James L. Janik, President and Chief Executive Officer of Douglas Dynamics, commented, "We are very pleased with our second quarter performance. We successfully completed our initial public offering and delivered solid operational and financial results. As we concluded our pre-season sales program, we achieved a year-over-year increase in equipment shipments, grew revenue, expanded margins and improved Adjusted EBITDA. In addition, we completed the closure of our manufacturing facility in Johnson City, Tennessee, transferring production to our Rockland, Maine and Milwaukee, Wisconsin facilities, which has and will continue to generate operational efficiencies, incremental cost savings and quality improvements throughout our manufacturing processes."
Net income was $0.1 million, or $0.00 per diluted share, in the second quarter of 2010 compared to net income of $5.7 million, or $0.38 per diluted share, in the second quarter of 2009. Net income in the second quarter of 2010 included $16.6 million in pretax non-recurring expenses incurred at the time of the Company's initial public offering. Adjusted net income (net income excluding these non-recurring expenses), was $9.0 million, or $0.49 per diluted share. Please see the Net Income to Adjusted Net Income Reconciliation table below for additional details regarding the non-recurring expenses. The estimated effective tax rate for 2010 is 45.6%.
The Company reported Adjusted EBITDA of $21.7 million in the second quarter of 2010, a 36.4% increase compared to Adjusted EBITDA of $15.9 million in the second quarter of 2009. The increase in Adjusted EBITDA is primarily attributable to increased unit shipments, improved product margins and controlled spending.
Net Income to Adjusted Net Income Reconciliation
|$ Millions, except per-share amounts||Three Months ended June, 30, 2010|
|Net Income (GAAP)||$0.1||$0.00|
|Non recurring expenses incurred at the time of IPO, net of tax|
|- Buyout of the management services agreement||3.1||0.17|
|- Loss on extinguishment of debt||4.4||0.24|
|- Liquidity bonus payment||0.5||0.03|
|- Stock based compensation||0.9||0.05|
|Adjusted Net Income (non-GAAP)||$9.0||0.49|