MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30				June 30
	2020		2019		2020		2019

NET SALES	$	128,529	$	222,346	$	304,583	$	419,559
COSTS OF OPERATIONS		110,802		197,133		268,318		371,749
GROSS PROFIT		17,727		25,213		36,265		47,810

OPERATING EXPENSES:
Selling, general and administrative expenses		10,067		10,968		21,041		21,183

NON-OPERATING (INCOME) EXPENSES:
Interest expense, net		429		721		788		1,389
Other (income) expense, net		(275)		57		(184)		311
Total expense, net		10,221		11,746		21,645		22,883

INCOME BEFORE INCOME TAXES		7,506		13,467		14,620		24,927
INCOME TAX PROVISION		1,680		2,784		3,363		5,584
NET INCOME	$	5,826	$	10,683	$	11,257	$	19,343

BASIC INCOME PER COMMON SHARE	$	0.51	$	0.94	$	0.99	$	1.70

CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.18	$	0.18	$	0.36	$	0.36

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		11,405		11,400		11,405		11,400

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In ~~thousands, except per share data)~~thousands)

(Unaudited)

Three Months Ended

March 31


2020

2019


NET SALES

$
176,054

$
197,213

COSTS OF OPERATIONS

157,516

174,616

GROSS PROFIT

18,538

22,597

OPERATING EXPENSES:





Selling, general and administrative expenses

10,974

10,215

NON-OPERATING (INCOME) EXPENSES:





Interest expense, net

359

668

Other (income) expense, net

91

254

Total expense, net

11,424

11,137

INCOME BEFORE INCOME TAXES

7,114

11,460

INCOME TAX PROVISION

1,683

2,800

NET INCOME

$
5,431

$
8,660

BASIC INCOME PER COMMON SHARE

$
0.48

$
0.76

CASH DIVIDENDS DECLARED PER COMMON SHARE

$
0.18

$
0.18

WEIGHTED AVERAGE SHARES OUTSTANDING:





Basic

11,405

11,400


	Three Months Ended				Six Months Ended
	June 30				June 30
	2020		2019		2020		2019
NET INCOME	$	5,826	$	10,683	$	11,257	$	19,343

OTHER COMPREHENSIVE LOSS:
Foreign currency translation adjustment		(312)		(930)		(384)		(653)
Total other comprehensive loss		(312)		(930)		(384)		(653)

COMPREHENSIVE INCOME	$	5,514	$	9,753	$	10,873	$	18,690

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~SHAREHOLDERS’ EQUITY

(In ~~thousands)~~thousands, except share data)


							Accumulated
			Additional				Other
	Common		Paid-In		Accumulated		Comprehensive
	Stock		Capital		Surplus		Loss		Total
BALANCE, December 31, 2018	$	114	$	150,905	$	81,354	$	(4,810)	$	227,563
Cumulative effect adjustment for adoption of ASU 2016-02		—		—		4		—		4
BALANCE, January 1, 2019		114		150,905		81,358		(4,810)		227,567
Components of comprehensive income:
Net income		—		—		8,660		—		8,660
Foreign currency translation adjustments		—		—		—		277		277
Total comprehensive income		—		—		8,660		277		8,937
Issuance of common stock to non-employee directors (5,556)		—		150		—		—		150
Dividends paid, $0.18 per share		—		—		(2,052)		—		(2,052)
BALANCE, March 31, 2019		114		151,055		87,966		(4,533)		234,602
Components of comprehensive income:
Net income		—		—		10,683		—		10,683
Foreign currency translation adjustments		—		—		—		(930)		(930)
Total comprehensive income		—		—		10,683		(930)		9,753
Dividends paid, $0.18 per share		—		—		(2,051)		—		(2,051)
BALANCE, June 30, 2019	$	114	$	151,055	$	96,598	$	(5,463)	$	242,304

BALANCE, December 31, 2019	$	114	$	151,055	$	112,261	$	(5,503)	$	257,927
Components of comprehensive income:
Net income		—		—		5,431		—		5,431
Foreign currency translation adjustments		—		—		—		(72)		(72)
Total comprehensive income		—		—		5,431		(72)		5,359
Issuance of common stock to non-employee directors (5,366)		—		194		—		—		194
Dividends paid, $0.18 per share		—		—		(2,053)		—		(2,053)
BALANCE, March 31, 2020		114		151,249		115,639		(5,575)		261,427
Components of comprehensive income:
Net income		—		—		5,826		—		5,826
Foreign currency translation adjustments		—		—		—		(312)		(312)
Total comprehensive income		—		—		5,826		(312)		5,514
Dividends paid, $0.18 per share		—		—		(2,053)		—		(2,053)
BALANCE, June 30, 2020	$	114	$	151,249	$	119,412	$	(5,887)	$	264,888

~~(Unaudited)~~

Three Months Ended


March 31


2020

2019

NET INCOME

$
5,431

$
8,660

OTHER COMPREHENSIVE INCOME:





Foreign currency translation adjustment

(72)

277

Total other comprehensive income

(72)

277

COMPREHENSIVE INCOME

$
5,359

$
8,937

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS’ EQUITY~~CASH FLOWS

(In ~~thousands, except share data)~~thousands)

Accumulated


Additional

Other

Common

Paid-In

Accumulated

Comprehensive

Stock

Capital

Surplus

Loss

Total
BALANCE, December 31, 2018

$
114

$
150,905

$
81,354

$
(4,810)

$
227,563
Cumulative effect adjustment for adoption of ASU 2016-02

—

—

4

—

4
BALANCE, January 1, 2019

114

150,905

81,358

(4,810)

227,567
Components of comprehensive income:

Net income

—

—

8,660

—

8,660
Foreign currency translation adjustments

—

—

—

277

277
Total comprehensive income

—

—

8,660

277

8,937
Issuance of common stock to non-employee directors (5,556)

—

150

—

—

150
Dividends paid, $0.18 per share

—

—

(2,052)

—

(2,052)
BALANCE, March 31, 2019

$
114

$
151,055

$
87,966

$
(4,533)

$
234,602

BALANCE, December 31, 2019

$
114

$
151,055

$
112,261

$
(5,503)

$
257,927
Components of comprehensive income:

Net income

—

—

5,431

—

5,431
Foreign currency translation adjustments

—

—

—

(72)

(72)
Total comprehensive income

—

—

5,431

(72)

5,359
Issuance of common stock to non-employee directors (5,366)

—

194

—

—

194
Dividends paid, $0.18 per share

—

—

(2,053)

—

(2,053)
BALANCE, March 31, 2020

$
114

$
151,249

$
115,639

$
(5,575)

$
261,427

(Unaudited)


	Six Months Ended
	June 30
	2020		2019
OPERATING ACTIVITIES:
Net income	$	11,257	$	19,343
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		4,590		4,214
(Gain) loss on disposal of property, plant and equipment		5		(4)
Provision for doubtful accounts		97		102
Issuance of non-employee director shares		194		150
Deferred tax provision		(51)		159
Changes in operating assets and liabilities:
Accounts receivable		45,165		(48,862)
Inventories		(3,221)		2,406
Prepaid expenses		(925)		(2,622)
Other assets		242		669
Accounts payable		(36,062)		31,601
Accrued liabilities		1,744		1,169
Net cash flows from operating activities		23,035		8,325
INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(7,545)		(8,437)
Proceeds from sale of property, plant and equipment		42		7
Net cash flows from investing activities		(7,503)		(8,430)
FINANCING ACTIVITIES:
Net proceeds under credit facility		—		5,000
Payments of cash dividends		(4,106)		(4,103)
Net payments on other long-term obligations		(184)		(185)
Finance lease obligation payments		(10)		(10)
Net cash flows from financing activities		(4,300)		702
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY INVESTMENTS		(188)		(398)
NET CHANGE IN CASH AND TEMPORARY INVESTMENTS		11,044		199
CASH AND TEMPORARY INVESTMENTS, beginning of period		26,072		27,037
CASH AND TEMPORARY INVESTMENTS, end of period	$	37,116	$	27,236
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	$	1,203	$	1,655
Cash payments for income taxes, net of refunds	$	1,710	$	5,249

The accompanying notes are an integral part of these financial statements.

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MILLER INDUSTRIES, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In thousands)~~

~~(Unaudited)~~

Three Months Ended

March 31


2020

2019

OPERATING ACTIVITIES:





Net income

$
5,431

$
8,660

Adjustments to reconcile net income to net cash flows from operating activities:





Depreciation and amortization

2,253

2,107

Loss on disposal of property, plant and equipment

7

2

Provision for doubtful accounts

50

55

Issuance of non-employee director shares

194

150

Deferred tax provision

(30)

41

Changes in operating assets and liabilities:





Accounts receivable

(342)

(34,646)

Inventories

(4,724)

(2,107)

Prepaid expenses

(2,925)

(2,537)

Other assets

227

491

Accounts payable

1,486

9,574

Accrued liabilities

(3,479)

356

Net cash flows from operating activities

(1,852)

(17,854)

INVESTING ACTIVITIES:





Purchases of property, plant and equipment

(3,526)

(3,155)

Proceeds from sale of property, plant and equipment

10

—

Net cash flows from investing activities

(3,516)

(3,155)

FINANCING ACTIVITIES:





Net proceeds under credit facility

25,000

15,000

Payments of cash dividends

(2,053)

(2,052)

Net payments on other long-term obligations

(92)

(95)

Finance lease obligation payments

(5)

(5)

Net cash flows from financing activities

22,850

12,848

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND TEMPORARY INVESTMENTS

(460)

103

NET CHANGE IN CASH AND TEMPORARY INVESTMENTS

17,022

(8,058)

CASH AND TEMPORARY INVESTMENTS, beginning of period

26,072

27,037

CASH AND TEMPORARY INVESTMENTS, end of period

$
43,094

$
18,979

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:





Cash payments for interest

$
594

$
787

Cash payments for income taxes, net of refunds

$
739

$
952

~~The accompanying notes are an integral part of these financial statements.~~

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~~MILLER INDUSTRIES, INC. AND SUBSIDIARIES~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share data and except as otherwise noted)

1. BASIS OF PRESENTATION

The condensed consolidated financial statements of Miller Industries, Inc. and subsidiaries (the “Company”) included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. Nevertheless, the Company believes that the disclosures are adequate to make the financial information presented not misleading. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, to present fairly the Company’s financial position, results of operations and cash flows at the dates and for the periods presented. Cost of goods sold for interim periods for certain activities is determined based on estimated gross profit rates. Interim results of operations are not necessarily indicative of results to be expected for the fiscal year.

These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form ~~10‑K~~10-K for the year ended December 31, 2019. The condensed consolidated financial statements include accounts of certain subsidiaries whose fiscal closing dates differ from December 31^st by 31 days (or less) to facilitate timely reporting.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Issued Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) 2019-12 Income Taxes (Topic 740), which among other things will require the Company to recognize franchise tax that is partially based on income as an income-based tax. The update will be effective for financial statements issued for annual periods, and interim periods within these annual periods, beginning after December 15, 2020, with early adoption permitted. The Company plans to apply the amendments in the update on a modified retrospective basis. The adoption of this update will not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recently Adopted Standards

During the first quarter of 2020, the Company adopted ASU ~~2018‑15~~2018-15 Intangibles – Goodwill and Other – Internal-Use Software (Subtopic ~~350‑40)~~350-40). The purpose of the standard is to align the requirements for capitalizing implementation costs incurred in cloud computing arrangements that are service contracts with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company applied the amendments in the update prospectively to all implementation costs incurred after the date of the adoption. The adoption of this update did not have a material impact on the Company’s consolidated financial statements or related disclosures.

3. BASIC INCOME PER SHARE

The Company has a simple capital structure consisting of common stock and preferred stock, with only shares of common stock outstanding. The Company had no0 stock options or any other dilutive instruments outstanding for the three or six months ended ~~March 31,~~June 30, 2020 or 2019. Basic income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period.

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4. REVENUE

Substantially all of our revenue is generated from sales of towing equipment. As such, disaggregation of revenue by product line would not provide useful information because all product lines have substantially similar characteristics. However, revenue streams are tracked by the geographic location of customers. This disaggregated information is presented in the table below.


	For the Three Months Ended
	March 31,
	2020		2019

					For the Three Months Ended				For the Six Months Ended
					June 30,				June 30,
					2020		2019		2020		2019
Net Sales:
North America	$	143,856	$	163,893	$	107,460	$	191,753	$	251,316	$	355,646
Foreign		32,198		33,320		21,069		30,593		53,267		63,913
	$	176,054	$	197,213
					$	128,529	$	222,346	$	304,583	$	419,559

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Except for certain extended service contracts on a small percentage of units sold, the Company’s performance obligations are satisfied, and sales revenue is recognized when products are shipped from the Company’s facilities. From time to time, revenue is recognized under a bill and hold arrangement. Recognition of revenue on bill and hold arrangements occurs when control transfers to the customer. The bill and hold arrangement must be substantive, and the product must be separately identified as belonging to the customer, ready for physical transfer, and unavailable to be used or directed to another customer.

Revenue is measured as the amount of consideration expected to be received in exchange for the transfer of products. Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. Warranty related costs are recognized as an expense at the time products are sold and a reserve is established. Depending on the terms of the arrangement, for certain contracts the Company may defer the recognition of a portion of the consideration received because a future obligation has not yet been satisfied, such as an extended service contract. An observable price is used to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach is utilized when one is not available.

Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to performance obligations to be satisfied in the future. As of ~~March 31,~~June 30, 2020, and December 31, 2019, contract liability balances were $287 and $324, respectively, and are included in accrued liabilities on the condensed consolidated balance sheets. During the ~~three~~six months ended ~~March 31,~~June 30, 2020, the Company recognized $37 of this liability into earnings after satisfaction of related performance obligations. NoNaN revenue related to contract liability balances was recognized during the three months ended ~~March 31,~~June 30, 2020, or during three and six months ended June 30, 2019. The Company did not have any contract assets at ~~March 31,~~June 30, 2020 or December 31, 2019. Terms on accounts receivable vary and are based on specific terms agreed upon with each customer. Write-offs of accounts receivable were not material during the three and six months ended ~~March 31,~~June 30, 2020 and 2019.

Trade accounts receivable are generally diversified due to the number of entities comprising the Company’s customer base and their dispersion across many geographic regions. The Company also frequently monitors the creditworthiness of the customers to whom the credit is granted in the normal course of business. There were no0 customers with a trade account receivable greater than 10% of total accounts receivable at ~~March 31,~~June 30, 2020 or December 31, 2019.

5. INVENTORIES

Inventory costs include materials, labor and factory overhead. Inventories are stated at the lower of cost or net realizable value, determined on a first-in, first-out basis. Appropriate consideration is given to obsolescence, valuation and other factors in determining net realizable

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value. Revisions of these estimates could result in the need for adjustments. Inventories, net of reserves, at ~~March 31,~~June 30, 2020 and December 31, 2019 consisted of the following:


	March 31,		December 31,
	2020		2019

					June 30,		December 31,
					2020		2019
Chassis	$	7,721	$	6,561	$	6,816	$	6,561
Raw materials		40,014		39,444		41,223		39,444
Work in process		17,179		16,520		16,694		16,520
Finished goods		27,727		25,440		26,169		25,440
	$	92,641	$	87,965
					$	90,902	$	87,965

6. LONG-TERM OBLIGATIONS

Credit Facility and Other Long-Term Obligations

Credit Facility

The Company’s current loan agreement with First Horizon Bank, which governs its existing $50,000 unsecured revolving credit facility with a maturity date of May 31, 2022, contains customary representations and warranties, events of default, and financial, affirmative and negative covenants for loan agreements of this kind. The credit facility restricts the payment of cash dividends if the payment would cause the Company to be in violation of the minimum tangible net worth test or the leverage ratio test in the loan agreement, among various other customary covenants. The Company has been in compliance with these covenants throughout 2019 and during the first ~~quarter~~half of 2020, and it is anticipated that the Company will continue to be in compliance during the remainder of 2020.

In the absence of a default, all borrowings under the credit facility bear interest at the LIBOR Rate plus 1.00% or 1.25% per annum, depending on the leverage ratio. The Company pays a non-usage fee under the current loan agreement at a rate per annum equal to between 0.15% and 0.35% of the unused amount of the credit facility, which fee is paid quarterly.

At ~~March 31,~~June 30, 2020 and December 31, 2019, the Company had ~~$29,998~~$5,000 and $4,998, respectively, in outstanding borrowings under the credit facility. ~~Borrowings under~~In March 2020, the Company drew $25,000 on its existing credit facility ~~during the first quarter of 2020 were partially~~ for working capital needs ~~during the quarter~~ and ~~partially~~ as a precautionary measure to ensure future short-term cash flow requirements were met due to operational disruptions resulting from the COVID-19 pandemic. However, during the second quarter of 2020, the Company repaid a total of $25,000 under its credit facility, as its cash position was stronger than anticipated. At ~~April~~June 30, 2020, the ~~Company’s~~Company had cash ~~position remained~~and cash equivalents of $37,116, which were substantially unchanged ~~from its cash position~~ at ~~March~~July 31, 2020.

Other Long-Term Obligations

The Company’s French subsidiary, Jige International S.A., has an agreement with Banque Européenne du Crédit Mutuel for an unsecured fixed rate loan with a maturity date of September 30, 2020. All borrowings under this loan bear interest at 0.3% per annum. At ~~March 31,~~June 30, 2020 and December 31, 2019, the Company had ~~$276~~$185 and $368, respectively, in outstanding borrowings under the loan agreement, all of which were classified as long-term obligations due within one year on the condensed consolidated balance sheets. The proceeds from the borrowings were used primarily for the purchase of land and making routine repairs to the operating facilities in France. The loan agreement contains no material restrictive covenants.

7. COMMITMENTS AND CONTINGENCIES

Leasing Activities

The Company leases certain equipment and facilities under long-term non-cancellable operating and finance lease agreements. The leases expire at various dates through 2026. Certain of the lease agreements contain renewal options. For those leases that have renewal options, the Company included these renewal periods in the lease term if the Company determined it was reasonably certain to exercise the renewal option. Lease payments during such renewal periods were also considered in the calculation of right-of-use assets and lease obligations.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Lease obligations are recognized at the commencement date based on the present

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value of lease payments over the lease term. Right-of-use assets are recognized at the commencement date as the initial measurement of the

~~Table of Contents~~

lease liability, plus payments made prior to lease commencement and any initial direct costs. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Expense is recognized on a straight-line basis over the lease term for operating leases. For finance leases, expense is recognized as the expense from straight-line amortization of the right-of-use asset plus the periodic interest expense from the lease obligation. Short-term leases have a lease term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related right-of-use asset or lease obligation for such contracts.

Right-of-use assets related to finance leases are included as a component of property, plant and equipment, net on the condensed consolidated balance sheets and had the following values at ~~March 31,~~June 30, 2020 and December 31, 2019.

March 31,

December 31,

2020

2019
Finance lease right-of-use assets

$
78

$
78
Accumulated amortization

(26)

(21)
Finance lease right-of-use assets, net

$
52

$
57


	June 30,		December 31,
	2020		2019
Finance lease right-of-use assets	$	78	$	78
Accumulated amortization		(32)		(21)
Finance lease right-of-use assets, net	$	46	$	57

A maturity analysis of the undiscounted cash flows of operating and finance lease obligations is as follows:

Operating Lease Obligation

Finance Lease Obligation
Remaining lease payments to be paid during the year ended December 31,

2020

$
287

$
17
2021

340

23
2022

325

15
2023

263

—
2024

224

—
Thereafter

289

—
Total lease payments

1,728

55
Less Imputed Interest

(184)

(2)
Lease obligation at March 31, 2020

$
1,544

$
53


	Operating Lease Obligation		Finance Lease Obligation
Remaining lease payments to be paid during the year ended December 31,
2020	$	186	$	11
2021		336		23
2022		321		15
2023		254		—
2024		214		—
Thereafter		276		—
Total lease payments		1,587		49
Less Imputed Interest		(157)		(1)
Lease obligation at June 30, 2020	$	1,430	$	48

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The lease cost and certain other information during the three and six months ended ~~March 31,~~June 30, 2020 and 2019 were as follows:

Three Months Ended

March 31


2020

2019

Lease Cost

Finance lease cost:

Amortization of right-of-use assets

$
5

$
5

Interest on lease obligation

1

1

Total finance lease cost

6

6

Total operating lease cost

102

200

Short-term lease cost

113

252

Total lease cost

$
221

$
458

Other Information

Cash paid for amounts included in the measurement of lease obligation:





Operating cash flows from operating leases

$
101

$
200

Financing cash flows from finance leases

5

5

Right-of-use assets obtained in exchange for new finance lease obligations

—

—

Right-of-use assets obtained in exchange for new operating lease obligations

—

—


	Three Months Ended				Six Months Ended
	June 30				June 30
	2020		2019		2020		2019
Lease Cost
Finance lease cost:
Amortization of right-of-use assets	$	5	$	6	$	10	$	11
Interest on lease obligation		—		—		1		1
Total finance lease cost		5		6		11		12
Total operating lease cost		99		185		201		385
Short-term lease cost		141		318		254		570
Total lease cost	$	245	$	509	$	466	$	967

Other Information
Cash paid for amounts included in the measurement of lease obligation:
Operating cash flows from operating leases	$	98	$	185	$	199	$	385
Financing cash flows from finance leases		5		5		10		10

Right-of-use assets obtained in exchange for new finance lease obligations		—		—		—		—
Right-of-use assets obtained in exchange for new operating lease obligations		26		—		26		—

The weighted average remaining lease term for operating leases and finance leases at ~~March 31,~~June 30, 2020 was ~~5.3~~5.1 years and ~~2.4~~2.2 years, respectively. The weighted average remaining lease term for operating leases and finance leases at December 31, 2019 was 5.6 years and 2.7 years, respectively. The weighted average discount rate for operating leases and finance leases at ~~March 31,~~June 30, 2020 was 3.4% and 4.0%, respectively. The weighted average discount rate for operating leases and finance leases at December 31, 2019 was 3.4% and 4.0%, respectively. The Company’s subsidiary in the United Kingdom leased facilities used for manufacturing and office space from a related party with related lease costs during the three months ended ~~March 31,~~June 30, 2020 and 2019 of ~~$57~~$45 and ~~$62,~~$55, respectively, and related lease costs during the six months ended June 30, 2020 and 2019 of $102 and $117, respectively. The Company’s French subsidiary leased a fleet of vehicles from a related party with related lease costs of $26 during each of the three months ended ~~March 31,~~June 30, 2020 and 2019, and related lease costs during the six months ended June 30, 2020 and 2019 of ~~$30~~$56 and ~~$43,~~$69, respectively.

Other Commitments

At ~~March 31,~~June 30, 2020 the Company had commitments of approximately $11,964 for construction and acquisition of property, plant and equipment, including a commitment of approximately $10,000 for the purpose of upgrading fabrication equipment at our Greeneville, Tennessee location. At December 31, 2019, the Company had commitments of approximately ~~$3,067 and~~ $3,583 ~~respectively,~~ for construction and acquisition of property, plant and equipment. The Company is also migrating its enterprise resource planning (ERP) system to a multi-tenant cloud environment which includes global ERP, human capital management, data analytics and the use of artificial intelligence. This migration and upgrade of the existing ERP system will be done in three phases over the next three years. Related to this project, at ~~March 31,~~June 30, 2020 and December 31, 2019, the Company had commitments of approximately ~~$7,949~~$6,179 and ~~8,430,~~$8,430, respectively, in software license fees payable in installments through 2025.

Contingencies

The Company has entered into arrangements with third-party lenders where it has agreed, in the event of default by a distributor within the independent distributor network, to repurchase from the third-party lender company products repossessed from the independent distributor customer. These arrangements are typically subject to a maximum repurchase amount. The maximum amount of collateral that the Company could be required to purchase was approximately ~~$76,751~~$93,737 at ~~March 31,~~June 30, 2020, and $73,958 at December 31, 2019. The Company’s risk under these arrangements is mitigated by the value of the products that would be repurchased as part of the transaction. The Company considered the fair value at inception of its liability under these arrangements and concluded that the liability associated with these potential repurchase obligations was not probable and thus not material at ~~March 31,~~June 30, 2020 or December 31, 2019.

The Company is, from time to time, a party to litigation arising in the normal course of its business. Litigation is subject to various inherent uncertainties, and it is possible that some of these matters could be resolved unfavorably to the Company, which could result in substantial

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damages against the Company. The Company has established accruals for matters that are probable and reasonably estimable and maintains product liability and other insurance that management believes to be adequate. Management believes that any liability that may ultimately

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result from the resolution of these matters in excess of available insurance coverage and accruals will not have a material adverse effect on the consolidated financial position or results of operations of the Company.

8. INCOME TAXES

As of ~~March 31,~~June 30, 2020, the Company had no0 federal net operating loss carryforwards and no0 significant state operating loss carryforwards.

9. SUBSEQUENT EVENTS

Dividends

On ~~May 4,~~August 3, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.18 per share. The dividend is payable ~~June 15,~~September 14, 2020 to shareholders of record as of ~~June 8,~~September 7, 2020.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our results of operations and financial condition should be read in conjunction with the condensed consolidated financial statements and the notes thereto. Unless the context indicates otherwise, all dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in thousands.

Executive Overview

Miller Industries, Inc. is The World’s Largest Manufacturer of Towing and Recovery Equipment^®, with domestic manufacturing subsidiaries in Tennessee and Pennsylvania, and foreign manufacturing subsidiaries in France and the United Kingdom. We offer a broad range of equipment to meet our customers’ design, capacity and cost requirements under our Century^®, Vulcan^®, Challenger^®, Holmes^®, Champion^®, Chevron™, Eagle^®, Titan^®, Jige™ and Boniface™ brand names. In this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the words “Miller Industries,” “the Company,” “we,” “our,” “ours” and “us” refer to Miller Industries, Inc. and its subsidiaries or any of them.

Our management focuses on a variety of key indicators to monitor our overall operating and financial performance. These indicators include measurements of revenue, operating income, gross margin, net income, earnings per share, capital expenditures and cash flow.

We derive revenues primarily from product sales made through our network of domestic and foreign independent distributors. Our revenues are sensitive to a variety of factors including general economic conditions as well as demand for, and price of, our products, our technological competitiveness, our reputation for providing quality products and reliable service, competition within our industry, and the cost and availability of raw materials (including aluminum, steel and petroleum-related products) and component parts.

Our history of innovation in the towing and recovery industry has been an important factor behind our growth over the last decade and we believe that our continued emphasis on research and development will be a key factor in our future growth. Our domestic plant expansion and modernization projects have installed sophisticated robotics and implemented other advanced technologies to optimize our manufacturing processes. We are in the process of implementing an enterprise software solution which we expect to substantially improve our administrative efficiency and customer service levels. We opened our free-standing R&D facility in Chattanooga in 2019, where we pursue various innovations in our products and manufacturing processes, some of which are intended to enhance the safety of our employees and reduce our environmental impact. Our latest new product, the M100, which we believe to be the world’s largest tow truck, was introduced in the fall of 2019.

Our industry is cyclical in nature. In recent years, the overall demand for our products and resulting revenues have been positively affected by favorable economic conditions, such as lower fuel prices, and positive consumer sentiment in our industry. However, historically, the overall demand for our products and our resulting revenues have at times been negatively affected by:

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wavering levels of consumer confidence;

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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;

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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

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the overall effects of global economic conditions.

We remain concerned about the continuing effects of these factors on the towing and recovery industry, and we continue to monitor our overall cost structure to see that it remains in line with business conditions.

In addition, we have been and will continue to be affected by changes in the prices that we pay for raw materials, particularly aluminum, steel, petroleum-related products and other raw materials, which represent a substantial part of our total cost of operations. Prices in raw materials can be affected by tariffs and quantitative restrictions, such as those that were imposed by the U.S. government in 2018. Historically, we have implemented price increases on our products to offset price increases in the raw materials that we use. We also developed alternatives to some of the components used in our production process that incorporate these raw materials, and our suppliers

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have implemented these alternatives in the production of our component parts. We continue to monitor raw material prices and availability in order to more favorably position the Company in this dynamic market.

Impact of COVID-19

The spread of the COVID-19 virus during the first ~~quarter~~half of 2020 has caused an economic downturn on a global scale, as well as significant volatility in the financial markets. We are considered a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. During the month of March 2020, we enacted limited shutdowns of all of our domestic facilities to make appropriate modifications to our operations because of COVID-19, which allowed us to continue to serve our customers, while taking precautions to provide a safe work environment for our employees and customers. We have been rotating our workforce every four days, and have designated periods of non-production time for sanitation efforts. We are adjusting work schedules to maximize our capacity while adhering to recommended precautions such as social distancing, and have established and implemented work from home provisions where possible. As part of our ongoing safety measures, we temporarily suspend operations from time to time to clean and disinfect areas within our facilities. Our international operations have also been affected by various comparable requirements of governmental ~~agencies.~~agencies and safety related operational adjustments. These safety modifications have had an adverse impact on our plant productivity. ~~It is likely that such adverse impact will be more pronounced in any future quarters when such measures are in effect for the full quarter, including the second quarter of 2020.~~

In March 2020, we drew $25,000 on our existing credit facility for working capital needs and as a precautionary measure to ensure future short-term cash flow requirements ~~are~~were met during the heightened uncertainty resulting from the COVID-19 pandemic. However, during the second quarter of 2020, we repaid a total of $25,000 under our credit facility, as our cash position was stronger than anticipated. At ~~April~~June 30, 2020, the ~~Company’s~~Company had cash ~~position remained~~and cash equivalents of $37,116, which were substantially unchanged ~~from its cash position~~ at ~~March~~July 31, 2020. We ~~also are considering~~continue to consider other steps to conserve liquidity in these uncertain times, including ~~delaying~~possible delays of certain capital ~~expenditures that are not already in progress or are not safety related.~~expenditures. We are also considering various scalable cost cutting measures to adapt to the fluid environment. We have not at this time applied for or taken any loans or grants under the Coronavirus Aid, Relief, and Economic Security Act, also referred to as the CARES Act, or other governmental ~~programs.~~ programs, and have no plans to do so.

While we have experienced no material disruptions in our supply of parts, components and materials due to the COVID-19 pandemic, we have had material curtailments of new chassis deliveries ~~since~~due to shutdowns and production slowdowns at our suppliers’ ~~facilities began shutting down in March 2020. Many~~facilities. Most of these facilities were operating at a reduced capacity by the end of the second quarter after complete shutdowns for most of March and April. We also have ~~recently reopened~~experienced reductions in orders for products since the beginning of the pandemic. This depressed demand along with the decreases in deliveries of chassis caused us to shut our domestic plants in Pennsylvania and ~~others are expected~~Greeneville, Tennessee for several weeks at the end of the second quarter and into the third quarter. Our international plants also were adversely impacted and experienced shutdowns during the second quarter. These plants have now reopened; however, the possibility of new shutdowns of one or more of our facilities due to ~~reopen~~the COVID-19 pandemic remains. This decrease in our production levels, coupled with our health and safety-related adjustments to operations, materially negatively impacted our revenues in the ~~next few weeks, typically at substantially reduced capacity. The~~second quarter, but also served to strengthen our current backlog of orders. However, the impacts of chassis delivery curtailments and the ~~shutdowns on our supply chain~~somewhat softened demand from towing equipment operators are still uncertain, and we are continuing to monitor these ~~reopenings of and the resumption of certain components in our supply chain~~factors to determine how they might impact our future production.

The impact of the ~~COVID~~-19 COVID-19 pandemic continues to unfold. The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or vaccines, the demand for new equipment from towing equipment operators, and the resumption of widespread economic activity. ~~While we have received some COVID-19 pandemic related cancellations, our backlog remains healthy.~~ We are monitoring orders from customers for COVID-19 pandemic related changes, where we would expect issues to become more serious the longer the pandemic-related effects on the economy continue. While we know that COVID-19 related changes to our operating processes will impact our production levels for so long as they are in place, due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the ~~COVID~~-19 COVID-19 pandemic on our future operations.

Critical Accounting Policies

Our condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates. Certain accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimations and assumptions. The accounting policies deemed to be most critical to our financial position and results of operations are those related to accounts receivable, inventory, long-lived assets, warranty reserves, revenues, and income taxes. There have been no significant changes in our critical accounting policies during the first ~~three~~six months of 2020.

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For additional information, refer to our summary of significant accounting policies in Note 2 of the "Notes to Consolidated Financial Statements" in Part IV, Item 15 and "Critical Accounting Policies" in Part II, Item 7 of our annual report on Form ~~10‑K~~10-K for the year ended December 31, 2019.

Results of Operations – Three Months Ended ~~March 31,~~June 30, 2020 Compared to Three Months Ended ~~March 31,~~June 30, 2019

Net sales for the three months ended ~~March 31,~~June 30, 2020 decreased ~~10.7%~~42.2% to ~~$176,054~~$128,529 from ~~$197,213~~$222,346 for the comparable period in 2019. The decrease in our revenue stream was largely attributable to ~~modified production schedules, short~~supply chain issues, nonproductive shutdown periods, ~~reduced~~

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~~sales from trade show cancellations,~~ and ~~supply chain issues~~health and safety-related adjustments to operations, all attributable to impacts of the COVID-19 pandemic. Such shutdowns ended in July and early August 2020; however, the possibility of new shutdowns of one or more of our facilities due to the COVID-19 pandemic ~~as well as some non-COVID-19 related supply chain issues. In contrast, the first quarter of 2019 sales volumes were aided by a correction of fourth quarter 2018 supply chain issues.~~remains. Net domestic sales decreased during the three-month period ended ~~March 31,~~June 30, 2020 to ~~$143,856~~$107,460 from ~~$163,893~~$191,753 for the comparable period in 2019, while net foreign sales decreased to ~~$32,198~~$21,069 from ~~$33,320~~$30,593 during the same three-month period.

Costs of operations for the three months ended ~~March 31,~~June 30, 2020 decreased ~~9.8%~~43.8% to ~~$157,516~~$110,802 from ~~$174,616~~$197,133 for the comparable period in 2019. Costs of operations ~~increased~~decreased as a percentage of sales to ~~89.5%~~86.2%, compared to ~~88.5%~~88.7% for the comparable period in 2019, which reflects ~~inefficiencies related to reduced fixed cost absorption and additional costs associated with reorganizing workforce schedules in response to the COVID-19 pandemic.~~enhanced margins from product mix changes.

Selling, general and administrative expenses for the three months ended ~~March 31,~~June 30, 2020 ~~increased~~decreased to ~~$10,974~~$10,067 from ~~$10,215~~$10,968 for the three months ended ~~March 31, 2019,~~June 30, 2019. This change is primarily ~~due to~~a result of decreases in IT related expenses, travel expenses, professional fees, and sales and marketing expenses, all of which offset increases in ~~software licensing fees, and~~ employee ~~benefit insurance~~related expenses. As a percentage of sales, selling, general and administrative expenses for the three months ended ~~March 31,~~June 30, 2020 increased to ~~6.2%~~7.8% from ~~5.2%~~4.9% in the comparable period in 2019, due primarily to reduced fixed cost absorption.

Interest expense, net decreased to ~~$359~~$429 from ~~$668~~$721 for the three months ended ~~March 31,~~June 30, 2020 as compared to the prior year period. Decreases in interest expense, net were due ~~an increase in interest billings on distributor receivables,~~to decreases in interest on the credit facility and decreases in ~~distributor~~ floor plan interest payments.

When the Company has transactions that are denominated in a currency other than its functional currency, the Company is exposed to foreign currency transaction risk and must record gains and losses through other (income) expense when the related balance sheet items are remeasured in the functional currency of the Company. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses, with the remainder being composed of gains and losses on disposals of equipment. For the three months ended ~~March 31,~~June 30, 2020, the Company experienced a net foreign currency exchange ~~loss~~gain of ~~$84,~~$273, compared to a net loss of ~~$252~~$63 for the three months ended ~~March 31,~~June 30, 2019.

The provision for income taxes for the three months ended ~~March 31,~~June 30, 2020 and 2019 reflects a combined effective U.S. federal, state and foreign tax rate of ~~23.7%~~22.3% and ~~24.4%~~20.7%, respectively. The principal differences between the federal statutory tax rate and the effective tax rate consist primarily of state taxes, domestic tax credits, and tax differences on foreign earnings.

Results of Operations – Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net sales for the six months ended June 30, 2020 decreased 27.4% to $304,583 from $419,559 for the comparable period in 2019. The decrease in our revenue stream was largely attributable to supply chain issues, nonproductive shutdown periods, and health and safety-related adjustments to operations, all attributable to impacts of the COVID-19 pandemic. Such shutdowns ended in July and early August 2020; however, the possibility of new shutdowns of one or more of our facilities due to the COVID-19 pandemic remains. Net domestic sales decreased during the six-month period ended June 30, 2020 to $251,316 from $355,646 for the comparable period in 2019, while net foreign sales decreased to $53,267 from $63,913 during the same six-month period.

Costs of operations for the six months ended June 30, 2020 decreased 27.8% to $268,318 from $371,749 for the comparable period in 2019. Overall, costs of operations decreased as a percentage of sales to 88.1%, compared to 88.6% for the comparable period in 2019, which was primarily due to differences in product mix.

Selling, general and administrative expenses for the six months ended June 30, 2020 decreased to $21,041 from $21,183 for the six months ended June 30, 2019. This change is primarily a result of decreases in professional fees and travel related expenses that offset increases in employee related expenses. As a percentage of sales, selling, general and administrative expenses for the six months ended June 30, 2020 increased to 6.9% from 5.0% in the comparable period in 2019.

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Interest expense, net decreased to $788 from $1,389 for the six months ended June 30, 2020 as compared to the prior year period. Decreases in interest expense were primarily due to decreases in interest on the credit facility and decreases in chassis interest expense.

When the Company has transactions that are denominated in a currency other than its functional currency, the Company is exposed to foreign currency transaction risk and must record gains and losses through other (income) expense when the related balance sheet items are remeasured in the functional currency of the Company. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses, with the remainder being composed of gains and losses on disposals of equipment. For the six months ended June 30, 2020, the Company experienced a net foreign currency exchange gain of $189, compared to a net loss of $315 for the six months ended June 30, 2019.

The provision for income taxes for the six months ended June 30, 2020 and 2019 reflects a combined effective U.S. federal, state and foreign tax rate of 23.0% and 22.4%, respectively. The principal differences between the federal statutory tax rate and the effective tax rate consist primarily of state taxes, domestic tax credits, and tax differences on foreign earnings.

Liquidity and Capital Resources

Cash ~~used in~~provided by operating activities was ~~$1,852~~$23,450 for the ~~three~~six months ended ~~March 31,~~June 30, 2020, compared to ~~$17,854~~cash provided of $8,325 in the comparable period in 2019. Cash provided by or used in operating activities is generally attributable to the receipt of payments from our customers as settlement of their contractual obligation once we have fulfilled all performance obligations related to our contracts with them. These cash receipts are netted with payments for purchases of inventory, materials used in manufacturing, and other expenses that are necessary in the ordinary course of our operations, such as utilities and taxes. ~~Cash~~Our decreased revenue stream during the six-month period ended June 30, 2020 caused less cash to be used for purposes of new production while receivables from higher sales levels of prior quarters continued to flow in, resulting in substantially greater cash provided by operating activities during the three months ended March 31, 2020 was impacted by a rise in finished goods inventory and slower than normal revenues during the quarter due to certain delays in shipping caused by supply chain issues resulting from the COVID-19 pandemic. period.

Cash used in investing activities was ~~$3,516~~$7,503 for the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to ~~$3,155~~$8,430 for the comparable period in 2019. The cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was primarily for purchases of property, plant and equipment.

Cash ~~provided by~~used in financing activities was ~~$22,850~~$4,300 for the ~~three~~six months ended ~~March 31,~~June 30, 2020, compared to ~~$12,848~~cash provided of $702 for the comparable period in 2019. The cash ~~provided by~~used in financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 resulted ~~primarily~~ from ~~net borrowings on the credit facility of $25,000, partially offset by~~ the payment of cash dividends of ~~$2,053,~~$4,106, payments on our French subsidiary’s loan of ~~$92,~~$184, and an immaterial amount of payments on finance lease obligations.

As of ~~March 31,~~June 30, 2020, we had cash and cash equivalents of ~~$43,094.~~$37,116. Our primary cash requirements include working capital, capital expenditures, the funding of any declared cash dividends and principal and interest payments on indebtedness. At ~~March 31,~~June 30, 2020, the Company had commitments of approximately ~~$3,067~~$11,964 for the acquisition of property, plant and equipment, including a commitment of approximately $10,000 for the purpose of upgrading fabrication equipment at our Greeneville, Tennessee location, and approximately ~~$7,949~~$6,179 in software license fees. We expect our primary sources of cash to be cash flows from operations, cash and cash equivalents on hand at ~~March 31,~~June 30, 2020, and additional borrowings under our credit facility as needed. We expect these sources to be sufficient to satisfy our cash needs during the remainder of 2020 and for the next several years. However, our ability to satisfy our cash needs will substantially depend upon several

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factors, including our future operating performance, taking into account the COVID-19 related economic and other factors discussed above and elsewhere in this Quarterly Report, as well as financial, business and other factors, many of which are beyond our control.

As of ~~March 31,~~June 30, 2020 and December 31, 2019, ~~$20,447~~$17,761 and $18,103, respectively, of the Company’s cash and temporary investments were held by foreign subsidiaries and their holdings are generally based in the local currency.

Credit Facilities and Other Obligations

Credit Facility

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At ~~March 31,~~June 30, 2020 and December 31, 2019, the Company had ~~$29,998~~$5,000 and $4,998, respectively, in outstanding borrowings under the credit facility.

Other Long-Term Obligations

Prior to applying a discount rate to our lease liabilities, at ~~March 31,~~June 30, 2020 and December 31, 2019, we had approximately ~~$1,728~~$1,587 and $1,807 in non-cancelable operating lease obligations, and ~~$55~~$49 and $61 in non-cancelable finance lease obligations, respectively.

Our French subsidiary, Jige International S.A., has an agreement with Banque Européenne du Crédit Mutuel for an unsecured fixed rate loan with a maturity date of September 30, 2020. All borrowings under this loan bear interest at 0.3% per annum. At ~~March 31,~~June 30, 2020 and December 31, 2019, the Company had ~~$276~~$185 and $368, respectively, in outstanding borrowings under the loan agreement, all of which was classified as long-term obligations due within one year on the condensed consolidated balance sheets. These borrowings are being used primarily for the purchase of land and routine repairs to the operating facilities in France. The loan agreement contains no material covenants.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of our business, we are exposed to market risk from changes in interest rates and foreign currency exchange rates that could impact our results of operations and financial position.

Interest Rate Risk

Changes in interest rates affect the interest paid on indebtedness under the credit facility because outstanding amounts of indebtedness under the credit facility are subject to variable interest rates. Under the credit facility, the non-default rate of interest is equal to the LIBOR Market Index Rate plus 1.00% or 1.25% per annum, depending on the leverage ratio, for a rate of interest ~~1.99%~~1.16% at ~~March 31,~~June 30, 2020. A one percent change in the interest rate on our variable-rate debt would not have materially impacted our financial position, results of operations or cash flows for the three and six months ended ~~March 31,~~June 30, 2020.

Foreign Currency Exchange Rate Risk

We are subject to risk arising from changes in foreign currency exchange rates related to our international operations in Europe. We manage our exposure to our foreign currency exchange rate risk through our regular operating and financing activities. Additionally, from time to time, we enter into certain forward foreign currency exchange contracts.

Because we report in U.S. dollars on a consolidated basis, foreign currency exchange fluctuations could have a translation impact on our financial position. During the three months ended ~~March 31,~~June 30, 2020, we recognized a ~~$72~~$312 decrease in our foreign currency translation

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adjustment account because of the fluctuations of the U.S. dollar against certain foreign currencies, compared to a ~~$277 increase~~$930 decrease for the prior year period. During the six months ended June 30, 2020, we recognized a $384 decrease, compared to a $653 decrease for the prior year period. These amounts were recognized as unrealized losses in accumulated other comprehensive loss on the condensed consolidated balance sheets.

For the three months ended ~~March 31,~~June 30, 2020 and 2019, the impacts of foreign currency exchange rate changes on our results of operations and cash flows were a net ~~loss~~gain of ~~$84~~$273 and a net loss of ~~$252,~~$63, respectively. For the six months ended June 30, 2020 and 2019, the impacts of foreign currency exchange rate changes on our results of operations and cash flows were a net gain of $189 and a net loss of $315, respectively.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation, as of the end of the period covered by this report on Form ~~10‑Q,~~10-Q, under the supervision and with the participation of our management, including our co-Chief Executive Officers (CEOs) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules ~~13a‑14(c)~~13a-14(c) under the Securities Exchange Act of 1934. Based

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upon this evaluation, our CEOs and CFO have concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are, from time to time, a party to litigation arising in the normal course of our business. Litigation is subject to various inherent uncertainties, and it is possible that some of these matters could be resolved unfavorably to us, which could result in substantial damages against us. We have established accruals for matters that are probable and reasonably estimable and maintain product liability and other insurance that management believes to be adequate. Management believes that any liability that may ultimately result from the resolution of these matters in excess of available insurance coverage and accruals will not have a material adverse effect on our consolidated financial position or results of operations.

ITEM 1A. RISK FACTORS

The Company is supplementing the risk factors previously disclosed under Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020, with the risk factor set forth below.

The ~~recent~~ ~~COVID~~-19 ~~outbreak~~continuing COVID-19 pandemic may adversely affect our revenues, results of operations and financial condition.

The U.S. and other countries are experiencing outbreaks of COVID-19,, which is continuing to spread to areas where we, our customers and our suppliers do business. The outbreak has resulted in governments around the world implementing ~~increasingly~~ stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures, and other measures. Other organizations, businesses and individuals are taking additional steps to avoid or reduce infection, including limiting travel and staying home from work. These measures taken to curb the spread of COVID-19 are disrupting normal business operations both in and outside of affected areas, including our business operations.

We have made and continue to make what we believe to be appropriate modifications to our operations because of COVID-19 to allow us to ~~operate~~protect our employees while operating all our facilities consistent with ~~federal~~applicable governmental guidelines and ~~state and local~~ orders. ~~These safety modifications have had an adverse impact on our plant productivity.~~ We continue to monitor government recommendations impacting our operations and may need to enact further precautionary measures to help minimize the risk of our employees being exposed to COVID-19, which could have a further adverse impact on our plant production levels. ~~The cancellation~~As part of ~~major industry shows~~our ongoing safety measures, we may also decide to temporarily suspend operations to clean and ~~events has also reduced~~disinfect areas within our ~~ability~~facilities, as needed to ~~meet with existing and potential new customers.~~protect our employees, which may have an adverse impact on our plant productivity.

The businesses of towing and recovery equipment operators have been disrupted and they ~~could seek~~have limited and may continue to limit spending as a result of COVID-19, which could negatively impact their willingness to purchase new equipment from us or our independent distributors, and ultimately

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adversely affect our revenues. ~~While we~~We have seen ~~some~~ order cancellations and softening of demand, ~~the impact has not been material date, but that~~which could worsen depending on the duration, spread, and severity of the pandemic. The cancellation of major industry shows and events has also reduced our ability to meet with existing and potential new customers.

Additionally, global economic disruptions ~~like~~such as the ~~COVID~~-19COVID-19 pandemic could negatively impact our supply chain and cause delays in the delivery of chassis, raw materials, components and other supplies that we need to manufacture our products. WeDuring the COVID-19 pandemic, we have had and, to a lesser extent are still experiencing, material curtailments of new chassis deliveries ~~since~~due to shutdowns and production slowdowns at our suppliers’ facilities. While most of these facilities ~~began shutting down in~~were operating by the end of the second quarter after complete shutdowns for most of March ~~2020.~~and April, they operated at a reduced capacity. The longer these ~~shutdowns or~~ decreased production levels continue, the greater is the likelihood of more substantial harm to our revenues and results of operations. ~~We may be unable to locate replacement materials, components or other supplies, and ongoing delays could reduce sales and adversely affect our revenues and results~~

Table of ~~operations.~~Contents

The ~~COVID~~-19 COVID-19 pandemic had a ~~limited~~material adverse impact on our financial results and business operations in the ~~first~~second quarter 2020, ~~but~~and economic and health conditions in the United States and across most of the globe ~~have changed~~continue to change dramatically ~~since the end~~from day to day as a result of the ~~quarter.~~COVID-19 pandemic. The ~~ultimate~~future impact of the ~~COVID~~-19COVID-19 pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, the timing of our chassis and other suppliers resuming normal shipment levels, the effect of the pandemic on spending levels of towing and recovery equipment operators, and any additional preventative and protective actions that governments, or we or other businesses, may direct, which may result in an extended period of continued business disruption and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but should be anticipated to have a material adverse impact on our business, financial condition and results of operations. Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business due to any resulting economic recession or depression, or to a general reduction in miles driven on roadways due to a decrease in travel.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

1819

Table of Contents

ITEM 6. EXHIBITS

Description

Incorporated by
Reference to
Registration File
Number

Form or
Report

Date of Report

Exhibit
Number in
Report

~~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)~~13a-14(a)/~~15d‑14(a)~~15d-14(a) by Co-Chief Executive Officer*

31.2

Certification Pursuant to Rules ~~13a‑14(a)~~13a-14(a)/~~15d‑14(a)~~15d-14(a) by Co-Chief Executive Officer*

31.3

Certification Pursuant to Rules ~~13a‑14(a)~~13a-14(a)/~~15d‑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.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Table of Contents

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, has been formatted in Inline XBRL.

~~101~~		The following information from the Company’s quarterly report on Form 10‑Q for the quarterly period ended March 31, 2020 formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets – March 31, 2020 and December 31, 2019; (ii) Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019; (iv) Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2020 and 2019; (v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019; and (vi) Notes to Condensed Consolidated Financial Statements.*

* Filed herewith

± Exhibit is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subjected to the liabilities of that Section. This exhibit shall not be incorporated by reference

~~Table of Contents~~

into any given registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

2021

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Miller Industries, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MILLER INDUSTRIES, INC.

	By:	/s/ Deborah L. Whitmire
		Deborah L. Whitmire
		Executive Vice President, Chief Financial Officer and Treasurer

Date: ~~May 6,~~August 5, 2020

2122

Tennessee		~~62‑1566286~~62-1566286
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)

8503 Hilltop Drive
~~8503 Hilltop Drive~~Ooltewah, Tennessee
~~Ooltewah, Tennessee~~		37363
(Address of principal executive offices)		(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	MLR	New York Stock Exchange

	Large accelerated filer ☐	Accelerated filer ☒

	Non-accelerated filer ☐	Smaller reporting company ☐

	Emerging growth company ☐


				Page Number
PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements
	~~Item 1.~~	~~Financial Statements~~

		Condensed Consolidated Balance Sheets – ~~March 31,~~June 30, 2020 and December 31, 2019	2

		Condensed Consolidated Statements of Income for the Three and Six Months Ended ~~March 31,~~June 30, 2020 and 2019	3

		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended ~~March 31,~~June 30, 2020 and 2019	4

		C~~ondensed~~Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended ~~March 31,~~June 30, 2020 and 2019	5

		Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2020 and 2019	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1617

	Item 4.	Controls and Procedures	17
	~~Item 4.~~	~~Controls and Procedures~~	17

PART II		OTHER INFORMATION

	Item 1.	Legal Proceedings	18

	Item 1.1A.	~~Legal Proceedings~~Risk Factors	1718

	Item ~~1A.~~2.	~~Risk Factors~~	17

	~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	1819

	Item 3.	Defaults Upon Senior Securities	1819

	Item 4.	Mine Safety Disclosures	19

	Item 4.5.	~~Mine Safety Disclosures~~Other Information	1819

	Item 6.	Exhibits	20
	~~Item 5.~~	~~Other Information~~	18

	~~Item 6.~~	~~Exhibits~~	19

SIGNATURES			2122


	June 30,
	2020		December 31,
	(Unaudited)		2019
ASSETS
CURRENT ASSETS:
Cash and temporary investments	$	37,116	$	26,072
Accounts receivable, net of allowance for doubtful accounts of $1,186 and $1,106 at June 30, 2020 and December 31, 2019, respectively		123,161		168,619
Inventories, net		90,902		87,965
Prepaid expenses		5,715		4,796
Total current assets		256,894		287,452
NONCURRENT ASSETS:
Property, plant and equipment, net		93,604		90,735
Right-of-use assets - operating leases		1,432		1,640
Goodwill		11,619		11,619
Other assets		424		521
TOTAL ASSETS	$	363,973	$	391,967

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	59,481	$	95,750
Accrued liabilities		29,581		27,813
Current portion of operating lease obligation		302		330
Current portion of finance lease obligation		22		21
Long-term obligations due within one year		185		368
Total current liabilities		89,571		124,282
NONCURRENT LIABILITIES
Long-term obligations		5,000		4,998
Noncurrent portion of operating lease obligation		1,128		1,307
Noncurrent portion of finance lease obligation		26		37
Deferred income tax liabilities		3,360		3,416
Total liabilities		99,085		134,040

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 5,000,000 shares authorized, NaN issued or outstanding		—		—
Common stock, $0.01 par value; 100,000,000 shares authorized, 11,405,468 and 11,400,102, outstanding at June 30, 2020 and December 31, 2019, respectively		114		114
Additional paid-in capital		151,249		151,055
Accumulated surplus		119,412		112,261
Accumulated other comprehensive loss		(5,887)		(5,503)
Total shareholders’ equity		264,888		257,927
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	363,973	$	391,967


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ___________________________________________ to ________________________________________


	Three Months Ended
	March 31
	2020		2019

NET SALES	$	176,054	$	197,213
COSTS OF OPERATIONS		157,516		174,616
GROSS PROFIT		18,538		22,597

OPERATING EXPENSES:
Selling, general and administrative expenses		10,974		10,215

NON-OPERATING (INCOME) EXPENSES:
Interest expense, net		359		668
Other (income) expense, net		91		254
Total expense, net		11,424		11,137

INCOME BEFORE INCOME TAXES		7,114		11,460
INCOME TAX PROVISION		1,683		2,800
NET INCOME	$	5,431	$	8,660

BASIC INCOME PER COMMON SHARE	$	0.48	$	0.76

CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.18	$	0.18

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		11,405		11,400


							Accumulated
			Additional				Other
	Common		Paid-In		Accumulated		Comprehensive
	Stock		Capital		Surplus		Loss		Total
BALANCE, December 31, 2018	$	114	$	150,905	$	81,354	$	(4,810)	$	227,563
Cumulative effect adjustment for adoption of ASU 2016-02		—		—		4		—		4
BALANCE, January 1, 2019		114		150,905		81,358		(4,810)		227,567
Components of comprehensive income:
Net income		—		—		8,660		—		8,660
Foreign currency translation adjustments		—		—		—		277		277
Total comprehensive income		—		—		8,660		277		8,937
Issuance of common stock to non-employee directors (5,556)		—		150		—		—		150
Dividends paid, $0.18 per share		—		—		(2,052)		—		(2,052)
BALANCE, March 31, 2019	$	114	$	151,055	$	87,966	$	(4,533)	$	234,602

BALANCE, December 31, 2019	$	114	$	151,055	$	112,261	$	(5,503)	$	257,927
Components of comprehensive income:
Net income		—		—		5,431		—		5,431
Foreign currency translation adjustments		—		—		—		(72)		(72)
Total comprehensive income		—		—		5,431		(72)		5,359
Issuance of common stock to non-employee directors (5,366)		—		194		—		—		194
Dividends paid, $0.18 per share		—		—		(2,053)		—		(2,053)
BALANCE, March 31, 2020	$	114	$	151,249	$	115,639	$	(5,575)	$	261,427


	Operating Lease Obligation		Finance Lease Obligation
Remaining lease payments to be paid during the year ended December 31,
2020	$	287	$	17
2021		340		23
2022		325		15
2023		263		—
2024		224		—
Thereafter		289		—
Total lease payments		1,728		55
Less Imputed Interest		(184)		(2)
Lease obligation at March 31, 2020	$	1,544	$	53