Miller Industries Reports 2003 Second Quarter Results
CHATTANOOGA, Tenn., Aug. 20, 2003 -- Miller Industries, Inc. today announced financial results for the second quarter of 2003, which ended June 30, 2003.
For the second quarter of 2003, net sales from continuing operations were $58.0 million, compared with $61.2 million in the second quarter of 2002. Second quarter 2003 income from continuing operations was $1.6 million, or $0.18 per diluted share, compared with income from continuing operations of $1.5 million, or $0.16 per diluted share, in the second quarter of 2002.
During the quarter ended December 31, 2002, the Company's management and its board of directors made the decision to divest of its remaining towing services segment, as well as the operations of the distribution group of the towing and recovery equipment segment. As a result, in accordance with generally accepted accounting principles, the assets for the towing services segment and the distribution group are considered a "disposal group" and the assets are no longer being depreciated. All assets and liabilities and results of operations associated with these assets have been separately presented in the accompanying financial statements. The statements of operations and related financial statement disclosures for all prior years have been restated to present the towing services segment and the distribution group as discontinued operations separate from continuing operations. The discussions and analyses that follow are of continuing operations, as restated, unless otherwise noted.
The results of operations and loss on disposal associated with certain towing services markets, which were sold in June 2003 have been reclassified from discontinued operations to continuing operations given the Company's significant continuing involvement in the operations of the disposal components via a consulting agreement, and the Company's ongoing interest in the cash flows of the operations of the disposal components via a long-term license agreement.
Including a loss of $(2.1) million, or $(0.23) per diluted share, after-tax, from these discontinued operations, Miller Industries reported a net loss for the 2003 second quarter of $(493,000) or $(0.05) per diluted share, compared to a net loss for the 2002 second quarter of $(342,000), or $(0.04) per diluted share. The net loss for the second quarter of 2002 includes a loss from discontinued operations of $(1.8) million, or $(0.20) per diluted share.
Cost of operations in the second quarter of 2003 were $49.4 million, compared to $52.1 million in the year-ago period. For the 2003 second quarter, selling, general and administrative expenses were $4.6 million, versus $5.5 million in the prior year period, reflecting the Company's ongoing focus on operating cost control. Interest expense in the second quarter of 2003 was $685,000, compared to $1.2 million in the year-ago second quarter. The significant reduction in interest expense reflects the current interest rate environment and the Company's ongoing efforts to reduce debt levels.
For the six-month period ended June 30, 2003, net sales from continuing operations were $105.9 million versus $116.6 million during the prior-year period. During the first half of 2003 the Company reported income from continuing operations of $3.4 million, or $0.36 per diluted share, compared to income from continuing operations of $3.7 million, or $0.39 per diluted share a year ago. Including a loss from discontinued operations of $(4.4) million, or $(0.47) per diluted share, the Company reported a net loss for the first half of 2003 of $(1.1) million, or $(0.11) per diluted share. Including a loss from discontinued operations of $(4.2) million, or $(0.45) per diluted share, and a goodwill impairment charge related to the Company's adoption of FAS 142, "Accounting for Goodwill and Other Intangible Assets" of $(21.8) million, or $(2.34) per diluted share, as previously announced, the Company reported a net loss for the 2002 six-month period of $(22.4) million, or $(2.40) per diluted share.
Jeffrey I. Badgley, President and CEO of Miller Industries, commented, "The trends that have affected our markets since early last year continued into the second quarter of 2003, including delays in purchasing decisions by our customers, as well as an increasingly competitive selling environment. As economic conditions remained weak during the quarter, we stayed the course of effectively managing our operating costs and other expenses and reducing debt levels, which resulted in improved income from continuing operations versus a year ago."
Mr. Badgley concluded, "While we don't foresee an immediate turnaround in our markets, we have seen some improvement since the end of the first quarter. Going into the second half of 2003, Miller Industries' focus will remain the same, to concentrate on our core manufacturing operations as we fully exit the remaining RoadOne markets, and manage costs and efficiencies to position the Company for an upturn in our business."
The Junior Credit Facility matured and was due and payable on July 23, 2003, under which $13.8 million was outstanding June 30, 2003. The Company has not yet repaid or refinanced the outstanding principal and interest under the Junior Credit Facility. The Company's failure to repay all outstanding principal, interest and any other amounts due and owing under the Junior Credit Facility on the maturity date constituted an event of default under the Junior Credit Facility and also triggered an event of default under the Senior Credit Facility cross-default provisions. Pursuant to the terms of the Intercreditor Agreement, the junior lender agent and the junior lenders are prevented from taking any enforcement action or exercising any remedies against the Company, its subsidiaries or their respective assets in respect of such event of default during a standstill period (the "Standstill Period") which will expire on the earlier of: (i) November 26, 2003 (the date which is 120 days after the date that written notice was given by the junior lender agent to the senior lender agent of its intent to commence an enforcement action as a result of the occurrence of the Junior Credit Facility defaults (the "Junior Notice")), subject to extension by notice from senior lender agent to junior lender agent to April 24, 2004 (the date which is 270 days after the date of the Junior Notice); (ii) the acceleration of the maturity of the obligations of the Company under the Senior Credit Facility by the senior lender agent, and (iii) the commencement of any bankruptcy, insolvency or similar proceeding against the Company or certain of its subsidiaries.
On August 5, 2003, the senior agent gave a payment blockage notice to the junior agent, thereby preventing the junior agent and junior lenders from receiving any payments from the Company in respect of the Junior Credit Facility while such blockage notice remains in effect. This payment blockage will expire on the earlier of (i) February 1, 2004 (subject to an extension to May 1, 2004) if the Standstill Period is extended from November 26, 2003 to April 24, 2004 at the election of the senior lender agent by notice to the junior lender agent as described above, or (ii) the date that the Senior Credit Facility defaults giving rise to the payment blockage notice have been cured or waived. An event of default has also occurred under the Junior Credit Facility and the Senior Credit Facility as a result of the auditor's report for the Company's December 31, 2002 financial statements including an explanatory paragraph that referred to uncertainty about the Company's ability to continue as a going concern for a reasonable period of time. These existing events of default under the Senior Credit Facility could result in the acceleration of the amounts due under the Senior Credit Facility as well as other remedies if not waived by the senior lenders. There is no assurance that the Company will be able to obtain such a waiver from the senior lenders or a waiver from the junior lenders of any events of default that have occurred.
The Company is currently in discussions with the lenders under the Junior Credit Facility to extend the maturity date of the Junior Credit Facility and/or to refinance the Junior Credit Facility. The Company has also entered into discussions with the lenders under the Senior Credit Facility to refinance the Senior Credit Facility. There can be no assurance that the Company will be able to extend the maturity date of the Junior Credit Facility or refinance either or both Credit Facilities.
Finally, the Company recently submitted a plan to the New York Stock Exchange ("NYSE") for regaining compliance with the NYSE's continued listing standards. The plan is centered on focusing all the Company's resources, manpower as well as financial, on returning the manufacturing operations to their historically profitable levels. The NYSE may take up to 45 days to review and evaluate the plan.
In conjunction with this release, Miller Industries will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for today, August 20, 2003 at 10:00 AM EDT. Listeners can access the conference call live and archived over the Internet through a link at http://www.firstcallevents.com/service/ajwz387523467gf12.html. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software. A replay of this call will be available approximately one hour after the live call ends through August 27, 2003. The replay number is 800-642-1687, Passcode 2277627.
Miller Industries is the world's largest manufacturer of towing and recovery equipment. The Company markets its towing and recovery equipment under a number of well-recognized brands, including Century, Vulcan, Chevron, Holmes, Challenger, Champion and Eagle.
Except for historical information contained herein, the matters set forth in this news release are forward-looking statements. The Company noted that forward looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including the risks and uncertainties discussed under the caption "Risk Factors" in the Company's Form 10-K for fiscal 2002, which discussion is incorporated herein by this reference.
Miller Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands except per share data)
Three Months Ended
June 30,
%
2003 2002 Change
NET SALES
TOWING AND RECOVERY EQUIPMENT $51,161 $54,159 -6%
TOWING SERVICES 6,801 7,028 -3%
57,962 61,187 -5%
COSTS AND EXPENSES:
COST OF OPERATIONS
TOWING AND RECOVERY EQUIPMENT 44,234 46,497 -5%
TOWING SERVICES 5,188 5,576 -7%
49,422 52,073 -5%
SELLING, GENERAL AND 4,641 5,471 -15%
ADMINISTRATIVE CHARGES
INTEREST EXPENSE, NET 685 1,169 -41%
LOSS ON DISPOSITION 682 0 100%
TOTAL COSTS AND EXPENSES 55,430 58,713 -6%
INCOME (LOSS) BEFORE INCOME TAXES 2,532 2,474 2%
INCOME TAX PROVISION 889 980 -9%
INCOME (LOSS) FROM CONTINUING OPERATIONS 1,643 1,494 10%
DISCONTINUED OPERATIONS:
LOSS FROM DISCONTINUED OPERATIONS,
BEFORE TAXES (3,035) (2,601) 17%
INCOME TAX PROVISION (899) (765) 18%
LOSS FROM DISCONTINUED OPERATIONS (2,136) (1,836) 16%
LOSS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING METHOD (493) (342) 44%
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING METHOD -- -- 0%
NET (LOSS) INCOME $(493) $(342) 44%
BASIC INCOME (LOSS) PER COMMON SHARE:
INCOME FROM CONTINUING OPERATIONS $0.18 $0.16 13%
LOSS FROM DISCONTINUED OPERATIONS $(0.23) $(0.20) 15%
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $-- $-- 0%
BASIC INCOME (LOSS) $(0.05) $(0.04) 25%
DILUTED INCOME (LOSS) PER COMMON SHARE:
INCOME FROM CONTINUING OPERATIONS $0.18 $0.16 13%
LOSS FROM DISCONTINUED OPERATIONS $(0.23) $(0.20) 15%
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $-- $-- 0%
DILUTED INCOME (LOSS) $(0.05) $(0.04) 25%
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 9,341 9,341 0%
DILUTED 9,346 9,355 0%
Miller Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands except per share data)
Six Months Ended
June 30,
%
2003 2002 Change
NET SALES
TOWING AND RECOVERY EQUIPMENT $91,903 $101,964 -10%
TOWING SERVICES 13,952 14,650 -5%
105,855 116,614 -9%
COSTS AND EXPENSES:
COST OF OPERATIONS
TOWING AND RECOVERY EQUIPMENT 79,050 87,408 -10%
TOWING SERVICES 10,618 11,198 -5%
89,668 98,606 -9%
SELLING, GENERAL AND 8,978 10,161 -12%
ADMINISTRATIVE CHARGES
INTEREST EXPENSE, NET 1,439 1,869 -23%
LOSS ON DISPOSITION 682 0 100%
TOTAL COSTS AND EXPENSES 100,767 110,636 -9%
INCOME (LOSS) BEFORE INCOME TAXES 5,088 5,978 -15%
INCOME TAX PROVISION 1,703 2,320 -27%
INCOME (LOSS) FROM CONTINUING OPERATIONS 3,385 3,658 -7%
DISCONTINUED OPERATIONS:
LOSS FROM DISCONTINUED OPERATIONS,
BEFORE TAXES (6,243) (6,076) 3%
INCOME TAX PROVISION (1,805) (1,841) -2%
LOSS FROM DISCONTINUED OPERATIONS (4,438) (4,235) 5%
LOSS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING METHOD (1,053) (577) 82%
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING METHOD -- (21,812) -100%
NET (LOSS) INCOME $(1,053) $(22,389) -95%
BASIC INCOME (LOSS) PER COMMON SHARE:
INCOME FROM CONTINUING OPERATIONS $0.36 $0.39 8%
LOSS FROM DISCONTINUED OPERATIONS $(0.47) $(0.45) 4%
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $-- $(2.34) -100%
BASIC INCOME (LOSS) $(0.11) $(2.40) -96%
DILUTED INCOME (LOSS) PER COMMON SHARE:
INCOME FROM CONTINUING OPERATIONS $0.36 $0.39 8%
$--
LOSS FROM DISCONTINUED OPERATIONS $(0.47) $(0.45) 4%
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $-- $(2.34) 100%
DILUTED INCOME (LOSS) $(0.11) $(2.40) -95%
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 9,341 9,341 0%
DILUTED 9,348 9,349 0%
Audio:
http://www.firstcallevents.com/service/ajwz387523467gf12.html