Finance

Matthews sees Memorialization revenue increase, backlog in cemetery orders and delay in cemetery capex

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Matthews International, the Pittsburgh based tri-partite conglomerate with the largest percentage of their sales in what they refer to as their “Memorialization Segment” saw an increase in total sales and Memorialization Segment sales for their 2021 Fiscal Year.  As you can see from this 4th Quarter (July, August, September) and Year End report sales in the Memorialization Segment increased from $656.0 million in FY 2020 to $769.0 million in FY 2021. . .that’s an increase of 17.2%.

Included among many Matthews memorialization product offerings are Aurora Caskets and Matthews Cremation Solutions.

Matthews total company revenues for FY 21 were $1.67 billion making the Memorialization sales 46% of that total as compared to 43.7% of the company’s total sales in FY2020.  And in both years, the Memorialization segment contributed to over 56% of the company’s EBITDA before deducting for Corporate and non-Operating expenses.  The sales numbers and percent of EBITDA numbers show the importance of the Memorialization Segment to the financial well being of the entire company.

The company also had an increase over FY2020 in the 4th Quarter Memorialization numbers  — that increase was a more modest 10.2% increase.  Here’s what Matthews CEO Joseph Bartolacci said about those results in the press release, “Our Memorialization segment reported sales of $195.9 million for the fiscal 2021 fourth quarter compared to $177.7 million a year ago. The increase mainly resulted from higher casket unit sales, improved price realization, and an increase in sales of cremation equipment. The increase in casket unit sales primarily reflected COVID-19 trends during the quarter.” 

Bartolacci went on to say this in the press release,  “Further, although declining death rates as the pandemic subsides are expected to impact casket and cemetery memorial unit sales, higher volume trends and continued growth in cremation-related sales are expected to mitigate some of this impact. As a result, we are currently projecting overall growth in consolidated sales for fiscal 2022.”

He continued, “Although we are projecting consolidated sales growth for fiscal 2022, adjusted EBITDA will be challenged by the significant increases in commodity costs during the past year. In addition, labor markets, supply chain and other inflationary challenges will also have an impact next year. We expect our projected consolidated sales growth and ongoing cost-reduction initiatives to mitigate some of this impact and, as a result, are projecting a modest decline in consolidated adjusted EBITDA for fiscal 2022.”

In Matthews International’s Earnings Call, CFO Steven Nicola also made some comments.  Here is one of interest that explains where the sales increases in the Memorialization Segment came from:  “For the year ended September 30, 2021, sales for the Memorialization segment were $769 million compared to $656 million a year ago. The increase resulted mainly from increased sales of caskets, cemetery memorial products and cremation equipment.”

In the Earnings Call, which you can read here, CEO Bartolacci had this to say about the Memorialization Segment: 

Joseph C. Bartolacci
Matthews International

“In our Memorialization segment, we delivered strong full year results. Cemetery Products, Funeral Home products and Environmental Solutions, all reported higher revenue than prior year. Our backlog and our current order rates in our Cemetery Products and our Environmental Solutions businesses continue to be very strong. And at least at this time, our Funeral Home Products revenues remains strong. Therefore, we expect another strong year from this business going into ’22.

Unfortunately, throughout the Memorialization segment, we are feeling the impact of inflationary pressures that impacted our business particularly hard in the fourth quarter and will impact our operating results in ’22. When compared to pre-pandemic levels, we are expecting over $50 million of inflationary pressures during ’22 in this segment. We are taking actions to mitigate these increases, including raising prices now and in the coming quarters, but we still expect to be impacted negatively.”

And, in a response to a “Supply-Chain” question, CEO Bartolacci had this answer:

There is no question.. . .  that our order rate backlogs, whatever you want to call it, on our cemetery product side are significantly higher than normal. We — in one part of the business, we’ve got a year’s worth of orders in-house and having difficulty in both getting product and getting it out the door. That tells you that not only are we having deferred memorialization, we are still trying to catch up with what is at need. So the orders are in place. So we’re expecting a strong year in that part of our business as we move forward.

Secondly, in that segment, there’s been probably some underinvestment in facilities when you talk about mausoleums and other kinds of capital-type investments, we’re expecting to see that to come back. Over the last couple of years, things have been a little slower than as you might expect, that will continue to come back as well.”

Funeral Director Daily take:  It’s interesting, even while Matthews International is investing heavily in new technologies in their other business segments that Memorialization continues to be its leader in sales and its leader in contributing to the bottom line.  Of course they are very diversified in the Memorialization segment with products that include caskets, cemetery products, cremation supplies, and crematories as well.  We believe that diversity will serve them well as we move into the future, especially the continued related trends of cremation related products.

It should also be pointed out that these remarks, and the remarks of Batesville Casket Company that we published last week were both made prior to the detection of the potential new Omicron variant of the current pandemic.  Both companies made forward looking statements that mentioned that declining death rates as the pandemic subsides would negatively affect casket sales.  While we are still in the dark about Omicron, this writer certainly hopes that both companies were correct in that assessment.  Decreased casket sales may not be great for the finances of these companies, but it would be great for humanity.

Here is the website which introduces Matthews Memorialization Segment.

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One Comment

  1. Matthew’s report in your posted article all sounds great, BUT our funeral received delivery of a cremation retort four months ago without burners. It is useless to us. Their excuse is that the burners are on back order. They didn’t hold back on taking our money.
    Frank Shelly
    Shelly Funeral Home, Inc.
    Warrington, PA

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