Miller Industries, Inc.

Good day, ladies and gentlemen, and welcome to the Miller Industries fourth quarter and full year 2022 results conference call. Please note, this event is being recorded. And now at this time, I would like to turn the call over to Mike Goodrow at FTI Consulting. Please go ahead, sir.

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 2022 fourth quarter and full year results which were released after the close of the market yesterday. With us from the management team today are Bill Miller, Chairman of the Board, Will Miller, President and CEO, Jeff Badgley, President of International and Military, Debbie Whitmire, Executive Vice President and CFO, Frank Madonia, Executive Vice President, Secretary and General Counsel, Vince Tiano, Chief Revenue Officer, and Jameson Linden, Chief Manufacturing Officer. Today's call will begin with formal remarks from management, followed by a question and answer session. 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. I would also like to inform you that Miller Industries intends to file a proxy statement and related proxy materials with the SEC in connection with the company's upcoming 2023 annual meeting of shareholders. And in connection with this annual meeting, the company, its directors, and certain of its executive officers are participants in the solicitation of proxies from its shareholders. Shareholders of Miller Industries are strongly encouraged to read the definitive proxy statement and all other related materials filed with the SEC carefully and in their entirety when they become available as they will contain important information about the 2023 Annual Meeting. On today's call, we will be limiting our discussion to quarterly results. At this time, I'd like to turn the call over to Will. Please go ahead, Will.

Thank you, and good morning, everyone. I'd like to start off by saying that we've recognized, particularly over the last few quarters, that the performance of the business is not very well understood by the street. In an effort to remedy this, we are committed to continuing to maximize shareholder value and help investors better understand the underlying dynamics of our business so they can better assess our financial performance and outlook. That said, We were very pleased with our fourth quarter results that were ahead of internal expectations, closing out 2022 on a strong note, despite a year of persistent supply chain challenges. Sales in the quarter increased 12% year over year and 9.9% sequentially to $225.9 million. Due to improved deliveries on our strong backlog and a large order from a new customer, which we began recognizing revenue on in the back half of the year, We expect to continue to recognize revenue from this as well as other new customer orders as we progress through 2023. Gross profit in the fourth quarter was $25.5 million, an increase of 63.6% compared to the prior year quarter, while gross margin of 11.3% improved 360 basis points year over year. Sequentially, gross profit improved 10.1%, while gross margins remained flat. Our probability continued to trend in the right direction due to moderating input costs and the full benefit of our 2022 price increases. These factors, combined with steps we've made to improve our supply chain and our normally scheduled 2023 price increases, which just began to roll out into the marketplace, give us confidence in improving profitability in 2023. While we continue to accumulate inventory in the form of goods near completion, we have taken a number of steps over the past year to ensure stability and flexibility of our supply chain to maximize our deliveries. For example, since the start of 2022, we've contracted with several new suppliers supplementing the availability of hard-to-find parts. Additionally, we've taken steps to improve the nimbleness of our manufacturing processes by improving our engineering redesign capabilities, enabling us to modify existing parts and or retrofitting them to meet specific needs instead of waiting for parts that are not available or with extended lead times. In an effort to provide more context as to why we feel it is prudent to accumulate inventory, the end of the year we have a record backlog that positions us to generate revenues in excess of one billion dollars in the fiscal 2023 subject to no further deterioration in the supply chain and general economic conditions historically our backlog has been resilient in recessionary times and we have a minimal amount of order cancellations therefore We continue to believe that the best investment we can make in our business is fulfilling our backlog and continuing to grow our business. Though there continue to be some challenges delivering finished goods, with such a strong backlog, we feel that investing in our inventory is still the most prudent use of capital in order to service our customers and recognize revenue as quickly as possible. In our international business, we are encouraged by the levels of demand we continue to see. Backlog remains strong. However, we are seeing slightly greater inflationary impacts compared to our domestic operations, such as unprecedented increases in energy costs. Because a large percentage of our sales in our international business are direct sales to end user, it has been more difficult to pass through price increases compared to our North American business, where we work largely through distributors. That said, we are confident that we will recognize the full benefit of these price increases over the course of the coming year. As a reminder, our international business makes up a mid to high single-digit percentage of our sales. Now I'd like to turn the call over to Debbie, who will review the fourth quarter financial results in more detail. Following her remarks, I'll provide a market outlook and some closing comments. Debbie?