Matthews CEO Bartolacci: “This is a different business than it was just 3 years ago”
Matthews International, parent company of Aurora Casket and Matthews Cremation, reported their 3rd Quarter 2023 results and 9-Month results for 2023 last week. I think the overriding take on that report is that Matthews International has continued their growing revenue spurt moved mostly by their recent entrance into the energy storage solutions business.
However, while their Industrial Technologies segment, where the energy storage solutions business is housed, grew sales for the quarter, as compared to their 2022 3rd quarter, by over $50 million, the company’s Memorialization segment continues to be the dominant segment for sales — with the Memorialization segment accounting for 44% of Matthews International’s 3Q 2023 company sales revenue.
Here are some of the prepared remarks about the Memorialization segment that were in the company’s 2023 3rd Quarter Report which you can access here:
- “The Memorialization segment reported higher sales and adjusted EBITDA for the current quarter compared to a year ago. The segment continues to perform well post-pandemic reflecting good market share performance, price realization, and cremation-related products sales. The strength of our brands, strong customer service, continued innovation in our production processes, and the growing level of our cremation-related products sales remain significant elements in the ongoing success of this segment.”
- “Memorialization segment sales increased for the current quarter compared to a year ago primarily reflecting improved pricing, higher sales of U.S. cremation equipment, and the impact of the acquisition of Eagle Granite, which more than offset lower unit sales for caskets and memorials resulting from the decline in COVID-related deaths.”
From the company’s earnings call on Friday, July 27, 2023, this additional comment was made by CEO Joseph Bartolacci, “In the Memorialization business, we continued to outperform pre-pandemic results driven by the significant effort made by the team. We have retained much of the market share gains that we have made during COVID and improved our operating efficiencies. Thus, we have reset this business to a higher performance level than before the pandemic.”
You can access the Earnings Call transcript from Seeking Alpha here.
Matthews Memorialization Segment by the numbers: Matthews International operates on a fiscal year beginning on October 1 rather than a calendar year which is why this report is on the 3rd Quarter instead of the traditional April, May, June months being the 2nd Quarter.
For the their 3rd Quarter of 2023 Matthews recorded Memorialization segment sales of $208.7 million as compared to 3Q 2022 sales for the segment of $203.1 million. For their 9-month 2023 period the segment has recorded sales of $638.1 million as compared to 9-month 2022 segment sales of $633.8 million.
For the 9-months of 2023 the company has also increased their Memorial segment EBITDA by almost $9 million. . . that’s about a 7.6% increase over the 9-month 2022 EBITDA of slightly over $118 million.
Funeral Director Daily take: In the Earnings Call Question and Answer period Funeral Director Daily noticed one particular answer we thought interesting. Recently, many people – (both Death Care professionals and some insightful consumers) have indicated that they think the “Funeral” business is changing rapidly. . i.e. it is not the same as it was only a few years ago. Nobody really pinpoints what makes it seem so, but I found CEO Bartolacci’s comment to a question from stock analyst Liam Burke of B. Riley very interesting. Here’s that exchange:
Question — “On the Memorialization, you talked about market share gains. Specifically, that’s both in Memorialization products and with caskets? Or is this across the board of all the product lines, including cremation?”
Answer — “I would tell you that we picked up market share in just about every one of the businesses that we operate in North America, but they’re small. These are incremental. But as you know, that incremental drop-through is positive.
The bigger issue, Liam, I think is — and I think The Street may have keep missing this. I mean if you look at where our business was just 3 years ago, it’s materially higher at this point in time. So that is a period of time that’s both through margin — excuse me, both through pricing and as well as with market share pickup. This is a different business than it was just 3 years ago.” (Emphasis from Funeral Director Daily)
I think Bartolacci meant “his business” — Matthews International. . . .but he could also just as easily be referring to the entirety of the Death Care business. From my point of view we are far past the business of being an accomodations business simply selling caskets, urns, and embalming. Death Care has moved into the personal care, personal services, and hospitality business in and around the death of a loved one. How much of the revenue of the “traditional funeral home” stays with the funeral home will say a lot in how we profit. . . . . Dollars that move away from traditional funeral homes for off-site services, receptions, differing forms of disposition, and more options that might well compete with traditional funeral homes will have a lot to say on the profitability of traditional funeral homes moving forward
More news from the world of Death Care:
- Funeral planners at Pure Cremation reveal final send off inspiration. Marketers Media Newswire (Great Britain)
- Cemetery commission aproves new regulations. Eureka Springs Times-Herald (Arkansas)
- Families looking for answers after Carson cemetery suddenly closes: We’re in the dark”. Video story and print article. KABX News 7 – Los Angeles (CA)
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