MILLER INDUSTRIES INC /TN/

Previous wording

To facilitate timely reporting, the condensed consolidated financial statements include accounts of certain subsidiaries whose closing dates differ fromthe applicable period end (December 31 st or September 30 th)by 31 days (or less).

Current wording

To facilitate timely reporting, the condensed consolidated financial statements include accounts of certain subsidiaries whose closing dates differ fromthe applicable period end (December 31 st or March 31 st)by 31 days (or less).

Previous wording

Our history of innovation in the towing and recovery industry has been an important factor behind our growth over the last decade and we believe that our continued emphasis on research and development will be a key factor in our future growth. We opened a free-standing research and development facility in Chattanooga in 2019, where we pursue various innovations in our products and manufacturing processes, some of which are intended to enhance the safety of our employees and reduce our environmental impact. Our investments in strategic and planned projects have contributed to our increased production capacity and optimized our manufacturing processes, including investing in component re-design capabilities that allow for more flexibility in our manufacturing and sourcing. Our recent domestic plant expansion and modernization projects have installed sophisticated robotics systems and other advanced technologies to complement our talented workforce. The projects completed during the period from 2017 to 2021 were at a cost of over $82 million. As we continue to focus on modernization and operational excellence, we expect to continue to invest in robotics and automated material handling equipment across all our domestic manufacturing facilities.

Current wording

Our history of innovation in the towing and recovery industry has been an important factor behind our growth over the last decade and we believe that our continued emphasis on research and development will be a key factor in our future growth. We opened a free-standing research and development facility in Chattanooga in 2019, where we pursue various innovations in our products and manufacturing processes, some of which are intended to enhance the safety of our employees and reduce our environmental impact. Our investments in strategic and planned projects have contributed to our increased production capacity and optimized our manufacturing processes, including investing in component re-design capabilities that allow for more flexibility in our manufacturing and sourcing. In addition, our strategic investment in Southern Hydraulic Cylinder, Inc. in May 2023, allowed us to strengthen our efforts to enhance the stability of our supply chain. Our recent domestic plant expansion and modernization projects have installed sophisticated robotics systems and other advanced technologies to complement our talented workforce. The projects completed during the period from 2017 to 2021 were at a cost of over $82 million. As we continue to focus on modernization and operational excellence, we expect to continue to invest in robotics and automated material handling equipment across all our domestic manufacturing facilities.

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 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.

Current wording

The impact of these factors remains largely out of our control, and we currently anticipate that one or more of these factors could have an adverse impact on our production capabilities, financial results, and cash flows through the remainder of 2025.

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 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.

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 three months ended March 31, 2025, 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, 2024.

Previous 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%.

Current wording

Net foreign sales for the three months ended March 31, 2025 were $39.3 million compared to $31.3 million for the corresponding period in fiscal 2024, an increase of 25.5%.

Previous 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.

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 March 31, 2025 was $191.7 million compared to $305.6 million for thecorresponding period in fiscal 2024, a decrease of 37.3%. The decrease in cost of operations was consistent with the anticipated decrease in sales.

Previous wording

Gross profit is equal to net sales less cost of operations. Gross profit for thethree months ended September 30, 2024 was$42.0 million compared to $42.9 million for thecorresponding period in fiscal 2023, a decrease of 2.0%. This decrease was primarily due to increased sales of chassis which put downward pressure on our overall margin.

Current wording

Gross profit is equal to net sales less cost of operations. Gross profit for thethree months ended March 31, 2025 was $33.9 million compared to $44.2 million for thecorresponding period in fiscal 2024, a decrease of 23.3%. This decrease was primarily due to the anticipated decrease in sales. As a percentage of sales, gross profit was 15.0% for the three months ended March 31, 2025, compared to 12.6% in the corresponding period in fiscal 2024, an increase of 19.0%. The year over year increase was primarily due to a favorable product mix driven by the decrease in chassis deliveries.

Previous 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.

Current wording

Selling, general and administrative expenses for the three months ended March 31, 2025 were $23.3 million compared to $21.5 million for the corresponding period in fiscal 2024, an increase of 8.0%. The increase in selling, general and administrative expenses was primarily due to compensation expense and incentives for all employees, including training and more competitive compensation to improve employee retention. As a percentage of net sales, selling, general and administrative expenses increased to 10.3% for the three months ended March 31, 2025, from 6.2% for the comparable period in fiscal 2024.

Previous wording

Interest expense, net for the three months ended September 30, 2024 was $0.3 million compared to $1.8 million for the corresponding period in fiscal 2023, a decrease of 86.2%. Interest expense was consistent with the comparable period in 2023, offset by increased interest income billed on open accounts receivable balances.

Current wording

Interest expense, net for the three months ended March 31, 2025 was $0.1 million compared to $1.2 million for the corresponding period in fiscal 2024, a decrease of 92.4%. Interest expense as of March 31, 2025 of $2.4 million was consistent with the interest expense of $2.2 million for the comparable period in 2024, offset by increased interest income of $2.3 million for the three months ended March 31, 2025, compared to interest income of $0.9 million for the comparable period in 2024. The increase in interest income is due to increased billings on open accounts receivable balances.

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 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.

Current wording

The Company is exposed to foreign currency transaction risks 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 loss of $0.2 million for the three months ended March 31, 2025 and 2024, respectively. Other (income) expense for the three months ended March 31, 2025 was de minimus.

Previous 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.

Current wording

The provision for income taxes for thethree months ended March 31, 2025 and 2024 reflects a combined federal, state, and foreign tax rate of 25.3%and 20.8%, respectively. The increase was primarily due to non-deductible executive compensation. 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 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.

Current wording

As of March 31, 2025, we had cash and temporary investments of $27.4 million, and $25.0 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 as of September 30, 2024 included $17.8 million of cash held by subsidiaries outside of the United States.

Current wording

The cash and temporary investments balance as of March 31, 2025 included $20.5 million of cash held by subsidiaries outside of the United States.

Previous 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.

Current wording

During the three months ended March 31, 2025, net cash provided by operating activities was $2.7 million compared to net cash provided by operating activities of $9.0 million in the comparable period in fiscal 2024. 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 was primarily driven by decreases in accounts receivable, inventory, and accounts payable, signifying further stabilization of changes in assets and liabilities as a result of continued supply chain recovery.

Previous 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.

Current wording

During the three months ended March 31, 2025, cash used in investing activities was $5.1 million compared to cash used in investing activities of $4.7 million for the comparable period in fiscal 2024. The cash used in investing activities was primarily for purchases of property, plant and equipment, as well as our continued investment in manufacturing automation and ERP system enhancements.

Previous 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.

Current wording

During the three months ended March 31, 2025, cash provided by financing activities was $5.6 million compared to cash used in financing activities of $7.2 million for the comparable period in fiscal 2024. The cash provided by financing activities was primarily due to an advance on the credit facility offset by cash payments for dividends and repurchases of common stock.

Previous 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.

Current wording

As of March 31, 2025 and December 31, 2024, we had commitments of approximately $10.0 million and $14.2 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 decrease 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, 2024.

Previous 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.

Current wording

The Company had outstanding borrowings of $75.0 million and $65.0 million under the credit facility as of March 31, 2025 and December 31, 2024, respectively. See the disclosure under the heading “Credit Facility” in Note 4 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 November 1, 2024, the outstanding balance on our credit facility was $65.0 million.

Current wording

As of May 1, 2025, the outstanding balance on our credit facility was $70.0 million.

Previous 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.

Current wording

Prior to applying a discount rate to our lease liabilities, we had approximately $0.5 million and $0.6 million in non-cancellable operating lease obligations as of March 31, 2025 and December 31, 2024, respectively. We had no non-cancellable finance lease obligations as of March 31, 2025 and December 31, 2024.

Previous 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.

Current wording

Capital expenditures during the three months ended March 31, 2025 and 2024 were $5.1 million and $4.7 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 three months ended March 31, 2025 in the use of robotics and automation in our production processes to streamline efficiency.