Miller Industries, Inc.

Good day, ladies and gentlemen, and welcome to Miller Industries' second quarter 2023 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 Goodrum 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 2023 second quarter results which were released yesterday. With us from the management team today are Bill Miller, Chairman of the Board, Will Miller, President and CEO, Debbie Whitmire, Executive Vice President and CFO, and Frank Madonia, Executive Vice President, Secretary, and General Counsel. 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. At this time, I'd like to turn the call over to Will. Please go ahead, Will.

Thank you, and good morning, everyone. We are very pleased to report another solid quarter, which demonstrates that our use of capital to reinvest in our facilities over the past decade in connection with our strategic initiatives we've undertaken over the past several quarters are continuing to pay off. This is a testament to our commitment to our shareholders, as well as our efforts to invest in our workforce during the pandemic. We generated record revenue of $300.3 million, increasing 49% year-over-year due to improved supply chain resilience and increased productivity. Gross profit for the second quarter was $39.9 million, an increase of 117.3% compared to the prior year quarter, while our gross margin of 13.3% improved 420 basis points year-over-year and 250 basis points sequentially. We are seeing continued benefits from the productivity initiatives and pricing adjustments to offset inflationary pressures and are optimistic about what this means for our profitability moving forward. To give a bit more context, to maximize production output after facing the challenges created by the pandemic, we have been focused on vertical integration to minimize production disruptions. This was a large driver behind our decision to acquire Southern Hydraulic Cylinder in May. The sourcing flexibility this acquisition provides us will continue to improve execution on our delivery of finished goods and consolidate lead times, particularly since hydraulic component availability has recently constrained our ability to maximize production. And historically, custom cylinders have longer than normal lead times. We are experiencing continued strong demand for our products in all of our end markets and have had no significant customer cancellations in 2023 so far. We've improved our ability to deliver finished goods through our productivity enhancements and supply chain dynamics mentioned earlier. But even despite our ability to ship product, our backlog remains elevated and near record levels. As a result, of our strong financial results and our elevated backlog, we continue to believe it is prudent to increase our inventory levels to service the demand. However, we'd expect inventories to grow at a slower rate than in the prior year. In our international business, which makes up approximately 10% of our sales, we are encouraged by the strong demand levels we continue to see. During the second quarter, we experienced improvement in our margins as we finalize the invoicing of orders in our backlog that have not been offered protected pricing. Lastly, before I turn the call over to Debbie, I'd like to make a few comments regarding our workforce. As a reminder, last quarter we announced changes to our executive compensation plan in order to mirror our peers and align executive compensation to company performance. As part of that exercise, we determined that some non-executive employees' compensation needed to be modified and have made provisions for these adjustments. It has always been part of our company's culture that we treat our employees with the utmost respect and try our best to retain our incredibly skilled team. These changes will not only benefit their lives, but will benefit Miller Industries as well, as their expertise is critical to our company's success. Now I'll turn the call over to Debbie, who will review the second quarter financial results in more detail. Following her remarks, I'll provide some closing comments and update on our outlook. Debbie?