Miller (MLR) Q1 2026 Earnings Call Transcript

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DATE

Thursday, May 7, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — William Miller
• Executive Vice President, Chief Financial Officer, and Treasurer — Deborah Whitmire

TAKEAWAYS

• Revenue -- $180.9 million, a decrease of 19.8% year over year, driven by earlier reductions in production levels that began in the second half of 2025.
• Sequential Revenue Growth -- Revenue increased by 5.7% quarter over quarter, reflecting higher production to meet rising order intake and retail activity early in the period.
• Gross Profit -- $25.7 million, representing 14.2% of sales for the quarter.
• Diluted Earnings Per Share -- $0.05, which includes an approximate $0.13 per diluted share reduction from noncash acquisition expenses related to Omars.
• Omars Integration -- The first full quarter of Omars' results contributed to higher SG&A expense and drove a portion of reported noncash charges.
• Noncash Acquisition-Related Charges -- Approximately $0.13 per share in the quarter; management expects this to equal about half the total onetime charges to be recognized through the rest of 2026.
• Cash Balance -- $53 million at quarter’s end, an $8.3 million increase from year-end, attributed to accelerated collections on receivables.
• Debt Reduction -- The outstanding credit facility was reduced by $10 million, resulting in a total debt balance of approximately $21 million.
• Dividend and Share Repurchases -- Returned $4.6 million to shareholders via $0.21 per share in dividends and $2.2 million in repurchases, with about $14 million remaining buyback authorization.
• Price Increase -- A 3% price increase on all manufactured products will take effect for invoicing on or after August 1, 2026, applied regardless of order date, to mitigate recent cost increases exceeding the current tariff surcharge.
• International Operations -- Overseas facilities maintained steady production rates with elevated backlog and stable customer demand, supported by a robust military RFQ pipeline.
• Capital Investments -- EUR 8 million expansion at Jige in France is on schedule for completion by mid-2027; site work for a 200,000-plus square foot facility in Ooltewah, Tennessee will begin construction by late summer 2026.
• Military Commitments -- Commenced 2026 with over $150 million in military business commitments, with most production beginning in 2027 and associated revenues recognized in 2028 and 2029.
• Full-Year 2026 Guidance -- Revenue expected between $850 million and $900 million; earnings per share anticipated to be generally in line with full-year 2025; revenue and production volumes forecast to be weighted toward the second half owing to order timing.
• Gross Margin Outlook -- Management expects gross margins will revert to historical levels in the mid-13% range for the full year, driven by product mix normalization.

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RISKS

• Management cited, "escalating geopolitical tensions in the Middle East introduced additional uncertainty and led to higher diesel prices, creating pressure on retail demand."
• Manufacturing costs in the United States have "continued to increase," outpacing the coverage provided by the company's existing tariff surcharge.
• Higher consolidated taxes and nondeductible executive compensation adversely impacted first quarter earnings per share.
• Due to higher diesel prices and heightened uncertainty from geopolitical tensions in the Middle East, production volumes and revenue are expected to be increasingly weighted towards the second half of 2026.

SUMMARY

Management stated that the Omars acquisition was smoothly integrated and is expected to be accretive after onetime expenses are recognized. The company's cash position increased primarily due to faster accounts receivable conversion, improving financial flexibility for capital deployment. Facility expansion projects in both France and Tennessee are on schedule, supporting scaling for projected global and military demand. Management confirmed that a pipeline of military recovery vehicle RFQs remains robust and that recent rises in chassis sales indicate underlying replacement demand. Booked military commitments exceed $150 million, with most revenue realization forecast beyond 2027.

• Company leadership highlighted that capacity for further SG&A efficiency exists, noting that Deborah Whitmire's "full stack" staffing and pan-European company synergies could yield future cost reductions.
• Recent late-quarter increases in fuel prices led to a near-term production pause in North America. Monitoring systems are in place to allow rapid resumption as conditions stabilize.
• Management described customer fleet ages as having "aged out slightly more," which could be a positive demand indicator as fleets approach replacement cycles.
• The company affirmed its commitment to funding growth and capital projects primarily from cash from operations, without new financing needs.

INDUSTRY GLOSSARY

• RFQ (Request for Quotation): A formal process through which potential buyers, including militaries, invite suppliers to submit pricing and terms for specialized equipment such as heavy-duty recovery vehicles.

Full Conference Call Transcript

William Miller: Thank you. Good morning, everyone, and thank you for joining us for our first quarter 2026 earnings call. I want to begin by thanking our employees around the world for their dedication and support. Our first quarter results and strategic progress reflect the commitment 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. I would like to start with a brief overview before I hand the call over to Debbie, who will review our results in greater detail. We entered the year with strong momentum.

The actions we took in 2025 to reduce field inventory, improve the health of our distribution channel, and strengthen our supply chain positioned us to capture rising demand across the business. As that demand materialized, we strategically increased production to deliver solid sequential revenue growth. Late in the quarter, escalating geopolitical tensions in the Middle East introduced additional uncertainty and led to higher diesel prices, creating pressure on retail demand. In response, our team remained disciplined and focused, proactively pausing our North American production increase at current levels to maintain balanced distributor inventory. We believe this was the right decision to best position the business for future success.

Despite the reduction in retail activity that we saw throughout 2025 and the recent effects of the conflict in the Middle East, we remain confident in the strength of our business and the structural demand opportunities ahead. Our core philosophy remains exactly as it has been since day-1. 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-year history and will continue to be our philosophy moving forward. Our 1,500-plus employees across Tennessee, Pennsylvania, France, the U.K. and Italy, and our distribution footprint gives us unmatched reach, capability and reliability that continues to position the company for future growth.

I want to recognize all of our teams across the U.S., Europe and the U.K. for their dedication to support the company throughout difficult periods. Their commitment allows us to stay agile in the near term while building 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 in 2026, capital allocation priorities and guidance.

Deborah Whitmire: Thank you, Will. Before I begin, I would like to note that this was our first full quarter of contribution from the Omars acquisition. We are encouraged by the smooth integration thus far and expect Omars to be an increasingly meaningful contributor to our results going forward. For the first quarter, revenue was $180.9 million, down 19.8% year-over-year and in line with our expectations for the quarter. This decline reflects the institution of lower production levels in the second half of 2025. Earlier this year, we started to accelerate production to meet increasing retail activity and order intake. This drove quarter-over-quarter revenue growth of 5.7%.

Gross profit was $25.7 million or 14.2% of sales, and diluted EPS was $0.05 per share. Higher SG&A expenses for the quarter were primarily attributable to the inclusion of Omars. Based on preliminary valuation estimates, we recorded certain noncash acquisition-related expenses associated with Omars during the first quarter, primarily related to fair value adjustments on equipment sales and the amortization of estimated intangible customer relationship assets. These items reduced first quarter results by approximately $0.13 per diluted share. At this time, we expect this amount to represent roughly half of those total onetime acquisition-related expenses anticipated to be recognized over the balance of 2026.

We are continuing to work closely with our third-party valuation specialists, and the final amounts will be recorded upon completion of the valuation process. We remain confident that the acquisition will be accretive in the first year after recognizing these noncash acquisition-related expenses. Earnings per share was also impacted by higher consolidated taxes, primarily as a result of a conservative tax approach to the acquisition-related expenses for Omars as well as nondeductible executive compensation. I'd like to now shift to a discussion of our balance sheet. At the end of the first quarter, we had a cash balance of $53 million, up $8.3 million from the end of last year as we continue to convert receivables at a faster pace.

Our strong cash position provides increased flexibility to deploy capital in the most efficient and value-creating way for our investors. Now I'll turn the call back to Will to discuss our markets and our outlook.

William Miller: Thank you, Debbie. In the domestic market, we started 2026 with strengthening retail activity and order intake. Due to geopolitical tensions and rising fuel costs towards the end of Q1, we saw a significant reduction in the overall market. At the same time, cost of manufacturing in the United States have continued to increase. While we implemented an initial surcharge in April 2025 to offset tariff-related costs, continued cost increases have exceeded the coverage that our surcharge provides. As a result, we have implemented an additional 3% price increase on all manufactured products to better align pricing with our current cost environment and support our continued investment in U.S. manufacturing.

Effective August 1, 2026, all manufactured products will begin invoicing at the updated pricing structure. Orders invoiced on or after this date will reflect new pricing regardless of order placement date. Importantly, more recent data suggests that the underlying demand that was present at the beginning of the year remains intact as we have seen a rise in chassis sales over the past few weeks. We remain optimistic that retail activity will increase in the second half of the year, which would enable us to continue to accelerate production. With systems in place to closely monitor demand signals, we are well positioned to respond quickly as market conditions improve.

With backlog levels elevated, our international facilities production rates remain consistent as they work to meet steady customer demands. We remain encouraged by the outlook for our export business, driven by growing international sales and a robust pipeline of global military RFQs. These positive trends should provide a strong multiyear growth tailwind. The acquisition of Omars and our EUR 8 million expansion at Jige in France, which remains on track to be completed by mid-2027, will both play significant roles in the success of our global initiatives. We continue to build a strong pipeline of military RFQs, continuing long-term growth in our overall business.

We began 2026 with more than $150 million in military commitments with production scheduled to begin in 2027 with the majority of revenue to be recognized in 2028 and 2029. We continue to work diligently with militaries around the globe and anticipate that defense-grade recovery vehicles will be an important contributor to our financial results in the years to come. To serve future demand, we are focused on being production ready in Ooltewah's new 200,000-plus square foot manufacturing facility by late 2027. Site preparation for the capacity expansion remains on schedule, and we are targeting facility construction to begin by late summer. As we shared last quarter, this investment will streamline heavy-duty workflow and enhance our manufacturing efficiencies.

The new facility will be key to providing -- producing global high-volume defense grade recovery vehicles as well as meeting increased demand for our global export markets while maintaining the ability to service our North American customer base. Our strong ongoing cash flow generation position us to fund the majority of this expansion organically through operating cash flow over the next several years. We remain disciplined in how we allocate capital, focusing on 5 key priorities: paying a consistent industry-leading quarterly dividend of $0.21 per share. We reduced our credit facility by $10 million, bringing the total debt balance to approximately $21 million at the end of the quarter.

Share repurchases, including $2.2 million in the first quarter and approximately $14 million remaining under our current authorization, selective M&A opportunities and ongoing investment in capacity expansion, automation and innovation. We're extremely proud that we paid our dividend for 62 consecutive quarters. In the first quarter, we returned approximately $4.6 million to shareholders between our dividend and share repurchase program. This balanced approach strengthens the company while also returning value directly to shareholders. As Debbie said earlier, our strong cash generation allows us to execute on each one of these priorities without the need for additional financing.

At this time, we remain optimistic that we are on track to generate between $850 million and $900 million in revenue for full year 2026 and expect earnings per share to be generally in line with full year 2025 results. While demand remains consistent, higher diesel prices and heightened uncertainty stemming from geopolitical tensions in the Middle East are leading customers to push orders. As a result, we expect production volumes and revenue to be increasingly weighted towards the second half of 2026. As external pressures on our industry lessen, we remain confident in our ability to approach $250 million in quarterly revenue by the second half of the year.

We also continue to expect that gross margins will return to historical levels in the mid-13% range for full year 2026, with product mix shifting towards historical levels of bodies and chassis. We look forward to meeting with investors to speak about these exciting developments throughout 2026 at the Three Part Advisors Conferences in New York, Chicago and Dallas, D.A. Davidson's Industrial Conference and additional non-deal roadshows to be scheduled. We 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 exceptionally well positioned to manage near-term uncertainty and capitalize on long-term global growth.

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

Operator: [Operator Instructions] Your first question comes from Mike Shlisky with D.A. Davidson.

Michael Shlisky: So let's see, the onetime items that you mentioned, Debbie, in your comments, were those in the -- on the SG&A line in the quarter? And maybe more broadly, you add SG&A about $3 million quarter-over-quarter because of the Omars deal. First of all, is that the right number that Omars is a run rate? Or were there onetime items in there? And do you anticipate any synergies over time to reduce some of that SG&A?

Deborah Whitmire: Mike, some of the onetime charges were at the gross margin line and some were at the SG&A line. About $600,000 is on the SG&A line that is related to those acquisition costs. The remaining amount will be pretty much the current run rate with a full quarter of Omars. The additional was the conservative approach that we took from a tax standpoint as we continue to understand the deductibility under Italian tax law of those acquisition-related expenses. So it's the combination of the 3.

Michael Shlisky: Great. And the synergies...

Deborah Whitmire: What was that?

William Miller: Opportunities to reduce SG&A in the future?

Deborah Whitmire: Yes. Omars was a stand-alone company. So they had a full stack of engineering, HR, accounting. We feel like the leverage that we can get is the synergies between the 3 European companies as we go forward to either enhance efficiencies or combine that with the U.S. for reductions of cost.

Michael Shlisky: Great. I also wanted to ask about your comments, Will, on the military opportunities out there. Did anything move closer to the commitment phase during the quarter? In other words, how is the pipeline looking as far as getting closer to being able to book things?

William Miller: Yes. We've seen some movement in positive directions from a few RFQs throughout the quarter. At this time, there's nothing specifically to add on any specific RFQ, but we're hoping that when we release Q2 earnings next quarter that we'll have some additional information that we can provide to you and shareholders more specifically about some of the RFQs that we have commitments for and some that are in the pipeline that we believe will move forward throughout the quarter.

Michael Shlisky: Great. And if you indulge me in one more here.

William Miller: No, no. Absolutely.

Michael Shlisky: Okay. Yes. They said 2 questions, but usually, there's very few other folks on this call here asking the question. So I appreciate the time. I just want to also ask the underlying reasons for a consumer to use a tow service are most of those kind of still intact? The average age of the car remains all-time records, number of cars on the road, miles driven. Most of those things are still trending in Miller's favor, you think, in 2026?

William Miller: I believe so. I think what we're seeing today is individuals as they're looking to make that purchase of $100,000 to $1 million with diesel price ranging anywhere from $5 to $9 a gallon here in the United States that a little bit of uncertainty with the current geopolitical tensions and waiting to see how that all levels out before they make that commitment. Obviously, we're still seeing some solid retail activity, but not at the levels where they were prior to 6 or 8 weeks ago. So I think that will quickly return once things in the Middle East settle down.

Michael Shlisky: And your view of maybe the average tow fleet truck is...

William Miller: It's still in line. If anything, over last year, lower retail activity. If anything, the age of the fleet has aged out slightly more, which is a positive trend for us as customers look to replace fleets.

Operator: We have reached the end of the question-and-answer session. And I will now turn the call over to William Miller for closing remarks. Please go ahead.

William Miller: 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 second 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 e-mail, investor.relations@millerind.com. Thank you, and may God bless you and may God bless our troops.

Operator: Thank you. This concludes today's conference, and you may now disconnect your lines. Thank you all for your participation.

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