Miller Industries(US:MLR)2025-11-06 16:00Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $178.7 million, a 43.1% year-over-year decrease, primarily due to a drop in chassis shipments [6][8] - Gross profit was $25.3 million, or 14.2% of net sales, compared to $42 million, or 13.4% of net sales in the prior year, with margin improvement driven by product mix [6][8] - Net income for Q3 2025 was $3.1 million, or $0.27 per diluted share, down from $15.4 million, or $1.33 per diluted share in the prior year [8] Business Line Data and Key Metrics Changes - SG&A expenses were $21.2 million in Q3 2025, down from $22.3 million in Q3 2024, with SG&A as a percentage of net sales at 11.9%, 480 basis points higher than the prior year [6][8] - A one-time cost of $900,000 for retirement packages was incurred, with a total program cost of $2.7 million expected to be recognized in Q4 [7] Market Data and Key Metrics Changes - Accounts receivable as of September 30, 2025, was $232.6 million, down from $270.4 million in the previous quarter and $313.4 million at the end of the previous year [9] - Inventories at the end of Q3 were $180.7 million, up from $165.5 million in Q2, attributed to pre-purchasing materials to mitigate tariff effects [9] Company Strategy and Development Direction - The company is focused on reducing production to manage elevated field inventory and has implemented cost-saving measures [4][10] - There is strong interest in the global military business, with expectations for increased demand in 2026 [5][12] - The company continues to return capital to shareholders, having paid dividends for 59 consecutive quarters and repurchased approximately $1.2 million of stock in Q3 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 from a position of strength, anticipating a recovery in the commercial market and increased demand for military vehicles [12][15] - The company reaffirmed its 2025 fiscal year revenue guidance in the range of $750 million to $800 million, factoring in potential impacts from holidays and maintenance [14][15] Other Important Information - The company has reduced its debt balance by $10 million during Q3, bringing it down to $45 million, with an additional $10 million paid down since then [8][9] - Management is closely monitoring field inventory and retail activity to align production with demand [19] Q&A Session Summary Question: Can you explain the inventory levels and their implications for 2026? - Management indicated that inventory levels are close to normalized, and they expect a return to more historic levels of chassis and body mix in 2026 [18][19] Question: Will the fourth quarter margins remain similar to current levels? - Management noted that Q4 is typically shorter due to holidays and maintenance, which may exert slight downward pressure on margins, but the mix is expected to remain similar [23] Question: What is the expected SG&A run rate going forward? - A clean SG&A run rate is anticipated in Q1 2026, with a split of retirements between salaried and hourly employees [24] Question: Are the factors driving demand for tow trucks still intact? - Management confirmed that the factors driving demand, such as older vehicles and increased road usage, remain unchanged [25][26]