Business Description
Miller Industries, Inc. is the world's largest manufacturer of towing and recovery equipment. The company designs, manufactures, and markets a wide range of towing and recovery equipment under several well-recognized brands. They sell products such as wreckers, car carriers, and transport trailers, which are essential for towing and recovery operations globally.
- Wreckers - Manufacture vehicles used to recover and tow disabled vehicles and other equipment, ranging from conventional tow trucks to large recovery vehicles with rotating hydraulic booms and lifting capacities of up to 100 tons.
- Car Carriers - Produce specialized flatbed vehicles with hydraulic tilt mechanisms that allow towing operators to drive or winch vehicles onto the bed for transport, effective for long-distance transport of new or disabled vehicles.
- Transport Trailers - Manufacture a line of transport trailers used in the towing and recovery industry.
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Q3 2024 Summary
What went well
- Post-election sentiment has improved significantly, with multiple deals that were on hold now completed, which is expected to increase orders and reinstill confidence in the consumer.
- Distributors are reinvesting and expanding their facilities, increasing their throughput capacity, which is anticipated to catch up in the next quarter or two, supporting sales growth.
- Management reaffirms expectation of achieving low double-digit growth for the full year 2024, and anticipates strong year-over-year profitability increase, showing confidence in the business outlook.
What went wrong
- Slow order entry during the quarter due to political uncertainty, with no immediate increase in orders observed after the election, potentially impacting future revenue growth.
- Distributor throughput capacity constraints are limiting their ability to process chassis deliveries, which may hinder the company's capacity to meet demand and affect sales.
- Elevated SG&A expenses driven by new compliance and regulations that are adding costs out of the company's control, possibly preventing SG&A from decreasing below the target of 6.5% of net sales and impacting profitability.
Q&A Summary
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Gross Margin Outlook
Q: How will gross margins look next year?
A: Management expects gross margins to remain consistent into next year, maintaining levels where they have been for the full year. They anticipate OEM chassis deliveries in 2024 to align with expectations, despite quarterly timing variances. Moving forward, they see no issues continuing at these margin levels. -
SG&A Leverage Potential
Q: Can SG&A be leveraged below 6.5% in 2025?
A: The company is aiming to control costs, but new global compliance and regulations are adding expenses as quickly as they manage others. They hope to gain some leverage, but the additional regulatory costs are largely beyond their control, making it difficult to reduce SG&A below the 6.5% goal level. -
Post-Election Orders and Dealer Throughput
Q: Are orders flowing post-election; can dealer throughput improve?
A: Post-election sentiment has increased significantly, with multiple deals previously on hold now completed. Although not yet reflected in order intake rates, they believe consumer confidence will improve. Dealers are expanding facilities and outsourcing integration to resolve throughput capacity issues, expecting to catch up in the next quarter or two.
Key Metrics
Revenue by Geography - in Millions of USD | FY 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | FY 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | FY 2015 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | FY 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | FY 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
North America | 258.167 | 272.32 | 242.70 | 265.77 | 1,038.96 | 318.54 | 340.7 | 286.56 | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 24.108 | 27.94 | 31.87 | 30.47 | 114.39 | 31.34 | 30.8 | 27.71 | ||||||||||||||||||||||||||||||||||||||||||||||
Total Revenue | 282.275 | 300.26 | 274.57 | 296.24 | 1,153.35 | 349.87 | 371.5 | 314.27 |
Executive Team
Questions to Ask Management
- "With the slowdown in order intake attributed to timing of OEM chassis deliveries, distributor throughput capacity, and political uncertainty, what specific actions are you taking to address these issues, and how confident are you that backlog will return to historical levels in the next 1-2 quarters? "
- "Given that SG&A expenses increased in Q3 due to new compliance and regulations, pushing SG&A as a percentage of net sales above your long-term target of 6.5%, what strategies do you have to control these costs and improve operating leverage in 2025? "
- "Gross margins decreased due to product mix shifts and normalization of chassis deliveries; what factors could impact your gross margins going forward, and how do you plan to manage potential fluctuations to maintain profitability? "
- "Considering the operational disruptions caused by Hurricane Helen, what risk mitigation plans do you have in place to protect your facilities from future extreme weather events, and how might such events affect your financial performance? "
- "You mentioned balancing returning capital to shareholders with potential capacity expansion and debt reduction; how are you prioritizing these capital allocation decisions, and what factors influence your investment in growth opportunities versus shareholder returns? "