10-K: Miller Industries Reports Strong 2024 Results Amid Supply Chain Recovery

Miller Industries, the world's largest towing and recovery equipment manufacturer, announced a 9% increase in net sales for fiscal year 2024, driven by improved supply chain conditions and robust customer demand.

Summary

• Miller Industries reported a 9.0% increase in consolidated net sales for fiscal year 2024, reaching $1.26 billion compared to $1.15 billion in fiscal year 2023.
• The increase in net sales was attributed to higher production volume due to stabilization of the supply chain, continued strong customer demand, and a 3% annual price increase implemented throughout the first half of the year.
• Net foreign sales also increased by 9.9%, totaling $125.7 million in fiscal year 2024 compared to $114.4 million in fiscal year 2023.
• Cost of operations increased by 8.5% to $1.09 billion, primarily due to increased deliveries resulting from increased stabilization in the supply chain.
• Gross profit increased by 12.5% to $170.8 million, with gross profit as a percentage of sales increasing to 13.6% from 13.2% in the previous year due to continuous investment in robotics and automation.
• Selling, general, and administrative expenses increased by 18.1% to $86.3 million, primarily due to additional executive compensation expense and increased investment in the workforce.
• Interest expense decreased by 34.2% to $3.9 million, with interest expense totaling $9.8 million offset by interest income of $5.9 million.
• The provision for income taxes reflects a combined federal, state, and foreign tax rate of 20.8%, resulting in a tax provision of $16.6 million.
• Net income increased by 8.9% to $63.494 million compared to $58.291 million for the prior year.
• As of December 31, 2024, the company had $65.0 million in borrowings outstanding under its credit facility, which increased to $70.0 million as of February 28, 2025.
• The Board of Directors authorized an 8 million expansion of the Company's facilities in France on March 3, 2025.
• The Board of Directors declared a quarterly cash dividend of $0.20 per share on March 3, 2025, payable March 24, 2025, to shareholders of record as of March 17, 2025.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong financial results and strategic initiatives, but also acknowledges ongoing challenges and risks, resulting in a moderately positive sentiment.

Positives

• Stabilization of the supply chain led to increased production volume and higher net sales.
• Investments in robotics and automation improved gross profit margin.
• The company has a strong backlog of orders.
• The company is launching multiple new products throughout fiscal year 2025.
• Employee turnover rates have trended down throughout fiscal 2023 and 2024.

Negatives

• Selling, general, and administrative expenses increased due to additional executive compensation and workforce investments.
• The timing of chassis deliveries was weighted heavily in the first half of 2024, resulting in a slowdown of demand in distribution channels during the second half of the year.
• The company continues to experience some ongoing supply chain challenges.

Risks

• Dependence on outside suppliers for component parts, chassis, and raw materials subjects the company to price and availability changes.
• Macroeconomic trends, availability of financing, and changing interest rates could adversely affect the business.
• International political, economic, and other uncertainties, including military conflicts, could materially adversely affect business results.
• Increases in the cost of skilled labor could adversely impact the business and profitability.
• The business is subject to the cyclical nature of the industry and changes in consumer confidence and economic conditions.
• Sales to U.S. and other governmental entities through prime contractors are subject to special risks.
• Overall demand from customers may be affected by increases in their fuel and insurance costs and changes in weather conditions.
• Competitors could impede the ability to attract or retain customers.
• The catastrophic loss of one of the manufacturing facilities could harm the business.
• Environmental and health and safety liabilities and requirements could require the company to incur material costs.
• Failure to comply with domestic and foreign anti-corruption laws could have an adverse effect on the business.
• The effects of regulations relating to conflict minerals may adversely affect the business.
• A product warranty or product liability claim in excess of insurance coverage, or an inability to acquire or maintain insurance at commercially reasonable rates, could have a material adverse effect upon the business.
• The stock price may fluctuate greatly as a result of the general volatility of the stock market, or from involvement with activist shareholders.
• The charter and bylaws contain anti-takeover provisions that may make it more difficult or expensive to acquire the company in the future or may negatively affect the stock price.
• The credit facility could restrict the ability to operate the business and failure to comply with its terms could adversely affect the business; obligations to repurchase products from third-party lenders could adversely impact future revenues and financial condition.
• A disruption in, or breach in security of, the information technology (IT) systems or any violation of data protection laws could adversely impact the business and operations.
• Any loss of the services of key executives could have a material adverse impact on operations.

Future Outlook

Based on the strong backlog, price increases, productivity improvements, lessening supply chain disruptions, and easing inflationary pressures, the company believes it is well-positioned to continue enhancing its operating results; however, performance will be heavily influenced by supply chain constraints, inflationary pressures, trade policies, geopolitical factors, and the threat of recession.

Management Comments

• In 2025, the Company plans to launch multiple new products as part of its continued focus on innovation and product development.
• Given these challenges, we are maintaining focus on meeting the needs of our customers.
• Ongoing communication and prioritization continue with our suppliers in an effort to identify and mitigate such risks, and to proactively manage inventory levels of materials and component parts to align with anticipated demand for our products.

Industry Context

The towing and recovery equipment manufacturing industry is highly competitive, with competition based primarily on product quality and innovation, reputation, technology, customer service, product availability, and price. The company's strategy is to compete primarily on the basis of quality and reputation rather than solely on the basis of price, and to continue to target the growing group of professional towing operators who recognize the quality of the products.

Comparison to Industry Standards

• Peer Group 1 index consists of Albany International Corp. (AIN), Blue Bird Corp. (BLBD), Columbus McKinnon Corp. (CMCO), Commercial Vehicle Group, Inc. (CVGI), Enerpac Tool Group Corp. (EPAC), ESCO Technologies Inc. (ESE), L.B. Foster Co. (FSTR), Gorman-Rupp Co. (GRC), Helios Technologies Inc. (HLIO), Kadant Inc. (KAI), Lindsay Corp. (LNN), Luxfer Holdings PLC (LXFR), NN, Inc. (NNBR), Douglas Dynamics Inc. (PLOW), Proto Labs Inc. (PRLB), Shyft Group Inc. (SHYF), and Standex International Corp (SXI).
• Peer Group 2 index consists of Astec Industries, Inc. (ASTE), Blue Bird Corp. (BLBD), Commercial Vehicle Group, Inc. (CVGI), Enerpac Tool Group Corp. (EPAC), L.B. Foster Co. (FSTR), Motorcar Parts of America, Inc. (MPAA), NN, Inc. (NNBR), Park-Ohio Holdings Corp (PKOH), Stoneridge, Inc. (SRI), Douglas Dynamics Inc. (PLOW), and Shyft Group Inc. (SHYF).

Corporate Governance

Legal Proceedings

• The Company is subject to a variety of claims and lawsuits that arise from time to time in the ordinary course of business.

Related Party Transactions

• The Company's subsidiary in the United Kingdom leased facilities used for manufacturing and office space from a related party with related lease costs during the year ended December 31, 2024 of $0.1 million, and $0.2 million for each of the years ended 2023 and 2022.
• The Company's French subsidiary leased a fleet of vehicles from a related party with related lease costs of $0.1 million, $0.2 million, and $0.1 million for the year ended December 31, 2024, 2023, and 2022, respectively.

Stakeholder Impact

• The company's performance impacts shareholders through stock value and dividend payments.
• Employees are affected by wages, benefits, and training programs.
• Customers benefit from product quality and innovation.
• Suppliers are impacted by the company's purchasing decisions.
• Creditors are affected by the company's financial stability and ability to meet obligations.

Next Steps

• The Company plans to launch multiple new products as part of its continued focus on innovation and product development.
• The company will continue to implement additional functionality available in the enterprise software solution.
• The company will continue to monitor labor costs and attempt to mitigate the risk associated with employee turnover through increased recruiting, training and retention efforts.

Key Dates