Q4 2020 Douglas Dynamics Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Douglas dynamics fourth quarter 2020 earnings Conference call. At this time all participant lines are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Sarah Lauber C. F. L. Thank you. Please go ahead ma'am.
Thank you welcome everyone and thank you for joining us on today's call before we begin I'd like to remind you that some of the comments that will be made during this conference call, including answers to your questions will constitute forward looking statements.
These forward looking statements are subject to risks that could cause actual results to be materially different. Those risks include among others matters that we have described in yesterday's press release and in our filings with the SEC.
Joining me on the call today is Bob Mccormick, our President and Chief Executive Officer in a moment, Bob will provide an overview of our performance then I will review our financial results and guidance. After that we'll open the call for your questions with that I'll hand, the call over to Bob.
Thanks, Sara good morning, everyone.
I'm very pleased with our Q4 results in fact, that's our second consecutive quarter of positive results.
Despite the difficult to non usual circumstances circumstances presented in 2020, our teams have endured remaining focused on serving our customers and improving performance.
Attachments group performed well with a strong finish to the year.
Which met our expectations.
Solutions improve the bottom line with particularly strong performance at Henderson.
If you had shown me our fourth quarter 2020 results in April of last year, I would've said I'll take it.
While pandemic and the related economic headwinds will present, some short term challenges from 2021.
Douglas dynamics is on a path to exit stronger.
Reaching towards our long term financial goals.
Now a quick health and safety update from a pandemic perspective, all of our facilities remained operational throughout the quarter.
We have seen an increase in absenteeism as people are meeting, making good personal decisions staying home when sick.
Protecting not just themselves but their teammates.
We remain vigilant our protocols are effective and we're ready to handle any outbreaks that occur.
I'm very proud of the way our people have adapted to and operated in this pandemic environment ultimately driving performance without compromising team safety.
Let's talk about the segments in more detail Firstly attachments group.
It's actually pretty simple the team executed strongly outperforming Q for 2019 across the board.
As we said earlier in the year, we knew this year would be different due to below average snowfall on the previous two winters and our preseason order period, coinciding with the start of the pandemic.
Having said that we were still somewhat optimistic for three reasons number one the landscapers were not heavily impacted by the pandemic.
Number two products such as the half ton V. Plow were very well received and number three despite the pandemic dealer credit remains strong.
So as previously stated we expected dealers would be more conservative with their pre season orders, which would place more emphasis than usual on the fourth quarter.
And that's exactly what happened.
Dealer orders began strengthening at the end of Q3 on into Q4, which was helped by some psychological snowfall early in the season.
For the fourth quarter net sales increased 4% and adjusted EBITDA increased 13% over the prior year with EBITDA margins pushing 29%.
As as Reorders came in while at the same time, we kept a lid on discretionary spending under our income protection plan.
Of course, I've been glued to the weather channel since October and there is snow season, certainly has been interesting.
This season has started off slow with snowfall totals under the 10 year average at the end of January.
Having said that the first three weeks of February have been very strong.
At this point I'm guessing we will be back above average at the end of the month.
It is worth, noting though that while we've seen a headline grabbing storms across the country. In recent weeks, we really focus on our core markets into more heavily populated areas of the Midwest and the east coast.
Assuming the month of March falls in line with historical patterns, we should see the snow season finished slightly above average which is good news after the previous two years of below average snowfall.
Keith Hagen and his team have a long track record of maximizing performance of attachments in good times and bad without fail.
We do not take their outstanding consistent performance for granted they sometimes make it look easy, but we know that is not the case.
Turning to solutions.
Very pleased with our solutions segment results this quarter.
Despite lower revenue overall, we were more profitable and produce EBITDA margins of 12, 2%.
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The shadows incoming orders were strong in 2020, when compared to 2019, despite the pandemic.
Class four through six chassis supply is still unpredictable with component availability, including computer chip shortages potentially impacting OEM production.
Bottom line is the number one recipient of pool chassis from our largest OEM partner, we will continue to grow with them.
Henderson business produced an excellent quarter as chassis flow was consistent and we worked off a portion of our strong backlog.
We are paying close attention to how the municipal customers are dealing with tax revenue challenges.
Municipal snow and ice control budgets are vital to ensure public safety and to allow commerce to continue but like everything else over the past year nothing is guaranteed.
And as expected we have seen some softness in order patterns.
And well customer quotes remained strong incoming orders will likely continue to be soft for the first half of 2021.
We will continue working our way through the backlog built over the past few years and we'll monitor the sales cycle in order trends as the year unfolds.
The important takeaway this quarter is how henderson can perform when demand and supply aligned.
Overall solutions turned in a great quarter, given the ongoing environment and then found ways to operate effectively in the pandemic.
With the review of the quarter complete I'd like to continue to focus on Henderson for a moment, but shift our focus to the vertical integration strategy, which we first outlined in October 2019, followed shortly thereafter by breaking ground on a greenfield manufacturing site in Milwaukee, Wisconsin.
As you know Henderson and their engineering team are laser focused on designing building and delivering custom solutions for the heavy duty class seven and eight municipal snow and ice control market.
<unk> core offering the reasonably are the market leader.
And while the heavy duty trucks tackle snow and ice control on highways Interstates municipalities also run smaller medium duty trucks to take care of public parking lots of schools and libraries et cetera.
Henderson has always had a medium duty truck offering, but it is an underserved market for us.
Here's where the vertical integration strategy comes into play.
The engineering teams at attachments and solutions collaborated.
To design, a total product solution to serve this medium duty market.
The result is a high feature content high performance product offering at a competitive price point, it's called the medium duty municipal first responder.
Designed from the ground up its operated as a complete integrated package not just apply on a spreader. It includes a dump body scissor lift and universal handheld controller.
Some of you joined our first virtual Investor event last month got a peek at this new product.
Why is this important work truck solutions as the long term topline growth engine for Douglas.
This product offering will provide a nice organic revenue growth stream for Henderson.
We expect to deliver the first units mid year, gaining traction for the full year 2022.
Many of these vertical integration projects will be singles and doubles, but all will contribute to organic long term growth.
And while this is the first vertical integration project launched there is more on the pipeline so stay tuned.
With that I should outline our capital allocation priorities, although I'm not quite sure that I need to do that at this point. Despite all the changes in the world over the past year. One thing remains the same our commitment to the dividend.
We increased our dividend again this year as we have before in both good times and bad and that will remain our plan for the foreseeable future.
We will also continue to use our strong free cash flow to pay down debt and maintain appropriate leverage providing future flexibility for capital deployment.
Looking ahead, we are seeing a few more M&A opportunities today compared to last year, and we would certainly like to see one of the blue chip companies on our list become available.
In the meantime, we will continue to build relationships and conduct due diligence on the logical opportunities that come our way but.
But we'll remain cautious regarding valuation and won't chase deals.
As I've stated before we will undoubtedly exit the pandemic stronger than we entered and.
And we firmly believe we are a stronger company today than we were a year ago.
The pandemic has temporarily impacted our growth and progress with some initiatives, but it has also accelerated progress on other projects.
Overall, we are pleased with the way we are operating in an uncertain environment. Our teams are doing an outstanding job of adapting as the environment continues to change.
We remain focused on our customers our products and our people.
Well getting better every day at what we already do best in.
Driving profitable growth along the way.
Now I'd like to pass the call on for Sarah.
Thanks, Bob.
Clearly we ended this extraordinary year on a positive note delivering strong performance across both segments. Despite the ongoing impacts of the pandemic on both demand and supply.
The headlines for the quarter include better top and bottom line results for attachments and a significant improvement in profitability for solution. Thanks in large part to more normalized chassis flow at Henderson.
In fact, it's important to note that on a consolidated basis adjusted EBITDA net income and margin all increased this quarter when compared to Q4 last year.
These improvements really highlight the ability of our income protection plan and Didi EMS initiatives to positively impact for adults.
Now I'll provide details of our full year and fourth quarter financial results.
Full year net sales were $480 million, which is a 16% decrease compared to last year. When we generated a record $572 million for the full year of 2019.
The decrease was primarily driven by lower volumes in attachments due to two consecutive seasons on below average snowfall.
Overall pandemic related disruption, which caused us to suspend operations for part of the first and second quarters of 2020.
And inconsistent class four to six chassis supply at solutions.
Gross profit for 2020 was $128 3 million or 26, 7% of net sales compared to $168 8 million or 29, 5% on net sales in 2019.
Gross margins were negatively impacted by our shutdown early in the year inconsistent supply due to the pandemic and inefficiencies due to absenteeism.
We partially offset these negative pandemic related headwinds with cost savings initiatives through our income protection plan.
On a GAAP basis, we recorded a full year net loss of $86 6 million or negative $3 81 per diluted share compared to generating full year net income of $49 2 million or $2.11 per diluted share in 2019.
The GAAP net loss was driven by the $127 9 million impairment charge taken in the second quarter of 2020, because of the pandemic and supply chain constraints.
From a non-GAAP perspective, we produced full year adjusted EBITDA of $74 9 million for full year 2020, compared to $108 1 million for 2019.
In 2020, we generated adjusted net income of $27 8 million or $1 18, compared to $56 3 million or $2.42 in 2019.
While the challenges of 2020 are evident in our full year results given the circumstances, we faced between March and June are results from the second half of the year are a testament to the strong execution by our teams.
In 2020 interest expense was $20 2 million, which was higher than the $16 8 million last year.
The increase was primarily due to $2 9 million in noncash mark to market interest expense on our interest rate swap.
And $1 2 million in higher interest paid on our term loans due to the increase in principal balance from our June refinancing.
This was somewhat offset by a lower revolver interest of 700000 as a result of decreased short term borrowings when compared to the prior year.
The effective tax benefit was negative 12, 4%, which was lower than the effective tax rate of 21, 5% for 2019, which was due to the impairment of non deductible goodwill related to the municipal reporting unit recorded in the second quarter of 2020.
Now, let's talk a little bit about the fourth quarter.
We reported net sales of $158 2 million, an approximate 1% decrease compared to the same period last year.
It's relatively flat performance was negatively impacted by supply chain constraints that solutions entering the quarter, but this was partially offset by strength in early retail activity and attachments.
We experienced early season snowfall in certain core markets, which positively impacted reorder activity.
Despite slightly lower net sales gross profit for the quarter was $47 8 million, one 5 million higher than the $46 3 million recorded in the fourth quarter last year.
As a percentage of net sales gross profit also increased 130 basis points to 32% from 28, 9% in the same period last year, driven by normalized class seven to eight chassis delivery.
Implementation of our income protection plan and the impact of Dms.
SG&A expenses for the quarter were $17 2 million, one 4 million lower than the $18 6 million recorded in the fourth quarter last year, driven by reduced discretionary spending.
We also produced adjusted EBITDA of $33 2 million in the fourth quarter compared to $29 9 million for the same period last year and adjusted EBITDA margin was 21% 230 basis points higher for the quarter compared to last year.
As you can see we exhibited many financial improvements on the fourth quarter, which are primarily related to strength and early retail activity and attachment reduced discretionary spending with our income protection plan normalized class seven to eight chassis delivery and Dms initiatives.
Positively impacting the solutions segment.
On a GAAP basis, our fourth quarter NIM net income increased 57% to $18 2 million or <unk> 78 per diluted share compared to $11 6 million or 50 cents per diluted share generated during the fourth quarter of last year.
On an adjusted basis fourth quarter net income was $18 2 million or <unk> 78 per diluted share an increase over the $16 7 million or <unk> 72 cents per diluted share for the corresponding period last year.
Now, let's look at the segment results for the fourth quarter.
Work truck attachments net sales increased approximately 4% to $83 million and adjusted EBITDA increased 13% to $24 million compared to the fourth quarter of 2019.
Adjusted EBITDA margin increased 220 basis points to 28, 9% improve.
The improvement can be primarily attributed to strong retail activity as well as reduced discretionary spending under our income protection plan. As a reminder, we mentioned earlier this year that due to pandemic disruption. We believed more dealers would be conservative in their ordering or wait to see how the retail season.
Start to unfold before putting in reorder.
It's exactly what we saw and true to form our attachments team was able to satisfy the demand.
The work truck solutions segment recorded revenue revenue of $75 2 million and adjusted EBITDA of $9 2 million in Q4 of last year. The segment's revenue and adjusted EBITDA were $80 4 million and $8 6 million respectively.
Despite net sales being lower in the fourth quarter.
Due to ongoing pandemic disruption in key markets adjusted EBITDA margin increased approximately 150 basis points to 12, 2% when compared to Q4 last year due to more normalized chassis flow for class seven to eight trucks.
Reduced discretionary spending and the impact of D. D. MF, we were particularly pleased with the EBITDA margins produced in this segment, which were driven by improvements at Henderson.
Turning to the balance sheet and liquidity figures for the full year 2020, net cash provided in operating activities was $53 4 million compared to a record $77 3 million in the prior year.
Similarly, the free cash flow of $38 9 million compares to $65 8 million generated during 2019.
We are very pleased with our 2020 free cash flow results, which well exceeded the dividend of $25 9 million.
The decline in cash generation is mainly attributable to the higher net loss reported during 2020 combined with unfavorable working capital changes, we proactively built up inventory in anticipation of supply chain constraints, which was partially offset by a decrease in accounts receive.
The ball.
At the end of 2020 total liquidity was approximately $140 1 million, which includes $41 million on cash and $99 1 million in borrowing capacity under our revolver compared to last year's liquidity of $135 1 million.
Net debt of $199 1 million at year end is down from $210 million at the end of 2019 due to the $30 million prepayment made during the fourth quarter of 2020, and the June refinancing of our $375 million credit facility, which further strengthened our.
Our financial position.
We are well positioned and within our targeted range with a net debt leverage ratio of two eight at the end of 2020.
Despite a challenging year, where we saw many companies cut their dividend we remain fully committed to ours. Accordingly, we paid our dividend of 28 per share at the end of December.
In addition at their recent meeting our board voted to increase our quarterly dividend to <unk> 28, and a half cents per common share moving forward. We will continue to prioritize returning capital to shareholders, while opportunistically paying down our debt investing in our growth initiatives and pursuing strategic acquisitions.
<unk> at logical valuations.
Capital expenditures for 2020 totaled $14 5 million, an increase of $3 million when compared to 2019 and right in line with our expectations.
Our higher capital expenditures are a result of continued investments in vertical integration projects that we first outlined in 2019, which we expect will continue at similar levels in the years ahead.
Overall, while our 2020 financial results were impacted by the pandemic. We are pleased with how our teams responded to the situation and turned in a relatively strong performance under the circumstances.
Now I'd like to outline our thoughts on guidance for 2021.
Clear 2021 will still present, a wide a range array of challenges, especially in the first half of the year.
But as Bob mentioned, we are confident we will exit the pandemic stronger than we entered it.
If the economic environment and pandemic conditions stabilize and continue to slowly improve we feel confident will improve upon our 2020 results and position ourselves to meet our long term profitable growth objectives.
The 2021 financial outlook anticipates net sales between $505 million and $565 million adjusted EBITDA to range from $75 million to $100 million <unk>.
Adjusted earnings per share are expected to be in the range of $1 20 per share to $2 per share and our tax rate is expected to be approximately 25% to 26%.
This year more than ever our guidance accounts for a wide range of scenarios largely driven by economic conditions snowfall pandemic restrictions and our supply chain. We think this guidance is a realistic view of 2021.
We remain committed to the long term growth and margin profiles, we have defined for our businesses.
The unprecedented challenges we faced in 2020 and the timing on a full recovery unknown. We do what we are going to remain focused on factors we can control.
Thus in 2021, we will continue with our near term actions that are needed to be successful for our longer term plans.
That being said, we do expect it to take another year or two to realize those targets.
Overall I can say this we are well positioned for long term success and confident in our financial and operating strategy.
With that I'll turn the call back to the operator for our Q&A session.
As a reminder to ask a question you will need to press star one on your telephone.
So on your question press the pound King please standby, while we compile the Q&A roster.
Our first question comes from the line of Tim <unk> from Baird. Your line is now open.
Hey, Hey, everybody makes no sense for the year.
Hi, Tim.
Well Hello, it's 38 degrees so we're actually.
Italy on it.
Temperatures today.
[laughter].
For a little bit of on boarding relieved.
Thanks for all the color I guess the first question on.
It's just maybe on the attachments business.
How would you characterize.
Your dealers and your distributors.
Inventory levels kind of relative to normal I think last quarter. You said they were a little bit below I'm, just kind of curious as you kind of picky here through mid February help how does this kind of trend.
Yes.
We take inventory at the end of January.
So we're about 30 days past the last inventory and the good news Jim at that point as inventories were still down a little bit to their historical averages.
So that.
Debt that bodes well for us going forward heading into heading into pre season for short.
Okay. Okay. That's good to hear and then thinking about the kind of margin.
Outlook for for for 2021, I'm kind of getting a little.
Low 20 kind of incremental EBITDA margin for the year to kind of take the midpoint and I'm just kind of curious what's the kind of puts and takes to that at all or just just given last year.
Have a fair amount of operating shutdowns in the first half of the year. So can you just help us a little bit with what kind of the puts and takes on to the margins in debt.
Some of the highs and lows.
Sure.
I'm going to break it down for you between attachments and solutions and then kind of a consolidated view when.
When I look at the increments for 'twenty to 'twenty, one I would say attachments are going to be around 35% and I'm talking EBITDA increment.
And that's not us.
Not as high as for as the decrement that we experienced and really the main thing that's going on there is the absenteeism in some of the inefficiencies that we experienced exiting the year and entering 2021.
We're still navigating through so I expect some headwind there that would not put us back to our typical inc.
Increment.
And then on the solutions side I would say it's closer to.
25%.
So blended 25 to 30.
And where I would put us.
It's not all the way back from to the 19 levels and that's really due to some of the COVID-19 overhang that where we're experiencing.
Okay.
It is hard to steel kind of factor into that I mean, you've obviously seen higher steel prices, but your ability to.
Go out and kind of.
Recover that through pricing has been pretty good historically.
Could you kind of think about price cost with steel specifically for 'twenty. One yeah. I mean, you you almost answered the question there and that we think about it the way we always do and that dollar for dollar we will cover the inflation that we experienced we are experiencing high steel inflation.
On the the difference I guess in 'twenty, one when I think about the guidance range.
Is there still some uncertainty as far as covering the inflation within the year.
So there might be a lag that would take it into 2022.
Okay.
That's helpful.
Great.
Finished for the year and good luck on on 'twenty, one hopefully a little bit more in a more normalized environment.
Thank you Tim.
Yeah.
Thank you. Our next question comes from the line of Ryan Macdonald from Craig Hallum Capital. Your line is now open.
Good morning, guys. Thanks for taking my questions. Good morning, Good morning, Ryan.
I just wanted to dive a little bit more and hopefully on the margins, but it seemed like you had a lot of these challenges from the second half for this year. It seems like things progressed and got better throughout the year exited for you're well on the margin side.
But now we're going to take a step back a fairly larger step I think than we were expecting in.
In 2021, especially you've seen the progress kind of exiting this year. So I guess can you can you walk through a little bit more kind of on operating inefficiencies thinks that.
We are getting worse I guess from exiting this year into 2021.
Yes sure.
Yeah. When you look at the fourth quarter of this year those were at 19 level, but there were headwinds.
Within those that are continuing into the front half on a year I mentioned.
And he has.
That that really was on the tail end of the fourth quarter. You know if you think about I guess some of the Covid peaks that we've experienced they were very late in the year and into January.
And that causes a lot of disruption in all of the locations on.
Debt that we have so that was that was certainly a headwind.
Steel as a headwind, we typically have a little bit of a lag on our steel inflation. So we have more of that coming in.
On Q2 Q3.
I'd say those are the those are the large ones I think I would.
I would add and we mentioned this during the during the script portion.
Municipal budget challenges from an order perspective will impact Henderson in the first half for the year.
That's obviously going to have an impact on their profitability again, the silver lining here is that quotes continue to be up which means equipment eventually needs to be replaced.
But until.
Until the municipalities get the tax revenue budgets.
Sorted out theyre sitting on a lot of quotes and orders have softened and that will impact performance in the first half.
We expect that to pick up nicely in the second half, but that's another driver for us from a profitability perspective I'm going on.
I had one more Ryan I guess, it's important to remind.
I remind everyone that when we do our guidance this time of the year.
We typically.
Plan for average snowfall for the year.
And what goes along with that is the spending them. So when we look at 2020 not only did we have our typical income protection plan that our attachments group always flexes too dependent on the snow.
We had what we call the IPP plus.
As you know the solutions team.
Also really buckled down.
We plan to turn some of that spending back on as we track through the year and start seeing more improvement on the top line.
Great and then just a follow up on you mentioned some of the municipal budget challenges. You also mentioned a big backlog that you work. It through so I guess can you walk through kind of how big how long the backlog that you currently have is expected to run through.
And then kind of offset that with why do you think the herself would be challenged given that backlog.
Yeah, well, you know I'm not going to go into providing backlog numbers, we haven't done that to date, but you will recall.
<unk> continued to grow their order book, even well the chassis constraints on that side of the business.
Showed themselves, Arizona chassis constraints.
Well I began to ease and orders began to flow, we really started to eat into that backlog in the second half of 2020 as I indicated that's when we started to see the order softening.
So we've eaten through most of what I would call that excess backlog at this point.
In the last six months of 2020 in the first couple months of 2021, so we're going to see a little bit of a GAAP here.
From an from an order perspective being able to flip those things and turn them on the work trucks and get them out the door during the during the during the first half so while that strong backlog came in handy.
We have it down to a more manageable reasonable historical level now, which is going to create some of the challenges we have until that order pace picks back up.
Great. That's it from me guys I'll hop back in queue. Thanks. Good luck, thanks, James Brian.
Thank you. Our next question comes from the line of Chris Mcginnis from Sidoti <unk> Company. Your line is now open.
Good morning, Thanks for taking my congrats on a nice quarter.
Thanks, Good morning, Chris.
Maybe just.
When youre thinking about the guidance for 'twenty, one I guess, just where are you thinking on the two day.
In terms of topline.
Do you expect.
Both to be up.
Given last year.
On the solution side itself.
What changes as the economy opens or what have you seen change in the under.
Your line trends.
Around openings of states from geographies that you see.
As we look into 'twenty one.
Things open up more how does that change the dynamic of the demand from Sir thanks.
Hey, Chris I'm, just kind of mentioned you you were cutting out on but I think you're talking more about the guidance on top line for each of the two segments.
Alright, I'll stay on on attachments.
And our guidance as we always do average snowfall so.
You'd see a natural increase there going from the second year of low low low below average snowfall for average snowfall I guess the other thing I'd add there is.
It was an unusual year for attachments and that I'm much more of the demand was in the back half of last year and it should go back to a more typical year.
In 2021, and then on net solution side.
I guess favorable mix that we would expect would be our comps in the front half of the year, because we were shut down.
For six weeks in Q1 and Q2.
We were not able to fully make that up in a year or.
So there will be the comps I guess would be better on the front half of the year than in the back half of the year I think more specific to the economy opening up and all of that like like Bob mentioned are pushing into orders have been very strong and that's that's all.
The best representation of kind of more of a GDP business.
And we've been very pleased with that with what we've been seeing.
For the larger concern is on the Henderson side and municipalities, making those decisions and getting those orders in.
Yeah, I think I might I might add I'm.
Sure is spot on the agenda is really the GDP business that we pay attention to and and they are on the east coast the mid Atlantic.
Which has certainly been a right in the heart of this pandemic from day one.
I would I would suggest that.
Their order pattern strength.
I don't want to completely laid that at the economy beginning to open back up they've done a terrific job of identifying growth opportunities in specific markets and targeting those markets and targeting specific customers. So.
So I think we're actually probably grabbing a little bit of market share.
As you see there their order pace strengthened which is which is terrific.
We already spoke about about the municipal budget side.
I think again I, just an overall comment from a pandemic perspective.
We're one year into this thing.
There's reasons to be positive right theres downward trends and positive cases across the country. The vaccines will have a positive impact.
But but but.
If we've learned one thing over the last 12 months have set this thing isn't over until it's over.
And so I think.
I think we are wise as a business to take a cautious approach until this thing is on a rearview mirror Sarah indicated earlier, yes, we have some income protection plan spending things that we keep a lid on hopefully when this thing opens up youll see some of that free up but we're gonna be cautious it has worked well for us.
At this point.
And I think that's the right approach for us to take knowing full well that when this thing is behind US we've got momentum in order patterns will have momentum on the municipal side windows.
Budgets free up and.
We should we should be in decent shape from a snowfall perspective, so I think things look good longer term.
We've just got to fight through these couple of near term headwinds.
We'll be a heck of a lot smarter on our on our next call.
Because of the snow season will be over and the municipal budget things should be starting to show itself.
Great I appreciate that color and then just just on the first responder that's on <unk>.
On that but.
Two questions one I guess just from a delivery maybe.
First half for late in the first this year can you just talk about some response youre seeing in Italy and then the question is can that will be made at the John I don't know if that came up with the Panther. Thanks.
Yes, I will.
I will start with your second part first it absolutely can be sold into Louisiana markets.
And so we will look to we will look to roll that portion of it I'll probably later during the year I will tell you no.
Here is probably what I think is one of the.
One of the most interesting early signs of its acceptance.
We put a number of demo trucks together, okay. A demo truck is a mock up it's not a production pristine product, but we built a handful of these complete packages and our salespeople drive them around to municipalities to show them off and say. This this is what it looks like this is what you can order.
Here's the availability.
We have sold all of those demo trucks already.
People have been waiting for the first production pieces to come.
Which was a terrific signal and what we think the early acceptance level is going to be the other thing that is interesting.
Is that while the municipalities have budget challenges right. These class seven and eight.
Trucks are anywhere from 75 to $150000 a vehicle for the most part and the smaller medium duty trucks are 30 to $35000.
So we may find some of these products may fit a little bit more nicely into the current budget environment as well that could turn out to be another positive driver for us.
Sure.
Thanks for taking my questions and good luck in Q1. Thank.
Thank you thanks, Chris.
Thank you as a reminder, ladies and gentlemen, if you have a question. Please press. The Star then the number one key on your Touchtone telephone.
At this time I'm showing no further questions I would like to turn the call back over to Bob Mccormick for closing remarks.
Thank you for your time today as always we appreciate your ongoing interest in Douglas dynamics.
We hope you are staying healthy and we look forward to seeing you in person down the road, but between now and then I'm sure we'll be seeing some of you on a zoom call soon.
Thanks, and have a terrific day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].
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Yes.
Okay.