MILLER INDUSTRIES INC TN

Previous wording

We develop innovative high-quality towing and recovery equipment worldwide. We design and manufacture bodies of car carriers and wreckers, which are installed on chassis manufactured by third parties and then sold to our customers under our Century®, Vulcan®, Chevron™, Holmes®, Challenger®, Champion®, Jige™, Boniface™, Titan®, and Eagle® brand names.

Current wording

We develop and manufacture innovative high-quality towing and recovery equipment worldwide. We design and manufacture bodies of car carriers and wreckers, which are installed on chassis manufactured by third parties and then sold to our customers under our Century®, Vulcan®, Chevron™, Holmes®, Challenger®, Champion®, Jige™, Boniface™, Titan®, and Eagle® brand names.

Previous wording

Continuing in 2024, our strong backlog allowed revenues to increase as a result of the actions we took to diversify and increase the flexibility of our supply chain, as well as the increased availability of parts and components due to global supply chain improvements. Gross margin also steadily improved due to our pricing actions, productivity improvements, and the stabilizing of raw material costs. The combination of favorable macroeconomic trends and improved productivity resulted in increased net income for the period.

Current wording

During the first three quarters of 2024, our strong backlog allowed revenues to increase as a result of the actions we took to diversify and increase the flexibility of our supply chain, as well as the increased availability of parts and components due to global supply chain improvements. Gross margin also slightly improved over the prior year’s average due to our pricing actions, productivity improvements, and the stabilizing of raw material costs. The combination of favorable macroeconomic trends and improved productivity resulted in increased net income for the period.

Previous wording

Based on our strong backlog, price increases, and productivity improvements we have implemented, lessening supply chain disruptions and easing inflationary pressures, our operating results improved throughout fiscal 2023 and through the six months ended June 30, 2024, and we believe we are well-positioned to continue enhancing our operating results. However, our performance will be heavily influenced by, among other things, supply chain constraints, inflationary pressures, the continuing impact of geopolitical factors, the threat of recession, and general economic factors. The impact of these factors remains largely out of our control, and we currently anticipate that these factors could have an adverse impact on our production capabilities, financial results, and cash flows through the second half of 2024.

Current wording

Based on our strong backlog, price increases, and productivity improvements we have implemented, lessening supply chain disruptions and easing inflationary pressures, our operating results improved throughout fiscal 2023 and through the nine months ended September 30, 2024, and we believe we are well-positioned to continue enhancing our operating results. However, our performance will be heavily influenced by, among other things, supply chain constraints, inflationary pressures, the continuing impact of geopolitical factors, the threat of recession, and general economic factors. The impact of these factors remains largely out of our control, and we currently anticipate that these factors could have an adverse impact on our production capabilities, financial results, and cash flows through the remainder of 2024.

Previous wording

The impacts of current global supply chain disruptions, inflationary environment, geopolitical tensions, and other macroeconomic factors have led to foreign currency fluctuations. The impact of inflationary or deflationary pressures have caused and may continue to cause foreign currency translation gains or losses within our condensed consolidated statement of comprehensive income.

Current wording

The impacts of the current global supply chain disruptions, inflationary environment, geopolitical tensions, and other macroeconomic factors have led to foreign currency fluctuations. The impact of inflationary or deflationary pressures have caused and may continue to cause foreign currency translation gains or losses within our condensed consolidated statements of comprehensive income.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates. Certain accounting policies are deemed “critical”, as they require management’s highest degree of judgment, estimations, and assumptions. The accounting policies deemed to be most critical to our financial position and results of operations are those related to accounts receivable, inventory, long-lived assets, warranty reserves, revenues, and income taxes. There have been no significant changes in our critical accounting policies during the six months ended June 30, 2024, from the information provided under the heading “Critical Accounting Policies and Sensitive Accounting Estimates” in Part II, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Current wording

Our condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates. Certain accounting policies are deemed “critical”, as they require management’s highest degree of judgment, estimations, and assumptions. The accounting policies deemed to be most critical to our financial position and results of operations are those related to accounts receivable, inventory, long-lived assets, warranty reserves, revenues, and income taxes. There have been no significant changes in our critical accounting policies during the nine months ended September 30, 2024, from the information provided under the heading “Critical Accounting Policies and Sensitive Accounting Estimates” in Part II., Item 7.– “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Previous wording

Net sales for the six months ended June 30, 2024 were $721.3 million compared to $582.5 million for the corresponding period in fiscal 2023, an increase of 23.8%. The increase in net sales was primarily driven by increases in production volume due to supply chain improvements and continued strong customer demand.

Current wording

Net sales for the three months ended September 30, 2024 were $314.3 million compared to $274.6 million for the corresponding period in fiscal 2023, an increase of 14.5%. The increase in net sales was primarily driven by increases in original equipment manufacturer (“OEM”) chassis deliveries over the prior year period.

Previous wording

Net foreign sales for the three months ended June 30, 2024 were $30.8 million compared to $27.9 million for the corresponding period in fiscal 2023, an increase of 10.0%.

Current wording

Net foreign sales for the three months ended September 30, 2024 were $27.7 million compared to $31.9 million for the corresponding period in fiscal 2023, a decrease of 13.0%.

Previous wording

Gross profit is equal to net sales less cost of operations. Gross profit for thethree months ended June 30, 2024 was$51.1 million compared to $39.9 million for thecorresponding period in fiscal 2023, an increase of 27.9%. Cost of operations includes the direct cost of manufacturing, including direct materials, labor and related overhead, physical inventory adjustments, as well as inbound and outbound freight.

Current wording

Cost of operations includes the direct cost of manufacturing, including direct materials, labor and related factory overhead, physical inventory adjustments, as well as inbound and outbound freight. Cost of operations for the three months ended September 30, 2024 were $272.2 million compared to $231.7 million for thecorresponding period in fiscal 2023, an increase of 17.5%. The increase in cost of operations was primarily attributed to increased OEM chassis deliveries during the quarter.

Previous wording

Selling, general and administrative expenses for the three months ended June 30, 2024 were $22.8 million compared to $19.5 million for the corresponding period in fiscal 2023, an increase of 16.9%. The increase in selling, general and administrative expenses was primarily due to additional executive compensation expense and incentives for all employees, investor relations activity, increased expenses associated with increased sales volume, and increased investment in our workforce, specifically for training and more competitive compensation to improve employee retention. As a percentage of net sales, selling, general and administrative expenses decreased to 6.1% for the three months ended June 30, 2024, from 6.5% for the comparable period in fiscal 2023.

Current wording

Selling, general and administrative expenses for the three months ended September 30, 2024 were $22.3 million compared to $19.3 million for the corresponding period in fiscal 2023, an increase of 15.6%. The increase in selling, general and administrative expenses was primarily due to additional executive compensation expense and incentives for all employees, including training and more competitive compensation to improve employee retention, and, to a lesser extent, due to increased investor relations activity during the quarter. As a percentage of net sales, selling, general and administrative expenses increased to 7.1% for the three months ended September 30, 2024, from 7.0% for the comparable period in fiscal 2023.

Previous wording

The Company is exposed to foreign currency transaction risk when the Company has transactions that are denominated in a currency other than its functional currency. When the related balance sheet items are remeasured in the functional currency of the Company, gains and losses are recorded through other (income) expense. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses. The Company experienced a net foreign currency exchange loss of $0.1 million and gain of $0.3 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

The Company is exposed to foreign currency transaction risk when the Company has transactions that are denominated in a currency other than its functional currency. When the related balance sheet items are remeasured in the functional currency of the Company, gains and losses are recorded through other (income) expense. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses. The Company experienced a net foreign currency exchange gain of $0.3 million and loss of $0.02 million for the three months ended September 30, 2024 and 2023, respectively. Other (income) expense for the three months ended September 30, 2024 was de minimus.

Previous wording

The provision for income taxes for thethree months ended June 30, 2024 and 2023 reflects a combined federal, state, and foreign tax rate of 21.8%and 21.4%, respectively. The principal differences between the federal statutory tax rate and the effective tax rate consist primarily of state taxes, domestic tax credits, and tax differences on foreign earnings.

Current wording

The provision for income taxes for thethree months ended September 30, 2024 and 2023 reflects a combined federal, state, and foreign tax rate of 22.0%and 20.8%, respectively. The principal differences between the federal statutory tax rate and the effective tax rate consist primarily of state taxes, domestic tax credits, and tax differences on foreign earnings.

Previous wording

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Current wording

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Previous wording

Net sales for the three months ended June 30, 2024 were $371.5 million compared to $300.3 million for the corresponding period in fiscal 2023, an increase of 23.7%. The increase in net sales was primarily driven by increases in production volume due to supply chain improvements and continued strong customer demand.

Current wording

Net sales for the nine months ended September 30, 2024 were $1.04 billion compared to $857.1 million for the corresponding period in fiscal 2023, an increase of 20.8%. The increase in net sales was primarily driven by increases in production volume due to supply chain improvements and continued strong customer demand.

Previous wording

Net foreign sales for thesix months ended June 30, 2024 were $62.1 million comparedto $52.1 millionfor the corresponding period in fiscal 2023, an increase of 19.3%.

Current wording

Net foreign sales for thenine months ended September 30, 2024 were $89.8 million comparedto $83.9 millionfor the corresponding period in fiscal 2023, an increase of 7.0%.

Previous wording

Cost of operations for the six months ended June 30, 2024 were $626.0 million compared to $512.2 million for thecorresponding period in fiscal 2023, an increase of 22.2%. The increase in cost of operations was primarily attributed to increased deliveries resulting from continued stabilization in our supply chain.

Current wording

Cost of operations includes the direct cost of manufacturing, including direct materials, labor and related factory overhead, physical inventory adjustments, as well as inbound and outbound freight. Cost of operations for the nine months ended September 30, 2024 were $898.2 million compared to $743.9 million for thecorresponding period in fiscal 2023, an increase of 20.7%. The increase in cost of operations was primarily attributed to increased deliveries resulting from continued stabilization in our supply chain.

Previous wording

Gross profit is equal to net sales less cost of operations. Gross profit for thesix months ended June 30, 2024 was $95.3 million compared to $70.3 million for thecorresponding period in fiscal 2023, an increaseof 35.5%. Cost of operations includes the direct cost of manufacturing, including direct materials, labor and related overhead, physical inventory adjustments, as well as inbound and outbound freight.

Current wording

Gross profit is equal to net sales less cost of operations. Gross profit for thenine months ended September 30, 2024 was $137.3 million compared to $113.2 million for thecorresponding period in fiscal 2023, an increaseof 21.3%. Gross profit as a percentage of sales remained consistent at approximately 13.2% for the period ending September 30, 2024 and 2023.

Previous wording

Selling, general and administrative expenses for the six months ended June 30, 2024 were $44.3 million compared to $37.4 million for the corresponding period in fiscal 2023, an increase of 18.5%. The increase in selling, general and administrative expenses was primarily due to additional executive compensation expense and incentives for all employees, investor relations activity, increased expenses associated with increased sales volume, and increased investment in our workforce, specifically for training and more competitive compensation to improve employee retention. As a percentage of net sales, selling, general and administrative expenses decreased to 6.1% for the six months ended June 30, 2024, from 6.4% for the comparable period in fiscal 2023.

Current wording

Selling, general and administrative expenses for the nine months ended September 30, 2024 were $66.6 million compared to $56.7 million for the corresponding period in fiscal 2023, an increase of 17.5%. The increase in selling, general and administrative expenses was primarily due to additional executive compensation expense and incentives for all employees, including training and more competitive compensation to improve employee retention, and, to a lesser extent, due to increased investor relations activity. As a percentage of net sales, selling, general and administrative expenses decreased to 6.4% for the nine months ended September 30, 2024, from 6.6% for the comparable period in fiscal 2023.

Previous wording

The Company is exposed to foreign currency transaction risk when the Company has transactions that are denominated in a currency other than its functional currency. When the related balance sheet items are remeasured in the functional currency of the Company, gains and losses are recorded through other (income) expense. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses. The Company experienced a net foreign currency exchange loss of $0.2 million and gain of $0.6 million for the six months ended June 30, 2024 and 2023, respectively. Other (income) expense for the six months ended June 30, 2024 includes $0.2 million of other income.

Current wording

The Company is exposed to foreign currency transaction risk when the Company has transactions that are denominated in a currency other than its functional currency. When the related balance sheet items are remeasured in the functional currency of the Company, gains and losses are recorded through other (income) expense. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses. The Company experienced a net foreign currency exchange gain of $0.2 million and gain of $0.6 million for the nine months ended September 30, 2024 and 2023, respectively. Other (income) expense for the nine months ended September 30, 2024 includes $0.2 million of other income.

Previous wording

The provision for income taxes for the six months ended June 30, 2024 and 2023 reflects a combined federal, state, and foreign tax rate of 21.4% and 21.6%, respectively. The principal differences between the federal statutory tax rate and the effective tax rate consist primarily of state taxes, domestic tax credits, and tax differences on foreign earnings.

Current wording

The provision for income taxes for the nine months ended September 30, 2024 and 2023 reflects a combined federal, state, and foreign tax rate of 21.5% and 21.2%, respectively. The principal differences between the federal statutory tax rate and the effective tax rate consist primarily of state taxes, domestic tax credits, and tax differences on foreign earnings.

Previous wording

As of June 30, 2024, we had cash and temporary investments of $23.8 million, and $30.0 million in available borrowings under our credit facility. Our primary cash requirements include working capital, capital expenditures, the funding of any declared cash dividends, purchases pursuant to our stock repurchase program, and principal and interest payments on indebtedness.

Current wording

As of September 30, 2024, we had cash and temporary investments of $40.6 million, and $35.0 million in available borrowings under our credit facility. Our primary cash requirements include working capital, capital expenditures, the funding of any declared cash dividends, purchases pursuant to our stock repurchase program, and principal and interest payments on indebtedness.

Previous wording

The cash and temporary investments balance at June 30, 2024 included $15.4 million of cash held by subsidiaries outside of the United States.

Current wording

The cash and temporary investments balance as of September 30, 2024 included $17.8 million of cash held by subsidiaries outside of the United States.

Previous wording

During the six months ended June 30, 2024, net cash used in operating activities was $1.7 million compared to net cash provided by operating activities of $2.9 million in the comparable period in fiscal 2023. Cash used in operating activities is generally attributable to the receipt of payments from our customers as settlement of their contractual obligation once we have fulfilled all performance obligations related to our contracts with them. These cash receipts are netted with payments for purchases of inventory, payments for materials used in manufacturing, and other payments that are necessary in the ordinary course of our operations, such as those for utilities and taxes. The change in operating activities is due to increased net income that was offset primarily by increased accounts receivable as a result of OEM chassis deliveries, as well as the timing of major components, creating an installation backlog throughout our distribution network and delays in completion of the retail product.

Current wording

During the nine months ended September 30, 2024, net cash provided by operating activities was $28.6 million compared to net cash provided by operating activities of $4.2 million in the comparable period in fiscal 2023. Cash provided by operating activities is generally attributable to the receipt of payments from our customers as settlement of their contractual obligation once we have fulfilled all performance obligations related to our contracts with them. These cash receipts are netted with payments for purchases of inventory, payments for materials used in manufacturing, and other payments that are necessary in the ordinary course of our operations, such as those for utilities and taxes. The change in operating activities is due to increased net income that was offset primarily by increased accounts receivable as a result of the timing of OEM chassis deliveries, as well as other major components, creating an installation backlog throughout our distribution network and delays in completion of the retail product.

Previous wording

During the six months ended June 30, 2024, cash used in investing activities was $7.7 million compared to cash used in investing activities of $24.2 million for the comparable period in fiscal 2023. The cash used in investing activities was primarily for purchases of property, plant and equipment as we continue to invest in manufacturing automation and ERP system enhancements. The prior year included $17.8 million for the acquisition by SHC.

Current wording

During the nine months ended September 30, 2024, cash used in investing activities was $14.0 million compared to cash used in investing activities of $27.5 million for the comparable period in fiscal 2023. The cash used in investing activities was primarily for purchases of property, plant and equipment as we continue to invest in manufacturing automation and ERP system enhancements. The prior year included $17.8 million for the acquisition by SHC which was adjusted down by $0.4 million as of June 30, 2024 as a result of the final valuation adjustment.

Previous wording

During the six months ended June 30, 2024, cash provided by financing activities was $3.6 million compared to cash provided by financing activities of $10.9 million for the comparable period in fiscal 2023. The cash provided by financing activities was primarily due to advances from our credit facility offset by the payment of dividends and the repurchase of common stock of $2.0 million.

Current wording

During the nine months ended September 30, 2024, cash used in financing activities was $4.4 million compared to cash provided by financing activities of $8.8 million for the comparable period in fiscal 2023. The cash used in financing activities was primarily due to cash payments for dividends and repurchase of common stock, offset by an advance on the credit facility.

Previous wording

As of June 30, 2024, we had commitments of approximately $17.0 million for the acquisition of property, plant and equipment and commitments of approximately $0.5 million in software license fees related to the implementation of our enterprise software solution. This increase was due to our continued investments in automation and the use of robotics in our production processes to streamline efficiency. There have been no other material changes to our contractual obligations from what was previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Current wording

As of September 30, 2024 and December 31, 2023, we had commitments of approximately $15.4 million and $8.6 million, respectively, for the acquisition of property, plant and equipment and commitments of approximately $0.5 million in software license fees related to the implementation of our enterprise software solution. This increase in commitments for acquisition of property, plant and equipment was due to our continued investments in automation and the use of robotics in our production processes to streamline efficiency. There have been no other material changes to our contractual obligations from what was previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Previous wording

The Company had outstanding borrowings of $70.0 million and $60.0 million under the credit facility at June 30, 2024 and December 31, 2023, respectively. See the disclosure under the heading “Credit Facility” in Note 5 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information regarding the Company’s credit facility.

Current wording

The Company had outstanding borrowings of $65.0 million and $60.0 million under the credit facility as of September 30, 2024 and December 31, 2023, respectively. See the disclosure under the heading “Credit Facility” in Note 5 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information regarding the Company’s credit facility.

Previous wording

As of August 1, 2024, the outstanding balance on our credit facility was $70.0 million.

Current wording

As of November 1, 2024, the outstanding balance on our credit facility was $65.0 million.

Previous wording

Prior to applying a discount rate to our lease liabilities, we had approximately $0.7 million and $0.9 million in non-cancelable operating lease obligations at June 30, 2024 and December 31, 2023, respectively. We had no non-cancelable finance lease obligations as of June 30, 2024 and December 31, 2023.

Current wording

Prior to applying a discount rate to our lease liabilities, we had approximately $0.6 million and $0.9 million in non-cancelable operating lease obligations as of September 30, 2024 and December 31, 2023, respectively. We had no non-cancelable finance lease obligations as of September 30, 2024 and December 31, 2023.

Previous wording

Capital expenditures during the six months ended June 30, 2024 and 2023 were $7.8 million and $6.6 million, respectively. We make ongoing capital investments in our property, plant and equipment to increase our production capacity and the efficiencies of our operations. See “Cash Flows” – “Cash Flows provided by (used in) Investing Activities” contained within this MD&A for additional discussion on capital expenditures.

Current wording

Capital expenditures during the nine months ended September 30, 2024 and 2023 were $14.1 million and $9.7 million, respectively. We make ongoing capital investments in our property, plant and equipment to increase our production capacity and the efficiencies, as well as the sustainability and safety of our operations. This includes capital investments during the nine months ended September 30, 2024 in the use of robotics and automation in our production processes to streamline efficiency. See “Cash Flows” – “Cash Flows Provided by (Used in) Investing Activities” contained within this MD&A for additional discussion on capital expenditures.