Douglas Dynamics (PLOW) Earnings Call Transcript

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Date

Feb. 24, 2026, 10:00 a.m. ET

Call participants

• President and Chief Executive Officer — Mark Van Genderen
• Chief Financial Officer — Sarah Lauber
• Vice President, Investor Relations and External Communications — Nathan Elwell

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Takeaways

• Consolidated net sales -- $184.5 million in the fiscal fourth quarter ended Dec. 31, 2025, up approximately 29%, with both segments contributing to growth.
• Gross profit -- $48.1 million in the fiscal fourth quarter, an increase of approximately 35%; gross margin rose 120 basis points to 26.1%.
• Net income -- $12.8 million for the fiscal fourth quarter, growth of over 60%, with diluted earnings per share at $0.54.
• Adjusted EBITDA -- $25.8 million in the fiscal fourth quarter, up 37%, with margins growing 90 basis points to 14%.
• Full-year net sales -- $656.1 million for fiscal year ended Dec. 31, 2025, representing a 15% increase and a company record.
• Full-year adjusted EPS -- $2.24, up 52% from the prior year.
• Work Truck Attachments segment (quarter) -- Net sales and adjusted EBITDA both grew over 50% to $83.1 million and $13.9 million, respectively, driven by early winter storms and higher demand.
• Work Truck Attachments segment (full year) -- Net sales increased 16% to $295.7 million; adjusted EBITDA reached $56.2 million with record parts and accessories sales.
• Parts and accessories sales -- Represented 14%-15% of Attachments sales for both year and quarter, delivering high-margin contributions.
• Work Truck Solutions segment (quarter) -- Net sales increased 13% to $101.5 million; adjusted EBITDA rose 22% to $11.9 million, with record 11.7% margin.
• Work Truck Solutions segment (full year) -- Net sales up 15%, adjusted EBITDA up 35%, and adjusted EBITDA margin reached 11.6% (up 170 basis points); included $81.8 million incremental chassis sales from large contracts.
• Backlog and demand -- Near-record backlog and "robust" municipal demand, with commercial dealer demand described as slightly softening.
• Free cash flow -- Up 91% to $63.6 million for the year, primarily from higher net income and a one-time $7 million tax benefit.
• Liquidity -- $127.8 million in total liquidity at year-end, including $8.3 million cash and $119.5 million in revolver capacity.
• Inventory -- Increased 9% to $150.0 million; reduction in snow and ice Attachments inventory was more than offset by acquisition inventory and higher chassis/components in Solutions.
• Leverage ratio -- Year-end leverage at 1.8 times, within the target range of 1.5 to 3.0 times.
• 2026 outlook: Net sales -- Guidance of $710 million to $760 million, exceeding all previous topline forecasts.
• 2026 outlook: Adjusted EBITDA -- Projected range of $100 million to $120 million, the highest ever issued by the company.
• 2026 outlook: Adjusted EPS -- Guidance of $2.25 to $2.85, with projections exceeding prior-year results at all range points.
• Capital allocation -- Quarterly dividend maintained at $0.295 per share; $38.0 million remains authorized for share repurchases.
• CapEx and investment -- 2025 capital expenditures reached $11.1 million; total spend including facility improvements was $15.1 million, near the traditional 2%-3% of sales range, with similar or slightly higher plans for 2026.
• Strategic expansion -- VENCO Venturo acquisition closed in November; financial expectations remain EPS and free cash flow accretive in 2026.
• Facility growth -- New Missouri facility for Henderson will open in early summer, adding 8%-10% annual volume capacity to the segment.
• Guidance assumptions -- 2026 forecast assumes above-average snowfall in the first quarter and average snowfall in the fourth quarter; margin improvement contingent on preseason equipment order trends.
• Segment growth expectations -- Solutions projected to grow mid- to high-single digits; Attachments growth driven by acquisition and higher expected Q1 snowfall.
• Margin profile -- Attachments ended at 19% margin; can reach "mid-twenties" at average volume according to management. Solutions targeted to maintain current margin with focus on EBITDA dollar growth.

Summary

Douglas Dynamics (NYSE:PLOW) delivered record growth in both net sales and profitability for the fiscal year ended Dec. 31, 2025, supported by favorable weather and operational execution. Management introduced a historic 2026 outlook with new highs in sales, adjusted EBITDA, and EPS guidance. The VENCO Venturo acquisition marks a return to M&A, with integration proceeding positively and anticipated financial accretion. Tight dealer inventories and robust municipal demand signal continued momentum, especially as a new facility expands production capacity in the Midwest. The company’s strategic pillars of optimize, expand, and activate are translating into measurable financial and operational outcomes across the organization.

• Management stated, “2025 was an important year for our company,” citing delivery at the high end of twice-increased guidance ranges.
• Lauber said, “2025 was a relatively straightforward year with fewer headwinds than we have seen in recent years,” pointing to both segments achieving double-digit EBITDA growth.
• Dealer sentiment and channel checks indicate “plow and hopper inventories are below the ten-year averages,” signaling a favorable setup for preseason orders.
• The new auto speed controller, retrofittable to all hoppers produced since 2016, is positioned by Attachments as a product innovation expected to enhance aftermarket penetration and customer satisfaction.
• Work Truck Solutions’ backlog remains near record levels without significant drawdown, reinforcing management’s view of continued municipal demand strength.
• Management indicated incremental margin expansion in Attachments will rely on returning to historical equipment volumes, as cost saving initiatives are already “baked in.”

Industry glossary

• DDMS system: Douglas Dynamics Management System — the company’s structured process for continuous operational improvement.
• Aftermarket demand: Sales of parts and accessories for equipment already in use, as opposed to new equipment units.
• Preseason orders: Equipment orders placed by dealers ahead of the primary snow season, often a forward indicator of end-user demand.
• Build-to-suit lease: Facility arrangement where a property is constructed to company specifications and then leased rather than owned.

Full Conference Call Transcript

Mark Van Genderen: Thanks, Nathan. And welcome, everyone, to our fourth quarter call. Given our core business, we would be remiss not to recognize the magnitude of winter storm Hernando's impact on the East Coast right now. Our dealers, contractors, and teams are doing everything they can to keep people safe during this historic winter event. Stepping back, as a company, we have experienced dramatic changes in operating conditions over the past several years. We have successfully navigated COVID, supply chain disruptions, tariffs, and the tough but necessary business decisions necessitated by several consecutive seasons of low snowfall. While the journey has been demanding, our teams have continually risen to the challenge.

We are emerging stronger, more resilient, and better prepared for what lies ahead.

In 2025, we saw a significant increase in business activity across the company, and once again, it was the determination, strength, and ingenuity of our people that allowed us to fully capitalize on these opportunities. Across every aspect of our operations, our people stepped up to the plate in 2025. Their commitment is clearly reflected in our results. So thank you to everyone at Douglas Dynamics, Inc. There are three main areas of focus Sarah and I would like to cover in this morning's call. First, an excellent fourth quarter topped off a fantastic 2025, with operational strength and robust financial performance in both the Work Truck Attachments and Work Truck Solutions segments.

Second, with an above-average snowfall so far this winter, we expect to build off of 2025's momentum in 2026, with continued growth in both segments. Sarah will cover that outlook later in our call. And finally, and arguably most importantly, the strategic framework we introduced in 2025 and the actions we have taken to support that strategy have positioned us extremely well not only going into 2026, but beyond, to drive sustainable long-term value creation.

So let us start with 2025 performance. We delivered strong financial results throughout the year, with each quarter, and in particular the fourth quarter, growing from the prior year. These year-over-year fourth quarter improvements were primarily driven by two things: the excellent performance at Solutions and the early onset of winter boosting demand at Attachments. During 2025, we increased our guidance ranges twice and still managed to come in at the high end of this range. When you look back over the past few years, our earnings have grown from roughly $1.00 of adjusted EPS in 2023 to $1.47 in 2024 to $2.24 in 2025. That’s a fantastic return to form.

Okay. Let us discuss our fourth quarter and full-year results in more detail. Starting with Work Truck Attachments. Demand for the product lines Work Truck Attachments designs, builds, and sells is primarily driven by snowfall. And as a refresher, the average life cycle of the equipment we produce is between five and ten years. We know that there are tens, if not hundreds of thousands, of our Fisher, Western, and SnowEx products in use on the roads today. Just as below-average snowfall winters lead to an elongated life expectancy, above-average snowfall winters drive increased usage and ultimately demand.

Of note, we measure this phenomenon over multi-year periods and develop forecast models, create production schedules, and make investment decisions based on snowfall over time, not any one given year. This is also the reason that one strong winter can help to provide a multiyear tailwind.

This winter, snowfall came early with major November and December storms in the Midwest and significant persistent lake-effect snow in the Great Lakes region. And so far in 2026, several large snow and ice storms made their way across much of the country, including the Plains, Mid-Atlantic states, and the Northeast, including the historical storm that many of you just experienced. In fact, after several years of low snowfall, we are confident that the current snow season will end above the ten-year average. I want to thank our many dealers and contractors in these core markets for their tireless work to keep people safe during these storms.

Our regular channel checks in January confirmed that with increased year-over-year retail sales, plow and hopper inventories are below the ten-year averages. These weather conditions in the fourth quarter helped increase net sales and adjusted EBITDA, including record sales of parts and accessories. Now, unlike sales of plows and hoppers, which are generally aligned with snowfall trends over multiple years, we see a high correlation and immediate impact between parts and accessories sales and current snowfall. On a full-year basis, net sales and adjusted EBITDA improved by double digits. With the end of the 2025–2026 snow season coming into view, our teams have been working nonstop to meet demand driven by the recent major storms.

In addition, we have already started planning and preparing for what we believe will be a solid preseason.

Okay. Turning to Work Truck Solutions, which exceeded our expectations once again. In fact, it was a record quarter to finish a record year. It is also the fourth consecutive year of improvements. On a full-year basis, not only did we deliver double-digit net sales growth and adjusted EBITDA growth, we saw record annual margins. Demand and backlog from municipal customers remain robust, and we continue to work through the large multiyear contracts that we discussed last year. After four consecutive years of growth, the bar is set high. Given our excellent lead times and customer support, we are in a formidable position in the marketplace today. We continue to see strong demand from municipal customers.

We are executing effectively, and we maintain a near-record backlog. All in all, we expect our municipal business will continue to grow, although not quite at the same pace we have experienced in the last four years.

Commercial demand dynamics remain somewhat opaque. While the fleet business remains generally solid, we are seeing some minor softening of demand in the dealer business, which is difficult to predict. Dealers have inventory on the ground, and smaller customers remain hesitant and price conscious. Our commercial teams remain diligently focused on optimizing this business. Overall, really a fantastic performance for the Solutions segment in 2025.

All right. Now that I have covered our results, let me just take a step back for a moment and discuss strategy. Building upon our strong financial performance in 2025, and with a seasoned management team now in place, we have crafted a more defined strategic vision for the future. This manifested itself through the three strategic pillars that we have been talking about for the past couple of quarters: optimize, expand, and activate.

The first priority is to optimize our current operations. Now continuous improvement through our DDMS system is part of our DNA, and our optimize pillar has helped refocus our efforts across the organization. The creation of centers of excellence within the Attachment segment was a great example where production has moved from brand-focused to a specific product-focused manufacturing approach at each facility. This has enabled greater specialization and brings the full breadth of our engineering, supply chain, and manufacturing expertise to bear across our Western, Fisher, and SnowEx product lines, while leveraging the unique strength of each location and workforce.

The second pillar is expand, pursuing organic geographic growth and new product offerings. For example, with lead times across the municipal sector top of mind, we are excited about the opening of Henderson's new Missouri facility this summer. This expansion will allow us to better serve customers in surrounding markets and continue to deliver trucks on time, both of which will strengthen our competitive advantage. In addition, the Attachments team launched the auto speed controller for hopper spreaders last year. This controller is linked directly to the truck's CPU, and as a result, can automatically adjust the flow of deicing material as the vehicle speed changes, improving efficiency, reducing waste, and allowing for better monitoring.

And it is retrofittable to all hoppers we have produced back to 2016. This product, its capabilities, and the fact that it can be fitted to every hopper that we have built and our dealers have sold over the past ten years, have all been received extremely well by our end-user professionals.

And finally, activate refers to last year's restart of our M&A efforts, which led to our first acquisition in nine years. We welcomed VENCO Venturo to the Douglas Dynamics, Inc. family in November. Adding this well-established and highly respected provider of truck-mounted cranes and dump hoists was a meaningful first step as we look to diversify and balance our portfolio over the long term. Our integration team has been working diligently to start realizing the benefits of this partnership and drive profitable growth. VENCO is a great example of the types of high-quality brands and businesses that align with our long-term vision.

Given the financial strength of Douglas Dynamics, Inc., combined with this clarifying strategic vision for the company, we will continue to pursue the right acquisitions in the vehicle attachment space.

I am really pleased to say that our mission, vision, and strategic direction have all been well received internally and externally. With substantial initiatives now underway across all three pillars, we entered 2026 with a clear focus on sustainable, profitable growth. So in summary, 2025 was an important year for our company. And frankly, we are just getting started. Divisional plans aligned with the optimize, expand, and activate strategies are rapidly gaining traction and delivering results. We are confident in the strategic path ahead, and we are focused on sustaining and expanding our recent success in 2026 and beyond.

Personally, I am looking forward to attending the NTEA Work Truck Show in Indianapolis in two weeks, which is always a great opportunity to reconnect with our teams and meet with partners and customers. It is an exciting time in our industry with considerable opportunities ahead, and our teams are continually striving to get better every day. With that, I would like to pass the call to Sarah.

Sarah Lauber: Thanks, Mark. Before I begin, unless stated otherwise, all the comparisons I will make today are between the fourth quarter or full year of 2025 versus the same time periods in 2024. Also, remember that 2024 results included a onetime gain of $42.3 million from the sale-leaseback transaction completed in September 2024.

Overall, our financial results were excellent. We closed out the year strong. I want to commend everyone at the company on their hard work this year that really paid off. Let me walk through the numbers for you, and I will start with the quarter and then discuss the full year. On a consolidated basis, fourth quarter net sales increased approximately 29% to $184.5 million with growth in both segments. Gross profit grew approximately 35% to $48.1 million with gross margin increasing 120 basis points to 26.1%. SG&A expenses increased approximately 29% to $27.3 million, primarily due to higher variable compensation on increased sales.

Net income and diluted earnings per share both increased over 60% to $12.8 million and $0.54 respectively. Adjusted EBITDA increased approximately 37% to $25.8 million and margins increased 90 basis points to 14%. Adjusted earnings per share increased approximately 58% to $0.62. These tremendous improvements to finish the year were driven by improved weather trends that helped boost demand coupled with positive execution at both of our segments.

Turning to the full year, 2025 net sales grew approximately 15% to a record $656.1 million. Gross profit grew approximately 19% to $175.0 million with gross margin increasing 80 basis points to 26.6%. SG&A expenses increased just 4% to $94.9 million. Net income and diluted earnings per share were $46.9 million and $1.96 respectively. Adjusted EBITDA increased approximately 23% to $97.9 million and margins increased 90 basis points to 14.9%. Adjusted earnings per share increased approximately 52% to $2.24. The effective tax rate for 2025 was 23.8%, in line with 24% for 2024. As you can see, 2025 was a relatively straightforward year with fewer headwinds than we have seen in recent years.

The generally favorable market conditions for both segments, coupled with a strong performance operationally, delivered strong year-over-year improvement.

Okay, let us look at the results for the two segments, and I will start with Work Truck Attachments. As Mark already mentioned, we are pleased to buck the trend of recent years with winter arriving early across a good portion of the Midwest and Northeast in the fourth quarter. The subsequent increase in demand caused fourth quarter net sales and adjusted EBITDA to both increase by more than 50% to $83.1 million and $13.9 million respectively. Looking at 2025 overall, the impact of increased snowfall in core markets in both the first and fourth quarters drove higher volume. Full-year net sales increased approximately 16% to $295.7 million and adjusted EBITDA also improved to $56.2 million.

We experienced very healthy aftermarket demand. In the quarter and for the full year, we achieved record sales of parts and accessories. We saw a dramatic spike in demand during December as end users went to dealers looking to keep their plows in tip-top shape. Equipment was being used, and this should help to chip away at the elongated replacement cycle we are experiencing. The outlook at Attachments is more positive today than it has been in recent years.

Next, I will cover Work Truck Solutions. Our teams produced record results for both the quarter and the year despite facing tough comparisons to 2024. The team really ended the year on a high note. Well done to everyone at Work Truck Solutions for delivering record results once again. Fourth quarter net sales increased approximately 13% to $101.5 million. Adjusted EBITDA grew approximately 22% to $11.9 million and adjusted EBITDA margins increased 80 basis points to a record 11.7%. Results were driven by ongoing strength of demand, plus efficient operations that meant more trucks were delivered. The fourth quarter results were really a continuation of the trends that we saw all year.

For 2025, net sales grew approximately 15% and adjusted EBITDA increased 35%. Adjusted EBITDA margins grew to a record 11.6%, a 170 basis point increase. As we have previously noted, 2025 net sales included approximately $81.8 million of incremental chassis sales related to several large contracts. So 2025 was the fourth consecutive year of significant financial improvement for Solutions. The goal now is to maintain this margin performance in the near to medium term and to continue to focus on meaningful projects to optimize and expand in the years ahead.

Turning to the balance sheet, total liquidity at quarter-end was $127.8 million, comprised of $8.3 million in cash, and $119.5 million of borrowing capacity on the revolver, which is more than enough for our needs in the foreseeable future. We are justifiably proud of our cash generation for the year. Free cash flow increased 91% to $63.6 million, which was primarily driven by the increase in net income, somewhat offset by higher inventory levels in Solutions. We also had a onetime benefit of approximately $7.0 million in lower cash taxes in 2025 due to the One Big Beautiful Bill Act. Inventory increased approximately 9% to $150.0 million.

The great reduction in finished goods inventory in our snow and ice control equipment within Attachments was more than offset by a combination of two items. First, the addition of inventory from VENCO Venturo. And second, the logical and necessary increase in chassis and components in the Solutions segment to support the sales growth that we have experienced.

Next, I would like to talk a little bit about how we are thinking about capital allocation. When we look at our capital allocation priorities for 2026, they are not fundamentally different than the past. First, we are continuing to focus on returning cash to shareholders predominantly through maintaining our strong dividend. To a lesser extent, we also have the flexibility for share repurchase with $38.0 million remaining on our buyback authority. Second, we want to support projects by investing in the business, as part of the optimize and expand strategic pillars. Beyond that, we expect to continue to pursue strategic M&A opportunities as they arise as part of our activate strategic pillar.

Let me add some detail to these points. On the dividend, we are maintaining the current quarterly cash dividend of $0.295 per share. For share repurchases, we would expect 2026 to be similar to that of 2025, with the opportunity to reassess as we go through the year. As far as investing in the business, capital expenditures for 2025 increased to $11.1 million after restricted spending in 2024. While not strictly classified as CapEx, we also invested approximately $5.0 million in facility improvement projects as part of the 2024 sale-leaseback agreement. For 2025, even with those two components combined to $15.1 million, we remained well within our traditional range of 2% to 3% of net sales.

With our plans for 2026 in place, we expect spending to increase year over year as we invest to grow, but we still expect to stay within that same 2% to 3% of net sales. Lastly, at year-end, leverage ratio was 1.8, which is well within our goal range of 1.5 to 3.0 times. We are well positioned to consider small to medium-sized acquisitions of complex attachments in the years ahead.

Okay. Let us review our outlook. Over the past two years, we have delivered meaningful improvements on both the top and bottom line. The trends we have been discussing allow us to issue a strong outlook for 2026. As you saw in the release, we expect 2026 net sales to be between $710 and $760 million. Adjusted EBITDA is predicted to range from $100 million to $120 million. Adjusted earnings per share is expected to be in the range of $2.25 to $2.85. The effective tax rate is expected to be approximately 24% to 25%.

As always, this assumes relatively stable economic and supply chain conditions, and we are assuming above-average snowfall in the first quarter and average snowfall in the fourth quarter, which should help address the elongated replacement cycle that we talked to earlier. Based on these assumptions, and with our current level of visibility, we believe the business is well positioned to drive improvements, with the midpoint of our ranges projecting higher volumes across both segments, which would lead to double-digit top-line growth for the company. I think you will agree this is a strong outlook overall.

It is the first time our net sales outlook has been above $700 million, the first time our adjusted EBITDA guidance started at $100 million, and the first time our adjusted earnings per share range exceeds prior year results. In summary, it was a great end to a great year. In 2025, we outlined our strategy and executed our plans effectively. We are in a strong position entering 2026 to deliver yet another very solid year. With that, we would like to open the call for questions.

Operator: We will now begin the question and answer session. To ask a question, if you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Mike Shlisky with D.A. Davidson. Please go ahead.

Mike Shlisky: Good morning and thanks for taking my questions here.

Sarah Lauber: Good morning, Mike.

Mike Shlisky: Yes, just following your last comment there, Sarah. I hope I did not miss this. You said that you will see growth in both segments. Can you maybe pinpoint for us which segment might have the better growth outlook for '26? And then secondly, from a margin perspective, which one has got the better opportunities for some additional margin leverage in 2026?

Sarah Lauber: Sure. Absolutely. So, yeah, you heard me on the call talk about double-digit sales growth for Douglas. Right now, the expectation in Solutions is that we are at our target in growth of mid to high single digits for the year. And then the remaining growth is in Attachment. And that is a combination of our VENCO acquisition plus higher-than-average snowfall expected in Q1. So we expect higher volume than we had last year. On the margin question, I would say on Solutions, and you heard in my script I talked about maintaining the margin, but continuing to grow through our optimize and expand. We will be working hard on both of those.

The optimize will certainly help to increase our margins, whereas the focus on growth this year is going to be more evident because we have the mid to high single digit level growth on a record year. The margins on Attachments I would say right now, assuming those to be relatively flat, and, again, there is upside as plow volumes return to average. For us, it is going to be just very critical for us to see what occurs in the preseason period.

Mike Shlisky: Got it. Got it. So as usual, a little bit better feel for it in the springtime, it sounds like. Yeah. Can you comment about how it has been going so far with owning VENCO Venturo? Anything to surprise you or look different than you expected?

Mark Van Genderen: Yeah. Mike, it is Mark. I would be happy to take that one. Thanks for the question. So far, it has been going very well. I mean, against the backdrop of the size of our company, as we have indicated, it is a relatively small acquisition. But we think there are huge opportunities there over the next not few months or years, but over a long period of time. I can tell you from an integration standpoint, it has been going—you know, we had high expectations, and it is going better than expected. It is a great team. Really committed, I think really proud to be part of Douglas Dynamics, Inc.

We have a great reputation in the industry of being a company that takes care of employees and really puts people and culture first. It has just been a really good dynamic so far. Now we are getting kind of past the initial, what I will call, the honeymoon period and really focusing on, hey, what is the potential of this company now with strength and backing of Douglas Dynamics, Inc.

Sarah Lauber: I would just add from a financial perspective, no surprises as we sit here today and the expectation that they would be earnings per share and free cash flow accretive. Although smaller for us, it is still there for 2026.

Mike Shlisky: Great. Maybe one last one for me. About all this recent snow. I have got the window. I can definitely see it has been a very heavy winter. In parts of the country, though, there were some large storms that do not always see a ton of snow. I do not mean like a Houston, Dallas, or even, you know, Southern Georgia area, I mean, like, Virginia, areas around the border or the edges of your typical most important core regions of the country. I am curious whether those kind of borderline states and markets have any kind of unusual growth potential in 2026, if there has been some very elongated period of replacement in, you know, those areas.

Mark Van Genderen: Yeah. I would say if you look across pretty much all the areas where we sell plows, the major areas in kind of that Northeast Corridor, Mid-Atlantic, Midwest, we have seen, as we mentioned, above-average snowfalls. And in some cases, it is huge storms like what you are experiencing on the East Coast or just did. In other cases, even if it is two or three inches, we call those plowable events. And two to three inches versus eight or nine is basically going to have the same impact in terms of the plow needs to go out, folks need to go out.

And then the other thing we have continued to see over the last several years is a lot more, I would say, average salt events. So events where trucks are going out and not just plowing, but putting down salt and sand on the roads using our hoppers. So overall, as I said, this has been a pretty good year so far. We still have, I do not know, say, six to eight weeks of winter left, knowing that sometimes storms in certain parts of the country can go into April. But so far, so good. And again, we feel like this will be an above-average winter compared to the last 10 for us.

Mike Shlisky: Okay. Mark, Sarah, thank you.

Sarah Lauber: Thanks, Mike.

Operator: The next question is from Timothy Wojs with Baird. Please go ahead.

Timothy Wojs: Hey, guys. Good morning. Nice to see the results here.

Mark Van Genderen: Good morning, Tim.

Timothy Wojs: Hey. So maybe could you put a little finer point on just kind of the parts and accessory performance in kind of the fourth quarter and maybe how big P&A was for Attachments for the year or maybe just the percentage of the business?

Sarah Lauber: Yeah. They operated for both the year and the quarter, call it 14% to 15% of sales for Douglas. And the benefit for us in the fourth quarter is really driven by the high margins that parts and accessories brings along with it.

Timothy Wojs: Okay. Is that why you are kind of assuming that margins in Attachments would be kind of flattish next year? I guess I would expect to see, just given some of the cost takeout you guys have had and the volume growth you would expect, that you would see margin leverage. Is there kind of a mix component with parts and accessories that kind of normalizes? Is that a headwind?

Sarah Lauber: Yep. You answered your own question.

Mark Van Genderen: Yeah. You are spot on. When we looked at last year, and we always talk about things kind of assuming average snowfall, then as a company, we have become, I think, really good at being able to adjust accordingly up or down. So last year in the fourth quarter, with some of the early snowfalls in the Midwest in particular, and some of the lake effect, that increase in P&A sales helped to drive our overall EPS in the quarter and then for the year above what we expected, which is great. And as I mentioned in the call, there is a direct impact.

If we see snow coming in, and especially knowing the amount of product that we have out in the field, we are going to see an immediate impact, which we saw in the fourth quarter, which helped to drive that overall volume. It is hard to speculate—had we seen more average snow volume in the fourth quarter, we most likely would not have seen as high a P&A sales. Results still would have been very good, but not as good as they are.

That is also why when we look at the full year for 2026 with parts and accessories, we say, hey, you know what, we are going to take an average approach, which then leads and drives to where our guidance was.

Sarah Lauber: And the cost takeouts that you mentioned, those occurred in '20, and they were essentially already baked in throughout '25, so not a lot of incremental cost savings coming to us in '26. And the real opportunity in Attachments is as the equipment volumes return, which again is critical for us to see the preseason order patterns.

Timothy Wojs: Is it too early to kind of understand what the preseason might look like? And is it just too early?

Mark Van Genderen: Yeah. It really is. I mean, anecdotally, we talked about the fact that we mentioned it here in the call that overall dealer inventories are lower than what we have seen in the last several years, which you might expect just given the increased snowfall. Dealer sentiment right now is very positive, and we have seen an increase overall in retail sales, not just in parts and accessories, but for our major equipment. We will know more in the next couple of months. Our sales teams are out talking with dealers on a regular basis, helping them get the plows that they need right now in season.

And then, yeah, we will really have a lot more color as we always do in the second quarter conference call.

Timothy Wojs: Okay. Okay. Great. And then just to put a finer point on Solutions, are you basically saying that the margins here are kind of in your kind of targeted range, call it, you know, low teens, kind of low double digits type range? And now you are really focused on driving EBITDA growth as opposed to margin expansion? Just trying to kind of understand maybe what the long-term margin profile Solutions really looks like.

Sarah Lauber: Yes. Thanks. The answer is yes. So, you know, our target was double digit to low teens. I am not saying there is not opportunity to grow from the 11.6%. But our focus very much is on the top-line growth, which we do expect further top-line growth after a year of having 15% top-line growth. So that is more so our focus is the EBITDA dollar growth.

Timothy Wojs: Okay. Gotcha. And then I will sneak one last one in. Any comments you want to make on the first quarter? And the reason I ask is I know that is kind of been a wonky quarter historically. So just any sort of modeling items or anything like that you would want to get out there?

Sarah Lauber: No. I mean, the first quarter, with Attachments driving much of it, is the lighter quarter. I mean, clearly, we have not seen snowstorms like this in a long time in the first quarter. So I do not expect really the quarterly cadence to change of the seasonality. The wildcard, I guess, will be what we see for parts and accessories.

Timothy Wojs: Okay. Okay. Well, good luck. Thanks, everybody.

Nathan Elwell: Yep. Thanks. Thanks, Tim.

Operator: The next question is from Greg Burns with Sidoti & Company. Please go ahead.

Greg Burns: Good morning. When we look at the results for the Solutions segment, how it ended the year on such a strong note. I think earlier in the year, you were expecting maybe a little bit of moderation in the second half that did not really seem to play out. It seemed to almost, like, accelerate momentum into the end of the year. So can you just talk about, you know, why that was? How—why the second half ended up, you know, maybe stronger than you had thought earlier in the year?

Sarah Lauber: Yeah. I would put it entirely on the team's execution in completing trucks and getting them out the door. They have quite a backlog, and they have the opportunity to certainly outperform. We did not want to get ahead of ourselves. But I would say the teams really stepped up to the plate, and we were able to deliver on the backlog. And it has not really lowered the backlog dramatically because they are also winning new business.

Greg Burns: Okay. And the Missouri facility, when is that capacity coming online?

Mark Van Genderen: We are targeting the second quarter. I think I said summer, early summer is what we are shooting for right now. And that is moving along nicely. Again, that is similar and consistent with what we have done with other properties. We will not own that. It is a build-to-suit lease. So we are working with the company, and that is coming along very nicely. And we are excited about that.

It will give us another maybe 8% to 10% volume increase for Henderson from an end truck, from a completed truck standpoint, in a targeted area for us that we have looked at and said, hey, we really want to make sure we are on the ground and providing great service to customers.

Sarah Lauber: And that growth is an annual growth.

Mark Van Genderen: Yeah. Great point.

Greg Burns: Okay. And then for the fourth quarter on the Attachment segment, your margin was, I guess, flat year over year, but you mentioned, obviously, the strength in the parts and services and the beneficial margin impact of that. So why was the—given the strong mix of parts and services, why was the margin flat this quarter?

Sarah Lauber: That is a great question. I think some of it is the first part of VENCO coming in. Some of it is variable compensation. I cannot think of anything other top of mind. I think it is just the growth. Last year in the fourth quarter was a much lighter year, but fourth quarter typically is parts and accessories, not whole units. So I think, you know, I think when you look at those—the size, it is different, but the mix is probably not dramatically different.

Greg Burns: Got it. Okay. And then when we look at the, I guess, the guide, the initial guide for, like, flattish margin for next year, I know you mentioned mix of parts and services. But is there any of that, like, cost avoidance that is maybe coming back online now that market demand is picking up? Like, is there any element of that, like, you are kind of resetting the cost structure and then maybe you start to see improved leverage into '27?

Sarah Lauber: Absolutely. So when I think about our businesses, I do not think the incremental volumes or incremental margins, the opportunity has changed. Our Solutions tend to be 15%–20%, and our Attachments is 25% to 30%. However, there are two caveats. One, we are layering some investments for growth this year in our plan. So we have that in 2026. And then the other area is the fact that our volumes still are not at average volume. And so that is probably the largest piece out there that changes the margin profile for Attachments and for the company.

Mark Van Genderen: I would add to that. You know, you look back a couple years ago, and, I guess, $10 to $12 million that we took out of the business at that time. That is not something that we did—it was necessary—it was not something that we did lightly. You know, that is not our MO as a company. And we are all very focused, I would say, as a management team and as a team, both at corporate and at the divisional levels, of making sure that as much of that as we can continue to keep flows through.

We are not opening up the checkbooks significantly, even against the backdrop of a better-than-average snowfall year, because we just want to make sure that we are being very, very, very prudent.

Greg Burns: Okay. I guess, you know, with that said, what are normalized margins? Like, normal volumes get back to kind of average historical levels. Where do you see the—what is the margin profile of the Attachments segment?

Sarah Lauber: Yeah. So we ended the year for Attachments at 19%. We get to the mid-twenties with average volume.

Greg Burns: Okay. Okay. Great. Thank you.

Operator: Again, if you have a question, please press star then 1. Showing no further questions, this concludes our question and answer session. I would like to turn the conference back over to Mark Van Genderen for any closing remarks.

Mark Van Genderen: Thank you. Hey, we really appreciate your continued interest in Douglas Dynamics, Inc. And certainly, please reach out to Nathan if you would like to talk to us in the coming weeks. Thanks, everyone.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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