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Second Quarter 2024 Highlights
- Net Sales: Achieved $169.5 million, reflecting a slight decrease of 0.9% or $1.5 million compared to the second quarter of 2023.
- Net Income: Reported at $8.3 million, or $0.32 per share, down from $10.5 million, or $0.40 per share, in the prior year.
- Adjusted Earnings Per Share: For the second quarter of 2024 were $0.54, compared to $0.41 in 2023.
- Incoming Orders: Rose to $162.5 million, marking an increase of $8.4 million or 5.5% from the same period last year.
- Refinanced Debt: Expected to cut annual interest expenses by over $7.0 million.
- Adjusted EBITDA: Reached a record $35.4 million, up $1.7 million or 4.9% from $33.7 million in the second quarter of 2023.
Sales Performance: The slight decline in net sales from $171.0 million in Q2 2023 to $169.5 million in Q2 2024 was mainly due to a decrease in volume, partially offset by pricing adjustments made earlier in the year. Increases in sales were noted in the municipal market ($6.7 million), OEM market ($2.2 million), repair market ($0.6 million), and petroleum market ($0.3 million). These were offset by a $8.0 million decline in the fire suppression market due to normalized backlog levels, and decreases in agriculture ($1.6 million), industrial ($1.2 million), and construction markets ($0.5 million).
Gross Profit and Margin: Gross profit for the second quarter of 2024 was $54.1 million, with a gross margin of 31.9%, up from $51.7 million and 30.2% in Q2 2023. This margin improvement was driven by a 280 basis point enhancement in cost of material and a 210 basis point gain from selling price adjustments, partially offset by a 110 basis point rise in labor and overhead expenses.
SG&A Expenses: Selling, general, and administrative expenses were $24.9 million, representing 14.7% of net sales, compared to $24.2 million and 14.1% in the prior year. These expenses included $1.3 million for refinancing transaction costs and a $1.1 million gain from a fixed asset sale.
Operating Income and Margin: Operating income for Q2 2024 was $26.0 million, yielding an operating margin of 15.4%, an increase from $24.3 million and 14.2% in the same quarter last year. The rise in operating margin was largely due to improved material costs, offset by higher labor, overhead, and SG&A expenses.
Interest Expense: Interest expense decreased to $9.0 million from $10.5 million in the previous year, attributed to refinancing transactions completed on May 31, 2024, which are anticipated to further lower interest expenses and extend debt maturities.
Other Income (Expense): Other net expenses totaled $6.3 million for Q2 2024, compared to $0.5 million in the prior year. This included a $4.4 million write-off of unamortized debt financing fees and a $1.8 million prepayment fee.
Net Income and Earnings Per Share: Net income for Q2 2024 was $8.3 million, or $0.32 per share, down from $10.5 million, or $0.40 per share, a year ago. Adjusted earnings per share were $0.54 compared to $0.41 in the prior year.
Adjusted EBITDA: Achieved $35.4 million or 20.8% of sales, an increase from $33.7 million or 19.7% in Q2 2023.
Year-to-Date 2024 Highlights
- Net Sales: Totaled $328.8 million, a 0.8% decrease or $2.7 million compared to the first six months of 2023.
- Net Income: Stood at $16.2 million, or $0.62 per share, compared to $17.0 million, or $0.65 per share, in 2023.
- Adjusted Earnings Per Share: For the first half of 2024 were $0.84, up from $0.68 in 2023.
- Gross Margin: Improved by 190 basis points.
- Adjusted EBITDA: Totaled $63.6 million, a 2.4% increase from $62.1 million in 2023.
Sales and Profit: Net sales for the first half of 2024 were slightly lower at $328.8 million compared to $331.5 million in the same period last year. Key areas of growth included the municipal market ($9.4 million) and the OEM market ($1.4 million), while declines were noted in the fire suppression market ($11.8 million) and agriculture market ($2.3 million). Gross profit was $102.5 million with a margin of 31.2%, compared to $97.2 million and 29.3% in 2023.
Operating Income and Interest Expense: Operating income for the first half of 2024 was $46.5 million with an operating margin of 14.1%, up from $43.4 million and 13.1% in 2023. Interest expense decreased to $19.1 million from $20.7 million, following debt refinancing transactions.
Other Income (Expense): Other net expenses for the first six months of 2024 were $6.6 million compared to $1.0 million in the same period of 2023.
Backlog and Cash Flow: The backlog of orders at June 30, 2024, was $224.4 million, up from $218.1 million at December 31, 2023. Net cash from operations was $33.4 million, with capital expenditures totaling $7.1 million. Total debt, net of cash, decreased by $17.5 million.
CEO Comment: Scott A. King, President and CEO, stated, “We continue to see solid incoming orders and a year-to-date increase in backlog. Our pricing strategies have bolstered gross margins and adjusted earnings. We remain focused on top-line growth, reducing backlog in the latter half of the year, and leveraging our refinancing to achieve significant interest savings