Matthews International(MATW) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated sales increased modestly to $450 million in the first quarter of fiscal 2024 from$449 million in the same period last year, primarily driven by higher sales in the industrial technologies and memorialization segments [8][38] - Consolidated adjusted EBITDA decreased to $45.5 million from$49.3 million year-over-year, reflecting lower adjusted EBITDA in the industrial technologies and memorialization segments, partially offset by an increase in the SGK Brand Solutions segment [39][68] - The net loss attributable to the company for the quarter was $2.3 million or$0.07 per share, compared to income of $3.7 million or$0.12 per share in the prior period [79] Business Line Data and Key Metrics Changes - Memorialization sales were $208.1 million, up from$206.5 million a year ago, mainly due to higher granite sales and the acquisition of Eagle Granite, despite a decline in casket sales [13][41][75] - SGK Brand Solutions segment reported sales of $130.5 million, down from$133.6 million, primarily due to lower retail base sales and continued weakness in the European brand market [42] - Industrial Technology segment sales increased to $111.4 million from$109.1 million, driven by growth in energy storage solutions [80] Market Data and Key Metrics Changes - The company noted a favorable impact of currency changes, contributing $5.1 million to current quarter sales and$354,000 to adjusted EBITDA compared to the previous year [14][41] - The energy solutions segment is expected to see higher revenue in fiscal 2024 than the previous year, driven by strong interest in hydrogen fuel cell production [34][37] Company Strategy and Development Direction - The company aims to continue consolidating sales growth and EBITDA for the full year, despite current delays in energy solutions, with a backlog of over $100 million at the end of the first quarter [37][74] - The strategy to extend marketing execution services to eCommerce digital marketing is expected to generate over$40 million in sales this year [76] - The company has renewed its revolving credit facility, providing access to capital during uncertain economic conditions [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth despite challenges in energy sales, emphasizing ongoing discussions with major global OEMs and battery manufacturers [50][69] - The memorialization business is expected to continue performing well, with recent weeks showing higher-than-normal sales volumes [75] - Management anticipates stronger cash flow trends in the latter half of the fiscal year as orders from the previous year convert to cash [77] Other Important Information - The company declared a dividend of $0.24 per share, payable on February 19, 2024 [20] - Outstanding debt increased to$862 million at the end of the quarter, with a leverage ratio of 3.71 compared to 3.31 at the end of the previous quarter [44] Q&A Session Summary Question: What are the expectations for energy storage and overall revenue growth? - Management indicated that discussions with customers are ongoing, and while timing of order intake is uncertain, they remain confident in achieving positive growth year-over-year [50] Question: How is the memorialization segment performing, especially regarding casket sales? - Management noted that while casket sales have normalized, granite memorial sales have increased, and they expect overall performance to remain strong [51][60] Question: What is the status of profit initiatives at OLBRICH? - Management stated that they expect profit contributions from OLBRICH to improve as cost actions are implemented [28][62]