Matthews International Corp (MATW) Q2 2024 Earnings Call Transcript Highlights: Navigating ...
Net Income: $9 million or $0.29 per share, stable year-over-year.
Adjusted Earnings Per Share: Increased to $0.69 from $0.65 last year.
Revenue: $471.2 million, a slight decrease from $479.6 million a year ago.
Adjusted EBITDA: $56.8 million, down from $58.4 million in the previous year.
Memorialization Sales: Stable at $222.2 million, nearly unchanged from $222.9 million.
SGK Brand Solutions Sales: Increased to $132.9 million from $131.2 million.
Industrial Technologies Sales: Decreased to $116.1 million from $125.5 million.
Debt Reduction: Reduced outstanding debt to $843 million from $862 million at the end of the last quarter.
Leverage Ratio: Improved to 3.62% from 3.71% at the end of the last quarter.
Dividend: Declared quarterly dividend of $0.24 per share.
Release Date: May 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Memorialization business maintained strong sales and EBITDA, continuing to exceed pre-COVID levels.
SGK Brand Solutions segment reported sales growth and significant margin improvement due to effective pricing and cost actions.
Successful advancement in digital e-commerce initiatives, expected to meet the $40 million sales target for the year.
Energy Solutions business reported sequential growth and high interest in dry battery electrode technology, indicating strong future potential.
Progress in new printhead solution, meeting all milestones for a scheduled launch by the end of the calendar year.
Negative Points
Overall sales for the quarter slightly declined due to macroeconomic impacts on several business segments.
Industrial Technologies segment experienced lower sales, particularly in warehouse automation due to reduced market development.
Delays in customer installations in the Energy Solutions business, impacting expected timelines and revenue recognition.
Challenges in the European market continue to affect the SGK segment despite growth in other regions.
Increased labor and material costs impacted the Memorialization segment's adjusted EBITDA, despite stable sales.
Q & A Highlights
Q: Can you elaborate on what you're seeing from your customers regarding the long-term transition to dry battery EV production? A: (Joseph Bartolacci - President, CEO) The transition to dry battery EV production is ongoing, though the timing has slowed. Interest levels are high due to the cost benefits and productivity of our system. We anticipate more discussions on this topic in the coming quarters.
Q: Regarding the platform for faster production mentioned in the remarks, is there any incremental expense or CapEx associated? A: (Joseph Bartolacci - President, CEO) Yes, accelerating the adoption of dry battery electrode will require about $40 million in CapEx over the next 12-18 months. This investment will help shorten the development cycle significantly by allowing customers to use a production-like facility for their formulations.
Q: Can you update us on the transition to the new chip provider for the printhead solution and your confidence in ramping up this product? A: (Joseph Bartolacci - President, CEO) We are satisfied with the new chip provider from Sweden. The current batch of wafers has shown no issues, and we are on track to enter the market by early calendar year 2025. There's significant market interest, and we plan to start with smaller clients to ensure the technology's effectiveness before expanding.
Q: How did the cremation segment perform this quarter, and what is the outlook for the rest of the year? A: (Joseph Bartolacci - President, CEO) The cremation segment performed well, with about $125 million in product and services. There are opportunities to improve performance in cremation equipment manufacturing, which could provide a good tailwind for next year.
Q: With the revised EBITDA guidance for the current fiscal year, what are the other puts and takes to consider beyond the delays from your major energy storage customer? A: (Joseph Bartolacci - President, CEO) Memorialization is performing better than expected, potentially due to market share gains. SGK and Product Identification are also performing well. However, the warehouse segment faces challenges due to large capital expenditure pullbacks by clients, influenced by interest rates.
Q: Can you discuss the impact of intellectual property issues on the energy storage side and how they might influence customer orders? A: (Joseph Bartolacci - President, CEO) Patents on dry battery electrode products expiring in July have accelerated customer interest and investment. Our investment aims to facilitate this by taking one of the prototype stages out of the development cycle, thus shortening the time to production.
These Q&A highlights from Matthews International Corp's earnings call provide insights into the company's strategic initiatives, particularly in transitioning to new technologies and managing operational challenges across its segments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
