Matthews records record sales, casket sales drop off

Matthews International reported their 3rd Quarter 2021 sales recently and in doing so reported a record revenue for their 3rd Quarter (April-June) of $428.4 million, which is a 19.2% increase over the same period of 2020.  As you may know, Matthews International has three business segments, one of which is their Memorialization segment.

The Memorialization segment of Matthews includes Matthews cremation and Aurora Casket Company as well as their cemetery memorial products division.  The segment recorded over 43% of total Matthews sales for the quarter with slightly over $184 million in sales.  That compares to $162 million in sales which comprised 45% of 3Q 2020 sales.

An interesting item about Matthews business is that while the Memorialization segment comprises somewhere around 45% of sales for the nine months ended in June of 2021, that segment contributed over 75% to the companies Total Adjusted EBITDA.

Here’s what CEO Joseph C. Bartolacci said in the Earnings Press release which you can access here, “Our Memorialization segment reported sales of $184.3 million for the current quarter, compared to $162.1 million for the same quarter a year ago, representing an increase of $22.2 million, or 13.7%. The growth primarily resulted from increased sales of cemetery memorial products and cremation equipment. As expected, unit sales of caskets decreased for the quarter reflecting lower U.S. deaths due to the declining impact of COVID-19.. . . . Recent increases in commodity costs have begun to impact our margins, particularly in the Memorialization segment. However, realized benefits from our cost reduction initiatives and investments have mitigated some of this impact on a consolidated level.”

Here are some comments by CFO Steve Nicola from the companies Earnings Call which you can access here, “The company also completed an acquisition of a small Cemetery Products business during the fiscal 2021 second quarter. . . . .The favorable effect of higher sales (in the Memorialization segment) was offset by the unfavorable impacts of higher commodity costs, mainly steel lumber and bronze, lower margin projects in our UK cremation and incineration equipment business and increased labor and freight costs during the current quarter. . . . Cost for the segment’s primary direct materials continued to increase during the recent quarter, which is expected to have an unfavorable impact into next fiscal year.”

CEO Bartolacci also noted that cremation equipment sales are very strong.  He indicated that backlog on cremation systems is out 15-16 months.  He explained it this way,  “The issue is generally not whether we’ve got product to sell. It’s more a question of whether a client is ready to accept the product. I mean these are pieces of equipment to go into other facilities. There is construction, there is permitting and everything else associated with that.”

On that same issue, CFO Nicola made the following comment, “While the market continues to grow, as you might expect, we are the leading provider of human cremation equipment in the world. We sell more equipment than anybody else by a long shot. As a result, our reach gets broader and broader, but I will tell you that outside of the United States most of the sales are made to municipalities and as those municipalities have been constrained by what’s going on with COVID in and of itself, you would expect those things to come overtime. Our backlog includes a lot of product in Latin and South America, Australia and we have a lot of backlog in Europe, Eastern and Western as well. We’re pretty comfortable that this is what we expect it to be a strong long-term consistent player, they continue to deliver value to — to the business.”

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