Finance

Matthews Memorialization segment reports higher sales, lower margins

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Mathews International, the global provider of memorialization products, industrial technologies, and brand solutions reported their Fiscal 3rd Quarter last week.  That quarter encompasses the April thru June 2022 time period.

In reporting their Memorialization segment finances we note that they may be reporting what we believe could become a common theme in death care company’s reports for the quarter — that is one of thinning margins.  You can see the quarterly financial press release here.

Here’s what Matthews CEO and President Joseph C. Bartolacci said of the Memorialization segment specifically in the report, “Memorialization sales continued to be strong in the fiscal 2022 third quarter. The segment reported sales of $203.2 million for the current quarter compared to $184.3 million a year ago, representing an increase of 10.2%. The increase primarily reflected growth in the sales of cemetery memorial products, steady casket sales, and improved pricing, which was necessary to mitigate commodity cost and other inflationary cost increases.”

That increase in sales, however, produced an Adjusted EBITDA in the Memorialization segment of $32.0 million, while last year’s 3rd Quarter produced an EBITDA of $36.4 million on sales of only $184.3 million.  In essence, EBITDA margins to sales was down approximately 11.9% for the quarter.  So, sales were up about 10.2%, but margins were down about 11.9%.

Bartolacci also commented about the company in general on some of that margin compression,  “Our Company reported another quarter of solid sales performance, despite increasingly challenged global economic conditions. . . . .We continue to focus our efforts toward managing through these challenges, including inflation, supply chain disruptions, currency volatility and other geopolitical events. . “

For the nine-months to date of the Matthews International fiscal year, the Memorialization segment has produced $633.8 million in sales as compared to $573.0 million in the prior year comparison period — an increase of 10.6%.  In the realm of the compressed margins, however, for the year-to-date the Memorialization segment has produced an EBITDA of $118.4 million, 10.4% less than last years nine-month total $132.0 million.

Funeral Director Daily take:  The good news is that Matthews continues to grow sales in the Memorialization segment.  In fact, the segment’s portion of total Matthews International sales continues to grow.  For the nine-months to date of the company’s fiscal year, the Memorialization segment has accounted for about 48.5% of the company’s total sales as compared to last year during the same period the Memorialization segment accounted for only about 46.5% of the total sales of the company.

As for the Total Adjusted EBITDA of the company, the Memorialization segment has accounted for 76.6% of the nine-month year-to-date EBITDA as compared to last years nine month figure of 75.1%. . . that shows the segment’s value to the overall company.

In this period of rising costs due to inflation of fuel and other commodities, I think we will be seeing most companies report shrinking margins until they can either raise their prices to compensate or we see inflation subside somewhat.  It will continue to be a challenge for business in the near future.

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