Miller Industries Inc (MLR) 2008 Q1 法說會逐字稿

Good morning. My name is Bobbie Joe and I will be your conference operator today. At this time, I would like to welcome ever to the Miller Industries 2008 first-quarter conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS).

I would now like to turn the conference over to Mr. Eric Boyriven of FD. Sir, you may begin.

Thank you and good morning, everyone. I'm Eric Boyriven of FD and I'd like to welcome you to the Miller Industries conference call. We are here to discuss the Company's 2008 first-quarter results, which were released after the close of market yesterday.

With us from management today are Bill Miller, Chairman of the Board and Co-CEO, Jeff Badgley, President and Co-CEO, Vince Mish, CFO, Frank Madonia, General Counsel, Debbie Whitmire, Corporate Controller, and [Allison Houten] Director of Finance. Today's call will begin with formal remarks from management, followed by a question-and-answer period.

Please note that, in this morning's call, management may reiterate forward-looking statements in accordance with the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. We would like to call your attention to the risks related to these statements, which are more fully described in the Company's annual report filed on Form 10-Q and other filings with the Securities and Exchange Commission.

With these formalities out of the way, I'd like to turn the call over to Jeff Badgley. Jeff, please go ahead.

Good morning and thank you, Eric.

Net sales for the 2008 first quarter declined about 20% from fourth-quarter levels to $67.6 million, reflecting the impact of the softening economic environment and the uncertainties associated with it and their effects on our customer demand levels. Our performance also reflects the absence of some significant government-related contracts that we worked to deliver through the first half of last year.

In response to the economic conditions, we have continued to adjust our production levels and we were successful in bringing our cost of operations down as sales levels declined. We have also continued to experience cost pressures as a result of rising raw material prices for steel, aluminum and petroleum-related products, and we have taken steps to mitigate the impact of these cost increases.

In order to properly align our operating structure with the current demand levels during the quarter, we reduced production levels and our cost base. As a result of these actions, our cost of goods sold and sales each declined relatively proportionally.

At the same time, we took steps to mitigate the effect of increased raw material costs on our business, and in April, we implemented price increases across all our product lines. This should begin flowing through our backlog as the year progresses, but we expect continued increases in raw material costs which will mitigate the effect of our price increases relative to margins.

Now, I will turn the call over to Vince, who will review the first-quarter 2008 financial results in greater detail. After that, I will be back to add some comments, following which we will take your questions. Vince?

Thanks, Jeff, and good morning, everyone. As Jeff mentioned, net sales in the first quarter of 2008 were $67.6 million versus $114.0 million in last year's first quarter. While sales were down approximately 40.7% year-over-year, cost of operations also decreased by 39.3% to $59.4 million in the 2008 first quarter compared to $97.8 million in the first quarter of 2007. This resulted in gross profit of $8.3 million or 12.2% of net sales in the 2008 first quarter, compared to $16.3 million, which was 14.3% of net sales in the first quarter of '07. The decline in gross margins reflected the impact of lower sales and was somewhat offset by our cost reduction efforts and the steps we've taken to bring production rates more in line with demand levels.

In the first quarter of 2008, SG&A expenses decreased 11.6% to $6.3 million compared to $7.2 million for the same period a year ago. As a percentage of sales, SG&A was 9.4% for the first quarter of 2008 versus 6.3% in the prior-year period, reflecting lower sales levels in the first quarter.

Total interest expense in the 2008 first quarter was $454,000, compared to $712,000 in the first quarter of last year, reflecting the elimination of Junior debt, reduced bank debt levels, lower interest rates, and less chassis interest expense.

Earnings before interest and taxes in the first quarter of 2008 were $1.9 million, 2.9% of net sales, compared with $9.1 million or 8.0% of net sales in the prior-year period.

Net income was $900,000 or $0.08 per diluted share. This compares to $5.4 million or $0.46 per diluted share for the first quarter of 2007.

Turning now to the balance sheet, accounts receivable at March 31, 2008 were $54.1 million compared to $67.0 million at December 31, 2007 and $85.6 million at March 31, 2007. Accounts Payable at March 31, 2008 was $32.8 million compared to $39.9 million at December 31, 2007 and $59.2 million at March 31, '07.

Inventories were $42.2 million at March 31, 2008 compared to $39.3 million at December 31, 2007 and $45.0 million at March 31, 2007. The increase in inventory results primarily from the timing of chassis purchases.

Total Senior debt at March 31, 2008 was $3.2 million, which is down from $3.5 million at year-end and down from $9.6 million of Senior and Junior debt at March 31, 2007. The only remaining Senior debt continues to be the term loan on the property, plant and equipment.

Now, I will turn it back to you, Jeff, for further remarks.

Thanks, Vince. Since the last economic downturn, Miller Industries has repositioned itself in the marketplace focusing on our core operations. We have also significantly improved the efficiency and flexibility of our operations and strengthened our financial position. Today, we are a different company, more capable of riding out the cycles in the marketplace.

Despite a significant decrease in sales during the first quarter, we still generated solid cash flows, which we continued to use to invest in the business. We're working toward the completion of the modernization of our heavy-duty wrecker facility in Ooltewah, Tennessee which will further enhance the efficiency of our operations when completed. This project and the other upgrades we've conducted over the last year position the Company to provide improved service and product quality to our customers going forward and to be more -- and more effectively compete in the international marketplace. Though the full benefit of these actions will not be seen until economic conditions improve, the steps we have taken are already improving the efficiency and flexibility of our operations.

While the economic downturn has impacted demand from our customers, we do see some positive trends for the future. Last month, we attended the Annual Florida Tow Show in which we featured many of our new products. Although order levels were somewhat tempered by current conditions, we saw significant interest in our products, particularly from customers outside the traditional U.S. market, which we believe provides us with opportunities to further broaden our business over the long term. We expect that tough economic conditions will continue in the near-term, and we remain cautious regarding the effects of the economy on our customer base in the coming quarters.

Additionally, we continue to experience cost pressures from our suppliers on commodities such as steel, aluminum, and petroleum-based products. We are working closely with our suppliers and will continue to take steps to mitigate these challenges wherever and whenever possible.

As always, we will continue to focus on keeping our overall costs and production levels in line with demand without sacrificing the quality of our products and our position as the market leader.

While economic challenges will likely persist in the coming quarters, order levels from our core customer base have remained stable in the recent months. We are very proud that we have the highest-quality people, products, facilities and distribution network in the industry. The steps we are taking -- have taken over the past few years to improve our operations and our financial strength will put us in an even stronger position for the eventual rebound in our market.

In closing, I would like to thank our employees, shareholders, suppliers and customers for their continued support of our company.

We are now ready to take your questions.

(OPERATOR INSTRUCTIONS). At this time, sir, there are no questions. I would now like to turn the call back over to management for closing remarks.

This is Jeff. We would like to thank you for joining our call, and we look forward to talking to you in the near future about our second-quarter results.

If they have any other questions, Jeff, just have them call us directly.

Yes. Thank you. You all have our number. Thank you.

This does conclude today's conference call. You may now disconnect.