Hillenbrand Industries, parent company of Batesville, reported its 2nd Quarter 2022 (January thru March) last week and with it reported that the Batesville division increased their sales over the same quarter of last year by 6% to $176 million for the quarter.  That was done, for the most part, by implementing a “price surcharge” in January 2022 to “offset the significant increase in commodity costs.”

The quarterly report, which you can read here, also made mention that “Burial casket volume was lower compared to the prior year primarily due to an estimated increase in the rate at which families opted for cremation.”

And, while the revenues for Batesville were up, it is apparent that the costs of doing business, including transportation will be bearing on the company’s bottom line as Adjusted EBITDA fell for the quarter dropped to $37.2 million as compared to last year’s 2nd Quarter Adjusted EBIDTA of $44.6 million  — that’s a drop of 17%.

Going forward for their 2022 Fiscal Year, management outlook points to the Batesville division coming in with annual revenue declines of somewhere from 1-3% less than Fiscal Year 2021.

In the press release for the Hillenbrand 2nd Quarter CEO Kim Ryan made this statement concerning Batesville, “. . . .Batesville performed above expectations due to the unfortunate effects of the Omicron variant. . .”

Here are some other interesting statements concerning the Batesville division of Hillenbrand Industries that were contained in the Earnings Call which you can access here:

CEO Kim Ryan on death rates and supply-chain issues:  “. .Batesville continued to deliver on its mission and performed above our expectations in the quarter. While COVID -related deaths were higher than expected due to the unfortunate effects of the Omicron variant, we saw the daily death rate fall significantly towards the end of March compared to earlier in the quarter. And we have seen this pattern continue through the start of our third quarter, which is in line with what we previously communicated. Like most companies, we are seeing unprecedented rise in global supply chain disruptions, inflationary pressures, labor constraints, and foreign currency headwinds, which have intensified with the return of COVID -related shutdowns in China and the war in Ukraine.”

CEO Kim Ryan on Batesville’s role in Hillenbrand:  “Our next strategic pillar is to manage Batesville for cash. As we continue to grow our industrial product platforms. Batesville is becoming a smaller part of the portfolio. Batesville continues to be a well-run business that generates stable and predictable cash flows in support of our profitable growth strategy.”

Hillenbrand CFO Robert Vanhimbergen on Batesville’s performance going forward:  “. . . turning to Batesville. We expect revenue to be the range of $605 million to $615 million, down 1% to 3% versus the prior year compared to our previous expectation of down five to 6% This change as a result of higher-than-expected volume in our second quarter and additional surcharge pricing in the second half of the fiscal year. We are maintaining our expectation for Batesville margin to be a range of 20 to 21% for the full-year.”

Funeral Director Daily take:  The Revenue range for Batesville has been upgraded in this report to reflect that the company expects revenue to be 1-3% lower than FY 2021 rather than a previous expectation of 5-6% lower according to the comments by CFO Vanhimbergen.  That’s a good sign for Batesville although I’ve heard from many funeral directors that they don’t like the “surcharge” situation.  The argument is that “once a surcharge is on, it is there to stay.”

On the other hand, if they had just increased the prices of the caskets, the added cost is also there. . .more than likely with the idea that the price will never be decreased. . . or in other words, permanent.

Finally, it is interesting for me to note that Batesville’s lower unit volumes is seen to be attributed to “an estimated increase in which families chose cremation” rather than any mention of lower Covid deaths in January thru March 2022 than in January thru March 2021.  Again, it is my opinion that families will continue to choose options such as cremation, alkaline hydrolysis, natural organic reduction, and green burial on an increasing basis continuing to lower Batesville’s unit numbers.

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

More news from the world of Death Care:

• Are more Black families choosing cremation over traditional burials?    Q City Metro (NC)
• Cremation, inurnment continue to grow in Catholic churches.  Arkansas Catholic (AR)
• Few eligible families have sought federal payment of COVID funeral expenses.  Print Article.  NPR Public Radio
• Gard Funeral Home & Cremation Services breaks ground on projects.  The Register-Herald (OH)
• Gard Funeral Home website
• NewBridge Group assists Delehanty Funeral Home in acquisition by Pinnacle Funeral Service.  NewBridge Group Press Release.

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