Douglas Dynamics Inc (PLOW) 2025 Q4 法說會逐字稿

Good morning, and welcome to the Douglas Dynamics Fourth Quarter 2025 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Nathan Elwell, Vice President, Investor Relations. Please go ahead.

Thank you, Gary. Welcome, everyone, and thank you for joining us on today's call.

Before we begin, I would 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. We also published a one-page fact sheet on our IR website that summarizes our results for the quarter.

Joining me on the call today is Mark Van Genderen, President and CEO; and Sarah Lauber, Executive Vice President and CFO. Mark will provide an overview of our performance then Sarah will review our financial results and outlook for 2026. After that, we'll open the call for questions.

With that, I'll hand the call over to Mark. Please go ahead.

Thanks, Nathan. And welcome, everyone, to our fourth quarter call. Given our core business, we'd be remiss not to recognize the magnitude of Winter Storm Hernando's impact on the East Coast right now. Our dealers, contractors and teams are doing everything they can to keep people safe during this historic winter event.

Stepping back, as a company, we've experienced dramatic changes in operating conditions over the past several years. We've successfully navigated COVID, supply chain disruptions, tariffs and the tough but necessary business decisions necessitated by several consecutive seasons of low snowfall. While the journey has been demanding, our teams have continually risen to the challenge, and we are emerging stronger, more resilient and better prepared for what lies ahead.

In 2025, we saw a significant increase in business activity across the company, and once again, it was the determination, strength and ingenuity of our people that allowed us to fully capitalize on these opportunities. Across every aspect of our operations, our people stepped up to the plate in 2025 and their commitment is clearly reflected in our results. So thank you to everyone at Douglas Dynamics.

There are three main areas of focus Sarah and I would like to cover in this morning's call. First, an excellent fourth quarter topped off a fantastic 2025 with operational strength and robust financial performance in both the Work Truck Attachments and Work Truck Solutions segments.

Second, with an above-average snowfall so far this winter, we expect to build off of 2025s momentum in 2026 with continued growth in both segments. Sarah will cover that outlook later in our call.

And finally, and arguably most importantly, the strategic framework we introduced in 2025 and the actions we've taken to support that strategy have positioned us extremely well, not only going into 2026 but beyond to drive sustainable long-term value creation.

So let's start with 2025 performance. We delivered strong financial results throughout the year with each quarter and in particular, the fourth quarter growing from the prior year. These year-over-year fourth quarter improvements were primarily driven by two things: the excellent performance at Solutions and the early onset of winter boosting demand at attachments.

During 2025, we increased our guidance ranges twice and still managed to come in at the high end of this range. When you look back over the past few years, our earnings have grown from roughly $1 of adjusted EPS in 2023 to $1.47 in 2024 to $2.24 in 2025. That's a fantastic return to form.

Okay. Let's discuss our fourth quarter and full year results in more detail, starting with Work Truck Attachments. Demand for the product lines, work truck attachments designs, builds and sells is primarily driven by snowfall. And as a refresher, the average life cycle of the equipment we produce is between 5 and 10 years. We know that there are tens, if not hundreds of thousands of our FISHER, WESTERN and SnowEx products in use on the roads today.

Just as below-average-snowfall winters lead to an elongated life expectancy above-average snowfall winter drive increased usage and ultimately, demand. Of note, we measure this phenomenon over multiyear periods and develop forecast models, create production schedules and make investment decisions based on snowfall over time, not any one given year. This is also the reason that one strong winter can help to provide a multiyear tailwind.

This winter snowfall came early with major November and December storms in the Midwest and significant persistent lake effect snow in the great Lakes region. And so far in 2026, several large snow and ice storms made their way across much of the country, including the Plains, Mid-Atlantic states and the Northeast including the historical storm that many of you just experienced. In fact, after several years of low snowfall, we're confident that the current snow season will end above the 10-year average.

We want to thank our many dealers and contractors in these core markets for their tireless work to keep people safe during these storms. Our regular channel checks at the end of January confirmed that with increased year-over-year retail sales file and hopper inventories are below the 10-year averages.

These weather conditions in the fourth quarter helped increase net sales and adjusted EBITDA, including record sales of parts and accessories. Now unlike sales of plows and hoppers, which are generally aligned with snowfall trends over multiple years, we see a high correlation and immediate impact between parts and accessories sales and current snowfall. On a full year basis, net sales and adjusted EBITDA improved by double digits.

With the end of the 2025, '26 snow season coming into view, our teams have been working nonstop to meet demand driven by the recent major storms. In addition, we have already started planning and preparing for what we believe will be a solid preseason.

Okay. Turning to Work Truck Solutions, which exceeded our expectations once again. In fact, it was a record quarter to finish a record year, which is also the fourth consecutive year of improvement. On a full year basis, not only did we deliver double-digit net sales growth and adjusted EBITDA growth, we saw record annual margins.

Demand and backlog from municipal customers remain robust and we continue to work through the large multiyear contracts that we discussed last year. After four consecutive years of growth, the bar is set high.

Given our excellent lead times and customer support, we are in a formidable position in the marketplace today. We continue to see strong demand from municipal customers. We are executing effectively and we maintain a near record backlog. All in all, we expect our municipal business will continue to grow, although not quite at the same pace we have experienced in the last four years.

Commercial demand dynamics remain somewhat opaque, while the fleet business remains generally solid, we are seeing some minor softening of demand in the dealer business, which is difficult to predict. Dealers have inventory on the ground and smaller customers remain hesitant and price conscious. Our commercial teams remain diligently focused on optimizing this business. Overall, really a fantastic performance for the Solutions segment in 2025.

All right. Now that I've covered our results, let me just take a step back for a moment and discuss strategy. Building upon our strong financial performance in 2025, and with a seasoned management team now in place, we have crafted a more defined strategic vision for the future. This manifested itself through the three strategic pillars that we've been talking about for the past couple of quarters, optimize, expand and activate.

The first priority is to optimize our current operations. Now continuous improvement through our DDMS system is part of our DNA, and our optimized pillar has helped refocus our efforts across the organization. The creation of centers of excellence within the Attachments segment was a great example where production has moved from brand focused to a specific product-focused manufacturing approach at each facility. This has enabled greater specialization and brings the full breadth of our engineering, supply chain and manufacturing expertise to bear across our WESTERN, FISHER and SnowEx product lines while leveraging the unique strength of each location and workforce.

The second pillar is expand pursuing organic geographic growth and new product offerings. For example, with lead times across the municipal sector top of mind, we are excited about the opening of Henderson's new Missouri upfit facility this summer. This expansion will allow us to better serve customers in surrounding markets and continue to deliver trucks on time, both of which will strengthen our competitive advantage.

In addition, the attachments team launched the auto speed controller for hopper spreaders last year. This controller is linked directly to the truck's CPU and as a result, can automatically adjust the flow of de-icing material as the vehicle speed changes, improving efficiency, reducing waste and allowing for better monitoring and it's retrofittable to all hoppers we produced back to 2016. This product its capabilities and the fact that it can be fitted to every hopper that we've built and our dealers have sold over the past 10 years have all been received extremely well by our end user professionals.

And finally, activate, which refers to last year's restart of our M&A efforts, which led to our first acquisition in nine years. We welcome Venco Venturo to the Douglas Dynamics family in November. Adding this well-established and highly respected provider of truck-mounted cranes and dump hoist was a meaningful first step as we look to diversify and balance our portfolio over the long term.

Our integration team has been working diligently to start realizing the benefits of this partnership and drive profitable growth. Venco is a great example of the types of high-quality brands and businesses that align with our long-term vision. Given the financial strength of Douglas Dynamics, combined with this clarifying strategic vision for the company, we will continue to pursue the right acquisitions in the Vehicle Attachments space. I'm really pleased to say that our mission, vision and strategic direction have all been well received internally and externally with substantial initiatives now underway across all three pillars we entered 2026 with a clear focus on sustainable, profitable growth.

So in summary, 2025 was an important year for our company. And frankly, we're just getting started. Divisional plans aligned with the optimized expand and activate strategies are rapidly gaining traction and delivering results. We are confident in the strategic path ahead and we are focused on sustaining and expanding our recent success in 2026 and beyond.

Personally, I'm looking forward to attending the NTEA Work Truck Show in Indianapolis in two weeks which is always a great opportunity to reconnect with our teams and meet with partners and customers. It's an exciting time in our industry with considerable opportunities ahead, and our teams are continually striving to get better every day.

With that, I'd like to pass the call to Sarah.

Thanks, Mark. Before I begin, unless stated otherwise, all the comparisons I'll make today are between the fourth quarter or full year of 2025 and versus the same time period in 2024. Also, please remember that 2024 results included a onetime gain of $42.3 million from the sale-leaseback transaction completed in September of 2024.

Overall, our financial results were excellent. We closed out the year strong I want to commend everyone at the company on their hard work this year that really paid off. Let me walk through the numbers for you, and I'll start with the quarter and then discuss the full year.

On a consolidated basis, fourth quarter net sales increased approximately 29% to $184.5 million with growth in both segments. Gross profit grew approximately 35% to $48.1 million, with gross margin increasing 120 basis points to 26.1%.

SG&A expenses increased approximately 29% to $27.3 million, primarily due to higher variable compensation on increased sales. Net income and diluted earnings per share both increased over 60% to $12.8 million and $0.54, respectively.

Adjusted EBITDA increased approximately 37% to $25.8 million and margins increased 90 basis points to 14%. And adjusted earnings per share increased approximately 58% to $0.62. These tremendous improvements to finish the year were driven by improved weather trends that helped boost demand, coupled with positive execution at both of our segments.

Turning to the full year. 2025 net sales grew approximately 15% to a record $656.1 million. Gross profit grew approximately 19% and to $175 million, with gross margin increasing 80 basis points to 26.6%.

SG&A expenses increased just 4% to $94.9 million. Net income and diluted earnings per share were $46.9 million and $1.96, respectively. Adjusted EBITDA increased approximately 23% to $97.9 million and margins increased 90 basis points to 14.9%. Adjusted earnings per share increased approximately 52% to $2.24. The effective tax rate for 2025 was 23.8% and in line with 24% for 2024.

As you can see, 2025 was a relatively straightforward year with fewer headwinds than we've seen in recent years. The generally favorable market conditions for both segments, coupled with a strong performance operationally, delivered strong year-over-year improvements.

Okay. Let's look at the results for the two segments, and I will start with Work Truck Attachments. As Mark already mentioned, we are pleased to buck the trend of recent years with winter arriving early across a good portion of the Midwest and Northeast in the fourth quarter. The subsequent increase in demand caused fourth quarter net sales and adjusted EBITDA to both increase by more than 50% to $83.1 million and $13.9 million, respectively.

Looking at 2025 overall, the impact of increased snowfall in core markets in both the first and fourth quarters drove higher volumes. Full year net sales increased approximately 16% to $295.7 million, and adjusted EBITDA also improved by 16% to $56.2 million.

We experienced very healthy aftermarket demand. In the quarter and for the full year, we achieved record sales of parks and accessories. We saw a dramatic spike in demand during December as end users went to dealers looking to keep their plows in tip top shape. Equipment was being used, and this should help to chip away at the elongated replacement cycle we are experiencing. The outlook at attachments is more positive today than it has been in recent years.

Next, I'll cover Work Truck Solutions. Our teams produced record results for both the quarter and the year despite facing tough comparisons to 2024. The team really ended the year on a high note. Well done to everyone at Work Truck Solutions for delivering record results once again.

Fourth quarter net sales increased approximately 13% to $101.5 million. Adjusted EBITDA grew approximately 22% to $11.9 million. And adjusted EBITDA margins increased 80 basis points to a record 11.7%.

Results were driven by ongoing strength of municipal demand plus efficient operations that meant more trucks were delivered. The fourth quarter results were really a continuation of the trends that we saw all year.

For 2025, net sales grew approximately 15% and adjusted EBITDA increased 35%, adjusted EBITDA margins grew substantially to a record 11.6%, a 170-basis-point increase. As we have previously noted, 2025 net sales included approximately $18 million of incremental chassis sales related to several large municipal contracts. So 2025 was the fourth consecutive year of significant financial improvement for Solutions. The goal now is to maintain this margin performance in the near to medium term and to continue to focus on meaningful projects to optimize and expand in the years ahead.

Okay. Turning to the balance sheet. Total liquidity at quarter end was $127.8 million, comprised of $8.3 million in cash and $119.5 million of borrowing capacity on the revolver, which is more than enough for our needs in the foreseeable future. We are just avidly proud of our cash generation for the year. Free cash flow increased 91% to $63.6 million, which was primarily driven by the increase in net income, somewhat offset by higher inventory levels and solutions.

We also had a onetime benefit of approximately $7 million in lower cash taxes in 2025 due to the One Big Beautiful Bill Act. Inventory increased approximately 9% to $150 million. The great reduction in finished goods inventory in our snow and ice control equipment within Attachments, was more than offset by a combination of two items. First, the addition of inventory from Venco Venturo. And second, the logical and necessary increase in champion components in the Solutions segment to support the sales growth that we have experienced.

Next, I'd like to talk a little bit about how we are thinking about capital allocation. When we look at our capital allocation priorities for 2026, they are not fundamentally different than the past. First, we are continuing to focus on returning cash to shareholders, predominantly through maintaining our strong dividend. To a lesser extent, we also have the flexibility for share repurchases with $38 million remaining on our buyback authority.

Second, we want to support projects by investing in the business as part of the optimized and expand strategic pillars. Beyond that, we expect to continue to pursue strategic M&A opportunities as they arise as part of our Activate strategic pillar.

Let me add some details to these points. On the dividend, we're maintaining the current quarterly cash dividend of $0.295 per share. For share repurchases, we would expect 2026 to be similar to that of 2025 with the opportunity to reassess as we go through the year. As far as investing in the business, Capital expenditures for 2025 increased to $11.1 million after restricted spending in 2024.

While not strictly classified as CapEx, we also invested approximately $5 million in facility improvement projects as part of the 2024 sale-leaseback agreement. For 2025, even with those two combined components combined to $15.1 million, we remained well within our traditional range of 2% to 3% of net sales. With our plans for 2026 in place, we expect spending to increase year-over-year as we invest to grow, but we still expect to stay within that same 2% to 3% of net sales.

Lastly, at year-end, our leverage ratio was 1.8x, which is well within our goal range of 1.5 to 3x. We are well positioned to consider small- to medium-sized acquisitions of complex attachments in the years ahead.

Okay. Let's review our outlook. Over the past two years, we have delivered meaningful improvements on both the top and bottom line. The trends we have been discussing allow us to issue a strong outlook for 2026. As you saw in the release, we expect 2026 net sales to be between $710 million and $760 million.

Adjusted EBITDA predicted to range from $100 million to $120 million. Adjusted earnings per share is expected to be in the range of $2.25 to $2.85. The effective tax rate is expected to be approximately 24% to 25%.

As always, this assumes relatively stable economic and supply chain conditions, and we are assuming above-average snowfall in the first quarter and average snowfall in the fourth quarter, which should help address the elongated replacement cycle that we talked to earlier.

Based on these assumptions and with our current level of visibility, we believe the business is well positioned to drive improvements with the midpoint of our ranges, projecting higher volumes across both segments, which would lead to double-digit top line growth for the company.

I think you'll agree this is a strong outlook overall. It's the first time our net sales outlook has been above $700 million. The first time our adjusted EBITDA guidance started at $100 million and the first time our adjusted earnings per share range exceeds prior year results.

In summary, it was a great end to a great year. In 2025, we outlined our strategy, executed our plans effectively. We're in a strong position entering 2026 to deliver yet another very solid year.

With that, we'd like to open the call for questions.

(Operator Instructions) Mike Shlisky, D.A. Davidson.

Just following your last comment there, Sarah. I just missed this. You said that you'll see growth in both segments -- can you maybe pinpoint for us which segment might have the better growth outlook for '26? And then secondly, from a margin perspective, which ones got the better opportunities for some additional margin leverage in 2026.

Sure, absolutely. So yes, you heard me on the call, talk about double-digit sales growth for Douglas as expected. Right now, the expectation and solutions is that we are at our target growth of mid- to high single digits for the year. And then the remaining growth is in attachments and that's a combination of our Venco acquisition plus higher-than-average snowfall expected in Q1. So we expect higher volumes than we had last year.

On the margin question, I would say on solutions, and you heard in my script, I talked about maintaining the margin, but continuing to grow through our optimize and expand. We will be working hard on both of those. We optimize will certainly help to increase our margins, whereas the focus on growth this year is going to be more evident because we have the mid- to high single-digit level growth on a record year. On the margin on Attachments, I would say, right now, assuming those to be relatively flat. And again, there's upside as cloud volumes return to average. For us, it's going to be just very critical for us to see what occurs in the preseason period.

Got it. Got it. So as usual, will be better feel for it in the springtime, it sounds like. Can you comment also about how it's been going so far with owning Venco Venturo or anything surprised you or look different than you expected?

Yes, Mike, this is Mark. I'd be happy to take that one. Thanks for the question. So far, it's been going very well. I mean against the backdrop of the size of our company, as we've indicated, it's a relatively small acquisition, but we think there's possibilities, huge opportunities there over the next not few months or years, but over a long period of time.

I can tell you from an integration standpoint, it's been going we had high expectations, and it's going better than expected. It's a great team, really committed, I think, really now proud to be part of Douglas Dynamics have a great reputation in the industry of being a company that takes care of employees and really puts people and culture first. So it's just been a really good dynamic so far. Now we're getting kind of past the initial what I'll call the honeymoon period and really focusing on, hey, what is the potential of this company now with strength and backing of Douglas Dynamics.

I would just add from a financial perspective, no surprises as we sit here today and the expectation that they would be earnings per share and free cash flow accretive, although smaller for us is still there for 2026.

Great. Maybe one last one for me, but all this recent snow, I got the window I can definitely see it's been a very heavy winter. In parts of the country, though, there were some large storms that don't always see a tonnage mill. I don't mean like a Houston and Dallas or even in the Southern Georgia area, but I mean like Virginia, are around the border or the edges of your typical most important core regions of the country. I'm curious whether those kind of borderline states and markets have any kind of unusual growth potential in 2026, if there's been some very elongated period of replacement in those areas.

Yes, I would say if you look across pretty much all the areas where we sell cloud the major areas and kind of that Northeast corridor, Mid-Atlantic, Midwest, we've seen, as we mentioned, above average snowfalls. And in some cases, it's huge storms like what you're experiencing on the East Coast or just did. In other cases, even if it's 2 or 3 inches. We call those plowable events and 2 to 3 inches versus 8 or 9 basically going to have the same impact in terms of the plow needs to go out, folks need to go out.

And then the other thing we've continued to see over the last several years is a lot more, I'd say, on average salt events. So events where trucks are going out and not just flowing but putting down salt and sand on the road using our hoppers.

So overall, as I said, this is -- it's been a pretty good year so far. We still have I don't know, say, six to eight weeks of winter left, knowing that sometimes storms in certain parts of the country can go into April. But so far, so good. And again, we feel like this will be an above-average winter compared to the last 10 for us.

Tim Wojs, Baird.

Nice to see the results here. So maybe could you put a little finer point on just kind of the parts and accessory performance in kind of the fourth quarter? And maybe how big P&A was for attachments for the year or maybe just the percentage of the business?

Yes. They operated for both the year and the quarter, call it, 14% to 15% of sales for Douglas. And the benefit for us in the fourth quarter is really driven by the high margins that parts and accessories bring along with it.

Okay. Is that why you're kind of assuming that margins and attachments would be kind of flattish next year, I guess, I would expect to see just given some of the cost takeout you guys have had and the volume growth you would expect that you would see margin leverage. Is there kind of a mix component with parts and accessories that kind of normalizes? Is that a headwind?

You answered your own question.

Yes, you're spot on. When we looked at last year, and we always talk about things kind of assuming average snowfall, and then as a company, we've become, I think, really good at being able to adjust accordingly up or down.

So last year in the fourth quarter with some of the early snowfalls in the Midwest, in particular, in some of the lake effect. That increase in P&A sales helped to drive that -- our overall EPS in the quarter and then for the year above what we expected, which is great.

And as I mentioned in the call, there is a direct impact. If we see snow coming in and especially knowing the amount of product that we have out in the field, we're going to see an immediate impact, which we saw in the fourth quarter, which helped to drive that overall volume.

It's hard to speculate how we seen more average snow volume in the fourth quarter, we most likely wouldn't have seen as high as P&A sales results still would have been very good, but not as good as they are, which is also why when we look at the full year for 2026, with parts and accessories, we say, hey, you know what, we're going to take an average approach, which then leads and drives to where our guidance was.

And the cost takeout that you mentioned, those occurred in '24, and they were -- they're essentially already baked in through '25. So not a lot of incremental cost savings coming to us in '26. The real opportunity in attachments is as the equipment volumes return, which, again, is critical for us to see the preseason order patterns.

And is it too early to kind of understand what the preseason might look like? Is it just too early?

Yes, it really is. I mean, anecdotally, we talked about the fact that we mentioned it here in the call that overall dealer inventories are lower than what we've seen in the last several years, which you might expect, just given the increased snowfall.

Dealer sentiment right now is very positive, and we've seen an increase overall in retail sales, not just in parts and accessories, but for our major equipment, we'll know more in the next couple of months. Our sales teams are out talking with dealers on a regular basis, helping them get the flowers that they need right now in season. And then, yes, we'll really -- we'll have a lot more color as we always do in the second quarter conference call.

Okay. Great. And then just to put a finer point on Solutions. Are you basically saying that the margins here are kind of in that your kind of targeted range, call it, low teens, kind of low double-digits type range, and now you're really focused on driving EBIT growth as opposed to margin expansion? Just trying to kind of understand maybe what the long-term margin profile solutions really looks like.

Yes. The answer is yes. So our target was double digit to low teens. I'm not saying there's not opportunity to grow from the 11.6%. But our focus very much is on the top line growth which we do expect further top line growth after a year of having 15% top line growth. So that is more so our focus is the EBITDA dollar growth.

Okay. Got you. And then I'll sneak one last one in. Any comments you want to make on the first quarter? And the reason I ask is I know that's kind of been a wonky quarter historically. So just any sort of modeling items or anything like that you'd want to get out there.

No. I mean, in the first quarter, with attachments driving much of it is the lighter quarter. I mean, clearly, we haven't seen snowstorms like this in a long time in the first quarter. So I don't expect really the quarterly cadence to change of the seasonality. The wildcard, I guess, will be what we see for parts and accessories.

Greg Burns, Sidoti & Company.

When we look at the results for the Solutions segment, how it ended the year on such a strong note. I think earlier in the year, you were expecting maybe a little bit of moderation in the second half that didn't really seem to play out. It seems to almost like accelerate momentum into the end of the year. So can you just talk about why that was -- why the second half end up maybe stronger than you had thought earlier in the year?

Yes. I would put it entirely on the team's execution in completing trucks and getting them out the door. They have quite a backlog, and so they have the opportunity to certainly outperform. We didn't want to get ahead of ourselves. But I would say the team has really stepped up to the plate, and we were able to deliver on the backlog. And it has not really lowered the backlog dramatically because they're also winning new business.

Okay. And the Missouri facility wins that capacity coming online?

We're targeting the second quarter. I think I said summer, early summer, I think, is what we're shooting for right now. And that is moving along nicely. Again, that's similar and consistent with what we've done with other properties. We won't own that, but it is a build-to-suit lease. So we're working with the company, and that's coming along very nicely, and we're excited about that. It will give us another maybe 8% to 10% volume increase for Henderson from an end truck from a completed truck standpoint in a targeted area for us that we've looked at and said, hey, we really want to make sure we're on the ground and providing great service to customers.

And that growth is an annual growth.

Yes, great point. Yes. Okay. And then for the fourth quarter in the Attachments segment, margin was, I guess, flat year-over-year, but you mentioned obviously the strength in the parts and services and the beneficial margin impact of that. So why was the -- given the strong mix of parts and services, why was the margin flat this quarter?

That's a great question. I think some of it is the first part of Venco coming in. Some of it is variable compensation. I can't think of anything other top of mind. I think it's just the growth last year in the fourth quarter was a much lighter year, but fourth quarter typically is parts and accessories, not whole units. So I think when you look at the size that's different, but the mix is probably not dramatically different.

Got it. Okay. And then when we're looking at the, I guess, the guide -- the initial guide for like flattish margin for next year, I know you mentioned mix of parts and services. But is there any of that like a cost avoidance that may be coming back online now that market demand is picking up. Like is there any element of that like you're kind of resetting the cost structure and then maybe you start to see improved leverage into '27.

Absolutely. So when I think about our businesses, I don't think the incremental volume or incremental margins, the opportunity has changed our solutions tend to be 15% to 20%, and our attachments is 25% to 30%. However, there's two caveats. One, we are layering in some investments for growth this year in our plan. So we have that in 2026.

And then the other area is the fact that our volumes still are not at average volumes. And so that's probably the largest piece out there that changes the margin profile for attachments and for the company.

I would add to that. You look back a couple of years ago and I think $10 million to $12 million that we took out of the business at that time. That's not something that we did it was necessary, but it wasn't something that we did lightly. That's not our MO as a company. And we're all very focused, I'd say, as a management team and as a leadership team, both at corporate and at the divisional levels, of making sure that as much of that as we can continue to keep flows through. We're not opening up the checkbook significantly even against the backdrop of a better than average snowfall year because we just want to make sure that we're being very prudent.

Okay. I guess with that said, where what are normalized margins like normal volumes get back to kind of average historical levels. Where do you see the -- what is the margin profile of the Attachments segment?

Yes. So we ended the year for attachments at 19%. We get to the mid-20s with average volumes.

(Operator Instructions) Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Mark Van Genderen for any closing remarks. Thank you.

We really appreciate your continued interest in Douglas Dynamics. And certainly, please reach out to Nathan, if you would like to talk to us in the coming weeks. Thanks, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.