Miller Industries Inc (MLR) 2024 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Miller Industries first quarter 2024 results conference call. Please note, this event is being recorded.

At this time, I would like to turn the call over to Mike Gaudreau at FTI Consulting. Please go ahead, sir.

Thank you and good morning, everyone. I would like to welcome you to the Miller Industries conference call. We are here to discuss the company's 2024 first quarter results, which were released after the close of market yesterday. With us from the management team today are Bill Miller, Chairman of the Board; Will Miller President and CEO; Debbie Whitmire, Executive Vice President and CFO; and Frank Madonia, Executive Vice President, Secretary and General Counsel.

Today's call will begin with formal remarks from management followed by a question and answer session. Please note in this morning's conference call, management may make forward-looking statements in accordance with the Safe Harbor provisions of 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 in the company's Annual Report filed on Form 10-K and other filings with the Securities and Exchange Commission.

At this time, I'd like to turn the call over to Will. Please go ahead.

Thank you, and good morning, everyone. Following our record 2023 with a strong start to 2024, generating another quarter of record revenues and maintain our year-over-year improvements in profitability. First and foremost, I'd like to thank our entire team for their continued efforts and dedication. Without them, these results would not be possible.

We continue to reap the benefits of our strategy to invest during a macroeconomic slowdown, doubling down on our investments in our business and our people at a time when many of our peers were cutting costs. As a result of these investments and continued strong demand environment for all of our products. We generated record revenues of $349.9 million, a nearly 24% increase compared to the prior year period.

We also saw chassis shipments increased significantly during the first quarter as OEMs shipped delayed orders from 2023. While we expect chassis OEM shipments to normalize in the second half of the year. We still anticipate high single digit top line growth in 2024 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 of 12.6% grew 108 basis points year-over-year. Increase is largely due to improved margins across all of our pipeline, 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 of certain manufactured products. 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.

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 last quarter. We said that given the company's strong financial performance in 2023 and now early 2024, the Board felt that our shareholders should share in our success.

To that end, we increased our dividend by 5.6% in April and took additional steps to improve shareholder shareholder returns. Given that our Board approved a 25 million share repurchase plan 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 end markets.

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?

Thanks, Mill, and good morning, everyone. Net sales for the first quarter 2024 for $349.9 million compared to $282.3 million in the first quarter of 2023 at 23.9% year over year increase. We are done largely by continued strong demand for our products across all our geographies and the significant increase in chassis shipments movements in there.

Cost of operations increased 21.3% to $305.6 million for the first quarter 2024 compared to $251.9 million for the first quarter of 2023. Increase in our cost of operations is largely a function of our higher revenue, as a percentage of net sales, cost of operations decreased approximately 108 basis points from the prior-year period to 87.4%.

Gross profit was $44.2 million or 12.6% of net sales for the first quarter 2024, versus $30.4 million or 10.8% of net sales for the prior year period. Year-over-year, improvement in gross margin was driven by higher revenues and improved margin levels across all of our products.

Sequentially, gross margin declined 45 basis points historically, our Q4 has seen a higher margin than our first and Lou mentioned our product mix this quarter was a headwind to our consolidated gross margin. As our product mix normalizes through the balance of the year, we expect gross margin levels to be consistent with recent quarterly results.

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, Investor Relation activity and higher costs related to increased sales volume. 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. Net interest expense for the first quarter 2024 was $1.2 million, up from $1 million for the first quarter of 2023, driven by an increase in customer floor plan financing to us, which fluctuate up and down with revenue and higher debt.

Other income expenses in 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 previous year, primarily due to adjustments related to foreign tax credits.

Net income for the first quarter 2024 was $79 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.

Starting to the balance sheet. Cash and cash equivalents as of March 31, 2024, is $26.8 million compared to $29.9 million as of December 31, 2023, and $29.7 million as of March 31, 2023. Accounts receivable as of March 31, 2024 was $338.9 million compared to $286.1 million as of December 31, 2023.

Accumulated $33.1 million as of March 31, point inventories were $184.3 million at March 31, 2024, compared to $189.8 million as of December 31, 2023, and $164.4 million as of March 31, 2023. We are encouraged by the reduction in our inventory levels and going forward, reducing our inventory while also supporting our operations with the top priority this year.

Acounts payable as of March 31, 2024 was $229 million compared to $191.8 million as of December 31, 2023, $169.5 million as of March 31, 2023. The outstanding balance on our $100 million revolving credit facility was $5 million at March 31, 2024 for $60 million at December 31, 2023, and $45 million at March 31, 2023. The current balance on our revolving credit facility is $65 million.

Lastly, Board of Directors approved our quarterly cash dividend of $0.19 per share payable June 10, 2024, for shareholders of record at the close of business on June 3, 2024 marking the 54 consecutive quarter, the company paid the dividend.

Now I'll turn the call back to Mill, for closing remarks.

Thank you, Debbie. 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.

As I said before, demand remains strong for all of our products across all of our geo 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 capacity, 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.

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. Brian, any questions?

(Operator Instructions) Mike Shlisky with DA Davidson.

Yes, hey. Good morning, let's take my question.

Has already been a --

Comment. Yes, yes, hey, well, thank you. Could you maybe comment on on the supply of truck chassis for your various products of update us on how things are doing in the lacss eight vocational truck chassis supply as well as the smaller your question three to five chassis?

Yes, for the first quarter, chassis shipments were at record months, -- 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 the receiving it chassis from all various OEMs outstanding.

And then given the very strong growth in the quarter from a revenue standpoint and even your strong backlog. You have any issues with the supply chain outside of truck chassis and other components that are part of your vehicles.

Now at this time, it seems that our efforts to broaden our supply chain base, in-sourcing efforts and everything that we've done and post COVID throughout '21, '22 are paying off generously and you minus, yes, minor shortages here and there and things that we deal with on a day-to-day basis manufacturing process overall, the supply chain base for all of our products seems extremely calm, strong.

Great. And maybe one one last one for me. You mentioned towards the end of your comments there. Well about your current capacity to build 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 to kind of help things out either on a temporary basis or just for this year and whether you're thinking more long term, whether you need to add a little bit on square footage adjacencies to kind of help we have some up some have capacity at your current plants?

Yes, on we are we are making adjustments in our carrier manufacturing processes, shifting products between our facilities to increase their production levels for our distribution. We are also working diligently on our efficiencies and throughput through our Bluewater facility and our heavy duty product lines.

So we're for certainly diligently working to maximize the square footage that we have today at all of our US 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 2024.

And to follow-up, there will just sort of how it works. Are you able to build some of your heavy duty stuff outside of due to our location? Can you do it in Pennsylvania or elsewhere? Or they have to be heavy duties in its own place and then the classes four through seven in the Senate in a different location.

And certainly our vendor base facility is dedicated strictly to us Carter reduction based on a layout and size of the equipment that is out there. And we do have some flexibility in our Greenville facility to do products in and out. But this time with the strong demand for the carrier product, we plan to keep it dedicated on carrier production and worked diligently at year-end in the wall with our employees to focus on processes and maximize our output for the time being.

Okay. Outstanding, I'll leave it there. Thanks for the answers. I appreciate.

Absolutely, Mike. Thank you so much.

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.

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/investors, or email investors.relations@millerind.com. Thank you again.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.