The MLR (NYSE: MLR) “Demand Drought”: Chassis Collapse or Tactical Retreat?

Miller Industries is grappling with a brutal post-boom hangover, as Q3 2025 results exposed the fragility of its towing equipment cycle. Net sales cratered 43.1% to $178.7M from $314.3M a year ago, while net income nosedived 80% to $3.1M, or $0.27 EPS—still profitable but a far cry from the $1.33 windfall last year. This isn’t a blip; it’s the painful unwind of pandemic-fueled chassis stockpiles and softening fleet demand.

Operationally, the rout stems from slashed chassis shipments (down sharply after 2024’s supply-chain rebound) and proactive production cuts to normalize field inventory. Gross margins ticked up to 14.2% on a healthier product mix and cost controls, but SG&A savings couldn’t fully offset the volume plunge. Workforce reductions and a voluntary retirement program shaved expenses, yet tariff threats and rising input costs (steel, aluminum) add fresh headwinds. International military interest offers a glimmer, but U.S. fleet replacements are stalling amid high interest rates.

The balance sheet holds firm: cash at $38.4M, debt trimmed $20M YTD to $45M, and $20M in quarterly operating cash flow supporting a bumped $0.20 dividend and $1.2M in buybacks. FY25 guidance stays at $750-800M revenue (implying a flat-to-down full year), with management eyeing 2026 upside from normalized inventory and potential DoD contracts. Dilution? Not on the radar—shares outstanding flat.

The bull case hinges on leaner ops and defense tailwinds juicing margins to 16%+ by 2026. The bear case dominates: if economic jitters prolong the drought, sales could flatline further. MLR traded as high as $76 in the ‘90s boom. At $36.16 today, it’s a yield play (2.2% dividend)—but vulnerable to macro crosswinds.

The Filing:

• Nov 5 10-Q: $178.7M revenue (-43.1% YoY). 

• Net income: $3.1M (vs. $15.4M). 

• Gross margin: 14.2% (up from 13.4%). 

The Context:

• Chassis shipments: Sharp decline YoY. 

• Cash: $38.4M; Debt $45M (down $20M YTD). 

• Stock -41% 3Y — 0.5x sales.

The Sharper Take:

 • Bull: Inventory normalization + military deals = 16% margins 2026. 

• Bear: Fleet demand stall = prolonged revenue trough.

Investor Action:

1. (Hold Signal): Collect the dividend yield; balance sheet buffers a soft landing, but trim on tariff escalations.

2. Monitor FY25 revenue at low-end ($750M); misses here accelerate downside to $30.

3. Accumulate under $35 for value hunters eyeing defense catalysts; avoid if Q4 bookings signal deeper cyclical pain.