Good day, ladies and gentlemen, and welcome to the Miller Industries Third 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, FTI Consulting. Please go ahead.

Thank you, and good morning, everyone. Before I begin, I want to take a moment to extend my sympathies to those impacted by the recent hurricanes in the Southeast and the extreme loss of life and property. First and foremost, our thoughts are with those still suffering and we hope for a speedy recovery for those affected. We are not immune to these extreme weather events and Hurricane Helen, in particular, had an impact on our operations. As a result, we had to pause production in our Greeneville, our smallest facility for two weeks. While the financial impact was thankfully marginal, impacting our revenues for the quarter by low single-digit millions. Our focus was ensuring that our employees were safe, secure and able to perform their jobs to the best of their ability. We are still assessing the hurricane impact on our production, but expect an effect on fourth quarter results to be equally minimal and expect that the marginal impact to revenue in the third quarter will be shifted into the fourth quarter as we catch up on invoicing. Turning to our quarterly results. I am pleased to share that even despite impacts from the hurricane, we've delivered another strong quarter of double-digit year-over-year revenue growth. In the third quarter of 2024, we generated revenues of $314.3 million, an increase of 14.5% year-over-year, driven by elevated OEM chassis deliveries. Shipments in the third quarter last year were abnormally low, but we were subsequently elevated to fill the gap in the first six months of 2024. Third quarter 2024 reflects a normalized level of chassis deliveries based on current demand. Gross profit for the third quarter was $42 million, a decrease of 2% compared to the prior year quarter while our gross margin of 13.4% decreased by 220 basis points year-over-year. The year-over-year decrease was primarily due to the shift in product mix compared to an extraordinary 2023 period. As I just mentioned, in the third quarter of 2023, gross margin saw a significant boost as chassis delivery slowed due to supply chain disruptions. Now that the chassis deliveries have normalized, we expect to continue operating at the current level. Our gross margins for the third quarter of 2024 are consistent with our expected annual margins. In our international business, which accounts for approximately 10% of our total sales, we are encouraged by continued demand and strong order intake. We believe there is still an opportunity to continue ramping international production and expanding activity in the military sector. We believe this can be a solid growth area for us moving forward. Lastly, before I turn the call over to Debbie, I want to touch on the production capacity expansion plans we mentioned earlier this year. We regularly analyze future production needs at all of our facilities around the globe and work diligently to invest our capital in the areas of the business that we believe will generate the greatest shareholder returns. While we can continue to grow with the current capacity that we have, we will continue to consider expanding capacity and investing in our business to meet future contractual agreements at the appropriate time. We also remain focused on our debt reduction strategy along with our regular distribution of capital to shareholders in the form of our quarterly dividend and investment in our share repurchase program. Now I'll turn the call over to Debbie, who will review the third quarter financial results in more detail. Following her remarks, I will provide some closing comments and an update on our outlook.

Thanks, Will, and good morning, everyone. Net sales for the third quarter of 2024 were $314.3 million versus $274.6 million for the third quarter of 2023, a 14.5% year-over-year increase driven largely by improved deliveries of finished products resulting from the normalization of the chassis market. Net sales for the first nine months of 2024 were $1 billion versus $857.1 million for the first nine months of 2023, a 20.8% increase year-over-year. Cost of operations increased 17.5% to $272.2 million for the third quarter of 2024 compared to $231.7 million for the third quarter of 2023. The increase in our cost of operations was due largely to our increased revenue levels. Cost of operations as a percentage of net sales increased approximately 220 basis points from the prior year period to 86.6%, which is largely attributable to the year-over-year product mix shift that Will mentioned earlier. Gross profit was $42 million, or 13.4% of net sales for the third quarter of 2024 compared to $42.9 million, or 15.6% of net sales for the prior year period. The year-over-year decrease was driven largely by the difficult year-over-year comparison regarding our product mix. As the chassis market normalizes after a few very tumultuous quarters, we expect that our gross margins will appear more in line with our projected level of mid-13s, subject to some slight quarter-to-quarter fluctuations based on product mix. SG&A expenses were $22.3 million in the third quarter of 2024 compared to $19.3 million in the third quarter of 2023. As a percentage of net sales, SG&A was 7.1%, 10 basis points higher than the prior year period. While this is above our long-term target of approximately 6.5%, SG&A as a percentage of sales for the first nine months of 2024 is 6.4%. We anticipate that we will end the year within our expected range. Interest expense for the third quarter of 2024 was $251,000, down 86.2% from $1.8 million for the third quarter of 2023. This reduction was driven by increased interest income related to our elevated accounts receivable balance. Other expense for the third quarter of 2024 was $321,000 compared to an expense of $294,000 for the third quarter of 2023, attributable largely to currency exchange rate fluctuations. Our effective tax rate for the quarter of 22% was slightly higher both year-over-year and sequentially. As a result, net income for the third quarter of 2024 was $15.4 million or $1.33 per diluted share compared to net income of $17.5 million or $1.52 per diluted share in the third quarter of 2023. Turning to the balance sheet. Cash and cash equivalents as of September 30, 2024, were $40.6 million compared to $23.8 million as of June 30, 2024, and $29.9 million as of December 31, 2023. Accounts receivable as of September 30, 2024, was $34 million compared to $391.8 million as of June 30, 2024, and $286.1 million as of December 31, 2023. We are incredibly encouraged by our cash generation in this quarter and the conversion of our receivables into cash. We said on our last earnings call that we expected a market increase in cash conversion in the second half of the year and believe that this dynamic will continue as our working capital returns to pre-pandemic levels as a percentage of revenue. Turning back to the balance sheet. Inventories were $190.3 million as of September 30, 2024, compared to $187.3 million as of June 30, 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 that we have essential parts readily available to turn work-in-process inventory into finished goods for delivery to our customers as quickly as possible. Accounts payable as of September 30, 2024, were $234.2 million, compared to $243.1 million as of June 30, 2024, and $191.8 million as of December 31, 2023. Related to our return of capital to shareholders, the Board of Directors approved our quarterly cash dividend of $0.19 per share payable December 9, 2024, to shareholders of record at the close of business on December 2, 2024, marking the 56th consecutive quarter that the company has paid a dividend. In addition, during the first three quarters of the year, the company has repurchased 45,000 shares representing $2.9 million of the $25 million repurchase program the Board of Directors authorized in April. As cash conversion continues to improve, we have more flexibility with regards to our capital allocation. However, as Will mentioned earlier, we remain focused on both returning capital to shareholders and paying down our debt in line with our long-standing business practice. Lastly, before I hand the call back to Will, I would just like to provide a brief reminder that our fourth quarter is a seasonably longer revenue quarter relative to the rest of the year due to holidays, annual inventory audits, and planned maintenance in our facilities.

Thank you, Debbie. The core demand drivers of our business remain solid, and distributor retail deliveries have remained steady compared to last year. However, we experienced a slow order entry during the quarter. While we are still conducting our analysis, early insights into our order intake and retail activity suggest this slowdown is not indicative of a fundamental decline in demand for our products. Instead, the timing of OEM chassis deliveries to our distributors, distributor throughput capacity, and furthermore, feedback from customers indicates they were holding off on orders due to political uncertainty, though their interest in our products remains strong. We anticipate that our backlog will return to historical levels over the next one to two quarters. Despite this, we believe our stabilized supply chain, purchasing effectiveness, and enhanced productivity position us to sustain positive momentum in our results as illustrated by our performance over the first nine months of this year. While we faced some challenges this quarter, we remain extremely confident in the business and our outlook. We are reaffirming our expectation of achieving low double-digit growth for the full year 2024, in line with our historical compounded annual growth rate, and we believe that we will achieve a strong year-over-year profitability increase as well. Notably, as we continue to convert our receivables into cash, we will continue to prioritize returning capital to our shareholders as we always have at Miller Industries. 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, I've maybe got a two-part question for you, Will, and based on your last comment there. One, it's only been a week or two since election day in the rearview mirror, have you gotten any indications that orders are beginning to flow again after that? And then maybe secondly, you mentioned there are some dealership limitations with their throughput. I hadn't appreciated that. I'm curious whether you have to help guide the dealers or give them any assistance in increasing their throughput or perhaps even find additional dealers or help them open new locations to kind of keep the ball rolling on growth here.

Thank you. Well, with regards to your first question about post-election sentiment in the industry, Vince Tiano, our Chief Revenue Officer, has been reaching out to distribution. General sentiment has increased significantly. We've seen multiple deals through different distributors that were holding, waiting for the election to take place that have actually completed. Although we haven't seen this in last week's order intake rate, which was only a few days after the election, we do believe that it will ultimately reinstill confidence in the consumer. With regards to throughput, obviously, distribution got more chassis earlier in the year. They're working through those, and we're providing them the appropriate inventory to finish those builds and deliver them to customers. I think from the distribution network as a whole, we're in a great position with the distribution network we have. Currently, I know of at least a handful of distributors that are reinvesting into their facilities and expanding their facilities as well as looking to outsource integration, chassis body integration to local body builders in their areas. So I think they're all diligently working on resolving their issues, and I believe in the next quarter or two, we'll see them catch up on their throughput capacity as well.

Great. I appreciate that. Maybe moving on to a discussion on margins. I guess first, I wanted to ask about the gross margin from here. You had mentioned kind of the low mid-13s is a reasonable range or you at least implied that. Talk a little about how that might play out next year if you've got a more normalized chassis environment, and I realize the comps were really on 2023 to 2024, changing. But now from 2024 to 2025, do you expect a comparable mix between the full chassis sales and the system-only sales? Or is there anything we should think about in next year's mix that would suggest that you would not be in the 13% range next year?

No. I think overall this year and last year have been somewhat inconsistent, as Debbie mentioned from quarter to quarter. For OEM chassis deliveries in 2024, we are expecting them to align with our forecasts, although the timing has not been what we anticipated from quarter to quarter. Looking ahead, I don't foresee any challenges maintaining margins at their current levels for the entirety of this year into the next year.

This is Debbie. We certainly are looking at cost control in any form or fashion that we can. But the new compliance and regulations around the world that we're dealing with are adding things as quickly as we're being able to control some of the other items. So hopefully, some of these compliance issues will not add as much SG&A as we are anticipating. So we hope to gain some leverage. However, the additional regulations that we're dealing with continue to add SG&A costs that are really out of our control.

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 fourth quarter conference call. If you would like information on how to participate and ask questions on the call, please visit our Investor Relations website millerind.com/investors or email [email protected]. Thank you.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.