Earnings call transcript: Miller Industries Q3 2025 reports EPS miss, revenue gain

Miller Industries (MLR) reported its third-quarter 2025 earnings, revealing a significant miss on earnings per share (EPS) but a slight beat on revenue expectations. The company’s EPS came in at $0.27, falling short of the forecasted $0.80, representing a negative surprise of 66.25%. Revenue reached $178.7 million, slightly surpassing the anticipated $177.55 million. Following the earnings release, the stock closed at $40.35, down 2.88%.

Key Takeaways

• EPS significantly missed expectations with a 66.25% negative surprise.
• Revenue slightly exceeded projections, despite a 43.1% YoY decline.
• Stock price fell by 2.88% following the earnings announcement.
• Military market focus and strategic inventory management highlighted.
• Strong balance sheet with reduced debt and increased cash reserves.

Company Performance

Miller Industries reported a challenging quarter, with a notable decline in net sales by 43.1% year-over-year, amounting to $178.7 million. Despite this, the company maintained a gross profit of $25.3 million, representing 14.2% of net sales. The focus on military vehicle markets and strategic operational adjustments were emphasized as key areas for future growth.

Financial Highlights

• Revenue: $178.7 million, a 43.1% YoY decrease.
• Earnings per share: $0.27, a substantial miss from the forecast.
• Gross Profit: $25.3 million, 14.2% of net sales.
• Cash Balance: $38.4 million, up $6.6 million sequentially.
• Debt Reduction: From $45 million to $35 million.

Earnings vs. Forecast

Miller Industries’ EPS of $0.27 missed the forecast of $0.80 by a wide margin, marking a 66.25% negative surprise. However, the revenue of $178.7 million slightly beat expectations of $177.55 million, showing a 0.65% positive surprise. This discrepancy highlights challenges in profitability despite stable revenue performance.

Market Reaction

Following the earnings release, Miller Industries’ stock price fell by 2.88%, closing at $40.35. This decline reflects investor disappointment with the EPS miss, despite the slight revenue beat. The stock remains near its 52-week low of $33.81, indicating ongoing market pressures.

Outlook & Guidance

Miller Industries maintains its 2025 revenue guidance of $750 million to $800 million, expressing confidence in a 2026 recovery and military vehicle market opportunities. The company plans to continue investing in innovation and automation, aiming to capitalize on future demand.

Executive Commentary

"We are confident that we will enter into 2026 from a position of strength," stated Will Miller, President and CEO, emphasizing the company’s strategic focus. He added, "We believe military recovery vehicles could be a substantial tailwind for us in future years," highlighting potential growth areas.

Risks and Challenges

• Macroeconomic uncertainty affecting retail equipment purchases.
• Supply chain adjustments and tariff impacts.
• Competitive pressures in the heavy-duty vehicle market.
• Execution risks in military market expansion.
• Inventory management challenges amidst fluctuating demand.

Q&A

During the earnings call, analysts inquired about inventory dynamics and the impact of retirement packages on the workforce. Executives confirmed that factors driving tow truck demand remain intact and projected a return to historical chassis and body mix in 2026.

Full transcript - Miller Industries Inc (MLR) Q3 2025:

Conference Operator: Good day, ladies and gentlemen, and welcome to the Miller Industries Third Quarter 2025 Results Conference call. Please note this event is being recorded. At this time, I would like to turn the call over to Mike Badro at FTI Consulting. Please go ahead, sir.

Mike Badro, FTI Consulting Representative, FTI Consulting: 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 at 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.

Will Miller, President and CEO, Miller Industries: 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 aligned with our expectations as we continued 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, right-sizing our costs 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. I’ll return later to provide some comments on the current market environment and our outlook.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: 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 one-time 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 one-time 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 cost. Other income for the third quarter was $312,000, compared to other income of $321,000 for the third quarter of 2024, attributable to a 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 pre-purchase 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.

Will Miller, President and CEO, Miller Industries: 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 three 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 costs 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 seven of our presentation, chassis inventory has now crossed below body inventory, which is ideal as historically this 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 gives us confidence that the commercial market will begin to recover. Further, we’re seeing greater demand in Europe, as well as a 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 longstanding 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-$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 the 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.

Conference Operator: Thank you. It is now time for our Q&A. Our first question comes from Mike Schlitzke with BA Davidson. You may now begin.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: Hi, good morning, and thank you. Your inventory chart you just referred to, Will. It looks like things are actually below a normalized level or very, very close to a 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 mixed issue, if there’s a mixed benefit in 2026 just from that alone.

Will Miller, President and CEO, Miller Industries: Yeah, I think what you’re seeing is a little bit of a mixed 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, yeah, 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 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 the 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.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: Great. Thanks for that. 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.

Will Miller, President and CEO, Miller Industries: 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.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: Okay, great. Great. To follow up on that comment there, Will, in the fourth quarter, it sounds like there will still be with the current mix you are at or roughly the same, but is that 14% range the right space to look at for Q4 and then again back to the 13% for 2026?

Will Miller, President and CEO, Miller Industries: Yeah, 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 at 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.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: Okay, great. Maybe lastly, I wasn’t sure, you didn’t go into exactly the folks that took a retirement during the quarter. I wasn’t sure if those were very senior folks or if they were production or if 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 sounded like there was still some severance here, but what is the clean SG&A kind of quarterly run rate here?

Will Miller, President and CEO, Miller Industries: You’ll start to see clean SG&A probably Q1 as the retirements are taking their stagger throughout the remainder of this year. It was about a 50/50 split on salaried and hourly employees. It was offered to all employees over the age of 65. It was a split between the two. 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.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: 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, Will, 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 reasons to buy a tow truck 12 months ago versus today?

Will Miller, President and CEO, Miller Industries: 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.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: Okay. Thanks so much. I will pass it along.

Will Miller, President and CEO, Miller Industries: Absolutely, Mike. Thank you so much for the questions.

Debbie Whitmire, Executive Vice President and CFO, Miller Industries: Thank you very much. That appears to be our last question. I will now turn the conference back to William Miller for any additional remarks.

Will Miller, President and CEO, Miller Industries: 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 email investor.relations@millerind.com. Thank you, and may God bless you all.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call.

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