Miller Industries, Inc. Stock

Good day, ladies and gentlemen, and welcome to the Miller Industries' Second Quarter 2026 Results Conference Call. Please note this event is being recorded.

And now at this time, I would like to turn the call over to Will Miller at Miller Industries. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us for our second quarter 2026 earnings call. I want to start by recognizing the hard work of our employees around the world. Our second quarter results and our continued progress in strengthening our business reflects the dedication 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.

Before I hand the call over to Debbie to discuss our results in greater detail, I would like to start with a brief overview of the quarter. We delivered strong sequential and year-over-year revenue growth in the second quarter while navigating an inconsistent macroeconomic environment. We also achieved continued improvement in profitability, reflecting the production efficiencies our operations team has implemented. These production efficiencies have also enhanced our already strong cash generation, enabling us to further improve our balance sheet and reduce our debt balance. This provides us with greater financial flexibility to invest in our business, focusing on the areas where we see the greatest opportunities to create long-term value. Together, we believe these actions position us well for a strong second half of the year.

Our core philosophy remains exactly as it has been since the start of the company. 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-plus year history and will continue to be our philosophy moving forward. Our 1,500-plus employees across Tennessee, Pennsylvania, France, the United Kingdom, and Italy, combined with our widespread distribution footprint, give us unmatched reach, capability, and reliability that continues to position the company for sustained, profitable growth.

I want to express my gratitude for all of our team members across the U.S., Europe, and the U.K. for their continued dedication to the company. Their commitment allows us to execute with discipline today while continuing to build 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, capital allocation priorities, and guidance.

Thank you, Will. For the second quarter, revenue was $240 million, up 12.1% year-over-year and 32.7% sequentially. This growth was driven by steady production rates to meet retail activity and order intake levels. Gross profit was $35.9 million, or 15% of sales, and net income was $7.3 million. Our improved profitability was driven by operational efficiency and disciplined labor cost management, which was made possible by the outstanding execution of our operations team across the globe. Gross profit was impacted by product mix as it returns to a more normalized balance of chassis and body after periods of significantly elevated inventory in our distribution channel.

Additionally, diluted EPS was $0.63 per share, up from $0.05 in the first quarter. As expected, EPS during the quarter continued to reflect transaction-related expenses from the Omars acquisition, which impacted EPS by $0.11 in the quarter. We have now recognized the majority of expenses related to the transaction, and we believe that any further impact will be far less material to our financial results. Our integration of Omars continues to progress smoothly, and we remain confident that the acquisition will be accretive in the first year after recognizing these expenses.

I'd like to now shift to a discussion of our balance sheet. At the end of the second quarter, we had a cash balance of $55.6 million, up $2.6 million from last quarter. We also reduced our debt by an additional $20 million since the end of Q1. This combination of strong cash generation and a robust balance sheet provides us with greater financial flexibility to invest in our business, pursue strategic opportunities, and allocate capital to maximize value for the company and our investors. During this quarter, we were pleased to return $4.9 million directly to our shareholders in the form of share repurchases and dividends.

Now I'll turn the call back to Will to discuss our markets and our outlook.

Thank you, Debbie. In the domestic market, despite the ongoing geopolitical tensions and elevated fuel prices, we are pleased to see stable retail demand, order entry and distributor inventory levels, which remain at historical averages. We currently anticipate that retail activity and production volumes will remain steady and in line with current levels as the product mix returns to an optimal ratio between bodies and chassis. We remain confident in the strength of our business and our ability to execute against our long-term strategy. In our international and export business, backlog levels remain consistent, and our international facilities are operating at a steady production pace to meet sustained customer demand. The acquisition of Omars and our EUR 8 million expansion in Jige in France, which remains on track to be completed mid-2027, will both be significant drivers of the success of our global initiatives.

Meanwhile, we continue to communicate with various domestic and international government agencies, building our confidence that our success in our military business will continue to grow in the second half of the year. We are pleased to report that our military commitments have now surpassed $200 million and production is scheduled to begin in 2027. We anticipate that the majority of revenue will be recognized in 2028 and 2029. We expect our diligent work with militaries around the globe and our industry-leading defense-grade recovery vehicles will be an important driver for our financial results in years ahead.

As it relates to our manufacturing capacity expansion in Ooltewah, we are still aiming to be production ready by late 2027. We're beginning to wrap up site preparation this month and are on schedule to begin construction of the new facility by Q4 of 2026. The new 200,000-plus square foot manufacturing facility will be instrumental to producing global high-volume defense-grade recovery vehicles and meeting increased demand for our global export markets while maintaining the ability to service our North American customer base. This project will also incorporate the latest manufacturing technology, helping streamline heavy-duty workflows and enhance our manufacturing efficiency. We believe our strong cash flow generation positions us well to fund most of the expansion organically over the next several years.

Our strengthened balance sheet now provides us with even more flexibility to allocate capital to our 5 key priorities. Industry-leading quarterly dividend currently at $0.21 per share; $2.5 million of share repurchases in the second quarter and approximately $11.5 million remaining under the current share repurchase authorization; strategic optimization of working capital; selective M&A opportunities; and ongoing investment in capacity expansion, automation and innovation.

We're extremely proud that we've paid our dividend for 63 consecutive quarters. As Debbie mentioned, in the second quarter, we continued to prioritize distributing capital by returning approximately $4.9 million to shareholders between our share repurchase program and dividends. This balanced approach allows us to continue investing in the company while also returning value directly to shareholders. We believe our cash generation capabilities will allow us to execute on each one of these priorities without expanding our credit facility.

Given our steady levels of production, we anticipate to attain similar quarterly results of approximately $250 million in revenue for the remainder of the year. We remain confident that we are on track to achieve our previously stated guidance, generating between $850 million to $900 million in revenue for the full year 2026. We anticipate that our earnings per share will be in line with full year 2025 results and gross margins to return to historical levels in the mid-13% range for the full year 2026.

We look forward to meeting with investors to speak about exciting developments at Miller Industries in the coming months at the D.A. Davidson Small Cap Conference on August 11; Midwest IDEAS Conference on August 26; the D.A. Davidson Diversified Industrials and Services Conference on September 23; Southwest IDEAS Conference on November 18; and additional non-deal roadshows to be scheduled. We always 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 well positioned to execute on our priorities in the near term while continuing to drive long-term global growth.

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

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Michael Shlisky of D.A. Davidson. Please go ahead.

The outlook for revenues of $250 million a quarter in the back half of the year, that's a -- it's a slight increase from where you were in 2Q, it's certainly above where you were in the first quarter. And the gross margins in those two quarters were 14% and even 15% this past quarter, but you're still guiding for the mid-13s for the full year. And then you also mentioned that mix is getting back to normal again as well between the chassis and the body. Can you maybe just help us give us a little more granular detail as to why gross margins might not be as robust in the back half as in the first half, if that's the case?

Yes, I mean, our projections, Mike, right now -- thank you for the question. Our projections right now are sort of to continue the current pace with bodies and chassis, but we're seeing that product mix return back to historical levels. So as our distribution base demands more chassis to integrate with their bodies, we're going to see an uptick in that chassis revenue, which will probably affect margins slightly. So we're not exactly sure, but we think somewhere in that mid-13% range for the full year as it starts to get back down to historical averages. It might be a little bit higher than that, but we're close.

Okay, great. I also want to clarify, I think I did this last quarter on the call, Debbie, that the EPS outlook for roughly flat year-over-year. That includes what looks like in the first half so far is almost $0.25 of Omars kind of one-time items. I know you don't put out adjusted EPS, but had it not been for that, your EPS would be up double digits if you didn't have those one-time charges. Is that the right way to think about it?

Yes, that's correct. The outlook does include those additional expenses that were recorded in the first and second quarter.

Okay. And you said in your comments that those are the majority of the one-time items. Could you maybe just give us a sense as to how much more it might be left in just a small amount, what will the full year look like from a one-time Omars perspective?

So first quarter, I think we said it was $0.13 impact; second quarter is $0.11. I would say the remainder of the year is $0.04 to $0.05.

Okay, great. Thank you for that. Also want to ask about military. Well, it was $150 million last quarter, now you're at $200 million. Can you give us a sense of what broadly speaking has been added? Is it extremely heavy stuff? Is it with a European partner, and then just a sense as to what the pipeline is, what you might think you got your sights on for the rest of the year or just the overall pipeline size for military?

Yes. The addition that we saw moving us from north of $150 million in commitments to now over $200 million was -- probably there were some small items in there along throughout the quarter there was one more larger commitment. All of it was --- the vast majority of it was heavy-duty production, some -- a few industrial car carriers. The vast majority was heavy-duty production. Can't disclose as far as the customer or region that the latest larger contract was at this time, but we hope to have a little bit more light for investors as we move into Q3 and Q4 this year with regards to where some of these vehicles may be headed.

You know, looking forward, there's still -- there has been a significant pipeline of potential opportunities with RFQs that we're actively working with the different governmental agencies globally. So we're excited and we're happy to see them starting to progress and move forward.

Great. Thanks for that. And then maybe turning to the core tow business, what -- can you share about your latest conversations with end users or with some dealers about how they feel about buying? I remember over the last, let's say, 12 months or so, political concerns, there's interest rate concerns. Things have gotten better at some points along the way here. Give us a sense, as you take the temperature of the customer base and dealer base, what they might be telling you about for the rest of this year and even the first part of '27?

Yes, I mean, right now what we're seeing is it's mostly consumer confidence and geopolitical and fuel pricing is what's on everybody's mind. So the confidence level isn't all that high. I mean, our production levels, retail activity levels, inventory levels, everything's really flat right now. So there's -- we're building at the proper rate. We're receiving orders to build at that rate. We're not having inventory shrink or grow at the distribution level. Our distributors are happy with the inventory levels that they have today. We seem to have pushed through all of the excess inventory for the most part at distribution.

I think everybody's in a solid steady state. There's obviously room for improvement in the domestic market, but I don't think we're going to see any of that until we get some light at the end of the tunnel with the current issues in the Middle East and fuel prices settling back down.

Oh, yes. I just wanted to make sure that you were done. Yes, thanks for those answers. I appreciate it. I will pass them along.

Thank you, Mike. We appreciate it.

And there are no further questions at this time. I would now like to turn the call back over to Will Miller for closing comments.

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 investor relations website, millerind.com/investors, or email [email protected]. Thank you. May God bless you and may God bless our troops.

Ladies and gentlemen, this concludes today's conference. We thank you for participating and ask that you please disconnect your lines.

Good day, ladies and gentlemen, and welcome to the Miller Industries First Quarter 2026 Results Conference Call. Please note, this event is being recorded.

And at this time, I would like to turn the call over to William Miller at Miller Industries. Please go ahead, sir.

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.

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.

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

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?

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.

Great. And the synergies...

What was that?

Opportunities to reduce SG&A in the future?

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.

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?

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.

Great. And if you indulge me in one more here.

No, no. Absolutely.

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?

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.

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

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.

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.

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, [email protected]. Thank you, and may God bless you and may God bless our troops.

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

Good day, ladies and gentlemen, and welcome to the Miller Industries Fourth Quarter 2025 Results Conference Call. Please note, this event is being recorded.

And now at this time, I would like to turn the call over to Will Miller at Miller Industries. Please go ahead, sir.

Good morning, everyone, and thank you for joining us for our fourth quarter and full year 2025 earnings call. I want to begin by thanking our employees around the world for their dedication throughout the year. Our 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 were pleased to deliver a fourth quarter that led to generating full year revenue in line with our revised expectations despite a challenging industry environment. I'm incredibly proud of the way our team rose to the challenge this year, focusing on operating discipline in the areas of the business within our control. We have over 1,500 employees across Tennessee, Pennsylvania, France, the United Kingdom and Italy. And our footprint gives us unmatched reach, capability and reliability.

During the year, we made many difficult but necessary decisions to protect the long-term health of the business. These included strategically decreasing production in response to elevated field inventory in our North American distribution network, rightsizing our cost structure for the current environment, and strengthening our supply chain to mitigate the impacts of tariffs. We also achieved meaningful milestones, completing the acquisition of Omars in an effort to expand our European footprint, and take advantage of the strong demand we are seeing in the region, particularly for our heavy-duty products. More on that shortly.

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 continues to position the company for future growth.

I want to directly acknowledge our teams across the United States, Europe and the United Kingdom, who delivered through a challenging market and a deliberate recalibration of production. Their execution enabled us to finish the year with momentum and enter 2026 from a position of strength.

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.

Thank you, Will. Before I begin, I would like to note that we closed the acquisition of Omars on December 2, so our fourth quarter results only reflect approximately 1 month of contribution from Omars.

For the fourth quarter, revenue was $171.2 million, down 22.9% year-over-year as expected. This decline reflects our decision earlier in the year to reduce production and allow distributor inventories to return to historically normalized levels. Gross profit was $26.5 million or 15.5% of sales and diluted EPS was $0.29 per share. We saw a sequential improvement in retail order activity late in the quarter, and that momentum has continued into 2026, consistent with our expectations. As a result, we have already begun to increase production levels at all the U.S. facilities to meet this demand.

For the full year 2025, revenue was $790.3 million, down 37.2% from 2024. Gross profit was $120.4 million or 15.2% of sales and net income was $23 million or $1.98 per diluted share. With distributor inventory now back to historical levels, we have greater visibility into retail demand and are operating with an improved production cadence.

Our SG&A expenses increased on a year-over-year basis for both the fourth quarter and full year 2025, primarily due to onetime expenses related to the voluntary retirement program in third and fourth quarter and as we executed planned workforce transitions across the organization. Also, transaction and integration costs related to the Omars acquisition, which represent an important investment in our European growth strategy and higher stock compensation expenses to retain key leadership talent and further align the executive team to the interest of shareholders. These were all planned and strategic investments and expenses that advance our future growth strategy.

Now I'll turn the call back to Will to discuss our markets and our outlook for 2026.

Thank you, Debbie. In the domestic market, we now see normalized distributor inventory, steadier retail demand and improved sales order entry as we move into 2026. We expect production levels to rise methodically throughout Q1 and Q2 to match this demand recovery. Our export business remains a major strength, and the 2026 outlook is very encouraging. Three drivers stand out in particular, consistent European demand; growing demand in other international markets such as Australia, Japan, Mexico, Indonesia and many others; and a robust pipeline of global military RFQs, which we will discuss further later in the presentation. These should provide a strong multiyear growth tailwind, and the acquisition of Omars and our expansion in Jige will both play large roles in this expected growth.

Our integration of Omars, Italy's premier towing equipment manufacturer, continues to progress extremely well. As we've previously shared, we expect our Omars acquisition to be accretive in the first year. Omars provides Miller Industries with new sales channels, a stronger brand presence in Europe and a strategic manufacturing and distribution hub in a key growth region. Omars is critical to our long-term growth in the European market. This acquisition should also increase U.S. production levels to supplement Omars' integration capacity and equip them with the necessary resources and scale to capitalize on the strong demand for their products.

At Jige in France, our EUR 8 million expansion is on schedule and is anticipated to double their heavy-duty integration capacity. We're expected to complete the expansion project by mid-2027. Meanwhile, at Boniface in the United Kingdom, we are investing in production efficiencies to increase capacity and support the growing need for both light and heavy-duty products. Demand in Europe remained strong. And to support this, our U.S. operations, especially Ooltewah's increased heavy-duty production capabilities will supply Jige, Boniface and Omars with reduced lead times, consistent quality and increased production volumes.

Earlier, I mentioned our robust pipeline of military RFQs. 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 are also actively engaged in a substantial pipeline of additional military RFQs. This level of military activity is unprecedented for our company and represents a major long-term growth vector.

To service future demand, we're beginning one of the most significant projects in our history, a 200,000-plus square foot addition to our Ooltewah facility. This estimated $100 million investment should unlock new capacity, streamline heavy-duty workflow and enhance our manufacturing efficiencies. With more than $150 million in military commitments secured and additional global RFQs underway, the new facility will be key to 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. We anticipate the new facility will be production-ready in late 2027.

As we continue our strong cash generation and debt continues to decline, we anticipate funding the majority of our 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 quarterly dividend which the Board of Directors increased 5% to $0.21 per share this quarter; debt reduction, which has been reduced to $20 million in January of 2026 through our diligent reduction in working capital; share repurchases, including $2.2 million in Q4 of 2025; selective M&A opportunities and ongoing investments in automation, innovation, people and capacity.

We're extremely proud that we've paid our dividend for 61 consecutive quarters. And in 2025, we returned approximately $15.1 million to shareholders between our dividend and share repurchase program. This balanced approach strengthens the company while also returning value directly to shareholders.

For 2026, we expect revenues between $850 million and $900 million. We also expect that performance will accelerate into the second half of the year as manufacturing activity increases throughout the first and second quarters and product mix normalizes. We anticipate that revenue will approach $250 million per quarter by the second half of 2026. Additionally, as product mix shifts to a historical percentage of manufactured product and chassis, we would also expect gross margins to return to historical levels in the mid-13% range for the full year.

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; at D.A. Davidson's Industrial Conference in Nashville and additional non-deal road shows to be scheduled. We always welcome continued dialogue with our shareholders.

In closing, I want to emphasize that 2025 was a difficult year, and our team managed multiple challenges extremely well. We now enter 2026 with normalized distributor inventories, stronger retail demand visibility, a growing international platform, major military momentum, a significant expansion of our U.S. manufacturing footprint and a strengthened balance sheet. We are exceptionally well positioned for long-term global growth, and I'm proud of the work our team has done to get us here. As always, I would like to thank our employees, customers, suppliers and shareholders for their ongoing support of Miller Industries.

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

[Operator Instructions] First question comes from Mike Shlisky at D.A. Davidson.

Help me understand -- so I guess I'm trying to figure out the margin story first. Would you say that the gross margin expectation for 13% range is better than you've seen in the past for the mix that you're expecting? I'm trying to make sure that the cost adjustments that you've undertaken are kind of having the desired effect or at least that we might see on the operating margin line and improvement when you consider your cost reductions that they're behind you? Or is it better or worse than it's been in the past is kind of what I'm trying to figure out here.

I believe they're normalizing. I think our margins are better than they were pre-COVID levels in '19, where we saw margins in the mid-12s to high 12s. But I think the -- you'll see the return back to on an average year, if you look at '23 and '24 in those mid-13s, although we did have some fluctuations for the quarter due to chassis availability and timing of shipments of chassis. But I think over a year period, you're going to see them normalize back in the mid-13% range.

So the cost reductions that you had, the people costs, et cetera, that you've done over the last 12 months, they haven't had any impact on margins? Or I'm just trying to figure out whether you're going to be seeing a better margin profile. Maybe it's operating margin rather than gross. But like do you feel you're going to get the benefit that you're expecting on the margin end from all those cost reductions?

Well, most of our people reduction was hourly employees that were focused on the reduction or lower levels of production. As we start to ramp back up, we'll intentionally add some people back. We did have some retirements that will help on the SG&A level. However, some of those employees have also been replaced as we moved on and we progressed to the -- and had plans to replace them throughout the process.

Okay. No, that makes sense. I get it. That's totally fair, Will. And then the top line outlook, I think back a year, what happened back then, we on RM were blindsided by some of the -- how the [ expectations ]. I think some of that even surprised you in the swiftness of how the market changed and things that happened in the late fourth quarter of 2024. So the outlook you have now for 2026 at this time of the year, do you feel like you've got a better sense to the confidence this time around than you had this time last year? What's changed, et cetera, that makes you feel like you've got that $850 million?

Yes. I think our confidence level is higher this year. So we saw an abrupt change in downward projections mid-year last year and really a couple of things. So we've utilized the technology that we have internal to be able to better analyze and project what our distribution needs and retail activity is going to be on an average basis. So we've got a lot more -- we had the data, but actually putting into a format to be able to project what we think future needs will be. Also, distribution inventories back to, as we said, the historical average levels. So we're starting to see that order intake pick back up. And really, what we're looking at is retail activity. Retail activity or retail demand from our distributors to the end users was consistent throughout all of 2025 and we see that consistency moving right back into 2026. So really, what we're projecting is that we're just ramping back production to meet the average retail demand levels that we saw consistent through '25 and into '26 so far.

Great.

Our confidence level...

And so you would characterize the mix between the chassis plus tow sales and the tow-only kind of packages as more normalized in '26 in your current outlook?

Absolutely.

And does that mean that's 50-50 or some other kind of traction?

No, it's not a one-for-one. As you realize that we do have distributors that provide their own chassis, what we call customer supply chassis. We also have municipalities that provide their own chassis along with all of our export product and our sales over in Europe. So it's not a one-for-one, but it's returning back to a normalized level. I mean every tow body that we manufacture does have to have a chassis to create a tow truck, but that doesn't mean that we sell every chassis with the...

Right. Okay. Just switching over to Omars real quick. You have a outlook for accretion in '26, if I'm not mistaken. But it sounds like your description of it, Will, was more of that Omars is going to help in a lot of other ways, help your U.S. capacity, help your European business with some synergies and cross-selling and some cross -- I guess, cross manufacturing. Is your comment that it was going to be accretive just based on just layering in the existing Omars' P&L? It that there's a lot more accretion that could happen once some of these synergies start to roll, is that a [indiscernible]?

Yes. It's more of a long-term play, right? So I mean, currently, you're going to see the P&L drop in dollars. And we do believe that it'll be accretive in year one. However, moving forward, we're now focused on in our European facilities, what product we should build where and what's most successful. And also looking at purchasing throughout those 3 facilities and how to best purchase product. And then augmenting Omars' heavy-duty production, which they make a great heavy-duty product but also giving them additional production capabilities from the United States that we can export to them to increase their sales capacity, similar to what we're doing with Jige, as both Jige and Boniface currently use about 50% of their heavy-duty product that's manufactured in the United States that they sell in the European market. So we believe there's a significant level of synergies other than bring on just their additional revenue to our organization, not to mention they have an amazing state-of-the-art factory with some great capacity and capabilities as well.

We have no further questions. I will turn the call back over to Will Miller for closing comments.

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 first 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, [email protected]. Thank you. May God bless you, and may God bless our troops.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good day, ladies and gentlemen, and welcome to the Miller Industries Third Quarter 2025 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 2025 third quarter results, which were released after 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, Mike. Good morning, everyone, and thank you for joining us today. I would like to start with a brief statement before I hand the call over to Debbie to discuss our results in more detail. Third quarter results were in line with our expectations as we continue to navigate industry-wide demand headwinds. The retail channel continues to delay purchases of new equipment due to macroeconomic uncertainty, which has left field inventory in our distribution channel elevated.

Despite this, we continue to focus on the aspects of our business that we can control. In the third quarter, we took proactive steps to support our bottom line, including prudently decreasing production to reduce field inventory, rightsizing our cost for the current environment and securing our supply chain to mitigate the effects of tariffs.

We are confident that we will enter into 2026 from a position of strength, and we are excited about the opportunities ahead of us, particularly the strong interest we are seeing for our global military business. Now I'll turn the call over to Debbie to review the quarter in more detail, and I'll return later to provide some comments on the current market environment and our outlook.

Thanks, Will, and good morning, everyone. Net sales for the third quarter of 2025 were $178.7 million, representing a 43.1% year-over-year decrease, driven primarily by a drop in chassis shipments after volumes were significantly elevated in the prior year period. Gross profit was $25.3 million or 14.2% of net sales for the third quarter of 2025 compared to $42 million or 13.4% of net sales for the prior year period.

The margin improvement was driven mainly by product mix with a higher percentage of unit deliveries compared to chassis shipments. SG&A expenses were $21.2 million in the third quarter of 2025 compared to $22.3 million in the third quarter of 2024.

As a percentage of net sales, SG&A was 11.9%, 480 basis points higher than the prior year period. The year-over-year decrease in overall SG&A expenses was driven primarily by our cost savings efforts and lower executive compensation expenses. This was partially offset by a $900,000 onetime cost for retirement packages offered to all U.S. employees aged 65 and above.

The total cost of the program was $2.7 million, and we expect to recognize the remainder of this onetime expense in the fourth quarter. Interest expense for the quarter was $93,000 compared to $251,000 in the prior year period, a decline of around 63%, driven primarily by a reduction in debt levels and to a lesser extent, a reduction in customer floor plan financing costs.

Other income for the third quarter was $312,000 compared to other income of $321,000 for the third quarter of 2024, attributable to the gain on the sale of assets and currency exchange rate fluctuations. As a result of all the factors above, net income for the third quarter of 2025 was $3.1 million or $0.27 per diluted share compared to net income of $15.4 million or $1.33 per diluted share in the prior year period.

Now I'd like to shift to a discussion on our balance sheet. At the end of the third quarter, we had a cash balance of $38.4 million, up $6.6 million sequentially and up $14.1 million as of the end of last year. In addition to growing our cash balance in the quarter, we also reduced our debt balance by $10 million down to $45 million during the third quarter. We have since paid down another $10 million, bringing the current debt balance down to $35 million.

We continue to see our receivables convert into cash at a faster rate as inventory at our distributors returns to more normalized levels. As a result, accounts receivable as of September 30, 2025, was $232.6 million compared to $270.4 million as of the end of last quarter and $313.4 million as of the end of last year. Inventories as of the end of Q3 were $180.7 million compared to $165.5 million in Q2 and $186.2 million as of December 31, 2024.

The sequential increase in inventories is due to our decision to prepurchase some materials to mitigate the effects of tariffs and slower chassis demand. Lastly, accounts payable as of September 30, 2025, was $82.2 million compared to $98 million as of June 30, 2025, and $145.9 million as of December 31, 2024. Now I'll turn the call back to Will to discuss our markets and our outlook for the remainder of 2025 and early 2026.

Thank you, Debbie. I'd like to provide some insight into how the steps we've taken will impact our fourth quarter. First, as part of our comprehensive cost reduction, in August, we made the decision to reduce headcount by approximately 150 positions across 3 of our U.S. manufacturing facilities. While this was an extremely difficult decision to make, we made it with long-term health of the business in mind, and we thank all of those employees for their valued contributions.

Next, while the tariff landscape continues to evolve, we continue to take proactive measures to mitigate potential impacts. Earlier this year, we implemented tariff surcharge on all new orders of manufactured product, along with additional price increases on accessories and parts. We are also strategically accumulating some key materials from low tariff geographies to maintain our margins and keep our cost for raw materials as low as possible.

Lastly, we are encouraged that inventory in our distribution channel continues to decrease. Despite the macroeconomic environment, we have preemptively adjusted production levels during the year to accelerate the reduction of field inventory. As we said in the second quarter, we expect to see a more normalized level of field inventory in 2026, which should position us well for when the demand environment improves.

Next, I'd like to provide a bit more color on the body and chassis inventory dynamic. As you can see on Slide 7 of our presentation, chassis inventory has now crossed below body inventory, which is ideal as historically, this has allowed -- has led to the best dynamic for maximum flexibility at the distribution level. Additionally, we believe that inventory is beginning to reach more optimal levels, which position us well for the year ahead.

Turning to 2026. We remain incredibly confident in our outlook for a strong year. We are entering the year with a strong balance sheet and the inventory dynamic I just spoke about give us confidence that the commercial market will begin to recover.

Further, we're seeing greater demand in Europe as well as notable increase in Request For Quote or RFQ activity for our military vehicles. We expect that interest will continue into 2026 as we begin to prepare for production of military orders in 2027. We believe military recovery vehicles could be a substantial tailwind for us in future years, and we are taking the steps needed to position the company to capitalize on the rising demand.

In the midst of all of the proactive steps we have taken to position the business for a strong 2026, we have continued our long-standing commitment of returning capital to our shareholders. We're extremely proud that we've paid a dividend for 59 consecutive quarters, and our Board just approved a dividend payable on December 9, 2025.

During the third quarter, we also repurchased approximately $1.2 million of stock, bringing our total quarterly returns to shareholders to $3.5 million. We believe that repurchasing our shares represents one of the most attractive investments we can make with our capital, which demonstrates our confidence in the company's long-term prospects.

At the same time, we continue to invest in our business, prioritizing innovation, automation and human capital. We are closely monitoring our capacity of heavy-duty recovery vehicles to ensure we are prepared to capitalize on exciting future growth opportunities. Despite current demand headwinds, we remain confident in our business and our outlook, reaffirming our previously issued 2025 fiscal year guidance for revenue in the range of $750 million to $800 million.

As always, we expect the fourth quarter will be impacted by the holidays and planned maintenance and downtime at our facilities, which we have factored into our guidance. Our revenue guidance also anticipates no change in the current regulations or unknown effects of the evolving tariff situation. While there continues to be uncertainty in the market, we are confident that our proactive steps we are taking position us well for a strong 2026. We are encouraged that field inventory continues to trend in the right direction. And as we look to next year, we're very excited about the opportunities ahead of us.

In closing, the entire management team and I would like to thank all of our employees, suppliers, customers and shareholders for their continued support. We will be on the road later this month at the Southwest IDEAS Conference and look forward to seeing some of you in person. At this time, we'd like to open the line for any questions.

It is now time for Q&A. Our first question comes from Mike Shlisky with D.A. Davidson.

Your inventory chart you just referred to, Will, it looks like things are actually below a normalized level or very, very close to normalized level at this point. I'm not sure, can you just explain to us what that means? I'm trying to figure out if 2025 has been dominated by most of your sales being without the chassis attached to them on the invoice, whether at least at 2026, there will be just a much different mix at the very least if you sell no more tow trucks in general, there will still be a higher number of attached chassis with the higher invoice. Just a sense as to if there's a mix issue -- there's a mix benefit in '26 just from that alone?

Yes. I think what you're seeing is a little bit of a mix benefit from a margin perspective in 2026 with the lower chassis revenue. I think -- or sorry, in 2025. Moving into 2026, I think you're going to see that stabilize back to more historic levels with the chassis and body mix returning to normal.

The inventory, yes, the projected line that we put out there earlier this year, we're slightly below that. We are closely monitoring field inventory as well as retail -- weekly retail activity and order entry. At this time, order entry is still slightly below the weekly average of retail activity. So we're waiting to see those get a little bit more in sync before we start planning to increase production. to meet current demand. But we believe we're close probably sometime late this quarter or early in Q1. We believe that all those factors will come together.

Great. And just to clarify again, if you sell the same number of tow trucks in 2026, you would expect to see higher top line just on...

Yes. That is correct. You'll see a higher top line with the chassis revenue being a part of that, and you'll see margins go back more to historical levels with the mix.

Okay. Great. Great. And to follow up on that comment there, Will. In the fourth quarter, it sounds like it'll still be with the older mix -- with the current mix you're at or roughly the same. But is that 14% range the right space to look at for 4Q and then again, back to the 13% for 2026?

Yes. I mean I think the mix will remain the same. Don't forget that Q4 is always our shortest quarter with the holidays as well as plant shutdowns in every facility for inventory as well as maintenance. So it could have a little bit of slightly downward pressure on those margins, although the mix probably stays similar.

Okay. Great. And then maybe lastly, I wasn't sure you can go into exactly the folks that were -- took a retirement during the quarter. I wasn't sure if those were very senior folks or if they were production or they were SG&A. But just a sense of the SG&A run rate going forward. Will the fourth quarter be a clean SG&A? It sounds like there's still some severance here, but what is the clean SG&A kind of quarterly run rate here?

That will -- you'll start to see clean SG&A probably in Q1 as the retirements are taking -- they're staggered throughout the remainder of this year. It was about a 50-50 split on salaried and hourly employees. So it was offered to all employees over the age 65. It was a split between the two. So there were some senior individuals in the sales offices that took part in it as well as some senior people in our manufacturing facilities as well.

Okay. Great. If I could just also maybe ask one last one to kind of sum it up because I think I mentioned in your comments as well, but all the factors that have driven increased record demand over the last bunch of years, older vehicles, more time on the road, more cell phone use behind the wheel, unfortunately, et cetera. Are all those factors still intact at this time and into 2026? Has anything changed as to the reason to buy a tow truck 12 months ago versus today?

No, I don't believe so. I think all of those factors that drive the demand at the retail level for the use of the equipment are all still intact.

That appears to be our last question. I will now turn the conference back to William Miller for any additional 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 the 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 e-mail [email protected]. Thank you, and may God bless you all.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.