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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. I would like to welcome you to the Miller Industries conference call. We are here to discuss the company's 2024 third quarter results, which were released after the close of the market yesterday. With us from the management team today are Bill Miller, Chairman of the Board; Will Miller, President and CEO; Debbie Whitmire, Executive Vice President and CFO; and Frank Madonia, Executive Vice President, Secretary and General Counsel. Today's call will begin with formal remarks from management, followed by a question-and-answer session. Please note in this morning's conference call, management may make forward-looking statements in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. I'd like to call your attention to the risks related to these statements, which are more fully described in the company's annual report filed on Form 10-K and other filings with the Securities and Exchange Commission. At this time, I'd like to turn the call over to Will. Please go ahead, Will.

Thank you, and good morning, everyone. 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 2 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 6 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 the chassis deliveries have normalized, we expect to continue operating at the current level. And 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. Debbie?

Thanks, Will, and good morning, everyone. Net sales for the third quarter of 2024 was $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 9 months of 2024 were $1 billion versus $857.1 million for the first 9 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 9 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, was $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, was $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 3 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. Now I'll turn the call back over to Will for some closing remarks.

Thank you, Debbie. The core demand drivers of our business remains 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, 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 remain strong. We anticipate that our backlog will return to historical levels over the next 1 to 2 quarters. Despite this, we believe our stabilized supply chain, purchasing effectiveness and enhanced productivity position, positions us to sustain positive momentum in our results as illustrated by our performance over the first 9 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 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.

[Operator Instructions] Our first question is from Mike Shlisky, D.A. Davidson.

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 2 but since election day in the rearview mirror, have you gotten any indications that orders are being 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 location to kind of keep the ball rolling on growth here.

Thank you. Well, with regards to your first question with regards to postelection sentiment in the industry, Vince Tiano, our Chief Revenue Officer, has been reaching out to distribution. And just 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, obviously, 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 those to customers. I think from the distribution network as a whole, we're in a great position with the distribution network we have. And 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 2024 to 2025, 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% to get next year?

No. I think overall this year and last year have been a little lumpy, as Debbie alluded to from quarter-to-quarter. What we're anticipating seeing for chassis -- OEM chassis deliveries for the full year of 2024 is right on par with what we expected, just not -- the timing of it wasn't exactly where we had anticipated from quarter-to-quarter. Moving forward, I don't see any issues continuing the margins where they have been for the full year into next year.

Okay. And from an SG&A standpoint, you've mentioned 6.5% kind of being the goal level. As you grow a little more from here, I mean, it sounds you still plan -- expect at least some growth in 2025. You've got good order cadence here. Do you think you can start to get some additional leverage on that SG&A spend and maybe get that a little less than 6.5% in '25?

This is Debbie. We certainly are looking at cost control in any form 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. But the additional regulations that we're dealing with continues to add SG&A costs that are really out of our control.

It looks like there are no further questions at this time. I'd like to turn the floor back to Will Miller for closing remarks.

Thank you. I'd like to thank you all again for joining us on the call today, and we look forward to speaking with you on our 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.