Earnings Call: Q4 2020

Mar 4, 2021

Day, ladies and gentlemen, and welcome to the Miller Industries 4th Quarter 2020 Results Conference Call. Please note this event is being recorded. And now at this time, I'd like to turn the conference call over to Mr. Brendan Nedlock at FTI Consulting. Please go ahead, sir. 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 2020 Q4 and full year results, which were released after the close of market yesterday. With us from the management team today are Bill Miller, Chairman of the Board Will Miller, President and Co CEO Jeff Badgley, Co CEO Debbie Whitmire, Executive Vice President and CFO I'm 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 period. 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 ks and other filings with the Securities and Exchange At this time, I'd like to turn the call over to Jeff. Please go ahead, Jeff. Thank you, and good morning, everyone. To begin today's call, I would like to first acknowledge the extraordinary dedication of our employees during one of the most challenging years in our company's history. COVID-nineteen has disrupted nearly every facet of everyday life and has required our employees to show a tremendous amount of flexibility in order to continue meeting the needs of our customers. During the Q4, we experienced steady improvement, and I continue to be encouraged by the underlying strength of our business as well as the resilience of our customers despite the ongoing impact of the COVID-nineteen pandemic. While we are encouraged to finish the year with such strong operating results, the start to the Q1 of 2021 of our new enterprise software system. In addition, we experienced supply chain disruptions Related to the impacts of COVID-nineteen as well as product delivery delays due to extreme weather conditions across parts of the U. S. And tightening availability of freight trucks. These factors Have caused substantial downward pressures on our revenues, margins and earnings during the first half of the first quarter of 2021. Despite these headwinds based on our strong backlog and the current status of our process improvements, We believe we have the opportunity to substantially improve our operating results in 2021 beyond the Q1 and will continue to capitalize on all future growth opportunities. As you do recall, last quarter we announced that we started repurposing our existing Greenville, Tennessee facility to bring specific production capabilities in house to mitigate future supply chain constraints. I am happy to announce that the facility transition has progressed as scheduled, and we anticipate that we will begin to see improvements and our production efficiency as we finalize the project and gain momentum through 2021. Now I'll turn the call over to Debbie, who will review the Q4 financial results. After that, I'll be back with comments about the market environment Thank you for closing remarks. Debbie? Thanks, Jeff, and good morning, everyone. Net sales for the Q4 of 20 were $178,300,000 versus $203,100,000 for the Q4 2019, A 12.2% year over year decrease driven by ongoing impacts from the COVID-nineteen pandemic, but a 5.9% improvement from the 3rd quarter as production levels and deliveries continue to expand throughout the quarter. Cost of operations decreased 12.6% to $154,100,000 for the Q4 2020 compared to $176,200,000 approximately 30 basis points to 86.4 percent from the prior year period. Gross profit was $24,300,000 Or 13.6 percent of net sales for the Q4 2020 compared to $26,900,000 or 13.3 percent of net sales for the Q4 2019, largely driven by continued cost mitigation efforts. SG and A expenses were $9,400,000 for the Q4 2020 compared to $11,800,000 for the Q4 2019, resulting from significantly reduced employee travel and trade show related expenses. As a percentage of sales, SG and A decreased approximately 50 basis points to 5.3% or 5.8% in the prior year period. Interest expense net for the Q4 2020 was $197,000 compared to $5,000 for the Q4 2019 due to decreases in interest on distributor floor plan activity and decreases in interest on the credit facility. Other income expense for the Q4 2020 was a net income of $275,000 compared to net income of $211,000 for the Q4 2019 due to currency exchange rate fluctuations. Net income for the Q4 2020 was $12,000,000 or $1.05 per share. Net income for the Q4 2019 was $11,700,000 or $1.03 per share. Now let me briefly review our results for the year ended December 31, 2020. Net sales for the year were $651,300,000 compared to $818,200,000 in the prior year period, a decrease of 20.4%. Gross profit for the year was $78,400,000 or 12 percent of sales compared to $96,500,000 for 11.8 percent of sales for 2019. Net income for the year was $29,800,000 are $2.62 per share, a decrease of 23.7 percent compared to net income of $39,100,000 or $3.43 per share for 2019. Now turning to the balance sheet. Cash and cash equivalents As of December 31, 2020, it was $57,500,000 compared to $47,500,000 as of September 30, 2020 $26,100,000 as of December 31, 2019. Accounts receivable at December 31, 2020, totaled $141,600,000 compared to $149,800,000 as of September 30, 2020 $168,600,000 as of December 31, 2019. Inventories were $83,900,000 as of December 31, 2020, compared to $87,400,000 as of September 30, 2020 $88,000,000 as of December 31, 2019. Accounts payable at December 31, 2020 was $85,500,000 compared to $93,000,000 as of September 30, 2020 $95,800,000 as of December 31, 2019. As you recall, during the Q3, we repaid the remaining $5,000,000 of our long term obligations as of September 30th. Despite the ongoing uncertainty related to the pandemic, our balance sheet remains strong and we are confident that we have adequate capital resources to drive the business forward through these challenging times, while continuing to strategically invest in our business. Lastly, The company also announced that its Board of Directors approved our quarterly cash dividend of $0.18 per share, payable March 22, 2021, To shareholders of record, it closed its business on March 15, 2021. Now I'll turn the call back to Jeff for further remarks. Thank you, Debbie. Over the last year, we were presented with one of the toughest operating environments in our company's history. I'm extremely proud of our employees and their ongoing commitment to operational excellence and industry leading customer service. Despite the challenging circumstances, over the last 12 months, we took steps to optimize our production capabilities While following guidelines to keep our employees safe, further enhanced our internal cost controls and continue to strengthen our balance sheet to ensure we have the financial flexibility to capitalize on future growth opportunities. Along with our operational improvements, we remain committed to returning capital to shareholders as evidenced by the declaration of our 41st Consecutive quarterly dividend of $0.18 per share. As we move into 2021, Vaccine rollouts continue to gain traction and global economies continue on the path to normalization. Going forward, our strong backlog, optimized production capabilities and healthy balance sheet Position us favorably to capitalize on strengthening customer demand. In closing, I'd like to thank our employees, Thank you again for joining us this morning. Operator, please open the line for questions. Thank I'd like to go ahead and turn the call back over to management for any additional or closing remarks. Thank you again for joining us on the call today, and we look forward to speaking with you again on our Q1 results conference call. Good day. Thank you. And that does conclude today's conference. We do thank you for your participation. You may now disconnect.