Douglas Dynamics: Announces third quarter 2012 results

Highlights:

— Company reported third quarter net sales of $37.8 million, in line with
internal expectations

— Pre-season order period (Q2 & Q3 combined) net sales were $103.3 million

— Produced earnings per diluted share of $0.10

— Reported Adjusted EBITDA of $7.8 million for the third quarter

— Board approves Q4 2012 dividend increase of 1.22% to $0.2075 per share

MILWAUKEE, Nov. 5, 2012 (GLOBE NEWSWIRE) — Douglas Dynamics, Inc.
(NYSE:PLOW), the North American leader in the design, manufacture and
sale of snow and ice control equipment for light trucks, today
announced financial results for the third quarter ended September 30,
2012.

Third Quarter Results

The Company’s pre-season sales period is comprised of the second
quarter and third quarters combined. To encourage distributors to
receive shipments prior to the peak fourth quarter retail selling
season, the Company offers promotional financial and freight terms to
distributors that place orders in the second quarter. These orders are
then shipped during the second and third quarters.

Net sales were $37.8 million in the third quarter of 2012, compared to
third quarter 2011 net sales of $53.5 million, a decrease of 29.3%. The
Company attributes the decrease in sales to the historic below average
snowfall across most of the Company’s core markets and timing of the
pre-season shipments. As contemplated in the second quarter 2012
earnings release and conference call, and consistent with the trends
over the past several years, the 2012 pre-season order period was more
heavily weighted towards the second quarter than the third quarter. The
timing of the pre-season orders and shipments are tactical in nature
and the Company views the pre-season order program as one time period
and doesn’t believe the shift between quarters is indicative of any
broader change in sales patterns.

James L. Janik, President and Chief Executive Officer commented, “Our
pre-season order period in 2012 was basically in line with our internal
expectations but fell short of 2011 results due to the record low
snowfall during the 2011/12 winter season, which was the lowest since
1961/62, according to the US National Snowfall Records. Further
compounding the challenges from last year’s mild winter were continued
economic weakness and the record drought. While droughts normally have
a negligible influence on sales, the severity of the most recent
drought exacerbated the considerable impact of the record low snowfall
to professional plowers who often run landscaping businesses during the
non-plowing season and use cash from both the past winter and summer
work to invest in new trucks and plows. As we look to the start of the
snow season, we remain committed to drive productivity improvements,
and reduce short-term discretionary spending, in an effort to maximize
operating results and cash flows.”

Net income was $2.3 million, or $0.10 per diluted share based on
weighted average shares of 22.0 million shares, in the third quarter of
2012 compared to net income of $4.0 million, or $0.18 per diluted share
based on weighted average shares of 21.8 million shares, in the third
quarter of 2011. The effective tax rate for the third quarter of 2012
was 24.1%, which was lower than the estimated annual effective rate due
to benefits recognized in the quarter related to tax credits recognized
with the filing of the Company’s 2011 tax return. The estimated
effective tax rate for full year 2012 is expected to be 37.0%.

The Company reported Adjusted EBITDA of $7.8 million in the third
quarter of 2012 compared to Adjusted EBITDA of $12.1 million in the
third quarter of 2011.

Balance Sheet and Liquidity

During the first nine months of 2012, the Company recorded net cash
used in operating activities of $35.1 million compared to net cash used
in operating activities of $18.2 million in the same period last year.
This increase was driven mainly by working capital changes and a
decline in net income.

Inventory was $30.4 million at the end of the third quarter of 2012, an
increase of $3.3 million compared to the third quarter of 2011.

Accounts receivable at the end of the third quarter of 2012 were $70.7
million, a decrease of $12.3 million compared to third quarter 2011.

Dividend

As previously reported on September 7, 2012, the Company declared a
quarterly cash dividend of $0.205 per share on its common stock. The
declared $0.205 per share cash dividend was paid on September 28, 2012
to stockholders of record as of the close of business on September 18,
2012.

The Company also announced that its board of directors has approved a
1.22% increase in the Company’s quarterly cash dividend to $0.2075 per
share effective for the fourth quarter 2012 dividend.

Mr. Janik commented, “The board’s decision to increase the quarterly
dividend reflects our confidence in the Company’s financial strength
and future outlook. In the midst of a challenging market environment,
we continue to generate strong cash flows on an annual basis and the
dividend increase demonstrates our on-going commitment to creating
shareholder value.”

Outlook

Based on results from the first nine months of 2012 and current trends,
the Company reaffirms its full year 2012 guidance, but expects results
will come in towards the lower end of those ranges. As previously
announced, net sales for full year 2012 are expected to range from $160
million to $190 million, Adjusted EBITDA to range from $35.0 million to
$45.0 million and earnings per share to range from $0.55 per share to
$0.79 per share. The full-year 2012 outlook assumes that the Company’s
core markets will experience average snowfall and the economy remains
stable. If economic headwinds persist and/or snowfall is below average,
then the Company’s forecast could fall below the projected ranges.

Mr. Janik added, “Visibility into early winter snowfall remains
extremely limited at this point in the quarter, and we remain
cautiously optimistic that a return to average snowfall levels coupled
with positive indicators such as light truck sales will help partially
offset the negative impact from continued economic weakness and
lingering effects from the mild winter and drought. As we’ve mentioned
before though, the biggest variable factor in determining our fourth
quarter results is the timing, amount and location of snowfall.”

Webcast Information

The Company will host an investor conference call on Tuesday, November
6, 2012 at 10:00 a.m. Central Time. The conference call will be
available on the Internet through the Investor Relations section of the
Company’s website at www.douglasdynamics.com. To listen to the live
call, please go to the website at least fifteen minutes early to
register, download and install any necessary audio software. For those
who cannot listen to the live broadcast, an Internet replay will be
available shortly after the call.

About Douglas Dynamics

Douglas Dynamics is the North American leader in the design,
manufacture and sale of snow and ice control equipment for light
trucks, which consists of snowplows and sand and salt spreaders, and
related parts and accessories. The Company sells its products under the
WESTERN(R), FISHER(R) and BLIZZARD(R) brands which are among the most
established and recognized in the industry. Additional press releases
and investor relations information is available at
www.douglasdynamics.com.