Contradictions in Chassis Demand and Margins: Key Insights from 2025Q2 Earnings Call

Revenue and Sales Decline:
- Miller Industries reported net sales of $214 million for Q2 2025, a 42.4% year-over-year decrease, driven mainly by a drop in chassis volumes.
- The decline was largely due to lower consumer confidence, elevated cost of ownership, and industry-wide headwinds, as well as elevated field inventory in the distribution channel.

Inventory and Production Adjustments:
- Chassis inventory has now crossed below body inventory, which is ideal, though it remains elevated compared to optimal levels.
- The company is adjusting production levels to meet current demand and reduce channel inventory, with expectations for inventory normalization over the next few quarters.

Cost Reduction Initiatives:
- Miller Industries is implementing targeted cost reduction initiatives in the second half of the year to align the operational structure with current demand levels.
- These actions aim to rightsize the business, preserve margins, and create operating leverage as demand normalizes.

Debt Reduction and Cash Management:
- The company reduced its debt balance by $20 million in Q2, bringing the current balance to $50 million.
- This reduction is part of a strategy to manage cash and accounts receivable more effectively, converting receivables into cash at a faster rate.

Tariff Mitigation and CARB Regulations:
- Miller Industries implemented tariff surcharges on all new orders and additional price increases on parts and accessories to mitigate potential tariff impacts.
- The company continues to advocate for its dealers and customers regarding CARB regulations, with sales into California limited until further action is taken by the federal government.