x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | March 31, 2014 |
o | 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) |
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o | Smaller reporting company o |
PART I | FINANCIAL INFORMATION | Page Number | ||
Item 1. | Financial Statements | |||
Condensed Consolidated Balance Sheets – March 31, 2014 | ||||
and December 31, 2013 | 2 | |||
Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2014 and 2013 | 3 | |||
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2014 and 2013 | 4 | |||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013 | 5 | |||
Notes to Condensed Consolidated Financial Statements | 6 | |||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 14 | ||
Item 4. | Controls and Procedures | 15 | ||
PART II | OTHER INFORMATION | |||
Item 1. | Legal Proceedings | 15 | ||
Item 1A. | Risk Factors | 15 | ||
Item 6. | Exhibits | 16 | ||
SIGNATURES | 17 |
Certain statements in this 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,” 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 words, 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. These forward-looking statements are subject to a number of risks and uncertainties, including, the cyclical nature of our industry and changes in consumer confidence; economic and market conditions; our customer’s access to capital and credit to fund purchases, including the ability of our customers to secure floor plan financing; our dependence on outside suppliers of raw materials; changes in the cost of aluminum, steel and related raw materials; changes in fuel and other transportation costs, insurance costs and weather conditions; changes in government regulation; foreign currency fluctuation; competitors could impede 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; the effects of new regulation 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; 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” 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 fiscal 2013, 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.
ITEM 1. | FINANCIAL STATEMENTS |
March 31, 2014 (Unaudited) | December 31, 2013 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and temporary investments | $ | 40,544 | $ | 42,864 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1,765 and $1,714 at March 31, 2014 and December 31, 2013, respectively | 82,005 | 80,821 | ||||||
Inventories | 56,659 | 54,172 | ||||||
Prepaid expenses | 3,766 | 2,190 | ||||||
Current deferred income taxes | 4,069 | 3,888 | ||||||
Total current assets | 187,043 | 183,935 | ||||||
PROPERTY, PLANT, AND EQUIPMENT, net | 30,097 | 30,834 | ||||||
GOODWILL | 11,619 | 11,619 | ||||||
OTHER ASSETS | 256 | 281 | ||||||
$ | 229,015 | $ | 226,669 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 47,696 | $ | 47,388 | ||||
Accrued liabilities | 15,924 | 15,726 | ||||||
Total current liabilities | 63,620 | 63,114 | ||||||
DEFERRED INCOME TAX LIABILITIES | 1,842 | 1,842 | ||||||
COMMITMENTS AND CONTINGENCIES (Notes 6 and 8) | ||||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued or outstanding | ||||||||
Common stock, $.01 par value; 100,000,000 shares authorized, 11,300,030 and 11,265,679 outstanding at March 31, 2014 and December 31, 2013, respectively | 113 | 113 | ||||||
Additional paid-in capital | 149,898 | 149,608 | ||||||
Retained earnings | 12,369 | 11,696 | ||||||
Accumulated other comprehensive income (loss) | 1,173 | 814 | ||||||
Total Miller Industries, Inc. shareholders’ equity | 163,553 | 162,231 | ||||||
Noncontrolling interests | --- | (518 | ) | |||||
Total Shareholders’ equity | 163,553 | 161,713 | ||||||
$ | 229,015 | $ | 226,669 |
2 |
Three Months Ended March 31 | ||||||||
2014 | 2013 | |||||||
NET SALES | $ | 104,168 | $ | 84,950 | ||||
COSTS OF OPERATIONS | 93,230 | 76,316 | ||||||
GROSS PROFIT | 10,938 | 8,634 | ||||||
OPERATING EXPENSES: | ||||||||
Selling, general and administrative expenses | 7,166 | 6,699 | ||||||
Interest expense, net | 70 | 67 | ||||||
Other (income) expense, net | 62 | (23 | ) | |||||
Total operating expenses | 7,298 | 6,743 | ||||||
INCOME BEFORE INCOME TAXES | 3,640 | 1,891 | ||||||
INCOME TAX PROVISION | 1,340 | 684 | ||||||
NET INCOME | 2,300 | 1,207 | ||||||
NET LOSS ATTRIBUTABLE TO | ||||||||
NONCONTROLLING INTERESTS | 66 | 121 | ||||||
NET INCOME ATTRIBUTABLE TO MILLER INDUSTRIES, INC. | $ | 2,366 | $ | 1,328 | ||||
BASIC INCOME PER COMMON SHARE | $ | 0.21 | $ | 0.12 | ||||
DILUTED INCOME PER COMMON SHARE | $ | 0.21 | $ | 0.12 | ||||
CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.15 | $ | 0.14 | ||||
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||
Basic | 11,285 | 11,198 | ||||||
Diluted | 11,353 | 11,316 |
3 |
Three Months Ended March 31 | ||||||||
2014 | 2013 | |||||||
NET INCOME | $ | 2,300 | $ | 1,207 | ||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
Foreign currency translation adjustment | 260 | (248 | ) | |||||
Derivative instrument and hedging activities | 27 | 338 | ||||||
Reclassification from accumulated other comprehensive income (loss) | 71 | – | ||||||
Total other comprehensive income (loss) | 358 | 90 | ||||||
COMPREHENSIVE INCOME | 2,658 | 1,297 | ||||||
NET LOSS ATTRIBUTABLE TO | ||||||||
NONCONTROLLING INTERESTS | 66 | 121 | ||||||
COMPREHENSIVE INCOME ATTRIBUTABLE | ||||||||
TO MILLER INDUSTRIES, INC. | $ | 2,724 | $ | 1,418 |
4 |
Three Months Ended March 31 | ||||||||
2014 | 2013 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ | 2,300 | $ | 1,207 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 936 | 898 | ||||||
Gain on disposal of equipment | - | 4 | ||||||
Loss on deconsolidation of subsidiary | 83 | – | ||||||
Provision for doubtful accounts | 45 | 47 | ||||||
Excess tax benefit from stock-based compensation | (22 | ) | (127 | ) | ||||
Issuance of non-employee director shares | 96 | 75 | ||||||
Deferred income tax provision | (181 | ) | 3 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (1,259 | ) | (4,889 | ) | ||||
Inventories | (3,629 | ) | (5,099 | ) | ||||
Prepaid expenses | (1,774 | ) | (1,407 | ) | ||||
Accounts payable | 2,754 | 9,098 | ||||||
Accrued liabilities | (95 | ) | 862 | |||||
Net cash flows from operating activities | (746 | ) | 672 | |||||
INVESTING ACTIVITIES: | ||||||||
Purchases of property, plant and equipment | (202 | ) | (815 | ) | ||||
Payments received on notes receivable | 9 | 10 | ||||||
Net cash flows from investing activities | (193 | ) | (805 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Payments of cash dividends | (1,692 | ) | (1,569 | ) | ||||
Proceeds from stock option exercises | 172 | 405 | ||||||
Excess tax benefit from stock-based compensation | 22 | 127 | ||||||
Net cash flows from financing activities | (1,498 | ) | (1,037 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY INVESTMENTS | 117 | 6 | ||||||
NET CHANGE IN CASH AND TEMPORARY INVESTMENTS | (2,320 | ) | (1,164 | ) | ||||
CASH AND TEMPORARY INVESTMENTS, beginning of period | 42,864 | 48,591 | ||||||
CASH AND TEMPORARY INVESTMENTS, end of period | $ | 40,544 | $ | 47,427 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash payments for interest | $ | 223 | $ | 207 | ||||
Cash payments for income taxes, net of refunds | $ | 1,701 | $ | (411 | ) |
5 |
1. | BASIS OF PRESENTATION |
2. | BASIC AND DILUTED INCOME PER SHARE |
3. | INVENTORIES |
March 31, 2014 | December 31, 2013 | |||||||
Chassis | $ | 7,451 | $ | 7,665 | ||||
Raw materials | 25,329 | 25,772 | ||||||
Work in process | 10,119 | 9,915 | ||||||
Finished goods | 13,760 | 10,820 | ||||||
$ | 56,659 | $ | 54,172 | |||||
4. | LONG-LIVED ASSETS |
6 |
5. | GOODWILL |
Goodwill consists of the excess of cost of acquired entities over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed. Goodwill is not amortized. However, the Company evaluates the carrying value of goodwill for impairment at least annually or if an event or circumstance occurs that would indicate that the carrying amount had been impaired. The Company reviews goodwill for impairment utilizing a qualitative assessment or a two-step process. If we choose to perform a qualitative analysis of goodwill and determine that the fair value more likely than not exceeds the carrying value, no further testing is needed. If we choose the two-step approach or if qualitative analysis determines the carrying value more likely than not exceeds fair value, the first step identifies potential impairment by comparing the fair value of the reporting unit with its carrying value. If the fair value exceeds the carrying value the second step is not necessary. If the carrying value is more than the fair value, the second step of testing is performed to compare the fair value of the goodwill with its carrying value. An impairment loss would be recognized to the extent that the carrying value of the goodwill exceeds its fair value.
6. | LONG-TERM OBLIGATIONS |
7. | STOCK-BASED COMPENSATION |
8. | COMMITMENTS AND CONTINGENCIES |
7 |
9. | INCOME TAXES |
10. | SHAREHOLDERS EQUITY |
Payment | Record Date | Payment Date | Dividend (per share) | Amount | ||||||
Q1 2011 | March 17, 2011 | March 24, 2011 | $ | 0.12 | $ | 1,415 | ||||
Q2 2011 | May 23, 2011 | May 31, 2011 | 0.12 | 1,429 | ||||||
Q3 2011 | August 19, 2011 | August 26, 2011 | 0.12 | 1,365 | ||||||
Q4 2011 | December 5, 2011 | December 19, 2011 | 0.12 | 1,336 | ||||||
Total for 2011 | $ | 0.48 | $ | 5,545 | ||||||
Q1 2012 | March 19, 2012 | March 26, 2012 | $ | 0.13 | $ | 1,437 | ||||
Q2 2012 | June 18, 2012 | June 25, 2012 | 0.13 | 1,439 | ||||||
Q3 2012 | September 17, 2012 | September 24, 2012 | 0.13 | 1,439 | ||||||
Q4 2012 | December 10, 2012 | December 17, 2012 | 0.13 | 1,447 | ||||||
Total for 2012 | $ | 0.52 | $ | 5,762 | ||||||
Q1 2013 | March 18, 2013 | March 25, 2013 | $ | 0.14 | $ | 1,569 | ||||
Q2 2013 | June 17, 2013 | June 24, 2013 | 0.14 | 1,573 | ||||||
Q3 2013 | September 16, 2013 | September 23, 2013 | 0.14 | 1,575 | ||||||
Q4 2013 | December 9, 2013 | December 16, 2013 | 0.14 | 1,577 | ||||||
Total for 2013 | $ | 0.56 | $ | 6,294 | ||||||
Q1 2014 | March 17, 2014 | March 24, 2014 | $ | 0.15 | $ | 1,692 | ||||
Total for 2014 | $ | 0.15 | $ | 1,692 |
8 |
11. | GEOGRAPHIC INFORMATION |
For the Three Months Ended | |||||||||
March 31 | |||||||||
2014 | 2013 | ||||||||
Net Sales: | |||||||||
North America | $ | 82,769 | $ | 72,613 | |||||
Foreign | 21,399 | 12,337 | |||||||
$ | 104,168 | $ | 84,950 | ||||||
March 31, 2014 | December 31, 2013 | ||||||
Long Lived Assets: | |||||||
North America | $ | 39,063 | $ | 39,832 | |||
Foreign | 2,653 | 2,645 | |||||
$ | 41,716 | $ | 42,477 | ||||
12. | CUSTOMER INFORMATION |
13. OTHER (INCOME) EXPENSE
Other (income) expense for the three months ended March 31, 2014 was a loss of $62 that includes a loss on deconsolidation of a subsidiary of $83 offset by foreign currency transaction gains of $21. On February 28, 2014, the Company entered into an agreement to sell all of its interest in the Delavan joint venture to its joint venture partner, which closed on March 31, 2014. Our Greeneville facility has ceased the manufacturing of Delavan products as of the end of the first quarter of 2014 so no further losses from the venture are expected. For the three months ended March 31, 2013, other (income) expense consisted of foreign currency transaction gains of $23.
9 |
The following table presents the financial instruments measured at fair value on a recurring basis: | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Current Assets | ||||||||||||||||
Derivative financial instruments | ||||||||||||||||
Foreign currency contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total assets | $ | — | $ | — | $ | — | $ | — | ||||||||
Current Liabilities | ||||||||||||||||
Derivative financial instruments | ||||||||||||||||
Foreign currency contracts | $ | — | $ | 263 | $ | — | $ | 263 | ||||||||
Total liabilities | $ | — | $ | 263 | $ | — | $ | 263 |
December 31, 2013 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Current Assets | ||||||||||||||||
Derivative financial instruments | ||||||||||||||||
Foreign currency contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total assets | $ | — | $ | — | $ | — | $ | — | ||||||||
Current Liabilities | ||||||||||||||||
Derivative financial instruments | ||||||||||||||||
Foreign currency contracts | $ | — | $ | 291 | $ | — | $ | 291 | ||||||||
Total liabilities | $ | — | $ | 291 | $ | — | $ | 291 | ||||||||
10 |
16. | RECENT ACCOUNTING PRONOUNCEMENTS |
In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (FASB ASU 2014-08). The amendment revises the definition of a discontinued operation to a disposal, sale or held-for-sale component or group of components that represents a strategic shift that will have a major effect on an entity's operations and financial results. The amendments in this ASU are effective for reporting periods beginning after December 15, 2014 with early adoption permitted in the first quarter of 2014 for calendar year-end companies. We have chosen to early adopt this pronouncement and it became effective for the Company in the first quarter of 2014. The adoption of the provisions of FASB ASU 2014-08 did not have a material impact on the Company’s consolidated financial statements.
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
● | wavering levels of consumer confidence; |
● | volatility and disruption in domestic and international capital and credit markets and the resulting decrease in the availability of financing, including floor plan financing, for our customers and towing operators; |
● | significant periodic increases in fuel and insurance costs and their negative effect on the ability of our customers to purchase towing and related equipment; and |
● | the overall effects of global economic downturns |
11 |
Goodwill is tested for impairment annually or if an event or circumstance occurs that would more likely than not reduce the fair value of the reporting unit below the carrying amount. We review goodwill for impairment utilizing a qualitative assessment or a two-step approach. If we choose to perform a qualitative analysis of goodwill and determine that the fair value more likely than not exceeds the carrying value, no further testing is needed. If we choose the two-step approach or if qualitative analysis determines the carrying value more likely than not exceeds fair value, the first step identifies potential impairment by comparing the fair value of the reporting unit with its carrying value. If the fair value exceeds the carrying value the second step is not necessary. If the carrying value is more than the fair value, the second step of testing is performed to compare the fair value of the goodwill with its carrying value. An impairment loss would be recognized to the extent that the carrying value of the goodwill exceeds its fair value. We cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill. Such events might include, but are not limited to, the impact of the economic environment or a material change in a relationship with significant customers.
12 |
13 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
14 |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
15 |
ITEM 6. | EXHIBITS |
Description | Incorporated by Reference to Registration File Number | Form or Report | Date of Report | Exhibit Number in Report | ||||||
31.1 | Certification Pursuant to Rules 13a-14(a)/15d- 14(a) by Co-Chief Executive Officer* | |||||||||
31.2 | Certification Pursuant to Rules 13a-14(a)/15d- 14(a) by Co-Chief Executive Officer* | |||||||||
31.3 | Certification Pursuant to Rules 13a-14(a)/15d- 14(a) by Chief Financial Officer* | |||||||||
32.1 | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code by Co-Chief Executive Officer* | |||||||||
32.2 | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code by Co-Chief Executive Officer* | |||||||||
32.3 | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code by Chief Financial Officer* | |||||||||
101 | The following information from the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets – March 31, 2014 and December 31, 2013; (ii) Condensed Consolidated Statements of Income for the three months ended March 31, 2014 and 2013; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013; and (v) Notes to Condensed Consolidated Financial Statements.* | |||||||||
*Filed herewith |
16 |
MILLER INDUSTRIES, INC. | ||
By: | /s/ J. Vincent Mish | |
J. Vincent Mish | ||
Executive Vice President and Chief Financial Officer |
17 |