Miller (MLR) EPS Up Sales Down 42

Miller Industries (MLR 0.17%), the world’s largest manufacturer of towing and recovery equipment, reported second quarter 2025 results on August 6, 2025. The headline news was a sharp drop in revenue and profits compared to the prior year, with GAAP net sales and net income both declining significantly as industry demand softened. Revenue (GAAP) was $214.0 million, falling short of the $222.9 million analyst estimate (GAAP). Despite this, diluted earnings per share (GAAP) were $0.73, comfortably beating GAAP forecasts of $0.55. Management also cut its full-year revenue outlook by 20‑25% for FY2025 and suspended earnings per share guidance, warning of possible extraordinary costs in the second half of the year. The period showed resilient margins, but marked challenges remain as the company faces high inventory, weak demand, and regulatory risk.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About the Business and Recent Focus

Miller Industries is the leading global producer of towing and recovery vehicles, supplying a broad range of products such as light, medium, and heavy-duty recovery trucks, car carriers, and military recovery vehicles. Its manufacturing operations are based in the United States, France, and the United Kingdom. The company distributes its equipment through a large, loyal network of specialist dealers, serving commercial towing operators and government customers worldwide.

Innovation and supply chain management are central to Miller’s ongoing strategy. Recent years brought investments in new product development and vertical integration -- for example, acquiring Southern Hydraulic Cylinder, Inc. to secure component supply. Maintaining a robust distribution channel and adapting to a continually evolving regulatory environment are also critical for success. In fiscal 2025, the company points to product innovation and increased supply chain resilience as key themes, with a goal of driving future growth and safeguarding its industry leadership.

Quarter in Review: Sales Decline and Margin Resilience

The latest period saw sales drop steeply, with revenue (GAAP) down 42.4% year over year. Management linked this mainly to a fall in product shipments, especially chassis—the base truck vehicles onto which Miller attaches tow and recovery bodies. Last year’s results had benefited from a surge in chassis deliveries as auto manufacturers caught up from earlier supply chain issues. The reversal in this flow led to weaker comparative results, compounded by what Miller described as “lower consumer confidence, elevated costs of ownership, and tariff-related price increases.”

The demand pressure showed up directly in the channel. Retail sales through Miller’s distribution network fell 20% quarter over quarter, and order intake from distributors dropped 30%. These declines reflected persistent excess inventory held by dealers, limiting new orders. Destocking -- the process of reducing high inventory in the supply chain -- weighed on distributor demand longer than expected, and management noted that elevated channel inventory has persisted since the end of last year.

Gross margin (GAAP) improved to 16.2% from 13.8% compared to Q2 2024, despite a sharp drop in gross profit dollars (GAAP). This margin expansion was attributed to a shift in sales mix, with a higher percentage of higher-value recovery bodies sold versus lower-margin chassis deliveries. However, selling, general, and administrative (SG&A) expenses rose 2.8% to $23.4 million (GAAP). With lower sales volume, SG&A expense represented 10.9% of net sales, compared to 6.1% in Q2 2024 -- suggesting less flexibility in cutting overhead as sales declined. Net income and earnings per share (GAAP) both fell by 58.8% and 59.0%, respectively.

Miller signaled ongoing operational initiatives to address these pressures, including reducing production, managing inventory more tightly, and actively monitoring supply chain risks tied to tariffs and regulation. However, there were no significant new product launches or research and development milestones announced during the quarter. Innovation remains a strategic pillar, but the quarter’s update provided no new detail on future product introductions or potential military contract wins.

Financially, management maintained the company’s regular dividend of $0.20 per share, marking the 59th consecutive quarterly payout. Cash and temporary investments increased to $31.8 million as of June 30, 2025, up from $24.3 million as of December 31, 2024. The company also reduced working capital, with inventories and receivables both declining in line with lower sales. Long-term obligations (debt) fell to $55 million as of June 30, 2025, from $65 million as of December 31, 2024.

Strategic Overview: Product Families and Industry Dynamics

Miller’s main products include recovery vehicle bodies -- the core equipment installed on truck chassis for towing, transport, and recovery operations. It also produces specialized car-carrier bodies and heavy-duty rotator trucks, such as the Century M100. The company supplies both commercial and military customers, with military-order opportunities framed as a potential upside but with no material updates this period.

The health of Miller’s distributor network remains a central issue. While this captive network gives Miller broad reach in North America and Europe -- and over 90% of distributors do not offer competing lines -- excess inventory across the network has delayed new orders and forced Miller to slow production. Management has prioritized working through this channel inventory before returning to growth, emphasizing the importance of a stable and loyal distribution base.

Supply chain resilience has also shaped recent strategy. The acquisition of Southern Hydraulic Cylinder, Inc. aimed to enhance the stability of Miller’s supply chain. Management highlighted continued monitoring of supply chains and proactive cost management to address the risk of tariff-driven price increases and ensure long-term operational flexibility.

Externally, regulations such as the California Air Resources Board’s Advanced Clean Trucks (ACT) standards continue to pose challenges for product eligibility and customer demand in key states. Management pointed to the ongoing effort required to adapt products and sourcing to evolving emissions requirements. The company is investing in compliance and monitoring activity that could affect future demand and product development.

Looking Ahead: Guidance, Risks, and What to Monitor

For the remainder of FY2025, Miller revised its revenue outlook sharply lower, now anticipating total revenue in the range of $750 million to $800 million. This is down from previous guidance of $950 million to $1.0 billion for FY2025. The company also suspended its earnings per share guidance, stating that “organization-wide operational initiatives we are evaluating could have a material impact on our cost structure, potentially resulting in extraordinary expenses and potential losses in the second half of the year.”

Investors should watch for several key factors. These include the pace of distributor inventory reduction, the timing and details of new product launches or military contract wins, ongoing responses to tariffs and regulatory developments, and trends in SG&A and operating margin as sales remain below last year’s level. Miller’s management signaled that long-term fundamentals remain constructive -- industry drivers like average vehicle age and miles driven are still positive -- but short-term caution dominates, given the possibility of operational losses and cost restructuring through the second half of the year.

The quarterly dividend was raised 5.3% to $0.20 per share compared to the prior year.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.