Release Date: November 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Matthews International Corp (MATW, Financial) reported a steady improvement in the SGK Brand Solutions segment, with three consecutive quarters of higher sequential sales and good margins.
- The Memorialization segment continues to outperform, benefiting from pricing actions, tuck-in acquisitions, and a diverse product portfolio including cremation and mausoleum-related products.
- The company successfully launched a new line of lasers and is preparing to launch the Axiom product, which has shown promising beta testing results.
- Matthews International Corp (MATW) reduced its outstanding debt by over $50 million during the fourth quarter, reflecting strong cash flow management.
- The company has initiated cost reduction programs expected to result in annual savings of up to $50 million, with significant portions from European operations and G&A costs.
Negative Points
- Consolidated sales and adjusted EBITDA were lower on a year-over-year basis, with fourth-quarter sales declining from $480 million in 2023 to $447 million in 2024.
- The Industrial Technologies segment faced slow shipments and installations for energy storage products and soft demand for warehouse solutions.
- The company reported a net loss of $68.2 million for the fourth quarter, primarily due to charges related to cost reduction programs and goodwill impairment.
- The Energy Solutions business experienced significant revenue declines due to slower-than-expected customer deliveries.
- Higher interest expenses and lower consolidated adjusted EBITDA negatively impacted non-GAAP adjusted net income for the current quarter.
Q & A Highlights
Q: Can you provide an update on the backlog for Energy Storage entering fiscal 2025 and discuss the opportunity set over the next several quarters?
A: Our backlog is about $100 million, mostly to be delivered over the next 12 months. While there is significant interest, we are cautious due to the ongoing dispute. We are evaluating what we can and cannot do at this time.
Q: What is embedded in the guidance for Industrial Technology, particularly regarding Warehouse Automation and the Axiom product?
A: We expect a slower first quarter for Warehouse Automation due to the holiday season but anticipate a stronger year in 2025 based on current quoting activity. The Axiom product launch is expected to contribute significantly in the future, with customer acceptance being key.
Q: Could you elaborate on the strategic review of the portfolio and what options are being considered?
A: We are evaluating the entire portfolio to maximize shareholder value, particularly as our Industrial Technologies segment shows significant growth opportunities. We are not discussing specific parts of the business at this time.
Q: Can you provide more detail on the Memorialization segment, especially regarding cremation-related products and their impact on the business?
A: The Memorialization segment is diverse, with cremation-related products now over $140 million. The growth in cremation is contributing to the segment's performance, and we see opportunities for tuck-in acquisitions to further enhance growth.
Q: What is the expected realization of the $50 million cost savings, and what are the associated costs?
A: We expect to realize $25 million to $30 million of savings by the end of this fiscal year, with the remainder by the end of the next fiscal year. The total cost to achieve these savings is estimated at $30 million to $40 million, with about 75% being cash costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
