Matthews International, an international conglomerate which serves the death care industry with memorial products, reported their January through March 2022 financial numbers last week.  Because they choose to report on a Fiscal Year that begins on October 1 each year, this report is considered their 2022 2nd Quarter Report.  You can access a copy of it here.

In short, Matthews reported total revenues for 2Q 2022 of $444.9 million as compared to the same period in 2021 when they reported $417.1 million. . . That’s an increase of 6.7%  for 2022.  However, the company  also saw margins decrease and selling expenses rise to bring home an Operating Profit of $7.3 million for the quarter.  That is less than half of 2Q 2021’s reported Operating Profit of $14.9 million.

The all -important Memorialization segment of Matthews contributed almost 50% of all revenues for the quarter as the segment had sales of $220.0 million of that $444.9 million company-wide total. . . .that’s 49.4% of all sales and compares to last years 2Q percentage of 49.1% — almost identical.

Here are some quotes from Matthews International’s call with stock analysts following the release of the 2Q report.  You can find a full call transcript here:

CFO Steven Nicola on Memorialization Segment Results:  “Memorialization segment sales for the fiscal 2022 second quarter were $220 million compared to $205.5 million a year ago, representing an increase of $14.5 million or 7.1%. The growth was primarily the result of higher cemetery memorial product sales and increased prices. Casket unit sales volumes were slightly lower for the current quarter as the impact of COVID 19 begins to subside. The company also completed an acquisition of a small cemetery products business during fiscal 2021 second quarter. For the first six months of fiscal 2022 memorialization segment sales were $430.7 million compared to $388.7 million a year ago representing an increase of $42 million or 10.8%. . . . . Memorialization segment adjusted EBITDA for the fiscal 2022 second quarter was $42.9 million compared to $51.6 million a year ago. The favorable effect of higher sales was offset by the significant unfavorable impact of higher material costs mainly steel, lumber, and bronze compared to a year ago as well as increased labor and freight costs. “

CEO Joseph C. Bartolacci on Inflation Pressures:  “Our revenue growth was both volume and price driven as all businesses have raised prices to mitigate the inflationary pressures. Well, as you all know the timing of our price increases doesn’t always match up with the increases in our costs. The price increases in Memorialization segment will help mitigate the declining volumes resulting from the lower COVID related deaths. . . . . .Our Memorialization segment continued strong top line performance particularly in cemetery and funeral products, was offset by rising commodity, labor, and freight costs. All of these businesses raised prices significantly, further action may be necessary in the future to mitigate costs like higher labor which are becoming a more permanent part of our cost structure.”

CEO Joseph C. Bartolacci responding to a question on the death rate returning to normal post-covid:  “Yeah, I mean the volumes are already coming back down to normal. It has been there for about a month now at this point or better than a month at least. The issues that — the Street may misunderstand is that the pricing actions that we’ve taken to date really are going to mitigate [indiscernible] completely, those volume reductions. That together with extremely strong backlogs in our cemetery products business we’re expecting another strong year in that segment this year as well.”

CEO Joseph Bartolacci responding to a question about cremation system sales in the Memorialization segment:  “So when we talk about our human cremation with our units, we’re strong. Our order rates remain strong or elevated. Elevated or as we’re having some difficulty in the supply chain side of things, getting things out. But we expect that to be a good contributor over the balance of the year and into next year as well.”

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  I don’t think that anybody that reads these reports will find anything too surprising in them.  It’s about what is expected from a company that has been in a two-year situation with a pandemic reeling across the world.  It appears that Matthews has figured out a way to continue to make the sales necessary while continuing to invest in new products that will eventually pay off for the company over time.  Unfortunately, like many other companies that have figured it out, economic challenges from product cost increases, supply chain delays, and general inflation is absorbing much of that potential profit that  increased sales could have turned to the bottom line.

Specifically to the Memorialization segment I don’t think it is a surprise that their casket volume has dropped in the January through March period as that has been predicted from many in the industry with the “pull-forward” effect that seems to be taking place.  And, it is not surprising that their cemetery products have increased sales and are also running a little late in scheduling  — that’s what I’m hearing from almost all cemetery product companies.  —  The two-year surge in product (grave makers, etc.) necessity coupled with a supply-chain delay is causing much longer lead times on product delivery for many companies.

More news from the world of Death Care:

• Life is worth a Pause.  Fort Madison Daily Democrat  (IA)
• Under new ownership, Valley Mortuary renamed Grand Teton Funeral Home and Crematory.  Teton Valley News (ID)
• Former funeral home owner/director indicted.  WTVQ  (KY)
• Life after Death:  Natural burial and cremation in Vermont’s first forest cemetery.  Listen or read print article.  Vermont Public Radio  (VT)

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