UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended	March 31, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________________________________ to ________________________________________


Commission file number	001-14124

MILLER INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Tennessee		62-1566286
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)

8503 Hilltop Drive
Ooltewah, Tennessee		37363
(Address of principal executive offices)		(Zip Code)

(423) 238-4171

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	MLR	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

	Large accelerated filer ☐	Accelerated filer ☒

	Non-accelerated filer ☐	Smaller reporting company ☐

	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $.01 per share, as of April 30, 2021 was 11,410,728.

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Index


			Page Number
PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets – March 31, 2021 and December 31, 2020	2

		Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2021 and 2020	3

		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and 2020	4

		Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2021 and 2020	5

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

	Item 4.	Controls and Procedures	16

PART II		OTHER INFORMATION

	Item 1.	Legal Proceedings	17

	Item 1A.	Risk Factors	17

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

	Item 3.	Defaults Upon Senior Securities	18

	Item 4.	Mine Safety Disclosures	18

	Item 5.	Other Information	18

	Item 6.	Exhibits	19

SIGNATURES			21

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FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q, including but not limited to statements made in Part I, Item 2–“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” statements made with respect to future operating results, expectations of future customer orders and the availability of resources necessary for our business may be deemed to be forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “continue,” “future,” “potential,” “believe,” “project,” “plan,” “intend,” “seek,” “estimate,” “predict,” “expect,” “anticipate” and similar expressions, or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements are made based on our management’s beliefs as well as assumptions made by, and information currently available to, our management. Our actual results may differ materially from the results anticipated in these forward-looking statements due to, among other things:

●

the overall impact of the COVID-19 pandemic on the Company’s revenues, results of operations and financial condition;

●

the duration and severity of the COVID-19 pandemic, including actions that may be taken by government authorities and others to address or otherwise mitigate the impact of the COVID-19 pandemic;

●

the cyclical nature of our industry and changes in consumer confidence; economic and market conditions, including the negative impacts of the COVID-19 pandemic on global economies and the Company’s customers, suppliers and employees;

●

our dependence upon outside suppliers for our raw materials, including aluminum, steel and petroleum-related products as well as other purchased component parts;

●

changes in price and availability (including as a result of the increased demand due to improving economic conditions, the impact of the COVID-19 pandemic and the imposition of additional tariffs) of aluminum, steel, petroleum-related products and other purchased component parts;

●

delays in receiving supplies of such materials or parts, including as a result of the impact of the COVID-19 pandemic;

●

our customers’ access to capital and credit to fund purchases;

●

operational challenges caused by increased sales volumes in recent years, prior to the COVID-19 pandemic;

●

various political, economic and other uncertainties relating to our international operations, including restrictive taxation and foreign currency fluctuation;

●

special risks from our sales to U.S. and other governmental entities through prime contractors;

●

our ability to secure new government orders;

●

changes in fuel and other transportation costs, insurance costs and weather conditions;

●

changes in government regulations;

●

failure to comply with domestic and foreign anti-corruption laws;

●

competition in our industry and our ability to attract or retain customers;

●

our ability to develop or acquire proprietary products and technology;

●

assertions against us relating to intellectual property rights;

●

problems hiring or retaining skilled labor;

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●

a disruption in, or breach in security of, our information technology systems or any violation of data protection laws;

●

changes in the tax regimes and related government policies and regulations in the countries in which we operate;

●

the effects of regulations relating to conflict minerals;

●

the catastrophic loss of one of our manufacturing facilities;

●

environmental and health and safety liabilities and requirements;

●

loss of the services of our key executives;

●

product warranty or product liability claims in excess of our insurance coverage;

●

potential recalls of components or parts manufactured for us by suppliers or potential recalls of defective products;

●

an inability to acquire insurance at commercially reasonable rates;

●

and those other risks referenced herein, including those risks referred to in Part II, Item 1A–“Risk Factors” in this Quarterly Report on Form 10-Q and those risks discussed in our other filings with the Securities and Exchange Commission, including those risks discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, which discussion is incorporated herein by this reference.

Such factors are not exclusive. We do not undertake to update any forward-looking statement that may be made from time to time by, or on behalf of, the Company.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	March 31,
	2021		December 31,
	(Unaudited)		2020
ASSETS
CURRENT ASSETS:
Cash and temporary investments	$	56,199	$	57,521
Accounts receivable, net of allowance for doubtful accounts of $1,348 and $1,295 at March 31, 2021 and December 31, 2020, respectively		167,694		141,642
Inventories, net		84,940		83,939
Prepaid expenses		6,552		3,167
Total current assets		315,385		286,269
NONCURRENT ASSETS:
Property, plant and equipment, net		98,734		98,620
Right-of-use assets - operating leases		1,431		1,468
Goodwill		11,619		11,619
Other assets		491		434
TOTAL ASSETS	$	427,660	$	398,410

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	113,351	$	85,534
Accrued liabilities		24,166		24,773
Current portion of operating lease obligation		371		354
Current portion of finance lease obligation		22		21
Total current liabilities		137,910		110,682
NONCURRENT LIABILITIES
Noncurrent portion of operating lease obligation		1,061		1,116
Noncurrent portion of finance lease obligation		9		15
Deferred income tax liabilities		4,143		4,144
Total liabilities		143,123		115,957

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 5,000,000 shares authorized, none issued or outstanding		—		—
Common stock, $0.01 par value; 100,000,000 shares authorized, 11,410,728 and 11,405,468, outstanding at March 31, 2021 and December 31, 2020, respectively		114		114
Additional paid-in capital		151,449		151,249
Accumulated surplus		135,003		133,879
Accumulated other comprehensive loss		(2,029)		(2,789)
Total shareholders’ equity		284,537		282,453
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	427,660	$	398,410

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31
	2021		2020

NET SALES	$	169,912	$	176,054
COSTS OF OPERATIONS		154,081		157,516
GROSS PROFIT		15,831		18,538

OPERATING EXPENSES:
Selling, general and administrative expenses		11,051		10,974

NON-OPERATING (INCOME) EXPENSES:
Interest expense, net		275		359
Other expense, net		276		91
Total expense, net		11,602		11,424

INCOME BEFORE INCOME TAXES		4,229		7,114
INCOME TAX PROVISION		1,051		1,683
NET INCOME	$	3,178	$	5,431

BASIC INCOME PER COMMON SHARE	$	0.28	$	0.48

CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.18	$	0.18

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		11,410		11,405

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended
	March 31
	2021		2020
NET INCOME	$	3,178	$	5,431

OTHER COMPREHENSIVE LOSS:
Foreign currency translation adjustment		760		(72)
Total other comprehensive loss		760		(72)

COMPREHENSIVE INCOME	$	3,938	$	5,359

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


							Accumulated
			Additional				Other
	Common		Paid-In		Accumulated		Comprehensive
	Stock		Capital		Surplus		Loss		Total
BALANCE, December 31, 2019	$	114	$	151,055	$	112,261	$	(5,503)	$	257,927
Components of comprehensive income:
Net income		—		—		5,431		—		5,431
Foreign currency translation adjustments		—		—		—		(72)		(72)
Total comprehensive income		—		—		5,431		(72)		5,359
Issuance of common stock to non-employee directors (5,366)		—		194		—		—		194
Dividends paid, $0.18 per share		—		—		(2,053)		—		(2,053)
BALANCE, March 31, 2020	$	114	$	151,249	$	115,639	$	(5,575)	$	261,427

BALANCE, December 31, 2020	$	114	$	151,249	$	133,879	$	(2,789)	$	282,453
Components of comprehensive income:
Net income		—		—		3,178		—		3,178
Foreign currency translation adjustments		—		—		—		760		760
Total comprehensive income		—		—		3,178		760		3,938
Issuance of common stock to non-employee directors (5,260)		—		200		—		—		200
Dividends paid, $0.18 per share		—		—		(2,054)		—		(2,054)
BALANCE, March 31, 2021	$	114	$	151,449	$	135,003	$	(2,029)	$	284,537

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended
	March 31
	2021		2020
OPERATING ACTIVITIES:
Net income	$	3,178	$	5,431
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		2,440		2,253
Loss on disposal of property, plant and equipment		5		7
Provision for doubtful accounts		51		50
Issuance of non-employee director shares		200		194
Deferred tax provision		(3)		(30)
Changes in operating assets and liabilities:
Accounts receivable		(25,812)		(342)
Inventories		(568)		(4,724)
Prepaid expenses		(3,377)		(2,925)
Other assets		37		227
Accounts payable		27,557		1,486
Accrued liabilities		(861)		(3,479)
Net cash flows from operating activities		2,847		(1,852)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(2,489)		(3,526)
Proceeds from sale of property, plant and equipment		—		10
Net cash flows from investing activities		(2,489)		(3,516)
FINANCING ACTIVITIES:
Net proceeds under credit facility		—		25,000
Payments of cash dividends		(2,054)		(2,053)
Net payments on other long-term obligations		—		(92)
Finance lease obligation payments		(5)		(5)
Net cash flows from financing activities		(2,059)		22,850
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY INVESTMENTS		379		(460)
NET CHANGE IN CASH AND TEMPORARY INVESTMENTS		(1,322)		17,022
CASH AND TEMPORARY INVESTMENTS, beginning of period		57,521		26,072
CASH AND TEMPORARY INVESTMENTS, end of period	$	56,199	$	43,094
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	$	280	$	594
Cash payments for income taxes, net of refunds	$	604	$	739

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share data and except as otherwise noted)

1. BASIS OF PRESENTATION

The condensed consolidated financial statements of Miller Industries, Inc. and subsidiaries (the “Company”) included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. Nevertheless, the Company believes that the disclosures are adequate to make the financial information presented not misleading. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, to present fairly the Company’s financial position, results of operations and cash flows at the dates and for the periods presented. Cost of goods sold for interim periods for certain activities is determined based on estimated gross profit rates. Interim results of operations are not necessarily indicative of results to be expected for the fiscal year.

These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The condensed consolidated financial statements include accounts of certain subsidiaries whose fiscal closing dates differ from December 31^st by 31 days (or less) to facilitate timely reporting.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Standards

During the first quarter of 2021, the Company adopted Accounting Standards Updated (“ASU”) 2019-12 Income Taxes (Topic 740), which among other things requires the Company to recognize franchise tax that is partially based on income as an income-based tax. The Company applied the amendments in the update on a modified retrospective basis, which did not have a material impact on the Company’s consolidated financial statements or related disclosures.

3. BASIC INCOME PER SHARE

The Company has a simple capital structure consisting of common stock and preferred stock, with only shares of common stock outstanding. The Company had no stock options or any other dilutive instruments outstanding for the three months ended March 31, 2021 or 2020. Basic income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period.

4. REVENUE

Substantially all of our revenue is generated from sales of towing and recovery equipment. As such, disaggregation of revenue by product line would not provide useful information because all product lines have substantially similar characteristics. However, revenue streams are tracked by the geographic location of customers. This disaggregated information is presented in the table below.


	For the Three Months Ended
	March 31,
	2021		2020
Net Sales:
North America	$	146,687	$	143,856
Foreign		23,225		32,198
	$	169,912	$	176,054

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Except for certain extended service contracts on a small percentage of units sold, the Company’s performance obligations are satisfied, and sales revenue is recognized when products are shipped from the Company’s facilities. From time to time, revenue is recognized under a bill and hold arrangement. Recognition of revenue on bill and hold arrangements occurs when control transfers to the customer. The bill and hold arrangement must be substantive,

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and the product must be separately identified as belonging to the customer, ready for physical transfer, and unavailable to be used or directed to another customer.

Revenue is measured as the amount of consideration expected to be received in exchange for the transfer of products. Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. Warranty related costs are recognized as an expense at the time products are sold and a reserve is established. Depending on the terms of the arrangement, for certain contracts the Company may defer the recognition of a portion of the consideration received because a future obligation has not yet been satisfied, such as an extended service contract. An observable price is used to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach is utilized when one is not available.

Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to performance obligations to be satisfied in the future. As of March 31, 2021 and December 31, 2020, contract liability balances were each $272, and are included in accrued liabilities on the condensed consolidated balance sheets. No revenue related to contract liability balances was recognized during the three months ended March 31, 2021 or during three months ended March 31, 2020. The Company did not have any contract assets at March 31, 2021 or December 31, 2020. Terms on accounts receivable vary and are based on specific terms agreed upon with each customer. Write-offs of accounts receivable were not material during the three months ended March 31, 2021 and 2020.

Trade accounts receivable are generally diversified due to the number of entities comprising the Company’s customer base and their dispersion across many geographic regions. The Company also frequently monitors the creditworthiness of the customers to whom the credit is granted in the normal course of business. No one customer made up greater than 10% of total company sales. There were also no customers with a trade account receivable greater than 10% of total accounts receivable at March 31, 2021 or December 31, 2020.

5. INVENTORIES

Inventory costs include materials, labor and factory overhead. Inventories are stated at the lower of cost or net realizable value, determined on a first-in, first-out basis. Appropriate consideration is given to obsolescence, valuation and other factors in determining net realizable value. Revisions of these estimates could result in the need for adjustments. Inventories, net of reserves, at March 31, 2021 and December 31, 2020 consisted of the following:


	2021		2020
Chassis	$	5,767	$	6,859
Raw materials		38,298		36,161
Work in process		27,167		16,282
Finished goods		13,708		24,637
	$	84,940	$	83,939

6. LONG-TERM OBLIGATIONS

Credit Facility and Other Long-Term Obligations

Credit Facility

SEC Form 10-Q filed by Miller Industries, Inc.