DOUGLAS DYNAMICS INC.
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TEAM MEMBERS : BHARATH CHANDRASHEKHAR, ROBERT EBERHAD, PURVI MITTAL, SHALINI R SIVARAJAH PowerPoint PPT Presentation


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DOUGLAS DYNAMICS INC. TEAM MEMBERS : BHARATH CHANDRASHEKHAR, ROBERT EBERHAD, PURVI MITTAL, SHALINI R SIVARAJAH Presented: April 22, 2014. AGENDA. Introduction Company Overview Macroeconomic Overview Market Prospects Financial and Ratio Analysis Financial Projections Valuation Tools

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TEAM MEMBERS : BHARATH CHANDRASHEKHAR, ROBERT EBERHAD, PURVI MITTAL, SHALINI R SIVARAJAH

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Team members bharath chandrashekhar robert eberhad purvi mittal shalini r sivarajah

DOUGLAS DYNAMICS INC.

TEAM MEMBERS: BHARATH CHANDRASHEKHAR, ROBERT EBERHAD, PURVI MITTAL, SHALINI R SIVARAJAH

Presented: April 22, 2014


Agenda

AGENDA

  • Introduction

  • Company Overview

  • Macroeconomic Overview

  • Market Prospects

  • Financial and Ratio Analysis

  • Financial Projections

  • Valuation Tools

  • Recommendation


Company overview

COMPANY OVERVIEW

  • North American leader in the design, manufacture and sale of snow and ice control equipment for light trucks

  • Founded in 1977, but traces history back to 1948 founding of Fisher Engineering

  • Headquartered in Milwaukee

  • Previously owned by steel companies and private equity; went public in May 2010

  • Acquired TrynEx International in 2013 to expand product line and geographic reach


Distribution network

DISTRIBUTION NETWORK

  • Worldwide distribution network of over 2,100 points of sale

  • Focus on “snow belt regions in North America

  • 80% of distributors are east of the Mississippi River

Source: Company 10-K and 2013 Investor Presentation


Consumer loyalty

CONSUMER LOYALTY

  • Installed base of over 500,000 units

  • Actively used snowplows are replaced every 7-9 years

  • Different brands based on needs of user

Sources: Company 10-K and 2013 Investor Presentation


Employees and lean manufacturing

EMPLOYEES AND LEAN MANUFACTURING

  • Non-union workforce with an average tenure of 9.3 years

  • Temporary workers allow for low fixed cost model to respond to consumer demand

  • Intense focus on lean manufacturing leads to high operational efficiency

Source: 2013 Investor Presentation


Macroeconomic overview

MACROECONOMIC OVERVIEW


Key industry drivers

KEY INDUSTRY DRIVERS

  • Annual average rainfall (precipitation)

  • Value of Construction

  • World price of Steel

  • Trade-Weighted Index

Source: Ibisworld


Industry outlook

INDUSTRY OUTLOOK

  • Pent-up demand and innovative plowing systems will be key growth drivers for the industry

  • Profit margins are expected to remain elevated due to use of lean manufacturing techniques

  • Manufacturers aim to mitigate rising steel prices by passing them down to consumers higher sale prices

  • Companies taking cost-cutting measures to increase profitability

  • Increase in construction leads to increase in total area that need snow clearing

Source: Ibisworld


Porter s industry analysis

PORTER’S INDUSTRY ANALYSIS


Swot analysis

SWOT ANALYSIS


Stock performance

STOCK PERFORMANCE


Market prospects

MARKET PROSPECTS

Source: Yahoo.Finance


Market comparison

MARKET COMPARISON


Comparables

COMPARABLES

Source: CapitalIQ


Comparables valuation

COMPARABLES VALUATION

Source: Yahoo.Finance


Financial analysis

FINANCIAL ANALYSIS


Projections discount rate

PROJECTIONS & DISCOUNT RATE


Valuation dcf

VALUATION - DCF


Recommendation watchlist

RECOMMENDATION: WATCHLIST*

  • DCF VALUATION=>10.73

  • COMPARABLE VALUATION=>12.51

  • CURRENT SHARE PRICE=>16.70

  • Good Business Story but Poor Capital Management

  • Reconsideration should be based on a more sustainable dividend policy


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