Miller Industries Reports Fiscal 2000 Fourth Quarter Results
31 July 2000
Miller Industries Reports Fiscal 2000 Fourth Quarter Results
CHATTANOOGA, Tenn. - Miller Industries, Inc. today announced results for its
fiscal 2000 fourth quarter and fiscal year ended April 30, 2000.
In the fiscal fourth quarter, net sales were $152.3 million, an
8% increase over net sales of $141.5 million in the fiscal 1999 fourth
quarter. Before non-recurring and non-cash impairment charges of
$76.9 million, the Company reported a fiscal 2000 fourth quarter loss from
operations of $5.3 million compared to a loss of $3.5 million in the year ago
period. The net loss for the fourth quarter of fiscal 2000 including the
impairment charges was $72.5 million, or $(1.55) per diluted share, versus a
loss of $4.5 million, or $(0.10) per diluted share in the fourth quarter of
fiscal 1999.
The Company periodically reviews the carrying amount of the long-lived
assets and goodwill in both its towing services and towing equipment
businesses to determine if those assets may be recoverable based upon the
future operating cash flows expected to be generated by those assets. As a
result of such review during the fourth quarter of fiscal 2000, the Company
concluded that the carrying value of such assets in certain towing services
markets and certain assets within the Company's towing and recovery equipment
segment were not fully recoverable. Accordingly, the Company recorded one-
time non-cash impairment charges of $69.1 million and $7.7 million in its
towing services and towing and recovery equipment segments, respectively.
For the full fiscal year 2000, the Company reported net sales of
$581.5 million, an increase of 11% over net sales of $525.9 million in fiscal
1999. Excluding the aforementioned impairment charges and $6 million in non-
recurring charges recognized in the fiscal 2000 second quarter to reflect the
rationalization of its RoadOne operations, operating income for fiscal 2000
was $8.9 million versus $14.9 million in the same period last year. Including
these charges, the Company's operating loss for fiscal 2000 totaled
$74.0 million. Net loss, including the non-recurring charges in fiscal 2000,
was $73.1 million, or $(1.57) per diluted share, compared with net income
of $2.2 million, or $0.05 per diluted share in the year ago period.
Within the towing and recovery equipment segment, revenues increased 9% to
$100.6 million from $92.5 million a year ago due primarily to continued demand
for the Company's core products, and increased sales volumes of large
trailers, chassis, and exported products. Operating income in this segment
before impairment charges was $1.9 million in the current quarter compared to
a loss of $0.1 million last year. Higher margins in the quarter for the
Company's core products were partially offset by lower margins in the
Company's distributor operations, as well as by the negative impact of lower
margins from the trailer, chassis and export sales product mix. The Company
realized an impairment charge of $7.7 million in the fourth quarter of fiscal
2000 to reflect the reduction in the carrying amount of goodwill and certain
other assets associated with the Company's towing and recovery equipment
segment, which resulted in an operating loss for the quarter of $5.9 million
in the segment. In connection with its annual physical inventory counts at
April 30, 2000, the Company identified certain adjustments that it deemed
necessary to more accurately state its previously reported results of
operations for the third quarter of fiscal 2000. The results for the third
quarter reflect a reduction in operating and net income of $2.7 million and
$1.7 million, respectively, from amounts previously reported by the Company.
At the Company's RoadOne towing services subsidiary, revenues increased 5%
to $51.7 million from $49.1 million in the fiscal fourth quarter of last year
due primarily to the contributions of acquisitions made subsequent to the
third quarter of fiscal 1999. RoadOne reported an operating loss before
impairment charges of $7.2 million for the current quarter, compared with an
operating loss of $3.4 million in the year ago period. This loss was due to
continued poor performance in a portion of RoadOne's markets, as well as an
increase in certain operating costs, most significantly fuel expenses.
RoadOne recorded an impairment charge of $69.1 million in the fourth quarter
to reflect the write-down of assets in certain markets. Including these
charges, the RoadOne operating loss was $76.3 million.
Selling, general and administrative expenses for the fiscal 2000 fourth
quarter were $24.4 million, a 12% increase from selling, general and
administrative expenses of $21.8 million a year ago. As a percentage of
sales, these expenses increased from 15.4% of sales in the fourth quarter of
fiscal 1999 to 16.0% in the current year period.
Interest expense increased to $4.0 million versus $3.4 million in the
fourth quarter of fiscal 1999 due to higher interest rates. Debt at April 30,
2000 was $135.3 million compared to $138.0 million at April 30, 1999.
In July 2000, the Company entered into an amendment to its bank credit
facility that extended the maturity from February 1, 2001 to August 1, 2001.
The amendment reduces the total available funds to $140 million, which
consists of a revolving credit facility of $115 million and $25 million of
borrowings under the previous credit facility that were converted to a term
loan. The amendment requires that the credit facility and term loan be
reduced by an aggregate of $13 million (which is included in current portion
of long-term obligations) by November 30, 2000. The amendment also makes
changes to availability formulas for eligible accounts receivable, inventory
and fixed assets, increases interest rates, and requires additional collateral
to be delivered, among other things.
The Company also announced that James A. McKinney has resigned as Chief
Executive Officer of the Company's RoadOne(R) towing services subsidiary, to
pursue other business opportunities. Jeffrey I. Badgley, President and Chief
Executive Officer of Miller Industries, assumed operating responsibility
for RoadOne. Mr. McKinney also resigned from the Miller Industries Board of
Directors.
Commenting on these results, Mr. Badgley stated, "Our fourth quarter
results in the Company's towing and recovery equipment segment were positive
although down somewhat from our recent expectations. We realized better
manufacturing efficiencies compared to last year as a result of the
initiatives we undertook to improve our processes. The quarter also saw a
high level of trailer, chassis, and foreign sales, which, in this quarter,
were less profitable than normal. We continue to monitor the impact of
increasing fuel prices, interest rates and activities of chassis manufacturers
on incoming domestic orders, as each of these factors may have an adverse
impact on future results."
Mr. Badgley continued, "Results at RoadOne were again disappointing. We
were pleased that the top-performing markets generated positive same-store
growth and consistent operating margins despite the impact of higher fuel
costs. However, these contributions were more than offset by continued revenue
declines and higher expenses in certain of our underperforming markets."
Mr. Badgley added, "The results generated by the top-performing operations
within RoadOne continue to demonstrate an ability to perform at desired
levels, which we believe confirms the viability of our business plan.
Nevertheless, we are accelerating our efforts to aggressively reduce expenses
at RoadOne at the corporate level, as well as in the field, to raise overall
returns. We are also considering all alternatives to bring our
underperforming markets to an acceptable level of profitability, including the
possible disposition of certain of such assets. As always, we continue to
investigate all financial alternatives with respect to the overall RoadOne
business to enhance shareholder value."
Miller Industries is the world's leading integrated provider of vehicle
towing and recovery equipment and services. The Company markets its towing
services under the national brand name RoadOne(R) and its towing equipment
under a number of well-recognized brands.
Miller Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands except per share data)
Three Months Ended Twelve Months Ended
April 30, April 30,
% %
2000 1999 Change 2000 1999 Change
NET SALES $152,250 $141,494 8% $581,488 $525,932 11%
COSTS AND EXPENSES:
COSTS OF 133,168 123,201 8% 489,986 435,691 12%
OPERATIONS
SELLING, GENERAL 24,406 21,812 12% 82,630 75,368 10%
AND ADMINISTRATIVE
EXPENSES
ASSET IMPAIRMENTS AND
OTHER NON-RECURRING
CHARGES 76,855 0 n/m 82,896 0 n/m
INTEREST 4,030 3,393 19% 12,427 10,395 20%
EXPENSE, NET
TOTAL COSTS AND 238,459 148,406 61% 667,939 521,454 28%
EXPENSES
(LOSS) INCOME (86,209) (6,912) 1147% (86,451) 4,478 -2031%
BEFORE TAXES
INCOME TAX (BENEFIT)
PROVISION (13,677) (2,424) 464% (13,308) 2,272 -686%
NET (LOSS) $(72,532) $(4,488) 1516% $(73,143) $2,206 -3416%
INCOME
NET (LOSS) INCOME PER COMMON SHARE:
BASIC $(1.55) $(0.10) 1450% $(1.57) $0.05 -3240%
DILUTED $(1.55) $(0.10) 1450% $(1.57) $0.05 -3240%
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 46,702 46,416 1% 46,694 46,338 1%
DILUTED 46,702 47,208 -1% 46,694 47,266 -1%
SUPPLEMENTAL SEGMENT DATA
(IN THOUSANDS)
Three Months Ended
April 30,
% of % of
2000 Total 1999 Total
NET SALES:
TOWING AND RECOVERY EQUIPMENT 100,604 66% 92,447 65%
TOWING SERVICES 51,646 34% 49,047 35%
$152,250 100% $141,494 100%
OPERATING (LOSS) (1):
TOWING AND RECOVERY EQUIPMENT (5,862) 7% (105) 3%
TOWING SERVICES (76,317) 93% (3,414) 97%
$(82,179) 100% $(3,519) 100%
Twelve Months Ended
April 30,
% of % of
2000 Total 1999 Total
NET SALES:
TOWING AND RECOVERY EQUIPMENT 373,546 64% 342,388 65%
TOWING SERVICES 207,942 36% 183,544 35%
$581,488 100% $525,932 100%
OPERATING (LOSS) INCOME(1)(2):
TOWING AND RECOVERY EQUIPMENT 8,704 -12% 14,443 97%
TOWING SERVICES (82,728) 112% 430 3%
$(74,024) 100% $14,873 100%
(1) Includes $76.9 million impairment of long-lived assets
for the three and twelve months ended April 30, 2000 and
6.0 million non-recurring charges for the twelve months
ended April 30, 2000.
(2) Includes a reduction in operating income of $2.7
million for the twelve months ended April 30, 2000 to
more accurately state its previously reported operating
income for the third quarter of fiscal 2000.