Miller Industries(MLR) - 2025 Q1 - Quarterly Results

Financial Highlights Q1 2025 Performance Overview In Q1 2025, Miller Industries reported a 35.5% year-over-year decrease in net sales to $225.7 million, primarily due to a decline in chassis shipments as supply chains normalized. Despite lower sales, gross margin improved from 12.6% to 15.0% because of a more favorable product mix (more bodies, fewer chassis). Net income saw a significant decline of 52.6% to $8.1 million, or $0.69 per diluted share, impacted by lower revenue and higher SG&A costs Financial Metrics Summary | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $225.7M | $349.9M | -35.5% | | Gross Profit | $33.9M | $44.2M | -23.3% | | Gross Margin | 15.0% | 12.6% | +2.4 p.p. | | SG&A Expenses | $23.3M | $21.5M | +8.0% | | Net Income | $8.1M | $17.0M | -52.6% | | Diluted EPS | $0.69 | $1.47 | -52.8% | - The year-over-year decrease in net sales was primarily driven by a decline in chassis shipments, which were previously elevated due to inconsistent delivery schedules from OEMs recovering from supply chain disruptions[2] - The increase in gross margin was attributed to a product mix shift from a higher percentage of chassis in the prior year to a higher percentage of bodies in the current period[3] - The rise in SG&A expenses was mainly due to annual market adjustments to salaries, cost of living increases, and elevated employee benefit costs[4] Management Commentary & Outlook Operational Strategy & Capital Allocation Management's current strategy focuses on normalizing the business by reducing field inventory and product lead times. The company is also committed to shareholder returns, having executed $2.1 million in share repurchases during the quarter, supported by improving cash conversion and declining working capital. A $20 million authorization remains for future buybacks - The company is executing its strategy to reduce field inventory and product lead times as the industry returns to a normalized channel flow[6] - In Q1 2025, the company executed approximately $2.1 million in share repurchases[6] - With improving cash conversion, declining working capital, and $20 million remaining in the share repurchase authorization, the company has flexibility for opportunistic buying[6] Business Outlook & Risk Mitigation Despite persistent tariff-related uncertainties, the company has implemented mitigation efforts including a tariff surcharge on new orders and price increases on parts. Management is diversifying its supply chain, reducing its minimal exposure to China. The outlook is positive, with strong fundamentals in end markets, particularly the global military market, and an expectation for continued improvement through the second half of 2025 - To mitigate tariff impacts, the company has implemented a tariff surcharge on all new orders of manufactured products and additional price increases on accessories and parts sales[8] - The company continues to diversify its supply chain, including further reducing its already-minimal exposure in China[8] - Management is encouraged by strong activity in the global military market and anticipates continued improvement throughout the second half of 2025, aiming to enter 2026 in a position of strength[8] Shareholder Returns Dividend Declaration The Board of Directors declared a quarterly cash dividend of $0.20 per share, a 5.3% increase from the $0.19 paid in the prior-year quarter. This marks the 58th consecutive quarter that the company has paid a dividend - The Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on June 9, 2025, to shareholders of record on June 2, 2025[5] - This payment represents the 58th consecutive quarterly dividend paid by the company[5] Financial Statements Condensed Consolidated Statements of Income The income statement for the three months ended March 31, 2025, shows a net income of $8.065 million on net sales of $225.651 million, compared to a net income of $17.023 million on net sales of $349.871 million in the prior-year period Condensed Consolidated Statements of Income | | Three Months Ended March 31 | % Change | | :--- | :--- | :--- | :--- | | (In thousands, except per share data) | 2025 | 2024 | | | NET SALES | $ 225,651 | $ 349,871 | (35.5)% | | COST OF OPERATIONS | 191,707 | 305,628 | (37.3)% | | GROSS PROFIT | 33,944 | 44,243 | (23.3)% | | Selling, General and Administrative Expenses | 23,260 | 21,543 | 8.0% | | Interest Expense, Net | 95 | 1,245 | (92.4)% | | Other (Income) Expense, Net | (202) | (33) | 512.5% | | INCOME BEFORE INCOME TAXES | 10,791 | 21,488 | (49.8)% | | INCOME TAX PROVISION | 2,726 | 4,465 | (38.9)% | | NET INCOME | $ 8,065 | $ 17,023 | (52.6)% | | DILUTED INCOME PER SHARE | $ 0.69 | $ 1.47 | (52.8)% | Condensed Consolidated Balance Sheets As of March 31, 2025, the company reported total assets of $639.7 million, down from $667.0 million at year-end 2024. The decrease was driven by reductions in accounts receivable and inventories. Total liabilities decreased to $233.2 million from $266.0 million, while shareholders' equity increased to $406.5 million Condensed Consolidated Balance Sheets | (In thousands) | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $ 500,945 | $ 529,766 | | Cash and temporary investments | $ 27,360 | $ 24,337 | | Inventories, net | $ 164,897 | $ 186,169 | | TOTAL ASSETS | $ 639,707 | $ 667,015 | | Total current liabilities | $ 155,238 | $ 197,873 | | Accounts payable | $ 113,512 | $ 145,853 | | Total liabilities | $ 233,201 | $ 265,985 | | TOTAL SHAREHOLDERS' EQUITY | $ 406,506 | $ 401,030 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 639,707 | $ 667,015 | Forward-Looking Statements Risk Disclosure The report contains forward-looking statements that are subject to numerous risks and uncertainties. Key risks highlighted include dependence on outside suppliers for parts and raw materials, customer access to credit, macroeconomic trends, competition, government regulations and tariffs, intellectual property claims, and potential IT system disruptions - Forward-looking statements include those relating to strategy execution, channel flow, cash conversion, share repurchases, tariff impacts, and future performance[13] - Key risks that could cause actual results to differ materially include: dependence on outside suppliers for components and chassis, changes in raw material prices (aluminum, steel), customer access to capital, competition, government regulations, and the imposition of tariffs[13]