Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a summary from the perspective of management on our consolidated operating results, financial condition, liquidity, and cash flows of our Company as of and for the periods presented.

The MD&A should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and the unaudited condensed consolidated financial statements and the accompanying notes thereto included herein.

To facilitate timely reporting, the condensed consolidated financial statements include accounts of certain subsidiaries whose closing dates differ from the applicable period end (December 31^st or September 30^th) by 31 days (or less).

References to "the Company", "we", "us", and "our" are intended to mean the business and operations of Miller Industries, Inc., and its consolidated subsidiaries unless the context requires otherwise.

ABOUT MILLER INDUSTRIES, INC.

Miller Industries, Inc. is The World's Largest Manufacturer of Towing and Recovery Equipment^®, with domestic manufacturing operations in Tennessee and Pennsylvania, and foreign manufacturing operations in France and the United Kingdom.

We develop and manufacture innovative high-quality towing and recovery equipment worldwide. We design and manufacture bodies of car carriers and wreckers, which are installed on chassis manufactured by third parties and then sold to our customers under our Century®, Vulcan®, Chevron™, Holmes®, Challenger®, Champion®, Jige™, Boniface™, Titan®, and Eagle® brand names.

Our products are primarily marketed and sold through a network of distributors that serve all 50 states, Canada, Mexico and other foreign markets, and through prime contractors to governmental entities. Furthermore, we have substantial distribution capabilities in Europe as a result of our ownership of Jige International S.A. and Boniface Engineering, Ltd. While most of our distributor agreements do not generally contain exclusivity provisions, management believes our independent distributors do not offer products of any other towing and recovery equipment manufacturer. We believe this is a testament of their loyalty to our brands.

In addition to selling our products, our independent distributors provide end-users with parts and service. We also utilize sales representatives to inform prospective end-users about our current product lines in an effort to drive sales to independent distributors. Management believes the strength of our distribution network and the breadth and quality of our product offerings are two key advantages over our competitors.

We focus 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.

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. We opened a free-standing research and development facility in Chattanooga, Tennessee 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 investments in strategic and planned projects have contributed to our increased production capacity and optimized our manufacturing processes, including investing in component re-design capabilities that allow for more flexibility in our manufacturing and sourcing. In addition, our strategic investment in Southern Hydraulic Cylinder, Inc. in May 2023, allowed us to strengthen our efforts to enhance the stability of our supply chain. Our domestic plant expansion and modernization projects have installed sophisticated robotics systems and other advanced technologies to complement our talented workforce. The projects completed during the period from 2017 to 2021 were at a cost of over $82 million. As we continue to focus on modernization and operational excellence, we expect to continue to invest in robotics and automated material handling equipment across all our domestic manufacturing facilities.

TRENDS AND OTHER FACTORS AFFECTING OUR BUSINESS

Based on the productivity enhancements that we have implemented and improved supply chain conditions, our gross profit as a percentage of sales improved for the nine months ended September 30, 2025, despite net sales and earnings being lower for the period. During the third quarter of 2025, our results continued to be affected by the high levels of inventory in our distribution channel, as our distributors worked through the inventory buildup stemming primarily from inconsistent supplier delivery schedules throughout 2024. We continue to believe that chassis and body inventory levels are moving closer to historical levels and that the flow of manufactured equipment and chassis deliveries will become more aligned during the remainder of 2025. However, during the second and third quarters, we also experienced demand headwinds, including reduced retail sales and lower order intake, which we believe are attributable to the continued high cost of equipment ownership in the current interest rate environment, escalating insurance costs for our customers, and the imposition of and ongoing uncertainty involving tariffs. As a result of these challenges, during the third quarter of 2025, we continued to strategically decrease

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production to reduce field inventory in our distribution channel, we implemented certain cost savings initiatives, and we continued to secure our supply chain to mitigate the long-term impacts of tariffs. These actions during the third quarter of 2025 included the implementation of a reduction in workforce, which we announced in August 2025, as part of our comprehensive cost reduction plan. Under this plan, we reduced our headcount by approximately 150 positions across three of our U.S. manufacturing facilities during the third quarter of 2025. As we continue to assess ongoing trends, we are closely monitoring production schedules and costs, and plan to continue to work towards returning our channel inventory to historical levels.

Our future performance will continue to be heavily influenced by, among other things, the high cost of equipment ownership, the potential impacts of new or increased tariffs, timing of supply chain deliveries and global supply chain pressures, the continuing impact of geopolitical factors, general economic factors, and regulations regarding emissions standards.

The impact of these factors remains largely out of our control, and we currently anticipate that these factors are having, and could continue to have, an adverse impact on our production capabilities, financial results, and cash flows through the remainder of 2025.

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 nine months ended September 30, 2025, from the information provided under the heading "Critical Accounting Policies and Sensitive Accounting Estimates" in Part II, Item 7 -"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Net Sales

Net sales for the three months ended September 30, 2025 were $178.7 million compared to $314.3 million for the corresponding period in fiscal 2024, a decrease of 43.1%. The decrease in net sales was primarily due to a reduction of chassis deliveries and lower production levels to mitigate inventory buildup in our distribution channel.

Net foreign sales for the three months ended September 30, 2025 were $30.6 million compared to $27.7 million for the corresponding period in fiscal 2024, an increase of 10.6%.

Cost of Operations

Cost of operations includes the direct cost of manufacturing, including direct materials, labor and related factory overhead, physical inventory adjustments, as well as inbound and outbound freight. Cost of operations for the three months ended September 30, 2025 was $153.3 million compared to $272.2 million for the correspondingperiod in fiscal 2024, a decrease of 43.7%. The decrease in cost of operations was consistent with the decrease in sales.

Gross Profit

Gross profit is equal to net sales less cost of operations. Gross profit for the three months ended September 30, 2025 was$25.3 million compared to $42.0 million for the corresponding period in fiscal 2024, a decrease of 39.7%. This decrease was primarily due to the decrease in sales. As a percentage of sales, gross profit was 14.2% for the three months ended September 30, 2025, compared to 13.4% in the corresponding period in fiscal 2024, an increase of 6.0%. The year-over-year increase was primarily due to a favorable product mix, which shifted from a higher percentage of chassis deliveries in the third quarter of 2024 to a higher percentage of units in the third quarter of 2025.

Selling, General and Administrative

Selling, general and administrative expenses for the three months ended September 30, 2025 were $21.2 million compared to $22.3 million for the corresponding period in fiscal 2024, a decrease of 4.8%. The decrease for the third quarter of 2025 was primarily due to lower executive compensation expense, specifically related to the Company's Executive Annual Bonus Program (the "EABP"). The EABP aligns executive bonus compensation with the Company's overall level of profitability. The provision for executive bonuses was calculated based on estimated annual adjusted pretax income at the appropriate rate per the EABP.

During the third quarter of 2025, the Company offered an enhanced retirement program available to all U.S. employees aged 65 and above. The program was voluntary and the amounts calculated were based on each individual's compensation and years of service with the Company. The Company recognizes the expense upon an irrevocable acceptance of the offer from the employee. The net financial impact totaled $2.7 million, of which $0.9 million was recognized in the third quarter of 2025. We expect to recognize the remaining $1.8 million expense in the fourth quarter of 2025.

As a percentage of net sales, selling, general and administrative expenses increased to 11.9% for the three months ended September 30, 2025, from 7.1% for the comparable period in fiscal 2024.

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Interest Expense, Net

Interest expense, net for the three months ended September 30, 2025 was $0.1 million compared to $0.3 million for the corresponding period in fiscal 2024, a decrease of 63.0%. Interest expense for the three months ended September 30, 2025 was $1.4 million and $2.5 million for the comparable period in 2024, offset by interest income of $1.3 million for the three months ended September 30, 2025, compared to interest income of $2.2 million for the comparable period in 2024.

Other (Income) Expense

The Company is exposed to foreign currency transaction risks when the Company has transactions that are denominated in a currency other than its functional currency. When the related balance sheet items are remeasured in the functional currency of the Company, gains and losses are recorded through other (income) expense. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses. The Company experienced a net foreign currency exchange loss of $0.2 million and gain of $0.3 million for the three months ended September 30, 2025 and 2024, respectively. Other (income) expense for the three months ended September 30, 2025 included gain on the sale of assets in the amount of $0.5 million.

Provision for Income Taxes

The provision for income taxes for the three months ended September 30, 2025 and 2024 reflects a combined federal, state, and foreign tax rate of 28.4% and 22.0%, respectively. The increase was primarily due to non-deductible executive compensation. 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.

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Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Net Sales

Net sales for the nine months ended September 30, 2025 were $618.4 million compared to $1.04 billion for the corresponding period in fiscal 2024, a decrease of 40.3%. The decrease in net sales was primarily due to a reduction of chassis deliveries and lower production levels to mitigate inventory buildup in our distribution channel.

Net foreign sales for the nine months ended September 30, 2025 were $108.0 million compared to $89.8 million for the corresponding period in fiscal 2024, an increase of 20.3%.

Cost of Operations

Cost of operations includes the direct cost of manufacturing, including direct materials, labor and related factory overhead, physical inventory adjustments, as well as inbound and outbound freight. Cost of operations for the nine months ended September 30, 2025 was $524.5 million compared to $898.2 million for the correspondingperiod in fiscal 2024, a decrease of 41.6%. The decrease in cost of operations was consistent with the decrease in sales.

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Gross Profit

Gross profit is equal to net sales less cost of operations. Gross profit for the nine months endedSeptember 30, 2025 was$93.9 million compared to $137.3 million for the corresponding period in fiscal 2024, a decrease of 31.7%. This decrease was primarily due to the decrease in sales. As a percentage of sales, gross profit was 15.2% for the nine months ended September 30, 2025, compared to 13.3% in the corresponding period in fiscal 2024, an increase of 14.5%. The year-over-year increase was primarily due to a favorable product mix, which shifted from a higher percentage of chassis deliveries throughout 2024 to a higher percentage of units throughout 2025.

Selling, General and Administrative

Selling, general and administrative expenses for the nine months ended September 30, 2025 were $67.9 million compared to $66.6 million for the corresponding period in fiscal 2024, an increase of 1.9%. As a percentage of net sales, selling, general and administrative expenses increased to 11.0% for the nine months ended September 30, 2025, from 6.4% for the comparable period in fiscal 2024. The increase was primarily due to higher stock-based compensation expense relating to prior year restricted stock unit grants and higher compensation expense and incentives for all employees to improve employee retention. This increase was partially offset by lower executive bonus expense for the current period.

During the third quarter of 2025, the Company offered an enhanced retirement program available to all U.S. employees aged 65 and above. The program was voluntary and the amounts calculated were based on each individual's compensation and years of service with the Company. The Company recognizes the expense upon an irrevocable acceptance of the offer from the employee. The net financial impact totaled $2.7 million, of which $0.9 million was recognized in the third quarter of 2025. We expect to recognize the remaining $1.8 million expense in the fourth quarter of 2025.

Interest Expense, Net

Interest expense, net for the nine months ended September 30, 2025 was $0.5 million compared to $3.5 million for the corresponding period in fiscal 2024, a decrease of 86.4%. Interest expense for the nine months ended September 30, 2025 was $5.9 million and $7.4 million for the comparable period in 2024, offset by increased interest income of $5.4 million for the nine months ended September 30, 2025, compared to interest income of $3.9 million for the comparable period in 2024. The increase in interest income is due to increased interest billings on open accounts receivable balances from customers.

Other (Income) Expense

The Company is exposed to foreign currency transaction risks when the Company has transactions that are denominated in a currency other than its functional currency. When the related balance sheet items are remeasured in the functional currency of the Company, gains and losses are recorded through other (income) expense. Other (income) expense, net is composed primarily of these foreign currency exchange gains and losses. The Company experienced a net foreign currency exchange gain of $0.5 million and gain of $0.2 million for the nine months ended September 30, 2025 and 2024, respectively. Other (income) expense for the nine months ended September 30, 2025 also included gain on the sale of assets in the amount of $0.5 million.

Provision for Income Taxes

The provision for income taxes for the nine months endedSeptember 30, 2025 and 2024 reflects a combined federal, state, and foreign tax rate of 25.9% and 21.5%, respectively. The increase was primarily due to non-deductible executive compensation. 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.

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LIQUIDITY AND CAPITAL RESOURCES

We currently believe that, based on available capital resources and projected operating cash flows, we have adequate capital resources to fund our operations and expected future cash needs over the next 12 months. However, our ability to satisfy our cash needs will substantially depend upon a number of factors, including our future operating performance, and the economic, regulatory, and other factors discussed elsewhere in this Quarterly Report, many of which are beyond our control.

Cash and Temporary Investments

As of September 30, 2025, we had cash and temporary investments of $38.4 million, and $55.0 million in availability for borrowing under our credit facility. Our primary cash requirements include working capital, capital expenditures, the funding of any declared cash dividends, purchases pursuant to our stock repurchase program, and principal and interest payments on indebtedness.

The cash and temporary investments balance as of September 30, 2025 included $24.6 million of cash held by subsidiaries outside of the United States.

Cash Flows

The following table summarizes our cash flows for the period:

Changes in working capital, which impact operating cash flows, can vary significantly depending on factors such as the timing of customer payments, inventory purchases and payments to vendors, and tax payments in the regular course of business.

Cash Flows Provided by (Used in) Operating Activities

During the nine months ended September 30, 2025, net cash provided by operating activities was $49.9 million compared to net cash provided by operating activities of $28.6 million in the comparable period in fiscal 2024. Cash provided by 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, payments for materials used in manufacturing, and other payments that are necessary in the ordinary course of our operations, such as those for utilities and taxes. The cash provided by operating activities was primarily driven by net income, non-cash expenses, and net positive change in working capital.

Cash Flows Provided by (Used in) Investing Activities

During the nine months ended September 30, 2025, cash used in investing activities was $7.3 million compared to cash used in investing activities of $14.0 million for the comparable period in fiscal 2024. The cash used in investing activities was primarily for purchases of property, plant and equipment, as well as our continued investment in manufacturing automation and enterprise resource planning (ERP) system enhancements, offset by proceeds from the sale of assets.

Cash Flows Provided by (Used in) Financing Activities

During the nine months ended September 30, 2025, cash used in financing activities was $30.6 million compared to cash used in financing activities of $4.4 million for the comparable period in fiscal 2024. The cash used in financing activities was primarily due to payments on the credit facility, cash payments for dividends, and repurchases of common stock.

Contractual Obligations

As of September 30, 2025 and December 31, 2024, we had commitments of approximately $15.5 million and $14.2 million, respectively, for the acquisition of property, plant and equipment. As of December 31, 2024, the Company had commitments related to the ERP implementation project of approximately $0.5 million. This increase in commitments for acquisition of property, plant and equipment was due to our continued investments in automation and the use of robotics in our production processes to streamline efficiency. There have been

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no other material changes to our contractual obligations from what was previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Credit Facility

The Company had outstanding borrowings of $45.0 million and $65.0 million under the credit facility as of September 30, 2025 and December 31, 2024, respectively. See the disclosure under the heading "Credit Facility" in Note 4 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information regarding the Company's credit facility.

As of October 31, 2025, the outstanding balance on our credit facility was $35.0 million.

Other Long-Term Obligations

Prior to applying a discount rate to our lease liabilities, we had approximately $0.4 million and $0.6 million in non-cancellable operating lease obligations as of September 30, 2025 and December 31, 2024, respectively. We had no non-cancellable finance lease obligations as of September 30, 2025 and December 31, 2024.

Capital Expenditures

Capital expenditures during the nine months ended September 30, 2025 and 2024 were $8.6 million and $14.1 million, respectively. We make ongoing capital investments in our property, plant and equipment to increase our production capacity and efficiencies, as well as the sustainability and safety of our operations. This includes capital investments during the nine months ended September 30, 2025 in the use of robotics and automation in our production processes to streamline efficiency.

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