Matthews International announced revenue for the first quarter of fiscal 2017 (3 months ended December 31, 2016). You can read the earnings release here and the Seeking Alpha earnings call transcript here. Funeral Director Daily will focus on the performance of the company’s memorialization segment which produces headstones, caskets and urns.
- Memorialization sales declined by 1.3% to $146 million during the first quarter of fiscal 2017 as a decline in casket sales offset an increase in memorial products sales (e.g. preneed sales).
- Operating profit for the memorialization segment was $14.4 million for the first quarter of fiscal 2017 versus $7.7 million for the first quarter of fiscal 2016 due to the absence of acquisition charges relating to the Aurora Casket acquisition during 2016.
- On the earnings call CEO Joe Bartolacci this to say about the memorialization business: “Our memorialization business saw strong results from our cemetery products group which helped the offset a lower Casket death rate during the quarter. Our granite business continued to see good revenue and profit resulting from market share gains and operating improvements while our cremation division saw a strong sales backlog growth during the quarter and recent large European incineration project, which has increased our expectations for a good year in this group as well.”
- Bartolacci commented that memorialization segment margins can be expected to improve due to synergies from the Aurora casket acquisition. “…we still have a lot of integration synergies to be achieved through the Aurora integration. So, we expect the margins to continue to improve over the course of the year and into next year.”
- The company has some exposure if the US retains a border tax because the company’s cheap metal caskets are produced in Mexico: “We do a fairly significant amount of our metal caskets coming out of Mexico today, all the woods are produced in North America. And of the metal caskets, it’s usually the lower end caskets that’s being produced and the higher ends are still produced in North America…So, in the proportionate dollar value of what we sell coming out of Mexico versus North America is not as much as the volume that comes out of Mexico. All that being said, what we’re seeing is a decline in the Mexican peso that will largely we believe, largely offset a lot of that of the tariff depending on what the amount may be on that tariff.”