Earnings Call: Q3 2016

Nov 10, 2016

Hello. This is Avaya Vid operator Welcome to the Miller Industries Third Quarter 20 16 Results Conference Call. As a reminder, all participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. And at this time, I'd like to turn the conference over to Mac Dutcher of FTI Consulting. Please go ahead. Thank you and good morning everyone. I'd like to welcome you to the Miller Industries conference call. We are here to discuss the company's 2016 third quarter results, which were released after close of market yesterday. With us from management today are Bill Miller, Chairman of the Board Jeff Badgley, Co CEO Will Miller, President and Co CEO Vince Mysh, Executive VP and CFO Frank Medonia, Executive Vice President, Secretary And General Counsel and Debbie Whitmire, Vice President And Corporate Controller. Today's call will begin with formal remarks from management, followed by a question and answer period. Please note that during this morning's conference call, management may make forward looking statements in accordance with the Safe Harbor provision 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 solid quarter for Miller Industries as we moved into the 2nd half of the 2016 year. We continue to execute on our strategic initiatives and we added to the momentum in our business which is evidenced by our strong financial performance. $47,600,000, an increase of 17% compared to $126,200,000 in the prior year period. Net income was an increase of 74.3 percent compared to net income of $3,200,000 or $0.28 per share in the 2015 third quarter. We maintained our production levels to continue to stay ahead of our customer demand reducing SG and A as a percentage of net sales to 5.8%, down from 6% in third quarter of last year. Our ability to drive sales while increasing production capacity has contributed to a successful quarter Now, I'll turn the call over to Vince, who will review the third quarter 9 months results. After that, I'll be back with comments on the market environment and some closing remarks. Vince? Thanks Jeff and good morning everyone. Net sales for the 3rd quarter of 2016 were $147,600,000 versus $126,200,000 for the 2015 third quarter. A 17% year over year increase. Costs to $130,500,000 in the 2016 third quarter compared to $113,400,000 last year. Which is attributable to increased production driven by the healthy demand levels that we have seen. Gross profit was $17,100,000 or 11.6 percent of net sales in the third quarter of 2016 compared to $12,800,000 or 10.1 $1,000,000 in the third quarter of 2016 compared to $7,500,000 in the third quarter of 2015. As a percentage of sales, SG and A decreased to 5.8% from 6.0% in the prior year period. Other income expense net for the 3rd quarter was a net gain of $238,000 compared to a net gain of 94 $1000 in $1000 compared to $291,000 in the third quarter of 2015 due to the borrowings on our credit line as well as by additional floor plan financing associated with our increased volumes. Net income in the 2016 third quarter was $5,500,000 or $0.49 per diluted share, an increase of 74.3 percent compared to the 2015 third quarter net income of $3,200,000 or $0.28 per diluted share. Now let me briefly review our results for the 9 months ended September 30, 2016. Net sales for the 1st 9 months of 2016 were $452,500,000 compared to $404,500,000 in the prior year period, an increase of 11.9%. Gross profit for the 9 months ended September 30, 2016 was $49,100,000 or 10.9 percent of sales, compared to $42,300,000 or 10.5 percent of sales for the 1st 9 months of 2015. Net income in the 1st 9 months of 2016 was $15,500,000 or $1.36 per diluted share. Which is an increase of 27.9 percent over net income in the first 9 months of 2015 of $12,100,000 or $1.07 per diluted share. Turning now to our balance sheet, cash and cash equivalents as of September 30, 2016 were $32,800,000 compared to $29,600,000 as of June 30, 201638,500,000 at December 31, 2015. Accounts receivable at September 30 2016 totaled 125 $900,000 compared to $138,400,000 as of June 30, 2016109,200,000 at December 31, 2015. Inventories were $64,800,000 as of September 30, 2016, compared to $69,300,000 as of June 30, 2016 $66,200,000 at December 31, 2015. Accounts payable at September 30, 2016 were $69,200,000 compared to $79,300,000 as of June 30, 2016 $73,400,000 at December 30 1, 2015. As of September 30 2016, We have borrowed $20,000,000 under our $50,000,000 unsecured revolving credit facility, primarily to help fund our plant expansion projects. We did not increase the amount borrowed during the third quarter. The company also announced that its Board of Directors approved our quarterly cash dividend of $0.17 per share payable December 12, 2016 to shareholders of record at the close of business on December 5, 2016. Now I'll turn the call on third quarter, which build upon the success that we had achieved in the 1st 6 months of the year. Our pipeline of business and bidding activity remained solid. Both domestically and Internationally. This is backed up by strong demand levels in our domestic markets upon which we are capitalizing. The consolidation and expansion of our Pennsylvania operations is nearing completion. And in the capital projects, and the capital projects at our Ottowa, Tennessee and Greenville, Tennessee facilities are moving forward. Overall, we are very pleased with our performance this quarter. We continue to enhance shareholder value by maintaining a healthy balance sheet and productively utilizing our assets. Our business position remains steady as we look forward to a solid close to 2016. And we are very positive about our prospects our shareholders, our suppliers, and certainly our customers for their ongoing support of Miller Industries. Lastly, with Vince's announced retirement, Will Bill and I would like to thank Vince Mesh for his years of service at Miller Industries and congratulate Debbie Whitmire on our new position with the company. With that, we're ready to take your questions. Thank you. And we'll pause for just a moment. And I have no questions at this time, but I'd like to remind everyone With the fact that there are no questions, we would like to thank you for joining our call and look forward to reporting our fourth quarter performance in the beginning of 2017. Thank you. And this does conclude today's event. Thank you for attending today's presentation. You may now disconnect.