Good day and thank you for joining us. Welcome to the Douglas Dynamics Third Quarter 2021 Earnings Conference Call. I would now like to turn it over to our speaker today, Sarah Lauber, CFO.

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 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, the matters 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 will open the call for your questions. With that, I will hand the call to Bob.

Thanks, Sarah. Good morning, everyone. Under the circumstances, we are pleased with our results for the quarter and are especially proud of our year-to-date performance. I am sure our comments today will echo what you have heard from many other companies during this earnings season. Demand trends continue to be strong, and macroeconomic supply headwinds have intensified in recent months. On a year-to-date basis, both segments have shown improved performance over last year, with attachments in particular producing strong results. The well-documented macroeconomic challenges are hindering our ability to effectively address the robust demand we are seeing across our businesses. First, supply chain disruptions and shortages have intensified, particularly as truck OEMs reduced their production numbers in recent months. Second, material price inflation continues to impact our margins as these unprecedented increases are outpacing our ability to pass through these costs timely. However, we are confident we will recapture it over the longer term. And third, the churn in entry-level shop floor positions has increased in recent quarters and continues to be a challenge. We’ve increased entry-level wages across the board and are starting to see an increase in job applicants. We will definitely be feeling the impact of these items well into 2022. I would like to give a shout-out to our division leadership teams who have been navigating these unchartered waters. They have done an outstanding job, and I want to give special recognition to our sourcing teams who have done an amazing job keeping production flowing while strengthening our supplier relationships. And to our HR teams, who are battling hiring challenges across the country, yet leading the charge to ensure we remain the employer of choice in our communities. As these unprecedented headwinds continue, remember that our problem-solving DDMS mindset means we are better equipped to handle these challenges than many companies. And we continue to implement short-term cost control measures, including rolling plant shutdowns at certain locations. The strong demand outlook in both segments means we are well-positioned for long-term success and are focused on factors within our control while limiting the negative impact of macroeconomic issues wherever we can. Now let’s look at each segment, starting with Work Truck Attachments, where we had another strong quarter. Following the unusual third consecutive below-average snow season, we produced $81.4 million of net sales and $14.8 million of adjusted EBITDA for the third quarter. As expected, we did see a shift back towards the historical 55-45 split in preseason shipments between the second and third quarter rather than the 50-50 split we saw last year, which was impacted by the pandemic, creating a tougher comparison for us this year. Additionally, if it weren’t for labor constraints, we could have shipped more plows this quarter. Increasing material costs and labor issues impacted margins for the quarter, leading us to implement additional price actions as we entered the fourth quarter. More importantly, we entered the snow season in great shape. Dealer sentiment remains positive. Retail activity over the summer months was strong, and dealer inventories are currently at 6-year lows. The resiliency of the attachment business cannot be understated. Looking at it on a year-to-date basis, the attachments team is turning in a fantastic year, even with economic and weather headwinds. Turning to our Work Truck Solutions segment, we reported net sales of $46.3 million and adjusted EBITDA of $0.7 million, both decreased compared to the prior year as global supply chain constraints impacted our ability to upfit trucks. We embarked on a rolling shutdown facility strategy earlier in the year, which continued in the third quarter. Utilizing these rolling shutdowns not only reduces short-term labor costs, but it also helps long-term employee retention. These shutdowns last only 30 days so employees can collect unemployment benefits while retaining their health insurance. This helps us retain this group of highly skilled installers, which is increasingly important for the long-term health of the business despite the temporary negative impact on margins. We implemented multiple price increases in solutions to combat material cost inflation, and we expect to fully cover the inflation over the longer time horizon. The great news is demand continues to be strong at both Henderson and Dejana. We started 2021 with record backlog levels, which have only increased as this year has progressed. Records are being broken almost every month, and backlog is now more than 1.4 times where we started in January. The Henderson team worked through the gap in production schedules earlier this year, but rolling shutdowns have continued at several facilities because of supply chain constraints. The significant change in recent months was deterioration in chassis supply, and we expect the second half of 2021 to have fewer chassis than the first half as supply chain constraints have impacted truck OEMs and component shipments. However, we haven’t seen and don’t expect to see any canceled orders. At Dejana, the strength of demand across our broad customer base bodes well for the future. We know we are at the front end of the line for chassis and orders will be fulfilled, but the limited supply of chassis and components is frustrating for all. It bears repeating that with record backlog at solutions, we are well positioned for long-term success. Let’s turn to capital deployment priorities. We continue to invest in the business to fund our long-term growth initiatives. As our vertical integration strategy continues, we are lining up projects that, when combined, will help drive long-term organic growth. And we remain committed to our dividend. When it comes to M&A, our list of blue-chip company targets has not changed. Those companies remain top of mind as we look to execute our long-term strategy. We will continue to forge strong relationships with these companies and conduct due diligence on logical opportunities that are presented. We are ready to execute on deals should we find the right opportunity at the right valuation. The valuations we see do seem high, and we will always look rationally at price versus long-term growth potential and strategic importance. In summary, overall, we are executing well under the circumstances and positioning ourselves for success over the long term. Demand trends remain very positive, and we continue to adapt to the rapidly changing conditions. We continue to play the long game while managing the short game. With our roots in an industry influenced by weather, we are used to managing through uncertainty, entering each year not knowing if market conditions will be strong or weak. From supply chain, labor, and inflation, we have seen more uncertainty in the last 18 months than ever before. However, our teams are built to manage through the unknown and use our continuous improvement mindset to exit this period stronger than we entered. While we do this, we maintain our focus on the long game, implementing the strategies that will ensure we build our industry-leading position from investments in vertical integration and new product development to doubling down on talent and organizational development. Although supply-related headwinds will impact our short-term results, we remain confident about our long-term future potential. With that, I’d like to pass the call to Sarah to discuss our financial results in more detail.

Thanks, Bob. Overall, our financial performance for the third quarter reflects robust demand dynamics limited by the economic realities facing all companies today, including inflationary pressures, supply chain constraints, and the availability of skilled labor. From a consolidated perspective, we generated third-quarter net sales of $127.6 million and gross profit of $30.6 million compared to net sales of $133.8 million and gross profit of $36.7 million during the third quarter of 2020. Net sales were lower compared to the same period last year due to global supply chain constraints impacting production and delivery in the Solutions segment, partially offset by positive price realization in all businesses. We recorded GAAP net income of $7 million or $0.30 per diluted share compared to $9.2 million and $0.39, respectively, in 2020. On an adjusted basis, we generated net income of $7 million and $0.29 per diluted share compared to adjusted net income of $9.8 million and $0.42 per diluted share. Similarly, we generated consolidated adjusted EBITDA of $15.5 million compared to $23.1 million in the corresponding period of the prior year. Profitability decreased year-over-year due to material and freight inflation versus the timing of price realization, production constraints due to supply chain shortages, and higher costs from temporary shutdowns and a tight labor market. SG&A expenses, including amortization expense, were $20.3 million, approximately $1.1 million higher than the prior year due to wage and benefit inflation, plus the return of more normalized travel and marketing spend in our Attachment segment. These increases were somewhat offset by a decrease in incentive-based compensation based on operating performance in the quarter. Interest expense was $2.2 million for the quarter, which was lower than the $5 million incurred in the same period in the prior year due to lower interest on the term loan resulting from the June 2021 refinancing. The effective tax rate was 14.6% for the quarter, considerably lower than the 26% rate for the third quarter of 2019 due to discrete tax benefits related to favorable state income tax audit results. Now let’s turn to information for the two segments. Within our Work Truck Attachments segment, we generated net sales of $81.4 million compared to net sales of $76.9 million. The 6% increase was primarily attributable to preseason price actions. Adjusted EBITDA was $14.8 million during the third quarter, lower compared to $20.2 million recorded in the prior year due to inflation on input costs outpacing earlier price actions and inefficiencies in manufacturing caused by the tight labor market. Following the initial price increases taken at the start of preseason, we instituted an additional price increase at the start of the fourth quarter to address the higher inflation. Despite coming off another season of below-average snowfall, our overall preseason shipments were very strong. Third-quarter shipments were comparable to 2020, which is a difficult comparison due to the pandemic that had increased the emphasis on the third quarter. This year, our preseason orders returned to a more traditional 55-45 split between the second and third quarters compared to a 50-50 split last year. As Bob mentioned, dealer inventories remain at a 6-year low today, and some of our third-quarter orders were pushed into the fourth quarter due to labor constraints. That brings us to Work Truck Solutions, where we reported net sales of $46.3 million and adjusted EBITDA of $700,000 compared to net sales of $56.9 million and adjusted EBITDA of $2.9 million in the same period last year. The declines are primarily due to supply chain constraints, which impacted production and led us to implement rolling shutdowns at several facilities to mitigate the impact. We will continue to utilize this approach as necessary to maximize efficiency while doing whatever we can to preserve our skilled workforce despite the short-term impact we are seeing on margins. Adjusted EBITDA was also negatively impacted by the acceleration of inflationary pressures. Price increases have been implemented at both businesses, but the rapid escalation of costs exceeded the price realized in the quarter. We remain very encouraged by the strong demand and ordering trends across the segment, which have created record backlog at both Henderson and Dejana. Turning to balance sheet and liquidity, net cash used in operating activities during the first 9 months of 2021 was $19.5 million compared to $27.1 million for the same period last year. The improvement was driven by year-to-date improved operating performance, which was slightly offset by an increase in accounts receivable due to increased sales and higher inventories driven by inflation. Free cash flow for the first 9 months of 2021 increased substantially to negative $26.8 million compared to negative $36.5 million during the same period in 2020 as we used less cash in operating activities and had lower capital expenditures. We saw a $6.4 million increase in inventory to $100.1 million at the end of the quarter compared to the third quarter of last year, driven primarily by inflation. Accounts receivable at the end of the quarter were $124.1 million, right in line with $123.2 million reported at the end of the third quarter last year. Total liquidity, which is comprised of $7.3 million in cash and $62.1 million in borrowing capacity under our revolver, was approximately $69.4 million at the end of the third quarter compared to $93.9 million at the end of the third quarter of 2020. Capital expenditures for the first 9 months of 2021 totaled $7.3 million, lower than the $9.5 million in the same period in 2020 due to the timing of capital investments related to strategic growth projects. At the end of the quarter, we had a net debt leverage ratio of 2.4 times, lower than 3.7 times at the same point last year. Finally, as you probably saw in our release, we are lowering the top end of our guidance ranges due to the supply chain shortages we are experiencing in solutions. Previously, we thought that July was the trough for supply chain constraints, and we would see sequential improvements monthly through the end of 2021. Now, however, we anticipate that our supply chain constraints, inflationary pressures, and labor shortages will continue to negatively impact our business in the fourth quarter and into 2022. For 2021, we now expect net sales to be between $525 million and $565 million, adjusted EBITDA in the range of $75 million to $90 million, and adjusted earnings per share in the range of $1.40 to $1.90. Our effective tax rate is now anticipated to be approximately 15% to 17% for the year due to the discrete tax benefits mentioned earlier. Of course, our fourth-quarter results, especially in attachments, will be influenced by the timing, location, and amounts of snowfall as it does every year. As we look to 2022, we expect the current operating environment to continue into the new year. A few comments on what we’re seeing today—of course, we will have more commentary when we provide guidance in February. We are pleased with the demand dynamics across all businesses and expect to enter 2022 with record backlog in solutions. We also anticipate some attachments delivery will be pushed to the first quarter of 2022. Supply chain constraints are expected to continue into the first half of 2022 for Solutions as the OEMs navigate their supply chain issues. We expect price realization to improve next year over 2021, and we hope that steel pricing peaked in August. That said, we anticipate the back half of 2022 to be better than the front half. We will monitor external factors influencing our results next year. We have the right team in place to work through these obstacles, and as the macroeconomic situation improves, we will be ready to take advantage of the improving conditions and ramp up further production to deliver on our record backlog. With that, we’d like to open the call for questions.

Your first question comes from the line of Tim Wojs from Baird.

Yes. Good morning, everybody.

Good morning.

Good morning, Tim.

Maybe just to start on pricing and cost inflation, I guess how are you thinking about the timing in terms of when price is able to catch up to inflation at this point? I guess, in attachments, do you think you can kind of exit the year being price cost-neutral? And I guess as you convert to backlog and solutions, how would you expect pricing there to perform relative to inflation?

Yes, absolutely. Let me take a step back, and I repeat something you’ve heard me say many times. We will cover the inflation dollar for dollar. The timing we knew this year would be a question. We have had multiple price increases in all of our businesses. I think the one that is probably highlighted more in the third quarter is attachment. And so when we look at attachments, we essentially had two increases prior to preseason. And I guess the way we think about preseason and the way we manage our business, we don’t change pricing during preseason. So second-quarter and third-quarter pricing stays the same. Now as we enter preseason, we do our best to predict what we’re going to see. What we saw, however, from the beginning of preseason through the end is that steel increased by more than 50%. So that’s what led to the fourth-quarter price increase. As we exit the year, Tim, I would say we’re going to be close, but it will depend heavily on getting all the production out the door. I am not worried from an attachment standpoint about covering costs. Going into next year, there may be a little lag that extends into the first quarter. On the solutions side, you pretty much hit the nail on the head. We adjust our quotes as the costs are changing. We’ve gone back in many areas of our backlog. Price will lag more so there because of the significant backlog we have in those businesses. I know we will enter 2022 with that lag, and it’s too difficult to predict right now because of the chassis supply.

Okay. Okay. But you have been able to go back on maybe some of your longer-dated orders and reprice some of the inflation?

Yes, absolutely. It’s imperative based on what we’ve been observing from an inflation standpoint.

Okay. Okay. And then on the labor side, just do you feel like you’ve made the necessary improvements now to normalize the labor pool in attachments? And I guess in solutions, because of the rolling shipments, have you been able to keep existing employees so that you’re ready to convert that backlog when you can?

Yes. We’ve taken across-the-board wage increases in our attachments business, as I mentioned earlier. We immediately saw an increase in job applicants. We are still early in that process to say that we have fully solved it, but we are on a path to do so. We have also ensured that those adjustments to permanent labor rates will be reflected in the price increases that we are taking to the market so we can cover both material cost inflation and wage inflation. On the solutions side, the rolling shutdowns have been quite successful so far. We have a loyal group of employees who are staying with us. However, we continue to make wage rate adjustments on that side of the business as well. I don’t think anybody can predict what this labor pool will look like or what the prevailing wage compensation will be when this all finally settles down, Tim. But I assure you that we are taking full control of this and have made permanent adjustments already, and we are positioned to do more if required. Again, this will ultimately be reflected in our products' pricing and the value proposition to our customers.

Okay. Great. And then just one last question. I mean I know there are a lot of moving pieces in the environment near-term, but you had an Analyst Day 2 years ago and outlined longer-term financial targets. I mean in your eyes, has any of that structurally changed?

No, not at all. Sarah and I are both aligned on this. That's what's exciting for us. We keep our focus on the long game while managing the short game. In fact, there is even more reason for us to be optimistic about those long-term financial targets because of the work we have done behind the scenes to prepare. They are just pushed out a year or two. Sarah, feel free to add your comments.

Yes. No, I think you covered it well. There is absolutely nothing structurally that has changed. The demand environment is strong; it’s really just navigating through these short-term headwinds.

Okay. Thanks. I will hop back in queue. Good luck, guys.

Thank you.

Your next question comes from the line of Chris McGinnis from Sidoti & Co.

Good morning. Thanks for taking my questions. This is a follow-up on labor; obviously a tough environment, but given the vaccine mandates, especially in New York, are you seeing any impact? How is that impacting you, and do you think that’s a long-term issue for you at some of your facilities? Thanks.

Yes, that’s a great question. Let me start there. As we sit here today across all of our Douglas locations, we are seeing very few COVID cases, and absenteeism due to quarantines has not been an issue. We are very thankful for that. We are also paying close attention to OSHA regulations, which we just saw yesterday. While we thought they would come out in early October, it looks like we may see something this week. Our stance has been and will continue to be to comply with OSHA directives, and this will be no different. We have communicated with our workforce, informing them about what may be coming regarding vaccination requirements and proof and testing capabilities. Therefore, we are poised to comply with those regulations when they do come out. Having said that, in New York, we have some up-fit locations in the Long Island area, which as of now haven’t fallen under directives regarding firemen and police and city workers. Thus, we haven’t had to make any unusual adjustments that have negatively impacted our labor force or resulted in employees leaving Douglas to work elsewhere. It’s hard to predict the impact once OSHA regulations are enforced, but as we sit here today, COVID has not impacted our business like it did 6, 9, or 12 months ago.

Great, and I appreciate that. And then just one more, just around solutions. Obviously, you have done a lot of work on DDMS. If chassis supply gets better, what’s the level of throughput through those facilities? Is there a risk of timing getting those out the door versus your backlog? Thanks.

Yes. I was hoping to add some color on this. We talk about exiting stronger than we entered. This past January, we showcased our Illinois upfit facility on the Henderson side for the DDMS flow improvements they made in that particular business model. Since then, while implementing rolling shutdowns and waiting for chassis supply to improve, we have been replicating that successful throughput model in our Ohio and New York facilities. We held open houses in both places just a couple of months ago, inviting many of our end-user customers to see the changes made, and the feedback was overwhelmingly positive. I am confident we are well-positioned when chassis start to flow again. With that, we will see margin and profit improvement on the Work Truck Solutions side given how our facilities are set up to respond once we start moving chassis through them.

I appreciate that. Thanks for taking my questions, and good luck in Q4.

Thank you.

Thanks, Chris.

Your next question comes from the line of Mike Shlisky from D.A. Davidson.

Hey, good morning, guys.

Good morning, Mike.

Thank you. I kind of wanted to ask first about the risk of cancellations across your snow businesses due to the seasonal product. Can you maybe talk about, in Henderson, the fact that some of those sales are meant to go to government customers that might have budget timing issues? And then across the main attachments business, if you can’t get things in by December, January, will people either cancel or say we found a plow from a different brand?

Got it. Okay. Let me address the municipal side first. We are still seeing very strong orders, and as we both mentioned, backlog is at record levels. Having said that, we went through a period in Q4 of last year into the first quarter of this year where we weren’t sure how municipal budgets would shake out. Fortunately, the recent government spending bills and support have alleviated those concerns. So, government budgets are back on track. What we are observing now is the impact of inflation. If your budget is X and you typically buy 10 trucks a year at price Y, then a 10% or 15% increase in pricing is an open question about whether those budgets will rise correspondingly. There could be a time when pricing on that side might result in a reduction like “I used to buy 10 trucks a year. I am going to buy 9.” We’re keeping a close eye on this. Now regarding the attachment side, here’s an interesting point: while many businesses have suffered during the pandemic, the landscaping business has benefited immensely. With everyone at home doing improvement projects, they had record years in 2020 and continue that trend into 2021. Even with below-average snowfall, we are seeing strong demand from those end-users. Hence, we don’t think that as we carry a larger backlog into 2022 that we will see cancellations; instead, we expect them to be content to receive products whenever they become available, and they are financially well-positioned to make those purchases.

Okay. Can I also ask across the business about chassis? Are you sensing whether it’s general or even in other businesses that customers are willing to switch chassis? If they were not only going to get a Ram, will they consider switching to a different brand if that’s what’s available? Or are people still very loyal to their current fleet brands?

Yes, that’s an excellent question. In general, our customers remain loyal to the chassis that are part of their specifications. A lot of that stems from performance and maintenance; they know how to maintain these vehicles and operate on these from a repair perspective. Therefore, altering chassis configurations generally isn’t worth the short-term benefits that can occur from quicker truck delivery. We haven’t observed much switching. Additionally, we haven’t seen cancellations. Interestingly, as lead times have lengthened, robust demand remains. So, at this moment, we don’t expect any one chassis supplier to outperform others significantly on lead times as the chip situation improves. However, it will be something to monitor closely in the future.

Got it. If I can ask one last quick one. Sarah, actually both of you guys, I didn’t hear the term mentioned. The price increase you put in there earlier in the year and here in the fourth quarter, they are not surcharges. These are permanent increases that will go through next year, even if we see price declines or other costs come down?

Yes. We actually have a mix of price and surcharge in all our businesses. I would say, as I mentioned, we have had multiple price increases across all businesses. It appears as we approach the next price increase, more gets rolled from surcharge into price every time. However, we’ve still maintained a combination of both.

Okay. Thanks so much, and I appreciate it.

Thanks, Mike.

Thanks, Mike.

I am showing no further questions at this time. I would now like to turn the conference back to Bob McCormick, President and CEO.

Thanks. Thank you for your time today. We appreciate, as always, your ongoing interest in Douglas Dynamics. We look forward to speaking with some of you at the Baird conference next week. Have a great day.

This concludes today’s conference call. Thank you for participating. You may now disconnect.