Daniel Johnson - FTI Consulting Deborah Whitmire - Executive Vice President, Chief Financial Officer and Treasurer Jeffrey Badgley - Co Chief Executive Officer

Thank you, and good morning, everyone. I would like to welcome you to the Miller Industries Conference Call.

We're here to discuss the company's 2017 third quarter results, which were released after the close of market yesterday. With us from the management team today are Bill Miller, Chairman of the Board; Jeff Badgley, Co-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 period. 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. With these formalities out of the way, I'd like to turn the call over to Jeff.

Please go ahead, Jeff.

Thank you, and good morning. We're pleased to discuss our third quarter performance with you today.

It was another strong quarter for Miller Industries. We continue to see strong demand remaining in place in both our domestic and international end markets.

We reported 2017 third quarter sales of $153.4 million, an increase of 3.9% compared to $147.6 million in the prior year period. Net income was $4.5 million or $0.39 per share compared to net income of $5.5 million or $0.49 per share in the 2016 third quarter.

Gross profit as a percentage of total sales this quarter was 10.2%, down from 11.6% in the third quarter of 2016. Our cost of operations was up 5.5% year-over-year.

Margins were compressed this quarter due to a number of coinciding factors, including product mix, higher health insurance cost, additional depreciation and investment in our facilities and increasing supplier lead times. While we do see rising insurance cost as being a longer-term, industry-wide concern, the costs within our control remain in check.

We're encouraged by our ability to control year-over-year selling, general and administrative expenses as well as material cost. Our capital projects continue to progress nicely.

Construction phases in Hermitage, Pennsylvania and Ooltewah, Tennessee are nearly complete and construction in Greenville, Tennessee remains on track for completion during the fourth quarter of 2017. We are pleased by our successes to date and by the dedication of our people to this undertaking as we balance implementing processes in the new facilities, with meeting our customers' expectations for product deliveries.

Our team is focused on meeting that challenge and that focus has kept our top line performance near our record high. Overall, we are encouraged by our performance in this quarter.

We continue to deliver solid top line results. We remain focused on maintaining a healthy balance sheet and implementing processes in our newly constructed facilities to enhance product quality, faster margin expansion and allow for production capacity to meet growing demand for our products.

Now I'll turn the call over to Debbie, who'll review the third quarter and 9 months' results. After that, I'll be back with comments on the market environment and some closing remarks.

Debbie?

Thanks, Jeff, and good morning, everyone. Net sales for the 2017 third quarter were $153.4 million versus $147.6 million for the 2016 third quarter, a 3.9% year-over-year increase compared to last year's quarterly sales.

Cost of operations was $137.7 million for the 2017 third quarter compared to $130.5 million for the 2016 third quarter. Gross profit was $15.7 million or 10.2% of net sales for the 2017 third quarter compared to $17.1 million or 11.6% of net sales for the 2016 third quarter.

SG&A expenses were $8.6 million for the 2017 third quarter compared to $8.5 million for the 2016 third quarter. As a percentage of sales, SG&A decreased to 5.6% from 5.8% in the prior year period.

Other income expense for the 2017 third quarter was a net gain of $106,000 compared to a net gain of $238,000 for the 2016 third quarter. Interest expense for the 2017 third quarter was $469,000 compared to $359,000 for the 2016 third quarter.

Net income for the 2017 third quarter was $4.5 million or $0.39 per diluted share compared to net income for the 2016 third quarter of $5.5 million or $0.49 per diluted share. Now let me briefly review our results for the 9 months ended September 30, 2017.

Net sales for the first 9 months of 2017 were $455.4 million compared to $452.5 million in the prior year period, an increase of 0.6%. Gross profit for the 9 months ended September 30, 2017, was $48.6 million or 10.7% of sales compared to $49.1 million or 10.9% of sales for the first 9 months of 2016.

Net income for the first 9 months of 2017 was $13.7 million or $1.21 per diluted share, a decrease of 11.3% compared to net income for the first 9 months of 2016 of $15.5 million or $1.36 per diluted share. Now turning to our balance sheet.

Cash and cash equivalents as of September 30, 2017, were $33.5 million compared to $33.0 million as of June 30, 2017, and $31.1 million at December 31, 2016. Accounts receivable at September 30, 2017, totaled $135.4 million compared to $134.2 million as of June 30, 2017, and $125.4 million at December 31, 2016.

Inventories were $64.6 million as of September 30, 2017, compared to $68.2 million as of June 30, 2017, and $64.1 million at December 31, 2016. Accounts payable at September 30, 2017, were $79.3 million compared to $82.6 million as of June 30, 2017, and $85.1 million at December 31, 2016.

As of September 30, 2017, we've borrowed $20 million under our $50 million unsecured revolving credit facility to help fund our ongoing capital projects. The company also announced that its Board of Directors approved our quarterly cash dividend of $0.18 per share payable December 11, 2017, to shareholders of record at the close of business on December 4, 2017.

Now I'll turn the call back over to Jeff for further comments.

Thank you, Debbie. Overall, we are encouraged by the trends we are seeing across our business, both internationally and domestically.

Our impressive top line performance is a testament to our product's reputation in the market and our dedicated employees' ability to meet the needs of our customers, while developing our business for future growth. As we look towards the final quarter of 2017, we remain committed to meeting strong demand, executing our strategic priorities and maintaining a healthy balance sheet.

To our employees, shareholders, suppliers and customers, thank you for your ongoing support. With that, we're ready to take your questions.

Ladies and gentlemen, it has been a pleasure reporting our Q3 earnings. And we look forward to reporting our Q4 earnings in the future.

Thank you very much for joining the call.