DOUGLAS DYNAMICS, INC
For the period ended Mar 31, 2026. Filed May 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 5, 2026
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-Q
Period ended 2025-09-30; filed 2025-11-04.
0001437749-25-033011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0001437749-26-014867
Item 2. Management’s 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 81 previous paragraphs and 78 current paragraphs.
38 unchanged; 36 reworded; 4 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 24 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 (4)
Current report
On February 20, 2026, the United States Supreme Court issued a decision invalidating the broad-based tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Significant uncertainty exists regarding the timing and amount of any potential tariff refunds. We will continue to assess these developments as additional information becomes available.
Current report
Net sales at our Work Truck Solutions segment were $76.9 million for the three months ended March 31, 2026 compared to $78.6 million in the three months ended March 31, 2025, a decrease of $1.7 million. The decrease in sales for the three months ended March 31, 2026 compared to the same period in 2025 was a result of lower commercial volumes and lower sales of Company-purchased chassis, somewhat offset by price increase realization.
Current report
Selling, general and administrative expenses, including intangibles amortization, were $27.9 million for the three months ended March 31, 2026 compared to $24.9 million for the three months ended March 31, 2025, an increase of $3.0 million, or 12.0%. The increase in the three months ended March 31, 2026 is related to higher incentive and stock-based compensation expense of $1.0 million, higher wages and salaries of $0.7 million related to increased headcount including the acquisition of Venco Venturo in November 2025, as well as increased rent costs and other discretionary spending.
Current report
The Company’s effective tax rate was 19.2% and 69.8% for the three months ended March 31, 2026 and 2025, respectively. The effective tax rate for the three months ended March 31, 2026 was impacted by a discrete tax benefit of $0.5 million related to tax from stock compensation. The effective tax rate for the three months ended March 31, 2025 was impacted by discrete tax expense of $0.2 million related to excess tax from stock compensation, and due to the low pre-tax income in the period, the rate was more significantly affected.
Removed paragraphs (7)
Previous report
Net sales at our Work Truck Solutions segment were $94.0 million for the three months ended September 30, 2025 compared to $69.1 million in the three months ended September 30, 2024, an increase of $24.9 million. Net sales at our Work Truck Solutions segment were $258.8 million for the nine months ended September 30, 2025 compared to $222.7 million in the nine months ended September 30, 2024, an increase of $36.1 million. The increase in sales for the three months ended September 30, 2025 compared to the same period in 2024 was a result of improved municipal and commercial volumes, improved throughput, and higher sales of Company-purchased chassis. The increase in sales for the nine months ended September 30, 2025 compared to the same period in 2024 was a result of improved municipal volumes, improved throughput, price increase realization, and higher sales of Company-purchased chassis.
Previous report
Selling, general and administrative expenses, including intangibles amortization, were $24.0 million for the three months ended September 30, 2025 compared to $27.3 million for the three months ended September 30, 2024, a decrease of $3.3 million, or 12.1%. Selling, general and administrative expenses, including intangibles amortization, were $72.3 million for the nine months ended September 30, 2025 compared to $76.4 million for the nine months ended September 30, 2024, a decrease of $4.1 million, or 5.4%. The decrease in the three months ended September 30, 2025 is related to $5.2 million in transaction costs related to the sale leaseback transaction incurred in 2024, somewhat offset by higher incentive compensation expense of $1.5 million and higher stock-based compensation expense of $0.7 million. The decrease in the nine months ended September 30, 2025 is related to $5.2 million in transaction costs related to the sale leaseback transaction incurred in 2024, lower intangibles amortization of $1.2 million related to an asset becoming fully amortized when compared to the prior year, lower CEO transition costs of $1.0 million, lower employee benefits costs of $1.0 million, and lower bad debt expense of $0.4 million somewhat offset by higher incentive-based compensation of $2.0 million, higher stock-based compensation expense of $1.6 million, as well as higher rent expense.
Previous report
Impairment Charges
Previous report
Impairment charges were $1.2 million in the nine months ended September 30, 2024. 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.
Previous report
Gain on Sale Leaseback Transaction
Previous report
Gain on sale leaseback transaction was $42.3 million in the three and nine months ended September 30, 2024, see Note 7 to the Unaudited Condensed Consolidated Financial Statements for additional information on the sale leaseback transaction.
Previous report
The Company’s effective tax rate was 23.5% and 22.7% for the three months ended September 30, 2025 and 2024, respectively. The Company’s effective tax rate was 24.4% and 24.5% for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rate for the three and nine months ended September 30, 2025 includes the impact of OBBBA on certain tax credits. The effective tax rate for the nine months ended September 30, 2024 was impacted by the establishment of reserves for uncertain tax positions of $0.9 million.
Reworded paragraphs (36)
Previous wording
This Quarterly Report on Form 10-Q contains certain“forward-looking statements”* within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the*“Exchange Act”). These statements include information relating to future events, product demand, the payment of dividends, future financial performance, strategies, expectations, competitive environment, regulation and availability of financial resources. These statements are often identified by use of words such as“anticipate,”* “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategies.* Such statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (i) weather conditions, particularly lack of or reduced levels of snowfall and the timing of such snowfall, including as a result of global climate change; (ii) our ability to manage general economic, business and geopolitical conditions, including the impacts of natural disasters, labor strikes, global political instability, adverse developments affecting the banking and financial services industries, pandemics and outbreaks of contagious diseases and other adverse public health developments; (iii) increases in the price of steel or other materials, including as a result of tariffs or inflationary conditions, necessary for the production of our products that cannot be passed on to our distributors; (iv) our inability to maintain good relationships with the original equipment manufacturers (“OEM”) with whom we currently do significant business; (v) the inability of our suppliers and OEM partners to meet our volume or quality requirements; (vi) increases in the price of fuel or freight, (vii) the effects of laws and regulations and their interpretations on our business and financial condition, including policy or regulatory changes related to climate change; (viii) a significant decline in economic conditions; (ix) our inability to maintain good relationships with our distributors; (x) lack of available or favorable financing options for our end-users, distributors or customers; (xi) inaccuracies in our estimates of future demand for our products; (xii) our inability to protect or continue to build our intellectual property portfolio; (xiii) our inability to develop new products or improve upon existing products in response to end-user needs; (xiv) losses due to lawsuits arising out of personal injuries associated with our products; (xv) factors that could impact the future declaration and payment of dividends or our ability to execute…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This Quarterly Report on Form 10-Q contains certain“forward-looking statements”* within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the*“Exchange Act”). These statements include information relating to future events, product demand, the payment of dividends, future financial performance, strategies, expectations, competitive environment, regulation and availability of financial resources. These statements are often identified by use of words such as“anticipate,”* “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategies.* Such statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (i) weather conditions, particularly lack of or reduced levels of snowfall and the timing of such snowfall, including as a result of global climate change; (ii) our ability to manage general economic, business and geopolitical conditions, including the impacts of natural disasters, labor strikes, global political instability, adverse developments affecting the banking and financial services industries, pandemics and outbreaks of contagious diseases and other adverse public health developments, or other significant decline in economic conditions; (iii) increases in the price of steel or other materials, including as a result of tariffs or inflationary conditions, necessary for the production of our products that cannot be passed on to our distributors; (iv) our inability to maintain good relationships with the original equipment manufacturers (“OEM”) with whom we currently do significant business; (v) the inability of our suppliers and OEM partners to meet our volume or quality requirements; (vi) increases in the price of fuel or freight, including the impact of the war with Iran; (vii) the effects of laws and regulations and their interpretations on our business and financial condition, including policy or regulatory changes related to climate change; (viii) a significant decline in economic conditions; (ix) our inability to maintain good relationships with our distributors; (x) lack of available or favorable financing options for our end-users, distributors or customers; (xi) inaccuracies in our estimates of future demand for our products; (xii) our inability to protect or continue to build our intellectual property portfolio; (xiii) our inability to develop new products or improve upon existing products in response to end-user needs; (xiv) the effects of laws and regulations and their interpretations on our business and financial co…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Work Truck Attachments. The Work Truck Attachments segment includes commercial snow and ice management attachments sold under the FISHER®, WESTERN® and SNOWEX® brands, as well as our vertically integrated products. This segment consists of our operations that manufacture and sell snow and ice control products. As described under “Seasonality and Year-To-Year Variability,” the Work Truck Attachments Segment is seasonal and, as a result, its results of operations can vary from quarter-to-quarter and from year-to-year.
Current wording
Work Truck Attachments. The Work Truck Attachments segment includes the Company's operations that manufacture and sell snow and ice control attachments and other products sold under the FISHER®, WESTERN® and SNOWEX® brands, and truck-mounted service cranes and dump hoists under the VENCO® and VENTURO® brands. As described under “Seasonality and Year-To-Year Variability,” the Work Truck Attachments Segment is seasonal and, as a result, its results of operations can vary from quarter-to-quarter and from year-to-year.
Previous wording
As a result of recent market volatility, enacted or potential tariffs, supply chain disruptions, labor strikes, labor shortages, inflationary pressures (including around materials, freight, labor and benefits) and other economic trends, our results of operations may be significantly impacted in future quarters. While Douglas Dynamics is primarily a domestic manufacturer and upfitter and most of our revenue is from domestic customers, we do rely on a global supply chain to source our parts and materials. We source certain materials from China and other countries where tariffs and export restrictions have been enacted or proposed. We may see increased materials costs as a result of these existing or future tariffs and export restrictions, and we may be unable to effectively offset these tariffs or export restrictions with price increases, which could negatively impact our profitability in future quarters. 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. We reduce discretionary spending where possible and defer payments where appropriate within existing contractual terms, while remaining committed to long term growth projects. In consideration of these recent macroeconomic trends and the various actions that we have taken to preserve our liquidity, we expect that cash on hand and cash we generate from operations, as well as available credit under our senior credit facilities, will provide adequate funds for the foreseeable future.
Current wording
As a result of recent market volatility, enacted or potential tariffs, supply chain disruptions, labor strikes, labor shortages, inflationary pressures (including around materials, freight including as a result of the war in Iran, labor and benefits) and other economic trends, our results of operations may be significantly impacted in future quarters. While Douglas Dynamics is primarily a domestic manufacturer and upfitter and most of our revenue is from domestic customers, we do rely on a global supply chain to source our parts and materials. We source certain materials from China and other countries where tariffs and export restrictions have been enacted or proposed. We may see increased materials costs as a result of these existing or future tariffs and export restrictions, and we may be unable to effectively offset these tariffs or export restrictions with price increases, which could negatively impact our profitability in future quarters. We may also not be able to effectively offset increased freight costs resulting from the war in Iran with price increases, which could negatively impact our profitability in future quarters. 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. We reduce discretionary spending where possible and defer payments where appropriate within existing contractual terms, while remaining committed to long term growth projects. In consideration of these recent macroeconomic trends and the various actions that we have taken to preserve our liquidity, we expect that cash on hand and cash we generate from operations, as well as available credit under our senior credit facilities, will provide adequate funds for the foreseeable future.
Previous wording
The following table sets forth, for the three and nine months ended September 30, 2025 and 2024, the consolidated statements of operations of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the table below and throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” consolidated statements of operations data for the three and nine months ended September 30, 2025 and 2024 have been derived from our unaudited consolidated financial statements. The information contained in the table below should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
The following table sets forth, for the three months ended March 31, 2026 and 2025, the consolidated statements of operations of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the table below and throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” consolidated statements of operations data for the three months ended March 31, 2026 and 2025 have been derived from our unaudited consolidated financial statements. The information contained in the table below should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
The following table sets forth for the three and nine months ended September 30, 2025 and 2024 the percentage of certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income, relative to net sales:
Current wording
The following table sets forth for the three months ended March 31, 2026 and 2025 the percentage of certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income, relative to net sales:
Previous wording
Net sales were $162.1 million for the three months ended September 30, 2025 compared to $129.4 million in the three months ended September 30, 2024, an increase of $32.7 million, or 25.3%. Net sales were $471.5 million for the nine months ended September 30, 2025 compared to $425.0 million in the nine months ended September 30, 2024, an increase of $46.5 million, or 10.9%. The increase in sales for the three months ended September 30, 2025 compared to the same period in 2024 is a result of strong municipal and commercial volumes and higher sales of Company-purchased chassis at Work Truck Solutions, as well as higher volumes at Work Truck Attachments related to the timing of preseason shipments between the second and third quarters. The increase in sales for the nine months ended September 30, 2025 compared to the same period in 2024 is a result of strong municipal volumes, higher sales of Company-purchased chassis and price increase realization at Work Truck Solutions, as well as improved snowfall in our core markets leading to higher Attachments volumes in 2025. See below for a discussion of net sales for each of our segments.
Current wording
Net sales were $137.8 million for the three months ended March 31, 2026 compared to $115.1 million in the three months ended March 31, 2025, an increase of $22.7 million, or 19.7%. The increase in sales for the three months ended March 31, 2026 compared to the same period in 2025 is a result of higher volumes at Work Truck Attachments related to improved snowfall levels. See below for a discussion of net sales for each of our segments.
Previous wording
Net sales at our Work Truck Attachments segment were $68.1 million for the three months ended September 30, 2025 compared to $60.2 million in the three months ended September 30, 2024, an increase of $7.9 million. Net sales at our Work Truck Attachments segment were $212.7 million for the nine months ended September 30, 2025 compared to $202.2 million in the nine months ended September 30, 2024, an increase of $10.5 million. The increase in sales in the three months ended September 30, 2025 was due to higher volumes related to the timing of preseason shipments between the second and third quarters, as well as price increase realization. The increase in sales in the nine months ended September 30, 2025 is related to improved snowfall in our core markets leading to higher volumes in 2025, and price increase realization. The most recent snow season ended March 2025 was 12% below the 10-year average, but was approximately 30% better than the prior snow season, which saw snowfall 39.0% below the 10-year average.
Current wording
Net sales at our Work Truck Attachments segment were $60.9 million for the three months ended March 31, 2026 compared to $36.5 million in the three months ended March 31, 2025, an increase of $24.4 million. The increase in sales in the three months ended March 31, 2026 was due to higher equipment volumes and parts and accessories sales related to improved snowfall levels. The most recent snow season ended March 2026 was approximately 26.0% above the 10-year average, compared to the prior snow season which saw snowfall 12.0% below the 10-year average.
Previous wording
Cost of sales was $124.0 million for the three months ended September 30, 2025 compared to $98.5 million for the three months ended September 30, 2024, an increase of $25.5 million or 25.9%. Cost of sales was $345.0 million for the nine months ended September 30, 2025 compared to $313.9 million for the nine months ended September 30, 2024, an increase of $31.1 million or 9.9%. The increase in cost of sales for the three and nine months ended September 30, 2025 compared to the same period in the prior year was driven by the higher volumes. Cost of sales as a percentage of sales were 76.5% and 73.2% for the three and nine months ended September 30, 2025, respectively, compared to 76.1% and 73.9% for the three and nine months ended September 30, 2024, respectively. The increase in cost of sales as a percentage of sales in the three months ended September 30, 2025 is related to segment mix. The decrease in cost of sales as a percentage of sales in the nine months ended September 30, 2025 is related to the higher volumes, efficiencies and segment mix.
Current wording
Cost of sales was $100.0 million for the three months ended March 31, 2026 compared to $86.9 million for the three months ended March 31, 2025, an increase of $13.1 million or 15.1%. The increase in cost of sales for the three months ended March 31, 2026 compared to the same period in the prior year was driven by the higher volumes at our Work Truck Attachments segment. Cost of sales as a percentage of sales were 72.6% for the three months ended March 31, 2026, compared to 75.5% for the three months ended March 31, 2025, respectively. The decrease in cost of sales as a percentage of sales in the three months ended March 31, 2026 is related to segment mix, as Work Truck Attachments typically has higher gross margins than Work Truck Solutions.
Previous wording
Gross profit was $38.1 million for the three months ended September 30, 2025 compared to $30.9 million for the three months ended September 30, 2024, an increase of $7.2 million, or 23.3%. Gross profit was $126.5 million for the nine months ended September 30, 2025 compared to $111.1 million for the nine months ended September 30, 2024, an increase of $15.4 million, or 13.9%. The change in gross profit is attributable to the changes in sales as discussed above under “—Net Sales.” As a percentage of net sales, gross profit decreased from 23.9% for the three months ended September 30, 2024 to 23.5% for the corresponding period in 2025. As a percentage of net sales, gross profit increased from 26.1% for the nine months ended September 30, 2024 to 26.8% for the corresponding period in 2025. The reasons for the changes in gross profit as a percentage of net sales are the same as those relating to the changes in cost of sales as a percentage of sales discussed above under “—Cost of Sales.”
Current wording
Gross profit was $37.8 million for the three months ended March 31, 2026 compared to $28.1 million for the three months ended March 31, 2025, an increase of $9.7 million, or 34.5%. The change in gross profit is attributable to the changes in sales as discussed above under “—Net Sales.” As a percentage of net sales, gross profit increased from 24.5% for the three months ended March 31, 2025 to 27.4% for the corresponding period in 2026. The reasons for the changes in gross profit as a percentage of net sales are the same as those relating to the changes in cost of sales as a percentage of sales discussed above under “—Cost of Sales.”
Previous wording
Debt modification expense was $0.2 million in the nine months ended September 30, 2025. The debt modification expense in 2025 related to fees incurred in conjunction with the Company’s March 26, 2025 refinancing of its term loan and revolving credit facilities by virtue of entering into the Credit Agreement.
Current wording
Debt modification expense was $0.2 million in the three months ended March 31, 2025. The debt modification expense in 2025 related to fees incurred in conjunction with the Company’s March 26, 2025 refinancing of its term loan and revolving credit facilities by virtue of entering into the Credit Agreement.
Previous wording
Loss on extinguishment of debt was $0.2 million in the nine months ended September 30, 2025. The loss on extinguishment of debt in 2025 related to fees incurred in conjunction with the Company’s March 26, 2025 refinancing of its term loan and revolving credit facilities by virtue of entering into the Credit Agreement.
Current wording
Loss on extinguishment of debt was $0.2 million in the three months ended March 31, 2025. The loss on extinguishment of debt in 2025 related to fees incurred in conjunction with the Company’s March 26, 2025 refinancing of its term loan and revolving credit facilities by virtue of entering into the Credit Agreement.
Previous wording
Interest expense was $3.8 million for the three months ended September 30, 2025, a decrease compared to the $4.5 million incurred in the same period in the prior year. Interest expense was $9.1 million for the nine months ended September 30, 2025, a decrease compared to the $12.1 million incurred in the same period in the prior year. The decrease in interest expense for the three months ended September 30, 2025 was due to lower interest on our term loan of $0.8 million and lower interest on our revolver of $0.5 million, somewhat offset by higher floor plan interest of $0.8 million. The decrease in interest expense for the nine months ended September 30, 2025 was due to lower interest on our term loan of $2.0 million and lower interest on our revolver of $1.9 million due to having lower revolver borrowings compared to the prior year, somewhat offset by higher floor plan interest of $1.1 million.
Current wording
Interest expense was $2.1 million for the three months ended March 31, 2026, a decrease compared to the $2.4 million incurred in the same period in the prior year. The decrease in interest expense for the three months ended March 31, 2026 was due to lower interest on our term loan of $0.2 million and lower interest on our revolver of $0.1 million related to lower interest rates.
Previous wording
On July 4, 2025, OBBBA, was signed into law. OBBBA amends U.S. tax law including provisions related to bonus depreciation, research and development and foreign derived intangible income.
Current wording
On July 4, 2025, OBBBA, was signed into law. OBBBA amends U.S. tax law including provisions that impact us related to bonus depreciation, research and development and foreign derived intangible income.
Previous wording
Net income for the three months ended September 30, 2025 was $8.0 million, compared to $32.3 million for the corresponding period in 2024, a decrease of $24.3 million. Net income for the nine months ended September 30, 2025 was $34.1 million, compared to $48.2 million for the corresponding period in 2024, a decrease of $14.1 million. The change in net income for the three and nine months ended September 30, 2025 was driven by the factors described above under “— Net Sales,” “— Cost of Sales,” “— Selling, General and Administrative Expense,” “— Impairment Charges,” “— Gain on Sale Leaseback Transaction,” “— Debt Modification Expense,” “— Loss on Extinguishment of Debt,” “—Interest Expense," and “— Income Taxes.” As a percentage of net sales, net income was 4.9% for the three months ended September 30, 2025 compared to 24.9% for the three months ended September 30, 2024. As a percentage of net sales, net income was 7.2% for the nine months ended September 30, 2025 compared to 11.5% for the nine months ended September 30, 2024.
Current wording
Net income for the three months ended March 31, 2026 was $6.4 million, compared to $0.1 million for the corresponding period in 2025, an increase of $6.3 million. The change in net income for the three months ended March 31, 2026 was driven by the factors described above under “— Net Sales,” “— Cost of Sales,” “— Selling, General and Administrative Expense,” “— Debt Modification Expense,” “— Loss on Extinguishment of Debt,” “—Interest Expense," and “— Income Taxes.” As a percentage of net sales, net income was 4.6% for the three months ended March 31, 2026 compared to 0.1% for the three months ended March 31, 2025.
Previous wording
Our primary uses of cash are to provide working capital, meet debt service requirements, finance capital expenditures, pay dividends under our dividend policy and support our growth, including through potential acquisitions, and for other general corporate purposes. For a description of the seasonality of our working capital rates see “—Seasonality and Year-To-Year Variability.”
Current wording
Our primary uses of cash are to provide working capital, meet debt service requirements, finance capital expenditures, pay dividends under our dividend policy, repurchase shares of our common stock, and support our growth, including through potential acquisitions, and for other general corporate purposes. For a description of the seasonality of our working capital rates see “—Seasonality and Year-To-Year Variability.”
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 our 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 repurchased approximately $6.0 million in shares during the nine months ended September 30, 2025.
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 our 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 repurchased approximately $3.0 million in shares during the three months ended March 31, 2026.
Previous wording
As of September 30, 2025, we had $70.1 million of total liquidity, comprised of $10.6 million in cash and cash equivalents and $59.5 million of borrowing availability under our revolving credit facility, compared with total liquidity as of December 31, 2024 of approximately $154.6 million, comprised of approximately $5.1 million in cash and cash equivalents and borrowing availability of approximately $149.5 million under our revolving credit facility. The change in our total liquidity from December 31, 2024 is primarily due to the seasonality of our business. In addition, as discussed in Note 7 and Note 9 to the Unaudited Condensed 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. We have taken various steps to preserve liquidity. In January 2024, we implemented the 2024 Cost Savings Program, which was primarily in the form of restructuring charges for salaried headcount reductions and impacted both the Work Truck Attachments segment and corporate functions. We are also continuing to reduce discretionary spending where appropriate and deferring payments where appropriate within existing contractual terms, while remaining committed to long term growth projects. We expect that cash on hand and cash we generate from operations, as well as available credit under our senior credit facilities, will provide adequate funds for the primary uses of cash we describe above for the foreseeable future. From time to time, we may seek additional funding through the issuance of debt or equity securities to provide additional liquidity to fund acquisitions aligned with our strategic priorities and for other general corporate purposes.
Current wording
As of March 31, 2026, we had $109.7 million of total liquidity, comprised of $5.2 million in cash and cash equivalents and $104.5 million of borrowing availability under our revolving credit facility, compared with total liquidity as of December 31, 2025 of approximately $127.8 million, comprised of approximately $8.3 million in cash and cash equivalents and borrowing availability of approximately $119.5 million under our revolving credit facility. The change in our total liquidity from December 31, 2025 is primarily due to the seasonality of our business. We have taken various steps to preserve liquidity, including reducing discretionary spending where appropriate and deferring payments where appropriate within existing contractual terms, while remaining committed to long term growth projects. We expect that cash on hand and cash we generate from operations, as well as available credit under our senior credit facilities, will provide adequate funds for the primary uses of cash we describe above for the foreseeable future. From time to time, we may seek additional funding through the issuance of debt or equity securities to provide additional liquidity to fund acquisitions aligned with our strategic priorities and for other general corporate purposes.
Previous wording
We had cash and cash equivalents of $10.6 million at September 30, 2025 compared to cash and cash equivalents of $5.1 million and $8.4 million at December 31, 2024 and September 30, 2024, respectively. 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 $5.2 million at March 31, 2026 compared to cash and cash equivalents of $8.3 million and $7.2 million at December 31, 2025 and March 31, 2025, respectively. The table below sets forth a summary of the significant sources and uses of cash for the periods presented.
Previous wording
Net cash used in operating activities decreased $12.0 million from the nine months ended September 30, 2024 to the nine months ended September 30, 2025. The decrease in cash used in operating activities was due to a $35.8 million increase in net income adjusted for reconciling items, somewhat offset by unfavorable changes in working capital and operating assets and liabilities of $23.7 million. The largest unfavorable changes in working capital and operating assets and liabilities was an increase in cash used in accounts receivable related to the higher sales year over year, as well as an increase in cash used related to contractually required improvements on the properties under the sale leaseback transaction.
Current wording
Net cash used in operating activities decreased $0.3 million from the three months ended March 31, 2025 to the three months ended March 31, 2026. The decrease in cash used in operating activities was due to a $6.9 million increase in net income adjusted for reconciling items, somewhat offset by unfavorable changes in working capital and operating assets and liabilities of $6.5 million. The largest unfavorable changes in working capital and operating assets and liabilities was an increase in cash used in accounts payable related to the timing of supplier payments, somewhat offset by higher cash provided by accounts receivable related to the timing of collections.
Previous wording
Net cash used in investing activities increased $68.6 million for the nine months ended September 30, 2025 compared to the corresponding period in 2024 due to gross proceeds on the sale leaseback transaction of $64.2 million in the prior year, as well as a higher level of capital expenditures related to the acquisition of equipment and the improvement of facilities.
Current wording
Net cash used in investing activities increased $1.9 million for the three months ended March 31, 2026 compared to the corresponding period in 2025 due to a higher level of capital expenditures, as well as the payment of the final working capital adjustment related to the Venco Venturo acquisition.
Previous wording
Net cash provided financing activities increased $77.8 million for the nine months ended September 30, 2025 as compared to the corresponding period in 2024. The increase in cash provided was related to having $65.0 million in revolver borrowings outstanding at September 30, 2025 and $0.0 million in revolver borrowings outstanding at December 31, 2024, compared to $63.0 million in revolver borrowings outstanding at September 30, 2024 and $47.0 million in revolver borrowings outstanding at December 31, 2023. This increase in cash provided was somewhat offset by there being $6.0 million in share repurchases in the nine months ended September 30, 2025, with no repurchases in the corresponding period in the prior year. In addition, the increase in cash provided by financing activities is related to a $42.0 million voluntary pre-payment of debt amortization principal payments in September 2024 using a portion of the proceeds from the sale leaseback transaction
Current wording
Net cash provided by financing activities decreased $3.6 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025. The decrease in cash provided was related to there being $3.0 million in share repurchases in the three months ended March 31, 2026, with no repurchases in the corresponding period in the prior year, as well as net borrowings in the prior year related to the debt refinancing that occurred on March 26, 2025. This decrease in cash provided was somewhat offset by having higher net revolver borrowings in the three months ended March 31, 2026 compared to the prior year.
Previous wording
Free cash flow for the three months ended September 30, 2025 was ($11.4) million compared to ($15.4) million in the corresponding period in 2024, an increase of $4.0 million. Free cash flow for the nine months ended September 30, 2025 was ($29.3) million compared to ($37.3) million in the corresponding period in 2024, an increase of $8.0 million. The increase in free cash flow for the nine months ended September 30, 2025 is primarily a result of lower cash used in operating activities of $12.0 million as discussed above under “Liquidity and Capital Resources.”
Current wording
Free cash flow for the three months ended March 31, 2026 was ($4.2) million compared to ($3.5) million in the corresponding period in 2025, a decrease of $0.7 million. The decrease in free cash flow for the three months ended March 31, 2026 is primarily a result of lower cash used in operating activities of $0.3 million as discussed above under “Liquidity and Capital Resources.”
Previous wording
Free cash flow is a non-GAAP financial measure which we define as net cash provided by (used in) operating activities less capital expenditures. Free cash flow should be evaluated in addition to, and not considered a substitute for, other financial measures such as net income and cash flow provided by (used in) operations. We believe that free cash flow represents our ability to generate additional cash flow from our business operations.
Current wording
Free cash flow is a non-GAAP financial measure which we define as net cash used in operating activities less capital expenditures. Free cash flow should be evaluated in addition to, and not considered a substitute for, other financial measures such as net income and cash flow used in operations. We believe that free cash flow represents our ability to generate additional cash flow from our business operations.
Previous wording
Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, as further adjusted for certain charges consisting of unrelated legal and consulting fees, severance, restructuring charges, write downs of property, plant and equipment, impairment charges, CEO transition costs, insurance proceeds, debt modification expense, loss on extinguishment of debt, gain on sale leaseback transaction and related transaction costs, and stock-based compensation. 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 before interest, taxes, depreciation and amortization, as further adjusted for certain charges consisting of unrelated legal and consulting fees, severance, restructuring expenses, debt modification expense, loss on extinguishment of debt, acquisition-related expenses, amortization of inventory step-up related to the Venco Venturo acquisition, and stock-based compensation. 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
The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to Adjusted EBITDA as well as the resulting calculation of Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024:
Current wording
The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to Adjusted EBITDA as well as the resulting calculation of Adjusted EBITDA for the three months ended March 31, 2026 and 2025:
Previous wording
The following table presents Adjusted EBITDA by segment for the three and nine months ended September 30, 2025 and 2024.
Current wording
The following table presents Adjusted EBITDA by segment for the three months ended March 31, 2026 and 2025.
Previous wording
Adjusted EBITDA at our Work Truck Attachments segment was $10.5 million for the three months ended September 30, 2025 compared to $8.1 million in the three months ended September 30, 2024, an increase of $2.4 million. Adjusted EBITDA at our Work Truck Attachments segment was $42.4 million for the nine months ended September 30, 2025 compared to $39.5 million in the nine months ended September 30, 2024, an increase of $2.9 million. The increase in the three months ended September 30, 2025 is due to higher volumes related to the timing of preseason shipments between the second and third quarters. The increase in the nine months ended September 30, 2025 from the corresponding period in 2024 was due to improved snowfall in our core markets leading to higher volumes in 2025. The most recent snow season ended March 2025 was 12% below the 10-year average, but was approximately 30% better than the prior snow season, which had snowfall 39.0% below the 10-year average.
Current wording
Adjusted EBITDA at our Work Truck Attachments segment was $7.7 million for the three months ended March 31, 2026 compared to $0.3 million in the three months ended March 31, 2025, an increase of $7.4 million. The change in the three months ended March 31, 2026 was due to higher equipment volumes and parts and accessories sales related to improved snowfall levels. The most recent snow season ended March 2026 was approximately 26.0% above the 10-year average, compared to the prior snow season which saw snowfall 12.0% below the 10-year average.
Previous wording
Adjusted EBITDA at our Work Truck Solutions segment was $9.6 million for the three months ended September 30, 2025 compared to $7.2 million in the three months ended September 30, 2024, an increase of $2.4 million. Adjusted EBITDA at our Work Truck Solutions segment was $29.8 million for the nine months ended September 30, 2025 compared to $21.1 million in the nine months ended September 30, 2024, an increase of $8.7 million. The change in the three and nine months ended September 30, 2025 was due to improved municipal volumes, improved throughput, price increase realization, and improved efficiencies.
Current wording
Adjusted EBITDA at our Work Truck Solutions segment was $9.1 million for the three months ended March 31, 2026 compared to $9.1 million in the three months ended March 31, 2025. The change in the three months ended March 31, 2026 was due to price increase realization and improved efficiencies, mostly offset by lower commercial volumes and lower sales of Company-purchased chassis.
Previous wording
Adjusted Net Income and Adjusted Earnings Per Share (calculated on a diluted basis) represents net income and earnings per share (as defined by GAAP), excluding the impact of stock-based compensation, severance, restructuring charges, write downs of property, plant and equipment, impairment charges, CEO transition costs, insurance proceeds, debt modification expense, loss on extinguishment of debt, gain on sale leaseback transaction and related transaction costs, certain charges related to unrelated legal fees and consulting fees, and adjustments on derivatives not classified as hedges, net of their income tax impact. 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 the Company’s 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 and earnings (loss) per share (as defined by GAAP), excluding the impact of stock-based compensation, severance, restructuring expenses, debt modification expense, loss on extinguishment of debt, acquisition-related expenses, amortization of inventory step-up related to the Venco Venturo acquisition, and certain charges related to unrelated legal fees and consulting fees. Management believes that Adjusted Net Income and Adjusted Earnings Per Share are useful in assessing the Company’s 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
The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to Adjusted net income as well as a reconciliation of diluted earnings per share, the most comparable GAAP financial measure, to Adjusted diluted earnings per share for the three and nine months ended September 30, 2025 and 2024:
Current wording
The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to Adjusted net income as well as a reconciliation of diluted earnings per share, the most comparable GAAP financial measure, to Adjusted diluted earnings per share for the three months ended March 31, 2026 and 2025:
Previous wording
Inflation in materials and labor had a material impact on our profitability in the three and nine months ended September 30, 2025 and 2024 and, although we are starting to see certain inflationary pressures ease, we expect the impact of any tariffs enacted and any ongoing inflationary pressures may also impact our profitability in the remainder of 2025. While we anticipate being able to 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 prior year as a result of inflationary pressures due to tariffs, we experienced significant increases in steel costs, but were 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.
Current wording
Inflation in materials, freight and labor, including as a result of tariffs and the war in Iran, had a material impact on our profitability in the three months ended March 31, 2026 and 2025 and we expect the impact of any tariffs enacted and any ongoing inflationary pressures may also impact our profitability in the remainder of 2026. While we anticipate being able to 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 prior years as a result of inflationary pressures due to tariffs, we experienced significant increases in steel costs, but were 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.
Previous wording
While our Work Truck Solutions segment has limited seasonality and variability, our Work Truck Attachments segment is seasonal and also varies from year-to-year. Consequently, our results of operations and financial condition for this segment vary from quarter-to-quarter and from year-to-year as well. In addition, because of this seasonality and variability, the results of operations for our Work Truck Attachments segment and our consolidated results of operations for any quarter may not be indicative of results of operations that may be achieved for a subsequent quarter or the full year, and may not be similar to results of operations experienced in prior years. That being the case, while snowfall levels vary within a given year and from year-to-year, snowfall, and the corresponding replacement cycle of snow and ice control equipment manufactured and sold by our Work Truck Attachments segment, is relatively consistent over multi-year periods.
Current wording
Our Work Truck Solutions segment has less seasonality and variability than our Commercial Snow & Ice reporting unit within our Work Truck Attachments segment, which is seasonal and also varies from year‑to‑year, in part due to changes in snowfall levels. Consequently, our Work Truck Attachments segment results of operations and financial condition for this segment vary from quarter-to-quarter and from year-to-year as well. In addition, because of this seasonality and variability, the results of operations for our Work Truck Attachments segment and our consolidated results of operations for any quarter may not be indicative of results of operations that may be achieved for a subsequent quarter or the full year, and may not be similar to results of operations experienced in prior years. That being the case, while snowfall levels vary within a given year and from year-to-year, snowfall, and the corresponding replacement cycle of snow and ice control equipment manufactured and sold by our Commercial Snow & Ice reporting unit, is relatively consistent over multi-year periods.
Previous wording
Sales of our Work Truck Attachments products are significantly impacted by the level, timing and location of snowfall, with sales in any given year and region most heavily influenced by snowfall levels in the prior snow season (which we consider to begin in October and end in March) in that region. This is due to the fact that end-user demand for our Work Truck Attachments products is driven primarily by the condition of their snow and ice control equipment, and in the case of professional snowplowers, by their financial ability to purchase new or replacement snow and ice control equipment, both of which are significantly affected by snowfall levels. Heavy snowfall during a given winter causes usage of our Work Truck Attachments products to increase, resulting in greater wear and tear to our products and a shortening of their life cycles, thereby creating a need for replacement commercial snow and ice control equipment and related parts and accessories. In addition, when there is a heavy snowfall in a given winter, the increased income our professional snowplowers generate from their professional snowplow activities provides them with increased purchasing power to purchase replacement commercial snow and ice control equipment prior to the following winter. To a lesser extent, sales of our Work Truck Attachments products are influenced by the timing of snowfall in a given winter. Because an early snowfall can be viewed as a sign of a heavy upcoming snow season, our end-users may respond to an early snowfall by purchasing replacement snow and ice control equipment during the current season rather than delaying purchases until after the season is over when most purchases are typically made by end-users.
Current wording
Sales of our snow and ice control products are significantly impacted by the level, timing and location of snowfall, with sales in any given year and region most heavily influenced by snowfall levels in the prior snow season (which we consider to begin in October and end in March) in that region. This is due to the fact that end-user demand for our Work Truck Attachments snow and ice control products is driven primarily by the condition of their snow and ice control equipment, and in the case of professional snowplowers, by their financial ability to purchase new or replacement snow and ice control equipment, both of which are significantly affected by snowfall levels. Heavy snowfall during a given winter causes usage of our Work Truck Attachments snow and ice control products to increase, resulting in greater wear and tear to our products and a shortening of their life cycles, thereby creating a need for replacement commercial snow and ice control equipment and related parts and accessories. In addition, when there is a heavy snowfall in a given winter, the increased income our professional snowplowers generate from their professional snowplow activities provides them with increased purchasing power to purchase replacement commercial snow and ice control equipment prior to the following winter. To a lesser extent, sales of our Work Truck Attachments snow and ice control products are influenced by the timing of snowfall in a given winter. Because an early snowfall can be viewed as a sign of a heavy upcoming snow season, our end-users may respond to an early snowfall by purchasing replacement snow and ice control equipment during the current season rather than delaying purchases until after the season is over when most purchases are typically made by end-users.
Previous wording
We attempt to manage the seasonal impact of snowfall on our revenues in part through our pre-season sales program, which involves actively soliciting and encouraging pre-season distributor orders in the second and third quarters by offering our Work Truck Attachments distributors a combination of pricing, payment and freight incentives during this period. These pre-season sales incentives encourage our Work Truck Attachments distributors to re-stock their inventory during the second and third quarters in anticipation of the peak fourth quarter retail sales period by offering pre-season pricing and payment deferral until the fourth quarter. As a result, we tend to generate our greatest volume of sales (an average of over two-thirds over the last ten years) for the Work Truck Attachments segment during the second and third quarters, providing us with manufacturing visibility for the remainder of the year. By contrast, our revenue and operating results for the Work Truck Attachments segment tend to be lowest during the first quarter, as management believes our end-users prefer to wait until the beginning of a snow season to purchase new equipment and as our distributors sell off inventory and wait for our pre-season sales incentive period to re-stock inventory. Fourth quarter sales for the Work Truck Attachments segment vary from year-to-year as they are primarily driven by the level, timing and location of snowfall during the quarter. This is because most of our fourth quarter sales and shipments for the Work Truck Attachments segment consist of re-orders by distributors seeking to restock inventory to meet immediate customer needs caused by snowfall during the winter months.
Current wording
We attempt to manage the seasonal impact of snowfall on our Work Truck Attachments revenues in part through our pre-season sales program, which involves actively soliciting and encouraging pre-season distributor orders in the second and third quarters by offering our Work Truck Attachments distributors a combination of pricing, payment and freight incentives during this period. These pre-season sales incentives encourage our distributors to re-stock their inventory during the second and third quarters in anticipation of the peak fourth quarter retail sales period by offering pre-season pricing and payment deferral until the fourth quarter. As a result, we tend to generate our greatest volume of sales (an average of over two-thirds over the last ten years) for the Work Truck Attachments segment during the second and third quarters, providing us with manufacturing visibility for the remainder of the year. By contrast, our revenue and operating results for the Work Truck Attachments segment tend to be lowest during the first quarter, as management believes our end-users prefer to wait until the beginning of a snow season to purchase new equipment and as our distributors sell off inventory and wait for our pre-season sales incentive period to re-stock inventory. Fourth quarter sales for the Work Truck Attachments segment vary from year-to-year as they are primarily driven by the level, timing and location of snowfall during the quarter. This is because most of our fourth quarter sales and shipments for the Work Truck Attachments segment consist of re-orders by distributors seeking to restock inventory to meet immediate customer needs caused by snowfall during the winter months.
Previous wording
Because of the seasonality of our sales of Work Truck Attachments products, we experience seasonality in our working capital needs as well. In the first quarter, we typically require capital as we are generally required to build our inventory for the Work Truck Attachments segment in anticipation of our second and third quarter pre-season sales. During the second and third quarters, our working capital requirements rise as our accounts receivable for the Work Truck Attachments segment increase as a result of the sale and shipment of products ordered through our pre-season sales program, and as we continue to build inventory. Working capital requirements peak towards the end of the third quarter and then begin to decline through the fourth quarter through a reduction in accounts receivable for the Work Truck Attachments segment when we receive the majority of the payments for pre-season shipped products.
Current wording
Because of the seasonality of our sales of Work Truck Attachments snow and ice control products, we experience seasonality in our working capital needs as well. In the first quarter, we typically require capital as we are generally required to build our snow and ice control inventory in anticipation of our second and third quarter pre-season sales. During the second and third quarters, our working capital requirements rise as our accounts receivable increase as a result of the sale and shipment of products ordered through our pre-season sales program, and as we continue to build inventory. Working capital requirements peak towards the end of the third quarter and then begin to decline through the fourth quarter through a reduction in accounts receivable for the Work Truck Attachments segment when we receive the majority of the payments for pre-season shipped products.
Previous wording
Additionally, although our annual capital expenditures are modest, they can be temporarily reduced by up to approximately 40% in response to actual or anticipated decreases in sales volumes. If we are unsuccessful in our asset management initiatives, the seasonality and year-to-year variability effects on our business may be compounded and in turn our results of operations and financial condition may suffer.
Current wording
Additionally, although our annual capital expenditures are modest and normally budgeted around 2-3% of net sales, they can be temporarily reduced by up to approximately 40% in response to actual or anticipated decreases in sales volumes. If we are unsuccessful in our asset management initiatives, the seasonality and year-to-year variability effects on our business may be compounded and in turn our results of operations and financial condition may suffer.