Matt Steinberg Jeffrey I. Badgley - Vice Chairman and Chief Executive Officer J. Vincent Mish - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Treasurer and President of Financial Services Group William G. Miller - Founder and Chairman

Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund Walter S. Lang - Avondale Partners, LLC

Hello. This is the Chorus Call operator. Welcome to the Miller Industries Third Quarter 2013 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. At this time, I'd like to turn the conference over to Matt Steinberg. Mr. Steinberg, the floor is yours, sir.

Thank you, and good morning, everyone. I'd like to welcome you to the Miller Industries' conference call. We're here to discuss the company's 2013 third quarter results, which were released after the close of the market yesterday. With us from management today are Bill Miller, Chairman of the Board; Jeff Badgley, CEO; Vince Mish, CFO; Frank Madonia, General Counsel; Will Miller, President; Vince Tiano, Vice President, North American Sales; Debbie Whitmire, Corporate Controller; and Allison Houghton, Director of Finance. Today's call will begin with formal remarks from management, followed by a question-and-answer period. Please note that 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 would like to turn the call over to Jeff Badgley. Jeff, please go ahead. Jeffrey I. Badgley: Thank you, and good morning. We reported strong results for the quarter as we achieved solid year-over-year revenue growth. Yesterday, we reported 2013 third quarter sales of $105.1 million compared to sales of $78 million in the prior year period, an increase of nearly 35%. Recent trends and orders, while not yet at normalized levels, have been improving across our domestic and international commercial markets, as evidenced by the growth in the third quarter order levels. Having taken actions to increase production earlier in the year, we were able to benefit from this growth and have expanded our top line. Our gross margin percentages were slightly weaker year-over-year as product mix impacted margins in the quarter. We were able to offset much of this impact in our profitability levels by effectively controlling our cost and improving operational efficiencies on our SG&A line. As a result of our actions, SG&A was virtually flat compared to the 2012 third quarter despite the increase in sales. This underscores our flexibility to operate under changing marketing -- market environments. Overall, I would like to characterize the market environment in the third quarter as improving but still challenging. The visibility in our market remains quite narrow. However, we continue to execute well under these less-than-ideal conditions. I am pleased with our growth in revenue and strong profitability before income taxes during the quarter. Now, I'll turn the call over to Vince, who will review the quarter's financial results. After that, I'll be back with some final comments. Then we'll go to Q&A. Vince? J. Vincent Mish: Thanks, Jeff, and good morning, everyone. As Jeff mentioned, net sales for the third quarter of 2013 were $105.1 million versus $78 million from the 2012 third quarter. Sales were up approximately 34.8% year-over-year, reflecting an improving order trend from improving domestic and international commercial markets. The increase in revenues was impacted by our decision to ramp-up production levels in the first quarter. Cost of operations increased 37.2% to $94.3 million in the 2013 third quarter, compared to $68.7 million last year, driven primarily by the higher sales volumes and the sales mix. Gross profit was $10.8 million or 10.3% of net sales in the third quarter of 2013, compared to $9.2 million or 11.8% of net sales in the third quarter of 2012. The decrease in gross margin percentage resulted from domestic product mix shifts in the quarter. SG&A expenses were $6.7 million in the third quarter of 2013 compared to $6.7 million in the third quarter of 2012. As a percentage of sales, SG&A decreased to 6.4% from 8.6% over the prior year period, which primary reflected our cost-containment efforts. Other income related to foreign currency transactions was a net gain of $11,000 in the third quarter of 2013 compared to a net gain of $97,000 in the third quarter of 2012. Interest expense in the 2013, third quarter was $102,000 compared to $192,000 in the third quarter of 2012. Income in the third quarter of 2013 included a net loss attributable to noncontrolling interest of $98,000 related to the startup of the Delavan Automotive LLC joint venture. Excluding that loss, net income attributable to Miller Industries in the 2013 third quarter was $2.6 million or $0.23 per diluted share. This compared to $2.9 million or $0.26 per diluted share in the 2012 third quarter. Please note that, net income in the year-ago period included $1.4 million or $0.12 per share of income tax benefits from production activity deductions and research and development and other tax credits. Now let me briefly review our results for the 9 months ended September 30, 2013. Net sales for the first 9 months of 2013 were $295.9 million compared to $260.3 million in the prior year period, an increase of 13.7%. Gross profit in the first 9 months of 2013 was $31.2 million or 10.5% of sales compared to $30.7 million or 11.8% of sales for the 9 months of 2012. Income in the first 9 months of 2013 included a net loss attributable to noncontrolling interests of $331,000 related to the startup of Delavan Automotive. Excluding that loss, net income attributable to Miller Industries in the first 9 months of 2013 was $6.9 million or $0.61 per diluted share, compared to net income for the first 9 months of 2012 of $7.4 million or $0.66 per diluted share, which includes the $1.4 million of income tax benefits from production activity deductions and research and development and other tax credits. Turning now to our balance sheet. Cash and cash equivalents as of September 30, 2013, were $41.2 million compared to $43.4 million as of June 30, 2013 and $48.6 million as of December 31, 2012. This cash level reflects our investments to increase production levels and product development. Accounts receivable at September 30, 2013, totaled $83.0 million compared to $79.5 million at June 30, 2013, and $59.1 million at December 31, 2012. The increase in sales volume drove accounts receivable higher in the quarter. Inventories were $53.7 million as of September 30, 2013, compared to $51.4 million at June 30, 2013, and $45.0 million at December 31, 2012. Accounts payable at September 30, 2013 were $51.3 million compared to $48.9 million at June 30, 2013, and $30.7 million at December 31, 2012. The increase in payables reflects our higher production levels. We continue to operate with no borrowing under our $25 million unsecured revolving credit facility. Now I will turn the call back to Jeff for further remarks. Jeffrey I. Badgley: Thank, Vince. Regarding our performance for the quarter, as I mentioned earlier, we are encouraged with the recent growth in our order levels. And speaking with our customers, conversations have been positive, and consumer sentiment appears to be improving, which are typically positive indications for the long-term demand levels within our domestic commercial markets. Our decision to ramp-up production levels beginning in the first quarter allowed us to deliver these orders during the third quarter and generate strong revenue growth. I would also like to specifically point out that the current budgetary issues in Washington do not seem to have affected our order levels and as such, we plan to maintain our production levels based on our market outlook for the fourth quarter. During the quarter, our production was impacted by the annual summer holiday period in France and in the U.S. by our annual maintenance shutdown in the week of July 4. The product mix during the quarter also had a negative impact on our margins. To counter this, we maintained our focus on controlling costs. Our actions were reflected in SG&A expenses being relatively unchanged from the year-ago period, despite the significant increase in net sales. Now let me provide you with an update on our geographic expansion strategy. We continue to deliver on our order with our prime contractor to provide towing and recovery equipment to the French military, an order that will proceed through the end of 2014. We also worked on other modestly sized orders in Europe and other market areas of the world, which further illustrates the in-roads we are making in the international marketplace. We remain optimistic about our international initiatives to expand our distribution channels across key growth regions. Our priority remains on building relationships with prime contact -- contractors who are bidding for government and military tenders, both domestically and abroad. Domestically, we continue to make progress on the Delavan venture. We have begun to produce trailers as we continue to prepare our facility and workforce for production increases. Progress has been slower than anticipated, but we remain encouraged by the demand levels in the market for the Delavan product. Looking ahead to the fourth quarter, while we have seen recent improvement in our domestic and international commercial markets, overall, economic conditions remain mixed and our visibility remains limited. We continue to face higher raw material costs despite the recent decline in aluminum prices. The planned price increase implemented in the first quarter has been flowing through our backlog and contributed to our results in this quarter. We anticipated -- anticipate this will contribute even more of an impact on our results in the fourth quarter. However, we will continue our focus on what we can control, our cost. And our ability to make adjustments as necessary under uncertain market conditions. Once again, I am extremely pleased with the progress we have made on our strategic initiatives to maximize profitability and expand our distribution channels. And I am confident in our future growth prospects. Our cash flow remains strong. Our balance sheet is solid. We remain committed to building value for our shareholders through our financial strength and flexibility, combined with our quarterly dividend. In closing, I'd like to thank our employees, our shareholders, our suppliers and our customers for their ongoing support of Miller Industries. With that, we're ready to take your questions. Thank you.

[Operator Instructions] The first question we have comes from Rich D'Auteuil of Columbia Management. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: So just a little bit on the French military order. I think on the last call, you had expected to deliver 5 units in this quarter, was that about what you did? Jeffrey I. Badgley: I believe, that is correct, Chad. I think we're right on target with our delivery to the French prime contractors. Obviously, as you look at that, Rick, you have to remember your -- we built more than 5, because we have, obviously, the unit going across the ocean. So I'm trying to remember how many we built versus how many actually got delivered. And I think it was 4 in the quarter and we shipped somewhere in the neighborhood of 6 to 8, as I look back. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: Okay. So my recollection was, just like the U.S military, we're doing that without the chassis right? Jeffrey I. Badgley: Correct, that is correct. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: Which is margin accretive, yet -- I guess we talked about mix being negative on margin, so this should have been -- this part of it should have been margin accretive, right? Jeffrey I. Badgley: It was accretive, the 9 months. And obviously -- obviously, what wasn't accretive in that whole mix is the fact that Jige was -- which has some fixed cost in France was closed, I think, a month of the quarter. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: Okay. And then, so maybe on -- just turning the page, on Delavan, what is -- what are the issues there? You talked about slower-than-expected progress, but yet good demand levels. So what is -- I guess -- what are the issues that are impediments? Jeffrey I. Badgley: The Delavan issues -- the main impediment is execution and delivering a product in a timely manner based on the labor we have hired to deliver the product. So it had a impact on margins of the Delavan product. Now some of that was caused by -- we had transplanted some people from Buffalo that didn't like Greenville, Tennessee and left. That was our -- kind of our experience level of building a product. So some of that is just new people building new product that they are not experienced with. Other issues included the completeness of the drawing package that we received in making the product and some building material issues in the package. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: So I guess, where do we stand? Labor will -- is that expected to improve as you find the people that are keepers and come up the learning curve? Jeffrey I. Badgley: Rick, our backlog of the product and, of course, you get backlog, you have to quote delivery dates to sell the order. And I would take the hit because I made a decision to run towards delivery dates versus taking a hard look at what our capabilities were. And we hired too much labor to get any kind of efficiencies. So now I would say, they hit their production targets in a number of units in the month of October. So I think it will get better. I don't think it will get better completely overnight. And I think, with the help of improved flow, the opportunity will be there. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: Did you hit your monthly October target with excess labor, so you threw resources at it or you... Jeffrey I. Badgley: No, we didn't hire anymore labor from quarter end to October. So now does that mean that -- I mean, I'm being perfectly clear that I believe even at that level, we have excess labor and we have to evaluate, do we run or do we slow down a bit and pair back our labor and risk -- have market risks on the other side versus inefficiency labors on the production side. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: But you're hoping -- your goal is to grow into your labor, is that the... Jeffrey I. Badgley: Well, it's a brand-new product with a lot of variation to pare back labor. William G. Miller: This is Bill. I think, what they really -- this product was more complex from a manufacturing standpoint. Although we build trailers, this is a more complex trailer. And that has been a little more challenging to try to make that change and get their building materials into our system and also to get their drawings into our system, because we do it differently. So I think, really, those are things that are having an impact. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: But I mean, are these things that you expect to have your hands around in the next 2 quarters or do you think this is going to draw out longer than that? Jeffrey I. Badgley: Bill, are you -- do you want me to answer that, or... William G. Miller: Yes, you tell him. You're closer to him. Jeffrey I. Badgley: No, my feeling is it will improve over the next 2 quarters. So, yes, in a sense, I think we'll make decisions that bring us to a level that makes sense in terms of labor versus production, yes. Richard G. D'Auteuil - Columbia Funds Series Trust I- Columbia Small Cap Core Fund: Okay. And then you mentioned backlog, what is the backlog level? Jeffrey I. Badgley: Well, I have a major competitor on that market. I really don't want to discuss backlog levels. I would say, demand for the Delavan product everyday improves.

[Operator Instructions] The next question we have comes from Walter Lang of Avondale. Walter S. Lang - Avondale Partners, LLC: A question on -- your [indiscernible] Jeff, indicate that demand internationally has strengthened, am I reading that correctly? Jeffrey I. Badgley: Well, yes, it has. I mean, our backlog levels, I think, in Europe total, although primarily excluding the French military -- excluding the French military, it's kind of pointed towards France. It is higher today than it's been in quite a while, excluding the military. Walter S. Lang - Avondale Partners, LLC: Alright. And then, when you say international, I assume it's primarily Europe. Jeffrey I. Badgley: Yes, yes. Although, we are making inroads, [indiscernible] and finding distribution in South America and our distributor in Asia seems to be doing quite well. Walter S. Lang - Avondale Partners, LLC: Okay. And then, I was going to ask a question, but you addressed that. You did not -- there was a hiccup or speed bump in domestic orders associated with this -- all the drama in Washington during October? Jeffrey I. Badgley: No, no. Walter S. Lang - Avondale Partners, LLC: So the trend in orders, domestically, continues, although at a relatively benign and slow, but it's still moving in the right direction? Jeffrey I. Badgley: Yes, sir, absolutely. Walter S. Lang - Avondale Partners, LLC: So it seems to be more the same that's been going on for 3 or 4 quarters now. It's what we read about -- it’s a recovery, but a slower abnormal recovery, what you're seeing in demand, which is consistent with U.S. economy? Jeffrey I. Badgley: Yes, yes. Walter S. Lang - Avondale Partners, LLC: And then no change in -- I see that year-over-year miles driven has been negative, just -- although slowly for the past couple of years for the first time in maybe decades, no impact on demand? Jeffrey I. Badgley: Well, I mean that's obviously... J. Vincent Mish: We can't tell, because we're not up to normal levels. Jeffrey I. Badgley: Yes, yes. So that's how I was going to answer. Walter S. Lang - Avondale Partners, LLC: So you didn't have a better feel for that one should get to normal levels? Jeffrey I. Badgley: Yes, sir.

Well, it appears that we have no further questions at this time. We'll go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks. Gentlemen? Jeffrey I. Badgley: Well, I'd like to thank you for joining our conference call. And we look forward to reporting our fourth quarter earnings for you at the scheduled time. Thank you.

And we thank you, sir, and to the rest of the management, for your time today. The conference has now concluded. We thank you, all, for attending today's presentation. At this time, you may disconnect your lines. Thank you and take care.