Miller Industries, Inc. Q2 FY2026 earnings call

• Overall Financial and Operational Performance • Delivered strong year-over-year and sequential revenue growth in Q2 2026 amid uneven macroeconomic conditions, with continued profitability improvement driven by implemented production efficiencies • Strong cash generation from operational efficiencies enabled debt reduction and improved balance sheet strength, creating greater financial flexibility for long-term value-creating investments • At quarter-end, cash balance was $55.6 million (up $2.6 million from Q1), total debt was reduced by an additional $20 million from Q1, and $4.9 million was returned to shareholders via share repurchases and dividends

• Capital Allocation Priorities • Maintains five core priorities: sustaining the industry-leading quarterly dividend (currently 21 cents per share), completing the current share repurchase authorization (with ~$11.5 million remaining after $2.5 million in Q2 repurchases), strategic working capital optimization, pursuing selective M&A opportunities, and investing in capacity expansion, automation and innovation • Has paid a consecutive dividend for 63 quarters, and strong organic cash flow is expected to fund all priorities without requiring credit facility expansion

• Strategic Growth Initiatives • Integration of the OMAR acquisition continues progressing smoothly, and management expects the acquisition to be accretive in its first full year after one-time transaction costs • The €8 million production facility expansion in Giger, France remains on track for completion in mid-2027 to support global growth initiatives • The new 200,000+ square foot manufacturing facility in Udawong remains on schedule for production readiness by late 2027: site preparation will wrap up this month, and construction will begin in Q4 2026. The facility will support production of high-volume defense-grade recovery vehicles, meet growing global export demand, and maintain North American customer service capacity, while incorporating advanced manufacturing technology to improve workflow and efficiency

• Market Updates • Domestic core towing business: Stable retail demand, order entry, and distributor inventory levels, which have returned to historical norms after the prior period of excess distributor inventory • International and export business: Backlog remains consistent, and international facilities operate at a steady production pace • Military business: Total contracted commitments have surpassed $200 million (up from $150 million last quarter), with production scheduled to begin in 2027 and the majority of revenue expected to be recognized in 2028 and 2029. A significant pipeline of additional military opportunities is currently being pursued with global government agencies

The call does not break out reported financial performance for separate product segments, only providing consolidated results for the quarter. Consolidated Q2 2026 revenue was $240 million, representing a 12.1% year-over-year increase and a 32.7% sequential increase from Q1 2026. Consolidated gross profit was $35.9 million, equal to 15% of total revenue, and consolidated net income was $7.3 million. Reported diluted EPS was 63 cents per share, up from 5 cents per share in Q1 2026; OMAR's acquisition transaction expenses reduced Q2 2026 EPS by 11 cents, with the majority of these one-time acquisition costs already recognized.

• Full year 2026 revenue guidance is maintained at $850 million to $900 million, with management expecting quarterly revenue of approximately $250 million in both Q3 and Q4 2026, a slight sequential increase from Q2 2026
• Full year 2026 gross margin guidance is maintained at the historical mid-13% range, as product mix between bodies and chassis returns to historical norms
• Full year 2026 EPS is expected to be roughly flat compared to full year 2025, including the remaining one-time OMAR acquisition transaction costs

• Uncertain macroeconomic conditions, ongoing geopolitical tensions (specifically in the Middle East), and elevated fuel prices are weighing on consumer and dealer confidence, which could limit domestic market demand improvement in the near term
• Unpredictable product mix shifts as distribution channels restock chassis could create downward pressure on gross margins relative to the elevated margin level seen in Q2 2026

Q: Why is full-year gross margin guided to the mid-13% range, even though Q2 margin hit 15% and product mix is normalizing? What is the expectation for back-half margins? / A: As product mix returns to historical levels, distributor demand for chassis, which carry lower margins than bodies, is increasing. This mix shift will pull full-year margins down to the historical mid-13% average, aligning with long-term trends, even though Q2 margins were stronger. Management notes the actual result may end up slightly above the guide, but expects to remain near this range. (228 characters)

Q: Is it correct that the full-year EPS outlook of flat year-over-year growth includes ~25 cents in one-time OMAR acquisition charges in H1, meaning core adjusted EPS would grow double-digits without these costs? How much more one-time expense remains for the full year? / A: That understanding is correct: the full-year EPS outlook includes all one-time OMAR acquisition costs. After 13 cents of impact in Q1 and 11 cents in Q2, management expects only an additional 4 to 5 cents of one-time acquisition-related expenses for the remainder of 2026. (221 characters)

Q: What accounts for the increase in military commitments from $150 million to over $200 million, and what is the current state of the military opportunity pipeline? / A: The increase included several smaller contracts plus one larger new commitment. The vast majority of the new commitments are for heavy-duty recovery vehicles. Management cannot disclose the customer or region for the latest large contract at this time, but notes there remains a large active pipeline of military opportunities globally that the team is currently pursuing. (215 characters)

Q: What are you hearing from dealers and end-users about current demand sentiment, and what is the outlook for core towing business through early 2027? / A: Customers and dealers remain cautious due to ongoing geopolitical concerns, elevated fuel prices, and low consumer confidence. However, current demand, production, and inventory levels are all at a steady solid state: distributor inventory has normalized after prior excess inventory, and order volumes match current production rates. Improvement is not expected until geopolitical tensions ease and fuel prices stabilize. (243 characters)