XML 29 R13.htm IDEA: XBRL DOCUMENT
v3.25.0.1

Note 2 - Summary of Significant Accounting Policies | 12 Months Ended
--- | ---
Dec. 31, 2024
Notes to Financial Statements |
Significant Accounting Policies [Text Block] | 2. Summary of Significant Accounting Policies Principles of consolidation The accompanying consolidated financial statements include the accounts of Douglas Dynamics, Inc. and its direct wholly‑owned subsidiary, Douglas Dynamics, L.L.C., and its wholly‑owned subsidiaries, Douglas Dynamics Finance Company (an inactive subsidiary), Fisher, LLC, Henderson Enterprises Group, Inc., Henderson Products, Inc. and Dejana Truck & Utility Equipment Company, LLC (hereinafter collectively referred to as the “Company”). All intercompany balances and transactions have been eliminated in consolidation. Use of estimates The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Accordingly, actual results could differ from those estimates. Cash and cash equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. Accounts receivable and allowance for credit losses The Company carries its accounts receivable at their face amount less an allowance for credit losses. The majority of the Company’s accounts receivable are due from distributors of truck equipment and dealers of completed upfit trucks. Credit is extended based on an evaluation of a customer’s financial condition. A receivable is considered past due if payments have not been received within agreed upon invoice terms. Accounts receivable are written off after all collection efforts have been exhausted. The Company takes a security interest in the inventory as collateral for the receivable but often does not have a priority security interest. The Company has short-term accounts receivable at its Work Truck Attachments and Work Truck Solutions segments subject to evaluation for expected credit losses. Expected credit losses are estimated based on the loss-rate and probability of default methods. On a periodic basis, the Company evaluates its accounts receivable and establishes the allowance for credit losses based on specific customer circumstances, past events including collections and write-off history, current conditions, and reasonable forecasts about the future. As of December 31, 2024, the Company had an allowance for credit losses on its trade accounts receivable of $1,768 and $604 at its Work Truck Attachments and Work Truck Solutions segments, respectively. As of December 31, 2023, the Company had an allowance for credit losses on its trade accounts receivable of $1,400 and $246 at its Work Truck Attachments and Work Truck Solutions segments, respectively. The following table rolls forward the activity related to credit losses for trade accounts receivable at each segment, and on a consolidated basis for the years ended December 31, 2024 and 2023:
|  | Balance at |  |  | Additions (reductions) |  |  |  |  |  |  |  |  |  |  | Balance at |
|  | December 31, |  |  | charged to |  |  |  |  |  |  | Changes to |  |  | December 31, |
|  | 2023 |  |  | earnings |  |  | Writeoffs |  |  | reserve, net |  |  | 2024 |
Year Ended December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Work Truck Attachments |  | $ | 1,400 |  |  | $ | 404 |  |  | $ | (41 | ) |  | $ | 5 |  |  | $ | 1,768 |
Work Truck Solutions |  |  | 246 |  |  |  | 298 |  |  |  | - |  |  |  | 60 |  |  |  | 604 |
Total |  | $ | 1,646 |  |  | $ | 702 |  |  | $ | (41 | ) |  | $ | 65 |  |  | $ | 2,372 |
|  | Balance at |  |  | Additions (reductions) |  |  |  |  |  |  |  |  |  |  | Balance at |
|  | December 31, |  |  | charged to |  |  |  |  |  |  | Changes to |  |  | December 31, |
|  | 2022 |  |  | earnings |  |  | Writeoffs |  |  | reserve, net |  |  | 2023 |
Year Ended December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Work Truck Attachments |  | $ | 1,000 |  |  | $ | 400 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,400 |
Work Truck Solutions |  |  | 366 |  |  |  | (80 | ) |  |  | (46 | ) |  |  | 6 |  |  |  | 246 |
Total |  | $ | 1,366 |  |  | $ | 320 |  |  | $ | (46 | ) |  | $ | 6 |  |  | $ | 1,646 |
Financing program The Company is party to a financing program in which certain distributors may elect to finance their purchases from the Company through a third party financing company. The Company provides the third party financing company recourse against the Company regarding the collectability of the receivable under the program due to the fact that if the third party financing company is unable to collect from the distributor the amounts due in respect of the product financed, the Company would be obligated to repurchase any remaining inventory related to the product financed, which is considered a right of return, and reimburse any legal fees incurred by the financing company. During the years ended December 31, 2024, 2023 and 2022, distributors financed purchases of $6,303, $9,022 and $15,782 through this financing program, respectively. At both December 31, 2024 and December 31, 2023, there were no uncollectible outstanding receivables related to sales financed under the financing program. The amount owed by distributors to the third party financing company under this program at December 31, 2024 and 2023 was $8,910 and $13,748, respectively. The Company was not required to repurchase any repossessed inventory for the years ended December 31, 2024, 2023 and 2022. In the past, minimal losses have been incurred under this agreement. However, an adverse change in distributor retail sales could cause this situation to change and thereby require the Company to repurchase repossessed units. Any repossessed units are inspected to ensure they are current, unused product and are restocked and resold. Interest Rate Swap The Company is a counterparty to interest rate swap agreements to hedge against the potential impact on earnings from increases in market interest rates. On June 13, 2019, the Company entered into an interest rate swap agreement to reduce its exposure to interest rate volatility. The interest rate swap has a notional amount of $175,000 effective for the period May 31, 2019 through May 31, 2024. The Company may have counterparty credit risk resulting from the interest rate swap, which it monitors on an on-going basis. The risk lies with one global financial institution. Under the interest rate swap agreement, the Company will either receive or make payments on a monthly basis based on the differential between 2.424% and SOFR. From June 13, 2019 through March 18, 2020, the interest rate swap was accounted for as a cash flow hedge. During the first quarter of 2020, the swap was determined to be ineffective. As a result, the swap was dedesignated on March 19, 2020, and the remaining losses included in Accumulated other comprehensive income on the Consolidated Balance Sheets would be amortized into interest expense on a straight line basis through the life of the swap. The amount amortized from Accumulated other comprehensive income into earnings during the years ended December 31, 2024 and 2023 was ($485) and ($1,163), respectively. A mark-to-market adjustment of $198 and $476 was recorded as Interest expense in the Consolidated Statements of Income for the years ended December 31, 2024 and 2023, respectively, related to the swap. On June 9, 2021, in conjunction with entering into the Credit Agreement described below, the Company re-designated its swap. As a result, the swap will be recorded at fair value with changes recorded in Accumulated other comprehensive income. The amortization from Accumulated other comprehensive income into earnings from the previous dedesignation has been adjusted as of June 9, 2021 to include the de-recognition of previously recognized mark-to-market gains and the amortization of the off-market component as of the re-designation date, and will continue to be recognized through the life of the swap. As of December 31, 2024, the amount in Accumulated other comprehensive income has been fully amortized into earnings. On May 19, 2022, the Company entered into an interest rate swap agreement to further reduce its exposure to interest rate volatility. The interest rate swap has a notional amount of $125,000 effective for the period May 31, 2024 through June 9, 2026. The Company may have counterparty credit risk resulting from the interest rate swap, which it monitors on an on-going basis. The risk lies with two global financial institutions. Under the interest rate swap agreement, the Company will either receive or make payments on a monthly basis based on the differential between 2.718% and SOFR. The interest rate swap is accounted for as a cash flow hedge. The fair value of the interest rate swaps, net of tax, is $1,732 and $2,984 at December 31, 2024 and December 31, 2023, respectively, of which $1,836 and $3,331 is included in Accumulated other comprehensive income on the balance sheet as of December 31, 2024 and 2023, respectively. This fair value was determined using Level 2 inputs as defined in Accounting Standards Codification Topic (“ASC”) 820 - Fair Value Measurements and Disclosures. Steel Hedging Instrument On December 17, 2024, the Company entered into a steel hedging agreement to reduce its exposure to commodity price volatility. The steel hedging instrument has a notional quantity of 3,000 short tons and is effective for the period August 1, 2025 through December 31, 2025, which the Company expects to be slightly less than half of its exposure during the effective period. Under the steel hedge agreement, the Company will make fixed payments of $819 per short ton for the Steel Hot Rolled Coil (HRC) commodity. The steel hedging instrument is accounted for as a cash flow hedge. The fair value of the steel hedging instrument, net of tax, is $40 at December 31, 2024, of which $40 is included in Accumulated other comprehensive income on the balance sheet as of December 31, 2024. This fair value was determined using Level 2 inputs as defined in ASC 820 - Fair Value Measurements and Disclosures. Inventories Inventories are stated at the lower of cost or market. Market is determined based on estimated realizable values. Inventory costs are primarily determined by the first‑in, first‑out (FIFO) method. The Company periodically reviews its inventory for slow moving, damaged and discontinued items and provides reserves to reduce such items identified to their recoverable amounts. The Company records inventories to include truck chassis inventory financed through a floor plan financing agreement as discussed in Note 8. The Company takes title to truck chassis upon receipt of the inventory through its floor plan agreement and performs upfitting service installations to the truck chassis inventory during the installation period. The floor plan obligation is then assumed by the dealer customer upon delivery. At December 31, 2024 and 2023, the Company had $2,612 and $2,217 of chassis inventory and related floor plan financing obligation, respectively. The Company recognizes revenue associated with upfitting and service installations net of the truck chassis. The Company receives, on consignment, truck chassis on which it performs upfitting service installations under “bailment pool” arrangements with major truck manufacturers. The Company never receives title to the truck chassis. The aggregate value of all bailment pool chassis on hand as of December 31, 2024 and 2023 was $17,489 and $20,293, respectively. The Company is responsible to the manufacturer for interest on chassis held for upfitting. The Company recognizes revenue associated with upfitting and service installations net of the truck chassis. Leases As of December 31, 2024, twenty-two of the Company’s offices, manufacturing facilities and upfit and distribution centers were subject to a lease agreement. See Note 6 for additional information on the Company’s leases. During the year ended December 31, 2024, the Company closed on a sale leaseback transaction with an unrelated third party. Under this transaction, the Company sold seven properties with a combined net book value of $21,852 for gross proceeds of $64,150, which was reduced by transaction costs of $5,494 for net cash proceeds of approximately $58,656. The properties in the sale leaseback transaction are comprised of three facilities located in Milwaukee, Wisconsin and four additional facilities located in each of Huntley, Illinois; Manchester, Iowa; Rockland, Maine; and Madison Heights, Michigan, totaling approximately 780,000 square feet of manufacturing and upfitting space. The lease agreement has an initial term of 15 years, with two optional 10-year renewal options. See Note 6 for additional information on the sale leaseback transaction. Property, plant and equipment Property, plant and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using straight‑line methods over the estimated useful lives for financial statement purposes and an accelerated method for income tax reporting purposes. The estimated useful lives of the assets are as follows:
|  | Years |
Land improvements and buildings |  | 15 - 40 |
Leasehold improvements |  | 12 |
Machinery and equipment |  | 3 - 20 |
Furniture and fixtures |  | 3 - 12 |
Mobile equipment and other |  | 3 - 10 |
During the year ended December 31, 2024, the Company closed on a sale leaseback transaction with an unrelated third party. Under this transaction, the Company sold seven properties with a combined net book value of $21,852, see Note 6 for additional information. Depreciation expense was $10,370, $11,142, and $10,418 for the years ended December 31, 2024, 2023 and 2022, respectively. The estimated useful lives of leasehold improvements is the shorter of the remainder of the lease term and twelve years. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to operations when incurred. Repairs and maintenance expenses amounted to $7,060, $6,925 and $6,750 for the years ended December 31, 2024, 2023 and 2022, respectively. When assets are sold or retired, the cost of the asset and the related accumulated depreciation are eliminated from the accounts and any gain or loss is recognized in results of operations. Impairment of long‑lived assets Long‑lived assets are reviewed for potential impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying value of such assets to the undiscounted future cash flows expected to be generated by the assets. If the carrying value of an asset exceeds its estimated undiscounted future cash flows, an impairment provision is recognized to the extent that the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or the fair value of the asset, less costs of disposition. Management of the Company considers such factors as current results, trends and future prospects, current market value, and other economic and regulatory factors in performing these analyses. During the year ended December 31, 2024, and in conjunction with the Company's 2024 Cost Savings Program, impairment charges of $1,224 were recorded in the Consolidated Statements of Income related to certain internally developed software at the Company's Work Truck Attachments segment representing the full capitalized value of the software. See Note 21 for additional information. Goodwill and other intangible assets Goodwill and indefinite lived intangible assets are tested for impairment annually as of December 31, or sooner if impairment indicators arise. The fair value of indefinite lived intangible assets is estimated based upon an income and market approach. In reviewing goodwill for impairment, potential impairment is identified by comparing the estimated fair value of the reporting units to its carrying value. The Company has determined it has three reporting units. When the fair value is less than the carrying value of the net assets of the reporting unit, including goodwill, an impairment loss would be recognized. The Work Truck Attachments segment consists of one reporting unit: Commercial Snow & Ice. The annual impairment tests performed as of December 31, 2024 and December 31, 2023 indicated no impairment for the Commercial Snow & Ice reporting unit, which had goodwill of $113,134 at both December 31, 2024 and 2023. The Work Truck Solutions consists of two reporting units: Municipal and Dejana. Each of the Municipal and Dejana reporting units had $0 in goodwill at December 31, 2023 and December 31, 2024. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and are reviewed for potential impairment when events or circumstances indicate that the carrying amount of the asset may not be recoverable. The Company amortizes its distribution network intangibles over periods ranging from 15 to 20 years, trademarks over 7 to 25 years, patents over 7 to 20 years, customer relationships over 15 to 19.5 years and noncompete agreements over 4 to 5 years. There were no indicators of impairment during the years ended December 31, 2024 or 2023. The Company had gross intangible assets and accumulated amortization of $273,755 and $160,205, respectively, for the year ended December 31, 2024, of which $177,765 and $111,945 relate to the Work Truck Attachments segment, and $95,990 and $48,260 relate to the Work Truck Solutions segment, respectively. The Company had gross intangible assets and accumulated amortization of $273,755 and $152,685, respectively for the year ended December 31, 2023, of which $177,765 and $109,551 relate to the Work Truck Attachments segment, and $95,990 and $43,134 relate to the Work Truck Solutions segment, respectively. At December 31, 2024, the Company’s Dejana reporting unit had tradenames of $14,000 and an estimated fair value of $17,600. If the Company is unable to attain the financial projections used in calculating the fair value, or if there are significant market conditions impacting the market approach, the Company’s Dejana tradenames could be at risk of impairment. If the Company experiences delays by its supplier and OEM partners in the production and delivery of chassis for a prolonged period of time, which could negatively affect the Company’s financial results, the Dejana tradenames may be impaired. The discount rate and royalty rate used in the calculation of the fair value are sensitive and based on the Company’s assumptions, and changes to those assumptions could cause the Dejana tradenames to be at risk of impairment. There were no indicators of impairment subsequent to the December 31, 2024 impairment test. Income taxes Deferred income taxes are accounted for under the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates. Deferred income tax provisions or benefits are based on the change in the deferred tax assets and liabilities from period to period. Deferred income tax assets are reduced by a valuation allowance if it is more likely than not that some portion of the deferred income tax asset will not be realized. Additionally, when applicable, the Company would classify interest and penalties related to uncertain tax positions in income tax expense. Deferred financing costs The costs of obtaining financing are capitalized and amortized over the term of the related financing on a basis that approximates the effective interest method. The changes in deferred financing costs are as follows:
Balance at December 31, 2021 |  | $ | 1,680 |
Amortization of deferred financing costs |  |  | (379 | )
Balance at December 31, 2022 |  |  | 1,301 |
Deferred financing costs capitalized on new debt |  |  | 334 |
Amortization of deferred financing costs |  |  | (475 | )
Balance at December 31, 2023 |  |  | 1,160 |
Deferred financing costs capitalized on new debt |  |  | 278 |
Amortization of deferred financing costs |  |  | (591 | )
Balance at December 31, 2024 |  | $ | 847 |
Fair value Fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). The following table presents financial assets and liabilities measured at fair value on a recurring basis and discloses the fair value of long‑term debt:
|  | Fair Value at December 31, 2024 |  |  | Fair Value at December 31, 2023 |
Assets: |  |  |  |  |  |  |  |
Non-qualified benefit plan assets (a) |  | $ | 10,482 |  |  | $ | 9,195 |
Interest rate swaps (b) |  |  | 2,340 |  |  |  | 4,033 |
Total Assets |  | $ | 12,822 |  |  | $ | 13,228 |
Liabilities: |  |  |  |  |  |  |  |
Long-term debt (c) |  |  | 147,526 |  |  |  | 189,413 |
Steel hedging instrument (d) |  |  | 54 |  |  |  | - |
Total Liabilities |  | $ | 147,580 |  |  | $ | 189,413 |
| (a) | Included in Non-qualified benefit plan assets is the cash surrender value of insurance policies on various individuals that are associated with the Company. The carrying amounts of these insurance policies approximates their fair value. The Company had outstanding loans of $546 and $750 against these Non-qualified benefit plan assets as of December 31, 2024 and December 31, 2023, respectively, included in Other long-term liabilities on the Consolidated Balance Sheets.
| (b) | Valuation models are calibrated to initial trade price. Subsequent valuations are based on observable inputs to the valuation model (e.g., interest rates and credit spreads). Model inputs are changed only when corroborated by market data. A credit risk adjustment is made on each swap using observable market credit spreads. Thus, inputs used to determine fair value of the interest rate swap are Level 2 inputs. Interest rate swaps of $1,712 and $628 at December 31, 2024 are included in Prepaid and other current assets and Other long-term assets, respectively. Interest rate swaps of $3,174 and $859 at December 31, 2023 are included in Prepaid and other current assets and Other long-term assets, respectively.
| (c) | The fair value of the Company’s long‑term debt, including current maturities, approximates its carrying value. Long‑term debt is recorded at carrying amount, net of discount and deferred debt issuance costs, as disclosed on the face of the balance sheet.
| (d) | Valuation models are calibrated to initial trade price. Subsequent valuations are based on observable inputs to the valuation model (e.g., market prices). Model inputs are changed only when corroborated by market data. Thus, inputs used to determine fair value of the interest rate swap are Level 2 inputs. Steel hedging instruments of $54 at December 31, 2024 are included in Accrued expenses and other current liabilities.
Concentration of credit risk The Company’s cash is deposited with multiple financial institutions. At times, deposits in these institutions exceed the amount of insurance provided on such deposits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant risk on these balances. No distributor represented more than 10% of the Company’s net sales or accounts receivable during the years ended December 31, 2024, 2023 and 2022. Revenue recognition The Company applies the guidance codified in Accounting Standards Codification 606, Revenue from Contracts with Customers (“Topic 606”). Revenue is recognized when or as the Company satisfies a performance obligation. See Note 3 for a more detailed description of revenue recognition policies. Cost of sales Cost of sales includes all costs associated with the manufacture of the Company’s products, including raw materials, purchased parts, freight, plant operating expenses, property insurance and taxes, and plant depreciation. All payroll costs and employee benefits for the hourly workforce, manufacturing management, and engineering costs are included in cost of sales. Related party transactions There were no material related party transactions during 2022, 2023 or 2024. Warranty cost recognition The Company accrues for estimated warranty costs as revenue is recognized. All warranties are assurance-type warranties. See Note 10 for further details. Defined benefit plan The Company has a noncontributory, defined benefit postretirement benefit plan covering certain employees. Management reviews underlying assumptions on an annual basis. Refer to Note 12 for additional information. Advertising expenses Advertising expenses include costs for the production of marketing media, literature, website content and displays. The Company participates in trade shows and advertises on billboards. Advertising expenses amounted to $4,033, $4,823 and $4,699 for the years ended December 31, 2024, 2023 and 2022, respectively. All costs associated with the Company’s advertising programs are expensed as incurred. Research and development expenses Research and development expenses include costs to develop new technologies to enhance existing products and to expand the range of product offerings. Research and development expenses amounted to $8,397, $10,081 and $12,159 for the years ended December 31, 2024, 2023 and 2022, respectively. Shipping and handling costs Generally, shipping and handling costs are paid directly by the customer to the shipping agent. Those shipping and handling costs billed by the Company are recorded as a component of sales with the corresponding costs included in cost of sales. Share‑based payments The Company applies the guidance codified in ASC 718, Compensation—Stock Compensation. This standard requires the measurement of the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award at the grant date and recognition of the compensation expense over the period during which an employee is required to provide service in exchange for the award (generally the vesting period). Accumulated other comprehensive income Accumulated other comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non‑owner resources and is comprised of net income and “other comprehensive income”. The Company’s other comprehensive income is comprised of the adjustments for postretirement benefit liabilities as well as the impact of its interest rate swaps and other hedging instruments. See Note 19 for the components of accumulated other comprehensive income. Segment reporting The Company operates through two operating segments for which separate financial information is available, and for which operating results are evaluated regularly by the Company's chief operating decision maker in determining resource allocation and assessing performance. The Company’s two current reportable business segments are described below. 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, as well as the Company's vertically integrated products. Work Truck Solutions. The Work Truck Solutions segment includes manufactured municipal snow and ice control products under the HENDERSON® brand and the up-fit of market leading attachments and storage solutions under the HENDERSON® brand, and the DEJANA® brand and its related sub-brands. Segment performance is evaluated based on segment net sales and Adjusted EBITDA. See Note 16 for financial information regarding these segments. Sales are primarily within the United States and substantially all assets are located within the United States.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/235/tableOfContent + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration