Earnings Call: Q2 2018

Aug 9, 2018

Good day ladies and gentlemen and welcome to the Miller Industries Second Quarter Twenty team Results Conference Call. Please note this event is being recorded. And now at this time, I would like to turn the call over to Ben Herskowitz at FTI Consulting. Call. We are here to discuss the company's 2018 second quarter results, which were released after the close of market yesterday. With us from the management team today are Bill Miller, Chairman of the Board Geoff Bags, the Co CEO Will Miller, President and Co CEO Debbie Whitmire, Executive Vice President and CFO and Frank Medonia, Executive Vice President, Secretary And General Counsel. Today's call will begin with formal remarks for management followed by a question and 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. With these formalities out of the way, I'd like to turn the call over to Jeff. Please go ahead, Jeff. Thank you, and good morning. We're pleased to discuss our second quarter results with you today. This was another strong quarter for Miller Industries as we achieved solid top line growth and gross margin expansion We continued to increase our profitability through careful cost management and increases in production due to our disciplined execution of our plant consolidation and expansion efforts our commitment to operational excellence continues to payoff as evidenced by our 20.9% increase in gross profit and our 40.1 percent increase in net income as compared to the second quarter of 2017. Results this quarter were driven by continued We reported 2018 second quarter sales of $176,900,000 an increase of 15.5 Net income was $7,600,000 or $0.67 per share compared to net income of $5,400,000 or $0.48 per share in the 2017 second quarter. Gross profit as a percentage 5% in administrative expenses decreased 40 basis points as a percentage of total sales to 5.5%. As of June 30, our plant expansion and consolidation efforts are substantially complete. Which has increased efficiency and boosted production levels allowing us to meet increased customer demand. Our balance sheet remains healthy and we continue to strategically deploy our resources to drive organic growth. We remain confident in Now, I'll turn the call over to Debbie, who will review the second quarter financial results. After that, I'll be back with comments on the market environment and some closing remarks. Were $176,900,000 versus $153,100,000 for the 2017 second quarter, a 15.5% increase. Cost of operations increased 14.9% to $155,600,000 for the 2018 second quarter compared to $135,500,000 for the 2017 second quarter, reflecting increased costs associated with higher demand. Gross profit was $21,300,000, or 12% of net sales for the 2018 second quarter compared to $17,600,000 or 11.5 percent of net sales for the 2017 second quarter. SG and A expenses were $9,700,000 the 2018 second quarter compared to $9,100,000 for the 2017 second quarter. As a percentage of sales, SG and A decreased to 5.5% from 5.9% in the prior year period. Other income expense net for the 2018 second quarter was an expense of $627,000 compared to other income of $470,000 for currency translation. Interest expense for the 2018 second quarter was $484,000, compared to $315,000 for the 2017 second quarter due to decreases in net foreign interest income and increases in floor plan costs and borrowings under the credit facility. Net income for the 2018 second quarter was $7,600,000 or $0.67 per diluted share. Net income for the 2017 second quarter was $5,400,000, or $0.48 per diluted share. Now turning to our balance sheet. Cash and cash equivalents as of June 30, 2018 were $19,700,000 compared to $15,100,000 as of March 31, 2018, and $21,900,000 at December 31, 2017. Accounts receivable at June 30, 2018 totaled $148,000,000 compared to $136,700,000 as of March 31, 2018 $132,700,000 at December 31, 2017. Inventories were $81,200,000 as of June 30, 2018 compared to $77,700,000 as of March 31, 2018 $68,600,000 at December 31, 2017. Accounts payable at June 30, 2018 were $92,000,000 compared to $82,700,000 as of March 31, 2018 $79,300,000 at December 31, 2017. As of June 30, 2018, we have borrowed $15,000,000 under our $50,000,000 unsecured revolving credit facility to help fund our capital projects and working capital needs as we work to meet customer demand. The company also announced that its Board of Directors approved our quarterly cash dividend of $0.18 per share, payable September 17, 2018, to shareholders of record at the close of business on September 10, 2018. Now, I'll turn the call back to Jeff for further comments. Thank you, Debbie. Our performance this quarter was very encouraging as which has resulted in strong sales and minimized our operational complexity while simultaneously increasing our production capacity. These factors combined with continued favorable macro trends globally bode well for our company's outlook. For the remainder of this year. As always, disciplined balance sheet management and capital deployment continue to remain central to our strategy as we strive to maximize shareholder value. To underscore our commitment to returning Lastly, while our growth the impact they may have on our raw material cost in the future. While we are concerned about the potential impact of any tariffs and remain in constant communication with our customers and suppliers that is still too early to make any meaningful assessment. In closing, I'd like to thank our employees shareholders, suppliers and customers for their ongoing support of Miller Industries. With that, we are ready to take your questions. Thank you. We'll take our first question from James Lee with Port Ferro. I have a question about the capital expenditure. Now that your plants, improving planning program that's been completed. How should we think about your annual capital expenditure going forward? Our plants in the U S. Are certainly complete We would we are looking at our backlogs in our European facility And as of yet, have not, determined if any further CapEx will need to take place there. But historically, in the past, our CapEx has somewhat ran in alignment with our depreciation. And we have no further phone questions. I'd like to turn the call back to management for any additional or closing remarks. Well, we certainly would like to thank you for joining our call today and we look forward to speaking with you to report our third quarter results in the future. Have a good afternoon. And with that ladies and gentlemen, that concludes today's conference call. We'd like to thank you again for your participation. You may now disconnect.