Good day everyone, and welcome to the Miller Industries third quarter 2015 earnings conference call. Today's call is being recorded. For opening remarks and introductions, I'll turn the call over to Katie Pyra. Katie, please go ahead.
Thank you. Good morning everyone. I would like to welcome you to the Miller Industries conference call. We're here to discuss the company's 2015 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, Will Miller, President and Co-CEO, Vince Mish, Executive Vice President and CFO, Frank Madonia, Executive Vice President, Secretary, and General Counsel, Debbie Whipker, Vice President and Corporate Controller, and Allison Houghton, Director of Finance. 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-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 are pleased to discuss with you today our third quarter performance, continuing the momentum that we have achieved. During the quarter, customer sentiment remained very positive, and we continue to see high levels of quoting activity both domestically and globally. During the quarter, we focused on improving our operations for the future. In the third quarter of 2015, we reported sales of $126.2 million, approximately 7% higher than sales of $118.4 million in the prior year period. Q3 2015 net income was $3.2 million, or $0.28 per share, which is a decrease of approximately $300,000, or 9%, compared to net income of $3.5 million, or $0.31 per share in the 2014 third quarter. Gross margin for the quarter was 10.1% of net revenues, down from 11% in the prior year period.
SG&A as a percentage of net sales was 6%, down from 6.1% in the third quarter of 2014. Our order levels and backlog remain strong, and overall quoting activity continues to drive our business forward. We continue to invest in our production capabilities and are working on our expansions of our manufacturing operations in Pennsylvania and Ooltewah, Tennessee to increase capacity and improve operating efficiencies. We are operating in a position of financial strength, and we continue to demonstrate our ability to react to shifts in the market and capitalize on opportunities as they emerge. I'll turn the call over to Vince, who will review the third quarter and nine months financial results. After that, I'll be back with comments on the market environment and some closing remarks. Vince?
Thanks, Jeff, and good morning everyone. As Jeff mentioned, net sales for the third quarter of 2015 were $126.2 million, versus $118.4 million for the 2014 third quarter, a 6.6% year-over-year increase. We've experienced strong continued domestic and international order flow and have been able to capitalize on that with our ramp-up of production levels in recent quarters. Cost of operations increased 7.6% to $113.4 million in the 2015 third quarter, compared to $105.4 million last year, driven primarily by the higher sales volumes and increasing production levels. Gross profit was $12.8 million, or 10.1% of net sales in the third quarter of 2015, compared to $13 million, or 11% of net sales in the third quarter of 2014. SG&A expenses were $7.5 million in the third quarter of 2015, compared to $7.2 million in the third quarter of 2014.
As a percentage of sales, SG&A decreased to 6.0% from 6.1% in the prior year period. Other income expense net for the quarter was a net gain of $94,000, compared to a net loss of $31,000 in the third quarter of 2014. Compared to $178,000 in the third quarter of 2014. Net income attributable to Miller Industries in the 2015 third quarter was $3.2 million, or $0.28 per diluted share. The income attributable to Miller Industries in the 2014 third quarter was $3.5 million, or $0.31 per diluted share. Let me briefly review our results for the nine months ended September 30, 2015. Net sales for the first nine months of 2015 were $404.5 million, compared to $345.0 million in the prior year period, an increase of 17.3%.
Gross profit for the nine months ended September 30, 2015 was $42.3 million, or 10.5% of sales, compared to $36.4 million, or 10.6% of sales for the first nine months of 2014. Net income attributable to Miller Industries in the first nine months of 2015 was $12.1 million, or $1.07 per diluted share, which is an increase of 30.8% over net income in the first nine months of 2014. Turning now to our balance sheet. Cash and cash equivalents as of September 30, 2015, were $41.0 million compared to $36.0 million at June 30, 2015, and $39.6 million at December 31, 2014. Accounts receivable at September 30, 2015, totaled $115.4 million, compared to $131.3 million at June 30, 2015, and $116.5 million at December 31, 2014.
Inventories were $64.5 million as of September 30, 2015, compared to $57.6 million as of June 30, 2015, and $56.5 million at December 31, 2014. The increase in inventories was attributable to the ramp-up in production in recent quarters. Accounts payable at September 30, 2015, were $76.7 million, compared to $81.8 million at June 30, 2015, and $70.6 million at December 31, 2014. We continue to operate with no borrowings under our $30 million unsecured revolving credit facility. The company also announced that its board of directors has declared a quarterly cash dividend of $0.16 per share, payable December 14, 2015, to shareholders of record at the close of business on December 7, 2015. I'll turn the call back to Jeff for closing remarks.
Thank you, Vince. The momentum that we achieved throughout 2015 continued into the third quarter with a strong financial performance. During the quarter, we focused on improving our operations for the future, which necessitated a one-week shutdown of manufacturing operations at our highest volume facility in Ooltewah, Tennessee, for a plant reorganization. This plant reorganization and the work on the expansion of the facilities in Pennsylvania also had an impact on our revenues during the quarter. During the quarter, customer sentiment remained very positive. We continued to see high levels of quoting activity both domestically and globally, and we have a healthy pipeline of business as we enter the fourth quarter and beyond. During the quarter, we continued to work on several new tenders that are long-lived in nature. We did receive some awards from these tenders that have delivery dates that extend through 2016 and beyond in some cases.
Overall, we are very pleased with our performance in the quarter. Into 2016, our outlook is very positive as we continue to bid on new contracts, grow our backlog, and further build our product offering successes. Finally, our balance sheet is strong, and we remain committed to deploying our assets to enhance shareholder value. In closing, I'd like to thank our employees, our shareholders, our suppliers, and our customers for their ongoing support of Miller Industries. With that, we're ready to take your questions.
Thank you. Ladies and gentlemen, to ask a question, you may do so by pressing the star key, followed by the digit 1 on your touch tone phone. If you are using a speakerphone, be sure to disengage your mute function so that your signal will reach our equipment. Again, star one. We'll pause just a moment to assemble the roster. Once again, ladies and gentlemen, star one. We'll take our question from Walter Leng with Avondale Partners.
Good morning. Congratulations on another strong quarter. The reorganization in Ooltewah, is that independent of what you're doing in Pennsylvania? Secondly, could you expand upon the new tenders that are long-lived in nature?
Question one, Walter. Yes, it is independent. Obviously, business is strong. Ooltewah, and you've been here and visited, and those on the call that have not, you know the layout of the plant. You also know that you can't just put a new building up to expand capacity. We're already working in key areas 20 hours a day with two 10-hour shifts. My Co-CEO, Will Miller, met with our production people, reorganized the plant to enhance our deliveries in the future. Pennsylvania is the construction of a new facility, but in that construction process, they also had to begin reorganizing the current plant for future blast and paint operations. They are independent, but they both had an impact on revenue for the quarter.
Question two, commenting about the long-lived tenders. First off, I think it's pretty apparent if you follow our company and you follow International, that it was announced that Navistar Defense, excuse me, I'm still old school calling Navistar International, but Navistar Defense had received an order, which they announced part of that order would be built in Ooltewah, Tennessee, and part of that order would be built in Mercer, Pennsylvania, which to the public would mean wreckers and carriers. They announced the value of that tender, which was fairly high because for their customer. The impact for Miller Industries is great, but it's not significant, and majority will hit in 2016, and it's approximately somewhere between $10 million and $12 million in revenue. The other tenders we're working on are much longer delivery periods.
In fact, Walter, it's hard for me to give you a breakout year after year after year because the delivery schedules for that particular tender has not been set in stone. As I look at the tender, I would suppose a majority of that tender would probably hit in 2019. I think on a yearly basis, although it will be a very nice order, is a very nice order. I don't want to disclose where it's going. I don't want to disclose who the prime is. It would have similar impacts on a yearly basis that Navistar Defense has. Nice order, but not big clumps of revenue in a one-year period.
Okay, thank you. Yep.
We also got 84 units from a prime who bid to the United States Postal Service. Those are small units and revenue will hit in 2016, it's a couple million dollars.
Yeah. The work in Ooltewah, is that complete then?
The work in Ooltewah will be ongoing, but the work that Will had scheduled out, and he probably can explain it better than I can is not inside the walls that we currently have. It's outside the walls. It should have less impact going forward. Will, you want to add anything?
Yeah, Walter, the expansion project we're doing here, we had to prep for it. After that point, we're going to do it in phases. There's 3 separate phases of the project, and our plan with our project manager for that is to minimize the impact on production as much as possible going forward. It's probably somewhere over the next nine months for completion.
The reorganization in Pennsylvania will continue for another 2 quarters, 3 quarters?
Probably somewhere in that neighborhood.
Okay.
The weather will have an impact.
Yeah. Weather dependent.
Okay, great. I appreciate your time in answering my questions.
No problem, Walter. We appreciate your support. Thank you. Certainly would like to thank you for joining our conference call, us reporting our third quarter results. Again, I'd like to mention that our backlog is extremely strong. We're very excited about the sentiment we see with our customers in the market, and we look forward to reporting our fourth quarter results in the future. Thank you very much.
Ladies and gentlemen, thank you for your participation. This does conclude today's conference.