Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the Matthews International Corporation First Quarter Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Bill Wilson, Senior Director of Corporate Finance. Bill. you, Thank

begin. You may

Bill Wilson

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

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

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

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

to And now Joe. call I'll turn the over

Joe Bartolacci

Thank you, Bill. Good morning.

pleased our results. We quarter are with fiscal first 'XX

These coding and parts, client thanks for revenue, and refurbishment of growth, announced storage During orders on the of the track $XXX is cover recently but segment maintenance. million to needs Olbrich the yet of the thanks business. strong in we importantly, Technology and in roller add year segment. This thanks equipment, to calendaring addition Automotive our to quarter, the higher plus energy new spare particularly Industrial R+S, not strong performance another most to have orders only

orders Peugeot, as Chrysler, our Saft, from consisting Automotive aspirations of Company, subsidiary stage. include like Cell a historical manufacturer battery received ACC, Indian and Mercedes, Jeep, the and with otherwise Aside [ph], from Fiat, advanced an known leading customers manufacturer global TotalEnergies. be clients, a e-mobility consortium All-Electric were our with also world These a battery to backing on orders government significant of

During orders, grow component reflect significant interest fuel electrode saw smaller, like orders the fuel dry These in time also give will suppliers. has grown. quarter, in demand cell from several our although cell our us growing hydrogen and the we this confidence that capabilities technology battery business hydrogen in

we received. of significant you Although will expect every keep new of don't quarter, million apprised are $XXX they as to we announce orders orders

energy we will total, dry our $XXX XXXX fiscal year. confident has business the continue our growth. last This From strong million that technology driven are battery $XX fiscal by XXXX, business, energy that almost to electrode from year, grown million to in

quarter record the total entire As first for our during amount intake technology the for almost orders order $XXX million, this segment. of segment, was

that's Technology So business our businesses in orders the Industrial that announced segment. the energy other $XXX million $XX plus comprise previously in million of another

automation Industrial [indiscernible]. this Louisiana track $XXX and double those during the Luxottica, product Pacific in well, it quarter year, Technology reported customers million revenue Warehouse segment had is like [indiscernible] in intake on But results. fiscal The and order to identification from good roughly as XXXX.

industries growing that services must for segment comprised and for products while, serve. quite propositions we saying is of unique fastest been we've a selling As our this our with making haves businesses the

segment this is Our year. for will $XXX this revenues million approach that expectation

pricing remain volumes, throughout our good business with revenues the the despite also sales memorialization strong, rates. post-COVID the good normalization Our delivered cemetery results funeral business. home lower product mix, to thanks death of product substantial strong Even very and

exceptionally to as success cost well subside. for throughout the so felt some has past beginning or past XXXX. business this pressures that are to begun years, that in performed maintain and year have to is margin poised normalize the we into have the of This several Our business

products sales Bronze our see in order are business, particularly rates the our lower casket that strong Cemetery to help expected. business, continue We cemetery partially which offset will

said its a a comparable to reset currently normalized before, revenues to higher than be EBITDA ago. is lower that materially years this segment volumes. the few I've even years, As results expect has just prior to We relatively level with

currency by continue In for $XX SGK, lower conditions quarter we to were translation. the translation. challenged negative and market Revenues due to be the reported European negative million currency

in degradation the we feel will at comparisons We war and the business size have European of year. which currency quarter of the we impact which business, significant of the one reduce our coming more second quarter help of our -- Moreover, which began end still have begun actions expect to the this quarters. difficult to we began last Ukraine

As we XXXX, the balance look to are sales we continued consolidated of forward expecting growth.

subsiding growing above, allow fastest remain for these Also, future our discussed As order in our benefit to commodity margins. to the will business the in bodes quarters more of costs businesses rates memorialization businesses. return high, continued development and us which well normal

in Cost favorable comparables our SGK starting make actions quarter. should third more at

to of and million. predict. uncertainties between previously Therefore, offset $XXX fiscal we reaffirming factors these positive this be $XXX which is all with cannot announced in are mind, our news However, by million economic XXXX EBITDA we the expectations

yet our orders towards prudent the business. this this range, we the have at energy determined to in be remain deliveries in the given time, deliver timing the we high-end to potentially hand Although of of

updates provide to through progress we continue the as year. will We

review. over turn financial now it our will Steve for I to

Steven Nicola

you, begin X. Slide Thank and with I'll morning. Joe, good

the increase in a have Changes quarter $XXX.X a unfavorable significant For the quarter, consolidated $XX.X the for X.X%. of rates sales currency representing reported million, on reported XXXX sales to impact an fiscal million first to fiscal we year, last or of $XXX.X continued to compared first compared million year-ago.

the last included reflected GmbH. basis and of the a quarter currency The fiscal constant our year-ago. consolidated for the R+S for $XX.X Industrial XXXX recent segment, Olbrich Automotive which Technology higher higher of a On X.X% or impact increase GmbH first were sales with million year, than primarily sales acquisitions

a of $X.XX or GAAP for year. was basis, to per company's the net the share current income for or million last the a compared $X.XX $XX.X $X.X quarter, same per quarter million, On share loss

The share plan. first million per on of loss the settlement principal and pension of included a year U.S the termination approximately $XX quarter or last company's $X.XX

currency the non-GAAP $XX.X year. quarter the on EBITDA, unfavorable On net which basis, adjusted adjustments represents had before a compared impact year. was quarter, income last to XXXX million of amortization Changes income other consolidated $X.X and for first same and compared to adjusted an interest depreciation $XX.X expense, million EBITDA last million in rates taxes, fiscal

year for share EBITDA EBITDA decrease ago. $X.XX Brand Solutions decline SGK for from current per compared further lower adjusted offset memorialization $X.XX adjusted The expense Technology to was reflected quarter I'll an earnings a primarily and and Adjusted segment. the in increase partially As for discuss the quarter. in minutes, resulted a the few an segments current for interest increase by the Industrial lower the

Please in EBITDA, currency earnings see non-GAAP constant EBITDA our release. sales share adjusted the of reconciliations adjusted provided per and adjusted earnings and

compared was The Interest GAAP year-ago. basis. the fiscal XXXX quarter on year-ago of a tax first XXXX the was $X.X The company's income last first ago. to pre-tax year rates fiscal million benefit the consolidated average for a and million to million, higher The reflected a $X.X higher expense quarter year expense for compared primarily interest debt benefit loss levels. a reflected compared a $XX.X increase to million, $X.X

XX%. contributors to of for Slide representing to Technology begin ago, turn sales Industrial of to our The year $XXX.X acquisitions Olbrich review increase. R+S results. segment Please to the a million current significant increase quarter an a of The of and year-over-year million compared X were reported segment the the $XX.X recent

unfavorable sales reflecting sales lower the a Energy storage and segment year completed the year. large quarter a year-ago, the Changes solutions higher quarter in for last of a to sales were low currency million the had in product fiscal same margin current rates $X.X than impact compared Warehouse than ago. last identification year. first quarter automation were on project an also

increased a resulted improved sales the energy quarter EBITDA compared compared year. first $X.X last Adjusted same solutions increase the an segment from segment's Technology on for impact fiscal segment automation ago. margins $X.X currency million rates and million The Changes had primarily storage the and $XX.X to the XX% warehouse EBITDA to increase approximately adjusted the year million XXXX for quarter, to in in the unfavorable Industrial businesses. of

year. Please current of currency the in million declining compared compared segment On were the turn $XXX.X for for million quarter, a memorialization $XXX.X compared relatively sales despite Changes impact on the basis, first X. million sales year to last ago, currency an constant sales steady Slide rates. lower death Memorialization a to only $X.X unfavorable quarter last year. rates quarter had to same X.X% are the to

the from fiscal our have U.S with higher levels. quarter, normalized XXXX fourth pandemic substantially deaths Consistent

a a were year and result, bronze volumes unit sales memorial than ago. casket products As for lower

U.S However, mitigated these and pricing by improved largely cremation product declines were equipment memorial higher sales. and granite

EBITDA adjusted the primarily costs compared segment quarter a to a $XX.X was reflected XXXX impacts million, Memorialization for $XX.X higher of first material ago. the decrease sales The million to year-ago. compared and lower year fiscal

increased and costs, costs and increases. freight related In addition, labor the current quarter project costs other reflected related higher inflation

for Brand turn an were impact year quarter Please $XXX.X $XX.X segment to ago. million to on compared had for ended last Solutions December the for current the XX. Currency segment the unfavorable SGK $XXX.X Sales year. XXXX rate million compared XX, of changes Slide million to a sales the quarter

markets European segment's lower a challenging reflecting market were year the continued in than sales addition, conditions. In ago,

In addition, lower. U.S sales were also

had million million for compared ago. currency XXXX segment rates the Brand $X Solutions year. the $XX.X last a on an same Fiscal $XX.X segment's compared quarter adjusted quarter was first impact adjusted the unfavorable of Changes EBITDA SGK year to in million EBITDA to

decrease related European the reflected packaging the of and decline, sales business for other increases. lower the addition, inflation In impact margins costs the

to based fiscal and used ago. quarter in year operating $XX.X cash accruals, a fiscal Please of businesses our first was flow compared Cash including to activities slower in $XX.X quarter payments for performance seasonality turn the on reflecting XXXX is Slide end Operating typically the compensation. first million XX. year million, flow

for of quarter termination flow connection with payout plans. cash the the supplemental company's settlement included current final the retirement in operating addition, In and

and a contributions retirement year for the termination flow principal of settlement the cash plans. U.S ago Operating company's included

XX, over XX, accrued December million, XXXX. company's pension September a X ago, the compared $XX.X XXXX, with years of little was As liability $XXX.X million,

XXXX at -- [technical ratio based months At Outstanding debt, trailing adjusted on XX, million XX, cash, $XXX debt, I'm December sorry, XX, EBITDA the debt XX, represents and to X.X. September million XXXX. December leverage December which difficulty] company's was was at net $XXX XXXX, outstanding XXXX, XX at compared

investments we energy As result storage business. recently our and acquisitions, solutions anticipated, levels of a recent our increased primarily have as and debt the

projections Approximately XX.X progresses. XX, these expect were fiscal XXXX. of our the at on the as levels XXXX million for year, fiscal December decline we Based shares remainder to outstanding

a cost tax purchases at $X.X During equity the fiscal connection in shares million. largely the compensation. with company The of obligations withholding first XXXX quarter, on XX,XXX purchased were

At approximately December XX, the XXXX, of shares the program. X.X company million authorization remaining had repurchase under

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

concludes open now to the will the review and Paul? we call This financial questions.

Operator

Instructions] [Operator Thank you.

question with Please with is question. Securities. first CJS Moore proceed from Our Daniel your

Daniel Moore

Thank Joe. Steve. Good you. morning, Good morning,

Joe Bartolacci

Good morning.

Steven Nicola

Dan. morning, Good

Daniel Moore

maybe storage. to with Start battery color. beta fuel versus much customers that previously of some XXX Specifically, the existing increased versus how hydrogen relates the lithium give the you more million a breakdown little described detail how it in roughly energy the new intake? order emerging that much is cells Appreciate of of regarding ion testing? customers Can technologies production terms and were like from any of you

Joe Bartolacci

otherwise. going related side down of XX% be about as break to but it between related I between to things tell can parts, going something answer equipment the is be to Does I or of tell But lithium calendaring, to you of would to customers, cell coatings, side hydrogen we're to it that new technologies, things our that that. Yes, business is fuel balance the going your spare you question. -- and into not the relates or

Daniel Moore

is It a momentum building. of just give sense Very helpful. where that's Yes, helpful.

million orders were remainder So look at -- roughly are percentage be the what $XXX of of what to orders of implied of much actually those we 'XX in those midpoint maybe 'XX? total? How versus and delivered the guidance, to if the

Joe Bartolacci

recall one capacity. get Dan, of to with things that I we X we if said million the $XXX you of in when matter buying months, you're Olbrich, a worth of the acquisition mean, to made trying But model. is were we of I a orders know

We have production square Czech landed feet put manufacturing on low just XXX months engineers, all of the Republic, cost in before XXX,XXX that these capabilities, we orders.

accept our space our both kind dependent of very able ability it. to [indiscernible] to extensive be timing to deliveries able the insignificant. of to the going portfolio And to So be on orders, talent which these and deliver customers be that not of to is readiness really is

suffice So expectation we deliveries at will time, year. this give it modeling that can't to say, I you maximize we but point information, in this every have

Daniel Moore

just Okay. it sticky, roughly decline? be Switching I to sounds profitability costs would input clarify, fairly continue And making pricing gears, even maybe like sure expect to heard expect that to memorialization, if right. remain flattish, you overall two, to just you

Joe Bartolacci

If we but I as that yes. the -- everything, control we to it never control, relates businesses

As our it do, that. relates and funeral to to, responsive what we competitors will for example, business, home be our watch

happen little expect the to sure to consistent delivers manage that bottom the we make to of begin side. drop what's level year commodities a We say to able pricing line as on going to be the at performance pricing throughout early a kind to

Dan, time materials to dropped in home business upwards that from commodities can the funeral hit the customer X our As distribution the especially warehouses X you from raw to to months. the P&L, be they the know, and time through of

time. margins, pricing how it will subside, takes be my which a We're So that not will is improve seeing in to control. continue our reflected little

Daniel Moore

a just Maybe allocation from more capital perspective. Okay. one

you you that of your look terms focus expect leverage you well? a As And would back stock buy in little M&A leverage? ticked of mentioned, continue would is maybe year Thanks. to and the for pay Where internal exit higher. arranged Or investments? as to outside it primary

Steven Nicola

Sure.

our in in -- things of made our a heard with associated you capital storage up as the build fairly uptick some the we and significant and principally, acquisition energy in investments So orders business working had commentary, in with that other nature.

be issue. a that expect timing to We

some the in of is we As dealing it Obviously, we closer what on collections, When we energy, than talk a funeral out large as auto that But you our organizations today. focus current pop of and us we have delivering, are work with projections larger we in the position, but us. we're the same year, relative X.X that clout can will we're mom with to to through industry at pop kind flow dealing time, substantially get homes. imagine based very see not about what shops. do mom what is ours. mixes that given are We also X, and

Daniel Moore

Thank -- I’ve any any if follow-up I'll it. Appreciate Understood. if follow-ups. you.

Joe Bartolacci

Okay.

Operator

Thank you.

Liam your Please is with question. from Burke Our Riley. next question with B. proceed

Liam Burke

morning, Steve. you. Thank Joe. Good Good morning,

Joe Bartolacci

Liam. morning, Good

Steven Nicola

Good morning, Liam.

Liam Burke

year down Joe, you factory revenues doing give is for if some the sense could on we sense, you how the backlog I I a mean, delivery give us know the on But could warehouse that a year-over-year normalize order? us automation project ago. of were

Joe Bartolacci

chunks color you have largely only clients And million Luxottica, We and some continuing when almost plus We I because come that part I are but on and do have the world in. accounts orders the backlog players $XXX we -- fairly we are [indiscernible] the those out who the the think would you that receive. customers mean of to strong. that using they to larger come a retail in significant some I when CPG is you as in year million wish top full we received our we I describe in business and are of -- That we with come. orders announced tell gave that of significant the I that booked people $XX ranges. is smaller play that of with, can on the feedback they

Liam Burke

But some be Are are to I Europe seeing what from the there? you SGK, any relief weak. obviously do side seeing Fair market? the enough. of kind adjustments tough on And you've know ledger. expense looks of a any you to on is had still stabilization

Joe Bartolacci

of U.K relief seeing are But that beyond are and we that of world. the as that noted, impact. part principally our which significant with for us It's the What and speaking is bit is little associated is, our European other surprising of related world Polish frankly, is the you businesses countries feeling presence. a a part German the Liam, in German

manages the you about year. this covers is cost which of countries -- is recognize pretty Europe. balance of that some other The team the U.K countries, Liam, bullish other Our the feeling that the actions,

we work The able to take actions. So plans the on. those as identified councils be comp to -- charges other take require and ability implement have those we to works go that negotiations

should it'll flow That's why and a within standpoint So of time said little impermanence take get fourth those to third quarter those a more and of bit from through. seeing balance comparable benefits. throughout the far that be we a

Liam Burke

Great, thank you, Joe.

Joe Bartolacci

Sure.

Operator

you. Thank

with Gabelli Bergner your question question. with proceed next Justin from Funds. Please Our is

Justin Bergner

Good morning, Joe.

Joe Bartolacci

Good morning, Justin.

Justin Bergner

you? How Steve. are Hi,

Steven Nicola

Hi, Justin.

Okay

Justin Bergner

Good, good.

The be storage I Industrial around is Technology $XX Industrial that first energy the storage businesses? Technology non-energy for book-to-bill related a representing modestly orders. so on one see or question above would Should million

Steven Nicola

Good question.

of a is an stretch, it as Let on -- would We will higher a tell to above I but head. any the you, focused downside probably Justin, my or modestly But extraordinary at math I I way do in it. have little way. me on lumpy. fair this caution by at you it. on to the can fair kind say would top look I really was quarter look because a be modestly it either wouldn't way that side,

Justin Bergner

first then parts And And expectations? own of your you you quarter, the as in would which at Great. businesses? is coming the annual quarter so, management look your first above guide if the characterize EBITDA and in revenue

Joe Bartolacci

comparability the higher, are for higher. us pretty The business line expectations our issue, guidance. in balance you would for currency. I slightly not I slightly with with think much is So, the our came in memorialization The tell significantly, but

at -- year, year basis for on to Steve, XXX, guidance XXX. full said of higher EBITDA. XXX last only on orders, we I'm out we -- a recall it had given call, what a If by finished our was orders I we strength in have what it On the to last looking towards house at And comparable basis, if end. controlled earnings our is our it hoped XXX here you saying when that to be the set able believe to we deliver to today we're I ability

Steven Nicola

Right.

Steven Nicola

Joe currency -- that if for would constant rates year-over-year. were that been that have clarify the To mentioned just

Joe Bartolacci

currency up. And that ends changing, anybody's we'll see guess. where is so It's

Justin Bergner

strength business. of you've terms that helped in Okay, first storage in fantastic. the that energy just is And sort know the of what point lot want you there in in highlighted quarter? out to of the that I a trigger orders anything acceleration business But in

Joe Bartolacci

process Sure. I message material can clear. like for we better solution other you willingness If for is, those technology of can of of to forward. What front mean, take is time, And the is getting been think well out pieces, the saying you're cheaper, deliver that benefits significant has a get our current are Act we've substantially chance wet a lot they and out out handling technology. to there think move and is other long it. is they the than what's called -- starting what ended, which as balance the electrode. IRA, effective, a What loud realizing more are see Inflation accounts, that's I figure I components as that what Reduction to stimulated there the to faster, the happening

is lot electrode is. a continue. expect dry discussion for We solid believe very significant. The of state There to the we market market in about acceleration of time over kind battery is what this

a on is battery get lithium step This grail, side. technology necessary to is there. the guess, the Solid holy state I a batteries ultimate

-- a think this -- time, as we I where at of But a be as going? trajectory beginning not. it quarter? same do we the likely consistent trend. this Will Most is $XXX the this million is think So don't we're as is Absolutely.

Justin Bergner

much. very you Thank Great.

Operator

turn you. to There back the questions to over further Thank no at time. this are Bill would I like Wilson. floor

Bill Wilson

joining you, Matthews. interest us today and for and your in Paul, you, Thank for thank everyone,

or about day. of information contact company me website. the additional our results, visit For and enjoy our you, financial the your please Thank and rest

Operator

This conference. concludes today's

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

Matthews International (MATW) 27 Jan 232023 Q1 Earnings call transcript