Recently I posted the outline for how I will analyze stocks.  Welcome to Part 1: Company Overview



The Company:  Miller Industries

Miller participates in the highly un-sexy business of manufacturing vehicle recovery and towing equipment.  Miller manufactures from light duty (8 ton capacity) to heavy duty (75 ton capacity) wreckers and car carriers (those auto transport carriers you see on the highway full of new cars - these days, usually Japanese cars).  The company went public in 1994.  They created RoadOne – a towing services company – in 1997.  The division was a drag on earnings and profitability.  Miller sold off the towing assets beginning in 2002.  By 2006, all towing assets were sold off.  This marked a period of turnaround for the company as it moved to focusing on its core business of selling wreckers and car carriers.

William G. Miller is chairman of the board and co-CEO.  According to the most recent 10-K, he owns over 12% of the outstanding shares of the company.  During the turnaround phase of the company, it entered into a Junior credit agreement with William G. Miller for $5.0m.  As of 2007, this debt was paid off.

The reason that Miller attracted my attention originally was that it's stock had dropped precipitously, but they had great profitability metric ROE (return on equity) in the 20% range ROIC (return on invested capital) in the 15% range.  Those have subsequently dropped off as the company struggles with the affects of the current economic downturn.

Common Sense Test: 

The company is relatively easy to understand.  They build tow trucks.  The way they earn and book revenue is fairly straightforward.  The income statements (all of the financials actually) are simple, straightforward and easy to understand.  They sell primarily in private, municipal and military markets.  And the management seems straightforward and honest in their communication.

Next time, I'll review the Bear Case for the company.  See you next post!