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    Miller Industries Inc (MLR)

    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.

    1. 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.
    2. 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.
    3. Transport Trailers - Manufacture a line of transport trailers used in the towing and recovery industry.

    Q3 2024 Summary

    Initial Price$54.99July 1, 2024
    Final Price$59.86October 1, 2024
    Price Change$4.87
    % Change+8.86%

    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

    1. 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.

    2. 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.

    3. 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

    View all financials →
    Revenue by Geography - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    North America258.167272.32242.70265.771,038.96318.54340.7286.56
    Foreign24.10827.9431.8730.47114.3931.3430.827.71
    Total Revenue282.275300.26274.57296.241,153.35349.87371.5314.27

    Executive Team

    NamePositionStart DateShort Bio
    William G. Miller IIPresident and Chief Executive OfficerMarch 2022William G. Miller II has been with Miller Industries since 2002, serving in roles such as Co-CEO (2013–2022), President (2011–2022), and Regional VP of Sales (2009–2011).
    Deborah L. WhitmireExecutive VP, Chief Financial Officer, and TreasurerJanuary 2017Deborah L. Whitmire has been with Miller Industries since 1996, holding roles such as VP and Corporate Controller (2014–2016) and Corporate Controller (2005–2014).
    William G. MillerExecutive Chairman of the Board of DirectorsApril 1994William G. Miller founded Miller Industries in 1994 and has served in roles such as CEO (1994–1997) and Co-CEO (2003–2011). He has prior leadership experience at companies like Bendix and Wheelabrator.
    Jeffrey I. BadgleyPresident of International and MilitaryMarch 2022Jeffrey I. Badgley has been with Miller Industries since 1988, serving in roles such as CEO (1997–2003; 2011–2013), Co-CEO (2003–2022), and President (1996–2011).
    Josias W. ReynekeVice President and Chief Information OfficerJanuary 2017Josias W. Reyneke joined Miller Industries as a consultant in 1997 and has held roles such as Director of Management Information Systems (1998–2011) and VP of Operations (2011–2016).
    Vincent TianoVice President and Chief Revenue OfficerJanuary 2021Vincent Tiano has been with Miller Industries since 1997, serving as VP of Sales (1997–2020) before becoming Chief Revenue Officer.
    Frank MadoniaExecutive VP, Secretary, and General CounselSeptember 1998Frank Madonia has been with Miller Industries since 1990, serving in roles such as VP, General Counsel, and Secretary (1994–1998). He has prior experience at companies like U.S. Steel and Wheelabrator.

    Questions to Ask Management

    1. "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? "
    2. "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? "
    3. "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? "
    4. "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? "
    5. "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? "

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateApril 2, 2024
    End Date/DurationNo expiration
    Total Additional Amount$25.0 million
    Remaining Authorization$22.1 million (as of 2024-09-30)
    DetailsDesigned to create shareholder value, reflects confidence in strategy and financial strength, and is part of a broader capital allocation strategy.

    Past Guidance

    Miller Industries (MLR) Guidance in the Last Four Earnings Calls

    Earnings Call TitleIssued PeriodGuided PeriodGuidance
    Q3 2024 Earnings CallQ3 2024FY 20241. Revenue Growth: Low double-digit growth for FY 2024, in line with historical CAGR. <br>2. Gross Margins: Mid-13% range, with slight quarter-to-quarter fluctuations based on product mix. <br>3. SG&A Expenses: Expected to end FY 2024 slightly above the long-term target of ~6.5% of sales. <br>4. Backlog: Anticipated to return to historical levels over the next 1-2 quarters.
    Q2 2024 Earnings CallQ2 2024FY 20241. Revenue Growth: Adjusted to low double-digit growth for FY 2024, aligning with historical CAGR. <br>2. Gross Margins: Mid-upper 13% range. <br>3. Seasonality: Q4 2024 expected to be a lower revenue quarter due to holidays, inventory audits, and planned maintenance.
    Q1 2024 Earnings CallQ1 2024FY 20241. Revenue Growth: High single-digit top-line growth for FY 2024 compared to record 2023. <br>2. Gross Margins: Expected to remain consistent with recent quarterly results as product mix normalizes. <br>3. SG&A Expenses: Expected to remain consistent as a percentage of sales.
    Q4 2023 Earnings CallQ4 2023N/AThe documents do not provide information about the guidance or the guided period for Q4 2023.