ended December 31, 2021, an increase of $56.6 million primarily due to pricing actions, as well as strong pre-season order demand leading to increased volumes. This increased pre-season order volume was despite snowfall in this most recent snow season ended March 2022 being approximately 14% below the ten-year average, compared to the prior snow season ended March 2021, which was approximately 8% below the ten-year average.
Previous report
Net sales at our Work Truck Solutions segment were $233.8 million for the year ended December 31, 2022 compared to $215.7 million in the year ended December 31, 2021, an increase of $18.1 million due primarily to price increase realization, somewhat offset by chassis and component shortages leading to lower production and deliveries.
Previous report
Cost of Sales. Cost of sales was $464.6 million for the year ended December 31, 2022 compared to $399.6 million in 2021, an increase of $65.0 million, or 16.3%. The increase in cost of sales for the year ended December 31, 2022 compared to the prior year was driven by the higher volumes at Work Truck Attachments, as well as material, labor and freight inflation. Cost of sales as a percentage of net sales increased from 73.8% for the year ended December 31, 2021 to 75.4% for the year ended December 31, 2022. The increase in cost of sales as a percentage of sales in the year ended December 31, 2022 when compared to the year ended December 31, 2021 was primarily due to inflation, slightly offset by product mix and cost savings initiatives.
Previous report
Selling, General and Administrative Expense. Selling, general and administrative expenses, including intangible asset amortization, were $92.7 million for the year ended December 31, 2022 compared to $89.5 million for the year ended December 31, 2021, an increase of $3.2 million, or 3.6%. The increase compared to the year ended December 31, 2021 was due to increased salaries and benefits, incentive compensation, travel expenditures, advertising costs, as well as other discretionary spending as spending was reduced in 2021 as a result of the COVID-19 pandemic. This increase was somewhat offset by a decrease in bad debt expense. As a percentage of net sales, selling, general and administrative expenses, including intangibles amortization, decreased from 16.5% for the year ended December 31, 2021 to 15.1% for the corresponding period in 2022.
Previous report
Impairment Charges. Impairment charges were $0.0 million and $1.2 million for the years ended December 31, 2022 and 2021, respectively. The impairment charges in 2021 relate to impairments recorded on leases for two Work Truck Solutions locations where we are significantly reducing our footprint. See Note 6 for additional information.
Previous report
Interest Expense. Interest expense was $11.3 million for the year ended December 31, 2022 compared to $11.8 million in the corresponding period in 2021. The decrease in interest expense for the year ended December 31, 2022 was primarily due to lower interest paid on our term loan of $2.4 million due to the decrease in principal balance from the June 9, 2021 refinancing. Somewhat offsetting this decrease is an increase in interest expense on our revolving line of credit of $1.6 million in the year ended December 31, 2022 due to having higher revolver borrowings during the year, as well as an increase in the variable interest rate in 2022. Also offsetting this decrease in interest expense was having a ($0.7) million gain in non-cash mark-to-market and amortization adjustments on an interest rate swap not accounted for as a hedge in the year ended December 31, 2022, respectively, compared to a ($1.2) million gain in the year ended December 31, 2021. See Note 8 for additional information.
Previous report
Loss on Extinguishment of Debt. Loss on extinguishment of debt was $4.9 million in the year ended December 31, 2021. The loss on extinguishment of debt in 2021 related to fees incurred in conjunction with our June 9, 2021 refinancing of the Credit Agreement. The previous debt was considered extinguished, as all lenders on our previous term loan exited their positions in conjunction with changing from a Term Loan B to a Term Loan A arrangement.
Previous report
Income Tax Expense. Our effective combined federal and state tax rate for 2022 was 18.5% compared to 11.3% for 2021. The effective tax rate for the year ended December 31, 2022 was higher than the rate in the prior year due to a discrete tax benefit of $3.3 million in the year ended December 31, 2021 related to favorable income tax audit results in states in which we file. The effective tax rate for the year ended December 31, 2022 was lower than historical averages related to higher tax credits and state income tax rate changes.
Previous report
Net cash provided by operating activities decreased $20.5 million from the year ended December 31, 2021 to the year ended December 31, 2022. The decrease in cash provided by operating activities was due to a $3.4 million decrease in net income adjusted for reconciling items in the year ended December 31, 2022 and $17.1 million in unfavorable working capital changes. The largest drivers negatively impacting working capital were an increase in accounts receivable attributable to the increase in sales compared to the prior year, as well as an increase in inventory due to the pulling forward of purchases in anticipation of inflationary price increases and supply chain disruptions, as well as higher material costs due to inflation, somewhat offset by an increase in accounts payable due to the timing of payments.
Previous report
Net cash used in investing activities increased $0.8 million for the year ended December 31, 2022, compared to the corresponding period in 2021 due to an increase in capital expenditures.
Previous report
Net cash used in financing activities decreased $9.1 million for the year ended December 31, 2022 as compared to the corresponding period in 2021. The decrease was primarily a result of making a voluntary $20.0 million prepayment on our debt in the year ended December 31, 2021 and no corresponding payment in 2022. We had no outstanding borrowings under our revolving credit facility at either December 31, 2022 or December 31, 2021. See Note 8 for additional information. Somewhat offsetting this decrease in cash used in financing activities is an increase related to $6.0 million in stock repurchases executed in the year ended December 31, 2022 and no repurchases in the prior year.
Reworded paragraphs (37)
Previous wording
The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2021*, 2022 and 2023 should be read together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form* 10‑K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10‑K, including information with respect to our plans and strategies for our business, includes forward‑looking statements that involve risks and uncertainties. You should review the“Risk Factors”* section of this Annual Report on Form* 10‑K for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, the forward‑looking statements contained in this Annual Report on Form 10‑K.
Current wording
The following discussion and analysis of our financial condition and results of operations for the years ended December 31,* 2023 and 2024 should be read together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form* 10‑K. For a discussion and analysis of the year ended December 31, 2023 compared to December 31, 2022, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024.Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10‑K, including information with respect to our plans and strategies for our business, includes forward‑looking statements that involve risks and uncertainties. You should review the“Risk Factors” section of this Annual Report on Form 10‑K for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, the forward‑looking statements contained in this Annual Report on Form 10‑K.
Previous wording
We may have challenges in short-term liquidity that could impact our ability to fund working capital needs. We have taken various steps to preserve liquidity, including reducing discretionary spending and deferring payments where appropriate within existing contractual terms, while remaining committed to long term growth projects. In addition, as discussed under the section "Liquidity and Capital Resources" below, in January 2023, we expanded the borrowing capacity of our revolving credit facility, and in January 2024, we amended our Credit Agreement to increase the minimum required leverage ratio from December 31, 2023 through June 30, 2024. In consideration of the recent macroeconomic trends, cash on hand and cash we generated from operations, as well as available credit under our senior credit facilities as amended during 2021, provided adequate and incremental funds throughout 2023, and we expect will continue to provide us with adequate funds in the foreseeable future.
Current wording
We may have challenges in short-term liquidity that could impact our ability to fund working capital needs. We have taken various steps to preserve liquidity, including reducing discretionary spending and deferring payments where appropriate within existing contractual terms, while remaining committed to long term growth projects. In January 2024, we implemented the 2024 Cost Savings Program, which is primarily in the form of restructuring charges for salaried headcount reductions and impacted both the Work Truck Attachments segment and corporate functions. See Note 21 to the Consolidated Financial Statements for additional information regarding the 2024 Cost Savings Program. In addition, as discussed under the section "Liquidity and Capital Resources" below, in January 2023, we expanded the borrowing capacity of our revolving credit facility, and in January 2024, we amended our Credit Agreement to increase the minimum required leverage ratio from December 31, 2023 through June 30, 2024. As discussed in Note 6 and Note 8 to the Consolidated Financial Statements, in September 2024, we executed a sale leaseback transaction for gross proceeds of $64.2 million, and, using a portion of the proceeds, we paid down $42.0 million on our term loan. In consideration of these recent macroeconomic trends and the various actions that we have taken to preserve our liquidity, cash on hand and cash we generated from operations, as well as available credit under our senior credit facilities as amended during 2021, provided adequate and incremental funds throughout 2024, and we expect will continue to provide us with adequate funds in the foreseeable future.
Previous wording
While our Work Truck Solutions operations are not as reliant on snowfall, snowfall is still the primary factor in evaluating our business results due to its significant impact on the results of operations of our Work Truck Attachments segment. We typically compare the snowfall level in a given period both to the snowfall level in the prior season and to those snowfall levels we consider to be average. References to “average snowfall” levels below refer to the aggregate average inches of snowfall recorded in 66 cities in 26 snow‑belt states in the United States during the annual snow season, from October 1 through March 31, from 1980 to 2023. During this period, snowfall averaged 3,004 inches, with the low in such period being 1,794 inches and the high being 4,502 inches. Meanwhile, over the last 10 years, snowfall averaged 2,990 inches for the snow periods ending March 31, 2014 through 2023.
Current wording
While our Work Truck Solutions operations are not as reliant on snowfall, snowfall is still the primary factor in evaluating our business results due to its significant impact on the results of operations of our Work Truck Attachments segment. We typically compare the snowfall level in a given period both to the snowfall level in the prior season and to those snowfall levels we consider to be average. References to “average snowfall” levels below refer to the aggregate average inches of snowfall recorded in 66 cities in 26 snow‑belt states in the United States during the annual snow season, from October 1 through March 31, from 1980 to 2024. During this period, snowfall averaged 2,978 inches, with the low in such period being 1,794 inches and the high being 4,502 inches. Meanwhile, over the last 10 years, snowfall averaged 2,738 inches for the snow periods ending March 31, 2015 through 2024.
Previous wording
During the six‑month snow season ended March 31, 2023, snowfall was 2,661 inches, which was 11.4% lower than averages from 1980 to 2023. During the six‑month snow season ended March 31, 2022, we experienced snowfall that was 13.3% lower than averages from 1980 to 2022. During the six-month snow season ended March 31, 2021, we experienced snowfall that was 9.4% lower than averages from 1980 to 2021. Snowfall was 11.0% below average during the snow season ended March 31, 2023 when compared to the average over the last 10 years and was the fifth snow season in a row below this average. Snowfall was 14.4% below average during the snow season ended March 31, 2022 when compared to the average over the previous 10 years. Additionally, the timing and location of snowfall can have an impact on our financial results. Specifically, in the snow season ended March 31, 2023, major cities along the I-95 corridor on the East Coast did not see any measurable snowfall. We believe the below-average snowfall in the year ended December 31, 2023 negatively impacted our business in 2023. We believe other factors also had a negative impact, including supply chain constraints. In 2021, 2022 and 2023, we encountered chassis availability issues with certain of our OEM partners, which negatively impacted our business, and which we expect to continue into 2024.
Current wording
During the six‑month snow season ended March 31, 2024, snowfall was 1,836 inches, which was 38.4% lower than averages from 1980 to 2024. During the six‑month snow season ended March 31, 2023, we experienced snowfall that was 11.4% lower than averages from 1980 to 2023. During the six-month snow season ended March 31, 2022, we experienced snowfall that was 13.3% lower than averages from 1980 to 2022. Snowfall was 32.9% below average during the snow season ended March 31, 2024 when compared to the average over the last 10 years and was the sixth snow season in a row below this average. Snowfall was 11.0% below average during the snow season ended March 31, 2023 when compared to the average over the previous 10 years. Additionally, the timing and location of snowfall can have an impact on our financial results. Specifically, in the snow season ended March 31, 2024, low snowfall in our core markets led to lower volumes, and in the snow season ended March 31, 2023, major cities along the I-95 corridor on the East Coast did not see any measurable snowfall. We believe the below-average snowfall in the years ended December 31, 2024 and 2023 negatively impacted our business. In 2022 and 2023, we encountered chassis availability issues with certain of our OEM partners, which negatively impacted our business.
Previous wording
Net Sales. Net sales were $568.2 million for the year ended December 31, 2023 compared to $616.1 million in 2022, a decrease of $47.9 million, or 7.8%. Net sales decreased for the year ended December 31, 2023 primarily due to lower volumes at our Work Truck Attachment segment. See below for a discussion of net sales for each of our segments.
Current wording
Net Sales. Net sales were $568.5 million for the year ended December 31, 2024 compared to $568.2 million in 2023, an increase of $0.3 million, or 0.1%. Net sales increased for the year ended December 31, 2024 primarily due to higher volumes at Work Truck Solutions, somewhat offset by low snowfall in our core markets leading to lower volumes at Work Truck Attachments in 2024. See below for a discussion of net sales for each of our segments.
Previous wording
Net sales at our Work Truck Attachment segment were $291.7 million for the year ended December 31, 2023 compared to $382.3 million in the year ended December 31, 2022, a decrease of $90.6 million primarily due to low snowfall in our core markets leading to lower volumes in 2023, somewhat offset by pricing actions implemented to offset inflation. The most recent snow season ended March 2023 was approximately 11.0% below the 10-year average. In particular, many large metropolitan areas on the East Coast saw the lowest snowfall levels in decades for the season, which significantly impacted volumes for the segment in 2023.
Current wording
Net sales at our Work Truck Attachment segment were $256.0 million for the year ended December 31, 2024 compared to $291.7 million in the year ended December 31, 2023, a decrease of $35.7 million primarily due to low snowfall in our core markets, as well as the impact of multiple years of below average snowfall, leading to lower volumes in 2024. The most recent snow season ended March 2024 was approximately 32.9% below the 10-year average.
Previous wording
Net sales at our Work Truck Solutions segment were $276.5 million for the year ended December 31, 2023 compared to $233.8 million in the year ended December 31, 2022, an increase of $42.7 million due primarily to higher volumes on improved chassis availability, higher sales of Company purchased chassis, which are typically sold at cost, as well as price increase realization.
Current wording
Net sales at our Work Truck Solutions segment were $312.5 million for the year ended December 31, 2024 compared to $276.5 million in the year ended December 31, 2023, an increase of $36.0 million due primarily as a result of higher volumes on improved throughput, price increase realization, as well as higher sales of Company-purchased chassis.
Previous wording
Cost of Sales. Cost of sales was $433.9 million for the year ended December 31, 2023 compared to $464.6 million in 2022, a decrease of $30.7 million, or 6.6%. The decrease in cost of sales for the year ended December 31, 2023 compared to the prior year was driven by the lower volumes. Cost of sales as a percentage of net sales increased from 75.4% for the year ended December 31, 2022 to 76.4% for the year ended December 31, 2023. The increase in cost of sales as a percentage of sales in the year ended December 31, 2023 when compared to the year ended December 31, 2022 was primarily due to the lower volumes and product mix.
Current wording
Cost of Sales. Cost of sales was $421.7 million for the year ended December 31, 2024 compared to $433.9 million in 2023, a decrease of $12.2 million, or 2.8%. The decrease in cost of sales for the year ended December 31, 2024 compared to the prior year was driven by the lower volumes at Work Truck Attachments. Cost of sales as a percentage of net sales decreased from 76.4% for the year ended December 31, 2023 to 74.2% for the year ended December 31, 2024. The decrease in cost of sales as a percentage of sales in the year ended December 31, 2024 when compared to the year ended December 31, 2023 was primarily due to lower spending in conjunction with our 2024 Cost Savings Program, as well as improved throughput at Work Truck Solutions.
Previous wording
Gross Profit. Gross profit was $151.5 million for the year ended December 31, 2022 compared to $141.9 million in 2021, an increase of $9.6 million, or 6.8%, due to the increase in net sales described above under “—Net Sales.” As a percentage of net sales, gross profit decreased from 26.2% for the year ended December 31, 2021 to 24.6% for the corresponding period in 2022, as a result of the factors discussed above under “—Cost of Sales.”
Current wording
Gross Profit. Gross profit was $146.8 million for the year ended December 31, 2024 compared to $134.3 million in 2023, an increase of $12.5 million, or 9.3%, due to the increase in net sales described above under “—Net Sales.” As a percentage of net sales, gross profit increased from 23.6% for the year ended December 31, 2023 to 25.8% for the corresponding period in 2024, as a result of the factors discussed above under “—Cost of Sales.”
Previous wording
Selling, General and Administrative Expense. Selling, general and administrative expenses, including intangible asset amortization, were $89.4 million for the year ended December 31, 2023 compared to $92.7 million for the year ended December 31, 2022, a decrease of $3.3 million, or 3.6%. The decrease compared to the year ended December 31, 2022 was due to lower stock based compensation of $5.8 million and incentive-based compensation of $3.2 million resulting from the decrease in operating performance. The decrease was somewhat offset by increased employee compensation and benefits of $2.7 million as a result of inflation and increased healthcare claims, an increase in bad debt expense of $1.8 million compared to the prior year related to the release of previously recorded reserves in the prior year, and an increase in supplies and other discretionary spending. As a percentage of net sales, selling, general and administrative expenses, including intangibles amortization, increased from 15.1% for the year ended December 31, 2022 to 15.7% for the corresponding period in 2023.
Current wording
Selling, General and Administrative Expense. Selling, general and administrative expenses, including intangible asset amortization, were $99.2 million for the year ended December 31, 2024 compared to $89.4 million for the year ended December 31, 2023, an increase of $9.8 million, or 11.0%. The increase compared to the year ended December 31, 2023 was due to $5.2 million in transaction costs related to the sale leaseback transaction, higher stock based compensation of $3.9 million and incentive-based compensation of $1.8 million resulting from the increase in operating performance, $1.4 million in CEO transition costs, an increase in employee benefits costs of $1.0 million, and an increase in severance costs of $0.9 million related to salaried headcount reductions at our Work Truck Attachments segment and our corporate function as part of our 2024 Cost Savings Program. The increase was somewhat offset by lower intangibles amortization of $3.0 million related to an asset becoming fully amortized when compared to the prior year, lower advertising expenses of $0.8 million, as well as other cost savings related to our 2024 Cost Savings Program. As a percentage of net sales, selling, general and administrative expenses, including intangibles amortization, increased from 15.7% for the year ended December 31, 2023 to 17.4% for the corresponding period in 2024.
Previous wording
Interest Expense. Interest expense was $15.7 million for the year ended December 31, 2023 compared to $11.3 million in the corresponding period in 2022. The increase in interest expense for the year ended December 31, 2023 was primarily due to higher interest on our revolver of $3.0 million due to having higher revolver borrowings compared to the prior year. In addition, the increase was due to higher interest on our term loan of $0.5 million related to higher interest rates. See Note 8 to the Consolidated Financial Statements for additional information. The remaining increase relates to an increase in interest on our floor plan agreement of $0.7 million, see Note 5 to the Consolidated Financial Statements for additional information regarding the floor plan agreement.
Current wording
Interest Expense. Interest expense was $15.3 million for the year ended December 31, 2024 compared to $15.7 million in the corresponding period in 2023. The decrease in interest expense for the year ended December 31, 2024 was primarily due to lower interest on our revolver of $0.9 million due to having lower revolver borrowings compared to the prior year. In addition, the decrease was due to lower interest on our term loan of $0.5 million related to lower interest rates, as well as lower debt as a result of a $42.0 million prepayment made in September 2024. See Note 8 to the Consolidated Financial Statements for additional information. The decrease in interest expense was somewhat offset by an increase in interest on our floor plan agreement, see Note 5 to the Consolidated Financial Statements for additional information regarding the floor plan agreement.
Previous wording
Income Tax Expense. Our effective combined federal and state tax rate for 2023 was 18.9% compared to 18.5% for 2022. The effective tax rate for the year ended December 31, 2023 was impacted by a tax benefit related to the purchase of investment tax credits included in the annual effective tax rate. The effective tax rate for the year ended December 31, 2022 was lower than historical averages related to higher tax credits and state income tax rate changes.
Current wording
Income Tax Expense. Our effective combined federal and state tax rate for 2024 was 24.0% compared to 18.9% for 2023. The effective tax rate for the year ended December 31, 2023 was impacted by a tax benefit related to the purchase of investment tax credits included in the annual effective tax rate. In addition, the rate was lower in 2023 related to higher credits that favorably impacted the rate.
Previous wording
Net Income. Net income for the year ended December 31, 2022 was $38.6 million compared to net income of $30.7 million for 2021, an increase of $7.9 million. This increase was driven by the factors described above.
Current wording
Net Income. Net income for the year ended December 31, 2024 was $56.2 million compared to net income of $23.7 million for 2023, an increase of $32.5 million. This increase was driven by the factors described above.
Previous wording
The most significant accounting estimates inherent in the preparation of our financial statements include estimates used in revenue recognition and the impairment assessment of indefinite lived intangible assets and goodwill.
Current wording
The most significant accounting estimates inherent in the preparation of our financial statements include estimates used in revenue recognition, the accounting for our sale leaseback transaction, and the impairment assessment of indefinite lived intangible assets and goodwill.
Previous wording
At December 31, 2023, our Dejana reporting unit had tradenames of $14.0 million and an estimated fair value of $19.7 million. If we are unable to attain the financial projections used in calculating the fair value, or if there are significant market conditions impacting the market approach, including the factors noted above, our Dejana tradenames could be at risk of impairment. If we experience further delays by our supplier and OEM partners in the production and delivery of chassis for a prolonged period of time, which could negatively affect our financial results, the Dejana tradenames may be impaired. The discount rate and royalty rate used in the calculation of the fair value are sensitive and based on our assumptions, and changes to those assumptions could cause the Dejana tradenames to be at risk of impairment. There were no indicators of impairment subsequent to the December 31, 2023 impairment test.
Current wording
At December 31, 2024, our Dejana reporting unit had a tradename of $14.0 million and an estimated fair value of $17.6 million. If we are unable to attain the financial projections used in calculating the fair value, or if there are significant market conditions impacting the market approach, including the factors noted above, our Dejana tradename could be at risk of impairment. If we experience delays by our supplier and OEM partners in the production and delivery of chassis for a prolonged period of time, which could negatively affect our financial results, the Dejana tradename may be impaired. The discount rate and royalty rate used in the calculation of the fair value are sensitive and based on our assumptions, and changes to those assumptions could cause the Dejana tradename to be at risk of impairment. There were no indicators of impairment subsequent to the December 31, 2024 impairment test.
Previous wording
We perform an annual impairment test for goodwill and more frequently if an event or circumstances indicate that an impairment loss has been incurred. Conditions that would trigger an impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset. The amount of goodwill impairment is determined by the amount the carrying value of the reporting unit exceeds its fair value. We have determined we have four reporting units, and all significant decisions are made on a company-wide basis by our chief operating decision maker. The fair value of the reporting unit is estimated by using an income and market approach. The estimated fair value is compared with our aggregate carrying value. If our fair value is greater than the carrying amount, there is no impairment. If our carrying amount is greater than the fair value, an impairment loss is recognized equal to the difference. Annual impairment tests conducted by us on December 31, 2023 and 2022 resulted in no adjustment to the carrying value of our goodwill.
Current wording
We perform an annual impairment test for goodwill and more frequently if an event or circumstances indicate that an impairment loss has been incurred. Conditions that would trigger an impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset. The amount of goodwill impairment is determined by the amount the carrying value of the reporting unit exceeds its fair value. We have determined we have three reporting units, and all significant decisions are made on a company-wide basis by our chief operating decision maker. The fair value of the reporting unit is estimated by using an income and market approach. The estimated fair value is compared with our aggregate carrying value. If our fair value is greater than the carrying amount, there is no impairment. If our carrying amount is greater than the fair value, an impairment loss is recognized equal to the difference. Annual impairment tests conducted by us on December 31, 2024 and 2023 resulted in no adjustment to the carrying value of our goodwill.
Previous wording
The Work Truck Attachments segment consists of two reporting units: Commercial Snow & Ice and Douglas Dynamics Vertical Integration. Only the Commercial Snow & Ice reporting unit has goodwill. The impairment tests performed as of December 31, 2022 and December 31, 2023 indicated no impairment for the Commercial Snow & Ice reporting unit. The Work Truck Solutions consists of two reporting units; Municipal and Dejana. Each of the Municipal and Dejana reporting units had $0 in goodwill at December 31, 2022 and December 31, 2023.
Current wording
The Work Truck Attachments segment consists of one reporting unit: Commercial Snow & Ice. The impairment tests performed as of December 31, 2023 and December 31, 2024 indicated no impairment for the Commercial Snow & Ice reporting unit. The Work Truck Solutions consists of two reporting units: Municipal and Dejana. Each of the Municipal and Dejana reporting units had $0 in goodwill at December 31, 2023 and December 31, 2024.
Previous wording
On February 16, 2022, our Board of Directors authorized the purchase of up to $50.0 million in shares of common stock at market value**.This authorization does not have an expiration date. **Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. We may also, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases of its shares under this authorization. This program does not obligate us to acquire any particular amount of shares and the program may be extended, modified, suspended or discontinued at any time at our discretion. We made $0.0 million in share repurchases during the year ended December 31, 2023. We made $6.0 million in share repurchases during the year ended December 31, 2022.
Current wording
On February 16, 2022, our Board of Directors authorized the purchase of up to $50.0 million in shares of common stock at market value**.This authorization does not have an expiration date. **Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. We may also, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases of its shares under this authorization. This program does not obligate us to acquire any particular amount of shares and the program may be extended, modified, suspended or discontinued at any time at our discretion. We made $0.0 million in share repurchases during the year ended December 31, 2024. We made $0.0 million in share repurchases during the year ended December 31, 2023.
Previous wording
As of December 31, 2023, we had liquidity comprised of approximately $24.2 million in cash and cash equivalents and borrowing availability of approximately $102.5 million under our revolving credit facility. We have taken various steps to preserve liquidity, including reducing discretionary spending and deferring payments where appropriate within existing contractual terms, while remaining committed to long-term growth projects. In consideration of macroeconomic factors facing the Company, we expect that cash on hand, cash generated from operations, as well as available credit under our senior credit facilities will provide adequate funds for the purposes described above for both 12 months from the date of this report, as well as beyond 12 months from the date of this report.
Current wording
As of December 31, 2024, we had liquidity comprised of approximately $5.1 million in cash and cash equivalents and borrowing availability of approximately $149.5 million under our revolving credit facility. We have taken various steps to preserve liquidity, including reducing discretionary spending and deferring payments where appropriate within existing contractual terms, while remaining committed to long-term growth projects. In January 2024, we implemented the 2024 Cost Savings Program, which is primarily in the form of restructuring charges for salaried headcount reductions and impacted both the Work Truck Attachments segment and corporate functions. In addition, as discussed in Note 6 and Note 8 to the Consolidated Financial Statements, in September 2024, we executed a sale leaseback transaction for gross proceeds of $64.2 million, and, using a portion of the proceeds, we paid down $42.0 million on our term loan. In consideration of the macroeconomic factors facing the Company and the various actions we have taken to preserve our liquidity, we expect that cash on hand, cash generated from operations, as well as available credit under our senior credit facilities will provide adequate funds for the purposes described above for both 12 months from the date of this report, as well as beyond 12 months from the date of this report.
Previous wording
On January 29, 2024, the Company entered into Amendment No. 3 to the Credit Agreement, which modifies the minimum required Leverage Ratio (as defined in the Credit Agreement) of the Company, which is measured as of the last day of each Reference Period (as defined in the Credit Agreement), from 3.50 to 1.00 for each Reference Period to (i) 3.50 to 1.00 for each Reference Period ending on or prior to September 30, 2023, (ii) 4.25 to 1.00 for the Reference Period ending on December 31, 2023, (iii) 4.00 to 1.00 for each Reference Period ending on March 31, 2024 and June 30, 2024, and (iv) 3.50 to 1.00 for each Reference Period ending on September 30, 2024 and thereafter.
Current wording
On January 29, 2024, the Company entered into Amendment No. 3 to the Credit Agreement, which modified the minimum required Leverage Ratio (as defined in the Credit Agreement) of the Company, which is measured as of the last day of each Reference Period (as defined in the Credit Agreement), from 3.50 to 1.00 for each Reference Period to (i) 3.50 to 1.00 for each Reference Period ending on or prior to September 30, 2023, (ii) 4.25 to 1.00 for the Reference Period ending on December 31, 2023, (iii) 4.00 to 1.00 for each Reference Period ending on March 31, 2024 and June 30, 2024, and (iv) 3.50 to 1.00 for each Reference Period ending on September 30, 2024 and thereafter.
Previous wording
We had cash and cash equivalents of $24.2 million at December 31, 2023 compared to cash and cash equivalents of $20.7 million at December 31, 2022. The table below sets forth a summary of the significant sources and uses of cash for the periods presented.
Current wording
We had cash and cash equivalents of $5.1 million at December 31, 2024 compared to cash and cash equivalents of $24.2 million at December 31, 2023. The table below sets forth a summary of the significant sources and uses of cash for the periods presented.
Previous wording
Net cash provided by operating activities decreased $27.6 million from the year ended December 31, 2022 to the year ended December 31, 2023. The decrease in cash provided by operating activities was due to a $3.3 million decrease in net income adjusted for reconciling items in the year ended December 31, 2023 and $24.2 million in unfavorable working capital changes. The largest driver negatively impacting working capital was an increase in cash used for accounts payable related to the timing of supplier payments. Somewhat offsetting this unfavorable working capital change was a favorable decrease in cash used for inventory related to a larger increase in inventory in the prior year from pulling forward purchases in anticipation of inflationary price increases and supply chain disruptions, and higher material costs due to inflation, as well as a decrease in cash used for accounts receivable attributable to the decrease in sales compared to the prior year, in particular in the fourth quarter.
Current wording
Net cash provided by operating activities increased $28.7 million from the year ended December 31, 2023 to the year ended December 31, 2024. The increase in cash provided by operating activities was due to $45.3 million in favorable working capital changes and changes in operating assets and liabilities in the year ended December 31, 2024, somewhat offset by a $16.6 million decrease in net income adjusted for reconciling items. The largest driver positively impacting working capital was a decrease in cash used in accounts payable related to the timing of supplier payments, as well as a decrease in income tax receivable, an increase in accrued wages, benefits and incentives, and a decrease in cash used for inventory related reduced inventory levels in 2024.
Previous wording
Net cash used in investing activities decreased $1.5 million for the year ended December 31, 2023, compared to the corresponding period in 2022 due to a decrease in capital expenditures.
Current wording
Net cash provided by investing activities increased $67.3 million for the year ended December 31, 2024, compared to the corresponding period in 2023 due to gross proceeds on the sale leaseback transaction of $64.2 million, as well as a decrease in capital expenditures.
Previous wording
Net cash used in financing activities decreased $45.8 million for the year ended December 31, 2023 as compared to the corresponding period in 2022. The decrease was primarily due to having $47.0 million in revolver borrowings outstanding at December 31, 2023 compared to $0.0 million in revolver borrowings outstanding at December 31, 2022. See Note 8 to the Condensed Consolidated Financial Statements for additional information. In addition, the decrease in cash used in financing activities is related to executing no stock repurchases in the nine months ended September 30, 2023, compared to $6.0 million in repurchases in the same period in the prior year. Somewhat offsetting the decrease in cash used is a $10.0 million increase in the repayment of long-term debt related to a voluntary pre-payment of debt amortization principal payments, see Note 8 to the Condensed Consolidated Financial Statements for additional information.
Current wording
Net cash used in financing activities increased $118.5 million for the year ended December 31, 2024 as compared to the corresponding period in 2023. The increase in cash used was primarily due to having $0.0 million in revolver borrowings outstanding at December 31, 2024, compared to $47.0 million outstanding at December 31, 2023. See Note 8 to the Consolidated Financial Statements for additional information. In addition, the increase in cash used in financing activities is related to a $42.0 million voluntary pre-payment of debt amortization principal payments in 2024 using a portion of the proceeds from the sale leaseback transaction, in comparison to a $10.0 million repayment of long-term debt related to a voluntary pre-payment of debt amortization principal payments in 2023, see Note 8 to the Consolidated Financial Statements for additional information.
Previous wording
Net cash provided by operating activities was $12.5 million in the year ended December 31, 2023 as compared to $40.0 million in the year ended December 31, 2022. Free cash flow (as defined below) for the year ended December 31, 2023 was $1.9 million compared to $28.0 million in 2022, a decrease in free cash flow of $26.1 million, or 93.2%. The decrease in free cash flow is primarily a result of a decrease in cash provided by operating activities of $27.6 million and a decrease in capital expenditures of $1.5 million, as discussed above under “Liquidity and Capital Resources.” Free cash flow for the year ended December 31, 2022 was $28.0 million compared to $49.3 million in 2021, a decrease in free cash flow of $21.3 million, or 43.2%. The decrease in free cash flow is primarily a result of a decrease in cash provided by operating activities of $20.5 million and an increase in capital expenditures of $0.8 million.
Current wording
Net cash provided by operating activities was $41.1 million in the year ended December 31, 2024 as compared to $12.5 million in the year ended December 31, 2023. Free cash flow (as defined below) for the year ended December 31, 2024 was $33.3 million compared to $1.9 million in 2023, an increase in free cash flow of $31.4 million, or 1652.6%. The increase in free cash flow is primarily a result of an increase in cash provided by operating activities of $28.7 million and a decrease in capital expenditures of $2.7 million, as discussed above under “Liquidity and Capital Resources.” Free cash flow for the year ended December 31, 2023 was $1.9 million compared to $28.0 million in 2022, a decrease in free cash flow of $26.1 million, or 93.2%. The decrease in free cash flow is primarily a result of a decrease in cash provided by operating activities of $27.6 million and a decrease in capital expenditures of $1.5 million
Previous wording
Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, as further adjusted for certain charges consisting of unrelated legal and consulting fees, pension termination costs, stock based compensation, severance, restructuring charges, loss on disposal of fixed assets related to facility relocations, litigation proceeds, certain non-cash purchase accounting expenses, impairment charges, expenses related to debt modifications, loss on extinguishment of debt, and in 2020 through 2022, incremental costs related to the COVID-19 pandemic. Such COVID-19 related costs included increased expenses directly related to the pandemic, and did not include either production related overhead inefficiencies or lost or deferred sales. We believe these costs were out of the ordinary, unrelated to our business and not representative of our results. We use, and we believe our investors benefit from the presentation of Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with additional tools to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. In addition, we believe that Adjusted EBITDA is useful to investors and other external users of our consolidated financial statements in evaluating our 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. Our management also uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. Management also uses Adjusted EBITDA to evaluate our ability to make certain payments, including dividends, in compliance with our senior credit facilities, which is determined based on a calculation of “Consolidated Adjusted EBITDA” that is substantially similar to Adjusted EBITDA.
Current wording
Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, as further adjusted for certain charges consisting of unrelated legal and consulting fees, stock based compensation, severance, restructuring charges, loss on disposal of fixed assets related to facility relocations, certain non-cash purchase accounting expenses, impairment charges, CEO transition costs, insurance proceeds, gain on sale leaseback transaction and related costs, expenses related to debt modifications, loss on extinguishment of debt, and in 2020 through 2022, incremental costs related to the COVID-19 pandemic. Such COVID-19 related costs included increased expenses directly related to the pandemic, and did not include either production related overhead inefficiencies or lost or deferred sales. We believe these costs were out of the ordinary, unrelated to our business and not representative of our results. We use, and we believe our investors benefit from the presentation of Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with additional tools to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. In addition, we believe that Adjusted EBITDA is useful to investors and other external users of our consolidated financial statements in evaluating our 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. Our management also uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. Management also uses Adjusted EBITDA to evaluate our ability to make certain payments, including dividends, in compliance with our senior credit facilities, which is determined based on a calculation of “Consolidated Adjusted EBITDA” that is substantially similar to Adjusted EBITDA.
Previous wording
Adjusted EBITDA for the year ended December 31, 2023 was $68.1 million compared to $86.8 million in 2022, a decrease of $18.7 million, or 21.5%. Adjusted EBITDA for the year ended December 31, 2022 was $86.8 million compared to $79.5 million in 2021, an increase of $7.3 million, or 9.2%. In addition to the specific changes resulting from the adjustments, the changes to Adjusted EBITDA for the periods discussed resulted from factors discussed above under “—Results of Operations.”
Current wording
Adjusted EBITDA for the year ended December 31, 2024 was $79.3 million compared to $68.1 million in 2023, an increase of $11.2 million, or 16.4%. Adjusted EBITDA for the year ended December 31, 2023 was $68.1 million compared to $86.8 million in 2022, a decrease of $18.7 million, or 21.5%. In addition to the specific changes resulting from the adjustments, the changes to Adjusted EBITDA for the periods discussed resulted from factors discussed above under “—Results of Operations.”
Previous wording
Adjusted EBITDA at our Work Truck Attachment segment were $50.6 million for the year ended December 31, 2023 compared to $78.2 million in the year ended December 31, 2022, a decrease of $27.6 million primarily due to low snowfall in our core markets leading to lower volumes. The most recent snow season ended March 2023 was approximately 11.0% below the 10-year average. In particular, many large metropolitan areas on the East Coast saw the lowest snowfall levels in decades for the season, which significantly impacted volumes for the segment in 2023.
Current wording
Adjusted EBITDA at our Work Truck Attachment segment was $48.5 million for the year ended December 31, 2024 compared to $50.6 million in the year ended December 31, 2023, a decrease of $2.1 million primarily due to low snowfall in our core markets, as well as the impact of multiple years of below average snowfall, leading to lower volumes in 2024. The most recent snow season ended March 2024 was approximately 32.9% below the 10-year average.
Previous wording
Adjusted EBITDA at our Work Truck Solutions segment were $17.6 million for the year ended December 31, 2023 compared to $8.6 million in the year ended December 31, 2022, an increase of $9.0 million due to improved volumes and price increase realization, as well as improved efficiencies.
Current wording
Adjusted EBITDA at our Work Truck Solutions segment was $30.9 million for the year ended December 31, 2024 compared to $17.6 million in the year ended December 31, 2023, an increase of $13.3 million due to improved volumes and price increase realization, as well as improved efficiencies.
Previous wording
Adjusted Net Income and Adjusted Earnings Per Share (calculated on a diluted basis) represents net income (loss) and earnings (loss) per share (as defined by GAAP), excluding the impact of stock based compensation, pension termination costs, severance, restructuring charges, loss on disposal of fixed assets related to facility relocations litigation proceeds, non-cash purchase accounting adjustments, certain charges related to unrelated legal fees and consulting fees, expenses related to debt modifications, loss on extinguishment of debt, incremental costs incurred in 2020 through 2022 related to the COVID-19 pandemic, and adjustments on derivatives not classified as hedges, net of their income tax impact. Such COVID-19 related costs included increased expenses directly related to the pandemic, and did not include either production related overhead inefficiencies or lost or deferred sales. We believe these costs were out of the ordinary, unrelated to our business and not representative of our results. Adjustments on derivatives not classified as hedges are non-cash and are related to overall financial market conditions; therefore, management believes such costs are unrelated to our business and are not representative of our results. Management believes that Adjusted Net Income and Adjusted Earnings Per Share are useful in assessing our financial performance by eliminating expenses and income that are not reflective of the underlying business performance. We believe that the presentation of Adjusted Net Income for the periods presented allows investors to make meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. Because the excluded items are not predictable or consistent, management does not consider them when evaluating our performance or when making decisions regarding allocation of resources.
Current wording
Adjusted Net Income and Adjusted Earnings Per Share (calculated on a diluted basis) represents net income (loss) and earnings (loss) per share (as defined by GAAP), excluding the impact of stock based compensation, severance, restructuring charges, loss on disposal of fixed assets related to facility relocations, non-cash purchase accounting adjustments, certain charges related to unrelated legal fees and consulting fees, CEO transition costs, insurance proceeds, gain on sale leaseback transaction and related transaction costs, expenses related to debt modifications, loss on extinguishment of debt, incremental costs incurred in 2020 through 2022 related to the COVID-19 pandemic, and adjustments on derivatives not classified as hedges, net of their income tax impact. Such COVID-19 related costs included increased expenses directly related to the pandemic, and did not include either production related overhead inefficiencies or lost or deferred sales. We believe these costs were out of the ordinary, unrelated to our business and not representative of our results. Adjustments on derivatives not classified as hedges are non-cash and are related to overall financial market conditions; therefore, management believes such costs are unrelated to our business and are not representative of our results. Management believes that Adjusted Net Income and Adjusted Earnings Per Share are useful in assessing our financial performance by eliminating expenses and income that are not reflective of the underlying business performance. We believe that the presentation of Adjusted Net Income for the periods presented allows investors to make meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. Because the excluded items are not predictable or consistent, management does not consider them when evaluating our performance or when making decisions regarding allocation of resources.
Previous wording
We are subject to certain contractual obligations, including long‑term debt and related interest. We have net unrecognized tax benefits of $2.0 million as of December 31, 2023. However, we cannot make a reasonably reliable estimate of the period of potential cash settlement of the underlying liabilities; therefore, we have not included unrecognized tax benefits in calculating the obligations set forth in the following table of significant contractual obligations as of December 31, 2023.
Current wording
We are subject to certain contractual obligations, including long‑term debt and related interest. We have net unrecognized tax benefits of $1.5 million as of December 31, 2024. However, we cannot make a reasonably reliable estimate of the period of potential cash settlement of the underlying liabilities; therefore, we have not included unrecognized tax benefits in calculating the obligations set forth in the following table of significant contractual obligations as of December 31, 2024.
Previous wording
See Note 8 for a description of our senior credit facilities and other debt.
Current wording
See Note 8 to the Audited Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a description of our senior credit facilities and other debt.
Previous wording
We possess a favorable tax structure where annual tax‑deductible intangible and goodwill amortization expense may be utilized in the event we have sufficient taxable income to utilize such benefit. As we have previously acquired businesses possessing significant intangible assets and goodwill, we have created a favorable tax structure where income tax expense is greater than book amortization expense. We expect the deductibility of intangible assets and goodwill amortization expense to exceed book by approximately $5.2 million in the year ended December 31, 2024 if we have the taxable income to utilize such benefit.
Current wording
We possess a favorable tax structure where annual tax‑deductible intangible and goodwill amortization expense may be utilized in the event we have sufficient taxable income to utilize such benefit. As we have previously acquired businesses possessing significant intangible assets and goodwill, we have created a favorable tax structure where income tax expense is greater than book amortization expense. We expect the deductibility of intangible assets and goodwill amortization expense to exceed book by approximately $5.7 million in the year ended December 31, 2025 if we have the taxable income to utilize such benefit.
Previous wording
Inflation in materials, freight and labor had a material impact on our profitability in 2022, and we expect ongoing inflationary pressures may impact our profitability in 2024. While we anticipate being able to fully cover this inflation by raising prices, there may be a timing difference of when we incur the increased costs and when we realize the higher prices in our backlog. In 2023 and in previous years, we experienced significant increases in steel costs, but were able or expect to be able to mitigate the effects of these increases through both temporary and permanent steel surcharges; we expect, but cannot be certain, that we will be able to do the same going forward. See “Risk Factors— The price of steel, a commodity necessary to manufacture our products, is highly variable. If the price of steel increases, our gross margins could decline”.
Current wording
Inflation in materials, freight and labor had a material impact on our profitability in 2023 and 2024, and we expect ongoing inflationary pressures may impact our profitability in 2025. While we anticipate being able to fully cover this inflation by raising prices, there may be a timing difference of when we incur the increased costs and when we realize the higher prices in our backlog. In 2024 and in previous years, we experienced significant increases in steel costs, but were able or expect to be able to mitigate the effects of these increases through both temporary and permanent steel surcharges; we expect, but cannot be certain, that we will be able to do the same going forward. See “Risk Factors— The price of steel, a commodity necessary to manufacture our products, is highly variable. If the price of steel increases, our gross margins could decline”.
Previous wording
Our Work Truck Attachments segment revenue and operating results tend to be lowest during the first quarter, during which period we typically experience negative earnings as the snow season draws to a close. Our Work Truck Attachments segment first quarter revenue has varied from approximately $19.1 million to approximately $45.8 million between 2018 and 2023. During the last five‑year period, net income (loss) during the first quarter has varied from net income of approximately $1.5 million to a net loss of approximately $13.4 million, with an average net loss of $4.7 million.
Current wording
Our Work Truck Attachments segment revenue and operating results tend to be lowest during the first quarter, during which period we typically experience negative earnings as the snow season draws to a close. Our Work Truck Attachments segment first quarter revenue has varied from approximately $19.1 million to approximately $45.8 million between 2019 and 2024. During the last five‑year period, net income (loss) during the first quarter has varied from net income of approximately $1.5 million to a net loss of approximately $13.4 million, with an average net loss of $6.6 million.
Previous wording
While our Work Truck Attachments monthly working capital has averaged approximately $57.6 million from 2021 to 2023, because of the seasonality of our sales, we experience seasonality in our working capital needs as well. In the first quarter we require capital as we are generally required to build our inventory in anticipation of our second and third quarter sales seasons. During the second and third quarters, our working capital requirements rise as our accounts receivables increase as a result of the sale and shipment of products ordered through our pre‑season sales program and we continue to build inventory. Working capital requirements peak towards the end of the third quarter (reaching an average peak of approximately $64.4 million over the prior three years) and then begin to decline through the fourth quarter through a reduction in accounts receivables (as it is in the fourth quarter that we receive a majority of the payments for previously shipped products).
Current wording
While our Work Truck Attachments monthly working capital has averaged approximately $54.4 million from 2022 to 2024, because of the seasonality of our sales, we experience seasonality in our working capital needs as well. In the first quarter we require capital as we are generally required to build our inventory in anticipation of our second and third quarter sales seasons. During the second and third quarters, our working capital requirements rise as our accounts receivables increase as a result of the sale and shipment of products ordered through our pre‑season sales program and we continue to build inventory. Working capital requirements peak towards the end of the third quarter (reaching an average peak of approximately $63.0 million over the prior three years) and then begin to decline through the fourth quarter through a reduction in accounts receivables (as it is in the fourth quarter that we receive a majority of the payments for previously shipped products).
Previous wording
These asset management and profit focus strategies, among other management tools, allow us to adjust fixed overhead and selling, general and administrative expenditures to account for the year‑to‑year variability of our sales volumes. Management currently estimates that consolidated annual fixed overhead expenses generally range from approximately $65.0 million in low sales volume years to approximately $80.0 million in high sales volume years. Further, management currently estimates that consolidated annual sales, general and administrative expenses other than amortization generally approximate $85.0 million, but can be reduced to approximately $70.0 million to maximize cash flow in low sales volume years, and can increase to approximately $95.0 million to maintain customer service and responsiveness in high sales volume years.
Current wording
These asset management and profit focus strategies, among other management tools, allow us to adjust fixed overhead and selling, general and administrative expenditures to account for the year‑to‑year variability of our sales volumes. Management currently estimates that consolidated annual fixed overhead expenses generally range from approximately $65.0 million in low sales volume years to approximately $80.0 million in high sales volume years. Further, management currently estimates that consolidated annual sales, general and administrative expenses other than amortization generally approximate $90.0 million, but can be reduced to approximately $80.0 million to maximize cash flow in low sales volume years, and can increase to approximately $100.0 million to maintain customer service and responsiveness in high sales volume years.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Gross Profit. Gross profit was $134.3 million for the year ended December 31, 2023 compared to $151.5 million in 2022, a decrease of $17.2 million, or 11.4%, due to the decrease in net sales described above under “—Net Sales.” As a percentage of net sales, gross profit decreased from 24.6% for the year ended December 31, 2022 to 23.6% for the corresponding period in 2023, as a result of the factors discussed above under “—Cost of Sales.”
Previous report — wording carried elsewhere
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The largest item affecting the deferred taxes is the difference between book and tax amortization of goodwill and other intangible amortization.
Previous report — wording carried elsewhere
Year Ended December 31, 2023****Compared to Year Ended December 31, 2022
Previous report — wording carried elsewhere
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Previous report — wording carried elsewhere
We had cash and cash equivalents of $20.7 million at December 31, 2022 compared to cash and cash equivalents of $37.0 million at December 31, 2021. The table below sets forth a summary of the significant sources and uses of cash for the periods presented.