Q3 2023 Miller Industries Inc Earnings Call

Deborah L. Whitmire, Executive Vice President, CFO & Treasurer, Miller Industries, Inc.
William G. Miller, President, CEO & Director, Miller Industries, Inc.
Michael Shlisky, MD & Senior Research Analyst, D.A. Davidson & Co., Research Division
Michael Gaudreau, Presentation Operator

Good day, ladies and gentlemen, and welcome to the Miller Industries Third Quarter 2023 Results Conference Call. This event is being recorded. I will now 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 2023 third quarter results, which were released after close of the market. 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.

Now, I’d like to turn the call over to Will. Please go ahead, Will.

Thank you, and good morning, everyone. It is a great feeling to report yet another strong quarter, proving once again that our strategic actions are yielding positive results. In 2019, we built a freestanding research and development facility to accelerate product development, increase research and integration of automation and robotics, reduce our environmental impact, and improve safety within our operating footprint. Unfortunately, given the macroeconomic environment over the last 2 to 3 years, we have not really had an opportunity to see these investments bear fruit in our results until this year.

We believe that the strong performance we’ve reported thus far this year is attributed to our team’s execution on the strategic initiatives we put in place. Our gross profit for the third quarter of 2023 was $42.9 million, an increase of 84.9% compared to the prior year quarter, while our gross margin of 15.6% improved 430 basis points year-over-year and 220 basis points sequentially. We also wanted to provide an update on our recent acquisition of Southern Hydraulic Cylinder or SHC, which we announced in May of this year. We’re very pleased with the way SHC is performing as part of our portfolio. The SHC team has seamlessly integrated, and the acquisition has helped shore up our supply chain tremendously.

Despite all the positives, we are not completely out of the woods on supply chain difficulties. Some chassis suppliers have had disruptions in production, and it is difficult to determine when that dynamics will improve. That said, the overall supply chain is in much better health than it was a year ago, and our results so far this year have demonstrated that we can continue to perform at a high level despite facing some macro challenges. Demand for our products remains high across all of our end markets. After all of our execution this year and strong year-over-year sales growth in the first 9 months, backlog is still substantially higher than prepandemic levels. Our strategy now remains the same as it has been throughout the year, investing in our inventory and in our business to improve lead times and ship finished goods to our customers as quickly as possible.

Debbie will now review the financial results in more detail. Following her remarks, I’ll provide some closing comments and an update on our outlook. Deborah, please go ahead.

Net sales for the third quarter of 2023 were $274.6 million versus $205.6 million for the third quarter of 2022, a 33.6% year-over-year increase, driven largely by improved delivery of finished product. Gross profit was $42.9 million or 15.6% of net sales for the third quarter of 2023 compared to $23.2 million or 11.3% of net sales for the prior year period. The increase in our cost of operations is largely due to an increase in deliveries to meet demand. SG&A expenses were $19.3 million in the third quarter of 2023 compared to $14.7 million in the third quarter of 2022. As a percentage of net sales, SG&A was 7%, 10 basis points lower than the prior year period.

Investing in our team is one of the most important aspects of our business, and we are thrilled to continue delivering strong results to our shareholders. Thank you.

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