MATW - Earnings call transcript Q2 2024 | Matthews International Corporation

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Operator

Greetings, and welcome to the Matthews International Second Quarter Fiscal 2024 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.

William Wilson

Christine. you, Thank and Fiscal everyone, the International Matthews Good XXXX welcome Conference Quarter Year Call. Second 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

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

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

Joseph Bartolacci

you, Thank morning. Good Bill.

businesses. we We in digital results continues given to restructuring trends that and pleased second well. Memorialization several 'XX quarter sales consistent, other are maintain transitory to impacting promise. while initiatives EBITDA very macro challenges showing due performed of strong slightly SGK's quarter EBITDA with generally the were several while adjusted of businesses, efforts businesses our during and the are our post-COVID, fiscal Sales our relatively only and faced declining

installations. to we sales solutions were see our but for As energy segment, delays customer in Technologies continue Industrial higher,

in continuing overall these sales, businesses lower offer Additionally, see has a strong the however, growth recently. Despite the business development seen warehouse to with warehouse market, both new we automation which long-term opportunities. near-term events, consistent reported moderation

levels. segment the rates. trends continues We're this business consistent despite pleased business the Sales prior relatively run as in sales adjusted rates with with the and for the exceeding with Memorialization EBITDA year pre-COVID to remained outperform lower death significantly

add significant us In recently opportunity we which our pleased another we will solutions. afford as for we offer growth of addition, to extensive won continued I'm portfolio account, that cemetery hope

SGK by to improvement. in segment's quarter continue the we be European past performance encouraged months, cost continued reported over EBITDA Thanks of a and in growth the the challenges the XX the despite the sales segment significant increase as and market. actions second to pricing margin also saw taken We adjusted in

the over at to team the despite the The have they last mentioned win also to continue accounts continue initiative last faced SGK year. e-commerce new challenges They quarter. on outperform and we digital execute

more the as year to we We spend expect to our set $XX consolidate program efficiently. ways their this for sales e-marketing clients hit target the for look million current

to Technologies were our automation respect With quarter, offset for the market our sales. business, primarily lower sales segment, driven that by by impacted warehouse total energy Industrial storage higher but conditions

economic a about and conditions, to continued on our interest dating last year prevailing customers evaluated the we earlier consumer other as mid I highlighted pullback experienced rates mentioned peers industry As confidence. back concerns the and calls, by high

quoting see upgrades, still customer seen and on we warehouse softness brought be projects, pickup in a We but continue in to some in have larger activity.

few the is Our more industry supported that published business their XX% increase confidence -- recently investment in of in growth an expected our in research the research recently next systems industry this by for in indicated robotic supported than published years. is opportunity respondents by me, excuse

through AI to software the as we that enhance for We autonomous execution technology platform advances and cloud like automation will believe robots, which our warehouse we demand warehouse manage, drive continue systems improvements.

remain we launching we new solution, the milestones the to launch on year-end, quarter. related stated. progress our to during All solution by met, made significant to printhead product schedule previously as calendar and Turning the were

continue update on this for to will progress product. our you We

reported solutions sequential the our discussed energy largest are installation to delays which business, of and benefit our continued control. for the growth, anticipated As from customers, orders reflecting customer experience our previously we though out customer, from we of multiple

me dry across in business electrode dry hope that a remains reiterate interest segment believe high. no fiscal before to opportunity. Interest we as to Let our very and we share our have the announcements in focus strategic globe we significant battery our unique of electrode had year-end. have We've in battery this shortage solutions,

the development we assisting quarter, In development lengthy. as their -- laser-focused second within good battery we technology electrode before, Therefore, dry our customers industry had however, battery battery our process. and we be are the entry, on mentioned cycle order OEMs. advantage in But the leveraging including X can

With electrode build shortening formulation a the production to in adoption cycle. at the significantly is mind, dry to thus that clients battery which accelerate adoption our their production. speed, allow would to as of run hope our for solution definitive We intend battery system, scale

$X market Our total has EV addressable billion the extended over market unchanged, but current time our cooldown. to remains due line of

we solution end, offers advantages a to including cheaper offers, lower it solvent-free and the dry battery. move required investment, given battery performance and and better it place, a expect process. buildout In our the improved OpEx, inherent in market remains and lower toward Demand the battery faster electrode

our the to on we partnership Secondly, well on utilizing development that for cell the announce focused as We significant year-end. stack of this increases cell hope are throughput significantly reduces creating fuel for components solution our proprietary fuel cost know-how. by a a via side, hydrogen the

capital reduction leverage continue end of further by improve the to respect our we debt in with the to fiscal year. Finally, to ratio our sheet, expect balance our allocation and will emphasize

energy recent through from storage 'XX, second anticipate we progress the as by our orders solutions in continued As in demand fiscal customers multiple we quarter. of the business, evidenced flow

start orders we of within We caution may that business to deliveries our the our of With delays have of expect and the impact continue outside energy results. control that customer some to forecasted said, soon.

fiscal the the into year in of in those well next further working year are expect We as orders and delivered. reduction latter half capital

result, a to we EBITDA million. for $XXX fiscal around As project adjusted 'XX be

our to it for more Steve? Steve over turn I'll financial insight on now results.

Steven Nicola

morning. Thank you, Joe. Good

Let's Slide with X. begin

income ago. million share adjusted for impact For the or $X the $X.XX fiscal the quarter share compared per per $X.X compared second $X.XX per On share slightly year to a benefits quarter, net last a non-GAAP higher $X.XX per EBITDA the tax $X.XX Income generally lower attributable to to or and basis, current quarter were for company interest current year. XXXX million expense. was adjusted offset the earnings of consolidated share

million Sales year. for the March million Brand a remained ago. quarter the the for were stable compared Solutions sales year $XXX.X Consolidated and ended XX, to increased compared quarter, for last SGK sales segment relatively to Memorialization $XXX.X XXXX, current

segment rates compared have Changes lower automation impact a $X.X to were same The energy to in reported quarter Industrial of offset ago sales the on a estimated with sales. year storage currency consolidated solutions than a Technologies lower year warehouse by ago. million sales favorable sales XXXX fiscal

the for of lower for second year Industrial ago. to adjusted XXXX Technologies million provided earnings fiscal EBITDA EBITDA which segment quarter, quarter Brand higher current compared adjusted and release. $XX.X was EBITDA The reconciliations Please Memorialization the the in adjusted share see segments. $XX.X was reported per adjusted in Solutions our the earnings adjusted Consolidated SGK EBITDA by million and non-GAAP offset a

for fiscal offset distributor a business of of resulting and which February a granite our The casket results. second $XXX.X deaths were relatively in and declines for recent million in Slide caskets segment X in for realization, volumes the Sales XXXX for Memorialization to U.S. sales to with the review XXXX move generally consistent cemetery a benefit quarter of from was the ago. same the price lower Please with quarter $XXX.X sales acquisitions XXXX, combined segment million, year January post-COVID. memorials improved

segment year. were recent for from $XX.X memorial current initiatives. adjusted increases increased These EBITDA Memorialization impact material million partially the labor of volumes The resulted of lower primarily pricing cost-savings $XX offset benefits quarter to from by quarter favorable improved the the and and compared the increase acquisitions, impact last sales and costs. same for million was

Sales engineering decline Slide warehouse resulted fiscal lower second million sales to Industrial $XXX.X were automation automotive for segment's for higher the current the on the by for move a the Currency segment were business. offset sales quarter Technologies primarily compared segment's rate solutions ago. X. These to from storage sales a partially of The changes to energy $XXX,XXX compared for Please and businesses. favorable ago. impact $XXX.X million XXXX the decreases year quarter a had year

engineering Technologies for primarily higher automation $XX Industrial margins of for was to current labor $XX.X a segment the business the Adjusted The for to decrease ago. year a sales, quarter lower year warehouse the lower ago. impact the million compared million and reflected costs EBITDA compared

partially product reflected improved the engineering project primarily work. reflected of margins EBITDA in year margins by offset design prior and had higher current Changes to compared identification declines business. ago. The The segment's rates a as reduction engineering $XXX,XXX the for quarter period on impact in a exchange favorable were currency timing adjusted higher-margin the pricing

ago. higher for on $XXX.X March packaging million The rates a U.S. improved ago. The to current unfavorable to to reflected impact and quarter had to continued private-label year Currency primarily year sales European Solutions to move ended $XXX.X compared Sales brand for Slide sales and increase an a for also businesses. XX. increased million Please Brand pricing. the SGK the the in $X.X million XX, from segment benefit market compared the segment quarter XXXX, of

current Brand higher million offset the Adjusted cost-reduction of was the $XX.X costs segment's the year Solutions $XX a bonus higher pricing the impacts the to reflected improved increase quarter and primarily EBITDA sales, for million and of for segment partially ago. by expense. benefits SGK The compared labor-related recent actions,

for a quarter consolidated several flow Operating reflected million March Please in settlement consolidated new and $XX.X for compared the ago. addition to working the ended the cash from the EBITDA to adjusted received flow company's primarily was capital the cash year reflected U.K. benefits working $XX.X year last The the reduction. current flow financing interest from cash XX. swaps capital to of rate of Slide million and operations facility move quarter XX, of receivables Operating XXXX, company's benefits reductions. the cash

$XX.X XX, during XX, quarter. Outstanding debt representing XXXX, reduction Net which a compared million at March second quarter. to outstanding of million second XXXX, $XXX the representing December cash, million March million the represents $XXX $XXX to a XXXX, at reduction during XX, less at December debt, $XXX million was at debt compared $XX.X XX, of was XXXX, million

on XXXX, the based XX, of net company's to end reduced the to X.XX last March adjusted at debt X.XX ratio, At quarter. trailing XX-months and leverage was compared EBITDA,

before completed renewed which bonds, fully do refinancing our end XXXX revolving not this and now are this during of until refinancing to Additionally, expect $XXX facility be XXXX. on our quarter credit million mature the the We second fiscal domestic we December of year. fiscal focused

the stock our XXXX quarter, purchased fiscal reduction. X,XXX company second under shares only focus primarily on the reflecting For program, its repurchase debt

focused the outstanding at price end While also we of activity cash may through XX.X fiscal the remain shares current XXXX the forecasted and we on were of end year, in reduction second will quarter. million Approximately stock increase fiscal flow. light debt repurchase the of levels

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

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

Operator

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

Dan Moore

with start well documented, absolutely no market slowdown the obviously, Let Yes, is very there. in me surprise EV so end energy storage.

prepared battery, you dry quarters, X and remarks, talked to have to be to you're Just about your it X to it opportunity few would looking Joe, to customers relates the par transition still your Do as but from what thought transition quarters in seeing elaborate that ago? longer-term the you expect on beyond hearing DBE next with maybe on production. what you and the

Joseph Bartolacci

I is the transition place. would in tell you

when mentioned, will you reality of higher. productivity occur. be I the we the just system slowed level the the little, slowing it And the battery will a The it that is has Dan, and think our timing. better is ultimately never cost been is winner, but comes I issue believe. the interest -- our out that the as in of will benefits, efficiency, timing it

our So discussion more we about from coming quarters, perspective. changed hope to over this the but have has nothing

Dan Moore

fast right. wasn't word. out prepared you platform And a that faster the plan right production. to typing build the you enable in but is the platform mentioned remarks, All I to not enough, --

with associated Just elaborate incremental any is it? CapEx that, and on or there expense

Joseph Bartolacci

Yes.

to to So cycle has and auto adoption of was full currently a the is that especially it A for development something when the lot could in-house these production with other OEMs. development process lot of years. done whether going industry reality manufacturers is lengthy, locations, multiple new take is our or the do cycle as the of that from be technology. the as battery fact at that being The innovative through in

We the to believe would formulation come just a, that ability our customers and dry we for have call, enough a I the what production-like build in-house accelerating allowing know-how battery adoption. their with to facility and electrode,

So they know a the basically would that produce their already what their with testing like. can own batteries and production-like necessary do formulations, look own is machine

would next I in within our well over of So and and eliminating to advance. $XX to it to require a ability done months, the least call of the going of CapEx testing manufacturing at fund. That's million the but lot serialization probably equipment XX worth that customization XX is

Dan Moore

to ID, update new hand technology printhead is we in in of out of have matter Do getting and up? integrated that smoothly? ramping solution the transition orders Got and us implemented functioning about that Or provider confidence chip it's buttoned go to it, and we your 'XX. as need and just very think a you kind and new test the chip the again on do helpful. product the And product on then just as

Joseph Bartolacci

So new so the We've with -- current with had in come we've of very chip. success us our exceptional. with to had, new batch we great respect have are The is issues out no that and Sweden that. of have that far, happy wafers helping provider

in calendar described be expectation We expect before, -- 'XX. our to early are with market we in we as line

end December, January, of there. should January, we be start out to by So

projects, Do multimillion-dollar we there's These but are Dan. have them $XX,XXX each, lot of These are $XX,XXX sold. are not customers? to a

there's Obviously, day out we're With CPGs a are with the people we've of to already lot spoken going interest. start the there coming, not to what's that about largest X.

we'll don't here significant a believe we the it. very market and what to is sure participate a what time, is at and make in. don't approach -- well, we there next of same is burn we year that with to correct novel go. the But be beginning we working at a upside and new Just in is believe lot functional of out market It's so that

Dan Moore

queue, sustained or seeing guess your much that one on Solutions. then Brand is I'll the of to just Perfect. of and spending I how And is in in SGK a comps improvement How more, revenue jump back customers? more commitment kind from much you're easier hearing

Joseph Bartolacci

have to prices, that to came increase this the top they're I the from it, you've in their best in way as last several believe and sustainable. product speak to it is about heard us America. you've development. new of brands ability We about is guess line describe their it and in CPGs the read raise having reinvest through Most over the exhausted innovation newspapers North quarters,

So an -- you we that as the driving and can see leader where the markets, to industry what's that spend. be into hope

come. to -- sustainable more hopefully, So more I more it's much tell you, would and

Operator

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

Liam Burke

business of How this the important did rest perform Memorialization, outlook on is part of an cremation the mix. the what's the quarter? still that And year? for Joe,

Joseph Bartolacci

in into give we business looking So $XXX segment. from the of is year, as It about equipment to tell us some cremation next business we have performed you at right manufacturing now, do we've said that should well. out improve that product I our performance that the tailwind services good opportunities which and the team before, still cremation -- Liam. would a publicly million going in

Liam Burke

easy Europe recovery Or challenge. of Europe sort prepared just you back did Okay, great. remains talk guess, looking But you Are your up. said about you comps? branding, a generally, at looking are I a SGK, that there? to being fragile Getting at statements you on

Joseph Bartolacci

mean seen to the I go say we've region. it's of the in a easy would recovery America Europe. I comps. yet. out North remains some and a while I still has -- wouldn't APAC help performance say of Europe business The

Liam Burke

APAC did how And this do year?

Joseph Bartolacci

and was quarter the for quarter. okay the being North driver This America

Operator

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

Justin Bergner

energy EBITDA your to you guidance customer, the current the and year, As other think puts the what think from major about beyond revised about? fiscal storage delays takes the for are

Joseph Bartolacci

a terms of comfortable me are? better. Justin, question help little we how In understand the

Justin Bergner

the of looking at they the and business start customer. were that that were of of year little parts Just business than bit of the the fiscal better major from a bit little a outside are parts challenged looking storage the delays more energy the

Joseph Bartolacci

And performing unknowns of with Memorialization my demand than had and There's recent we that's well, consistent share, well. I pretty side picked on we comments lot start that is a think would better summary and maybe some of the as up when the expected that, tell performing us you, a obviously initially wins market for new business. help and you much year, the especially we year. should are

as well well. performing SGK is

to case. that the expect We continue to be

performing very they a could that But change. is make And in forward. be day, for contributor to business that identification team that, there, contributor well. a this launch we of That to as our is will performing going sustainable well, and new think very You a place results. that have a bigger well. we quarter year -- only end over at go are the a getting that's business the there's the Product should new ready

have I of not, whether Warehouse mean is a it's expected what it's into going year. challenged. I of not it's a question mean would This or making profitable is it's the -- not money. question we

with consistent more our could I line. about XX%, as warehouse numbers the XX% off into competitors, much top on automated see it, look struggling the that. well. We're marketplace, be these you'll you mean If who public are

we But think turns. that

spend, capital environment might be number contracts of because rate on impacting maybe our the that's size interest back capital of as We've clients a a spend. that seen of the well. the pull and think large I

So been in little warehouse challenge bit a of forward. has a going

covered all think that businesses I've about the at I just than point. energy other

Justin Bergner

very helpful. Great. Okay. That's

side, the mentioned from multiple press customers. in a On energy you release the of orders benefit

the early the equipment that serialize XXXX, into to is $XX kind CapEx manufacturing As production set broader looking that is standardize million of to more able potential for this flexibly the likely driving And really of order and of are investment spigot orders? or later XXXX up equipment? kind customers opening

Joseph Bartolacci

Yes.

machine I So multi-quarter as a at is understand, to it from relates what I you to that you production the to preproduction process mean a would I minimum. development a go cycle, machine, call a production -- would help prototype to

So the comes those turns what -- we're taking lot well as as of that doing is, making done one that a off manufacturing. to machine with from product the of prototype investment, that the is testing out,

now, side. machine. on just our directly seeing, investment, trying significantly. I They're smaller would would you what production be orders cycle We're that shorten that the with right should So I that a, the a we're and would call, from to say, lab concept take equipment to beyond

Justin Bergner

I I energy might customers off. present have that your I Fantastic. time? issues was my hindered Has storage guess that other that's of guess, equipment of ability potential some customer there the part accelerated in intellectual Okay. interest side some the of the in order But question property, the rolling think the production was probably to

Joseph Bartolacci

Yes.

held dry there question. battery are a Now electrode Yes, there I in understand -- expires July. your here on that products that patents is are

that of investment. about question accelerated And trying the with what acceleration to our interest So because has call, in and that. investing the, that. of interest No I'd facilitate the we're

Operator

question comes Management. of from the next line NR Nick Ripostella Our with

Nick Ripostella

outside businesses? the not at This a really other big-picture businesses the for question. at have these is Because Memorialization, these being how any would they strategy and up from stock benefited benefited long in price If made All you split the more so really businesses time look shareholders? of the shareholders you investments change point, you've have -- of a together.

Joseph Bartolacci

question. understand Yes, your I

We have fairly been had we've public the with -- commentary.

these Our the the looks begin a to strategy at scale what hope like going and smaller look business then is forward. build of to to to continue to businesses

X that it, evaluation what come energy be to these As looks nascent, like would product some things be still market, it and will point, think what identification -- say that being say couple it's of get an at that At printhead as starts relatively the the there with of I they -- to new we're this we're business that probably a fair at businesses these point yet. the in not time. just as to to I legs whether

Nick Ripostella

enough. I'm Fair way, speak by but... this, to a to questions. I Well, the shareholder, not apparently a I'll and you still Okay. Relations contact, just troubling, or your that a I'm long-time ask through to little find shareholder, because can't but say get Investor institutional, anyone an

Joseph Bartolacci

sorry. sorry I'm that. I'm to hear

Nick Ripostella

ends to issue. under and Well, the that messages. promising be stock. as many insiders up happen here's you I left more levered, to all have if investors I case. I Because pay XX -- and to things, will a what you're down there just long-term never are We the pushouts and But want anyway, just technologies. or like buying hope XX, I'd know see I of you the debt there's now. lot that's hope stock

can't a really advantage dramatic in it, just reflect my that's any situation way. I where in opinions, to wanted feelings. you You're my But take

Joseph Bartolacci

Nick, your about I'll that we the contact. sorry investor somebody we if try can to reach can information. get will it I'm to see out --

Operator

follow-up a is CJS Moore from Daniel Securities. with question next Our question

Dan Moore

decremental looking I closer work. XX% less would industrial just But out decrementals you tech, what is kind looking normally higher Steve, just last to to think Just year, at than EBITDA think. -- at kind called and margin, some little the of quarter bit a the this looking the QX engineering of you

be else weighing temporary? margins that or unusual anything might going So or on on

Steven Nicola

no... Dan,

Dan Moore

decline? Revenue

Steven Nicola

the phases of a working higher-margin, particularly decline, we we the of when things And the to engineering now we're the work design-related X design-related were the work, versus but comparable are, stage higher, engineering on The was revenue -- to with that again, was ago, it's year more work. the margins to year where last mention respect it's look at the one, highlight side. Yes. the warehouse on just to revenue industrial business,

the to the So major impact. those that's margin elements are -- X

Dan Moore

debt. helpful. update the appreciate on the And Okay, I

to you you if refinancing on Just were terms the and given and time market bonds reasonable year-end? amount at like look least wait for could of today, between to any have now go see sense what a or

Steven Nicola

working now starting just and Yes, we're that get indications. we're through and -- some those understand actually, of to market

Operator

is Justin question Gabelli. from question Bergner follow-up next with a Our

Justin Bergner

quick here. follow-ups Two

as You any of be you the sort equipment is that mentioned Is to sort deliver more and capital you that storage up working on energy side, release that much can there business? way how working tied for capital. will frame of released in

Joseph Bartolacci

looking say, I you $XX a perspective mean it a I See, why working million don't closer would tell I'm to on at give I $XX Steve. it? significant we to would capital, is of million, Steve? that Steve, amount but

Steven Nicola

that versus working Yes, when assets, reflect in that accounts line Justin, based revenue the balance called of done the are reached our necessarily and the areas because the in we've and on, area to work where area -- what sit recognized you but would if see items those XX-Q -- capital that the is billing the today, receivable, difference release between sheet. we've we've our contract the we -- be noticed But item line for an when I'd the done the -- working liabilities contract say built capital called really the opportunity you'll because milestones biggest not the we've the purposes. work going that

Justin Bergner

Got you.

Okay.

or case? in asset contract this liability would be it a So

Steven Nicola

sit be of on it aspect where milestone a both It depending could particular a on we payments actually be with project. -- would

So you line should see both items.

Justin Bergner

then realize question that energy storage acquisitions the And other EBITDA engineering does acquisitions the But to an the relates little it now from a assume or on to which support years go? business is basis? business, Got that's more least ways your was you. have business were. auto at of the a profitable to still ago. quick couple I I Or

Joseph Bartolacci

So are business. that of in that happening a couple there's things

of we've unions latter fairly this as modestly for That's prior in in the an well with that here point. fiscal profitable hopefully to at been this substantial in of quite headcount. We change both trying compensation year part there a a significant. as negotiations at over the incrementally adjustment are terms while, as organization, But better than looking get we're year, starting in

So fiscal get we that, a hope more little little year confirmation. to once a about we in the bit later Justin, talk

Operator

Wilson, we this back time. comments. for would floor like I further Mr. have no to to at questions over the you closing turn

William Wilson

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

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

Operator

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

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

Matthews International (MATW) 3 May 242024 Q2 Earnings call transcript