Death care conglomerate Matthews International, based in Pittsburgh, Pennsylvania, posted their 2nd quarter earnings report of Fiscal Year 2018 last week. Here’s what President and CEO Joseph C. Bartolacci said of the report, “The company’s results for the fiscal 2018 second quarter were in line with our internal expectation and we are on track to achieve the fiscal 2018 targets that we increased in reporting our first quarter results.”
You can read the Matthews International press release on the earnings here.
Here are some of what we believe are the highlights of the report:
- The company’s sales increased 8.7% in year over year (YoY) sales from $380.9 million to $414.1 million
- Net income increased 21.9% to $18.2 million from $14.9 million YoY
- All three operating segments of Matthews International recorded increased sales YoY
- Specifically, the Memorialization segment (which is of interest to the death care industry and contains Aurora Casket Company) increased a total of $6.6 million from $162.1 million to $168.7 million YoY. Part of this, according to the release from Matthews is attributable to the recent acquisition of Star Granite and Bronze, which was announced in February 2018. Again, according to the release, it is stated that “excluding the acquisition, sales were relatively consistent with a year ago”.
- In discussing first-half 2018 results, management, according to the release, said this about the Memorialization segment, “Memorialization segment sales for the first six months of fiscal 2018 were $313.6 million compared to $307.7 million a year ago, representing an increase of $5.9 million. The increase primarily reflected higher cremation equipment sales and the acquisition of Star Granite and Bronze.”
Funeral Director Daily take: We think that this is a solid report showing solid growth and sound management. If you are a stockholder you are seeing increased dividends of late and a bounce off the company’s 52-week low in the stock price. Increasing sales almost 9% year over year is no small matter, and in my opinion, is a great indication that the companies products are relevant in the marketplace. Again, in my opinion, it all starts with sales — if you cannot get the sales, well, then there is really nothing to manage.
From a death care point of view, it is interesting to me that there is no mention of how the Aurora Casket acquisition is progressing. There is a blip in the report that says, when referring to the Memorialization segment, “sales were relatively consistent with a year ago reflecting the effects of a more severe flu season on casket sales in the current quarter, offset by lower memorial sales.” To me that says that casket sales were probably slightly up, but not of a material nature to the segment.
We have heard rumors, I’ve seen not statistics, but have heard from several industry experts that the number of deaths was significantly higher in the first three months of 2018 than in 2017. If that is true, then I just think that the mix of service cases continues to rapidly go in favor of cremation. If that was not the case, I would guess that we would hear of higher casket sales in a report like this.