Miller Industries(MLR) - 2024 Q4 - Annual Report

Acquisition and Expansion - Miller Industries acquired substantially all assets of Southern Hydraulic Cylinder, Inc. in fiscal 2023, enhancing its product portfolio and supply chain stability[33]. - The company has invested over $100 million in property, plant, and equipment projects since 2017, increasing manufacturing production capacity and implementing advanced technologies[40]. - The company expects to launch multiple new products throughout fiscal year 2025, continuing its focus on innovation[38]. - The company has a diverse product line marketed under 10 separate brand names, catering to various customer segments[20]. Manufacturing and Operations - The company operates ten manufacturing facilities in the U.S., France, and the U.K., utilizing advanced technologies for efficient assembly-line manufacturing[35]. - The backlog of manufactured equipment returned to historical levels during fiscal 2024, but demand slowed in the second half due to delivery timing issues[51]. - Management expects a harmonized flow of manufactured equipment and chassis deliveries throughout fiscal 2025, despite potential global supply chain disruptions[51]. Distribution and Sales - In 2024, no distributor accounted for more than 10% of consolidated total sales, indicating a diverse distribution network[42]. - Approximately 76 distributor locations in North America and over 30 distributors in foreign markets support the company's sales efforts[41]. - Management believes that over 90% of independent distributors do not offer products from other manufacturers, reflecting strong brand loyalty[12]. Financial Performance - Net sales for the year ended December 31, 2024, reached$ 1,257,500, an increase of 9.0% compared to $1,153,354 in 2023[272]. - Gross profit for 2024 was$ 170,805, representing a gross margin of approximately 13.6%, up from $151,854 in 2023[272]. - Net income for 2024 was$ 63,494, reflecting a 8.8% increase from $58,291 in 2023[272]. - Basic earnings per share increased to$ 5.55 in 2024, compared to $5.10 in 2023, marking a 8.8% growth[272]. - Total assets as of December 31, 2024, were$ 667,015, up from $647,210 in 2023, indicating a growth of 3.9%[269]. - Total liabilities decreased to$ 265,985 in 2024 from $299,290 in 2023, a reduction of 11.1%[269]. - Shareholders' equity increased to$ 401,030 in 2024, compared to $347,920 in 2023, representing a growth of 15.2%[269]. - Cash and temporary investments decreased to$ 24,337 in 2024 from $29,909 in 2023, a decline of 18.5%[269]. - The company declared cash dividends of$ 0.76 per share in 2024, up from $0.72 in 2023[272]. Employee and Labor Management - As of December 31, 2024, the company employed approximately 1,711 employees globally, with 98.8% being full-time[56]. - Employee turnover rates have trended down throughout fiscal 2023 and 2024 due to various retention efforts[60]. - The company has invested in training programs, including a Welding School and a Front-Line Leadership Academy, to address skill shortages and develop future leaders[58]. - The company has experienced substantial increases in employee wages since 2022 to retain and recruit skilled labor, which may continue to affect profitability[109]. - The company continues to monitor labor costs and implement strategies to mitigate risks associated with employee turnover and recruitment challenges[109]. Regulatory and Compliance Issues - The company is subject to stringent environmental regulations, including California's Advanced Clean Trucks regulation, which may negatively impact customer demand[73]. - Compliance with new environmental regulations has already negatively impacted customer demand during 2024 and early 2025[73]. - The company is subject to various legal and regulatory risks, including anti-corruption laws, which could adversely affect its business operations[122]. - Compliance with environmental regulations, including those aimed at reducing emissions, is becoming increasingly stringent and may negatively impact customer demand[119]. Market and Economic Conditions - The towing and recovery equipment industry is highly competitive, with the company focusing on quality and innovation rather than solely on price[47]. - The towing and recovery industry is cyclical, with demand and revenues affected by consumer confidence and economic conditions, including volatility in capital and credit markets[111]. - Customer demand may be negatively impacted by rising fuel and insurance costs, as well as unpredictable weather conditions and global supply chain disruptions[114]. - The company faces risks related to government contracts, including potential decreases in government spending and intense competition for contract awards[113]. - The company is subject to risks from international political and economic uncertainties, including tariffs and trade restrictions, which could adversely affect supply chains and costs[104]. - The ongoing military conflicts in Ukraine and the Middle East have created legal, political, and economic uncertainties that may impact the company's operations[105]. Supply Chain and Inventory Management - The company experienced significant supply chain challenges in 2024, leading to substantial price increases for raw materials and component parts, which adversely impacted profitability and results of operations[95]. - In the first half of 2024, there was a buildup of inventory in the distribution channel due to elevated levels of chassis shipments earlier than expected, affecting sales[95]. - The company faced difficulties in accurately forecasting and managing inventory, resulting in unexpected production disruptions and increased costs[94]. Financial Risks and Investments - The company is exposed to interest rate risks and foreign currency exchange rate risks, which could affect cash flow and earnings fluctuations[245]. - The availability of capital and access to credit for customers has been affected by rising interest rates, which could materially impact sales[100]. - The U.S. Federal Reserve maintained elevated interest rates throughout 2023, but began to lower rates in 2024, which may influence inflation levels and customer purchasing behavior[102]. - The company has obligations to repurchase products from third-party lenders if distributors default, which could impact future revenues[138]. - The company incurred a net foreign currency exchange loss of$ 0.6 million for the year ended December 31, 2024, compared to a gain of $0.8 million in 2023[248]. - The company reported a foreign currency translation loss of$ 1.8 million for the year ended December 31, 2024, compared to a gain of $3.2 million in 2023[249]. - A hypothetical 100-basis point change in interest rates would have changed interest expense by approximately$ 0.4 million for the year ended December 31, 2024[246]. Strategic Initiatives - The company must continuously develop or acquire new technology and products to maintain market share, as rapid technological advancements characterize the industry[124]. - The company has incurred significant costs to implement security measures for its IT systems to protect against potential breaches[141]. - The loss of key executives could have a material adverse impact on the company's operations[144]. - The company invests significant time and expense in employee training, which increases their value to competitors, posing a risk of employee turnover and associated hiring costs[110]. - Rising costs of equipment ownership, including increased insurance premiums and fluctuating trade-in values, have negatively impacted customer demand for the company's products[101].