Matthews International Corp. announced financial results for its second quarter of fiscal 2023 in an April 28 news release.
The company earned 65 cents adjusted earnings per share and $479.6 million in revenue.
According to Zacks Equity Research, those results handily beat the consensus estimate of 53 cents per share. Over the last four quarters, the company has surpassed consensus EPS estimates four times, according to Zacks. After reporting results, the stock went up about 6%.
Joseph C. Bartolacci, president and chief executive Officer, stated:
“For the fiscal 2023 second quarter, our Industrial Technologies segment reported an increase of $47.4 million, or 60.6%, in sales from the same quarter a year ago. Higher sales for our energy storage solutions business and the acquisitions of Olbrich GmbH and R+S Automotive GmbH (August 2022) were the significant contributors to this increase. Our energy storage solutions business continues to grow and interest in our offerings is increasing. Our Industrial Technologies segment is on track to approach sales of $500 million for fiscal 2023, more than double its sales of $228.5 million three years ago (fiscal 2020).
“Our Memorialization segment also reported sales growth for the current quarter despite a significant decline in U.S. casketed deaths. The increase for the current quarter primarily reflected growth in sales of cemetery memorial products and mausoleums, improved price realization, and the acquisition of Eagle Granite Co. (February 2023). These increases were partially offset by lower casket unit volume reflecting the lower death rates.
“Sales for the SGK Brand Solutions business continued to be challenged due to unfavorable currency rate changes and difficult European market conditions. However, recent cost reduction actions mitigated some of this impact. In addition, further cost structure actions have been initiated in our European operations which, together with our actions to date, should yield improved margins for the balance of the fiscal year.
“Additionally, as a result of strong operating cash flow, we reported a $59.1 million reduction in outstanding debt during the fiscal 2023 second quarter, reducing our net leverage ratio to 3.5 at March 31, 2023. We expect further debt reduction over the remaining two quarters of this fiscal year.”
Consolidated sales for the quarter ended March 31, 2023 were $479.6 million, compared to $445.0 million for the same quarter a year ago, representing an increase of $34.6 million, or 7.8%. On a constant currency basis, consolidated sales increased $44.5 million, or 10.0%, from a year ago. Changes in foreign currency exchange rates were estimated to have an unfavorable impact of $9.9 million on fiscal 2023 second quarter sales compared to the prior year.
Net income attributable to the company for the quarter ended March 31, 2023 was $9.1 million, or $0.29 per share, compared to a loss of $1.9 million, or $0.06 per share in the prior year. The second quarter last year reflected asset write-downs related to the Russia-Ukraine conflict. On a non-GAAP adjusted basis, earnings for the fiscal 2023 second quarter were $0.65 per share, compared to $0.74 per share a year ago. The decrease was primarily attributable to higher interest expense compared to a year ago, offset partially by the increase in consolidated adjusted EBITDA (net income before interest expense, income taxes, depreciation and amortization, and other adjustments) for the current quarter. Adjusted EBITDA for the fiscal 2023 second quarter was $58.4 million. On a constant currency basis, adjusted EBITDA was $60.0 million for the current quarter, compared to $55.2 million a year ago, primarily reflecting higher adjusted EBITDA for the Memorialization and Industrial Technologies segments partially offset by a decline in the SGK Brand Solutions segment.
Consolidated sales for the six months ended March 31, 2023 were $928.8 million, compared to $883.6 million a year ago, representing an increase of $45.2 million, or 5.1%. On a constant currency basis, consolidated sales increased $72.2 million, or 8.2%, from a year ago. Changes in foreign currency exchange rates were estimated to have an unfavorable impact of $27.0 million on fiscal 2023 sales compared to the prior year.
Net income attributable to the company for the first six months of fiscal 2023 was $12.8 million, or $0.41 per share, compared to a net loss of $21.7 million, or $0.68 per share in the prior year. The loss in the prior year-to-date period included the settlement of the Company’s principal defined benefit pension plan and asset write-downs related to the Russia-Ukraine conflict.
On a non-GAAP adjusted basis, earnings for the first six months of fiscal 2023 were $1.18 per share, compared to $1.48 per share a year ago, representing an decrease of $0.30 per share or 20.3%. The decrease primarily reflected higher interest expense and modestly lower year-to-date adjusted EBITDA. Adjusted EBITDA for the first six months of fiscal 2023 was $107.7 million, compared to $108.5 million a year ago, representing a decrease of $0.8 million. The impact of higher consolidated sales was offset by significant material cost increases, higher labor costs, and other inflationary cost increases.
Outlook
Bartolacci further stated: “With respect to the balance of fiscal 2023, we are pleased with the progress and direction of each of our businesses and we are on track to our guidance. In our energy storage solutions business, we are in the earlier stages of the orders that we announced in January 2023, which will benefit the balance of this fiscal year into mid-fiscal 2024. For our Warehouse Automation business, backlog remains solid, particularly for deliveries through the end of this fiscal year. In addition, our Memorialization business continues to perform well despite the return to normal death rates following coronavirus disease 2019 (“COVID-19”). Lastly, pricing conditions for the SGK Brand Solutions business appear to be improving and we have started to realize the benefits from our recent cost reduction actions.
“Based on these considerations, we are maintaining our previously reported guidance for fiscal 2023 (adjusted EBITDA range of $215 million to $235 million).”
