Earnings call transcript Q2 2023

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Operator

Greetings. Welcome to the Matthews International Second Quarter Fiscal 2023 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] Please note this conference is being recorded.

the of to Corporate turn Wilson, host, now Director Senior Development. will conference your over Bill I

You may begin.

Bill Wilson

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

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

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

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

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

Joe Bartolacci

Thank you, Good morning. Bill.

last thank Let to our me of all employees quarter. first continuing globally contributions for success the

significant our COVID growth see strong segment with deaths. for fiscal quarter decline a in the pleased and automation very results interest energy warehouse related business our and results momentum to are in in Memorialization solutions we our We continued despite XXXX second in our as business,

we year. us. evolve continuing to to the our focused financial We before guidance are our on to on for remain opportunities the meet businesses current target And meet

the Consolidated sales and on basis. a X% increased year-over-year almost EBITDA quarter in adjusted X% fiscal by of second XXXX improved by

challenging basis, X% prior environment. sales strong performance compared a year, increased a almost increased in Importantly, a our and to EBITDA currency our on constant XX%

solutions well Looking at R+S through over the as business acquisitions sales XX% our technologies automotive. energy of and from year, grew by year-over as businesses, industrial primarily storage higher our Olbrich

interest the we engage The of based in strong our with battery Asia most the remains many leaders space, Pacific offerings battery including manufacturers. storage in industry as energy

OEMs we to to quarter last on grow world, stay the as and energy announced around on well we business. track $XXX As Progress the position million continue going in this over well. orders of is

We over discussions look additional the several negotiations. orders few sharing of our the phase forward quarters, in are to detail information as new on approaching next final

message our to was capacity yet our line, be has bottom market, skills the acquisition Olbrich grow a significantly doubtful and a business. orders to orders received, now the with am EV for have to the that current the contributed Although and clear to entrusted we and have energy we Olbrich discussing. we But our have the would that relationships us I customers the alone let are prospective acquisition, the

as to raise beginning are We results significant going our prices Olbrich business to forward. the overall a reduce as our look at we to costs contributor and position our

death normalized rates COVID. business Memorialisation following the more grew to despite Our return

continuing to a As products cremation evolved our earlier and overall business higher market for our capital COVID business poised through stated significant since of success. acquisitions, growing gains, business in to investments performance, tuck-in this productivity. share calls, we've designed This is level improve

quarter business to our focus example, continued XXXX necessary steady overall death fiscal of immediately For quarter, COVID improvements assures by began evolve to sales grew compared cash before to reducing our and emerge. preceding on first Memorialisation the debt. a flow These XX% when

in make products. product where our our in We we new clearly are innovators attribute this to business, at continue of the And can core. progress seen good our development identification be

party third its based print products increased we one those value silicone production. giving which confidence to of mentioned proposition I've opportunity as For received before, move the external we ahead of a revalidation of ever us head

of new that this XD products. total changing coding the the ability and research confirms use, or When the external over ease codes cost of stronger proposition product coupled ownership to codes, to gets can Our each with lifetime meet competitive of and of XX% demand, our marketing business be lower like QR up day.

In business, of early a at in are business automation this of our warehouse as the we evolution phase well. stages new

technologies a that e-commerce market. demands aware, an leading execution meet are the picked and you provider we of of are ever help As warehouse expanding software companies like

to in in further This great Our this abilities the warehouse. early further in this enable is latest confidence success. solution But will automated business solutions for in stages. have our still to vehicle its solution penetrate space management autonomous innovate proprietary Matthews we

on Moving and to rate market variety including continues impacted of currency a business Europe. be by unfavorable difficult in SGK, to elements the conditions changes,

further this in quarter actions the cost However, margin last the our the and to of Europe improve fiscal mitigated are XXXX the expect effect actions cost have structure reduction XXXX. beginning quarters in business Europe initiated planned are in throughout some of improvement in we remainder coming to impact we and negative particularly and take into

forward we of expecting we the continued look the year, are consolidated remainder As growth. to

of of We energy in the in this stages are solutions year. orders only we early the January announced

some is orders orders, quarter the XXXX nature recognition given the fiscal throughout change. As and to revenue remainder these these timing result of subject fiscal the second benefit But to the XXXX. a of through into we of and expect of provide significant

return death improvement perform implemented as do to remains strong benefits the warehouse and we're automation remain earlier, death, business an despite normalize another us business. realize of this for business discussed rates assuring cost see from we Backlog We also confident for our a continue Memorialisation of in that environment as pricing actions. recently starting SGK, our to year strong, post will the to reduction COVID. And

maintaining XXXX to EBITDA $XXX -- between previous in near remain term adjusted Consequently, continuation are our $XXX cautious uncertain for environments, outlook. factors addition million we economic fiscal these million. to With in our of the mind, of we guidance in our of

the the to orders the have energy existing we year, the remain in we Although recognition this of have a orders to strong chosen business. of orders future timing on revenue cautious and on timing deliver

hand to financial Let over for quarter me results greater the discuss the call will detail. the Steve in now who

Steven Nicola

begin were an a slide higher compared segment. On Joe morning. and the last sales sales for million quarter The seven. Consolidated currency million, a Industrial the quarter you, same primarily than fiscal good $XXX Technology the with year. or I'll basis, higher representing to $XXX.X million reflected for Thank XXXX $XX.X year second sales XX% ago, X.X%. increase constant of were increase

Automotive a million in engineering, higher compared sales GmbH the increase primarily to sales impact storage reflecting or August of GmbH The acquisitions XX.X% year Industrial last year. ago, Technology segment and $XX.X reported a energy solution of Olbrich the of of R+S and

year of same per compared GAAP $X.XX quarter per was consolidated a also net year Memorialisation last On lower modestly a ago. were loss ago. sales On million the quarter, or currency basis, than an current segment changes sales share segment $X.X the rates to current for quarter. million income company's the on share increased a for $X.XX solution $X.X compared current $X.X of the to had a unfavorable a for in brand Sales SGK basis, for year. quarter million, the impact or

X.X%. share last offset fiscal non-GAAP compared or net technology increase EBITDA, war. the and Memorialization basis, expense, On lower change The for writedowns Year-over-year segments adjusted quarter to year depreciation related taxes, year SGK increases of represents other Russia an solution reflected by and $X.X ago, to partially amortization million asset XXXX was representing EBITDA income for the which industrial $XX.X the a brand second $XX.X $X.XX million, interest for a of $XX.X second million quarter adjusted consolidated per included primarily segment. Ukraine and or income approximately adjustments before million the

the rates compared Adjusted current consolidated currency in an average ago. current Changes impact earnings interest compared per debt $X.X for to increase year interest year higher higher the same unfavorable increasing expense. a for by ago. million quarter of $X.XX levels to reflected interest were primarily share consolidated compared rates to EBITDA EBITDA offset quarter a a was for had quarter current adjusted higher $X.XX, and The The quarter the in on expense ago. year adjusted

EBITDA, to quarter acquisitions automotive primarily The business on year million to XX.X%. increase million R+S and currency earnings energy contributed current results. in and reflecting the sales adjusted constant to Sales and of Please sales Industrial adjusted business. provided quarter solutions The XXXX year for our reconciliations engineering compared to adjusted million growth $XX.X the to of the slide our eight share or million second current storage representing the a for our reported non-GAAP Olbrich compared a for ago, turn segment segment higher begin quarter. an review ago, to fiscal refer continued $XX.X Please earnings release. per EBITDA of Technology were of a the $XXX.X $XX.X

warehouse higher $X.X on automation for quarter to currency ago. impact a an identification the unfavorable the compared to of Our had year in and last current year. sales segments rates Changes sales million compared reported also product quarter businesses current

growth The was the unfavorably segment primarily for Adjusted quarter. for Olbrich million, current impacted Industrial segments for increase the EBITDA $XX.X sales ago. was a automotive the R+S the compared million the Technology acquisitions. EBITDA percentage segment reflected $XX.X margin adjusted quarter current to year by The

the an Changes discussed, unfavorable quarter current segment's contribute not rates anticipated adjusted of compared exchange a immediately. on previously EBITDA in we acquisitions to these to As year adjusted million were had $X.X ago. impact EBITDA to currency

unit quarter increase the to segments equipment improved for products, the $XXX increases offset fiscal same and quarter reflected year had a million, related modest reflecting impact quarter and unfavorable Memorial the deaths. were in compared ago. cremation currency rates cemetery per Granite XXXX sales Eagle caskets, primarily a sales compared sales mausoleums million turn the memorialization of of partially second $XXX,XXX These Sales on the Changes Please nine. to ago. of benefits higher of year by The acquisition the to an of slide $XXX.X COVID pricing, Company. lower segment for for were lower U.S.

for quarter was the and resulted sales, volumes improved savings of casket Memorialization materials, from and $XX.X million labor These from other compared initiatives. primarily the sales inflation for higher costs. last The year. increased offset benefits increases operational the lower fiscal $XX quarter were million, current pricing impact increase to related cost by segment EBITDA partially and adjusted second

of European resulting sales to March brand ended continued Russia unfavorable Please reported $XXX.X $XXX.X ago. be The SGK XXXX, market segment million turn solution Ukraine to conditions XX. XX challenged quarter the year the million for by a compared from slide businesses to The segments war.

In million current in rates quarter a ago. of on sales an had unfavorable currency compared year changes to $X.X impact addition,

cost lower EBITDA for the sales million a the $XX compared segment reflected related year also businesses compared retail $XX.X These year inflation The offset rates Sales ago. the was were reduction for actions. unfavorable recent a for of impact segment's current lower. benefits to were partially segments in and from the adjusted million Adjusted cost an based decrease brand quarter solution increases. Changes $XXX,XXX ago. impacts currency SGK by primarily EBITDA had to on

the $XX.X million, turn was operating Please XX. XXXX compared flow ago. a to to from quarter year activities fiscal slide Cash million second for $XX.X

XXXX For million compared the March ended $XX.X months $XX.X ago. cash XX a was million to operating year six flow

quarter for reflected the in Operating the for principal plans obligations. settlement $XX.X the the $XX.X quarter. payouts settlement of first cash final XXXX fiscal the of payouts for retirement pension in Final supplemental flow U.S. settlement plan million plan U.S. the final million first year. totaled for of The company's company's both fiscal year-to-date payouts last periods retirement totaled the

represents XXXX XX which XX on March net September million the In was the trailing $XXX higher compared at a XX ratio XX and was current months and debt of current X.X At an million company’s Outstanding inventories reflected XXXX, primarily December XX to operating the of XXXX December XXXX, debt on representing working $XXX decrease and for quarter. Outstanding from year at liabilities. less capital, XXXX the and outstanding store X.X resulting end flow EBITDA cash reduced was in based million leverage increase million $XX.X March X.XX at adjusted $XXX debt addition, as XXXX. in September XX of debt cash the current

XX the projections year, fiscal March on of at for remainder to million XXXX. our were decline further. expect approximately Based we these the XX.X levels shares outstanding

tax the to purchases quarter, company fiscal XXXX second compensation. The withholding shares, equity XXXX on cost $XXX,XXX. a purchased the During related of obligations at

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

call of for stockholders we Finally, review $X.XX board earlier the this the the and open the dividend is week, The company's stock. quarterly financial on dividend a questions. X will now declared payable of XX May XXXX. May share XXXX, per record concludes This common to

Operator

[Operator your Please with Moore the Instructions] line Our first question question. comes with of Securities. from Daniel proceed CJS

Daniel Moore

thanks for Bill, Good morning, questions. Joe, you. taking the Thank Steve,

Joe Bartolacci

Dan. Morning,

Daniel Moore

much revenue represented storage, specifically you're does pipeline piece How storage, Start in million? just the approach if how with the XXX by about is of what energy and terms maybe energy of industrial talk of opportunities. that seeing much assuming new and

orders of that, new million that we XXX in? Beyond took

Joe Bartolacci

there. I questions think I two heard

So I'll get try to two. to it

So to be we're to we of or other million year. be recognition determined that particular $XXX of revenue, made this be much going worth our at $XXX if approaching in the is million recognized. about half worth million revenue timing recognized $XXX We're we're about up of revenues And energy. have of of orders expecting going of that is how that fiscal

XXX about this we million XXX So expect half, total this to to energy year. orders to million be would if achieve were of I it

includes Now of the the recognize, that half Olbrich R+S about impact acquisitions and of Automotive. Dan and

Daniel Moore

really. no, no, not no, no, No,

Joe Bartolacci

Not XXX. half they of the that

Daniel Moore

of XXX. the half Oh, Yes.

Okay.

Joe Bartolacci

I was were of saying, Dan. half okay, recognized Now, orders the

million, to of of $XXX that, in hit million year. of $XXX should of somewhere for that to is orders dependent half, year, So those which energy recognition, fiscal million control. out around not on have if Timing we the XXX is fiscal hit the our necessarily we XXX% this if revenue about we orders that

of what is happening. terms In else

up my in the commentary, of ramp is significant. heard You inquiries

more the APAC from We've also negotiations of manufacturers and stages the battery We well. significant that final as are like related in lot orders, But mentioned negotiations, Ola. fairly a in with several of before, result significant or orders we in ACC are of could OEMs. relationship

we innovative technology where as and always bullish, pretty we that going. we're in have So been this have it's

Daniel Moore

R+S Olbrich average. why And And Very than helpful. are a little and and margins this that's this obviously you've quarter. discussed before lower lower margins

ultimately kind and to segment the or margins maybe double talk digits to getting mid-teens back path of Just about overall maybe even

Joe Bartolacci

the double full to from be year expect We an EBITDA in for standpoint. digits margin

actions those business actions this this to continue should quarter, both to quarters fiscal take Olbrich We that the the to the at fiscal as as that of come. actions latter part for to And are well pricing improve relates third it starting quarter, R+S. fiscal year, as are and costs

they're talking without side organization the the going you that confident not a we're the But today be able traditional on some of So orders their to mind that do to in would we probably business. we're about be contributor energy to them.

in a good on business So our behalf, we will it's in where it believe think go. this was our, I move

Daniel Moore

Certainly. just with And then well, we'll stick industrial you mentioned warehouse automation.

that's some got That's that. progress printhead and Solutions, on jump they'll you like sounds incremental just And the new overall and two, we're Warehouse one of, kind in solution. activity

So you fix…

Joe Bartolacci

full for is Warehouses year. the

expecting not we're any So significant.

in But the they with year. than pretty when of pause order people been we we when in pause watched of order a it The to bit year. understand. size we're can those while we slower see rapidly a projects, for very little pause, get you intakes. you've in given projects. time lose activity And sometimes very, comes a the Now crises contracts. next change Dan, it of anticipating those And projects, us don't is this our the not this we It guidance, these economic rapidly of at of terms it's where would we've going change some like business any

done have party that one that adds propositions, we're and calling On validation product development party that out the our business is we to frankly. because things of of validation our third external reconfirms the specifically confidence, new an external

Lab And moving for are we ramping We speak. to as up we our production, as purposes. new moving that Fab we are a expect is production

XXXX. in day. opportunities We And bigger the get expect be every in market to

businesses three technologies. confident industrial strong. building those been of the pretty clearly our this in something businesses next we're with all us. little these We've year We think right balance should for remain will stellar year significant. another into fairly of year be So But now could

Daniel Moore

Very do the helpful. follow jump I'll Joe, back up. Thanks. and

Operator

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

Liam Burke

and give highlighted you what's color? you Could lower operating your Good about and timing Thank Steve, you. some talked cash inventories. us Bill. in specifically prepared Joe it comments, just number? from that in Is Steve you or higher morning, operations year-over-year

Steven Nicola

driven, Business Liam.

the very good. well. than inventory with little cash our But related business build. revenues, increased businesses, granted last in operating point memorialization $XX.X partly those similarly, energy been our million. volume increased second inventories you do as were was the the areas work. higher. our growing. to increases And number. business bit lower it So increased because flow on a was inventories that would to And It as still there was two that quarter And the year's side And driven by I'd expect, that has we've of increased, seen And demand, had

in support businesses. growth inventory So those to growth two

Liam Burke

consistent Great. Thanks, the there sticking to has to a Granite, the Steve. on the cemetery products changed, to variable be a like something in And a seems Is used quarter-to-quarter? seems a now. contributor be be with it seems just rather it to or business contributor This growth. consistent consistent revenue

Joe Bartolacci

Yes, Liam, gains allowed to has We've while. market that. we've one those of for pricing well been calling every share had maintain a it that both as us businesses strong and realization as out

images continued we're great businesses, improve automation into forward. were strong in generate improve margins But we continue us flows, cash gives our to ability business steps our taking has they anticipate to be were As will we the I normal. are were revenues, be before. going forward But said, from my back different pre-COVID. been comments, the to where going it. put Volumes reset our in to of I The materially this if bottom show you to to that we than confidence line comments,

Liam Burke

cemetery excuse has the How sales me, Great, margin higher. on thank there? contribution U.S. highlighted on the been cremation, were you. And real quick

Joe Bartolacci

this it it let's I put Liam. way mean,

$XXX little we hope better. cremation the services, you we margins related of sold the sales, in mid-teens over million gets over over and a I cremation and the would tell that are it's in the growing. there that products consistently and time that On

are our the overall we margins new We in moving moving, that and cremation and UK projects some business segment incineration goals improve into incineration think will well. our new as

Liam Burke

thanks Steve, Joe. Thanks Great.

Operator

And the question. Gabelli comes next line of Funds. proceed Bergner question with Justin our your Please from with

Justin Bergner

Good morning.

Joe Bartolacci

Good morning, Justin.

Justin Bergner

Joe? Steve? How are you, you? How are

Joe Bartolacci

morning. We're well, good early

Justin Bergner

First question automation. warehouse the to relates

to you don't you're year? the that some but the of going mentioned on for beyond of next the of inactivity, or sort you speak half I year year? You fiscal guess Can sort might current that that seeing mean effect next first just pausing fiscal expect the what looking

Joe Bartolacci

It's difficult to to that current unless year there tell. causes a economic significant we're any the impact pause. not anticipating disruption is fiscal some

orders now are and deliver in strong are the projects in year. right So our time to house on a

it the call customer would I environment As our scale out seeing advance, the more we a begin and four have market And next before the time. least now in we're you say or a five being very, what's try might anticipating next of very a We rather with first one base, land that quickly, at consistent year. in. months relatively to would some as still cautiousness But happening bit we at slowing in a very, pause overall projects this economic the feeling. be of quarter million from probably from they Justin, what expect, might the we're I with figure necessarily that weren't up have than changes ended to the be can you projects you orders million, some of will that $X roll year, months $XX quickly these of can

keep course two. year. major we're into anticipating next right date the up or the not we'll over any now, next you of So But to challenges quarter

Justin Bergner

could and alluded you I warehouse the little elaborate new you're the initiatives to a automation product additional of bit just terms of secondly, the side, you to looking And on into. in technology further, Okay. areas some guess, get

Joe Bartolacci

is EVs projects guided of the that of half moving movement the managing robotic opportunities, AGVs, carts, a is product of Autonomous what's a the are of think the that warehouse allow this a square system vehicles. autonomous vehicles I working and one on move So we're basically feet. without some has And management multiple in guided a that that around autonomously will could called million in page upwards whole a and be magic conveyors. warehouse significant

speak technology, the we'll out Obviously, it I'm a that in test at not got So six out here, years a next that we're going large or successful, the about. rolling model developing is with that U.S. liberty months if over to we've be so come. customer hopefully to

market of and these commentary about of presented continue not is I businesses, technology, us businesses more call are be to static. think we in are evolve that on and it Justin market. three the allow our The us, all grow that And part them. of that lost that will a one The demands businesses to continue we the that space. that these around, lot to we're things is innovators matter, and in opportunities And for industrial of to each meet

Justin Bergner

Got And timing it. the then printhead, innovation, any in there? terms on thoughts of sort of

Joe Bartolacci

we are. Yes,

We're coming I'm fact, off. or In month in European to here two. lab off a fabrication the

me, start tell to the of not production, event. this found going excuse that product, you, you XX and for we're And have expect, we is expectation have might of that of it we takes as the production a we are will product. I the partner product overnight that a it a production development is for Our an levels is

Justin Bergner

relative Okay, to your mentioned and pension I And settle didn't cash the I you last those lastly, write… you repeat year. could outflows then this believe just

Joe Bartolacci

Sure.

the year, million. XX first quarter in year quarter this million. the in pension our little And plans supplemental was over a U.S. settled that settled we XX our first we plan. So Last

Justin Bergner

so you Right. much. Thank

Joe Bartolacci

You're you. Thank welcome Justin.

Operator

closing for reached back have end to the Bill of And now our we session. question-and-answer call turn remarks. over I'll Wilson the

Bill Wilson

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

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

Operator

at today's conference concludes line this may you participation. your And time. for Thank disconnect your and this you

Matthews International (MATW) 28 Apr 232023 Q2 Earnings call transcript