MILLER INDUSTRIES INC /TN/ Q3 FY2024 earnings call

Sympathies and Hurricane Impact

• Extended sympathies to those impacted by recent hurricanes, with production in Greeneville paused for 2 weeks due to Hurricane Helen, having marginal financial impact on revenues.

Quarterly Results

• Generated revenues of $314.3 million in Q3 2024, up 14.5% y-o-y driven by elevated OEM chassis deliveries. Gross profit was $42 million, down 2% y-o-y, gross margin 13.4% (down 220bps) due to product mix shift.

International Business

• International business accounts for ~10% of total sales, with opportunity to ramp production and expand in the military sector.

Production and Capital Allocation

• Regularly analyze production needs and consider capacity expansion. Focus on debt reduction and returning capital to shareholders via quarterly dividend and share repurchase program.

In the third quarter of 2024, Miller Industries generated revenues of $314.3 million, an increase of 14.5% year-over-year. Gross profit for the third quarter was $42 million, a decrease of 2% compared to the prior year quarter while the gross margin was 13.4%, a decrease of 220 basis points year-over-year. The international business accounts for approximately 10% of the total sales.

• Reaffirm expectation of low double-digit growth for full year 2024, expecting strong year-over-year profitability increase.
• Anticipate gross margins to be in the mid-13s range going forward, consistent with expected annual margins.

• Impact of extreme weather events like Hurricane Helen causing production pause and marginal financial impact.
• Currency exchange rate fluctuations affecting other expenses.
• Regulatory compliance adding to SG&A costs.

Q: First, it's only been a week or 2 but since election day in the rearview mirror, have you gotten any indications that orders are being to flow again after that? And then maybe secondly, you mentioned there are some dealership limitations with their throughput. I hadn't appreciated that. I'm curious whether you have to help guide the dealers or give them any assistance in increasing their throughput or perhaps even find additional dealers or help them open new location to kind of keep the ball rolling on growth here.

A: With regards to postelection sentiment, Vince Tiano, Chief Revenue Officer, has been reaching out to distribution and general sentiment has increased significantly with multiple deals completing. With regards to throughput, distribution got more chassis earlier in the year, working through those and providing appropriate inventory. Distributors are reinvesting in facilities and expanding, with expectation to catch up on throughput capacity in next quarter or two.

Q: Maybe moving on to a discussion on margins. I guess, first, I wanted to ask about the gross margin from here. You had mentioned kind of the low mid-13s is a reasonable range or you at least implied that. Talk a little about how that might play out next year if you've got a more normalized chassis environment, and I realize the comps were really on 2023 to 2024, changing. But now 2024 to 2025, you expect a comparable mix between the full chassis sales and the system only sales? Or is there anything we should think about in next year's mix that would suggest that you would not be in the 13% to get next year?

A: Overall, this year and last year have been a little lumpy. Anticipate OEM chassis deliveries for full year 2024 are right on par with expectations, and no issues seen continuing margins in mid-13s into next year Q: From an SG&A standpoint, you've mentioned 6.5% kind of being the goal level. As you grow a little more from here, I mean, it sounds you still plan -- expect at least some growth in 2025. You've got good order cadence here. Do you think you can start to get some additional leverage on that SG&A spend and maybe get that a little less than 6.5% in '25?

A: This is Debbie. We certainly are looking at cost control, but new compliance and regulations around the world are adding to SG&A. Hoping some compliance issues will not add as much SG&A, but additional regulations continue to add out-of-control SG&A costs