Miller Industries, Inc. (MLR) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates a significant decline in net sales and net income, despite some margin improvement and debt reduction. The Q&A section reveals management's vague responses on cost reduction and sales strategies, and uncertainty about military contracts. While the share repurchase plan and cash balance improvement are positive, they are outweighed by weak financial performance and lack of clear guidance. The absence of a strong catalyst or new partnership announcement further supports a negative sentiment.
Key Financial Performance
Net Sales $214 million for Q2 2025, a 42.4% year-over-year decrease from $371.5 million in Q2 2024, driven largely by a drop in chassis volumes after elevated volumes in the prior year period.
Gross Profit $34.6 million or 16.2% of net sales for Q2 2025, compared to $51.1 million or 13.8% of net sales in Q2 2024. The margin improvement was driven mainly by product mix with a higher percentage of body deliveries compared to chassis volumes.
SG&A Expenses $23.4 million in Q2 2025 compared to $22.8 million in Q2 2024. As a percentage of net sales, SG&A was 10.9%, 480 basis points higher than the prior year period, driven primarily by higher stock-based compensation expense and employee compensation.
Interest Expense $294,000 in Q2 2025 compared to $2 million in Q2 2024, a decline of around 85.6%, driven primarily by lower customer floor plan expense and a reduction in debt levels.
Other Expenses $479,000 in Q2 2025 compared to other income of $13,000 in Q2 2024, attributable largely to currency exchange rate fluctuations.
Net Income $8.5 million or $0.73 per diluted share in Q2 2025 compared to $20.5 million or $1.78 per diluted share in Q2 2024, reflecting the combined impact of lower sales and other financial factors.
Cash Balance $31.8 million at the end of Q2 2025, up $4.4 million sequentially and $7.5 million from the end of last year, driven by faster conversion of receivables into cash.
Debt Balance Reduced by $20 million to $55 million during Q2 2025, with an additional $5 million paid down subsequently, bringing the current balance to $50 million.
Accounts Receivable $270.4 million as of June 30, 2025, compared to $292.6 million at the end of last quarter and $313.4 million at the end of last year, reflecting continued conversion of receivables to cash.
Inventories $165.5 million as of the end of Q2 2025, compared to $164.9 million in Q1 2025 and $186.2 million as of December 31, 2024, indicating normalization of inventory levels.
Accounts Payable $98 million as of June 30, 2025, compared to $113.5 million as of March 31, 2025, and $145.9 million as of December 31, 2024, reflecting reduced obligations.
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Operating Highlights
Market demand challenges: Retail sales activity decreased by 20% quarter-over-quarter, with a 30% drop in order intake from distributors due to lower consumer confidence, elevated cost of ownership, and tariff-related price increases.
California market limitations: Sales into California remain limited due to CARB regulations, with no immediate resolution expected.
Cost reduction initiatives: Targeted cost reduction measures are being implemented to align operational structure with current demand levels and preserve margins.
Inventory management: Production levels are being adjusted to reduce elevated field inventory, with normalization expected over the next few quarters.
Debt reduction: Debt was reduced by $20 million during Q2, with an additional $5 million paid down subsequently, bringing the current balance to $50 million.
Capital allocation priorities: Focus on operational efficiency, innovation, automation, and human capital investment. Plans for capacity expansion are being evaluated, particularly for military RFQ activity.
Dividend and share repurchase: Commitment to returning capital to shareholders through dividends and share repurchases, with the dividend paid for the 59th consecutive quarter.
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Risk or Challenges
Industry-wide demand headwinds: Retail sales activity decreased by 20% quarter-over-quarter, leading to a 30% drop in order intake from distributors. This is attributed to lower consumer confidence, elevated cost of ownership (interest rates, insurance costs, and tariff-related price increases), and elevated field inventory in the distribution channel.
Tariff-related risks: Tariffs have increased costs, leading to the implementation of surcharges and price increases on parts and accessories. The evolving tariff landscape poses ongoing risks to cost structures and profitability.
California Air Resource Board (CARB) regulations: Sales into California remain limited due to CARB regulations, impacting revenue potential in the state. Advocacy efforts are ongoing, but no resolution has been achieved.
Elevated inventory levels: Field inventory in the distribution channel remains above optimal levels, delaying normalization and impacting production planning and cash flow.
Economic uncertainties: Factors such as fluctuating interest rates, insurance costs, and consumer confidence are creating uncertainties in demand and delaying purchases of new equipment.
Operational cost structure: SG&A expenses increased as a percentage of net sales, driven by higher stock-based compensation and employee costs. The company is reviewing its cost structure to align with current demand levels.
Currency exchange rate fluctuations: Other expenses increased due to currency exchange rate fluctuations, adding to financial volatility.
Revised revenue guidance and potential extraordinary expenses: Revenue guidance for 2025 has been revised downward to $750 million-$800 million, with earnings per share guidance suspended. Operational initiatives may result in extraordinary expenses and potential losses in the second half of the year.
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Guidance & Outlook
Revenue Guidance: The company has revised its revenue guidance for fiscal year 2025 to a range of $750 million to $800 million, down from previous expectations.
Earnings Per Share Guidance: Guidance on earnings per share has been suspended due to heightened uncertainty and potential extraordinary expenses in the second half of the year.
Market Recovery Expectations: The company anticipates a recovery in the commercial towing market in the near term but acknowledges continued pressure on retail customers delaying equipment purchases.
Inventory Normalization: Field inventory is expected to normalize over the next few quarters as production levels are adjusted to accelerate inventory reduction.
Cost Reduction Initiatives: Targeted cost reduction initiatives are being implemented in the second half of 2025 to align operational structure with current demand levels, preserve margins, and create operating leverage.
Tariff Mitigation: Efforts to mitigate tariff impacts include tariff surcharges on new orders and price increases on parts and accessories. The company will continue to monitor and adjust as needed.
California Air Resource Board (CARB) Regulations: Sales into California remain limited due to CARB regulations, with no immediate resolution expected.
Long-Term Growth Drivers: Fundamental drivers such as miles driven, average vehicle age, and accidents per mile are steadily climbing, supporting long-term business performance.
Capital Allocation: The company will prioritize operational efficiency, capital allocation, and long-term shareholder value, including maintaining its dividend and share repurchase program.
Military Contracts: Potential upside from pending military contracts is expected to contribute to revenue and earnings growth in 2026 and beyond.
Capacity Expansion: Initial plans for capacity expansion are being evaluated, particularly in response to steady military RFQ activity.
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Shareholder Return Plan
Dividend Program: The company has committed to paying its industry-leading dividend for the 59th consecutive quarter, emphasizing its priority on returning capital to shareholders.
Share Repurchase Program: The company plans to continue repurchasing shares, expressing strong confidence in its market position and long-term growth potential. Management believes this action reflects their belief in the long-term value of the company.
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Key Q&A
Q:What actions are being taken to reduce the cost structure?
A:The company is analyzing all aspects of the business, including SG&A expenses, temporary and long-term expenses, current projects (e.g., IT), marketing, and sales. They aim to ensure short-term decisions do not affect long-term success and may postpone some expenses to future quarters.
Q:What is being done on the sales side to encourage customers to make purchases?
A:The company has worked with chassis partners to create incentives and programs for the distribution channel to move products, focusing more on Class 5 model chassis than Class 6 and Class 8 products.
Q:Will an interest rate cut unlock orders, and is it included in the guidance?
A:An interest rate cut would be a potential upside and is not included in the current guidance. The company is basing predictions on no change in the environment. A rate cut, along with accelerated depreciation and year-end capital spending, could increase order intake and production levels.
Q:How much is left on the stock buyback plan, and what is the Board's stance on it?
A:There is $20 million left on the $25 million buyback plan. The Board evaluates it quarterly and believes investing back in the company at the current price is advantageous for shareholders. They will aggressively consider it in the coming quarters.
Q:What is the update on military work and RFQs/RFPs?
A:The company has been successful with small projects on a quarterly basis. A contract with the Canadian military was signed, and they are actively pursuing multiple larger RFQs, though none have been awarded yet. Activity levels are higher than pre-COVID levels in 2018 and 2019.
Q:What are the expectations for the mix between chassis invoices and chassis plus body invoices in the back half of the year, and the gross margin impact?
A:The chassis mix is expected to normalize over the next two quarters and into next year, returning to historical levels. Margins are anticipated to settle back in the mid-13% range, though the exact timing is uncertain.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timing of when margins will normalize and when larger military RFQs will be awarded. Additionally, responses on cost reduction actions and sales strategies were somewhat general, lacking detailed plans or numerical specifics.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Co Research
Davidson Co
Debbie result
Director Shlisky
Division ET
ET day
Executive VP
Executive Vice
Gaudreau Investor
Inventories end
Miller Industries
Miller President
President CEO
Relations Deborah
Research Division
SGA structure
Shlisky DA
Treasurer Miller
VP CFO
Vice President
Whitmire Executive
account cash
cash balance
challenge
channel
chassis volume
compensation
decrease
end cash
market environment
reduction
sic
step
tariff
MLR Transcript
Miller Industries, Inc. (MLR) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call reveals negative financial performance with a significant drop in net sales and net income. The suspension of EPS guidance and lowered revenue guidance indicate uncertainty. While there are some positives like margin improvement and debt reduction, the overall sentiment is negative due to decreased sales, potential operational inefficiencies due to holidays, and the impact of one-time retirement costs. The Q&A confirms ongoing demand but highlights short-term margin pressures. The market is likely to react negatively over the next two weeks.
Miller Industries, Inc. (MLR) Q2 2025 Earnings Call Transcript
Unknown8-8
The earnings call summary indicates a significant decline in net sales and net income, despite some margin improvement and debt reduction. The Q&A section reveals management's vague responses on cost reduction and sales strategies, and uncertainty about military contracts. While the share repurchase plan and cash balance improvement are positive, they are outweighed by weak financial performance and lack of clear guidance. The absence of a strong catalyst or new partnership announcement further supports a negative sentiment.
Miller Industries, Inc. (NYSE:MLR) Q4 2024 Earnings Call Transcript
Unknown3-7
The earnings call presents mixed signals: strong full-year financial performance contrasts with Q4's revenue decline due to chassis shipment issues. While management shows confidence in long-term growth, near-term challenges like rising costs and regulatory changes pose risks. The dividend and share repurchase program support shareholder returns, yet vague guidance on military contracts and a neutral Q&A sentiment suggest limited immediate upside. With no market cap data, assuming a mid-sized company, the stock price is likely to remain stable over the next two weeks, leading to a neutral sentiment.
Miller Industries, Inc. (MLR) Q4 2024 Earnings Call Transcript
Unknown3-6
The earnings call presented mixed signals: strong full-year financial metrics contrasted with weak Q4 results due to supply chain issues. Management's cautious guidance and lack of clarity on military contracts add uncertainty. Shareholder returns via dividends and repurchase programs are positive, but regulatory impacts and rising costs pose risks. The Q&A highlighted ongoing challenges with chassis shipments and inventory management. Overall, the sentiment is neutral as positive long-term strategies are balanced by short-term operational concerns.
MLR Report
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Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
