Matthews works through “flat-market” quarter

May 13, 2024/Finance/

Editor’s Note: This was our feature article for last Friday morning. However, for some reason still unknown to us, the server we contract to support our website was down for a few hours early in the morning. So, if you missed this article, here it is. . . .

Matthews International reported their 2nd Quarter financial results of 2024 last week. Their 2nd Quarter covers the period of January, February, and March 2024. You can see their results here.

Revenue and even earnings wise, it was somewhat of what I would term a “stagnant” quarter. Total sales were off $8.4 million from the corresponding period in 2023 and that was a 1.7% decrease percentage wise. Net Income dropped slightly also. . . from $9.1 million in 2Q23 to $9.0 million in 2Q24 — that’s only $100,000 on over $471 million in sales, so almost the very same results.

Even when we look to Matthews Memorial Segment, which I term as one leg of their three-legged business model, results were unusually close to the same period in 2023. The Memorial Segment, which includes “cemetery memorial and casket sales, plus a growing portfolio of cremation-related products and services” reported sales that were very close to 2023 sales. The Memorial Segment sales for 2Q24 came in at almost $222.2 million as compared to sales of almost $222.9 million in 2Q23 — a slight and negligible lesser total this year than last year.

Adjusted EBITDA for the Memorialization segment dropped about $1.5 million in 2Q24 as compared to 2Q23. On roughly the same amount of sales that indicates that operations got a little more expensive — not surprising when looked at in the scope of the continuing inflation over the past year.

Here’s some of what Matthews International CEO Joseph Bartolacci said in prepared statements in the company press release:

“Sales for the Memorialization segment for the fiscal 2024 second quarter were relatively consistent with a year ago despite lower U.S. death rates. The benefits of recent acquisitions and improved price realization substantially offset post-COVID unit volume declines for the quarter. The segment continues to perform well post-COVID, with current sales and adjusted EBITDA run-rates well ahead of pre-COVID levels.”

“During the fiscal 2024 second quarter, we reduced our outstanding debt by $19.6 million and net debt (outstanding debt less cash) by $27.2 million. Based on our current cash flow forecasts, we project further reductions in our outstanding debt and leverage ratio by the end of the fiscal year.”

“We remain very confident in our long-term strategies and outlook. Our Memorialization business continues to be very well positioned with its strong, stable base of cemetery memorial and casket sales, plus its growing portfolio of cremation-related products and services. “

Tom Anderson
Funeral Director Daily

Funeral Director Daily take: We’ve now reported on Service Corporation International, Carriage Services, and Matthews International for the preceding quarter. A theme that seems to be coming to the forefront on these companies is that the 2nd Quarter of 2024 was very similar to the 2nd Quarter of 2023. Albeit, all of those companies reported “slight unit volume” declines with the probable cause that the country is falling back to its normal mortality less some “pull-forward” effect continuing to reduce the mortality total number.

Another theme we see is that all of those companies made note of the fact that they reduced debt in the quarter and look forward to continuing to do so. We think that is healthy and can only be a good move.

It’s probably a good sign that you should take a look at your own debt and, if possible, look to pay some down before you are forced to refinance at a higher rate.

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