Miller Industries(US:MLR)2023-11-09 17:04Financial Data and Key Metrics Changes - In Q3 2023, the company generated revenues of $274.6 million, a 33.6% increase year-over-year, attributed to improved deliveries from a healthy backlog [16][18] - Gross profit for Q3 was $42.9 million, representing an 84.9% increase compared to the prior year, with a gross margin improvement of 430 basis points to 15.6% [16][20] - Net income for Q3 2023 was $17.5 million or $1.52 per diluted share, compared to $5.2 million or $0.46 per diluted share in Q3 2022 [10] - SG&A expenses increased to $19.3 million in Q3 2023 from $14.7 million in Q3 2022, but as a percentage of net sales, it decreased to 7% [9] Business Line Data and Key Metrics Changes - The international and military business, which constitutes approximately 10% of sales, is experiencing strong demand, similar to the domestic business [7] - The company has seen significant improvements in productivity and a favorable product mix contributing to gross profit growth [20] Market Data and Key Metrics Changes - Demand for products remains high across all end markets, with backlog still substantially higher than pre-pandemic levels [6] - The overall supply chain health has improved compared to the previous year, although some chassis suppliers are still facing production disruptions [5][6] Company Strategy and Development Direction - The company is focused on investing in inventory and business improvements to enhance lead times and fulfill customer demand [6] - The recent acquisition of Southern Hydraulic Cylinder (SHC) is performing well and has positively impacted the supply chain [17] - The company aims to prioritize debt reduction while maintaining a strong dividend policy [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting expectations for over $1 billion in annual revenue and significant year-over-year profitability improvements for 2023 [35] - The leadership team believes that the strategic initiatives and investments made during the pandemic have yielded positive results [34] Other Important Information - The effective tax rate for Q3 was 20.8%, slightly lower than the previous year, primarily due to tax credits [10] - The Board of Directors approved a quarterly cash dividend of $0.18 per share, payable on December 11, 2023 [12] Q&A Session Summary Question: Inventory and Debt Reduction - Analyst inquired about the potential to reduce inventory and use cash to pay down debt, to which management confirmed they are reaching peak inventory levels and prioritize debt reduction [25][26] Question: Chassis Supply and Sales Growth - Analyst asked if improved chassis supply contributed to sales growth, and management confirmed they own the chassis and expect better deliveries in the upcoming quarters [27][28] Question: SG&A Expenses and R&D Investment - Analyst questioned the consistency of SG&A expenses and potential increases in R&D, management indicated they plan to maintain overall SG&A levels while possibly increasing R&D investments [29][30]