Good day, ladies and gentlemen, and welcome to the Miller Industries Second Quarter 2024 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 Gaudreau 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 2024 second 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.

Thank you, and good morning, everyone. We are very pleased to report yet another strong quarter with record results. The year-over-year growth was predominantly due to consistent demand from customers, increased production volume and elevated OEM chassis deliveries in the quarter. As a result, we generated revenues of $371.5 million, increasing 23.7% year-over-year. Gross profit for the second quarter was $51.1 million, an increase of 27.9% compared to the prior year's quarter while our gross margin of 13.8% improved 50 basis points year-over-year and 120 basis points sequentially. Gross margins expanded due to benefits from productivity initiatives and manufacturing efficiencies. We continue to maintain production levels to decrease our backlog to historical levels, allowing us to meet future customer expectations. While we anticipate the chassis deliveries will normalize during the second half of the year, in our international business which accounts for approximately 10% of our total sales, we are encouraged by the strong levels of customer demand we continue to see. Our order intake remains robust while our backlog is stable. We continue to increase production internationally and anticipate additional upside if and when geopolitical tensions in Europe begin to subside. As we enter the second half of the year, we are focused on assisting distribution and delivering retail products to ensure that the revenue we generate translates into cash which will fund our continued growth and enhance the strength of our balance sheet. Lastly, before I turn the call over to Debbie, I want to touch on the production capacity expansion plans we mentioned last quarter. We continue to analyze future production needs at all of our facilities around the globe and work diligently to invest our capital to maximize shareholder returns through continued investment in the business, quarterly dividends and our share repurchase program. Now I'll turn the call over to Debbie who will review the second quarter financial results in more detail. Following her remarks, I will provide some closing comments and an update on our outlook. Debbie?

Thanks, Will and good morning, everyone. Net sales for the second quarter 2024 were $371.5 million versus $300.3 million for the second quarter of 2023, a 23.7% year-over-year increase driven by increases in both production and deliveries. Cost of operations increased 23.1% to $320.4 million for the second quarter of 2024 compared to $260.3 million for the second quarter 2023. The increase in our cost of operations is due largely to our higher revenue levels. Cost of operations as a percentage of net sales decreased approximately 50 basis points from the prior year period to 86.2%. Gross profit was $51.1 million or 13.8% of net sales for the second quarter of 2024 compared to $39.9 million or 13.3% of net sales for the prior year period. The year-over-year improvement was driven largely by volume increases across both production and deliveries. Sequentially, gross margin improved 120 basis points largely driven by the same volume increases and to a lesser extent sales mix. As a reminder, our gross margins are subject to some quarter-to-quarter fluctuations based on mix. However, in a quarter like this one where we saw increased OEM chassis deliveries, we were glad to see an increase in gross margin as a direct result of our cost control efforts. SG&A expenses were $22.8 million in the second quarter of 2024, compared to $19.5 million in the second quarter 2023. As a percentage of net sales, SG&A was 6.1%, 40 basis points lower than the prior year period. This figure falls within our consistently expected SG&A as a percentage of sales range of 6% to 6.5%. Interest expense for the second quarter of 2024 was $2 million, up from $1.7 million for the second quarter of 2023, primarily related to an increase in our debt levels to fund our working capital. Additionally, interest expense was impacted by our distributor floor plan financing costs, which shift up and down with revenue. Other income for the second quarter was $13,000, compared to an expense of $229,000 for the second quarter 2023, attributable largely to currency exchange rate fluctuations. Our effective tax rate for the quarter was 21.8% and slightly higher year-over-year primarily due to unfavorable adjustments to pre-tax income. Net income for the second quarter 2024 was $20.5 million, or $1.78 per diluted share compared to net income of $14.9 million, or $1.29 per diluted share in the second quarter of 2023. Turning to the balance sheet, cash and cash equivalents as of June 30, 2024, was $23.8 million, compared to $26.8 million as of March 31, 2024, and $29.9 million as of December 31, 2023. Accounts receivable as of June 30, 2024, was $391.8 million, compared to $338.9 million as of March 31, 2024 and $286.1 million as of December 31, 2023. As Will noted, a key focus of ours is ensuring that dealers pass along product to our end users and collecting our receivables to improve our cash conversion, which we anticipate to improve significantly in the second half of 2024. Inventories were $187.3 million as of June 30, 2024, compared to $184.3 million as of March 31, 2024, and $189.8 million as of December 31, 2023. Our inventory levels have remained relatively consistent and we will keep investing in our inventory as appropriate to ensure we have central parts readily available to turn work in process inventory and to finished goods, and finally to our customers as quickly as possible. Accounts payable as of June 30, 2024, was $243.1 million, compared to $229 million as of March 31, 2024, and $191.8 million as of December 31, 2023. As it relates to capital allocation, in addition to returning capital to our shareholders, we remain focused on investing in three core areas of the business: productivity improvements, capacity expansion and the health and safety of our employees. Will mentioned that the capacity expansion is where the bulk of our efforts will be focused in the near to mid-term. And while we are still in the early stages, we look forward to sharing further updates on our efforts as appropriate. During the quarter, we borrowed an additional $15 million against our revolver in order to continue to fund our growth. As you all know, we are a debt-averse company, but believe that the best use of cash is investing in the future and then the growth of our business. Lastly, as it relates to returns of capital to our shareholders, the Board of Directors approved our quarterly cash dividend of $0.19 per share payable September 16, 2024, and to shareholders of record at the close of business on September 9, 2024, marking the 55th consecutive quarter that the company has paid a dividend. We also bought back 35,000 shares, representing $2 million of the outstanding $25 million share repurchase program our board authorized in April of this year. Now, I'll turn the call back over to Will for some closing remarks.

Thank you, Debbie. Another record first half of the year has clearly demonstrated the continued success of our operations and markets. As we ended fiscal year 2023 with record revenue, we anticipated high single-digit growth for 2024. Given the performance to date, we are now adjusting our initial revenue guidance of high single-digit growth for the year. We expect to achieve low double-digit growth for the full year of 2024, in line with our historical compounded annual growth rate. As a reminder to all investors, our fourth quarter is historically a lower revenue quarter due to holidays, annual inventory audits and planned maintenance at our facilities. Our backlog and current trends provide us with visibility into a solid second half of 2024. As always, 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. At this time, we'd like to open the line for any questions.

First question comes from Mike Shlisky with D.A. Davidson. Please go ahead.

Good morning, and thank you for taking my question. I wanted to inquire about the raised revenue outlook for the year. Could you share your thoughts on margins for the remainder of the year? While I understand you may not provide specific guidance, considering the increased cash supply for pricing and potential improvements in the supply chain, do you believe there will be a greater year-over-year expansion in margin in the second half compared to what we've seen in the previous quarters?

Yes. I think I heard you a little broken up. But no, we believe that as we continue through the remainder of the year that margins will maintain and we expect that our margins for the year 2024 will be in the mid-upper 13 range.

Great. Outstanding. And then as far as maybe some longer term outlook here. There's been some emissions changes that are taking place in 2027 on the larger end of the engine spectrum. We're starting to hear about people who use larger trucks with their vehicles in the Class A for example and some of our heavier carriers try to buy ahead in advance of price increases from the OEMs in 2027. I was kind of wondering if you started to hear some chatter about people buying early in '25 or '26 in advance of that or if both are going to buy before that?

At this point in time, there is quite a bit of chatter in the trucking OEM truck market as far as pre-buy things of that nature. I don't believe that our customer base has really started discussing it at a significant volume as far as truck rebuys. But I think as we get closer to the emission change, that outlook could potentially change from our customer base and we're watching the OEM market, the chassis market very closely as we move closer and closer to that date.

Thank you.

I would like to turn the floor over to William Miller for closing remarks.

Thank you. 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 third quarter conference call. If you'd like information on how to participate and ask questions on the call, please visit our updated Investor Relations website millerind.com/investors or e-mail [email protected]. Thank you so much. Have a great day.

This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.