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spk00: ladies and gentlemen, and welcome to the Miller Industries first quarter 2024 results conference call. Please note this event is being recorded. At this time, I'd like to turn the call over to Mike Goodrow at FTI Consulting. Please go ahead, sir.
spk02: 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 2024 first quarter 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, 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.
spk05: Thank you. And good morning, everyone.
spk03: Following our record 2023, we had a strong start to 2024, generating another quarter of record revenues and maintaining our year over year improvements and profitability. First and foremost, I'd like to thank our entire team for their continued efforts and dedication. Without them, these results would not be possible. We continue to reap the benefits our strategy to invest during a macroeconomic slowdown doubling down on our investments in our business and in our people at a time when many of our peers were cutting costs as a result of these investments and continued strong demand environment for all of our products we generated record revenues of 349.9 million dollars a nearly 24 percent increase compared to the prior year period We also saw chassis shipments increase significantly during the first quarter as OEMs shipped delayed orders from 2023. While we expect chassis OEM shipments to normalize in the second half of the year, we still anticipate high single-digit top-line growth in 2024 compared to our record year in 2023. Gross profit for the first quarter was $44.2 million, an increase of 45.5% compared to the prior year quarter. while gross margin of 12.6% in Group 108-based supplies. The year-over-year increase is largely due to improved margins across all of our product lines, coupled with higher revenue levels and improvements we have made to our supply chain over the last several years. This includes diversifying our supplier base and insourcing of certain manufactured processes. Our gross margin improvement this quarter was slightly offset by our product mix as the year progresses and our product mix normalizes, we anticipate some expansion of our gross margins in future boards. Lastly, before I turn the call over to Debbie, I want to touch on some of the capital allocation decisions we've made since our last earnings call. Last quarter, we said that given the company's strong financial performance in 2023, and now early 2024, the board felt that our shareholders should share in our success. To that end, we increased our dividend by 5.6% in April and took additional steps to improve shareholder returns. As our board approved a $25 million share repurchase plan to create more value for our shareholders, we believe this plan reflects the board's confidence in our strategy, our balance sheet, and the strength of our end markets. Now I'd like to turn the call over to Debbie, who will review the first quarter financial results in more detail. Following her remarks, I'll provide a market outlook and some closing comments on our priorities for the remainder of the year. Debbie?
spk04: Thanks, Will. Good morning, everyone. Net sales for the first quarter of 2024 were $349.9 million compared to $282.3 million in the first quarter of 2023, a 23.9% year-over-year increase. driven largely by continued strong demand for our products across all our geographies and a significant increase in chassis shipments, little mentioned earlier. Cost of operations increased 21.3% to $305.6 million for the first quarter of 2024, compared to $251.9 million for the first quarter of 2023. The increase in our cost of operations is largely a function of our higher revenues, As a percentage of net sales, cost of operations decreased approximately 180 basis points from the prior year period to 87.4%. Gross profit was $44.2 million for 12.6% of net sales for the first quarter of 2024 versus $30.4 million or 10.8% of net sales for the prior year period. The year-over-year improvement in gross margin was driven by our higher revenue and improved margin levels across all of our product lines. Sequentially, gross margins declined 40 basis points. Historically, our fourth quarter contained a higher margin than our first, as Will mentioned. Our product mix this quarter was a headwind to our consolidated gross margin. As our product mix normalizes through the balance of the year, we expect gross margin levels to be consistent with recent quarterly results. SG&A expenses were $21.5 million for the first quarter of 2024, compared to $17.9 million in the first quarter of 2023 due primarily to incentive, training, and retention programs for all of our employees, investor relation activity, and higher costs related to increased sales costs. As a percentage of sales, SG&A was 6.2%, 10 basis points lower than the prior year period. Moving forward, we continue to expect SG&A to remain consistent as a percentage of fit. Interest expense for the first quarter of 2024 was $1.2 million, up from $1 million for the first quarter of 2023, driven by an increase in customer floor plan financing costs, which fluctuate up and down with revenue and higher debt levels. Other income for the first quarter was $33,000, compared to other income of $318,000 for the first quarter of 2023, attributable to foreign currency exchange rates. Our effective tax rate for the quarter decreased slightly compared to the previous year, primarily due to adjustments related to foreign tax credit. Net income for the first quarter of 2024 was $17 million, or $1.47 per diluted share, compared to net income of $9.2 million, or 81 cents for diluted share in the first quarter of 2023. Starting to the balance sheet, cash and cash equivalents as of March 31st, 2024 was $26.8 million compared to $29.9 million as of December 31st, 2023 and $29.7 million as of March 31st, 2023. The accounts receivable as of March 31st, 2024 was $338.9 million compared to $286.1 million as of December 31, 2023, and $233.1 million as of March 31, 2023. Inventories were $184.3 million as of March 31, 2024, compared to $189.8 million as of December 31, 2023, and $164.4 million as of March 31st, 2023. We are encouraged by the reduction in our inventory levels and going forward, reducing our inventory while also supporting our operation is a top priority this year. Counts payable as of March 31st, 2024 was $229 million compared to $191.8 million as of December 31st, 2023 and $169.5 million as of March 31st, 2023. The outstanding balance on our $100 million revolving credit facility was 55 million in March 31st, 2024, $60 million at December 31st, 2023, and $45 million in March 31st, 2023. The current balance on our revolving credit facility is $65 million. Lastly, Board of Directors approved our quarterly cash dividend of 19 cents per share, payable June 10, 2024, to shareholders of record if it closes business on June 3, 2024, marking the 54th consecutive quarter that the company has paid the dividend. Now, I'll turn the call back to Will for some closing remarks.
spk05: Thank you, Debbie.
spk03: Looking ahead, our first quarter performance and our healthy backlog gives us confidence in meeting the targets we set last quarter for high single-digit top-line growth in 2024. While we do expect a more moderate top-line growth rate as product mix normalizes, we are off to an extremely strong start. As I said before, demand remains strong for all of our products across all of our geographies. And despite continued strong revenue growth, our substantial backlog remains consistently high quarter-to-quarter, demonstrating continued strong demand. The significant demand and the continued growth of our order book also means that we are closely monitoring our manufacturing capacity. As cash conversion improves throughout the year and we assess our future capital allocation plans, production capacity is certainly a key focus of ours, both domestically and internationally. As always, the entire management team and I would like to thank all of our employees, suppliers, for their continued support of Miller Industries.
spk05: At this time, we'd like to open the line for any questions.
spk00: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Mike Schilske with DA Davidson. Please proceed with your question.
spk01: Yes. Hi. Good morning. Thanks for taking my question. Absolutely. Yes. Yes. Hi, Will. Thank you. Could you let me comment on the supply of truck chassis for your various products? Can you update us on how things are
spk03: are doing in the class 8 vocational truck chassis supply as well as the smaller you know classes 335 chassis yeah for the uh first quarter uh chassis shipments were at record levels um so it seems that most of the oems are catching up on uh chassis delays for 2023 and at this point in time we have no issues across
spk05: with receiving chassis from all various OEMs.
spk01: Outstanding. And then given the very strong growth in the quarter from a revenue standpoint and even your strong backlog, do you have any issues with supply chain outside of truck chassis and other components that are part of your vehicles?
spk03: No. At this time, it seems that our efforts to broaden our supply chain base, insourcing efforts and everything that we've done post-COVID throughout 21, 22 are paying off generously. And, you know, minus, you know, minor shortages here and there and things that you deal with on a daily basis, the manufacturing process overall, the supply chain base, strong.
spk01: Great. And maybe one last one for me. You mentioned towards the end of your comments there, Will, about your current capacity to build your products. I was wondering if you've got any major projects happening within your facilities within the current square footage that you've got to kind of help things out either on a temporary basis or just for this year, and whether you're thinking more long-term, whether you need to add a little bit of
spk03: square footage adjacencies to kind of help free up some some capacity at your current plants yeah we are we are making adjustments in our carrier manufacturing processes shifting products between our facilities to increase carrier production levels for our distribution we are also working diligently on our efficiencies and throughput through our blue wall facility and our heavy-duty product lines. So we're certainly diligently working to maximize the square footage that we have today at all of our U.S. facilities. And we are, as I stated, monitoring closely the needs for any potential expansions or capital allocations in the future.
spk01: To follow up there, Will, just so I know how it works, are you able to build some of your heavy duty stuff outside of the Ottawa location? Can you do it in Pennsylvania or elsewhere, or does it have to be heavy duty in its own place and then the classes four through seven in a different location?
spk03: Certainly in our Pennsylvania facility. production based on its layout and size of equipment that it has there. We do have some flexibility in our Greenville facility to move products in and out, but at this time, with the strong demand for the carrier product, we plan to keep it dedicated on carrier production and work diligently
spk05: for the time being.
spk01: Okay. Outstanding. I'll leave it there. Thanks for the answers.
spk05: I appreciate it. Absolutely, Mike. Thank you so much.
spk00: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mr. Miller for closing comments.
spk05: Thank you.
spk03: I'd like to thank you all again for joining us on the call today, and we look forward to speaking with you on our second quarter conference call. If you'd like information on how to participate and ask questions on the call, please visit our investor relations website, millerind.com forward slash investors, or email investors.relations at millerind.com.
spk05: Thank you again.
spk00: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
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