MATW - Earnings call transcript Q1 2020 | Matthews International Corporation

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Operator

Greetings. Welcome to Matthews International Corporation First Quarter Fiscal 2020 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note being recorded. Please

time, Senior Director this begin. I’ll Wilson, turn Wilson, Bill over conference of may the you At Corporate Mr. Development.

Bill Wilson

you, are Bill Steve Financial Wilson, to Director of Officer; and quarter Thank and With Nicola, earnings President Senior morning Officer. us and Development. International Executive today XXXX is Chief Matthews Bartolacci, first welcome This call. Corporate Good Rob. Joe our the everyone Chief

was you Before night. our posted of we call release I’d accessed our start, section the The last the Web be in our on remind site, section that in to for www.matw.com, can Web also site. the Investors earnings like Investors presentation

the Reform in company's with Private reminder, annual forward-looking statements discussed report on Safe with Act a periodic in provisions to any XX-K, set SEC. connection Securities other differ company's Factors to of today the of the filings cause discussion are that the could forth and are XXXX. Litigation this those As from Harbor results being pursuant Form made the

encourage we and non-GAAP located connection you today's on these any information, financial In will site. discussing and read materials please reconciliation statements to carefully non-GAAP financial forward-looking be included consider metrics. disclosures metrics the read as disclaimer with addition, tables presentation our In and you in our Web

to I'll now, Steve. call the And over turn

Steven Nicola

morning. Good Bill. you, Thank

Slide at X. start Let’s

Solutions million compared year for lower Technologies quarter million Industrial XXXX quarter, first offset the to consolidated $XXX first of the SGK to in fiscal compared the a and the $XXX year reported segments Memorialization For sales Brand sales fiscal by ago. segment. company a higher reflected XXXX ago, The sales

were Industrial and factors and memorial segment equipment sales. the the was the the driven in sales sales improved caskets Memorialization Technologies product on higher identification price realization sales and increase principal primarily by cremation improvement in Higher products

significant client Solutions fiscal year. year-over-year affected the during the account year, a first Brand sales with which the quarter segment, by SGK loss our was comparability of occurred For consistent last last fiscal

products In in addition, lower engineered changes currency unfavorable and to decline. and contributed Europe sales of cylinder, surfaces the

basis, year. per for GAAP basis the the on from last compared the $X.XX share The a share. resulted On current reported of quarter per a GAAP million, to loss $XX.X intangible share income current per for non-cash a amortization primarily $X.XX company of quarter $X.XX loss of

cost In our of to strategic $X.XX current $XX.X share or program. included cost per addition, quarter related most million the of which reduction initiatives to related

basis, $X.XX million to consolidated for the lower share primarily a adjusted a quarter reflected decline On EBITDA for quarter first year were compared the The was $X.XX $XX last per XXXX decrease year. the Adjusted current earnings compared quarter. operating for non-GAAP $XX XXXX in ago. the fiscal income first to million fiscal and sales

a quarter first benefit of the of a fiscal for in XXXX $X.X compared company’s million income the investments the primarily to reflects ago. year million Investment trust loss performance $X.X certain was of for Investment plan. held income

decline in $X.X the million a quarter ago, reflecting quarter average expense debt average interest relative for $XX.X to Interest lower rates million quarter year current a the last was compared XXXX the for fiscal first first year. and to

portion to and and deductions XX, decrease postretirement income of a costs. Other net of the December a in income year. and ended $XXX,XXX for last pre-tax million represented quarter pension quarter Other XXXX $X.X deductions income same compared improved the non-service for

of XXXX, $X.X ended portion quarter the was $XXX,XXX to December postretirement non-service pension the last For costs compared XX, million year. and

benefit reflected year. a loss The December quarter income a ended quarter XXXX XX, basis. on for pre-tax the the were the to same for of current the million three months $X.X for benefit expense primarily of taxes compared GAAP tax an income Consolidated $XXX,XXX company's last

items discrete the reflected of periods tax certain their period. Both impact to respective

estimates its rate for currently company XXXX. at XXXX approximately fiscal to these consolidated the fiscal XX% Excluding XX% effective for compared tax impacts,

a Please to results. segment our Slide begin review of X to turn

Brand $XXX.X a the were million SGK segment, to For the million Solutions sales for current ago. compared year quarter $XXX.X

the reflected occurred which in products significant client surfaces cylinder and Europe. a previously reported of of sales engineered fiscal year, decrease in brand sales the U.S. impacts European the The loss the last decrease quarter primarily a tobacco and to market in account low first of

exchange by These the impact an $X.X unfavorable in declines sales last in U.S. year. in the solutions and foreign same were with sales merchandising sales partially segment’s of of on increased higher quarter million currency Asia-Pacific market rates Changes offset compared the the had

SGK ago. The for lower quarter million the million XXXX $XX.X impact reflected shift. primarily compared Fiscal the an EBITDA sales unfavorable to first with product $XX.X combined decline Brand was segment Solutions mix year adjusted a of

factors the margin percentages on mix, loss with sales. merchandising incremental the associated the and impacting various account in than margin Among sales product decline client the tobacco the were percentages brand increase higher the

for current million realization turn $XXX.X a and the same lower of memorial in unit segment quarter by ago. caskets for and particularly compared $XXX.X market price UK cremation Memorialization sales, Please improved to were products, impact and Slide year memorial offset million the to partially sales equipment the the sales Higher products. for quarter volumes caskets for X. were

from segment’s exchange on declined deaths impact the of same currency the with estimated quarter compared year. casketed in had sales U.S. same were unfavorable Changes rates to last quarter the foreign year. an $XXX,XXX approximately have last

lower incineration projects. Memorialization cost costs benefit on fiscal quarter million compared several ago. sales equipment, $XX.X segment first due current higher and year was productivity margins adjusted The million the to increase the offset to on overruns waste XXXX reflected a the EBITDA in initiatives, primarily of for primarily freight $XX.X and quarter by

offset for warehouse technologies Slide million XXXX segment compared ago. Industrial were Please $XX partially a lower quarter turn were sales product and by $XX.X sales the products. year systems first to fiscal X. of sales automation Technologies to applied identification million Higher

impact continues the segment’s to in grow. primarily year. of business last from unfavorable The Changes warehouse with this customers, decline rates exchange in on compared resulted currency automation by same as in quarter $XXX,XXX delays foreign sales sales had an the project backlog

the a with the ago. The adjusted year change. quarter increase was EBITDA EBITDA sales segment's reflected million million The the the in segment's primarily for for $X.X adjusted quarter current $X.X compared

turn X. flow was to Please for to fiscal from million first adjusted ago. related operating program. The of million EBITDA compared the Cash quarter year primarily a reduction the $X.X to $X.X lower and activities XXXX costs impact Slide the cost decline reflected

to income an cash debt, and quarter fiscal the seasonally at company's the quarter XXXX, XX, during portion, million first was approximated million typically $XXX December basis. XX, long-term $XXX XXXX. the September compared The At is flow the increase including as consolidated anticipated operating slowest on current

focus XXXX reduction the at $XXX expects to fiscal XX, cash at during XXXX. debt September on ago, long-term report reducing The consolidated consistent with intends XXXX fiscal million to year and A $XXX company's company XXXX. company was December million to debt, flow fiscal debt compared XXXX currently XX, the

on Additionally, rules. company's XXXX. balance by the XXXX, adoption other impact December of of increasing please had approximately of X, and the new assets impact XX, lease other sheet on note accounting million the adoption This October at the the $XX liabilities

XXXX. outstanding at shares million XX, were XX.X December Approximately

compensation. required purchased share repurchase withholding only the quarter, equity the approximately filling primarily connection under shares with program, to related tax During the obligations in XX,XXX recent company

February payable share a dividend stockholders common week February of the XXXX record XXXX. company's Board the X, to per of dividend last XX, stock. $X.XX Finally, declared is on The

our comment will review. This concludes the Joe financial operations. now And on company's

Joseph Bartolacci

morning. you. Thank Good

of Our several several and with exceeded positive we first expectations. in quarter while our trends some our results Several met however, businesses targets were of short. our in see line our Together, expectations, fell our business.

the in First, relative reported that as a ago to aware, we quarter APAC our mind, the America. quarter SGK Brand quarter. the revenue region sales past in account. With you that expectations, account which from SGK quarter this a are was North the in significant America year in we and last North in higher business had This lost during

several customers and Unfortunately, remain as our early our us our our cylinders expectations on the at innovation particularly for of tissues year. of help business short positive marketing our business, and increased fell businesses, slowed challenges, of German these Despite surface orders, our balance product we should signs surfaces and and expectations. flooring as tobacco the meet of particularly

interest business cell strong storage discussed batteries fuel production. of we’ve lithium-ion engineering as energy and seeing solutions Similarly, for the the last portion quarter, their in is

to and property lead growth year-over-year should intellectual Our group this this good year knowhow and beyond.

be order are I large last we a storage to from delivered customer As the capabilities that this significant year. expect quarter in in the equipment fourth this finalizing business. have we the energy a and customer, of received noted quarter, with we our of design Together

in business cremation delivered this Memorialization death, higher Better products sales grow. and our results. casketed despite this equipment business, price a solid Regarding to realization, growth in ancillary decline cremation allowed group

and share. mausoleums expand to good to as and other stone addition we market business cremation been This products for private our a has to to continue continue solutions. especially grow our Memorialization monuments expect We

cremation equipment be costs to quarter. opportunity but our what as With we for of and for incineration performance, view energy had good in our the costs these associated part learning to We projects to long-term early with respect hampered waste incineration. overruns the sales process believe business, a waste results we significant

as be a experiences are opportunity. and management project growing our learnt hope have we for We what capability improved from to we prepare

performance In and a the for year positioned good exceeded our full performance. Industrial looks segment, business the prior results Technologies year

the which timing This likely were third show for due deferred good business significant quarter. of part warehouse appear exceeded which more identification deferred automation second into our to our but in latter opportunity in and to the were product Specifically, the continues last largely quarter, be to our quarter growth. business of projects prior our orders expectations

in In product hot our acceptance to have e-commerce positive which chosen Our a pleased and continues have our warehouse participates particularly opening continues grow to new last in outside automation business year’s received business, well. our clients were we market. automation the our are very our backlog And grow products our software as who as that past. of warehouse scope accounts in identification market business

which is There of business. companies our than better does business no the at quality with it reflection of looking the

noted investment off have an the better our by substantially revenue we base past, on implementation, that now levels. initiative As ERP in we our cost our have aligning with our have capitalize we to completed kicked

the to our as centralize ERP. we the We also costs of but facilitated on overall more capitalize by and reduce expect this to brand back-office functions back-office initiative our benefit our business automation largely

million results. annual years run an deliver to savings to this of next initiative year's full this and $XX contribute rate over modestly the of over expect We couple year

confident investment believe Industrial remain Technologies and of the for as strategy new we we development. process our segment, in be phase what to our Regarding the final we with our our enter development product our of

into remain our delayed previously As launch next discussed, most full year. likely will

but production feel to get comfortable us We to have yet our have consistent validated the to a effectiveness allowing of we launch. with the product, level

these early hope to issues the of some We year. will through production and continue information throughout to work report more I

look positive at we for opportunities full growth. and the expectations, businesses our we As year remain about our

that In our guidance, making we assumptions are are several critical.

new by sales to segment, business. in wins projects. expect grow, Technologies in the driven product expect our waste largely our automation modest We by in continued account Similarly, segment Memorialization energy we our identification to to warehouse continue our Industrial new incineration driven growth and

also I growth. opportunities that and driven we Give mid-single Finally, business expect have we EBITDA energy expectations, sales by to growth EPS modest of equipment non-GAAP for maintaining fiscal these brand referenced our the XXXX guidance above. are our digits, storage

our cash the this usual to other with of will we remain year current debt lower initiatives utilize the We saw as our to significantly now. focused debt we that year that on flow expect repayment despite cash debt and finish reduce increase remain and confident we Finally, in debt. seasonal quarter,

up With that, open questions. let’s for it

Operator

be [Operator question-and-answer this Thank a session. you. conducting Instructions]. Thank At we’ll you. time,

CJS of with the Moore from questions. Our your is first proceed line Securities. question with Dan Please

Stefanos Crist

Stefanos morning. Good Dan. is This Crist for calling

Steven Nicola

Good morning.

Joseph Bartolacci

Stefanos. morning. Hi, Good

Stefanos Crist

give us the million where cost on some we’ll maybe on Could the statement? see detail annual you savings, that $XX more income

Steven Nicola

The time of we operating to as the functions. most a SGK to million balance in costs. see you’re overall million come And you of as of million, going out at corporate it course to $XX our our of the call is what I class, going over tell would out that. $XX come $X back-office out So reduction would

Stefanos Crist

forward? Got the into storage, energy maybe going it. go And orders detail can a little the you potential more size around initial of

Steven Nicola

the So a test million of extensively continues quote grow this our you as whole We��ve $XX of X or is the been something to in has for XX as initial work production as continue well. new backlog us. X phase. tell would tell you million we phase more of a But couple we is to pricing. ranging It’s from been our million that projects can million industry to in years. more I order doing rather the upwards not I than to million, or for that upwards and finalize XX

more that basis consistent revenue as expect expect we towards and we’re forward. although from more equipment choppy, a a quarterly production-related moving stream Now to phase, production see more we we go here, larger and

Stefanos Crist

Thank much. I’ll back you so the queue. jump in

Operator

[Operator Instructions]. you. Thank

is the question of your Burke line B. Riley next from FBR. Please questions. with proceed Our with Liam

Liam Burke

Thanks. Joe. Steve. Good morning, Good morning,

Joseph Bartolacci

Liam. morning, Good

Steven Nicola

Good morning, Liam.

Liam Burke

on Joe, in out you factor SGK expect How business. rest the Asia that an into SGK Pacific the what business had influence for of the year? coronavirus of the does

Joseph Bartolacci

Frankly, Liam, the you Pac lot Right production. know, source the watching. a that’s do region. lot of we It our areas of in is of work one that the of as of are we many now, Asia a

We of proud principally in that. very four We’re five or operate locations.

us. China for It’s And small, China. One it shutdown today shutdown is of locations is week. been but all those is

what looking we impact work to any other of it both the other move for but to is produce. P&Ls be to also force to have, having world steps our shutdowns that to cautiously able at taking parts forward prepare We’re to going might the

So is a today. of it cautious part is focus as the unfortunate, else world everybody in is. but we’re It our

Liam Burke

private do how this business Okay. have – what you And And you quarter? XXXX? how do kind of label did in do for outlook that

Joseph Bartolacci

part Private a growing. So business of we has to and significant accounts. label be gain continue to continued our

a you’re quarter. the launches this in Although product a quarter of not the seasonal new is business, having in lot

that full will But So to provider today. this – packaging continue of basis as would take share is stellar. as a grow in our on revenue we business services we’re you expectation is not and frankly year label there the what the say leading globe our for private

market. part on bullish we’re this the So of

Liam Burke

you, Great. Thank Joe.

Joseph Bartolacci

Yes.

Operator

Thank you.

no are further floor for time, there this Bill remarks. back additional to As questions any I’ll at turn the

Bill Wilson

Matthews. joining for for in Rob. Thank and you thank Again, thank today your you you, us interest

your about results, enjoy the and For and visit rest our day. company the additional our Web financial of information you Thank please site.

Operator

Thank conclude you. will conference. this Ladies today’s and gentlemen,

may disconnect lines at participation. for this your your You Thank time. you

Matthews International (MATW) 31 Jan 202020 Q1 Earnings call transcript