Miller Industries, Inc. 2026 Q2 Earnings Call

Good morning, everyone, and thank you for joining us for our second quarter 2026 earnings call. I want to start by recognizing the hard work of our employees around the world. Our second quarter results and our continued progress in strengthening our business reflects the dedication and passion of our team, our suppliers, our customers, and our shareholders. As always, our remarks today will include forward-looking statements. Actual results may differ materially. Please refer to our SEC filings and the safe harbor statement included in today's presentation. Before I hand the call over to Debbie to discuss our results in greater detail, I would like to start with a brief overview of the quarter. We delivered strong sequential and year-over-year revenue growth in the second quarter while navigating an inconsistent macroeconomic environment. We also achieved continued improvement in profitability, reflecting the production efficiencies our operations team has implemented.

These production efficiencies have also enhanced our already strong cash generation, enabling us to further improve our balance sheet and reduce our debt balance. This provides us with greater financial flexibility to invest in our business, focusing on the areas where we see the greatest opportunities to create long-term value. Together, we believe these actions position us well for a strong second half of the year. Our core philosophy remains exactly as it has been since the start of the company. Miller Industries has the best people, the best products, and the best distribution network in the towing and recovery industry. That philosophy is the backbone of Miller Industries' 35-plus year history and will continue to be our philosophy moving forward.

Our 1,500-plus employees across Tennessee, Pennsylvania, France, the United Kingdom, and Italy, combined with our widespread distribution footprint, give us unmatched reach, capability, and reliability that continues to position the company for sustained, profitable growth. I want to express my gratitude for all of our team members across the U.S., Europe, and the U.K. for their continued dedication to the company. Their commitment allows us to execute with discipline today while continuing to build the foundation for longer-term growth and value creation. I'll now turn the call over to Debbie, who will provide an update on our financial results in more detail before returning with some more specific thoughts on our markets, capital allocation priorities, and guidance.

Thank you, Will. For the second quarter, revenue was $240 million, up 12.1% year-over-year and 32.7% sequentially. This growth was driven by steady production rates to meet retail activity and order intake levels. Gross profit was $35.9 million, or 15% of sales, and net income was $7.3 million. Our improved profitability was driven by operational efficiency and disciplined labor cost management, which was made possible by the outstanding execution of our operations teams across the globe. Gross profit was impacted by product mix as it returns to a more normalized balance of chassis and body after periods of significantly elevated inventory in our distribution channels. Additionally, diluted EPS was $0.63 per share, up from $0.05 in the first quarter.

As expected, EPS during the quarter continued to reflect transaction-related expenses from the Omars' acquisition, which impacted EPS by $0.11 in the quarter. We have now recognized the majority of expenses related to the transaction, and we believe that any further impact will be far less material to our financial results. Our integration of Omars continues to progress smoothly, and we remain confident that the acquisition will be accretive in the first year after recognizing these expenses. I'd like to now shift to a discussion of our balance sheet. At the end of the second quarter, we had a cash balance of $65.6 million, up $2.6 million from last quarter. We also reduced our debt by an additional $20 million since the end of Q1.

This combination of strong cash generation and a robust balance sheet provides us with greater financial flexibility to invest in our business, pursue strategic opportunities, and allocate capital to maximize value for the company and our investors. During the quarter, we were pleased to return $4.9 million directly to our shareholders in the form of share repurchases and dividends. I'll turn the call back to Will to discuss our markets and our outlook.

Thank you, Debbie. In the domestic market, despite the ongoing geopolitical tensions and elevated fuel prices, we are pleased to see stable retail demand, order entry, and distributor inventory levels which remain at historical averages. We currently anticipate that retail activity and production volumes will remain steady and in line with current levels as the product mix returns to an optimal ratio between bodies and chassis. We remain confident in the strength of our business and our ability to execute against our long-term strategy. In our international and export business, backlog levels remain consistent, and our international facilities are operating at a steady production pace to meet sustained customer demand. The acquisition of Omars and our €8 million expansion in Gigean, France, which remains on track to be completed mid-2027, will both be significant drivers of the success of our global initiatives.

Meanwhile, we continue to communicate with various domestic and international government agencies, building our confidence that our success and our military business will continue to grow in the second half of the year. We are pleased to report that our military commitments have now surpassed $200 million, and production is scheduled to begin in 2027. We anticipate that the majority of revenue will be recognized in 2028 and 2029. We expect our diligent work with militaries around the globe and our industry-leading defense grade recovery vehicles will be an important driver for our financial results in years ahead. As it relates to our manufacturing capacity expansion in Ooltewah, we are still aiming to be production ready by late 2027. We are beginning to wrap up site preparation this month and are on schedule to begin construction of the new facility by Q4 of 2026.

The new 200,000-plus sq ft manufacturing facility will be instrumental to producing global high volume defense grade recovery vehicles and meeting increased demand for our global export markets while maintaining the ability to service our North American customer base. The project will also incorporate the latest manufacturing technology, helping streamline heavy-duty workflows and enhance our manufacturing efficiency. We believe our strong cash flow generation positions us well to fund most of the expansion organically over the next several years. Our strengthened balance sheet now provides us with even more flexibility to allocate capital to our five key priorities. Industry leading quarterly dividend currently at $0.21 per share. $2.5 million of share repurchases in the second quarter and approximately $11.5 million remaining under the current share repurchase authorization. Strategic optimization of working capital. Selective M&A opportunities, ongoing investment in capacity expansion, automation, and innovation.

We're extremely proud that we've paid our dividend for 63 consecutive quarters. As Debbie mentioned in the second quarter, we continue to prioritize distributing capital by returning approximately $4.9 million to shareholders between our share repurchase program and dividends. This balanced approach allows us to continue investing in the company while also returning value directly to shareholders. We believe our cash generation capabilities will allow us to execute on each one of these priorities without expanding our credit facility. Given our steady levels of production, we anticipate to attain similar quarterly results of approximately $250 million in revenue for the remainder of the year. We remain confident that we are on track to achieve our previously stated guidance, generating between $850 million-$900 million in revenue for the full year 2026.

We anticipate that our earnings per share will be in line with full year 2025 results, and gross margins to return to historical levels in the mid 13% range for the full year 2026. We look forward to meeting with investors to speak about exciting developments in Miller Industries in the coming months at the D.A. Davidson Small Cap Conference on August 11th, Midwest IDEAS Conference on August 26th, the D.A. Davidson Diversified Industrials and Services Conference on September 23rd, Southwest IDEAS Conference on November 18th, additional non-deal roadshows to be scheduled. We always welcome continued dialogue with our shareholders. In closing, the entire management team and I would like to thank all of our employees, suppliers, customers, and shareholders for their continued support of Miller Industries. We are well-positioned to execute on our priorities in the near term while continuing to drive long-term global growth.

Thank you again for joining us. Operator, please open the line for questions.