Douglas Dynamics, Inc.

Consolidated net sales increased 10% to a record $214.6 million. Gross margin was 31%, flat year over year. SG&A increased 37% to $29.8 million, adjusted EBITDA increased 5% to a record $44.6 million, and adjusted EPS increased 7% to a record $1.22. In Attachments, net sales rose 20% to $129.3 million and adjusted EBITDA increased 13% to $35.8 million with 27.7% margins; in Solutions, net sales were $85.3 million and adjusted EBITDA was $8.8 million. For 2026, guidance is now net sales of $765 million to $805 million, adjusted EBITDA of $120 million to $135 million, and adjusted EPS of $2.90 to $3.40, with an effective tax rate of about 24% to 25%. Management said the outlook assumes relatively stable economic and supply chain conditions and average snowfall in the fourth quarter.

Mark Van Genderen said both segments performed well and the company delivered a record quarter, driven by above-average snowfall last winter, strong municipal demand, and disciplined execution. He emphasized that dealer inventories are lower than in recent years, Attachments is set up for a strong Q3, and the company is building finished goods inventory to be ready for winter demand. He also highlighted the broader strategic refresh around optimize, expand, and activate, along with the updated mission to keep people safe and communities thriving and the vision to build the most comprehensive portfolio of trusted work vehicle attachments and solutions.

Sarah Lauber said the quarter was a record second quarter overall and that the company is well positioned for the back half of the year. She noted gross margin held at 31%, SG&A rose to $29.8 million due to higher incentive and stock-based compensation and costs from Venco Venturo, and adjusted EBITDA and EPS reached records at $44.6 million and $1.22. She also walked through cash flow: net cash used in operating activities increased $12.5 million to $25.2 million for the first half, free cash flow was negative $32.5 million, liquidity was $69.4 million, and capex was $7.3 million year to date with full-year capex still expected to be 2% to 3% of net sales. Capital returns included a dividend and about 67,500 shares repurchased, totaling $10.1 million returned to shareholders in the quarter.

Analysts focused on why Attachments margins were down year over year despite higher sales, and Sarah said the biggest factors were the Venco Venturo acquisition and shipment timing/mix; excluding Venco, margins would have been flat to last year on higher volumes. On fourth-quarter Attachments, management said it is being relatively conservative on whole-unit expectations, though dealers appear optimistic and preseason shipments should be completed by the end of Q3. On Solutions, management said municipal demand remains strong, backlog is very close to the record set in 2022, Missouri added about 10% capacity, and the planned Ohio move should add roughly the same amount next year while throughput improvements continue. Management also said some larger fleet customers have paused orders while they evaluate geopolitical and economic conditions, but those orders were described as delayed rather than lost.