Company Quick10K Filing
Quick10K
Miller Industries
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$31.43 11 $358
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-10-31 Quarter: 2018-10-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-07-31 Quarter: 2018-07-31
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-05-24 Shareholder Vote
8-K 2019-05-08 Earnings, Exhibits
8-K 2019-03-06 Earnings, Exhibits
8-K 2018-12-20 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-09-05 Officers
8-K 2018-08-08 Earnings, Exhibits
8-K 2018-07-19 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-05-25 Shareholder Vote
CAT Caterpillar 67,329
TEX Terex 1,753
PLOW Douglas Dynamics 977
HY Hyster-Yale Materials Handling 903
CMCO Columbus McKinnon 836
ASTE Astec Industries 605
BLBD Blue Bird 484
MTW Manitowoc 462
GENC Gencor Industries 165
ASV ASV Holdings 69
MLR 2019-06-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 mlr-20190630ex311af111d.htm
EX-31.2 mlr-20190630ex312056c05.htm
EX-31.3 mlr-20190630ex31340df9e.htm
EX-32.1 mlr-20190630ex3219e7474.htm
EX-32.2 mlr-20190630ex3220d905e.htm
EX-32.3 mlr-20190630ex323f33bec.htm

Miller Industries Earnings 2019-06-30

MLR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 mlr-20190630x10q.htm 10-Q mlr_Current_Folio_10Q

 

 

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

  June 30, 2019

 

 

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 July 31, 2019 was 11,400,102.

 

 

 

 

Picture 1

Index

 

 

 

 

 

 

Page Number

PART I 

FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets – June 30, 2019 and December 31, 2018

2

 

 

 

 

 

 

Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2019 and 2018

3

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018

4

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the Six Months Ended June 30, 2019 and 2018

5

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018

6

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

16

 

 

 

 

 

Item 4.

Controls and Procedures

17

 

 

 

 

PART II 

 

OTHER INFORMATION

17

 

 

 

 

 

Item 1.

Legal Proceedings

17

 

 

 

 

 

Item 1A.

Risk Factors

17

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

17

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

17

 

 

 

 

 

Item 4.

Mine Safety Disclosures

17

 

 

 

 

 

Item 5.

Other Information

18

 

 

 

 

 

Item 6.

Exhibits

19

 

 

 

 

SIGNATURES 

20

 

 

 

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 cyclical nature of our industry and changes in consumer confidence; economic and market conditions; our customers’ access to capital and credit to fund purchases; our dependence upon outside suppliers for our raw materials, including aluminum, steel, petroleum-related products and other purchased component parts; changes in price (including as a result of the imposition of tariffs) of aluminum, steel, petroleum-related products and other purchased component parts; delays in receiving supplies of such materials or parts; operational challenges caused by our increased sales volumes; changes in fuel and other transportation costs, insurance costs and weather conditions; changes in government regulation; various political, economic and other uncertainties relating to our international operations, including restrictive taxation and foreign currency fluctuation; failure to comply with domestic and foreign anti-corruption laws; special risks from our sales to U.S. and other governmental entities through prime contractors; our ability to secure new military orders; competition 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; 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, 2018 (as the same may be updated from time to time in subsequent quarterly reports), 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, our company.

 

 

 

PART I. FINANCIAL INFORMATION

ITEM 1.          FINANCIAL STATEMENTS

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

June 30, 

    

 

 

 

 

2019

 

December 31, 

 

    

(Unaudited)

    

2018

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and temporary investments

 

$

27,236

 

$

27,037

Accounts receivable, net of allowance for doubtful accounts of $1,208 and $1,112 at June 30, 2019 and December 31, 2018, respectively

 

 

197,760

 

 

149,142

Inventories, net

 

 

90,973

 

 

93,767

Prepaid expenses

 

 

5,884

 

 

3,272

Total current assets

 

 

321,853

 

 

273,218

NONCURRENT ASSETS:

 

 

 

 

 

 

Property, plant and equipment, net

 

 

87,004

 

 

82,850

Right-of-use assets - operating leases

 

 

1,547

 

 

 —

Goodwill

 

 

11,619

 

 

11,619

Other assets

 

 

527

 

 

497

TOTAL ASSETS

 

$

422,550

 

$

368,184

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

129,449

 

$

98,220

Accrued liabilities

 

 

26,763

 

 

24,863

Current portion of operating lease obligation

 

 

362

 

 

 —

Current portion of finance lease obligation

 

 

21

 

 

20

Long-term obligations due within one year

 

 

479

 

 

285

Total current liabilities

 

 

157,074

 

 

123,388

NONCURRENT LIABILITIES

 

 

 

 

 

 

Long-term obligations

 

 

20,079

 

 

15,475

Noncurrent portion of operating lease obligation

 

 

1,182

 

 

 —

Noncurrent portion of finance lease obligation

 

 

47

 

 

58

Deferred income tax liabilities

 

 

1,864

 

 

1,700

Total liabilities

 

 

180,246

 

 

140,621

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Notes 6 and 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, 11,400,102 and 11,394,546, outstanding at June 30, 2019 and December 31, 2018, respectively

 

 

114

 

 

114

Additional paid-in capital

 

 

151,055

 

 

150,905

Accumulated surplus

 

 

96,598

 

 

81,354

Accumulated other comprehensive loss

 

 

(5,463)

 

 

(4,810)

Total shareholders’ equity

 

 

242,304

 

 

227,563

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

422,550

 

$

368,184

 

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

2

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

 

June 30

 

    

2019

    

2018

    

2019

    

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

222,346

 

$

176,888

 

$

419,559

 

$

336,048

COSTS OF OPERATIONS

 

 

197,133

 

 

155,609

 

 

371,749

 

 

296,342

GROSS PROFIT

 

 

25,213

 

 

21,279

 

 

47,810

 

 

39,706

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

  

 

 

  

 

 

  

 

 

  

Selling, general and administrative expenses

 

 

10,968

 

 

9,678

 

 

21,183

 

 

19,267

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-OPERATING (INCOME) EXPENSES:

 

 

  

 

 

  

 

 

  

 

 

  

Interest expense, net

 

 

721

 

 

484

 

 

1,389

 

 

904

Other (income) expense, net

 

 

57

 

 

627

 

 

311

 

 

(288)

Total expense, net

 

 

11,746

 

 

10,789

 

 

22,883

 

 

19,883

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

13,467

 

 

10,490

 

 

24,927

 

 

19,823

INCOME TAX PROVISION

 

 

2,784

 

 

2,890

 

 

5,584

 

 

5,553

NET INCOME

 

$

10,683

 

$

7,600

 

$

19,343

 

$

14,270

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC INCOME PER COMMON SHARE

 

$

0.94

 

$

0.67

 

$

1.70

 

$

1.25

DILUTED INCOME PER COMMON SHARE

 

$

0.94

 

$

0.67

 

$

1.70

 

$

1.25

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.18

 

$

0.18

 

$

0.36

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

  

 

 

  

 

 

  

 

 

  

Basic

 

 

11,400

 

 

11,384

 

 

11,400

 

 

11,384

Diluted

 

 

11,400

 

 

11,393

 

 

11,400

 

 

11,393

 

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

3

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

 

June 30

 

    

2019

    

2018

    

2019

    

2018

NET INCOME

 

$

10,683

 

$

7,600

 

$

19,343

 

$

14,270

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME:

 

 

  

 

 

  

 

 

  

 

 

  

Foreign currency translation adjustment

 

 

(930)

 

 

(1,332)

 

 

(653)

 

 

(515)

Total other comprehensive income

 

 

(930)

 

 

(1,332)

 

 

(653)

 

 

(515)

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

$

9,753

 

$

6,268

 

$

18,690

 

$

13,755

 

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

4

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

    

 

 

    

Accumulated

    

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

 

 

 

 

Common

 

Paid-In

 

Accumulated

 

Comprehensive

 

 

 

 

 

Stock

 

Capital

 

Surplus

 

Loss

 

Total

BALANCE, December 31, 2017

 

$

114

 

$

150,699

 

$

55,580

 

$

(3,293)

 

$

203,100

Cumulative effect adjustment for adoption of ASU 2014-09

 

 

 —

 

 

 —

 

 

(324)

 

 

 —

 

 

(324)

BALANCE, January 1, 2018

 

 

114

 

 

150,699

 

 

55,256

 

 

(3,293)

 

 

202,776

Components of comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

6,670

 

 

 —

 

 

6,670

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

817

 

 

817

Total comprehensive income

 

 

 —

 

 

 —

 

 

6,670

 

 

817

 

 

7,487

Issuance of common stock to non-employee directors (5,814)

 

 

 —

 

 

150

 

 

 —

 

 

 —

 

 

150

Dividends paid, $0.18 per share

 

 

 —

 

 

 —

 

 

(2,049)

 

 

 —

 

 

(2,049)

BALANCE, March 31, 2018

 

 

114

 

 

150,849

 

 

59,877

 

 

(2,476)

 

 

208,364

Components of comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

7,600

 

 

 —

 

 

7,600

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

(1,332)

 

 

(1,332)

Total comprehensive income

 

 

 —

 

 

 —

 

 

7,600

 

 

(1,332)

 

 

6,268

Dividends paid, $0.18 per share

 

 

 —

 

 

 —

 

 

(2,049)

 

 

 —

 

 

(2,049)

BALANCE, June 30, 2018

 

$

114

 

$

150,849

 

$

65,428

 

$

(3,808)

 

$

212,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, December 31, 2018

 

$

114

 

$

150,905

 

$

81,354

 

$

(4,810)

 

$

227,563

Cumulative effect adjustment for adoption of ASU 2016-02

 

 

 —

 

 

 —

 

 

 4

 

 

 —

 

 

 4

BALANCE, January 1, 2019

 

 

114

 

 

150,905

 

 

81,358

 

 

(4,810)

 

 

227,567

Components of comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

8,660

 

 

 —

 

 

8,660

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

277

 

 

277

Total comprehensive income

 

 

 —

 

 

 —

 

 

8,660

 

 

277

 

 

8,937

Issuance of common stock to non-employee directors (5,556)

 

 

 —

 

 

150

 

 

 —

 

 

 —

 

 

150

Dividends paid, $0.18 per share

 

 

 —

 

 

 —

 

 

(2,052)

 

 

 —

 

 

(2,052)

BALANCE, March 31, 2019

 

 

114

 

 

151,055

 

 

87,966

 

 

(4,533)

 

 

234,602

Components of comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

10,683

 

 

 —

 

 

10,683

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

(930)

 

 

(930)

Total comprehensive income

 

 

 —

 

 

 —

 

 

10,683

 

 

(930)

 

 

9,753

Dividends paid, $0.18 per share

 

 

 —

 

 

 —

 

 

(2,051)

 

 

 —

 

 

(2,051)

BALANCE, June 30, 2019

 

$

114

 

$

151,055

 

$

96,598

 

$

(5,463)

 

$

242,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30

 

    

2019

    

2018

OPERATING ACTIVITIES:

 

 

  

 

 

  

Net income

 

$

19,343

 

$

14,270

Adjustments to reconcile net income to net cash flows from operating activities:

 

 

  

 

 

  

Depreciation and amortization

 

 

4,214

 

 

3,518

(Gain) Loss on disposal of property, plant and equipment

 

 

(4)

 

 

133

Provision for doubtful accounts

 

 

102

 

 

115

Issuance of non-employee director shares

 

 

150

 

 

150

Deferred tax provision

 

 

159

 

 

182

Changes in operating assets and liabilities:

 

 

  

 

 

  

Accounts receivable

 

 

(48,862)

 

 

(15,585)

Inventories

 

 

2,406

 

 

(13,024)

Prepaid expenses

 

 

(2,622)

 

 

(287)

Other assets

 

 

669

 

 

(21)

Accounts payable

 

 

31,601

 

 

12,823

Accrued liabilities

 

 

1,169

 

 

3,817

Net cash flows from operating activities

 

 

8,325

 

 

6,091

INVESTING ACTIVITIES:

 

 

  

 

 

  

Purchases of property, plant and equipment

 

 

(8,437)

 

 

(9,392)

Proceeds from sale of property, plant and equipment

 

 

 7

 

 

132

Net cash flows from investing activities

 

 

(8,430)

 

 

(9,260)

FINANCING ACTIVITIES:

 

 

  

 

 

  

Net borrowings under credit facility

 

 

5,000

 

 

5,000

Payments of cash dividends

 

 

(4,103)

 

 

(4,098)

Net proceeds (payments) on other long-term obligations

 

 

(185)

 

 

374

Finance lease obligation payments

 

 

(10)

 

 

 —

Net cash flows from financing activities

 

 

702

 

 

1,276

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY INVESTMENTS

 

 

(398)

 

 

(289)

NET CHANGE IN CASH AND TEMPORARY INVESTMENTS

 

 

199

 

 

(2,182)

CASH AND TEMPORARY INVESTMENTS, beginning of period

 

 

27,037

 

 

21,895

CASH AND TEMPORARY INVESTMENTS, end of period

 

$

27,236

 

$

19,713

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

  

 

 

  

Cash payments for interest

 

$

1,655

 

$

1,121

Cash payments for income taxes, net of refunds

 

$

5,249

 

$

3,699

 

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

6

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, 2018. The condensed consolidated financial statements include accounts of certain subsidiaries whose fiscal closing dates differ from December 31st by 31 days (or less) to facilitate timely reporting.

 

2.          RECENT ACCOUNTING PRONOUNCEMENTS

Recently Issued Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) 2018‑15 Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350‑40) to align the requirements for capitalizing implementation costs incurred in cloud computing arrangements that are service contracts with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update will be effective for financial statements issued for annual periods, and interim periods within these annual periods, beginning after December 15, 2019, with early adoption permitted. The Company plans to apply the amendments in the update prospectively to all implementation costs incurred after the date of the adoption. The adoption of this update will not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recently Adopted Standards

The FASB issued ASU 2016‑02 Leases (Topic 842) to improve financial reporting on leasing transactions. The update affects all companies that lease assets. The amendments require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by lease agreements with terms greater than twelve months. Companies are also required to provide disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements concerning additional information about the amounts recorded in the financial statements. The Company elected the package of practical expedients permitted by ASC Topic 842. Accordingly, the Company accounted for its existing operating leases as operating leases under the new guidance without reassessing whether the contracts contained a lease under ASC Topic 842 or whether classification of the operating leases would be different in accordance with ASC Topic 842. In the same manner, the company will not reassess the allocation of initial direct costs on existing leases. The Company also elected to not allocate consideration between lease and non-lease components. The amendments were adopted by the Company in the first quarter of 2019 by applying the modified retrospective approach and making a cumulative-effect adjustment to the opening balance of retained earnings at January 1, 2019. The cumulative effect adjustment to the consolidated balance sheets as of January 1, 2019 was as follows:

7

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

Cumulative Effect

 

Balance at

 

    

December 31, 2018

    

Adjustment

    

January 1, 2019

Assets

 

 

 

 

 

 

 

 

 

Right-of-use assets - operating leases

 

$

 —

 

$

2,268

 

$

2,268

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

  

 

 

  

 

 

  

Current portion of operating lease obligation

 

 

 —

 

 

1,358

 

 

1,358

Noncurrent portion of operating lease obligation

 

 

 —

 

 

905

 

 

905

Deferred income tax liabilities

 

 

1,700

 

 

 1

 

 

1,701

Accumulated surplus

 

 

81,354

 

 

 4

 

 

81,358

In August 2018, the SEC issued a final rule to amend certain redundant or outdated disclosure requirements to simplify compliance with financial reporting. In an effort to reduce such duplicative disclosures, many requirements of the SEC were either eliminated or reduced where GAAP had identical or similar disclosure provisions for the notes to financial statements. In other instances, disclosure requirements were enhanced to improve transparency. The Company adopted these amendments in the first quarter of 2019. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

3.          BASIC AND DILUTED INCOME PER SHARE

Basic income per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted income per share is calculated by dividing net income by the weighted average number of common and potential dilutive common shares outstanding. Diluted income per share takes into consideration the assumed exercise of outstanding stock options resulting in approximately 9,000 potential dilutive common shares for each of the three and six months ended June 30, 2018.  The Company had no outstanding stock options and no potential dilutive common shares for the three and six months ended June 30, 2019. For the three and six months ended June 30, 2018, none of the outstanding stock options would have been anti-dilutive.

 

4.          REVENUE

Substantially all of our revenue is generated from sales of towing 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

    

For the Six Months Ended

 

 

June 30, 

 

June 30, 

 

    

2019

    

2018

    

2019

    

2018

Net Sales:

 

 

  

 

 

  

 

 

  

 

 

  

North America

 

$

191,753

 

$

143,137

 

$

355,646

 

$

274,781

Foreign

 

 

30,593

 

 

33,751

 

 

63,913

 

 

61,267

 

 

$

222,346

 

$

176,888

 

$

419,559

 

$

336,048

 

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, 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. 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

8

to be satisfied in the future. As of June 30, 2019, and December 31, 2018,  contract liability balances related to extended service contracts were $700 and $331, respectively, and are included in accrued liabilities on the consolidated balance sheets. No revenue related to contract liability balances was recognized during the three and six months ended June 30, 2019 and 2018. The Company did not have any contract assets at June 30, 2019 or December 31, 2018. Terms on accounts receivable vary and are based on specific terms agreed upon with each customer. Impairment losses on accounts receivable were de minimis during the three and six months ended June 30, 2019 and 2018.

 

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 and by frequent monitoring of the creditworthiness of the customers to whom the credit is granted in the normal course of business. At December 31, 2018 the Company had one customer with a trade account receivable balance greater than 10% of total accounts receivable, which account subsequently decreased to less than 10% of the total accounts receivable balance at June 30, 2019.

 

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 June 30, 2019 and December 31, 2018 consisted of the following:

 

 

 

 

 

 

 

 

 

 

June 30, 

 

December 31, 

 

    

2019

    

2018

Chassis

 

$

6,360

 

$

8,921

Raw materials

 

 

38,719

 

 

40,021

Work in process

 

 

17,243

 

 

14,995

Finished goods

 

 

28,651

 

 

29,830

 

 

$

90,973

 

$

93,767

 

 

6.          LONG-TERM OBLIGATIONS

Credit Facility and Other Long-Term Obligations

Credit Facility

On December 20, 2018, we amended and restated our loan agreement with First Tennessee Bank National Association, which governs our existing $50,000 unsecured revolving credit facility, to (i) renew and extend the maturity date to May 31, 2022 and make certain other conforming changes, (ii) reduce the interest rate on outstanding loans from one month LIBOR rate plus 150 basis points to one month LIBOR rate plus an applicable margin of either 1.00% or 1.25% depending on the Company’s Leverage Ratio (as such term is defined in the amended and restated master revolving credit note), which margin adjusts periodically from time to time based on changes in such Leverage Ratio, and make certain other changes to the interest rate provisions, (iii) amend the tangible net worth covenant to increase the minimum required compliance level thereunder from $130,000 to $160,000 (the Company’s tangible net worth at June 30, 2019 was approximately $231,000) and (iv) modify certain definitions and other terms thereof. The credit facility contains customary representations and warranties, events of default, and financial, affirmative and negative covenants for loan agreements of this kind. Covenants under the credit facility restrict the payment of cash dividends if the Company would be in violation of the minimum tangible net worth test or the leverage ratio test in the current loan agreement as a result of the dividend, among various restrictions. The Company has been in compliance with these covenants throughout 2018 and during the first half of 2019, and we anticipate that the Company will continue to be in compliance during the remainder of 2019.  

In the absence of a default, all borrowings under the current credit facility bear interest at the LIBOR Rate plus 1.00% or 1.25% per annum, depending on the leverage ratio. The Company pays a non-usage fee under the current loan agreement at a rate per annum equal to between 0.15% and 0.35% of the unused amount of the current credit facility, which fee is paid quarterly.

At June 30, 2019 and December 31, 2018, the Company had $20,000 and $15,000, respectively, in outstanding borrowings under the credit facility.    

9

Other Long-Term Obligations

The Company’s French subsidiary, Jige International S.A., has an agreement with Banque Européenne du Crédit Mutuel for an unsecured fixed rate loan with a maturity date of September 30, 2020. All borrowings under this loan bear interest at  0.3% per annum. At June 30, 2019, the Company had $558 in outstanding borrowings under the loan agreement, of which $79 and $479 were classified as long-term obligations and long-term obligations due within one year, respectively, on the consolidated balance sheets. At December 31, 2018, the Company had $760 in outstanding borrowings under the loan agreement, of which $475 and $285 were classified as long-term obligations and long-term obligations due within one year, respectively, on the consolidated balance sheets. These borrowings are being used primarily for the purchase of land and making routine repairs to the operating facilities in France. The loan agreement contains no material covenants.

 

7.          COMMITMENTS AND CONTINGENCIES

Leasing Activities

The Company leases certain equipment and facilities under long-term non-cancellable operating and finance lease agreements.  The leases expire at various dates through 2026.  Certain of the lease agreements contain renewal options.  For those leases that have renewal options, the Company included these renewal periods in the lease term if the Company determined it was reasonably certain to exercise the renewal option. Lease payments during such renewal periods were also considered in the calculation of right-of-use assets and lease obligations.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Lease obligations are recognized at the commencement date based on the present value of lease payments over the lease term. Right-of-use assets are recognized at the commencement date as the initial measurement of the lease liability, plus payments made prior to lease commencement and any initial direct costs. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Expense is recognized on a straight-line basis over the lease term for operating leases. For finance leases, expense is recognized as the expense from straight-line amortization of the right-of-use asset plus the periodic interest expense from the lease obligation. Short-term leases have a lease term of twelve months or less.  The Company recognizes short-term leases on a straight-line basis and does not record a related right-of-use asset or lease obligation for such contracts.

Right-of-use assets related to finance leases are included as a component of property, plant and equipment, net on the consolidated balance sheets and had the following values at June 30, 2019.

 

 

 

 

 

 

June 30, 

 

    

2019

Finance lease right-of-use assets

 

$

78

Accumulated amortization

 

 

(11)

Finance lease right-of-use assets, net

 

$

67

A maturity analysis of the undiscounted cash flows of operating and finance lease obligations is as follows:

 

 

 

 

 

 

 

 

 

Operating Lease Obligation

 

Finance Lease Obligation

Remaining lease payments to be paid during the year ended December 31, 

 

 

 

 

 

 

2019

    

$

219

 

$

10

2020

 

 

373

 

 

23

2021

 

 

280

 

 

23

2022

 

 

263

 

 

15

2023

 

 

222

 

 

 —

Thereafter

 

 

339

 

 

 —

Total lease payments

 

 

1,696

 

 

71

Less Imputed Interest

 

 

(152)

 

 

(3)

Lease obligation at June 30, 2019

 

$

1,544

 

$

68

 

10

The lease cost and certain other information during the three and six months ended June 30, 2019 is as follows:

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

 

June 30

 

    

2019

    

2019

Lease Cost

 

 

 

 

 

 

Finance lease cost:

 

 

 

 

 

 

Amortization of right-of-use assets

 

$

 6

 

$

11

Interest on lease obligation

 

 

 —

 

 

 1

Total finance lease cost

 

 

 6

 

 

12

Total operating lease cost

 

 

185

 

 

385

Short-term lease cost

 

 

318

 

 

570

Total lease cost

 

$

509

 

$

967

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease obligation:

 

 

  

 

 

  

Operating cash flows from operating leases

 

$

185

 

$

385

Financing cash flows from finance leases

 

 

 5

 

 

10

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new finance lease obligations

 

 

 —