Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Memorialization segment reported solid performance despite a decline in U.S. casketed deaths, with improved pricing and modular OEM sales offsetting volume declines.
- SGK Brand Solutions demonstrated stable top-line growth, benefiting from improved pricing and cost reduction actions, as well as increased activity in the European packaging market.
- The company is on track to exceed its $40 million sales target for its e-commerce digital initiative, highlighting a successful area of focus and opportunity.
- Matthews International Corp (MATW, Financial) reduced its outstanding debt by $13 million through effective cash flow management and plans further reductions by year-end.
- The company is initiating a cost reduction program targeting up to $50 million in annual savings, primarily from changes in engineering and tooling operations in Europe.
Negative Points
- Consolidated sales and adjusted EBITDA declined year-over-year, primarily due to customer delays in shipments and installations for energy storage products.
- The Industrial Technology segment experienced a significant decline in sales, particularly in engineering and warehouse automation businesses.
- Legal fees related to a lawsuit with Tesla are impacting SG&A costs, adding financial pressure.
- Cash flow from operating activities decreased significantly compared to the previous year, reflecting lower consolidated adjusted EBITDA.
- The company faces challenges in the warehouse automation business due to slow market conditions and higher interest rates, impacting order placements.
Q & A Highlights
Q: On the revised guidance for fiscal 2024, how much energy storage revenue is included, and is there a risk of revenue slipping into fiscal 2025?
A: Joseph Bartolacci, President and CEO, explained that they expect to carry over $60 million to $70 million worth of backlog into 2025. For the fourth quarter, they anticipate about $30 million in billings, with shipments planned through late February of next year.
Q: Are plans to build battery production capability in-house still on track, and what will the capacity look like?
A: Joseph Bartolacci clarified that they are building a production line rather than production capability. This line will standardize the DBE solution, accelerating adoption by major customers and improving cost structure.
Q: Is fiscal 2025 expected to be a growth year for the energy storage business?
A: Joseph Bartolacci indicated that 2025 is expected to be a good year, though not significantly growth-oriented. The focus will be on cost structure improvements and potentially more announcements post-litigation.
Q: Can you provide more details on the $50 million cost reduction plan and its cash impact?
A: Steven Nicola, CFO, noted that the majority of the cost reduction plan involves cash, but there is a component related to asset write-offs. Specific cash figures were not provided during the call.
Q: How are you approaching non-core businesses given your current debt position and refinancing plans?
A: Joseph Bartolacci stated that they are considering all options, especially as their Industrial Technologies business progresses. They are evaluating non-core businesses more comprehensively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
