Earnings call transcript Q3 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Matthews International Third Quarter Fiscal 2023 Financial Results Conference Call. [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 Development. Thank you, sir.

You may begin.

Bill Wilson

Christine. you, Thank and Fiscal everyone, the International Matthews Good XXXX welcome Conference Quarter Year Call. Third morning, to This is Bill Wilson, Senior Director of Corporate Development.

are Nicola, Officer. With Officer; today Joe and President me Chief and Steve our Financial Chief Bartolacci, Executive

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

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

addition, disclosures consider In read metrics. to financial will as non-GAAP you carefully discussing we encourage these metrics you and be and table reconciliation our

please statements In disclaimer forward-looking website. connection today's with our included any financial and read materials on in the presentation located information, non-GAAP

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

Joe Bartolacci

Bill. Good morning. you, Thank

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

quarter, we're of businesses basis. with well our quite results our year-over-year as on all a pleased performed this Again,

growth As and our Technologies recent Energy expected, the our in significant ongoing continued we to business, we business. see Solutions orders Industrial our driven by interest in

contributors overall our growth our in businesses, and solid our were Automation continued Warehouse saw also We to Identification which performance. Product

improving in year-over-year. In addition, results improvement showed we SGK, which Memorialization strong our results had in and

in by good all, improved the adjusted XX%. for All EBITDA quarter. increased company and very XX% sales Consolidated almost a by

our the grew demand XX% business and and for to the energy businesses, primarily prior resources the at the Automotive. growing over from as look the Solutions our to through and of I the our performance our acquisitions Solutions capacity support meet on higher Industrial Technologies business. well recent Energy increased storage These gained individual necessary orders for segment by benefits provided acquisitions As R+S sales ability as Olbrich our year, additional of execute

progress We and year. with carry in These strong to $XXX our over year that we million term, received and the start already we announced fiscal make together good are the near other another continuing anticipate over into in in for of orders have earlier orders orders Solutions energy Energy that this a orders, year fulfilling business. provide next very will

Discussions on finalized. as continue additional new business our orders to are opportunities progress will they we ongoing, on are and share

will much the actions the Now and cost the XX the resources impaired acquisitions the that that quarters. the past we the have of have and R+S, and directly we few focusing contribute of required performance are over improve will to at we XX Beginning meet capacity business increased these operating much months have that quarter, demand, which be improving taken -- next now to the of performance platform to Olbrich over this line. bottom on

expired. We at acquisition, earlier those contracts labor time taking the have prevented due now the been of our to place have contracts from but action in

Memorialization by continued business, effort we significant outperform the the by pre-pandemic made the In to driven team. results

to retained operating than have our have efficiencies. have improved Thus, gains COVID during level We and this reset market the pandemic. we of before share much made that business we higher the a performance

operating pandemic before and Granite, the X% quarter third the and the fiscal by segment efforts corresponding those of in result the XX% acquisition when grew results Memorialization in a almost began. the period recent compared As of Eagle by to 'XX

year. prior pleased direction said actions 'XX. able to cost the changes. taken we results results in further as relative along We SGK. unfavorable anticipate though, quarter to Top improvement to on Moving of were and the with to for be over margin in rate SGK With by impacted continued the actions the line pass take towards Europe challenges market year, that currency and increases coming driving its cost geared to additional was to improve be performance operating

'XX business good softening strengthen the in quoting fourth the softening, impact but a early our activity, -- results quarter, strong we the call. forecast in year Product impact business, recent and still early see Warehouse the next saw in business we to throughout for which bodes into is in began uptick some advised our it did recent the saw last to Identification early another but -- year. As order Warehouse particular, fiscal the quarter. Automation Still In quarterly of the we to activity in well to earnings decline for as activity third any

driven business volume Identification good quarter and Product price increases. by also contributed increases a slight Our

During the this progress engine made on quarter, and our in quarter. plan our print Identification business production our Product we new coming finalizing

better you timing the of year-end call. We rollout a understanding the new expect our to give earnings of product in the of

solid and improving we in combined SGK quarter, fourth good outlook the in The the Energy about gives results another particular, trend business, of businesses. to results in future with us the a have our all quarter. the and our Technologies steady of This strong. our segment Solutions Industrial to feel ahead to towards to performance, expected continue strength year confidence Looking continued is from finish Memorialization

a in fiscal of our projects As the resulting Solutions 'XX results. quarter strong from a in benefited business, of the particularly reminder, closing Energy fourth

Although line project to results do Industrial as operating we in segment recent we our upcoming make do Technologies we prior year in on anticipate closures relatively in similar not results progress remain with have orders. quarter, our the

Solutions fiscal revenue the of half should result This those increase 'XX. performance recognize to Energy track of first 'XX in XX% the 'XX about a year-over-year business in about and our on over remainder remain $XXX half our fiscal in million. orders We bringing about to

segment double $XXX Moreover, approach in they than revenues more expected is report to were Industrial fiscal our Technologies total million, what that XXXX.

not to in revenue large control. our accounting recognition Thus, revenue of subject earlier out the laid orders recognition Solutions on consists Energy I've business timing As calls, the rules. entirely is of our

Memorialization expecting margin continued business at card perform remains to is earlier, improvement to year-over-year our continue expected which on as economic to a the see wild SGK, we noted fourth Europe. continues our to hinder in well we basis. quarter. the efforts forecast The in Our in And environment, are

aforementioned 'XX least believe we given in With prudent on our it and that of current previous Therefore, our assumptions, to $XXX maintaining is adjusted the outlook. fiscal are we mind, of remain projections guidance cautious for our million EBITDA. at with

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

Steve Nicola

$XX.X the Consolidated to quarter million increase Thank and reflected sales Joe, higher a I'll ago, for you, fiscal sales were representing million increase an for $XX.X third begin XX.X%. with The year Slide million X. compared or of XXXX good $XXX.X morning. primarily the $XXX.X of increase of sales year GmbH Industrial Industrial Technologies and Technologies the the to in ago, segment. Olbrich year. R+S higher engineering, reflecting and August a million reported compared XX.X% segment Automotive last acquisitions sales or GmbH The impact energy primarily a of storage

SGK for and lower $X.X a Memorialization for the segment increased the quarter, current Solutions Brand segment million were sales million ago. sales $X.X than year

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

benefit the was a income current quarter, GAAP operating per the or $X.X higher reflected higher million same for company's the last the On by share share offset $X.XX per for income The income expense. or interest net and $X.X tax for increase partially quarter quarter an year. current million basis, compared to primarily $X.XX

$XX On adjusted to third reflected and interest higher $XX.X for income adjusted compared ago. increase which expense, segments. a ago, million an EBITDA an quarter million was EBITDA, of increase of EBITDA represents or the adjustments compared income XXXX the non-GAAP depreciation a $XX.X currency adjusted and basis, all year $XXX,XXX representing consolidated impact on approximately quarter net taxes, of other X rates had to The consolidated million before Changes amortization fiscal company's in XX.X%. reporting current year for exchange unfavorable a

offset higher quarter earnings reflected $X.XX by lower was per the current adjusted quarter, current a partially year expense. and GAAP higher impact EBITDA compared for expense to share to increase earnings Adjusted the share, same quarter the primarily interest income $X.XX ago. the per Similar a for tax for

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

the of to XX.X%. $XXX.X Recent for compared for Please a R+S third were million year a results. million Olbrich XXXX segment turn segment quarter quarter. to the or ago, review acquisitions, million fiscal Slide $XX.X X and $XX.X Sales to to our million Technologies Industrial of $XX.X representing begin primarily contributed the increase an Automotive current

primarily business for reported engineering reflecting continued compared a current sales business. storage our ago, year in solutions growth energy quarter The to the higher

a year and on impact current the sales higher reported year. compared of currency segment's rates Identification quarter Our Automation $XXX,XXX in Warehouse compared to businesses current sales quarter to also the last had an unfavorable Product Changes approximately ago. for

for million for quarter growth The compared The by current EBITDA operating $XX current $XX.X year margin a for EBITDA segment's sales acquisitions, for losses impacted was quarter. quarter. current million recent segment's the Technologies unfavorably Industrial Adjusted primarily which adjusted segment increase the ago. was the to percentage reflected reported the the

with acquisitions EBITDA expected immediately, integration fiscal results have continue to adjusted we are year these but previously actions. we discussed, to As anticipated not were their as to contribute next improve

partially the Eagle for and $XXX.X a improved lower caskets to by ago. deaths. COVID-related cremation Granite the XXXX pricing, increase unit turn were of lower memorials acquisition million offset and reflected for quarter to $XXX.X for which of the benefits third the U.S. the higher quarter year Company, X. Sales were of Memorialization sales equipment of same Slide sales Please The segment primarily reflecting fiscal million compared

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

sales, of $XXX.X for XX. in to turn sales quarter. currency XXXX, Slide $XXX.X to and million current million $X.X were the a XX, segment's private European sales market unfavorable the unfavorable ended which segment year continued be rates Solutions Retail-based for label quarter The includes lower quarter Brand to merchandising June on compared impact of conditions. an ago. year challenged compared current reported had businesses also Changes by million Please ago. The to a SGK

cost actions. million had adjusted pass a Adjusted Solutions lower improvements reduction on quarter, in the adjusted compared a increases EBITDA ago. impact of XXXX $XX.X was ability for primarily for year current the $XXX,XXX EBITDA Despite segment's to to fiscal for increased sales, recent from the compared rates and along $XX.X million cost Changes the reflecting EBITDA currency unfavorable third SGK in segment benefits to the year ago. quarter for an Brand

ago. year from the XX. a flow reduction higher to $XX.X was compared cash a The Please quarter primarily Cash activities reflected Slide increase quarter. for $XX.X and third operating to the in in working for turn earnings XXXX fiscal used million million capital

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

year in current primarily higher the inventories operating for capital, reduced resulting reflected cash liabilities. flow and current working addition, an increase from In

which was XXXX, during and a EBITDA representing Outstanding debt, XX the net XX, XXXX. XXXX, XX, million the as was debt at of leverage and was June based outstanding approximately ratio trailing both million decrease XX, million $XXX current months XXXX, X.XX of represents on less quarter. XX, X.X XX, March company's XXXX. XXXX, and Outstanding $XXX at September adjusted on million At cash, compared debt March debt $X to $XXX September XX, June

Approximately of were outstanding XXXX. shares XX.X XX, million June as

repurchase were company June During remaining the X.X the obligations had its million At shares fiscal connection purchased XX, in under approximately equity company XXXX the of shares with authorization quarter, on program. X,XXX compensation. third XXXX, tax which withholding

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

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

Operator

[Operator Securities. of first comes line with Instructions] CJS Moore from the Our Dan question

Pete Lukas

It's Dan. just on I Pete for Automation. Lukas guess Warehouse touching

'XX? QX. in is in the color you saw us like in mentioned it remarks, on terms activity Can and growth look touched you as softening any year strength You of in likely some QX look fiscal give to prepared we and you early into what more

Joe Bartolacci

slowing some order quoting. here. in Pete, we're starting It's Is the early that's us. We for the for actually point. facing challenge saw Quoting generally intake.

quarters that have is look given of generally Fortunately, the 'XX, wants X warehouses. that of you the quarter first the -- nobody the slower in as into we we their

us begin on for early too look to it's to So impact at the 'XX.

Pete Lukas

Fair your expectations in of then Memorialization, what trajectory to enough. of for 'XX? And as we revenue terms are the look

recovered margins And think, in have of, for the past midterm How think off? also to you for EBITDA about the what now nicely, do above And do sustainable, outlook back X you leveling terms of X years? is margins say, X quarters. XX%

Joe Bartolacci

Top that, control Memorialization would expecting it's of. for difficult us. We're obviously, death you to But mean, double-digit line rates is tell segment. grower not something project. growth I I have the we in a don't multiple that are modest

at this in margin standpoint, say a I pretty that stable From we to point time. were close would

to bit. around day, have down be at stabilized historic our and -- end that the going that's going be. to up where we think But of where have the you're little rates. We at You're should a quarters we

Pete Lukas

for into Do one SGK few the Brand last next me, Solutions. quarters? you jump the over revenue even slowing perhaps And or reversing declines anticipate

terms margins up the get to to outlook. back wondering made know in of sustainable and that but there? to there, just mid-teens? have still achievable I what low is the And you improvements happen some And needs margins, to

A –Joe Bartolacci

top are rates our Europe. North APAC to the – there. is business the better. historic Yes. to or and Europe, our in balance Today, The of with Europe, America and at line It’s the region story the operating respect margins completely

a in the in job have done operated a in time. has team long great markets long, the we – we’re which So for

business. as challenge we’re to feel similar will balance if things out when good somewhat our The to of a is it are is facing are have that market or way the that take now to we the rate. I footprint recover actions right the that don’t that a of Not control. the of European more palatable back for But part But a there. getting in world shrink margin task easy over we to forward. to that’s going as to only move that do size an we the of see profitability to

Operator

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

Liam Burke

share On about the talked you market Memorialization, gains.

across Memorialization and the all products of caskets? including lines, in both that's Specifically, this board cremation? the with Or is product

Joe Bartolacci

one operate is of as picked These positive. North America, are about I the that tell market we that but would you know, businesses up that we share small. But you just in drop-through in every they're incremental incremental.

our I The X have Street time. Liam, in think this materially bigger if is issue, at you point -- I it's and at years I think The may was just keep where mean ago, missing look business higher this.

through business is both me, years that of is as period pricing excuse well with a just and market was margin it that's pickup. different share a through So time both than -- This as ago. X

Liam Burke

any ability I you is this and in see benefit mean, to a but event? your will costs Great. in And now Or acquisitions those 'XX about, a all you have talked primarily take look at these businesses, Olbrich, XXXX?

Joe Bartolacci

to revenue the some I start recognition, side, about utilization orders talked the more begin Olbrich of you'll the that Energy would we in deliver say, capacity. of we've the see to as So the

but So have throughout will improve course that been of the the margins, they negative year.

tell reverse would the third into quarter I of you next should second, year. impact

Liam Burke

capital that flow cash did working are there Great. on businesses need inventories quickly, at you that capital you specific Solutions? and And other additional Steve, needs any its increase there for it. operating effect Got investment? Is year. highlight Energy increased require real working to the Or business

Steve Nicola

addressing businesses where that inventory that that business, for X granite was backlog increase saw the in that of some were the business. built-up and So we year the the

sheet the acquisition on our Granite. balance Eagle see relates to you increase that of of some And

is business second business. Energy then as grown, business And the the has our

as you capital increased, that our As would related expect, business revenues to has have the working increased.

that So those were are areas X impacted. the

Operator

Our line the Bergner next from of Gabelli. question comes with Justin

Justin Bergner

announced year recognized so on First million that 'XX. the mentioned or I $XXX fiscal be are in likely be half of in mean, question would energy orders the year to storage. of you early

levels should Or meaningfully 'XX 'XX? $XXX leg that are from of to there step up, more in the 'XX event? million, is drivers that Beyond up storage cause a additional that energy next

Joe Bartolacci

-- So receiving $XXX of been the would announcements expect, would magnitude carry, you if assume might orders made. quarters we put to out. announcement we since around we we've the million that couple throughout the that have you Obviously, last as that announced, we otherwise, not have

to discussions call are yes, multiple we have year also lines. backlog move strong the forward. ready of we very what a I But -- would in we'll for with players the production beginning But start with

year a could standpoint, change in the be So be good to will 'XX. I a expect would probably year next year dramatically. it from revenue bigger that But

Justin Bergner

Okay. That's in production chunks discussions bigger revenue. to would these material that year some XXXX helpful. relate of to of And translating hopefully line

Okay.

Joe Bartolacci

Yes.

Justin Bergner

like nice be you SGK improving, the closer position just I sales future? that Second considering businesses you you nice mean consider would actions? are distant Brand question think do Or be pickup. to over quarter, ready on you'd XX-month to Solutions, where you're still improvement to the in given before period noncore longer to XX- those a might or margins a see in are of

Joe Bartolacci

think, and The stand I bigger is Energy side the we development the whole driver, the where Tech. Industrial on of Justin,

talk portfolio we would heard companies the we'll consumed, more we -- businesses you Steve additional these about capital capital. to that need look get As as management. And earlier those to as scale,

segment in are the year, is pleased a is well. as say SGK be be answer moving. for Will where the this very that it to at Memorialization the And with would me that after, of time. we performance point still direction it difficult next for year on matter, But

Justin Bergner

to trying a of I'm sort mid-teens of recovery mid-teens? Got low targeting just Like at of margins to get or the for sense margins SGK you sort or it. sort And -- normalized the then are

Joe Bartolacci

on Low to blended markets. across mid-teens a all basis

Justin Bergner

Okay.

not you're too this So from away far on based that quarter.

Joe Bartolacci

No.

Justin Bergner

It's I of at lastly, margins happen. that years? the there margins sorts anything the sort memorialization, or I of I all things down couple then of over back step And mean, close to can Okay. performance, that great margins. that are next you see XX%. unpredictable concern realize could Is gives great great to mean there

that sort there levels -- can next the anything hold you margins these at of do for the you think unpredictable, years? is just of couple But of outside

Joe Bartolacci

costs take every spikes nickel recover necessarily we Look, is what it that that a long-term are all have We last commodity business from look period. proven standpoint. don't in things we in rapid of at one a

of So period these yes, rapid where have costs, impaired. to we if could had our margins of will But margins. period we cycle, a of of a of could time are escalation over the course where time we business return we normal have commodity a kind

Operator

you. Thank

We now question-and-answer like of reached back Wilson I closing the the to session. have turn Mr. to would end floor over for comments. the

Bill Wilson

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

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

Operator

this teleconference. and today's gentlemen, does conclude Ladies

your disconnect may lines have you time. for a wonderful Thank your day. and at You participation, this

Matthews International (MATW) 28 Jul 232023 Q3 Earnings call transcript