Hello, this is the Chorus Call operator. Welcome to the Miller Industries Fourth Quarter 2011 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Alexandra Tramont. Ms. Tramont?

Thank you, and good morning, everyone. I would like to welcome you to the Miller Industries conference call. We're here to discuss the company's 2011 fourth quarter and full year results which were released after the close of the market yesterday. With us from management today are Bill Miller, Chairman of the Board; Jeff Badgley, CEO; Vince Mish, CFO; Frank Madonia, General Counsel; and Allison Houghton, Director of Finance. Today's call will begin with formal remarks from management, followed by a question-and-answer period. Please note that in this morning's call, management may make forward-looking statements in accordance with the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. I would like to call your attention to the risks related to these statements, which are more fully described in the company's annual report filing on Form 10-K and other filings with the Securities and Exchange Commission. With these formalities out of the way, I would like to turn the call over to Jeff Badgley. Jeff, please go ahead.

Thank you, and good morning. Yesterday, we reported 2011 fourth quarter sales of $109.4 million, representing solid year-over-year sales growth of over 37%. The increase in sales reflected the completion of deliveries from our government-related add-on orders and gradually strengthening demand for our products across our core domestic and European markets. Overall, product sales mix resulted in a decline in our gross margin percentage compared to the prior year period. Somewhat offsetting these factors were our cost reduction initiatives and overall, we saw a 36% increase in net income. During the 2011 fourth quarter, we fulfilled our commitments to deliver our government-related add-on orders. I am extremely pleased that we were able to meet the tight deadlines that we were required and deliver high-quality products that met our customers' requirements. Currently, we do not have any other large follow-on orders in our backlog. As we've mentioned before, while we will continue to pursue these opportunities, their absence will create revenue and margin headwinds going forward as our sales volumes and mix will reflect the current moderate commercial demand levels. Our sales growth in the quarter was also supported by our European markets, which saw incremental growth despite the ongoing sovereign debt crisis. We continue to actively seek out new distribution channels in Europe as we target future market penetration there. We remain committed to maximizing value for our shareholders. We paid our regular $0.12 share cash dividend in the quarter and completed our $20 million common stock repurchase plan, buying 1,184,000 shares during the year. In addition, we also announced that we have increased the quarterly cash dividend to $0.13 per share beginning this month. Now, I'll turn the call over to Vince, who will review the quarter's financial results. After that, I'll be back for some more comments, then we'll open the line for questions. Vince?

Yes. Thanks, Jeff and good morning everyone. As Jeff mentioned, net sales for the fourth quarter of 2011 were $109.4 million versus $79.7 million in the 2010 fourth quarter. Sales were up approximately 37% year-over-year. During the fourth quarter of 2011, 20.1% of our net sales were made to the U.S. federal government through prime contractors as compared to 17.6% in the prior year period. Cost of operations increased by about 40% to $93.1 million in the 2011 fourth quarter compared to $66.6 million last year, as we ramped up operations to complete our government-related orders prior to the close of the year. Gross profit was $16.3 million or 14.9% of net sales in the fourth quarter of 2011 compared to $13.1 million or 16.4% of net sales in the fourth quarter of 2010. The decrease in gross margin percentage resulted from the increased level of lower margin chassis sales in the quarter. SG&A expense increased 15.3% over the prior year to $8.1 million. As a percentage of sales, SG&A decreased to 7.4% from 8.8% over the prior year period. Other income related to foreign currency transactions was the net gain of $143,000 in the fourth quarter of 2011 compared to a net gain of $56,000 the fourth quarter of 2010. Interest expense in the 2011 fourth quarter was $194,000 compared to interest expense of $59,000 in the fourth quarter of 2010, reflecting higher interest expense on chassis and distributor floor plan financing. Net income was $4.9 million, $0.43 per diluted share compared to $3.6 million or $0.30 per diluted share for the 2010 fourth quarter, an increase of 35.9%. Now let me briefly review our results for the full year period ended December 31, 2011. Net sales were $412.7 million in 2011 compared to $306.9 million in the prior…

Thanks, Vince. Overall, we are pleased with the results and the progress we have made in the past year. Our results reflected significant year-over-year growth on both the top and bottom lines while operating in a very difficult economic environment. We successfully completed multiple government-related orders during the 2011 fourth quarter, reflecting our ability to meet the tight production deadlines while still providing high-quality products that our customers have come to expect from us. We are continually researching and developing new products to meet our customers' needs, and many of our innovative products for the commercial market will be on display at next month's annual Florida Tow Show. Beyond our performance for government-related customers, we have seen modest growth in our commercial backlog from levels at the end of 2010 as the economy continues to slowly recover and the market moves towards stable demand environment. We also saw some improved demand in Europe in recent months. There continues to be uncertainty surrounding certain of the key economic indicators such as consumer confidence, the rising cost of petroleum and the ultimate impact of the sovereign debt crisis in Europe on the global economy, all of which affect the purchasing decisions of our end users around the world. Outside of our strong operational performance, we further executed on our commitment to enhance shareholder value by initiating a quarterly dividend and fully exercising our common stock repurchase program. We will continue to look for ways to further enhance shareholder value in the future. With the completion of our most recent U.S. government-related orders, which represented approximately 20% of our net sales in the quarter, we remain focused on growth initiatives both within our domestic markets and around the world. In the meantime, we will continue to closely monitor our costs and ensure that…

[Operator Instructions] The first question comes from David Cohen of Midwood Capital.

One comment before I ask a question. It's quite a challenge to find the dial-in number for the call. It's something you might want to make a little bit easier in the future. So my question is I know you guys are not in the habit of giving guidance, but with -- by my math, government orders in excess of $100 million that won't repeat in 2012, can you give us a sense of the potential profitability of this company going forward relative to the very strong 2011 performance?

Well, first of all, I'm sorry you didn't get the number. I thought there was invites out there. But we have not given guidance where we're seeing the domestic markets picking up and that will have, obviously, a positive impact overall. And you can sort out the numbers that dropped from the military, though we are still trying to pursue more of those opportunities. But beyond that, we really haven't given any guidance.

So relative to what I think was like a 17% consolidated gross margin, would military carry higher margin -- would that have carried higher margins throughout 2011 in your company average?

This is Jeff. Obviously, when you look at the military tender and specifics, there are no chassis in the sale of that -- on our side in the sale of that military supply. So it doesn't -- the pure revenue generated doesn't have a downward pressure based on supplying chassis. But from a standpoint of pure manufactured product, it's pretty similar. When you look at the large wreckers that we supplied to the military, the margins are pretty similar to the large wreckers that we supply to our commercial markets.

And I got on the call a little bit late, but with the 14.9% gross margin for the fourth quarter compared to the prior couple of quarters, what accounted for the downward pressure on that even though military was still a relatively high portion of the sales?

As Vince mentioned, we had a higher proportion of chassis sales year-over-year with the increase in domestic demand levels. And in fact, our proportion of chassis to bodies actually -- although we don't disclose that proportion, I will tell you it actually went up in our fourth quarter. And we think that is based on chassis manufacturers who had some supply issues in the second and third quarter pushing to get out -- not pushing, but actually delivering their units towards the end of the year, which gave us more volume of chassis over prior year period.

[Operator Instructions] The next question comes from Matt Sherwood of Cooper Creek Partners.

I actually just had a quick question on the -- just the demand environment. You guys obviously had a pretty strong back half in terms of revenue. Was there any pull forward with the accelerated depreciation of some of the supply issues that you just mentioned with the chassis manufacturers?

I can't -- that's a good question and the accelerated depreciation, I think, has some impact in fourth quarter deliveries of some of our units, with the amount of pull forward, I'm not sure. We did in 2011 with a much stronger backlog than 2010. So as far as the word pull forward, if there was pull forward we didn't get everything delivered in 2010 for our customers. Sure it had some impact, but remember that we're dealing our customer the average fleet size of 6 units. We're in a -- on the commercial side, in a mom-and-pop industry.

And then just with regard to the commentary then with the moderate demand environment, just to -- what is moderate relative to what -- how should we look at that?

Well, I mean, if you look at our peak periods, we're tracking well below from a percentage standpoint of those peak periods. So in terms of number of units manufactured and delivered. So we believe that, that demand is going to come back over time, but we don't believe that, that demand is just going to dump down upon us in a single year. We think it'll be a slow steady climb.

All right. And then last question, just on the gross margins here, I know you were talking about it. But if the fourth quarter had some military sales in it, which it did, should we expect gross margins down sequentially from the fourth quarter or was there just a disproportionate mix of chassis relative to what commercial would usually have?

Well, I think our sales mix, when you look forward, will have a strong -- because we're out of the military business, we'll obviously, I mean in terms of large orders, still -- out of is not the right word, but we don't have these large government orders flowing through, which means if our volume -- if that volume is out of the mix and the volume settles with commercial application, that will indicate and should indicate to our shareholders that there will be a stronger percentage of chassis in that volume which, of course, means that margins will come back.

As a percentage.

As a percentage.

Right. Including from -- but the fourth quarter margins were just somewhat lower than the other margins earlier in the year. So I was just wondering if they finally reflected a normalization or whether they should -- they had military in them, too, so I'm just trying to understand.

Yes, yes. Obviously, fourth quarter margins over margins throughout the year are down, and I think Vince explained that we had a stronger percentage of chassis sales in the fourth quarter than we did in the previous quarters, which obviously had an impact on margins. I mean, as a shareholder, I understand your concern about the margin. As the CEO of the company, as I see a stronger percentage of chassis sales in our mix, I actually get excited because that tells me commercial demand is coming back. So it's, I guess, a 2-headed coin. And you as a shareholder, I certainly understand your concern. When I see chassis sales go up, it's an indicator to me that demand is coming back.

The next question comes from Rick D'Auteuil of Columbia Management.

I'll echo the good quarter and year. Just a quick question. So I don't know if there are statistics on this, but is there data out there that measures the average age of the equipment that's in use out there, and how does that compare to the historical averages?

There is no data, Rick, but, I mean, the data we can generate internally based on units sold over the last 7 or 8 years versus units sold I mean there's plenty of runway. I don't know how else -- and I think that what you're trying to get to is...

Well, I mean, we see that data on the traffic trucks. We see that data on the trailers, and they're after multiple years of under normal demand. We're starting to see those markets start to spend again, and maybe not above average, but at least back to sort of average levels. And I would think the same would hold true in your market, too.

Well, obviously the average age of the fleet in our estimation over the last years has gone up.

It had to go up, Jeff.

Yes, yes. I mean, obviously, Rick, we think those units will have to be replaced. It's just the outside environmental factors that affect purchase decisions, which would affect the timing of replacement. Again, we deal in our industry with moms and pops. And we don't deal directly with them, we deal through our distributors, but we are very close to the final end user. And bad news, economically, rising fuel costs have an impact on the timing of when they're going to pull the trigger on buying that new carrier or that new heavy-duty.

Yes, versus trying to keep it in repair.

Right, okay. And then the last question is, what's the status for that mom-and-pop, their ability to get financing? Has that returned to normal levels or is that still...

I don't think it's returned to normal levels, but it's gotten better. I mean, I don't know that'll -- well, we need to define what's normal first. Was it normal that a guy could get into a truck with no money down and sign a piece of paper and he's driving a new truck? I don't know that, that was normal, but it is getting back to where credit is getting approved. Now we have a retail finance relationship with the bank and we continuously see that their fundings are growing. So at the end of the day, it's getting better.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Well thank you for your questions and thank you for listening to our call. We obviously appreciate your support. And as we've stated in our call, we'll continue to do everything we can to enhance our shareholder value. I would like to make one final comment. We at Miller Industries are extremely proud of our performance of last year. In fact, it's probably the best year we've ever had. So as we enter into this year, you can be guaranteed that our people would look to be aggressive in replacing military contracts. So with that, I want to say thank you, and we will talk to you with first quarter results. Appreciate your support.

This concludes today's event. Thank you for attending today's presentation. You may now disconnect.