Earnings Call: Q3 2017

Nov 9, 2017

Good day, and welcome to the Miller Industries Third Quarter 2017 Results Conference Call. As a reminder, all participants will be in a listen only mode. After today's presentation, there will be an opportunity Please note this event is being recorded. At this time, I would like to turn the conference over to Daniel Johnston at FTI Consulting. Please go ahead, sir. 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 2017 third 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, Jeff Badgley, 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 from management's 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 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 are pleased to discuss our 3rd quarter performance with you today. It was another strong quarter for Miller Industries. We continue to see strong demand remaining in place in both our domestic and international end markets. We reported 2017 third quarter sales of $143,400,000 an increase of 3.9% compared to $147,600,000 in the prior year period. Net income was $4,500,000 or $0.39 per share compared to net income of 5,500,000 or $0.49 per share in the 2016 third quarter. Gross profit as a percentage of total sales this quarter was 10.2%, down from 11.6% in third quarter of 2016. Our cost of operations was up coinciding factors, including product mix, higher health insurance costs, additional depreciation and investment in our facilities, and increasing supplier lead times. While we do see rising insurance costs as being a longer term industry wide concern, The costs within our control remain in check. We are encouraged by our ability to control year over year selling general and administrative expenses as well as material cost. To progress nicely. Construction phases in Hermitage, Pennsylvania and Ultaw Attenity are nearly complete and construction in Greenville, Tennessee remains on track for completion during the fourth quarter of 2017. We are pleased by our successes to as we balance implementing processes in the new facilities for product deliveries. Our team is focused on meeting that challenge, and that focus has kept our top line performance near our record high. Overall, we are encouraged by our performance in this quarter. We continue to deliver solid top line results. We remain focused on maintaining a healthy balance sheet and implementing processes foster margin expansion and allow for production capacity to meet growing demand for our products. Now I'll turn the call over to Debbie, who will review the 3rd quarter and 9 month results. After that, I'll be back with comments on the market environment and some closing remarks. Debbie? Thanks, Jess, and good morning, everyone. Net sales for the 2017 third quarter were $153,400,000 versus $147,600,000 for the 2016 third quarter. A 3.9% year over year increase compared to last year's quarterly sales. Cost of operations was $137,700,000 for the 2017 third quarter compared to $130,500,000 for the 2016 third quarter. Gross profit was $15,700,000 or 10.2 percent of net sales the 2017 third quarter compared to $17,100,000 or 11.6 percent of net sales for the 2016 third quarter. SG and A expenses were $8,600,000 for the 2017 third quarter compared to $8,500,000 for the 2016 third quarter. As a percentage of sales, SG and A decreased to 5.6% from 5.8 of $106,000 compared to a net gain of $238,000 for the 2016 third quarter. Interest expense for the 2017 third quarter was $469,000 compared to $359,000 for the 20 3rd quarter. Net income for the 2017 third quarter was $4,500,000 or $0.39 per diluted share, compared to net income for the 2016 third quarter of $5,500,000 or $0.49 per diluted share. Now let me briefly review our results for the 9 months ended September 30, 2017. Net sales for the 1st 9 months of 2017 were $455,400,000 compared to $452,500,000 in the prior year period, an increase of 0.6%. Gross profit for the 9 months ended September 30, 2017 was $48,600,000 or 10.7 percent of sales compared to $49,100,000 or 10.9% of sales for the 1st 9 months of 2016. Net income for the 1st 9 months of 2017 was 13 point $7,000,000 or $1.21 per diluted share, a decrease of 11.3% compared to net income for the 1st 9 months of 2016 of $15,500,000 or $1.36 per diluted share. Now turning to our balance sheet, cash and cash equivalents as of September 30, 2017 were 33 $33,500,000 compared to $33,000,000 as of June 30, 2017, and $31,100,000 at December 31, 2016. Accounts receivable at September 30, 2017 of $135,400,000 compared to $134,200,000 as of June 30, 2017. And $125,400,000 at December 31, 2016. Inventories were 64.6 $1,000,000 as of September 30, 2017 compared to $68,200,000 as of June 30, 2017. And $64,100,000 at December 31, 2016. Accounts payable at September 30, 2017 or $79,300,000 compared to $82,600,000 as of June 30, 2017. And $85,100,000 at December 31, 2016. As of September 30, 2017, we have borrowed $20,000,000 under our $50,000,000 unsecured revolving credit facility to help fund our ongoing capital projects. The company also announced its Board of Directors approved our quarterly cash dividend of $0.18 per share payable December 11, 2017 to shareholders of record at the close of business on December 4, 2017. Now, I'll turn the call back over to Jeff for further comments. Thank you, Debbie. Overall, we are encouraged by the trends we are seeing across our business. Both Internationally and domestically. Our impressive top line performance is a testament to our products reputation in the market and our dedicated employees ability to meet the needs of our customers, while developing our business for future growth. As we look towards the final quarter of 2017, we remain committed to meeting strong demand, executing our strategic To our employees, shareholders, suppliers and customers, thank you for your ongoing support. With that, we're ready to take your questions. Thank And once again, ladies and gentlemen, that Ladies and gentlemen, it has been a pleasure reporting our Q3 earnings and we look forward to reporting our And once again ladies and gentlemen, that concludes today's conference. We appreciate your participation today.