Yahoo Finance Miller Industries, Inc. (NYSE:MLR) Q1 2024 Earnings Call Transcript
Miller Industries, Inc. (NYSE:MLR) Q1 2024 Earnings Call Transcript May 11, 2024
Miller Industries, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, ladies and gentlemen, and welcome to the Miller Industries First Quarter 2024 Results Conference Call. Please note, this event is being recorded. At this time, I would like to turn the call over to Mike Gaudreau at FTI Consulting. Please go ahead, sir.
Mike Gaudreau: 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 2024 first quarter results, which were released after the close of the market yesterday. 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. Please note in this morning's conference call, management may make forward-looking statements in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
I'd like to call your attention to the risks related to these statements, which are more fully described in the company's annual report filed on Form 10-K and other filings with the Securities and Exchange Commission. At this time, I'd like to turn the call over to Will. Please go ahead, Will.
Will Miller : Thank you, and good morning, everyone. Following our record 2023, we had a strong start to 2024, generating another quarter of record revenues and maintaining our year-over-year improvements in profitability. First and foremost, I'd like to thank our entire team for their continued efforts and dedication. Without them, these results would not be possible. We continue to reap the benefits of our strategy to invest during a macroeconomic slowdown, doubling down on our investments in our business and in our people at a time when many of our peers were cutting costs. As a result of these investments and continued strong demand environment for all of our products, we generated record revenues of $349.9 million, a nearly 24% increase compared to the prior year period.
We also saw chassis shipments increase significantly during the first quarter as OEMs shipped delayed orders from 2023. While we expect chassis OEM shipments to normalize in the second half of the year, we still anticipate high single-digit top line growth in 2024 compared to our record year in 2023. Gross profit for the first quarter was $44.2 million, an increase of 45.5% compared to the prior year quarter, while gross margin of 12.6% improved 108 basis points. The year-over-year increase is largely due to improved margins across all of our product lines, coupled with higher revenue levels and improvements we have made to our supply chain over the last several years. This includes diversifying our supplier base and in-sourcing of certain manufactured processes.
Our gross margin improvement this quarter was slightly offset by our product mix. As the year progresses and our product mix normalizes, we anticipate some expansion of our gross margins in future quarters. Lastly, before I turn the call over to Debbie, I want to touch on some of the capital allocation decisions we've made since our last earnings call. Last quarter, we said that given the company's strong financial performance in 2023, and now early 2024, the Board felt that our shareholders should share in our success. To that end, we increased our dividend by 5.6% in April and took additional step to improve shareholder returns as our Board approved a $25 million share repurchase plan to create more value for our shareholders. We believe this plan reflects the Board's confidence in our strategy, our balance sheet and the strength of our end markets.
Now I'd like to turn the call over to Debbie, who will review the first quarter financial results in more detail. Following her remarks, I'll provide a market outlook and some closing comments on our priorities for the remainder of the year. Debbie?
Debbie Whitmire: Thanks, Will, and good morning, everyone. Net sales for the first quarter of 2024 were $349.9 million compared to $282.3 million in the first quarter of 2023, a 23.9% year-over-year increase, driven largely by continued strong demand for our products across all our geographies and the significant increase in chassis shipments Will mentioned earlier. Cost of operations increased 21.3% to $305.6 million for the first quarter 2024 compared to $251.9 million for the first quarter of 2023. The increase in our cost of operations is largely a function of our higher revenue levels. As a percentage of net sales, cost of operations decreased approximately 180 basis points from the prior year period to 87.4%. Gross profit was $44.2 million or 12.6% of net sales for the first quarter of 2024 versus $30.4 million or 10.8% of net sales for the prior year period.
The year-over-year improvement in gross margin was driven by our higher revenue levels and improved margin levels across all of our product lines. Sequentially, gross margin declined 40 basis points. Historically, our fourth quarter contained a higher margin than our first, as Will mentioned. Our product mix this quarter was a headwind to our consolidated gross margin. As our product mix normalizes through the balance of the year, we expect gross margin levels to be consistent with recent quarterly results. SG&A expenses were $21.5 million for the first quarter 2024 compared to $17.9 million in the first quarter of 2023 due primarily to incentive training and retention programs for all of our employees, investor relation activity and higher costs related to increased sales volume.
As a percentage of sales, SG&A was 6.2%, 10 basis points lower than the prior year period. Moving forward, we continue to expect SG&A to remain consistent as a percentage of sales. Interest expense for the first quarter of 2024 was $1.2 million, up from $1 million for the first quarter of 2023, driven by an increase in customer flow plan financing costs, which fluctuate up and down with revenue and higher debt levels. Other income for the first quarter was $33,000 compared to other income of $318,000 for the first quarter of 2023, attributable to foreign currency exchange rate shifts. Our effective tax rate for the quarter decreased slightly compared to the previous year, primarily due to adjustments related to foreign tax growth. Net income for the first quarter of 2024 was $17 million or $1.47 per diluted share compared to net income of $9.2 million or $0.81 per diluted share in the first quarter of 2023.
Turning to the balance sheet. Cash and cash equivalents as of March 31, 2024 was $26.8 million compared to $29.9 million as of December 31, 2023 and $29.7 million as of March 31, 2023. Accounts receivable as of March 31, 2024, was $338.9 million compared to $286.1 million as of December 31, 2023 and $233.1 million as of March 31, 2023. Inventories were $184.3 million on March 31, 2024 compared to $189.8 million as of December 31, 2023 and $164.4 million as of March 31, 2023. We are encouraged by the reduction in our inventory levels and going forward, reducing our inventory while also supporting our operation is a top priority this year. Accounts payable as of March 31, 2024 was $229 million compared to $191.8 million as of December 31, 2023 and $169.5 million as of March 31, 2023.
The outstanding balance on our $100 million revolving credit facility was $55 million at March 31, 2024, $60 million at December 31, 2023, and $45 million in March 31, 2023. The current balance on our revolving credit facility is $55 million. Lastly, Board of Directors approved our quarterly cash dividend of $0.19 per share payable June 10, 2024 to shareholders of record on the close of business on June 3, 2024, marking the 54th consecutive quarter that the company has paid a dividend. Now I'll now turn the call back to Will for some closing remarks.
Will Miller: Thank you, Debbie. Looking ahead, our first quarter performance and our healthy backlog gives us confidence in meeting the targets we set last quarter for high single-digit top line growth in 2024. While we do expect a more moderate top line growth rate as product makes normalized, we are off to an extremely strong start. As I said before, demand remains strong for all of our products across all of our geographies. And despite continued strong revenue growth, our substantial backlog remains consistently high quarter-to-quarter, demonstrating continued strong demand. The significant demand and the continued growth of our order book also means that we are closely monitoring our manufacturing capacity as cash conversion improves throughout the year, and we assess our future capital allocation fans.
Production capacity is certainly a key focus of ours, both domestically and internationally. As always, the entire management team and I would like to thank all of our employees, suppliers, customers and shareholders for their continued support of Miller Industries. At this time, we'd like to open the line for any questions.
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