Q4 2019 Earnings Call

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Good day, ladies and gentlemen, and welcome to the Miller Industries fourth quarter 2019 results Conference call. Please note. This event is being recorded and now at this time I would like to turn the call overture blended Dunlap equity I consulting. Please go ahead Sir.

Thank you and good morning, everyone.

I'd like to welcome you to the Miller Industries Conference call. We are here to discuss the company to 29 to fourth quarter results, which were released after the close of market yesterday.

That's from the management team. They are Bill Miller Chairman of the board well Miller, President and co CEO, Jeff Badgley co CEO, Debbie Whitmire Executive Vice President and CFO and break that down yet executive Vice President Secretary and General Counsel.

Today's call will begin formal remarks permit.

Followed by a question and answer period. Please note as far as conference call management May make forward looking statements in accordance with the Safe Harbor provisions on the private Securities Litigation Reform Act of 1995.

I'd like to call your attention to the risks related to these statements which are more fully described the Katrina annual report filed on form 10-K, and other filings with the Securities Exchange Commission.

These formalities I'll give away I'd like to turn the call over to Jeff. Please go ahead.

Thank you and good morning, everyone.

We usually gets goes or fourth quarter and full year results with you today.

She's been a record breaking you are familiar industries is we achieved the highest full year revenues and net income.

Our company's history.

Finished the year with strong topline growth gross margin expansion and an increase you know for sure.

Revenue during the fourth quarter increased 12.9% to $203.1 billion versus $180 million, a year ago, driven by broad based demand across our portfolio.

Our domestic business continued its strong performance during the quarter as new order rates remain steady and our distributors continued good work at full capacity.

To deliver existing orders.

Our international business also performed in line with our expectations on a year over year basis.

Additionally, our fourth quarter results benefited from a catch up related to its supply chain delays, we experienced during the third quarter.

Quarterly gross profit increased by 21.6% year over year to $26.9 million and our gross margin expanded 100 basis points year over year to 13.3 person, which reflects strong demand.

Favorable nuts and other cost reduction measures. Additionally, during the quarter.

We continue to realize benefits from lower cost control initiatives as SGN expenses as a percentage of sales decreased by approximately 20 basis points from the prior year period.

Net income was $11.7 million or one.

One dollar and three cents per share compared to net income of $10.8 million or 95 cents per share in the fourth quarter 2008 too.

As we moved into the first quarter of 2020, our backlog remains healthy in both our domestic and international markets and we remain committed to providing best in class customer service, while continuing to invest in our business and generating shareholder value.

Further our balance sheet remains healthy as we continue to pay down debt and strategically deploy our resources to drive sustainable long term growth.

Now I'll turn the call over the Debbie who will review the fourth quarter financial result results after that I'll be back with comments about the market environment and sort of closing remarks.

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Thanks, Jeff Good morning, everyone.

Sales for the fourth quarter, 2000 licensing or $203.1 million versus $180 million.

Fourth quarter 2018 at 12.9% year over year increase driven by broad based demand across our portfolio as well and some additional sales that were included in the fourth quarter.

Well of supplier delay issues.

Bags and the preceding quarter.

Cost of operations increased 11.7% to $176.2 million for the fourth quarter 2019, compared to $157.8 million for the fourth quarter 2018, driven by our top line sales growth.

However cost of operations as a percentage of Mexico contracted approximately 100 basis points to 86.7% from the prior year period.

Gross profit was $26.9 million or 13.3% of net sales for the fourth quarter 2019, compared to $23.2 million or 12.3% of net sales for the fourth quarter 2018, reflecting a favorable product mix.

SGN expenses were $11.8 million for the fourth quarter 2019, compared to $10.8 million for the fourth quarter 2018.

As a percentage of sales.

In a decrease approximately 20 basis points to 5.8% from 6% on the prior year period.

Driven by our effective cost controls increased operational efficiency across the organization.

Interest expense net for the fourth quarter 2019, that's $565000 compared to $449000 for the fourth quarter 2018, as an increase in customer floor plan financing costs more than offset lower long terms that related interest expense.

Other income expense for the fourth quarter 2009 thing, hoping that gain of $211000 comparison that expense of $465000 for the fourth quarter 2018.

<unk>, primarily due to currency exchange rate fluctuations.

That Intel for the fourth quarter, 2019 was $11.7 million or one dollar and three cents per diluted share.

Net income for the fourth quarter, 2018 was $10.8 million or 95 cents per diluted share.

Now let me briefly review our results for the 12 months ended December 31st 2019.

Net sales for the year were $818.2 million compared to $711.7 million in the prior year period.

An increase of 15%.

Gross profit for the year was $96.5 million or 11.8% of that so compared to 83.3 million or 11.7% of net sales for 2018.

SGN expenses were $43.4 million for 2019, or 5.3% of net sales compared to $39.5 million or 5.6% of net sales for 2018.

Net income for the year was $39.1 million all $3.43 per diluted share an increase of 15.9%.

Compared to net income of $33.7 billion or $2, a 96 cents per diluted share in 2018.

Now turning to our balance sheet.

Cash and cash equivalents as of December 31st 2019 was $26.1 million compared to $27.5 million as of September Thirtyth, 2019, and $27 million at December 31st 2018.

Accounts receivable at December 31st 2000 licensing totaled $168.6 million compared to $165.8 million as of September Thirtyth 2019.

And $149.1 million at December 30, Onest 2018.

Inventories were $88 million as of December 31st 2019, compared to $98.1 million as of September Thirtyth 2019, $93.8 million at December 31st 2008.

Accounts payable at December 31st 2009 thing was $95.8 million compared to $114.9 million as of September Thirtyth 2019, $98.2 million at December 31st 2018.

During the quarter, we reduced our long term debt by approximately $5 million from the prior quarter, bringing about to approximately $5 million as of December 30, Onest 2019.

Overall, our balance sheet remains strong and we continue to generate solid free cash flow, which provides us with financial flexibility to invest in our business and continue to drive long term shareholder value.

Lastly, the company also announced but its board of directors approved our quarterly cash dividend of 18 cents per share payable March 20, Threerd 2020 to shareholders of record at the close of business on March 16 2020.

Now I'll turn the call back over to Jeff will further enhance thank you Debbie.

We're very proud of our performance this quarter and or a record setting you.

Our performance this quarter was very encouraging as we returned solid year over year growth on both the top and bottom lines, our steadfast commitment to operational excellence disciplined cost control measures and strategic capital deployment Grant.

Flexibility choose outstanding long term growth of our business, while generating shareholder value.

Our quarterly dividends I was 18 cents per share underscores our continued commitment to returning capital to our shareholders.

As we transition into this turbulent first quarter of 2020.

We remain confident in the strength of our backlog and our underlying fundamentals in all our end markets. We will continue to monitor the developing situation was closed that 19 and the impact it may have on our supply chain and operations.

Finally, we are confident that our previous and ongoing capital investments in conjunction with our strong cash flows and healthy balance sheet have positioned us to best serve our customers, while providing us with the financial flexibility to pursue it.

Any future opportunities to grow our business in closing I'd like to thank our employees customers suppliers and shareholders for their ongoing support.

We're industries.

Thank you again for joining us this morning, I'd like to turn the call over to Bill Miller for a few words before we take.

Your questions Bill.

Yes, Jeff. Thank you I'd like your close by welcoming our two new board members.

Well and Deborah Whitmire.

Rewarding is an independent director and she has more than 40 years of experience.

Rising public companies on in the areas of corporate governance and corporate finance.

Debbie Whitmire or there's three companies executive Vice President.

Chief Financial Officer, and Treasurer and has provided.

I'm on invaluable or excrete expertise and leadership to our senior management team.

Over and over the last several years.

As a member of our Executive Committee.

The leadership they will bring.

We will be invaluable contribution and I hope you all join me and.

Congratulating them and their welcome everyone to board.

In addition, I'd like to just take one second to.

I congratulate all the employees good Miller industries.

All of our vendors suppliers and other partners distributors for a phenomenal a year.

A record breaking year after 30 years.

$880 million in sales.

Does that Jeff.

You have you guys are four for questions.

Thank you Bill and as you said, we're now ready to field your questions.

Thank you if you would like to ask a question. Please take note by pressing star one on your telephone keypad and you're using speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our Clinton.

Once again that is press star one to ask a question.

Just a moment to allow everyone an opportunity to signal for questions.

Well take our first question from James Lee with Taro capital.

Well, thanks for taking my questions.

Appreciate your commentary about backlog remaining healthy, but given the job I guess covert 19 at the development that impact here in the U.S. and you ever just starting have you have you heard anything changes.

In terms of the demand from your dealers here and here in Europe.

Oh will I mean, you talked to are domestic dealers all the time.

Yeah from a from a domestic standpoint or this is bill Miller, our order intake remains consistent.

With a the order intake we've seen over the last quarter and a customer sentiment and.

The communication that we're getting on a daily and weekly basis remains confident and strong at this time.

And Oh this is job.

Our our international companies.

Still have a very strong as backbone of those two.

England in France.

The order entry rates.

Seems to be remaining LC.

So at this point no, but I understand your question completely things can change quickly.

And regarding the supply chain, you know weve heard or read about the factory issues in China impacting the auto industry.

You have you seen or do you anticipate dot hills affect your ability to to obtained.

I think that your equipment.

You know we have we have not see.

The major impact at this point will has done a great job doing the U.S. and aren't purchasing people in Europe.

Great job monitoring our supply chain.

Our VP of.

Purchasing.

We met with yesterday both of US at this point there are some spotty places, but none of them being major supply. He is digging deep aim to not only supplies coming out of China.

Also supply is coming out of the U.S. to other countries in the world that have some companies, it's coming out of China and at this point, we feel comfortable but again.

We all understand the issue and we all know that there's a little does not perfect and things can change, but we will continue to monitor.

And Jeff This is bill or.

Our time movie.

The bulk of our our product is are number one manufactured here, but our sub components are the bulk of more from the United States. So.

We consider ourselves made in America.

Got it.

Lastly on yeah, what's what does your Catholic Capex plan for the year.

Obviously.

We think we will return back to normal levels of Capex that if he table I think we've talked about that we're instituting.

So on new system in our operation, but if you look a normalized level it should be somewhere.

Around depreciation I would I would tell you.

We've been very successful.

Making investments to Capex 30, please or companies sustainability.

We look at opportunities.

All the time.

Right. Thank you.

As a reminder, ladies and gentlemen that star one if you'd like to ask a question.

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And once again that is start.

And with that that does conclude today's question and answer session I turn the call back over to management for any additional for closing comments.

Yes, we'd like to thank you for Ah joining portfolio today, and we look look forward to talk to your T. you to report or Q1.

Sure for you.

Have a nice afternoon.

Thank you and that concludes today's conference call, we'd like to thank you again for your participation you may now disconnect.

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