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Image: Douglas Dynamics.

Seasonal businesses can be tricky for investors to analyze, and as a maker of plows and other snow- and ice-handling equipment, Douglas Dynamics (NYSE:PLOW) is a company that most people don't think twice about during the summer months. Coming into Monday afternoon's second-quarter earnings report, Douglas Dynamics investors were expecting a big drop in earnings despite solid sales gains, and the stock had slid from its highest levels during the cold winter months. As it turned out, though, Douglas Dynamics managed to limit its earnings declines and give investors better sales performance than they thought. Let's take a closer look at Douglas Dynamics to see what we can learn from its latest financial report.

How winter helped drive Douglas Dynamics forward
Douglas Dynamics did a lot better than most people had expected. Quarterly net sales jumped 21% to $107.1 million, and while the company correctly noted that a huge portion of the additional revenue came from the acquisition of Henderson Enterprises Group, it nevertheless exceeded the 18% growth expectations that most investors had. Net income declined about 10% to $13.1 million, but earnings of $0.57 per share were still a nickel per share higher than the consensus forecast among those following the stock.

Douglas Dynamics attributed the solid performance to a number of factors. The acquisition of Henderson, which is a provider of customized winter solutions for government departments of transportation and others with sizable heavy-truck fleets to keep roads clear, definitely added to the company's overall performance. Yet Douglas Dynamics also reported strong pre-season ordering sales, as customers begin to look forward to the winter of 2015-2016 and place orders for equipment accordingly.

Partially to blame for the drop in earnings from year-ago levels was a big jump in overhead expenses. Selling, general, and administrative costs climbed by a third, outpacing growth in sales and thereby pulling operating margins down considerably. Higher interest costs had a particularly sizable impact on Douglas Dynamics' bottom line, and when you look at pre-tax operating earnings before interest, depreciation and amortization, the company managed to eke out slight gains from year-ago levels.

CEO James Janik expressed satisfaction with Douglas Dynamics' results. "[O]ur pre-season order book was strong, signaling positive dealer sentiment," Janik said, and he also pointed to "excitement around our new product lines, the launch of which further enhances our industry-leading portfolio." In addition, the CEO said that "pent-up demand from deferred equipment purchases continued to contribute to our strong first-half results," indicating that even hard-hit municipal governments that are enduring financial challenges still have to replace winter-handling equipment eventually.

Can Douglas Dynamics keep growing?
Janik was also optimistic about how the acquisition of Henderson has gone. "The integration is progressing as planned, and we've identified opportunities to implement our proprietary Douglas Dynamics Management System to drive value creation across the business and better serve customers." More broadly, the CEO believes that early signs point to continued strength for the entire business, although Janik pointed out that fourth-quarter results are hardest to predict given the vagaries of winter weather.

Investors got a huge upgrade in Douglas Dynamics' guidance. The company boosted its expected sales range to $385 million to $420 million, and earnings of $1.70 to $2.05 per share would be quite a bit higher than the $1.35 per share that most investors currently expect. With its projections using average winter figures, Douglas Dynamics could see even faster growth if next winter turns out to be snowier than usual.

In response to the report, Douglas Dynamics' investors were ecstatic, pushing the stock up by nearly 10% in the first two hours of after-market trading following the announcement. With such a huge push higher in future expectations and all signs pointing to healthy gains in sales that should eventually translate into higher earnings as well, Douglas Dynamics can root for another bad winter to promote its products even more.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Douglas Dynamics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.