Miller Industries (MLR) 8 Aug 24 2024 Q2 Earnings call transcript

In the recent earnings call for the second quarter of 2024, Miller Industries showcased its robust financial health and strategic growth initiatives, highlighting a record quarter with increased revenue, gross profit, and optimistic outlook for the future.

Strong Financial Performance and Strategic Expansion

Miller Industries reported a 23.7% year-over-year increase in revenue to $371.5 million, driven by consistent customer demand, increased production volume, and elevated OEM chassis deliveries. The company's gross profit also rose by 27.9% to $51.1 million, indicating a 50 basis point improvement in gross margin year-over-year and 120 basis points sequentially. These numbers underscore the company's operational efficiency and strategic focus on production and delivery optimization.

International Business and Capacity Expansion

The international business, which accounts for approximately 10% of the company's total sales, continues to showcase strong customer demand and robust order intake. Miller Industries plans to increase production internationally, anticipating additional upside if geopolitical tensions in Europe subside. The company's production capacity expansion is a key focus area, with plans to analyze future needs at all facilities globally and invest in maximizing shareholder returns.

Financial Highlights and Outlook

Deborah Whitmire, Executive Vice President and CFO, provided a detailed overview of the financial results for the second quarter. The company's net sales increased by 23.7% to $371.5 million, with gross profit at $51.1 million and a gross margin of 13.8%. SG&A expenses remained consistent at 6.1% of net sales, while interest expense rose due to increased debt levels to fund working capital and distributor floor plan financing costs. The effective tax rate for the quarter was 21.8%.

Looking ahead, Miller Industries anticipates low double-digit growth for the full year of 2024, up from the initial high single-digit growth forecast. The company's focus on maintaining margins and investing in productivity improvements, capacity expansion, and employee health and safety positions Miller Industries for continued success.

Analysts' Questions and Management's Responses

During the question-and-answer session, Michael Shlisky of D.A. Davidson inquired about the potential for improved margins in the back half of the year. Miller Industries expects margins to maintain the mid-upper 13 range for the year 2024. Shlisky also asked about the potential impact of emissions changes on the company's customer base and the truck market. While there is currently limited discussion about prebuys, Miller Industries is closely monitoring the OEM market and chassis market as they move closer to the emission change date.

Conclusion

Miller Industries' strong financial performance, strategic expansion plans, and optimistic outlook demonstrate the company's resilience and commitment to growth. The company's focus on production efficiency, international expansion, and capacity expansion positions it well for continued success in the evolving market landscape. As Miller Industries looks ahead to the second half of 2024, its robust financials, strategic initiatives, and proactive approach to market challenges bode well for its future growth prospects.