Earnings Call: Q2 2016

Aug 4, 2016

Good day, ladies and gentlemen. This is your AvivaID operator, and welcome to the Miller Industry Second Quarter 2016 Results Conference Call. As a reminder, all participants will be in listen only mode. After today's presentation, there will be an opportunity to ask conference over to Max Dutcher of FTI Consulting. Please go ahead, Max. 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 2016 second 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 Vice President and CFO Frank Modonia, Executive Vice President, Secretary And General Counsel and Debbie Whitmire, vice president corporate controller. Today's call will begin with formal remarks from management followed by 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, Good morning. We're pleased to discuss our 2nd quarter performance with you today. It was a solid quarter for Miller Industries, one which built on a strong start to 2016. Demand for our products has remained healthy, which led to a solid top and bottom line financial performance in the quarter. Results were driven by a solid pop pipeline of business, which led to growth in revenue achieved during the quarter based on recovering economic conditions and improving customer sentiment. We reported 2016 second quarter sales of $156,100,000 compared to $151,500,000 in the prior year period. Net income was 6,600,000 or $0.58 per share compared to net income of $5,900,000 or $0.52 per share in 2015 second quarter. Sylvania Manufacturing operations. Furthermore, our projects to enhance our ULTua and Greenville, Tennessee plants have been initiated. Now, I'll turn the call over to Vince, who will review the second quarter 6 months financial results. After that, I'll be back with comments and good morning everyone. Net sales for the second quarter of 2016 were $156,100,000, which $151,500,000 for the 2015 second quarter, a 3.0 percent euro per year increase. Cost of operations increased 2.3 percent to 137,100,000 in the 2016 second quarter compared to $134,000,000 last year. Gross profit was $19,000,000 or 12.2 percent of net sales in the second quarter of 2016 compared to 17,500,000 or 11.6 percent of net sales 16 compared to $7,600,000 in the second quarter of 2015. As a percentage of sales, SG and A increased to 5.3% from 5% in the prior year period. The increase in expenses was primarily related to increases in less staffing limits. Other income expense net for the 2nd quarter was a net gain of $128,000 compared to a net gain of 2 6000 in the second quarter of 2015. Interest expense in the 2016 second quarter was $259,000 compared $245,000 in the second quarter of 2015. Net income in the 2016 second quarter was $6,600,000 or $0.58 per diluted share. Net income in the 2015 second quarter was $5,900,000 or $0.52 per diluted share. Now let me briefly review our results for the 6 months ended June 30, 2016. Net sales for the 1st 6 months of 2016 were $304,900,000 compared to $278,300,000 in the prior year period, an increase of 9.6%. Gross profit for the 6 months ended June 30, 2016 was $32,000,000 or 10.5 percent of sales compared to $29,500,000 or 10.6 percent of sales for the 1st 6 months of 2015. Net income in the 1st 6 months of 2016 was $9,900,000 or 80 dollars per diluted share which is an increase of 11.4 percent over net income in the 1st 6 months of 2015 of 8.9 as of June 30 2016 were $29,600,000 compared to $33,300,000 at March 31 2016 $38,400,000 at December 31 2015. Accounts receivable at June 30 2016 totaled $138,400,000 compared to $129,100,000 as of March 30 1, 2016 $109,200,000 at December 31, 2015. Inventories were $69,300,000 as of June 30 2016 compared to $71,400,000 as of March 31, 2016 $66,200,000 at December 31, 2015. Accounts payable in June 30 2016 were $79,300,000 compared to $88,200,000 as of March 31, 2016 $73,400,000 at December 31, 2015. As of June 30, 2016, we have borrowed $20,000,000 under our $50,000,000 unsecured revolving credit facility and part of the financing of our capital projects. The company also announced that Florida directors approved our quarterly cash dividend of $0.17 per share payable September 19 2016 to shareholders of record at the close of business on September 12 2016. Now, I'll turn the call back to Jeff for further remarks. Thank you, Bugs. The second quarter rounded out a strong first half of the year for Miller Industries. Demand continues to be strong in our domestic markets based on recovering economic conditions, continuing to execute on multiple capital projects to expand our production capabilities. Overall we are very pleased with the quarter. We maintain a strong balance sheet that puts us in a position of strength to operate our business. We remain committed to enhancing shareholder value through and our quarterly dividend of $0.17 per share. As we move into the 3rd quarter, we retain our positive outlook knowing we are well Losing, I'd like to thank our employees, our shareholders, our suppliers, and certainly our customer for their ongoing support of Miller Industries. With that, we're ready to take your questions. Thank you. Thank you, sir. To allow us to receive All right. It looks like our first of the day comes from Walter Lang with Avondale Partners. Can your commentary on positive sentiment from customers, does that extend to non domestic customers as well? I'm in various in the regions worldwide. We've seen towards the end of the second quarter. We've seen, not so positive, in the UK, but we really haven't seen any changes, in Western, I'm sorry, in the market in Germany. We still, we see still strong demand in the Asian market's Japan. So it it varies, Walter. Okay. And then your credit facility extended first to 30,000,000. Now you've taken it up to 50,000,000. Do you envision accessing that entire line? This is Vince Walter. I wouldn't anticipate accessing the entire line, but a lot of it depends on timing just as a as it has. It's a matter when the when the capital improvements come aboard and and how much business we have and how much receivables go up and as we get these out the door, but I can't just don't anticipate we'll get the whole. Right, you'll have a buffer in there. What and then just hypothetically what if the the work had been complete at the end of in Pennsylvania have been completed as of theendofJune? What you know could you take advantage right now the increased capacity throughput? I know it's hypothetical. Yeah, it's extremely hypothetical. The, the 2 plants in Pennsylvania, did a great job during this process of plant expansion and consolidation, certainly the plant that, we're building will increase capacity greatly. I don't know that if you completed the end of June that you would recognize immediate results, because obviously you've got to get your suppliers online. You've you've got people to train a little bit. So yeah, I mean, you'd see some of it welder. But I'm not gonna explode. But yeah, Jeff, this is Bill and actually Greenville has actually picked up some of their they've added capacity from a standpoint of The car care is in the interim, switching from other products. So we have had a, we've had a pickup even before we're finished. Okay. And then just the last question on Vince commented on increased staffing levels. So, I assume that's a result of increased demand, right? It equates? That's a good assumption. Yes. Okay. Alright, that's enough. I appreciate your time. Great quarter. Thanks a lot. Hey, Walter. Appreciate your support. Always good to hear from you. Same here. All right, ladies and gentlemen, it looks like we have no further questions from the audience. I'd like to turn the floor back to management for any additional or closing remarks. Well, we certainly are very happy with our performance during the first half of twenty sixteen. And we look forward to reporting the Q3 results in the near future. Thank you very much. Brian, ladies and gentlemen, this concludes today's event. You for attending this presentation.