Batesville casket sales, margins both drop


Hillenbrand Industries, parent company of Batesville Casket, reported their Fiscal Year 2022 1st Quarter last week. The First Quarter of their fiscal year represents the months of October, November, and December 2021.  You can read the entire report on the company’s 1Q 2022 here.

While Hillenbrand Industries is a conglomerate of companies, they still report their Batesville operating segment separately and that is what is of interest to us at Funeral Director Daily.

For the 1st Quarter of Fiscal 2022, Batesville is reporting that their sales dropped by about 1% compared to the 1Q 2021 Fiscal Year period.  Total Batesville sales for 1Q 2022 were reported as $163 million.  The company explained the lower sales this way, “Revenue of $163 million decreased 1% year over year primarily due to lower burial casket volume resulting from an estimated decrease in deaths associated with the COVID-19 pandemic and an estimated increase in the rate at which families opted for cremation, partially offset by higher average selling price.”

Batesville also reported their adjusted EBITDA, or margins, as being lower this period than the same period of a year ago.  Adjusted EBITDA decreased to $40.5 million as compared to about $52.3 million in last year’s first quarter.  In essence, Batesville saw their margins drop to about 24.9% of sales “primarily due to inflation, including higher transportation premiums, and the impact of lower volume, which more than offset the impact of higher average selling price” for the latest quarter.

Looking forward for the balance of the Hillenbrand 2022 Fiscal Year, the company gave estimates for Batesville Casket.  The estimates show probable yearly revenues in the range of $585 to $595 million which would be a decrease of 5-6% as compared to Fiscal Year 2021.  The company also gave forward looking guidance that Batesville’s Adjusted EBITDA would be in the 20-21% area.

Funeral Director Daily take:  I see a couple of “take-aways” for me from this report that the average funeral director can relate to.  The first, much like the Matthews International report of last week, is the erosion of margin as a percentage of sales.  As you may know, it is widely believed that Batesville Casket is the market share leader in caskets and Matthews Aurora brand is believed to be second in that market share category.  Both of those companies losing margin percentage should give you a pretty good idea how inflation can erode your profits.

Tom Anderson
Funeral Director Daily

Individual funeral home operators need to look at their own pricing so they do not get in the situation where they are doing the same amount, or more work, and taking home less cash because of compressed margins.  That can be the effect of inflation on a funeral home operation.

Secondly, the decrease in sales at this point in time with the pandemic is interesting to note.  America has just passed the 900,000 number of Covid-19 deaths.  So, I wonder if that decrease in sales is not necessarily only because of a lower number of Covid deaths last quarter as it may more of an ever-increasing cremation choice option.

Or, as the market leader share leader, I wonder if Batesville has suffered a little because of the supply chain issues affecting America.  As more funeral homes look for a secondary supplier, just in case they may need one, you would guess that the market share leader might suffer the largest loss in sales because of that scenario.

Disclaimer— The author of this article holds a stock position in Hillenbrand Industries

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