Q1 2024 Miller Industries Inc Earnings Call
Before compared to a record year in 2023.
William G. Miller: compared to our record year in 2023. Gross profit for the first quarter was $44.2 million, an increase of 45.5% compared to the prior year quarter, while gross margin was 12.6% in group 108. The year-over-year increase is largely due to improved margins across all of our products, coupled with higher revenue levels and improvements we have made to our supply chain over the last several years. This includes diversifying our supplier base and insourcing certain manufactured products.
William G. Miller: Gross profit for the first quarter was $44 2 million, an increase of 45, 5% compared to the prior year quarter.
William G. Miller: While gross margin of 12, 6% improved 180 basis points.
William G. Miller: The year over year increase is largely due to improved margins across all of our pipelines.
William G. Miller: Coupled with higher revenue levels and improvements we have made to our supply chain over the last several years.
William G. Miller: This includes diversifying our supplier base and in sourcing of certain manufactured products.
William G. Miller: Our gross margin improvement this quarter was slightly offset by our product mix as the year progresses, and our product mix normalizes, we anticipate some expansion of our gross margins in future quarters.
Speaker Change: Lastly, before I turn the call over to Debbie I wanted to touch on some of the capital allocation decisions. We've made since our last earnings call.
William G. Miller: Our gross margin improvement this quarter was slightly offset by our product. As the year progresses and our product mix normalizes, we anticipate some expansion of our gross margins in future quarters. Lastly, before I turn the call over to Debbie, I want to touch on some of the capital allocation decisions we've made since our last earnings call. Last quarter, we said that given the company's strong financial performance in 2023 and now early 2024, the board bet that our shareholders should share in our success.
William G. Miller: Last quarter, we said that given the company's strong financial performance in 2023.
William G. Miller: And now early 2024, the board bet that our shareholders should share in our success.
William G. Miller: To that end, we increased our dividend by 5.6% and took additional steps to improve shareholding and shareholder returns. For example, our board approved a $25 million share repurchase plan to create more value for our shareholders. We believe this plan reflects the board's confidence in our strategy, our balance sheet, and the strength of our in-market strategy. Now, I'd like to turn the call over to Debbie, who will review the first quarter financial results in more detail. Following her remarks, I'll provide a market outlook and some closing comments on our priorities for the remainder of the year. Debbie?
Debbie: To that end, we increased our dividend by five 6% in April.
Debbie: Additional set to improve shareholder.
Debbie: Shareholder returns.
Debbie: As our board approved a $25 million share repurchase plan create more value for our shareholders.
Debbie: We believe this plan reflects the board's confidence in our strategy, our balance sheet and the strength of our end markets.
William G. Miller: Now I'd like to turn the call over to Debbie who will review the first quarter financial results in more detail.
Debbie: Knowing her remarks, I will provide a market outlook and some closing comments on our priorities for the remainder of the year.
William G. Miller: Eddie.
Deborah L. Whitmire: Thanks, Will. Good morning, everyone.
Debbie: Thanks, Paul and good morning, everyone.
Deborah L. Whitmire: Net sales for the first quarter of 2024 were $349.9 million compared to $282.3 million in the first quarter of 2023, a 23.9% year-over-year increase, driven largely by continued strong demand for our products across all our geographies and a significant increase in shafty shipments, Will mentioned earlier. Cost of operations increased 21.3% to $305.6 million for the first quarter of 2024 compared to $251.9 million for the first The increase in our cost of operations is largely a function of our higher revenue.
Debbie: Net sales for the first quarter of 2024, and $349 9 million.
Deborah L. Whitmire: $282 3 million in the first quarter of 2023 at 28, 9% year over year increase we have done largely by continued strong demand for our products.
Deborah L. Whitmire: All our geography, and a significant increase in chassis shipments wellness generic.
Deborah L. Whitmire: Cost of operations increased 21, 3% to $305 6 million for the first quarter of 2024 compared to $251 9 million for the first quarter of 2020.
Deborah L. Whitmire: The increase in our cost of operations is largely a function of our higher ending England.
Deborah L. Whitmire: As a percentage of net sales, cost of operations decreased approximately 188.8% from the prior year period to 87.4%. Gross profit was $44.2 million, or 12.6% of net sales for the first quarter of 2024, versus $30.4 million, or 10.8% of net sales for the prior year period. The year-over-year improvement in gross margin was driven by higher revenue levels and improved margin levels across all of our products, sequentially, gross margin, supply, and rebate. Historically, our fourth quarter contained a higher margin than our first, as Will mentioned.
Deborah L. Whitmire: As a percentage of net sales cost of operations decreased approximately 180 basis points.
Speaker Change: Hey, good period to 87, 4%.
Deborah L. Whitmire: Gross profit was $43 million.
Deborah L. Whitmire: 6% of net sales for the first quarter 'twenty four versus $30 4 million or 10, 8% of net sales.
Deborah L. Whitmire: Higher year period.
Deborah L. Whitmire: The year over year upgrades and gross margin was driven by higher revenue.
Deborah L. Whitmire: And increase margin levels across all of our product line.
Deborah L. Whitmire: Sequentially gross margin declined 40 basis points historically, our fourth quarter maintain a higher margin than efforts as Lou mentioned, our product mix this quarter with a hint plan. So our consolidated gross margin.
Deborah L. Whitmire: Our product mix this quarter was a headwind to our consolidated growth rate. As our product mix normalizes for the balance of the year, we expect gross margin levels to be consistent with the recent quarterly results. SG&A expenses were $21.5 million for the first quarter of 2020, compared to $17.9 million in the first quarter of 2023 due primarily to incentives, training, and retention programs for all of our employees, investor relations activity, and higher costs related to increased sales. As a percentage of sales, SG&A was 6.2%, 10 basis points lower than the prior year period. Moving forward, we continue to expect SG&A to remain consistent as a percentage of sales.
Deborah L. Whitmire: As our product mix normalizes for the balance of the year, we expect gross margin level to be consistent with recent quarterly results.
Deborah L. Whitmire: SG&A expenses were $21 5 million for the first quarter 2024, compared to $17 $9 million in the first quarter of 2023, due primarily to incentive training and retention programs for all of our employees.
Deborah L. Whitmire: Investor relation activity and higher costs related to increased sales volume.
Deborah L. Whitmire: As a percentage of sales SG&A was six 2% 10 basis points lower than the prior year period.
Deborah L. Whitmire: In Florida, we continue to expect SG&A through 19 systems as a percentage of sales.
Deborah L. Whitmire: Interest expense for the first quarter of 2024 was $1 2 million.
Deborah L. Whitmire: Interest expense for the first quarter of 2024 was $1.2 million, up from $1 million for the first quarter of 2023, driven by an increase in customer flow plan financing costs, which fluctuate up and down with revenue, and higher debt. Other income for the first quarter was $33,000 compared to other income of $318,000 for the first quarter of 2023, attributable to foreign currency exchange rates. Our effective tax rate for the quarter decreased slightly compared to the previous year, primarily due to adjustments related to the foreign tax credit.
Deborah L. Whitmire: Without the $1 million.
Deborah L. Whitmire: The first quarter of 2023% driven by an increase in customer flow of quantifying that.
Deborah L. Whitmire: Which fluctuate up and down with revenue and higher debt levels.
Deborah L. Whitmire: Other income for the first quarter was $33000 compared to other income of $318000 for the first quarter 2023 attributable to foreign currency exchange rate shifts.
Deborah L. Whitmire: Our effective tax rate for the quarter decreased slightly compared to the previous year, primarily due to adjustments related to foreign tax credits.
Deborah L. Whitmire: Net income for the first quarter 2004, with $17 million or $1 47 per diluted share compared to net income of $9 2 million or 81 per diluted share in the first quarter of 2023.
Deborah L. Whitmire: Net income for the first quarter of 2024 was $17 million, or $1.47 per diluted share, compared to net income of $9.2 million, or $0.81 per diluted share, in the first quarter of 2023. Turning to the balance sheet, cash and cash equivalents as of March 31st, 2024 were $26.8 million, compared to $29.9 million as of December 31st, 2023 and $29.7 million as Accounts receivable as of March 31st, 2024 was $338.9 million compared to $286.1 million as of December 31st, 2023 and $233.1 million as of March 31st, 2023.
Deborah L. Whitmire: Turning to the balance sheet.
Deborah L. Whitmire: Cash and cash equivalents as of March 30, <unk> 2024 was $26 $8 million compared to $29 9 million as of December 31, 2023.
Deborah L. Whitmire: $29 7 million as of March 31st place long periods.
Deborah L. Whitmire: Accounts receivable as of March 31, 2024 was $338 9 million compared.
Deborah L. Whitmire: Compared to $286 $1 million as of December 31st 2023 accumulated $33 1 million as of March 31.
Deborah L. Whitmire: Inventories were $184 3 million on March 31, 2024.
Deborah L. Whitmire: Inventories were $184.3 million as of March 31st, 2024, compared to $189.8 million as of December 31st, 2023 and $164.4 million as of March 31st, 2023. We are encouraged by the reduction in our inventory levels, and going forward, reducing our inventory while also supporting our operations is a top priority.
Deborah L. Whitmire: <unk> to $189 million as of December 31st 2023, and $164 4 million.
Deborah L. Whitmire: As of March 31, 2023.
Deborah L. Whitmire: We're encouraged by the reduction in our inventory levels and going forward, reducing our inventory while also supporting our operation is a top priority this year.
Deborah L. Whitmire: Accounts payable as of March 31, 2024, with $229 million compared to $191 8 million as of December 31, 2023 and.
Deborah L. Whitmire: Accounts payable as of March 31st, 2024 was $229 million compared to $191.8 million as of December 31st, 2023 and $169.5 million as of March 31st, 2023. The outstanding balance on our $100 million revolving credit facility was $55 million on March 31, 2024. $60 million at December 31st, 2023 and $45 million at March 31st, 2023. The current balance in our revolving credit facility is $65 million. Lastly, the Board of Directors approved our quarterly cash dividend of 19 cents per share paid on June 10, 2024 to shareholders of record to close the business on June 3, 2024, marking the 54th consecutive quarter that the company has closed the business. Now, I'll turn the call back to Will.
Deborah L. Whitmire: $169 5 million as of March 31, 2023.
Will: Yes standing balance on our 100 million revolving credit facility was $55 million in March 30 <unk>.
Deborah L. Whitmire: 24.
Will: $60 million at December 31st 2023, and.
Deborah L. Whitmire: $45 million at March 31, 2012.
Will: The current balance on our revolving credit facility and $65 million.
Deborah L. Whitmire: Lastly.
Deborah L. Whitmire: Board of directors approved a quarterly cash dividend of <unk> 19 per share payable June 10, 2024 to shareholders of record at the close of business on June 32024, marking the 54th consecutive quarter that the company has paid a dividend.
Deborah L. Whitmire: Now I will now turn the call back to <unk> remarks.
Will: Thank you Debbie.
William G. Miller: Looking ahead, our first quarter performance and our healthy backlog gives us confidence in meeting the targets we set last quarter for high single-digit top-line growth in 2024. While we do expect a more moderate top-line growth rate as product mix normalizes, we are off to an extremely strong start.
Will: Looking at our first quarter performance and our healthy backlog gives us confidence in meeting the targets, we set last quarter for high single digit top line growth in 2024.
William G. Miller: While we do expect a more moderate top line growth rate that's product mix normalizes, we are off to an extremely strong start.
William G. Miller: As I said before, demand remains strong for all of our products across all of our geographies. And despite continued strong revenue growth, our substantial backlog remains consistently high, quarter-to-quarter, demonstrating continued strong demand. The significant demand and the continued growth of our order book also means that we are closely monitoring our manufacturing path. As cash conversion improves throughout the year, and we assess our future capital allocation plans, production capacity is certainly a key focus of ours, both domestically and internationally.
William G. Miller: As I've said before demand remained strong for all of our products across all of our geographies and despite continued strong revenue growth our substantial backlog remains consistently high quarter to quarter demonstrating continued strong demand.
William G. Miller: The significant demand and the continued growth of our order book also means that we are closely monitoring our manufacturing fast as cash conversion improved throughout the year and we assess our future capital allocation plans production capacity is certainly a key focus of ours, both domestically and internationally.
William G. Miller: As always the entire management team and we'd.
William G. Miller: We'd like to thank all of our employees suppliers customers and shareholders for their continued support of Miller industries.
William G. Miller: As always, the entire management team and I would like to thank all of our employees, suppliers, customers, and shareholders for their continued support of Miller Industries. At this time, we'd like to open the line for any questions.
Speaker Change: At this time, we'd like to open the line for any questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is another question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing.
Operator: <unk> one.
Operator: One moment, please, while we poll for questions. Our first question comes from the line of Mike Shlisky with D.A. Davidson. Please proceed with your question.
Operator: One moment, please while we poll for questions.
Michael Shlisky: Our first question comes from the line of Mike <unk> with D. A Davidson. Please proceed with your question.
Michael Shlisky: Yes, hi, good morning. Thanks for taking my question. Absolutely.
Michael Shlisky: Yes, hi, good morning, Thanks for taking my question.
Michael Shlisky:
Michael Shlisky: I mean the comment.
Michael Shlisky: Yes, yes, hi Will, thank you. Could you please comment on the supply of truck chassis for your various products? Can you update us on how things are doing in the Class 8 vocational truck chassis supply as well as the smaller, you know, Class 3 through 5 chassis?
Michael Shlisky: Yes, hi, well thank you.
Speaker Change: Let me comment on.
Michael Shlisky: The supply of truck chassis is for your various products.
Michael Shlisky: Can you update us on how things are.
Michael Shlisky: Doing into class eight vocational truck chassis supply as well as the smaller parts of 385.
Michael Shlisky: <unk>.
William G. Miller: Yeah, for the first quarter, chassis shipments were at record levels. So it seems that most of the OEMs are catching up on chassis delays for 2023. And at this point in time, we have no issues across all product lines, four through eight, with receiving chassis from all various OEMs.
Michael Shlisky: Yes for the.
William G. Miller: First quarter.
William G. Miller: Chassis shipments were at record levels.
William G. Miller: So it seems that most of the Oems are catching up on.
William G. Miller: Chassis delays for 2023.
William G. Miller: And at this point in time, we have no issues across all product lines.
William G. Miller: Okay.
William G. Miller: With receiving chat.
William G. Miller: Chassis from all various Oems.
Michael Shlisky: And then given the very strong growth in the quarter from a revenue standpoint and even your strong backlog, do you have any issues with the supply chain outside of truck chassis and other components that are part of your vehicle?
William G. Miller: Outstanding.
Michael Shlisky: And then given the very strong growth in the quarter from a revenue standpoint, and even your strong backlog do you have any issues with the supply chain outside of truck chassis and other components that are part of your vehicles.
William G. Miller: No, at this time, it seems that our efforts to broaden our supply chain base, insourcing efforts, and everything that we've done post-COVID throughout 2021-2022 are paying off generously. And, you know, minus, you know, minor shortages here and there and things that you deal with on a daily basis, the manufacturing process overall, the supply chain base for all of our...
Speaker Change: No at this time it seems that the.
William G. Miller: Our efforts to <unk>.
William G. Miller: And our supply chain base in sourcing efforts and everything we've done.
William G. Miller: Covid throughout the 'twenty one 'twenty two are.
William G. Miller: Paying off.
William G. Miller: <unk>.
William G. Miller: <unk>.
William G. Miller: Minus.
William G. Miller: Minor shortages here and there and things that you deal with on a daily basis accurate process overall.
William G. Miller: The supply chain base.
William G. Miller: For all of our products seems extremely.
William G. Miller: Strong.
William G. Miller: Okay.
William G. Miller: Great.
Michael Shlisky: Great. And maybe one last one for me, and you had mentioned towards the end of your comments there, Will, about your current capacity to build. I was wondering if you've got any major projects happening within your facilities within the current square footage that you've got to kind of help things out either on a temporary basis or just for this year, and whether you're thinking kind of more long-term, whether you need to add a little bit of square footage adjacencies to kind of help free up some capacity at your current plant.
William G. Miller: Maybe one.
Michael Shlisky: One last one for me and you had mentioned towards the end of your comments there will about.
Michael Shlisky: Your current capacity to build.
Michael Shlisky: Your products I was wondering if you've got any major projects happening within your facilities within the current square footage that you've got the.
Michael Shlisky: To help things out.
Michael Shlisky: On a temporary basis or just for this year.
Michael Shlisky: Are you thinking more long term, whether you need to add a little bit of a square footage adjacencies.
Michael Shlisky: Kind of.
Michael Shlisky: We have some some.
Michael Shlisky: At your current plants.
William G. Miller: Yeah, we are making adjustments in our carrier manufacturing processes, shifting products between our facilities to increase carrier production levels for our distribution. We are also working diligently on our efficiency through our food wall facility and our heavy-duty product lines, so we're certainly, uh.., diligently working to maximize the square footage that we have today at all of our U.S. facilities. And we are, as I stated, monitoring closely the needs for any potential expansions or capital allocations in the future as we look past.
Michael Shlisky: Yes.
Michael Shlisky: We are making adjustments.
William G. Miller: Our carrier manufacturing processes.
William G. Miller: Shifting.
William G. Miller: Between our facilities to increase.
William G. Miller: Carrier production levels for our distribution.
William G. Miller: We are also working diligently on our efficiencies throughput through our.
William G. Miller: Meanwhile facility in our heavy duty product lines.
William G. Miller: So we're.
William G. Miller: Certainly.
William G. Miller: Diligently working to maximize the square footage that we have today at all of our U S facilities.
William G. Miller: We.
William G. Miller: We are as I stated monitoring them closely.
William G. Miller: The needs for any potential.
William G. Miller: Expansions or.
William G. Miller: Capital allocations in the future.
William G. Miller: As we look past 2024.
Michael Shlisky: To follow up, Bill, just so I know how it works, are you able to build some of your heavy-duty stuff outside of... Neal, at our location? Can you do it in, you know, Pennsylvania or elsewhere, or does it have to be heavy duty in its own place and then classes four through seven in a different location?
Speaker Change: To follow up that will just don't know how it works are you able to build some of your heavy duty stuff outside of.
Michael Shlisky: Due to Oh location can you do it in Pennsylvania or elsewhere or does it have to be heavy duty is in its own place and then the.
Michael Shlisky: Classes four through seven in the deck.
Michael Shlisky: Location.
William G. Miller: Certainly, our Pennsylvania facility is dedicated strictly to car care production based on its layout and the size of the equipment that it has there. We do have some flexibility in our Greenville facility to move products in and out, but at this time, with the strong demand for the carrier product, we plan to keep it dedicated to carrier production and, you know, work diligently.
Bill: Certainly at our Pennsylvania facility, it's dedicated.
William G. Miller: Strictly to <unk>.
William G. Miller: Carter production based on <unk>.
Michael Shlisky: Okay. Outstanding. I'll leave it there. Thanks for the answers. I appreciate it.
William G. Miller: Layout and size of equipment.
Michael Shlisky: Has there, but we do have some flexibility in our Greenville facility to move products in and out but this time with the strong demand for the carrier product we plan to keep it dedicated on.
Michael Shlisky: Carrier production.
Michael Shlisky: And work diligently.
Michael Shlisky: Diligently.
Michael Shlisky: Here, our new wall with our employees too.
Michael Shlisky: Focus on processes.
Michael Shlisky: Maximize our output.
Michael Shlisky: With that big.
Michael Shlisky: Okay.
Speaker Change: I'll leave it there thanks for the answers I appreciate it.
William G. Miller: Absolutely, Mike. Thank you so much.
Speaker Change: Oh, absolutely Mike. Thank you so much.
Operator: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mr. Miller for closing comments.
Speaker Change: Thank you there are no further questions at this time I'd like to turn the floor back over to Mr. Miller for closing comments.
William G. Miller: Thank you. I'd like to thank you all again for joining us on the call today, and we look forward to speaking with you on our second quarter conference call. If you'd like information on how to participate and ask questions on the call, please visit our investor relations website, millerind.com forward slash investors, or email investors.relations at millerind.com.
William G. Miller: Thank you.
Operator: I'd like to thank you all again for joining us on the call today, and we look forward to speaking with you on our second quarter conference call, if you'd like information on how to participate and ask questions on the call. Please visit our Investor Relations website Miller <unk> dot com forward slash investors or email investor relations at <unk>.
William G. Miller: <unk> dot com. Thank.
William G. Miller: Thank you again.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Speaker Change: This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
Operator: [music].